Exhibit 10.1

AMAZON.COM, INC.

1997 STOCK INCENTIVE PLAN

(as amended and restated )

SECTION 1. PURPOSE

The purpose of the Amazon.com, Inc. 1997 Stock Incentive Plan (the “Plan”) is to
enhance the long-term stockholder value of Amazon.com, Inc., a Delaware
corporation (the “Company”), by offering opportunities to employees, directors,
officers, consultants, agents, advisors and independent contractors of the
Company and its Subsidiaries (as defined in Section 2) to participate in the
Company’s growth and success, and to encourage them to remain in the service of
the Company and its Subsidiaries and to acquire and maintain stock ownership in
the Company.

SECTION 2. DEFINITIONS

For purposes of the Plan, the following terms shall be defined as set forth
below:

 

2.1 Award

“Award” means an award or grant made pursuant to the Plan, including, without
limitation, awards or grants of Options and Stock Awards , or any combination of
the foregoing.

 

2.2 Board

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

 

2.3 Cause

“Cause” means dishonesty, fraud, misconduct, unauthorized use or disclosure of
confidential information or trade secrets, or conviction or confession of a
crime punishable by law (except minor violations), in each case as determined by
the Plan Administrator, and its determination shall be conclusive and binding.

 

2.4 Code

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

 

2.5 Common Stock

“Common Stock” means the common stock, par value $.01 per share, of the Company.

 

2.6 Corporate Transaction

“Corporate Transaction” means any of the following events:

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(a) Consummation of any merger or consolidation of the Company in which the
Company is not the continuing or surviving corporation, or pursuant to which
shares of the Common Stock are converted into cash, securities or other property
(other than a merger of the Company in which the holders of Common Stock
immediately prior to the merger have the same proportionate ownership of capital
stock of the surviving corporation immediately after the merger);

(b) Consummation of any sale, lease, exchange or other transfer in one
transaction or a series of related transactions of all or substantially all of
the Company’s assets other than a transfer of the Company’s assets to a
majority-owned subsidiary corporation (as the term “subsidiary corporation” is
defined in Section 8.3) of the Company; or

(c) Approval by the holders of the Common Stock of any plan or proposal for the
liquidation or dissolution of the Company.

 

2.7 Disability

“Disability” means “permanent and total disability” as that term is defined for
purposes of Section 22(e)(3) of the Code.

 

2.8 Early Retirement

“Early Retirement” means early retirement as that term is defined by the Plan
Administrator from time to time for purposes of the Plan.

 

2.9 Exchange Act

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

2.10 Fair Market Value

The “Fair Market Value” shall be as established in good faith by the Plan
Administrator or (a) if the Common Stock is listed on the Nasdaq National
Market, the average of the high and low per share sales prices for the Common
Stock as reported by the Nasdaq National Market for a single trading day or
(b) if the Common Stock is listed on the New York Stock Exchange or the American
Stock Exchange, the average of the high and low per share sales prices for the
Common Stock as such price is officially quoted in the composite tape of
transactions on such exchange for a single trading day. If there is no such
reported price for the Common Stock for the date in question, then such price on
the last preceding date for which such price exists shall be determinative of
the Fair Market Value.

 

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2.11 Grant Date

“Grant Date” means the date the Plan Administrator adopted the granting
resolution and all conditions precedent to the grant have been satisfied;
provided that conditions to the exercisability or vesting of Awards shall not
defer the Grant Date. If, however, the Plan Administrator designates in a
resolution a later date as the date an Award is to be granted, then such later
date shall be the “Grant Date.”

 

2.12 Incentive Stock Option

“Incentive Stock Option” means an Option to purchase Common Stock granted under
Section 7 with the intention that it qualify as an “incentive stock option” as
that term is defined in Section 422 of the Code.

 

2.13 Nonqualified Stock Option

“Nonqualified Stock Option” means an Option to purchase Common Stock granted
under Section 7 other than an Incentive Stock Option.

 

2.14 Option

“Option” means the right to purchase Common Stock granted under Section 7.

 

2.15 Participant

“Participant” means (a) the person to whom an Award is granted; (b) for a
Participant who has died, the personal representative of the Participant’s
estate, the person(s) to whom the Participant’s rights under the Award have
passed by will or by the applicable laws of descent and distribution, or the
beneficiary designated in accordance with Section 10; or (c) person(s) to whom
an Award has been transferred in accordance with Section 10.

 

2.16 Plan Administrator

“Plan Administrator” means the Board or any committee of the Board designated to
administer the Plan under Section 3.1.

 

2.17 Retirement

“Retirement” means retirement on or after the individual’s normal retirement
date under the Company’s 401(k) plan or other similar successor plan applicable
to salaried employees, unless otherwise defined by the Plan Administrator from
time to time for purposes of the Plan.

 

2.18 Securities Act

“Securities Act” means the Securities Act of 1933, as amended.

 

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2.19 Stock Award

“Stock Award” means shares of Common Stock or units denominated in Common Stock
granted under Section 9, the rights of ownership of which may be subject to
restrictions prescribed by the Plan Administrator.

