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                                                                  EXHIBIT 10.1.2

                                 BLUE NILE, INC.
                           1999 EQUITY INCENTIVE PLAN

                             STOCK OPTION AGREEMENT
                   (INCENTIVE AND NONSTATUTORY STOCK OPTIONS)

         Pursuant to your Stock Option Grant Notice ("GRANT NOTICE") and this
Stock Option Agreement, Blue Nile, Inc. (the "COMPANY") has granted you an
Option under its 1999 Equity Incentive Plan (the "PLAN") to purchase the number
of shares of the Company's Common Stock indicated in your Grant Notice at the
exercise price indicated in your Grant Notice. Defined terms not explicitly
defined in this Stock Option Agreement but defined in the Plan shall have the
same definitions as in the Plan.

         The details of your Option are as follows:

         1. VESTING. Subject to the limitations contained herein, your Option
will vest as provided in your Grant Notice, provided that vesting will cease
upon the termination of your Continuous Service.

         2. NUMBER OF SHARES AND EXERCISE PRICE. The number of shares of Common
Stock subject to your Option and your exercise price per share referenced in
your Grant Notice may be adjusted from time to time for Capitalization
Adjustments, as provided in the Plan.

         3. EXERCISE PRIOR TO VESTING ("EARLY EXERCISE"). If permitted in your
Grant Notice (i.e., the "EXERCISE SCHEDULE" indicates that "EARLY EXERCISE" of
your Option is permitted) and subject to the provisions of your Option, you may
elect at any time that is both (a) during the period of your Continuous Service
and (b) during the term of your Option, to exercise all or part of your Option,
including the nonvested portion of your Option; provided, however, that:

                  (a) a partial exercise of your Option shall be deemed to cover
first vested shares of Common Stock and then the earliest vesting installment of
unvested shares of Common Stock;

                  (b) any shares of Common Stock so purchased from installments
that have not vested as of the date of exercise shall be subject to the purchase
option in favor of the Company as described in the Company's form of Early
Exercise Stock Purchase Agreement;

                  (c) you shall enter into the Company's form of Early Exercise
Stock Purchase Agreement with a vesting schedule that will result in the same
vesting as if no early exercise had occurred; and

                  (d) if your Option is an Incentive Stock Option, then, as
provided in the Plan, to the extent that the aggregate Fair Market Value
(determined at the time of grant) of the shares of Common Stock with respect to
which your Option plus all other Incentive Stock Options you hold are
exercisable for the first time by you during any calendar year (under all plans
of the Company and its Affiliates) exceeds one hundred thousand dollars
($100,000), your Option(s) or portions thereof that exceed such limit (according
to the order in which they were granted) shall be treated as Nonstatutory Stock
Option(s).

                                       1.
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         4. METHOD OF PAYMENT. Payment of the exercise price is due in full upon
exercise of all or any part of your Option. You may elect to make payment of the
exercise price in cash or by check or in any other manner PERMITTED BY YOUR
GRANT NOTICE, which may include one or more of the following:

                  (a) In the Company's sole discretion at the time your Option
is exercised and provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in The Wall Street Journal, pursuant to a
program developed under Regulation T as promulgated by the Federal Reserve Board
that, prior to the issuance of Common Stock, results in either the receipt of
cash (or check) by the Company or the receipt of irrevocable instructions to pay
the aggregate exercise price to the Company from the sales proceeds.

                  (b) Provided that at the time of exercise the Common Stock is
publicly traded and quoted regularly in The Wall Street Journal, by delivery of
already-owned shares of Common Stock either that you have held for the period
required to avoid a charge to the Company's reported earnings (generally six
months) or that you did not acquire, directly or indirectly from the Company,
that are owned free and clear of any liens, claims, encumbrances or security
interests, and that are valued at Fair Market Value on the date of exercise.
"Delivery" for these purposes, in the sole discretion of the Company at the time
you exercise your Option, shall include delivery to the Company of your
attestation of ownership of such shares of Common Stock in a form approved by
the Company. Notwithstanding the foregoing, you may not exercise your Option by
tender to the Company of Common Stock to the extent such tender would violate
the provisions of any law, regulation or agreement restricting the redemption of
the Company's stock.

                  (c) Pursuant to the following deferred payment alternative:

                           (i) Not less than one hundred percent (100%) of the
aggregate exercise price, plus accrued interest, shall be due four (4) years
from date of exercise or, at the Company's election, upon termination of your
Continuous Service.

                           (ii) Interest shall be compounded at least annually
and shall be charged at the minimum rate of interest necessary to avoid the
treatment as interest, under any applicable provisions of the Code, of any
portion of any amounts other than amounts stated to be interest under the
deferred payment arrangement.

                           (iii) At any time that the Company is incorporated in
Delaware, payment of the Common Stock's "par value," as defined in the Delaware
General Corporation Law, shall be made in cash and not by deferred payment.

                           (iv) In order to elect the deferred payment
alternative, you must, as a part of your written notice of exercise, give notice
of the election of this payment alternative and, in order to secure the payment
of the deferred exercise price to the Company hereunder, if the Company so
requests, you must tender to the Company a promissory note and a security
agreement covering the purchased shares of Common Stock, both in form and
substance satisfactory to the Company, or such other or additional documentation
as the Company may request.

         5. WHOLE SHARES. You may exercise your Option only for whole shares of
Common Stock.

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         6. SECURITIES LAW COMPLIANCE. Notwithstanding anything to the contrary
contained herein, you may not exercise your Option unless the shares of Common
Stock issuable upon such exercise are then registered under the Securities Act
or, if such shares of Common Stock are not then so registered, the Company has
determined that such exercise and issuance would be exempt from the registration
requirements of the Securities Act. The exercise of your Option must also comply
with other applicable laws and regulations governing your Option, and you may
not exercise your Option if the Company determines that such exercise would not
be in material compliance with such laws and regulations.

