Document:

<PAGE>

                                                                    EXHIBIT 10.5

                               ISILON SYSTEMS INC.

                           2006 EQUITY INCENTIVE PLAN

     1. Purposes of the Plan. The purposes of this Plan are:

          -    to attract and retain the best available personnel for positions
               of substantial responsibility,

          -    to provide additional incentive to Employees, Directors and
               Consultants, and

          -    to promote the success of the Company's business.

          The Plan permits the grant of Incentive Stock Options, Nonstatutory
Stock Options, Restricted Stock, Restricted Stock Units, Stock Appreciation
Rights, Performance Units and Performance Shares.

     2. Definitions. As used herein, the following definitions will apply:

          (a) "Administrator" means the Board or any of its Committees as will
be administering the Plan, in accordance with Section 4 of the Plan.

          (b) "Applicable Laws" means the requirements relating to the
administration of equity-based awards under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where Awards are, or will be, granted under
the Plan.

          (c) "Award" means, individually or collectively, a grant under the
Plan of Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock
Units, Performance Units or Performance Shares.

          (d) "Award Agreement" means the written or electronic agreement
setting forth the terms and provisions applicable to each Award granted under
the Plan. The Award Agreement is subject to the terms and conditions of the
Plan.

          (e) "Board" means the Board of Directors of the Company.

          (f) "Change in Control" means the occurrence of any of the following
events:

               (i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule
13d-3 of the Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting power represented
by the Company's then outstanding voting securities;

               (ii) The consummation of the sale or disposition by the Company
of all or substantially all of the Company's assets;

               (iii) A change in the composition of the Board occurring within a
two (2)-year period, as a result of which fewer than a majority of the directors
are Incumbent Directors. "Incumbent

<PAGE>

Directors" means directors who either (A) are Directors as of the effective date
of the Plan, or (B) are elected, or nominated for election, to the Board with
the affirmative votes of at least a majority of the Incumbent Directors at the
time of such election or nomination (but will not include an individual whose
election or nomination is in connection with an actual or threatened proxy
contest relating to the election of directors to the Company); or

               (iv) The consummation of a merger or consolidation of the Company
with any other corporation, other than a merger or consolidation which would
result in the voting securities of the Company outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or its parent) at least
fifty percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation.

          (g) "Code" means the Internal Revenue Code of 1986, as amended. Any
reference to a section of the Code herein will be a reference to any successor
or amended section of the Code.

          (h) "Committee" means a committee of Directors or of other individuals
satisfying Applicable Laws appointed by the Board in accordance with Section 4
hereof.

          (i) "Common Stock" means the common stock of the Company.

          (j) "Company" means Isilon Systems Inc., a Delaware corporation, or
any successor thereto.

          (k) "Consultant" means any person, including an advisor, engaged by
the Company or a Parent or Subsidiary to render services to such entity.

          (l) "Director" means a member of the Board.

          (m) "Disability" means total and permanent disability as defined in
Section 22(e)(3) of the Code, provided that in the case of Awards other than
Incentive Stock Options, the Administrator in its discretion may determine
whether a permanent and total disability exists in accordance with uniform and
non-discriminatory standards adopted by the Administrator from time to time.

          (n) "Employee" means any person, including Officers and Directors,
employed by the Company or any Parent or Subsidiary of the Company. Neither
service as a Director nor payment of a director's fee by the Company will be
sufficient to constitute "employment" by the Company.

          (o) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

          (p) "Exchange Program" means a program under which (i) outstanding
Awards are surrendered or cancelled in exchange for Awards of the same type
(which may have lower exercise prices and different terms), Awards of a
different type, and/or cash, (ii) Participants would have the opportunity to
transfer any outstanding Awards to a financial institution or other person or
entity selected by the Administrator, and/or (iii) the exercise price of an
outstanding Award is reduced. The Administrator will determine the terms and
conditions of any Exchange Program in its sole discretion. Notwithstanding the
previous sentence, the Administrator may not institute an Exchange Program
without stockholder approval.

                                      -2-

<PAGE>

          (q) "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

               (i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value will be the closing sales price for such stock (or the closing
bid, if no sales were reported) as quoted on such exchange or system on the day
of determination, as reported in The Wall Street Journal or such other source as
the Administrator deems reliable;

               (ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, the Fair Market Value of
a Share will be the mean between the high bid and low asked prices for the
Common Stock on the day of determination, as reported in The Wall Street Journal
or such other source as the Administrator deems reliable;

               (iii) For purposes of any Awards granted on the Registration
Date, the Fair Market Value will be the initial price to the public as set forth
in the final prospectus included within the registration statement in Form S-1
filed with the Securities and Exchange Commission for the initial public
offering of the Company's Common Stock; or

               (iv) In the absence of an established market for the Common
Stock, the Fair Market Value will be determined in good faith by the
Administrator.

          (r) "Fiscal Year" means the fiscal year of the Company.

          (s) "Incentive Stock Option" means an Option intended to qualify as an
incentive stock option within the meaning of Section 422 of the Code and the
regulations promulgated thereunder.

          (t) "Inside Director" means a Director who is an Employee.

          (u) "Nonstatutory Stock Option" means an Option that by its terms does
not qualify or is not intended to qualify as an Incentive Stock Option.

          (v) "Officer" means a person who is an officer of the Company within
the meaning of Section 16 of the Exchange Act and the rules and regulations
promulgated thereunder.

          (w) "Option" means a stock option granted pursuant to the Plan.

          (x) "Outside Director" means a Director who is not an Employee.

          (y) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

          (z) "Participant" means the holder of an outstanding Award.

          (aa) "Performance Share" means an Award denominated in Shares which
may be earned in whole or in part upon attainment of performance goals or other
vesting criteria as the Administrator may determine pursuant to Section 10.

                                      -3-

<PAGE>

          (bb) "Performance Unit" means an Award which may be earned in whole or
in part upon attainment of performance goals or other vesting criteria as the
Administrator may determine and which may be settled for cash, Shares or other
securities or a combination of the foregoing pursuant to Section 10.

          (cc) "Period of Restriction" means the period during which the
transfer of Shares of Restricted Stock are subject to restrictions and
therefore, the Shares are subject to a substantial risk of forfeiture. Such
restrictions may be based on the passage of time, the achievement of target
levels of performance, or the occurrence of other events as determined by the
Administrator.

          (dd) "Plan" means this 2006 Equity Incentive Plan.

          (ee) "Registration Date" means the effective date of the first
registration statement that is filed by the Company and declared effective
pursuant to Section 12(g) of the Exchange Act, with respect to any class of the
Company's securities.

          (ff) "Restricted Stock" means Shares issued pursuant to a Restricted
Stock award under Section 7 of the Plan, or issued pursuant to the early
exercise of an Option.

          (gg) "Restricted Stock Unit" means a bookkeeping entry representing an
amount equal to the Fair Market Value of one Share, granted pursuant to Section
8. Each Restricted Stock Unit represents an unfunded and unsecured obligation of
the Company.

          (hh) "Rule 16b-3" means Rule 16b-3 of the Exchange Act or any
successor to Rule 16b-3, as in effect when discretion is being exercised with
respect to the Plan.

          (ii) "Section 16(b)" means Section 16(b) of the Exchange Act.

          (jj) "Service Provider" means an Employee, Director or Consultant.

          (kk) "Share" means a share of the Common Stock, as adjusted in
accordance with Section 14 of the Plan.

          (ll) "Stock Appreciation Right" means an Award, granted alone or in
connection with an Option, that pursuant to Section 9 is designated as a Stock
Appreciation Right.

          (mm) "Subsidiary" means a "subsidiary corporation", whether now or
hereafter existing, as defined in Section 424(f) of the Code.

     3. Stock Subject to the Plan.

          (a) Stock Subject to the Plan. Subject to the provisions of Section 14
of the Plan, the maximum aggregate number of Shares that may be issued under the
Plan is 9,300,000 Shares, plus (i) any Shares that, as of the Registration
Date, have been reserved but not issued pursuant to any awards granted under the
Company's Amended and Restated 2001 Stock Plan (the "2001 Plan") and are not
subject to any awards granted thereunder, and (ii) any Shares subject to stock
options or similar awards granted under the 2001 Plan that expire or otherwise
terminate without having been exercised in full and Shares issued pursuant to
awards granted under the 2001 Plan that are forfeited to or repurchased by the
Company.
                                      -4-

<PAGE>
The Shares may be authorized, but unissued, or reacquired Common Stock.

          (b) Automatic Share Reserve Increase. The number of Shares available
for issuance under the Plan shall be increased on the first day of each Fiscal
Year beginning with the 2008 Fiscal Year, in an amount equal to the least of (A)
3,500,000 Shares, (B) five percent (5%) of the outstanding Shares on the
last day of the immediately preceding Fiscal Year or (C) such number of Shares
determined by the Board.

