Document:

ex10-3.htm

    
      

    

    Exhibit
10.3

     

    
      FIRST
AMENDMENT

      TO THE
INTERNAP NETWORK SERVICES CORPORATION

      1999
NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

       

      
 

      This First Amendment to the Internap
Network Services Corporation 1999 Non-Employee Directors' Stock Option Plan (the
"Plan") is made and entered into by Internap Network Services Corporation (the
"Company").

      

      W I T N E
S S E T H:

      

      WHEREAS, the Company maintains the
Plan, which is administered by the Compensation Committee of the Board of
Directors of the Company (the "Board"), to provide for grants of incentive
compensation to its non-employee directors; and

      

      WHEREAS, the Board has determined
that it is advisable to amend the Plan at this time to increase the number of
shares available for the issuance of awards under the Plan; and

      

      WHEREAS, Section 12 of the Plan
permits the Board to amend the Plan at any time; and

      

      WHEREAS, the Board adopted
resolutions approving the First Amendment on February 27, 2003;

      

      NOW, THEREFORE, the Company hereby
amends the Plan as follows:

      

      1.

      
        
           

        

        
           

          
            

          

        

        
           

        

         

      

      Effective as of the date of
shareholder approval of this First Amendment, Section 4(a) of the Plan shall be
amended to read as follows:

      

      "(a) Share Reserve. Subject to the
provisions of Section 11 relating to adjustments upon changes in stock, the
stock that may be issued pursuant to Options shall not exceed in the aggregate
three million, five hundred thousand (3,500,000) shares of Common
Stock."

      

      2.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      Except as specifically amended
hereby, the Plan shall remain in full force and effect.

      

      IN WITNESS WHEREOF, the Company has
caused its duly authorized officer to execute this First Amendment on the date
set forth below.

       

       

                                                                          INTERNAP NETWORK
SERVICES CORPORATION

      

      

      By:_______________________________________________________________

      

      

      Name:_____________________________________________________________

      

      

      Title:______________________________________________________________

      

      

      Date:______________________________________________________________ex10-5.htm

    
      

    

    Exhibit
10.5

    

    

    AMENDED
AND RESTATED

    INTERNAP
NETWORK SERVICES CORPORATION

    1999
STOCK INCENTIVE PLAN FOR NON-OFFICERS

    

    

    (Originally
adopted on June 28, 1999 as the CO SPACE Stock Incentive Plan, amended on
December 22, 1999, January 11, 2000, and March 30, 2000 and assumed by InterNap
Network Services Corporation in connection with the Merger Agreement dated May
26, 2000. Amended and Restated as the InterNAP Network Services Corporation 1999
STOCK INCENTIVE PLAN FOR NON-OFFICERS on September 20, 2000)

    

    1.    PURPOSE.  This
1999 Stock Incentive Plan For Non-Officers (the "Plan") is intended to provide
incentives: (a) to non-officer employees and consultants of InterNAP Network
Services Corporation, a Delaware corporation (the "Company"), and any present or
future parent or subsidiaries of the Company (collectively, "Related
Corporations") by providing them with opportunities to purchase stock in the
Company pursuant to Non-Qualified Stock Options ("NSOs") that do not qualify as
Incentive Stock Options under Section 422 of the Internal Revenue Code of 1986,
as amended (the "Code") and (b) to non-officer employees and consultants of the
Company and Related Corporations by providing them with opportunities to receive
awards of stock in the Company whether such stock awards are in the form of
bonus shares, deferred stock awards, or of performance share awards (the
"Awards"), and (c) to non-officer employees and consultants of the Company and
Related Corporations by providing them with opportunities to make direct
purchases of restricted stock in the Company ("Restricted Stock Purchases").
Non-Qualified Options are referred to hereafter as "Option." Options, Awards and
authorizations to make Restricted Stock Purchases are referred to hereafter
individually as a "Stock Right" and collectively as "Stock Rights." Documents
evidencing the award of Stock Rights may be referred to collectively as "Stock
Rights Agreements." As used herein, the terms "parent" and "subsidiary" mean
"parent corporation" and "subsidiary corporation", respectively, as those terms
are defined in Section 424 of the Code.

