Exhibit 10.1

AMENDED AND RESTATED

LITHIA MOTORS, INC.

2009 EMPLOYEE STOCK PURCHASE PLAN

Amended and Restated Effective as of April 25, 2019

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TABLE OF CONTENTS

 
 
 
 
Page
 
 
 
 
 
1.
 
PURPOSE
1
2.
 
DEFINITIONS
1
 
 
Account
1
 
 
Benefits Representative
1
 
 
Board
1
 
 
Code
1
 
 
Committee
1
 
 
Common Stock
1
 
 
Company
1
 
 
Effective Date
2
 
 
Employee
2
 
 
Employer
2
 
 
Employment
2
 
 
Entry Date
2
 
 
Fiscal Quarter
2
 
 
Participant
3
 
 
Plan
3
 
 
Stock
3
 
 
Subsidiary
3
 
 
Total Pay
3
3.
 
ELIGIBILITY
3
 
 
3.1
Eligibility Requirements
3
 
 
3.2
Limitations on Eligibility
3
4.
 
SHARES SUBJECT TO THE PLAN
4
5.
 
PARTICIPATION
4
 
 
5.1
Payroll Deduction Authorization
4
 
 
5.2
Continuing Effect of Payroll Deduction Authorization
5
 
 
5.3
Employment and Shareholders Rights
5
6.
 
PAYROLL DEDUCTIONS
5
 
 
6.1
Participant Contributions by Payroll Deductions
5

 
i
 

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TABLE OF CONTENTS
(continued)

 
 
 
 
Page
 
 
 
 
 
 
 
6.2
No Other Participant Contributions Permitted
5
 
 
6.3
Changes in Participant Contributions
5
7.
 
GRANTING OF OPTION TO PURCHASE STOCK
5
 
 
7.1
Quarterly Grant of Options
6
 
 
7.2
Option Price
6
8.
 
EXERCISE OF OPTION
6
 
 
8.1
Automatic Exercise of Options
6
 
 
8.2
Dividends Generally
6
 
 
8.3
Pro-rata Allocation of Available Shares
6
9.
 
OWNERSHIP AND DELIVERY OF SHARES
6
 
 
9.1
Beneficial Ownership
6
 
 
9.2
Registration of Stock
7
 
 
9.3
Delivery of Stock Certificates
7
 
 
9.4
Regulatory Approval
7
10.
 
WITHDRAWAL OF PAYROLL DEDUCTIONS
7
11.
 
TERMINATION OF EMPLOYMENT
8
 
 
11.1
General Rule
8
 
 
11.2
Termination Due to Retirement, Death or Disability
8
 
 
11.3
Termination Other Than for Retirement, Death or Disability
8
 
 
11.4
Rehired Employees
8
12.
 
ADMINISTRATION OF THE PLAN
8
 
 
12.1
No Participation in Plan by Committee Members
9
 
 
12.2
Authority of the Committee
9
 
 
12.3
Meetings
9
 
 
12.4
Decisions Binding
9
 
 
12.5
Expenses of Committee
9
 
 
12.6
Indemnification
9
13.
 
DESIGNATION OF BENEFICIARY
10
14.
 
TRANSFERABILITY
10
15.
 
NO RIGHTS AS A SHAREHOLDER UNTIL SHARES ISSUED
10

 
ii
 

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TABLE OF CONTENTS
(continued)

 
 
 
 
Page
 
 
 
 
 
16.
 
CHANGES IN THE COMPANY’S CAPITAL STRUCTURE
10
17.
 
PLAN EXPENSES; USE OF FUNDS; NO INTEREST PAID
12
18.
 
TERM OF THE PLAN
12
19.
 
AMENDMENT OR TERMINATION OF THE PLAN
12
20.
 
SECURITIES LAWS RESTRICTIONS ON EXERCISE
12
21.
 
SECTION 16 COMPLIANCE
13
22.
 
WITHHOLDING TAXES FOR DISQUALIFYING DISPOSITION
13
23.
 
NO RESTRICTION ON CORPORATE ACTION
13
24.
 
USE OF FUNDS
13
25.
 
MISCELLANEOUS
13
 
 
25.1
Options Carry Same Rights and Privileges
13
 
 
25.2
Headings
13
 
 
25.3
Gender and Tense
13
 
 
25.4
Governing Law
14
 
 
25.5
Regulatory Approvals and Compliance
14
 
 
25.6
Severability
14
 
 
25.7
Refund of Contributions on Noncompliance with Tax Law
14
 
 
25.8
No Guarantee of Tax Consequences
14
 
 
25.9
Company as Agent for the Employers
14

 
iii
 

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AMENDED AND RESTATED

LITHIA MOTORS, INC.

