Document:

ex_10-19.htm

    Exhibit
10.19

    

    

    

    ITRON,
INC.

    EXECUTIVE
DEFERRED COMPENSATION PLAN

     

    ARTICLE
I. ESTABLISHMENT AND NATURE OF PLAN

     

    The
Company established the Plan effective October 1, 1991.  The Plan
was amended and restated effective August 1, 1996, and was further amended
in 2007.  The Plan is amended and restated in its entirety effective
January 1, 2008, and this amendment and restatement applies to all amounts
deferred under the Plan that remain unpaid on or after January 1, 2008 (whether
deferred before, on or after January 1, 2005).  The purpose of the
Plan is to permit a select group of management and highly compensated employees
of the Company to defer receipt of a portion of their anticipated compensation
in addition to the amount that they can defer under the Company's 401(k)
plan.  The Company intends that the Plan shall constitute, and shall
be construed and administered as, an unfunded plan of deferred compensation
within the meaning of the Employee Retirement Income Security Act of 1974, as
amended, and the Code.

     

    ARTICLE
II.  DEFINITIONS

     

    Whenever
used herein, the following terms shall have the respective meanings set forth
below, unless the context clearly indicates otherwise.  In addition,
unless some other meaning or intent is apparent from the context, the plural
shall include the singular and vice versa; and masculine, feminine and neuter
words shall be used interchangeably.

     

    2.1           "Account"
means, with respect to each Participant, the account established by the Company
to reflect the Deferrals under Article IV and the Matching
Contributions under Article V below, increased (decreased) by allocated earnings
(losses) and income (expenses) as determined under Article VI
below.

     

    2.2           "Administrator" means the person or
persons appointed by the Compensation Committee to administer the Plan or, if no
such person has been appointed, the Compensation Committee.

     

    2.3           "Beneficiary"
means the person, trust or other entity designated by the Participant in
accordance with Section 8.4 below to receive payment under the Plan in the event
of the Participant's death.

     

    2.4           "Board"
means the Board of Directors of Itron, Inc.  With respect to the
exercise of authority hereunder, not otherwise delegated, including, but not
limited to, the powers to amend, modify or terminate the Plan, "Board" shall
mean the Board acting through the Compensation Committee or such other
committees, officers or persons as the Board may authorize from time to time.

     

    2.5           "Bonus" means any amount paid to
an Eligible Employee as a bonus pursuant to a bonus arrangement maintained by
the Company, before payroll deduction (including, without limitation, payroll
deductions for taxes, deferrals under this Plan and deferrals under the Itron,
Inc. Incentive Savings Plan).

     

    2.6           "Change
of Control" means any of the following:

     

    
      	 
      	
              (a)

            	
              the
      purchase or other acquisition by any person, entity or group of persons,
      within the meaning of Section 13(d) or 14(d) of the Securities Exchange
      Act of 1934 (the "Act"), or any comparable successor provisions, of
      beneficial ownership (within the meaning of Rule 13d-3 promulgated under
      the Act) of fifteen percent (15%) or more of either the Company's then
      outstanding shares of common stock or the combined voting power of the
      Company's then outstanding securities entitled to vote
      generally;

            

    

     

    
      	 
      	
              (b)

            	
              during
      any period of twenty-four (24) consecutive months, individuals who at the
      beginning of such period constituted the Board cease for any reason to
      constitute at least a majority of the Board, unless the election of each
      new director, or his or her nomination for election by the stockholders of
      the Company, was approved by a vote of at least two-thirds (2/3) of the
      directors then still in office who were directors at the beginning of such
      period;

            

    

     

    
      	 
      	
              (c)

            	
              the
      approval by the stockholders of the Company of a reorganization, merger,
      consolidation or share exchange, in each case, with respect to which
      persons who were stockholders of the Company immediately prior to such
      reorganization, merger, consolidation or share exchange do not,
      immediately thereafter, own more than eighty-five percent (85%) of the
      combined voting power entitled to vote generally in the election of
      directors of the reorganized, merged, consolidated or exchanged Company's
      then outstanding securities; or

            

    

     

    
      	 
      	
              (d)

            	
              the
      approval by the stockholders of the Company of the complete liquidation or
      dissolution of the Company or an agreement for the sale of all or
      substantially all of the Company's
assets.

            

    

     

    2.7           "Code"
means the Internal Revenue Code of 1986, as now or hereafter amended and in
effect.

     

    2.8           "Company"
means Itron, Inc. and any other corporation or other entity that is aggregated
with Itron, Inc. under Code Section 414(b) or (c) to which the Board, in its
sole discretion, may from time to time extend the Plan.

     

    2.9           "Compensation
Committee" means the Compensation Committee of the Board.

     

    2.10           "Deferral
Agreement" means the election form(s) promulgated by the Administrator and
executed by the Participant authorizing the deferral of Salary and/or Bonus and
consenting to the terms and conditions of the Plan, the same as if the
Participant were a signatory hereto.

     

    2.11           "Eligible
Employee" means an employee of the Company who meets the eligibility
requirements set forth in Article III below.

     

    2.12           "Hostile
Change of Control" means an event or occurrence described in Section 2.6(a), (c)
or (d) above that occurs without the prior recommendation, approval or consent
of the Board or an event or occurrence described in Section 2.6(b)
above.

     

    2.13           "Measurement
Fund" means a phantom investment fund designated by the Administrator to serve
as a measurement device for purposes of valuing the portion, if any, of a
Participant’s Account allocated to such phantom investment fund.

     

    2.14           "Participant" means an Eligible
Employee who has elected, under the Plan to defer payment of Salary and/or
Bonus.  A person remains a Participant so long as he has an Account
balance under the Plan, whether or not he remains an Eligible
Employee.

     

    2.15           "Plan"
means the Itron, Inc. Executive Deferred Compensation Plan, as set forth herein,
together with all amendments hereto.

