Document:

<PAGE>

                                                                    Exhibit 10.7

                                 AMENDMENT NO. 1
                           TO THE AMENDED AND RESTATED
                              GOVERNANCE AGREEMENT

     This Amendment No. 1 ("Amendment No. 1") is made this 20th day of May, 1999
(the "Amendment Effective Date") by and between AMERICAN CYANAMID COMPANY, a
corporation organized and existing under the laws of the State of Maine
("CYANAMID") and a wholly-owned subsidiary of AMERICAN HOME PRODUCTS
CORPORATION, a corporation organized and existing under the laws of the State of
Delaware and having its principal office at Five Giralda Farms, Madison, New
Jersey 07940 ("AHPC") and IMMUNEX CORPORATION, a corporation organized and
existing under the laws of the State of Washington and having its principal
office at 51 University Street, Seattle, Washington 98101 ("IMMUNEX"), and
amends the Amended and Restated Governance Agreement dated as of December 15,
1992, among American Cyanamid Company, Immunex Corporation and Lederle Oncology
Corporation (the "Governance Agreement").

     WHEREAS, AHPC and IMMUNEX have entered into a certain Note Purchase
Agreement dated as of the date hereof, pursuant to which IMMUNEX has issued, and
AHPC has purchased, a 3% Convertible Subordinated Note due 2006 in the principal
amount of $450 million ("Note"), which Note is convertible, in whole or in part,
into common stock of IMMUNEX at a specified price per share, subject to
adjustment in certain circumstances;

     WHEREAS, AHPC and IMMUNEX have agreed that the shares that are subject to
issuance to AHPC upon conversion of the Note may be included in the calculation
of AHPC's and CYANAMID's ownership of Immunex common stock for certain purposes
under the Governance Agreement;

     NOW THEREFORE, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, each intending to be legally
bound, hereby agree as follows:

     1.   All initially capitalized terms used herein and not defined shall have
          the meanings set forth in the Governance Agreement.

     2.   Article II of the Governance Agreement shall be amended to add the
          following new provision, Section 2.03, as follows:

     2.03 COMMON STOCK ISSUABLE UPON CONVERSION OF NOTE. The Common Stock
          issuable upon conversion of the Note issued by the Company and
          purchased by American Home Products Corporation ("AHPC") pursuant to
          the Note Purchase Agreement dated as of May 20, 1999 shall, at the
          option of Cyanamid, regardless of whether the Note is converted by
          AHPC so long as AHPC or its Affiliates hold the Note, be included in
          (i) "Cyanamid's Interest" for purposes of Article IV; (ii) Cyanamid's
          "Pro Rata Share" for purposes of Section 2.01; (iii) Cyanamid's "Owned
          Shares" for purposes of Section 2.02 (and shall be deemed to be issued
          and outstanding as of the Quarterly Date immediately preceding the
          effective date of the Note Purchase Agreement) ; and (iv) "Registrable
          Securities" for purposes of Article VI.

     3.   Article V of the Governance Agreement shall be amended to add the
          following new provision, Section 5.01(h), as follows:

          (h) The Note issued by the Company and purchased by AHPC pursuant to
          the Note Purchase Agreement dated as of May 20, 1999 shall not be
          deemed to be an interest in New Shares for purposes of Section 5.01(c)
          hereof and AHPC shall have the right to transfer such Note in
          accordance with the terms of the Note Purchase Agreement.
          Notwithstanding the foregoing, however, the Common Stock issuable upon
          conversion of such Note shall, when and if issued, be deemed to be New
          Shares for purposes of this Article V.

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     4.   The first clause of Section 6.03(d) shall be deleted in its entirety
          and replaced as follows:

          (d)   The Company shall not be obligated to effect more than three
                registrations pursuant to this Section 6.03;

     5.   Except as otherwise set forth in this Amendment No. 1, all other
          terms and provisions of the Governance Agreement shall remain in full
          force and effect.

     6.   This Amendment No. 1 may be executed in counterparts, each of which
          shall be deemed an original and all of which shall constitute together
          one and the same instrument.

                                       72

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 as of
the day and year first above written.

