Exhibit 10.1
GRANITE CONSTRUCTION INCORPORATED
AMENDED AND RESTATED
1999 EQUITY INCENTIVE PLAN
(As Adopted Effective May 24, 2004)
(As Amended Effective January 1, 2005)
SECTION 1. ESTABLISHMENT, PURPOSE, AND TERM OF PLAN
     1.1 Establishment. The Granite Construction Incorporated 1999 Equity
Incentive Plan was initially established effective May 24, 1999 (the “Initial
Plan”). The Initial Plan was amended and restated in its entirety as the Granite
Construction Incorporated Amended and Restated 1999 Equity Incentive Plan (the
“Plan”) effective as of May 24, 2004, the date of its approval by the
stockholders of the Company (the “Effective Date”). The Plan was further amended
effective January 1, 2005 to incorporate the requirements of Section 409A of the
Code.
     1.2 Purpose. The purpose of the Plan is to advance the interests of the
Company, by encouraging and providing for the acquisition of an equity interest
in the success of the Company by Employees and Directors, by providing
additional incentives and motivation toward superior performance of the Company,
and by enabling the Company to attract and retain the services of Employees and
Directors upon whose judgment, interest, and special effort the successful
conduct of its operations is largely dependent. The Plan seeks to achieve this
purpose by providing for Awards in the form of Options, Restricted Stock,
Restricted Stock Units, Performance Shares and Performance Units, by providing
Nonemployee Directors with the opportunity to receive Options or Stock Units in
lieu of compensation otherwise payable-in cash, and by providing for payments in
the form of shares of Stock or cash.
     1.3 Term of Plan. The Plan shall remain in effect until the earlier of
(a) its termination by the Committee pursuant to Section 14 or (b) the date on
which all of the shares of Stock available for issuance under the Plan have been
issued and all restrictions on such shares under the terms of the Plan and the
agreements evidencing Awards granted under the Plan have lapsed. However, all
Awards shall be granted, if at all, within ten (10) years from the Effective
Date.
SECTION 2. DEFINITIONS AND CONSTRUCTION
     2.1 Definitions. Whenever used herein, the following terms shall have their
respective meanings set forth below:
          (a) “Award” means any Option, Restricted Stock, Restricted Stock Unit,
Performance Share, Performance Unit or Director Fee Award granted under the
Plan.
          (b) “Award Agreement” means a written agreement between the Company
and a Participant setting forth the terms, conditions and restrictions of the
Award granted to the Participant. An Award Agreement may be an “Option
Agreement,” a “Restricted Stock

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Agreement,” a “Restricted Stock Units Agreement,” a “Performance Share
Agreement,” a “Performance Unit Agreement,” a “Nonemployee Director Option
Agreement,” or a “Stock Units Agreement.”
          (c) “Board” means the Board of Directors of the Company.
          (d) “Cause” means, unless otherwise defined by the Participant’s Award
Agreement or contract of employment or service, any of the following: (i) the
Participant’s theft, dishonesty, or falsification of any Participating Company
documents or records; (ii) the Participant’s repeated failure to report to work
during normal hours, other than for customarily excused absences for personal
illness or other reasonable cause; (iii) the Participant’s conviction (including
any plea of guilty or nolo contendere) of theft or felony; (iv) the
Participant’s wrongful disclosure of a Participating Company’s trade secrets or
other proprietary information; (v) any other dishonest or intentional action by
the Participant which has a detrimental effect on a Participating Company; or
(vi) the Participant’s habitual and repeated nonperformance of the Participant’s
duties.
          (e) “Code” means the Internal Revenue Code of 1986, as amended, and
any applicable regulations promulgated thereunder.
          (f) “Committee” means the Compensation Committee or other committee of
the Board duly appointed to administer the Plan and having such powers as shall
be specified by the Board. If no committee of the Board has been appointed to
administer the Plan, the Board shall exercise all of the powers of the Committee
granted herein, and, in any event, the Board may in its discretion exercise any
or all of such powers.
          (g) “Company” means Granite Construction Incorporated, a Delaware
corporation, or any successor corporation thereto.
          (h) “Director” means a member of the Board.
          (i) “Director Fee Award” means any Nonemployee Director Option or
Stock Unit granted pursuant to Section 9.
          (j) “Disability” means a permanent and total disability as defined
under the Company’s Long Term Disability Plan or any successor plan, regardless
of whether the Participant is covered by such Long Term Disability Plan.
          (k) “Dividend Equivalent” means a credit, made at the discretion of
the Committee or as otherwise provided by the Plan, to the account of a
Participant in an amount equal to the cash dividends paid on one share of Stock
for each share of Stock represented by an Award held by such Participant.
          (l) “Employee” means any person treated as an employee (including an
officer or a Director who is also treated as an employee) in the records of a
Participating Company and, with respect to any Incentive Stock Option granted to
such person, who is an employee for purposes of Section 422 of the Code;
provided, however, that neither service as a Director nor payment of a
director’s fee shall be sufficient to constitute employment for purposes

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of the Plan. The Company shall determine in good faith and in the exercise of
its discretion whether an individual has become or has ceased to be an Employee
and the effective date of such individual’s employment or termination of
employment, as the case may be. For purposes of an individual’s rights, if any,
under the Plan as of the time of the Company’s determination, all such
determinations by the Company shall be final, binding and conclusive,
notwithstanding that the Company or any court of law or governmental agency
subsequently makes a contrary determination,
          (m) “Exchange Act” means the Securities Exchange Act of 1934, as
amended.
          (n) “Fair Market Value” means, as of any relevant date, the closing
sale price of a share of Stock (or the mean of the closing bid and asked prices
if the Stock is so quoted instead) on the relevant date on the New York Stock
Exchange or such other national or regional securities exchange or market system
constituting the primary market for the Stock, as reported in The Wall Street
Journal or such other source as the Company deems reliable. If the relevant date
does not fall on a day on which the Stock has traded on such securities exchange
or market system, the date on which the Fair Market Value shall be established
shall be the last day on which the Stock was so traded prior to the relevant
date, or such other appropriate day as shall be determined by the Committee, in
its discretion. If, on such date, there is no public market for the Stock, the
Fair Market Value of a share of Stock shall be as determined by the Committee.
          (o) “Incentive Stock Option” means an Option intended to be (as set
forth in the Award Agreement) and which qualifies as an incentive stock option
within the meaning of Section 422(b) of the Code.
          (p) “Insider” means an officer, a Director or any other person whose
transactions in Stock are subject to Section 16 of the Exchange Act.
          (q) “Nonemployee Director” means a Director who is not an Employee.
          (r) “Nonemployee Director Option” means a Director Fee Award in the
form of Nonstatutory Stock Option granted pursuant to the terms and conditions
of Section 10.
          (s) “Nonstatutory Stock Option” means an Option not intended to be (as
set forth in the Award Agreement) or which does not qualify as an Incentive
Stock Option.
          (t) “Option” means the right to purchase Stock at a stated price for a
specified period of time pursuant to the terms and conditions of the Plan. An
Option may be either an Incentive Stock Option or a Nonstatutory Stock Option.
          (u) “Parent Corporation” means any present or future “parent
corporation” of the Company, as defined in Section 424(e) of the Code.
          (v) “Participant” means any eligible person who has been granted one
or more Awards.
          (w) “Participating Company” means the Company or any Parent
Corporation or Subsidiary Corporation.