    

    2.    ADMINISTRATION OF THE
PLAN.

     

    A.    BOARD OR
COMMITTEE ADMINISTRATION. The Plan shall be administered by the Board of
Directors of the Company (the "Board"). The Board may appoint a Compensation
Committee or a Stock Incentive Plan Committee (as the case may be, the
"Committee") of two (2) or more of its members to administer the Plan and to
grant Stock Rights hereunder, provided such Committee is delegated such powers
in accordance with state law. (All references in this Plan to the "Committee"
shall mean the Board if no such Compensation Committee or Stock Incentive Plan
Committee has been so appointed).

    

    B.    AUTHORITY OF
BOARD OR COMMITTEE. Subject to the terms of the Plan, the Committee shall have
the authority to: (i) determine the employees of the Company and Related
Corporations to whom Options may be granted; (ii) determine the time or times at
which Options or Awards may be granted or Restricted Stock Purchases made; (iii)
determine the exercise price of shares subject to each Option, which price shall
not be less than the minimum price specified in paragraph 6, and the purchase
price of shares subject to each Restricted Stock Purchase or Award; (iv)
determine (subject to paragraph 7) the time or times when each Option shall
become exercisable and the duration of the exercise period; (v) determine
whether restrictions such as repurchase options are to be imposed on shares
subject to Options, Awards and Restricted Stock Purchases and the nature of such
restrictions, if any; (vi) impose such other terms and conditions with respect
to capital stock issued pursuant to Stock Rights not inconsistent with the terms
of this Plan as it deems necessary or desirable; and (vii) interpret the Plan
and prescribe and rescind rules and regulations relating to it.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

     

    The
interpretation and construction by the Committee of any provisions of the Plan
or of any Stock Right granted under it shall be final unless otherwise
determined by the Board. The Committee may from time to time adopt such rules
and regulations for carrying out the Plan as it may deem best. No member of the
Board or the Committee shall be liable for any action or determination made in
good faith with respect to the Plan or any Stock Right granted under
it.

    

    C.    DELEGATION OF
AUTHORITY TO GRANT AWARDS TO OFFICER. Without limiting the foregoing, the Board,
in its discretion, may also delegate to a single officer of the Company who is a
member of the Board (to the extent consistent with state law) all or part of the
Board's or Committee's authority and duties with respect to the granting of
Stock Rights to individuals. Such officer (the "Delegated Officer") shall act as
a one member committee of the Board, and shall in any event be subject to the
same limitations as are applicable to the Committee. References to the Committee
in this Plan shall also include the Delegated Officer, but only to the extent
consistent with the authorities and duties delegated to the Delegated Officer by
the Board. The Board may revoke or amend the terms of a delegation at any time
but such action shall not invalidate any prior actions of the Delegated Officer
that were consistent with the terms of the Plan.

    

    D.    COMMITTEE
ACTIONS. The Committee may select one of its members as its chairman and shall
hold meetings at such time and places as it may determine. Acts by a majority of
the Committee, acting at a meeting (whether held in person or by
teleconference), or acts reduced to or approved in writing by all of the members
of the Committee, shall be the valid acts of the Committee. From time to time
the Board may increase the size of the Committee and appoint additional members
thereof, remove members (with or without cause) and appoint new members in
substitution therefore, fill vacancies however caused, or remove all members of
the Committee and thereafter directly administer the Plan, subject to compliance
with paragraph 2A.

    

    3.    ELIGIBLE
EMPLOYEES AND OTHERS. Stock Rights may be granted to any employee, consultant or
advisor of the Company or any Related Corporation. However, notwithstanding any
other provision herein to the contrary, no person shall be eligible for a Stock
Right under the Plan (i) who holds a position of vice president or higher of the
Company or Related Corporations, (ii) who would be considered an "officer" or "
director" within the meaning of those terms under Rule 4460(i)(1)(A) of the
National Association of Securities Dealers Manual (or such amended or successor
rule), (iii) who would be considered a person subject to Section 16b of the
Exchange Act of 1934, as amended (and regulations promulgated thereunder), or
(iv) whose eligibility would require approval of the Plan by the stockholders of
the Company under any law or regulation or the rules of any stock exchange or
market system upon which the Common Stock may then be listed. If not
inconsistent with any such law, regulation or rule, a Stock Right may be granted
to a person, not previously employed by the Company or a Related Corporation, as
an inducement essential to entering into an employment contract with the Company
or a Related Corporation.

    

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

     

    The Committee may take into
consideration a recipient's individual circumstances
in determining whether to grant a Stock Right. Granting a Stock Right to any
individual or entity shall neither entitle that individual or entity to, nor
disqualify him from, participation in any other grant of Stock
Rights.