 

2.20 Subsidiary

“Subsidiary,” except as provided in Section 8.3 in connection with Incentive
Stock Options, means any entity that is directly or indirectly controlled by the
Company or in which the Company has a significant ownership interest, as
determined by the Plan Administrator, and any entity that may become a direct or
indirect parent of the Company.

SECTION 3. ADMINISTRATION

 

3.1 Plan Administrator

The Plan shall be administered by the Board or a committee or committees (which
term includes subcommittees) appointed by, and consisting of two or more members
of, the Board. If and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, the Board shall consider in
selecting the Plan Administrator and the membership of any committee acting as
Plan Administrator, with respect to any persons subject or likely to become
subject to Section 16 of the Exchange Act, the provisions regarding (a) “outside
directors” as contemplated by Section 162(m) of the Code and (b) “nonemployee
directors” as contemplated by Rule 16b-3 under the Exchange Act. The Board may
delegate the responsibility for administering the Plan with respect to
designated classes of eligible persons to different committees consisting of one
or more members of the Board, subject to such limitations as the Board deems
appropriate. Committee members shall serve for such term as the Board may
determine, subject to removal by the Board at any time. To the extent consistent
with applicable law, the Plan Administrator may authorize one or more officers
of the Company to grant Awards to designated classes of eligible persons, within
the limits specifically prescribed by the Plan Administrator.

 

3.2 Administration and Interpretation by the Plan Administrator

Except for the terms and conditions explicitly set forth in the Plan, the Plan
Administrator shall have exclusive authority, in its discretion, to determine
all matters relating to Awards under the Plan, including the selection of
individuals to be granted Awards, the type of Awards, the number of shares of
Common Stock subject to an Award, all terms, conditions, restrictions and
limitations, if any, of an Award and the terms of any instrument that evidences
the Award. The Plan Administrator shall also have exclusive authority to
interpret the Plan and may from time to time adopt, and change, rules and
regulations of general application for the Plan’s administration. The Plan
Administrator’s interpretation of the Plan and its rules and regulations, and
all actions taken and determinations made by the Plan Administrator pursuant to
the Plan, shall be conclusive and binding on all parties involved or affected.
The Plan Administrator may delegate administrative duties to such of the
Company’s officers as it so determines.

 

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SECTION 4. STOCK SUBJECT TO THE PLAN

 

4.1 Authorized Number of Shares

Subject to adjustment from time to time as provided in Section 11.1, the number
of shares of Common Stock that shall be available for issuance under the Plan
shall be:

(a) 80 million shares plus;

(b) an annual increase to be added as of the first day of the Company’s fiscal
year beginning in 2001 and ending with a final increase on January 1, 2010,
equal to (i) the lesser of (a) 4% of the outstanding common shares of the
Company as of the end of the immediately preceding fiscal year and
(b) 15 million shares, or (ii) a lesser amount determined by the Plan
Administrator; provided that any shares from any such increases in previous
years that are not actually issued shall be added to the aggregate number of
shares available for issuance under the Plan; plus

(c) any authorized shares of Common Stock that, as of February 26, 1997, were
available for issuance under the Company’s 1994 Stock Option Plan (the “Prior
Plan”) (or that thereafter become available for issuance under the Prior Plan in
accordance with its terms as in effect on such date), up to an aggregate maximum
of 21,025,075 shares.

(d) Notwithstanding the foregoing, the maximum number of shares that may be
issued pursuant to Options intended to qualify as Incentive Stock Options shall
be 251,025,075

Shares issued under the Plan shall be drawn from authorized and unissued shares
or shares now held or subsequently acquired by the Company as treasury shares.

 

4.2 Limitations

Subject to adjustment from time to time as provided in Section 11.1, not more
than 4,500,000 shares of Common Stock may be made subject to Awards under the
Plan to any individual in the aggregate in any one fiscal year of the Company,
except that the Company may make additional one-time grants of up to
18 million shares to newly hired or newly promoted individuals, such limitation
to be applied in a manner consistent with the requirements of, and only to the
extent required for compliance with, the exclusion from the limitation on
deductibility of compensation under Section 162(m) of the Code.

 

4.3 Reuse of Shares

Any shares of Common Stock that have been made subject to an Award that cease to
be subject to the Award (other than by reason of exercise or payment of the
Award to the extent it is exercised for or settled in shares), and/or shares of
Common Stock subject to repurchase or forfeiture which are subsequently
reacquired by the Company, shall again be available for issuance in connection
with future grants of Awards under the Plan; provided, however, that for
purposes of Section 4.2, any such shares shall be counted in accordance with the
requirements of Section 162(m) of the Code.

 

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SECTION 5. ELIGIBILITY

Awards may be granted under the Plan to those officers, directors and employees
of the Company and its Subsidiaries as the Plan Administrator from time to time
selects. Awards may also be granted to consultants, agents, advisors and
independent contractors who provide services to the Company and its
Subsidiaries.