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          (x) “Participating Company Group” means, at any point in time, all
corporations collectively which are then Participating Companies.
          (y) “Performance Goal” means a performance goal established by the
Committee pursuant to Section 9.3.
          (z) “Performance Period” means a period established by the Committee
pursuant to Section 9.3 at the end of which one or more Performance Goals are to
be measured.
          (aa) “Performance Share” means a bookkeeping entry representing a
right granted to a Participant pursuant to the terms and conditions of Section 8
to receive a payment equal to the value of a Performance Share, as determined by
the Committee, based on performance.
          (bb) “Performance Unit” means a bookkeeping entry representing a right
granted to a Participant pursuant to the terms and conditions of Section 9 to
receive a payment equal to the value of a Performance Unit, as determined by the
Committee, based upon performance.
          (cc) “Restricted Stock” means Stock granted to a Participant pursuant
to the terms and conditions of Section 7.
          (dd) “Restricted Stock Unit” means a bookkeeping entry representing a
right granted to a Participant pursuant to Section 8 to receive a share of Stock
on a date determined in accordance with the provisions of Section 8 and the
Participant’s Award Agreement.
          (ee) “Restriction Period” means the period established in accordance
with Section 7.3 of the Plan during which shares subject to a Restricted Stock
Award are subject to Vesting Conditions.
          (ff) “Retirement” means (i) with respect to an Employee, termination
of employment for retirement under the terms of the Company’s defined
contribution plans, and (ii) with respect to a Nonemployee Director, resignation
from Service on the Board after attaining the age of 55 and after at least ten
years of Service on the Board.
          (gg) “Rule 16b-3” means Rule 16b-3 under the Exchange Act, as amended
from time to time, or any successor rule or regulation.
          (hh) “Section 162(m)” means Section 162(m) of the Code.
          (ii) “Securities Act” means the Securities Act of 1933, as amended.
          (jj) “Service” means a Participant’s employment or service with the
Participating Company Group, whether in the capacity of an Employee or a
Director. A Participant’s Service shall not be deemed to have terminated merely
because of a change in the capacity in which the Participant renders such
Service or a change in the Participating Company for which the Participant
renders such Service, provided that there is no interruption or termination of
the Participant’s Service. Furthermore, a Participant’s Service shall not be

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deemed to have terminated if the Participant takes any military leave, sick
leave, or other bona fide leave of absence approved by the Company; provided,
however, that if any such leave exceeds three (3) months, on the first day
immediately following such three-month period any Incentive Stock Option held by
the Participant shall cease to be treated as an Incentive Stock Option and
instead shall be treated thereafter as a Nonstatutory Stock Option unless the
Participant’s right to return to Service with the Participating Company Group is
guaranteed by statute or contract. Notwithstanding the foregoing, unless
otherwise designated by the Company or required by law, a leave of absence shall
not be treated as Service for purposes of determining vesting under the
Participant’s Award Agreement. A Participant’s Service shall be deemed to have
terminated either upon an actual termination of Service or upon the corporation
for which the Participant performs Service ceasing to be a Participating
Company. Subject to the foregoing, the Company, in its discretion, shall
determine whether a Participant’s Service has terminated and the effective date
of such termination.
          (kk) “Stock” means the Common Stock of the Company, as adjusted from
time to time in accordance with Section 5.3.
          (ll) “Stock Unit” means a Director Fee Award in the form of a
bookkeeping entry representing a right granted to a Participant pursuant to the
terms and conditions of Section 10 to receive payment of one (1) share of Stock.
          (mm) “Subsidiary Corporation” means any present or future “subsidiary
corporation” of the Company, as defined in Section 424(f) of the Code.
          (nn) “Ten Percent Owner” means a Participant who, at the time an
Option is granted to the Participant, owns stock possessing more than ten
percent (10%) of the total combined voting power of all classes of stock of a
Participating Company within the meaning of Section 422(b)(6) of the Code.
          (oo) “Vesting Conditions” mean those conditions established in
accordance with Section 7.3 or Section 8.3 of the Plan prior to the satisfaction
of which shares or share equivalents subject to a Restricted Stock Award or
Restricted Stock Unit Award, respectively, remain subject to forfeiture or a
repurchase option in favor of the Company upon the Participant’s termination of
Service.
     2.2 Construction. Captions and titles contained herein are for convenience
only and shall not affect the meaning or interpretation of any provision of the
Plan. Except when otherwise indicated by the context, words in the masculine
gender, when used in the Plan shall include the feminine gender, the singular
shall include the plural, and the plural shall include the singular. Use of the
term “or” is not intended to be exclusive, unless the context clearly requires
otherwise.
SECTION 3. ELIGIBILITY AND AWARD LIMITATIONS
     3.1 Persons Eligible for Incentive Stock Options. Incentive Stock Options
may be granted only to Employees. For purposes of the foregoing sentence, the
term “Employees” shall include prospective Employees to whom Options are granted
in connection with written offers of

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employment with the Participating Company Group, provided that any such Option
shall be deemed granted effective on the date that the Participant commences
Service as an Employee, with an exercise price determined as of such date in
accordance with Section 6.2.
     3.2 Persons Eligible for Other Awards. Awards other than Incentive Stock
Options may be granted only to Employees and Directors. For purposes of the
foregoing sentence, the terms “Employees” and “Directors” shall include
prospective Employees and prospective Directors to whom Awards are granted in
connection with written offers of employment or service as a Director with the
Participating Company Group, provided that no Stock subject to any such Award
shall vest, become exercisable or be issued prior to the date on which the
Participant commences Service. A Director Fee Award may be granted only to a
person who, at the time of grant, is a Nonemployee Director. Eligible persons
may be granted more than one (1) Award.
     3.3 Section 162(m) Award Limits. The following limitations shall apply to
the grant of any Award if, at the time of grant, the Company is a “publicly held
corporation” within the meaning of Section 162(m).
          (a) Stock Options. Subject to adjustment as provided in Section 5.3,
no Employee shall be granted one or more Options within any fiscal year of the
Company which in the aggregate are for the purchase of more than one hundred
thousand (100,000) shares; provided, however, that the Company may make an
additional one-time grant to any newly-hired Employee of an Option for the
purchase of up to two hundred fifty thousand (250,000) shares. An Option which
is canceled in the same fiscal year of the Company in which it was granted shall
continue to be counted against the limits described in this subsection for such
period.
          (b) Restricted Stock. Subject to adjustment as provided in
Section 5.3, no Employee may be granted within any fiscal year of the Company
more than one hundred thousand (100,000) shares of Restricted Stock, provided
that such limit shall apply only to Awards of Restricted Stock which are granted
or subject to Vesting Conditions based upon the attainment of Performance Goals.
          (c) Restricted Stock Units. Subject to adjustment as provided in
Section 5.3, no Employee shall be granted within any fiscal year of the Company
more than one hundred thousand (100,000) Restricted Stock Units, provided that
such limit shall apply only to Awards of Restricted Stock Units which are
granted or subject to Vesting Conditions based upon the attainment of
Performance Goals.
          (d) Performance Shares and Performance Units. Subject to adjustment as
provided in Section 5.3, no Employee may be granted (i) Performance Shares which
could result in such Employee receiving more than one hundred thousand (100,000)
shares of Stock for each full fiscal year of the Company contained in the
Performance Period for such Award, or (ii) Performance Units which could result
in such Employee receiving more than one million five hundred thousand dollars
($1,500,000) for each full fiscal year of the Company contained in the
Performance Period for such Award. No Participant may be granted more than one
Performance Share Award or one Performance Unit Award (but not both such Awards)
for the same Performance Period.