    

    4.    STOCK. The stock
subject to Stock Rights shall be the common stock of the Company (the "Common
Stock"), or shares of Common Stock reacquired by the Company in any manner. The
aggregate number of shares which may be issued pursuant to the Plan is
1,346,840, subject to adjustment as provided in paragraph 13.

    

    5.    GRANTING OF STOCK
RIGHTS. Stock Rights may be granted under the Plan at any time after June 29,
1999 and prior to June 28, 2009. The date of grant of a Stock Right under the
Plan will be the date specified by the Committee at the time it grants the Stock
Right or such date that is specified in the instrument or agreement evidencing
such Stock Right; provided, however, that such date shall not be prior to the
date on which the Committee acts to approve the grant.

    

    6.    MINIMUM OPTION
PRICE.

    

    A.   PRICE FOR INCENTIVE
STOCK OPTIONS.  Incentive Stock Options shall not be granted under
this Plan.

    

    B.    DETERMINATION
OF FAIR MARKET VALUE. "Fair Market Value" shall be determined as of the last
business day for which the prices or quotes discussed in this sentence are
available prior to the date such Option is granted and shall mean (i) the
average (on that date) of the high and low prices of the Common Stock on the
principal national securities exchange on which the Common Stock is traded, if
the Common Stock is then traded on a national securities exchange; or (ii) the
last reported sale price (on that date) of the Common Stock on the NASDAQ
National Market List, if the Common Stock is not then traded on a national
securities exchange; or (iii) the closing bid price (or average of bid prices)
last quoted (on that date) by an established quotation service for
over-the-counter securities, if the Common Stock is not then traded on a
national securities exchange and is not reported on the NASDAQ National Market
List.

    

    7.    OPTION DURATION.
Subject to earlier termination as provided in

    paragraphs
9, 10, and 13, each Option shall expire on the date specified by or shall have
such duration as may be specified by the Committee and set forth in the original
stock option agreement granting such Option, but not more than ten years from
the date of grant. Options shall expire on the date specified in the agreement
granting such Options, subject to extension as determined by the
Committee.

    

    8.    EXERCISE OF OPTION.
Subject to the provisions of paragraphs 9 through 13, each Option granted under
the Plan shall be exercisable as follows:

     

    A.    VESTING.
Unless otherwise specified by the Committee, Options granted to employees shall
vest in accordance with the following schedule: (a) as to 25% of the shares
subject to the Option, on the first anniversary of the date of grant of the
Option; and (b) as to the remaining 75% of the shares subject to the Option, in
36 equal monthly installments (such monthly vesting dates shall commence one
months following such first annual anniversary on the exact day of the month as
the date of such first annual anniversary, and continue at one month intervals
thereafter, except with respect to any month that does not have such date, in
which case the date in such month shall be the last day of such month). The
Committee may also specify such other conditions precedent as it deems
appropriate to the exercise of an Option.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

     

    B.    FULL VESTING
OF INSTALLMENTS. Once an installment becomes exercisable it shall remain
exercisable until expiration or termination of the Option, unless otherwise
specified by the Committee.

    

    C.    PARTIAL
EXERCISE. Each Option or installment may be exercised at any time or from time
to time, in whole or in part, for up to the total number of shares with respect
to which it is then exercisable, provided that the Committee may specify a
certain minimum number or percentage of the shares issuable upon exercise of any
Option that must be purchased upon any exercise.

    

    D.    ACCELERATION
OF VESTING. The Committee shall have the right to accelerate the date of
exercise of any installment of any Option, despite the fact that such
acceleration may cause the application of Sections 280G and 4999 of the Code if
a Change in Control Event, as defined below in paragraph 13C,
occurs.

    

    9.    TERMINATION OF
EMPLOYMENT. Nothing in the Plan shall be deemed to give any grantee of any Stock
Right the right to be retained in employment or other service by the Company or
any Related Corporation for any period of time.

    

    Notwithstanding anything contained in
this paragraph 9 to the contrary, the Board or Committee may establish rules in
particular stock option agreements with respect to Misconduct, committed by a
grantee of a Stock Right. Misconduct shall have the same meaning as the term
Cause, as defined below.

