ex_10-20.htm


    Exhibit
10.20

    


    


    ITRON,
INC.

    


    AMENDED
AND RESTATED

    2002
EMPLOYEE STOCK PURCHASE PLAN

    


     

       As
adopted by the board on February 28, 2005 and approved by the shareholders on
May 3, 2005

    and
amended by the board on December 16, 2008

       

     

    SECTION
1.    PURPOSE

     

    The
purposes of the Itron, Inc. Amended and Restated 2002 Employee Stock Purchase
Plan (the “Plan”) are to (a) assist employees of Itron, Inc., a Washington
corporation (the “Company”), and its parent and subsidiary corporations in
acquiring a stock ownership interest in the Company, and (b) help employees
provide for their future security and to encourage them to remain in the
employment of the Company and its subsidiary corporations.  It is the
intention of the Company that the Plan qualify as an “employee stock purchase
plan” under Section 423 of the Internal Revenue Code of 1986, as amended (the
“Code”) (the “Section 423 Plan”), although the Company makes no undertaking nor
representation to maintain such qualification.  In addition, the Plan
authorizes the grant of Options (as defined below) that do not qualify under
Section 423 of the Code (the “Non-423 Plan”) pursuant to rules, procedures or
sub-plans adopted by the Plan Administrator (as defined below) designed to
achieve favorable taxation, compliance with securities laws or other legal
requirements or other objectives of the Company in particular locations outside
the United States.  Except as otherwise indicated, the Section 423
Plan and the Non-423 Plan will operate and be administered in the same
manner.

     

    SECTION
2.    DEFINITIONS

     

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

     

    “Additional Shares” has the
meaning set forth in Section 8.2.

     

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

     

    “Change Notice Date” has the
meaning set forth in Section 11.1.

     

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

     

    “Company” means Itron, Inc.,
a Washington corporation.

     

    “Company Transaction” means
any of the following events:

     

    (a)
Consummation of any merger or consolidation of the Company with or into another
corporation;

     

    (b)
Consummation of any sale, lease, exchange or other transfer in one transaction
or a series of related transactions of all or substantially all the Company’s
outstanding securities or all or substantially all the Company’s assets other
than a transfer of the Company’s assets to a majority-owned Subsidiary
Corporation; or

     

    (c)
Acquisition by a person, within the meaning of Section 3(a)(9) or of Section
13(d)(3) (as in effect on the date of adoption of the Plan) of the Exchange Act
of a majority or more of the Company’s outstanding voting securities (whether
directly or indirectly, beneficially or of record). Ownership of voting
securities shall take into account and shall include ownership as determined by
applying Rule 13d-3(d)(1)(i) (as in effect on the date of adoption of the Plan)
under the Exchange Act.

     

    “Designated Corporation” has
the meaning set forth under the definition of “Eligible Employee” in this
Section 2.

     

    “Eligible Compensation” means
all regular cash compensation, including overtime, cash bonuses and commissions.
Regular cash compensation does not include severance pay, hiring and relocation
bonuses, pay in lieu of vacations, sick leave or any other special
payments.

     

    “Eligible Employee” means any
employee of the Company (or any Parent Corporation or Subsidiary Corporation
designated by the Plan Administrator (a “Designated Corporation”)) who is in the
employ of the Company (or any such Designated Corporation) on one or more
Offering Dates and who meets the following criteria:

     

    (a) the
employee does not, immediately after the Option is granted, own stock (as
defined by Code Sections 423(b)(3) and 424(d)) possessing 5% or more of the
total combined voting power or value of all classes of stock of the Company or
of a Parent or Subsidiary Corporation;

     

    (b) the
employee’s customary employment is for 20 hours or more per week or any lesser
number of hours established by the Plan Administrator for a future Offering;
and

     

    (c) the
employee’s customary employment is for more than five months in any calendar
year or any lesser number of months established by the Plan Administrator for a
future Offering.

     

    If the
Company permits employees of a Designated Corporation to participate in the
Plan, the Plan Administrator shall determine whether such employees of a
Designated Corporation shall participate in the Section 423 Plan or the Non-423
Plan.