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     3.4 Maximum Number of Shares Issuable Pursuant to Incentive Stock Options.
Subject to adjustment as provided in Section 5.3, the maximum aggregate number
of shares of Stock that may be issued under the Plan pursuant to the exercise of
incentive Stock Options shall not exceed four million two hundred fifty thousand
(4,250,000) shares. The maximum aggregate number of shares of Stock that may be
issued under the Plan pursuant to all Awards other than Incentive Stock Options
shall be the number of shares determined in accordance with Section 5.1, subject
to adjustment as provided in Section 5.2 and Section 5.3.
     3.5 Aggregate Limit on Restricted Stock, Restricted Stock Unit, Performance
Share and Performance Unit Awards Not Providing for Certain Minimum Vesting.
Notwithstanding any provision of the Plan to the contrary, no more than five
percent (5%) of the maximum aggregate number of shares of Stock that may be
issued under the Plan, determined in accordance with Section 5.1 (as adjusted
from time to time pursuant to Sections 5.2 and 5.3), shall be issued pursuant to
the following Awards granted on or after the Effective Date: (a) Restricted
Stock or Restricted Stock Unit Awards having Vesting Conditions which (i) if
based upon a Service requirement, provide for vesting more rapid than annual pro
rata vesting over a period of three (3) years or (ii) if based upon the
attainment of one or more Performance Goals, provide for a Performance Period of
less than twelve (12) months, or (b) Performance Share or Performance Unit
Awards having a Performance Period of less than twelve (12) months.
SECTION 4. ADMINISTRATION
     4.1 Administration by the Committee. The Plan shall be administered by the
Committee. All questions of interpretation of the Plan or of any Award shall be
determined by the Committee, and such determinations shall be final, binding and
conclusive for all purposes and upon all persons whomsoever.
     4.2 Authority of Officers. Any officer of a Participating Company shall
have the authority to act on behalf of the Company with respect to any matter,
right, obligation, determination or election which is the responsibility of or
which is allocated to the Company herein, provided the officer has apparent
authority with respect to such matter, right, obligation, determination or
election.
     4.3 Administration with Respect to Insiders. With respect to participation
by Insiders in the Plan, at any time that any class of equity security of the
Company is registered pursuant to Section 12 of the Exchange Act, the Plan shall
be administered in compliance with the requirements, if any, of Rule 16b-3.
     4.4 Committee Complying with Section 162(m). If the Company is a “publicly
held corporation” within the meaning of Section 162(m), the Board may establish
a Committee of “outside directors” within the meaning of Section 162(m) to
approve the grant of any Award which might reasonably be anticipated to result
in the payment of employee remuneration that would otherwise exceed the limit on
employee remuneration deductible for income tax purposes pursuant to
Section 162(m).

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     4.5 Powers of the Committee. In addition to any other powers set forth in
the Plan and subject to the provisions of the Plan, the Committee shall have the
full and final power and authority, in its discretion:

  (a)   to determine the persons to whom, and the time or times at which, Awards
shall be granted and the number of shares of Stock or units to be subject to
each Award and the value of a unit;     (b)   to determine the type of Award
granted and to designate Options as Incentive Stock Options or Nonstatutory
Stock Options;     (c)   to determine the Fair Market Value of shares of Stock
or other property;     (d)   to determine the terms, conditions and restrictions
applicable to each Award (which need not be identical) and any shares acquired
pursuant thereto, including, without limitation, (i) the exercise price of any
Option, (ii) the method of payment for shares purchased upon the exercise of any
Option, (iii) the method for satisfaction of any tax withholding obligation
arising in connection with any Award, including by the withholding or delivery
of shares of stock, (iv) the timing, terms and conditions of the exercisability
or vesting of any Award or any shares acquired pursuant thereto, (v) the
Performance Goals applicable to any Award and the extent to which such
Performance Goals have been attained, (vi) the time of the expiration of any
Award, (vii) the effect of the Participant’s termination of Service on any of
the foregoing, and (viii) all other terms, conditions and restrictions
applicable to the Award or shares acquired pursuant thereto not inconsistent
with the terms of the Plan;     (e)   to determine whether an Award of
Performance Shares or Performance Units will be settled in shares of Stock,
cash, or in any combination thereof;     (f)   to approve one or more forms of
Award Agreement;     (g)   to the extent permitted under Code Section 409A, to
amend, modify, extend, cancel or renew any Award or to waive any restrictions or
conditions applicable to any Award or any shares acquired pursuant thereto;    
(h)   to the extent permitted under Code Section 409A, to accelerate, continue,
extend or defer the exercisability or vesting of any Award or any shares
acquired pursuant thereto, including with respect to the period following a
Participant’s termination of Service;     (i)   to prescribe, amend or rescind
rules, guidelines and policies relating to the Plan, or to adopt sub-plans or
supplements to, or alternative versions of the Plan, including, without
limitation, as the Committee deems necessary or desirable to comply with the
laws or regulations of, or to accommodate

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      the tax policy, accounting principles or custom of, foreign jurisdictions
whose citizens may be granted Awards; and     (j)   to correct any defect,
supply any omission or reconcile any inconsistency in the Plan or any Award
Agreement and to make all other determinations and take such other actions with
respect to the Plan or any Award as the Committee may deem advisable to the
extent not inconsistent with the provisions of the Plan or applicable law.

     4.6 Option Repricing. Without the affirmative vote of holders of a majority
of the shares of Stock cast in person or by proxy at a meeting of the
stockholders of the Company at which a quorum representing a majority of all
outstanding shares of Stock is present or represented by proxy, the Board shall
not approve a program providing for either (a) the cancellation of outstanding
Options and the grant in substitution therefor of new Options having a lower
exercise price or (b) the amendment of outstanding Options to reduce the
exercise price thereof. This paragraph shall not be construed to apply to
“issuing or assuming a stock option in a transaction to which section 424(a)
applies,” within the meaning of Section 424 of the Code.
SECTION 5. STOCK SUBJECT TO PLAN
     5.1 Maximum Number of Shares Issuable. Subject to adjustment as provided in
Section 5.3, the maximum aggregate number of shares of Stock that may be issued
under the Plan shall be four million two hundred fifty thousand (4,250,000) and
shall consist of authorized but unissued or reacquired shares of Stock not
reserved for any other purpose, or any combination thereof.
     5.2 Share Accounting. If an outstanding Award for any reason expires or is
terminated or canceled without having been exercised or settled in full, or if
shares of Stock acquired pursuant to an Award subject to forfeiture or
repurchase are forfeited or repurchased by the Company at the Participant’s
purchase price, the shares of Stock allocable to the terminated portion of such
Award or such forfeited or repurchased shares of Stock shall again be available
for issuance under the Plan. Shares of Stock shall not be deemed to have been
issued pursuant to the Plan (a) with respect to any portion of an Award that is
settled in cash or (b) to the extent such shares are withheld in satisfaction of
tax withholding obligations pursuant to Section 13.2. If the exercise price of
an Option is paid by tender to the Company, or attestation to the ownership, of
shares of Stock owned by the Participant, the number of shares available for
issuance under the Plan shall be reduced by the net number of shares for which
the Option is exercised.
     5.3 Adjustment in Capitalization. In the event of any stock dividend, stock
split, reverse stock split, recapitalization, merger, combination, exchange of
shares, reclassification or similar change in the capital structure of the
Company, appropriate adjustments shall be made in the number and class of shares
subject to the Plan and to any outstanding Awards, in the Award limits set forth
in Sections 3.3, 3.4 and 3.5, and in the exercise price per share of any
outstanding Options. If a majority of the shares which are of the same class as
the shares that are subject to outstanding Awards are exchanged for, converted
into, or otherwise become (whether or not