     

    2.16           "Salary"
means the base salary paid to an Eligible Employee by the Company before payroll
deduction.

     

    2.17           "Specified
Employee" means a Participant who, as of the date of the Participant's
Termination, is a key employee of the Company.  A Participant is a key
employee if the Participant meets the requirements of Code
Section 416(i)(1)(A)(i), (ii), or (iii) (applied in accordance with the
regulations thereunder and disregarding Code Section 416(i)(5)) at any time
during the 12 month period ending on a "specified employee identification
date."  If a Participant is a key employee as of a specified employee
identification date, he or she shall be treated as a Specified Employee for the
12 month period beginning on the related "specified employee effective
date."  Unless Itron, Inc. has designated different dates in
accordance with the provisions of Treasury Regulation Sections 1.409A-1(i)(3),
(4) and (8), the specified employee identification date shall be December 31 of
each year and the specified employee effective date shall be the following April
1.

     

    2.18           "Termination"
and its derivations, such as "Terminate," mean separation from service as an
Employee within the meaning of Code Section 409A and the regulations thereunder,
voluntarily or involuntarily, for any reason other than death.

     

    2.19           "Trust"
means the Itron, Inc. Benefits Protection Trust, as now or hereafter amended and
in effect.

     

    2.20           "Unforeseeable
Emergency" means a severe financial hardship to the Participant resulting from
an illness or accident of the Participant, of the Participant's spouse, the
Participant's Beneficiary or the Participant's dependent (as defined in Code
Section 152(a), without regard to Sections 152(b)(1), (b)(2) and
(d)(1)(B)), loss of the Participant's property due to casualty (including the
need to rebuild a home following damage to a home not otherwise covered by
insurance, for example, not as a result of a natural disaster); or other similar
extraordinary and unforeseeable circumstances arising as a result of events
beyond the control of the Participant.  For example, the following may
be Unforeseeable Emergencies:  (a) the imminent foreclosure of or
eviction from the Participant's primary residence may constitute an
Unforeseeable Emergency; (b) the need to pay for medical expenses, including
nonrefundable deductibles, as well as for the costs of prescription drug
medication may constitute an Unforeseeable Emergency; or (c) the need to pay for
the funeral expenses of a spouse, a Beneficiary, or a dependent (as defined in
Code Section 152, without regard to Sections 152(b)(1), (b)(2) and
(d)(1)(B)).  Examples of events not considered Unforeseeable
Emergencies include the need to pay for tuition or the desire to purchase a
home.

     

    ARTICLE
III.  ELIGIBILITY AND PARTICIPATION

     

    3.1           Eligibility.  All
executive officers of Itron, Inc., and such other employees of the Company as
the Board may designate from time to time, shall be eligible to participate in
the Plan as of the date designated by the Board; provided, however, that the
Board may revoke an active Participant's privilege to make prospective deferrals
to this Plan at any time.

     

    3.2           Participation.  An
Eligible Employee shall become a Participant by completing a Deferral Agreement
and filing it with the Company in accordance with Article IV
below.

     

    ARTICLE
IV.  DEFERRALS

     

    4.1           Salary
Deferrals.

     

    (a)           Prior
to the beginning of each calendar year, an Eligible Employee may elect to defer
receipt of up to fifty percent (50%) of the Salary that he anticipates earning
for services performed during such calendar year.  Such election shall
be made by filing a Deferral Agreement with the Company in the manner and by the
time specified by the Administrator; provided, however that such Deferral
Agreement must be filed with the Company prior to the first day of the first
calendar year for which it is to be effective and shall become irrevocable with
respect to a calendar year on the last day of the calendar year immediately
preceding such calendar year (or such earlier date as the Administrator may
prescribe).  Notwithstanding the foregoing, an Eligible Employee who
first becomes eligible to participate in the Plan during a calendar year may
elect to defer Salary that has not yet been earned in that calendar year (as of
the date his Deferral Agreement is filed with the Company) within thirty (30)
days after becoming eligible to participate.

     

    (b)           
In addition to, or in lieu of, deferrals pursuant to subsection (a) immediately
above, prior to the beginning of each calendar year, an Eligible Employee may
elect to defer receipt of Salary that he anticipates earning for services
rendered in such calendar year in an amount equal to the amount of any salary
deferrals (and related earnings) returned to him during such year from the
Itron, Inc. Incentive Savings Plan due to such plan’s failure to satisfy the
actual deferral percentage test under Section 401(k)(3) of the
Code.  Such election shall be made by filing a Deferral Agreement with
the Company in the manner and by the time specified by the Administrator;
provided, however, that such Deferral Agreement must be filed with the Company
prior to the first day of the first calendar year for which it is to be
effective and shall become irrevocable with respect to a calendar year on the
last day of the calendar year immediately preceding such calendar
year.

     

    4.2           Bonus Deferrals.  An
Eligible Employee may elect to defer receipt of up to fifty percent (50%) of any
Bonus that he anticipates receiving.  Such election shall be made by
filing a Deferral Agreement with the Company in the manner and by the time
specified by the Administrator; provided, however that (a) if such Bonus is
“performance-based compensation,” as defined in Treasury Regulation 1.409A-1(e),
such Deferral Agreement must be filed with the Company (and become irrevocable)
no later than June 30 of the calendar year in which the services to which
the Bonus relates are performed, and (b) if such Bonus is not “performance-based
compensation,” such Deferral Agreement must be filed with the Company (and
become irrevocable) no later than the end of the calendar year preceding the
calendar year in which the services to which the Bonus relates are
performed.