         7. TERM. The term of your Option commences on the Date of Grant and
expires upon the EARLIEST of the following:

                  (a) three (3) months after the termination of your Continuous
Service for any reason other than your Disability or death, provided that if
during any part of such three (3) month period your Option is not exercisable
solely because of the condition set forth in the preceding paragraph relating to
"Securities Law Compliance," your Option shall not expire until the earlier of
the Expiration Date or until it shall have been exercisable for an aggregate
period of three (3) months after the termination of your Continuous Service;

                  (b) twelve (12) months after the termination of your
Continuous Service due to your Disability;

                  (c) eighteen (18) months after your death if you die either
during your Continuous Service or within three (3) months after your Continuous
Service terminates;

                  (d) the Expiration Date indicated in your Grant Notice; or

                  (e) the tenth (10th) anniversary of the Date of Grant.

         If your Option is an Incentive Stock Option, note that, to obtain the
federal income tax advantages associated with an "INCENTIVE STOCK OPTION," the
Code requires that at all times beginning on the date of grant of your Option
and ending on the day three (3) months before the date of your Option's
exercise, you must be an employee of the Company or an Affiliate, except in the
event of your death or Disability. The Company has provided for extended
exercisability of your Option under certain circumstances for your benefit but
cannot guarantee that your Option will necessarily be treated as an "INCENTIVE
STOCK OPTION" if you continue to provide services to the Company or an Affiliate
as a Consultant or Director after your employment terminates or if you otherwise
exercise your Option more than three (3) months after the date your employment
terminates.

         8. EXERCISE.

                  (a) You may exercise the vested portion of your Option (and
the unvested portion of your Option if your Grant Notice so permits) during its
term by delivering a Notice of Exercise (in a form designated by the Company)
together with the exercise price to the Secretary of the Company, or to such
other person as the Company may designate, during regular business hours,
together with such additional documents as the Company may then require.

                  (b) By exercising your Option you agree that, as a condition
to any exercise of your Option, the Company may require you to enter into an
arrangement providing for the payment by you to the Company of any tax
withholding obligation of the Company arising by reason of (1) the exercise of
your Option, (2) the lapse of any substantial risk of forfeiture to which the
shares of Common Stock are

                                       3.
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subject at the time of exercise, or (3) the disposition of shares of Common
Stock acquired upon such exercise.

                  (c) If your Option is an Incentive Stock Option, by exercising
your Option you agree that you will notify the Company in writing within fifteen
(15) days after the date of any disposition of any of the shares of the Common
Stock issued upon exercise of your Option that occurs within two (2) years after
the date of your Option grant or within one (1) year after such shares of Common
Stock are transferred upon exercise of your Option.

                  (d) By exercising your Option you agree that the Company (or a
representative of the underwriter(s)) may, in connection with the first
underwritten registration of the offering of any securities of the Company under
the Securities Act, require that you not sell, dispose of, transfer, make any
short sale of, grant any Option for the purchase of, or enter into any hedging
or similar transaction with the same economic effect as a sale, any shares of
Common Stock or other securities of the Company held by you, for a period of
time specified by the underwriter(s) (not to exceed one hundred eighty (180)
days) following the effective date of the registration statement of the Company
filed under the Securities Act. You further agree to execute and deliver such
other agreements as may be reasonably requested by the Company and/or the
underwriter(s) that are consistent with the foregoing or that are necessary to
give further effect thereto. In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to your shares of
Common Stock until the end of such period.

         9. TRANSFERABILITY. Your Option is not transferable, except by will or
by the laws of descent and distribution, and is exercisable during your life
only by you. Notwithstanding the foregoing, by delivering written notice to the
Company, in a form satisfactory to the Company, you may designate a third party
who, in the event of your death, shall thereafter be entitled to exercise your
Option.

         10. RIGHT OF FIRST REFUSAL. Shares of Common Stock that you acquire
upon exercise of your Option are subject to any right of first refusal that may
be described in the Company's bylaws in effect at such time the Company elects
to exercise its right. The Company's right of first refusal shall expire on the
Listing Date.

         11. RIGHT OF REPURCHASE. To the extent provided in the Company's
Bylaws, as amended from time to time, the Company shall have the right to
repurchase all or any part of the shares of Common Stock you acquire pursuant to
the exercise of your Option.

         12. OPTION NOT A SERVICE CONTRACT. Your Option is not an employment or
service contract, and nothing in your Option shall be deemed to create in any
way whatsoever any obligation on your part to continue in the employ of the
Company or an Affiliate, or of the Company or an Affiliate to continue your
employment. In addition, nothing in your Option shall obligate the Company or an
Affiliate, their respective stockholders, Boards of Directors, Officers or
Employees to continue any relationship that you might have as a Director or
Consultant for the Company or an Affiliate.

         13. WITHHOLDING OBLIGATIONS.

                  (a) At the time you exercise your Option, in whole or in part,
or at any time thereafter as requested by the Company, you hereby authorize
withholding from payroll and any other amounts payable to you, and otherwise
agree to make adequate provision for (including by means of a "cashless
exercise" pursuant to a program developed under Regulation T as promulgated by
the Federal Reserve Board to the extent permitted by the Company), any sums
required to satisfy the federal, state,

                                       4.
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local and foreign tax withholding obligations of the Company or an Affiliate, if
any, which arise in connection with your Option.

                  (b) Upon your request and subject to approval by the Company,
in its sole discretion, and compliance with any applicable conditions or
restrictions of law, the Company may withhold from fully vested shares of Common
Stock otherwise issuable to you upon the exercise of your Option a number of
whole shares of Common Stock having a Fair Market Value, determined by the
Company as of the date of exercise, not in excess of the minimum amount of tax
required to be withheld by law. If the date of determination of any tax
withholding obligation is deferred to a date later than the date of exercise of
your Option, share withholding pursuant to the preceding sentence shall not be
permitted unless you make a proper and timely election under Section 83(b) of
the Code, covering the aggregate number of shares of Common Stock acquired upon
such exercise with respect to which such determination is otherwise deferred, to
accelerate the determination of such tax withholding obligation to the date of
exercise of your Option. Notwithstanding the filing of such election, shares of
Common Stock shall be withheld solely from fully vested shares of Common Stock
determined as of the date of exercise of your Option that are otherwise issuable
to you upon such exercise. Any adverse consequences to you arising in connection
with such share withholding procedure shall be your sole responsibility.