          (c) Lapsed Awards. If an Award expires or becomes unexercisable
without having been exercised in full, is surrendered pursuant to an Exchange
Program, or, with respect to Restricted Stock, Restricted Stock Units,
Performance Units or Performance Shares, is forfeited to or repurchased by the
Company due to failure to vest, the unpurchased Shares (or for Awards other than
Options or Stock Appreciation Rights the forfeited or repurchased Shares) which
were subject thereto will become available for future grant or sale under the
Plan (unless the Plan has terminated). With respect to Stock Appreciation
Rights, only Shares actually issued pursuant to a Stock Appreciation Right will
cease to be available under the Plan; all remaining Shares under Stock
Appreciation Rights will remain available for future grant or sale under the
Plan (unless the Plan has terminated). Shares that have actually been issued
under the Plan under any Award will not be returned to the Plan and will not
become available for future distribution under the Plan; provided, however, that
if Shares issued pursuant to Awards of Restricted Stock, Restricted Stock Units,
Performance Shares or Performance Units are repurchased by the Company or are
forfeited to the Company, such Shares will become available for future grant
under the Plan. Shares used to pay the exercise price of an Award or to satisfy
the tax withholding obligations related to an Award will become available for
future grant or sale under the Plan. To the extent an Award under the Plan is
paid out in cash rather than Shares, such cash payment will not result in
reducing the number of Shares available for issuance under the Plan.
Notwithstanding the foregoing and, subject to adjustment as provided in Section
14, the maximum number of Shares that may be issued upon the exercise of
Incentive Stock Options shall equal the aggregate Share number stated in Section
3(a), plus, to the extent allowable under Section 422 of the Code and the
Treasury Regulations promulgated thereunder, any Shares that become available
for issuance under the Plan pursuant to Section 3(c).

          (d) Share Reserve. The Company, during the term of this Plan, will at
all times reserve and keep available such number of Shares as will be sufficient
to satisfy the requirements of the Plan.

     4. Administration of the Plan.

          (a) Procedure.

               (i) Multiple Administrative Bodies. Different Committees with
respect to different groups of Service Providers may administer the Plan.

               (ii) Section 162(m). To the extent that the Administrator
determines it to be desirable to qualify Options granted hereunder as
"performance-based compensation" within the meaning of Section 162(m) of the
Code, the Plan will be administered by a Committee of two (2) or more "outside
directors" within the meaning of Section 162(m) of the Code.

               (iii) Rule 16b-3. To the extent desirable to qualify transactions
hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder
will be structured to satisfy the requirements for exemption under Rule 16b-3.

                                      -5-

<PAGE>

               (iv) Other Administration. Other than as provided above, the Plan
will be administered by (A) the Board or (B) a Committee, which committee will
be constituted to satisfy Applicable Laws.

          (b) Powers of the Administrator. Subject to the provisions of the
Plan, and in the case of a Committee, subject to the specific duties delegated
by the Board to such Committee, the Administrator will have the authority, in
its discretion:

               (i) to determine the Fair Market Value;

               (ii) to select the Service Providers to whom Awards may be
granted hereunder;

               (iii) to determine the number of Shares to be covered by each
Award granted hereunder;

               (iv) to approve forms of Award Agreements for use under the Plan;

               (v) to determine the terms and conditions, not inconsistent with
the terms of the Plan, of any Award granted hereunder. Such terms and conditions
include, but are not limited to, the exercise price, the time or times when
Awards may be exercised (which may be based on performance criteria), any
vesting acceleration or waiver of forfeiture restrictions, and any restriction
or limitation regarding any Award or the Shares relating thereto, based in each
case on such factors as the Administrator will determine;

               (vi) to determine the terms and conditions of any, and to
institute any Exchange Program. Notwithstanding the foregoing sentence, the
Administrator may not institute an Exchange Program without stockholder
approval;

               (vii) to construe and interpret the terms of the Plan and Awards
granted pursuant to the Plan;

               (viii) to prescribe, amend and rescind rules and regulations
relating to the Plan, including rules and regulations relating to sub-plans
established for the purpose of satisfying applicable foreign laws;

               (ix) to modify or amend each Award (subject to Section 19(c) of
the Plan), including the discretionary authority to extend the post-termination
exercisability period of Awards;

               (x) to allow Participants to satisfy withholding tax obligations
in such manner as prescribed in Section 15;

               (xi) to authorize any person to execute on behalf of the Company
any instrument required to effect the grant of an Award previously granted by
the Administrator;

               (xii) to allow a Participant to defer the receipt of the payment
of cash or the delivery of Shares that would otherwise be due to such
Participant under an Award

               (xiii) to make all other determinations deemed necessary or
advisable for administering the Plan.

                                      -6-

<PAGE>

          (c) Effect of Administrator's Decision. The Administrator's decisions,
determinations and interpretations will be final and binding on all Participants
and any other holders of Awards.

     5. Eligibility. Nonstatutory Stock Options, Stock Appreciation Rights,
Restricted Stock, Restricted Stock Units, Performance Shares and Performance
Units may be granted to Service Providers. Incentive Stock Options may be
granted only to Employees.

     6. Stock Options.

          (a) Limitations. Each Option will be designated in the Award Agreement
as either an Incentive Stock Option or a Nonstatutory Stock Option. However,
notwithstanding such designation, to the extent that the aggregate Fair Market
Value of the Shares with respect to which Incentive Stock Options are
exercisable for the first time by the Participant during any calendar year
(under all plans of the Company and any Parent or Subsidiary) exceeds one
hundred thousand dollars ($100,000), such Options will be treated as
Nonstatutory Stock Options. For purposes of this Section 6(a), Incentive Stock
Options will be taken into account in the order in which they were granted. The
Fair Market Value of the Shares will be determined as of the time the Option
with respect to such Shares is granted.

          (b) Term of Option. The term of each Option will be stated in the
Award Agreement. In the case of an Incentive Stock Option, the term will be ten
(10) years from the date of grant or such shorter term as may be provided in the
Award Agreement. Moreover, in the case of an Incentive Stock Option granted to a
Participant who, at the time the Incentive Stock Option is granted, owns stock
representing more than ten percent (10%) of the total combined voting power of
all classes of stock of the Company or any Parent or Subsidiary, the term of the
Incentive Stock Option will be five (5) years from the date of grant or such
shorter term as may be provided in the Award Agreement.

          (c) Option Exercise Price and Consideration.

               (i) Exercise Price. The per share exercise price for the Shares
to be issued pursuant to exercise of an Option will be determined by the
Administrator, subject to the following:

                    (1) In the case of an Incentive Stock Option

                         a) granted to an Employee who, at the time the
Incentive Stock Option is granted, owns stock representing more than ten percent
(10%) of the voting power of all classes of stock of the Company or any Parent
or Subsidiary, the per Share exercise price will be no less than one hundred ten
percent (110%) of the Fair Market Value per Share on the date of grant.

                         b) granted to any Employee other than an Employee
described in paragraph (A) immediately above, the per Share exercise price will
be no less than one hundred percent (100%) of the Fair Market Value per Share on
the date of grant.

                    (2) In the case of a Nonstatutory Stock Option, the per
Share exercise price will be no less than one hundred percent (100%) of the Fair
Market Value per Share on the date of grant.

                    (3) Notwithstanding the foregoing, Options may be granted
with a per Share exercise price of less than one hundred percent (100%) of the
Fair Market Value per Share on the

                                      -7-

<PAGE>

date of grant pursuant to a transaction described in, and in a manner consistent
with, Section 424(a) of the Code.

               (ii) Waiting Period and Exercise Dates. At the time an Option is
granted, the Administrator will fix the period within which the Option may be
exercised and will determine any conditions that must be satisfied before the
Option may be exercised.

               (iii) Form of Consideration. The Administrator will determine the
acceptable form of consideration for exercising an Option, including the method
of payment. In the case of an Incentive Stock Option, the Administrator will
determine the acceptable form of consideration at the time of grant. Such
consideration may consist entirely of: (1) cash; (2) check; (3) other Shares,
provided Shares acquired directly or indirectly from the Company, (A) have been
owned by the Participant and not subject to substantial risk of forfeiture for
more than six months on the date of surrender, and (B) have a Fair Market Value
on the date of surrender equal to the aggregate exercise price of the Shares as
to which said Option will be exercised; (4) consideration received by the
Company under a broker-assisted (or other) cashless exercise program implemented
by the Company in connection with the Plan; (5) any combination of the foregoing
methods of payment; or (6) such other consideration and method of payment for
the issuance of Shares to the extent permitted by Applicable Laws.

