Employee Stock Purchase Plan – Pixelworks Inc.

PIXELWORKS, INC.

AMENDED AND RESTATED 2010 EMPLOYEE STOCK PURCHASE PLAN

1.	PURPOSE

The purpose of this Plan is to assist Eligible Employees in acquiring a stock
ownership interest in the Corporation, at a favorable price and upon favorable
terms, pursuant to a plan which is intended to qualify as an “employee stock
purchase plan” under Section 423 of the Code. This Plan is also intended to
encourage Eligible Employees to remain in the employ of the Corporation or a
Participating Subsidiary and to provide them with an additional incentive to
advance the best interests of the Corporation.

2.	DEFINITIONS

Capitalized terms used herein which are not otherwise defined shall have the
following meanings.

“Account” means the bookkeeping account maintained by the
Corporation, or by a recordkeeper on behalf of the Corporation, for a
Participant pursuant to Section 7(a).

“Board” means the Board of Directors of the Corporation.

“Code” means the U.S. Internal Revenue Code of 1986, as
amended from time to time.

“Commission” means the U.S. Securities and Exchange
Commission.

“Committee” means the committee appointed by the Board to
administer this Plan pursuant to Section 12.

“Common Stock” means the common stock, par value $0.001 per
share, of the Corporation, and such other securities or property as may become
the subject of Options pursuant to an adjustment made under Section 17.

“Compensation” means an Eligible Employee153s regular earnings
and shall not include any overtime pay, sick pay, shift differential, shift
premium, vacation pay, cash incentive compensation, commissions or cash bonuses.
Compensation also includes any amounts contributed as salary reduction
contributions to a plan qualifying under Section 401(k), 125 or 129 of the Code.
Any other form of remuneration is excluded from Compensation, including (but not
limited to) the following: prizes, awards, relocation or housing allowances,
stock option exercises, stock appreciation right payments, the vesting or grant
of restricted stock, the payment of stock units, performance awards, auto
allowances, tuition reimbursement, perquisites, non-cash compensation and other
forms of imputed income. Notwithstanding the foregoing, Compensation shall not
include any amounts deferred under or paid from any nonqualified deferred
compensation plan maintained by the Corporation or any Subsidiary.

“Contributions” means the bookkeeping amounts credited to
the Account of a Participant pursuant to this Plan, equal in amount to the
amount of Compensation that the Participant has elected to contribute for the
purchase of Common Stock under and in accordance with this Plan.

“Corporation” means Pixelworks, Inc., an Oregon corporation,
and its successors.

“Effective Date” means the date on which this Plan is
initially approved by the shareholders of the Corporation.

“Eligible Employee” means any employee of the Corporation,
or of any Subsidiary which has been designated in writing by the Committee as a
“Participating Subsidiary.” Notwithstanding the foregoing, “Eligible Employee”
shall not include any employee whose customary employment is twenty (20) hours
or less per week.

“Exchange Act” means the U.S. Securities Exchange Act of
1934, as amended from time to time.

“Fair Market Value” on any date means:

(a)

if the Common Stock is listed or admitted to trade on a national securities
exchange, the closing price of a share of Common Stock on such date on the
principal national securities exchange on which the Common Stock is so listed or
admitted to trade, or, if there is no trading of the Common Stock on such date,
then the closing price of a share of Common Stock on such exchange on the next
preceding date on which there was trading in the shares of Common Stock;

(b)

in the absence of exchange data required to determine Fair Market Value
pursuant to the foregoing, the value as established by the Committee as of the
relevant time for purposes of this Plan.

“Grant Date” means, with respect to an Offering Period, the
first day of that Offering Period.

“Individual Limit” has the meaning given to such term in
Section 4(b).

“Offering Period” means the period of eighteen (18)
consecutive months commencing on each Grant Date as provided in Section 5;
provided, however, that the Committee may declare, as it deems appropriate and
in advance of the applicable Offering Period, a shorter (not to be less than
three months) Offering Period or a longer (not to exceed 27 months) Offering
Period.

“Option” means the stock option to acquire shares of Common
Stock granted to a Participant pursuant to Section 8.

“Option Price” means the per share exercise price of an
Option as determined in accordance with Section 8(b).

“Parent” means any corporation (other than the Corporation)
in an unbroken chain of corporations ending with the Corporation in which each
corporation (other than the Corporation) owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one or more of the
other corporations in the chain.

“Participant” means an Eligible Employee who has elected to
participate in this Plan and who has filed a valid and effective Subscription
Agreement to make Contributions pursuant to Section 6.

“Participating Subsidiary” shall have the meaning given to
such term in Section 19(c).

“Plan” means this Pixelworks, Inc. Employee Stock Purchase
Plan, as it may be amended or restated from time to time.

“Purchase Date” means, with respect to a Purchase Period,
the last day of that Purchase Period.

“Purchase Period” has the meaning set forth in Section 5.

“Subscription Agreement” means the written agreement filed
by an Eligible Employee with the Corporation pursuant to Section 6 to
participate in this Plan.

“Subsidiary” means any corporation (other than the
Corporation) in an unbroken chain of corporations (beginning with the
Corporation) in which each corporation (other than the last corporation) owns
stock possessing 50% or more of the total combined voting power of all classes
of stock in one or more of the other corporations in the chain.

