Document:

1998 Stock Option Gain and Bonus Deferral Program

 Exhibit 10.7 
  
 1998 MICROSOFT CORPORATION 
 STOCK
OPTION GAIN AND BONUS DEFERRAL PROGRAM 
  
 1. Purpose.

  
 The purpose of this 1998 Microsoft Corporation Stock Option
Gain and Bonus Deferral Program is to further the long-term growth of Microsoft Corporation by allowing selected Microsoft Corporation executives to defer the payment of cash bonuses and the issuance of stock equal to the gain realized upon the
exercise of stock options in order to keep their financial interests aligned with Microsoft and provide them with a long-term incentive to continue employment with Microsoft. 
  
 2. Effective Date. 
  
 This Program is established effective November 18, 1998. 
  
 3. Definitions. 
  
 3.1 Account or Accounts means the account(s) established for a Participant pursuant to Section 8, consisting of a Deferred Bonus Account and/or a
Deferred Stock Option Gain Account. Accounts shall be maintained solely as bookkeeping entries by the Company to evidence unfunded, unsecured obligations of the Company. 
  
 3.2 Board means the Board of Directors of Microsoft Corporation. 
  
 3.3 Bonus means the amount payable by the Company to an Eligible
Executive as an individual performance bonus, executive bonus or any other bonus/incentive award that is approved by the Program Administrator for deferral under the Program. 
  
 3.4 Claimant means a Participant (or in the case of the Participant’s death, the personal representative of his
estate) who makes a written application to the Program 

  

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Administrator for benefits that he believes are due under the Program. For purposes of determining the proper death beneficiary under this Program, this
Program shall not be interpreted as preempting applicable state law regarding the ownership rights of Accounts upon the Participant’s death. For example, although this Program states that upon a Participant’s death, Account balances will
be paid to his estate, the personal representative will be obligated to pay any benefits owed to a spouse or otherwise as a result of any applicable community property laws. 
  
 3.5 Code means the Internal Revenue Code of 1986, as amended. 
  
 3.6 Company means Microsoft Corporation. 
  
 3.7 Deferral Election means an election to defer (i) issuance of the
shares of Stock equal to the Stock Option Gain realized upon the exercise of an Option or (ii) receipt of part or all of a Bonus. 
  
 3.8 Deferral Period means with respect to a specific deferral of a Bonus or Stock Option Gain, the period of five (5), seven (7), or ten (10) years
from the date on which the corresponding Bonus would otherwise have been paid or the date the Option was scheduled to expire had it not been exercised; provided that in the event of the Participant’s Termination of Employment the Deferral
Period shall end on the date of Termination of Employment. 
  
 3.9
Deferred Bonus Account means a bookkeeping account established pursuant to Section 8.1 for Bonuses that are subject to a Participant’s Deferral Election. 
  
 3.10 Deferred Stock Option Gain Account means a bookkeeping account established pursuant to Section 8.2 for Stock
Option Gains deferred under this Program. 
  
 3.11
Disability means any long-term disability as defined under the Company’s long-term disability plan. The Program Administrator, in its complete and sole discretion, shall 

  

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determine a Participant’s Disability. The Program Administrator may require that the Participant submit to an examination on an annual basis, at the
expense of the Company, by a competent physician or medical clinic selected by the Program Administrator to assist in the determination of Disability. On the basis of such medical evidence, the determination of the Program Administrator as to
whether or not a condition of Disability exists or continues shall be conclusive. 
  
 3.12 Election Form means the form specified by the Program Administrator on which a Participant makes a Deferral Election. 
  
 3.13 Eligible Executive means a full-time employee of the Company who is (i) an elected officer of the Company, (ii)
at the level of Vice President or above, (iii) at Level 80 or above on the Company’s salary range, and (iv) working within the United States of America. In addition, the Compensation Committee of the Board may, in its discretion, extend
coverage to persons who are selected by the Committee and who either (x) meet all of the foregoing requirements except that they are working outside of the United States of America, (y) meet all of the foregoing requirements except that they are
full-time employees of a subsidiary of the Company, or (z) are officers of a subsidiary of the Company. 
  
 3.14 ERISA means the Employee Retirement Income Security Act of 1974, as amended. 
  
 3.15 Exercise means an election to exercise an Option. 
  
 3.16 Mature Shares means shares of the Company’s Stock delivered by a Participant in payment of the Exercise
price of an Option; provided that Mature Shares shall not include any shares of the Company’s Stock that may be received upon exercise of such Option, nor Stock that the Participant purchased pursuant to a prior stock option exercise which
occurred less than six months prior to the exercise of such Option. 
  

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 3.17 Fair Market Value of the Stock as of a particular date means the closing price of the Stock
as reported on NASDAQ on such date. 
  
 3.18 Option shall
mean one or more non-qualified stock options, issued to a Participant under any stock option plan of the Company, with respect to which the Participant has elected to defer the Stock Option Gain. Option shall not include any rights under the
Company’s Employee Stock Purchase Plan 
  
 3.19
Participant means an Eligible Executive who has elected to participate in the Program and has made a Deferral Election. 
  
 3.20 Program means this 1998 Microsoft Corporation Stock Option Gain and Bonus Deferral Program, as amended from time to time. 
  
 3.21 Program Administrator means the Compensation Committee of the
Board, or its delegate or delegates appointed to administer the Program. 
  
 3.22 Program Year means the 12-month period from January 1 to December 31, provided that the initial Program Year shall be a short Program Year that begins on the Effective Date and ends on December 31, 1998.