     

    4.3           Changes in Deferral
Elections.  Subject to Section 8.3 below, a Participant's
Deferral Agreement shall remain in effect from calendar year to calendar year
until terminated or modified by the Participant or until the Participant ceases
to be an Eligible Employee.  A Participant may terminate or modify his
Deferral Agreement, effective as of the first day of any subsequent calendar
year, by filing a new Deferral Agreement with the Company in accordance with the
provisions of Section 4.1 and/or 4.2 above, as applicable.

     

    4.4           Accounting.  The
Company shall credit a Participant's deferrals pursuant to Section 4.1 and
4.2 above to the Participant's Account on the date such amounts would have been
paid to the Participant had they not been deferred by the Participant (or as
soon as administratively practicable thereafter).

     

    ARTICLE
V.  MATCHING CONTRIBUTIONS

     

    5.1           Amount of Matching
Contributions.  A Participant’s Account shall be credited with
matching contributions in an amount equal to fifty percent (50%) of the first
six percent (6%) of total Salary and Bonuses deferred under the Plan by such
Participant during a payroll period.  Matching contributions shall be
credited to a Participant whose employment with the Company terminates based
upon the total Salary and Bonuses deferred under the Plan by such Participant
through his termination date.

     

    5.2           Accounting.  The
Company shall credit its matching contribution for a payroll period for a
Participant to the Participant's Account at the same time as it credits the
deferrals to which such contributions relate to such Account.

     

    ARTICLE
VI.  ACCOUNTS

     

    6.1           Establishment and Nature of
Participant Accounts.  The Company shall establish and maintain
in the name of each Participant an Account to reflect the Participant's interest
under the Plan.  The maintenance of such Accounts is for record
keeping purposes only.  No funds or other assets of the Company shall
be segregated or attributable to the amounts that may be credited to a
Participant's Accounts from time to time, but rather benefit payments under the
Plan shall be made from the general assets of the Company at the time any such
payments become due and payable.

     

    6.2           Account
Earnings.

     

    (a)           Allocation
of Gains and Losses.  Participant Accounts shall be adjusted on a
daily basis (through the date immediately preceding the date on which the last
payment to the Participant or Beneficiary, as applicable, is processed),
according to the performance of the Measurement Fund(s) selected by the
Participant pursuant to Section 6.2(b).  Credits and debits to a
Participant’s Account on a particular day shall be taken into account for
purposes of calculating earnings or losses in a manner determined by the
Administrator.

     

    (b)           Allocation
to Measurement Funds.  A Participant may allocate and reallocate his
Account among the various Measurement Funds designated by the Administrator from
time to time.  All such allocations and reallocations must be made in
accordance with, and subject to, such rules and procedures as the Administrator
may establish.  To the extent a Participant fails to allocate his or
her Account to a Measurement Fund, such Participant will be deemed to have
selected the Measurement Fund designated by the Administrator as the default
Measurement Fund.

     

    (c)           No
Actual Investment.  Notwithstanding any provision in the Plan to the
contrary, the Measurement Funds are to be used for measurement purposes
only.  Neither the Participant’s selection of a Measurement Fund nor
the crediting or debiting of amounts to the Participant’s Account in accordance
with that selection shall be considered or construed as an actual investment of
the Participant’s Account in any Measurement Fund or as requiring the Company or
the Administrator to invest any assets in any Measurement Fund or in any other
particular investment.  In the event that the Company or the
Administrator, in its own discretion, decides to invest funds in any or all of
the investments on which the Measurement Funds are based, no Participant (or
Beneficiary) shall have any rights in or to such investments.  Without
limiting the foregoing, a Participant’s Account balance shall at all times be a
bookkeeping entry only and shall not represent any investment made on his or her
behalf by the Company or the Administrator; the Participant shall at all times
remain an unsecured creditor of the Company.  The Administrator is
under no obligation to offer any particular investment as a Measurement Fund and
may discontinue, substitute, modify or add Measurement Funds at any
time.

     

    6.3           Account
Statements.  After the close of each calendar year, or more
frequently as the Administrator, in its sole discretion, determines, the Company
shall furnish each Participant with a statement of the value of his
Account.

     

    ARTICLE
VII.  VESTING

     

    A
Participant shall be fully vested in his Account at all times, subject only to
the Participant's status as a general unsecured creditor of the Company in the
event of its insolvency or bankruptcy.

     

    ARTICLE
VIII.  DISTRIBUTIONS

     

    8.1           Timing of
Distribution.  Except as provided otherwise in this
Article VIII, a Participant's Account shall be distributed or commence to
be distributed to the Participant within ninety (90) days after the
Participant's Termination.

     

    8.2           Form of
Distribution.  Except as provided otherwise in this
Article VIII, a Participant's Account shall be distributed to the
Participant in either a lump sum or in approximately equal annual installments
over a period not to exceed ten (10) years.  Said form shall be
irrevocably elected by the Participant on the Participant's initial Deferral
Agreement; provided, however, that the Participant may, with the consent of the
Administrator, change the distribution form, provided such change does not
result in the acceleration of payments within the meaning of Code
Section 409A.  Any such change (a) must be requested in
writing (and such request must be filed with the Administrator) at least twelve
(12) months prior to the date on which the Participant Terminates,
(b) shall automatically result in the distribution (or commencement of
distribution) of the Participant's benefit being delayed until the fifth (5th)
anniversary of the date on which it would otherwise have occurred (or
commenced), (c) shall not take effect for twelve (12) months after the date
on which such change request is filed with the Administrator, and (d) shall
not be effective unless and until approved by the Administrator.  Any
change requested which does not meet all the above requirements shall be null
and void.  If a Participant fails to elect a form of distribution on
his initial Deferral Agreement, then such Participant shall be deemed to have
initially elected a lump sum distribution.