SECTION 6. AWARDS

 

6.1 Form and Grant of Awards

The Plan Administrator shall have the authority, in its sole discretion, to
determine the type or types of Awards to be made under the Plan. Such Awards may
include, but are not limited to, Incentive Stock Options, Nonqualified Stock
Options and Stock Awards. Awards may be granted singly or in combination.

 

6.2 Settlement of Awards

The Company may settle Awards through the delivery of shares of Common Stock,
cash payments, the granting of replacement Awards or any combination thereof as
the Plan Administrator shall determine. Any Award settlement, including payment
deferrals, may be subject to such conditions, restrictions and contingencies as
the Plan Administrator shall determine. The Plan Administrator may permit or
require the deferral of any Award payment, subject to such rules and procedures
as it may establish, which may include provisions for the payment or crediting
of interest, or dividend equivalents, including converting such credits into
deferred stock equivalents. The Plan Administrator may at any time offer to buy
out, for a payment in cash or Common Stock, an Award previously granted based on
such terms and conditions as the Plan Administrator shall establish and
communicate to the Participant at the time such offer is made.

 

6.3 Acquired Company Option Awards

Notwithstanding anything in the Plan to the contrary, the Plan Administrator may
grant Awards under the Plan in substitution for awards issued under other plans,
or assume under the Plan awards issued under other plans, if the other plans are
or were plans of other acquired entities (“Acquired Entities”) (or the parent of
an Acquired Entity) and the new Award is substituted, or the old award is
assumed, by reason of a merger, consolidation, acquisition of property or of
stock, reorganization or liquidation (the “Acquisition Transaction”). In the
event that a written agreement pursuant to which the Acquisition Transaction is
completed is approved by the Board and said agreement sets forth the terms and
conditions of the substitution for or assumption of outstanding awards of the
Acquired Entity, said terms and conditions shall be deemed to be the action of
the Plan Administrator without any further action by the Plan Administrator,
except as may be required for compliance with Rule 16b-3 under the Exchange Act,
and the persons holding such awards shall be deemed to be Participants.

 

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SECTION 7. TERMS AND CONDITIONS OF OPTIONS

 

7.1 Grant of Options

The Plan Administrator is authorized under the Plan, in its sole discretion, to
issue Options as Incentive Stock Options or as Nonqualified Stock Options, which
shall be appropriately designated.

 

7.2 Option Exercise Price

The exercise price for shares purchased under an Option shall be as determined
by the Plan Administrator, but shall not be less than 100% of the Fair Market
Value of the Common Stock on the Grant Date with respect to Incentive Stock
Options.

 

7.3 Term of Options

The term of each Option shall be as established by the Plan Administrator or, if
not so established, shall be 10 years from the Grant Date.

 

7.4 Exercise and Vesting of Options

The Plan Administrator shall establish and set forth in each instrument that
evidences an Option the time at which, or the installments in which, the Option
shall vest and become exercisable, which provisions may be waived or modified by
the Plan Administrator at any time. If not otherwise established in the
instrument evidencing the Option, the Option will vest and become exercisable
according to the following schedule, which may be waived or modified by the Plan
Administrator at any time:

 

Period of Participant’s Continuous Employment or

Service With the Company or Its Subsidiaries

From the Grant Date

  

Percent of Total Option

That Is Vested and Exercisable

After 1 year

   20%

After 2 years

   40%

Each three-month period completed thereafter

   An additional 5%

After 5 years

   100%

To the extent that an Option has become exercisable, the Option may be exercised
from time to time by written notice to the Company, in accordance with
procedures established by the Plan Administrator, setting forth the number of
shares with respect to which the Option is being exercised and accompanied by
payment in full as described in Section 7.5. The Plan Administrator may
determine at any time that an Option may not be exercised as to less than
100 shares at any one time for vested shares and any number in its discretion
for unvested shares (or the lesser number of remaining shares covered by the
Option).

 

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7.5 Payment of Exercise Price

The exercise price for shares purchased under an Option shall be paid in full to
the Company by delivery of consideration equal to the product of the Option
exercise price and the number of shares purchased. Such consideration must be
paid in cash or by check or, unless the Plan Administrator in its sole
discretion determines otherwise, either at the time the Option is granted or at
any time before it is exercised, a combination of cash and/or check (if any) and
one or both of the following alternative forms: (a) tendering (either actually
or, if and so long as the Common Stock is registered under Section 12(b) or
12(g) of the Exchange Act, by attestation) Common Stock already owned by the
Participant for at least six months (or any shorter period necessary to avoid a
charge to the Company’s earnings for financial reporting purposes) having a Fair
Market Value on the day prior to the exercise date equal to the aggregate Option
exercise price or (b) if and so long as the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act, delivery of a properly executed
exercise notice, together with irrevocable instructions, to (i) a brokerage firm
designated by the Company to deliver promptly to the Company the aggregate
amount of sale or loan proceeds to pay the Option exercise price and any
withholding tax obligations that may arise in connection with the exercise and
(ii) the Company to deliver the certificates for such purchased shares directly
to such brokerage firm, all in accordance with the regulations of the Federal
Reserve Board. In addition, the exercise price for shares purchased under an
Option may be paid, either singly or in combination with one or more of the
alternative forms of payment authorized by this Section 7.5, by (y) a promissory
note delivered pursuant to Section 13 or (z) such other consideration as the
Plan Administrator may permit.