  
 3.23 Stock means Microsoft Corporation common stock.

  
 3.24 Stock Option Gain means the number of shares
underlying an Option minus the number of Mature Shares required to pay the Exercise price for those shares. For example, if a Participant elects to defer the gain on 100 shares and is required to deliver 10 shares of Stock as payment for the
Exercise price on the 100 shares, the Stock Option Gain will be 90 shares. 
  

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 3.25 Termination of Employment means the termination of the Participant’s employment
relationship with the Company for any reason including, without limitation, involuntary termination with or without cause, voluntary termination, disability, death, or retirement. 
  
 4. Participation. 
  
 Each Eligible Executive becomes an active Participant on the date he first submits an Election Form pursuant to Section 5 or 6. An individual’s
eligibility to make additional deferrals under Section 5 or 6 shall cease upon the date he ceases to be an Eligible Executive. In the event an Eligible Executive ceases to be an Eligible Executive (but does not incur a Termination of Employment)
between the date a Deferral Election is made and the date (i) a Bonus is scheduled to be paid (absent the deferral) or (ii) an Option is exercised, the Bonus will be deferred and the Option will be exercisable and the gain deferred pursuant to the
Participant’s prior Deferral Election. An individual who has been an active Participant under the Program will cease to be a Participant on the date his Accounts are fully paid out. 
  
 5. Bonus Deferral Election. 
  

5.1 Manner. Each Eligible Executive may make an election to defer under the Program any percentage (in 10% increments up to 100%) of his Bonus by
submitting a valid Election Form to the Program Administrator. To be effective, an Eligible Executive’s Election Form for a Bonus deferral must set forth the percentage of his Bonus to be deferred (in 10% increments), the investment choice
under Section 8.1 (in 1% increments ), the Deferral Period, and any other information that may be requested by the Program Administrator from time to time. A Participant is not required to defer all Bonuses expected to be paid in any given year.

  

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 5.2 Timing. Subject to the next two sentences, an Eligible Executive must make a Deferral Election with
respect to his Bonus in the calendar year prior, and at least six (6) months prior, to the date on which the Bonus would otherwise be paid. A new hire who is an Eligible Executive may make a Deferral Election with respect to his Bonus to be paid
during the current calendar year so long as the Deferral Election is made either before his date of hire or within thirty (30) days after his date of hire, and is made before the Bonus is earned. The Program Administrator may establish limited
Deferral Election periods during which Eligible Executives must make Deferral Elections. 
  
 6. Stock Deferral Election. 
  
 6.1 Manner. Each Eligible Executive may make an election to defer under the Program the Stock Option Gain on 100% of the shares underlying an Option or on a portion of the shares underlying the Option (in 10,000 share increments) that would
otherwise be recognized upon exercise of an Option, by submitting a valid Election Form to the Program Administrator. To be effective, an Eligible Executive’s Election Form for a deferral of a Stock Option Gain must set forth the specific
Option and number of shares on which the gain will be deferred the Deferral Period, and any other information that may be requested by the Program Administrator from time to time. 
  
 6.2 Timing. An Eligible Executive must make a Deferral Election with respect to an Option (i) at least six (6) months prior
to the date such Option will be exercised, and (ii) prior to the calendar year in which such Option will be exercised. The Program Administrator may establish limited Deferral Election periods during which Eligible Executives must make Deferral
Elections. Deferred Options may only be exercised within the last two months prior to the date the term of the Option is scheduled to expire. Notwithstanding anything in this Program to the 

  

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contrary, in the event a Participant’s Option is expected to expire prior to its stated term (e.g., due to the termination of the Participant’s
continuous status as an employee), the Deferred Options must be exercised during the two month period ending on the date the Option is expected to expire. 
  
 7. General Provisions Relating to Bonus and Stock Deferral Elections. 
  
 7.1 Separate Elections. A separate Deferral Election must be made by an Eligible Executive for each Bonus or Stock Option
Gain deferral. If an Eligible Executive fails to file a properly completed and executed Election Form with the Program Administrator by the prescribed time, he will be deemed to have elected not to defer any Bonus or Stock Option Gain for the
applicable Program Year. 
  
 7.2 Irrevocability of Elections. An
election is irrevocable once received and determined by the Program Administrator to be properly completed. After the Program Administrator makes such determination, the Participant shall not be allowed to cancel the election nor increase or
decrease the amount or percentage a Participant elects to defer. 
  
 7.3 Deferral Period. An Eligible Executive making a Deferral Election shall specify a Deferral Period of five (5), seven (7) or ten (10) years on his Election Form. On a one-time basis with respect to each deferral, a Participant may elect
in writing to extend the Deferral Period for a Bonus or Stock Option Gain for an additional five (5), seven (7), or ten (10) years, provided that such extension is elected in the calendar year prior, and at least six (6) months prior, to the
expiration of the initial Deferral Period and the Participant is an Eligible Executive at the time he makes the election to extend the Deferral Period. 
  
