{"id":40600,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/stock-incentive-plan-costco-wholesale-corp.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"stock-incentive-plan-costco-wholesale-corp","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/stock-incentive-plan-costco-wholesale-corp.html","title":{"rendered":"Stock Incentive Plan – Costco Wholesale Corp."},"content":{"rendered":"

SIXTH RESTATED 2002 STOCK INCENTIVE PLAN <\/strong>\n<\/p>\n

OF <\/strong><\/p>\n

COSTCO WHOLESALE CORPORATION <\/strong><\/p>\n\n\n\n
\n

1.<\/p>\n<\/td>\n

\n

Purpose of this Plan<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The purpose of this Sixth Restated 2002 Stock Incentive Plan of Costco
\nWholesale Corporation is to provide a means by which eligible recipients of
\nStock Awards may be given an opportunity to benefit from increases in value of
\nthe Common Stock through the granting of the following Stock Awards: Options,
\nand Stock Units. The Plan has been operated in good faith compliance with Code
\nsection 409A and was amended and restated July 21, 2008, to comply with Section
\n409A, effective for Awards earned and vested after December 31, 2004.<\/p>\n\n\n\n
\n

2.<\/p>\n<\/td>\n

\n

Definitions and Rules of Interpretation<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

2.1 Definitions<\/strong>. This Plan uses the following defined terms:\n<\/p>\n

(a) “Administrator”<\/strong><\/em> means the Board, the Committee,
\nor any officer or employee of the Company to whom the Board or the Committee
\ndelegates authority to administer this Plan.<\/p>\n

(b) “Affiliate”<\/strong><\/em> means, in the case of Incentive
\nStock Options, a “parent” or “subsidiary” (as each is defined in Section 424 of
\nthe Code) of the Company and in the case of Stock Awards other than Incentive
\nStock Options, all persons with whom the Company would be considered a single
\nemployer under Section 414(b) or Section 414(c) of the Code, except that, for
\npurposes of determining whether there is a controlled group or common control,
\nthe language “at least 50 percent” is used instead of “at least 80 percent.”\n<\/p>\n

(c) “Applicable Law”<\/strong><\/em> means the legal requirements
\nrelating to the administration of equity compensation plans, including under
\napplicable U.S. state corporate laws, U.S. federal and applicable state
\nsecurities laws, other U.S. federal and state laws, the Code, any stock exchange
\nrules or regulations and the applicable laws, rules and regulations of any other
\ncountry or jurisdiction where Awards are granted under the Plan, as such laws,
\nrules, regulations and requirements shall be in place from time to time.<\/p>\n

(d) “Award”<\/strong><\/em> means a grant of an Option or an award
\nof a Stock Unit in accordance with the terms of this Plan.<\/p>\n

(e) “Award Shares”<\/strong><\/em> means shares of common stock
\ncovered by a Stock Award.<\/p>\n

(f) “Board”<\/strong><\/em> means the board of directors of the
\nCompany.<\/p>\n

(g) “Change of Control” <\/strong><\/em>is defined in Section 11.4.\n<\/p>\n

(h) “Code”<\/strong><\/em> means the Internal Revenue Code of 1986.\n<\/p>\n

(i) “Committee”<\/strong><\/em> means a committee composed of
\nCompany Directors appointed in accordance with the Company153s Articles of
\nIncorporation and Bylaws and Section 4.<\/p>\n

(j) “Company”<\/strong><\/em> means Costco Wholesale Corporation, a
\nWashington corporation.<\/p>\n

(k) “Company Director”<\/strong><\/em> means a member of the Board.\n<\/p>\n

1<\/p>\n

\n

(l) “Consultant”<\/strong><\/em> means an individual who, or an
\nemployee of any entity that, provides bona fide services to the Company or an
\nAffiliate not in connection with the offer or sale of securities in a
\ncapital-raising transaction, but who is not an Employee.<\/p>\n

(m) “Continuous Service”<\/strong><\/em> means that the
\nParticipant153s service with the Company or an Affiliate, whether as an Employee,
\nDirector or Consultant, is not interrupted or terminated by a Termination as
\ndefined in Section 2.1(qq).<\/p>\n

(n) “Covered Employee” <\/strong><\/em>has the meaning as
\ndetermined for purposes of Section 162(m) of the Code.<\/p>\n

(o) “Disability”<\/strong><\/em> means the permanent and total
\ndisability of a person within the meaning of Section 22(e)(3) of the Code.<\/p>\n

(p) “Director”<\/strong><\/em> means a member of the board of
\ndirectors of the Company or an Affiliate.<\/p>\n

(q) “Divestiture”<\/strong><\/em> means any transaction or event
\nthat the Board specifies as a Divestiture under Section 11.5.<\/p>\n

(r) “Employee”<\/strong><\/em> means a regular employee of the
\nCompany or an Affiliate, including an officer or Director, who is treated as an
\nemployee in the personnel records of the Company or an Affiliate, but not
\nindividuals who are classified by the Company or an Affiliate as: (i) leased
\nfrom or otherwise employed by a third party, (ii) independent contractors, or
\n(iii) intermittent or temporary workers. The Company153s or an Affiliate153s
\nclassification of an individual as an “Employee” (or as not an “Employee”) for
\npurposes of this Plan shall not be altered retroactively even if that
\nclassification is changed retroactively for another purpose as a result of an
\naudit, litigation or otherwise. A Participant shall not cease to be an Employee
\ndue to transfers between locations of the Company, or between the Company and an
\nAffiliate, or to any successor to the Company or an Affiliate that assumes the
\nParticipant153s Award under Section 11, unless such event results in a Termination
\nas defined in Section 2.1(qq). Neither service as a Director nor receipt of a
\ndirector153s fee shall be sufficient to make a Director an “Employee.”<\/p>\n

(s) “Exchange Act”<\/strong><\/em> means the Securities Exchange
\nAct of 1934.<\/p>\n

(t) “Executive”<\/strong><\/em> means an individual who is subject
\nto Section 16 of the Exchange Act or who is a “Covered Employee”, in either case
\nbecause of the individual153s relationship with the Company or an Affiliate.<\/p>\n

(u) “Expiration Date”<\/strong><\/em> means, with respect to an
\nOption, the date stated in the Award Agreement as the expiration date of the
\nOption or, if no such date is stated in the Award Agreement, then the last day
\nof the maximum exercise period for the Option, disregarding the effect of a
\nParticipant153s Termination or any other event that would shorten that period.\n<\/p>\n

(v) “Fair Market Value”<\/strong><\/em> means the value of Shares
\nas determined under Section 17.2.<\/p>\n

(w) “Fundamental Transaction”<\/strong><\/em> means any transaction
\nor event described in Section 11.3.<\/p>\n

(x) “Grant Date”<\/strong><\/em> means the date the Administrator
\napproves the grant of an Award. However, if the Administrator specifies that an
\nAward153s Grant Date is a future date or the date on which a condition is
\nsatisfied, the Grant Date for such Award is that future date or the date that
\nthe condition is satisfied.<\/p>\n

2<\/p>\n

\n

(y) “Incentive Stock Option”<\/strong><\/em> means an Option
\nintended to qualify as an incentive stock option under Section 422 of the Code
\nand designated as an Incentive Stock Option in the Option Agreement for that
\nOption.<\/p>\n

(z) “Nonstatutory Option”<\/strong><\/em> means any Option other
\nthan an Incentive Stock Option.<\/p>\n

