Document:

THIS EMPLOYMENT AGREEMENT (the "Agreement") is made on the 25th day of March,
2002

BETWEEN:

1.   Intermost Corporation,  a corporation duly organized,  validly existing and
     in good standing under the laws of the State of Utah (the "Company"); and

2.   Zacky Sun, an individual resident in Hong Kong (the "Executive").

WHEREBY IT IS AGREED as follows:

1.     INTERPRETATION

1.1  In this Agreement, unless the context requires otherwise:

     "Board" means the board of directors from time to time of the Company;

     "Group"  means  the  Company  and its  subsidiaries  from  time to time and
     "member of the Group" shall be constructed accordingly;

     "HK$" means Hong Kong dollars;

     "Hong  Kong"  means  the Hong  Kong  Special  Administrative  Region of The
     People's Republic of China;

     "Listing  Rules" means the Rules governing the Listing of Securities on The
     National Association of Securities Dealers/NASD;

     "Month" means calendar month.

1.2  References  herein to Clauses are to clauses in this  Agreement  unless the
     context requires otherwise.

1.3  The headings are  inserted  for  convenience  only and shall not affect the
     construction of the Agreement.

1.4  Unless the context requires otherwise, words importing the singular include
     the  plural  and vice  versa and words  importing  a gender  include  every
     gender.

<PAGE>

2.     EMPLOYMENT

     Subjectto the terms and conditions  herein,  the Company hereby employs the
     Executive,  and the Executive hereby accepts employment by the Company,  as
     an executive of the Company.

3.     EXECUTIVE'S DUTIES

     The Executive shall, during the continuance of this employment hereunder:

a)   comply  with  any  lawful  instructions  or  directions  from  time to time
     reasonably  given or made by the Board, or with the authority of the Board,
     and shall  comply  with the  Company's  rules,  regulations,  policies  and
     procedures from time to time in force;

b)   faithfully  and  diligently  serve the Group  and use his  reasonable  best
     endeavours to promote the business and interests thereof;

c)   vote himself exclusively and diligently to the business and interest of the
     Group and  personally  attend  thereto at all times during  usual  business
     hours and during such other times as the  Company  may  reasonably  require
     except in case of incapacity  through  illness or accident in which case he
     shall  forthwith  notify the  Secretary of the Company of such capacity and
     shall furnish to the Board such evidence thereof as it may require;

d)   keep the Board  promptly and full  informed (in writing if so requested) of
     his  conduct  of the  business  or affairs  of the Group and  provide  such
     explanations as the Board may reasonably require in connection therewith;

<PAGE>

e)   carry  out his  duties  and  exercise  his  powers  jointly  with any other
     director  or  executive  member of the Group as shall  from time to time be
     appointed by the Board to act jointly with the  Executive and the Board may
     at any time require the Executive to cease  performing or exercising any of
     his duties or powers under this Agreement; and

f)   comply with the relevant requirements of all applicable laws,  regulations,
     codes of practice and rules Ordinance  (including the Listing Rules and any
     rules of any other stock  exchange,  market or dealing  system on which the
     securities  of any member of the Group is traded and the  applicable  laws,
     regulations, codes of practice in that jurisdiction).

4.     RUMUNERATION

The remuneration of the Executive shall be as follows:

a)   The Company shall pay the Executive an annual salary of HK$600,000, payable
     no less frequently than semi-monthly, without any deductions,  withholdings
     or offsets. Such salary shall include any sum receivable as director's fees
     or other  remuneration  from any other  member  of the Group (if any),  and
     shall be reviewed  by the Board each year at the time of the annual  salary
     reviews for senior  executives  provided that the  Executive  shall abstain
     from  voting  and shall not be  counted  in the  quorum in  respect  of any
     resolution  regarding  the amount  payable to  himself in  relation  to his
     employment  under this  Agreement  which is  proposed at any meeting of the
     Board;

b)   The Company shall,  immediately upon the Executive's execution and delivery
     of this Agreement, and on each anniversary date of this Agreement, issue to
     the Executive such number of the Company's  freely  tradable  Common Shares
     valued at HK$400,000. After each such issuance each year, the Company shall
     have the right to  repurchase  such shares issued with respect to such year
     at HK$1 if either the Executive voluntarily terminates his employment under
     this Agreement or the Company  terminates the Executive's  employment under
     this  Agreement  under Clause 8.2 below,  provided  that at the end of each
     90-day period after each date of each  issuance,  the Company's  repurchase
     right  under this  Clause  4(b) with  respect to one quarter of such shares
     issued with respect to such year  terminates.  For the  avoidance of doubt,
     for each annual issuance, the right of repurchase terminates 360 days after
     such  issuance.  The shares  issuable  under this  Clause  4(b),  if freely
     tradable,  shall be valued at the last trade on the exchange where they are
     primarily  traded  or,  if not  traded  on an  exchange,  generally  at the
     reported  last  sale or  reported  closing  bid  price  last  quoted  by an
     established   over-the-counter  quotation  service  (the  "Market  Price").
     Restricted  securities  will be valued at a 15%  discount  from the  Market
     Price. Notwithstanding any provision herein to the contrary, if the Company
     fails to issue any such Common  Shares to the Executive as provided in this
     Clause 4(b) for whatever  reason  within six months after such  issuance is
     due, the Company shall  immediately pay the Executive  HK$200,000 and shall
     pay the Executive an additional  HK$200,000 on the  anniversary of the date
     when such  issuance is due, and the  Company's  obligation  to issue Common
     Shares  under  this  Clause  4(b)  for  such  year  shall  then  be  deemed
     discharged;

<PAGE>

c)   The Company's Board may, in respect of every financial year of the Company,
     grant to the Executive a discretionary bonus, provided that bonuses payable
     by the Company to its executive  directors in any financial  year shall not
     exceed ten per cent of the net profits  (after tax and after  extraordinary
     items) of the Company for such year as shown in its audited accounts.  Said
     discretionary  bonus  shall be payable  within  thirty  (30) days after the
     Company's  accounts for the relevant year have been audited and  certified,
     provided  that such  discretionary  bonus  shall be paid only on a pro rata
     basis in respect of any financial year of the Company during a portion only
     of which the  Executive  has  served  the  Company  hereunder,  unless  his
     employment shall have been terminated pursuant to Clause 8.2, in which case
     no discretionary bonus is payable.

In addition to the above benefits,  the Executive shall also be entitled to such
other benefits under any applicable  employee benefit plan (including  medical &
hospital coverage insurance, spouse and dependable medical insurance).

5.     INSURANCE

The Company  shall  purchase for the  Executive  (i)  directors'  and  officers'
insurance in an amount and on terms and  conditions no less  favorable than that
purchased for any other director or officer of the Company or that is reasonable
and  customary in the  Company's  industry;  and (ii) travel  insurance  for the
Executive's travels for the Company.

6.     EXPENSES

The Company shall  promptly  reimburse the Executive  (against  receipts or such
other  reasonable  evidence of  expenditure  as the Board may  require)  for all
reasonable  expenses  incurred in the course of his  employment  hereunder or in
promoting or otherwise in connection with the business of the Company.

7.     LEAVE

The  Executive  shall be  entitled  to 21 days of annual  leave (in  addition to
public  holidays) with full pay. The Executive  accrues annual leave at the rate
of 1.75 days per month,  and may  accumulate  and carry  forward a maximum of 21
leave days. Any balance in excess of 21 days cannot be carried  forward.  Unused
leave may be taken after the  Executive  has  submitted  his  resignation.  Upon
termination of employment, the Executive is paid for unused accrued leave.

<PAGE>

8.     TERMINATION

8.0    There is a probation period of three months. During the probation period,
       both the Executive  and the Company may then  terminate  this  employment
       with seven (7) days notice in writing without compensation.

8.1    From  the  second  year  of the  Executive  employment,  i.e.  after  the
       Executive fully employed by the Company for one year, if the Executive is
       at any time prevented from performing his duties  hereunder due to death,
       illness,   injury  or  accident,  or  if  the  Executive  terminates  his
       employment  hereunder  at any time due to the Company  failure to perform
       its obligations  hereunder  (including without limitation Clauses 4, 5, 6
       and 7 above),  he (or in the case of death, his estate) shall be entitled
       to receive his full salary for the first three (3) months (or in the case
       of illness,  injury or  accident,  any shorter  period  during which such
       incapacity  continues).  In the  case  of  incapacity,  if the  Executive
       continues  to be  incapacitated  for  a  period  longer  than  three  (3)
       consecutive  months,  the Company may then terminate his employment  with
       one (1) month notice in writing.

8.2    If at any time during the term of his employment  hereunder the Executive
       shall  be  guilty  of or  commit  any  serious  misconduct  which  in the
       reasonable  opinion  of  the  Board  is in  any  way  detrimental  to the
       interests of any member of the Group, or shall be in breach of any of the
       terms of this Agreement,  or shall commit any act of bankruptcy or become
       insolvent,  or make any  arrangements  or composition  with his creditors
       generally,  or fail to pay his  personal  debts  or shall  be  guilty  of
       persistent  insobriety or be convicted of any criminal offence  involving
       his  integrity  or  honesty,  the  Company may  terminate  the  Executive
       employment  hereunder  forthwith  without any bonus or payment in lieu of
       notice and upon  termination,  the  Executive  shall not  entitled to any
       bonus.
<PAGE>

8.3  Either party may also terminate this Agreement and the employment hereunder
     with three (3) months written notice.