                  (c) You may not exercise your Option unless the tax
withholding obligations of the Company and/or any Affiliate are satisfied.
Accordingly, you may not be able to exercise your Option when desired even
though your Option is vested, and the Company shall have no obligation to issue
a certificate for such shares of Common Stock or release such shares of Common
Stock from any escrow provided for herein.

         14. NOTICES. Any notices provided for in your Option or the Plan shall
be given in writing and shall be deemed effectively given upon receipt or, in
the case of notices delivered by mail by the Company to you, five (5) days after
deposit in the United States mail, postage prepaid, addressed to you at the last
address you provided to the Company.

         15. GOVERNING PLAN DOCUMENT. Your Option is subject to all the
provisions of the Plan, the provisions of which are hereby made a part of your
Option, and is further subject to all interpretations, amendments, rules and
regulations which may from time to time be promulgated and adopted pursuant to
the Plan. In the event of any conflict between the provisions of your Option and
those of the Plan, the provisions of the Plan shall control.

         16. TRANSFERABILITY.

                  (a) If your Option is an Incentive Stock Option, your Option
is not transferable, except by will or by the laws of descent and distribution,
and is exercisable during your life only by you. Notwithstanding the foregoing,
by delivering written notice to the Company, in a form satisfactory to the
Company, you may designate a third party who, in the event of your death, shall
thereafter be entitled to exercise your Option.

                  (b) If your Option is a Nonstatutory Stock Option, your Option
is not transferable, except (i) by will or by the laws of descent and
distribution, (ii) with the prior written approval of the Company, by instrument
to an inter vivos or testamentary trust, in a form accepted by the Company, in
which the Option is to be passed to beneficiaries upon the death of the trustor
(settlor) and (iii) with the prior written approval of the Company, by gift, in
a form accepted by the Company, to your "immediate family" as that term is
defined in 17 C.F.R. 240.16a-1(e). The term "immediate family" is defined in 17

                                       5.
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C.F.R. 240.16a-1(e) to mean any child, stepchild, grandchild, parent,
stepparent, grandparent, spouse, sibling, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law, or sister-in-law, and includes
adoptive relationships. Your Option is exercisable during your life only by you
or a transferee satisfying the above-stated conditions. The right of a
transferee to exercise the transferred portion of your Option after termination
of your Continuous Service shall terminate in accordance with your right to
exercise your Option as specified in your Option. In the event that your
Continuous Service terminates due to your death, your transferee will be treated
as a person who acquired the right to exercise your Option by bequest or
inheritance. In addition to the foregoing, the Company may require, as a
condition of the transfer of your Option to a trust or by gift, that your
transferee enter into an Option transfer agreement provided by, or acceptable
to, the Company. The terms of your Option shall be binding upon your
transferees, executors, administrators, heirs, successors, and assigns.
Notwithstanding the foregoing, by delivering written notice to the Company, in a
form satisfactory to the Company, you may designate a third party who, in the
event of your death, shall thereafter be entitled to exercise your Option.

                                       6.<PAGE>
                                                                  EXHIBIT 10.2.1

                                 BLUE NILE, INC.

                 2004 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

                              ADOPTED MARCH 9, 2004
                   APPROVED BY STOCKHOLDERS MARCH _____, 2004

1. PURPOSES.

         (a) ELIGIBLE OPTION RECIPIENTS. The persons eligible to receive Options
are the Non-Employee Directors of the Company.

         (b) AVAILABLE OPTIONS. The purpose of the Plan is to provide a means by
which Non-Employee Directors may be given an opportunity to benefit from
increases in value of the Common Stock through the granting of Nonstatutory
Stock Options.

         (c) GENERAL PURPOSE. The Company, by means of the Plan, seeks to retain
the services of its Non-Employee Directors, to secure and retain the services of
new Non-Employee Directors and to provide incentives for such persons to exert
maximum efforts for the success of the Company and its Affiliates.

2. DEFINITIONS.

         (a) "ACCOUNTANT" means the independent public accountants of the
Company.

         (b) "AFFILIATE" means any parent corporation or subsidiary corporation
of the Company, whether now or hereafter existing, as those terms are defined in
Sections 424(e) and (f), respectively, of the Code.

         (c) "ANNUAL GRANT" means an Option granted annually to all Non-Employee
Directors who meet the specified criteria pursuant to Section 6(c).

         (d) "ANNUAL MEETING" means the annual meeting of the stockholders of
the Company.

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

         (f) "CAPITALIZATION ADJUSTMENT" has the meaning ascribed to that term
in Section 11(a).

                                       1.
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         (g) "CHANGE IN CONTROL" means the occurrence, in a single transaction
or in a series of related transactions, of any one or more of the following
events:

                  (i) any Exchange Act Person becomes the Owner, directly or
indirectly, of securities of the Company representing more than fifty percent
(50%) of the combined voting power of the Company's then outstanding securities
other than by virtue of a merger, consolidation or similar transaction.
Notwithstanding the foregoing, a Change in Control shall not be deemed to occur
solely because the level of Ownership held by any Exchange Act Person (the
"Subject Person") exceeds the designated percentage threshold of the outstanding
voting securities as a result of a repurchase or other acquisition of voting
securities by the Company reducing the number of shares outstanding, provided
that if a Change in Control would occur (but for the operation of this sentence)
as a result of the acquisition of voting securities by the Company, and after
such share acquisition, the Subject Person becomes the Owner of any additional
voting securities that, assuming the repurchase or other acquisition had not
occurred, increases the percentage of the then outstanding voting securities
Owned by the Subject Person over the designated percentage threshold, then a
Change in Control shall be deemed to occur;

                  (ii) there is consummated a merger, consolidation or similar
transaction involving (directly or indirectly) the Company and, immediately
after the consummation of such merger, consolidation or similar transaction, the
stockholders of the Company immediately prior thereto do not Own, directly or
indirectly, outstanding voting securities representing more than fifty percent
(50%) of the combined outstanding voting power of the surviving Entity in such
merger, consolidation or similar transaction or more than fifty percent (50%) of
the combined outstanding voting power of the parent of the surviving Entity in
such merger, consolidation or similar transaction;

                  (iii) the stockholders of the Company approve or the Board
approves a plan of complete dissolution or liquidation of the Company, or a
complete dissolution or liquidation of the Company shall otherwise occur;

                  (iv) there is consummated a sale, lease, license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries, other than a sale, lease, license or other
disposition of all or substantially all of the consolidated assets of the
Company and its Subsidiaries to an Entity, more than fifty percent (50%) of the
combined voting power of the voting securities of which are Owned by
stockholders of the Company in substantially the same proportions as their
Ownership of the Company immediately prior to such sale, lease, license or other
disposition; or

                  (v) individuals who, on the date this Plan is adopted by the
Board, are members of the Board (the "Incumbent Board") cease for any reason to
constitute at least a majority of the members of the Board; (provided, however,
that if the appointment or election (or nomination for election) of any new
Board member was approved or recommended by a majority vote of the members of
the Incumbent Board then still in office, such new member shall, for purposes of
this Plan, be considered as a member of the Incumbent Board).