 8. Accounts. 
  
 8.1 Deferred Bonus Account. 
  

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 (a) Any amount of Bonus deferred by an Eligible Executive for a Program Year will be deducted from the
amount of his Bonus under the applicable compensation program at the time the Bonus would otherwise be paid and the amount deferred will be credited to the Participant’s Deferred Bonus Account. A Participant’s Deferred Bonus Account is a
bookkeeping device to track the value of his deferrals (and the Company’s liability therefor). No assets shall be reserved or segregated in connection with any Deferred Bonus Account, and no Deferred Bonus Account shall be insured or otherwise
secured. The Participant’s share of FICA and FUTA taxes owed on the deferred Bonus amount shall be deducted from the Participant’s salary or other cash compensation received on or about the date the deferred Bonus would otherwise have been
paid. To the extent the Participant is not owed salary or other cash compensation sufficient to pay such taxes, the Participant must submit to the Company, a cash payment (by way of check, wire transfer, or otherwise) for the remaining amount of the
Participant’s share of FICA and FUTA taxes owed on the deferred Bonus amount. In addition, a Participant may elect to pay the Company for the full amount of the Participant’s share of such employment taxes and avoid any reduction in his
salary or other cash compensation. The Participant’s Deferred Bonus Account will not be credited with the deferred Bonus until the Company has received, through payroll withholding or directly from the Participant, the full amount of the
Participant’s share of the employment taxes. Deemed investment earnings will not be credited for periods of time before the Bonus is credited to the Participant’s Deferred Bonus Account. In the event the Company does not receive the full
amount of the Participant’s share of the employment taxes by the end of the calendar year in which the Bonus was otherwise to be paid, the Participant shall forfeit the Bonus and any obligation of the Company to pay the Bonus shall terminate.

  

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 (b) The Program Administrator shall specify two or more investment funds that shall serve as benchmarks
for the investment performance of amounts credited to the Deferred Bonus Account. The Deferred Bonus Account shall be adjusted to reflect the gain or loss, net of any allocable costs or expenses, such account would experience had it actually been
invested in the specified funds at the relevant times. The Deferred Bonus Account shall not be reduced for income or capital gains taxes the Company would have to pay on the investment income and gains it would earn if it invested the Deferred Bonus
Account in the applicable investment funds. The Program Administrator may change the available investment funds from time to time, but not more frequently than quarterly. A Participant may select his investment options for his Deferred Bonus Account
at such times and using such form or forms as the Program Administrator may specify. The investment options that the Participant selects will apply to his entire Deferral Bonus Account. The Company is not obligated to actually invest any assets in
the investment funds selected by the Participant. 
  
 (c) The
amount in a Participant’s Deferred Bonus Account shall be adjusted for gain or loss on the last day of each month (or more frequently, at the Program Administrator’s discretion) based on the performance of the investment options selected
by the Participant in accordance with this Section 8.1. 
  
 (d) As
of each December 31, the Program Administrator shall prepare and deliver to each Participant a statement listing the amount credited to his Deferred Bonus Account as of the close of business on December 31. 
  
 (e) A Participant’s interest in the value of his Deferred Bonus Account
shall at all times be 100 percent vested, which means that it will not forfeit as a result of his Termination of Employment. 
  

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 8.2 Deferred Stock Option Gain Account. 
  
 (a) A Participant must Exercise an Option during the two-month period that ends on the date the Option was scheduled to
expire. On the date of Exercise, the Participant must deliver the Mature Shares to the Company in payment of the Exercise price. In addition, the Participant must deliver to the Company cash equal to the Participant’s share of the FICA and FUTA
taxes owed with respect to such Exercise. An option exercise is not effective until the Company has received the required FICA and FUTA taxes from the Participant. Within thirty (30) days of Exercise, the Company will issue to the Participant a
number of new shares equal to the number of Mature Shares and will credit the Stock Option Gain to the Participant’s Deferred Stock Option Gain Account. 
  
 (b) If a Participant fails to exercise an Option during the two-month period ending on the scheduled expiration date of the Option’s term, as
required by Section 8.2(a) above, his Option will expire. 
  
 (c)
A Participant’s Deferred Stock Option Gain Account is a bookkeeping device to track the value of his deferrals (and the Company’s liability therefor). No assets shall be reserved or segregated in connection with any Deferred Stock Option
Gain Account, and no Deferred Stock Option Gain Account shall be insured or otherwise secured. The Deferred Stock Option Gain Account represents an unfunded obligation of the Company to issue to the Participant shares of Stock at the end of the
Deferral Period. Although the shares of Stock will not be issued until the end of the Deferral Period as described in Section 9.1, the Company’s obligation to issue shares in the future shall be accounted for by denominating the obligation to
each Participant in shares of Stock. Since the shares are not issued until the end of the Deferral Period, there are no voting or other shareholder rights associated with shares credited to the 

  

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Deferred Stock Option Gain Account; provided, however, that the amount of cash and stock dividends and stock splits declared from time to time on the Stock
shall be credited to the Deferred Stock Option Gain Account as if the shares were issued at such time (and the amount of any cash dividend shall be deemed to have been reinvested on such date in additional Stock). 
  
 (d) If a Participant has not made a Deferral Election with respect to all
options that were granted on the same date, and if he is not exercising all options available under said grant, then at the time of exercise the Participant shall identify which options are being exercised, deferred Options, options that were not
deferred, or a combination of the two. 
  
 (e) As of each December
31, the Program Administrator shall provide each Participant with a statement setting forth the number of shares credited to the Participant’s Deferred Stock Option Gain Account, the value of such shares at the time originally credited to the
Deferred Stock Option Gain Account based on the Fair Market Value on the date the shares were credited to the Deferred Stock Option Gain Account, and the value of such shares on such December 31 based on the Fair Market Value of Stock as of the
close of business on such December 31. 
  
 (f) The
Participant’s right to the value of his Deferred Stock Option Gain Account, as adjusted for gains and losses, shall be 100 percent vested at all times. 
  
 9. Distribution. 
  
 9.1 Timing. As soon as practicable following the final day of the Deferral Period for a specific deferral, the Company will distribute to the Participant
(or in the case of the Participant’s death, his estate), all proceeds in the Participant’s Deferred Bonus Account and will issue to the Participant (or in the event of the Participant’s death, the personal representative or
beneficiaries of his estate) shares of Stock credited to the Participant’s Deferred Stock Option 

  

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Gain Account, that are attributed to that deferral. With respect to a specific deferral, the final day of the Deferral Period shall be the earliest of the
last day of the Deferral Period selected by the Participant in accordance with Section 7.3 or the date he has a Termination of Employment. Upon Termination of Employment, a Participant will have the same rights with respect to an unexercised Option
that he would have if he had not elected to defer the Stock Option Gain relating to that Option. The portion of a Participant’s Accounts that can be attributed to a specific deferral shall be determined in the sole discretion of the Program
Administrator. 
  