          (d) Exercise of Option.

               (i) Procedure for Exercise; Rights as a Stockholder. Any Option
granted hereunder will be exercisable according to the terms of the Plan and at
such times and under such conditions as determined by the Administrator and set
forth in the Award Agreement. An Option may not be exercised for a fraction of a
Share.

                    An Option will be deemed exercised when the Company
receives: (i) notice of exercise (in such form as the Administrator specify from
time to time) from the person entitled to exercise the Option, and (ii) full
payment for the Shares with respect to which the Option is exercised (together
with applicable withholding taxes). Full payment may consist of any
consideration and method of payment authorized by the Administrator and
permitted by the Award Agreement and the Plan. Shares issued upon exercise of an
Option will be issued in the name of the Participant or, if requested by the
Participant, in the name of the Participant and his or her spouse. Until the
Shares are issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder will exist with
respect to the Shares subject to an Option, notwithstanding the exercise of the
Option. The Company will issue (or cause to be issued) such Shares promptly
after the Option is exercised. No adjustment will be made for a dividend or
other right for which the record date is prior to the date the Shares are
issued, except as provided in Section 14 of the Plan.

                    Exercising an Option in any manner will decrease the number
of Shares thereafter available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.

               (ii) Termination of Relationship as a Service Provider. If a
Participant ceases to be a Service Provider, other than upon the Participant's
death or Disability, the Participant may exercise his or her Option within such
period of time as is specified in the Award Agreement to the extent that the
Option is vested on the date of termination (but in no event later than the
expiration of the term of such Option as set forth in the Award Agreement). In
the absence of a specified time in the Award Agreement, the Option will remain
exercisable for three (3) months following the Participant's

                                      -8-

<PAGE>

termination. Unless otherwise provided by the Administrator, if on the date of
termination the Participant is not vested as to his or her entire Option, the
Shares covered by the unvested portion of the Option will revert to the Plan. If
after termination the Participant does not exercise his or her Option within the
time specified by the Administrator, the Option will terminate, and the Shares
covered by such Option will revert to the Plan.

               (iii) Disability of Participant. If a Participant ceases to be a
Service Provider as a result of the Participant's Disability, the Participant
may exercise his or her Option within such period of time as is specified in the
Award Agreement to the extent the Option is vested on the date of termination
(but in no event later than the expiration of the term of such Option as set
forth in the Award Agreement). In the absence of a specified time in the Award
Agreement, the Option will remain exercisable for twelve (12) months following
the Participant's termination. Unless otherwise provided by the Administrator,
if on the date of termination the Participant is not vested as to his or her
entire Option, the Shares covered by the unvested portion of the Option will
revert to the Plan. If after termination the Participant does not exercise his
or her Option within the time specified herein, the Option will terminate, and
the Shares covered by such Option will revert to the Plan.

               (iv) Death of Participant. If a Participant dies while a Service
Provider, the Option may be exercised following the Participant's death within
such period of time as is specified in the Award Agreement to the extent that
the Option is vested on the date of death (but in no event may the option be
exercised later than the expiration of the term of such Option as set forth in
the Award Agreement), by the Participant's designated beneficiary, provided such
beneficiary has been designated prior to Participant's death in a form
acceptable to the Administrator. If no such beneficiary has been designated by
the Participant, then such Option may be exercised by the personal
representative of the Participant's estate or by the person(s) to whom the
Option is transferred pursuant to the Participant's will or in accordance with
the laws of descent and distribution. In the absence of a specified time in the
Award Agreement, the Option will remain exercisable for twelve (12) months
following Participant's death. Unless otherwise provided by the Administrator,
if at the time of death Participant is not vested as to his or her entire
Option, the Shares covered by the unvested portion of the Option will
immediately revert to the Plan. If the Option is not so exercised within the
time specified herein, the Option will terminate, and the Shares covered by such
Option will revert to the Plan.

     7. Restricted Stock.

          (a) Grant of Restricted Stock. Subject to the terms and provisions of
the Plan, the Administrator, at any time and from time to time, may grant Shares
of Restricted Stock to Service Providers in such amounts as the Administrator,
in its sole discretion, will determine.

          (b) Restricted Stock Agreement. Each Award of Restricted Stock will be
evidenced by an Award Agreement that will specify the Period of Restriction, the
number of Shares granted, and such other terms and conditions as the
Administrator, in its sole discretion, will determine. Unless the Administrator
determines otherwise, the Company as escrow agent will hold Shares of Restricted
Stock until the restrictions on such Shares have lapsed.

          (c) Transferability. Except as provided in this Section 7, Shares of
Restricted Stock may not be sold, transferred, pledged, assigned, or otherwise
alienated or hypothecated until the end of the applicable Period of Restriction.

          (d) Other Restrictions. The Administrator, in its sole discretion, may
impose such other restrictions on Shares of Restricted Stock as it may deem
advisable or appropriate.

                                      -9-

<PAGE>

          (e) Removal of Restrictions. Except as otherwise provided in this
Section 7, Shares of Restricted Stock covered by each Restricted Stock grant
made under the Plan will be released from escrow as soon as practicable after
the last day of the Period of Restriction or at such other time as the
Administrator may determine. The Administrator, in its discretion, may
accelerate the time at which any restrictions will lapse or be removed.

          (f) Voting Rights. During the Period of Restriction, Service Providers
holding Shares of Restricted Stock granted hereunder may exercise full voting
rights with respect to those Shares, unless the Administrator determines
otherwise.

          (g) Dividends and Other Distributions. During the Period of
Restriction, Service Providers holding Shares of Restricted Stock will be
entitled to receive all dividends and other distributions paid with respect to
such Shares, unless the Administrator provides otherwise. If any such dividends
or distributions are paid in Shares, the Shares will be subject to the same
restrictions on transferability and forfeitability as the Shares of Restricted
Stock with respect to which they were paid.

          (h) Return of Restricted Stock to Company. On the date set forth in
the Award Agreement, the Restricted Stock for which restrictions have not lapsed
will revert to the Company and again will become available for grant under the
Plan.

     8. Restricted Stock Units.

          (a) Grant. Restricted Stock Units may be granted at any time and from
time to time as determined by the Administrator. After the Administrator
determines that it will grant Restricted Stock Units under the Plan, it shall
advise the Participant in an Award Agreement of the terms, conditions, and
restrictions related to the grant, including the number of Restricted Stock
Units.

          (b) Vesting Criteria and Other Terms. The Administrator shall set
vesting criteria in its discretion, which, depending on the extent to which the
criteria are met, will determine the number of Restricted Stock Units that will
be paid out to the Participant. The Administrator may set vesting criteria based
upon the achievement of Company-wide, business unit, or individual goals
(including, but not limited to, continued employment), or any other basis
determined by the Administrator in its discretion.

          (c) Earning Restricted Stock Units. Upon meeting the applicable
vesting criteria, the Participant shall be entitled to receive a payout as
determined by the Administrator. Notwithstanding the foregoing, at any time
after the grant of Restricted Stock Units, the Administrator, in its sole
discretion, may reduce or waive any vesting criteria that must be met to receive
a payout.

          (d) Form and Timing of Payment. Payment of earned Restricted Stock
Units shall be made as soon as practicable after the date(s) determined by the
Administrator and set forth in the Award Agreement. The Administrator, in its
sole discretion, may only settle earned Restricted Stock Units in cash, Shares,
or a combination of both.

          (e) Cancellation. On the date set forth in the Award Agreement, all
unearned Restricted Stock Units shall be forfeited to the Company.

                                      -10-

<PAGE>

     9. Stock Appreciation Rights.

          (a) Grant of Stock Appreciation Rights. Subject to the terms and
conditions of the Plan, a Stock Appreciation Right may be granted to Service
Providers at any time and from time to time as will be determined by the
Administrator, in its sole discretion.

          (b) Number of Shares. The Administrator will have complete discretion
to determine the number of Stock Appreciation Rights granted to any Service
Provider.

          (c) Exercise Price and Other Terms. The per share exercise price for
the Shares to be issued pursuant to exercise of a Stock Appreciation Right shall
be determined by the Administrator and shall be no less than one hundred percent
(100%) of the Fair Market Value per Share on the date of grant, except that
Stock Appreciation Rights may be granted with a per Share exercise price of less
than one hundred percent (100%) of the Fair Market Value per Share on the date
of grant pursuant to a transaction described in, and in a manner consistent
with, Section 424(a) of the Code. Otherwise, subject to Section 6(a) of the
Plan, the Administrator, subject to the provisions of the Plan, shall have
complete discretion to determine the terms and conditions of Stock Appreciation
Rights granted under the Plan.