2009 EMPLOYEE STOCK PURCHASE PLAN

1.PURPOSE. This Amended and Restated Lithia Motors, Inc. 2009 Employee Stock
Purchase Plan (the “Plan”) is amended and restated as of [•], 2019. The Plan is
intended to provide an incentive for employees of Lithia Motors, Inc. (the
“Company”) and its participating Subsidiaries to acquire or increase their
proprietary interests in the Company through the purchase of shares of Common
Stock of the Company. The Plan is intended to qualify as an “employee stock
purchase plan” under Sections 421 and 423 of the Internal Revenue Code of 1986,
as amended (the “Code”). The provisions of the Plan will be construed in a
manner consistent with the requirements of such sections of the Code and the
respective Code regulations.
2.    DEFINITIONS. As used in this Plan:
2.1    “Account” means the account recorded in the records of the Company
established on behalf of a Participant to which the amount of the Participant’s
payroll deductions authorized under Section 6 and purchases of Common Stock
under Section 8 shall be credited, and any distributions of shares of Common
Stock under Section 9 and withdrawals under Section 10 shall be charged.
2.2    “Benefits Representative” means the employee benefits department of the
Company or any such other person, regardless of whether employed by an Employer,
who has been formally, or by operation or practice, designated by the Committee
to assist the Committee with the day-to-day administration of the Plan.
2.3    “Board” means the Board of Directors of the Company.
2.4    “Code” means the Internal Revenue Code of 1986, or any successor thereto,
as amended and in effect from time to time. Reference in the Plan to any Section
of the Code shall be deemed to include any amendments or successor provisions to
any Section and any treasury regulations thereunder.
2.5    “Committee” means the Compensation Committee of the Board. The Board
shall have the power to fill vacancies on the Committee arising by resignation,
death, removal or otherwise. The Board, in its sole discretion, may split the
powers and duties of the Committee among one or more separate Committees, or
retain all powers and duties of the Committee in a single Committee. The members
of the Committee shall serve at the discretion of the Board.
2.6    “Common Stock” means the Class A Common Stock, without par value, of the
Company.
2.7    “Company” means Lithia Motors, Inc., an Oregon corporation, and any
successor thereto.

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2.8    “Disability” means permanently and totally disabled as defined in
Section 22(e)(3) of the Code.
2.9    “Effective Date” means the date on which this Plan was initially approved
by the shareholders of the Company.
2.10    “Employee” means any person who, at such time, is in the Employment of
an Employer.
2.11    “Employer” means the Company, its successors, any Subsidiary, and any
parent or subsidiary corporation that issues or assumes rights or obligations
under the Plan in any transaction described in Section 424(a) of the Code or by
a parent corporation or a subsidiary corporation of such corporation..
2.12    “Employment” means Employment as an employee or officer by the Company
or a Subsidiary as designated in such entity’s payroll records, or by any
corporation issuing or assuming rights or obligations under the Plan in any
transaction described in Section 424(a) of the Code or by a parent corporation
or a subsidiary corporation of such corporation. In this regard, neither the
transfer of a Participant from Employment by the Company to Employment by a
Subsidiary nor the transfer of a Participant from Employment by a Subsidiary to
Employment by either the Company or any other Subsidiary shall be deemed to be a
termination of Employment of the Participant. The Employment shall be treated as
continuing while a participant is on military leave, sick leave or other leave
of absence approved by the Company or a Subsidiary that meets the requirements
of Treasury Regulations Section 1.421-1(h)(2). Where the period of leave exceeds
3 months or such other period of time specified in such Regulation and the
Participant’s right to reemployment is not guaranteed by statute or contract
Employment shall be deemed to be terminated on the first day following such
three month period or such other period specified in such Regulation. Any worker
treated as an independent contractor by the Company or any Subsidiary who is
later reclassified as a common-law employee shall not be in Employment during
any period in which such worker was treated by the Company or a Subsidiary as an
independent contractor. Any “leased employee”, as described in Section 414(n) of
the Code, shall not be deemed an Employee hereunder.
2.13    “Entry Date” means the first day of each Fiscal Quarter.
2.14    “Fiscal Quarter” means a three consecutive month period beginning on
each January 1, April 1, July 1 and October 1, commencing with the first such
date following the Effective Date and continuing until the Plan is terminated.
2.15    “Market Price” means, the market value of a share of Stock on any date,
which shall be determined as (i) the closing sales price on the immediately
preceding business day of a share of Stock as reported on the New York Stock
Exchange or other principal securities exchange on which shares of Stock are
then listed or admitted to trading or (ii) if not so reported, the average of
the closing bid and asked prices for a share of Stock on the immediately
preceding business day as quoted on the National Association of Securities
Dealers Automated Quotation System (“NASDAQ”), or (iii) if not quoted on NASDAQ,
the average of the closing bid and asked prices for a share of Stock as quoted
by the National Quotation Bureau’s “Pink Sheets” or