3.	ELIGIBILITY

Any person employed as an Eligible Employee as of the beginning of any given
Offering Period (and who is not a Participant in any Offering Period then in
effect) shall be eligible to participate in such Offering Period, subject to the
Eligible Employee satisfying the requirements of Section 6.

4.	STOCK SUBJECT TO THIS PLAN; SHARE LIMITATIONS

(a)

Aggregate Share Limit. Subject to the provisions of Section 17, the
capital stock that may be delivered under this Plan will be shares of the
Corporation153s authorized but unissued Common Stock. The maximum number of shares
of Common Stock that may be delivered pursuant to Options granted under this
Plan is 1,300,000 shares, subject to adjustments pursuant to Section 17.

(b)

Individual Share Limit. The maximum number of shares of Common Stock
that any one individual may acquire upon exercise of his or her Option with
respect to any one Purchase Period is 3,000, subject to adjustments pursuant to
Section 17 (the “Individual Limit“). The Committee may amend
the Individual Limit in effect for any particular Offering Period, any such
amendment to be made prior to the first day of such Offering Period, without
stockholder approval.

(c)

Shares Not Actually Delivered. Shares that are subject to or
underlie Options, which for any reason are cancelled or terminated, are
forfeited, fail to vest, or for any other reason are not paid or delivered under
this Plan shall again, except to the extent prohibited by law, be available for
subsequent Options under this Plan.

5.	OFFERING AND PURCHASE PERIODS

(a)

Offering Periods. During the term of this Plan, the Corporation will
grant Options to purchase shares of Common Stock in each Offering Period to all
Participants in that Offering Period. Unless otherwise specified by the
Committee in advance of a particular Offering Period, each Offering Period will
be of eighteen (18) months duration, with the first such Offering Period to
commence on August 1, 2010, and a new Offering Period shall commence on each
February 1 or August 1 thereafter such that more than one Offering Period may be
in effect at any one time; provided, however, that no Eligible Employee may be a
Participant in, or hold an outstanding Option with respect to, more than one
Offering Period at any one time. In the event that the Fair Market Value of the
Common Stock on any Purchase Date during an Offering Period is lower than the
Fair Market Value of the Common Stock on the Grant Date of that Offering Period,
that Offering Period will terminate on such Purchase Date, and each Participant
in such terminated Offering Period will be automatically enrolled in the new
Offering Period that commences on the February 1 or August 1, as applicable,
that immediately follows such Purchase Date. Each Option shall become effective
on the Grant Date of the Offering Period with respect to which the Option is
granted. The term of each Option shall be the duration of the related Offering
Period and shall end on the Purchase Date for the third and final Purchase
Period of that Offering Period. Offering Periods shall continue until this Plan
is terminated in accordance with Section 18 or 19, or, if earlier, until no
shares of Common Stock remain available for Options pursuant to Section 4.

(b)

Purchase Periods. Unless otherwise specified by the Committee in
advance of a particular Offering Period, each Offering Period will consist of
three (3) Purchase Periods, and each Purchase Period will be of six (6) months
duration. Purchase Periods shall commence each February 1 and August 1 and shall
end the immediately following July 31 or January 31, respectively.

6.	PARTICIPATION

(a)

Enrollment. An Eligible Employee may become a participant in this
Plan by completing a Subscription Agreement on a form approved by and in a
manner prescribed by the Committee (or its delegate). To become effective, a
Subscription Agreement must be signed by the Eligible Employee and be filed with
the Corporation at the time specified by the Committee, but in all cases prior
to the start of the Offering Period with respect to which it is to become
effective, and must set forth a whole percentage (or, if the Committee so
provides, a stated amount) of the Eligible Employee153s Compensation to be
credited to the Participant153s Account as Contributions each pay period.

(b)

Contribution Limits. Notwithstanding the foregoing, a Participant
may not elect to contribute less than one percent (1%) nor more than ten percent
(10%) (or such other limit as the Committee may establish prior to the start of
the applicable Offering Period) of his or her Compensation during any one pay
period as Plan Contributions. The Committee also may prescribe other limits,
rules or procedures for Contributions.

(c)

Content and Duration of Subscription Agreements. Subscription
Agreements shall contain the Eligible Employee153s authorization and consent to
the Corporation153s withholding from his or her Compensation the amount of his or
her Contributions. An Eligible Employee153s Subscription Agreement, and his or her
participation election and withholding consent thereon, shall remain valid for
all Offering Periods until (1) the Eligible Employee153s participation terminates
pursuant to the terms hereof, (2) the Eligible Employee files a new Subscription
Agreement that becomes effective, or (3) the Committee requires that a new
Subscription Agreement be executed and filed with the Corporation.

7.	METHOD OF PAYMENT OF CONTRIBUTIONS

(a)

Participation Accounts. The Corporation shall maintain on its books,
or cause to be maintained by a recordkeeper, an Account in the name of each
Participant. The percentage of Compensation elected to be applied as
Contributions by a Participant shall be deducted from such Participant153s
Compensation on each payday during the period for payroll deductions set forth
below and such payroll deductions shall be credited to that Participant153s
Account as soon as administratively practicable after such date. A Participant
may not make any additional payments to his or her Account. A Participant153s
Account shall be reduced by any amounts used to pay the Option Price of shares
acquired, or by any other amounts distributed pursuant to the terms hereof.

