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AMENDED AND RESTATED
INTERNAP NETWORK SERVICES CORPORATION
1999 STOCK INCENTIVE PLAN FOR NON-OFFICERS
(Originally adopted on June 28, 1999 as the CO SPACE Stock Incentive Plan,
amended on December 22, 1999, January 11, 2000, and March 30, 2000 and
assumed by InterNap Network Services Corporation in connection with the
Merger Agreement dated May 26, 2000. Amended and Restated as the InterNAP
Network Services Corporation 1999 STOCK INCENTIVE PLAN FOR NON-OFFICERS on
September 20, 2000)
1. PURPOSE. This 1999 Stock Incentive Plan For Non-Officers (the
"Plan") is intended to provide incentives: (a) to non-officer employees and
consultants of InterNAP Network Services Corporation, a Delaware corporation
(the "Company"), and any present or future parent or subsidiaries of the
Company (collectively, "Related Corporations") by providing them with
opportunities to purchase stock in the Company pursuant to Non-Qualified
Stock Options ("NSOs") that do not qualify as Incentive Stock Options under
Section 422 of the Internal Revenue Code of 1986, as amended (the "Code") and
(b) to non-officer employees and consultants of the Company and Related
Corporations by providing them with opportunities to receive awards of stock
in the Company whether such stock awards are in the form of bonus shares,
deferred stock awards, or of performance share awards (the "Awards"), and (c)
to non-officer employees and consultants of the Company and Related
Corporations by providing them with opportunities to make direct purchases of
restricted stock in the Company ("Restricted Stock Purchases"). Non-Qualified
Options are referred to hereafter as "Option." Options, Awards and
authorizations to make Restricted Stock Purchases are referred to hereafter
individually as a "Stock Right" and collectively as "Stock Rights." Documents
evidencing the award of Stock Rights may be referred to collectively as
"Stock Rights Agreements." As used herein, the terms "parent" and
"subsidiary" mean "parent corporation" and "subsidiary corporation",
respectively, as those terms are defined in Section 424 of the Code.
2. ADMINISTRATION OF THE PLAN.
A. BOARD OR COMMITTEE ADMINISTRATION. The Plan shall be
administered by the Board of Directors of the Company (the "Board"). The
Board may appoint a Compensation Committee or a Stock Incentive Plan
Committee (as the case may be, the "Committee") of two (2) or more of its
members to administer the Plan and to grant Stock Rights hereunder, provided
such Committee is delegated such powers in accordance with state law. (All
references in this Plan to the "Committee" shall mean the Board if no such
Compensation Committee or Stock Incentive Plan Committee has been so
appointed).
B. AUTHORITY OF BOARD OR COMMITTEE. Subject to the terms of the
Plan, the Committee shall have the authority to: (i) determine the employees
of the Company and Related Corporations to whom Options may be granted; (ii)
determine the time or times at which Options or Awards may be granted or
Restricted Stock Purchases made; (iii) determine the exercise price of shares
subject to each Option, which price shall not be less than the minimum price
specified in paragraph 6, and the purchase price of shares subject to each
Restricted Stock Purchase or Award; (iv) determine (subject to paragraph 7)
the time or times when each Option shall become exercisable and the duration
of the exercise period; (v) determine whether restrictions such as
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repurchase options are to be imposed on shares subject to Options, Awards and
Restricted Stock Purchases and the nature of such restrictions, if any; (vi)
impose such other terms and conditions with respect to capital stock issued
pursuant to Stock Rights not inconsistent with the terms of this Plan as it
deems necessary or desirable; and (vii) interpret the Plan and prescribe and
rescind rules and regulations relating to it.
The interpretation and construction by the Committee of any provisions
of the Plan or of any Stock Right granted under it shall be final unless
otherwise determined by the Board. The Committee may from time to time adopt
such rules and regulations for carrying out the Plan as it may deem best. No
member of the Board or the Committee shall be liable for any action or
determination made in good faith with respect to the Plan or any Stock Right
granted under it.