2

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the National Association of Securities Dealers’ OTC Bulletin Board System on the
immediately preceding business day. If the price of a share of Stock shall not
be so reported or quoted pursuant to the previous sentence, the fair market
value of a share of Stock shall be determined by the Committee in its
discretion, provided that such method is appropriate for purposes of an employee
stock purchase plan under Section 423 of the Code.
2.16    “Participant” means any Employee who meets the eligibility requirements
of Section 3 and who has elected to and is participating in the Plan.
2.17    “Plan” means the Lithia Motors, Inc. 2009 Employee Stock Purchase Plan,
as set forth herein, and all amendments hereto.
2.18    “Stock” means the Common Stock (as defined above).
2.19    “Subsidiary” means any domestic or foreign corporation, limited
liability company, partnership or other form of business entity (other than the
Company) (i) which, pursuant to Section 424(f) of the Code, is included in an
unbroken chain of entities beginning with the Company if, at the time of the
granting of the option, each of the entities other than the last entity in the
unbroken chain owns at least a majority of the total combined voting power of
all interests in one of the other entities in such chain, and (ii) which has
been designated by the Board or the Committee as an entity whose Employees are
eligible to participate in the Plan.
2.20    “Total Pay” means regular straight-time earnings or base salary, plus
payments for overtime, shift differentials, incentive compensation, bonuses, and
other special payments, fees, allowances or extraordinary compensation, prior to
reduction pursuant to Section 125, 132(f) or 401(k) of the Code, but excluding
allowances and reimbursements for expenses such as relocation allowances or
travel allowances, income or gains on the exercise of Company stock options, and
similar items.
3.    ELIGIBILITY.
3.1    Eligibility Requirements. Participation in the Plan is voluntary. Each
Employee who has completed at least ninety (90) days of continuous Employment
with an Employer (calculated from his last date of hire to the termination of
his Employment for any reason), is regularly scheduled to work at least 20 hours
per week and has reached the age of majority in the jurisdiction of his legal
residency, will be eligible to participate in the Plan on the first day of the
payroll period commencing on or after the later of (i) the Effective Date or
(ii) the Entry Date on which the Employee first satisfies the aforementioned
eligibility requirements. Each Employee whose Employment terminates and who is
rehired by an Employer shall be treated as a new Employee for eligibility
purposes under the Plan.
3.2    Limitations on Eligibility. Notwithstanding any provision of this Plan to
the contrary, no Employee will be granted an option under the Plan:
3.2.1    if, immediately after the grant, the Employee would own stock, and/or
hold outstanding options to purchase stock, possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Company or of any Subsidiary; or

3

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3.2.2    which permits the Employee’s rights to purchase stock under this Plan
and all other employee stock purchase plans (within the meaning of Section 423
of the Code) of the Company and its Subsidiaries to accrue at a rate which
exceeds $25,000 of the fair market value of the stock (determined at the time
such option is granted) for each calendar year in which such option is
outstanding at any time, all as determined in accordance with Section 423(b)(8)
of the Code.
For purposes of Section 3.2.1 above, pursuant to Section 424(d) of the Code, (i)
the Employee with respect to whom such limitation is being determined shall be
considered as owning the stock owned, directly or indirectly, by or for his
brothers and sisters (whether by the whole or half blood), spouse, ancestors,
and lineal descendants; and (ii) stock owned, directly or indirectly, by or for
a corporation, partnership, estate, or trust, shall be considered as being owned
proportionately by or for its shareholders, partners, or beneficiaries. In
addition, for purposes of Section 3.2.2 above, pursuant to Section 423(b)(8) of
the Code, (i) the right to purchase stock under an option accrues when the
option (or any portion thereof) first becomes exercisable during the calendar
year, (ii) the right to purchase stock under an option accrues at the rate
provided in the option but in no case may such rate exceed $25,000 of fair
market value of such stock (determined at the time such option is granted) for
any one calendar year, and (iii) a right to purchase stock which has accrued
under one option granted pursuant to the Plan may not be carried over to any
other option.
4.    SHARES SUBJECT TO THE PLAN. The total number of shares of Common Stock
that upon the exercise of options granted under the Plan will not exceed
3,000,000 shares (subject to subsequent shareholder approval of additional
shares and registration of such shares) and subject to adjustment as provided in
Section 16, and such shares may be originally issued shares, treasury shares,
reacquired shares, shares bought in the market, or any combination of the
foregoing. If any option which has been granted expires or terminates for any
reason without having been exercised in full, the shares represented by such
option will again become available for purposes of the Plan. Any shares which
are not subject to outstanding options upon the termination of the Plan shall
cease to be subject to the Plan.
5.    PARTICIPATION.
5.1    Payroll Deduction Authorization. An Employee shall be eligible to
participate in the Plan as of the first Entry Date following such Employee’s
satisfaction of the eligibility requirements of Section 3. At least 10 days (or
such other period as may be prescribed by the Committee or a Benefits
Representative) prior to the first Entry Date as of which an Employee is
eligible to participate in the Plan, the Employee shall execute and deliver to
the Benefits Representative, on the form prescribed for such purpose, an
authorization for payroll deductions which specifies his chosen rate of payroll
deduction contributions pursuant to Section 6, and such other information as is
required to be provided by the Employee on such enrollment form. The enrollment
form shall authorize the Employer to reduce the Employee’s Total Pay by the
amount of such authorized contributions. To the extent provided by the Committee
or a Benefits Representative, each Participant shall also be required to open a
stock brokerage account with a brokerage firm which has been engaged to
administer the purchase, holding and sale of Common Stock for Accounts under the
Plan and, as a condition of participation