     

    “ESPP Broker” has the meaning
set forth in Section 10.

     

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

     

    “Fair Market Value” shall be
as established in good faith by the Plan Administrator or, if the Stock is
listed on the Nasdaq National Market (or any national stock exchange (an
“exchange”) on which the Stock is at the time listed or admitted to trading),
Fair Market Value shall mean the closing price of the Stock on the Offering Date
or on the Purchase Date, as applicable. If no sales of the Stock were made on
the Nasdaq National Market (or an exchange) on the applicable date, Fair Market
Value shall mean the closing price of a share of the Stock as reported for the
next preceding day on which sales of the Stock were made on the Nasdaq National
Market (or an exchange).

     

     “Offering” has the
meaning set forth in Section 5.1.

     

    “Offering Date” means the
first day of an Offering.

     

    “Option” means an option
granted under the Plan to an Eligible Employee to purchase shares of
Stock.

     

    “Non-423 Plan” means an
employee stock purchase plan which does not meet the requirements set forth in
Section 423 of the Code.

     

    “Parent Corporation” means
any corporation, other than the Company, in an unbroken chain of corporations
ending with the Company if, at the time of the granting of the Option, each of
the corporations, other than the Company, owns stock possessing 50% or more of
the total combined voting power of all classes of stock in one of the other
corporations in such chain.

     

    “Participant” means any
Eligible Employee who has elected to participate in an Offering in accordance
with the procedures set forth in Section 6.1 and who has not withdrawn from the
Plan or whose participation in the Plan is not terminated.

     

    “Plan” means the Itron, Inc.
Amended and Restated 2002 Employee Stock Purchase Plan, as set forth herein, and
as amended from time to time, which includes a Section 423 Plan and a Non-423
Plan.

     

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

     

    “Purchase Date” means the
last day of each Purchase Period.

     

    “Purchase Period” has the
meaning set forth in Section 5.2.

     

    “Purchase Price” has the
meaning set forth in Section 8.

     

    “Section 423 Plan” means an
employee stock purchase plan which is designed to meet the requirements set
forth in Section 423 of the Code.  The provisions of the Section 423
Plan shall be construed, administered and enforced in accordance with Section
423 of the Code.

     

    “Stock” means the common
stock, no par value, of the Company.

     

    “Subscription Date” means the
last day on which an Eligible Employee may enroll in an Offering
Period.

     

    “Subsidiary Corporation”
means any corporation, other than the Company, in an unbroken chain of
corporations beginning with the Company if, at the time of the granting of the
Option, each of the corporations, other than the last corporation in the
unbroken chain, owns stock possessing 50% or more of the total combined voting
power of all classes of stock in one of the other corporations in such
chain.

     

    “Successor Corporation” has
the meaning set forth in Section 20.3.

     

    SECTION
3.    ADMINISTRATION

     

    3.1    Plan
Administrator

     

    The Plan
shall be administered by the Compensation Committee of the Board, except to the
extent that the Board appoints another committee or committees (which term
includes subcommittees) consisting of one or more members of the Board to
administer the Plan. Committee members shall serve for such terms as the Board
may determine, subject to removal by the Board at any time.

     

    3.2    Administration
and Interpretation by the Plan Administrator

     

    Subject
to the provisions of the Plan, the Plan Administrator shall have exclusive
authority, in its discretion, to determine all matters relating to Options
granted under the Plan, including all terms, conditions, restrictions and
limitations of Options; provided, however, that all Participants granted Options
pursuant to the Plan shall have the same rights and privileges within the
meaning of Code Section 423(b)(5). 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 or employees as it so
determines.

     

    SECTION
4.    STOCK SUBJECT TO PLAN

     

    Subject
to adjustment from time to time as provided in Section 20, the maximum number of
shares of Stock that shall be available for issuance under the Plan shall be
704,411 shares.