IMMUNEX CORPORATION                           AMERICAN HOME PRODUCTS CORPORATION

By: /s/ Edward V. Fritzky                     By: /s/ Gerald A. Jibilian

Name: Edward V. Fritzky                       Name: Gerald A Jibilian
Title: Chairman and Chief Executive Officer   Title: Vice President

                                       73<PAGE>

                                                                   Exhibit 10.15

                             AMENDMENT NO. 1 TO THE
                            PRODUCT RIGHTS AGREEMENT

     This Amendment No. 1 ("Amendment No. 1") is made this 20th day of May, 1999
(the "Amendment Effective Date") by and between AMERICAN HOME PRODUCTS
CORPORATION, a corporation organized and existing under the laws of the State of
Delaware and having its principal office at Five Giralda Farms, Madison New
Jersey 07940 ("AHPC") and IMMUNEX CORPORATION, a corporation organized and
existing under the laws of the State of Washington and having its principal
office at 51 University Street, Seattle, Washington 98101 ("IMMUNEX"), and
amends the Product Rights Agreement effective as of July 1, 1998, by and among
AHPC, IMMUNEX and American Cyanamid Company ("Product Rights Agreement")

     WHEREAS, AHPC and IMMUNEX have entered into a certain Note Purchase
Agreement as of the date hereof, pursuant to which IMMUNEX has issued, and AHPC
has purchased, a 3% Convertible Subordinated Note due 2006 in the principal
amount of $450 million ("Note"), which Note is convertible, in whole or in part,
into common stock of IMMUNEX at a specified price per share, subject to
adjustment in certain circumstances;

     WHEREAS, AHPC and IMMUNEX have agreed that the shares that are subject to
issuance to AHPC upon conversion of the Note may be included in the calculation
of AHPC's ownership of Immunex common stock for certain purposes;

     NOW THEREFORE, in consideration of the mutual covenants contained herein,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, each intending to be legally
bound, hereby agree as follows:

     1.   All initially capitalized terms used herein and not defined shall have
          the meanings set forth in the Product Rights Agreement.

     2.   Section 8.5 of the Product Rights Agreement shall be amended to add
          the following sentence:

          For purposes of this Section 8.5, any shares of common stock issuable
          upon conversion of the Note issued by the Company and purchased by AHP
          pursuant to the Note Purchase Agreement dated as of May 20, 1999
          shall, at the option of AHP, be included in any determination of
          whether AHP is a majority shareholder of Immunex.

     3.   Except as otherwise set forth in this Amendment No. 1, all other terms
          and provisions of the Product Rights Agreement shall remain in full
          force and effect.

     4.   This Amendment No. 1 may be executed in counterparts, each of which
          shall be deemed an original and all of which shall constitute together
          one and the same instrument.

IN WITNESS WHEREOF, the parties hereto have executed this Amendment No. 1 as of
the day and year first above written.

IMMUNEX CORPORATION                           AMERICAN HOME PRODUCTS CORPORATION

By: /s/ Edward V. Fritzky                     By: /s/ Gerald A. Jibilian

Name: Edward V. Fritzky                       Name: Gerald A. Jibilian
Title: Chairman and Chief Executive Officer   Title: Vice President

                                       74<PAGE>

                                                                   Exhibit 10.20

                               IMMUNEX CORPORATION
                             1999 STOCK OPTION PLAN
                    AS AMENDED AND RESTATED ON JULY 27, 1999

                               SECTION 1. PURPOSE

     The purpose of the Immunex Corporation 1999 Stock Option Plan (the "Plan")
is to enhance the long-term shareholder value of Immunex Corporation, a
Washington corporation (the "Company"), by offering opportunities to selected
employees, officers and directors to participate in the Company's growth and
success, and to encourage them to remain in the service of the Company and its
Related Corporations (as defined in Section 2) and to acquire and maintain stock
ownership in the Company.

                             SECTION 2. DEFINITIONS

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

"BOARD" means the Board of Directors of the Company.

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

"CODE" means the Internal Revenue Code of 1986, as amended from time to time.

"COMMON STOCK" means the common stock, par value $.01 per share, of the Company.