C. DELEGATION OF AUTHORITY TO GRANT AWARDS TO OFFICER. Without
limiting the foregoing, the Board, in its discretion, may also delegate to a
single officer of the Company who is a member of the Board (to the extent
consistent with state law) all or part of the Board's or Committee's
authority and duties with respect to the granting of Stock Rights to
individuals. Such officer (the "Delegated Officer") shall act as a one member
committee of the Board, and shall in any event be subject to the same
limitations as are applicable to the Committee. References to the Committee
in this Plan shall also include the Delegated Officer, but only to the extent
consistent with the authorities and duties delegated to the Delegated Officer
by the Board. The Board may revoke or amend the terms of a delegation at any
time but such action shall not invalidate any prior actions of the Delegated
Officer that were consistent with the terms of the Plan.
D. COMMITTEE ACTIONS. The Committee may select one of its members
as its chairman and shall hold meetings at such time and places as it may
determine. Acts by a majority of the Committee, acting at a meeting (whether
held in person or by teleconference), or acts reduced to or approved in
writing by all of the members of the Committee, shall be the valid acts of
the Committee. From time to time the Board may increase the size of the
Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill
vacancies however caused, or remove all members of the Committee and
thereafter directly administer the Plan, subject to compliance with paragraph
2A.
3. ELIGIBLE EMPLOYEES AND OTHERS. Stock Rights may be granted to any
employee, consultant or advisor of the Company or any Related Corporation.
However, notwithstanding any other provision herein to the contrary, no
person shall be eligible for a Stock Right under the Plan (i) who holds a
position of vice president or higher of the Company or Related Corporations,
(ii) who would be considered an "officer" or " director" within the meaning
of those terms under Rule 4460(i)(1)(A) of the National Association of
Securities Dealers Manual (or such amended or successor rule), (iii) who
would be considered a person subject to Section 16b of the Exchange Act of
1934, as amended (and regulations promulgated thereunder), or (iv) whose
eligibility would require approval of the Plan by the stockholders of the
Company under any law or regulation or the rules of any stock exchange or
market system upon which the Common Stock may then be listed. If not
inconsistent with any such law, regulation or rule, a Stock Right may be
granted to a person, not previously employed by the Company or a Related
Corporation, as an inducement essential to entering into an employment
contract with the Company or a Related Corporation.
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The Committee may take into consideration a recipient's individual
circumstances in determining whether to grant a Stock Right. Granting a Stock
Right to any individual or entity shall neither entitle that individual or
entity to, nor disqualify him from, participation in any other grant of Stock
Rights.
4. STOCK. The stock subject to Stock Rights shall be the common stock
of the Company (the "Common Stock"), or shares of Common Stock reacquired by
the Company in any manner. The aggregate number of shares which may be issued
pursuant to the Plan is 1,346,840, subject to adjustment as provided in
paragraph 13.
5. GRANTING OF STOCK RIGHTS. Stock Rights may be granted under the Plan
at any time after June 29, 1999 and prior to June 28, 2009. The date of grant
of a Stock Right under the Plan will be the date specified by the Committee
at the time it grants the Stock Right or such date that is specified in the
instrument or agreement evidencing such Stock Right; provided, however, that
such date shall not be prior to the date on which the Committee acts to
approve the grant.
6. MINIMUM OPTION PRICE.
A. PRICE FOR INCENTIVE STOCK OPTIONS. Incentive Stock Options
shall not be granted under this Plan.
B. DETERMINATION OF FAIR MARKET VALUE. "Fair Market Value" shall be
determined as of the last business day for which the prices or quotes
discussed in this sentence are available prior to the date such Option is
granted and shall mean (i) the average (on that date) of the high and low
prices of the Common Stock on the principal national securities exchange on
which the Common Stock is traded, if the Common Stock is then traded on a
national securities exchange; or (ii) the last reported sale price (on that
date) of the Common Stock on the NASDAQ National Market List, if the Common
Stock is not then traded on a national securities exchange; or (iii) the
closing bid price (or average of bid prices) last quoted (on that date) by an
established quotation service for over-the-counter securities, if the Common
Stock is not then traded on a national securities exchange and is not
reported on the NASDAQ National Market List.