     

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

     

    SECTION
5.    OFFERING DATES

     

    5.1    Offerings

     

    Except as
otherwise set forth below, the Plan shall be implemented by a series of
Offerings (each, an “Offering”). Offerings shall commence on January 1, April 1,
July 1 and October 1 of each year and end on the next March 31, June 30,
September 30 and December 31, respectively, occurring thereafter.
Notwithstanding the foregoing, the Plan Administrator may establish (a) a
different term for one or more future Offerings and (b) different commencing and
ending dates for such Offerings; provided, however, that an Offering may not
exceed five years. In the event the first or the last day of an Offering is not
a regular business day, then the first day of the Offering shall be deemed to be
the next regular business day and the last day of the Offering shall be deemed
to be the last preceding regular business day.

     

    5.2    Purchase
Periods

     

    Each
Offering shall consist of one Purchase Period (a “Purchase Period”). The last
day of each Purchase Period shall be the Purchase Date for such Purchase Period.
Purchase Periods shall commence on January 1, April 1, July 1 and October 1 of
each year and shall end on the next March 31, June 30, September 30 and December
31, respectively, occurring thereafter. Notwithstanding the foregoing, the Plan
Administrator may establish (a) a different term for one or more future Purchase
Periods and (b) different commencing dates and Purchase Dates for any such
Purchase Period. In the event the first or last day of a Purchase Period is not
a regular business day, then the first day of the Purchase Period shall be
deemed to be the next regular business day and the last day of the Purchase
Period shall be deemed to be the last preceding regular business
day.

     

    SECTION
6.    PARTICIPATION IN THE PLAN

     

    6.1    Initial
Participation

     

    An
Eligible Employee shall become a Participant on the first Offering Date after
satisfying the eligibility requirements and delivering to the Company’s payroll
office not later than the last business day before such Offering Date (the
“Subscription Date”) a subscription agreement indicating the Eligible Employee’s
election to participate in the Plan and authorizing payroll deductions or other
contributions. An Eligible Employee who does not deliver a subscription
agreement to the Company’s payroll office on or before the Subscription Date
shall not participate in the Plan for that Offering or for any subsequent
Offering, unless such Eligible Employee subsequently enrolls in the Plan by
filing a subscription agreement with the Company by the Subscription Date for
such subsequent Offering. The Plan Administrator may, from time to time, change
the Subscription Date as deemed advisable by the Plan Administrator in its sole
discretion for the proper administration of the Plan.

     

    An
employee who becomes eligible to participate in the Plan after an Offering has
commenced shall not be eligible to participate in such Offering but may
participate in any subsequent Offering, provided that such employee is still an
Eligible Employee as of the commencement of any such subsequent Offering.
Eligible Employees may not participate in more than one Offering at a
time.

     

    6.2    Continued
Participation

     

    If a
Participant withdraws from an Offering pursuant to Section 11.2, the Participant
is required to file a new subscription agreement, as provided in Section 6.1,
for the next Offering in which the Participant wishes to
participate.

     

    SECTION
7.    LIMITATIONS ON RIGHT TO PURCHASE SHARES

     

    7.1    $25,000
Limitation

     

    No
Participant shall be entitled to purchase Stock under the Plan (or any other
employee stock purchase plan that is intended to meet the requirements of Code
Section 423 sponsored by the Company, a Parent Corporation or a Subsidiary
Corporation) at a rate that exceeds $25,000 in Fair Market Value, determined as
of the Offering Date for each Offering (or such other limit as may be imposed by
the Code), for each calendar year in which a Participant participates in the
Plan (or any other employee stock purchase plan described in this Section
7.1).

     

    7.2    Number
of Shares Purchased

     

    No
Participant shall be entitled to purchase more than 250 shares of Stock (or such
other number as the Plan Administrator shall specify for a future Offering)
under the Plan in any Purchase Period.

     

    7.3    Pro
Rata Allocation

     

    In the
event the number of shares of Stock that might be purchased by all Participants
in the Plan exceeds the number of shares of Stock available in the Plan, the
Plan Administrator shall make a pro rata allocation of the remaining shares of
Stock in as uniform a manner as shall be practicable and as the Plan
Administrator shall determine to be equitable. Fractional shares may be issued
under the Plan only to the extent permitted by the Board or the Plan
Administrator.