(b)

Payroll Deductions. Subject to such other rules as the Committee may
adopt, payroll deductions with respect to an Offering Period shall commence as
of the first day of the payroll period which coincides with or immediately
follows the applicable Grant Date and shall end on the last date of the payroll
period which coincides with or immediately precedes the applicable Purchase
Date, unless sooner terminated by the Participant as provided in Section 7(d) or
until his or her participation terminates pursuant to Section 11.

(c)

Changes in Contribution Elections for Next Purchase Period. A
Participant may discontinue, increase, or decrease the level of his or her
Contributions (within the Plan limits) by completing and filing with the
Corporation, on such terms as the Committee (or its delegate) may prescribe, a
new Subscription Agreement which indicates such election. Subject to any other
timing requirements that the Committee may impose, an election pursuant to this
Section 7(c) shall be effective with the first Purchase Period that commences
after the Corporation153s receipt of such election. Except as contemplated by
Section 7(d) and 7(e), changes in Contribution levels may not take effect during
a Purchase Period. Other modifications or suspensions of Subscription Agreements
are not permitted.

(d)

Withdrawal During an Offering Period. A Participant may terminate
his or her Contributions during an Offering Period (and receive a distribution
of the balance of his or her Account in accordance with Section 11) by
completing and filing with the Corporation, in such form and on such terms as
the Committee (or its delegate) may prescribe, a written withdrawal form which
shall be signed by the Participant. Such termination shall be effective as soon
as administratively practicable after its receipt by the Corporation. A
withdrawal election pursuant to this Section 7(d) with respect to an Offering
Period shall only be effective for a particular Purchase Period, however, if it
is received by the Corporation prior to the Purchase Date of that Purchase
Period (or such earlier deadline that the Committee may reasonably require to
process the withdrawal prior to the applicable Purchase Date). Partial
withdrawals of Accounts are not permitted.

(e)

Discontinuance of Contributions During a Purchase Period. A
Participant may discontinue his or her Contributions at any time during a
Purchase Period by completing and filing with the Corporation, on such terms as
the Committee (or its delegate) may prescribe, a new Subscription Agreement
which indicates such election. If a Participant elects to discontinue his or her
Contributions pursuant to this Section 7(e), the Contributions previously
credited to the Participant153s Account for that Purchase Period shall be used to
exercise the Participant153s Option as of the applicable Purchase Date in
accordance with Section 9 (unless the Participant makes a timely withdrawal
election in accordance with Section 7(d), in which case such Participant153s
Account shall be paid to him or her in cash in accordance with Section 11(a)).

(f)

Leaves of Absence. During leaves of absence approved by the
Corporation or a Participating Subsidiary and meeting the requirements of
Regulation Section 1.421-1(h)(2) under the Code, a Participant may continue
participation in this Plan by cash payments to the Corporation on his normal
paydays equal to the reduction in his Plan Contributions caused by his leave.

8.	GRANT OF OPTION

(a)

Grant Date; Number of Shares. On each Grant Date, each Eligible
Employee who is a Participant during that Offering Period shall be granted an
Option to purchase a number of shares of Common Stock. The Option shall be
exercised on each Purchase Date that occurs during that Offering Period. The
number of shares of Common Stock to be purchased upon exercise of the Option on
each Purchase Date shall be determined by dividing the Participant153s Account
balance as of that Purchase Date by the Option Price, subject to the limits of
Section 8(c).

(b)

Option Price. The Option Price per share of the shares subject to an
Option for a Purchase Period shall be the lesser of: (i) 85% of the Fair
Market Value of a Share on the Grant Date of the Offering Period to which the
Purchase Period relates; or (ii) 85% of the Fair Market Value of a Share on the
Purchase Date of that Purchase Period; provided, however, that the Committee may
provide prior to the start of any Purchase Period that the Option Price for that
Purchase Period shall be determined by applying a discount amount (not to exceed
15%) to either

(1) the Fair Market Value of a share of Common Stock on the Grant Date of the
Offering Period to which the Purchase Period relates, or (2) the Fair Market
Value of a share of Common Stock on the Purchase Date of that Purchase Period,
or (3) the lesser of the Fair Market Value of a share of Common Stock on the
Grant Date of the Offering Period to which the Purchase Period relates or the
Fair Market Value of a share of Common Stock on the Purchase Date of that
Purchase Period. Notwithstanding anything to the contrary in the preceding
provisions of this Section 8(b), in no event shall the Option Price per share be
less than the par value of a share of Common Stock.

(c)

Limits on Share Purchases. Notwithstanding anything else contained
herein, the maximum number of shares subject to an Option for an Offering Period
shall be subject to the Individual Limit in effect on the Grant Date of that
Offering Period (subject to adjustment pursuant to Section 17) and any person
who is otherwise an Eligible Employee shall not be granted any Option (or any
Option granted shall be subject to compliance with the following limitations) or
other right to purchase shares under this Plan to the extent:

(1)

it would, if exercised, cause the person to own stock (within the meaning of
Section 423(b)(3) of the Code) possessing 5% or more of the total combined
voting power or value of all classes of stock of the Corporation, or of any
Parent, or of any Subsidiary; or

(2)

such Option causes such individual to have rights to purchase stock under
this Plan and any other plan of the Corporation, any Parent, or any Subsidiary
which is qualified under Section 423 of the Code which accrue at a rate which
exceeds $25,000 of the fair market value of the stock of the Corporation, of any
Parent, or of any Subsidiary (determined at the time the right to purchase such
stock is granted, before giving effect to any discounted purchase price under
any such plan) for each calendar year in which such right is outstanding at any
time.