(aa) “Non-Employee Director”<\/strong><\/em> means a Director of
\nthe Company who either (i) is not a current Employee or Officer of the Company
\nor its parent or a subsidiary, does not receive compensation (directly or
\nindirectly) from the Company or its parent or a subsidiary for services rendered
\nas a consultant or in any capacity other than as a Director (except for an
\namount as to which disclosure would not be required under Item 404(a) of
\nRegulation S-K promulgated pursuant to the Securities Act (“Regulation S-K”)),
\ndoes not possess an interest in any other transaction as to which disclosure
\nwould be required under Item 404(a) of Regulation S-K and is not engaged in a
\nbusiness relationship as to which disclosure would be required under Item 404(b)
\nof Regulation S-K; or (ii) is otherwise considered a “non-employee director” for
\npurposes of Rule 16b-3.<\/p>\n

(bb) “Objectively Determinable Performance
\nCondition”<\/strong><\/em> shall mean any one or more of the following performance
\ncriteria, either individually, alternatively or in any combination, applied to
\neither the Company as a whole or to a business unit, Affiliate or business
\nsegment, either individually, alternatively or in any combination, and measured
\neither annually or cumulatively over a period of years, on an absolute basis or
\nrelative to a pre-established target, to previous years153 results or to a
\ndesignated comparison group, in each case as specified by the Committee in the
\nAward: (i) cash flow; (ii) earnings (including gross margin, earnings before
\ninterest and taxes, earnings before taxes, and net earnings); (iii) earnings per
\nshare; (iv) growth in earnings or earnings per share; (v) stock price; (vi)
\nreturn on equity or average shareowners153 equity; (vii) total shareowner return;
\n(viii) return on capital; (ix) return on assets or net assets; (x) return on
\ninvestment; (xi) revenue; (xii) income or net income; (xiii) operating income or
\nnet operating income; (xiv) operating profit or net operating profit; (xv)
\noperating margin; (xvi) return on operating revenue; (xvii) market share;
\n(xviii) sales or revenue growth; (xix) overhead or other expense reduction; (xx)
\ngrowth in shareowner value relative to the moving average of the S&P 500
\nIndex or a peer group index; (xxi) credit rating; (xxii) strategic plan
\ndevelopment and implementation; (xxiii) improvement in workforce diversity, and
\n(xxiv) any other similar criteria. The Committee may appropriately adjust any
\nevaluation of performance under an Objectively Determinable Performance Criteria
\nto exclude any of the following events that occurs during a performance period:
\n(A) asset write-downs; (B) litigation or claim judgments or settlements; (C) the
\neffect of changes in tax law, accounting principles or other such laws or
\nprovisions affecting reported results; (D) accruals for reorganization and
\nrestructuring programs; and (E) any extraordinary non-recurring items as
\ndescribed in Accounting Principles Board Opinion No. 30 and\/or in management153s
\ndiscussion and analysis of financial condition and results of operations
\nappearing in the Company153s annual report to shareowners for the applicable year.\n<\/p>\n

(cc) “Option”<\/strong><\/em> means a right to purchase Shares of
\nthe Company granted under this Plan.<\/p>\n

(dd) “Option Agreement”<\/strong><\/em> means the document
\nevidencing the grant of an Option.<\/p>\n

(ee) “Option Price”<\/strong><\/em> means the price payable under
\nan Option for Shares, not including any amount payable in respect of withholding
\nor other taxes.<\/p>\n

(ff) “Outside Director”<\/strong><\/em> means a Company Director
\nwho either (i) is not a current employee of the Company or an “affiliated
\ncorporation” (within the meaning of Treasury Regulations promulgated under
\nSection 162(m) of the Code), is not a former employee of the Company or an
\n“affiliated corporation” receiving compensation for prior services (other than
\nbenefits under a tax qualified pension plan), was not an officer of the Company
\nor an “affiliated corporation” at any time and is not currently receiving direct
\nor indirect remuneration from the Company or an “affiliated corporation” for
\nservices in any capacity other than as a Director or (ii) is otherwise
\nconsidered an “outside director” for purposes of Section 162(m) of the Code.\n<\/p>\n

3<\/p>\n

\n

(gg) “Participant”<\/strong><\/em> means a person to whom an Award
\nis granted pursuant to the Plan or, if applicable, such other person who holds
\nan outstanding Award.<\/p>\n

(hh) “Plan”<\/strong><\/em> means this 2002 Stock Incentive Plan of
\nCostco Wholesale Corporation, as amended and restated from time to time.<\/p>\n

(ii) “Qualified Domestic Relations Order”<\/strong><\/em> means a
\njudgment, order, or decree meeting the requirements of Section 414(p)(1)(A) of
\nthe Code.<\/p>\n

(jj) “Rule 16b-3”<\/strong><\/em> means Rule 16b-3 adopted under
\nSection 16(b) of the Exchange Act.<\/p>\n

(kk) “Securities Act”<\/strong><\/em> means the Securities Act of
\n1933.<\/p>\n

(ll) “Share”<\/strong><\/em> means a share of the common stock
\n$.005 par value per share, of the Company or other securities substituted for
\nthe common stock under Section 11.<\/p>\n

(mm) “Stock Award”<\/strong><\/em> means any right involving Shares
\ngranted under the Plan, including an Option or Stock Unit.<\/p>\n

(nn) “Stock Award Agreement”<\/strong><\/em> means a written
\nagreement between the Company and a holder of a Stock Award evidencing the terms
\nand conditions of an individual Stock Award grant. Each Stock Award Agreement
\nshall be subject to the terms and conditions of the Plan.<\/p>\n

(oo) “Stock Unit”<\/strong><\/em> means an award giving the right
\nto receive Shares granted under Section 9.1 below.<\/p>\n

(pp) “Substitute Award”<\/strong><\/em> means an Award granted in
\nsubstitution for, or upon the conversion of, an option granted by another entity
\nto purchase equity securities in the granting entity.<\/p>\n

(qq) “Termination”<\/strong><\/em> means “termination of
\nemployment” or “separation from service” as defined in Section 409A of the Code.
\nHowever, with respect to an Employee, Termination will occur at the date
\nreasonably anticipated by the Company and Employee that a Participant153s level of
\nservice will permanently decrease to 21% or less of the average level of service
\nprovided by the Participant over the immediately preceding 36 months period (or
\nif providing services for less than 36 months, such lesser period). If a
\nParticipant153s status changes from an Employee to an independent contractor or
\nfrom an independent contractor to an Employee, whether there has been a
\nTermination will be determined in accordance with the regulations under Section
\n409A of the Code.<\/p>\n

2.2 Rules of Interpretation. <\/strong>Any reference to a “Section,”
\nwithout more, is to a Section of this Plan. Captions and titles are used for
\nconvenience in this Plan and shall not, by themselves, determine the meaning of
\nthis Plan. Except when otherwise indicated by the context, the singular includes
\nthe plural and vice versa. Any reference to a statute is also a reference to the
\napplicable rules and regulations adopted under that statute. Any reference to a
\nstatute, rule or regulation, or to a section of a statute, rule or regulation,
\nis a reference to that statute, rule, regulation, or section as amended from
\ntime to time, both before and after the effective date of this Plan and
\nincluding any successor provisions.<\/p>\n

4<\/p>\n

\n\n\n\n
\n

3.<\/p>\n<\/td>\n

\n

Shares Subject to this Plan; Term of this Plan<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

3.1 Number of Option Shares. <\/strong>Subject to adjustment under
\nSection 11, the maximum number of Shares that may be granted as awards under the
\nPlan is 16 million plus any Shares previously authorized for grant under this
\nPlan or its predecessors that have not been granted as of the date of this
\namendment plus any Shares covered by Awards granted under the Plan or its
\npredecessors prior to the date of this amendment that are subsequently cancelled
\nor expire unexercised or unvested.<\/p>\n