     

    SECTION
8.    PURCHASE PRICE

     

    The
purchase price (the “Purchase Price”) at which Stock may be acquired in an
Offering pursuant to the exercise of all or any portion of an Option granted
under the Plan shall be 85% of the Fair Market Value of the Stock on the
Purchase Date. Notwithstanding the foregoing, the Plan Administrator may
establish a different Purchase Price for any Offering, which shall not be less
than the Purchase Price set forth in the preceding sentence.

     

    SECTION
9.    PAYMENT OF PURCHASE PRICE

     

    9.1    General
Rules

     

    Subject
to Section 9.11, Stock that is acquired pursuant to the exercise of all or any
portion of an Option may be paid for only by means of payroll deductions from
the Participant’s Eligible Compensation, except that eligible employees
participating in the Non-423 Plan (or the Section 423 Plan if permitted under
Code Section 423 regulations) may participate in the Plan through other means
specified by the Plan Administrator to comply with non-U.S. legal
requirements.  Except as set forth in this Section 9, the amount of
compensation to be withheld from a Participant’s Eligible Compensation during
each pay period (or otherwise contributed) shall be determined by the
Participant’s subscription agreement.

     

    9.2    Amount
Withheld or Contributed

     

    The
amount of payroll withholding with respect to the Plan for any Participant
during any pay period (or any other contributions) shall be a fixed dollar
amount or percentage of the Participant’s Eligible Compensation, such amount to
be, in either case, at least 1% of the Participant’s Eligible Compensation for
such pay period and not more than 10% of the Participant’s Eligible Compensation
for such pay period (or such other percentages as the Plan Administrator may
establish for future Offerings). Amounts shall be withheld (or contributed) in
whole dollars or percentages only, as applicable.

     

    9.3    Payroll
Deductions and Other Contributions

     

    Payroll
deductions shall commence on the first payday following the Offering Date and
shall continue through the last payday of the Offering unless sooner altered or
terminated as provided in the Plan.  For the Non-423 Plan (or the
Section 423 Plan, if permitted), other contributions (if permitted) shall be
made at the time and in the manner prescribed by the Plan Administrator and
communicated to Eligible Employees in advance of the Subscription Date
applicable to an Offering.

     

    9.4    Memorandum
Accounts

     

    Individual
accounts shall be maintained for each Participant for memorandum purposes only
unless otherwise required under local law and the Option is granted under the
Non-423 Plan (or determined to be permitted under Code Section 423
regulations).  All payroll deductions from a Participant’s
compensation or other contributions which are credited to such account shall be
deposited with the general funds of the Company.  All payroll
deductions or contributions received or held by the Company may be used by the
Company for any corporate purpose, except for deductions or contributions made
to the Non-423 Plan (or the Section 423 Plan if permitted under Code Section 423
regulations) where, as determined by the Plan Administrator, non-U.S. law
requires segregation of such amounts.

     

    9.5    No
Interest

     

    Interest
shall not be paid on sums withheld from a Participant’s compensation (or
otherwise contributed), except as may be required by applicable law, as
determined by the Plan Administrator, for Participants in the Non-423 Plan (or
the Section 423 Plan if permitted under Code Section 423
regulations).

     

    9.6    Acquisition
of Stock

     

    Subject
to Section 7, on each Purchase Date of an Offering, each Participant shall
automatically acquire, pursuant to the exercise of the Participant’s Option, the
number of whole shares of Stock arrived at by dividing the total amount of the
Participant’s accumulated payroll deductions or other contributions for the
Purchase Period by the Purchase Price; provided, however, that in no event shall
the number of shares of Stock purchased by the Participant exceed the number of
shares of Stock subject to the Participant’s Option. Fractional shares may be
issued under the Plan only to the extent permitted by the Board or the Plan
Administrator.