 9.2 Disability. In the event of a
Participant’s Disability and upon application by such Participant, the Program Administrator may determine that payment of all, or part, of such Participant’s Accounts shall be made in a different manner, or on an earlier date than the
time or times specified in Section 9.1 above, but only to the extent determined by the Program Administrator to be reasonably required to satisfy the Participant’s need. 
  
 10. Conditions Related to Benefits. 
  
 10.1 Nonalienation of Benefits. This Program inures to the benefit of and is binding upon the parties hereto and their
successors, heirs and assigns; provided, however, that the amounts credited to the Accounts of a Participant are not, except as provided in Section 10.2, subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge,
encumbrance, charge, garnishment, execution or levy of any kind, either voluntary or involuntary, and any attempt to anticipate, alienate, sell, transfer, assign, pledge, encumber, charge or otherwise dispose of any right to any benefits payable
hereunder, including, without limitation, any assignment or alienation in connection with a separation, divorce, child support or similar arrangement, will be null and void and not binding on the Program or the Company. 
  

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 10.2 Withholding Taxes. If the whole or any part of any Participant’s Accounts becomes liable for
the payment of any estate, inheritance, income, or other tax that the Company may be required to pay or withhold, the Company will have the full power and authority to withhold and pay such tax out of any moneys or other property in its hand for the
account of the Participant. The Company will provide the Participant notice of such withholding. Prior to making any payment, the Company may require such releases or other documents from any lawful taxing authority as it shall deem necessary. Any
payment of benefits under Section 9 shall be net of any amounts the Company is required to withhold and remit as payment for taxes on behalf of the Participant. 
  

10.3 Participant’s Unsecured Rights. The benefits provided by this Program are unfunded. All benefits payable under this Program to Participants
are paid either from the general assets of the Company or in newly issued shares of Stock. Nothing contained in this Program requires the Company to set aside or hold in trust any amounts or assets for the purpose of paying benefits to Participants.
This Program creates only a contractual obligation on the part of the Company to pay the value of the Deferred Bonus Account and issue the shares of Stock equal to the amount credited to the Deferred Stock Option Gain Account. The Participant shall
be no more than a general unsecured creditor of the Company with no special or prior right to any assets of the Company for payment of any obligations hereunder. 
  
 10.4 Participant’s Cooperation. The Participant shall cooperate with the Company by furnishing any and all information
requested by the Program Administrator in order to facilitate the payment of benefits hereunder, taking such physical examinations as the Program Administrator may deem necessary and taking such other actions as may be requested by the Program
Administrator. If the Participant refuses to cooperate, the Company shall have no further obligation to the Participant under the Program. 
  

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 11. Administration of Program. 
  
 The Program Administrator shall administer the Program and shall have full discretionary authority to interpret, construe
and apply its provisions and to make determinations as to an Eligible Executive’s right to participate in the Program and the timing and amount of benefits, if any, owed to the Participant (or in the case of the Participant’s death, his
estate). The Program Administrator shall further establish, adopt or revise such rules and regulations as it may deem necessary or advisable for the administration of the Program. Subject to the appeal procedure set forth in Section 14.2 below, all
decisions of the Program Administrator shall be final and binding on all parties. The Program Administrator (including any individual members thereof) shall, except as prohibited by law, be indemnified and held harmless by the Company from any and
all liabilities, costs, and expenses (including legal fees), to the extent not covered by liability insurance, arising out of any action taken by the Program Administrator (including any individual members thereof) with respect to the Program,
unless such liability arises from the individual’s own gross negligence or willful misconduct. 
  
 12. Amendment or Termination of the Program. 
  
 12.1 Amendment of Program. The Company may at any time amend the Program in whole or in part, provided, however, that such amendment shall not decrease
the amount credited to the Participant’s Accounts at the time of such amendment. 
  
 12.2 Termination of Program. The Company may at any time terminate the Program. If the Company terminates the Program, the date of such termination shall be treated as each Participant’s date of Termination of
Employment for the purpose of calculating Program 

  

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benefits, and the Company shall pay to the Participant in a cash lump sum the amount credited to the Participant’s Deferred Bonus Account and shall
issue to the Participant shares of Stock credited to the Participant’s Deferred Stock Option Gain Account as of the date of Program termination (subject to applicable withholding of taxes pursuant to Section 10). 
  
 12.3 Constructive Receipt Termination. In the event the Program Administrator
determines that amounts deferred under the Program with respect to a specific deferral have been constructively received by Participants and must be recognized as income for federal income tax purposes prior to the scheduled distribution of such
amounts, the Program shall terminate with respect to such deferral and distributions shall be made to Participants of the Bonuses and Stock Option Gains (less applicable tax withholding) related to that deferral as determined by the Program
Administrator. The determination of the Program Administrator under this Section shall be binding and conclusive on all parties. 
  
 12.4 Board Action. Amendment or termination of the Program shall be made by action of either the Board or the Compensation Committee of the Board.

  
 13. Limitation of Rights. 
  
 13.1 No Right to Bonuses or Stock Options. Nothing in this Program shall be
construed to give any Eligible Executive any right to be granted a bonus award or any stock options. 
  