4

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hereunder, the Participant shall be required to execute any form required by the
brokerage firm to open and maintain such brokerage account.
5.2    Continuing Effect of Payroll Deduction Authorization. Payroll deductions
for a Participant will commence with the first payroll period beginning after
the Participant’s authorization for payroll deductions becomes effective, and
will end with the payroll period that ends when terminated by the Participant in
accordance with Section 6.3 or due to his termination of Employment in
accordance with Section 11. Payroll deductions will also cease when the
Participant is suspended from participation due to a withdrawal of payroll
deductions in accordance with Section 10. When applicable with respect to
Employees who are paid on a hourly wage basis, the authorized payroll deductions
shall be withheld from wages when actually paid following the period in which
the compensatory services were rendered. Only payroll deductions that are
credited to the Participant’s Account during the Fiscal Quarter will be used to
purchase Common Stock pursuant to Section 8 regardless of when the work was
performed.
5.3    Employment and Shareholders Rights. Nothing in this Plan will confer on a
Participant the right to continue in the employ of the Employer or will limit or
restrict the right of the Employer to terminate the Employment of a Participant
at any time with or without cause. A Participant will have no interest in any
Common Stock to be purchased under the Plan or any rights as a shareholder with
respect to such Stock until the Stock has been purchased and credited to the
Participant’s Account.
6.    PAYROLL DEDUCTIONS.
6.1    Participant Contributions by Payroll Deductions. At the time a
Participant files his payroll deduction authorization form, the Participant will
elect to have deductions made from the Participant’s Total Pay for each payroll
period such authorization is in effect in whole percentages at the rate of not
less than 1% nor more than 10% of the Participant’s Total Pay.
6.2    No Other Participant Contributions Permitted. All payroll deductions made
for a Participant will be credited to the Participant’s Account under the Plan.
A Participant may not make any separate cash payment into such Account.
6.3    Changes in Participant Contributions. Subject to Sections 10 and 21, a
Participant may increase, decrease, suspend, or resume payroll deductions under
the Plan by giving written notice to a designated Benefits Representative at
such time and in such form as the Committee or Benefits Representative may
prescribe from time to time. Such increase, decrease, suspension or resumption
will be effective as of the first day of the payroll period as soon as
administratively practicable after receipt of the Participant’s written notice,
but not earlier than the first day of the payroll period of the Fiscal Quarter
next following receipt and acceptance of such form. Notwithstanding the previous
sentence, a Participant may completely discontinue contributions at any time
during a Fiscal Quarter, effective as of the first day of the payroll period as
soon as administratively practicable following receipt of a written
discontinuance notice from the Participant on a form provided by a designated
Benefits Representative. Following a discontinuance of contributions, a
Participant cannot authorize any payroll

5

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contributions to his Account for the remainder of the Fiscal Quarter in which
the discontinuance was effective.
7.    GRANTING OF OPTION TO PURCHASE STOCK.
7.1    Quarterly Grant of Options. For each Fiscal Quarter, on the first day of
the Fiscal Quarter a Participant will be deemed to have been granted an option
to purchase as many whole shares as may be purchased with the payroll deductions
credited to the Participant’s Account during the Fiscal Quarter (together with
any payroll deductions from the previous Fiscal Quarter retained in the
Participant’s Account as of the end of such Fiscal Quarter as provided in
Section 8.1 and any cash dividends paid during the Fiscal Quarter as provided in
Section 8.2).
7.2    Option Price. Notwithstanding any provision to the contrary in this Plan,
the option price of the Common Stock purchased with the amount credited to the
Participant’s Account during each Fiscal Quarter will be equal to 85% of the
Market Price of a share of Stock on the last day of the Fiscal Quarter.
8.    EXERCISE OF OPTION.
8.1    Automatic Exercise of Options. Unless a Participant has elected to
withdraw payroll deductions in accordance with Section 10, the Participant’s
option for the purchase of Common Stock will be deemed to have been exercised
automatically as of the last day of the Fiscal Quarter for the purchase of the
number of whole shares of Common Stock which the accumulated payroll deductions
(and cash dividends on the Common Stock as provided in Section 8.2) in the
Participant’s Account at that time will purchase at the applicable option price.
No fractional shares may be issued under the Plan. As of the last day of each
Fiscal Quarter, the balance of each Participant’s Account shall be applied to
purchase the number of whole shares of Common Stock as determined by dividing
the balance of such Participant’s Account as of such date by the option price
determined pursuant to Section 7.2. Any amounts accumulated in a Participant’s
Account during a Fiscal Quarter under Section 5.1 that are not sufficient to
purchase a full share of Common Stock at the end of such Fiscal Quarter shall be
retained in the Participant’s Account for the subsequent Fiscal Quarter, subject
to earlier withdrawal by the Participant as provided in Section 10. The
Participant’s Account shall be debited accordingly. The Committee or its
delegate shall make all determinations with respect to applicable currency
exchange rates when applicable.
8.2    Dividends Generally. Cash dividends paid on shares of Common Stock which
have not been delivered to the Participant pending the Participant’s request for
delivery pursuant to Section 9.3, will be combined with the Participant’s
payroll deductions and applied to the purchase of Common Stock at the end of the
Fiscal Quarter in which the cash dividends are received, subject to the
Participant’s withdrawal rights set forth in Section 10. Dividends paid in the
form of shares of Common Stock or other securities with respect to shares that
have been purchased under the Plan, but which have not been delivered to the
Participant, will be credited to the shares that are credited to the
Participant’s Account.
8.3    Pro-rata Allocation of Available Shares. If the total number of shares to
be purchased under option by all Participants exceeds the number of shares
authorized under