 

7.6 Post-Termination Exercises

The Plan Administrator shall establish and set forth in each instrument that
evidences an Option whether the Option will continue to be exercisable, and the
terms and conditions of such exercise, if a Participant ceases to be employed
by, or to provide services to, the Company or its Subsidiaries, which provisions
may be waived or modified by the Plan Administrator at any time. If not so
established in the instrument evidencing the Option, the Option will be
exercisable according to the following terms and conditions, which may be waived
or modified by the Plan Administrator at any time.

In case of termination of the Participant’s employment or services other than by
reason of death or Cause, the Option shall be exercisable, to the extent of the
number of shares vested at the date of such termination, only (a) within one
year if the termination of the Participant’s employment or services is
coincident with Retirement, Early Retirement at the Company’s request or
Disability or (b) within three months after the date the Participant ceases to
be an employee, director, officer, consultant, agent, advisor or independent
contractor of the Company or a Subsidiary if termination of the Participant’s
employment or services is for any reason other than Retirement, Early Retirement
at the Company’s request or Disability, but in no event later than the remaining
term of the Option. Any Option exercisable at the time of the Participant’s
death may be exercised, to the extent of the number of shares vested at the date
of the Participant’s death, by the personal representative of the Participant’s
estate, the person(s) to whom the Participant’s rights under the Option have
passed by will or the applicable laws of

 

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descent and distribution or the beneficiary designated pursuant to Section 10 at
any time or from time to time within one year after the date of death, but in no
event later than the remaining term of the Option. Any portion of an Option that
is not vested on the date of termination of the Participant’s employment or
services shall terminate on such date, unless the Plan Administrator determines
otherwise. In case of termination of the Participant’s employment or services
for Cause, the Option shall automatically terminate upon first notification to
the Participant of such termination, unless the Plan Administrator determines
otherwise. If a Participant’s employment or services with the Company are
suspended pending an investigation of whether the Participant shall be
terminated for Cause, all the Participant’s rights under any Option likewise
shall be suspended during the period of investigation.

With respect to employees, unless the Plan Administrator at any time determines
otherwise, “termination of the Participant’s employment or services” for
purposes of the Plan (including without limitation this Section 7 and
Section 14) shall mean any reduction in the Participant’s regular hours of
employment to less than thirty (30) hours per week. A transfer of employment or
services between or among the Company and its Subsidiaries shall not be
considered a termination of employment or services. The effect of a
Company-approved leave of absence on the terms and conditions of an Option shall
be determined by the Plan Administrator, in its sole discretion.

SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS

To the extent required by Section 422 of the Code, Incentive Stock Options shall
be subject to the following additional terms and conditions:

 

8.1 Dollar Limitation

To the extent the aggregate Fair Market Value (determined as of the Grant Date)
of Common Stock with respect to which Incentive Stock Options are exercisable
for the first time during any calendar year (under the Plan and all other stock
option plans of the Company) exceeds $100,000, such portion in excess of
$100,000 shall be subject to delayed exercisability or treated as a Nonqualified
Stock Option as set forth by the Plan Administrator in the agreement(s)
evidencing the Option. In the event the Participant holds two or more such
Options that become exercisable for the first time in the same calendar year,
such limitation shall be applied on the basis of the order in which such Options
are granted.

 

8.2 10% Stockholders

If an individual owns more than 10% of the total voting power of all classes of
the Company’s stock, then the exercise price per share of an Incentive Stock
Option shall not be less than 110% of the Fair Market Value of the Common Stock
on the Grant Date and the Option term shall not exceed five years. The
determination of 10% ownership shall be made in accordance with Section 422 of
the Code.

 

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8.3 Eligible Employees

Individuals who are not employees of the Company or one of its parent
corporations or subsidiary corporations may not be granted Incentive Stock
Options. For purposes of this Section 8.3, “parent corporation” and “subsidiary
corporation” shall have the meanings attributed to those terms for purposes of
Section 422 of the Code.

 

8.4 Term

The term of an Incentive Stock Option shall not exceed 10 years.

 

8.5 Exercisability

To qualify for Incentive Stock Option tax treatment, an Option designated as an
Incentive Stock Option must be exercised within three months after termination
of employment for reasons other than death, except that, in the case of
termination of employment due to Disability, such Option must be exercised
within one year after such termination. Disability shall be deemed to have
occurred on the first day after the Company has furnished its opinion of
Disability to the Plan Administrator. Employment shall not be deemed to continue
beyond the first 90 days of a leave of absence unless the Participant’s
reemployment rights are guaranteed by statute or contract.