8.4  In the  event of  termination  of the  Executive  employment  for  whatever
     reason,  the  Executive  shall resign as a director of the Company and from
     all  directorships or other offices held by him in any member of the Group.
     The  Executive  irrevocably  authorizes  the Company in his name and on his
     behalf to execute all documents and do all things  necessary to effect such
     resignation in the event of his failure to do so.

8.5  Any delay or forbearance by either party in exercising any right under this
     Agreement shall not constitute a waiver of such right.

9.     EXECUTIVE  UNDERTAKINGS

9.1    The Executive  shall not either during the  continuance of his employment
       hereunder or at any time thereafter  divulge to any person  whomsoever or
       to any body corporate or unincorporated  (except to those officers of the
       Group whose  province it is to know the same) or use for his own purposes
       or for any  purposes  other  than  those of the  Group  and shall use his
       reasonable   endeavours  to  prevent  the  unauthorized   publication  or
       disclosure of any trade secret or any confidential information concerning
       the  business  or  finances  of any  member  of the  Group  or any of its
       dealings,  transactions or affairs or those of its customers,  suppliers,
       management and shareholders  which may come to his knowledge during or in
       the course of his  employment.  Confidential  information  shall include,
       without  limitation,   lists  or  details  of  customers  and  suppliers,
       information  relating to the working of any process of invention  carried
       on or used by any member of the Group,  information  relating to research
       and other Projects, prices, discounts, mark-ups, future business strategy
       and  development,  marketing,  price-sensitive  information and any other
       information which is not generally available to the public.
<PAGE>

9.2    Forthwith  upon  the  termination  of the  employment  of  the  Executive
       hereunder,  and/or at any other time if the Company shall so request, the
       Executive   shall  deliver  to  the  Company  all  documents   (including
       correspondence, lists of customers, notes, memoranda, plans, drawings and
       other documents of whatsoever nature),  models or sample made or compiled
       by or delivered to the Executive  during his employment or affairs of any
       member of the Group and credit  cards and any  equipment  used by or made
       available to the Executive by the Company or any member of the Group. For
       the  avoidance  of doubt it is hereby  declared  that the property in all
       such documents as aforesaid  shall at all times be vested in the relevant
       member of the Group.

9.3    The  Executive  shall  not at any  time  during  the  continuance  of his
       employment  hereunder or for a period of six (6) months thereafter either
       on his own  account  or in  conjunction  with or on  behalf  of any other
       person or body corporate or unincorporated in competition with any member
       of the Group  directly  or  indirectly  solicit  or entice  away from any
       member of the Group, any person or body corporate or  unincorporated  who
       now is or at any time  during  or at the date of the  termination  of the
       said employment have been or become a customer or supplier or prospective
       customer  or  supplier  of any  member  of the  Group  and with  whom the
       Executive had personal contact or dealings during his said employment.

9.4    The  Executive  shall  not at any  time  during  the  continuance  of his
       employment hereunder or for a period of six (6) months thereafter solicit
       or entice away from any member of the Group or employ or otherwise engage
       any  person  who  now is or at any  time  during  or at the  date  of the
       termination of the said  employment have become an employee of any member
       of the Group and with whom the  Executive  had  contact  during  his said
       employment,  whether or not such  person  would  commit any breach of his
       contract of  employment  by reason of leaving the service of the relevant
       member of the Group,  provided that this Clause 9.4 shall not prevent the
       Executive  from  hiring any  employee of the Company or any member of the
       Group who responds to an advertisement  or other public  solicitations of
       employment.
<PAGE>

9.5    The Executive shall not at any time or for any purpose after  termination
       of his employment hereunder use either the English or Chinese name of the
       Company or any name  similar  thereto in  connection  with his own or any
       other  name in any  way  calculated  to  suggest  that he is or has  been
       connected with the Company  business,  nor in any way hold himself out as
       having had any such connection.

9.6    While the  restrictions  contained in this Clause 9 are considered by the
       parties to be reasonable  for the protection of the business and interest
       of the Group and in all the  circumstances  and do not work  harshly upon
       die  Executive  it is  recognized  that  restrictions  of the  nature  in
       question may fail for technical reasons  unforeseen and accordingly it is
       hereby  agreed  and  declared  that if any  such  restrictions  shall  be
       adjudged  to be void  as  going  beyond  what  is  reasonable  in all the
       circumstances for the protection of the interests of the member(s) of the
       Group but would be valid if part of the wording  thereof  were deleted or
       the periods  (if any)  thereof  were  reduced or the range of products or
       area dealt with thereby were reduced in scope, the said restriction shall
       apply with such  modifications  as may be  necessary to make it valid and
       effective.

<PAGE>

10.    INTELLECTUAL PROPERTY RIGHTS
       ----------------------------

10.1   The Company  (or any other  member of the Group as the case may be) shall
       be entitled free of charge to the sole ownership and exclusive use of any
       invention or  improvement  made or discovered by the Executive and of any
       copyright,  design right,  trade mark, service mark or trade name created
       or used by the  Executive  (hereinafter  referred  to as the  ntellectual
       property rights in the course of or for the purpose of providing services
       hereunder to the Company or any other member of the Group.

10.2   The Executive shall forthwith and from time to time both during and after
       the term of this  Agreement  and at the request and cost of the  Company,
       insofar as it is within his power,  do such acts and things and executive
       such  documents,  as may in the  opinion  of the  Company  be  reasonable
       necessary for obtaining letters patent,  registration or other protection
       for any such  intellectual  property  rights in any part of the world and
       shall  effect such  registration  and vest such  letters  patent or other
       protection  in the Company (or any other  member of the Group as the case
       may be) or its nominees. The Executive irrevocably authorizes the Company
       for the purposes  aforesaid in the name of the  Executive and execute any
       document or do anything on his behalf.  The  Executive  shall at the cost
       and  request of the  Company  render  all  reasonable  assistance  to the
       Company (or any other  member of the Group as the case may be) for and in
       connection with the purposes aforesaid.
<PAGE>

10.3   The Executive  shall not during or after the termination of the Agreement
       use to the  detriment  or prejudice of the Group or divulge to any person
       any confidential  information concerning the intellectual property rights
       of the Group which may have come to his knowledge.

11.    MISCELLANEOUS
       --------------

11.1   This Agreement shall be in substitution  for any subsisting  agreement or
       arrangement  (oral  or  otherwise)  made  between  the  Company  and  the
       Executive which shall be deemed to have been terminated by mutual consent
       as from the date on which the Executive  employment  under this Agreement
       commences.
11.2   The expiration or termination of this Agreement  howsoever  arising shall
       not operate to affect such of the provisions hereof as in accordance with
       their terms are expressed to operate or have effect thereafter.

11.3   In  the  event  of  any  variation  of the  remuneration  payable  to the
       Executive  hereunder  being made by consent of the parties  hereto,  such
       variation  shall not  constitute  a new  agreement  but  (subject  to any
       express  agreement  to the  contrary)  the  employment  of the  Executive
       hereunder  shall  continue  subject  in all  respects  to the  terms  and
       conditions of this Agreement with such variation as aforesaid.
<PAGE>

11.4   Each  notice,  demand or other  communication  given or made  under  this
       Agreement shall be in writing and delivered or sent to the relevant party
       at its address or facsimile  number set out below (or such other  address
       or facsimile  number as the  addressee has by five (5) days prior written
       notice specified to the other parties):

       To the Company:
       Suite 3108, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong

       To the Executive:
         Flat 28C, Yanville, 8 Tai Yuen Street, Hong Kong.

       Any notice,  demand or other  communication  so addressed to the relevant
       Party  shall be  deemed to have  been  delivered  (a) if given or made by
       letter,  by post,  two (2) clear business days after the date of posting,
       or by recorded delivery, when actually delivered to the relevant address;
       and (b) if given or made by facsimile, when dispatched subject to receipt
       of  machine-printed  confirmation of error-free  dispatch of the whole of
       the  notice,  demand  or  communication  to the  facsimile  number of the
       intended addressee.

11.5   If at any time any  Provision of this  Agreement  is or becomes  illegal,
       invalid or  unenforceable  in any  respect,  the  legality,  validity and
       enforceability of the remaining provisions of this Agreement shall not be
       affected or impaired thereby.
<PAGE>

11.6   No failure or delay by the Company in exercising any right,  power remedy
       under this  Agreement  shall operate as a waiver  thereof,  nor shall any
       single or partial  exercise of the same  preclude  any  further  exercise
       thereof or the  exercise  of any other  right,  power or remedy.  Without
       limiting  the  foregoing,  no waiver by the  Company of any breach by the
       Executive  of any  provision  in this  Agreement  shall be deemed to be a
       waiver of any  subsequent  breach of that or any other  provision in this
       Agreement.

11.7   This Agreement  shall be governed by and construed in accordance with the
       laws  Hong  Kong  and  the  parties  hereby  irrevocably  submit  to  the
       non-exclusive jurisdiction of the Hong Kong courts.

IN WITNESS  WHEREOF,  this Agreement has been executed on the day and year first
above written.

Signed by Andy Lin                  )
For and on behalf of                )
Intermost Corporation               )
In the presence of                  )

Signed by Zacky Sun                 )
                                    )
                                    )<PAGE>

                                                                    Exhibit 10.1

                                 SONOSITE, INC.