6

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Section 4, a pro-rata allocation of the available shares will be made among all
Participants authorizing such payroll deductions based on the amount of their
respective payroll deductions through the last day of the Fiscal Quarter.
9.    OWNERSHIP AND DELIVERY OF SHARES.
9.1    Beneficial Ownership. A Participant will be the beneficial owner of the
shares of Common Stock purchased under the Plan on exercise of an option and
will have all rights of beneficial ownership in such shares. Any dividends paid
with respect to such shares will be credited to the Participant’s Account and
applied as provided in Section 8 until the shares are delivered to the
Participant.
9.2    Registration of Stock. Stock to be delivered to a Participant under the
Plan will be registered on the books and records of the Company in the name of
the Participant, or if the Participant so directs by written notice to the
designated Benefits Representative or brokerage firm, if any, prior to the
purchase of Stock hereunder, in the names of the Participant and one such other
person as may be designated by the Participant, as joint tenants with rights of
survivorship or as tenants by the entireties, to the extent permitted by
applicable law. Any such designation shall not apply to shares purchased after a
Participant’s death by the Participant’s beneficiary or estate, as the case may
be, pursuant to Section 11.2. If a brokerage firm is engaged by the Company to
administer Accounts under the Plan, such firm shall provide such account
registration forms as are necessary for each Participant to open and maintain a
brokerage account with such firm.
9.3    Delivery of Stock Certificates. The Company, or a brokerage firm or other
entity selected by the Company, shall deliver to each Participant a certificate
for the number of shares of Common Stock purchased by the Participant hereunder
as soon as practicable after the close of each Fiscal Quarter. Alternatively, in
the discretion of the Committee, the stock certificate, or other written
documentation or notice of electronic transfer evidencing such stock ownership,
may be delivered to a designated stock brokerage account maintained for the
Participant and held in “street name” in order to facilitate the subsequent sale
of the purchased shares.
9.4    Regulatory Approval. In the event the Company is required to obtain from
any commission or agency the authority to issue any stock certificate hereunder,
the Company shall seek to obtain such authority. The inability of the Company to
obtain from any such commission or agency the authority which counsel for the
Company deems necessary for the lawful issuance of any such certificate shall
relieve the Company from liability to any Participant, except to return to the
Participant the amount of his Account balance used to exercise the option to
purchase the affected shares.
10.    WITHDRAWAL OF PAYROLL DEDUCTIONS. At any time during a Fiscal Quarter,
but in no event later than 15 days (or such shorter prescribed by the Committee
or a Benefits Representative) prior to the last day of the Fiscal Quarter, a
Participant may elect to abandon his election to purchase Common Stock under the
Plan. By written notice to the designated Benefits Representative on a form
provided for such purpose, the Participant may thus elect to withdraw all of the
accumulated balance in his Account being held for the purchase

7

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of Common Stock in accordance with Section 8. Partial withdrawals will not be
permitted. All such amounts will be paid to the Participant as soon as
administratively practical after receipt of his notice of withdrawal. After
receipt and acceptance of such withdrawal notice, no further payroll deductions
will be made from the Participant’s Total Pay beginning as of the next payroll
period during the Fiscal Quarter in which the withdrawal notice is received. The
Committee, in its discretion, may determine that amounts otherwise withdrawable
hereunder by Participants shall be offset by an amount that the Committee, in
its discretion, determines to be reasonable to help defray the administrative
costs of effecting the withdrawal, including, without limitation, fees imposed
by any brokerage firm which administers such Participant’s Account. After a
withdrawal, an otherwise eligible Participant may resume participation in the
Plan as of the first day of the Fiscal Quarter next following his delivery of a
payroll deduction authorization pursuant to the procedures prescribed in Section
5.1.
11.    TERMINATION OF EMPLOYMENT.
11.1    General Rule. Upon termination of a Participant’s Employment for any
reason, his participation in the Plan will immediately terminate.
11.2    Termination Due to Retirement, Death or Disability. If the Participant’s
termination of Employment is due to (i) retirement from Employment on or after
his attainment of age 65, (ii) death or (iii) Disability, the Participant (or
the Participant’s personal representative or legal guardian in the event of
Disability, or the Participant’s beneficiary (as defined in Section 12) or the
administrator of his will or executor of his estate in the event of death), will
have the right to elect, either to:
11.2.1    Withdraw all of the cash and shares of Common Stock credited to the
Participant’s Account as of his termination date; or
11.2.2    Exercise the Participant’s option for the purchase of Common Stock on
the last day of the Fiscal Quarter (in which termination of Employment occurs)
for the purchase of the number of shares of Common Stock which the cash balance
credited to the Participant’s Account as of the date of the Participant’s
termination of Employment will purchase at the applicable option price.
The Participant (or, if applicable, such other person designated in the first
paragraph of this Section 11.2) must make such election by giving written notice
to the Benefits Representative at such time and in such manner as prescribed
from time to time by the Committee or Benefits Representative. In the event that
no such written notice of election is received by the Benefits Representative
within 30 days of the Participant’s termination of Employment date, the
Participant (or such other designated person) will automatically be deemed to
have elected to withdraw the balance in the Participant’s Account as of his
termination date. Thereafter, any accumulated cash and shares of Common Stock
credited to the Participant’s Account as of his termination of Employment date
will be delivered to or on behalf of the Participant as soon as administratively
practicable.
11.3    Termination Other Than for Retirement, Death or Disability. Upon
termination of a Participant’s Employment for any reason other than retirement,
death, or