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pursuant to a Change in Control, as defined in Section 11.3) shares of another
corporation (the “New Shares”), the Committee may unilaterally amend the
outstanding Awards to provide that such Awards are for New Shares. In the event
of any such amendment, the number of shares subject to outstanding Awards and
the exercise price per share of outstanding Options shall be adjusted in a fair
and equitable manner as determined by the Committee, in its discretion.
Notwithstanding the foregoing, any fractional share resulting from an adjustment
pursuant to this Section 5.3 shall be rounded down to the nearest whole number,
and in no event may the exercise price of any Option be decreased to an amount
less than the par value, if any, of the stock subject to the Option. The
adjustments determined by the Committee pursuant to this Section 5.3 shall be
final, binding and conclusive.
SECTION 6. STOCK OPTIONS
     6.1 Grant of Options. Subject to the provisions of Sections 1.3, 3 and 5,
Options (other than pursuant to a Director Fee Award) may be granted to
Participants at any time and from time to time as shall be determined by the
Committee. Each Option shall be evidenced by an Award Agreement that shall
specify the type of Option granted, the exercise price, the duration of the
Option, the number of shares of Stock to which the Option pertains, and such
other provisions as the Committee shall determine. No Option or purported Option
shall be a valid and binding obligation of the Company unless evidenced by a
fully executed Award Agreement. Award Agreements evidencing Options may
incorporate all or any of the terms of the Plan by reference and, except as
otherwise set forth in Section 10 with respect to a Nonemployee Director Option,
shall comply with and be subject to the terms and conditions set forth in
Sections 6.2 through 6.6 below.
     6.2 Exercise Price. The exercise price for each Option shall be established
in the discretion of the Committee; provided, however, that (a) the exercise
price per share shall be not less than the Fair Market Value of a share of Stock
on the effective date of grant of the Option and (b) no Incentive Stock Option
granted to a Ten Percent Owner shall have an exercise price per share less than
one hundred ten percent (110%) of the Fair Market Value of a share of Stock on
the effective date of grant of the Option. Notwithstanding the foregoing, an
Option (whether an Incentive Stock Option or a Nonstatutory Stock Option) may be
granted with an exercise price lower than the minimum exercise price set forth
above if such Option is granted pursuant to an assumption or substitution for
another option in a manner qualifying under the provisions of Section 424(a) of
the Code.
     6.3 Exercise Period. Options shall be exercisable at such time or times, or
upon such event or events, and subject to such terms, conditions, performance
criteria and restrictions as shall be determined by the Committee and set forth
in the Award Agreement evidencing such Option; provided, however, that (a) no
Option shall be exercisable after the expiration of ten (10) years after the
effective date of grant of such Option, (b) no Incentive Stock Option granted to
a Ten Percent Owner shall be exercisable after the expiration of five (5) years
after the effective date of grant of such Option, and (c) no Option granted to a
prospective Employee or prospective Director may become exercisable prior to the
date on which such person commences Service. Subject to the foregoing, unless
otherwise specified by the Committee in the grant of an Option,

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any Option granted hereunder shall have a term of ten (10) years from the
effective date of grant of the Option, unless earlier terminated in accordance
with its provisions.
     6.4 Payment of Exercise Price. The purchase price of Stock upon exercise of
any Option shall be paid in full by such methods as shall be permitted by the
Committee or as provided in a Participant’s Award Agreement, which need not be
the same for all Participants, and subject to the following:
          (a) Forms of Consideration Authorized. Except as otherwise provided
below, payment of the exercise price for the number of shares of Stock being
purchased pursuant to any Option shall be made (i) in cash, by check, or cash
equivalent, (ii) by tender to the Company, or attestation to the ownership, of
shares of Stock owned by the Participant having a Fair Market Value not less
than the exercise price, (iii) by delivery of a properly executed notice of
exercise together with irrevocable instructions to a broker providing for the
assignment to the Company of the proceeds of a sale or loan with respect to some
or all of the shares being acquired upon the exercise of the Option (including,
without limitation, through an exercise complying with the provisions of
Regulation T as promulgated from time to time by the Board of Governors of the
Federal Reserve System) (a “Cashless Exercise”), (iv) by such other
consideration as may be approved by the Committee from time to time to the
extent permitted by applicable law, or (v) by any combination thereof. The
Committee may at any time or from time to time grant Options which do not permit
all of the foregoing forms of consideration to be used in payment of the
exercise price or which otherwise restrict one or more forms of consideration.
The proceeds from payment of the Option exercise prices shall be added to the
general funds of the Company and shall be used for general corporate purposes.
          (b) Limitations on Forms of Consideration.
               (i) Tender of Stock. Notwithstanding the foregoing, an Option may
not be exercised by tender to the Company, or attestation to the ownership, of
shares of Stock to the extent such tender or attestation would constitute a
violation of the provisions of any law, regulation or agreement restricting the
redemption of the Company’s stock. Unless otherwise provided by the Committee,
an Option may not be exercised by tender to the Company, or attestation to the
ownership, of shares of Stock unless such shares either have been owned by the
Participant for more than six (6) months (and not used for another Option
exercise by attestation during such period) or were not acquired, directly or
indirectly, from the Company.
               (ii) Cashless Exercise. The Company reserves, at any and all
times, the right, in the Company’s sole and absolute discretion, to establish,
decline to approve or terminate any program or procedures for the exercise of
Options by means of a Cashless Exercise, including with respect to one or more
Participants specified by the Company notwithstanding that such program or
procedures may be available to other Participants.
     6.5 Effect of Termination of Service.
          (a) Option Exercisability. Subject to earlier termination of the
Option as otherwise provided herein and unless otherwise provided by the
Committee in the grant of an Option and set forth in the Award Agreement, an
Option shall be exercisable after a Participant’s

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termination of Service only during the applicable time period determined in
accordance with this Section and thereafter shall terminate:
               (i) Death or Disability. If the Participant’s Service is
terminated by reason of the death or Disability of the Participant, the Option,
to the extent unexercised and exercisable on the date on which the Participant’s
Service terminated, may be exercised by the Participant (or the Participant’s
guardian or legal representative or other person who acquired the right to
exercise the Option by reason of the Participant’s death) at any time prior to
the expiration of six (6) months (or such longer period of time as determined by
the Committee, in its discretion) after the date on which the Participant’s
Service terminated, but in any event no later than the date of expiration of the
Option’s term as set forth in the Award Agreement evidencing such Option (the
“Option Expiration Date”). If an Option intended to be an Incentive Stock Option
is exercised by a Participant more than three (3) months following the
Participant’s termination of Service by reason of a Disability which is not a
“permanent and total disability” as defined in Section 22(e)(3) of the Code,
such exercise will be treated as the exercise of a Nonstatutory Stock Option to
the extent required by Section 422 of the Code. The Participant’s Service shall
be deemed to have terminated on account of death if the Participant dies within
three (3) months after the Participant’s termination of Service.
               (ii) Retirement. If the Participant’s Service is terminated by
reason of the Retirement of the Participant, the Option may be exercised at such
time (but in any event no later than the Option Expiration Date) and in such
amounts as shall be determined by the Committee at the time of grant of the
Option and set forth in the Award Agreement.
               (iii) Termination for Cause. Notwithstanding any other provision
of the Plan to the contrary, if the Participant’s Service is terminated for
Cause, the Option shall terminate and cease to be exercisable immediately upon
such termination of Service.
               (iv) Other Termination of Service. If the Participant’s Service
terminates for any reason, except death, Disability, Retirement or Cause, the
Option, to the extent unexercised and exercisable by the Participant on the date
on which the Participant’s Service terminated, may be exercised by the
Participant within thirty (30) days (or such longer period of time as determined
by the Committee, in its discretion) after the date on which the Participant’s
Service terminated, but in any event no later than the Option Expiration Date.
          (b) Extension if Exercise Prevented by Law. Notwithstanding the
foregoing, other than termination of Service for Cause, if the exercise of an
Option within the applicable time periods set forth in Section 6.5(a) is
prevented by the provisions of Section 12.1 below regarding compliance with
securities laws, the Option shall remain exercisable until thirty (30) days
after the date the Participant is notified by the Company that the Option is
exercisable, but in any event no later than the Option Expiration Date.
          (c) Extension if Participant Subject to Section 16(b). Notwithstanding
the foregoing, other than termination of Service for Cause, if a sale within the
applicable time periods set forth in Section 6.5(a) of shares acquired upon the
exercise of the Option would subject the Participant to suit under Section 16(b)
of the Exchange Act, the Option shall remain exercisable until the earliest to
occur of (i) the tenth (10th) day following the date on which a