                             1998 Stock Option Plan
                 (as amended and restated on February 13, 2002)

1.   Purpose

     The purpose of the Plan is to enhance the long-term shareholder value of
the Corporation by offering opportunities to selected persons to participate in
the Corporation's growth and success, and to encourage them to remain in the
service of the Corporation and its subsidiaries and to acquire and maintain
stock ownership in the Corporation.

2.   Definitions

     The following terms have the corresponding meanings for purposes of the
Plan:

     "Change in Control" means

     (a) a "Board Change." For purposes of the Plan, a Board Change shall have
occurred if a majority of the seats (other than vacant seats) on the
Corporation's Board of Directors (the "Board") were to be occupied by
individuals who were neither (i) nominated by a majority of the Incumbent
Directors nor (ii) appointed by directors so nominated. An "Incumbent Director"
is a member of the Board who has been either (i) nominated by a majority of the
directors of the Corporation then in office or (ii) appointed by directors so
nominated, but excluding, for this purpose, any such individual whose initial
assumption of office occurs as a result of either an actual or threatened
election contest (as such terms are used in Rule 14a-11 of Regulation 14A
promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")) or other actual or threatened solicitation of proxies or consents by or
on behalf of a Person (as defined in Section 2(b)) other than the Board; or

     (b) The acquisition by any individual, entity or group (within the meaning
of Section 13(d) (3) or 14(d) (2) of the Exchange Act) (a "Person") of
"Beneficial Ownership" (within the meaning of Rule 13d3 promulgated under the
Exchange Act) of (i) 20% or more of either (A) the then outstanding shares of
common stock (the "Outstanding Corporation Common Stock") or (B) the combined
voting power of the then outstanding voting securities of the Corporation
entitled to vote generally in the election of directors (the "Outstanding
Corporation Voting Securities"), in the case of either (A) or (B) of this clause
(i), which acquisition is not approved in advance by a majority of the Incumbent
Directors or (ii) 33% or more of either (A) the Outstanding Corporation Common
Stock or (B) the Outstanding Corporation Voting Securities, in the case of
either (A) or (B) of this clause (ii), which acquisition is approved in advance
by a majority of the Incumbent Directors; provided, however, that the following
acquisitions shall not constitute a Change in Control: (x) any acquisition by
the Corporation, (y) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Corporation or any corporation controlled
by the Corporation, or (z) any acquisition by any corporation pursuant to a
reorganization, merger or consolidation, if,

<PAGE>

following such reorganization, merger or consolidation, the conditions described
in clauses (i), (ii) and (iii) of the following subsection (c) are satisfied; or

     (c) Approval by the shareholders of the Corporation of a reorganization,
merger or consolidation, in each case, unless, following such reorganization,
merger or consolidation, (i) more than 60% of, respectively, the then
outstanding shares of common stock of the corporation resulting from such
reorganization, merger or consolidation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors is then beneficially owned, directly or
indirectly, by all or substantially all of the individuals and entities who were
the beneficial owners, respectively, of the Outstanding Corporation Common Stock
and Outstanding Corporation Voting Securities immediately prior to such
reorganization, merger or consolidation in substantially the same proportions as
their ownership, immediately prior to such reorganization, merger or
consolidation, of the Outstanding Corporation Common Stock and Outstanding
Corporation Voting Securities, as the case may be, (ii) no Person (excluding the
Corporation, any employee benefit plan (or related trust) of the Corporation or
such corporation resulting from such reorganization, merger or consolidation and
any Person beneficially owning, immediately prior to such reorganization, merger
or consolidation, directly or indirectly, 33% or more of the Outstanding
Corporation Common Stock or Outstanding Corporation Voting Securities, as the
case may be) beneficially owns, directly or indirectly, 33% or more of,
respectively, the then outstanding shares of common stock of the corporation
resulting from such reorganization, merger or consolidation or the combined
voting power of the then outstanding voting securities of such corporation
entitled to vote generally in the election of directors, and (iii) at least a
majority of the members of the board of directors of the corporation resulting
from such reorganization, merger or consolidation were Incumbent Directors at
the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation; or

     (d) Approval by the shareholders of the Corporation of (i) a complete
liquidation or dissolution of the Corporation or (ii) the sale or other
disposition of all or substantially all of the assets of the Corporation, other
than to a corporation, with respect to which following such sale or other
disposition, (A) more than 60% of, respectively, the then outstanding shares of
common stock of such corporation and the combined voting power of the then
outstanding voting securities of such corporation entitled to vote generally in
the election of directors is then beneficially owned, directly or indirectly, by
all or substantially all of the individuals and entities who were the beneficial
owners, respectively, of the Outstanding Corporation Common Stock and
Outstanding Corporation Voting Securities immediately prior to such sale or
other disposition in substantially the same proportion as their ownership,
immediately prior to such sale or other disposition, of the Outstanding
Corporation Common Stock and Outstanding Corporation Voting Securities, as the
case may be, (B) no Person (excluding the Corporation and any employee benefit
plan (or related trust) of the Corporation or such corporation and any Person
beneficially owning, immediately prior to such sale or other disposition,
directly or indirectly, 33% or more of the Outstanding Corporation Common Stock
or Outstanding Corporation Voting Securities, as the case may be) beneficially
owns, directly or indirectly, 33% or more of, respectively, the then outstanding
shares of common stock of such corporation and the combined voting power of the
then outstanding voting securities of such corporation entitled to vote
generally in the election of directors, and (C) at least a majority of the
members of the board of directors of such corporation were approved by a
majority of the Incumbent Directors at the time of the execution of the initial
agreement or action of the Board providing for such sale or other disposition of
assets of the Corporation.

                                       2

<PAGE>

     "Code" means the Internal Revenue Code of 1986, as amended.

     "Committee" means the Committee provided for in Section 6, which shall
administer the Plan.

     "Common Stock" means common stock, par value $0.01 per share, of the
Corporation.

     "Corporation" means SonoSite, Inc., a Washington corporation.

     "Designated Beneficiary" means any person designated in writing by a
Participant as a legal recipient of payments due under an award in the event of
the Participant's death, or in the absence of such designation, the
Participant's estate. Such designation must be on file with the Corporation in
order to be effective but, unless the Participant has made an irrevocable
designation, may be changed from time to time by the Participant.

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

     "Early Retirement" means early retirement as that term is defined by the
Plan Administrator from time to time for purposes of the Plan.

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

     "Fair Market Value" of the Common Stock as of any trading day means the
average (rounded to the next highest cent in the case of fractions of a cent) of
the high and low sales prices of the Common Stock as reported on such trading
day by the Nasdaq National Market. If no sales price is reported for the Common
Stock on such trading day, then "Fair Market Value" shall mean the highest bid
price reported for the Common Stock on such trading day by the National
Quotation Bureau Incorporated or any similar nationally recognized organization.
The Committee, in its sole discretion, shall make all determinations required by
this definition.

     "Participant" means an employee, director, consultant or independent
contractor who has received an award under the Plan.

     "Payment Schedule" means the schedule adopted by the Committee in
accordance with Section 13 with respect to an Award Cycle to govern
determination of the Payment Value of a performance unit at the end of such
Award Cycle in accordance with Section 13.

     "Payment Value" means the value, expressed in dollars, of a performance
unit at the conclusion of an Award Cycle, determined in accordance with Section
13.

     "Plan" means this SonoSite, Inc. 1998 Option, Stock Appreciation Right,
Restricted Stock, Stock Grant and Performance Unit Plan.

     "Restricted Stock" means the shares of Common Stock referred to in Section
11.

                                       3

<PAGE>

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

     "Withholding Tax" means any tax, including any federal, state or local
income tax, required by any governmental entity to be withheld or otherwise
deducted and paid with respect to the transfer of shares of Common Stock as a
result of the exercise of a Nonqualified Stock Option or stock appreciation
right, the payment of performance units or the award of Restricted Stock or
stock grants.

3.   Stock Subject to the Plan

     There are reserved for issuance upon the exercise of options, for issuance
of Restricted Stock and stock grant awards and for issuance upon the payment of
performance units and stock appreciation rights under the Plan 2,000,000 shares
of Common Stock, of which no more than an aggregate of 333,333 shares may be
issued as Restricted Stock awards and stock grants under the Plan. Such shares
may be authorized and unissued shares of Common Stock or shares now held or
subsequently acquired by the Corporation. If any option or stock appreciation
right granted under the Plan shall expire or terminate for any reason
(including, without limitation, by reason of its surrender, pursuant to the
third paragraph of Section 9(b) or otherwise, or cancellation, in whole or in
part, pursuant to the provisions of Section 9(c) or otherwise or pursuant to
Section 10(f), or the substitution in place thereof of a new option or stock
appreciation right) without having been exercised in full, the shares subject
thereto shall again be available for the purposes of issuance under the Plan;
provided, however, that for purposes of Section 4, any such shares shall be
counted in accordance with the requirements of Section 162(m) of the Code. If
shares of Restricted Stock shall be forfeited and returned to the Corporation
pursuant to the provisions of Section 11, such shares shall again be available
for the purposes of issuance under the Plan. In no event shall shares of Common
Stock which, under the Plan, are authorized to be used in payment of performance
unit awards be deemed to be unavailable for purposes of the Plan until such
shares have been issued in payment thereof in accordance with the provisions of
Section 13(g). Stock appreciation rights and performance unit awards providing
for payments only in cash are not subject to the overall limitations referred to
above.