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Disability pursuant to Section 11.2, the participation of the Participant in the
Plan will immediately terminate. Thereafter, any accumulated cash and shares of
Common Stock credited to the Participant’s Account as of his termination of
Employment date will be delivered to the Participant as soon as administratively
practicable.
11.4    Rehired Employees. Any Employee whose Employment terminates and who is
subsequently rehired by an Employer shall be treated as a new Employee for
purposes of eligibility to participate in the Plan.
12.    ADMINISTRATION OF THE PLAN.
12.1    No Participation in Plan by Committee Members. No options may be granted
under the Plan to any member of the Committee during the term of his membership
on the Committee.
12.2    Authority of the Committee. Subject to the provisions of the Plan, the
Committee shall have the plenary authority to (i) interpret the Plan and all
options granted under the Plan, (ii) make such rules as it deems necessary for
the proper administration of the Plan, (iii) make all other determinations
necessary or advisable for the administration of the Plan, and (iv) correct any
defect or supply any omission or reconcile any inconsistency in the Plan or in
any option granted under the Plan in the manner and to the extent that the
Committee deems advisable. Any action taken or determination made by the
Committee pursuant to this and the other provisions of the Plan shall be
conclusive on all parties. The act or determination of a majority of the
Committee shall be deemed to be the act or determination of the Committee. By
express written direction, or by the day-to-day operation of Plan
administration, the Committee may delegate the authority and responsibility for
the day-to-day administrative or ministerial tasks of the Plan to a Benefits
Representative, including a brokerage firm or other third party engaged for such
purpose.
12.3    Meetings. The Committee shall designate a chairman from among its
members to preside at its meetings, and may designate a secretary, without
regard to whether that person is a member of the Committee, who shall keep the
minutes of the proceedings. Meetings shall be held at such times and places as
shall be determined by the Committee, and the Committee may hold telephonic
meetings. The Committee may take any action otherwise proper under the Plan by
the affirmative vote of a majority of its members, taken at a meeting, or by the
affirmative vote of all of its members taken without a meeting. The Committee
may authorize any one or more of their members or any officer of the Company to
execute and deliver documents on behalf of the Committee.
12.4    Decisions Binding. All determinations and decisions made by the
Committee shall be made in its discretion pursuant to the provisions of the
Plan, and shall be final, conclusive and binding on all persons including the
Company, Participants, and their estates and beneficiaries.
12.5    Expenses of Committee. The Committee may employ legal counsel,
including, without limitation, independent legal counsel and counsel regularly
employed by the Company, consultants and agents as the Committee may deem
appropriate for the administration

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of the Plan. The Committee may rely upon any opinion or computation received
from any such counsel, consultant or agent. All expenses incurred by the
Committee in interpreting and administering the Plan, including, without
limitation, meeting expenses and professional fees, shall be paid by the
Company.
12.6    Indemnification. Each person who is or was a member of the Committee
shall be indemnified by the Company against and from any damage, loss,
liability, cost and expense that may be imposed upon or reasonably incurred by
him in connection with. or resulting from any claim, action, suit, or proceeding
to which he may be a party or in which he may be involved by reason of any
action taken or failure to act under the Plan, except for any such act or
omission constituting willful misconduct or gross negligence. Such person shall
be indemnified by the Company for all amounts paid by him in settlement thereof,
with the Company’s approval, or paid by him in satisfaction of any judgment in
any such action, suit, or proceeding against him, provided he shall give the
Company an opportunity, at its own expense, to handle and defend the same before
he undertakes to handle and defend it on his own behalf. The foregoing right of
indemnification shall not be exclusive of any other rights of indemnification to
which such persons may be entitled under the Company’s Articles of Incorporation
or Bylaws, as a matter of law, or otherwise, or any power that the Company may
have to indemnify them or hold them harmless.
13.    DESIGNATION OF BENEFICIARY. At such time, in such manner, and using such
form as shall be prescribed from time to time by the Committee or a Benefits
Representative, a Participant may file a written designation of a beneficiary
who is to receive any Common Stock and/or cash credited to the Participant’s
Account at the Participant’s death. Such designation of beneficiary may be
changed by the Participant at any time by giving written notice to the Benefits
Representative at such time and in such form as prescribed. Upon the death of a
Participant, and receipt by the Benefits Representative of proof of the identity
at the Participant’s death of a beneficiary validly designated under the Plan,
the Benefits Representative will take appropriate action to ensure delivery of
such. Common Stock and/or cash to such beneficiary. In the event of the death of
a Participant and the absence of a beneficiary validly designated under the Plan
who is living at the time of such Participant’s death, the Benefits
Representative will take appropriate action to ensure delivery of such Common
Stock and/or cash to the executor or administrator of the estate of the
Participant, or if no such executor or administrator has been appointed (to the
knowledge of the Benefits Representative), the Committee, in its discretion, may
direct delivery of such Common Stock and/or cash to the spouse or to any one or
more dependents of the Participant as the Committee may designate in its
discretion. Prior to the death of the Participant, no beneficiary will acquire
any interest in any Common Stock or cash credited to the Participant’s Account.
14.    TRANSFERABILITY. No amounts credited to a Participant’s Account, whether
cash or Common Stock, nor any rights with regard to the exercise of an option or
to receive Common Stock under the Plan, may be assigned, transferred, pledged,
or otherwise disposed of in any way by the Participant other than by will or the
laws of descent and distribution. Any such attempted assignment, transfer,
pledge, or other disposition will be void and without effect. Each option shall
be exercisable, during the Participant’s lifetime, only by the Employee to whom
the option was granted. The Company shall not recognize, and shall be under no
duty to