3.2 Limitation on Award of Stock Units<\/strong>. Subject to
\nadjustment as provided in Section 11 below, the maximum number of Shares that
\nmay be issued shall be reduced by 1.75 Shares for each Share granted in a Stock
\nAward in which the Participant is issued Shares without tendering to the Company
\npayment of an amount in connection therewith equal to the Fair Market Value of
\nsuch Shares on the date of the Stock Award; provided however that, to the extent
\nthat previously-issued Shares are later forfeited under the terms and conditions
\nof the Stock Award, then any Shares so forfeited shall not count against the
\nlimit set forth in this section 3.2.<\/p>\n

3.3 Source of Shares. <\/strong>Award Shares may be authorized but
\nunissued Shares. If an Award is terminated, expires, or otherwise becomes
\nunexercisable without having been exercised in full, the unpurchased Shares that
\nwere subject to the Award shall revert to this Plan and shall again be available
\nfor future issuance under this Plan. The following shares of stock shall not
\nagain be made available for issuance as Awards under this Plan: (i) Shares
\nactually issued under this Plan in a Stock Option even if repurchased by the
\nCompany; (ii) Shares not issued or delivered as a result of the net settlement
\nof an outstanding stock appreciation right or Option, or (iii) Shares used to
\npay the exercise price or withholding taxes related to an outstanding Award.\n<\/p>\n

3.4 Term of this Plan<\/strong><\/p>\n

(a) This Plan and any amendment shall be effective on the date it has been
\nadopted by the Board or, to the extent that shareholder approval is required, on
\nthe date it has been approved by the shareholders.<\/p>\n

(b) Subject to Section 14, this Plan shall continue in effect for a period of
\nten years from the earlier of the date on which the Plan was adopted by the
\nBoard and the date on which the Plan was approved by the Company153s shareholders.\n<\/p>\n\n\n\n
\n

4.<\/p>\n<\/td>\n

\n

Administration<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

4.1 General<\/strong><\/p>\n

(a) The Board shall have ultimate responsibility for administering this Plan.
\nThe Board may delegate certain of its responsibilities to a Committee, which
\nshall consist of at least two members of the Board and solely of Outside
\nDirectors. The Board or the Committee may further delegate its responsibilities
\nto any Employee of the Company or any Affiliate. Where this Plan specifies that
\nan action is to be taken or a determination made by the Board, only the Board
\nmay take that action or make that determination. Where this Plan specifies that
\nan action is to be taken or a determination made by the Committee, only the
\nCommittee may take that action or make that determination. Where this Plan
\nreferences the “Administrator,” the action may be taken or determination made by
\nthe Board, the Committee, or other Administrator. However, only the Board or the
\nCommittee may approve Awards to Executives, and an Administrator other than the
\nBoard or the Committee may grant Options only within guidelines established by
\nthe Board or Committee. Moreover, all actions and determinations by any
\nAdministrator are subject to the provisions of this Plan.<\/p>\n

5<\/p>\n

\n

(b) So long as the Company has registered and outstanding a class of equity
\nsecurities under Section 12 of the Exchange Act, the Committee shall consist of
\nCompany Directors who are “Non-Employee Directors” and who are “Outside
\nDirectors.”<\/p>\n

4.2 Authority of Administrator<\/strong>. Subject to the other
\nprovisions of this Plan, the Administrator shall have the authority, in a manner
\nthat complies with Section 409A of the Code:<\/p>\n

(a) to make and determine the types of Awards, provided that no Non-Employee
\nDirector may be granted Awards for more than 12,000 shares in any fiscal year
\n(subject to proportionate increase in the event of any share dividends or stock
\nsplits);<\/p>\n

(b) to determine the Fair Market Value of Shares;<\/p>\n

(c) to determine the Option Price;<\/p>\n

(d) to determine Objective Determinable Performance Conditions;<\/p>\n

(e) to select the Participants;<\/p>\n

(f) to determine the times that Awards are granted;<\/p>\n

(g) to determine the number of Shares subject to each Award;<\/p>\n

(h) to determine the types of payment that may be used to acquire Award
\nShares and the types of payment that may be used to satisfy withholding tax
\nobligations;<\/p>\n

(i) to determine the other terms of each Award, including but not limited to
\nthe time or times at which Options may be exercised, whether and under what
\nconditions an award is assignable, and whether an Option is a Nonstatutory
\nOption or an Incentive Stock Option;<\/p>\n

(j) to modify or amend any Award, including, without limitation, to extend
\nthe period during which an Option may be exercised, but neither the
\nAdministrator, the Board, nor the Committee shall have the authority to reduce
\nthe Option Price of any outstanding Option without obtaining the approval of the
\nCompany153s shareholders or to make a modification or amendment under this Section
\n4.2(j) that results in an Award that was exempt from Section 409A of the Code
\nbecoming subject to Section 409A and noncompliant with Section 409A or an Award
\nthat is subject to Section 409A of the Code becoming noncompliant with Section
\n409A.<\/p>\n

(k) to authorize any person to sign any Award Agreement or other document
\nrelated to this Plan on behalf of the Company;<\/p>\n

(l) to determine the form of any Award Agreement or other document related to
\nthis Plan, and whether that document, including signatures, may be in electronic
\nform;<\/p>\n

(m) to interpret this Plan and any Award Agreement or document related to
\nthis Plan;<\/p>\n

(n) to correct any defect, remedy any omission, or reconcile any
\ninconsistency in this Plan, any Award Agreement or any other document related to
\nthis Plan;<\/p>\n

(o) to adopt, amend, and revoke rules and regulations under this Plan,
\nincluding rules and regulations relating to sub-plans and Plan addenda;<\/p>\n

6<\/p>\n

\n

(p) to adopt, amend, and revoke rules and procedures relating to the
\noperation and administration of this Plan to accommodate non-U.S. Participants
\nand the requirements of Applicable Law such as: (i) rules and procedures
\nregarding the conversion of local currency, withholding procedures and the
\nhandling of stock certificates to comply with local practice and requirements,
\nand (ii) sub- plans and Plan addenda for non-U.S. Participants; and<\/p>\n

(q) to make all other determinations the Administrator deems necessary or
\nadvisable for the administration of this Plan.<\/p>\n

4.3 Scope of Discretion<\/strong>. Subject to the last sentence of
\nthis Section 4.3, on all matters for which this Plan confers the authority,
\nright or power on the Board, the Committee, or other Administrator to make
\ndecisions, that body may make those decisions in its sole and absolute
\ndiscretion. Moreover, but again subject to the last sentence of this Section
\n4.3, in making those decisions the Board, Committee or other Administrator need
\nnot treat all persons eligible to receive Awards, all Participants, all Awards
\nor all Award Shares the same way. However, the discretion of the Board,
\nCommittee or other Administrator is subject to the specific provisions and
\nspecific limitations of this Plan, as well as all rights conferred on specific
\nParticipants by Award Agreements and other agreements.<\/p>\n\n\n\n
\n

5.<\/p>\n<\/td>\n

\n

Persons Eligible to Receive Awards<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

5.1 Eligible Individuals. <\/strong>Awards may be granted to, and only
\nto, Employees, Directors and Consultants, including to prospective Employees,
\nDirectors and Consultants conditioned on the beginning of their service for the
\nCompany or an Affiliate.<\/p>\n

5.2 Section 162(m) Limitation<\/strong>.<\/p>\n

(a) So long as the Company is a “publicly held corporation” within the
\nmeaning of Section 162(m) of the Code: (a) no Employee or prospective Employee
\nmay be granted one or more Stock Awards within any fiscal year of the Company to
\npurchase or receive more than 500,000 Shares, subject to adjustment under
\nSection 11, and (b) Awards may be granted to an Executive only by the Committee
\n(and, notwithstanding Section 4.1(a), not by the Board).<\/p>\n