          (d) Stock Appreciation Right Agreement. Each Stock Appreciation Right
grant will be evidenced by an Award Agreement that will specify the exercise
price, the term of the Stock Appreciation Right, the conditions of exercise, and
such other terms and conditions as the Administrator, in its sole discretion,
will determine.

          (e) Expiration of Stock Appreciation Rights. A Stock Appreciation
Right granted under the Plan will expire upon the date determined by the
Administrator, in its sole discretion, and set forth in the Award Agreement.
Notwithstanding the foregoing, the rules of Section 6(d) also will apply to
Stock Appreciation Rights.

          (f) Payment of Stock Appreciation Right Amount. Upon exercise of a
Stock Appreciation Right, a Participant will be entitled to receive payment from
the Company in an amount determined by multiplying:

               (i) The difference between the Fair Market Value of a Share on
the date of exercise over the exercise price; times

               (ii) The number of Shares with respect to which the Stock
Appreciation Right is exercised.

     At the discretion of the Administrator, the payment upon Stock Appreciation
Right exercise may be in cash, in Shares of equivalent value, or in some
combination thereof.

     10. Performance Units and Performance Shares.

          (a) Grant of Performance Units/Shares. Performance Units and
Performance Shares may be granted to Service Providers at any time and from time
to time, as will be determined by the Administrator, in its sole discretion. The
Administrator will have complete discretion in determining the number of
Performance Units and Performance Shares granted to each Participant.

                                      -11-

<PAGE>

          (b) Value of Performance Units/Shares. Each Performance Unit will have
an initial value that is established by the Administrator on or before the date
of grant. Each Performance Share will have an initial value equal to the Fair
Market Value of a Share on the date of grant.

          (c) Performance Objectives and Other Terms. The Administrator will set
performance objectives or other vesting provisions (including, without
limitation, continued status as a Service Provider) in its discretion which,
depending on the extent to which they are met, will determine the number or
value of Performance Units/Shares that will be paid out to the Service
Providers. The time period during which the performance objectives or other
vesting provisions must be met will be called the "Performance Period." Each
Award of Performance Units/Shares will be evidenced by an Award Agreement that
will specify the Performance Period, and such other terms and conditions as the
Administrator, in its sole discretion, will determine. The Administrator may set
performance objectives based upon the achievement of Company-wide, divisional,
or individual goals, applicable federal or state securities laws, or any other
basis determined by the Administrator in its discretion.

          (d) Earning of Performance Units/Shares. After the applicable
Performance Period has ended, the holder of Performance Units/Shares will be
entitled to receive a payout of the number of Performance Units/Shares earned by
the Participant over the Performance Period, to be determined as a function of
the extent to which the corresponding performance objectives or other vesting
provisions have been achieved. After the grant of a Performance Unit/Share, the
Administrator, in its sole discretion, may reduce or waive any performance
objectives or other vesting provisions for such Performance Unit/Share.

          (e) Form and Timing of Payment of Performance Units/Shares. Payment of
earned Performance Units/Shares will be made as soon as practicable after the
expiration of the applicable Performance Period. The Administrator, in its sole
discretion, may pay earned Performance Units/Shares in the form of cash, in
Shares (which have an aggregate Fair Market Value equal to the value of the
earned Performance Units/Shares at the close of the applicable Performance
Period) or in a combination thereof.

          (f) Cancellation of Performance Units/Shares. On the date set forth in
the Award Agreement, all unearned or unvested Performance Units/Shares will be
forfeited to the Company, and again will be available for grant under the Plan.

     11. Formula Awards to Outside Directors.

          (a) General. Outside Directors will be entitled to receive all types
of Awards (except Incentive Stock Options) under this Plan, including
discretionary Awards not covered under this Section 11. All grants of Awards to
Outside Directors pursuant to this Section will be automatic and
nondiscretionary, except as otherwise provided herein, and will be made in
accordance with the following provisions:

          (b) Type of Option. If Options are granted pursuant to this Section
they will be Nonstatutory Stock Options and, except as otherwise provided
herein, will be subject to the other terms and conditions of the Plan.

          (c) No Discretion. No person will have any discretion to select which
Outside Directors will be granted Awards under this Section or to determine the
number of Shares to be covered by such Awards (except as provided in Sections
11(d), 11(g) and 14).

                                      -12-

<PAGE>

          (d) Initial Award. Each person who first becomes an Outside Director
following the Registration Date will be granted an Option to purchase such
number of Shares as determined by the Administrator in its sole discretion (the
"Initial Award") on or about the date on which such person first becomes an
Outside Director, whether through election by the stockholders of the Company or
appointment by the Board to fill a vacancy. Nothing in this Section 11(d) shall
obligate the Administrator to grant an Initial Award if it should determine in
its discretion not to do so.

          (e) Annual Award. Each Outside Director will be automatically granted
an Option to purchase 20,000 Shares (an "Annual Award") on each date of the
annual meeting of the stockholders of the Company beginning in 2007, if as of
such date, he or she will have served on the Board for at least the preceding
ten (10) months.

          (f) Terms. The terms of each Award granted pursuant to this Section
will be as follows:

               (i) The term of the Award will be ten (10) years.

               (ii) The exercise price for Shares subject to Awards will be one
hundred percent (100%) of the Fair Market Value on the grant date.

               (iii) Subject to Section 14, the Initial Award will vest and
become exercisable as the Administrator determines in its sole discretion.

               (iv) Subject to Section 14, the Annual Award will vest and become
exercisable as to one hundred percent (100%) of the Shares subject to such Award
on the day prior to the next year's annual stockholder meeting (but in no event
later than December 31 of the calendar year following the calendar year during
which the Annual Award was granted), provided that the Participant continues to
serve as a Director through such date.

          (g) Adjustments. The Administrator in its discretion may change and
otherwise revise the terms of Awards granted under this Section 11, including,
without limitation, the number of Shares and exercise prices thereof, for Awards
granted on or after the date the Administrator determines to make any such
change or revision.

     12. Leaves of Absence/Transfer Between Locations. Unless the Administrator
provides otherwise, vesting of Awards granted hereunder will be suspended during
any unpaid leave of absence. A Service Provider will not cease to be an Employee
in the case of (i) any leave of absence approved by the Company or (ii)
transfers between locations of the Company or between the Company, its Parent,
or any Subsidiary. For purposes of Incentive Stock Options, no such leave may
exceed ninety (90) days, unless reemployment upon expiration of such leave is
guaranteed by statute or contract. If reemployment upon expiration of a leave of
absence approved by the Company is not so guaranteed, then three (3) months
following the ninety-first (91st) day of such leave any Incentive Stock Option
held by the Participant will cease to be treated as an Incentive Stock Option
and will be treated for tax purposes as a Nonstatutory Stock Option.

     13. Transferability of Awards. Unless determined otherwise by the
Administrator, an Award may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner other than by will or by the laws of
descent or distribution and may be exercised, during the lifetime of the
Participant, only by the Participant. If the Administrator makes an Award
transferable, such Award will contain such additional terms and conditions as
the Administrator deems appropriate.

                                      -13-

<PAGE>

     14. Adjustments; Dissolution or Liquidation; Merger or Change in Control.

          (a) Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, Shares, other securities, or other property),
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase, or exchange of
Shares or other securities of the Company, or other change in the corporate
structure of the Company affecting the Shares occurs, the Administrator, in
order to prevent diminution or enlargement of the benefits or potential benefits
intended to be made available under the Plan, will adjust the number and class
of Shares that may be delivered under the Plan and/or the number, class, and
price of Shares covered by each outstanding Award, the numerical Share limits in
Section 3 of the Plan and the number of Shares issuable pursuant to Awards to be
granted under Section 11.

          (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, the Administrator will notify each
Participant as soon as practicable prior to the effective date of such proposed
transaction. To the extent it has not been previously exercised, an Award will
terminate immediately prior to the consummation of such proposed action.

          (c) Change in Control. In the event of a merger or Change in Control,
each outstanding Award will be treated as the Administrator determines,
including, without limitation, that each Award be assumed or an equivalent
option or right substituted by the successor corporation or a Parent or
Subsidiary of the successor corporation. The Administrator shall not be required
to treat all Awards similarly in the transaction.

          In the event that the successor corporation does not assume or
substitute for the Award, the Participant will fully vest in and have the right
to exercise all of his or her outstanding Options and Stock Appreciation Rights,
including Shares as to which such Awards would not otherwise be vested or
exercisable, all restrictions on Restricted Stock and Restricted Stock Units
will lapse, and, with respect to Awards with performance-based vesting, all
performance goals or other vesting criteria will be deemed achieved at one
hundred percent (100%) of target levels and all other terms and conditions met.
In addition, if an Option or Stock Appreciation Right is not assumed or
substituted in the event of a Change in Control, the Administrator will notify
the Participant in writing or electronically that the Option or Stock
Appreciation Right will be exercisable for a period of time determined by the
Administrator in its sole discretion, and the Option or Stock Appreciation Right
will terminate upon the expiration of such period.