     

    8.3           Unforeseeable
Emergency.  (a)                                                                           Any
Participant who experiences an Unforeseeable Emergency may request a
distribution from his Account under the Plan.  The amount of any such
distribution may not exceed the lesser of the balance in the Participant's
Account as of the date of distribution or the amount reasonably necessary to
satisfy the emergency need (which may include amounts necessary to pay Federal,
state, local or foreign income taxes or penalties reasonably anticipated to
result from the distribution).  Whether a Participant has experienced
an Unforeseeable Emergency permitting a distribution under this Section 8.3
shall be determined by the Administrator based on the relevant facts and
circumstances of each case, but, in any case, a distribution on account of an
Unforeseeable Emergency may not be made to the extent that the emergency need is
or may be relieved through reimbursement or compensation by insurance or
otherwise, by liquidation of the Participant's assets (to the extent the
liquidation would not itself cause severe financial hardship), or by cessation
of deferrals under the Plan.  A Participant shall be required to
submit a written request for such a withdrawal, together with such supporting
documentation as the Administrator may require, to the Administrator for review
and approval.  If the Administrator approves the Participant's
request, the Participant's deferrals under the Plan shall be cancelled
prospectively, effective upon the date of such approval, and any distribution
shall be made within ninety (90) days after such approval.  If the
requesting Participant's emergency need can be satisfied simply by cancelling
the Participant's deferrals under the Plan without a corresponding distribution,
then the Administrator may authorize such cancellation, even though no
distribution can be made.  A Participant whose deferrals have been
cancelled under this subsection (a) may not recommence deferrals under the
Plan until the first day of the following calendar year.

     

    (b)           A
Participant's deferrals shall be cancelled prospectively upon the Participant's
receipt of a hardship withdrawal from the Itron, Inc. Incentive Savings Plan or
any other 401(k) plan sponsored, maintained or contributed to by the
Company.  A Participant whose deferrals have been cancelled under this
subsection (b) may not recommence deferrals under the Plan until the first
day of the first calendar year commencing at least six (6) months after the date
of such hardship withdrawal.

     

    (c)           The
recommencement of deferrals following cancellation pursuant to this
Section 8.3 shall be governed by the provisions of Sections 4.1 and 4.2
above.

     

    8.4           Death
Benefits.

     

    (a)           Upon
the death of a Participant, any portion of the Participant's Account that has
not yet been distributed shall be paid in a lump sum to the Participant's
Beneficiary within ninety (90) days after the Participant's death.

     

    (b)           A
Participant shall designate his Beneficiary on such form (filed with the
Company) as the Administrator shall prescribe and may change that designation at
any time by filing a new beneficiary designation with the
Company.  Any such change shall be effective only if the Participant
is alive at the time the Company receives such change.  The most
recent beneficiary designation on file with the Company shall be
controlling.  If the Participant fails to designate a Beneficiary, or
if all of the Participant's designated Beneficiaries predecease the Participant,
then the Participant's Beneficiary shall be the Participant's surviving spouse
or, if the Participant has no surviving spouse, the Participant's surviving
children in equal shares, or, if the Participant has no surviving spouse or
surviving children, the Participant's estate.

     

    8.5           Payments to Specified
Employees.  Notwithstanding the foregoing, in the case of any
Specified Employee, payments due upon Termination shall not be made (or commence
to be made) before the date that is six (6) months after the date of Termination
(or if earlier, the date of such Specified Employee's death).  Any
amounts that would have been paid during the six (6) month period immediately
following Termination but for such delay will be paid on the first business day
following the date that is six (6) months after the Specified Employee's date of
Termination.

     

    8.6           Delay Due to Non-Deductibility under
Section 162(m).  Notwithstanding any provision of the Plan to
the contrary, but subject to the requirements of Code Section 409A, the
Company may delay any payment under the Plan to the extent it reasonably
anticipates that if the payment were made as scheduled, the Company's deduction
with respect to such payment would not be permitted due to the application of
Code Section 162(m).  Subject to the requirements of Code
Section 409A, any payment that is delayed under this Section 8.6 shall
be paid during the first taxable year of the Company in which the Company
reasonably anticipates, or should reasonably anticipate, that if the payment is
made during such year, the deduction of such payment will not be barred by
application of Code Section 162(m).

     

    8.7           Distribution in Event of
Taxation.  Notwithstanding any provision in the Plan to the
contrary, if this Plan fails to meet the requirements of Code Section 409A and
the regulations thereunder, the Administrator may distribute to each Participant
an amount from his or her Account not to exceed the amount required to be
included in such Participant’s income as a result of the Plan’s failure to meet
such requirements.

     

    ARTICLE
IX.  ADMINISTRATION

     

    9.1           Plan
Administration.  (a)  The Plan shall be administered
by the Administrator.

     

    (b)           The
Administrator shall have and exercise all discretionary and other authority to
control and manage the operation and administration of the Plan, except such
authority as is specifically allocated otherwise by or under the terms hereof,
and shall have the power to take any action necessary or appropriate to carry
out such responsibilities.  Without limiting the foregoing, and in
addition to the authority and duties specified elsewhere herein, the
Administrator shall have the discretionary authority to construe, interpret and
apply the terms and provisions of the Plan; to prescribe such rules and
regulations, and issue such directives, as it deems necessary or appropriate for
the administration of the Plan; and to make all other determinations and
decisions as it deems necessary or appropriate for the administration of the
Plan.  The Administrator may correct any defect or supply any omission
or reconcile any inconsistency in the Plan in the manner and to the extent it
deems expedient.  Decisions of the Administrator shall be final and
binding upon the Participants, and their legal representatives and
Beneficiaries.

     

    (c)           No
Participant who represents or is authorized to act on behalf of (or who is a
member of) the Administrator or the Board may decide, determine or act on any
matter that affects the distribution, nature or method of settlement of solely
his Account under the Plan, except in exercising an election available to that
member in his capacity as a Participant.