 

8.6 Taxation of Incentive Stock Options

In order to obtain certain tax benefits afforded to Incentive Stock Options
under Section 422 of the Code, the Participant must hold the shares issued upon
the exercise of an Incentive Stock Option for two years after the Grant Date of
the Incentive Stock Option and one year from the date of exercise. A Participant
may be subject to the alternative minimum tax at the time of exercise of an
Incentive Stock Option. The Plan Administrator may require a Participant to give
the Company prompt notice of any disposition of shares acquired by the exercise
of an Incentive Stock Option prior to the expiration of such holding periods.

 

8.7 Promissory Notes

The amount of any promissory note delivered pursuant to Section 13 in connection
with an Incentive Stock Option shall bear interest at a rate specified by the
Plan Administrator but in no case less than the rate required to avoid
imputation of interest (taking into account any exceptions to the imputed
interest rules) for federal income tax purposes.

SECTION 9. STOCK AWARDS

 

9.1 Grant of Stock Awards

The Plan Administrator is authorized to make Awards of Common Stock or Awards
denominated in units of Common Stock on such terms and conditions and subject to
such restrictions, if any (which may be based on continuous service with the
Company or the achievement of performance goals related to profits or loss,
revenue or profit growth or loss

 

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reduction, profit or loss related return ratios, other balance sheet or income
statement targets or ratios, market share, project completion, operational or
productivity efficiency gains, cash flow, share price appreciation or total
stockholder return, where such goals may be stated in absolute terms or relative
to comparison companies), as the Plan Administrator shall determine, in its sole
discretion, which terms, conditions and restrictions shall be set forth in the
instrument evidencing the Award. The terms, conditions and restrictions that the
Plan Administrator shall have the power to determine shall include, without
limitation, the manner in which shares subject to Stock Awards are held during
the periods they are subject to restrictions and the circumstances under which
forfeiture of the Stock Award shall occur by reason of termination of the
Participant’s employment or service relationship.

 

9.2 Issuance of Shares

Upon the satisfaction of any terms, conditions and restrictions prescribed in
respect to a Stock Award, or upon the Participant’s release from any terms,
conditions and restrictions of a Stock Award, as determined by the Plan
Administrator, the Company shall release, as soon as practicable, to the
Participant or, in the case of the Participant’s death, to the personal
representative of the Participant’s estate or as the appropriate court directs,
the appropriate number of shares of Common Stock.

 

9.3 Waiver of Restrictions

Notwithstanding any other provisions of the Plan, the Plan Administrator may, in
its sole discretion, waive the forfeiture period and any other terms, conditions
or restrictions on any Stock Award under such circumstances and subject to such
terms and conditions as the Plan Administrator shall deem appropriate; provided,
however, that the Plan Administrator may not adjust performance goals for any
Stock Award intended to be exempt under Section 162(m) of the Code for the year
in which the Stock Award is settled in such a manner as would increase the
amount otherwise payable to a Participant.

SECTION 10. ASSIGNABILITY

No Awards granted under the Plan or any interest therein may be assigned,
pledged or transferred by the Participant other than by will or by the
applicable laws of descent and distribution, and, during the Participant’s
lifetime, such Award may be exercised only by the Participant or a permitted
assignee or transferee of the Participant (as provided below). Notwithstanding
the foregoing, and to the extent permitted by Section 422 of the Code, the Plan
Administrator, in its sole discretion, may permit such assignment, transfer and
exercisability and may permit a Participant to designate a beneficiary who may
exercise the Award or receive payment under the Award after the Participant’s
death; provided, however, that any Award so assigned or transferred shall be
subject to all the same terms and conditions contained in the instrument
evidencing the Award.

 

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SECTION 11. ADJUSTMENTS

 

11.1 Adjustment of Shares

In the event that, at any time or from time to time, a stock dividend, stock
split, spin-off, combination or exchange of shares, recapitalization, merger,
consolidation, distribution to stockholders other than a normal cash dividend,
or other change in the Company’s corporate or capital structure results in
(a) the outstanding shares, or any securities exchanged therefor or received in
their place, being exchanged for a different number or class of securities of
the Company or of any other corporation or (b) new, different or additional
securities of the Company or of any other corporation being received by the
holders of shares of Common Stock of the Company, then the Plan Administrator
shall make proportional adjustments in (i) the maximum number and kind of
securities subject to the Plan as set forth in Sections 4.1(a), (b) and (c);
(ii) the maximum number and kind of securities that may be issued as ISOs under
the Plan as set forth in Section 4.1(d); (iii) the maximum number and kind of
securities that may be made subject to Awards to any individual as set forth in
Section 4.2, and (iv) the number and kind of securities that are subject to any
outstanding Award and the per share price of such securities, without any change
in the aggregate price to be paid therefor. The determination by the Plan
Administrator as to the terms of any of the foregoing adjustments shall be
conclusive and binding.