         (h) "CODE" means the Internal Revenue Code of 1986, as amended.

                                       2.
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         (i) "COMMON STOCK" means the common stock of the Company.

         (j) "COMPANY" means Blue Nile, Inc., a Delaware corporation.

         (k) "CONSULTANT" means any person, including an advisor, (i) engaged by
the Company or an Affiliate to render consulting or advisory services and who is
compensated for such services or (ii) serving as a member of the Board of
Directors of an Affiliate. However, the term "Consultant" shall not include
either Directors of the Company who are not compensated by the Company for their
services as Directors or Directors of the Company who are merely paid a
director's fee by the Company for their services as Directors.

         (l) "CONTINUOUS SERVICE" means that the Optionholder's service with the
Company or an Affiliate, whether as an Employee, Director or Consultant, is not
interrupted or terminated. The Optionholder's Continuous Service shall not be
deemed to have terminated merely because of a change in the capacity in which
the Optionholder renders service to the Company or an Affiliate as an Employee,
Consultant or Director or a change in the entity for which the Optionholder
renders such service, provided that there is no interruption or termination of
the Optionholder's Continuous Service. For example, a change in status from a
Non-Employee Director of the Company to a Consultant of an Affiliate or an
Employee of the Company will not constitute an interruption of Continuous
Service. The Board or the chief executive officer of the Company, in that
party's sole discretion, may determine whether Continuous Service shall be
considered interrupted in the case of any leave of absence approved by that
party, including sick leave, military leave or any other personal leave.

         (m) "CORPORATE TRANSACTION" means the occurrence, in a single
transaction or in a series of related transactions, of any one or more of the
following events:

                  (i) a sale or other disposition of all or substantially all,
as determined by the Board in its discretion, of the consolidated assets of the
Company and its Subsidiaries;

                  (ii) a sale or other disposition of at least ninety percent
(90%) of the outstanding securities of the Company;

                  (iii) a merger, consolidation or similar transaction following
which the Company is not the surviving corporation; or

                  (iv) a merger, consolidation or similar transaction following
which the Company is the surviving corporation but the shares of Common Stock
outstanding immediately preceding the merger, consolidation or similar
transaction are converted or exchanged by virtue of the merger, consolidation or
similar transaction into other property, whether in the form of securities, cash
or otherwise.

         (n) "DIRECTOR" means a member of the Board of Directors of the Company.

         (o) "DISABILITY" means the inability of a person, in the opinion of a
qualified physician acceptable to the Company, to perform the major duties of
that person's position with the Company or an Affiliate of the Company because
of the sickness or injury of the person.

                                       3.
<PAGE>

         (p) "EMPLOYEE" means any person employed by the Company or an
Affiliate. Service as a Director or payment of a director's fee by the Company
or an Affiliate shall not be sufficient to constitute "employment" by the
Company or an Affiliate.

         (q) "ENTITY" means a corporation, partnership or other entity.

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

         (s) "EXCHANGE ACT PERSON" means any natural person, Entity or "group"
(within the meaning of Section 13(d) or 14(d) of the Exchange Act), except that
"Exchange Act Person" shall not include (A) the Company or any Subsidiary of the
Company, (B) any employee benefit plan of the Company or any Subsidiary of the
Company or any trustee or other fiduciary holding securities under an employee
benefit plan of the Company or any Subsidiary of the Company, (C) an underwriter
temporarily holding securities pursuant to an offering of such securities, or
(D) an Entity Owned, directly or indirectly, by the stockholders of the Company
in substantially the same proportions as their Ownership of stock of the
Company.

         (t) "FAIR MARKET VALUE" means, as of any date, the value of the Common
Stock determined as follows:

                  (i) If the Common Stock is listed on any established stock
exchange or traded on the Nasdaq National Market or the Nasdaq SmallCap Market,
the Fair Market Value of a share of Common Stock shall be the closing sales
price for such stock (or the closing bid, if no sales were reported) as quoted
on such exchange or market (or the exchange or market with the greatest volume
of trading in the Common Stock) on the last market trading day prior to the day
of determination, as reported in The Wall Street Journal or such other source as
the Board deems reliable.

                  (ii) In the absence of such markets for the Common Stock, the
Fair Market Value shall be determined in good faith by the Board.

         (u) "INITIAL GRANT" means an Option granted to a Non-Employee Director
who meets the specified criteria pursuant to Section 6(a).

         (v) "IPO DATE" means the date on which the registration statement in
connection with the Company's initial public offering is declared effective.

         (w) "NON-EMPLOYEE DIRECTOR" means a Director who is not an Employee.

         (x) "NONSTATUTORY STOCK OPTION" means an Option not intended to qualify
as an incentive stock option within the meaning of Section 422 of the Code and
the regulations promulgated thereunder.

         (y) "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.

         (z) "OPTION" means a Nonstatutory Stock Option granted pursuant to the
Plan.

                                       4.
<PAGE>

         (aa) "OPTION AGREEMENT" means a written agreement between the Company
and an Optionholder evidencing the terms and conditions of an individual Option
grant. Each Option Agreement shall be subject to the terms and conditions of the
Plan.

         (bb) "OPTIONHOLDER" means a person to whom an Option is granted
pursuant to the Plan or, if applicable, such other person who holds an
outstanding Option.