"DISABILITY," unless otherwise defined by the Plan Administrator, means a mental
or physical impairment of the Optionee that is expected to result in death or
that has lasted or is expected to last for a continuous period of 12 months or
more and that causes the Optionee to be unable, in the opinion of the Company
and one independent physician selected by the Company, to perform his or her
duties for the Company or a Related Corporation and to be engaged in any
substantial gainful activity.

"EFFECTIVE DATE" means the date on which the Plan is adopted by the Board, so
long as it is approved by the Company's shareholders at any time within 12
months of such adoption.

"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

"EXCHANGE STOCK" has the meaning set forth in Section 11.3.

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

"GOVERNANCE AGREEMENT" means the Amended and Restated Governance Agreement among
American Cyanamid Company, Lederle Oncology Corporation and Immunex Corporation
dated as of December 15, 1992.

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"GRANT DATE" means the date on which the Plan Administrator completes the
corporate action relating to the grant of an Option and all conditions precedent
to the grant have been satisfied, provided that conditions to the exercisability
or vesting of Options shall not defer the Grant Date.

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

"NONQUALIFIED STOCK OPTION" means an Option to purchase Common Stock granted
under Section 7 other than an Incentive Stock Option. "OPTION" means the right
to purchase Common Stock granted under Section 7.

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

"OPTION TERM" has the meaning set forth in Section 7.3.

"PARENT," except as provided in Section 8.3 in connection with Incentive Stock
Options, means any entity, whether now or hereafter existing, that directly or
indirectly controls the Company.

"PLAN ADMINISTRATOR" means the Board or any committee or committees designated
by the Board or any person to whom the Board has delegated authority to
administer the Plan under Section 3.1.

"RELATED CORPORATION" means any Parent or Subsidiary of the Company.

"RETIREMENT" means retirement as of the individual's normal retirement date
under the Company's 401(k) Plan or other similar successor plan applicable to
salaried employees, unless otherwise defined by the Plan Administrator from time
to time for purposes of the Plan.

"SECURITIES ACT" means the Securities Act of 1933, as amended.

"SUBSIDIARY," except as provided in Section 8.3 in connection with Incentive
Stock Options, means any entity that is directly or indirectly controlled by the
Company.

"TERMINATION DATE" has the meaning set forth in Section 7.6.

                            SECTION 3. ADMINISTRATION

3.1  Plan Administrator

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

                                       76
<PAGE>

All delegations of authority by the Board pursuant to this Section 3.1 shall be
subject to the procedural requirements of Section 4.03 of the Governance
Agreement.

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

                      SECTION 4. STOCK SUBJECT TO THE PLAN

4.1  Authorized Number of Shares
Subject to adjustment from time to time as provided in Section 11.1, a maximum
of 6,000,000 shares of Common Stock shall be available for issuance under the
Plan. Shares issued under the Plan shall be drawn from authorized and unissued
shares or shares now held or subsequently acquired by the Company.

4.2  Limitations
Subject to adjustment from time to time as provided in Section 11.1,
not more than 200,000 shares of Common Stock may be made subject to Options
under the Plan to any individual in the aggregate in any one fiscal year of the
Company, except that the Company may make additional one-time grants of up to
200,000 shares to newly hired individuals, such limitation to be applied in a
manner consistent with the requirements of, and only to the extent required for
compliance with, the exclusion from the limitation on deductibility of
compensation under Section 162(m) of the Code.

4.3  Reuse of Shares
Any shares of Common Stock that have been made subject to an Option that cease
to be subject to the Option (other than by reason of exercise of the Option to
the extent it is exercised for shares) shall again be available for issuance in
connection with future grants of Options under the Plan; provided, however, that
for purposes of Section 4.2, any such shares shall be counted in accordance with
the requirements of Section 162(m) of the Code.

                             SECTION 5. ELIGIBILITY

Options may be granted under the Plan to those officers, directors and employees
of the Company and its Related Corporations as the Plan Administrator from time
to time selects.

                       SECTION 6. ACQUIRED COMPANY OPTIONS

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

                                       77

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                   SECTION 7. TERMS AND CONDITIONS OF OPTIONS

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

7.2  Option Exercise Price
The exercise price for shares purchased under an Option shall be as determined
by the Plan Administrator, but shall not be less than 100% of the Fair Market
Value of the Common Stock on the Grant Date with respect to Incentive Stock
Options and not less than 85% of the Fair Market Value of the Common Stock on
the Grant Date with respect to Nonqualified Stock Options. For Incentive Stock
Options granted to a more than 10% shareholder, the Option exercise price shall
be as specified in Section 8.2.