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sale of such shares by the Participant would no longer be subject to such suit,
(ii) the one hundred and ninetieth (190th) day after the Participant’s
termination of Service, or (iii) the Option Expiration Date.
     6.6 Transferability of Options. During the lifetime of the Participant, an
Option shall be exercisable only by the Participant or the Participant’s
guardian or legal representative. No Option shall be assignable or transferable
by the Participant, except by will or by the laws of descent and distribution.
Notwithstanding the foregoing, to the extent permitted by the Committee, in its
discretion, and set forth in the Award Agreement evidencing such Option, a
Nonstatutory Stock Option shall be assignable or transferable subject to the
applicable limitations, if any, described in the General Instructions to Form
S-8 Registration Statement under the Securities Act.
SECTION 7. RESTRICTED STOCK
     7.1 Grant of Restricted Stock. Subject to the provisions of Sections 1.3, 3
and 5, Awards of Restricted Stock may be granted to Participants at any time and
from time to time as shall be determined by the Committee, including, without
limitation, upon the attainment of one or more Performance Goals as described in
Section 9.4. If either the grant of Restricted Stock or the lapsing of the
Restriction Period is to be contingent upon the attainment of one or more
Performance Goals, the Committee shall follow procedures substantially
equivalent to those set forth in Sections 9.3 through 9.5. Each grant of
Restricted Stock shall be evidenced by an Award Agreement that shall specify the
number of shares of Stock subject to and the other terms, conditions and
restrictions of such Award as the Committee shall determine. No Restricted Stock
Award or purported Restricted Stock Award shall be a valid and binding
obligation of the Company unless evidenced by a fully executed Award Agreement.
Award Agreements evidencing Restricted Stock Awards may incorporate all or any
of the terms of the Plan by reference and shall comply with and be subject to
the terms and conditions set forth in Sections 7.2 through 7.6 below.
     7.2 Purchase Price. No monetary payment (other than applicable tax
withholding) shall be required as a condition of receiving shares of Restricted
Stock, the consideration for which shall be services actually rendered to a
Participating Company or for its benefit. Notwithstanding the foregoing, the
Participant shall furnish consideration in the form of cash or past services
rendered to a Participating Company or for its benefit having a value not less
than the par value of the shares of Stock subject to such Restricted Stock
Award.
     7.3 Vesting and Restrictions on Transfer. Shares issued pursuant to any
Restricted Stock Award may or may not be made subject to Vesting Conditions
based upon the satisfaction of such Service requirements, conditions,
restrictions or performance criteria, including, without limitation, Performance
Goals as described in Section 9.4, as shall be established by the Committee and
set forth in the Award Agreement evidencing such Award. During any Restriction
Period in which shares acquired pursuant to a Restricted Stock Award remain
subject to Vesting Conditions, such shares may not be sold, exchanged,
transferred, pledged, assigned or otherwise alienated or hypothecated, other
than pursuant to an Ownership Change Event, as defined in Section 14.1. Upon
request by the Company, each Participant shall execute any agreement evidencing
such transfer restrictions prior to the receipt of shares of Stock hereunder

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and shall promptly present to the Company any and all certificates representing
shares of Stock acquired hereunder for the placement on such certificates of
appropriate legends evidencing any such transfer restrictions. All rights with
respect to Restricted Stock granted to a Participant hereunder shall be
exercisable during his or her lifetime only by such Participant.
     7.4 Other Restrictions. The Committee may impose such other restrictions on
any shares of Restricted Stock granted hereunder as it may deem advisable,
including, without limitation, restrictions under applicable Federal securities
law and under any blue sky or state securities laws applicable to such shares,
and may legend the certificates representing the Restricted Stock to give
appropriate notice of such restrictions.
     7.5 Voting Rights; Dividends and Distributions. Except as provided in this
Section, Section 7.4 and any Award Agreement, during the Restriction Period
applicable to shares subject to a Restricted Stock Award, the Participant shall
have all of the rights of a stockholder of the Company holding shares of Stock,
including the right to vote such shares and to receive all dividends and other
distributions paid with respect to such shares. However, in the event of a
dividend or distribution paid in shares of Stock or any other adjustment made
upon a change in the capital structure of the Company as described in
Section 5.3, then any and all new, substituted or additional securities or other
property (other than normal cash dividends) to which the Participant is entitled
by reason of the Participant’s Restricted Stock Award shall be immediately
subject to the same Vesting Conditions as the shares subject to the Restricted
Stock Award with respect to which such dividends or distributions were paid or
adjustments were made.
     7.6 Effect of Termination of Service. Unless otherwise provided by the
Committee in the grant of a Restricted Stock Award and set forth in the Award
Agreement, the effect of a Participant’s termination of Service on his or her
Restricted Stock Award shall be as follows:
          (a) Death or Disability. If the Participant’s Service is terminated by
reason of the death or Disability of the Participant during the Restriction
Period, the restrictions applicable to the shares of Restricted Stock pursuant
to Section 7.3 shall terminate automatically with respect to all such shares.
          (b) Other Termination of Service. If the Participant’s Service
terminates during the Restriction Period for any reason except death or
Disability, any shares of Restricted Stock still subject to restrictions
pursuant to Section 7.3 at the date of such termination shall be forfeited and
automatically reacquired by the Company; provided, however, that, in the event
of an involuntary termination of the Participant’s Service, the Committee, in
its sole discretion, may waive the automatic forfeiture of any or all such
shares and/or add such new restrictions to such shares of Restricted Stock as it
deems appropriate.
SECTION 8. RESTRICTED STOCK UNITS
     8.1 Grant of Restricted Stock Units. Subject to the provisions of
Sections 1.3, 3 and 5, Awards of Restricted Stock Units may be granted to
Participants at any time and from time to time as shall be determined by the
Committee, including, without limitation, upon the attainment of one or more
Performance Goals as described in Section 9.4. If either the grant of a