 13.2 No Right to Continued Employment. Neither the Program nor a Participant’s deferral of any Bonus or Stock Option Gain, nor any other action taken
pursuant to the Program, shall constitute, or be evidence of, any agreement or understanding, express or implied, that the Company or any of its subsidiaries or affiliates will employ any employee (including, without limitation, a Participant) for
any period of time, in any position or at any particular rate of compensation. The Company reserves the right to terminate any employee’s employment at any time for any reason, except as otherwise expressly provided in a written employment
agreement between the employee and the Company. 
  

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 14. Claims Procedure. 
  
 14.1 Claims for Benefits. The Program Administrator shall notify a Claimant in writing, within ninety (90) days after it
receives his written application for benefits, of his eligibility or noneligibility for benefits under the Program. If the Program Administrator determines that a Claimant is not eligible for benefits or full benefits, the notice shall set forth:
(i) the specific reasons for such denial; (ii) a specific reference to the provisions of the Program on which the denial is based; (iii) a description of any additional information or material necessary for the Claimant to perfect his claim, and a
description of why it is needed; and (iv) an explanation of the Program’s claims review procedure and other appropriate information as to the steps to be taken if the Claimant wishes to have the claim reviewed. If the Program Administrator
determines that there are special circumstances requiring additional time to make a decision, the Program Administrator shall notify the Claimant of the special circumstances and the date by which a decision is expected to be made, and may extend
the time of the initial review for up to an additional ninety-day period. 
  
 14.2 Appeals. If a Claimant is determined by the Program Administrator not to be eligible for benefits, or if the Claimant believes that he is entitled to greater or different benefits, the Claimant shall have the
opportunity to have such claim reviewed by the Board by filing a petition for review with the Board within sixty (60) days after receipt of the notice issued by the Program Administrator. Said petition shall state the specific reasons that the
Claimant believes entitle him to benefits or to greater or different benefits. Within sixty (60) days after receipt by 

  

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the Board of the petition, the Board shall afford the Claimant (and counsel, if any) an opportunity to present his position to the Board orally or in
writing, and the Claimant (or counsel) shall have the right to review the pertinent documents. The Board shall notify the Claimant of its decision in writing within the sixty-day period. Such notice shall be written in a manner calculated to be
understood by the Claimant, and shall state specifically the basis of the Board’s decision and the specific provisions of the Program on which the decision is based. If, because of the need for a hearing, the sixty-day period is not sufficient,
the Board may defer its decision for up to another sixty-day period at the election of the Board, but notice of this deferral shall be given to the Claimant. The Board’s decision on appeal shall be final, binding and conclusive on all parties.

  
 15. Miscellaneous. 
  
 15.1 ERISA Program. The Program is intended to be an unfunded program
maintained primarily to provide deferred compensation benefits for “a select group of management or highly compensated employees” within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of
Title I of ERISA. 
  
 15.2 Gender, Singular and Plural. All
pronouns and variations thereof shall be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may be read as the plural and the plural as the singular.

  
 15.3 Captions. The captions of the sections and subsections of
the Program are for convenience only and shall not control or affect the meaning or construction of any of its provisions. 
  
 15.4 Validity. If any provision of the Program is held invalid, void or unenforceable, the same shall not affect, in any respect whatsoever, the validity
of any other provisions of the Program. 
  

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 15.5 Waiver of Breach. The waiver by the Company of any breach of any provision of the Program by the
Participant shall not operate or be construed as a waiver of any subsequent breach by the Participant. 
  
 15.6 Notice. Any notice or filing required or permitted to be given to the Program Administrator under the Program shall be sufficient if in writing and
hand-delivered, or sent by first class mail to the principal office of the Company, directed to the attention of the Program Administrator. Such notice shall be deemed given as of the date of delivery, or, if delivery is made by mail, as of the date
shown on the postmark. 
  
 16. Legally Binding. 

 
 In the event of any consolidation, merger, acquisition or reorganization,
the obligations of the Company under this Program shall continue and be binding on the Company and its successors or assigns. The rights, privileges, benefits and obligations under the Program are intended to be legal obligations of the Company and
binding upon the Company, its successors and assigns. 
  
 17.
Other Benefits. 
  
 Nothing in this Program shall diminish
or impair the Participant’s eligibility, participation or benefit entitlement under any qualified retirement plan for employees of the Company, or any other benefit, insurance or compensation plan or agreement of the Company now or hereinafter
in effect. Notwithstanding the foregoing, benefits paid under this Program shall not be considered as salary, wages or other compensation for purposes of calculating the amount of benefits payable under any other benefit plan, program or arrangement
sponsored by the Company, its subsidiaries or affiliates including, without limitation, any life, disability or severance benefits. 
  

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 18. Venue and Governing Law. 
  
 In the event the Company or any Participant or (or in the case of the Participant’s death, his estate) initiates
litigation related to this Program, it is agreed and understood that venue for such action will be in King County, Washington. It is further agreed and understood that this Program shall be governed by and construed under the laws of the State of
Washington, or federal law to the extent it preempts Washington law. 
  
 19. Attorneys Fees and Costs. 
  
 In the event
that a dispute regarding benefits arises between the Company or Program Administrator and Participants (or in the case of the Participant’s death, his estate) and such dispute is resolved through arbitration or litigation in court, the
prevailing party(ies) shall be entitled to their reasonable attorneys’ fees and costs incurred in such action. 
  