7.3  Term of Options
The term of each Option (the "Option Term") shall be as established by the Plan
Administrator or, if not so established, shall be 10 years from the Grant Date.
For Incentive Stock Options, the maximum Option Term shall be as specified in
Sections 8.2 and 8.4.

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

<TABLE>
<CAPTION>

     PERIOD OF OPTIONEE'S CONTINUOUS EMPLOYMENT OR
         SERVICE WITH THE COMPANY OR ITS RELATED
             CORPORATIONS FROM THE OPTION                                  PERCENT OF TOTAL OPTION
                        GRANT DATE                                     THAT IS VESTED AND EXERCISABLE
      ----------------------------------------------                   -------------------------------
<S>                                                                               <C>
                      After one year                                              20%

                      After two years                                             40%

                     After three years                                            60%

                     After four years                                             80%

                     After five years                                            100%

</TABLE>

The Plan Administrator may adjust the vesting schedule of an Option held by an
Optionee who works less than "full-time" as that term is defined by the Plan
Administrator. To the extent that the right to purchase shares has accrued
thereunder, an Option may be exercised from time to time by delivery to the
Company of a stock option exercise agreement or notice, in a form and in
accordance with procedures established by the Plan Administrator, setting forth
the number of shares with respect to which the Option is being exercised, the
restrictions imposed on the shares purchased under such exercise agreement, if
any, and such representations and agreements as may be required by the Company,
accompanied by payment in full as described in Section 7.5. An Option may not be
exercised as to less than a reasonable number of shares at any one time, as
determined by the Plan Administrator.

7.5  Payment of Exercise Price
The exercise price for shares purchased under an Option shall be paid in full to
the Company by delivery of consideration equal to the product of the Option
exercise price and the number of shares purchased. Such consideration must be
paid in cash or by check or, unless the Plan Administrator in its sole
discretion determines otherwise, either at the time the Option is granted or at
any time before it is exercised, in any combination of

(a)  cash or check;

(b)  tendering (either actually or, if and so long as the Common Stock is
registered under Section 12(b) or 12(g) of the Exchange Act, by attestation)
shares of Common Stock already owned by the Optionee for at least six months (or
any shorter period necessary to avoid a charge to the Company's earnings for
financial reporting purposes) having a Fair Market Value on the day prior to the
exercise date equal to the aggregate Option exercise price;

(c)  if and so long as the Common Stock is registered under Section 12(b) or
12(g) of the Exchange Act, delivery of an exercise notice, together with
irrevocable instructions, to a brokerage firm designated by the Company to
deliver promptly to the Company the aggregate amount of sale or loan proceeds to
pay the Option

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exercise price and any withholding tax obligations that may arise in connection
with the exercise and the Company to deliver the certificates for such purchased
shares directly to such brokerage firm, all in accordance with the regulations
of the Federal Reserve Board; or

(d)  such other consideration as the Plan Administrator may permit. In addition,
to assist an Optionee (including an Optionee who is an officer or a director of
the Company) in acquiring shares of Common Stock pursuant to an Option granted
under the Plan, the Plan Administrator, in its sole discretion, may authorize,
either at the Grant Date or at any time before the acquisition of Common Stock
pursuant to the Option, (i) the payment by the Optionee of a full-recourse
promissory note, (ii) the payment by the Optionee of the purchase price, if any,
of the Common Stock in installments, or (iii) the guarantee by the Company of a
loan obtained by the Optionee from a third party. Subject to the foregoing, the
Plan Administrator shall in its sole discretion specify the terms of any loans,
installment payments or loan guarantees, including the interest rate and terms
of and security for repayment.

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

(a)  Any portion of an Option that is not vested and exercisable on the date of
termination of the Optionee's employment or service relationship (the
"Termination Date") shall expire on such date, unless the Plan Administrator
determines otherwise.