4.   Limitations

     Subject to adjustment from time to time as provided in Section 17, no more
than 250,000 shares of Common Stock may be made subject to awards under the Plan
to any individual in the aggregate in any one fiscal year of the Corporation.

5.   Administration

     The Plan shall be administered by the Committee. Subject to the express
provisions of the Plan, the Committee shall have plenary authority, in its
discretion, to determine the individuals to whom, and the time or times at
which, performance units or Restricted Stock shall be awarded and stock
appreciation rights or options shall be granted (including, without limitation,
whether such options shall be Incentive Stock Options or Nonqualified Stock
Options or a combination thereof, as such terms are defined in Section 9(a)) and
the number of units and/or shares to be covered by each such award or grant.
Provided, however, that the Chief Executive Officer shall have the limited
authority

                                       4

<PAGE>

to grant Incentive Stock Options or Nonqualified Stock Options or a combination
thereof, in an amount not to exceed 25,000 shares per individual per calendar
year, to attract and retain nonofficer employees. In making such determinations,
the Committee may take into account the nature of the services rendered by the
respective Participants, their present and potential contributions to the
Corporation's success and such other factors as the Committee in its discretion
may deem relevant. Subject to the express provisions of the Plan, the Committee
shall have plenary authority to interpret the Plan, to prescribe, amend and
rescind rules and regulations relating to it, to determine the terms and
provisions of Restricted Stock, performance unit, stock appreciation right and
option agreements (which need not be identical) and to make all other
determinations necessary or advisable for the administration of the Plan. The
Committee's determinations of the matters referred to in this Section 5 shall be
conclusive. The Corporation intends that administration of the Plan comply in
all respects with Section 16(b) of the Exchange Act and Section 162(m) of the
Code, and the rules and regulations promulgated thereunder. Notwithstanding
anything in the Plan to the contrary, the Board, in its absolute discretion, may
bifurcate the Plan so as to restrict, limit or condition the use of any
provision of the Plan to persons who are subject to Section 16 of the Exchange
Act without so limiting or conditioning the Plan with respect to other persons.

6.   The Committee

     The Board shall designate a Committee of members of the Board which shall
meet the requirements of Section 16(b) of the Exchange Act and Section 162(m) of
the Code. Currently, the Committee shall consist solely of two or more members
of the Board who are outside, non-employee directors. If at any time an
insufficient number of outside, non-employee directors is available to serve on
such Committee, other directors may serve on the Committee; however, during such
time, no options, stock appreciation rights or Restricted Stock shall be granted
under the Plan to any person if the granting of such options, stock appreciation
rights or Restricted Stock would not meet the requirements of Section 16(b) of
the Exchange Act or Section 162(m) of the Code.

     For purposes of this Section 6, a "non-employee" is a person who meets the
definition of "non-employee director" as set forth in the rules and regulations
promulgated under Section 16(b) of the Exchange Act or any successor rule or
regulatory requirement. For purposes of this Section 6, an "outside director" is
a person who meets the definition of "outside director" as set forth in the
rules and regulations promulgated under Rule 162(m) of the Code or any successor
rule or regulatory requirement. The Committee shall be appointed by the Board,
which may from time to time appoint members of the Committee in substitution for
members previously appointed and may fill vacancies, however caused, in the
Committee. The Committee shall select one of its members as its Chairman and
shall hold its meetings at such times and places as it may determine. A majority
of its members shall constitute a quorum. All determinations of the Committee
shall be made by not less than a majority of its members. Any decision or
determination reduced to writing and signed by all the members shall be fully as
effective as if it had been made by a majority vote at a meeting duly called and
held. The Committee may appoint a secretary, shall keep minutes of its meetings
and shall make such rules and regulations for the conduct of its business as it
shall deem advisable.

7.   Eligibility

     The Committee may award performance units and Restricted Stock and grant
options and stock appreciation rights only to employees, directors, consultants
or independent contractors (which term as used herein includes officers) of the
Corporation and of its present and future subsidiary

                                       5

<PAGE>

corporations ("subsidiaries"). Any person eligible under the Plan may receive
one or more awards of performance units or Restricted Stock or one or more
grants of options or stock appreciation rights, or any combination thereof, as
the Committee shall from time to time determine, and such determinations may be
different as to different Participants and may vary as to different awards and
grants.

8.   Performance Goals

     Awards under the Plan to persons subject to or anticipated to be subject to
Section 162(m) of the Code shall be based on (i) individual targets set by the
Committee in writing with respect to the relevant Performance Period (as defined
below) and (ii) the Performance Goal or Goals (as defined below) for the
Performance Period. In no event, however, shall any award to a Participant
exceed (i) 250,000 shares in a fiscal year (subject to adjustment from time to
time as provided in Section 17) or (ii) 200% of the annualized highest rate of
base salary paid to any executive of the Company with respect to 2000 as
reported in the Company's proxy statement for the 2001 annual meeting of
shareholders with respect to a Performance Period. The Committee may reduce an
individual's maximum award amount calculated under the preceding formula in its
sole discretion.

     A "Performance Period" shall be, with respect to a participant, any period
not exceeding 36 months, as determined by the Committee in its sole discretion.
The Committee may establish different Performance Periods for different
Participants, and the Committee may establish concurrent or overlapping
Performance Periods. The "Performance Goals" may include one or more of the
following: (i) earnings, (ii) earnings per share, (iii) revenue, (iv) expenses,
(v) net interest margin, and (vi) return on equity, each with respect to the
Corporation and/or any operating unit or units of the Corporation, as determined
by the Committee in its sole discretion. The Performance Goals may be adjusted
in accordance with factors adopted by the Committee with respect to the
Performance Period that relate to unusual items. The selection and adjustment of
applicable Performance Goals, and the establishment of targets, shall be done in
compliance with Section 162(m) of the Code. No award shall be made under the
Plan unless and until the Committee certifies in writing the extent to which the
Performance Goal or Goals applicable to a Participant have been achieved or
exceeded.

     The terms of this Section 8 shall not apply to grants of stock options or
stock appreciation rights under the Plan.

9.   Option Grants

     (a) The Committee is authorized under the Plan, in its discretion, to issue
options as "Incentive Stock Options" (as defined in Section 422 of the Code) or
as "Nonqualified Stock Options" (all other options granted hereunder) and the
options shall be designated as Incentive Stock Options or Nonqualified Stock
Options in the applicable option agreement. Unless approved by the holders of a
majority of the shares of the Corporation present in person or by proxy and
entitled to vote thereon at a duly convened meeting of shareholders, the
Committee shall not (a) grant any options under the terms of the Plan with a
purchase price that is less than 100% of the Fair Market Value of the Common
Stock on the date of grant or (b) reduce the purchase price of any option
outstanding or to be granted in the future under the terms of the Plan; any
amendment or repeal of the provisions of this sentence requires the affirmative
vote of the holders of a majority of shares of the Corporation present at a duly
convened shareholders' meeting in person or by proxy and entitled to

                                       6

<PAGE>

vote thereon. Notwithstanding the previous sentence, any Nonqualified Stock
Option may provide that the purchase price be equal to the average Fair Market
Value of the Common Stock over any continuous period of trading days beginning
and ending no more than 30 business days before or after the date such option is
granted.

     (b) The Committee shall be authorized in its discretion to prescribe in the
option grant the installments, if any, in which an option granted under the Plan
shall become exercisable, provided that no option shall be exercisable prior to
date that is the six months following the date of grant thereof except as
provided in Sections 9(c), (d), (g), (h) and (i) or except as the Committee
otherwise determines. In no case may an option be exercised as to less than 50
shares at any one time (or the remaining shares covered by the option if less
than 50) during the term of the option. The Committee shall also be authorized
to establish the manner of the exercise of an option. The term of each option
shall be not more than 10 years from the date of grant thereof.

     In general, upon exercise, the option price is to be paid in full in cash;
however, the Committee can determine at the time the option is granted for
Incentive Stock Options or at any time prior to exercise for Nonqualified Stock
Options, that additional forms of payment will be permitted. To the extent
permitted by the Committee and applicable laws and regulations (including, but
not limited to, federal tax and securities laws and regulations and state
corporate law), an option may be exercised (i) in Common Stock owned by the
option holder having a Fair Market Value on the date of exercise equal to the
aggregate option price, or in a combination of cash and stock; provided,
however, that payment in stock shall not be made unless such stock shall have
been owned by the option holder for a period of at least six months prior
thereto (or any shorter period necessary to avoid a charge to the Corporation's
earnings for financial reporting purposes); or (ii) by delivery of a properly
executed exercise notice, together with irrevocable instructions to a broker
designated by the Corporation, all in accordance with the regulations of the
Federal Reserve Board, to deliver promptly to the Corporation the amount of sale
or loan proceeds to pay the exercise price and any federal, state or local
withholding tax obligations that may arise in connection with the exercise.

     In lieu of requiring an option holder to pay cash or stock and to receive
in turn certificates for shares of Common Stock upon the exercise of a
Nonqualified Stock Option, if the option so provides, the Committee may elect to
require the option holder to surrender the option to the Corporation for
cancellation as to all or any portion of the number of shares covered by the
intended exercise and receive in exchange for such surrender a payment, at the
election of the Committee, in cash, in shares of Common Stock or in a
combination of cash and shares of Common Stock, equivalent to the appreciated
value of the shares covered by the option surrendered for cancellation. Such
appreciated value shall be the difference between the option price of such
shares (as adjusted pursuant to Section 17) and the Fair Market Value of such
shares, which shall for this purpose be determined by the Committee taking into
consideration all relevant factors, but which shall not be less than the Fair
Market Value of such shares on the date on which the option holder's notice of
exercise is received by the Corporation. Upon delivery to the Corporation of a
notice of exercise of option, the Committee may avail itself of its right to
require the option holder to surrender the option to the Corporation for
cancellation as to shares covered by such intended exercise. The Committee's
right of election shall expire, if not exercised, at the close of business on
the fifth business day following the delivery to the Corporation of such notice.
Should the Committee not exercise such right of election, the delivery of the
aforesaid notice of exercise shall constitute an exercise by the option holder
of the option to the extent therein set forth, and payment for the shares
covered by such exercise shall become due immediately.