 19Form of Stock Award Agreement

 Exhibit 10.8 
  
 STOCK AWARD AGREEMENT UNDER 
 THE
MICROSOFT CORPORATION 2001 STOCK PLAN 
  
 Award Number
<<GrantIdentifier>> 
  
 1. Award of Stock
Awards.   Microsoft Corporation (hereinafter the “Company”), in the exercise of its sole discretion pursuant to the Microsoft Corporation 2001 Stock Plan (the “Plan”), does on <<GrantDate>>
(the “Award Date”) hereby award to <<FullName>> (the “Awardee”) <<SharesGrantedQuantity>> Stock Awards (“SAs”) upon the terms and subject to the conditions hereinafter contained. Capitalized
terms used but not defined herein shall have the meanings assigned to them in the Plan. SAs represent the Company’s unfunded and unsecured promise to issue Common Shares at a future date, subject to the terms of this Award Agreement and the
Plan. Awardee has no rights under the SAs other than the rights of a general unsecured creditor of the Company. 
  
 2. Vesting Schedule and Conversion of SAs.   
 (a) Subject to
the terms of this Award Agreement and the Plan and provided that Awardee remains continuously employed throughout the vesting periods set out below, the SAs shall vest and be converted into an equivalent number of Common Shares that will be
distributed to the Awardee as follows; provided that fractional SAs shall be converted into Common Shares as set out in Section 8(c) of this Award Agreement: 
  

			
	Vesting Date	  	Percentage
of SAs
	 One (1) year from the Award Date
	  	20%
	 Two (2) years from the Award Date
	  	20%
	 Three (3) years from the Award Date
	  	20%
	 Four (4) years from the Award Date
	  	20%
	 Five (5) years from the Award Date
	  	20%

  
 (b) THE AWARDEE’S RIGHTS IN THE
SAs SHALL BE AFFECTED, WITH REGARD TO BOTH VESTING SCHEDULE AND TERMINATION, BY LEAVES OF ABSENCE, CHANGES IN THE NUMBER OF HOURS WORKED, PARTIAL DISABILITY, AND OTHER CHANGES IN AWARDEE’S EMPLOYMENT STATUS AS PROVIDED IN THE COMPANY’S
CURRENT POLICIES IN SUCH MATTERS. ACCOMPANYING THIS AWARD AGREEMENT IS A CURRENT COPY OF THE COMPANY’S POLICIES IN SUCH MATTERS. THESE POLICIES MAY CHANGE FROM TIME TO TIME WITHOUT NOTICE IN THE COMPANY’S SOLE DISCRETION, AND
AWARDEE’S RIGHTS WILL BE GOVERNED BY THE POLICIES IN EFFECT AT THE TIME OF ANY EMPLOYMENT STATUS CHANGE. CONTACT “STOCK” FOR A COPY OF THE MOST CURRENT POLICY STATEMENT AT ANY POINT IN TIME. 
  
 3. Termination.   Unless terminated earlier under Section 4, 5, or 6 below,
an Awardee’s rights under this Award Agreement with respect to the SAs issued under this Award Agreement shall terminate at the time such SAs are converted into Common Shares. 
  
 4. Termination of Awardee’s Status as a Participant.   Except as otherwise specified in Section 5 and 6 below, in the
event of termination of Awardee’s Continuous Status as a Participant (as such term is defined in Section 2(j) of the Plan), Awardee’s rights under this Award Agreement in any unvested SAs shall terminate. For the avoidance of doubt, an
Awardee’s Continuous Status as a Participant terminates at the time the Awardee’s actual employer ceases to be the Company or a “Subsidiary” of the Company, as that term is defined in Section 2(z) of the Plan, and as further
described in Section 10(g) of this Award Agreement. 
  

 1 

 5. Disability of Awardee.   Notwithstanding the provisions of Section 4 above, in the event of
termination of Awardee’s Continuous Status as a Participant as a result of total and permanent disability (as such term is defined in Section 12(c) of the Plan), the next vesting date for the SAs, set out in Section 2(a), above, shall
accelerate by twelve (12) months as of such date of termination. If Awardee’s disability originally required him or her to take a short-term disability leave which was later converted into long-term disability, then for the purposes of the
preceding sentence the date on which Awardee ceased performing services shall be deemed to be the date of commencement of the short-term disability leave. The Awardee’s rights in any unvested SAs that remain unvested after the application of
this Section 5 shall terminate at the time Awardee ceases to be in Continuous Status as a Participant. 
  
 6. Death of Awardee.   Notwithstanding the provisions of Section 4 above, in the event of the death of Awardee: 
 (a) If Awardee is, at the time of death, in Continuous Status as a Participant, the next vesting date for the SAs, set out in Section 2(a) above, shall accelerate by twelve (12) months as of the date of death. 
 (b) The Awardee’s rights in any unvested SAs that remain after the application of Section 6(a) shall terminate at the time of the Awardee’s death. 

 
 7. Value of Unvested SAs.   In consideration of the award of these SAs,
Awardee agrees that upon and following termination of Awardee’s Continuous Status as a Participant for any reason (whether or not in breach of applicable laws), and regardless of whether Awardee is terminated with or without cause, notice, or
pre-termination procedure or whether Awardee asserts or prevails on a claim that Awardee’s employment was terminable only for cause or only with notice or pre-termination procedure, any unvested SAs under this Award Agreement shall be deemed to
have a value of zero dollars ($0.00). 
  