     

    9.7    Refund
of Excess Amounts

     

    Any cash
balance remaining in the Participant’s account shall be refunded to the
Participant as soon as practical after the Purchase Date. In the event the cash
to be returned to a Participant pursuant to the preceding sentence is an amount
less than the amount necessary to purchase a whole share of Stock, and the Board
or the Plan Administrator has determined that fractional shares may not be
issued, the Plan Administrator may establish procedures whereby such cash is
maintained in the Participant’s account and applied to the purchase of Stock in
the subsequent Purchase Period or Offering. If the Participant does not
participate in the next Purchase Period, such remaining cash balance shall be
refunded to the Participant as soon as practical after the Purchase Date without
the payment of any interest.

     

    9.8    Withholding
Obligations

     

    At the
time the Option is exercised, in whole or in part, or at the time some or all of
the Stock is disposed of, the Participant shall make adequate provision for
local, federal, state and foreign withholding obligations of the Company, if
any, that arise upon exercise of the Option or upon disposition of the Stock.
The Company may, but shall not be obligated to, withhold from the Participant’s
compensation the amount necessary to meet such withholding
obligations.

     

    9.9    Termination
of Participation

     

    No Stock
shall be purchased on behalf of a Participant on a Purchase Date whose
participation in a current Offering or the Plan has terminated on or before such
Purchase Date.

     

    9.10    Procedural
Matters

     

    The Plan
Administrator may, from time to time, establish (a) limitations on the frequency
and/or number of changes in the amount withheld (or otherwise contributed)
during an Offering, (b) an exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, (c) payroll withholding in excess of the
amount designated by a Participant in order to adjust for delays or mistakes in
the Company’s processing of properly completed withholding elections, and (d)
such other limitations or procedures as deemed advisable by the Plan
Administrator in the Plan Administrator’s sole discretion that are consistent
with the Plan and in accordance with the requirements of Code Section 423 (for
Options granted under the Section 423 Plan).

     

    9.11    Leaves
of Absence

     

    During
leaves of absence approved by the Company or a Subsidiary Corporation or Parent
Corporation and meeting the requirements of Treasury Regulations Section
1.421-7(h)(2) (for Participants in the U.S.), a Participant may continue
participation in the Plan by delivering cash payments to the Company’s payroll
office on the Participant’s normal paydays equal to the amount of his or her
payroll deductions under the Plan had the Participant not taken a leave of
absence. Currently, the Treasury Regulations provide that a Participant may
continue participation in the Plan only during the first 90 days of a leave of
absence unless the Participant’s reemployment rights are guaranteed by statute
or contract.

     

    SECTION
10.    EVIDENCE OF STOCK OWNERSHIP

     

    Promptly
following each Purchase Date, the number of shares of Stock purchased by each
Participant shall be deposited into an account established in the Participant’s
name at a stock brokerage or other financial services firm designated or
approved by the Plan Administrator (the “ESPP Broker”). A Participant shall be
free to undertake a disposition of the shares of Stock in his or her account at
any time, but, in the absence of such a disposition, the shares of Stock must
remain in the Participant’s account at the ESPP Broker until the holding periods
set forth in Code Section 423(a) has been satisfied. With respect to shares of
Stock for which the Code Section 423(a) holding periods have been satisfied, the
Participant may move those shares of Stock to another brokerage account of the
Participant’s choosing or request that a stock certificate be issued and
delivered to him or her. A Participant who is not subject to payment of U.S.
income taxes may move his or her shares of Stock to another brokerage account of
his or her choosing or request that a stock certificate be delivered to him or
her at any time, without regard to the Code Section 423(a) holding
periods.

     

    SECTION
11.    CHANGES IN WITHHOLDING OR CONTRIBUTION AMOUNTS AND
VOLUNTARY WITHDRAWAL

     

    11.1    Changes
in Withholding or Contribution Amounts

     

    (a)
Unless the Plan Administrator establishes otherwise for a future Offering,
during an Offering, a Participant may elect to decrease the amount withheld from
his or her Eligible Compensation (or otherwise contributed) by filing an amended
subscription agreement with the Company’s payroll office on or before the
seventh day prior to the end of the pay period for which such election is to be
effective (the “Change Notice Date”); provided, however, that the Plan
Administrator may change such Change Notice Date from time to time. An amended
subscription agreement shall remain in effect until the Participant changes such
agreement in accordance with the terms of the Plan.