 

11.2 Corporate Transaction

11.2.1 Options

Except as otherwise provided in the instrument that evidences the Option, in the
event of a Corporate Transaction, the Plan Administrator shall determine whether
provision will be made in connection with the Corporate Transaction for an
appropriate assumption of the Options theretofore granted under the Plan (which
assumption may be effected by means of a payment to each Participant (by the
Company or any other person or entity involved in the Corporate Transaction), in
exchange for the cancellation of the Options held by such Participant, of the
difference between the then Fair Market Value of the aggregate number of shares
of Common Stock then subject to such Options and the aggregate exercise price
that would have to be paid to acquire such shares) or for substitution of
appropriate new options covering stock of a successor corporation to the Company
or stock of an affiliate of such successor corporation. If the Plan
Administrator determines that such an assumption or substitution will be made,
the Plan Administrator shall give notice of such determination to the
Participants, and the provisions of such assumption or substitution, and any
adjustments made (i) to the number and kind of shares subject to the outstanding
Options (or to the options in substitution therefor), (ii) to the exercise
prices, and/or (iii) to the terms and conditions of the stock options, shall be
binding on the Participants. Any such determination shall be made in the sole
discretion of the Plan Administrator and shall be final, conclusive and binding
on all Participants. If the Plan Administrator, in its sole discretion,
determines that no such assumption or substitution will be made, the Plan
Administrator shall give notice of such determination to the Participants, and
each Option that is at the time outstanding shall automatically accelerate so
that each such Option shall, immediately prior to the specified effective date
for the Corporate Transaction, become

 

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100% vested and exercisable, except that such acceleration will not occur if, in
the opinion of the Company’s outside accountants, it would render unavailable
“pooling of interest” accounting for a Corporate Transaction that would
otherwise qualify for such accounting treatment. All such Options shall
terminate and cease to remain outstanding immediately following the consummation
of the Corporate Transaction, except to the extent assumed by the successor
corporation or an affiliate thereof.

 

  11.2.2  Stock Awards

Except as otherwise provided in the instrument that evidences the Award, in the
event of a Corporate Transaction, the vesting of shares subject to Stock Awards
shall accelerate, and the forfeiture provisions to which such shares are subject
shall lapse, if and to the same extent that the vesting of outstanding Options
accelerates in connection with the Corporate Transaction. If unvested Options
are to be assumed, continued or substituted by a successor corporation without
acceleration upon the occurrence of a Corporate Transaction, the forfeiture
provisions to which such Stock Awards are subject will continue with respect to
shares of the successor corporation that may be issued in exchange for such
shares subject to Stock Awards.

 

11.3 Further Adjustment of Awards

Subject to Section 11.2, the Plan Administrator shall have the discretion,
exercisable at any time before a sale, merger, consolidation, reorganization,
liquidation or change in control of the Company, as defined by the Plan
Administrator, to take such further action as it determines to be necessary or
advisable, and fair and equitable to Participants, with respect to Awards. Such
authorized action may include (but shall not be limited to) establishing,
amending or waiving the type, terms, conditions or duration of, or restrictions
on, Awards so as to provide for earlier, later, extended or additional time for
exercise and other modifications, and the Plan Administrator may take such
actions with respect to all Participants, to certain categories of Participants
or only to individual Participants. The Plan Administrator may take such action
before or after granting Awards to which the action relates and before or after
any public announcement with respect to such sale, merger, consolidation,
reorganization, liquidation or change in control that is the reason for such
action.

 

11.4 Limitations

The grant of Awards will in no way affect the Company’s right to adjust,
reclassify, reorganize or otherwise change its capital or business structure or
to merge, consolidate, dissolve, liquidate or sell or transfer all or any part
of its business or assets.

 

11.5 Fractional Shares

In the event of any adjustment in the number of shares covered by any Award,
each such Award shall cover only the number of full shares resulting from such
adjustment.

 

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SECTION 12. WITHHOLDING

The Company may require the Participant to pay to the Company the amount of any
withholding taxes that the Company is required to withhold with respect to the
grant, vesting or exercise of any Award. Subject to the Plan and applicable law,
the Plan Administrator may, in its sole discretion, permit the Participant to
satisfy withholding obligations, in whole or in part, (a) by paying cash, (b) by
electing to have the Company withhold shares of Common Stock (up to the minimum
required federal withholding rate), or (c) by transferring shares of Common
Stock to the Company (already owned by the Participant for the period necessary
to avoid a charge to the Company’s earnings for financial reporting purposes),
in such amounts as are equivalent to the Fair Market Value of the withholding
obligation. The Company shall have the right to withhold from any shares of
Common Stock issuable pursuant to an Award or from any cash amounts otherwise
due or to become due from the Company to the Participant an amount equal to such
taxes. The Company may also deduct from any Award any other amounts due from the
Participant to the Company or a Subsidiary.