    

    In the event that grantee's Service
terminates (other than upon death or Disability or for Cause), the grantee may
exercise his or her Option (to the extent that the grantee was entitled to
exercise such Option 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 grantee's Service, or (ii) the expiration of the term of the
Option as set forth in the Option. If, after termination, the grantee does not
exercise his or her Option within the time specified in the Option, the Option
shall terminate. In the event an grantee's Service terminates for Cause, then
his or her Option shall terminate immediately upon such event.

     

    10.   DEATH;
DISABILITY.

    

    A.   DEATH.  If an
optionee ceases to be employed by the Company and all Related Corporations by
reason of his death, or if the employee dies within the thirty (30) day period
after the employee ceases to be employed by the Company and all Related
Corporations, any Option of his may be exercised, to the extent of the number of
shares with respect to which he could have exercised it on the date of his
death, by his estate, personal representative or beneficiary who has acquired
the Option by will or by the laws of descent and distribution, at any time prior
to the earlier of the specified expiration date of the Option or one hundred and
eighty (180) days from thedate of such optionee's death.

    

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    

    B.    DISABILITY.  If
an optionee ceases to be employed by the Company and all Related Corporations by
reason of his disability, he shall have the right to exercise any Option held by
him on the date of termination of employment, to the extent of the number of
shares with respect to which he could have exercised it on that date, at any
time prior to the earlier of the specified expiration date of the Option or one
(1) year from the date of the termination of the optionee's employment. For the
purposes of the Plan, the term "disability" shall mean "permanent and total
disability" as defined in Section 22(e)(3) of the Code or successor
statute.

    

    11.   ASSIGNABILITY.  Except
for Options which may be transferred for estate planning purposes to the extent
provided in the instrument or agreement granting such Options, no Stock Right
shall be assignable or transferable by the grantee except by will or by the laws
of descent and distribution, and during the lifetime of the grantee each Stock
Right shall be exercisable only by him. No Stock Right, nor the right to
exercise any portion thereof, shall be subject to execution, attachment, or
similar process, assignment, or any other alienation or hypothecation. Upon any
attempt so to transfer, assign, pledge, hypothecate, or otherwise dispose of any
Stock Right, or of any right or privilege conferred thereby, contrary to the
provisions thereof or hereof or upon the levy of any attachment or similar
process upon any Stock Right, right or privilege, such Stock Right and such
rights and privileges shall immediately become null and void. The foregoing
shall not be construed to restrict the ability to assign or transfer shares of
Common Stock issued upon the exercise or award of a Stock Right to the extent
that the instrument or agreement granting such Stock Right permits such
assignment or transfer.

    

    12.   TERMS AND CONDITIONS OF
STOCK RIGHTS. Stock Rights shall be evidenced by instruments (which need not be
identical) in such forms as the Committee may from time to time approve. Such
instruments shall conform to the terms and conditions set forth in paragraphs 6
through 11 hereof to the extent applicable and may contain such other provisions
as the Committee deems advisable which are not inconsistent with the Plan.
Without limiting the foregoing, such provisions may include transfer
restrictions, rights of refusal, vesting provisions, and repurchase rights with
respect to shares of Common Stock issuable upon exercise of Stock Rights, and
such other restrictions applicable to shares of Common Stock issuable upon
exercise of Stock Rights as the Committee may deem appropriate. The Committee
may from time to time confer authority and responsibility on one or more of its
own members and/or one or more officers of the Company to execute and deliver
such instruments. The proper officers of the Company are authorized and directed
to take any and all action necessary or advisable from time to time to carry out
the terms of such instruments.

    

    13.   ADJUSTMENTS. Upon the
occurrence of any of the following events, an individual's rights with respect
to Stock Rights granted to him hereunder shall be adjusted as hereinafter
provided, unless otherwise specifically provided in the written agreement
between the optionee and the Company relating to such Stock Right:

    

    A.   CAPITALIZATION
ADJUSTMENTS. If any change is made in the Common Stock subject to the Plan, or
subject to any Stock Rights, 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), the Plan will be appropriately adjusted in the
class(es) and maximum number of securities subject to the Plan pursuant to
subsection 4 and the outstanding Stock Rights will be appropriately adjusted in
the class(es) and number of securities and price per share of Common Stock
subject to such outstanding Stock Rights. 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.)

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

     

    B.    DISSOLUTION
OR LIQUIDATION. In the event of a dissolution or liquidation of the Company,
then all outstanding Stock Rights shall terminate immediately prior to such
event.