7. OPTION DURATION. Subject to earlier termination as provided in
paragraphs 9, 10, and 13, each Option shall expire on the date specified by
or shall have such duration as may be specified by the Committee and set
forth in the original stock option agreement granting such Option, but not
more than ten years from the date of grant. Options shall expire on the date
specified in the agreement granting such Options, subject to extension as
determined by the Committee.
8. EXERCISE OF OPTION. Subject to the provisions of paragraphs 9
through 13, each Option granted under the Plan shall be exercisable as
follows:
A. VESTING. Unless otherwise specified by the Committee, Options
granted to employees shall vest in accordance with the following schedule:
(a) as to 25% of the shares subject to the Option, on the first anniversary
of the date of grant of the Option; and (b) as to the remaining 75% of the
shares subject to the Option, in 36 equal monthly installments (such monthly
vesting dates shall commence one months following such first annual
anniversary on
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the exact day of the month as the date of such first annual anniversary, and
continue at one month intervals thereafter, except with respect to any month
that does not have such date, in which case the date in such month shall be
the last day of such month). The Committee may also specify such other
conditions precedent as it deems appropriate to the exercise of an Option.
B. FULL VESTING OF INSTALLMENTS. Once an installment becomes
exercisable it shall remain exercisable until expiration or termination of
the Option, unless otherwise specified by the Committee.
C. PARTIAL EXERCISE. Each Option or installment may be exercised at
any time or from time to time, in whole or in part, for up to the total
number of shares with respect to which it is then exercisable, provided that
the Committee may specify a certain minimum number or percentage of the
shares issuable upon exercise of any Option that must be purchased upon any
exercise.
D. ACCELERATION OF VESTING. The Committee shall have the right to
accelerate the date of exercise of any installment of any Option, despite the
fact that such acceleration may cause the application of Sections 280G and
4999 of the Code if a Change in Control Event, as defined below in paragraph
13C, occurs.
9. TERMINATION OF EMPLOYMENT. Nothing in the Plan shall be deemed to
give any grantee of any Stock Right the right to be retained in employment or
other service by the Company or any Related Corporation for any period of
time.
Notwithstanding anything contained in this paragraph 9 to the contrary,
the Board or Committee may establish rules in particular stock option
agreements with respect to Misconduct, committed by a grantee of a Stock
Right. Misconduct shall have the same meaning as the term Cause, as defined
below.
In the event that grantee's Service terminates (other than upon death or
Disability or for Cause), the grantee may exercise his or her Option (to the
extent that the grantee was entitled to exercise such Option as of the date
of termination) but only within such period of time ending on the earlier of
(i) the date three (3) months following the termination of the grantee's
Service, or (ii) the expiration of the term of the Option as set forth in the
Option. If, after termination, the grantee does not exercise his or her
Option within the time specified in the Option, the Option shall terminate.
In the event an grantee's Service terminates for Cause, then his or her
Option shall terminate immediately upon such event.
10. DEATH; DISABILITY.
A. DEATH. If an optionee ceases to be employed by the Company and
all Related Corporations by reason of his death, or if the employee dies
within the thirty (30) day period after the employee ceases to be employed by
the Company and all Related Corporations, any Option of his may be exercised,
to the extent of the number of shares with respect to which he could have
exercised it on the date of his death, by his estate, personal representative
or beneficiary who has acquired the Option by will or by the laws of descent
and distribution, at any time prior to the earlier of the specified
expiration date of the Option or one hundred and eighty (180) days from the
date of such optionee's death.
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B. DISABILITY. If an optionee ceases to be employed by the Company
and all Related Corporations by reason of his disability, he shall have the
right to exercise any Option held by him on the date of termination of
employment, to the extent of the number of shares with respect to which he
could have exercised it on that date, at any time prior to the earlier of the
specified expiration date of the Option or one (1) year from the date of the
termination of the optionee's employment. For the purposes of the Plan, the
term "disability" shall mean "permanent and total disability" as defined in
Section 22(e)(3) of the Code or successor statute.