For purposes of the foregoing, a right to purchase stock accrues when it
first become exercisable during the calendar year. In determining whether the
stock ownership of an Eligible Employee equals or exceeds the 5% limit set forth
above, the rules of Section 424(d) of the Code (relating to attribution of stock
ownership) shall apply, and stock which the Eligible Employee may purchase under
outstanding options shall be treated as stock owned by the Eligible Employee.

9.	EXERCISE OF OPTION

(a)

Purchase of Shares. Unless a Participant withdraws pursuant to
Section 7(d) or the Participant153s Plan participation is terminated as provided
in Section 11, his or her Option for the purchase of shares shall be exercised
automatically on each Purchase Date for that Offering Period, without any
further action on the Participant153s part, and the maximum number of whole shares
of Common Stock subject to such Option (subject to the limits of Section 8(c))
shall be purchased at the Option Price with the balance of such Participant153s
Account.

(b)

Account Balance Remaining After Purchase. If any amount which is not
sufficient to purchase a whole share remains in a Participant153s Account after
the exercise of his or her Option on the Purchase Date: (1) such amount shall be
credited to such Participant153s Account for the next Purchase Period, if he or
she is then a Participant; or (2) if such Participant is not a Participant in
the next Purchase Period, or if the Committee so elects, such amount shall be
refunded to such Participant as soon as administratively practicable after such
date. If the share limit of Section 4(a) is reached, any amount that remains in
a Participant153s Account after the exercise of his or her Option on the Purchase
Date to purchase the number of shares that he or she is allocated shall be
refunded to the Participant as soon as administratively practicable after such
date. If any amount which exceeds the limits of Section 8(c)(1) remains in a
Participant153s Account after the exercise of his or her Option on the Purchase
Date, such amount shall be refunded to the Participant as soon as
administratively practicable after such date. The Participant153s Account shall be
reduced on a dollar-for-dollar basis by any amount used to purchase shares
hereunder or any amount refunded to the Participant.

10.

DELIVERY OF SHARES

As soon as administratively practicable after the Purchase Date, the
Corporation shall, in its discretion, either deliver to each Participant a
certificate representing the shares of Common Stock purchased upon exercise of
his or her Option, provide for the crediting of such shares in book entry form
in the name of the Participant, or provide for an alternative arrangement for
the delivery of such shares to a broker or recordkeeping service for the benefit
of the Participant. In the event the Corporation is required to obtain from any
commission or agency authority to issue any such certificate or otherwise
deliver such shares, the Corporation will seek to obtain such authority. If the
Corporation is unable to obtain from any such commission or agency authority
which counsel for the Corporation deems necessary for the lawful issuance of any
such certificate or other delivery of such shares, or if for any other reason
the Corporation cannot issue or deliver shares of Common Stock and satisfy
Section 21, the Corporation shall be relieved from liability to any Participant
except that the Corporation shall return to each Participant to whom such shares
cannot be issued or delivered the amount of the balance credited to his or her
Account that would have otherwise been used for the purchase of such shares.

11.

TERMINATION OF EMPLOYMENT; CHANGE IN ELIGIBLE STATUS

(a)

General. Except as provided in Section 11(b) below, if a Participant
ceases to be an Eligible Employee for any reason (including, without limitation,
due to the Participant153s death, disability, quit, resignation or retirement, or
due to a layoff or other termination of employment with or without cause), or if
the Participant elects to withdraw from the Plan pursuant to Section 7(d), at
any time prior to the last day of an Offering Period in which he or she
participates, such Participant153s Account shall be paid to him or her (or, in the
event of the Participant153s death, to the person or persons entitled thereto
under Section 13) in cash, and such Participant153s Option and participation in
the Plan shall automatically terminate as of the time that the Participant
ceased to be an Eligible Employee.

(b)

Change in Eligible Status; Leave. If a Participant (1) ceases to be
an Eligible Employee during a Purchase Period but remains an employee of the
Corporation or a Subsidiary through the Purchase Date for that Purchase Period
(for example, and without limitation, due to a change in the Participant153s
employer from the Corporation or a Participating Subsidiary to a
non-Participating Subsidiary, if the Participant153s employer ceases to maintain
the Plan as a Participating Subsidiary but otherwise continues as a Subsidiary,
or if the Participant153s customary level of employment no longer satisfies the
requirements set forth in the definition of Eligible Employee), or (2) during a
Purchase Period commences a sick leave, military leave, or other leave of
absence approved by the Corporation or a Participating Subsidiary, and the leave
meets the requirements of Treasury Regulation Section 1.421-1(h)(2) and the
Participant is an employee of the Corporation or a Subsidiary or on such leave
as of the applicable Purchase Date, such Participant153s Contributions shall cease
(subject to Section 7(d) and Section 7(f)), and the Contributions previously
credited to the Participant153s Account for that Purchase Period shall be used to
exercise the Participant153s Option as of the applicable Purchase Date in
accordance with Section 9 (unless the Participant makes a timely withdrawal
election in accordance with Section 7(d), in which case such Participant153s
Account shall be paid to him or her in cash in accordance with Section 11(a)).