         (cc) "OWN," "OWNED," "OWNER," "OWNERSHIP" A person or Entity shall be
deemed to "Own," to have "Owned," to be the "Owner" of, or to have acquired
"Ownership" of securities if such person or Entity, directly or indirectly,
through any contract, arrangement, understanding, relationship or otherwise, has
or shares voting power, which includes the power to vote or to direct the
voting, with respect to such securities.

         (dd) "PLAN" means this Blue Nile, Inc. 2004 Non-Employee Directors'
Stock Option Plan.

         (ee) "RELOAD GRANT" means an Option granted to a Non-Employee Director
who meets the specified criteria pursuant to Section 6(b).

         (ff) "RULE 16b-3" means Rule 16b-3 promulgated under the Exchange Act
or any successor to Rule 16b-3, as in effect from time to time.

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

         (hh) "SUBSIDIARY" means, with respect to the Company, (i) any
corporation of which more than fifty percent (50%) of the outstanding capital
stock having ordinary voting power to elect a majority of the board of directors
of such corporation (irrespective of whether, at the time, stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time, directly or
indirectly, Owned by the Company, and (ii) any partnership in which the Company
has a direct or indirect interest (whether in the form of voting or
participation in profits or capital contribution) of more than fifty percent
(50%).

3. ADMINISTRATION.

         (a) ADMINISTRATION BY BOARD. The Board shall administer the Plan. The
Board may not delegate administration of the Plan to a committee.

         (b) POWERS OF BOARD. The Board shall have the power, subject to, and
within the limitations of, the express provisions of the Plan:

                  (i) To determine the provisions of each Option to the extent
not specified in the Plan.

                  (ii) To construe and interpret the Plan and Options granted
under it, and to establish, amend and revoke rules and regulations for its
administration. The Board, in the exercise of this power, may correct any
defect, omission or inconsistency in the Plan or in any

                                       5.
<PAGE>

Option Agreement, in a manner and to the extent it shall deem necessary or
expedient to make the Plan fully effective.

                  (iii) To amend the Plan or an Option as provided in
Section 12.

                  (iv) Generally, to exercise such powers and to perform such
acts as the Board deems necessary or expedient to promote the best interests of
the Company and that are not in conflict with the provisions of the Plan.

         (c) EFFECT OF BOARD'S DECISION. All determinations, interpretations and
constructions made by the Board in good faith shall not be subject to review by
any person and shall be final, binding and conclusive on all persons.

4. SHARES SUBJECT TO THE PLAN.

         (a) SHARE RESERVE. Subject to the provisions of Section 11 relating to
adjustments upon changes in the Common Stock, the Common Stock that may be
issued pursuant to Options shall not exceed in the aggregate One Million
(1,000,000) shares of Common Stock, plus an annual increase for ten years
beginning on January 1, 2005 and ending on (and including) January 1, 2014 equal
to the number of shares subject to Options granted during the prior calendar
year. Notwithstanding the foregoing, the Board may act, prior to the first day
of any fiscal year of the Company, to increase the share reserve by such number
of shares of Common Stock as the Board shall determine, which number shall be
less than the amount described in the foregoing sentence.

         (b) REVERSION OF SHARES TO THE SHARE RESERVE. If any Option shall for
any reason expire or otherwise terminate, in whole or in part, without having
been exercised in full, the shares of Common Stock not acquired under such
Option shall revert to and again become available for issuance under the Plan.

         (c) SOURCE OF SHARES. The shares of Common Stock subject to the Plan
may be unissued shares or reacquired shares, bought on the market or otherwise.

5. ELIGIBILITY.

         The Options, as set forth in Section 6, automatically shall be granted
under the Plan to all Non-Employee Directors who meet the criteria specified in
Section 6.

6. NON-DISCRETIONARY GRANTS.

         (a) INITIAL GRANTS. Without any further action of the Board, (i) each
person who is a Non-Employee Director on the IPO Date and (ii) each person who
after the IPO Date is elected or appointed for the first time to be a
Non-Employee Director automatically shall, upon the IPO Date or the date of his
or her initial election or appointment to be a Non-Employee Director, as
applicable, be granted an Initial Grant to purchase Fifty Thousand (50,000)
shares of Common Stock on the terms and conditions set forth herein.

                                       6.
<PAGE>

         (b) RELOAD GRANTS. Without any further action of the Board, (i) each
person who receives an Initial Grant pursuant to Section 6(a) automatically
shall, upon the date that such Initial Grant becomes fully vested in accordance
with Section 7(e), be granted a Reload Grant to purchase Forty Thousand (40,000)
shares of Common Stock on the terms and conditions set forth herein, provided
that such person is a Non-Employee Director on the date of such Reload Grant;
and (ii) each Non-Employee Director who receives a Reload Grant in accordance
with the foregoing automatically shall be granted a Reload Grant upon the date
that any previously granted Reload Grant becomes fully vested in accordance with
Section 7(e), provided that such person is a Non-Employee Director on such date.

         (c) ANNUAL GRANTS. Without any further action of the Board, on the day
following each Annual Meeting, commencing with the Annual Meeting in 2005, each
person who is then a Non-Employee Director automatically shall be granted an
Annual Grant to purchase Ten Thousand (10,000) shares of Common Stock on the
terms and conditions set forth herein; provided, however, that if the person has
not been serving as a Non-Employee Director for the entire period since the
preceding Annual Meeting, then the number of shares subject to such Annual Grant
shall be reduced pro rata for each full quarter prior to the date of grant
during which such person did not serve as a Non- Employee Director.

7. OPTION PROVISIONS.

         Each Option shall be in such form and shall contain such terms and
conditions as required by the Plan. Each Option shall contain such additional
terms and conditions, not inconsistent with the Plan, as the Board shall deem
appropriate. Each Option shall include (through incorporation of provisions
hereof by reference in the Option or otherwise) the substance of each of the
following provisions:

         (a) TERM. No Option shall be exercisable after the expiration of ten
(10) years from the date it was granted.

         (b) EXERCISE PRICE. The exercise price of each Option shall be one
hundred percent (100%) of the Fair Market Value of the stock subject to the
Option on the date the Option is granted.