11. ASSIGNABILITY. Except for Options which may be transferred for
estate planning purposes to the extent provided in the instrument or
agreement granting such Options, no Stock Right shall be assignable or
transferable by the grantee except by will or by the laws of descent and
distribution, and during the lifetime of the grantee each Stock Right shall
be exercisable only by him. No Stock Right, nor the right to exercise any
portion thereof, shall be subject to execution, attachment, or similar
process, assignment, or any other alienation or hypothecation. Upon any
attempt so to transfer, assign, pledge, hypothecate, or otherwise dispose of
any Stock Right, or of any right or privilege conferred thereby, contrary to
the provisions thereof or hereof or upon the levy of any attachment or
similar process upon any Stock Right, right or privilege, such Stock Right
and such rights and privileges shall immediately become null and void. The
foregoing shall not be construed to restrict the ability to assign or
transfer shares of Common Stock issued upon the exercise or award of a Stock
Right to the extent that the instrument or agreement granting such Stock
Right permits such assignment or transfer.
12. TERMS AND CONDITIONS OF STOCK RIGHTS. Stock Rights shall be
evidenced by instruments (which need not be identical) in such forms as the
Committee may from time to time approve. Such instruments shall conform to
the terms and conditions set forth in paragraphs 6 through 11 hereof to the
extent applicable and may contain such other provisions as the Committee
deems advisable which are not inconsistent with the Plan. Without limiting
the foregoing, such provisions may include transfer restrictions, rights of
refusal, vesting provisions, and repurchase rights with respect to shares of
Common Stock issuable upon exercise of Stock Rights, and such other
restrictions applicable to shares of Common Stock issuable upon exercise of
Stock Rights as the Committee may deem appropriate. The Committee may from
time to time confer authority and responsibility on one or more of its own
members and/or one or more officers of the Company to execute and deliver
such instruments. The proper officers of the Company are authorized and
directed to take any and all action necessary or advisable from time to time
to carry out the terms of such instruments.
13. ADJUSTMENTS. Upon the occurrence of any of the following events, an
individual's rights with respect to Stock Rights granted to him hereunder
shall be adjusted as hereinafter provided, unless otherwise specifically
provided in the written agreement between the optionee and the Company
relating to such Stock Right:
A. CAPITALIZATION ADJUSTMENTS. If any change is made in the Common
Stock subject to the Plan, or subject to any Stock Rights, without the
receipt of consideration by the Company (through merger, consolidation,
reorganization, recapitalization, reincorporation, stock dividend, dividend
in property other than cash, stock split, liquidating dividend, combination
of shares, exchange of shares, change in corporate structure or other
transaction not involving the receipt of consideration by the Company), the
Plan will be appropriately adjusted in the class(es)
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and maximum number of securities subject to the Plan pursuant to subsection 4
and the outstanding Stock Rights will be appropriately adjusted in the
class(es) and number of securities and price per share of Common Stock
subject to such outstanding Stock Rights. The Board shall make such
adjustments, and its determination shall be final, binding and conclusive.
(The conversion of any convertible securities of the Company shall not be
treated as a transaction "without receipt of consideration" by the Company.)
B. DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Stock Rights shall terminate
immediately prior to such event.
C. CERTAIN CHANGES IN CONTROL. In the event of (i) a sale, lease or
other disposition of all or substantially all of the assets of the Company,
(ii) a merger or consolidation in which the Company is not the surviving
corporation or (iii) a reverse merger in which the Company is the surviving
corporation but the shares of Common Stock outstanding immediately preceding
the merger are converted by virtue of the merger into other property, whether
in the form of securities, cash or otherwise (collectively, a "Change in
Control" or "Corporate Transaction"), then any surviving corporation or
acquiring corporation may assume or continue any Stock Rights outstanding
under the Plan or may substitute similar stock awards (including an award to
acquire the same consideration paid to the shareholders in the transaction
described in this subsection 13C) for those outstanding under the Plan. In
the event any surviving corporation or acquiring corporation refuses to
assume or continue such Stock Rights or to substitute similar stock awards
for those outstanding under the Plan, then with respect to Stock Rights held
by participants whose Service has not terminated, the vesting of such Stock
Rights (and, if applicable, the time during which such Stock Rights may be
exercised) shall be accelerated in full, and the Stock Rights shall terminate
if not exercised (if applicable) at or prior to such event. With respect to
any other Stock Rights outstanding under the Plan, such Stock Rights shall
terminate if not exercised (if applicable) prior to such event.