          For the purposes of this subsection (c), an Award will be considered
assumed if, following the Change in Control, the Award confers the right to
purchase or receive, for each Share subject to the Award immediately prior to
the Change in Control, the consideration (whether stock, cash, or other
securities or property) received in the Change in Control by holders of Common
Stock for each Share held on the effective date of the transaction (and if
holders were offered a choice of consideration, the type of consideration chosen
by the holders of a majority of the outstanding Shares); provided, however, that
if such consideration received in the Change in Control is not solely common
stock of the successor corporation or its Parent, the Administrator may, with
the consent of the successor corporation, provide for the consideration to be
received upon the exercise of an Option or Stock Appreciation Right or upon the
payout of a Restricted Stock Unit, Performance Unit or Performance Share, for
each Share subject to such Award, to be solely common stock of the successor
corporation or its Parent equal in fair market value to the per share
consideration received by holders of Common Stock in the Change in Control.

                                      -14-

<PAGE>

          Notwithstanding anything in this Section 14(c) to the contrary, an
Award that vests, is earned or paid-out upon the satisfaction of one or more
performance goals will not be considered assumed if the Company or its successor
modifies any of such performance goals without the Participant's consent;
provided, however, a modification to such performance goals only to reflect the
successor corporation's post-Change in Control corporate structure will not be
deemed to invalidate an otherwise valid Award assumption.

          (d) Outside Director Awards. With respect to Awards granted to an
Outside Director that are assumed or substituted for, if on the date of or
following such assumption or substitution the Participant's status as a Director
or a director of the successor corporation, as applicable, is terminated other
than upon a voluntary resignation by the Participant (unless such resignation is
at the request of the acquirer), then the Participant will fully vest in and
have the right to exercise Options and/or Stock Appreciation Rights as to all of
the Shares underlying such Award, including those Shares which would not
otherwise be vested or exercisable, all restrictions on Restricted Stock and
Restricted Stock Units will lapse, and, with respect to Performance Units and
Performance Shares, all performance goals or other vesting criteria will be
deemed achieved at one hundred percent (100%) of target levels and all other
terms and conditions met.

     15. Tax Withholding.

          (a) Withholding Requirements. Prior to the delivery of any Shares or
cash pursuant to an Award (or exercise thereof), the Company will have the power
and the right to deduct or withhold, or require a Participant to remit to the
Company, an amount sufficient to satisfy federal, state, local, foreign or other
taxes (including the Participant's FICA obligation) required to be withheld with
respect to such Award (or exercise thereof).

          (b) Withholding Arrangements. The Administrator, in its sole
discretion and pursuant to such procedures as it may specify from time to time,
may permit a Participant to satisfy such tax withholding obligation, in whole or
in part by (without limitation) (a) paying cash, (b) electing to have the
Company withhold otherwise deliverable cash or Shares having a Fair Market Value
equal to the minimum statutory amount required to be withheld, or (c) delivering
to the Company already-owned Shares having a Fair Market Value equal to the
minimum statutory amount required to be withheld. The Fair Market Value of the
Shares to be withheld or delivered will be determined as of the date that the
taxes are required to be withheld.

     16. No Effect on Employment or Service. Neither the Plan nor any Award will
confer upon a Participant any right with respect to continuing the Participant's
relationship as a Service Provider with the Company, nor will they interfere in
any way with the Participant's right or the Company's right to terminate such
relationship at any time, with or without cause, to the extent permitted by
Applicable Laws.

     17. Date of Grant. The date of grant of an Award will be, for all purposes,
the date on which the Administrator makes the determination granting such Award,
or such other later date as is determined by the Administrator. Notice of the
determination will be provided to each Participant within a reasonable time
after the date of such grant.

                                      -15-

<PAGE>

     18. Term of Plan. Subject to Section 22 of the Plan, the Plan will become
effective upon its adoption by the Board. It will continue in effect for a term
of ten (10) years from the date adopted by the Board, unless terminated earlier
under Section 19 of the Plan.

     19. Amendment and Termination of the Plan.

          (a) Amendment and Termination. The Board may at any time amend, alter,
suspend or terminate the Plan.

          (b) Stockholder Approval. The Company will obtain stockholder approval
of any Plan amendment to the extent necessary and desirable to comply with
Applicable Laws.

          (c) Effect of Amendment or Termination. No amendment, alteration,
suspension or termination of the Plan will impair the rights of any Participant,
unless mutually agreed otherwise between the Participant and the Administrator,
which agreement must be in writing and signed by the Participant and the
Company. Termination of the Plan will not affect the Administrator's ability to
exercise the powers granted to it hereunder with respect to Awards granted under
the Plan prior to the date of such termination.

     20. Conditions Upon Issuance of Shares.

          (a) Legal Compliance. Shares will not be issued pursuant to the
exercise of an Award unless the exercise of such Award and the issuance and
delivery of such Shares will comply with Applicable Laws and will be further
subject to the approval of counsel for the Company with respect to such
compliance.

          (b) Investment Representations. As a condition to the exercise of an
Award, the Company may require the person exercising such Award to represent and
warrant at the time of any such exercise that the Shares are being purchased
only for investment 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.

     21. Inability to Obtain Authority. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, will relieve the Company of any liability in respect of
the failure to issue or sell such Shares as to which such requisite authority
will not have been obtained.

     22. Stockholder Approval. The Plan will be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted by the Board. Such stockholder approval will be obtained in the manner
and to the degree required under Applicable Laws.

                                   **********

                                      -16-<PAGE>

                                                                    EXHIBIT 10.6

                              ISILON SYSTEMS, INC.

                        2006 EMPLOYEE STOCK PURCHASE PLAN

     1. Purpose. The purpose of the Plan is to provide employees of the Company
and its Designated Subsidiaries with an opportunity to purchase Common Stock
through accumulated payroll deductions. The Company's intention is to have the
Plan qualify as an "employee stock purchase plan" under Section 423 of the Code.
The provisions of the Plan, accordingly, will be construed so as to extend and
limit Plan participation in a uniform and nondiscriminatory basis consistent
with the requirements of Section 423 of the Code. In addition, the Plan
authorizes the grant of options that would not qualify under Section 423 of the
Code pursuant to rules, procedures, or sub-plans adopted by the Administrator
designed to achieve desired tax or other objectives in particular locations
outside the United States.

     2. Definitions.

          (a) "Administrator" means the Board or any Committee designated by the
Board to administer the Plan pursuant to Section 14.

          (b) "Applicable Laws" means the requirements relating to the
administration of equity-based awards under U.S. state corporate laws, U.S.
federal and state securities laws, the Code, any stock exchange or quotation
system on which the Common Stock is listed or quoted and the applicable laws of
any foreign country or jurisdiction where participants in the Plan are located.

          (c) "Board" means the Board of Directors of the Company.

          (d) "Change in Control" means the occurrence of any of the following
events:

               (i) Any "person" (as such term is used in Sections 13(d) and
14(d) of the Exchange Act) becomes the "beneficial owner" (as defined in Rule
13d-3 of the Exchange Act), directly or indirectly, of securities of the Company
representing fifty percent (50%) or more of the total voting power represented
by the Company's then outstanding voting securities; or

               (ii) The consummation of the sale or disposition by the Company
of all or substantially all of the Company's assets; or

               (iii) The consummation of a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which
would result in the voting securities of the Company outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity or its parent) at
least fifty percent (50%) of the total voting power represented by the voting
securities of the Company or such surviving entity or its parent outstanding
immediately after such merger or consolidation; or

<PAGE>

               (iv) A change in the composition of the Board occurring within a
two (2)-year period, as a result of which less than a majority of the Directors
are Incumbent Directors. "Incumbent Directors" means Directors who either (A)
are Directors as of the effective date of the Plan, or (B) are elected, or
nominated for election, to the Board with the affirmative votes of at least a
majority of the Directors at the time of such election or nomination (but will
not include an individual whose election or nomination is in connection with an
actual or threatened proxy contest relating to the election of Directors to the
Company).

          (e) "Code" means the Internal Revenue Code of 1986, as amended. Any
reference to a section of the Code herein will be a reference to any successor
or amended section of the Code.

          (f) "Committee" means a committee of the Board appointed in accordance
with Section 14 hereof.

          (g) "Common Stock" means the common stock of the Company.

          (h) "Company" means Isilon Systems, Inc., a Delaware corporation.