SECTION 13. LOANS, INSTALLMENT PAYMENTS AND LOAN GUARANTEES

To assist a Participant (including a Participant who is an officer or a director
of the Company) in acquiring shares of Common Stock pursuant to an Award granted
under the Plan, the Plan Administrator, in its sole discretion, may authorize,
either at the Grant Date or at any time before the acquisition of Common Stock
pursuant to the Award, (a) the extension of a full-recourse loan to the
Participant by the Company, (b) the payment by the Participant of the purchase
price, if any, of the Common Stock in installments, or (c) the guarantee by the
Company of a full-recourse loan obtained by the Participant from a third party.
Subject to the foregoing, the terms of any loans, installment payments or loan
guarantees, including the interest rate and terms of repayment, will be subject
to the Plan Administrator’s discretion. The maximum credit available is the
purchase price, if any, of the Common Stock acquired, plus the maximum federal
and state income and employment tax liability that may be incurred in connection
with the acquisition.

SECTION 14. REPURCHASE RIGHTS; ESCROW

 

14.1 Repurchase Rights

The Plan Administrator shall have the discretion to authorize the issuance of
unvested shares of Common Stock pursuant to the exercise of an Option. In the
event of termination of the Participant’s employment or services, all shares of
Common Stock issued upon exercise of an Option which are unvested at the time of
cessation of employment or services shall be subject to repurchase at the
exercise price paid for such shares. The terms and conditions upon which such
repurchase right shall be exercisable (including the period and procedure for
exercise) shall be established by the Plan Administrator and set forth in the
agreement evidencing such right.

All of the Company’s outstanding repurchase rights under this Section 14.1 are
assignable by the Company at any time and shall remain in full force and effect
in the event of a Corporate Transaction; provided that if the vesting of Options
is accelerated pursuant to Section 11.2, the repurchase rights under this
Section 14.1 shall terminate and all shares subject to such terminated rights
shall immediately vest in full.

 

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The Plan Administrator shall have the discretionary authority, exercisable
either before or after the Participant’s cessation of employment or services, to
cancel the Company’s outstanding repurchase rights with respect to one or more
shares purchased or purchasable by the Participant under an Option and thereby
accelerate the vesting of such shares in whole or in part at any time.

 

14.2 Escrow

To ensure that shares of Common Stock acquired pursuant to an Award that are
subject to any repurchase or forfeiture right and/or security for any promissory
note will be available for repurchase or forfeiture, the Plan Administrator may
require the Participant to deposit the certificate or certificates evidencing
such shares with an agent designated by the Plan Administrator under the terms
and conditions of escrow and security agreements approved by the Plan
Administrator. If the Plan Administrator does not require such deposit as a
condition of exercise of an Option or grant of a Stock Award, the Plan
Administrator reserves the right at any time to require the Participant to so
deposit the certificate or certificates in escrow. The Company shall bear the
expenses of the escrow. The Company, at its discretion, may in lieu of issuing a
stock certificate for such shares, make a book entry credit in the Company’s
stock ledger to evidence the issuance of such shares.

As soon as practicable after the expiration of any repurchase or forfeiture
rights, and after full repayment of any promissory note secured by the shares in
escrow, the agent shall deliver to the Participant the shares no longer subject
to such restrictions and no longer security for any promissory note.

In the event shares held in escrow are subject to the Company’s exercise of a
repurchase or forfeiture right, the notices required to be given to the
Participant shall be given to the agent and any payment required to be given to
the Participant shall be given to the agent. Within 30 days after payment by the
Company, the agent shall deliver the shares which the Company has purchased to
the Company and shall deliver the payment received from the Company to the
Participant.

In the event of any stock dividend, stock split or consolidation of shares or
any like capital adjustment of any of the outstanding securities of the Company,
any and all new, substituted or additional securities or other property to which
the Participant is entitled by reason of ownership of shares acquired upon
exercise of an Option or grant of a Stock Award shall be subject to any
repurchase or forfeiture rights, and/or security for any promissory note with
the same force and effect as the shares subject to such repurchase or forfeiture
rights and/or security interest immediately before such event.

 

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SECTION 15. AMENDMENT AND TERMINATION OF PLAN

 

15.1 Amendment of Plan

The Plan may be amended only by the Board in such respects as it shall deem
advisable; however, to the extent required for compliance with Section 422 of
the Code or any applicable law or regulation, stockholder approval will be
required for any amendment that will (a) increase the total number of shares
available for issuance under the Plan, (b) modify the class of persons eligible
to receive Options, or (c) otherwise require stockholder approval under any
applicable law or regulation.

 

15.2 Termination of Plan

The Board may suspend or terminate the Plan at any time. The Plan will have no
fixed expiration date; provided, however, that no Incentive Stock Options may be
granted more than 10 years after the later of (a) the Plan’s adoption by the
Board and (b) the adoption by the Board of any amendment to the Plan that
constitutes the adoption of a new plan for purposes of Section 422 of the Code.

 

15.3 Consent of Participant

The amendment or termination of the Plan shall not, without the consent of the
Participant, impair or diminish any rights or obligations under any Award
theretofore granted under the Plan.