         (c) CONSIDERATION. The purchase price of stock acquired pursuant to an
Option may be paid, to the extent permitted by applicable law, in any
combination of (i) cash or check, (ii) delivery to the Company of other Common
Stock or (iii) pursuant to a program developed under Regulation T as promulgated
by the Federal Reserve Board that, prior to the issuance of Common Stock,
results in either the receipt of cash (or check) by the Company or the receipt
of irrevocable instructions to pay the aggregate exercise price to the Company
from the sales proceeds. The purchase price of Common Stock acquired pursuant to
an Option that is paid by delivery to the Company of other Common Stock
acquired, directly or indirectly from the Company, shall be paid only by shares
of the Common Stock of the Company that have been held for more than six (6)
months (or such longer or shorter period of time required to avoid a charge to
earnings for financial accounting purposes).

                                       7.
<PAGE>

         (d) TRANSFERABILITY. Except as otherwise provided for in this Section,
an Option is transferable only by will or by the laws of descent and
distribution and exercisable only by the Optionholder during the life of the
Optionholder. However, an Option may be transferred for no consideration upon
written consent of the Board (i) if, at the time of transfer, a Form S-8
registration statement under the Securities Act is available for the issuance of
shares by the Company upon the exercise of such transferred Option or (ii) the
transfer is to the Optionholder's employer at the time of transfer or an
affiliate of the Optionholder's employer at the time of transfer. Any such
transfer is subject to such limits as the Board may establish, and subject to
the transferee agreeing to remain subject to all the terms and conditions
applicable to the Option prior to such transfer. The forgoing right to transfer
the Option shall apply to the right to consent to amendments to the Stock Option
Agreement for such Option. In addition, until the Optionholder transfers the
Option, an Optionholder may, by delivering written notice to the Company, in a
form provided by or otherwise satisfactory to the Company, designate a third
party who, in the event of the death of the Optionholder, shall thereafter be
entitled to exercise the Option.

         (e) VESTING. Options shall vest as follows:

                  (i) Initial Grants: 1/30th of the shares shall vest monthly
from the date of grant for one (1) year and 1/60th of the shares shall vest
monthly thereafter over the next three (3) years.

                  (ii) Reload Grants: 1/48th of the shares shall vest monthly
from the date of grant for four (4) years.

                  (iii) Annual Grants: 1/12th of the shares shall vest monthly
from the date of grant for one (1) year.

         (f) EARLY EXERCISE. The Option may, but need not, include a provision
whereby the Optionholder may elect at any time before the Optionholder's
Continuous Service terminates to exercise the Option as to any part or all of
the shares of Common Stock subject to the Option prior to the full vesting of
the Option. Any unvested shared of Common Stock so purchased may be subject to a
repurchase option in favor of the Company or to any other restriction the Board
determines to be appropriate. The Company will not exercise its repurchase
option until at least six (6) months (or such longer or shorter period of time
required to avoid a charge to earnings for financial accounting purposes) have
elapsed following exercise of the Option unless the Board otherwise specifically
provides in the Option.

         (g) TERMINATION OF CONTINUOUS SERVICE. In the event an Optionholder's
Continuous Service terminates (other than upon the Optionholder's death or
Disability), the Optionholder may exercise his or her Option (to the extent that
the Optionholder was entitled to exercise it as of the date of termination) but
only within such period of time ending on the earlier of (i) the date three (3)
months following the termination of the Optionholder's Continuous Service, or
(ii) the expiration of the term of the Option as set forth in the Option
Agreement. If the Optionholder's Continuous Service terminates in a manner
described in Section 11(d), then the Optionholder may exercise his or her Option
(to the extent that the Optionholder was entitled to exercise it as of the date
of termination) but only within such period of time ending on the earlier

                                       8.
<PAGE>

of (i) the date twelve (12) months following the termination of the
Optionholder's Continuous Service, or (ii) the expiration of the term of the
Option as set forth in the Option Agreement. If, after termination, the
Optionholder does not exercise his or her Option within the time specified in
the Option Agreement, the Option shall terminate.

         (h) EXTENSION OF TERMINATION DATE. If the exercise of the Option
following the termination of the Optionholder's Continuous Service (other than
upon the Optionholder's death or Disability) would be prohibited at any time
solely because the issuance of shares would violate the registration
requirements under the Securities Act, then the Option shall terminate on the
earlier of (i) the expiration of the term of the Option as set forth in the
Option Agreement or (ii) the expiration of a period of three (3) months after
the termination of the Optionholder's Continuous Service during which the
exercise of the Option would not be in violation of such registration
requirements.

         (i) DISABILITY OF OPTIONHOLDER. In the event an Optionholder's
Continuous Service terminates as a result of the Optionholder's Disability, the
Optionholder may exercise his or her Option (to the extent that the Optionholder
was entitled to exercise it as of the date of termination), but only within such
period of time ending on the earlier of (i) the date twelve (12) months
following such termination or (ii) the expiration of the term of the Option as
set forth in the Option Agreement. If, after termination, the Optionholder does
not exercise his or her Option within the time specified herein, the Option
shall terminate.

         (j) DEATH OF OPTIONHOLDER. In the event (i) an Optionholder's
Continuous Service terminates as a result of the Optionholder's death or (ii)
the Optionholder dies within the three-month period after the termination of the
Optionholder's Continuous Service for a reason other than death, then the Option
may be exercised (to the extent the Optionholder was entitled to exercise the
Option as of the date of death) by the Optionholder's estate, by a person who
acquired the right to exercise the Option by bequest or inheritance or by a
person designated to exercise the Option upon the Optionholder's death, but only
within the period ending on the earlier of (1) the date eighteen (18) months
following the date of death or (2) the expiration of the term of such Option as
set forth in the Option Agreement. If, after death, the Option is not exercised
within the time specified herein, the Option shall terminate.

8. SECURITIES LAW COMPLIANCE.

         The Company shall seek to obtain from each regulatory commission or
agency having jurisdiction over the Plan such authority as may be required to
grant Options and to issue and sell shares of Common Stock upon exercise of the
Options; provided, however, that this undertaking shall not require the Company
to register under the Securities Act the Plan, any Option or any stock issued or
issuable pursuant to any such Option. If, after reasonable efforts, the Company
is unable to obtain from any such regulatory commission or agency the authority
which counsel for the Company deems necessary for the lawful issuance and sale
of stock under the Plan, the Company shall be relieved from any liability for
failure to issue and sell stock upon exercise of such Options unless and until
such authority is obtained.