(c)

Re-Enrollment. A Participant153s termination from Plan participation
precludes the Participant from again participating in this Plan during that
Offering Period. However, such termination shall not have any effect upon his or
her ability to participate in any succeeding Offering Period, provided that the
applicable eligibility and participation requirements are again then met. A
Participant153s termination from Plan participation shall be deemed to be a
revocation of that Participant153s Subscription Agreement and such Participant
must file a new Subscription Agreement to resume Plan participation in any
succeeding Offering Period.

(d)

Change in Subsidiary Status. For purposes of this Plan, if a
Subsidiary ceases to be a Subsidiary, each person employed by that Subsidiary
will be deemed to have terminated employment for purposes of this Plan, unless
the person continues as an employee of the Corporation or another Subsidiary.

12.

ADMINISTRATION

(a)

The Committee. The Board shall appoint the Committee, which shall be
composed of not less than two members of the Board. The Board may, at any time,
increase or decrease the number of members of the Committee, may remove from
membership on the Committee all or any portion of its members, and may appoint
such person or persons as it desires to fill any vacancy existing on the
Committee, whether caused by removal, resignation, or otherwise. The Board may
also, at any time, assume the administration of all or a part of this Plan, in
which case references (or relevant references in the event the Board assumes the
administration of only certain aspects of this Plan) to the “Committee” shall be
deemed to be references to the Board. Action of the Committee with respect to
this Plan shall be taken pursuant to a majority vote or by the unanimous written
consent of its members. No member of the Committee shall be entitled to act on
or decide any matter relating solely to himself or herself or solely to any of
his or her rights or benefits under this Plan.

(b)

Powers and Duties of the Committee. Subject to the express
provisions of this Plan, the Committee shall supervise and administer this Plan
and shall have the full authority and discretion: (1) to construe and interpret
this Plan and any agreements defining the rights and obligations of the
Corporation, any Subsidiary, and Participants under this Plan; (2) to further
define the terms used in this Plan; (3) to prescribe, amend and rescind rules
and regulations relating to the administration of this Plan (including, without
limitation, deadlines for making elections or for providing any notices
contemplated by this Plan, which deadlines may be more restrictive than any
deadlines otherwise contemplated by this Plan); and (4) to make all other
determinations and take such other action as contemplated by this Plan or as may
be necessary or advisable for the administration of this Plan or the
effectuation of its purposes. Notwithstanding anything else contained in this
Plan to the contrary, the Committee may also adopt rules, procedures or
sub-plans applicable to particular Subsidiaries or locations, which sub-plans
may be designed to be outside the scope of Section 423 of the Code and need not
comply with the otherwise applicable provisions of this Plan.

(c)

Decisions of the Committee are Binding. Any action taken by, or
inaction of, the Corporation, any Subsidiary, the Board or the Committee
relating or pursuant to this Plan and within its authority hereunder or under
applicable law shall be within the absolute discretion of that entity or body
and shall be conclusive and binding upon all persons.

(d)

Indemnification. Neither the Board nor any Committee, nor any member
thereof or person acting at the direction thereof, shall be liable for any act,
omission, interpretation, construction or determination made in good faith in
connection with this Plan, and all such persons shall be entitled to
indemnification and reimbursement by the Corporation in respect of any claim,
loss, damage or expense (including, without limitation, attorneys153 fees) arising
or resulting therefrom to the fullest extent permitted by law and/or under any
directors and officers liability insurance coverage that may be in effect from
time to time.

(e)

Reliance on Experts. In making any determination or in taking or not
taking any action under this Plan, the Committee or the Board, as the case may
be, may obtain and may rely upon the advice of experts, including professional
advisors to the Corporation. No director, officer or agent of the Corporation or
any Participating Subsidiary shall be liable for any such action or
determination taken or made or omitted in good faith.

(f)

Delegation. The Committee may delegate ministerial,
non-discretionary functions to individuals who are officers or employees of the
Corporation or a Subsidiary.

13.

DESIGNATION OF BENEFICIARY

If the Committee permits beneficiary designations with respect to this Plan,
then each Participant may file, on a form and in a manner prescribed by the
Committee (or its delegate), a written designation of a beneficiary who is to
receive any shares or cash from or with respect to such Participant153s Account
under this Plan in the event of such Participant153s death. If a Participant is
married and the designated beneficiary is not solely his or her spouse, spousal
consent shall be required for such designation to be effective unless it is
established (to the satisfaction of the Committee or its delegate) that there is
no spouse or that the spouse cannot be located. The Committee may rely on the
last designation of a beneficiary filed by a Participant in accordance with this
Plan. Beneficiary designations may be changed by the Participant (and his or her
spouse, if required) at any time on forms provided and in the manner prescribed
by the Committee (or its delegate).