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recognize, any assignment or purported assignment by an. Employee of his option
or of any rights under his option.
15.    NO RIGHTS AS A SHAREHOLDER UNTIL SHARES ISSUED. With respect to shares of
Stock subject to an option, an optionee shall not be deemed to be a shareholder,
and the optionee shall not have any of the rights or privileges of a
shareholder. An optionee shall have the rights and privileges of a shareholder
when, but not until, the shares have been issued to the optionee following
exercise of his option and reflected in the shareholder records of the Company
or its transfer agent.
16.    CHANGES IN THE COMPANY’S CAPITAL STRUCTURE. The Board shall make or
provide for such adjustments in the maximum number of shares specified in
Section 4 and the number and option price of shares subject to options
outstanding under the Plan as the Board shall determine is appropriate to
prevent dilution or enlargement of the rights of Participants that otherwise
would result from any stock dividend, stock split, stock exchange, combination
of shares, or other change in the capital structure of the Company, merger,
consolidation, spin-off of assets, reorganization, partial or complete
liquidation, issuance of rights or warrants to purchase securities, any other
corporate transaction or event having an effect similar to any of the foregoing.
In the event of a merger of one or more corporations into the Company, or a
consolidation of the Company and one or more other corporations in which the
Company is the surviving corporation, each Participant, at no additional cost,
shall be entitled, upon his payment for all or part of the Common Stock
purchasable by him under the Plan, to receive (subject to any required action by
shareholders) in lieu of the number of shares of Common Stock which he was
entitled to purchase, the number and class of shares of stock or other
securities to which such holder would have been entitled pursuant to the terms
of the agreement of merger or consolidation if, immediately prior to such merger
or consolidation, such holder had been the holder of record of the number of
shares of Common Stock equal to the number of shares purchasable by the
Participant hereunder.
If the Company is not the surviving corporation in any reorganization, merger or
consolidation (or survives only as a subsidiary of an entity other than a
previously wholly-owned subsidiary of the Company), or if the Company is to be
dissolved or liquidated or sell substantially all of its assets or stock to
another corporation or other entity, then, unless a surviving corporation
assumes or substitutes new options (within the meaning of Section 424(a) of the
Code) for all options then outstanding, (i) the date of exercise for all options
then outstanding shall be accelerated to dates fixed by the Committee prior to
the effective date of such corporate event, (ii) a Participant may, at his
election by written notice to the Company, either (x) withdraw from the Plan
pursuant to Section 10 and receive a refund from the Company in the amount of
the accumulated cash and Stock balance in the Participant’s Account, (y)
exercise a portion of his outstanding options as of such exercise date to
purchase shares of Stock, at the option price, to the extent of the balance in
the Participant’s Account, or (z) exercise in full his outstanding options as of
such exercise date to purchase shares of Stock, at the option price, which
exercise shall require such Participant to pay the related option price, and
(iii) after such effective date any unexercised option shall expire. The date
the Committee selects for the

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exercise date under the preceding sentence shall be deemed to be the exercise
date for purposes of computing the option price per share of Stock. If the
Participant elects to exercise all or any portion of the options, the Company
shall deliver to such Participant a stock certificate issued pursuant to Section
9.4 for the number of shares of Stock with respect to which such options were
exercised and for which such Participant has paid the option price. If the
Participant fails to provide the notice set forth above within three days after
the exercise date selected by the Committee under this Section 16, the
Participant shall be conclusively presumed to have requested to withdraw from
the Plan and receive payment of the accumulated balance of his Account. The
Committee shall take such steps in connection with such transactions as the
Committee shall deem necessary or appropriate to assure that the provisions of
this Section 16 are effectuated for the benefit of the Participants.
Except as expressly provided in this Section 16, the issue by the Company of
shares of stock of any class, or securities convertible into shares of stock of
any class, for cash or property, or for labor or services either upon direct
sale or upon the exercise of rights or warrants to subscribe therefor, or upon
conversion of shares or obligations of the Company convertible into such shares
or other securities, shall not affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Stock then available
for purchase under the Plan.
17.    PLAN EXPENSES; USE OF FUNDS; NO INTEREST PAID. The expenses of the Plan
shall be paid by the Company except as otherwise provided herein or under the
terms and conditions of any agreement entered into between the Participant and
any brokerage firm engaged to administer Accounts. All funds received or held by
the Company under the Plan shall be included in the general funds of the Company
free of any trust or other restriction, and may be used for any corporate
purpose. No interest shall be paid to any Participant or credited to his Account
under the Plan.
18.    TERM OF THE PLAN. The Plan shall become effective upon the approval of
the Plan by the holders of the majority of the Common Stock present and
represented at a special or annual meeting of the Company’s shareholders held on
or before 12 months after adoption of this Plan by the board of directors.
Except with respect to options then outstanding, if not terminated sooner under
the provisions of Section 19, no further options shall be granted under the Plan
at the earlier of (i) December 31, 2029, or (ii) the point in time when no
shares of Stock reserved for issuance under Section 4 are available.
19.    AMENDMENT OR TERMINATION OF THE PLAN. The Board shall have the plenary
authority to terminate or amend the Plan; provided, however, that the Board
shall not, without the approval of the shareholders of the Company, (i) increase
the maximum number of shares which may be issued under the Plan pursuant to
Section 4, (ii) materially amend the requirements as to the class of employees
eligible to purchase Stock under the Plan, or (iii) permit the members of the
Committee to purchase Stock under the Plan. No termination, modification, or
amendment of the Plan shall adversely affect the rights of a Participant with
respect to an option previously granted to him under such option without his
written consent.
In addition, to the extent that the Committee determines that, in the opinion of
counsel, (i) the listing for qualification requirements of any national
securities exchange or quotation system

