Table of Contents

---

---

---

---

Table of Contents

---

---

---

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

(1)

Fiscal year 2001 includes an unfavorable cumulative effect of accounting change of $375 million or $0.06 per diluted share, reflecting the adoption of SFAS No. 133, and $4.80 billion (pre-tax) in impairments of certain investments, primarily cable and telecommunication investments.

(2)

Fiscal year 2002 includes $4.32 billion (pre-tax) in impairments of certain investments, primarily related to the Company’s AT&T investment and further declines in the fair values of European cable and telecommunications holdings, and a $1.25 billion (pre-tax) gain on the sale of Expedia, Inc.

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents

(1)

Includes an unfavorable cumulative effect of accounting change of $375 million or $0.07 per basic share and $0.06 per diluted share, reflecting the adoption of SFAS No. 133.

(2)

Includes $3.92 billion (pre-tax) in impairments of certain investments.

(3)

Includes $1.82 billion (pre-tax) in impairments of certain investments.

(4)

Includes $1.25 billion (pre-tax) gain on the sale of Expedia, Inc. and $1.19 billion (pre-tax) in impairments of certain investments.

(5)

Includes $1.19 billion (pre-tax) in impairments of certain investments.

---

Table of Contents

---

Table of Contents

---

Table of Contents

(1)

Incorporated by reference to Annual Report on Form 10-K For The Fiscal Year Ended June 30, 1999.

(2)

Incorporated by reference to Registration Statement 333-52-852 on Form S-8.

(3)

Incorporated by reference to Annual Report on Form 10-K For The Fiscal Year Ended June 30, 1997.

(4)

Incorporated by reference to Registration Statement 33-37623 on Form S-8.

(5)

Incorporated by reference to Registration Statement 333-91755 on Form S-8.

(6)

Incorporated by reference to Annual Report on Form 10-K For The Fiscal Year Ended June 30, 2001.

(7)

Incorporated by reference to Annual Report on Form 10-K For The Fiscal Year Ended June 30, 2000.

---

Table of Contents

---

---

---

Table of Contents

(1)

Incorporated by reference to Annual Report on Form 10-K For The Fiscal Year Ended June 30, 1999.

(2)

Incorporated by reference to Registration Statement 333-52-852 on Form S-8.

(3)

Incorporated by reference to Annual Report on Form 10-K For The Fiscal Year Ended June 30, 1997.

(4)

Incorporated by reference to Registration Statement 33-37623 on Form S-8.

(5)

Incorporated by reference to Registration Statement 333-91755 on Form S-8.

(6)

Incorporated by reference to Annual Report on Form 10-K For The Fiscal Year Ended June 30, 2001.

(7)

Incorporated by reference to Annual Report on Form 10-K For The Fiscal Year Ended June 30, 2000.

                                                                     Exhibit 3.2

                                     BYLAWS

                                       OF

                              MICROSOFT CORPORATION

                                    ARTICLE I

                                  Shareholders

         1.1   Annual Meeting. The annual meeting of the shareholders of the
Corporation for the election of directors and for the transaction of such other
business as properly may be submitted to such annual meeting, shall be held at
the hour and on the date designated by the Board of Directors or an authorized
committee of the Board of Directors, such date to be within 150 days of the end
of the fiscal year.

         1.2   Special  Meetings.  Special  meetings of the  shareholders of the
Corporation, for any purpose or purposes, may be called at any time by the Board
of Directors or an authorized committee of the Board of Directors.

         1.3   Place of Meetings. Meetings of shareholders shall be held at such
place within or without the State of Washington as determined by the Board of
Directors, or an authorized committee of the Board, pursuant to proper notice.

         1.4   Notice. Written or electronic notice of each shareholders'
meeting stating the date, time, and place and, in case of a special meeting, the
purpose(s) for which such meeting is called, shall be given by the Corporation
not less than ten (10) (unless a greater period of notice is required by law in
a particular case) nor more than sixty (60) days prior to the date of the
meeting, to each shareholder of record, to the shareholder's address as it
appears on the current record of shareholders of the Corporation.

         1.5   Quorum of Shareholders. At any meeting of the shareholders, a
majority in interest of all the shares entitled to vote on a matter, represented
by shareholders of record in person or by proxy, shall constitute a quorum of
that voting group for action on that matter.

         Once a share is represented at a meeting, other than to object to
holding the meeting or transacting business, it is deemed to be present for
quorum purposes for the remainder of the meeting and for any adjournment of that
meeting unless a new record date is or must be set for the adjourned meeting. At
such reconvened meeting, any business may be transacted that might have been
transacted at the meeting as originally notified.

         If a quorum exists, action on a matter is approved by a voting group if
the votes cast within the voting group favoring the action exceed the votes cast
within the voting group opposing the action, unless the question is one upon
which by express provision of the Washington Business Corporation Act, as
amended ("WBCA"), or of the Articles of Incorporation or of these Bylaws a
different vote is required.

         1.6   Adjournment. A majority of the shares represented at the meeting,
even if less than a quorum, may adjourn the meeting from time to time. At such
reconvened meeting at which a quorum is present any business may be transacted
at the meeting as originally notified. If a meeting is adjourned to a different
date, time, or place, notice need not be given of the new date, time, or place
if a new date, time, or place is announced at the meeting before adjournment;
however, if a new record date for the adjourned meeting is or must be fixed in
accordance with the WBCA, notice of the adjourned meeting must be given to
persons who are shareholders as of the new record date.



         1.7   Record Date and Transfer Books. For the purpose of determining
shareholders who are entitled to notice of or to vote at any meeting of
shareholders or any adjournment thereof, or entitled to receive payment of any
dividend, or in order to make a determination of shareholders for any other
proper purpose, the Board of Directors may fix in advance a record date for any
such determination of shareholders, such date in any case to be not more than
seventy (70) days and, in case of a meeting of shareholders, not less than ten
(10) days prior to the date on which the particular action, requiring such
determination of shareholders, is to be taken.

         If no record date is fixed for such purposes, the date on which notice
of the meeting is given or the date on which the resolution of the Board of
Directors declaring such dividend is adopted, as the case may be, shall be the
record date for such determination of shareholders.

         When a determination of shareholders entitled to vote at any meeting of
shareholders has been made as provided in this section, such determination shall
apply to any adjournment thereof, unless the Board of Directors fixes a new
record date, which it must do if the meeting is adjourned more than one hundred
twenty (120) days after the date is fixed for the original meeting.

         1.8   Voting Record. The officer or agent having charge of the stock
transfer books for shares of the Corporation shall make at least ten (10) days
before each meeting of shareholders a complete record of the shareholders
entitled to vote at such meeting or any adjournment thereof, arranged by any
applicable voting groups and in alphabetical order, with the address of and the
number of shares held by each. Such record shall be produced and kept open at
the time and place of the meeting and shall be subject to the inspection of any
shareholder or any shareholder's agent during the whole time of the meeting for
the purposes thereof.

         1.9   Proxies. Shareholders of record may vote at any meeting either in
person or by proxy. A shareholder may appoint a proxy to vote for the
shareholder by submission of (a) an appointment form signed by the shareholder
or the shareholder's attorney-in-fact, or (b) an electronic transmission sent in
accordance with the provisions for electronic notice under Section 3.3. An
appointment of proxy is effective when an appointment form or an electronic
transmission (or documentary evidence thereof, including verification
information) is received by the person authorized to tabulate votes for the
Corporation. The proxy has the same power to vote as that possessed by the
shareholder, unless the appointment form or electronic transmission contains an
express limitation on the power to vote or direction as to how to vote the
shares on a particular matter, in which event the Corporation must tabulate the
votes in a manner consistent with that limitation or direction. An appointment
of proxy is valid for eleven (11) months unless a longer period is expressly
provided in the appointment form or electronic transmission.

         1.10  Organization of Meeting. The officer designated by the Chief
Executive Officer (or in his absence, any other officer designated by the Board
of Directors) may call any meeting of shareholders to order and shall be the
Chairman thereof. The Secretary of the Corporation, if present at any meeting of
its shareholders, shall act as the Secretary of such meeting. If the Secretary
is absent from any such meeting, the Chairman of such meeting may appoint a
Secretary for the meeting.

         1.11  Order of Business. The Chairman of a meeting of shareholders,
determined in accordance with Section 1.10, shall have discretion to establish
the order of business for such meeting subject to any specific order established
by the Board of Directors.

Bylaws of Microsoft Corporation--Page 2



                                   ARTICLE II

                               Board of Directors

         2.1   Number and Qualifications. The business affairs and property of
the Corporation shall be managed by a Board of not less than three directors nor
more than eleven directors. The number of directors may at any time be increased
or decreased by resolution of the Board of Directors or by the shareholders at
the annual meeting. Directors need not be shareholders of the Corporation or
residents of the State of Washington.

         2.2   Election - Term of Office. The directors shall be elected by the
shareholders at each annual shareholders' meeting to hold office until the next
annual meeting of the shareholders and until their respective successors are
elected and qualified. If, for any reason, the directors shall not have been
elected at any annual meeting, they may be elected at a special meeting of
shareholders called for that purpose in the manner provided by these Bylaws.

         2.3   Regular Meetings. Regular meetings of the Board of Directors
shall be held at such places, and at such times as the Board may determine, and,
if so determined, no notice thereof need be given. A regular meeting of the
Board of Directors may be held without notice immediately after the annual
meeting of shareholders at the same place at which such meeting was held.

         2.4   Special Meetings. Special  meetings of the Board of  Directors
may be held at any time or place upon the call of a majority of directors, the
Chief Executive Officer or the Chief Operating Officer.

         2.5   Notice. No notice is required for regular meetings of the Board
of Directors. Notice of special meetings of the Board of Directors, stating the
date, time, and place thereof, shall be given in a manner described in Section
3.3 at least two (2) days prior to the date of the meeting. The purpose of the
meeting need not be given in the notice.

         2.6   Waiver of Notice. A director may waive notice of a special
meeting of the Board of Directors either before or after the meeting, and such
waiver shall be deemed to be the equivalent of giving notice. The waiver must be
in given in accordance with the requirements of written or electronic notice in
Section 3.3. Attendance or participation of a director at a meeting shall
constitute waiver of notice of that meeting unless said director attends or
participates for the express purpose of objecting to the transaction of business
because the meeting has not been lawfully called or convened.

         2.7   Quorum of Directors. A majority of the members of the Board of
Directors shall constitute a quorum for the transaction of business, but if at
any meeting of the Board there shall be less than a quorum present, a majority
of those present may adjourn the meeting from time to time until a quorum shall
have been obtained. When a quorum is present at any meeting, a majority of the
members present shall decide any question brought before such meeting, except as
otherwise provided by the Articles of Incorporation or by these Bylaws.

         2.8   Adjournment. A majority of the directors present, even if less
than a quorum, may adjourn a meeting and continue it to a later time. Notice of
the adjourned meeting or of the business to be transacted thereat, other than by
announcement, shall not be necessary. At any adjourned meeting at which a quorum
is present, any business may be transacted which could have been transacted at
the meeting as originally called.

Bylaws of Microsoft Corporation--Page 3



         2.9   Resignation. Any director of the Corporation may resign at any
time by giving written notice to the Board of Directors, the Chairman, the
President, or the Secretary of the Corporation. Any such resignation is
effective when the notice is delivered, unless the notice specifies a later
effective date.

         2.10  Vacancies. Unless otherwise provided by the WBCA, in case of any
vacancy in the Board of Directors, including a vacancy resulting from an
increase in the number of directors, the remaining directors, whether
constituting a quorum or not, may fill the vacancy.

         2.11  Compensation. The Board of Directors shall have the sole
authority to fix the amount of compensation of directors.

         2.12  Committees. The Board of Directors, by resolution adopted by a
majority of the full Board, may designate from among its members one or more
committees, each of which:

               a.   Shall have two (2) or more members;

               b.   Shall be governed by the same rules regarding meetings,
         action without  meetings,  notice,  and waiver of notice, and quorum
         and voting requirements as applied to the Board; and

               c.   To the extent provided in such resolution, shall have and
         may exercise all the authority of the Board, except no such committee
         shall have the authority to:

                    (1)  Authorize or approve a distribution except according to
               a general formula or method  prescribed by the Board;

                    (2)  Approve or propose to shareholders action which the
               WBCA requires to be approved by shareholders;

                    (3)  Fill vacancies on the Board or on any of its
               committees;

                    (4)  Amend the Articles of Incorporation;

                    (5)  Adopt, amend, or repeal the Bylaws;

                    (6)  Approve a plan of merger not requiring shareholder
               approval; or

                    (7)  Authorize or approve the issuance or sale or
               contract for sale of shares, or determine the designation and
               relative rights, preferences, and limitations on a class or
               series of shares, except that the Board may authorize a
               committee, or a senior executive officer of the Corporation, to
               do so within limits specifically prescribed by the Board.