(b) Any Stock Unit that is intended as “qualified performance-based
\ncompensation” within the meaning of Section 162(m) of the Code must vest or
\nbecome exercisable contingent on the achievement of one or more Objectively
\nDeterminable Performance Conditions. Subject to the limitations included in
\nSections 3.2, the Committee shall have the discretion to determine the time and
\nmanner of compliance with Section 162(m) of the Code. Prior to the payment of
\nany compensation under an Award intended to qualify as “performance-based
\ncompensation” under Section 162(m) of the Code, the Committee shall certify the
\nextent to which any Objectively Determinable Performance Criteria and any other
\nmaterial terms under such Award have been satisfied (other than in cases where
\nsuch relate solely to the increase in the value of the Common Stock).<\/p>\n

(c) Notwithstanding satisfaction of any completion of any Objectively
\nDeterminable Performance Criteria, to the extent specified at the time of grant
\nof an Award to “covered employees” within the meaning of Section 162(m) of the
\nCode, the number of Shares, Options or other benefits granted, issued,
\nretainable and\/or vested under an Award on account of satisfaction of such
\nObjectively Determinable Performance Criteria may be reduced by the Committee on
\nthe basis of such further considerations as the Committee in its sole discretion
\nshall determine.<\/p>\n

7<\/p>\n

\n\n\n\n
\n

6.<\/p>\n<\/td>\n

\n

Terms and Conditions of Options<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The following rules apply to all Options:<\/p>\n

6.1 Price<\/strong>. No Option may have an Option Price less than 100%
\nof the Fair Market Value of the Shares on the Grant Date.<\/p>\n

6.2 Term<\/strong>. No Option shall be exercisable after its
\nExpiration Date. No Option may have an Expiration Date that is more than ten
\nyears after its Grant Date.<\/p>\n

6.3 Vesting<\/strong>.<\/p>\n

(a) Options shall be exercisable in accordance with a schedule related to the
\nGrant Date, the date the Participant153s directorship, employment or consultancy
\nbegins, or a different date specified in the Option Agreement evidencing such
\nOption; provided that no Option shall be exercisable until one year from the
\nGrant Date except as provided below.<\/p>\n

(b) For Options granted after October 10, 2003, the Administrator shall have
\nthe authority in its discretion to permit the exercise of an Option prior to the
\nexpiration of one year from the Grant Date based on the Pro Rata Number of
\nShares formula in Section 8.4(a) hereof and in an amount not to exceed 20% of
\nthe Option Shares granted on that Grant Date. In the event that the Participant,
\nwhether voluntarily or involuntarily, experiences a change to an employment
\nstatus or position in the Company that is not eligible for Option grants or is
\neligible for a lesser number of Options, except as otherwise determined by the
\nAdministrator the Option Shares shall cease to vest at the time of such change,
\nexcept that the Participant shall be entitled to a vesting of a Pro Rata Number
\nof Shares computed in accordance with Section 8.4(a) using the next anniversary
\nof the Grant Date following the change in status.<\/p>\n

(c) Grants to Non-Employee Directors shall be vested and exercisable at the
\nGrant Date.<\/p>\n

6.4 Form of Payment<\/strong>.<\/p>\n

(a) The Administrator shall determine the acceptable form and method of
\npayment for exercising an Option.<\/p>\n

(b) Acceptable forms of payment for all Option Shares are cash, check or wire
\ntransfer, denominated in U.S. dollars except as specified by the Administrator
\nfor non-U.S. Employees or non-U.S. sub-plans.<\/p>\n

(c) In addition, the Administrator may permit payment to be made by any of
\nthe following methods:<\/p>\n

(i) other Shares, or the designation of other Shares, which have a Fair
\nMarket Value on the date of surrender equal to the Option Price of the Shares as
\nto which the Option is being exercised;<\/p>\n

(ii) provided that a public market exists for the Shares, through a “same day
\nsale” commitment from the Participant and a broker-dealer that is a member of
\nthe National Association of Securities Dealers (an “ NASD
\nDealer”<\/em><\/strong>) under which the Participant irrevocably elects to
\nexercise the Option and the NASD Dealer irrevocably commits to forward an amount
\nequal to the Option Price, directly to the Company, upon receipt of the Option
\nShares (a “Cashless Exercise”<\/em><\/strong>);<\/p>\n

(iii) any combination of the methods of payment permitted by any paragraph of
\nthis Section 6.4.<\/p>\n

8<\/p>\n

\n

(d) The Administrator may also permit any other form or method of payment for
\nOption Shares permitted by Applicable Law.<\/p>\n

6.5 Nonassignability of Awards<\/strong>. Except as determined by the
\nAdministrator, no Award shall be assignable or otherwise transferable by the
\nParticipant except (a) by will or by the laws of descent and distribution, (b)
\nto a grantor trust or partnership established for estate planning purposes to
\nthe extent permitted by Applicable Laws, or (c) in accordance with a Qualified
\nDomestic Relations Order.<\/p>\n\n\n\n
\n

7.<\/p>\n<\/td>\n

\n

Incentive Stock Options<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

The following rules apply only to Incentive Stock Options and only to the
\nextent these rules are more restrictive than the rules that would otherwise
\napply under this Plan. With the consent of the Participant, or where this Plan
\nprovides that an action may be taken notwithstanding any other provision of this
\nPlan, the Administrator may deviate from the requirements of this Section,
\nnotwithstanding that any Incentive Stock Option modified by the Administrator
\nwill thereafter be treated as a Nonstatutory Option.<\/p>\n

7.1 The Expiration Date of an Incentive Stock Option shall not be later than
\nten years from its Grant Date, with the result that no Incentive Stock Option
\nmay be exercised after the expiration of ten years from its Grant Date.<\/p>\n

7.2 No Incentive Stock Option may be granted more than ten years from the
\ndate this Plan was approved by the Board.<\/p>\n

7.3 Options intended to be incentive stock options under Section 422 of the
\nCode that are granted to any single Participant under all incentive stock option
\nplans of the Company and its Affiliates, including Incentive Stock Options
\ngranted under this Plan, may not vest at a rate of more than $100,000 in Fair
\nMarket Value of stock (measured on the grant dates of the options) during any
\ncalendar year. For this purpose, an option vests with respect to a given share
\nof stock the first time its holder may purchase that share, notwithstanding any
\nright of the Company to repurchase that share. Unless the Administrator
\nspecifies otherwise in the related agreement governing the Option, this vesting
\nlimitation shall be applied by, to the extent necessary to satisfy this $100,000
\nrule, treating certain stock options that were intended to be incentive stock
\noptions under Section 422 of the Code as Nonstatutory Options. The stock options
\nor portions of stock options to be reclassified as Nonstatutory Options are
\nthose with the highest Option Prices, whether granted under this Plan or any
\nother equity compensation plan of the Company or any Affiliate that permits that
\ntreatment. This Section 7.3 shall not cause an Incentive Stock Option to vest
\nbefore its original vesting date or cause an Incentive Stock Option that has
\nalready vested to cease to be vested.<\/p>\n

7.4 In order for an Incentive Stock Option to be exercised for any form of
\npayment other than those described in Section 6.4(b), that right must be stated
\nin the Option Agreement relating to that Incentive Stock Option.<\/p>\n

7.5 Any Incentive Stock Option granted to a Ten Percent Shareholder (as
\ndefined below), must have an Expiration Date that is not later than five years
\nfrom its Grant Date, with the result that no such Option may be exercised after
\nthe expiration of five years from the Grant Date. A “Ten Percent
\nShareholder”<\/em><\/strong> is any person who, directly or by attribution under
\nSection 424(d) of the Code, owns stock possessing more than ten percent of the
\ntotal combined voting power of all classes of stock of the Company or of any
\nAffiliate on the Grant Date.<\/p>\n