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on which the Company’s Common Stock is then listed or quoted, or (ii) the Code
or Treasury regulations issued thereunder, require shareholder approval in order
to maintain compliance with such listing or qualification requirements or to
maintain any favorable tax advantages or qualifications, then the Plan shall not
be amended by the Board in such respect without first obtaining such required
approval of the Company’s shareholders.
20.    SECURITIES LAWS RESTRICTIONS ON EXERCISE. The Committee may, in its
discretion, require as conditions to the exercise of any option that the shares
of Common Stock reserved for issuance upon the exercise of the option shall have
been duly listed, upon official notice of issuance, upon a stock exchange, and
that either (i) a Registration Statement under the Securities Act of 1933, as
amended, with respect to said shares shall be effective; or (ii) the Participant
shall have represented at the time of purchase, in form and substance
satisfactory to the Company, that it is his intention to purchase the Stock for
investment and not for resale or distribution.
21.    SECTION 16 COMPLIANCE. The Plan, and transactions hereunder by persons
subject to Section 16 of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), are intended to comply with all applicable conditions of Rule
16b 3 or any successor exemption provision promulgated under the Exchange Act.
To the extent that any provision of the Plan or any action by the Committee or
the Board fails, or is deemed to fail, to so comply, such provision or action
shall be null and void but only to the extent permitted by law and deemed
advisable by the Committee in its discretion.
22.    WITHHOLDING TAXES FOR DISQUALIFYING DISPOSITION. Whenever shares of Stock
that were received upon the exercise of an option granted under the Plan are
disposed of within two years after the date of grant of such option or one year
from the date of exercise of such option (within the meaning of Section
423(a)(1)), the Company shall have the right to require the Participant to remit
to the Company in cash an amount sufficient to satisfy federal, state and local
withholding and payroll tax requirements, if any, attributable to such
disposition prior to authorizing such disposition or permitting the delivery of
any certificate or certificates with respect thereto.
23.    NO RESTRICTION ON CORPORATE ACTION. Subject to Section 19, nothing
contained in the Plan shall be construed to prevent the Board or any Employer
from taking any corporate action which is deemed by the Employer to be
appropriate or in its best interest, whether or not such action would have an
adverse effect on the Plan or any option granted under the Plan. No Employee,
beneficiary or other person shall have any claim against any Employer as a
result of any such action.
24.    USE OF FUNDS. The Employers shall promptly transfer all amounts withheld
under Section 6 to the Company or to any brokerage firm engaged to administer
Accounts, as directed by the Company. All payroll deductions received or held by
the Company under the Plan may be used by the Company for any corporate purpose,
and the Company will not be obligated to segregate such payroll deductions.
25.    MISCELLANEOUS.

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25.1    Options Carry Same Rights and Privileges. To the extent required to
comply with the requirements of Section 423 of the Code, all Employees granted
options under the Plan to purchase Common Stock shall have the same rights and
privileges hereunder.
25.2    Headings. Any headings or subheadings in this Plan are inserted for
convenience of reference only and are to be ignored in the construction or
interpretation of any provisions hereof.
25.3    Gender and Tense. Any words herein used in the masculine shall be read
and construed in the feminine when appropriate. Words in the singular shall be
read and construed as though in the plural, and vice-versa, when appropriate.
25.4    Governing Law. This Plan shall be governed and construed in accordance
with the laws of the State of Oregon to the extent not preempted by federal law.
25.5    Regulatory Approvals and Compliance. The Company’s obligation to sell
and deliver Common Stock under the Plan is at all times subject to all approvals
of and compliance with the (i) regulations of any applicable stock exchanges
(including NASDAQ) and (ii) any governmental authorities required in connection
with the authorization, issuance, sale or delivery of such Stock, as well as
federal, state and foreign securities laws.
25.6    Severability. In the event that any provision of this Plan shall be held
illegal, invalid, or unenforceable for any reason, such provision shall be fully
severable, but shall not affect the remaining provisions of the Plan, and the
Plan shall be construed and enforced as if the illegal, invalid, or
unenforceable provision had not been included herein.
25.7    Refund of Contributions on Noncompliance with Tax Law. In the event the
Company should receive notice that this Plan fails to qualify as an “employee
stock purchase plan” under Section 423 of the Code, all then existing Account
balances will be paid to the Participants and the Plan shall immediately
terminate.
25.8    No Guarantee of Tax Consequences. The Company, Board, and the Committee
do not make any commitment or guarantee that any tax treatment will apply or be
available to any person participating or eligible to participate in the Plan,
including, without limitation, any tax imposed by the United States or any state
thereof, any estate tax, or any tax imposed by a foreign government.
25.9    Company as Agent for the Employers. Each Employer, by adopting the Plan,
appoints the Company and the Board as its agents to exercise on its behalf all
of the powers and authorities hereby conferred upon the Company and the Board by
the terms of the Plan, including, but not by way of limitation, the power to
amend and terminate the Plan.

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