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Restricted Stock Unit Award or the Vesting Conditions with respect to such Award
is to be contingent upon the attainment of one or more Performance Goals, the
Committee shall follow procedures substantially equivalent to those set forth in
Sections 9.3 through 9.5. Restricted Stock Unit Awards shall be evidenced by
Award Agreements specifying the number of Restricted Stock Units subject to the
Award, in such form as the Committee shall from time to time establish. No
Restricted Stock Unit Award or purported Restricted Stock Unit Award shall be a
valid and binding obligation of the Company unless evidenced by a fully executed
Award Agreement. Award Agreements evidencing Restricted Stock Units may
incorporate all or any of the terms of the Plan by reference and shall comply
with and be subject to the terms and conditions set forth in Sections 8.2
through 8.7 below.
     8.2 Purchase Price. No monetary payment (other than applicable tax
withholding, if any) shall be required as a condition of receiving a Restricted
Stock Unit Award, the consideration for which shall be services actually
rendered to a Participating Company or for its benefit.
     8.3 Vesting. Restricted Stock Units may or may not be made subject to
Vesting Conditions based upon the satisfaction of such Service requirements,
conditions, restrictions or performance criteria, including, without limitation,
Performance Goals as described in Section 9.4, as shall be established by the
Committee and set forth in the Award Agreement evidencing such Award.
     8.4 Voting, Dividend Equivalent Rights and Distributions. Participants
shall have no voting rights with respect to shares of Stock represented by
Restricted Stock Units until the date of the issuance of such shares (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). However, the Committee, in its
discretion, may provide in a Participant’s Award Agreement that the Participant
shall be entitled to receive Dividend Equivalents with respect to the payment of
cash dividends on Stock having a record date prior to date on which Restricted
Stock Units held by such Participants are settled. Such Dividend Equivalents, if
any, shall be paid by crediting the Participant with additional whole Restricted
Stock Units as of the date of payment of such cash dividends on Stock. The
number of additional Restricted Stock Units (rounded to the nearest whole
number) to be so credited shall be determined by dividing (a) the amount of cash
dividends paid on such date with respect to the number of shares of Stock
represented by the Restricted Stock Units previously credited to the Participant
by (b) the Fair Market Value per share of Stock on such date. Such additional
Restricted Stock Units shall be subject to the same terms and conditions and
shall be settled in the same manner and at the same time (or within forty-five
(45) days thereafter) as the Restricted Stock Units originally subject to the
Restricted Stock Unit Award. In the event of a dividend or distribution paid in
shares of Stock or any other adjustment made upon a change in the capital
structure of the Company as described in Section 5.3, appropriate adjustments
shall be made in the Participant’s Restricted Stock Unit Award so that it
represents the right to receive upon settlement any and all new, substituted or
additional securities or other property (other than normal cash dividends) to
which the Participant would entitled by reason of the shares of Stock issuable
upon settlement of the Award, and all such new, substituted or additional
securities or other property shall be immediately subject to the same Vesting
Conditions as are applicable to the Award.

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     8.5 Effect of Termination of Service. Unless otherwise provided by the
Committee in the grant of a Restricted Stock Unit Award and set forth in the
Award Agreement, if a Participant’s Service terminates for any reason, whether
voluntary or involuntary (including the Participant’s death or disability), then
the Participant shall forfeit to the Company any Restricted Stock Units pursuant
to the Award which remain subject to Vesting Conditions as of the date of the
Participant’s termination of Service.
     8.6 Settlement of Awards. The Company shall issue to a Participant on the
date on which Restricted Stock Units subject to the Participant’s Restricted
Stock Unit Award vest or on such other date determined by the Committee, in its
discretion, and set forth in the Award Agreement one (1) share of Stock (and/or
any other new, substituted or additional securities or other property pursuant
to an adjustment described in Section 8.4) for each Restricted Stock Unit then
becoming vested or otherwise to be settled on such date, subject to the
withholding of applicable taxes. Notwithstanding the foregoing, if permitted by
the Committee and set forth in the Award Agreement, the Participant may elect in
accordance with terms specified in the Award Agreement to defer receipt of all
or any portion of the shares of Stock or other property otherwise issuable to
the Participant pursuant to this Section. Any deferral election made pursuant to
the terms of this Section 8.6 shall be made by giving notice in a manner and
within the time prescribed by the Company and in compliance with Section 409A of
the Code.
     8.7 Nontransferability of Restricted Stock Unit Awards. Prior to the
issuance of shares of Stock in settlement of a Restricted Stock Unit Award, the
Award shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, or garnishment by creditors of the
Participant or the Participant’s beneficiary, except transfer by will or by the
laws of descent and distribution.
SECTION 9. PERFORMANCE SHARES AND PERFORMANCE UNITS
     9.1 Grant of Performance Shares or Performance Units. Subject to the
provisions of Sections 1.3, 3 and 5, the Committee, at any time and from time to
time, may grant Awards of Performance Shares or Performance Units to such
Participants and in such amounts as it shall determine. Each grant of a
Performance Share or Performance Unit Award shall be evidenced by an Award
Agreement that shall specify the number of Performance Shares or Performance
Units subject thereto, the value of each Performance Share or Performance Unit,
the Performance Goals and Performance Period applicable to the Award, and the
other terms, conditions and restrictions of the Award as the Committee shall
determine. No Performance Share or Performance Unit Award or purported Award
shall be a valid and binding obligation of the Company unless evidenced by a
fully executed Award Agreement. Award Agreements evidencing Performance Share or
Performance Unit Awards may incorporate all or any of the terms of the Plan by
reference and shall comply with and be subject to the terms and conditions set
forth in Sections 9.2 through 9.10 below.
     9.2 Value of Performance Shares and Performance Units. Unless otherwise
provided by the Committee in granting an Award, each Performance Share shall
have an initial value equal to the Fair Market Value of one (1) share of Stock,
subject to adjustment as provided in Section 5.3, on the effective date of grant
of the Performance Share, and each Performance

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Unit shall have an initial value of one hundred dollars ($100). The final
payable to the Participant in settlement of a Performance Share or Performance
Unit will depend on the extent to which Performance Goals established by the
Committee are attained within the applicable Performance Period established by
the Committee.
     9.3 Establishment of Performance Goals and Performance Period. The
Committee, in its discretion, shall establish in writing the Performance Period
and Performance Goal(s) applicable to each Performance Share or Performance Unit
Award. Unless otherwise permitted in compliance with the requirements under
Section 162(m) with respect to “performance-based compensation,” the Committee
shall establish the Performance Goal(s) applicable to each Award no later than
the earlier of (a) the date ninety (90) days after the commencement of the
applicable Performance Period or (b) the date on which 25% of the Performance
Period has elapsed, and, in any event, at a time when the outcome of the
Performance Goals remains substantially uncertain. Such Performance Goal(s),
when measured at the end of the Performance Period, shall determine the ultimate
value of the Award to be paid to the Participant. Once established, the
Performance Goals shall not be changed during the Performance Period. The
Company shall notify each Participant granted a Performance Share or Performance
Unit Award of the terms of such Award, including the Performance Period and
applicable Performance Goal(s).
     9.4 Measurement of Performance Goals. Performance Goals shall be
established by the Committee on the basis of targets to be attained
(“Performance Targets”) with respect one or more measures of business or
financial performance (each, a “Performance Measure”). Performance Measures
shall have the same meanings as used in the Company’s financial statements, or
if such terms are not used in the Company’s financial statements, they shall
have the meaning applied pursuant to generally accepted accounting principles,
or as used generally in the Company’s industry. Performance Targets may include
a minimum, maximum, target level and intermediate levels of performance, with
the ultimate value of a Performance Share or Performance Unit Award determined
by the level attained during the applicable Performance Period. A Performance
Target may be stated as an absolute value or as a value determined relative to a
standard selected by the Committee. Performance Measures shall be calculated
with respect to the Company and each Subsidiary Corporation consolidated
therewith for financial reporting purposes or such division or other business
unit thereof as may be selected by the Committee. For purposes of the Plan, the
Performance Measures applicable to an Award shall be calculated in accordance
with generally accepted accounting principles, but prior to the accrual or
payment of any Performance Share or Performance Unit Award for the same
Performance Period and excluding the effect (whether positive or negative) of
any change in accounting standards or any extraordinary, unusual or nonrecurring
item, as determined by the Committee, occurring after the establishment of the
Performance Goals applicable to the Award. Performance Measures may be one or
more of the following as determined by the Committee: (a) revenue, (b) operating
income, (c) pre-tax profit, (d) net income, (e) gross margin, (f) operating
margin, (g) earnings per share, (h) return on stockholder equity, (i) return on
capital, (j) return on net assets, (k) economic value added and (l) cash flow.
     9.5 Determination of Value of Performance Shares and Performance Units. As
soon as practicable following the completion of the Performance Period for each
Performance Share and Performance Unit Award, the Committee shall certify in
writing the extent to which