                                   ARTICLE III

                    Special Measures Applying to Meetings of
        Shareholders, the Board of Directors and Committees of the Board

         3.1   Action by Unanimous Consent. Any action required or permitted to
be taken at a meeting of the Board of Directors or a committee of the Board may
be accomplished without a meeting if the action is taken by all the members of
the Board or all the members of the committee, as the case may be. The action
must be evidenced by one or more consents describing the action to be taken,
given by all directors or all members of the committee, as the case may be, to
the Corporation for inclusion in the minutes in a manner equivalent to written
or

Bylaws of Microsoft Corporation--Page 4




electronic notice under Section 3.3. Directors' consents may be given either
before or after the action taken.

         Action taken by unanimous consent is effective when the last director
consents to the action, unless the consent specifies a later effective date.

         3.2   Use of Communications Equipment. Meetings of the shareholders,
the Board of Directors and committees of the Board may be effectuated by means
of a conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other during the meeting.
Participation by such means shall constitute presence in person at such meeting.

         3.3   Oral, Written and Electronic Notice. Terms used in this Bylaw
shall be as defined in the WBCA.

         Oral notice may be communicated in person or by telephone, wire or
wireless equipment that does not transmit a facsimile of the notice. Oral notice
is effective when communicated if communicated in a comprehensible manner.

         Written notice may be transmitted by mail, private carrier, or personal
delivery; telegraph or teletype; or telephone, wire, or wireless equipment that
transmits a facsimile of the notice and provides the transmitter with an
electronically generated receipt. Written notice is effective at the earliest of
the following: (a) when received; (b) five (5) days after its deposit in the
U.S. mail if mailed with first-class postage, to the address as it appears on
the current records of the Corporation; (c) on the date shown on the return
receipt, if sent by registered or certified mail, return receipt requested, and
the receipt is signed by or on behalf of the addressee. Written notice to a
shareholder is effective (a) when mailed, if mailed with first class postage
prepaid; and (b) when dispatched, if prepaid, by air courier.

         Notices to directors and shareholders from the Corporation and from
directors and shareholders to the Corporation may be provided in an electronic
transmission which contains or is accompanied by information from which it can
be reasonably verified that the transmission was authorized by the shareholder
or by the shareholder's attorney-in-fact. Subject to contrary provisions in the
WBCA, notice to shareholders or directors in an electronic transmission shall be
effective only with respect to shareholders and directors that have consented,
in the form of a record, to receive electronically transmitted notices and that
have designated in the consent the address, location, or system to which these
notices may be electronically transmitted and with respect to a notice that
otherwise complies with any other requirements of the WBCA and any applicable
federal law. A shareholder or director who has consented to receipt of
electronically transmitted notices may revoke this consent by delivering a
revocation to the Corporation in the form of a record. The consent of any
shareholder or director is revoked if (a) the Corporation is unable to
electronically transmit two consecutive notices given by the Corporation in
accordance with the consent, and (b) this inability becomes known to the
Secretary, the transfer agent, or any other person responsible for giving the
notice. The inadvertent failure by the Corporation to treat this inability as a
revocation does not invalidate any meeting or other action.

                                   ARTICLE IV

                                    Officers

         4.1   Positions. The officers of the Corporation may consist of a
Chairman, a Chief Executive Officer, a President, one or more Vice Presidents
(who may be designated as Corporate Vice Presidents, Senior Vice Presidents,
Executive Vice Presidents or Group Vice Presidents), a Secretary and a Treasurer
as appointed by the Board of Directors or the Chief Executive Officer. The
Corporation may have such additional or assistant officers (sometimes referred
to as "additional officers") as the Board of Directors, Chief Executive Officer
or Chief

Bylaws of Microsoft Corporation--Page 5



Operating Officer may deem necessary for its business and may appoint from time
to time. The Board of Directors shall also have the authority, but shall not be
required, to designate officers as the Chief Operating Officer, the Chief
Financial Officer or similar such titles. Any two or more offices may be held by
the same person.

         If a director/officer has not been designated as Chairman, or if the
designated Chairman is not present at a meeting, the Board of Directors shall
elect a Chairman from amongst its members to serve as Chairman of the Board of
Directors for such meeting. The Chairman shall preside at all meetings of the
Board of Directors, and shall have such other powers as the Board may determine.

         4.2   Appointment and Term of Office. The officers of the Corporation
shall be appointed annually by the Board of Directors at the first meeting of
the Board held after each annual meeting of the shareholders. If officers are
not appointed at such meeting, such appointment shall occur as soon as possible
thereafter, or may be left vacant. Each officer shall hold office until a
successor shall have been appointed and qualified or until said officer's
earlier death, resignation, or removal.

         4.3   Authority and Duties of the Chief Executive Officer. The Chief
Executive Officer shall have general charge and supervision of the business of
the Corporation, shall see that all orders, actions and resolutions of the Board
of Directors are carried out, and shall have such other authority and shall
perform such other duties as set forth in these Bylaws or, to the extent
consistent with the Bylaws, such other authorities and duties as prescribed by
the Board.

         4.4   Authority and Duties of Other Officers. Each officer other than
the Chief Executive Officer shall have the authority and shall perform the
duties set forth in these Bylaws or, to the extent consistent with the Bylaws,
the duties prescribed by the Board of Directors, by the Chief Executive Officer,
or by an officer authorized by the Board to prescribe the duties of such
officer. Any designation of duties by the Chief Executive Officer or other
officer shall be subject to review by the Board of Directors but shall be in
full force and effect in the absence of such review.

         4.5   Compensation and Contract Rights. The Board of Directors shall
have authority (a) to fix the compensation, whether in the form of salary,
bonus, stock options or otherwise, of all officers and employees of the
Corporation, either specifically or by formula applicable to particular classes
of officers or employees, and (b) to authorize officers of the Corporation to
fix the compensation of subordinate employees. The Board of Directors shall have
authority to appoint a Compensation Committee and may delegate to such committee
any or all of its authority relating to compensation. The appointment of an
officer shall not of itself create contract rights.

         4.6   Resignation or Removal. Any officer of the Corporation may resign
at any time by giving notice to the Board of Directors or the Corporation. Any
such resignation is effective when the notice is given, unless the notice
specifies a later date, and shall be without prejudice to the contract rights,
if any, of such officer.

         The Board of Directors, by majority vote of the entire Board, may
remove any officer or agent, with or without cause. An officer or assistant
officer, if appointed by another officer, may also be removed by any officer
authorized to appoint officers or assistant officers. The removal shall be
without prejudice to the contract rights, if any, of the person so removed.

         4.7   Vacancies. If any office becomes vacant by any reason, the
directors may appoint a successor or successors who shall hold office for the
unexpired term or leave such office vacant.

Bylaws of Microsoft Corporation--Page 6



                                    ARTICLE V

                    Certificates of Shares and Their Transfer

         5.1   Issuance; Certificates of Shares. No shares of the Corporation
shall be issued unless authorized by the Board of Directors. Such authorization
shall include the maximum number of shares to be issued, the consideration to be
received, and a statement that the Board of Directors considers the
consideration to be adequate. Shares may but need not be represented by
certificates. Certificates for shares of the Corporation shall be in such form
as is consistent with the provisions of the WBCA or the law of a predecessor
corporation and after the effective date of these Bylaws shall state:

               a.   The name of the Corporation and that the Corporation is
         organized under the laws of the State of Washington;

               b.   The name of the person to whom issued; and

               c.   The number and class of shares and the designation of the
         series, if any, which such certificate represents.

         The certificate shall be signed by original or facsimile signature of
two officers of the Corporation, and the seal of the Corporation may be affixed
thereto.

         5.2   Rules and Regulations Concerning the Issue, Transfer and
Registration of Shares. The Board of Directors shall have power and authority to
make all such rules and regulations as the Board may deem proper or expedient
concerning the issue, transfer and registration of shares of stock. In case of
the loss, mutilation, or destruction of a certificate of stock, a duplicate
certificate may be issued upon such terms as the Board of Directors shall
authorize. The Board of Directors shall have power and authority to appoint from
time to time one or more transfer agents and registrar of the shares of stock.

         5.3   Shares without Certificates. The Board of Directors may authorize
the issue of some or all of the shares without certificates. Within a reasonable
time after the issue or transfer of shares without certificates, the Corporation
shall send the shareholder a written statement of the information required on
certificates by the WBCA.

                                   ARTICLE VI

                                Books and Records

         6.1   Books of Accounts, Minutes, and Share Register. Except as
otherwise provided by law the Corporation:

               a.   Shall keep as permanent records minutes of all meetings of
         its shareholders and Board of Directors, a record of all actions taken
         by the Board without a meeting, and a record of all actions taken by a
         committee of the Board exercising the authority of the Board on behalf
         of the Corporation;

               b.   Shall maintain appropriate accounting records;

               c.   Or its agent shall maintain a record of its shareholders, in
         a form that permits preparation of a list of the names and addresses of
         all shareholders, in alphabetical order by class of shares showing the
         number and class of shares held by each; and

Bylaws of Microsoft Corporation--Page 7



               d.   Shall keep a copy of the following records at its principal
         office:

                    (1)      The Articles or Restated Articles of Incorporation
               and all amendments to them currently in effect;

                    (2)      The Bylaws or Restated Bylaws and all amendments to
               them currently in effect;

                    (3)      The  minutes of all shareholders' meetings, and
               records of all actions taken by shareholders without a meeting,
               for the past three (3) years;

                    (4)      Its financial statements for the past three (3)
               years, including balance sheets showing in reasonable detail
               the financial condition of the Corporation as of the close of
               each fiscal year, and an income statement showing the results
               of its operations during each fiscal year prepared on the
               basis of generally accepted accounting principles or, if not,
               prepared on a basis explained therein;

                    (5)      All communications to shareholders generally within
               the past three (3) years;

                    (6)      A list of the names and business addresses of its
               current directors and officers; and

                    (7)      Its most recent annual report delivered to the
               Secretary of State of Washington.

         6.2   Copies of Resolutions. Any person dealing with the Corporation
may rely upon a copy of any of the records of the proceedings, resolutions, or
votes of the Board of Directors or shareholders, when certified by the
Secretary, an assistant secretary, or other officer authorized by the Board.

Adopted:  August 22, 2002.

Bylaws of Microsoft Corporation--Page 8

                                                                    Exhibit 10.5

                              MICROSOFT CORPORATION

                                STOCK OPTION PLAN
                          FOR CONSULTANTS AND ADVISORS


     1.   Purposes of the Plan. The purposes of this Stock Option Plan are to
attract and maintain a long-term relationship with the best available
consultants and advisors, to provide additional incentive to such individuals,
and to promote the success of the Company's business. Options granted hereunder
shall be Nonqualified Stock Options, and shall be evidenced by written Stock
Option Agreements.

     2.   Definitions. As used herein, the following definitions shall apply:

          (a)  "Board" shall mean the Committee, if such Committee has been
appointed, or the Board of Directors of the Company, if such Committee has not
been appointed.

          (b)  "Code" shall mean the Internal Revenue Code of 1986, as amended.

          (c)  "Committee" shall mean the Committee appointed by the Board of
Directors in accordance with paragraph (a) of Section 4 of the Plan, if one is
appointed.

          (d)  "Common Stock" shall mean the common stock of Microsoft
Corporation.

          (e)  "Company" shall mean Microsoft Corporation, a Washington
corporation.

          (f)  "Continuous Status as a Consultant or Advisor" shall mean the
absence of any interruption, expiration, or termination of an Optionee's
consulting or advisory relationship, with the Company. Continuous Status as a
Consultant or Advisor shall not be considered interrupted in the case of any
temporary interruption in such person's availability to provide services to the
Company which has been authorized in writing by a Vice President of the Company
prior to its commencement; provided, however, that the Company may require
suspension of vesting in such cases. Continuous Status as a Consultant or
Advisor shall not be considered terminated if such person accepts employment
with the Company, and thereafter a person's Continuous Status as an Employee,
and the effects of an interruption or termination thereof (including by reason
of death or disability), shall be determined with reference to the Company's
1991 Stock Option Plan.

          (g)  "Nonqualified Stock Option" shall mean an Option not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.

          (h)  "Option" shall mean a stock option granted pursuant to the Plan.

          (i)  "Optioned Stock" shall mean the Common Stock subject to an
Option.

          (j)  "Optionee" shall mean any consultant or advisor who receives an
Option.

          (k)  "Plan" shall mean this Stock Option Plan for Consultants and
Advisors.

          (l)  "Share" shall mean one share of Common Stock, as adjusted in
accordance with Section 11 of the Plan.

                                       1.



     3. Stock Subject to the Plan. Subject to the provisions of Section 11 of
the Plan, the maximum aggregate number of shares which may be optioned and sold
under the Plan is 2,400,000 shares of Common Stock. The Shares may be
authorized, but unissued, or reacquired Common Stock.

        If an Option should expire or become unexercisable for any reason
without having been exercised in full, the unpurchased Shares which were subject
thereto shall, unless the Plan shall have been terminated, become available for
future grant under the Plan.

     4. Administration of the Plan.

        (a) Procedure. The Plan shall be administered by the Board of Directors
of the Company.

            (1) The Board of Directors may appoint a Committee, consisting of
not less than two members of the Board of Directors, to administer the Plan on
behalf of the Board of Directors, subject to such terms and conditions as the
Board of Directors may prescribe. Once appointed, such Committee shall continue
to serve until otherwise directed by the Board of Directors.