(b)  Any portion of an Option that is vested and exercisable on the Termination
Date shall expire upon the earliest to occur of:

     (i)  the last day of the Option Term;

     (ii) if the Optionee's Termination Date occurs for reasons other than
Cause, Disability, death or Retirement, the three-month anniversary of such
Termination Date; and

     (iii) if the Optionee's Termination Date occurs by reason of Disability,
death or Retirement, the one-year anniversary of such Termination Date.
Notwithstanding the foregoing, if the Optionee dies after the Termination Date
while the Option is otherwise exercisable, the Option shall expire upon the
earlier to occur of (y) the last day of the Option Term and (z) the first
anniversary of the date of death.

Also notwithstanding the foregoing, in case of termination of the Optionee's
employment or service relationship for Cause, the Option shall automatically
expire upon first notification to the Optionee of such termination, unless the
Plan Administrator determines otherwise. If an Optionee's employment or service
relationship with the Company is suspended pending an investigation of whether
the Optionee shall be terminated for Cause, all the Optionee's rights under any
Option likewise shall be suspended during the period of investigation. An
Optionee's transfer of employment or service relationship between or among the
Company and its Related Corporations, or a change in status from an employee to
a consultant that is evidenced by a written agreement between an Optionee and
the Company or a Related Corporation, shall not be considered a termination of
employment or service relationship for purposes of this Section 7. Employment or
service relationship shall be deemed to continue while the Optionee is on a bona
fide leave of absence, if such leave was approved by the Company or a Related
Corporation in writing and if continued crediting of service for purposes of
this Section 7 is expressly required by the terms of such leave or by applicable
law (as determined by the Company). The effect of a Company-approved leave of
absence on the terms and conditions of an Option shall be determined by the Plan
Administrator, in its sole discretion.

                  SECTION 8. INCENTIVE STOCK OPTION LIMITATIONS

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

8.1  Dollar Limitation
To the extent the aggregate Fair Market Value (determined as of the Grant Date)
of Common Stock with respect to which Incentive Stock Options are exercisable
for the first time during any calendar year (under the Plan and all other stock
option plans of the Company) exceeds $100,000, such portion in excess of
$100,000 shall be treated as a Nonqualified Stock Option. In the event the
Optionee holds two or more such Options that become exercisable for

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the first time in the same calendar year, such limitation shall be applied on
the basis of the order in which such Options are granted.

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

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

8.4  Term
Except as provided in Section 8.2, the Option Term shall not exceed 10 years.

8.5  Exercisability
An Option designated as an Incentive Stock Option shall cease to qualify for
favorable tax treatment as an Incentive Stock Option to the extent it is
exercised (if permitted by the terms of the Option) (a) more than three months
after the Termination Date for reasons other than death or Disability, (b) more
than one year after the Termination Date by reason of Disability, or (c) after
the Optionee has been on leave of absence for more than 90 days, unless the
Optionee's reemployment rights are guaranteed by statute or contract. For
purposes of this Section 8.5, Disability shall mean "disability" as that term is
defined for purposes of Section 422 of the Code.

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

8.7  Promissory Notes
The amount of any promissory note delivered pursuant to Section 7.5 in
connection with an Incentive Stock Option shall bear interest at a rate
specified by the Plan Administrator, but in no case less than the rate required
to avoid imputation of interest (taking into account any exceptions to the
imputed interest rules) for federal income tax purposes.

                             SECTION 9. WITHHOLDING

The Company may require the Optionee to pay to the Company the amount of any
withholding taxes that the Company is required to withhold with respect to the
grant, vesting or exercise of any Option. Subject to the Plan and applicable
law, the Plan Administrator may, in its sole discretion, permit the Optionee to
satisfy withholding obligations, in whole or in part, by paying cash, by
electing to have the Company withhold shares of Common Stock or by transferring
shares of Common Stock to the Company, in such amounts as are equivalent to the
Fair Market Value of the withholding obligation. The Company shall have the
right to withhold from any Option or any shares of Common Stock issuable
pursuant to an Option or from any cash amounts otherwise due or to become due
from the Company to the Optionee an amount equal to such taxes. The Company may
also deduct from any Option any other amounts due from the Optionee to the
Company or a Related Corporation.