     

    9.2           Finality of
Determination.  Except as provided in Sections 9.6(d) and (e)
below with respect to appeals of claim denials, the determination of the
Administrator with respect to any question arising out of or in connection with
the administration, interpretation, and application of the Plan shall be final,
binding, and conclusive upon all persons and shall be given the greatest
deference permitted by law.

     

    9.3           Expenses.  All
expenses and costs incurred in connection with the administration and operation
of the Plan and Trust shall be borne by the Company.

     

    9.4           Legal
Proceedings.  Neither the Company, the Board, the Compensation
Committee, the Administrator nor any other person shall be bound to institute any legal
action against or between any person or persons, unless it shall first have been
indemnified to its satisfaction by the Plan.  If any dispute shall
arise regarding the person to whom payment or delivery of any sums or property
should be made by the Company, or regarding any act to be performed, the Company
may, in its sole discretion, retain such payment and postpone the performing of
such act until final adjudication of such dispute shall have been made in a
court of competent jurisdiction or otherwise to the satisfaction of the Company
or until the Company shall have been indemnified against loss to its
satisfaction.

     

    9.5           Disputed Payee or
Act.  If any dispute arises regarding the person to whom
payment or delivery of any sums or property should be made by the Company, or
regarding any act to be performed, the Company may, in its sole discretion,
retain such payment and postpone the performing of such act until final
adjudication of such dispute has been made in a court of competent jurisdiction
or otherwise to the satisfaction of the Company or until the Company has been
indemnified against loss to its satisfaction.

     

    9.6           Claims
Procedure.

     

    (a)           Filing a
Claim.  Benefits under the Plan shall be paid only if the
Administrator or the Compensation Committee decides, in its sole and absolute
discretion, that the Participant or Beneficiary, as applicable (the "Claimant")
is entitled to them.  A Participant or a Beneficiary (the "Claimant"),
or the authorized representative of either, shall file a claim for benefits
under the Plan with the Administrator in writing.  The Administrator
may prescribed a particular form for filing such claims, and, if it does so, a
claim will not be deemed properly filed unless such form is used, but the
Administrator shall provide a copy of such form to any person whose claim for
benefits is improper solely for this reason.

     

    (b)           Claim
Review.  Claims will be decided by the Administrator (or, if
the Administrator is the Compensation Committee, the senior human resources
officer of Itron, Inc., or another individual designated by the Compensation
Committee), which will make its decision with respect to a claim and notify the
Claimant (or his authorized representative) in writing of such decision within
ninety (90) days after receiving the claim.  The Administrator (or the
designee) may extend this ninety-day (90-day) period for an additional ninety
(90) days if it determines that special circumstances require additional time to
process the claim.  The Administrator (or the designee) will notify
the Claimant (or his authorized representative) in writing of any such extension
within ninety (90) days of receiving the claim.  The notice will
included the reason(s) why the extension is necessary and the date by which the
Administrator (or the designee) expects to render its decision on the
claim.

     

    If a
claim is partially or completely denied, the written notice to the Claimant (or
his authorized representative) will include:

     

    
      	 
      	
              (1)

            	
              The
      specific reason or reasons for the
denial;

            

    

     

    
      	 
      	
              (2)

            	
              Reference
      to the specific Plan provisions on which the denial is
    based;

            

    

     

    
      	 
      	
              (3)

            	
              A
      description of any additional material or information necessary for the
      Claimant to perfect the claim and an explanation of why such material or
      information is necessary; and

            

    

     

    
      	 
      	
              (4)

            	
              A
      description of the Plan’s claim appeal procedure (and the time limits
      applicable thereto), including a statement of the Claimant's right to
      bring a civil action under Section 502(a) of ERISA, following an
      adverse determination on appeal.

            

    

     

    If a
Claimant submits a claim in accordance with the procedure described above and
does not hear from the Administrator (or the designee) within ninety (90) days,
the Claimant may consider the claim denied.

     

    (c)           Appealing a Claim
Denial.  If a claim is partially or completely denied, the
Claimant has the right to appeal the denial.  To appeal a claim
denial, the Claimant (or his authorized representative) must file a written
request for appeal with the Compensation Committee within sixty (60) days after
receiving written notice of the claim denial.  This written request
for appeal should include:

     

    
      	 
      	
              (1)

            	
              A
      statement of the grounds on which the appeal is
  based;

            

    

     

    
      	 
      	
              (2)

            	
              Reference
      to the specific Plan provisions that support your
  claim;

            

    

     

    
      	 
      	
              (3)

            	
              The
      reason(s) or argument(s) why the Claimant believes the claim should be
      granted and the evidence supporting each reason or argument;
      and

            

    

     

    
      	 
      	
              (4)

            	
              Any
      other comments, documents, records or information relating to the claim
      that the Claimant wishes to submit.

            

    

     

    The
Claimant (or his authorized representative) will be provided, upon request and
free of charge, reasonable access to, and copies of, all documents, records and
other information relevant (within the meaning of 29 C.F.R.
§ 2560.503-1(m)(8)) to his claim.

     

    (d)           Decision on
Appeal.  Appeals will be decided by the Compensation Committee,
which will render its decision with respect to an appeal and notify the Claimant
(or his authorized representative) in writing of such decision within sixty (60)
days after receiving the appeal.  The Compensation Committee may
extend this sixty-day (60-day) period for an additional sixty (60) days if it
determines that special circumstances require additional time to process the
appeal.  The Compensation Committee will notify the Claimant (or his
authorized representative) in writing of any such extension within sixty
(60) days of receiving the appeal.  The notice will included the
reason(s) why the extension is necessary and the date by which the Compensation
Committee expects to render its decision on the appeal.  In reaching
its decision, the Compensation Committee will take into account all of the
comments, documents, records and other information that the Claimant (or his
authorized representative) submitted, without regard to whether such information
was submitted or considered by the Administrator in its initial denial of the
claim.