    

    C.    CERTAIN
CHANGES IN CONTROL. In the event of (i) a sale, lease or other disposition of
all or substantially all of the assets of the Company, (ii) a merger or
consolidation in which the Company is not the surviving corporation or (iii) a
reverse merger in which the Company is the surviving corporation but the shares
of Common Stock outstanding immediately preceding the merger are converted by
virtue of the merger into other property, whether in the form of securities,
cash or otherwise (collectively, a "Change in Control" or "Corporate
Transaction"), then any surviving corporation or

    acquiring
corporation may assume or continue any Stock Rights outstanding under the Plan
or may substitute similar stock awards (including an award to acquire the same
consideration paid to the shareholders in the transaction described in this
subsection 13C) for those outstanding under the Plan. In the event any surviving
corporation or acquiring corporation refuses to assume or continue such Stock
Rights or to substitute similar stock awards for those outstanding under the
Plan, then with respect to Stock Rights held by participants whose Service has
not terminated, the vesting of such Stock Rights (and, if applicable, the time
during which such Stock Rights may be exercised) shall be accelerated in full,
and the Stock Rights shall terminate if not exercised (if applicable) at or
prior to such event. With respect to any other Stock Rights outstanding under
the Plan, such Stock Rights shall terminate if not exercised (if applicable)
prior to such event.

    

    D.    TERMINATION
OF SERVICE FOLLOWING A CHANGE IN CONTROL. Unless otherwise specified in the
applicable Stock Rights Agreement, in the event of the occurrence of a Change in
Control and provided that a participant's Stock Right remains in effect
following such Change in Control or is assumed, continued or substituted for any
similar stock award in connection with the Change in Control, then, if such
participant's Service is terminated by the Company without Cause within thirteen
(13) months following the effective date of the Change in Control, all Stock
Rights held by such participant (or any substituted stock awards) shall, as of
the date of such termination of Service, vest in full and become fully
exercisable (if applicable) to the extent not previously vested or exercisable.
Such Stock Rights shall remain exercisable until they expire in accordance with
their terms.

    

    The term "Cause" shall have such
meaning as is defined in the grantee's employment or consulting agreement with
the Company or a Related Corporation. If the grantee does not have an employment
or consulting agreement with the Company or a Related Corporation, or if such
agreement does not define the term "cause," then the term "cause" shall mean:
(i) misconduct or dishonesty that materially adversely affects the Company or a
Related Corporation, including without limitation (A) an act materially in
conflict with the financial interests of the Company or a Related Corporation,
(B) an act that could damage the reputation or customer relations of the Company
or a Related Corporation, (C) an act that could subject the Company or a Related
Corporation to liability, (D) an act constituting sexual harassment or other
violation of the civil rights of coworkers, (E) failure to obey any lawful
instruction of the Board or any officer of the Company or of a Related
Corporation and (F) failure to comply with, or perform any duty required under,
the terms of any confidentiality, inventions or non-competition agreement the
grantee may have with the Company or a Related Corporation, or (ii) acts
constituting the unauthorized disclosure of any of the trade secrets or
confidential information of the Company or a Related Corporation, unfair
competition with the Company or a Related Corporation or the inducement of any
customer of the Company or a Related Corporation to breach any contract with the
Company or a Related Corporation. The right to exercise any Option shall be
suspended automatically during the pendency of any investigation by the Board or
its designee, and/or any negotiations by the Board or its designee and the
grantee, regarding any actual or alleged act or omission by the grantee of the
type described in this section.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

     

    The term "Service" means the
performance of services for the Company or a Related Corporation by an
individual. An individual shall be deemed to remain in Service for so long as
such individual renders services to the Company or a Related Corporation on a
periodic basis in the capacity of an employee or an independent consultant or
advisor.

    

    E.    SECURITIES
ACQUISITION. In the event of an acquisition by any person, entity or group
within the meaning of Section 13(d) or 14(d) of the Exchange Act of 1934, as
amended (the "Exchange Act"), or any comparable successor provisions (excluding
any employee benefit plan, or related trust, sponsored or maintained by the
Company or an Affiliate) of the beneficial ownership (within the meaning of Rule
13d-3 promulgated under the Exchange Act, or comparable successor rule) of
securities of the Company representing at least fifty percent (50%) of the
combined voting power entitled to vote in the election of Directors, then with
respect to Stock Rights held by participants whose Service has not terminated,
the vesting of such Stock Rights (and, if applicable, the time during which such
Stock Rights may be exercised) shall be accelerated in full. Such Stock Rights
shall remain exercisable until they expire in accordance with their
terms.