 8. Conversion of SAs to Common
Shares; Responsibility for Taxes.   
 (a) Provided Awardee has satisfied the requirements of Section 8(b) below, on the vesting of any SAs,
such vested SAs shall be converted into an equivalent number of Common Shares that will be distributed to Awardee or, in the event of Awardee’s death, to Awardee’s legal representative, as soon as practicable. The distribution to the
Awardee, or in the case of the Awardee’s death, to the Awardee’s legal representative, of Common Shares in respect of the vested SAs shall be evidenced by a stock certificate, appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company, or other appropriate means as determined by the Company. In the event ownership or issuance of Common Shares is not feasible due to applicable exchange controls, securities regulations, tax laws or other
provisions of applicable law, as determined by the Company in its sole discretion, Awardee, or in the event of Awardee’s death, the Awardee’s legal representative, shall receive cash proceeds in an amount equal to the value of the Common
Shares otherwise distributable to Awardee, net of the satisfaction of the requirements of Section 8(b) below. 
 (b) Regardless of any action the Company or
Awardee’s actual employer takes with respect to any or all income tax (including federal, state and local taxes), social insurance, payroll tax or other tax-related withholding (“Tax Related Items”), Awardee acknowledges that the
ultimate liability for all Tax Related Items legally due by Awardee is and remains Awardee’s responsibility and that the Company and/or the Awardee’s actual employer (i) make no representations or undertakings regarding the treatment of
any Tax Related Items in connection with any aspect of the SAs, including the grant of the SAs, the vesting of SAs, the conversion of the SAs into Common Shares or the receipt of an equivalent cash payment, the subsequent sale of any Common Shares
acquired at vesting and the receipt of any dividends; and (ii) do not commit to structure the terms of the grant or any aspect of the SAs to reduce or eliminate the Awardee’s liability for Tax Related Items. 
  

 2 

 Prior to the issuance of Common Shares upon vesting of SAs or the receipt of an equivalent cash payment as provided in
Section 8(a) above, Awardee shall pay, or make adequate arrangements satisfactory to the Company or to the Awardee’s actual employer (in their sole discretion) to satisfy all withholding obligations of the Company and/or the Awardee’s
actual employer. In this regard, Awardee authorizes the Company or the Awardee’s actual employer to withhold all applicable Tax Related Items legally payable by Awardee from Awardee’s wages or other cash compensation payable to Awardee by
the Company or the Awardee’s actual employer. Alternatively, or in addition, if permissible under applicable law, the Company or the Awardee’s actual employer may, in their sole discretion, (i) sell or arrange for the sale of Common Shares
to be issued on the vesting of SAs to satisfy the withholding obligation, and/or (ii) withhold in Common Shares, provided that the Company and the Awardee’s actual employer shall withhold only the amount of shares necessary to satisfy the
minimum withholding amount. Awardee shall pay to the Company or to the Awardee’s actual employer any amount of Tax Related Items that the Company or the Awardee’s actual employer may be required to withhold as a result of Awardee’s
receipt of SAs, the vesting of SAs, or the conversion of vested SAs to Common Shares that cannot be satisfied by the means previously described. Except where applicable legal or regulatory provisions prohibit, the standard process for the payment of
an Awardee’s Tax Related Items shall be for the Company or the Awardee’s actual employer to withhold in Common Shares only to the amount of shares necessary to satisfy the minimum withholding amount. The Company may refuse to deliver
Common Shares to Awardee if Awardee fails to comply with Awardee’s obligation in connection with the Tax Related Items as described herein. 
  
 (c) In lieu of issuing fractional Common Shares, on the vesting of a fraction of a SA, the Company shall round the shares to the nearest whole share and any such share
which represents a fraction of a SA will be included in a subsequent vest date. 
 (d) Until the distribution to Awardee of the Common Shares in respect to
the vested SAs is evidenced by a stock certificate, appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company, or other appropriate means, Awardee shall have no right to vote or receive dividends or any
other rights as a shareholder with respect to such Common Shares, notwithstanding the vesting of SAs. The Company shall cause such distribution to Awardee to occur promptly upon the vesting of SAs. No adjustment will be made for a dividend or other
right for which the record date is prior to the date Awardee is recorded as the owner of the Common Shares, except as provided in Section 14 of the Plan. 
 (e) By accepting the Award of SAs evidenced by this Award Agreement, Awardee agrees not to sell any of the Common Shares received on account of vested SAs at a time when applicable laws or Company policies prohibit a sale. This restriction
shall apply so long as Awardee is an Employee, Consultant or outside director of the Company or a Subsidiary of the Company. 
  
 9. Non-Transferability of SAs.   Awardee’s right in the SAs awarded under this Award Agreement and any interest therein may not be sold, pledged,
assigned, hypothecated, transferred, or disposed of in any manner, other than by will or by the laws of descent or distribution, prior to the distribution of the Common Shares in respect of such SAs. SAs shall not be subject to execution, attachment
or other process. 
  
 10. Acknowledgment of Nature of Plan and
SAs.   In accepting the Award, Awardee acknowledges that: 
 (a) the Plan is established voluntarily by the Company, it is discretionary in
nature and may be modified, amended, suspended or terminated by the Company at any time, as provided in the Plan; 
 (b) the Award of SAs is voluntary and
occasional and does not create any contractual or other right to receive future awards of SAs, or benefits in lieu of SAs even if SAs have been awarded repeatedly in the past; 
 (c) all decisions with respect to future awards, if any, will be at the sole discretion of the Company; 
 (d) Awardee’s
participation in the Plan is voluntary; 
  

 3 

 (e) the future value of the underlying Common Shares is unknown and cannot be predicted with certainty; 
 (f) if Awardee receives Common Shares, the value of such Common Shares acquired on vesting of SAs may increase or decrease in value; 
 (g) notwithstanding any terms or conditions of the Plan to the contrary and consistent with Section 4, above, in the event of involuntary termination of Awardee’s
employment (whether or not in breach of applicable laws), Awardee’s right to receive SAs and vest under the Plan, if any, will terminate effective as of the date that Awardee is no longer actively employed and will not be extended by any notice
period mandated under applicable law; furthermore, in the event of involuntary termination of employment (whether or not in breach of applicable laws), Awardee’s right to receive Common Shares pursuant to the SAs after termination of
employment, if any, will be measured by the date of termination of Awardee’s active employment and will not be extended by any notice period mandated under applicable law; the Committee shall have the exclusive discretion to determine when
Awardee is no longer actively employed for purposes of the award of SAs; and 
 (h) Awardee acknowledges and agrees that, regardless of whether Awardee is
terminated with or without cause, notice or pre-termination procedure or whether Awardee asserts or prevails on a claim that Awardee’s employment was terminable only for cause or only with notice or pre-termination procedure, Awardee has no
right to, and will not bring any legal claim or action for, (a) any damages for any portion of the SAs that have been vested and converted into Common Shares, or (b) termination of any unvested SAs under this Award Agreement. 
  