                                       7

<PAGE>

     (c) In the event that a Participant's services for the Corporation or one
of its subsidiaries shall cease and the termination of such individual's service
is for cause, the option shall automatically terminate upon first notification
to the option holder of such termination of services, unless the Committee
determines otherwise, and such option shall automatically terminate upon the
date of such termination of services for all shares which were not purchasable
upon such date. For purposes of this Section 9(c), "cause" is defined as a
determination by the Committee that the option holder (i) has committed a
felony, (ii) has engaged in an act or acts of deliberate and intentional
dishonesty resulting or intended to result directly or indirectly in improper
material gain to or personal enrichment of the individual at the Corporation's
expense, or (iii) has willfully disobeyed the Corporation's appropriate rules,
instructions or orders, and such willful disobeyance has continued for a period
of 10 days following notice thereof from the Corporation.

     In the event of the termination of the services of the holder of an option
because of Retirement, Early Retirement at the Corporation's request or
Disability, he may (unless such option shall have been previously terminated
pursuant to the provisions of the preceding paragraph or unless otherwise
provided in his option grant) exercise such option at any time prior to the
expiration of the option, (i) in the event of Disability or Retirement, to the
extent of the number of shares covered by such option, whether or not such
shares had become purchasable by him at the date of the termination of his
services and (ii) in the event of Early Retirement at the Corporation's request,
to the extent of the number of shares covered by such option at such time or
times as such option becomes purchasable by him in accordance with its terms.
(Although the option may be exercised after Retirement, Early Retirement at the
Corporation's request or Disability, under Section 422 of the Code, if the
option has been designated as an Incentive Stock Option, it must be exercised
within three months after the date of Retirement or Early Retirement or one year
after the termination of employment due to Disability in order to qualify for
incentive stock option tax treatment. For purposes of the preceding sentence,
Disability shall mean "disability" as that term is defined for purposes of
Section 422 of the Code.)

     In the event of the death of an individual to whom an option has been
granted under the Plan, while he is performing services for the Corporation or a
subsidiary, the option theretofore granted to him (unless his option shall have
been previously terminated pursuant to the provisions of this Section 9(c) or
unless otherwise provided in his option grant) may, subject to the limitations
described in Section 9(f), be exercised by his Designated Beneficiary, by his
legatee or legatees of the option under his last will, or by his personal
representatives or distributees, at any time within a period of one year after
his death, but not after the expiration of the option, to the extent of the
remaining shares covered by his option whether or not such shares had become
purchasable by such an individual at the date of his death. In the event of the
death of an individual (i) during the 30-day period, or the 90-day period, as
applicable, following termination of his services or (ii) following termination
of his services by reason of Retirement, Early Retirement at the Corporation's
request or Disability, then the option (if not previously terminated pursuant to
the provisions of this Section 9(c)) may be exercised during the one-year period
following termination of his services or during the remaining term of the
option, respectively, but not after the expiration of the option, by his
Designated Beneficiary, by his legatee under his last will, or by his personal
representative or distributee, but only to the extent of the number of shares
purchasable by such Participant pursuant to the provisions of Section 9(d) at
the date of termination of his services.

                                       8

<PAGE>

     In the event of the termination of the services of the holder of an option,
other than by reason of Retirement, Early Retirement at the Corporation's
request, Disability or death, he may (unless his option shall have been
previously terminated pursuant to the provisions of this Section 9(c) or unless
otherwise provided in his option grant) exercise his option at any time within
30 days after such termination, if such option was granted prior to February 8,
2001, or within 90 days after such termination, if such option was granted on or
after February 8, 2001, or such longer period as determined by the Committee,
but not after the expiration of the option, to the extent of the number of
shares covered by his option which were purchasable by him at the date of the
termination of his services, and such option shall automatically terminate upon
the date of such termination of services for all shares which were not
purchasable upon such date.

     (d) Notwithstanding the foregoing provisions, the Committee may determine,
in its sole discretion, in the case of any termination of services, that the
holder of an option may exercise such option to the extent of some or all of the
remaining shares covered thereby whether or not such shares had become
purchasable by such an individual at the date of the termination of his services
and may exercise such option at any time prior to the expiration of the original
term of the option, except that such extension shall not cause any Incentive
Stock Option to fail to continue to qualify as an Incentive Stock Option without
the consent of the option holder. Options granted under the Plan shall not be
affected by any change of relationship with the Corporation so long as the
holder continues to be an employee, consultant or independent contractor of the
Corporation or of a subsidiary; however, a change in a participant's status from
an employee to a nonemployee (e.g., consultant or independent contractor) shall
result in the termination of an outstanding Incentive Stock Option held by such
participant in accordance with Section 9(c). The Committee, in its absolute
discretion, may determine all questions of whether particular leaves of absence
constitute a termination of services; provided, however, that with respect to
Incentive Stock Options, such determination shall be subject to any requirements
contained in the Code. Nothing in the Plan or in any option granted pursuant to
the Plan shall confer on any individual any right to continue in the employ or
other service of the Corporation or any other person or interfere in any way
with the right of the Corporation or any other person to terminate his
employment or other services at any time.

     (e) The date of grant of an option pursuant to the Plan shall be the date
specified by the Committee at the time it grants such option, provided that such
date shall not be prior to the date of such action by the Committee and that the
price shall be determined in accordance with Section 9(a) on such date. The
Committee shall promptly notify a grantee of an award and a written option grant
shall promptly be duly executed and delivered by or on behalf of the
Corporation.

     (f) In the event an optionee is granted Incentive Stock Options that in the
aggregate entitle the optionee to purchase, in the first year such options
become exercisable (whether under their original terms or as a result of the
occurrence of an Acceleration Event, as defined below), Common Stock of the
Corporation, any parent corporation or any subsidiary of the Corporation having
a Fair Market Value (determined as of the time such options are granted) in
excess of $100,000, such portion in excess of $100,000 shall be treated as a
Nonqualified Stock Option. Such limitation shall not apply if the Internal
Revenue Service publicly rules, issues a private ruling to the Corporation, any
optionee of the Corporation or any legatee, personal representative or
distributee of an optionee or states in proposed, temporary or final regulations
that provisions which allow the full exercise of an optionee's Incentive Stock
Options upon the occurrence of the relevant Acceleration Event do not violate
Section 422(d) of the Code. An "Acceleration Event" means (i) a determination of
the

                                       9

<PAGE>

Committee to allow an optionee to exercise his options in full upon termination
of his employment or other service as provided in Section 9(c) or (d), (ii) the
death of an optionee while he is employed by the Corporation or a subsidiary,
(iii) any Change in Control, or (iv) the optionee's termination of employment or
other service under circumstances that will allow him to exercise options not
otherwise exercisable pursuant to Section 9(i).

     (g) Notwithstanding any contrary waiting period, installment period or
other limitation or restriction in any option agreement or in the Plan, in the
event of a Change in Control, each option outstanding under the Plan shall
thereupon become exercisable at any time during the remaining term of the
option, but not after the term of the option, to the extent of the number of
shares covered by the option, whether or not such shares had become purchasable
by the Participant thereunder immediately prior to such Change in Control.

     (h) Anything in the Plan to the contrary notwithstanding, during the 90-day
period from and after a Change in Control (x) an optionee (other than an
optionee who initiated a Change in Control in a capacity other than as an
officer or a director of the Corporation) who is an officer or a director of the
Corporation (within the meaning of Section 16 of the Exchange Act and the rules
and regulations promulgated thereunder) with respect to an option that was
granted at least six months prior to the date of exercise pursuant to this
sentence and is unaccompanied by a stock appreciation right and (y) any other
optionee who is not an officer or a director with respect to an option that is
unaccompanied by a stock appreciation right shall, unless the Committee shall
determine otherwise at the time of grant, have the right, in lieu of the payment
of the full purchase price of the shares of Common Stock being purchased under
the option and by giving written notice to the Corporation, to elect (within
such 90-day period) to surrender all or part of the option to the Corporation
and to receive in cash an amount equal to the amount by which the amount
determined pursuant to Section 9(d) hereof on the date of exercise (determined
as if the optionee had exercised a limited stock appreciation right on such
date) shall exceed the purchase price per share under the option multiplied by
the number of shares of Common Stock granted under the stock option as to which
the right granted by this sentence shall have been exercised. Such written
notice shall specify the optionee's election to purchase shares granted under
the option or to receive the cash payment referred to in the immediately
preceding sentence.

     (i) Notwithstanding the foregoing provisions, the optionee's employment or
other contract with the Corporation may provide that upon termination of his
employment or other services for other than cause or for "good reason" (as
defined in his contract), all stock options shall become immediately
exercisable.