     

    If a
claim is partially or completely denied on appeal, the written notice of claim
denial will include the following:

     

    
      	 
      	
              (1)

            	
              The
      specific reason or reasons for the
denial;

            

    

     

    
      	 
      	
              (2)

            	
              Reference
      to the specific Plan provisions on which the denial is
    based;

            

    

     

    
      	 
      	
              (3)

            	
              A
      statement that the Claimant (or his authorized representative) is entitled
      to receive, upon request and free of charge, reasonable access to, and
      copies of, all documents, records and other information relevant (within
      the meaning of 29 C.F.R. § 2560.503-1(m)(8)) to the claim;
      and

            

    

     

    
      	 
      	
              (4)

            	
              A
      statement of the Claimant's right to bring an action under Section 502(a)
      of ERISA.

            

    

     

    If a
Claimant files an appeal in accordance with the procedure described above and
does not hear from the Administrator within sixty (60) days, the Claimant may
consider the appeal denied.

     

    (e)           Filing
Suit.  A Participant or Beneficiary must comply with the claim
and appeal procedures described above before seeking any other legal recourse
(including filing a law suit) regarding claims for benefits.  If a
Claimant wishes to file a court action after exhausting the foregoing
procedures, the Claimant (or his authorized representative) must file such
action in a court of competent jurisdiction within one hundred eighty (180) days
after the date on which the Claimant (or his authorized representative) received
the Administrator's written denial of the appeal.  Court actions may
not be commenced after this one hundred eighty (180) day period.  Any
judicial review of the Compensation Committee's decision on a claim will be
limited to whether, in the particular instance, the Compensation Committee
abused its discretion.  In no event will such judicial review be on a
de novo basis, because the Compensation Committee has discretionary authority to
determine eligibility for (and the amount of) benefits under the Plan and to
construe and interpret the terms and provisions of the Plan.

     

    ARTICLE
X.  HOSTILE CHANGE OF CONTROL

     

    10.1           Benefits Protection
Trust.  As soon as administratively practicable (but in no
event more than 14 days) after a Hostile Change of Control, the Company shall
contribute to the Trust an amount equal to the total of the Participants'
Account balances as of the date of the Hostile Change of Control, less the
amount already held in the Trust with respect to such Accounts, provided that
the Company is not then insolvent.  In addition, on and after a
Hostile Change of Control, the following shall apply (provided that the Company
is not then insolvent):

     

    
      	 
      	
              (a)

            	
              As
      soon as administratively practicable (but in no event more than 14 days)
      after the end of the month in which occurs a Hostile Change of Control and
      each month commencing thereafter, Company shall make an irrevocable
      contribution to the Trust in an amount that is equal to any amounts
      deferred pursuant to Article IV hereof by Participants during such
      month.

            

    

     

    
      	 
      	
              (b)

            	
              As
      soon as administratively practicable (but in no event more than one month)
      after the end of the calendar year in which occurs a Hostile Change of
      Control and each calendar year commencing thereafter, Company shall make
      an irrevocable contribution to the Trust in an amount equal to any
      Matching Contribution required to be made under this Plan pursuant to
      Section 5.1 hereof.

            

    

     

    
      	 
      	
              (c)

            	
              As
      soon as administratively practicable (but in no event more than two and
      one-half months) after the end of the calendar year in which occurs a
      Hostile Change of Control and each calendar year commencing thereafter,
      Company shall make an irrevocable contribution to the Trust in an amount
      that is equal to the total amount credited to the Participants' Accounts
      pursuant to Section 6.2 above, if any, for such calendar
      year.

            

    

     

    The
Company shall be insolvent if either (i) it is generally unable to pay its debts
as they become due unless such debts are the subject of a bona fide dispute, or
(ii) the Company is subject to a pending proceeding as a debtor under the United
States Bankruptcy Code.  The Company shall have no obligation to
contribute to the Trust or any other "rabbi" trust with respect to the Plan
except in the event of a Hostile Change of Control.

     

    10.2           Legal Defense
Trust.  Immediately upon a Hostile Change of Control, the
Company shall contribute to the Itron, Inc. Legal Defense Trust such amount as
may be specified in the trust agreement for such trust for purposes of
reimbursing Participants for legal fees and other related costs incurred by any
Participant in attempting to enforce such Participant's rights under the Plan,
provided that the Company is not then insolvent (as defined in Section 10.1
above).  The terms and conditions under which such fees and costs
shall be reimbursed shall be set forth in the trust agreement for such
trust.

     

    10.3           No Amendment After Hostile Change of
Control.  This Article X may not be amended or modified
following a Hostile Change of Control.

     

    ARTICLE
XI.  AMENDMENT, MODIFICATION AND TERMINATION

     

    Subject
to Section 10.3 above, this Plan may be amended, modified or terminated at any
time by the Board; provided, however, that no amendment, modification or
termination may adversely affect the rights of any
Participant, without his consent, to any benefit under the Plan to which he was
entitled prior to the effective date (or, if later, the adoption date) of such
amendment, modification or termination; and provided further, that the Plan may
not be amended, modified or terminated in any way without the consent of each
Participant for a period of two (2) years following a Change of
Control.  No amendment shall be made to the Plan if such amendment
would cause the Plan to be funded, or cause any amounts allocated to
Participants' Accounts under the Plan to be taxable to the Participants or their
Beneficiaries prior to the calendar year of actual receipt of such amounts, or
otherwise cause the Plan to lose its exemption from ERISA.  In the
event of the termination of the Plan, the Accounts shall be distributed to
Participants pursuant to Article VIII above, unless the Board, in its sole and
absolute discretion, directs that distributions occur sooner in accordance with
the provisions of Treasury Regulation
Section 1.409A-3(j)(4)(ix).