                                       9.
<PAGE>

9. USE OF PROCEEDS FROM STOCK.

         Proceeds from the sale of stock pursuant to Options shall constitute
general funds of the Company.

10. MISCELLANEOUS.

         (a) STOCKHOLDER RIGHTS. No Optionholder shall be deemed to be the
holder of, or to have any of the rights of a holder with respect to, any shares
subject to such Option unless and until such Optionholder has satisfied all
requirements for exercise of the Option pursuant to its terms.

         (b) NO SERVICE RIGHTS. Nothing in the Plan or any instrument executed
or Option granted pursuant thereto shall confer upon any Optionholder any right
to continue to serve the Company as a Non-Employee Director or shall affect the
right of the Company or an Affiliate to terminate (i) the employment of an
Employee with or without notice and with or without cause, (ii) the service of a
Consultant pursuant to the terms of such Consultant's agreement with the Company
or an Affiliate or (iii) the service of a Director pursuant to the Bylaws of the
Company or an Affiliate, and any applicable provisions of the corporate law of
the state in which the Company or the Affiliate is incorporated, as the case may
be.

         (c) INVESTMENT ASSURANCES. The Company may require an Optionholder, as
a condition of exercising or acquiring stock under any Option, (i) to give
written assurances satisfactory to the Company as to the Optionholder's
knowledge and experience in financial and business matters and/or to employ a
purchaser representative reasonably satisfactory to the Company who is
knowledgeable and experienced in financial and business matters and that he or
she is capable of evaluating, alone or together with the purchaser
representative, the merits and risks of exercising the Option; and (ii) to give
written assurances satisfactory to the Company stating that the Optionholder is
acquiring the stock subject to the Option for the Optionholder's own account and
not with any present intention of selling or otherwise distributing the stock.
The foregoing requirements, and any assurances given pursuant to such
requirements, shall be inoperative if (1) the issuance of the shares upon the
exercise or acquisition of stock under the Option has been registered under a
then currently effective registration statement under the Securities Act or (2)
as to any particular requirement, a determination is made by counsel for the
Company that such requirement need not be met in the circumstances under the
then applicable securities laws. The Company may, upon advice of counsel to the
Company, place legends on stock certificates issued under the Plan as such
counsel deems necessary or appropriate in order to comply with applicable
securities laws, including, but not limited to, legends restricting the transfer
of the stock.

         (d) WITHHOLDING OBLIGATIONS. The Optionholder may satisfy any federal,
state or local tax withholding obligation relating to the exercise or
acquisition of stock under an Option by any of the following means (in addition
to the Company's right to withhold from any compensation paid to the
Optionholder by the Company) or by a combination of such means: (i) tendering a
cash payment; (ii) authorizing the Company to withhold shares from the shares of
the Common Stock otherwise issuable to the Optionholder as a result of the
exercise or acquisition of stock under the Option; provided, however, that no
shares of Common Stock are withheld

                                      10.
<PAGE>

with a value exceeding the minimum amount of tax required to be withheld by law;
or (iii) delivering to the Company owned and unencumbered shares of the Common
Stock.

11. ADJUSTMENTS UPON CHANGES IN COMMON STOCK.

         (a) CAPITALIZATION ADJUSTMENTS. If, on or after the date the Plan is
adopted by the Board, any change is made in, or other events occur with respect
to, the stock subject to the Plan, or subject to any Option, without the receipt
of consideration by the Company (through merger, consolidation, reorganization,
recapitalization, reincorporation, stock dividend, dividend in property other
than cash, stock split, liquidating dividend, combination of shares, exchange of
shares, change in corporate structure or other transaction not involving the
receipt of consideration by the Company (each a "Capitalization Adjustment")),
the Plan will be appropriately adjusted in the class(es) and maximum number of
securities subject both to the Plan pursuant to Section 4 and to the
nondiscretionary Options specified in Section 6, and the outstanding Options
will be appropriately adjusted in the class(es) and number of securities and
price per share of stock subject to such outstanding Options. The Board shall
make such adjustments, and its determination shall be final, binding and
conclusive. (The conversion of any convertible securities of the Company shall
not be treated as a transaction "without receipt of consideration" by the
Company.)

         (b) DISSOLUTION OR LIQUIDATION. In the event of a dissolution or
liquidation of the Company, then all outstanding Options shall terminate
immediately prior to the completion of such dissolution or liquidation.

         (c) CORPORATE TRANSACTION. In the event of a Corporate Transaction, any
surviving corporation or acquiring corporation may assume any or all Options
outstanding under the Plan or may substitute similar stock options for Options
outstanding under the Plan (it being understood that similar stock options
include, but are not limited to, options to acquire the same consideration paid
to the stockholders or the Company, as the case may be, pursuant to the
Corporate Transaction). In the event that any surviving corporation or acquiring
corporation does not assume any or all such outstanding Options or substitute
similar stock options for such outstanding Options, then with respect to Options
that have been neither assumed nor substituted and that are held by
Optionholders whose Continuous Service has not terminated prior to the effective
time of the Corporate Transaction, the vesting of such Options (and, if
applicable, the time at which such Options may be exercised) shall (contingent
upon the effectiveness of the Corporate Transaction) be accelerated in full to a
date prior to the effective time of such Corporate Transaction as the Board
shall determine (or, if the Board shall not determine such a date, to the date
that is five (5) days prior to the effective time of the Corporate Transaction),
and the Options shall terminate if not exercised (if applicable) at or prior to
such effective time. With respect to any other Options outstanding under the
Plan that have been neither assumed nor substituted, the vesting of such Options
(and, if applicable, the time at which such Options may be exercised) shall not
be accelerated unless otherwise provided in Section 11(d) or in a written
agreement between the Company or any Affiliate and the holder of such Options,
and such Options shall terminate if not exercised (if applicable) prior to the
effective time of the Corporate Transaction.

                                      11.
<PAGE>

         (d) CHANGE IN CONTROL. If a Change in Control occurs, then, immediately
prior to such Change in Control, the Optionholder's Options shall become fully
vested and exercisable.