D. TERMINATION OF SERVICE FOLLOWING A CHANGE IN CONTROL. Unless
otherwise specified in the applicable Stock Rights Agreement, in the event of
the occurrence of a Change in Control and provided that a participant's Stock
Right remains in effect following such Change in Control or is assumed,
continued or substituted for any similar stock award in connection with the
Change in Control, then, if such participant's Service is terminated by the
Company without Cause within thirteen (13) months following the effective
date of the Change in Control, all Stock Rights held by such participant (or
any substituted stock awards) shall, as of the date of such termination of
Service, vest in full and become fully exercisable (if applicable) to the
extent not previously vested or exercisable. Such Stock Rights shall remain
exercisable until they expire in accordance with their terms.
The term "Cause" shall have such meaning as is defined in the grantee's
employment or consulting agreement with the Company or a Related Corporation.
If the grantee does not have an employment or consulting agreement with the
Company or a Related Corporation, or if such agreement does not define the
term "cause," then the term "cause" shall mean: (i) misconduct or dishonesty
that materially adversely affects the Company or a Related Corporation,
including without limitation (A) an act materially in conflict with the
financial interests of the Company or a Related Corporation, (B) an act that
could damage the reputation or customer relations of the Company or a Related
Corporation, (C) an act that could subject the Company or a Related
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Corporation to liability, (D) an act constituting sexual harassment or other
violation of the civil rights of coworkers, (E) failure to obey any lawful
instruction of the Board or any officer of the Company or of a Related
Corporation and (F) failure to comply with, or perform any duty required
under, the terms of any confidentiality, inventions or non-competition
agreement the grantee may have with the Company or a Related Corporation, or
(ii) acts constituting the unauthorized disclosure of any of the trade
secrets or confidential information of the Company or a Related Corporation,
unfair competition with the Company or a Related Corporation or the
inducement of any customer of the Company or a Related Corporation to breach
any contract with the Company or a Related Corporation. The right to exercise
any Option shall be suspended automatically during the pendency of any
investigation by the Board or its designee, and/or any negotiations by the
Board or its designee and the grantee, regarding any actual or alleged act or
omission by the grantee of the type described in this section.
The term "Service" means the performance of services for the Company or
a Related Corporation by an individual. An individual shall be deemed to
remain in Service for so long as such individual renders services to the
Company or a Related Corporation on a periodic basis in the capacity of an
employee or an independent consultant or advisor.
E. SECURITIES ACQUISITION. In the event of an acquisition by any
person, entity or group within the meaning of Section 13(d) or 14(d) of the
Exchange Act of 1934, as amended (the "Exchange Act"), or any comparable
successor provisions (excluding any employee benefit plan, or related trust,
sponsored or maintained by the Company or an Affiliate) of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Exchange
Act, or comparable successor rule) of securities of the Company representing
at least fifty percent (50%) of the combined voting power entitled to vote in
the election of Directors, then with respect to Stock Rights held by
participants whose Service has not terminated, the vesting of such Stock
Rights (and, if applicable, the time during which such Stock Rights may be
exercised) shall be accelerated in full. Such Stock Rights shall remain
exercisable until they expire in accordance with their terms.