     

    (b)
Unless the Plan Administrator establishes otherwise for a future Offering, a
Participant may elect to increase or decrease the amount to be withheld from his
or her Eligible Compensation (or otherwise contributed) for future Offerings by
completing and filing an amended subscription agreement with the Company’s
payroll office by such Change Notice Date established by the Plan Administrator.
An amended subscription agreement shall remain in effect until the Participant
changes such agreement in accordance with the terms of the Plan.

     

    (c)
Notwithstanding the foregoing, to the extent necessary to comply with Code
Section 423 and Section 7.2, a Participant’s payroll deductions or contributions
shall be decreased to 0% during any Purchase Period if the aggregate of all
payroll deductions or contributions accumulated with respect to one or more
Purchase Periods ending within the same calendar year exceeds $25,000 of Fair
Market Value of the Stock determined as of the first day of an Offering. Payroll
deductions or contributions shall re-commence at the rate provided in such
Participant’s subscription agreement at the beginning of the first Purchase
Period that is scheduled to end in the following calendar year, unless the
Participant terminates participation in an Offering or the Plan as provided in
Section 11.2 or Section 11.3 or indicates otherwise in an amended subscription
agreement. Also notwithstanding the foregoing, a Participant’s payroll
deductions or contributions shall be decreased to 0% at such time that the
aggregate of all payroll deductions accumulated with respect to a Purchase
Period exceeds the amount necessary to purchase 250 shares of Stock in such
Purchase Period (or such other number as the Board or Committee shall specify
for a future Offering). Payroll deductions or contributions shall re-commence at
the rate provided in such Participant’s subscription agreement at the beginning
of the next Purchase Period, provided the Participant continues to participate
in the Plan and such participation complies with Section 7.2.

     

    11.2    Withdrawal
From an Offering

     

    A
Participant may withdraw from an Offering by completing and delivering to the
Company’s payroll office a written notice of withdrawal on a form provided by
the Plan Administrator for such purpose. Such withdrawal may be elected at any
time prior to the end of an Offering; provided, however, that if a Participant
withdraws after the Purchase Date for a Purchase Period of an Offering, the
withdrawal shall not affect Stock acquired by the Participant in the earlier
Purchase Periods. A Participant is prohibited from again participating in the
same Offering at any time upon withdrawal from such Offering. The Company may,
from time to time, impose a requirement that the notice of withdrawal be on file
with the Company’s payroll office for a reasonable period prior to the
effectiveness of the Participant’s withdrawal.

     

    11.3    Withdrawal
From the Plan

     

    A
Participant may withdraw from the Plan by signing a written notice of withdrawal
on a form provided by the Plan Administrator for such purpose and delivering
such notice to the Company’s payroll office. In the event a Participant
voluntarily elects to withdraw from the Plan, the withdrawing Participant may
not resume participation in the Plan during the same Offering, but may
participate in any subsequent Offering under the Plan by again satisfying the
definition of Participant. The Company may, from time to time impose a
requirement that the notice of withdrawal be on file with the Company’s payroll
office for a reasonable period prior to the effectiveness of the Participant’s
withdrawal.

     

    11.4    Return
of Payroll Deductions or Contributions

     

    Upon
withdrawal from an Offering pursuant to Section 11.2 or from the Plan pursuant
to Section 11.3, the withdrawing Participant’s accumulated payroll deductions or
contributions that have not been applied to the purchase of Stock shall be
returned as soon as practical after the withdrawal, without the payment of any
interest (subject to Section 9.5), to the Participant, and the Participant’s
interest in the Offering shall terminate. Such accumulated payroll deductions or
contributions may not be applied to any other Offering under the
Plan.