         (e) PARACHUTE PAYMENTS. If the acceleration of the vesting and
exercisability of Options provided for in Section 11(c) or (d), together with
payments and other benefits of an Optionholder, (collectively, the "Payment")
(i) constitute a "parachute payment" within the meaning of Section 280G of the
Code, or any comparable successor provisions, and (ii) but for this Section
11(e) would be subject to the excise tax imposed by Section 4999 of the Code, or
any comparable successor provisions (the "Excise Tax"), then such Payment shall
be either (1) provided to such Optionholder in full, or (2) provided to such
Optionholder as to such lesser extent that would result in no portion of such
Payment being subject to the Excise Tax, whichever of the foregoing amounts,
when taking into account applicable federal, state, local and foreign income and
employment taxes, the Excise Tax, and any other applicable taxes, results in the
receipt by such Optionholder, on an after-tax basis, of the greatest amount of
the Payment, notwithstanding that all or some portion of the Payment may be
subject to the Excise Tax.

                  Unless the Company and such Optionholder otherwise agree in
writing, any determination required under this Section 11(e) shall be made in
writing in good faith by the Accountant. If a reduction in the Payment is to be
made as provided above, reductions shall occur in the following order unless the
Optionholder elects in writing a different order (provided, however, that such
election shall be subject to Company approval if made on or after the date that
triggers the Payment or a portion thereof): reduction of cash payments;
cancellation of accelerated vesting of Options; reduction of employee benefits.
If acceleration of vesting of Options is to be reduced, such acceleration of
vesting shall be cancelled in the reverse order of date of grant of Options
(i.e., earliest granted Option cancelled last) unless the Optionholder elects in
writing a different order for cancellation.

                  For purposes of making the calculations required by this
Section 11(e), the Accountant may make reasonable assumptions and approximations
concerning applicable taxes and may rely on reasonable, good faith
interpretations concerning the application of the Code and other applicable
legal authority. The Company and the Optionholder shall furnish to the
Accountant such information and documents as the Accountant may reasonably
request in order to make such a determination. The Company shall bear all costs
the Accountant may reasonably incur in connection with any calculations
contemplated by this Section 11(e).

                  If, notwithstanding any reduction described above, the
Internal Revenue Service (the "IRS") determines that the Optionholder is liable
for the Excise Tax as a result of the Payment, then the Optionholder shall be
obligated to pay back to the Company, within thirty (30) days after a final IRS
determination or, in the event that the Optionholder challenges the final IRS
determination, a final judicial determination, a portion of the Payment equal to
the "Repayment Amount." The Repayment Amount with respect to the Payment shall
be the smallest such amount, if any, as shall be required to be paid to the
Company so that the Optionholder's net after-tax proceeds with respect to the
Payment (after taking into account the payment of the Excise Tax and all other
applicable taxes imposed on the Payment) shall be maximized. The Repayment
Amount with respect to the Payment shall be zero if a Repayment Amount of more
than zero would not result in the Optionholder's net after-tax proceeds with

                                      12.
<PAGE>

respect to the Payment being maximized. If the Excise Tax is not eliminated
pursuant to this paragraph, the Optionholder shall pay the Excise Tax.

                  Notwithstanding any other provision of this Section 11(e), if
(i) there is a reduction in the Payment as described above, (ii) the IRS later
determines that the Optionholder is liable for the Excise Tax, the payment of
which would result in the maximization of the Optionholder's net after-tax
proceeds of the Payment (calculated as if the Payment had not previously been
reduced), and (iii) the Optionholder pays the Excise Tax, then the Company shall
pay or otherwise provide to the Optionholder that portion of the Payment that
was reduced pursuant to this Section 11(e) contemporaneously or as soon as
administratively possible after the Optionholder pays the Excise Tax so that the
Optionholder's net after-tax proceeds with respect to the Payment are maximized.

                  If the Optionholder either (i) brings any action to enforce
rights pursuant to this Section 11(e), or (ii) defends any legal challenge to
his or her rights under this Section 11(e), the Optionholder shall be entitled
to recover attorneys' fees and costs incurred in connection with such action,
regardless of the outcome of such action; provided, however, that if such action
is commenced by the Optionholder, the court finds that the action was brought in
good faith.

12. AMENDMENT OF THE PLAN AND OPTIONS.

         (a) AMENDMENT OF PLAN. The Board, at any time and from time to time,
may amend the Plan. However, except as provided in Section 11 relating to
adjustments upon changes in Common Stock, no amendment shall be effective unless
approved by the stockholders of the Company to the extent stockholder approval
is necessary to satisfy the requirements of applicable laws.

         (b) STOCKHOLDER APPROVAL. The Board, in its sole discretion, may submit
any other amendment to the Plan for stockholder approval.

         (c) NO IMPAIRMENT OF RIGHTS. Rights under any Option granted before
amendment of the Plan shall not be impaired by any amendment of the Plan unless
(i) the Company requests the consent of the Optionholder and (ii) the
Optionholder consents in writing.

         (d) AMENDMENT OF OPTIONS. The Board, at any time, and from time to
time, may amend the terms of any one or more Options; provided, however, that
the rights under any Option shall not be impaired by any such amendment unless
(i) the Company requests the consent of the Optionholder and (ii) the
Optionholder consents in writing.

13. TERMINATION OR SUSPENSION OF THE PLAN.

         (a) PLAN TERM. The Board may suspend or terminate the Plan at any time.
No Options may be granted under the Plan while the Plan is suspended or after it
is terminated.

         (b) NO IMPAIRMENT OF RIGHTS. Suspension or termination of the Plan
shall not impair rights and obligations under any Option granted while the Plan
is in effect except with the written consent of the Optionholder.

                                      13.
<PAGE>

14. EFFECTIVE DATE OF PLAN.

         The Plan shall become effective on the IPO Date, but no Option shall be
exercised unless and until the Plan has been approved by the stockholders of the
Company, which approval shall be within twelve (12) months before or after the
date the Plan is adopted by the Board.

15. CHOICE OF LAW.

         The law of the state of Delaware shall govern all questions concerning
the construction, validity and interpretation of this Plan, without regard to
such state's conflict of laws rules.

                                      14.

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