          (i) "Compensation" means an Employee's base straight time gross
earnings, commissions (to the extent such commissions are an integral, recurring
part of compensation), overtime and shift premium, but exclusive of payments for
incentive compensation, bonuses and other compensation.

          (j) "Designated Subsidiary" means any Subsidiary that has been
designated by the Administrator from time to time in its sole discretion as
eligible to participate in the Plan.

          (k) "Director" means a member of the Board.

          (l) "Eligible Employee" means any individual who is a common law
employee of an Employer and is customarily employed for at least twenty (20)
hours per week and more than five (5) months in any calendar year by the
Employer, unless for participants outside the United States, such limitation in
eligibility is not permitted under Applicable Laws outside the United States.
For purposes of the Plan, the employment relationship will be treated as
continuing intact while the individual is on sick leave or other leave of
absence that the Employer approves. Where the period of leave exceeds ninety
(90) days and the individual's right to reemployment is not guaranteed either by
statute or by contract, the employment relationship will be deemed to have
terminated on the ninety-first (91st) day of such leave. The Administrator, in
its discretion, from time to time may, prior to an Offering Date for all options
to be granted on such Offering Date, determine (on a uniform and
nondiscriminatory basis) that the definition of Eligible Employee will or will
not include an individual if he or she: (i) has not completed at least two (2)
years of service since his or her last hire date (or such lesser period of time
as may be determined by the Administrator in its discretion), (ii) customarily
works not more than twenty (20) hours per week (or such lesser period of time as
may be determined by the Administrator in its discretion), (iii) customarily
works not more than five (5) months per calendar year (or such lesser period of
time as may be determined by the Administrator in its discretion), (iv) is an
officer or other manager, or (v) is a highly compensated employee under Section
414(q) of the Code.

                                       -2-

<PAGE>

          (m) "Employer" means any one or all of the Company and its Designated
Subsidiaries.

          (n) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, including the rules and regulations promulgated thereunder.

          (o) "Exercise Date" means the first Trading Day on or after February
15 and August 15 of each year. The first Exercise Date under the Plan will be
August 15, 2007.

          (p) "Fair Market Value" means, as of any date and unless the
Administrator determines otherwise, the value of Common Stock determined as
follows:

               (i) If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation the Nasdaq
National Market, its Fair Market Value will be the closing sales price for such
stock (or the closing bid, if no sales were reported) as quoted on such exchange
or system on the date of determination, as reported in The Wall Street Journal
or such other source as the Administrator deems reliable;

               (ii) If the Common Stock is regularly quoted by a recognized
securities dealer but selling prices are not reported, its Fair Market Value
will be the mean of the closing bid and asked prices for the Common Stock on the
date of determination, as reported in The Wall Street Journal or such other
source as the Administrator deems reliable; or

               (iii) In the absence of an established market for the Common
Stock, the Fair Market Value thereof will be determined in good faith by the
Administrator.

          (q) "Fiscal Year" means the fiscal year of the Company.

          (r) "New Exercise Date" means a new Exercise Date set by shortening
any Offering Period then in progress.

          (s) "Offering Date" means the first Trading Day of each Offering
Period.

          (t) "Offering Periods" means the periods of approximately six months
during which an option granted pursuant to the Plan may be exercised, (i)
commencing on the first Trading Day on or after February 15 of each year and
terminating on the first Trading Day on or following August 15, approximately
six months later, and (ii) commencing on the first Trading Day on or after
August 15 of each year and terminating on the first Trading Day on or following
February 15, approximately six months later; provided, however, that the first
Offering Period under the Plan will commence with the first Trading Day on or
after February 15, 2007 and end on the first Trading Day on or after August 15,
2007; and provided, further, that the second Offering Period under the Plan will
commence on the first Trading Day on or after August 15, 2007. The duration and
timing of Offering Periods may be changed pursuant to Sections 4 and 20.

          (u) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

          (v) "Plan" means this Isilon Systems, Inc. 2006 Employee Stock
Purchase Plan.

                                      -3-

<PAGE>

          (w) "Purchase Period" means the period during an Offering Period
during which shares of Common Stock may be purchased on a participant's behalf
in accordance with the terms of the Plan. Unless the Administrator provides
otherwise, the Purchase Period will have the same duration and coincide with the
length of the Offering Period.

          (x) "Purchase Price" means an amount equal to eighty-five percent
(85%) of the Fair Market Value of a share of Common Stock on the Exercise Date;
provided however, that the Purchase Price may be determined for subsequent
Offering Periods by the Administrator subject to compliance with Section 423 of
the Code (or any successor rule or provision or any other applicable law,
regulation or stock exchange rule) or pursuant to Section 20.

          (y) "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

          (z) "Trading Day" means a day on which the national stock exchange
upon which the Common Stock is listed is open for trading.

     3. Eligibility.

          (a) Offering Periods. Any Eligible Employee on a given Offering Date
will be eligible to participate in the Plan, subject to the requirements of
Section 5.

          (b) Limitations. Any provisions of the Plan to the contrary
notwithstanding, no Eligible Employee will be granted an option under the Plan
(i) to the extent that, immediately after the grant, such Eligible Employee (or
any other person whose stock would be attributed to such Eligible Employee
pursuant to Section 424(d) of the Code) would own capital stock of the Company
or any Parent or Subsidiary of the Company and/or hold outstanding options to
purchase such stock possessing five percent (5%) or more of the total combined
voting power or value of all classes of the capital stock of the Company or of
any Parent or Subsidiary of the Company, or (ii) to the extent that his or her
rights to purchase stock under all employee stock purchase plans (as defined in
Section 423 of the Code) of the Company or any Parent or Subsidiary of the
Company accrues at a rate which exceeds twenty-five thousand dollars ($25,000)
worth of stock (determined at the Fair Market Value of the stock at the time
such option is granted) for each calendar year in which such option is
outstanding at any time.

     4. Offering Periods. The Plan will be implemented by consecutive Offering
Periods with a new Offering Period commencing on the first Trading Day on or
after February 15 and August 15 each year, or on such other date as the
Administrator will determine. The Administrator will have the power to change
the duration of Offering Periods (including the commencement dates thereof) with
respect to future offerings without stockholder approval if such change is
announced prior to the scheduled beginning of the first Offering Period to be
affected thereafter.

     5. Participation. An Eligible Employee may participate in the Plan pursuant
to Section 3(a) by (i) submitting to the Company's payroll office (or its
designee), on or before a date prescribed by the Administrator prior to an
applicable Offering Date, a properly completed subscription agreement
authorizing payroll deductions in the form provided by the Administrator for
such purpose, or (ii) following an electronic or other enrollment procedure
prescribed by the Administrator.

                                      -4-

<PAGE>

     6. Payroll Deductions.

          (a) At the time a participant enrolls in the Plan pursuant to Section
5, he or she will elect to have payroll deductions made on each pay day during
the Offering Period in an amount not exceeding ten percent (10%) of the
Compensation which he or she receives on each pay day during the Offering
Period; provided, however, that should a pay day occur on an Exercise Date, a
participant will have the payroll deductions made on such day applied to his or
her account under the subsequent Purchase or Offering Period. A participant's
subscription agreement will remain in effect for successive Offering Periods
unless terminated as provided in Section 10 hereof.

          (b) Payroll deductions for a participant will commence on the first
pay day following the Offering Date and will end on the last pay day prior to
the Exercise Date of such Offering Period to which such authorization is
applicable, unless sooner terminated by the participant as provided in Section
10 hereof.

          (c) All payroll deductions made for a participant will be credited to
his or her account under the Plan and will be withheld in whole percentages
only. A participant may not make any additional payments into such account.

          (d) A participant may discontinue his or her participation in the Plan
as provided in Section 10, or may decrease (but not increase) the rate of his or
her payroll deductions during an Offering Period (it being understood that a
participant may increase his or her payroll deductions for future Offering
Periods prior to the commencement of any such Offering Period). Any change of a
participant's contribution rate may be accomplished by (i) properly completing
and submitting to the Company's payroll office (or its designee), on or before a
date prescribed by the Administrator prior to an applicable Exercise Date, a new
subscription agreement authorizing the change in payroll deduction rate in the
form provided by the Administrator for such purpose, or (ii) following an
electronic or other procedure prescribed by the Administrator; provided,
however, that a participant may only make one payroll deduction change during
each Offering Period. If a participant has not followed such procedures to
change the rate of payroll deductions, the rate of his or her payroll deductions
will continue at the originally elected rate throughout the Offering Period and
future Offering Periods (unless terminated as provided in Section 10). The
Administrator may, in its sole discretion, limit the nature and/or number of
payroll deduction rate changes that may be made by participants during any
Offering Period. Any change in payroll deduction rate made pursuant to this
Section 6(d) will be effective as of the first full payroll period following
five (5) business days after the date on which the change is made by the
participant (unless the Administrator, in its sole discretion, elects to process
a given change in payroll deduction rate more quickly).