10.  Stock Appreciation Rights

     (a) Stock appreciation rights may be paid upon exercise in cash, Common
Stock or any combination thereof, as the Committee in its sole discretion may
determine. A stock appreciation right is an incentive award that permits the
holder to receive (per share covered thereby) an amount equal to the amount by
which the Fair Market Value of a share of Common Stock on the date of exercise
exceeds the Fair Market Value of such share on the date the stock appreciation
right was granted.

     (b) The Committee may grant a stock appreciation right separately or in
tandem with a related option and may grant both "general" and "limited" stock
appreciation rights. A general stock

                                       10

<PAGE>

appreciation right granted in tandem with a related option will generally have
the same terms and provisions as the related option with respect to
exercisability, and the base price of such a stock appreciation right will
generally be equal to the option price under the related option. Upon the
exercise of a tandem stock appreciation right, the related option will be deemed
to be exercised for all purposes of the Plan and vice versa.

     (c) A general stock appreciation right granted separately and not in tandem
with any option will have such terms as the Committee may determine. Unless
approved by the holders of a majority of the shares of the Corporation present
in person or by proxy and entitled to vote thereon at a duly convened meeting of
shareholders, the Committee shall not (a) grant any stand-alone stock
appreciation rights under the terms of the Plan with a base price that is less
than 100% of the Fair Market Value of the Common Stock on the date of grant,
determined as in Section 9(a) in the case of a Nonqualified Stock Option, or (b)
reduce the base price of any stock appreciation right outstanding or to be
granted in the future under the terms of the Plan; any amendment or repeal of
the provisions of this sentence requires the affirmative vote of the holders of
a majority of shares of the Corporation present at a duly convened shareholders'
meeting in person or by proxy and entitled to vote thereon. The term of a
stand-alone stock appreciation right may not be greater than 10 years from the
date it was granted.

     (d) A limited stock appreciation right may be exercised only during the 90
calendar days immediately following the date of a Change in Control. For the
purpose of determining the amount payable upon exercise of a limited stock
appreciation right, the fair market value of the Common Stock will be equal to
the higher of (x) the highest Fair Market Value of the Common Stock during the
90-day period ending on the date the limited stock appreciation right is
exercised and (y) whichever of the following is applicable:

         (i) the highest per share price paid in any tender or exchange offer
which is in effect at any time during the 90 calendar days preceding the
exercise of the limited right;

         (ii) the fixed or formula price for the acquisition of shares of Common
Stock in a merger or similar agreement approved by the Corporation's
shareholders or Board, if such price is determinable on the date of exercise;
and

         (iii) the highest price per share paid to any shareholder of the
Corporation in a transaction or group of transactions giving rise to the
exercisability of the limited right. In no event, however, may the holder of a
limited stock appreciation right granted in tandem with a related Incentive
Stock Option receive an amount in excess of the maximum amount which will enable
the option to continue to qualify as an Incentive Stock Option without the
consent of the Participant.

     (e) Limited stock appreciation rights are payable only in cash. General
stand-alone stock appreciation rights are payable only in cash, unless the
Committee provides otherwise at the time of grant. General stock appreciation
rights granted in tandem with a related option are payable in cash, Common Stock
or any combination thereof, as determined in the sole discretion of the
Committee. Notwithstanding the foregoing, and to the extent required by Rule
16b-3 promulgated under Section 16(b) of the Exchange Act, a payment, in whole
or in part, of cash upon exercise of a stock appreciation right may be made to
an optionee who is an officer or director of the Corporation (within the meaning
of Section 16 of the Exchange Act and the rules and regulations promulgated
thereunder) only if (i) the right was granted at least six months prior to the
date of exercise (except

                                       11

<PAGE>

that in the event of the death or Disability of the optionee prior to the
expiration of the six-month period, this limitation shall not apply) and (ii)
the optionee's election to receive cash in settlement of the right and the
exercise of the right are made (a) during the period beginning on the third
business day following the date of release for publication of the quarterly or
annual summary statements of sales and earnings of the Corporation and ending on
the twelfth business day following such date, (b) six months prior to the date
the stock appreciation right becomes taxable or (c) during the 90-day period
from and after a Change in Control.

     (f) Unless otherwise provided by the Committee at the time of grant, the
provisions of Section 9 relating to the termination of the service of a holder
of an option shall apply equally, to the extent applicable, to the holder of a
stock appreciation right.

11.  Restricted Stock Awards

     (a) The consideration to be received for shares of Restricted Stock issued
hereunder out of authorized but unissued shares or shares subsequently acquired
by the Corporation shall be equal to cash in an amount equal to the par value
thereof and past services for the Corporation. The recipient of Restricted Stock
shall be recorded as a shareholder of the Corporation, at which time the
Corporation, at its discretion, may either issue a Restricted Stock Certificate
or make a book entry credit in the Corporation's stock ledger to evidence the
award of such Restricted Stock, and the Participant shall have, subject to the
provisions hereof, all the rights of a shareholder with respect to such shares
and receive all dividends or other distributions made or paid with respect to
such shares; provided, that the shares themselves, and any new, additional or
different shares or securities which the recipient may be entitled to receive
with respect to such shares by virtue of a stock split or stock dividend or any
other change in the corporate or capital structure of the Corporation, shall be
subject to the restrictions hereinafter described.

     (b) During a period of months following the date of grant, as determined by
the Committee, which shall in no event be less than six months (the "Restricted
Period"), the Restricted Stock or any rights thereto may not be sold, assigned,
transferred, pledged, hypothecated or otherwise encumbered or disposed of by the
recipient, except in the event of death or the transfer thereof to the
Corporation under the provisions of the next succeeding paragraph. In the event
of the death or Retirement of the recipient during the Restricted Period, such
restrictions shall immediately lapse, and the recipient or, in the case of the
recipient's death, his Designated Beneficiary, the legatee under his last will
or his personal representative or distributee shall be free to transfer,
encumber or otherwise dispose of the Restricted Stock. In the event of the Early
Retirement at the Corporation's request of the recipient during the Restricted
Period, such restrictions shall continue until they lapse in accordance with the
terms of the grant.

     Except as provided in Section 11(c), in the event that, during the
Restricted Period, the service of the recipient by the Corporation or one of its
subsidiaries is terminated for any reason (including termination with or without
cause by the Corporation or such subsidiary or resignation by the recipient),
other than termination of service due to the Retirement, Early Retirement at the
Corporation's request or death of the recipient, then the shares of Restricted
Stock held by him shall be forfeited to the Corporation and the recipient shall
immediately transfer and return to the Corporation the certificates, if any have
been issued to him, representing all the Restricted Stock and the recipient's
rights as a shareholder with respect to the Restricted Stock shall cease,
effective with such termination of service. Notwithstanding the foregoing, the
recipient's service contract with the

                                       12

<PAGE>

Corporation may provide that upon termination of his service for other than
cause or for good reason, all Restricted Stock shall cease to be subject to such
restrictions.

     A recipient's rights to Restricted Stock may not be assigned or transferred
except upon death by will, descent or distribution. In the event of any attempt
by the recipient to sell, exchange, transfer, pledge or otherwise dispose of
shares of Restricted Stock in violation of the provisions hereof, such shares
shall be forfeited to the Corporation.

     (c) Notwithstanding the Restricted Period contained in the grant of
Restricted Stock, in the event of a Change in Control (as defined in Section 2),
all restrictions on shares of Restricted Stock shall immediately lapse and such
Restricted Shares shall become immediately transferable and nonforfeitable.

     (d) Notwithstanding anything contained in the Plan to the contrary, the
Committee may determine, in its sole discretion, in the case of any termination
of a recipient's service, that the restrictions on some or all of the shares of
Restricted Stock awarded to a recipient shall immediately lapse and such
Restricted Shares shall become immediately transferable and nonforfeitable.

12.  Stock Grant Awards

     (a) Each nonofficer employee of the Corporation is eligible to receive a
grant of Common Stock as a stock bonus (i) at the end of each fiscal year or
(ii) if the employee terminates prior to year-end, at the time of termination.
The number of shares to be granted shall be determined by setting a percentage
of the employee's salary at the fiscal year-end or time of termination and
dividing that amount by the price per share of the Common Stock or by any other
method determined by the Committee. For this purpose, the price for the Common
Stock shall be the Fair Market Value on the date of grant and each grant shall
be for full shares only; any fractional shares resulting from this calculation
shall be disregarded. The consideration to be received for shares of Common
Stock issued under this Section 12(a) shall be cash in an amount equal to the
par value thereof and past services for the Corporation.

     (b) In addition, each recipient of a stock grant under Section 12(a) may be
granted a cash award at the time the shares are issued in an amount sufficient
to offset the recipient's estimated tax liabilities arising from the issuance of
the Common Stock under Section 12(a).

     (c) Determinations regarding eligibility for grants under Section 12(a),
the amount of individual grants of Common Stock, the amount of the cash offset
award, the interpretation of Section 12 and all other matters relating to the
administration of Section 12 are within the sole discretion of the Committee.

13.  Performance Unit Awards

     (a) Performance units which are awarded to a Participant shall have a "unit
base value," expressed in dollars, determined by the Committee on the day on
which the award is granted and generally determined to be the Fair Market Value
of the Common Stock on such day. The performance units will also have a Payment
Value at the end of the applicable Performance Period contingent upon the
attainment of the Performance Goals during the Performance Period.

                                       13

<PAGE>

     (b) In determining the number of performance units to be awarded, the
Committee shall take into account a person's responsibility level, performance,
potential, cash compensation level and such other considerations as it deems
appropriate.