     

    ARTICLE
XII.  MISCELLANEOUS

     

    12.1           Plan Year.  The Plan
year shall be the calendar year.

     

    12.2           Withholding for Taxes and Other
Deductions.  The Company shall have the right to deduct from
any deferral, distribution or withdrawal under the Plan any applicable taxes
that it is required by law to withhold.  In addition, the Company may
also deduct from any distribution or withdrawal under the Plan any amounts owed
by the Participant to the Company; provided, however, that the amount deducted
from any distribution or withdrawal may not exceed the amount of such
distribution or withdrawal, less any applicable tax withholding.  The
immediately preceding sentence shall not apply after a Hostile Change of
Control.

     

    12.3           No Right to
Employment.  Nothing contained in the Plan or in any Deferral
Agreement executed by a Participant in connection herewith shall be construed to
(i) confer upon any employee any right of employment with the Company, (ii)
restrict in any way with the Company's right to terminate or change the terms or
conditions of any employee's employment at any time, or (iii) confer upon any
employee or any other person any claim or right to any distribution under the
Plan except in accordance with its terms.

     

    12.4           Alienation
Prohibited.  Neither the Participant nor any Beneficiary shall
have any right or ability to alienate, sell, transfer, assign, pledge or
encumber, either voluntarily or involuntarily, any amount due or expected to
become due under the Plan.  Nor shall any such amounts be subject to
garnishment, execution, levy or other seizure by any creditor of a Participant
or Beneficiary.  Notwithstanding the foregoing, the Administrator, in
its sole discretion, may authorize payment (including immediate payment) to an
“alternate payee” to the extent necessary to fulfill a "domestic relations
order," as defined in Code Section 414(p).

     

    12.5           General Limitation of
Liability.  Neither the Company, the Board, the Compensation
Committee, the Administrator nor any other person shall be liable, either
jointly or severally, for any act or failure to act or for anything whatsoever
in connection with the Plan, or the administration thereof, except, and only to
the extent of, liability imposed because of willful misconduct, gross negligence
or bad faith.  All benefit payments shall be made solely from the
Company's general assets.

     

    12.6           Contributions to
Trust.  Nothing contained herein shall be construed or
interpreted to preclude the Company from contributing to the Trust, or from
establishing and contributing to any other trust, to facilitate benefit payments
under the Plan prior to a Hostile Change of Control.  All amounts held
in the Trust (both now and in the future) shall be used to pay benefits under
the Plan on a first-come, first-served basis, and shall not be earmarked to pay
benefits to any particular Participant or Beneficiary.

     

    12.7           Unfunded
Plan.  Notwithstanding the existence of the Trust or any other
trust created pursuant to Section 12.6 above, the Plan shall be
unfunded.  All amounts deferred by, or credited to, Participants under
the Plan, all Participant Accounts established and maintained pursuant to the
Plan and all amounts contributed to the Trust or any other trust established
pursuant to Section 12.6 above shall continue for all purposes to be part
of the general assets of the Company until distributed; all benefits under the
Plan shall be paid solely from the general assets of the Company.  The
Plan constitutes a mere promise by the Company to make benefit payments in the
future.  Participants and Beneficiaries shall have the status of
general unsecured creditors of the Company with respect to the Plan and any
rights and benefits thereunder.  No Participant or Beneficiary shall
have any preferred claim to the amounts credited to a Participant's Accounts or
to any assets of the Company (or any trust established pursuant to
Section 12.6 above) on account of a Participant's participation in the Plan
prior to the time such amounts are actually paid to the Participant or
Beneficiary, and then only to the extent of any such payment.

     

    12.8           Applicable Law.  The
Plan shall be construed and its validity determined in accordance with the laws
of the State of Washington to the extent such laws are not preempted by federal
law.

     

    12.9           Severability.  If
any provision of the Plan is held by a court of competent jurisdiction to be
illegal, invalid or unenforceable, said illegality, invalidity or
unenforceability shall not affect the remaining provisions of the Plan, which
shall remain fully effective and shall be construed and enforced as if said
illegal, invalid or unenforceable provision had never been included
herein.

     

    12.10                      Successors and
Assigns.  The terms and conditions of the Plan, as amended and
in effect from time to time, shall be binding upon the Company's successors and
assigns, including without limitation any entity into which the Company may be
merged or with which the Company may be consolidated.

     

    12.11                      Compliance with
Section 409A.  The Plan is intended to comply with the
requirements of Code Section 409A (including accompanying regulations and
current IRS guidance) and to conform to the current operation of the
Plan.  Notwithstanding any provision of the Plan to the contrary, the
Plan shall be interpreted, operated and administered in a manner consistent with
this intention, so as to avoid the predistribution inclusion in income of
amounts deferred under the Plan and the imposition of any additional taxes or
interest thereon.  With respect to any Participant whose taxable year
is not the calendar year, all references in the Plan to "calendar year," except
those in Article V and Section 6.3 above, shall be deemed to be
revised to refer to the Participant's "taxable year."  The Company and
the Administrator may conclusively presume that a Participant's taxable year is
the calendar year until notified otherwise in writing by the
Participant.

     

    *           *           *           *           *

     

    IN
WITNESS WHEREOF, this instrument has been executed by the Company as
the

    ______________________day
of __________________________, 2008.

     

    

     

                                                                             ITRON, INC.

                                                                         By: _____________________________                                                     

                                                                         Its:
_____________________________ex_10-20.htm

    Exhibit
10.20

    

    

    ITRON,
INC.