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the applicable Performance Goals have been attained and the resulting final
value of the Award earned by the Participant and to be paid upon its settlement
in accordance with the terms of the Award Agreement. The Committee shall have no
discretion to increase the value of an Award payable upon its settlement in
excess of the amount called for by the terms of the Award Agreement on the basis
of the degree of attainment of the Performance Goals as certified by the
Committee. However, notwithstanding the attainment of any Performance Goal, if
permitted under a Participant’s Award Agreement evidencing a Performance Share
or Performance Unit Award, the Committee shall have the discretion, on the basis
of such criteria as may be established by the Committee, to reduce some or all
of the value of an Award that would otherwise be paid upon its settlement. No
such reduction may result in an increase in the amount payable upon settlement
of another Participant’s Award. As soon as practicable following the Committee’s
certification, the Company shall notify the Participant of the determination of
the Committee.
     9.6 Dividend Equivalents. The Committee may, in its discretion, provide
that any Performance Share shall include a right to Dividend Equivalents with
respect to cash dividends paid on Stock for which the record date is prior to
the date on which the Performance Share is settled or forfeited. Dividend
Equivalents may be paid currently or may be accumulated and paid to the extent
that Performance Shares become nonforfeitable, as determined by the Committee
and set forth in the Award Agreement. Settlement of Dividend Equivalents may be
in cash, shares of Stock, or a combination thereof as determined by the
Committee, and may be paid on the same basis as settlement of the related
Performance Share as provided in Section 9.7. Dividend Equivalents shall not be
paid with respect to Performance Units.
     9.7 Form and Timing of Payment. Payment of the ultimate value of a
Performance Share or Performance Unit Award earned by a Participant as
determined following the completion of the applicable Performance Period
pursuant to Sections 9.5 and 9.6 may be made in cash, shares of Stock, or a
combination thereof as determined by the Committee. Payments in shares of Stock
shall be determined by the Fair Market Value of a share of Stock on the last day
of such Performance Period. Payment may be made in a lump sum or installments as
prescribed by the Committee and set forth in the Award Agreement. If any payment
is to be made on a deferred basis, the Committee may, but shall not be obligated
to, provide for the payment of Dividend Equivalents or interest during the
deferral period. Any payment made on a deferred basis shall be made in a manner
and within the time prescribed by the Committee and in compliance with
Section 409A of the Code.
     9.8 Restrictions Applicable to Payment in Shares. Shares of Stock issued in
payment of any Performance Share or Performance Unit Award may be fully vested
and freely transferable shares or may be shares of Restricted Stock subject to
Vesting Conditions as provided in Section 7.3. Any such shares of Restricted
Stock shall be evidenced by an Award Agreement and shall be subject to the terms
and conditions set forth in Sections 7.3 through 7.6 above.
     9.9 Effect of Termination of Service. Unless otherwise provided by the
Committee in the grant of a Performance Share or Performance Unit Award and set
forth in the Award Agreement, the effect of a Participant’s termination of
Service on his or her Performance Share or Performance Unit Award shall be as
follows:

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          (a) Death, Disability or Retirement. If the Participant’s Service is
terminated by reason of the death, Disability or Retirement of the Participant
while he or she is the holder of a Performance Share or Performance Unit Award
but before the completion of the applicable Performance Period, the value of the
Participant’s Award shall be determined by the extent to which the applicable
Performance Goals have been attained with respect to the entire Performance
Period and shall be prorated based on the number of months of the Participant’s
Service during the Performance Period. Payment shall be made following the end
of the Performance Period in any manner permitted by Section 9.7.
          (b) Other Termination of Service. If the Participant’s Service
terminates for any reason except death, Disability or Retirement before the
completion of the Performance Period applicable to a Performance Share or
Performance Unit Award held by such Participant, such Award shall be forfeited
in its entirety; provided, however, that in the event of an involuntary
termination of the Participant’s Service, the Committee, in its sole discretion,
may waive the automatic forfeiture of all or any portion of any such Award and
provide for payment of such Award or portion thereof on the same basis as if the
Participant’s Service had terminated by reason of Retirement.
     9.10 Nontransferability. Prior to settlement in accordance with the
provisions of the Plan, no Performance Share or Performance Unit may be subject
in any manner to anticipation, alienation, sale, exchange, transfer, assignment,
pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant’s beneficiary, except transfer by will or by the laws of descent and
distribution. All rights with respect to a Performance Share or Performance Unit
Award granted to a Participant hereunder shall be exercisable during his or her
lifetime only by such Participant or the Participant’s guardian or legal
representative.
SECTION 10. DIRECTOR FEE AWARDS
     10.1 Effective Date and Duration of this Section.
          (a) Original Effective Date. This Section 10 shall become effective on
the first day (the “Section 10 Effective Date”) of the first calendar quarter
beginning after the Effective Date, provided that elections pursuant to
Section 10.2 may be made prior to the Section 10 Effective Date. Notwithstanding
the foregoing, Director Fee Awards shall be granted pursuant to this Section
with respect to elections made by Participants under the Initial Plan for the
Plan Year quarter which ends on or after the Effective Date of the Plan.
          (b) Section 409A Effective Date. This revised Section 10 shall become
effective as of January 1, 2005. On and after January 1, 2005, any Option
Payment (as defined below) shall be calculated in accordance with Section 10.5
as set forth in the Plan as amended effective January 1, 2005.
          (c) Duration. This Section 10 shall continue in effect for the
remainder of the calendar year commencing on the Section 10 Effective Date (the
“Initial Plan Year”) and for each subsequent calendar year commencing during the
term (as provided in Section 1.3) of the Plan (a “Plan Year”). In accordance
with a Participant’s prior election pursuant to Section 10.2, Director Fees (as
defined below) with respect to which Director Fee Awards have not been

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granted prior to termination of the Plan shall thereafter be deferred into a
deferred cash account in compliance with Section 409A of the Code. However,
subject to compliance with applicable law as provided in Section 12, all
Director Fee Awards granted prior to termination of the Plan shall continue to
be governed by and may be exercised or settled in accordance with the terms of
the Plan and the Award Agreement evidencing such Director Fee Award.
     10.2 Mandatory and Elective Director Fee Awards. Except as otherwise
provided below, each Nonemployee Director shall be granted one or more Director
Fee Awards in lieu of payment in cash of fifty percent (50%) of such
Participant’s annual retainer fee, meeting fees and other compensation payable
with respect to such Participant’s service as a Director (“Director Fees”)
during the Initial Plan Year and each subsequent Plan Year (or the portion of
such Plan Year following an individual’s initial appointment or election as a
Nonemployee Director). In addition, each Participant may elect to receive
Director Fee Awards in lieu of payment in cash of all or any portion of the
remaining fifty percent (50%) of such Participant’s Director Fees for the
Initial Plan Year and each subsequent Plan Year or applicable portion thereof.
For the Initial Plan Year and each subsequent Plan Year or applicable portion
thereof, a Participant shall be entitled to elect one of the following
alternative forms of payment of the value of the Participant’s Director Fees:
          (a) Option Payment. A minimum of fifty percent (50%), together with
such additional portion, if any, elected by the Participant up to a maximum of
one hundred percent (100%), of the Participant’s Director Fees will be paid in
the form of a Nonemployee Director Option (an “Option Payment”) and the balance
will be paid in cash in accordance with the Company’s normal Director Fee
payment procedures.
          (b) Stock Units Payment. A minimum of fifty percent (50%), together
with such additional portion, if any, elected by the Participant up to a maximum
of one hundred percent (100%), of the Participant’s Director Fees will be paid
in the form of Stock Units (a “Stock Units Payment”) and the balance will be
paid in cash in accordance with the Company’s normal Director Fee payment
procedures. In connection with an election to receive a Stock Units Payment, the
Participant may elect an “Early Settlement Date” (as defined below) upon which
the Stock Units will be settled in accordance with Section 10.6(d); provided,
however, that upon termination of the Participant’s Service as a Director prior
to the Early Settlement Date, settlement shall be made as provided in
Section 10.6(d). Any “Early Settlement Date” elected by the Participant shall
become irrevocable as provided in Section 10.3(b) and except as provided in
Section 10.6(e) shall be December 1 of the third Plan Year following the Plan
Year of the Stock Units Payment or December 1 of any subsequent Plan Year.
     10.3 Time and Manner of Election.
          (a) Time of Election. Each Nonemployee Director shall make an election
pursuant to Section 10.2:
               (i) for the Initial Plan Year: prior to the earlier of (1) the
date thirty (30) days following the Effective Date or (2) the Section 10
Effective Date;