7.6 The Option Price of an Incentive Stock Option shall never be less than
\nthe Fair Market Value of the Shares at the Grant Date. The Option Price for the
\nShares covered by an Incentive Stock Option granted to a Ten Percent Shareholder
\nshall never be less than 110% of the Fair Market Value of the Shares at the
\nGrant Date.<\/p>\n

9<\/p>\n

\n

7.7 Incentive Stock Options may be granted only to Employees. If a
\nParticipant changes status from an Employee to a Consultant, that Participant153s
\nIncentive Stock Options become Nonstatutory Options if not exercised within the
\ntime period described in Section 7.9.<\/p>\n

7.8 No rights under an Incentive Stock Option may be transferred by the
\nParticipant, other than by will or the laws of descent and distribution. During
\nthe life of the Participant, an Incentive Stock Option may be exercised only by
\nthe Participant. The Company153s compliance with a Qualified Domestic Relations
\nOrder, or the exercise of an Incentive Stock Option by a guardian or conservator
\nappointed to act for the Participant, shall not violate this Section 7.8.<\/p>\n

7.9 An Incentive Stock Option shall be treated as a Nonstatutory Option if it
\nremains exercisable after, but is not exercised within, the three-month period
\nbeginning with the Participant153s Termination for any reason other than the
\nParticipant153s death or Disability. In the case of Termination due to death, an
\nIncentive Stock Option shall continue to be treated as an Incentive Stock Option
\nif it remains exercisable after, but is not exercised within, that three-month
\nperiod provided it is exercised before the Expiration Date. In the case of
\nTermination due to Disability, an Incentive Stock Option shall be treated as a
\nNonstatutory Option if it remains exercisable after, but is not exercised
\nwithin, one year after the Participant153s Termination.<\/p>\n\n\n\n
\n

8.<\/p>\n<\/td>\n

\n

Exercise of Options; Termination<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

8.1 In General<\/strong>. An Option shall be exercisable in accordance
\nwith this Plan, the Option Agreement under which it is granted, and as
\nprescribed by the Administrator.<\/p>\n

8.2 Time of Exercise. <\/strong>Options shall be considered exercised
\nwhen the Company receives: (a) written notice of exercise from the person
\nentitled to exercise the Option, (b) full payment, or provision for payment, in
\na form and method approved by the Administrator, for the Shares for which the
\nOption is being exercised, and (c) with respect to Nonstatutory Options,
\npayment, or provision for payment, in a form approved by the Administrator, of
\nall applicable withholding taxes due upon exercise. An Option may not be
\nexercised for a fraction of a Share.<\/p>\n

8.3 Issuance of Option Shares. <\/strong>The Company shall issue
\nOption Shares in the name of the person properly exercising an Option. If the
\nParticipant is that person and so requests, the Option Shares shall be issued in
\nthe name of the Participant and the Participant153s spouse. The Company shall
\nendeavor to issue Option Shares promptly after an Option is exercised. However,
\nuntil Option Shares are actually issued, as evidenced by the appropriate entry
\non the stock books of the Company or its transfer agent, no right to vote or
\nreceive dividends or other distributions, and no other rights as a shareholder,
\nshall exist with respect to the Option Shares, even though the Participant has
\ncompleted all the steps necessary to exercise the Option. No adjustment shall be
\nmade for any dividend, distribution, or other right for which the record date
\nprecedes the date the Option Shares are issued, except as provided in Section
\n11.<\/p>\n

8.4 Termination<\/strong><\/p>\n

(a) In General. <\/strong><\/em>Except as provided by the
\nAdministrator, including in an Award Agreement, after a Participant153s
\nTermination, except as otherwise provided in Sections 8.4(b), (c), (d) and (e),
\nthe Participant153s Options shall be exercisable to purchase, or Awards shall be
\nfully vested as to, (A) the number of Shares for which such Awards have vested
\non the date of that Termination plus<\/em> (B) (in the event the Award only
\nvests in annual increments and such Termination occurs after the one year
\nanniversary of the Grant Date) the Pro Rata<\/p>\n

10<\/p>\n

\n

Number of Shares for which the Award would have become vested on the next
\nanniversary of the Grant Date following Termination. As used in this Section 8,
\nthe “Pro Rata Number of Shares” shall be equal to (a) the additional number of
\nShares that would have become vested on the next anniversary of the Grant Date
\nfollowing Termination, multiplied by<\/em> (b) a fraction, the numerator of
\nwhich shall be the number of days from the anniversary of the Grant Date
\npreceding Termination and the denominator of which shall be 365, rounded to the
\nnearest whole Share. Except as otherwise provided by the Administrator or in the
\nAward Agreement, such Options shall only be exercisable during the period ending
\n30 days after the Termination for Options granted prior to July 21, 2005 and the
\nperiod ending 120 days after Termination for Options granted after July 21,
\n2005, <\/em>but in no event after the Expiration Date. To the extent the
\nParticipant does not exercise an Option within the time specified for exercise,
\nthe Option shall automatically terminate.<\/p>\n

(b) Leaves of Absence<\/strong><\/em>. Unless otherwise provided in
\nthe Award Agreement, no Option may be exercised more than 90 days after the
\nbeginning of a leave of absence, other than a personal or medical leave approved
\nby the Administrator with employment guaranteed upon return. Unless otherwise
\ndetermined by the Administrator, Options shall not continue to vest during a
\nleave of absence, other than an approved personal or medical leave with
\nemployment guaranteed upon return.<\/p>\n

(c) Death or Disability<\/strong><\/em>. In the event of the death
\nof a Participant who at the date of death either (i) was an officer of the
\nCompany with the title of Assistant Vice President or above or (ii) had been
\nemployed by the Company for ten or more continuous years, all Awards that were
\ngranted to that Participant with vesting provisions tied to continuation of
\nemployment, but are unvested as of the date of the Participant153s death shall
\nbecome vested, effective as of the date of death. In the event of the death of a
\nParticipant who at the date of death is an Employee but qualifies under neither
\nclause (i) or (ii) of the previous sentence, 50% of the Awards that were granted
\nto that Participant but unvested on the date of the Participant153s death shall
\nbecome vested, effective as of the date of death. Unless otherwise provided by
\nthe Administrator, if a Participant153s Termination is due to death or disability
\n(as determined by the Administrator with respect to Nonstatutory Options and as
\ndefined by Section 22(e) of the Code with respect to Incentive Stock Options),
\nall Options of that Participant may be exercised for one year after that
\nTermination, but in no event after the Expiration Date. In the case of
\nTermination of an Employee due to death, such Options shall be exercisable to
\npurchase the number of shares for which the Options were vested as of the
\nTermination Date in accordance with the first two sentences of this Section
\n8.4(c). In the case of Termination due to disability, such Options shall be
\nexercisable to purchase (A) the number of Shares for which such Options have
\nvested as of the Termination Date, plus (B) the Pro Rata Number of Shares (as
\ndefined in Section 8.4(a)) for which the Option would have vested on the next
\nanniversary of the Grant Date (in the event the Option only vests in annual
\nincrements and such Termination occurs after the one year anniversary of the
\nGrant Date). In the case of Termination due to death, an Option may be exercised
\nas provided in Section 16. In the case of Termination due to disability, if a
\nguardian or conservator has been appointed to act for the Participant and been
\ngranted this authority as part of that appointment, that guardian or conservator
\nmay exercise the Option on behalf of the Participant. Death or disability
\noccurring after a Participant153s Termination shall not cause the Termination to
\nbe treated as having occurred due to death or disability. To the extent an
\nOption is not so exercised within the time specified for its exercise, the
\nOption shall automatically terminate.<\/p>\n