Any change or adjustment to an outstanding Incentive Stock Option shall not,
without the consent of the Participant, be made in a manner so as to constitute
a “modification” that would cause such Incentive Stock Option to fail to
continue to qualify as an Incentive Stock Option.

SECTION 16. GENERAL

 

16.1 Evidence of Awards

Awards granted under the Plan shall be evidenced by a written agreement that
shall contain such terms, conditions, limitations and restrictions as the Plan
Administrator shall deem advisable and that are not inconsistent with the Plan.

 

16.2 Continued Employment or Services; Rights in Awards

None of the Plan, participation in the Plan or any action of the Plan
Administrator taken under the Plan shall be construed as giving any person any
right to be retained in the employ of the Company or limit the Company’s right
to terminate the employment or services of any person.

 

16.3 Registration

The Company shall be under no obligation to any Participant to register for
offering or resale or to qualify for exemption under the Securities Act, or to
register or qualify under state

 

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securities laws, any shares of Common Stock, security or interest in a security
paid or issued under, or created by, the Plan, or to continue in effect any such
registrations or qualifications if made. The Company may issue certificates for
shares with such legends and subject to such restrictions on transfer and
stop-transfer instructions as counsel for the Company deems necessary or
desirable for compliance by the Company with federal and state securities laws.

Inability of the Company to obtain, from any regulatory body having
jurisdiction, the authority deemed by the Company’s counsel to be necessary for
the lawful issuance and sale of any shares hereunder or the unavailability of an
exemption from registration for the issuance and sale of any shares hereunder
shall relieve the Company of any liability in respect of the nonissuance or sale
of such shares as to which such requisite authority shall not have been
obtained.

As a condition to the exercise of an Award, the Company may require the
Participant to represent and warrant at the time of any such exercise or receipt
that such shares are being purchased or received only for the Participant’s own
account and without any present intention to sell or distribute such shares if,
in the opinion of counsel for the Company, such a representation is required by
any relevant provision of the aforementioned laws. At the option of the Company,
a stop-transfer order against any such shares may be placed on the official
stock books and records of the Company, and a legend indicating that such shares
may not be pledged, sold or otherwise transferred, unless an opinion of counsel
is provided (concurred in by counsel for the Company) stating that such transfer
is not in violation of any applicable law or regulation, may be stamped on stock
certificates to ensure exemption from registration. The Plan Administrator may
also require such other action or agreement by the Participant as may from time
to time be necessary to comply with the federal and state securities laws.

 

16.4 No Rights as a Stockholder

No Option or Stock Award denominated in units shall entitle the Participant to
any dividend, voting or other right of a stockholder unless and until the date
of issuance under the Plan of the shares that are the subject of such Award,
free of all applicable restrictions.

 

16.5 Compliance With Laws and Regulations

Notwithstanding anything in the Plan to the contrary, the Board, in its sole
discretion, may bifurcate the Plan so as to restrict, limit or condition the use
of any provision of the Plan to Participants who are officers or directors
subject to Section 16 of the Exchange Act without so restricting, limiting or
conditioning the Plan with respect to other Participants. Additionally, in
interpreting and applying the provisions of the Plan, any Option granted as an
Incentive Stock Option pursuant to the Plan shall, to the extent permitted by
law, be construed as an “incentive stock option” within the meaning of
Section 422 of the Code.

 

16.6 No Trust or Fund

The Plan is intended to constitute an “unfunded” plan. Nothing contained herein
shall require the Company to segregate any monies or other property, or shares
of Common Stock, or to create any trusts, or to make any special deposits for
any immediate or deferred amounts payable to any Participant, and no Participant
shall have any rights that are greater than those of a general unsecured
creditor of the Company.

 

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16.7 Severability

If any provision of the Plan or any Option is determined to be invalid, illegal
or unenforceable in any jurisdiction, or as to any person, or would disqualify
the Plan or any Option under any law deemed applicable by the Plan
Administrator, such provision shall be construed or deemed amended to conform to
applicable laws, or, if it cannot be so construed or deemed amended without, in
the Plan Administrator’s determination, materially altering the intent of the
Plan or the Option, such provision shall be stricken as to such jurisdiction,
person or Option, and the remainder of the Plan and any such Option shall remain
in full force and effect.

 

16.8 Participants in Foreign Countries

The Plan Administrator shall have the authority to adopt such modifications,
procedures and subplans as may be necessary or desirable, after consideration of
the provisions of the laws of foreign countries in which the Company or its
Subsidiaries may operate, to ensure the viability of the benefits from Awards
granted to Participants employed in such countries and to meet the objectives of
the Plan.

 

16.9 Choice of Law

The Plan and all determinations made and actions taken pursuant hereto, to the
extent not otherwise governed by the laws of the United States, shall be
governed by the laws of the State of Washington without giving effect to
principles of conflicts of laws.

SECTION 17. EFFECTIVE DATE

The Plan’s effective date is the date on which it is adopted by the Board, so
long as it is approved by the Company’s stockholders at any time within 12
months of such adoption.

 

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