          (e) Notwithstanding the foregoing, to the extent necessary to comply
with Section 423(b)(8) of the Code and Section 3(b), a participant's payroll
deductions may be decreased to zero percent (0%) at any time during an Offering
Period. Subject to Section 423(b)(8) of the Code and Section 3(b) hereof,
payroll deductions will recommence at the rate originally elected by the
participant effective as of the beginning of the first Offering Period which is
scheduled to end in the following calendar year, unless terminated by the
participant as provided in Section 10.

          (f) At the time the option is exercised, in whole or in part, or at
the time some or all of the Common Stock issued under the Plan is disposed of,
the participant must make adequate

                                      -5-

<PAGE>

provision for the Company's or Employer's federal, state, or any other tax
liability payable to any authority, national insurance, social security or other
tax withholding obligations, if any, which arise upon the exercise of the option
or the disposition of the Common Stock. At any time, the Company or the Employer
may, but will not be obligated to, withhold from the participant's compensation
the amount necessary for the Company or the Employer to meet applicable
withholding obligations, including any withholding required to make available to
the Company or the Employer any tax deductions or benefits attributable to sale
or early disposition of Common Stock by the Eligible Employee.

     7. Grant of Option. On the Offering Date of each Offering Period, each
Eligible Employee participating in such Offering Period will be granted an
option to purchase on each Exercise Date during such Offering Period (at the
applicable Purchase Price) up to a number of shares of Common Stock determined
by dividing such Eligible Employee's payroll deductions accumulated prior to
such Exercise Date and retained in the Eligible Employee's account as of the
Exercise Date by the applicable Purchase Price; provided that in no event will
an Eligible Employee be permitted to purchase during each Offering Period more
than 2,500 shares of the Common Stock (subject to any adjustment pursuant to
Section 19), and provided further that such purchase will be subject to the
limitations set forth in Sections 3(b) and 13. The Eligible Employee may accept
the grant of such option by electing to participate in the Plan in accordance
with the requirements of Section 5. The Administrator may, for future Offering
Periods, increase or decrease, in its absolute discretion, the maximum number of
shares of Common Stock that an Eligible Employee may purchase during each
Offering Period. Exercise of the option will occur as provided in Section 8,
unless the participant has withdrawn pursuant to Section 10. The option will
expire on the last day of the Offering Period.

     8. Exercise of Option.

          (a) Unless a participant withdraws from the Plan as provided in
Section 10, his or her option for the purchase of shares of Common Stock will be
exercised automatically on the Exercise Date, and the maximum number of full
shares subject to option will be purchased for such participant at the
applicable Purchase Price with the accumulated payroll deductions in his or her
account. No fractional shares of Common Stock will be purchased; any payroll
deductions accumulated in a participant's account which are not sufficient to
purchase a full share will be retained in the participant's account for the
subsequent Offering Period, subject to earlier withdrawal by the participant as
provided in Section 10. Any other funds left over in a participant's account
after the Exercise Date will be returned to the participant. During a
participant's lifetime, a participant's option to purchase shares hereunder is
exercisable only by him or her.

          (b) If the Administrator determines that, on a given Exercise Date,
the number of shares of Common Stock with respect to which options are to be
exercised may exceed (i) the number of shares of Common Stock that were
available for sale under the Plan on the Offering Date of the applicable
Offering Period, or (ii) the number of shares of Common Stock available for sale
under the Plan on such Exercise Date, the Administrator may in its sole
discretion provide that the Company will make a pro rata allocation of the
shares of Common Stock available for purchase on such Offering Date or Exercise
Date, as applicable, in as uniform a manner as will be practicable and as it
will determine in its sole discretion to be equitable among all participants
exercising options to purchase Common Stock on such Exercise Date, and continue
all Offering Periods then in effect or

                                      -6-

<PAGE>

terminate all Offering Periods then in effect pursuant to Section 20. The
Company may make a pro rata allocation of the shares available on the Offering
Date of any applicable Offering Period pursuant to the preceding sentence,
notwithstanding any authorization of additional shares for issuance under the
Plan by the Company's stockholders subsequent to such Offering Date.

     9. Delivery. As soon as reasonably practicable after each Exercise Date on
which a purchase of shares of Common Stock occurs, the Company will arrange the
delivery to each participant the shares purchased upon exercise of his or her
option in a form determined by the Administrator (in its sole discretion) and
pursuant to rules established by the Administrator. The Company may permit or
require that shares be deposited directly with a broker designated by the
Company or to a designated agent of the Company, and the Company may utilize
electronic or automated methods of share transfer. The Company may require that
shares be retained with such broker or agent for a designated period of time
and/or may establish other procedures to permit tracking of disqualifying
dispositions of such shares. No participant will have any voting, dividend, or
other stockholder rights with respect to shares of Common Stock subject to any
option granted under the Plan until such shares have been purchased and
delivered to the participant as provided in this Section 9.

     10. Withdrawal.

          (a) A participant may withdraw all but not less than all the payroll
deductions credited to his or her account and not yet used to exercise his or
her option under the Plan at any time by (i) submitting to the Company's payroll
office (or its designee) a written notice of withdrawal in the form prescribed
by the Administrator for such purpose, or (ii) following an electronic or other
withdrawal procedure prescribed by the Administrator. All of the participant's
payroll deductions credited to his or her account will be paid to such
participant promptly after receipt of notice of withdrawal and such
participant's option for the Offering Period will be automatically terminated,
and no further payroll deductions for the purchase of shares will be made for
such Offering Period. If a participant withdraws from an Offering Period,
payroll deductions will not resume at the beginning of the succeeding Offering
Period, unless the participant re-enrolls in the Plan in accordance with the
provisions of Section 5.

          (b) A participant's withdrawal from an Offering Period will not have
any effect upon his or her eligibility to participate in any similar plan which
may hereafter be adopted by the Company or in succeeding Offering Periods which
commence after the termination of the Offering Period from which the participant
withdraws.

     11. Termination of Employment. Upon a participant's ceasing to be an
Eligible Employee, for any reason, he or she will be deemed to have elected to
withdraw from the Plan and the payroll deductions credited to such participant's
account during the Offering Period but not yet used to purchase shares of Common
Stock under the Plan will be returned to such participant or, in the case of his
or her death, to the person or persons entitled thereto under Section 15, and
such participant's option will be automatically terminated.

     12. Interest. No interest will accrue on the payroll deductions of a
participant in the Plan, unless required by non-United States Applicable Laws
for participants outside the United States.

                                      -7-

<PAGE>

     13. Stock.

          (a) Subject to adjustment upon changes in capitalization of the
Company as provided in Section 19 hereof, the maximum number of shares of Common
Stock which will be made available for sale under the Plan will be 750,000
shares, plus an annual increase to be added on the first day of each Fiscal Year
beginning with the 2008 Fiscal Year, equal to the least of (i) 750,000 shares of
Common Stock, (ii) one percent (1%) of the outstanding shares of Common Stock on
such date or (iii) an amount determined by the Administrator.

          (b) Until the shares are issued (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the
Company), a participant will only have the rights of an unsecured creditor with
respect to such shares, and no right to vote or receive dividends or any other
rights as a stockholder will exist with respect to such shares.

          (c) Shares of Common Stock to be delivered to a participant under the
Plan will be registered in the name of the participant or in the name of the
participant and his or her spouse.

     14. Administration. The Plan will be administered by the Board or a
Committee appointed by the Board, which Committee will be constituted to comply
with Applicable Laws. The Administrator will have full and exclusive
discretionary authority to construe, interpret and apply the terms of the Plan,
to determine eligibility and to adjudicate all disputed claims filed under the
Plan, including, without limitation, as further provided in Section 25. Every
finding, decision and determination made by the Administrator will, to the full
extent permitted by law, be final and binding upon all parties.

     15. Designation of Beneficiary.

          (a) A participant may file a designation of a beneficiary who is to
receive any shares of Common Stock and cash, if any, from the participant's
account under the Plan in the event of such participant's death subsequent to an
Exercise Date on which the option is exercised but prior to delivery to such
participant of such shares and cash. In addition, a participant may file a
designation of a beneficiary who is to receive any cash from the participant's
account under the Plan in the event of such participant's death prior to
exercise of the option. If a participant is married and the designated
beneficiary is not the spouse, spousal consent will be required for such
designation to be effective.