     

    SECTION
12.    TERMINATION OF EMPLOYMENT

     

    Termination
of a Participant’s employment with the Company or a Subsidiary Corporation or
Parent Corporation for any reason, including retirement, death or the failure of
a Participant to remain an Eligible Employee, shall immediately terminate the
Participant’s participation in the Plan. In such event, the payroll deductions
or contributions credited to the Participant’s account since the last Purchase
Date shall, as soon as practical, be returned to the Participant or, in the case
of a Participant’s death, to the Participant’s legal representative, and all the
Participant’s rights under the Plan shall terminate. Interest shall not be paid
on sums returned to a Participant pursuant to this Section 12, unless required
under applicable local law and the Option was granted under the Non-423 Plan (or
permitted under Code Section 423 regulations).

     

    SECTION
13.    RESTRICTIONS UPON ASSIGNMENT

     

    13.1    Transferability

     

    An Option
granted under the Plan shall not be transferable otherwise than by will or the
laws of descent and distribution, and is exercisable during the Participant’s
lifetime only by the Participant. The Plan Administrator will not recognize, and
shall be under no duty to recognize, any assignment or purported assignment by a
Participant, other than by will or the laws of descent and distribution, of the
Participant’s interest in the Plan, of his or her Option or of any rights under
his or her Option.

     

    13.2    Beneficiary
Designation

     

    A
Participant may designate on a Company-approved form a beneficiary who is to
receive any shares and cash, if any, from the Participant’s account under the
Plan in the event the Participant dies after the Purchase Date for an Offering
but prior to delivery to such Participant of such shares and cash if such
designations are permitted by the Plan Administrator.  In addition, if
permitted by the Plan Administrator, a Participant may designate on a
Company-approved form a beneficiary who is to receive any cash from the
Participant’s account under the Plan in the event that the Participant dies
before the Purchase Date for an Offering. Such designation may be changed by the
Participant at any time by written notice to the Company.

     

    SECTION
14.    NO RIGHTS OF SHAREHOLDER UNTIL SHARES
ISSUED

     

    With
respect to shares of Stock subject to an Option, a Participant shall not be
deemed to be a shareholder of the Company, and he or she shall not have any of
the rights or privileges of a shareholder. A Participant shall have the rights
and privileges of a shareholder of the Company when, but not until, the shares
have been issued following exercise of the Participant’s Option.

     

    SECTION
15.    LIMITATIONS ON SALE OF STOCK PURCHASED UNDER THE
PLAN

     

    The Plan
is intended to provide Stock for investment and not for resale. The Company does
not, however, intend to restrict or influence any Participant in the conduct of
his or her own affairs. A Participant, therefore, may sell Stock purchased under
the Plan at any time he or she chooses subject to compliance with Company
policies and any applicable federal and state securities laws. A Participant
assumes the risk of any market fluctuations in the price of the
Stock.

     

    SECTION
16.    AMENDMENT OF THE PLAN

     

    The Board
may amend the Plan in such respects as it shall deem advisable; provided,
however, that to the extent required for compliance with Code Section 423 or any
applicable law or regulation, shareholder approval will be required for any
amendment that will (a) increase the total number of shares as to which Options
may be granted under the Plan, (b) modify the class of persons eligible to
receive Options, or (c) otherwise require shareholder approval under any
applicable law or regulation; and provided further, no amendment to the Plan
shall make any change in any Option previously granted which adversely affects
the rights of any Participant.

     

    SECTION
17.    SUSPENSION OR TERMINATION OF THE PLAN

     

    The Board
may suspend or terminate the Plan at any time. Unless the Plan shall theretofore
have been terminated by the Board, the Plan shall terminate on, and no Options
shall be granted after May 24, 2012. No Options shall be granted during any
period of suspension of the Plan. Except as provided in Section 20, no such
termination of the Plan may affect Options previously granted; provided,
however, that the Plan or an Offering may be terminated by the Board on a
Purchase Date or by the Board’s setting a new Purchase Date with respect to an
Offering and a Purchase Period then in progress if the Board determines that
termination of the Plan and/or the Offering is in the best interests of the
Company and the shareholders or if continuation of the Plan and/or the Offering
would cause the Company to incur adverse accounting charges as a result of a
change in the generally accepted accounting rules applicable to the
Plan.