                            SECTION 10. ASSIGNABILITY

Options granted under the Plan and any interest therein may not be assigned,
pledged or transferred by the Optionee and may not be made subject to attachment
or similar proceedings otherwise than by will or by the applicable laws of
descent and distribution, and, during the Optionee's lifetime, such Options may
be exercised only by the Optionee. Notwithstanding the foregoing, and to the
extent permitted by Section 422 of the Code, the Plan Administrator, in its sole
discretion, may permit such assignment, transfer and exercisability and may
permit an Optionee to designate a beneficiary who may exercise the Option or
receive compensation under the Option after the Optionee's death; provided,
however, that any Option so assigned or transferred shall be subject to all the
same terms and conditions contained in the instrument evidencing the Option.

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<PAGE>

             SECTION 11. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION

11.1 Adjustment of Shares
The aggregate number and class of shares for which Options may be granted under
the Plan, the number and class of shares covered by each outstanding Option and
the exercise price per share thereof (but not the total price), shall all be
proportionately adjusted for any increase or decrease in the number of issued
shares of Common Stock resulting from a split-up or consolidation of shares or
any like capital adjustment, or the payment of any stock dividend (not including
the stock dividend approved by the Board on February 23, 1999).

11.2 Cash, Stock or Other Property for Stock
Except as provided in Section 11.3, upon a merger (other than a merger of the
Company in which the holders of Common Stock immediately prior to the merger
have the same proportionate ownership of Common Stock in the surviving
corporation immediately after the merger), consolidation, acquisition of
property or stock, separation, reorganization (other than a mere reincorporation
or the creation of a holding company) or liquidation of the Company, as a result
of which the shareholders of the Company receive cash, stock or other property
in exchange for or in connection with their shares of Common Stock, any Option
granted hereunder shall terminate, but the Optionee shall have the right
immediately prior to any such merger, consolidation, acquisition of property or
stock, liquidation or reorganization to exercise such Option in whole or in part
whether or not the vesting requirements set forth in the Option agreement have
been satisfied.

11.3 Conversion of Options on Stock for Stock Exchange
     If the shareholders of the Company receive capital stock of another
corporation ("Exchange Stock") in exchange for their shares of Common Stock in
any transaction involving a merger (other than a merger of the Company in which
the holders of Common Stock immediately prior to the merger have the same
proportionate ownership of Common Stock in the surviving corporation immediately
after the merger), consolidation, acquisition of property or stock, liquidation
or reorganization (other than a mere reincorporation or the creation of a
holding company), the Company and the corporation issuing the Exchange Stock, in
their sole discretion, may determine that all Options granted hereunder shall be
converted into options to purchase shares of Exchange Stock instead of
terminating in accordance with the provisions of Section 11.2. The amount and
price of converted options shall be determined by adjusting the amount and price
of the Options granted hereunder in the same proportion as used for determining
the number of shares of Exchange Stock the holders of the Common Stock receive
in such merger, consolidation, acquisition of property or stock, liquidation or
reorganization. Unless accelerated by the Board, the vesting schedule set forth
in the Option agreement shall continue to apply to the options granted for the
Exchange Stock.

11.4 Fractional Shares
In the event of any adjustment in the number of shares covered by any Option,
any fractional shares resulting from such adjustment shall be disregarded and
each such Option shall cover only the number of full shares resulting from such
adjustment.

11.5 Determination of Board to Be Final
All Section 11 adjustments shall be made by the Plan Administrator, and its
determination as to what adjustments shall be made, and the extent thereof,
shall be final, binding and conclusive. Unless an Optionee agrees otherwise, any
change or adjustment to an Incentive Stock Option shall be made in such a manner
so as not to constitute a "modification" as defined in Section 424(h) of the
Code and so as not to cause his or her Incentive Stock Option issued hereunder
to fail to continue to qualify as an "incentive stock option" as defined in
Section 422(b) of the Code.