    

    AMENDED
AND RESTATED

    2002
EMPLOYEE STOCK PURCHASE PLAN

    

     

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

    and
amended by the board on December 16, 2008

       

     

    SECTION
1.    PURPOSE

     

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

     

    SECTION
2.    DEFINITIONS

     

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

     

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

     

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

     

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

     

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

     

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

     

    “Company Transaction” means
any of the following events:

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

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

     

    SECTION
3.    ADMINISTRATION

     

    3.1    Plan
Administrator

     

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

     

    3.2    Administration
and Interpretation by the Plan Administrator

     

    Subject
to the provisions of the Plan, the Plan Administrator shall have exclusive
authority, in its discretion, to determine all matters relating to Options
granted under the Plan, including all terms, conditions, restrictions and
limitations of Options; provided, however, that all Participants granted Options
pursuant to the Plan shall have the same rights and privileges within the
meaning of Code Section 423(b)(5). The Plan Administrator shall also have
exclusive authority to interpret the Plan and may from time to time adopt, and
change, rules and regulations of general application for the Plan’s
administration. The Plan Administrator’s interpretation of the Plan and its
rules and regulations, and all actions taken and determinations made by the Plan
Administrator pursuant to the Plan, shall be conclusive and binding on all
parties involved or affected. The Plan Administrator may delegate administrative
duties to such of the Company’s officers or employees as it so
determines.

     

    SECTION
4.    STOCK SUBJECT TO PLAN

     

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

     

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

     

    SECTION
5.    OFFERING DATES

     

    5.1    Offerings

     

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

     

    5.2    Purchase
Periods

     

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

     

    SECTION
6.    PARTICIPATION IN THE PLAN

     

    6.1    Initial
Participation

     

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

     

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

     

    6.2    Continued
Participation

     

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

     

    SECTION
7.    LIMITATIONS ON RIGHT TO PURCHASE SHARES

     

    7.1    $25,000
Limitation

     

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

     

    7.2    Number
of Shares Purchased

     

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

     

    7.3    Pro
Rata Allocation

     

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

     

    SECTION
8.    PURCHASE PRICE

     

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

     

    SECTION
9.    PAYMENT OF PURCHASE PRICE

     

    9.1    General
Rules

     

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

     

    9.2    Amount
Withheld or Contributed

     

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

     

    9.3    Payroll
Deductions and Other Contributions

     

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

     

    9.4    Memorandum
Accounts

     

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

     

    9.5    No
Interest

     

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

     

    9.6    Acquisition
of Stock

     

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

     

    9.7    Refund
of Excess Amounts

     

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

     

    9.8    Withholding
Obligations

     

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

     

    9.9    Termination
of Participation

     

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

     

    9.10    Procedural
Matters

     

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

     

    9.11    Leaves
of Absence

     

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

     

    SECTION
10.    EVIDENCE OF STOCK OWNERSHIP

     

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

     

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

     

    11.1    Changes
in Withholding or Contribution Amounts

     

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

     

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

     

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

     

    11.2    Withdrawal
From an Offering

     

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

     

    11.3    Withdrawal
From the Plan

     

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

     

    11.4    Return
of Payroll Deductions or Contributions

     

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

     

    SECTION
12.    TERMINATION OF EMPLOYMENT

     

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

     

    SECTION
13.    RESTRICTIONS UPON ASSIGNMENT

     

    13.1    Transferability

     

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

     

    13.2    Beneficiary
Designation

     

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

     

    SECTION
14.    NO RIGHTS OF SHAREHOLDER UNTIL SHARES
ISSUED

     

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

     

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

     

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

     

    SECTION
16.    AMENDMENT OF THE PLAN

     

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

     

    SECTION
17.    SUSPENSION OR TERMINATION OF THE PLAN

     

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

     

    SECTION
18.    NO RIGHTS AS AN EMPLOYEE

     

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

     

    SECTION
19.    EFFECT UPON OTHER PLANS

     

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

     

    SECTION
20.    ADJUSTMENTS

     

    20.1    Adjustment
of Shares

     

    In the
event that, at any time or from time to time, a stock dividend, stock split,
spin-off, combination or exchange of shares, recapitalization, merger,
consolidation, distribution to shareholders other than a normal cash dividend,
or other change in the Company’s corporate or capital structure results in (a)
the outstanding shares, or any securities exchanged therefor or received in
their place, being exchanged for a different number or class of securities of
the Company or of any other corporation or (b) new, different or additional
securities of the Company or of any other corporation being received by the
holders of shares of Stock, then the Plan Administrator, in its sole discretion,
shall make such equitable adjustments as it shall deem appropriate in the
circumstances in (i) the maximum number and kind of shares of Stock subject to
the Plan as set forth in Section 4, (ii) the maximum number and kind of
securities that are subject to any outstanding Option and the per share price of
such securities and (iii) the maximum number and kind of shares of Stock that
may be purchased by a Participant in a Purchase Period. The determination by the
Plan Administrator as to the terms of any of the foregoing adjustments shall be
conclusive and binding. Notwithstanding the foregoing, a dissolution,
liquidation or Company Transaction shall not be governed by this Section 20.1
but shall be governed by Sections 20.2 and 20.3, respectively.

     

    20.2    Dissolution
or Liquidation of the Company

     

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

     

    20.3    Company
Transaction

     

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

     

    20.4    Limitations

     

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

     

    SECTION
21.    REGISTRATION; CERTIFICATES FOR SHARES

     

    The
Company shall be under no obligation to any Participant to register for offering
or resale under the Securities Act of 1933, as amended, or register or qualify
under state securities laws, any shares of Stock. The Company may issue
certificates for shares with such legends and subject to such restrictions on
transfer and stop-transfer instructions as counsel for the Company deems
necessary or desirable for compliance by the Company with federal and state
securities laws.

     

    SECTION
22.    GOVERNING LAW

     

    The Plan
and all determinations made and actions taken hereto, to the extent not
otherwise governed by the laws of the United States, shall be governed by the
laws of the State of Washington, without giving effect to such state’s conflict
of laws principles.

     

    SECTION
23.    EFFECTIVE DATE

     

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

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