     

    SECTION
18.    NO RIGHTS AS AN EMPLOYEE

     

    Nothing
in the Plan shall be construed to give any person (including any Eligible
Employee or Participant) the right to remain in the employ of the Company or a
Parent Corporation or Subsidiary Corporation or to affect the right of the
Company and the Parent Corporations and Subsidiary Corporations to terminate the
employment of any person (including any Eligible Employee or Participant) at any
time with or without cause.

     

    SECTION
19.    EFFECT UPON OTHER PLANS

     

    The
adoption of the Plan shall not affect any other compensation or incentive plans
in effect for the Company or any Parent Corporation or Subsidiary Corporation.
Nothing in the Plan shall be construed to limit the right of the Company, any
Parent Corporation or any Subsidiary Corporation to (a) establish any other
forms of incentives or compensation for employees of the Company, any Parent
Corporation or any Subsidiary Corporation or (b) grant or assume options
otherwise than under the Plan in connection with any proper corporate purpose,
including, but not by way of limitation, the grant or assumption of options in
connection with the acquisition, by purchase, lease merger, consolidation or
otherwise, of the business, stock or assets of any corporation, firm or
association.

     

    SECTION
20.    ADJUSTMENTS

     

    20.1    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 shareholders 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 Stock, then the Plan Administrator, in its sole discretion,
shall make such equitable adjustments as it shall deem appropriate in the
circumstances in (i) the maximum number and kind of shares of Stock subject to
the Plan as set forth in Section 4, (ii) the maximum number and kind of
securities that are subject to any outstanding Option and the per share price of
such securities and (iii) the maximum number and kind of shares of Stock that
may be purchased by a Participant in a Purchase Period. The determination by the
Plan Administrator as to the terms of any of the foregoing adjustments shall be
conclusive and binding. Notwithstanding the foregoing, a dissolution,
liquidation or Company Transaction shall not be governed by this Section 20.1
but shall be governed by Sections 20.2 and 20.3, respectively.

     

    20.2    Dissolution
or Liquidation of the Company

     

    In the
event of the proposed dissolution or liquidation of the Company, the Offering
then in progress shall be shortened by setting a new Purchase Date and shall
terminate immediately prior to the consummation of such proposed dissolution or
liquidation, unless provided otherwise by the Board. The new Purchase Date shall
be a specified date before the date of the Company’s proposed dissolution or
liquidation. The Board shall notify each Participant in writing prior to the new
Purchase Date that the Purchase Date for the Participant’s Option has been
changed to the new Purchase Date and that the Participant’s Option shall be
exercised automatically on the new Purchase Date, unless prior to such date the
Participant has withdrawn from an Offering then in progress or the Plan as
provided in Section 11.

     

    20.3    Company
Transaction

     

    In the
event of a proposed Company Transaction, each outstanding Option shall be
assumed or an equivalent option substituted by the successor company or parent
thereof (the “Successor Corporation”). In the event that the Successor
Corporation refuses to assume or substitute for the Option, any Offering then in
progress shall be shortened by setting a new Purchase Date. The new Purchase
Date shall be a specified date before the date of the Company Transaction. The
Board shall notify each Participant in writing, prior to the new Purchase Date,
that the Purchase Date for the Participant’s Option has been changed to the new
Purchase Date and that the Participant’s Option shall be exercised automatically
on the new Purchase Date, unless prior to such date the Participant has
withdrawn from an Offering then in progress or the Plan as provided in Section
11.

     

    20.4    Limitations

     

    The grant
of Options 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.

     

    SECTION
21.    REGISTRATION; CERTIFICATES FOR SHARES

     

    The
Company shall be under no obligation to any Participant to register for offering
or resale under the Securities Act of 1933, as amended, or register or qualify
under state securities laws, any shares of Stock. 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.

     

    SECTION
22.    GOVERNING LAW

     

    The Plan
and all determinations made and actions taken 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 such state’s conflict
of laws principles.

     

    SECTION
23.    EFFECTIVE DATE

     

    The
Plan’s effective date is the date on which it is approved by the Company’s
shareholders.