If a Participant dies with no validly designated beneficiary under this Plan
who is living at the time of such Participant153s death (or in the event the
Committee does not permit beneficiary designations under this Plan), the
Corporation shall deliver all shares and/or cash payable pursuant to the terms
hereof to the executor or administrator of the estate of the Participant, or if
no such executor or administrator has been appointed, the Corporation, in its
discretion, may deliver such shares and/or cash to the spouse or to any one or
more dependents or relatives of the Participant, or if no spouse, dependent or
relative is known to the Corporation, then to such other person as the
Corporation may designate.

If a Participant153s death occurs before the end of an Offering Period or
subsequent to the end of an Offering Period but prior to the delivery to him or
her or for his or her benefit of any shares deliverable under the terms of this
Plan, and the Corporation has notice of the Participant153s death, then any shares
purchased for that Offering Period and any remaining balance of such
Participant153s Account shall be paid to such beneficiary (or such other person
entitled to such payment pursuant to this Section 13). If the Committee permits
beneficiary designations with respect to this Plan, any such designation shall
have no effect with respect to shares purchased and actually delivered (or
credited, as the case may be) to or for the benefit of the Participant.

14.

TRANSFERABILITY

Neither Contributions credited to a Participant153s Account nor any Options or
rights with respect to the exercise of Options or right to receive shares under
this Plan may be anticipated, alienated, encumbered, assigned, transferred,
pledged or otherwise disposed of in any way (other than by will, the laws of
descent and distribution, or as provided in Section 13) by the Participant. Any
such attempt at anticipation, alienation, encumbrance, assignment, transfer,
pledge or other disposition shall be without effect and all amounts shall be
paid and all shares shall be delivered in accordance with the provisions of this
Plan. Amounts payable or shares deliverable pursuant to this Plan shall be paid
or delivered only to (or credited in the name of, as the case may be) the
Participant or, in the event of the Participant153s death, the Participant153s
beneficiary pursuant to Section 13.

15.

USE OF FUNDS; INTEREST

All Contributions received or held by the Corporation under this Plan will be
included in the general assets of the Corporation and may be used for any
corporate purpose. Notwithstanding anything else contained herein to the
contrary, no interest will be paid to any Participant or credited to his or her
Account under this Plan (in respect of Account

balances, refunds of Account balances, or otherwise). Amounts payable under
this Plan shall be payable in shares of Common Stock or from the general assets
of the Corporation and, except for any shares that may be reserved on the books
of the Corporation for issuance with respect to this Plan, no special or
separate reserve, fund or deposit shall be made to assure payment of amounts
that may be due with respect to this Plan.

16.

REPORTS

Statements shall be provided (either electronically or in written form, as
the Committee may provide from time to time) to Participants as soon as
administratively practicable following each Purchase Date. Each Participant153s
statement shall set forth, as of such Purchase Date, that Participant153s Account
balance immediately prior to the exercise of his or her Option, the Option
Price, the number of whole shares purchased and his or her remaining Account
balance, if any.

17.

ADJUSTMENTS OF AND CHANGES IN THE STOCK

Upon or in contemplation of any reclassification, recapitalization, stock
split (including a stock split in the form of a stock dividend), or reverse
stock split; any merger, combination, consolidation, or other reorganization;
split-up, spin-off, or any similar extraordinary dividend distribution in
respect of the Common Stock (whether in the form of securities or property); any
exchange of Common Stock or other securities of the Corporation, or any similar,
unusual or extraordinary corporate transaction in respect of the Common Stock;
or a sale of substantially all the assets of the Corporation as an entirety
occurs; then the Committee shall equitably and proportionately adjust (1) the
number and type of shares or the number and type of other securities that
thereafter may be made the subject of Options (including the specific maxima and
numbers of shares set forth elsewhere in this Plan), (2) the number, amount and
type of shares (or other securities or property) subject to any or all
outstanding Options, (3) the Option Price of any or all outstanding Options,
and/or (4) the securities, cash or other property deliverable upon exercise of
any outstanding Options, in each case to the extent necessary to preserve (but
not increase) the level of incentives intended by this Plan and the
then-outstanding Options.

Upon the occurrence of any event described in the preceding paragraph, or any
other event in which the Corporation does not survive (or does not survive as a
public company in respect of its Common Stock); then the Committee may make
provision for a cash payment or for the substitution or exchange of any or all
outstanding Options for cash, securities or property to be delivered to the
holders of any or all outstanding Options based upon the distribution or
consideration payable to holders of the Common Stock upon or in respect of such
event.

The Committee may adopt such valuation methodologies for outstanding Options
as it deems reasonable in the event of a cash or property settlement and,
without limitation on other methodologies, may base such settlement solely upon
the excess (if any) of the amount payable upon or in respect of such event over
the Option Price of the Option.

In any of such events, the Committee may take such action sufficiently prior
to such event to the extent that the Committee deems the action necessary to
permit the Participant to realize the benefits intended to be conveyed with
respect to the underlying shares in the same manner as is or will be available
to shareholders generally.

18.