     (c) Except as otherwise provided in Section 13(l), an award of performance
units to a Participant shall terminate for all purposes if the services of the
Participant for the Corporation or one of its subsidiaries ceases during the
Performance Period, except in the case of death, Disability or Early Retirement
at the request of the Corporation, in which case (and provided that the
Participant at the time of death, Disability or Early Retirement as aforesaid
shall have maintained his employment or other qualifying relationship with the
Corporation or one of its subsidiaries continuously during the period commencing
on the date the award was granted and ending on the first anniversary thereof)
the Participant will be entitled to payment (such payment to be made in
accordance with the provisions of Section 13(d)) of the same portion of the
Payment Value of the award the Participant would otherwise have been paid (such
Payment Value, if any, to be determined at the conclusion of the applicable
Performance Period in accordance with the provisions of Sections 13(a) and 13(e)
unless otherwise provided in Section 13(l)) as the portion of the Performance
Period during which the Participant maintained such relationship with the
Corporation bears to the full Performance Period. Under particular
circumstances, the Committee may make other determinations with respect to
Participants whose services do not meet the foregoing requirements, including
the waiver of any of the requirements of this subsection (c) relating to periods
of continuous service.

     (d) Except as otherwise provided in Section 13(l), unless the Committee
otherwise determines, no payment with respect to performance units will be made
to a Participant prior to the end of such Participant's Performance Period;
provided, however, that if a Participant should die during an Performance Period
and his award shall not have been terminated hereunder prior to his death, such
Participant's Designated Beneficiary, the legatee under the Participant's last
will, his personal representative or his distributee may elect instead, subject
to the approval of the Committee, to have the pro rata portion of the
Participant's Payment Value determined by the Committee as of the end of the
year during which such Participant's death occurred, based upon application of
the Payment Schedule to the part of the Performance Period which shall have
elapsed (for such purpose, the cumulative growth rate or improvement achieved in
the applicable performance measures to the end of the fiscal year in which death
occurs will be assumed to continue for the Performance Period), in which event
such pro rata portion shall be paid in cash or Common Stock, as provided in
Section 13(g), as soon as practicable following such year (or in such number of
installments as shall have been requested by the Participant and approved by the
Committee) to such Participant's Designated Beneficiary or legal representative.

     (e) Except as otherwise provided in Section 13(d) in the case of death, or
in Section 13(l) in the case of a Change in Control, a Participant's interest in
any performance units awarded to him shall mature on the last day of the
Performance Period for such award. The Payment Value of a performance unit shall
be the dollar amount calculated on the basis of the Payment Schedule applicable
to such Performance Period.

     (f) The total amount of Payment Value due a Participant at the conclusion
of an Performance Period shall be paid on such date following the conclusion of
such Performance Period as the Committee shall designate, except as specifically
otherwise provided in the Plan; provided, however, that the Committee shall have
authority, if it deems appropriate, to defer payment (in cash or in stock or

                                       14

<PAGE>

both in specified percentages) of the Payment Value due a Participant if the
Participant shall request the Committee to do so at any time prior to the last
year of the Performance Period for such award. In respect of awards made or to
be made in one or more deferred installments in cash, interest shall be credited
semiannually on each such award at a rate to be determined semiannually by the
Committee, but in no event shall such rate be less than the average rate on
10-year AAA new industrial corporate bonds during each such semiannual period as
calculated on the basis of the average of such rates for each calendar week
ending during the period January 1 through June 30 and July 1 through December
31; provided that awards made during any such six-month period shall be credited
on the basis of the average rate for that period; and provided further that
installments paid during any six-month period shall be credited with interest on
the basis of the average rate for the next preceding six-month period. in each
case adjusted for the number of days such award was to be credited. Unless paid
to the recipient of such award at the time credited, interest at the foregoing
rate shall be credited on the interest so credited until so paid. The foregoing
minimum interest rate for any award that is payable in one or more deferred
installments under the Plan may not be modified without the prior written
consent of the Participant.

     Whenever an award is made in one or more deferred installments in Common
Stock, the Committee may determine that there shall be credited on such award an
amount equivalent to the dividends which would have been paid with respect to
such shares of Common Stock if they had been issued and outstanding. Such
dividend equivalents shall be credited on the dividend record dates until
certificates for such shares shall have been delivered to the recipient of such
award or until such earlier date as the Committee may determine.

     Such interest and dividend equivalents shall be paid to the recipient of
any such award in cash (or in property if the related dividend shall have been
in property) at such time or times during the deferred period of such award or
at the same time as the cash or shares of Common Stock to which such interest
and dividend equivalents apply, all as the Committee shall determine. The
Committee may also determine that any such dividend equivalents may be used to
purchase additional shares of outstanding Common Stock (such shares to be valued
for such purpose at Fair Market Value on the dividend record date) to be added
to the shares of Common Stock covered by such award and held subject to the same
terms and conditions, including provisions relating to the payment of amounts
equivalent to dividends thereon.

     (g) Except as otherwise provided in Section 13(l), the Committee in its
discretion may determine at the time of grant or at the end of the Performance
Period as to each Participant whether the payment of the Payment Value due a
Participant shall be made (i) in cash, (ii) in shares of Common Stock (valued at
the average Fair Market Value of the Common Stock for the five trading days
immediately preceding the date of payment), or (iii) in a combination of cash
and shares of Common Stock so valued.

     (h) If the payment of any award shall be deferred until after the
termination of the services of the recipient by the Corporation or one of its
subsidiaries, the cash or Common Stock covered by such award, together with any
deferred interest or dividend equivalents thereon, shall be delivered in not
more than 20 annual installments, commencing not later than the January 31 after
such termination of services (or such other date as the Committee from time to
time shall determine), all as the Committee may determine. If the payment of an
award under the Plan is deferred, such payment thereafter may be accelerated so
that such payment shall be made immediately or at such

                                       15

<PAGE>

earlier time or in such less number of installments, in each case as the
Committee may from time to time determine, but only with the prior written
consent of the Participant.

     (i) A Participant to whom any award has been made shall not have any
interest beyond that of a general creditor of the Corporation in the cash or
Common Stock awarded, or in any interest or dividend equivalents credited to him
until the cash has been paid to him or the certificates for the Common Stock
have been delivered to him, as the case may be, in accordance with the
provisions of the Plan.

     (j) In the case of the death of the recipient of an award, before or after
the termination of his services, any unpaid installments of such deferred award
shall pass to the Designated Beneficiary, the legatee under the Participant's
last will, his personal representative or his distributee. Unpaid installments
of a deferred award shall be paid either in the same installments as originally
provided or otherwise as the Committee may determine in individual cases.

     (k) Subject to the provisions of Section 13(l), in any case in which
payment of an award is to be made in Common Stock, the Corporation shall have
the right, in lieu of delivering the certificate or certificates for any or all
of the stock which would otherwise be deliverable to the Participant pursuant to
the Plan, to pay to such Participant on the date on which such certificate or
certificates would otherwise be deliverable an amount in cash equal to the Fair
Market Value of such Common Stock on such date or dates as may be determined by
the Committee, but not more than five trading days prior to such date, all as
the Committee may determine in individual cases.

     (l) Anything herein to the contrary notwithstanding, in the event of a
Change in Control, with respect to any unmatured performance unit awards which a
Participant held immediately prior to such Change in Control, the Participant
will be entitled to immediate payment in cash (unless payment of such
performance unit awards shall be deferred in accordance with Section 13(f), in
which event the amount provided to be payable by this Section 13(l) shall also
be so deferred) in an amount equal to the value of such units determined in
accordance with the Payment Schedule applicable to such awards, based on the
cumulative, growth rate in the Corporation's reported earnings per share for all
previously elapsed fiscal years, if any, included in the Performance Periods for
such awards and the actual or presumed cumulative growth rate in the earnings
per share for the balance of each Performance Period, determined as follows: (i)
if such Change in Control occurs prior to the completion of the first fiscal
year of an Performance Period, the cumulative growth rate to be utilized for the
balance of the Performance Period shall be the cumulative growth rate in the
Corporation's earnings per share in the four fiscal years preceding the first
year and (ii) if such Change in Control occurs during any subsequent fiscal year
of an Performance Period, the cumulative growth rate to be utilized for the
balance of the Performance Period shall be the cumulative growth rate of the
preceding fiscal year(s) in that Performance Period prior to the fiscal year in
which occurs the Change in Control. In the event that a performance measure
other than earnings per share is employed, similar adjustments shall be made for
such holders of unmatured performance units. The Committee may in its discretion
determine that such historical financial data are not appropriate or not
available and may use the latest budgets, projections, forecasts or plans for
the Corporation or its business units or subsidiaries. Except as expressly set
forth in this Section 13(l), upon the occurrence of a Change in Control, no
change(s) shall be made in the terms of any performance unit (including, without
limitation, its unit base value, Payment Value or performance criteria) or in
the underlying accounting assumptions or practices for purposes of determining
the

                                       16

<PAGE>

amount due thereunder, which change(s) would lessen the value of any performance
unit to the holder thereof

14.  Withholding Taxes

     In connection with the transfer of shares of Common Stock as a result of
the exercise of a Nonqualified Stock Option or stock appreciation right, the
payment of performance units or the award of Restricted Stock or stock grants,
the Corporation (a) shall not issue a certificate for such shares until it has
received payment from the Participant of any Withholding Tax in cash or by the
retention or acceptance upon delivery thereof by the Participant of shares of
Common Stock sufficient in Fair Market Value to cover the amount of such
Withholding Tax and (b) shall have the right to retain or sell without notice,
or to demand surrender of, shares of Common Stock in value sufficient to cover
any Withholding Tax. The Corporation shall have the right to withhold from any
cash amounts due from the Corporation to the award recipient pursuant to the
Plan an amount equal to the Withholding Tax. In either case, the Corporation
shall make payment (or reimburse itself for payment made) to the appropriate
taxing authority of an amount in cash equal to the amount of such Withholding
Tax, remitting any balance to the Participant. For purposes of this Section 13,
the value of shares of Common Stock so retained or surrendered shall be equal to
the Fair Market Value of such shares on the date that the amount of the
Withholding Tax is to be determined (the "Tax Date"), and the value of shares of
Common Stock so sold shall be the actual net sale price per share (after
deduction of commissions) received by the Corporation.