          (b) Such designation of beneficiary may be changed by the participant
at any time by notice in a form determined by the Administrator. In the event of
the death of a participant and in the absence of a beneficiary validly
designated under the Plan who is living at the time of such participant's death,
the Company will deliver such shares 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 Company), the Company,
in its discretion, may deliver such shares and/or cash to the spouse or to any
one or more dependents or relatives of the participant, or if no spouse,
dependent or relative is known to the Company, then to such other person as the
Company may designate.

          (c) All beneficiary designations will be in such form and manner as
the Administrator may designate from time to time.

                                      -8-

<PAGE>

     16. Transferability. Neither payroll deductions credited to a participant's
account nor any rights with regard to the exercise of an option or to receive
shares of Common Stock under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by will, the laws of descent and
distribution or as provided in Section 15 hereof) by the participant. Any such
attempt at assignment, transfer, pledge or other disposition will be without
effect, except that the Company may treat such act as an election to withdraw
funds from an Offering Period in accordance with Section 10 hereof.

     17. Use of Funds. The Company may use all payroll deductions received or
held by it under the Plan for any corporate purpose, and the Company will not be
obligated to segregate such payroll deductions. Until shares of Common Stock are
issued, participants will only have the rights of an unsecured creditor with
respect to such shares.

     18. Reports. Individual accounts will be maintained for each participant in
the Plan. Statements of account will be given to participating Eligible
Employees at least annually, which statements will set forth the amounts of
payroll deductions, the Purchase Price, the number of shares of Common Stock
purchased and the remaining cash balance, if any.

     19. Adjustments, Dissolution, Liquidation, Merger or Change in Control.

          (a) Adjustments. In the event that any dividend or other distribution
(whether in the form of cash, Common Stock, other securities, or other
property), recapitalization, stock split, reverse stock split, reorganization,
merger, consolidation, split-up, spin-off, combination, repurchase, or exchange
of Common Stock or other securities of the Company, or other change in the
corporate structure of the Company affecting the Common Stock occurs, the
Administrator, in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan, will, in such
manner as it may deem equitable, adjust the number and class of Common Stock
which may be delivered under the Plan, the Purchase Price per share and the
number of shares of Common Stock covered by each option under the Plan which has
not yet been exercised, and the numerical limits of Sections 7 and 13.

          (b) Dissolution or Liquidation. In the event of the proposed
dissolution or liquidation of the Company, any Offering Period then in progress
will be shortened by setting a New Exercise Date, and will terminate immediately
prior to the consummation of such proposed dissolution or liquidation, unless
provided otherwise by the Administrator. The New Exercise Date will be before
the date of the Company's proposed dissolution or liquidation. The Administrator
will notify each participant in writing, at least ten (10) business days prior
to the New Exercise Date, that the Exercise Date for the participant's option
has been changed to the New Exercise Date and that the participant's option will
be exercised automatically on the New Exercise Date, unless prior to such date
the participant has withdrawn from the Offering Period as provided in Section 10
hereof.

          (c) Merger or Change in Control. In the event of a merger or Change in
Control, each outstanding option will be assumed or an equivalent option
substituted by the successor corporation or a Parent or Subsidiary of the
successor corporation. In the event that the successor corporation refuses to
assume or substitute for the option, the Offering Period with respect to which
such option relates will be shortened by setting a New Exercise Date and will
end on the New

                                      -9-

<PAGE>

Exercise Date. The New Exercise Date will occur before the date of the Company's
proposed merger or Change in Control. The Administrator will notify each
participant in writing prior to the New Exercise Date, that the Exercise Date
for the participant's option has been changed to the New Exercise Date and that
the participant's option will be exercised automatically on the New Exercise
Date, unless prior to such date the participant has withdrawn from the Offering
Period as provided in Section 10 hereof.

     20. Amendment or Termination.

          (a) The Administrator, in its sole discretion, may amend, suspend, or
terminate the Plan, or any part thereof, at any time and for any reason. If the
Plan is terminated, the Administrator, in its discretion, may elect to terminate
all outstanding Offering Periods either immediately or upon completion of the
purchase of shares of Common Stock on the next Exercise Date (which may be
accomplished by the Administrator setting a New Exercise Date in its
discretion), or may elect to permit Offering Periods to expire in accordance
with their terms (and subject to any adjustment pursuant to Section 19). If the
Offering Periods are terminated prior to expiration, all amounts then credited
to participants' accounts which have not been used to purchase shares of Common
Stock will be returned to the participants (without interest thereon, except as
otherwise required under local laws) as soon as administratively practicable.

          (b) Without stockholder consent and without limiting Section 20(a),
the Administrator will be entitled to change the Offering Periods, limit the
frequency and/or number of changes in the amount withheld during an Offering
Period, establish the exchange ratio applicable to amounts withheld in a
currency other than U.S. dollars, permit 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, establish
reasonable waiting and adjustment periods and/or accounting and crediting
procedures to ensure that amounts applied toward the purchase of Common Stock
for each participant properly correspond with amounts withheld from the
participant's Compensation, and establish such other limitations or procedures
as the Administrator determines in its sole discretion advisable which are
consistent with the Plan.

          (c) In the event the Administrator determines that the ongoing
operation of the Plan may result in unfavorable financial accounting
consequences, the Administrator may, in its discretion and, to the extent
necessary or desirable, modify, amend or terminate the Plan to reduce or
eliminate such accounting consequence including, but not limited to:

               (i) amending the Plan to conform with the safe harbor definition
under Statement of Financial Accounting Standards 123(R), including with respect
to an Offering Period underway at the time;

               (ii) altering the Purchase Price for any Offering Period
including an Offering Period underway at the time of the change in Purchase
Price;

               (iii) shortening any Offering Period by setting a New Exercise
Date, including an Offering Period underway at the time of the Administrator
action;

               (iv) reducing the maximum percentage of Compensation a
participant may elect to set aside as payroll deductions; and

                                      -10-

<PAGE>

               (v) reducing the maximum number of Shares a participant may
purchase during any Offering Period or Purchase Period.

Such modifications or amendments will not require stockholder approval or the
consent of any Plan participants.

     21. Notices. All notices or other communications by a participant to the
Company under or in connection with the Plan will be deemed to have been duly
given when received in the form and manner specified by the Company at the
location, or by the person, designated by the Company for the receipt thereof.

     22. Conditions Upon Issuance of Shares. Shares of Common Stock will not be
issued with respect to an option unless the exercise of such option and the
issuance and delivery of such shares pursuant thereto will comply with all
applicable provisions of law, domestic or foreign, including, without
limitation, the Securities Act of 1933, as amended, the Exchange Act, the rules
and regulations promulgated thereunder, and the requirements of any stock
exchange upon which the shares may then be listed, and will be further subject
to the approval of counsel for the Company with respect to such compliance.

          As a condition to the exercise of an option, the Company may require
the person exercising such option to represent and warrant at the time of any
such exercise that the shares are being purchased only for investment 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 of
the aforementioned applicable provisions of law.

     23. Term of Plan. The Plan will become effective upon the earlier to occur
of its adoption by the Board or its approval by the stockholders of the Company.
It will continue in effect for a term of twenty (20) years, unless sooner
terminated under Section 20.

     24. Stockholder Approval. The Plan will be subject to approval by the
stockholders of the Company within twelve (12) months after the date the Plan is
adopted by the Board. Such stockholder approval will be obtained in the manner
and to the degree required under Applicable Laws.

     25. Rules for Non-United States Jurisdictions.

          (a) Special Rules or Procedures. Notwithstanding any provision to the
contrary in this Plan, the Administrator may adopt rules or procedures relating
to the operation and administration of the Plan to accommodate the specific
requirements of local laws and procedures for jurisdictions outside of the
United States. Without limiting the generality of the foregoing, the
Administrator is specifically authorized to adopt rules and procedures regarding
eligibility to participate, the definition of Compensation, handling of payroll
deductions, making of contributions to the Plan in forms other than payroll
deductions, establishment of bank or trust accounts to hold payroll deductions,
payment of interest, conversion of local currency, obligations to pay payroll
tax, determination of beneficiary designation requirements, withholding
procedures and handling of stock certificates which vary with local
requirements.

                                      -11-

<PAGE>

          (b) Non-423 Plan Rules, Procedures or Sub-Plans. The Administrator may
also adopt rules, procedures or sub-plans applicable to particular Designated
Subsidiaries or locations, which sub-plans may be designed to be outside the
scope of Section 423 of the Code. Such rules, procedures and sub-plans may take
precedence over other provisions of this Plan, with the exception of Sections
13(a) and 20, but unless otherwise superseded by such rules, procedures and
sub-plans, the provisions of this Plan shall govern the operation of such
arrangements. To the extent inconsistent with the requirements of Section 423 of
the Code, the options affected by such rules, procedures and sub-plans shall not
be considered to comply with Section 423 of the Code.

                                   **********

                                      -12-

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}]]