            (2) The Board of Directors may, from time to time, increase the size
of the Committee and appoint additional members thereof, remove members (with or
without cause) and appoint new members in substitution therefor, fill vacancies
however caused, or remove all members of the Committee and thereafter directly
administer the Plan.

        (b) Powers of the Board. Subject to the provisions of the Plan, the
Board shall have the authority, in its discretion: (i) to grant Nonqualified
Stock Options; (ii) to determine, in accordance with Section 8(b) of the Plan,
the fair market value of the Common Stock; (iii) to determine, in accordance
with Section 8(a) of the Plan, the exercise price per share of Options to be
granted, (iv) to determine the individuals to whom, and the time or times at
which, options shall be granted and the number of Shares to be represented by
each Option; (v) to interpret the Plan; (vi) to prescribe, amend, and rescind
rules and regulations relating to the Plan; (vii) to determine the terms and
provisions of each Option granted (which need not be identical) and, with the
consent of the holder thereof, modify or amend each Option; (viii) to reduce the
exercise price per share of outstanding and unexercised Options; (ix) to
accelerate or defer (with the consent of the Optionee) the exercise date of any
Option; (x) to authorize any person to execute, on behalf of the Company, any
instrument required to effectuate the grant of an Option previously granted by
the Board; and (xi) to make all other determinations deemed necessary or
advisable for the administration of the Plan.

        (c) Effect of Board's Decision. All decisions, determinations, and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.

     5. Eligibility.

        (a) Options may be granted to consultants and advisors who provide
consulting services to the Company. In no event shall any employees (full-time
or part-time) of the Company be eligible for the grant of an Option under the
Plan. Notwithstanding the foregoing, the fact that an Optionee subsequently
becomes an employee of the Company shall not affect

                                       2.



such Optionee's Option, so long as the Optionee's Continuous Status as a
Consultant or Advisor was uninterrupted prior to his or her commencement of
employment with the Company.

            (b) Nothing in the Plan or any Option granted hereunder shall confer
upon any Optionee any right to continue or require the continuance of the
Optionee's consulting or advisory relationship with the Company, nor shall it
interfere in any way with the Optionee's right or the Company's right to
terminate such relationship at any time, with or without cause.

     6.     Term of Plan. The Plan shall become effective upon its adoption by
the Board and shall continue in effect for ten (10) years, unless sooner
terminated under Section 14 of the Plan.

     7.     Term of option. The term of each Option shall be no more than ten
(10) years from the date of grant.

     8.     Exercise Price and Consideration.

            (a) The per Share exercise price under each Option shall be such
price as is determined by the Board, which price may be less than, equal to, or
greater than the fair market value per Share on the date of grant.

            (b) The fair market value per Share shall be the closing price per
share of the Common Stock on the National Association of Securities Dealers
Automated Quotation ("NASDAQ") National Market System on the date of grant. If
the Common Stock ceases to be listed on the NASDAQ National Market System, the
Board shall designate an alternative method of determining the fair market
value of the Common Stock.

            (c) The consideration to be paid for the Shares to be issued upon
exercise; of an Option, including the method of payment, shall be determined by
the Board at the time of grant and may consist of cash and/or check. Payment may
also be made by delivering a properly executed exercise notice, together with
irrevocable instructions to a broker to promptly deliver to the Company the
amount of sale proceeds necessary to pay the exercise price.

            (d) Prior to issuance of the Shares upon exercise of an Option, the
Optionee shall pay any federal, state, and local withholding obligations of the
Company, if applicable.

     9.     Exercise of Option.

            (a) Procedure for Exercise; Rights as a Stockholder. Any Option
 granted hereunder shall be exercisable at such times and under such conditions
 as determined by the Board at the time of grant, and as shall be permissible
 under the terms of the Plan. An Option may not be exercised for a fraction of
 a Share.

                An Option shall be deemed to be exercised when written notice of
such excercise has been given to the Company in accordance with the terms of the
Option by the person entitled to exercise the Option and full payment for the
Shares with respect to which the Option is exercised has been received by the
Company. Full payment may, as authorized by the Board, consist of any
consideration and method of payment allowable under Section 8(c) of the Plan.
Until the issuance (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company) of the stock
certificate evidencing such Shares, no right to vote or receive dividends or any
other rights as a stockholder shall exist with

                                       3.



respect to the Optioned Stock, notwithstanding the exercise of the Option. The
Company shall issue (or cause to be issued) such stock certificate promptly upon
exercise of the Option. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 11 of the Plan.

                The exercise of an Option in any manner shall result in a
decrease in the number of Shares which thereafter may be available, both for
purposes of the Plan and for sale under the Option, by the number of Shares as
to which the Option is exercised.

            (b) Termination of Consulting Relationship with Optionee. In the
event of termination of an Optionee's Continuous Status as a Consultant or
Advisor, such Optionee may exercise stock options to the extent exercisable on
the date of termination. Such exercise must occur within three (3) months (or
such shorter time as may be specified in the grant), after the date of such
termination (but in no event later than the date of expiration of the term of
such Option as set forth in the Option Agreement). To the extent that the
Optionee was not entitled to exercise the Option at the date of such
termination, or does not exercise such Option within the time specified herein,
the Option shall terminate.

            (c) Termination of Consulting Relationship Due to Disability of
Optionee. Notwithstanding the provisions of Section 9(b) above, in the event of
termination of an Optionee's Continuous Status as a Consultant or Advisor as a
result of total and permanent disability (i.e., the inability to engage in any
substantial gainful activity by reason of any medically determinable physical or
mental impairment which can be expected to result in death or which has lasted
or can be expected to last for a continuous period of twelve (12) months), such
Optionee may exercise stock options to the extent exercisable on the date of
termination. Such exercise must occur within eighteen (18) months (or such
shorter time as may be specified in the grant), after the date of such
termination (but in no event later than the date of expiration of the term of
such Option as set forth in the Option Agreement). To the extent that the
Optionee was not entitled to exercise such Option within the time specified
herein, the Option shall terminate.

            (d) Death of Optionee. Notwithstanding the provisions of Section 9
(b) above, In the event of the death of an Optionee:

                (i) who is at the time of death a consultant or advisor to the
Company, the Option may be exercised, at any time within six (6) months
following the date of death (but in no event later than the date of expiration
of the term of such Option as set forth in the Option Agreement), by the
Optionee's Personal Representative or by a person who acquired the right to
exercise the Option by bequest or inheritance, but only to the extent of the
right to exercise that had accrued as of the date of death; or

                (ii) whose Option has not yet expired, but whose Continuous
Status as a Consultant or Advisor terminated prior to the date of death, the
Option may be exercised, at any time within six (6) months following the date of
death (but in no event later than the date of expiration of the term of such
Option as set forth in the Option Agreement), by the Optionee's Personal
Representative or by a person who acquired the right to exercise the Option by
bequest or inheritance, but only to the extent of the right to exercise that had
accrued at the date of termination.

            (e) Notwithstanding subsections (b), (c), and (d) above, the Board
shall have the authority to extend the expiration date of any outstanding option
in circumstances in which it

                                       4.



deems such action to be appropriate (provided that no such extension shall
extend the term of an option beyond the date on which the option would have
expired if no termination of the Optionee's Continuous Status as a Consultant
or Advisor had occurred).

     10. Non-Transferability of Options. The Option 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 and may be exercised, during the
lifetime of the Optionee, only by the Optionee.

     11. Adjustments Upon Changes in Capitalization or Merger. Subject to any
required action by the stockholders of the Company, the number of shares of
Common Stock covered by each outstanding Option, and the number of shares of
Common Stock which have been authorized for issuance under the Plan but as to
which no Options have yet been granted or which have been returned to the Plan
upon cancellation or expiration of an Option, as well as the price per share of
Common Stock covered by each such outstanding Option, shall be proportionately
adjusted for any increase or decrease in the number of issued shares of Common
Stock resulting from stock split, reverse stock split, stock dividend,
combination, or reclassification of the Common Stock, or any other increase or
decrease in the number of issued shares of Common Stock effected without receipt
of consideration by the Company; provided, however, that conversion of any
convertible securities of the Company shall not be deemed to have been "effected
without receipt of consideration." Such adjustment shall be made by the Board,
whose determination in that respect shall be final, binding, and conclusive.
Except as expressly provided herein, no issuance by the Company of shares of
stock of any class, or securities convertible into shares of stock of any class,
shall affect, and no adjustment by reasons thereof shall be made with respect
to, the number or price of shares of Common Stock subject to an Option.

         In the event of the proposed dissolution or liquidation of the Company,
the Option will terminate immediately prior to the consummation of such proposed
action, unless otherwise provided by the Board. The Board may, in the exercise
of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Board and give each Optionee the right to
exercise an Option as to all or any part of the Optioned Stock, including Shares
as to which the Option would not otherwise be exercisable. In the event of a
proposed sale of all or substantially all of the assets of the Company, or the
merger of the Company with or into another corporation, the Option shall be
assumed or an equivalent option shall be substituted by such successor
corporation or a parent or subsidiary of such successor corporation, unless such
successor corporation does not agree to assume the Option or to substitute an
equivalent option, in which case the Board shall, in lieu of such assumption or
substitution, provide for the Optionee to have the right to exercise the Option
as to all of the Optioned Stock, including Shares as to which the Option would
not otherwise be exercisable. If the Board makes an Option fully exercisable in
lieu of assumption or substitution in the event of a merger or sale of assets,
the Board shall notify the Optionee that the Option shall be fully exercisable
for a period of fifteen (15) days from the date of such notice, and the Option
will terminate upon the expiration of such period.

     12. Time of Granting Options. The date of grant of an Option shall, for all
purposes, be the date on which the Board makes the determination granting such
Option. Notice of the determination shall be given to each consultant or advisor
to whom an Option is so granted within a reasonable time after the date of such
grant.

                                       5.



     13. Substitutions and Assumptions. The Board shall have the right to
substitute or assume Options in connection with mergers, reorganizations,
separations, or other transactions to which Section 424(a) of the Code applies,
provided such substitutions and assumptions are permitted by Section 424 of the
Code and the regulations promulgated thereunder. The number of Shares reserved
pursuant to Section 3 may be increased by the corresponding number of Options
assumed and, in the case of a substitution, by the net increase in the number of
Shares subject to Options before and after the substitution.

     14. Amendment and Termination of the Plan.

         (a) Amendment and Termination. The Board may amend or terminate the
Plan from time to time in such respects as the Board may deem advisable.

         (b) Effect of Amendment or Termination. Any such amendment or
termination of the Plan shall not affect Options already granted and such
Options shall remain in full force and effect as if this Plan had not been
amended or terminated, unless mutually agreed otherwise between the Optionee and
the Board, which agreement must be in writing and signed by the Optionee and the
Company.

     15. Conditions Upon Issuance of Shares. Shares shall not be issued pursuant
to the exercise of an Option unless the exercise of such Option and the issuance
and delivery of such shares pursuant to thereto shall comply with all relevant
provisions of law, including, without limitation, the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, the rules and
regulations promulgated thereunder, and the requirements of any stock exchange
upon which the Shares may then be listed, and shall be further subject of the
approval of counsel for the Company with respect to such compliance.

     16. Reservation of Shares. The Company, during the term of this Plan, will
at all times reserve and keep available such number of Shares as shall be
sufficient to satisfy the requirements of the Plan.

[The number of shares in Section 3 has been adjusted for stock splits in 1992,
1994, 1996, 1998, and 1999.]

                                       6.

                                                                    Exhibit 10.8

                                TRUST AGREEMENT


         This TRUST AGREEMENT is made on June 1, 1993, between MICROSOFT
CORPORATION, a Delaware corporation ("Grantor"), and FIRST INTERSTATE BANK OF
WASHINGTON, N.A. ("Trustee"), whose address is P.O. Box 21927, Seattle,
Washington 98111, and William G. Reed, Jr. (the initial "Beneficiaries'
Representative").

         WHEREAS Grantor has agreed to indemnify "Beneficiaries" as defined in
Section 1.1, including but not limited to the Directors and certain executive
officers listed in Exhibit A, in accordance with its statutory and contractual
obligations, including, but not limited to, those assumed in indemnification
agreements in the form attached as Exhibit B to this Agreement or such other
forms of indemnification agreement as may be entered into between Grantor and
Beneficiaries; and

         WHEREAS Grantor desires to create a trust (the "Trust") to fund its
obligations for indemnification of the foregoing directors and officers.