F. PARACHUTE PAYMENTS. If any payment or benefit participant would
receive in connection with a Change in Control from the Company or otherwise
("Payment") would (i) constitute a "parachute payment" within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"),
and (ii) but for this sentence, be subject to the excise tax imposed by
Section 4999 of the Code (the "Excise Tax"), then such Payment shall be
reduced to the Reduced Amount. The "Reduced Amount" shall be either (x) the
largest portion of the Payment that would result in no portion of the Payment
being subject to the Excise Tax or (y) the largest portion, up to and
including the total, of the Payment, whichever amount, after taking into
account all applicable federal, state and local employment taxes, income
taxes, and the Excise Tax (all computed at the highest applicable marginal
rate), results in paraticipant's receipt, on an after-tax basis, of the
greater amount of the Payment notwithstanding that all or some portion of the
Payment may be subject to the Excise Tax. If a reduction in payments or
benefits constituting "parachute payments" is necessary so that the Payment
equals the Reduced Amount, reduction shall occur in the following order
unless the participant elects in writing a different order (provided,
however, that such election shall be subject to Company approval if made on
or after the effective date of the Change of Control): reduction of cash
payments; cancellation of accelerated vesting of stock awards; reduction of
employee benefits. In the event
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that acceleration of vesting of stock award compensation is to be reduced,
such acceleration of vesting shall be cancelled in the reverse order of the
date of grant of the participant's stock awards unless the participant elects
in writing a different order for cancellation.
The accounting firm engaged by the Company for general audit purposes as
of the day prior to the effective date of the Change in Control shall perform
the foregoing calculations. If the accounting firm so engaged by the Company
is serving as accountant or auditor for the individual, entity or group
effecting the Change in Control, the Company shall appoint a nationally
recognized accounting firm to make the determinations required hereunder. The
Company shall bear all expenses with respect to the determinations by such
accounting firm required to be made hereunder.
The accounting firm engaged to make the determinations hereunder shall
provide its calculations, together with detailed supporting documentation, to
the Company and participant within fifteen (15) calendar days after the date
on which participant's right to a Payment arises (if requested at that time
by the Company or participant) or at such other time as requested by the
Company or participant. If the accounting firm determines that no Excise Tax
is payable with respect to a Payment, either before or after the application
of the Reduced Amount, it shall furnish the Company and participant with an
opinion reasonably acceptable to participant that no Excise Tax will be
imposed with respect to such Payment. Any good faith determination of the
accounting firm made hereunder shall be final, binding and conclusive upon
the Company and participant.
G. ISSUANCES OF SECURITIES AND NON-STOCK DIVIDENDS. Except as
expressly provided herein, no issuance by the Company of shares of stock of
any class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to,
the number or price of shares subject to Options. No adjustments shall be
made for dividends paid in cash or in property other than securities of the
Company (and, in the case of securities of the Company, such adjustments
shall be made pursuant to the foregoing subparagraph A).
H. FRACTIONAL SHARES. No fractional shares shall be issued under
the Plan, and the optionee shall receive from the Company cash in lieu of
such fractional shares.
I. ADJUSTMENTS. Upon the happening of any of the foregoing events
described in subparagraphs A, B or C above, the class and aggregate number of
shares set forth in paragraph 4 hereof that are subject to Stock Rights which
previously have been or subsequently may be granted under the Plan shall also
be appropriately adjusted to reflect the events described in such
subparagraphs. The Committee or the board of directors of the surviving
entity shall determine the specific adjustments to be made under this
paragraph 13 and its determination shall be conclusive.
If any person or entity owning Common Stock obtained by exercise of a
Stock Right made hereunder receives shares or securities or cash in
connection with a corporate transaction described in this section as a result
of owning such Common Stock, such shares or securities or cash shall be
subject to all of the conditions and restrictions applicable to the Common
Stock
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with respect to which such shares or securities or cash were issued, unless
otherwise determined by the Committee or the Board of Directors of the
surviving entity.
J. POOLING-OF-INTERESTS ACCOUNTING. If the Company proposes to
engage in a Corporate Transaction or Change in Control intended to be
accounted for as a pooling-of-interests, and in the event that the provisions
of this Plan or of any agreement hereunder, or any actions of the Board taken
in connection with such Corporate Transaction or Change in Control, are
determined by the Company's or the surviving entity's independent public
accountants to cause such Change in Control or Corporate Transaction to fail
to be accounted for as a pooling-of-interests, then such provisions or
actions may be amended or rescinded at the election of the Committee, without
the consent of any grantee, to be consistent with pooling-of-interests
accounting treatment for such Corporate Transaction or Change in Control.