    

    F.    PARACHUTE
PAYMENTS. If any payment or benefit participant would receive in connection with
a Change in Control from the Company or otherwise ("Payment") would (i)
constitute a "parachute payment" within the meaning of Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code"), and (ii) but for this
sentence, be subject to the excise tax imposed by Section 4999 of the Code (the
"Excise Tax"), then such Payment shall be reduced to the Reduced Amount. The
"Reduced Amount" shall be either (x) the largest portion of the Payment that
would result in no portion of the Payment being subject to the Excise Tax or (y)
the largest portion, up to and including the total, of the Payment, whichever
amount, after taking into account all applicable federal, state and local
employment taxes, income taxes, and the Excise Tax (all computed at the highest
applicable marginal rate), results in participant's receipt, on an after-tax
basis, of the greater amount of the Payment notwithstanding that all or some
portion of the Payment may be subject to the Excise Tax. If a reduction in
payments or benefits constituting "parachute payments" is necessary so that the
Payment equals the Reduced Amount, reduction shall occur in the following order
unless the participant elects in writing a different order (provided, however,
that such election shall be subject to Company approval if made on or after the
effective date of the Change of Control): reduction of cash payments;
cancellation of accelerated vesting of stock awards; reduction of employee
benefits. In the event that acceleration of vesting of stock award compensation
is to be reduced, such acceleration of vesting shall be cancelled in the reverse
order of the date of grant of the participant's stock awards unless the
participant elects in writing a different order for cancellation.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

     

    The
accounting firm engaged by the Company for general audit purposes as of the day
prior to the effective date of the Change in Control shall perform the foregoing
calculations. If the accounting firm so engaged by the Company is serving as
accountant or auditor for the individual, entity or group effecting the Change
in Control, the Company shall appoint a nationally recognized accounting firm to
make the determinations required hereunder. The Company shall bear all expenses
with respect to the determinations by such accounting firm required to be made
hereunder.

    

    The accounting firm engaged to make
the determinations hereunder shall provide its calculations, together with
detailed supporting documentation, to the Company and participant within fifteen
(15) calendar days after the date on which participant's right to a Payment
arises (if requested at that time by the Company or participant) or at such
other time as requested by the Company or participant. If the accounting firm
determines that no Excise Tax is payable with respect to a Payment, either
before or after the application of the Reduced Amount, it shall furnish the
Company and participant with an opinion reasonably acceptable to participant
that no Excise Tax will be imposed with respect to such Payment. Any good faith
determination of the accounting firm made hereunder shall be final, binding and
conclusive upon the Company and participant.

    

    G.    ISSUANCES OF
SECURITIES AND NON-STOCK DIVIDENDS. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
subject to Options. No adjustments shall be made for dividends paid in cash or
in property other than securities of the Company (and, in the case of securities
of the Company, such adjustments shall be made pursuant to the foregoing
subparagraph A).

    

    H.    FRACTIONAL
SHARES. No fractional shares shall be issued under the Plan, and the optionee
shall receive from the Company cash in lieu of such fractional
shares.

    

    I.              ADJUSTMENTS.
Upon the happening of any of the foregoing events described in subparagraphs A,
B or C above, the class and aggregate number of shares set forth in paragraph 4
hereof that are subject to Stock Rights which previously have been or
subsequently may be granted under the Plan shall also be appropriately adjusted
to reflect the events described in such subparagraphs. The Committee or the
board of directors of the surviving entity shall determine the specific
adjustments to be made under this paragraph 13 and its determination shall be
conclusive.

    

    If any person or entity owning Common
Stock obtained by exercise of a Stock Right made hereunder receives shares or
securities or cash in connection with a corporate transaction described in this
section as a result of owning such Common Stock, such shares or securities or
cash shall be subject to all of the conditions and restrictions applicable to
the Common Stock with respect to which such shares or securities or cash were
issued, unless otherwise determined by the Committee or the Board of Directors
of the surviving entity.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

     

    J.              POOLING-OF-INTERESTS
ACCOUNTING. If the Company proposes to engage in a Corporate Transaction or
Change in Control intended to be accounted for as a pooling-of-interests, and in
the event that the provisions of this Plan or of any agreement hereunder, or any
actions of the Board taken in connection with such Corporate Transaction or
Change in Control, are determined by the Company's or the surviving entity's
independent public accountants to cause such Change in Control or Corporate
Transaction to fail to be accounted for as a pooling-of-interests, then such
provisions or actions may be amended or rescinded at the election of the
Committee, without the consent of any grantee, to be consistent with
pooling-of-interests accounting treatment for such Corporate Transaction or
Change in Control.