POSSIBLE EARLY TERMINATION OF PLAN AND OPTIONS

Upon a dissolution or liquidation of the Corporation, or any other event
described in Section 17 that the Corporation does not survive or does not
survive as a publicly-traded company in respect of its Common Stock, as the case
may be, this Plan and, if prior to the last day of an Offering Period, any
outstanding Option granted with respect to that Offering Period shall terminate,
subject to any provision that has been expressly made by the Board for the
survival, substitution, assumption, exchange or other settlement of this Plan
and Options. In the event a Participant153s Option is terminated pursuant to this
Section 18 without a provision having been made by the Board for a substitution,
exchange or other settlement of the Option, such Participant153s Account shall be
paid to him or her in cash without interest.

19.

TERM OF PLAN; AMENDMENT OR TERMINATION

(a)

Effective Date; Termination. Subject to Section 19(b), this Plan
shall become effective as of the Effective Date. No new Offering Periods shall
commence on or after the tenth anniversary of the Effective Date, and this Plan
shall terminate as of the Purchase Date on or immediately following such date
unless sooner terminated pursuant to Section 18 or this Section 19. In the event
that during a particular Purchase Period all of the shares of Common Stock made
available under this Plan are subscribed prior to the expiration of this Plan,
this Plan and all outstanding Options hereunder shall terminate at the end of
that Purchase Period and the shares available shall be allocated for purchase by
Participants in that Purchase Period on a pro-rata basis determined with respect
to Participants153 Account balances.

(b)

Board Amendment Authority. The Board may, at any time, terminate or,
from time to time, amend, modify or suspend this Plan, in whole or in part and
without notice. Shareholder approval for any amendment or modification shall not
be required, except to the extent required by law or applicable stock exchange
rules, or required under Section 423 of the Code in order to preserve the
intended tax consequences of this Plan. No Options may be granted during any
suspension of this Plan or after the termination of this Plan, but the Committee
will retain jurisdiction as to Options then outstanding in accordance with the
terms of this Plan. No amendment, modification, or termination pursuant to this
Section 19(b) shall, without written consent of the Participant, affect in any
manner materially adverse to the Participant any rights or benefits of such
Participant or obligations of the Corporation under any Option granted under
this Plan prior to the effective date of such change. Changes contemplated by
Section 17 or Section 18 shall not be deemed to constitute changes or amendments
requiring Participant consent.

(c)

Certain Additional Committee Authority. Notwithstanding the
amendment provisions of Section 19(b) and without limiting the Board153s authority
thereunder and without limiting the Committee153s authority pursuant to any other
provision of this Plan, the Committee shall have the right (1) to designate from
time to time the Subsidiaries whose employees may be eligible to participate in
this Plan (including, without limitation, any Subsidiary that may first become
such after the date shareholders first approve this Plan) (each a
“Participating Subsidiary“), and (2) to change the service and
other qualification requirements

set forth under the definition of Eligible Employee in Section 2 (subject to
the requirements of Section 423(b) of the Code and applicable rules and
regulations thereunder). Any such change shall not take effect earlier than the
first Purchase Period that starts on or after the effective date of such change.
Any such change shall not require shareholder approval.

20.

NOTICES

All notices or other communications by a Participant to the Corporation
contemplated by this Plan shall be deemed to have been duly given when received
in the form and manner specified by the Committee (or its delegate) at the
location, or by the person, designated by the Committee (or its delegate) for
that purpose.

21.

CONDITIONS UPON ISSUANCE OF SHARES

This Plan, the granting of Options under this Plan and the offer, issuance
and delivery of shares of Common Stock are subject to compliance with all
applicable federal and state laws, rules and regulations (including but not
limited to state and federal securities laws) and to such approvals by any
listing, regulatory or governmental authority as may, in the opinion of counsel
for the Corporation, be necessary or advisable in connection therewith. The
person acquiring any securities under this Plan will, if requested by the
Corporation and as a condition precedent to the exercise of his or her Option,
provide such assurances and representations to the Corporation as the Committee
may deem necessary or desirable to assure compliance with all applicable legal
requirements.

22.

PLAN CONSTRUCTION

(a)

Section 16. It is the intent of the Corporation that transactions
involving Options under this Plan (other than “Discretionary Transactions” as
that term is defined in Rule 16b-3(b)(1) promulgated by the Commission under
Section 16 of the Exchange Act, to the extent there are any Discretionary
Transactions under this Plan), in the case of Participants who are or may be
subject to the prohibitions of Section 16 of the Exchange Act, satisfy the
requirements for exemption under Rule 16b-3(c) promulgated by the Commission
under Section 16 of the Exchange Act to the maximum extent possible.
Notwithstanding the foregoing, the Corporation shall have no liability to any
Participant for Section 16 consequences of Options or other events with respect
to this Plan.

(b)

Section 423. Except as the Committee may expressly provide in the
case of one or more sub-plans adopted pursuant to Section 12(b), this Plan and
Options are intended to qualify under Section 423 of the Code. Accordingly, all
Participants are to have the same rights and privileges (within the meaning of
Section 423(b)(5) of the Code and except as not required thereunder to qualify
this Plan under Section 423) under this Plan, subject to differences in
Compensation among Participants and subject to the Contribution and share limits
of this Plan.

(c)

Interpretation. If any provision of this Plan or of any Option would
otherwise frustrate or conflict with the intents expressed above, that provision
to the extent possible shall be interpreted so as to avoid such conflict. If the
conflict remains irreconcilable, the Committee may disregard the provision if it
concludes that to do so furthers the interest of the Corporation and is
consistent with the purposes of this Plan as to such persons in the
circumstances.