         NOW, THEREFORE, the Trustee accepts the trust created hereby and agrees
that it will hold all property which it may receive hereunder, IN TRUST, for the
purposes and upon the terms and conditions hereinafter stated and Grantor and
Trustee agree as follows:



                                    ARTICLE I

                            THE BENEFICIARIES AND THE

                          BENEFICIARIES' REPRESENTATIVE

         1.1  The Beneficiaries. All present and future members of the Board
of Directors or executive officers of Grantor who are specifically given the
benefits of this Trust Agreement pursuant to an indemnification agreement
substantially similar to the form attached as Exhibit B shall be
"Beneficiaries" of the Trust, provided, however, that if there is a "Change in
Control" of Grantor no officers or directors elected or appointed after or in
connection with such Change in Control shall be entitled to be Beneficiaries
who were not Beneficiaries prior to such Change in Control. For purposes of this
Agreement, the term "Change of Control" shall mean (a) a tender offer or
exchange offer where the purpose of such offer is to take over and control the
Company and such offer is accepted by owners of securities of the Company
representing 50% or more of the combined voting power of the Company's then
outstanding voting securities, (b) the Company is merged or consolidated with
another corporation and as a result of such merger or consolidation less than
50% of the outstanding voting securities of the surviving or resulting
corporation shall then be owned in the aggregate by the former stockholders of
the Company, (c) the Company transfers substantially all of its assets to
another corporation which is not a wholly owned subsidiary of the Company, or
(d) during any period of twelve consecutive months, individuals who at the
beginning of such twelve month period were directors of the Company cease for
any reason to

                                       2



constitute at least a majority of the Board of Directors of the Company. The
Beneficiaries' Representative shall promptly notify the Trustee of a Change in
Control. A list of the Beneficiaries as of the date of this Agreement is annexed
hereto as Exhibit A. Any individual who is or becomes a Beneficiary shall remain
so despite his resignation, removal, or other failure to continue to be an
officer or member of the Board of Directors during the term of this Agreement.

     1.2 New Beneficiaries. If an individual not listed in Exhibit A is duly
elected to the Board of Directors of Grantor or appointed as an executive
officer, Grantor agrees to notify the Trustee promptly of such election or
appointment by delivering to the Trustee an updated Exhibit A which has been
certified by the Secretary of Grantor to be accurate and to have been prepared
in good faith. The Trustee shall have the right to rely on the accuracy and
completeness of the most recent Exhibit A so provided.

     1.3 Beneficiaries' Representative. All communications or demands made by
and among the Trustee and the Beneficiaries are to be made through the
individual then designated as the Beneficiaries' Representative. The
Beneficiaries' Representative shall have the exclusive right to make demands
from time to time on the Trustee to direct payment to one or more of the
Beneficiaries.

     1.4 Identity of Beneficiaries' Representative. The Beneficiaries'
Representative shall be a present or past non-employee director of Grantor,
designated in writing to the Trustee

                                        3



and Grantor by a majority of the then living past and present nonemployee
directors who are Beneficiaries under this Agreement. The Trustee and Grantor
shall be entitled to rely on the original appointment of that individual as the
Beneficiaries' Representative unless notified in writing of a change in the
Beneficiaries' Representative, which writing must be signed by at least a
majority of the then living past and present nonemployee directors who are
Beneficiaries under this Agreement. The Trustee shall then be entitled to rely
on such subsequent appointment as of the date such writing is received by the
Trustee. The Trustee shall be entitled to rely on the accuracy and completeness
of a written list delivered to the Trustee by Grantor, and certified by the
Secretary of Grantor to be accurate and to have been prepared in good faith,
identifying the individuals who constitute the then living past and present
nonemployee directors who are Beneficiaries under this Agreement. In the absence
of an effective appointment of a Beneficiaries' Representative, the Trustee or
any Beneficiary may, after ten days' written notice to all Beneficiaries,
petition a court of competent jurisdiction at the expense of the Trust for
appointment of a Beneficiaries' Representative who need not be a Beneficiary (if
none are willing or able to serve), but shall in no event be an officer or
director elected or appointed after a Change in Control who was not a
Beneficiary prior to such Change in Control. The designation or appointment of a
successor Beneficiaries' Representative shall become effective only upon the
execution of a counterpart of this Trust Agreement whereby such successor
Beneficiaries'

                                       4



Representative shall assume and become bound by all the duties and
responsibilities under this Trust Agreement and each indemnification agreement
covered by this Trust Agreement.

         1.5 Right of Beneficiaries to Receive Payments. The rights of the
Beneficiaries to demand and receive distributions from the Trustee shall not be
affected or diminished in any way by the existence of any dispute between
Beneficiaries and Grantor, and the Trustee shall be entitled to rely upon the
simple demand of the Beneficiaries' Representative pursuant to Section 2.7 in
making distributions from the Trust Fund. Such distributions shall be made
notwithstanding any notice or demand by or on behalf of Grantor that the
distributions should not be made, whether based on Grantor's claim that any
Beneficiary is not entitled to some or all of the amount of such distributions
or otherwise. The Trustee shall have no responsibility or liability to Grantor
for making any payment despite having received any such notice or demand by or
on behalf of Grantor. The Trustee shall have no responsibility to inquire into
the accuracy or truthfulness of any such notice or demand, whether from the
Grantor or the Beneficiaries' Representative.

                                   ARTICLE II

                                 THE TRUST FUND

         2.1 Trust Fund. The Trustee shall hold all property received by it
hereunder as one fund which, together with the income and gains therefrom and
additions thereto, shall constitute the Trust Fund.

                                       5



          2.2 Minimum Balance.  Grantor hereby delivers to the Trustee the sum
 of $7,000,000 in cash (the "Minimum Balance"), the receipt of which is hereby
 acknowledged by the Trustee, to be held IN TRUST in accordance with the terms
 of this Agreement. Nothing contained herein shall preclude Grantor from making
 additional deliveries of funds from time to time to the Trustee, whether
 required under the terms of this Agreement or not, to be held IN TRUST as part
 of the Trust Fund.

          2.3 Maintenance of Minimum Balance. The Trustee agrees to provide
monthly reports to Grantor and the Beneficiaries' Representative showing the
current fair market value of the Trust Fund. If any such report shows that the
current fair market Value of the Trust Fund is less than the Minimum Balance,
then within ten days after such report, Grantor agrees to deliver cash funds to
the Trustee equal to the difference between the fair market value of the Trust
Fund and the Minimum Balance so that the thrust fund balance is at least equal
to the Minimum Balance. Notwithstanding the foregoing, Grantor shall have no
obligation to make payments to the Trustee in excess of $100,000,000 over the
term of this Trust Agreement.

          2.4 Additional Contributions. Subject to the aggregate limitations of
$100,000,000 for all Beneficiaries as set forth in Section 2.3, Grantor further
agrees to make additional contributions to the Trust Funds within ten (10) days
after receipt of a written request from the Beneficiaries' Representative
certifying in good faith that Claims have or are reasonably expected to be
asserted against Beneficiaries and that

                                        6



estimated Losses and Expenses for all pending, threatened or anticipated
Claims against all the Beneficiaries are reasonably expected to exceed the then
Trust Fund balance. A copy of such written certification shall be provided to
the Trustee at the same time and in the same manner as it is provided to
Grantor. Such written certification shall be accompanied by an opinion of
independent counsel to the effect that based on the information made known to
such counsel that the Claims are not Excluded Claims and that the amount
requested is reasonable. Independent counsel shall be selected by the
Beneficiaries' Representative and shall have no present or past professional
relationship to the Beneficiaries who are the subject of the Claims. The terms
"Claims," "Losses," "Expenses" and "Excluded Claims" shall have the same
meaning as defined in the Indemnification Agreement attached as Exhibit B.

          2.5 Excess Balance. If the fair market value of the Trust Fund shall
exceed the Minimum Balance, plus any additional contributions which continue to
be required pursuant to Section 2.4, Grantor shall be entitled to withdraw an
amount equal to the excess over the Minimum Balance with the written consent of
the Beneficiaries' Representative.

          2.6 Direction of Investment. Notwithstanding anything contained
herein to the contrary, Grantor retains the right to direct the investment of
the Trust Fund and the Trustee shall have no duty to review or recommend
investments. In the event the Trustee is required to make a distribution
pursuant to Section 2.7 hereof at a time when the Trust Fund has insufficient
cash to

                                       7



cover such distribution, the Trustee shall seek the advice of the Grantor with
regard to which Trust investments to liquidate in order to cover the required
distribution; if the Grantor does not respond to the Trustee's inquiry within
forty-eight (48) hours the Trustee shall use its discretion in choosing which
investments to liquidate.

           2.7 Distributions From Trust Fund. The Trustee shall make
distributions to a Beneficiary from the Trust Fund only upon demand of the
Beneficiaries' Representative. Each such demand shall be submitted to the
Trustee, in writing, signed by the Beneficiaries' Representative, and shall
state (i) that such demand is being made pursuant to an indemnification
agreement between Grantor and the Beneficiary, (ii) that the demand is for
satisfaction of indemnification obligations and the amount being demanded by a
Beneficiary, (iii) that, pursuant to the Indemnification agreement, the
Beneficiary has certified that he or she is entitled to payment of at least the
amount demanded, (iv) that the Beneficiary has previously made demand for
payment upon Grantor, and (v) that no part of the amount then being demanded
from the Trust Fund has been previously received from the Grantor. A copy of
each demand shall be delivered to Grantor by the Trustee. As soon as practicable
after such demand is made by the Beneficiaries' Representative, subject to the
provisions of Section 1.5, the Trustee shall distribute funds to the Beneficiary
specified in such demand in the amount and manner set forth therein. If the
Trustee does not have sufficient funds to satisfy all pending demands of
Beneficiaries in full, the Trustee shall

                                        8



make all reasonable efforts to make pro rata payments, less any amounts due the
Trustee, to the Beneficiaries as specified by the Beneficiaries' Representative.
Upon the replenishment of the Trust Fund, in accordance with Section 2.3, the
Trustee shall continue to make pro rata distributions, less any amounts due the
Trustee, until such demand is satisfied or to satisfy subsequent demands.

     2.8 Taxes. The Grantor agrees to pay any and all taxes on the Trust Fund or
the income thereof or which the Beneficiaries or the Trustee would otherwise be
required to pay with respect to the interest of any person or persons therein,
and to provide the Trustee with proof of payment.

     2.9 Duties and Responsibilities of Beneficiaries' Representative. The
Beneficiaries' Representative (and any successor Beneficiaries Representative)
shall have the following affirmative duties and responsibilities:

         2.9.l to demand deposits from the Grantor so as to maintain the
Minimum Balance of the Trust in accordance with Section 2.3 and any Additional
Contributions required by section 2.4 and any indemnification agreement with any
Beneficiary;

         2.9.2 to demand payment by the Trustee to a Beneficiary who has made a
demand and who, in the good faith judgment of the Beneficiaries' Representative,
has satisfied the conditions for indemnification as set forth in this Agreement
and the indemnification agreement between the Beneficiary and the Grantor;

                                        9



          2.9.3  to generally cause the Grantor and Trustee to discharge their
respective responsibilities under this Agreement and the responsibilities of the
Grantor under each indemnification agreement, including the bringing of legal
actions and proceedings to enforce such agreement.

     2.10 Investment Powers of the Trustee. In addition to any powers which the
Trustee may have under Washington law, the Trustee shall have, with respect to
any property at any time held by him and constituting part of the Trust Fund,
the power (subject to Grantor's right pursuant to Section 2.6 to direct the
investment of the Trust Fund) to do any of the following:

          2.10.1 To retain any property at any time received by the Trustee;

          2.10.2 To sell or exchange any property at public or private sale for
cash or on credit and to grant options for the purchase or exchange thereof;

          2.10.3 To participate in any plan of reorganization, consolidation,
merger, combination, liquidation, or other similar plan relating to any property
held in the Trust Fund, and to consent to or oppose any such plan or any action
thereunder, or any contract, lease, mortgage, purchase, sale, or other action by
any person or corporation;

          2.10.4 To exercise conversion and subscription rights pertaining to
any property held in the Trust Fund;

          2.10.5 To extend the time of payment of any obligation held in the
Trust Fund;

                                       10



          2.10.6   To enter into stand-by agreements for future Investment,
either with or without a standby fee;

          2.10.7   To lend securities held in any Investment Fund to
broker-dealers with whom the Trustee may from time to time conclude securities
lending agreements on behalf of the Trust Fund, and to receive collateral for
such securities; provided, however, the Trustee shall not lend securities if
such lending activity would violate any State or Federal law;

          2.10.8   To exercise all voting rights with respect to any investment
and to grant proxies, discretionary or otherwise;

          2.10.9   To settle, compromise, or submit to arbitration any claims,
debts, or damages due or owing to or from the Trust; to commence or defend suits
or legal proceedings to protect any interest of the Trust; and to represent or
cause to be represented the Trust in all suits or legal proceedings in any court
or before any other body or tribunal; and

          2.10.10  For the purpose of the Trust, to borrow money from others, to
issue its promissory note or notes therefor, and to secure the repayment thereof
by pledging any property in Trustee's possession; provided, however, that no
such loan or advance shall be made by the Trustee hereunder other than temporary
advances to the Trust Fund, on a cash or overdraft basis, on which no interest
is payable.

     2.11 Administrative Powers of Trustee. The Trustee shall have power, in its
sole discretion, to do any of the following:

          2.11.1   To cause any investment to be registered and held in the name
of one or more of its nominees, or one or more

                                       11



nominees of any system for the central handling of securities, without increase
or decrease of liability;

         2.11.2 To collect and receive any and all money and other property due
to the Trust Fund and to give full discharge therefor;

         2.11.3 To organize under the laws of any state a corporation for the
purpose of acquiring and holding title to any property which Trustee is
authorized to acquire under this Agreement and to exercise with respect thereto
any or all of the powers set forth in this Agreement; and

         2.11.4 To hold uninvested, without liability for interest thereon, such
monies received by the Trustee as the Trustee considers necessary to meet
anticipated and imminent disbursements.