     Notwithstanding the foregoing, the Participant may elect, subject to
approval by the Committee, to satisfy the obligation to pay any Withholding Tax,
in whole or in part, by providing the Corporation with funds sufficient to
enable the Corporation to pay such Withholding Tax or by having the Corporation
retain or accept upon delivery thereof by the Participant shares of Common Stock
sufficient in Fair Market Value to cover the amount of such Withholding Tax.
Each election by a Participant to have shares retained or to deliver shares for
this purpose shall be in writing and made on or prior to the Tax Date.

15.  Transferability and Ownership Rights of Options, Stock Appreciation Rights
        and Performance Units

     No option or stock appreciation right granted or performance unit awarded
under the Plan shall be transferable otherwise than pursuant to the designation
of a Designated Beneficiary or by will, descent or distribution, and an option
or stock appreciation right may be exercised, during the lifetime of the holder
thereof, only by him. The holder of an option, stock appreciation right or
performance unit award shall have none of the rights of a shareholder until the
shares subject thereto or awarded thereby shall have been registered in the name
of such holder on the transfer books of the Corporation.

16.  Holding Periods

        In order to obtain certain tax benefits afforded to incentive stock
options under Section 422 of the Code, an optionee must hold the shares issued
upon the exercise of an incentive stock option for two years after the date of
grant of the option and one year from the date of exercise. An optionee may be
subject to the alternative minimum tax at the time of exercise of an incentive
stock option. The Committee may require an optionee to give the Corporation
prompt notice of any

                                       17

<PAGE>

disposition in advance of the required holding period of shares of Common Stock
acquired by exercise of an incentive stock option. Tax advice should be obtained
when exercising any option and prior to the disposition of the shares issued
upon the exercise of any option.

17.  Adjustments Upon Changes in Capitalization

     Except as otherwise provided in Section 9(g) and Section 13(l), in the
event of any changes in the outstanding stock of the Corporation by reason of
stock dividends, stock splits, recapitalizations, mergers, consolidations,
combinations or exchanges of shares, split-ups, split-offs, spin-offs,
liquidations or other similar changes in capitalization, or any distribution to
shareholders other than cash dividends, the Committee shall make such
adjustments, if any, in light of the change or distribution as the Committee in
its sole discretion shall determine to be appropriate, (i) in the number and
class of shares or rights subject to options and stock appreciation rights and
the exercise prices of the options and stock appreciation rights covered
thereby, (ii) in the number of shares of Common Stock covered by a performance
unit award for which certificates have not been delivered, any dividend
equivalents to which deferred awards of Common Stock are entitled, and the
performance measures established by the Committee under Section 13(a), and (iii)
the maximum number and class of shares or rights that may be subject to awards
to any individual as set forth in Section 4. In the event of any such change in
the outstanding Common Stock of the Corporation, the aggregate number and class
of shares available under the Plan and the maximum number of shares as to which
options may be granted and stock appreciation rights or performance units
awarded and the maximum number of shares of Restricted Stock which may be
awarded shall be appropriately adjusted by the Committee.

18.  Amendment and Termination

     Unless the Plan shall theretofore have been terminated as hereinafter
provided, the Plan shall terminate on, and no awards of performance units, stock
appreciation rights, or Restricted Stock or options shall be made after, April
5, 2008; provided, however, that such termination shall have no effect on awards
of performance units, stock appreciation rights, Restricted Stock or options
made prior thereto. The Plan may be terminated, modified or amended by the
shareholders of the Corporation. The Board of Directors of the Corporation may
also terminate the Plan, or modify or amend the Plan in such respects as it
shall deem advisable in order to conform to any change in any law or regulation
applicable thereto, or in other respects; however, to the extent required by
applicable law or regulation, shareholder approval will be required for any
amendment which will (a) materially increase the total number of shares as to
which options may be granted or which may be used in payment of performance unit
awards or stock appreciation right awards under the Plan or which may be issued
as Restricted Stock, (b) materially change the class of persons eligible to
receive awards of performance units or Restricted Stock and grants of stock
appreciation rights or options, (c) materially amend Section 8 of the Plan, or
(c) otherwise require shareholder approval under any applicable law or
regulation. In addition, as specified in Sections 9(a) and 10(c) of the Plan,
any amendment or repeal of the applicable provisions of such Sections requires
the affirmative vote of the holders of a majority of shares of the Corporation
present at a duly convened shareholders' meeting in person or by proxy and
entitled to vote thereon. The amendment or termination of the Plan shall not,
without the consent of the recipient of any award under the Plan, alter or
impair any rights or obligations under any award theretofore granted under the
Plan.

                                       18

<PAGE>

19.  Effectiveness of the Plan

     The Plan shall become effective on April 6, 1998. The Committee may in its
discretion authorize the awarding of performance units and Restricted Stock and
the granting of options and stock appreciation rights, the payments, issuance or
exercise of which, respectively, shall be expressly subject to the conditions
that (a) the shares of Common Stock reserved for issuance under the Plan shall
have been duly listed, upon official notice of issuance, upon each stock
exchange in the United States upon which the Common Stock is traded and (b) a
registration statement under the Securities Act of 1933, as amended, with
respect to such shares shall have become effective.

Adopted by the Board on April 3, 1998, and approved by the Company's
shareholders on April 3, 1998. The Plan became effective on April 6, 1998.
Amended by the Board on June 8, 1998. Plan amended and restated by the Board on
February 24, 1999. Shareholder approval of Sections 3 and 4 obtained on May 6,
1999. Plan amended and restated by the Board on February 8, 2001, September 6,
2001, and on February 13, 2002. Shareholder approval of amendments to Section 3
and of new Section 8 was obtained on April 30, 2002.

                    PLAN ADOPTION AND AMENDMENTS/ADJUSTMENTS
                                  SUMMARY PAGE

<TABLE>
<CAPTION>
         Date of                                                                                        Date of
       Board Action               Action Taken               Section/Effect of Amendment              Shareholder
       ------------               ------------               ---------------------------               Approval
                                                                                                       --------
    <S>                         <C>                   <C>                                             <C>
    April 3, 1998               Initial Plan                          -----                              April 3, 1998
                                   Adoption/1/

    June 8, 1998                Amendment              Section 3, Administration (currently              Not Required
                                                       (currently Section 5) - CEO
                                                      granted limited authority to grant
                                                       ISOs and NSOs to nonofficer
                                                               employees.
    February 24, 1999           Amendment and            All Sections - various amendments,              May 6, 1999
                                  Restatement          including an increase in the authorized        (Sections 3 and
                                                      number of shares of common stock reserved           4 only)
                                                           for issuance under the Plan from
                                                            1,000,000 to 1,500,000 shares.
    February 8, 2001            Amendment and          Section 8(c), Option Grants - certain             Not Required
                                  Restatement          options granted on or after February 8,
                                                         2001, may be exercised for a 90-day
                                                              period after termination.
    September 6, 2001           Amendment and               Sections 8(a), 9(c) and 17                   Not Required
                                  Restatement               amended to provide that stock
</TABLE>
_______________________

/1/    Although the Board and the shareholders each adopted the Plan on April 3,
1998, the Plan did not become effective until April 6, 1998.

                                       19

<PAGE>

<TABLE>
<CAPTION>
         Date of                                                                                        Date of
       Board Action            Action Taken               Section/Effect of Amendment                  Shareholder
       ------------            ------------               ---------------------------                    Approval
                                                                                                         --------
    <S>                       <C>                   <C>                                                <C>
                                                      options, including stock appreciation
                                                     rights, cannot be granted with an
                                                      exercise price that is less than
                                                     100% of fair market value on the date
                                                      of grant and that the exercise
                                                    price of any stock option, including any
                                                      stock appreciation right, cannot be
                                                      reduced without the approval of the
                                                    shareholders. These amendment were made
                                                      in accordance with the terms of that
                                                     certain Share Purchase Agreement dated
                                                    August 8, 2001, among SonoSite, Inc. and
                                                    the purchasers named on Schedule A thereto.
    February 13, 2002         Amendment and         Section 3 amended to increase authorized
                               Restatement         number of shares of common stock reserved           April 30, 2002
                                                        for issuance under the Plan from               (Sections 3 and 8)
                                                       1,500,000 to 2,000,000 shares, new
                                                    Section 8 added to add performance goal
                                                      criteria and to specify the maximum
                                                    amount for certain awards in accordance
                                                      with Section 162(m) of the Internal
                                                       Revenue Code of 1986, and various
                                                              conforming changes.
</TABLE>

                                       20

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