(d) Divestiture<\/strong><\/em>. If a Participant153s Termination is
\ndue to a Divestiture, the Board may take any one or more of the actions
\ndescribed in Section 11.3 or 11.4.<\/p>\n

(e) Termination for Cause<\/strong><\/em>. If a Participant153s
\nTermination is due to Cause (as defined below), all of the Participant153s Options
\nshall automatically terminate and cease to be exercisable at the time of
\nTermination. “ Cause<\/em><\/strong>” means dishonesty, fraud,
\nmisconduct, disclosure or misuse of confidential information, conviction of, or
\na plea of guilty or no contest to, a felony or similar offense, habitual absence
\nfrom work for reasons other than illness, intentional conduct that could cause
\nsignificant injury to the Company or an Affiliate, or habitual abuse of alcohol
\nor a controlled substance, in each case as determined by the Administrator.<\/p>\n

11<\/p>\n

\n\n\n\n
\n

9.<\/p>\n<\/td>\n

\n

Provisions of Stock Units<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Each Award Agreement reflecting the issuance of a Stock Unit shall be in such
\nform and shall contain such terms and conditions as the Board shall deem
\nappropriate. The terms and conditions of such agreements may change from time to
\ntime, and the terms and conditions of separate agreements need not be identical,
\nbut each such agreement shall include (through incorporation of provisions
\nhereof by reference in the agreement or otherwise) the substance of each of the
\nfollowing provisions:<\/p>\n

(a) Consideration<\/em>. <\/strong>A Stock Unit may be awarded in
\nconsideration for such property or services as is permitted under Applicable
\nLaw, including for past services actually rendered to the Company or an
\nAffiliate for its benefit.<\/p>\n

(b) Vesting; Restrictions<\/em>. <\/strong>Shares of Common Stock
\nawarded under the agreement reflecting a Stock Unit award may, but need not, be
\nsubject to a Share repurchase option, forfeiture restriction or other conditions
\nin favor of the Company in accordance with a vesting or lapse schedule to be
\ndetermined by the Board. The Administrator may make provisions for accelerated
\nvesting, including (without limitation) accelerated vesting based on length of
\nservice.<\/p>\n

(c) Accelerated Vesting; Non Executive Directors<\/em><\/strong>.
\nGrants to non-executive directors of Stock Units shall vest upon Termination as
\nfollows:<\/p>\n\n\n\n
<\/td>\n\n

(1)<\/p>\n<\/td>\n

\n

after five years of service, at Termination 50% of otherwise unvested Stock
\nUnits shall vest; and<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/p>\n\n\n\n
<\/td>\n\n

(2)<\/p>\n<\/td>\n

\n

after ten years of service, at Termination 100% of otherwise unvested Stock
\nUnits shall vest.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

(d) Termination of Participant153s Continuous Service<\/em>.
\n<\/strong>In the event a Participant153s Continuous Service terminates, the Company
\nmay reacquire any or all of the Shares of Common Stock held by the Participant
\nwhich have not vested or which are otherwise subject to forfeiture or other
\nconditions as of the date of termination under the terms of the agreement.<\/p>\n

(e) Transferability<\/em>. <\/strong>Rights to acquire Shares of
\nCommon Stock under a Stock Unit agreement shall be transferable by the
\nParticipant only upon such terms and conditions as are set forth in the
\nagreement, as the Board shall determine in its discretion, so long as Common
\nStock awarded under the agreement remains subject to the terms of the
\nagreement . <\/strong><\/p>\n

(f) Payment Terms<\/em>. <\/strong>Each Award reflecting the
\nissuance of a Stock Unit shall specify, on the Grant Date, that issuance of
\nShares with respect to the Stock Unit will be made at a time and\/or upon the
\noccurrence of events that comply with Section 409A of the Code, including,
\nwithout limitation, on a Change In Control event that is defined in Section
\n409A(a)(2)(A)(v) and shall include, where required in the case of specified
\nemployees, the six-month delay in Section 409A(a)(2)(B).<\/p>\n\n\n\n
\n

10.<\/p>\n<\/td>\n

\n

Consulting or Employment Relationship.<\/strong><\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Nothing in this Plan or in any Award Agreement, and no Award shall: (a)
\ninterfere with or limit the right of the Company or any Affiliate to terminate
\nthe employment or consultancy of any Participant at any time, whether with or
\nwithout cause or reason, and with or without the payment of severance or any
\nother compensation or payment, or (b) interfere with the application of any
\nprovision in any of the Company153s or any Affiliate153s charter documents or
\nApplicable Law relating to the election, appointment, term of office, or removal
\nof a Director.<\/p>\n

12<\/p>\n

\n

11. Certain Transactions and Events <\/strong><\/p>\n

11.1 In General<\/strong>. Except as provided in this Section 11, no
\nchange in the capital structure of the Company, merger, sale or other
\ndisposition of assets or a subsidiary, change of control, issuance by the
\nCompany of shares of any class of securities convertible into shares of any
\nclass, conversion of securities, or other transaction or event shall require or
\nbe the occasion for any adjustments of the type described in this Section 11.\n<\/p>\n

11.2 Changes in Capital Structure<\/strong>. In the event of any stock
\nsplit, reverse stock split, recapitalization, combination or reclassification of
\nstock, stock dividend, spin-off, extraordinary cash dividend or similar change
\nto the capital structure of the Company (not including a Fundamental Transaction
\nor Change of Control), the Board shall make appropriate and equitable
\nadjustments to preserve the value of outstanding and future Awards, including
\nadjustments to: (a) the number and type of Awards that may be granted under this
\nPlan, (b) the number and type of Awards that may be granted to any individual
\nunder this Plan, (c) the purchase price of any Stock Award, and (d) the Option
\nPrice and number and class of securities issuable under each outstanding Option.
\nSubject to the foregoing requirement, the specific form of any such adjustments
\nshall be determined by the Board. Unless the Board specifies otherwise, any
\nsecurities issuable as a result of any such adjustment shall be rounded to the
\nnext lower whole security.<\/p>\n

11.3 Fundamental Transactions<\/strong>. If the Company merges with
\nanother entity in a transaction in which the Company is not the surviving entity
\nor if, as a result of any other transaction or event, other securities are
\nsubstituted for the Shares or Shares may no longer be issued (each a
\n“Fundamental Transaction”<\/em><\/strong>), then, notwithstanding any
\nother provision of this Plan, the Board shall do one or more of the following
\ncontingent on the closing or completion of the Fundamental Transaction: (a)
\narrange for the substitution of options or other compensatory awards of equity
\nsecurities other than Shares (including, if appropriate, equity securities of an
\nentity other than the Company) in exchange for Stock Awards, (b) accelerate the
\nvesting and termination of outstanding Stock Awards so that Stock Awards can be
\nexercised in full before or otherwise in connection with the closing or
\ncompletion of the transaction or event but then terminate or (c) cancel Stock
\nAwards in exchange for cash payments to Participants. The Board need not adopt
\nthe same rules for each Stock Award or each Participant.<\/p>\n

11.4 Changes of Control<\/strong>. In connection with a Change of
\nControl, notwithstanding any other provision of this Plan (but subject to
\nsection 11.8), the Board may take any one or more of the actions described in
\nSection 11.3. In addition, the Board may extend the date for the exercise of
\nOptions (but not beyond their original Expiration Date). The Board need not
\nadopt the same rules for each Option or each Optionee. “Change in
\nControl”<\/strong> shall mean the occurrence of any of the following events: (i)
\nat any time during any two consecutive year period, at least a majority of the
\nBoard shall cease to consist of “Continuing Directors” (meaning directors of the
\nCompany who were directors at the beginning of such two-year period, or who
\nsubsequently became directors and whose election, or nomination for election by
\nthe Company153s stockholders, was approved by a majority of the then Continuing
\nDirectors); or (ii) any “person” or “group” (as determined for purposes of
\nSection 13(d)(3) of the Exchange Act, except any majority-owned subsidiary of
\nthe Company or any employee benefit plan of the Company or any trust thereunder,
\nshall have acquired “beneficial ownership” (as determined for purposes of
\nSecurities and Exchange Commission (“SEC”) Regulation 13d-3) of Shares having
\n30% or more of the voting power of all outstanding Shares, unless such
\nacquisition is approved by a majority of the directors of the Company in office
\nimmediately preceding such acquisition; or (iii) a merger or consolidation
\noccurs to which the Company is a party, in which outstanding Shares are
\nconverted into shares of another company or other securities (of either the
\nCompany or another company) or cash or other property.<\/p>\n