                                   ARTICLE III

                    RESIGNATION, REMOVAL, OR DEATH OF TRUSTEE

     3.1 Resignation of Trustee. The Trustee may resign at any time by filing
his written resignation with Grantor. Such resignation shall take effect sixty
days from the date of such filing or upon appointment of a successor pursuant to
Section 3.3, whichever shall first occur.

     3.2 Removal of Trustee. Grantor and the Beneficiaries' Representative may
remove the Trustee at any time by delivering to the Trustee a written notice of
his removal and an appointment of a successor pursuant to Section 3.3.

                                       12



          3.3 Appointment of Successor Trustee.

              3.3.1 Removal of the Trustee and the appointment of a successor
Trustee shall take effect sixty days following delivery to the Trustee of (i) an
instrument in writing removing the Trustee and appointing such successor,
executed by Grantor and accompanied by an instrument in writing signed by the
Beneficiaries' Representative certifying that two-thirds of the then living
Beneficiaries agree to such removal and appointment, and (ii) an acceptance in
writing, executed by such successor, both acknowledged in the same form as this
Agreement. The Trustee may agree to an earlier effective date. In the event of
the death or dissolution of the Trustee, the successor trustee shall be
appointed by the Grantor with the approval of the Beneficiaries' Representative,
which approval shall not be unreasonably withheld, and a writing to such effect
and an acceptance in writing, as referred to above, shall be delivered to the
Trustee's legal representative.

              3.3.2 All of the provisions set forth herein with respect to the
Trustee shall relate to each successor with the same force and effect as if such
successor had been originally named as Trustee hereunder.

              3.3.3 If a successor is not appointed within sixty days after the
Trustee gives notice of his resignation pursuant to Section 3.1, or within sixty
days after the Trustee's death, the Trustee or the Beneficiaries' Representative
may apply to any court of competent jurisdiction at the expense of the trust for
appointment of a successor.

                                       13



         3.4 Transfer of Fund to Successor. Upon appointment of a successor
trustee as set forth above, and after the final account of the Trustee has been
settled as provided in Section 5.4, the Trustee shall transfer and deliver the
Trust Fund to such successor.

                                   ARTICLE IV

                  DURATION, TERMINATION, AND AMENDMENT OF TRUST

         4.1 Term. This trust shall terminate upon the written consent of the
Grantor and two-thirds of the then living Beneficiaries. The Grantor's Board of
Directors shall have the right to terminate the Trust unilaterally as of each
anniversary of the execution of this Agreement. Any such termination, whether by
written consent of two-thirds of the then living Beneficiaries or unilaterally
by the Grantor shall be on a prospective basis only, and all provisions of this
Agreement shall remain in fu1l force and effect as to any "Claim" relating to a
"Covered Act" (as those two terms are defined in the indemnification agreement
attached as Exhibit B) which Covered Act occurs prior to the effective date of
such termination. Notice of such termination shall be given to the Trustee by an
instrument in writing executed by the Grantor and the Beneficiaries'
Representative together with a certified copy of the resolution of the Board of
Directors of Grantor authorizing such termination. Copies of such notice shall
also be given to each individual Beneficiary, the provisions of Section 1.3
notwithstanding. Termination shall be effective when such notices are effective
pursuant to Section 6.6.

                                       14



         4.2 Distribution Upon Termination. When this Trust is terminated in
accordance with Section 4.1, the Trustee shall distribute the Trust Fund to
Grantor less any full and adequate provision for any distributions to be made
pursuant to any outstanding demands under Section 2.7 and any deductions
authorized or required by Section 5.3 hereof.

         4.3 Amendment of Trust Instrument. This trust may not be amended by
Grantor except upon the written consent of two-thirds of the then living
Beneficiaries and the Trustee, provided that no such amendment shall deny, limit
or otherwise modify the then existing rights of any Beneficiary who does not so
consent. Notice of such amendment shall be given to the Trustee by an instrument
in writing executed by the Grantor and the Beneficiaries' Representative
acknowledged in the same form as this Agreement, together with a certified copy
of the resolution of the Board of Directors of Grantor authorizing such
amendment. The Grantor shall send a copy of such notice to each individual
Beneficiary, the provisions of Section 1.3 notwithstanding.

                                    ARTICLE V

                      RIGHTS AND OBLIGATIONS OF THE TRUSTEE

         5.1 Duties of Trustees. The duties and liabilities of the Trustee shall
at all times be limited to those expressly stated in this Agreement. The Trustee
shall discharge his duties hereunder with the care, skill, prudence, and
diligence under the circumstances then prevailing that a prudent person acting
in a like capacity and familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims.

                                       15



The Trustee shall not be liable for any loss sustained by the Trust Fund by
reason of the purchase, retention, sale, or exchange or any investment in good
faith and in accordance with the Grantor's directions and the provisions of this
Agreement.

     5.2 Indemnification of Trustee. The Trustee shall not be liable for any
action taken or omitted by him in good faith and believed by him to be
authorized hereby or within the rights or powers conferred upon him hereunder,
or taken or omitted by him in accordance with advice of counsel (which counsel
may be of the Trustee's own choosing and which may be house counsel of the
Trustee), and shall not be liable for any mistake of fact or error of judgment
or for any acts or omissions of any kind unless caused by willful misconduct or
gross negligence. Grantor agrees to indemnify the Trustee and hold him harmless
against any and all liabilities, losses, claims, expenses, (including reasonable
attorneys' fees), and damages incurred by him hereunder, except for liabilities,
losses, claims, expenses, and damages incurred by the Trustee resulting from his
own willful misconduct or gross negligence.

     5.3 Expenses and Compensation. The Trustee shall pay from the Trust Fund,
to the extent not paid by Grantor, the Trustee's reasonable expenses of
administration of the Trust, including reasonable compensation of counsel
(including house counsel) and any agents engaged by the Trustee to assist him in
such administration. The Grantor shall pay the Trustee reasonable compensation
for his services as Trustee hereunder and the Trustee

                                       16



shall have a lien on the Trust Fund for such compensation and expenses until
paid.

          5.4 Settlement of Accounts of Trustees.  The Trustee shall keep full
accounts of all of his receipts and disbursements. His financial statements,
books, and records with respect to the Trust fund shall be open to inspection by
the Grantor or the Beneficiaries' Representative or their representatives at all
reasonable times during business hours of the Trustee and may be audited not
more frequently than once in each fiscal year by an independent certified public
accountant engaged by the Beneficiaries' Representative.

          Within ninety days after the close of each fiscal year, or any
termination of the duties of the Trustee, the Trustee shall prepare, sign, and
submit in duplicate to Grantor an account of his acts and transactions as
Trustee hereunder. If Grantor finds the account to be correct, Grantor shall
sign the instrument of settlement annexed to one counterpart of the account and
return such counterpart to the Trustee, whereupon the account shall become an
account stated as between the Trustee and Grantor. If within ninety days after
receipt of the account or any amended account Grantor has not signed and
returned a counterpart to the Trustee, nor filed with the Trustee notice of any
objection to any act or transaction of the Trustee, the account or amended
account shall become an account stated as between the Trustee and Grantor. If
any objection has been filed, and if Grantor is satisfied that it should be
withdrawn or if the account is adjusted to its satisfaction, Grantor shall
deliver to the Trustee its written

                                       17



approval of the account and it shall become an account stated as between the
Trustee and the Grantor.

         When an account becomes an account stated, such account shall be
finally settled, and the Trustee shall be completely discharged and released, as
if such account had been settled and allowed by a judgment or decree of a court
of competent jurisdiction in any action or proceeding in which the Trustee and
Grantor were parties.

         The Trustee, the Beneficiaries' Representative, or Grantor shall have
the right to apply at any time to a court of competent jurisdiction for judicial
settlement of any account of the Trustee not previously settled as hereinabove
provided. In any such action or proceeding it shall be necessary to join as
parties only the Trustee, the Beneficiaries' Representative, and Grantor
(although the Trustee may also join such other parties as he may deem
appropriate), and any judgment or decree entered therein shall be conclusive.

                                   ARTICLE VI

                                  MISCELLANEOUS

         6.1  Governing Law. The validity, interpretation, performance, and
enforcement of this Agreement and the Trust created hereby shall be governed by
the laws of the state of Washington. Notwithstanding the foregoing, the rights
of the Beneficiaries to receive indemnification from Grantor are governed by the
laws of the state of incorporation of Grantor. The parties irrevocably submit to
the jurisdiction and venue of any Washington

                                       18



State or United States Federal Court sitting in Seattle, Washington.

         4.2 Successors. This Agreement and the Trust created hereby shall be
binding upon and shall inure to the benefit of the spouses, heirs, personal and
legal representatives, estates, successors, and assigns of the parties hereto
and of the Beneficiaries.

         6.3 Third Party Beneficiaries. The Beneficiaries are specifically
acknowledged as third party beneficiaries of this Agreement and shall have the
right to bring actions to enforce this Agreement where the Beneficiaries'
Representative fails to bring such an action or fails to prosecute an action in
good faith.

         6.4 Enforcement Expenses. Grantor shall be responsible for all costs
and expenses, including reasonable attorneys' fees and costs, incurred in any
action brought to enforce or interpret this Agreement, whether brought by the
Beneficiaries' Representative, a Beneficiary, the Trustee, or otherwise, unless
the court determines that such Claim for enforcement was not brought in good
faith or was frivolous.

         6.5 Titles and Headings Not to Control. The titles to Articles and
headings of Sections in this Agreement are placed herein for convenience of
reference only and in case of any conflict the text of this Agreement, rather
than such titles or headings, shall control.

         6.6 Notices, Consents and Other Communications. All notices, consents,
or other communications required or

                                       19



contemplated by this Agreement shal1 be in writing and shall be deemed to have
been given when delivered either by (a) personal delivery, (b) overnight
courier, or (c) postage prepaid return receipt requested certified mail to the
last address given to the Trustee by each respective Beneficiary. Notice by
personal delivery shall be effective upon the date service is made and notice by
certified mail or overnight courier shall be effective on the date it is
recorded as delivered by the U.S. Postal Service or the overnight courier,
respectively.

     IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the day and year first above written.

Attest:                                       FIRST INTERSTATE BANK OF
                                              WASHINGTON, N.A.
                                              ("Trustee")


/s/ Joan Robinson                             By: /s/ Pamela A. Jorgenson
- --------------------------------------            -----------------------------
Attest: Assistant Corporate Secretary
                                              MICROSOFT CORPORATION


                                              ("Grantor")


By: /s/ William H. Neukom                     By: /s/ William H. Gates
   -----------------------------                  -----------------------------

                                               ("Beneficiaries' Representative")


                                              /s/ William G. Reed, Jr.
                                              ---------------------------------
                                              WILLIAM G. REED, JR.

                                       20

                                                                    Exhibit 10.9


                            INDEMNIFICATION AGREEMENT

     This Agreement is made this 1st day of June, 1993, by and between Microsoft
Corporation, a Delaware corporation (the "Company") and ______________
("Indemnitee"), a director and/or executive officer of the Company and William
G. Reed, Jr. (the initial "Beneficiaries' Representative").

     WHEREAS, there is a general awareness that competent and experienced
persons are becoming more reluctant to serve as directors or executive officers
of publicly-held corporations unless they are protected by comprehensive
policies of insurance or indemnification, due to the increasing number of
lawsuits against such corporations and their directors and officers, the
attendant expense of defending against such lawsuits, and the exposure of such
directors and officers to unreasonably high damages;

     WHEREAS, present laws and interpretations are frequently too uncertain to
provide such officers and directors with adequate, reliable knowledge of the
legal risks to which they may be exposed as a result of serving the corporation;

     WHEREAS, the Board of Directors has concluded that its directors and
executive officers should be provided with protection against such risks in
order to insure that the most capable persons will be attracted to such
positions; and, therefore, has determined to contractually obligate itself to
indemnify in a reasonable manner its directors and executive



officers and to assume for itself the liability for expenses and damages in
connection with claims lodged against its directors and executive officers as a
result of their service to the Company.

     WHEREAS, applicable law empowers corporations to indemnify persons serving
as a director, officer, employee, or agent of the corporation or a person who
serves at the request of the corporation as a director, officer, employee, or
agent of another corporation, partnership, joint venture, trust, or other
enterprise, and further empowers a corporation to purchase and maintain
insurance (on behalf of such persons) against liability which may be asserted
against Indemnitee or incurred by Indemnitee in any such capacity, or arising
out of Indemnitee's status as such, whether or not the corporation would have
the power to indemnify against such liability under the provisions of said laws;

     WHEREAS, the Board of Directors has concluded that, due to the high cost
and other negative features of the coverage under presently available directors
and officers liability insurance, at this time it would not be in the best
interest of its shareholders for the Company to purchase and maintain such
insurance in the amounts customarily held by similar corporations and that its
shareholders' interest would be better served by contracting to indemnify its
executive officers and directors thereby reasonably self-insuring against such
potential liabilities;

                                       -2-



     WHEREAS, the Company desires to have Indemnitee serve or continue to serve
as a director or executive officer of the Company free from undue concern for
damages by reason of Indemnitee being a director and/or executive officer of the
Company or by reason of his or her decision or actions on its behalf, and
Indemnitee is willing to serve, or to continue to serve, only if he or she is
furnished the indemnity provided for hereinafter in one or more of such
capacities; and

     WHEREAS, the parties believe it appropriate to memorialize and reaffirm the
Company's indemnification obligations to Indemnitee and, in addition, to set
forth the agreements contained herein.