    

    14.   MEANS OF EXERCISING
OPTIONS. An Option (or any part or installment thereof) shall be exercised by
giving written notice to the Company at its principal office address. Such
notice shall identify the Option being exercised and specify the number of
shares as to which such Option is being exercised, accompanied by full payment
of the purchase price therefore either (a) in United States dollars in cash or
by check, or (b) at the discretion of the Committee, by delivery of an
irrevocable and unconditional undertaking, satisfactory in form and substance to
the Company, by a creditworthy broker to deliver promptly to the Company
sufficient funds to pay the exercise price, or delivery to the Company of a copy
of irrevocable and unconditional instructions, satisfactory in form and
substance to the Company, to a creditworthy broker to deliver promptly to the
Company cash or a check sufficient to pay the exercise price, or (c) at the
discretion of the Committee through delivery of shares of Common Stock having a
fair market value equal as of the date of the exercise to the cash exercise
price of the Option, provided, however, that such shares of Common Stock
delivered must have been acquired by the holder of the Option more than six
months prior to the exercise of the Option, or (d) at the discretion of the
Committee, by delivery of the grantee's personal recourse note bearing interest
payable not less than annually at no less than 100% of the applicable Federal
rate, as defined in Section 1274(d) of the Code, or (e) at the discretion of the
Committee, by any combination of (a), (b) (c) and (d) above. The holder of an
Option shall not have the rights of a shareholder with respect to the shares
covered by his Option until the date of issuance of a stock certificate to him
for the shares subject to the Option. Except as expressly provided above in
paragraph 13 with respect to changes in capitalization and stock dividends, no
adjustment shall be made for dividends or similar rights for which the record
date is before the date such stock certificate is issued.

    

    15.   TERM AND AMENDMENT
OF PLAN. The Plan shall expire on June 28, 2009 (except as to Options
outstanding on that date). The Board may terminate or amend the Plan in any
respect at any time; provided, however that Stock Rights outstanding on such
date shall not be affected by the termination of the Plan.

    

    16.   SECTION 162(m):
Section 162(m) does not apply to grants of Stock Rights under this
Plan.

    

    17.   AMENDMENT OF STOCK
RIGHTS. The Board or Committee may amend, modify or terminate any outstanding
Stock Rights including, but not limited to, substituting therefor another Stock
Right of the same or a different type, and changing the date of exercise or
realization, provided, that, except as otherwise provided in paragraphs 9 or 10,
the grantee's consent to such action shall be required unless the Board or
Committee determines that the action, taking into account any related action,
would not materially and adversely affect the grantee.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

     

    18.   APPLICATION OF
FUNDS. The proceeds received by the Company from the sale of shares pursuant to
Options granted and Restricted Stock Purchases authorized under the Plan shall
be used for general corporate purposes.

    

    19.   GOVERNMENTAL
REGULATION. The Company's obligation to sell and deliver shares of the Common
Stock under this Plan is subject to the approval of any governmental authority
required in connection with the authorization, issuance or sale of such
shares.

    

    20.   WITHHOLDING OF
ADDITIONAL INCOME TAXES. Upon the exercise of a Non-Qualified Option, the making
of a Restricted Stock Purchase for less than its fair market value, the granting
of an Award, or the vesting of restricted Common Stock acquired on the exercise
of a Stock Right hereunder, the Company, in accordance with Section 3402(a) of
the Code, may require the grantee or purchaser to pay additional withholding
taxes in respect of the amount that is considered compensation includible in
such person's gross income. The Committee in its discretion may condition (i)
the exercise of an Option, (ii) the making of a Restricted Stock Purchase for
less than its fair market value, (iii) the granting of an Award, or (iv) the
vesting of restricted Common Stock acquired by exercising a Stock Right, on the
grantee's payment of such additional withholding taxes.

    

    21.   GOVERNING LAW;
CONSTRUCTION. The validity and construction of the Plan and the instruments
evidencing Options shall be governed by the laws of the state of Washington. In
construing this Plan, the singular shall include the plural and the masculine
gender shall include the feminine and neuter, unless the context otherwise
requires.

     

     

    10

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00155-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00155-of-00352.parquet"}]]