13<\/p>\n

\n

11.5 Divestiture<\/strong>. If the Company or an Affiliate sells or
\notherwise transfers equity securities of an Affiliate to a person or entity
\nother than the Company or an Affiliate, or leases, exchanges or transfers all or
\nany portion of its assets to such a person or entity, then the Board, in its
\nsole and absolute discretion, may specify that such transaction or event
\nconstitutes a “Divestiture.”In connection with a Divestiture, notwithstanding
\nany other provision of this Plan, the Board may take one or more of the actions
\ndescribed in Section 11.3 or 11.4 with respect to Awards or Award Shares held
\nby, for example, Employees, Directors or Consultants for whom that transaction
\nor event results in a Termination. The Board need not adopt the same rules for
\neach Award or each Participant.<\/p>\n

11.6 Dissolution<\/strong>. If the Company adopts a plan of
\ndissolution, the Board may, in its sole and absolute discretion, cause Awards to
\nbe fully vested and exercisable (but not after their Expiration Date) before the
\ndissolution is completed but contingent on its completion and may cause the
\nCompany153s repurchase rights on Award Shares to lapse upon completion of the
\ndissolution. To the extent not exercised before the earlier of the completion of
\nthe dissolution or their Expiration Date, Options shall terminate just before
\nthe dissolution is completed. The Board need not adopt the same rules for each
\nOption or each Optionee.<\/p>\n

11.7 Substitute Awards. <\/strong>The Board may cause the Company to
\ngrant Substitute Awards in connection with the acquisition by the Company or an
\nAffiliate of equity securities of any entity (including by merger) or all or a
\nportion of the assets of any entity. Any such substitution shall be effective
\nwhen the acquisition closes. Substitute Awards that are Options may be
\nNonstatutory Options or Incentive Stock Options. Unless and to the extent
\nspecified otherwise by the Board, Substitute Awards shall have the same terms
\nand conditions as the options they replace, except that (subject to Section 11)
\nsubstitute options shall be Options to purchase Shares rather than equity
\nsecurities of the granting entity and shall have an Option Price that, as
\ndetermined by the Board in its sole and absolute discretion, properly reflects
\nthe substitution.<\/p>\n

11.8 Compliance with Section 409A. <\/strong>The Board shall take no
\naction pursuant to this Section 11 that would cause an Award that is exempt from
\nSection 409A of the Code to become subject to Section 409A and noncompliant with
\nSection 409A, or an Award that is subject to Section 409A to become noncompliant
\nwith Section 409A, unless the Board clearly indicates in writing its intent to
\ntake action under this Section 11 that is noncompliant with Section 409A of the
\nCode.<\/p>\n

11.9 Cut-Back to Preserve Benefits<\/strong>. If the Administrator
\ndetermines that the net after-tax amount to be realized by any Participant,
\ntaking into account any accelerated vesting, termination of repurchase rights,
\nor cash payments to that Participant in connection with any transaction or event
\naddressed in this Section 11 would be greater if one or more of those steps were
\nnot taken with respect to that Participant153s Awards or Award Shares, then and to
\nthat extent one or more of those steps shall not be taken; provided, however, no
\nsuch cutback shall be taken in connection with Awards that are subject to
\nSection 409A.<\/p>\n

12. Withholding and Tax Reporting <\/strong><\/p>\n

12.1 Tax Withholding Alternatives. <\/strong>To the extent provided by
\nthe terms of a Stock Award Agreement, the Participant may satisfy any federal,
\nstate or local tax withholding obligation relating to the exercise or
\nacquisition of Shares under a Stock Award by any of the following means (in
\naddition to the Company153s right to withhold from any compensation paid to the
\nParticipant by the Company) or by a combination of such means: (i) tendering a
\ncash payment; (ii) authorizing the Company to withhold Shares from the Shares
\notherwise issuable to the Participant as a result of the exercise or acquisition
\nof stock under the Stock Award; or (iii) delivering to the Company owned and
\nunencumbered Shares.<\/p>\n

14<\/p>\n

\n

12.2 Reporting of Dispositions. <\/strong>Any holder of Option Shares
\nacquired under an Incentive Stock Option shall promptly notify the Administrator
\nin writing of the sale or other disposition of any of those Option Shares if the
\ndisposition occurs during: (a) the longer of two years after the Grant Date of
\nthe Incentive Stock Option and one year after the date the Incentive Stock
\nOption was exercised, or (b) such other period as the Administrator has
\nestablished.<\/p>\n

13. Compliance with Law <\/strong><\/p>\n

The grant of Awards and the issuance and subsequent transfer of Award Shares
\nshall be subject to compliance with all Applicable Law, including all applicable
\nsecurities laws. Options may not be exercised, and Option Shares may not be
\ntransferred, in violation of Applicable Law. Thus, for example, Options may not
\nbe exercised unless: (a) a registration statement under the Securities Act is
\nthen in effect with respect to the related Option Shares, or (b) in the opinion
\nof legal counsel to the Company, those Option Shares may be issued in accordance
\nwith an applicable exemption from the registration requirements of the
\nSecurities Act and any other applicable securities laws. The failure or
\ninability of the Company to obtain from any regulatory body the authority
\nconsidered by the Company153s legal counsel to be necessary or useful for the
\nlawful issuance of any Award Shares or their subsequent transfer shall relieve
\nthe Company of any liability for failing to issue those Award Shares or
\npermitting their transfer. As a condition to the exercise of any Option or the
\ntransfer of any Award Shares, the Company may require the Participant to satisfy
\nany requirements or qualifications that may be necessary or appropriate to
\ncomply with or evidence compliance with any Applicable Law.<\/p>\n

14. Amendment or Termination of this Plan or Outstanding Awards
\n<\/strong><\/p>\n

14.1 Amendment and Termination<\/strong>. The Board may at any time
\namend, suspend, or terminate this Plan. On termination of the Plan, the Board
\nmay pay out benefits under the Plan in a manner that does not result in a
\nviolation of Section 409A of the Code.<\/p>\n

14.2 Shareholder Approval<\/strong>. The Company shall obtain the
\napproval of the Company153s shareholders for any amendment to this Plan if
\nshareholder approval is necessary or desirable to comply with any Applicable
\nLaw, with the requirements applicable to the grant of Options intended to be
\nIncentive Stock Options or if the amendment would materially enhance the
\nbenefits available to participants under the Plan. The Board may also, but need
\nnot, require that the Company153s shareholders approve any other amendments to
\nthis Plan. Unless a greater vote is required by Applicable Law, any amendment to
\nthe Plan shall be deemed approved if such amendment receives more affirmative
\nvotes than negative votes at a shareholders153 meeting at which a quorum is
\npresent.<\/p>\n

14.3 Cancellation and Re-Grant of Options<\/strong>. The Company may
\nnot reprice any outstanding Stock Awards under the Plan, including implement any
\nprogram whereby outstanding Stock Awards will be cancelled and replaced with
\nStock Awards bearing a lower purchase or exercise price, without first obtaining
\nthe approval of the shareholders of the Company; provided however that this
\nSection 14.3 shall in no way limit the Company153s ability to adjust Stock Awards
\nas provided under Section 11 above.<\/p>\n