14. MEANS OF EXERCISING OPTIONS. An Option (or any part or installment
thereof) shall be exercised by giving written notice to the Company at its
principal office address. Such notice shall identify the Option being
exercised and specify the number of shares as to which such Option is being
exercised, accompanied by full payment of the purchase price therefor either
(a) in United States dollars in cash or by check, or (b) at the discretion of
the Committee, by delivery of an irrevocable and unconditional undertaking,
satisfactory in form and substance to the Company, by a creditworthy broker
to deliver promptly to the Company sufficient funds to pay the exercise
price, or delivery to the Company of a copy of irrevocable and unconditional
instructions, satisfactory in form and substance to the Company, to a
creditworthy broker to deliver promptly to the Company cash or a check
sufficient to pay the exercise price, or (c) at the discretion of the
Committee through delivery of shares of Common Stock having a fair market
value equal as of the date of the exercise to the cash exercise price of the
Option, provided, however, that such shares of Common Stock delivered must
have been acquired by the holder of the Option more than six months prior to
the exercise of the Option, or (d) at the discretion of the Committee, by
delivery of the grantee's personal recourse note bearing interest payable not
less than annually at no less than 100% of the applicable Federal rate, as
defined in Section 1274(d) of the Code, or (e) at the discretion of the
Committee, by any combination of (a), (b) (c) and (d) above. The holder of an
Option shall not have the rights of a shareholder with respect to the shares
covered by his Option until the date of issuance of a stock certificate to
him for the shares subject to the Option. Except as expressly provided above
in paragraph 13 with respect to changes in capitalization and stock
dividends, no adjustment shall be made for dividends or similar rights for
which the record date is before the date such stock certificate is issued.
15. TERM AND AMENDMENT OF PLAN. The Plan shall expire on June 28, 2009
(except as to Options outstanding on that date). The Board may terminate or
amend the Plan in any respect at any time; provided, however that Stock
Rights outstanding on such date shall not be affected by the termination of
the Plan.
16. SECTION 162(m): Section 162(m) does not apply to grants of Stock
Rights under this Plan.
17. AMENDMENT OF STOCK RIGHTS. The Board or Committee may amend, modify
or terminate any outstanding Stock Rights including, but not limited to,
substituting therefor another Stock Right of the same or a different type,
and changing the date of exercise or
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realization, provided, that, except as otherwise provided in paragraphs 9 or
10, the grantee's consent to such action shall be required unless the Board
or Committee determines that the action, taking into account any related
action, would not materially and adversely affect the grantee.
18. APPLICATION OF FUNDS. The proceeds received by the Company from the
sale of shares pursuant to Options granted and Restricted Stock Purchases
authorized under the Plan shall be used for general corporate purposes.
19. GOVERNMENTAL REGULATION. The Company's obligation to sell and
deliver shares of the Common Stock under this Plan is subject to the approval
of any governmental authority required in connection with the authorization,
issuance or sale of such shares.
20. WITHHOLDING OF ADDITIONAL INCOME TAXES. Upon the exercise of a
Non-Qualified Option, the making of a Restricted Stock Purchase for less than
its fair market value, the granting of an Award, or the vesting of restricted
Common Stock acquired on the exercise of a Stock Right hereunder, the
Company, in accordance with Section 3402(a) of the Code, may require the
grantee or purchaser to pay additional withholding taxes in respect of the
amount that is considered compensation includible in such person's gross
income. The Committee in its discretion may condition (i) the exercise of an
Option, (ii) the making of a Restricted Stock Purchase for less than its fair
market value, (iii) the granting of an Award, or (iv) the vesting of
restricted Common Stock acquired by exercising a Stock Right, on the
grantee's payment of such additional withholding taxes.
21. GOVERNING LAW; CONSTRUCTION. The validity and construction of the
Plan and the instruments evidencing Options shall be governed by the laws of
the state of Washington. In construing this Plan, the singular shall include
the plural and the masculine gender shall include the feminine and neuter,
unless the context otherwise requires.
10.