 11. No Employment Right.   Awardee acknowledges that neither the fact of
this Award of SAs nor any provision of this Award Agreement or the Plan or the policies adopted pursuant to the Plan shall confer upon Awardee any right with respect to employment or continuation of current employment with the Company or with the
Awardee’s actual employer, or to employment that is not terminable at will. Awardee further acknowledges and agrees that neither the Plan nor this Award of SAs makes Awardee’s employment with the Company or the Awardee’s actual
employer for any minimum or fixed period, and that such employment is subject to the mutual consent of Awardee and the Company or the Awardee’s actual employer, and may be terminated by either Awardee or the Company or the Awardee’s actual
employer at any time, for any reason or no reason, with or without cause or notice or any kind of pre- or post-termination warning, discipline or procedure. 
  
 12. Administration.   The authority to manage and control the operation and administration of this Award Agreement shall be vested in the Committee (as
such term is defined in Section 2(f) of the Plan), and the Committee shall have all powers and discretion with respect to this Award Agreement as it has with respect to the Plan. Any interpretation of the Award Agreement by the Committee and any
decision made by the Committee with respect to the Award Agreement shall be final and binding on all parties. 
  
 13. Plan Governs.   Notwithstanding anything in this Award Agreement to the contrary, the terms of this Award Agreement shall be subject to the terms of the Plan, and this Award Agreement is subject
to all interpretations, amendments, rules and regulations promulgated by the Committee from time to time pursuant to the Plan. 
  
 14. Notices.   Any written notices provided for in this Award Agreement which are sent by mail shall be deemed received three business days after
mailing, but not later than the date of actual receipt. Notices shall be directed, if to Awardee, at the Awardee’s address indicated by the Company’s records and, if to the Company, at the Company’s principal executive office.

  
 15. Electronic Delivery.   The Company may, in its sole
discretion, decide to deliver any documents related to SAs awarded under the Plan or future SAs that may be awarded under the Plan by electronic means or request Awardee’s consent to participate in the Plan by electronic means. Awardee hereby
consents to receive such documents by electronic delivery and agrees 
  

 4 

 to participate in the Plan through an on-line or electronic system established and maintained by the Company or another
third party designated by the Company. 
  
 16. Acknowledgment.  
By Awardee’s acceptance as evidenced below, Awardee acknowledges that Awardee has received and has read, understood and accepted all the terms, conditions and restrictions of this Award Agreement, the Plan, and the current policies referenced
in Section 2(b) of this Award Agreement. Awardee understands and agrees that this Award Agreement is subject to all the terms, conditions, and restrictions stated in this Award Agreement and in the other documents referenced in the preceding
sentence, as the latter may be amended from time to time in the Company’s sole discretion. I further acknowledge that I must accept this Award Agreement in the manner prescribed by the Company no later than the earlier of the first anniversary
of Award Date or the first vesting date specified in Section 2 of this Award Agreement. 
  
 17. Board Approval.   These SAs have been awarded pursuant to the Plan and accordingly this Award of SAs is subject to approval by an authorized committee of the Board of Directors. If this Award of SAs has not already been
approved, the Company agrees to submit this Award for approval as soon as practical. If such approval is not obtained, this award is null and void. 
  
 18. Governing Law.   This Award Agreement shall be governed by the laws of the State of Washington, U.S.A., without regard to Washington laws that might
cause other law to govern under applicable principles of conflicts of law. 
  
 19.
Severability.   If one or more of the provisions of this Award Agreement shall be held invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby and the invalid, illegal or unenforceable provisions shall be deemed null and void; however, to the extent permissible by law, any provisions which could be deemed null and void shall first be construed, interpreted or
revised retroactively to permit this Award Agreement to be construed so as to foster the intent of this Award Agreement and the Plan. 
  
 20. Complete Award Agreement and Amendment.   This Award Agreement, the Notice of Receipt of Stock Awards (if any), and the Plan constitute the entire
agreement between Awardee and the Company regarding SAs. Any prior agreements, commitments or negotiations concerning these SAs are superseded. This Award Agreement may be amended only by written agreement of Awardee and the Company, without consent
of any other person. Awardee agrees not to rely on any oral information regarding this Award of SAs or any written materials not identified in this Section 20. 
  

EXECUTED the day and year first above written. 
  

	
	MICROSOFT CORPORATION
	
	/s/    KEN
DIPIETRO        
	 Ken DiPietro,
 Vice President, Human Resources

  
 AWARDEE’S ACCEPTANCE: 

I have read and fully understood this Award Agreement and, as referenced in Section 16 above, I accept and agree to be bound by all of the terms, conditions and
restrictions contained in this Award Agreement and the other documents referenced in it. I intend to express my acceptance of the Award and this Award Agreement by typing my name in the Awardee acceptance window provided in “step 2” of the
award acceptance checklist, and I further intend the typing of my name to have the same force and effect in all respects as a handwritten signature. 
  

 5

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