14.4 Effect.<\/strong> No amendment, suspension, or termination of
\nthis Plan, and no modification of any Award even in the absence of an amendment,
\nsuspension, or termination of this Plan, shall impair any existing contractual
\nrights of any Participant unless the affected Participant consents to the
\namendment, suspension, termination, or modification. However, no such consent
\nshall be required if the Administrator determines in its sole and absolute
\ndiscretion that the amendment, suspension, termination, or modification: (a) is
\nrequired or advisable in order for the Company, the Plan or the Award to satisfy
\nApplicable Law, to meet the requirements of any accounting standard or to avoid
\nany adverse accounting treatment, or (b) in connection with any transaction or
\nevent described in Section 11, is in the best interests of the Company or its
\nshareholders. The<\/p>\n

15<\/p>\n

\n

Administrator may, but need not, take the tax consequences to affected
\nParticipants into consideration in acting under the preceding sentence.
\nTermination of this Plan shall not affect the Administrator153s ability to
\nexercise the powers granted to it under this Plan with respect to Awards granted
\nbefore the termination, or Award Shares issued under such Awards, even if those
\nAward Shares are issued after the termination.<\/p>\n

15. Reserved Rights <\/strong><\/p>\n

15.1 Nonexclusivity of this Plan.<\/strong> This Plan shall not limit
\nthe power of the Company or any Affiliate to adopt other incentive arrangements
\nincluding, for example, the grant or issuance of stock options, stock, or other
\nequity-based rights under other plans or independently of any plan.<\/p>\n

15.2 Unfunded Plan.<\/strong> This Plan shall be unfunded. Although
\nbookkeeping accounts may be established with respect to Participants, any such
\naccounts will be used merely as a convenience. The Company shall not be required
\nto segregate any assets on account of this Plan, the grant of Awards, or the
\nissuance of Award Shares. The Company and the Administrator shall not be deemed
\nto be a trustee of stock to be awarded under this Plan. Any obligations of the
\nCompany to any Participant shall be based solely upon contracts entered into
\nunder this Plan, such as Award Agreements. No such obligation shall be deemed to
\nbe secured by any pledge or other encumbrance on any assets of the Company.
\nNeither the Company nor the Administrator shall be required to give any security
\nor bond for the performance of any such obligation.<\/p>\n

16. Beneficiaries <\/strong><\/p>\n

A Participant may file a written designation of one or more beneficiaries who
\nare to receive the Participant153s rights under the Participant153s Options after
\nthe Participant153s death. A Participant may change such a designation at any time
\nby written notice. If a Participant designates a beneficiary, the beneficiary
\nmay exercise the Participant153s Options after the Participant153s death. If a
\nParticipant dies when the Participant has no living beneficiary designated under
\nthis Plan, the Company shall allow the executor or administrator of the
\nParticipant153s estate to exercise the Option or, if there is none, the person
\nentitled to exercise the Option under the Participant153s will or the laws of
\ndescent and distribution. In any case, no Option may be exercised after its
\nExpiration Date.<\/p>\n

17. Miscellaneous <\/strong><\/p>\n

17.1 Governing Law.<\/strong> This Plan and all determinations made
\nand actions taken under this Plan shall be governed by the substantive laws, but
\nnot the choice of law rules, of the State of Washington.<\/p>\n

17.2 Determination of Value<\/strong>. Fair Market Value shall be
\ndetermined as follows:<\/p>\n

(a) Listed Stock<\/em><\/strong>. If the Shares are traded on any
\nestablished stock exchange or quoted on a national market system, Fair Market
\nValue shall be the closing sales price for the Shares as quoted on that stock
\nexchange or system for the date the value is to be determined (the
\n“Value Date”<\/em><\/strong>) as reported in The Wall Street
\nJournal<\/em> or a similar publication. If no sales are reported as having
\noccurred on the Value Date, Fair Market Value shall be that closing sales price
\nfor the last preceding trading day on which sales of Shares are reported as
\nhaving occurred. If no sales are reported as having occurred during the five
\ntrading days before the Value Date, Fair Market Value shall be the closing bid
\nfor Shares on the Value Date. If Shares are listed on multiple exchanges or
\nsystems, Fair Market Value shall be based on sales or bids on the primary
\nexchange or system on which Shares are traded or quoted.<\/p>\n

(b) Stock Quoted by Securities Dealer<\/em><\/strong>. If Shares
\nare regularly quoted by a recognized securities dealer but selling prices are
\nnot reported on any established stock exchange or quoted on a national market
\nsystem, Fair<\/p>\n

16<\/p>\n

\n

Market Value shall be the mean between the high bid and low asked prices on
\nthe Value Date. If no prices are quoted for the Value Date, Fair Market Value
\nshall be the mean between the high bid and low asked prices on the last
\npreceding trading day on which any bid and asked prices were quoted.<\/p>\n

(c) No Established Market<\/em><\/strong>. If Shares are not traded
\non any established stock exchange or quoted on a national market system and are
\nnot quoted by a recognized securities dealer, the Administrator will determine
\nFair Market Value in good faith and consistent with the requirements of Section
\n409A of the Code to the extent necessary to maintain an exemption from or
\ncompliance with Section 409A. The Administrator will consider the following
\nfactors, and any others it considers significant, in determining Fair Market
\nValue: (i) the price at which other securities of the Company have been issued
\nto purchasers other than Employees, Directors, or Consultants, (ii) the
\nCompany153s net worth, prospective earning power, dividend-paying capacity, and
\nnon-operating assets, if any, and (iii) any other relevant factors, including
\nthe economic outlook for the Company and the Company153s industry, the Company153s
\nposition in that industry, the Company153s goodwill and other intellectual
\nproperty, and the values of securities of other businesses in the same industry.\n<\/p>\n

17.3 Reservation of Shares.<\/strong> During the term of this Plan,
\nthe Company will at all times reserve and keep available such number of Shares
\nas are still issuable under this Plan.<\/p>\n

17.4 Electronic Communications.<\/strong> Any Award Agreement, notice
\nof exercise of an Option, or other document required or permitted by this Plan
\nmay be delivered in writing or, to the extent determined by the Administrator,
\nelectronically. Signatures may also be electronic if permitted by the
\nAdministrator.<\/p>\n

17.5 Escrow of Shares<\/strong>. To enforce any restriction applicable
\nto Shares issued under the Plan, the Board or the Committee may require a
\nParticipant or other holder of such Shares to deposit the certificates
\nrepresenting such Shares, with approved stock powers or other transfer
\ninstruments endorsed in blank, with the Company or an agent of the Company until
\nthe restrictions have lapsed. Such certificates (or other notations representing
\nthe Shares) may bear a legend or legends referencing the applicable
\nrestrictions.<\/p>\n

17.6 Notices.<\/strong> Unless the Administrator specifies otherwise,
\nany notice to the Company under any Award Agreement or with respect to any
\nAwards or Award Shares shall be in writing (or, if so authorized by Section
\n17.4, communicated electronically), shall be addressed to the Secretary of the
\nCompany, and shall only be effective when received by the Secretary of the
\nCompany.<\/p>\n

17.7 Arbitration.<\/strong> Any dispute arising out of or relating to
\nthe Plan or any Award Agreement, including (without limitation) breach,
\ntermination or the validity thereof, shall be finally resolved by arbitration by
\na sole arbitrator in Seattle, Washington in accordance with the CPR Rules of
\nNon-Administered Arbitration, and judgment upon the award rendered by the
\narbitrator may be entered by any court having jurisdiction thereof.<\/p>\n

17<\/p>\n

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