23.

EMPLOYEES153 RIGHTS

(a)

No Employment Rights. Nothing in this Plan (or in any Subscription
Agreement or other document related to this Plan) will confer upon any Eligible
Employee or Participant any right to continue in the employ or other service of
the Corporation or any Subsidiary, constitute any contract or agreement of
employment or other service or effect an employee153s status as an employee at
will, nor shall interfere in any way with the right of the Corporation or any
Subsidiary to change such person153s compensation or other benefits or to
terminate his or her employment or other service, with or without cause. Nothing
contained in this Section 23(a), however, is intended to adversely affect any
express independent right of any such person under a separate employment or
service contract other than a Subscription Agreement.

(b)

No Rights to Assets of the Company. No Participant or other person
will have any right, title or interest in any fund or in any specific asset
(including shares of Common Stock) of the Corporation or any Subsidiary by
reason of any Option hereunder. Neither the provisions of this Plan (or of any
Subscription Agreement or other document related to this Plan), nor the creation
or adoption of this Plan, nor any action taken pursuant to the provisions of
this Plan will create, or be construed to create, a trust of any kind or a
fiduciary relationship between the Corporation or any Subsidiary and any
Participant, Beneficiary or other person. To the extent that a Participant,
Beneficiary or other person acquires a right to receive payment pursuant to this
Plan, such right will be no greater than the right of any unsecured general
creditor of the Corporation.

(c)

No Shareholder Rights. A Participant will not be entitled to any
privilege of stock ownership as to any shares of Common Stock not actually
delivered to and held of record by the Participant. No adjustment will be made
for dividends or other rights as a shareholder for which a record date is prior
to such date of delivery.

24.

MISCELLANEOUS

(a)

Governing Law. This Plan, the Options, Subscription Agreements and
other documents related to this Plan shall be governed by, and construed in
accordance with, the laws of the State of Oregon.

(b)

Severability. If any provision shall be held by a court of competent
jurisdiction to be invalid and unenforceable, the remaining provisions of this
Plan shall continue in effect.

(c)

Captions and Headings. Captions and headings are given to the
sections of this Plan solely as a convenience to facilitate reference. Such
captions and headings shall not be deemed in any way material or relevant to the
construction of interpretation of this Plan or any provision hereof.

(d)

No Effect on Other Plans or Corporate Authority. The adoption of
this Plan shall not affect any other Corporation or Subsidiary compensation or
incentive plans in effect. Nothing in this Plan will limit or be deemed to limit
the authority of the Board or Committee (1) to establish any other forms of
incentives or compensation for employees of the Corporation or any Subsidiary
(with or without reference to the Common Stock), or (2) to grant or assume
options (outside the scope of and in addition to those contemplated by this
Plan) in connection with any proper corporate purpose; to the extent consistent
with any other plan or authority. Benefits received by a Participant under an
Option granted pursuant to this Plan shall not be deemed a part of the
Participant153s compensation for purposes of the determination of benefits under
any other employee welfare or benefit plans or arrangements, if any, provided by
the Corporation or any Subsidiary, except where the Committee or the Board (or
the Board of Directors of the Subsidiary that sponsors such plan or arrangement,
as applicable) expressly otherwise provides or authorizes in writing.

25.

TAX WITHHOLDING

Notwithstanding anything else contained in this Plan herein to the contrary,
the Corporation may deduct from a Participant153s Account balance as of a Purchase
Date, before the exercise of the Participant153s Option is given effect on such
date, the amount of taxes (if any) which the Corporation reasonably determines
it or any Subsidiary may be required to withhold with respect to such exercise.
In such event, the maximum number of whole shares subject to such Option
(subject to the other limits set forth in this Plan) shall be purchased at the
Option Price with the balance of the Participant153s Account (after reduction for
the tax withholding amount).

Should the Corporation for any reason be unable, or elect not to, satisfy its
or any Subsidiary153s tax withholding obligations in the manner described in the
preceding paragraph with respect to a Participant153s exercise of an Option, or
should the Corporation or any Subsidiary reasonably determine that it or an
affiliated entity has a tax withholding obligation with respect to a disposition
of shares acquired pursuant to the exercise of an Option prior to satisfaction
of the holding period requirements of Section 423 of the Code, the Corporation
or Subsidiary, as the case may be, shall have the right at its option to (1)
require the Participant to pay or provide for payment of the amount of any taxes
which the Corporation or Subsidiary reasonably determines that it or any
affiliate is required to withhold with respect to such event or (2) deduct from
any amount otherwise payable to or for the account of the Participant the amount
of any taxes which the Corporation or Subsidiary reasonably determines that it
or any affiliate is required to withhold with respect to such event.

26.

NOTICE OF SALE

Any person who has acquired shares under this Plan shall give prompt written
notice to the Corporation of any sale or other transfer of the shares if such
sale or transfer occurs (1) within the two-year period after the Grant Date of
the Offering Period with respect to which such shares were acquired, or (2)
within the twelve-month period after the Purchase Date of the Purchase Period
with respect to which such shares were acquired.

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