     NOW, THEREFORE, in consideration of the promises, conditions,
representations, and warranties set forth herein, including the Indemnitee's
continued service to the Company, the Company and Indemnitee hereby agree as
follows:

     1. Definitions. The following terms, as used herein, shall have the
following respective meanings:

     "Beneficiary" or "Beneficiaries" means an officer or director of the
Company who qualifies as a Beneficiary under Section 1.1 of the Trust Agreement.

     "Beneficiaries' Representative" means a non-employee director of the
Company, or other individual selected in accordance with the procedures set
forth in Section 1.4 of the Trust Agreement.

                                       -3-



     "Claim or Claims" includes without limitation any threatened, pending, or
completed action, suit, or proceeding whether civil, derivative, criminal,
administrative, investigative, or otherwise, and includes any Claims by or in
the right of the Company.

     "Covered Amount" means Loss and Expenses which, in type or amount, are not
insured under any D&O Insurance.

     "Covered Act" means any act or omission (including without limitation any
breach of duty, neglect, error, misstatement, misleading statement, or
otherwise, or appearing as or preparing to be a witness) by Indemnitee, and any
Claim against Indemnitee, by reason of the fact that Indemnitee is or was a
director or officer of the Company, or of any subsidiary or division, or is or
was serving at the request of the Company as a director, officer, partner,
trustee, employee, or agent of another corporation, partnership, joint venture,
trust, employee benefit plan, or other enterprise.

     "D&O Insurance" means any directors' and officers' liability insurance
issued to the Company the proceeds of which are available for, and are tendered
to, the Indemnitee.

     "Determination" means a determination, based on the facts known at the
time, made by:

          (i) A majority vote of a quorum of disinterested directors; or

                                       -4-



          (ii)  Independent legal counsel in a written opinion prepared at the
request of a majority of a quorum of disinterested directors; or

          (iii) A majority of the disinterested stockholders of the Company; or

          (iv)  A final order by a court of competent jurisdiction from which
there is no further right of appeal.

     "Determined" shall have a correlative meaning.

     "Excluded Claim" means any payment for Losses or Expenses in connection
with any Claim the payment of which is Ultimately Determined to be prohibited by
the Delaware General Corporation Law, public policy, or other applicable law
(including binding regulations and orders of, and undertakings or other
commitments with, any governmental entity or agency) as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the corporation to provide broader indemnification
rights than said law permitted the corporation to provide prior to such
amendment).

     "Expenses" means any reasonable expenses incurred by Indemnitee as a result
of a Claim or Claims made against him for Covered Acts including, without
limitation, counsel fees and costs of investigative, judicial, or administrative
proceedings and any appeals.

     "Fines" shall include any fine, penalty or, with respect to an employee
benefit plan, any excise tax or penalty assessed with respect thereto.

                                       -5-



     "Loss" means any amount which Indemnitee is legally obligated to pay as a
result of any Claim or Claims made against him or her for Covered Acts
including, without limitation, Fines, damages, judgments, and sums paid in
settlement of any Claim or Claims.

     "Trust Agreement" shall mean the Trust established between the Company and
First Interstate Bank of Washington, N.A. ("Trustee") attached as Exhibit A.

     "Ultimate Determination" means the method of Determination set forth in
clause (i), (ii), or (iii) of the above definition of Determination as selected
by the Company, except that a final order from which there is no further right
of appeal in any action in which Indemnitee seeks indemnification shall
constitute the Ultimate Determination of the Indemnitee's right to
indemnification from the Company "Ultimately Determined" shall have a
correlative meaning.

     2. Indemnification. The Company agrees to indemnify and defend Indemnitee
and hold him or her harmless from and against any and all Losses and Expenses
subject, in each case, to the further provisions of this Agreement.

     3. Excluded Coverage. The Company shall have no obligation to indemnify
Indemnitee for and hold him or her harmless from any Loss or Expense which has
been Ultimately Determined to constitute an Excluded Claim or to the extent that
Indemnitee has received the proceeds of D&O Insurance or to the extent that
Indemnitee has otherwise been indemnified.

                                       -6-



 4.  Indemnification Procedures.

     4.1  Notice. Promptly after receipt by Indemnitee of notice of the
commencement of or the threat of commencement of any Claim, Indemnitee shall, if
Indemnitee intends to seek indemnification with respect thereto from the Company
under this Agreement, promptly notify the Company and the Beneficiaries,
Representative of the commencement thereof and shall keep the Company generally
informed of, and consult with the Company with respect to, the status of any
such Claim.

     4.2  D&O Insurance Applicable. If, at the time of the receipt of such
notice, the Company has D&O Insurance in effect, the Company shall give prompt
notice of the commencement of such Claim to the insurers in accordance with the
procedures set forth in the respective policies in favor of Indemnitee. The
Company shall thereafter take all necessary or desirable action to cause such
insurers to pay, on behalf of Indemnitee, all Losses and Expenses payable as a
result of such Claim in accordance with the terms of such policies.

     4.3  Advances of Expenses. The Company agrees to pay the Expenses of any
such Claim in advance of the final disposition thereof to the extent payment for
such Expenses is not promptly received from D&O Insurance or any other source of
indemnity. The Company, if appropriate, shall be entitled to assume the defense
of any Claim, with counsel satisfactory to Indemnitee, upon the delivery to
Indemnitee of written notice of its election to assume the defense. After
delivery of such notice and so long

                                       -7-



as the Company continues such defense, the Company will not be liable to
Indemnitee under this Aqreement for any legal or other Expenses subsequently
incurred by the Indemnitee in connection with such defense other than Expenses
of investigation and any out-of-pocket personal expenses incurred in preparing
for and participating in the Claim. Indemnitee shall have the right to employ
his or her counsel in any such Claim but the fees and expenses of such counsel
incurred after delivery of notice from the Company of its assumption of such
defense shall be at the Indemnitee's expense provided that if (i) the employment
of counsel by Indemnitee has been previously authorized by the Company, (ii)
Indemnitee shall have reasonably concluded that there may be a conflict of
interest between the Company and Indemnitee in the conduct of any such defense
or (iii) the Company shall not, in fact, have employed counsel which has assumed
and continues the defense of such action, the fees and expenses of counsel shall
be at the expense of the Company.

     4.4 Payment of Expenses. All payments on account of the Company's
indemnification obligations under this Agreement shall be made within sixty
(60) days of Indemnitee's written request therefor unless an Ultimate
Determination is made that the claims giving rise to Indemnitee's request are
Excluded Claims or otherwise not payable under this Agreement, provided that
all payments on account of the Company's obligations under Section 4.3 of this
Agreement prior to the final disposition of any Claim shall be made within 20
days of Indemnitee's written

                                       -8-



request therefor and such obligation shall not be subject to any such Ultimate
Determination but shall be subject to this Agreement.

     4.5 Indemnitee's Obligation to Reimburse. Indemnitee agrees that he will
reimburse the Company for all Losses and Expenses paid by the Company, or any
Trustee of a Trust created by the Company, in connection with any Claim against
Indemnitee in the event and only to the extent that an Ultimate Determination
shall have been made that the Indemnitee is not entitled to be indemnified by
the Company for such Expenses because the claim is an Excluded Claim or because
Indemnitee is otherwise not entitled to payment under this Agreement.

     5.  Settlement. The Company shall have no obligation to indemnify
Indemnitee under this Agreement for any amounts paid in settlement of any Claim
effected without the Company's prior written consent except to the extent it is
Ultimately Determined that such settlement is reasonable and in good faith. The
Company shall not settle any Claim in any manner which would impose any Fine or
any obligation on Indemnitee without Indemnitee's written consent. Neither the
Company nor Indemnitee shall unreasonably withhold their consent to any proposed
settlement.

     6.  Partial Indemnification. If Indemnitee is entitled under any provisions
of this Agreement to indemnification by the Company for some or a portion of
Expenses and Losses but not, however, for the total amount thereof, the Company
shall

                                       -9-



nevertheless indemnify Indemnitee for the portion of such Expenses and Losses to
which Indemnitee is entitled.

     7.   Enforcement.

          7.1  Burden of Proof. Indemnitee's right to indemnification shall be
enforceable by Indemnitee in any court of competent jurisdiction and shall be
enforceable notwithstanding any adverse Determination (pursuant to clauses (i),
(ii) or (iii) but not (iv) of the definition of Determination in Section 1). In
any action in which Indemnitee seeks indemnification, the Company shall have the
burden of proving that indemnification is not required under this Agreement. The
termination of any Claim by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not of itself create a
presumption that Indemnitee did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.

          7.2  Enforcement Expenses. In the event that any action is instituted
in which Indemnitee or the Beneficiaries' Representative seeks indemnification
of Indemnitee under this Agreement, or to enforce or interpret any of the terms
of this Agreement, Indemnitee shall be entitled to be paid all costs and
expenses, including reasonable attorneys' fees and costs, incurred by Indemnitee
with respect to such action, unless the

                                       -10-



court determines that such action was not brought in good faith or was
frivolous.

          8.   Severability. In the event that any provision of this Agreement
is determined by a court to require the Company to do or to fail to do an act
which is in violation of applicable law, such provision shall be limited or
modified in its application to the minimum extent necessary to avoid a violation
of law, and, as so limited or modified, such provision and the balance of this
Agreement shall be enforceable in accordance with their terms.

          9.   Choice of Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of Delaware.

          10.  Successors and Assigns. This Agreement shall be (i) binding upon
all successors and assigns of the Company (including any transferee of all or
substantially all of its assets and any successor by merger or otherwise by
operation of law) and of the Beneficiaries' Representative and (ii) shall be
binding on and inure to the benefit of the spouses, heirs, personal
representatives, and estate of Indemnitee. The Company shall not effect any sale
of substantially all of its assets, merger consolidation, or other
reorganization unless the surviving entity agrees in writing to assume all the
obligations of the company under this Agreement and to indemnify Indemnitee and
advance Expenses in accordance with this Agreement.

          11.  Amendment. No amendment, modification, termination, or
cancellation of this Agreement shall be effective unless made in

                                      -11-



a writing signed by each of the parties hereto. No waiver of any of the
provisions of this Agreement shall be deemed or shall constitute a waiver of any
other provision of this Agreement (whether or not similar) nor shall such waiver
constitute a continuing waiver.

     12. Deposit in Trust. The Company has created a Trust (the "Trust") for the
benefit of the Indemnitee and others (Collectively, including Indemnitee, the
"Beneficiaries") in the form of Exhibit A (the 'Trust Agreement"). Indemnitee is
specifically acknowledqed as a third party beneficiary of the Trust Agreement,
and therefore, in addition to Indemnitee's rights under this Agreement and any
applicable insurance policy, Indemnitee shall also have the right to receive
indemnification from the Trust in accordance with the terms of this Agreement
and of the Trust Agreement. The Company agrees to fund and maintain the Trust
Fund in accordance with the procedures set forth in Article II of the Trust
Agreement and to discharge all its other ,obligations pursuant to the Trust
Agreement.

     13. Procedure for Making Demand. Indemnitee shall first make demand upon
the Company in accordance with the Indemnification Procedures of Section 4 to
honor its indemnity obligation under this Agreement. If the Company shall fail
to indemnify on a timely basis, the Beneficiary shall deliver a certificate to
the Beneficiaries' Representative settinq forth the information required
pursuant to Section 2.7 of the Trust Agreement. Indemnitee shall not be required
to institute a

                                      -12-



lawsuit or take other actions against the Company or any insurer to recover the
unpaid amount prior to the Beneficiaries' Representative making a demand and
receiving payment from the Trustee on his or her behalf.

     14.  Duties and Responsibilities of Beneficiaries' Representative. The
Beneficiaries' Representative (and any successor Beneficiaries' Representative)
shall have the following affirmative duties and responsibilities:

          14.1 to demand deposits from the Company so as to maintain the
Minimum Balance and make any Additional Contribution as required by Sections 2.3
and 2.4 of the Trust Agreement;

          14.2 to demand payments by the Trustee to Indemnitee upon demand by
Indemnitee where, in the good faith judgment of the Beneficiaries'
Representative, the Indemnitee has satisfied the conditions for indemnification
as set forth in this Agreement and the Trust Agreement.

          14.3 to generally cause the Company and Trustee to discharge their
respective responsibilities under this Agreement and the Trust Agreement,
including the bringing of legal actions and proceedings to enforce such
Agreement.

     15.  Other Indemnity. The provisions in this Agreement are intended to
be nonexclusive of indemnity granted pursuant to the Company's Certificate of
Incorporation, Bylaws, other agreements, vote of stockholders or disinterested
directors, or otherwise. All applicable indemnity shall be interpreted and
applied so as

                                      -13-



to provide Indemnitee with the broadest but nonduplicative indemnity to which he
or she is entitled.