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

                  SECTION 12. AMENDMENT AND TERMINATION OF PLAN

12.1 Amendment of Plan
The Plan may be amended only by the Board in such respects as it shall deem
advisable; provided, however, that to the extent required for compliance with
Section 422 of the Code or any applicable law or regulation, shareholder
approval shall be required for any amendment that would (a) increase the total
number of shares available for

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<PAGE>

issuance under the Plan, (b) modify the class of persons eligible to receive
Options, or (c) otherwise require shareholder approval under any applicable law
or regulation. Any amendment made to the Plan that would constitute a
"modification" to Incentive Stock Options outstanding on the date of such
amendment shall not, without the consent of the Optionee, be applicable to such
outstanding Incentive Stock Options but shall have prospective effect only.

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

12.3 Consent of Optionee
The amendment or termination of the Plan or the amendment of an outstanding
Option shall not, without the Optionee's consent, impair or diminish any rights
or obligations under any Option theretofore granted to the Optionee under the
Plan. Except as otherwise provided in the Plan, no outstanding Option shall be
terminated without the consent of the Optionee. Any change or adjustment to an
outstanding Incentive Stock Option shall not, without the consent of the
Optionee, be made in a manner so as to constitute a "modification" that would
cause such Incentive Stock Option to fail to continue to qualify as an Incentive
Stock Option.

                               SECTION 13. GENERAL

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

13.2 No Individual Rights
Nothing in the Plan or any Option granted under the Plan shall be deemed to
constitute an employment contract or confer or be deemed to confer on any
Optionee any right to continue in the employ of, or to continue any other
relationship with, the Company or any Related Corporation or limit in any way
the right of the Company or any Related Corporation of the Company to terminate
an Optionee's employment or other relationship at any time, with or without
Cause.

13.3 Registration
Notwithstanding any other provision of the Plan, the Company shall have no
obligation to issue or deliver any shares of Common Stock under the Plan or make
any other distribution of benefits under the Plan unless such issuance, delivery
or distribution would comply with all applicable laws (including, without
limitation, the requirements of the Securities Act), and the applicable
requirements of any securities exchange or similar entity. The Company shall be
under no obligation to any Optionee to register for offering or resale or to
qualify for exemption under the Securities Act, or to register or qualify under
state securities laws, any shares of Common Stock, security or interest in a
security paid or issued under, or created by, the Plan, or to continue in effect
any such registrations or qualifications if made. The Company may issue
certificates for shares with such legends and subject to such restrictions on
transfer and stop-transfer instructions as counsel for the Company deems
necessary or desirable for compliance by the Company with federal and state
securities laws. To the extent that the Plan or any instrument evidencing an
Option provides for issuance of stock certificates to reflect the issuance of
shares of Common Stock, the issuance may be effected on a noncertificated basis,
to the extent not prohibited by applicable law or the applicable rules of any
stock exchange.

13.4 No Rights as a Shareholder
No Option shall entitle the Optionee to any cash dividend, voting or other right
of a shareholder unless and until the date of issuance under the Plan of the
shares that are the subject of such Option.

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

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<PAGE>

13.6 Optionees in Foreign Countries
The Plan Administrator shall have the authority to adopt such modifications,
procedures and subplans as may be necessary or desirable to comply with
provisions of the laws of foreign countries in which the Company or its Related
Corporations may operate to assure the viability of the benefits from Options
granted to Optionees employed in such countries and to meet the objectives of
the Plan.

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

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

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

                           SECTION 14. EFFECTIVE DATE

The Effective Date is the date on which the Plan is adopted by the Board, so
long as it is approved by the Company's shareholders at any time within 12
months of such adoption.
ADOPTED BY THE BOARD ON FEBRUARY 23, 1999 AND APPROVED BY THE COMPANY'S
SHAREHOLDERS ON APRIL 29, 1999.

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<PAGE>

                    PLAN ADOPTION AND AMENDMENTS/ADJUSTMENTS
                                  SUMMARY PAGE

<TABLE>
<CAPTION>

                                                      SECTION/EFFECT OF                DATE OF SHAREHOLDER
DATE OF BOARD ACTION     ACTION                       AMENDMENT                        APPROVAL
<S>                      <C>                          <C>                              <C>
February 23, 1999        Initial Plan Adoption                                         April 29, 1999

July 27, 1999            Plan Amendment               9; Revised to prevent excess     Not required
                                                      stock tax withholding

</TABLE>

                                       84

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