     16.   Notices, Consents, and Other Communications. All notices, consents,
or other communications required or contemplated by this Agreement shall be in
writing and shall be deemed to have been given when delivered either by (a)
personal delivery, (b) overnight courier, or (c) postage prepaid return receipt
requested certified mail to the last address given to the Trustee by each
respective Beneficiary. Notice by personal delivery shall be effective upon the
date service is made and notice by certified mail or overnight courier shall be
effectiive on the date it is recorded as delivered by the U.S. Postal Service or
the overnight courier, respectively.

     IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.

Attest:                              MICROSOFT CORPORATION


BY __________________________        By _____________________________
   Secretary                            Chairman

                                     ________________________________
                                     Indemnitee

                                     Indemnitee's Address:

                                     ________________________________
                                     ________________________________


                                     ________________________________
                                     WILLIAM G. REED, JR.,
                                     Beneficiaries' Representatives

                                       -14-

                                                                   Exhibit 10.10

                              Resignation Agreement


     RESIGNATION AGREEMENT dated as of July 23, 2002, between Richard Belluzzo
("Belluzzo") residing at 1622 38/th/ Avenue East, Seattle, Washington and
Microsoft Corporation ("Microsoft") ("Agreement").

1.   Resignation. Belluzzo hereby acknowledges his voluntary and irrevocable
resignation from the offices of President and Chief Operating Officer effective
May 1, 2002. In addition, Belluzzo voluntarily and irrevocably resigns his
employment with Microsoft effective August 23, 2002 ("Resignation Date"). Except
as expressly modified by paragraphs 2, 3 and 4 of this Agreement, Belluzzo's
existing compensation and benefits shall remain in place until the Resignation
Date. In the event that Belluzzo elects to resign his employment prior to the
Resignation Date, any and all compensation and stock option vesting will cease
on the last day of his employment with Microsoft except as set forth below in
paragraph 2. In consideration of Belluzzo signing this Agreement and his
executing a general release of claims in a form acceptable to Microsoft
("Release"), Microsoft has agreed to undertake the commitments described in
Paragraphs 2 and 3 below, some or all to which Belluzzo would not otherwise be
entitled.


2.   Bonus and Other Consideration. In consideration of Belluzzo irrevocably
resigning his employment and office as set forth in Section 1, signing this
Agreement, delivering an effective and timely Release and honoring the
commitments undertaken herein, and conditioned upon each of the foregoing events
having occurred, Microsoft agrees to: (1) take the actions described in
Paragraph 3 below; and (2) award Belluzzo a bonus under the Partner Bonus Plan
for the fiscal year ending June 30, 2002 in the amount of $350,000, which
amount exceeds the amount to which Belluzzo would be entitled as of right under
the Partner Bonus Plan. This bonus shall be payable on August 15, 2002 in
accordance with Microsoft's  regular payroll procedures for payment of such
bonuses (including tax withholding). Belluzzo acknowledges and agrees that he is
not eligible for and waives any and all rights to a bonus under the Partner
Bonus Plan for the fiscal year beginning July 1, 2002 and ending June 30, 2003.
Nothing in this Agreement represents a waiver by Belluzzo of any rights he might
otherwise have, including to be paid accrued vacation, receive health or other
insurance, or exercise his stock options in accordance with Microsoft's stock
option plans except as set forth in Paragraph 3.

3.   Cancellation of Options. In connection with option grants made September 1,
1999 for 1,000,000 shares, March 6, 2000 for 1,000,000 shares, May 30, 2000 for
500,000 shares and May 30, 2000 for 1,000,000 shares (the "99/00 Options"), on
December 12, 2000 Microsoft and Belluzzo entered into an arrangement whereby
Belluzzo was advanced the sum of $15,000,000 which represented a minimum benefit
to be received from the potential exercise of the 99/00 Options unless Microsoft
terminated his employment with cause or Belluzzo terminated without good reason.
The advance was acknowledged by a promissory note a copy of which is attached as
Exhibit A (the "Note"). In lieu of the provisions in the Note, the parties have
parties have agreed that the 99/00 Options shall be cancelled as of the
Resignation Date and Belluzzo shall retain all funds previously advanced.
Microsoft shall forgive the remaining unpaid balance of interest and principal
owing under the Note. Microsoft will thereafter promptly cancel the Note and
return it to Belluzzo. Belluzzo will execute such instruments as are reasonably
requested by Microsoft to evidence surrender and cancellation of the 99/00
Options. The forgoing arrangements shall supercede any conflicting terms of the
Note or any other oral or written agreement between the parties. Belluzzo
understands that forgiveness of the Note and cancellation of the 99/00 Options
will constitute ordinary income taxable to him, and which will be reported by
Microsoft as income to him. Accordingly, Belluzzo agrees to pay to Microsoft not
later than October 1, 2002, and Microsoft shall timely pay to the United States
Treasury the amount of federal tax and employment withholding Microsoft is
required to withhold with respect to the debt forgiven. The parties will execute
such instruments and documentation as is reasonably necessary to evidence
withholding and payment of the withheld sum.

                                       1.



4.   Miscellaneous.  This Agreement and the Release contain the entire
agreements and all the promises and covenants exchanged by the parties and merge
any and all prior written and oral communications concerning the financial terms
relating to Belluzzo's resignation. In executing this Agreement, each party
warrants that he or it is relying solely upon his or its own judgment and
knowledge, and that he or it is signing in the absence of any caercion or duress
whatsoever. The parties agree that the provisions of this Agreement are
severable. In the event that any provision is found to be unlawful or
unenforceable, the remaining provisions shall remain in full force and effect.
The parties further agree that all questions with respect to the construction of
this Agreement and the rights and liabilities under it shall be governed by the
laws of the State of Washington, and any dispute arising in connection with the
execution and/or operation of this Agreement shall be determined in a Washington
court of competent jurisdiction, to whose personal jurisdiction Belfuzzo
consents to submit. In the event suit is commenced to enforce this Agreement,
the substantially prevailing party shall be entitled to an award of his or its
reasonable attorneys' fees and costs. This Agreement shall bind the heirs,
successors, representatives, and assigns of each party.

                                        Microsoft Corporation


/s/ Richard Belluzzo                    By /s/ Steven A. Ballmer
- --------------------                       ----------------------------------
Richard Belluzzo                           Steven A. Ballmer, Chief Executive
                                               Officer

                                       1.



                                    EXHIBIT A
                                 PROMISSORY NOTE

$15,000,000.00                 Redmond, Washington             December 12, 2000

     Subject to the terms and conditions herein, MICROSOFT CORPORATION
("Company") agrees to lend RICHARD BELLUZZO ("Maker") the principal amount to
Fifteen Million Dollars (U.S.) ($15,000,000.00) (the "Principal") and, for value
received, Maker promises to pay Company, or its assigns or order ("Payee"), the
principal sum of Fifteen Million Dollars (U.S.)($15,000,000.00), with interest
as provided herein. Unless otherwise provided herein, both Principal and
Interest, defined below, shall be payable in lawful money of the United States
of America, which shall be legal tender for public and private debts.

1.   Interest. Interest shall accrue from the date of payment on the unpaid
Principal outstanding, and shall be compounded annually until this Note is paid
in full, at the lowest applicable federal interest rate available in the month
of December 2000 (i.e., 5.87%)(the "Interest"). Interest will be calculated
based on a 365 day year and applied to the actual number of days elapsed. The
sum of Principal and Interest accrued as of any date shall constitute the "Total
Obligations" as of such date.

2.   Maturity Date. Absent a Default Event, and subject to the terms limiting
the Company's recourse hereunder, the Total Obligation, if not sooner paid,
shall be due and payable in a single installment on the fifth (5/th/)
anniversary of the date hereof, or the date on which Maker's employment with the
Company terminates, whichever is earlier ("Maturity Date"). Maker and any
endorsers of this Note hereby waive demand, grace, notice, presentment for
payment, and protest, and agree and consent that the Company may renew this
Note, and extend the time of payment, without notice, and without releasing any
party hereto.

3.   Prepayment. Maker may prepay the Total Obligation, in whole or in part ,at
any time before the Maturity Date, in cash, without being required to pay any
penalty or premium for such priviledge.

4.   Payment Method.

     4.1  On or after the Maturity Date, the payment of amounts owed under this
Note may be made, at Maker's discretion, in cash and/or by forefeiting vested
Company stock options subject to the 99/00 Grants having an aggregate Vested
Value (defined below in Subsection 6.1) equal to the amount being repaid. For
purposes of this Note, the term of September 1, 1999 for 1,000,000 shares; (ii)
grant of March 6, 2000 for 1,000,000 shares; (iii) grant of May 30, 2000 for
500,000 shares; and (iv) grant of May 30, 2000 for 1,000,000 shares.

     4.2  If Maker fails to repay the Adjusted Total Obligation (defined in
Subsection 6.2) within one hundred twenty (120) days after the Maturity Date,
Company may thereafter obtain repayment utilizing, at its discretion, any of the
applicable repayment methods or combinations thereof as set forth in Section 5.
In the event that the Company elects to cancel options subject to the 99/00
Grants in order to satisfy any part of the Adjusted Total Obligation, Company
shall use the Vested Value of such options as defined in Subsection 6.1 to
determine the aggregate pre-tax value of said options.

     4.3  If the Company forgives any portion of the Total Obligation, pursuant
to the terms limiting recourse hereunder, then such amount shall be treated as a
forgiveness of debt owed by Maker, and shall be reported by the Company as
income to Maker.



5.   Recourse. The Company's recourse against Maker for repayment of the
Principal and Interest shall be only as follows:

     5.1 If Maker is still in the employ of Company on the fifth anniversary of
this Note, or if Maker's employment is terminated by the Company without Cause
or Maker resigns for Good Reason at any time, the Company may obtain repayment
of the Adjusted Total Obligation by one or a combination of the following
methods: (i) by canceling the minimum necessary number of options subject to the
99/00 Grants to cover the amount being repaid, and (ii) through limited personal
recourse against Maker to the extent Maker has exercised any part of the 99/00
Grants; namely, the excess aggregate fair market value (i.e. the closing price
on the date of exercise) of the Company common stock obtained as a result of
such exercise over the aggregate exercise price thereof. For purposes of this
Note, the term "Cause" shall mean Maker's commission of a felony, or gross
negligence or willfull misconduct resulting in material damage to the Company;
and "Good Reason" shall mean that: (i) Maker's responsibilities to Company were
significantly diminished; (ii) Makers job location is moved by Company out of
King Country, Washington; (iii) the Company is split into two or more
independent companies for any reason, whether or not pursuant to a final,
non-appealable judgment or settlement in the Company's pending action with the
Department of Justice or otherwise; or (iv) there is a change in control of the
Company, which for the purposes of this Note means the acquisition, directly or
indirectly, by any person or related group of persons of beneficial ownership of
securities possessing more than fifty (50%) percent of the total combined voting
power of the Company's outstanding securities, or a merger or consolidation in
which securities possessing at least fifty (50%) percent of the total combined
voting power of the Company's outstanding securities are transferred to a person
or persons different from the persons holding those securities immediately prior
to such transaction or sale, or the sale transfer or other disposition of
seventy-five(75%) percent or more of the Company's assets in liquidation or
dissolution of the Company.

     5.2 If Maker is not in the employ of the Company and has been terminated by
the Company for Cause, or resigned without Good Reason, the Company may obtain
repayment of the Adjusted Total Obligation by one or a combination of the
following methods, at its discretion: (i) by canceling the minimum necessary
number of options subject to the 99/00 Grants to cover the amount being repaid,
and (ii) through full personal recourse against Maker.

     5.3 If Maker's employment is terminated by the Company due to death or
Disability prior to the fifth anniversary of this Note, the Company may obtain
repayment of the Total Obligation by one or a combination of the following
methods, at its discretion: (i) by canceling the minimum necessary number of
options subject to the 99/00 Grants to cover the amount being repaid, and (ii)
through full personal recourse against Maker or Maker's estate, as the case may
be; provided, however, that if the after-tax value of the 99/00 Grants, minus
the Total Obligation, is less than Five Million Dollars ($5,000,000), the
Company will forgive such portion of the Adjusted Total Obligation as is
necessary to leave Maker or Maker's estate, respectively, with a net amount of
Five Million Dollars ($5,000,000) after repayment to the Company. For purposes
of this Note, "Disability" has the meaning set fourth in the Company's 1991
Stock Option Plan

6.   Valuation Payment Mechanism. The Vested Value of the 99/00 Grants shall
be determined in accordance with the following "Valuation Payment Mechanism":

     6.1 Vested Value Determination: As soon as practicable after the Maturity
Date, the Company shall determine the Vested Value of the 99/00 Grants. The
"Vested Value" of the 99/00 Grants shall equal the sum of the Vested Values of
each respective option grant comprising the 99/00 Grants. The "Vested Value" of
any stock option grant shall be equal to: (i) the excess of) (y) the average
closing price of Company stock on the twenty (20) trading days immediately
preceding the Maturity Date

                                        2



over (z) the exercise price of the respect grant, multiplied by (ii) the number
of shares of the respective grant that are then vested; provided that the Vested
Value of any options that have been exercised shall be equal to the excess of
the closing price (as of the date of exercise) of Company common stock obtained
as a result of such exercise over the exercise price thereof.

         6.2 Adjusted Total Obligation Determination: Effective on the Maturity
Date, the Total Obligation shall be adjusted and repaid in accordance with the
following terms (as so adjusted, the "Adjusted Total Obligation"):

         (a) If Maker's employment is terminated on or before the second
         anniversary of the Note, Maker shall immediately repay the Total
         Obligation in full.

         (b) If Maker's Employment terminates after the second and on or before
         the third anniversaries of the Note, repayment shall be as follows: If
         the Vested Value of the 99/00 Grants exceeds the Total Obligation,
         Maker shall immediately repay the Total Obligation in full. If the
         Vested Value of the 99/00 Grants is less than the Total Obligation, the
         company shall forgive that portion of the Total Obligation that exceeds
         the Vested Value of the 99/00 Grants, provided, however, that the
         amount of forgiveness shall not exceed Four Million Dollars
         ($4,000,000) plus interest to the date of repayment, and Maker shall
         immediately repay the balance of the Total Obligation not forgiven.

         (c) If Maker's Employment terminates after the third and on or before
         the fourth anniversaries of the Note, repayment shall be as follows: If
         the Vested Value of the 99/00 Grants exceeds the Total obligation,
         Maker shall immediately repay the Total Obligation in full. If the
         Vested Value of the 99/00 Grants is less than the Total Obligation, the
         Company shall forgive that portion of the Total Obligation that exceeds
         the Vested Value of the 99/00 Grants, provided, however, that the
         amount of forgiveness shall not exceed Nine Million Dollars
         ($9,000,000) plus interest to the date of repayment, and Maker shall
         immediately repay the balance of the Total Obligation not forgiven.

         (d) If Maker's employment terminates after the fourth and on or before
         the fifth anniversaries of the Note, repayment shall be as follows: If
         the Vested Value of the 99/00 Grants exceeds the Total Obligation,
         Maker shall immediately repay the Total Obligation in full. If the
         Vested Value of the 99/00 Grants is less than the Total Obligation, the
         Company shall forgive that portion of the Total Obligation that exceeds
         the Vested Value of the 99/00 Grants, provided, however, that the
         amount of forgiveness shall not exceed Twelve Million Dollars
         ($12,000,000) plus interest to the date of repayment, and Maker shall
         immediately repay the balance of the Total Obligation not forgiven.

         (e) If Maker remains employed by Company on the fifth anniversary of
         the date of the Note, repayment shall be as follows: If the Vested
         Value of the 99/00 Grants exceeds the Total Obligation, Maker shall
         immediately repay the Total Obligation in full. If the Vested Value of
         the 99/00 Grants is less than the Total Obligation, the Company shall
         forgive that portion of the Total Obligation that exceeds the Vested
         Value of the 99/00 Grants, and Maker shall immediately repay the
         balance of the Total Obligation not forgiven.

7.       Default. Upon the commencement of any proceedings under any bankruptcy
or insolvency laws by or against Maker ("Default Event"), the Company, or other
holder or owner of this Note, may at its option accelerate the Maturity Date of
this Note, including all Principal and Interest thereon, without presentment,
demand, or notice to Maker or to any person obligated hereon: Upon the
occurrence of a Default Event and acceleration of the Maturity Date, the amount
of the Adjusted Total Obligation shall

                                       3



become due and payable immediately. Interest shall accrue at the same rate of
Interest specified above until this Note is paid in full, regardless of any
Default Event.

8.    Attorneys' Fees. If this Note is placed in the hands of an attorney for
collection or collected through bankruptcy or other judicial proceedings, or if
suit is brought hereon, Maker agrees to pay, in addition to all other amounts
owing hereunder, all expenses and costs of collection, including reasonable
attorneys' fees incurred by the Company.

9.    Governing Law/Severability. All terms, obligations, and provisions of this
Note are to be determined and governed by the laws of the State of Washington,
excluding its choice of law provisions. Should any term or provision of this
Note be declared invalid, such determination shall not affect the remaining
provisions hereof, which shall remain in full force and effect. Notwithstanding
any provision contained herein to the contrary, the holder shall not be entitled
to receive, collect, or apply as interest on the obligation evidenced hereby,
any amount in excess of the maximum rate of interest permitted by applicable
law.

      Maker is on notice that ORAL AGREEMENTS OR ORAL COMMITMENTS TO LOAN MONEY,
EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE NOT
ENFORCEABLE UNDER WASHINGTON LAW.

                                     "Maker"


                                      /s/ Richard Belluzzo
                                      --------------------
                                      Richard Belluzzo

                                       4

                                                                      Exhibit 21

Subsidiaries

Microsoft Corporation
One Microsoft Way
Redmond, WA 98052-6399
Microsoft Capital Corporation (NEVADA)
Microsoft FSC Corporation (U.S. VIRGIN ISLANDS)
Microsoft Investments, Inc. (NEVADA)
Microsoft Ireland Operations Limited (IRELAND)
Microsoft Licensing, Inc. (NEVADA)
MSLI, GP (NEVADA)
Microsoft Operations Pte Ltd. (SINGAPORE)
Microsoft Product Development Ltd. (NEVADA)
Microsoft Regional Sales Corporation (NEVADA-SINGAPORE BRANCH)
Microsoft Risk Company (NEVADA)
Microsoft Puerto Rico, Inc. (DELAWARE)
The Microsoft Network L.L.C. (DELAWARE)
Microsoft Treasury, Inc (NEVADA)
GraceMac Corporation (NEVADA)
Microsoft Algerie S.A.R.L. (ALGERIA)
Microsoft de Argentina S.A.
Microsoft Pty. Limited (AUSTRALIA)
Microsoft Gesellschaft m.b.H. (AUSTRIA)
Microsoft B.V.B.A.  (BELGIUM)
Microsoft Bolivia S.R.L.
Microsoft Informatica Limitada (BRAZIL)
Microsoft Bulgaria EOOD
Microsoft Canada Co.
NCompass Labs, Inc. (CANADA)
Microsoft Chile S.A.
Microsoft Colombia, Inc. (DELAWARE)
Microsoft de Centroamerica S.A. (COSTA RICA)
Microsoft Hrvatska d.o.o. (CROATIA)
Microsoft s.r.o. (CZECH REPUBLIC)
Microsoft Danmark ApS (DENMARK)
Microsoft Dominicana, S.A. (DOMINICAN REPUBLIC)
Microsoft Del Ecuador S.A.
Microsoft Egypt, Limited Liability Company
Microsoft El Salvador S.A. de C.V.
Microsoft Oy (FINLAND)
Microsoft France S.A.R.L.
Microsoft G.m.b.H. (GERMANY)
Microsoft Hellas S.A. (GREECE)
Microsoft de Guatemala, S.A.
Microsoft Hong Kong Limited
Microsoft Hungary Kft.
Microsoft Corporation (India) Private Limited
Microsoft India (R&D) Private Limited
PT Microsoft Indonesia
Microsoft Finance Company Limited (IRELAND)
Microsoft Israel Ltd.
Microsoft SRL (ITALY)
Microsoft Cote d'Ivoire SARL (IVORY COAST)
Microsoft Jamaica, Inc.
Microsoft Company Limited (JAPAN)
Microsoft Asia Ltd (NEVADA-JAPAN BRANCH)
East Africa Software Limited (KENYA)
Microsoft CH (KOREA)
Microsoft Kuwait Representative Office
SIA Microsoft Latvija (LATVIA)



Microsoft Corporation Lebanon Representative Office
Microsoft (Malaysia) Sdn. Bhd.
Microsoft Indian Ocean Islands Limited (MAURITIUS)
Microsoft Mexico, S.A. de C.V.
Microsoft Maroc S.A.R.L. (MOROCCO)
Microsoft Namibia (Proprietary) Limited
Microsoft B.V. (THE NETHERLANDS)
Microsoft International B.V. (THE NETHERLANDS)
Microsoft Manufacturing B.V. (THE NETHERLANDS)
Microsoft New Zealand Limited
Microsoft Nigeria Limited
Microsoft Norge AS (NORWAY)
Microsoft Corporation-Pakistan Liaison Office
Microsoft de Panama, S.A.
Microsoft (China) Company Limited (THE PEOPLE'S REPUBLIC OF CHINA)
Microsoft Peru, S.R.L.
Microsoft Philippines, Inc.
Microsoft sp. z.o.o. (POLAND)
MSFT-Software Para Microcomputadores, LDA (PORTUGAL)
Microsoft Caribbean, Inc. (DELAWARE)
Microsoft Romania SRL
Microsoft ZAO (RUSSIA)
Moscow Microsoft Ireland Operations Limited (Representative Office) (RUSSIA)
Microsoft Arabia Limited (SAUDI ARABIA, 60% owned)
Microsoft Singapore Pte Ltd
Microsoft Slovakia s.r.o.
Microsoft d.o.o., Ljubljana (SLOVENIA)
Microsoft (S.A.) (Proprietary) Limited (SOUTH AFRICA)
Microsoft Iberica S.R.L. (SPAIN)
Microsoft Aktiebolag (SWEDEN)
Microsoft AG (SWITZERLAND)
Microsoft Taiwan Corporation
Microsoft (Thailand) Limited
Microsoft Trinidad & Tobago Limited
Microsoft Tunisie, S.A.R.L. (TUNISIA)
Microsoft Bilgisayar Yazilim Hizmetleri Limited Sirketi (TURKEY)
Microsoft Corporation (UNITED ARAB EMIRATES)
Microsoft Gulf FZ-LLC (UNITED ARAB EMIRATES)
Microsoft Limited (UNITED KINGDOM)
Microsoft Research Limited (UNITED KINGDOM)
Microsoft Uruguay S.A.
Microsoft Venezuela S.A.
The Resident Representative Office of MICROSOFT
Corporation in Hanoi (VIETNAM)
Microsoft Corporation, Zimbabwe Liaison Office
Ensemble Studios Corporation (DELAWARE)
Great Plains Software, Inc. (MINNESOTA)
FRx Software Corporation (DELAWARE)
HomeAdvisor Holdings, Inc. (NEVADA)
Visio International Incorporated (WASHINGTON)
WebAppoint.com, Inc. (DELAWARE)
CarPoint, Inc. (WASHINGTON, 75% owned)
WebTV Networks K.K. (JAPAN, 75% owned)
MSNBC Cable, L.L.C. (DELAWARE, 50% owned)
MSNBC Interactive News, L.L.C. (DELAWARE, 50% owned)
T1MSN, Corp. (DELAWARE, 50% owned)
ninemsn Pty Limited (AUSTRALIA, 50% owned)

                                                                      Exhibit 23

INDEPENDENT AUDITORS' CONSENT


We consent to the incorporation by reference in Registration Statement Numbers
33-06335, 33-18381, 33-25575, 33-33695, and 33-37623 (Microsoft Corporation 1981
Stock Option Plan), 33-44302, 33-51583, and 333-06298 (Microsoft Corporation
1991 Stock Option Plan), 33-37622 (Microsoft Corporation 1991 Employee Stock
Purchase Plan), 33-10732 (Microsoft Corporation Savings Plus Plan), 33-36498
(Microsoft Corporation Stock Option Plan for Non-Employee Directors), 33-45617
(Microsoft Corporation Stock Option Plan for Consultants and Advisors), 333-
16665 (Microsoft Corporation 1997 Employee Stock Purchase Plan), 333-61729
(Microsoft Corporation 1998 Special Stock Award Program), 333-75243 (Microsoft
Corporation Savings Plus 401(k) Plan), 333-91755 (Microsoft Corporation 1999
Stock Option Plan for Non-Employee Directors), 33-06298, 333-52852 (Microsoft
Corporation 2001 Stock Plan) of Microsoft Corporation on Forms S-8 and 33-29823,
33-34794, 33-36347, 33-46958, 33-49496, 33-56039, 33-57277, 33-57899, 33-58867,
33-62725, 33-63471, 33-64870, 333-00857, 333-01177, 333-02759, 333-05961,
333-8081, 333-12441, 333-17143, 333-18055, 333-18195, 333-23621, 333-31803,
333-37841, 333-41387, 333-43449, 333-45989, 333-52377, 333-61507, 333-65813,
333-69027, 333-75389, 333-79461, 333-89793 333-94499, 333-38694, 333-40998,
333-47814, 333-53378, and 333-60782 of Microsoft Corporation on Forms S-3, and
333-26411, 333-90119, and 333-54810 of Microsoft Corporation on Forms S-4 of our
report dated July 18, 2002 (which report expresses an unqualified opinion and
includes an explanatory paragraph relating to the adoption of Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments
and Hedging Activities, and Statement of Financial Accounting Standards No. 142,
Goodwill and Other Intangible Assets) appearing in this Annual Report on Form
10-K of Microsoft Corporation for the year ended June 30, 2002.




/s/ Deloitte & Touche LLP
Deloitte & Touche LLP
Seattle, Washington
September 5, 2002

---

---