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               (ii) for each subsequent Plan Year: prior to the first day of
such Plan Year; and
               (iii) in the case of a newly appointed or elected Nonemployee
Director: on the date of such appointment or election for the remainder of the
Initial Plan Year or subsequent Plan Year of appointment or election, as the
case may be; provided, that such election shall be applicable only with respect
to Director Fees earned subsequent to the effective date of the newly appointed
or elected Nonemployee Director.
          (b) Election Irrevocable. An election pursuant to Section 10.2 shall
become irrevocable as of the commencement of the Plan Year or portion thereof to
which it applies.
          (c) Failure to Timely Elect. Any Nonemployee Director who fails to
make an election in accordance with this Section for any Plan Year (or the
Initial Plan Year, as the case may be) shall be deemed to have elected pursuant
to Section 10.2 to receive Option Payments for fifty (50%) of the value of such
Participant’s Director Fees earned during such Plan Year (or Initial Plan Year)
and to receive the balance of such Participant’s Director Fees in cash in
accordance with the Company’s normal Director Fee payment procedures.
          (d) Manner of Election. Each election in accordance with this Section
shall be made on a form prescribed by the Company for this purpose and in
compliance with Section 409A of the Code, filed with the Chief Financial Officer
of the Company.
          (e) Special Election for 2005 and 2006 Directors Fees. In accordance
with IRS Notice 2005-1, A-18(d), on or before March 31, 2006, Nonemployee
Directors who previously elected to receive Option Payments in 2005, 2006 or
2005 and 2006 were permitted to terminate their original election and instead
elect to receive (i) Option Payments calculated in accordance with Section 10.5
as amended effective January 1, 2005 or (ii) Stock Units Payments calculated as
if the Nonemployee Director had elected to receive Stock Units Payments at the
time of his or her original election. Elections made pursuant to this
Section 10.3(e) are irrevocable and subject to any special administrative rules
imposed by the Committee consistent with Section 409A of the Code and Notice
2005-1, A-18. No special election under this Section 10.3(e) shall be permitted
after December 31, 2006.
     10.4 Automatic Grant of Director Fee Awards. Subject to the provisions of
Sections 1.3, 3 and 5, effective as of the last day of each quarter during any
Plan Year (or the Initial Plan Year, as the case may be), each Nonemployee
Director shall be granted automatically and without further action of the
Committee a Director Fee Award in lieu of that portion of the Director Fees
earned by the Participant during such quarter and specified by the Participant’s
election under Section 10.2 for such Plan Year (or Initial Plan Year) and any
fractional share amount carried over from the prior quarter as provided in
Section 10.7 (the “Quarterly Director Fees”). In accordance with the
Participant’s election under Section 10.2 for the Plan Year (or Initial Plan
Year), the Director Fee Award shall be either in the form of an Option Payment
pursuant to Section 10.5 or a Stock Units Payment pursuant to Section 10.6.
     10.5 Option Payment. Each Option Payment shall be in the form of a
Nonemployee Director Option and shall be evidenced by an Award Agreement that
shall specify the exercise

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price, the duration of the Nonemployee Director Option, the number of shares of
Stock to which the Nonemployee Director Option pertains, and such other
provisions as the Committee shall determine. No such Nonemployee Director Option
or purported Nonemployee Director Option shall be a valid and binding obligation
of the Company unless evidenced by a fully executed Award Agreement. Such Award
Agreements may incorporate all or any of the terms of the Plan by reference and
shall comply with and be subject to the terms and conditions of Section 6 to the
extent not inconsistent with this Section and the terms and conditions set forth
in Sections 10.5(a) through 10.5(d) below:
          (a) Exercise Price. The exercise price per share for each Nonemployee
Director Option shall be not less than 100% of the average of the Fair Market
Values of a share of Stock for the ten (10) trading days preceding the effective
date of grant of the Nonemployee Director Option.
          (b) Number of Shares Subject to Nonemployee Director Option. The
number of shares of Stock subject to a Nonemployee Director Option shall be
determined by the following formula (with any resulting fractional share being
disregarded):
               X = A / (B x 25%)
     where,
               “X” is the number of shares subject to the Nonemployee Director
Option;
               “A” is the amount of Quarterly Director Fees in lieu of which the
Option Payment is made; and
               “B” is the average of the Fair Market Values of a share of Stock
for the ten (10) trading days preceding the effective date of grant of the
Nonemployee Director Option.
          (c) Exercise Period. Each Nonemployee Director Option shall be vested
and exercisable on and after the date of grant of the Nonemployee Director
Option and shall terminate and cease to be exercisable on the date ten
(10) years after the date of grant of the Nonemployee Director Option, unless
earlier terminated pursuant to the terms of the Plan or the Award Agreement.
          (d) Effect of Termination of Service.
               (i) Nonemployee Director Option Grant. No Participant shall be
granted a Nonemployee Director Option following the date on which such
Participant’s Service as a Director terminates for any reason. All of such
Participant’s Director Fees with respect to which Director Fee Awards have not
been granted prior to the Participant’s termination of Service as a Director
shall be paid in cash in accordance with the Company’s normal Director Fee
payment procedures.
               (ii) Nonemployee Director Option Exercisability. Subject to
earlier termination as otherwise provided herein, a Nonemployee Director Option
shall remain

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exercisable after a Participant’s termination of Service at any time prior to
the expiration of thirty-six (36) months after the date on which the
Participant’s Service terminated, but in any event no later than the Option
Expiration Date.
               (iii) Extension if Exercise Prevented by Law. Notwithstanding the
foregoing, if the exercise of a Nonemployee Director Option within the
applicable time period set forth in Section 10.5(d)(ii) is prevented by the
provisions of Section 12.1 below, the Nonemployee Director Option shall remain
exercisable until thirty (30) days after the date the Participant is notified by
the Company that the Nonemployee Director Option is exercisable, but in any
event no later than the Option Expiration Date.
               (iv) Extension if Participant Subject to Section 16(b).
Notwithstanding the foregoing, if a sale within the applicable time period set
forth in Section 10.5(d)(ii) of shares acquired upon the exercise of the
Nonemployee Director Option would subject the Participant to suit under Section
16(b) of the Exchange Act, the Option shall remain exercisable until the
earliest to occur of (i) the tenth (10th) day following the date on which a sale
of such shares by the Participant would no longer be subject to such suit,
(ii) the one hundred and ninetieth (190th) day after the Participant’s
termination of Service, or (iii) the Option Expiration Date.
     10.6 Stock Units Payment. Each Stock Units Payment shall be evidenced by an
Award Agreement that shall specify the number of Stock Units to which the Award
Agreement pertains, the form and time of settlement of such Stock Units and such
other provisions as the Committee shall determine. No such Stock Unit Award or
purported Stock Unit Award shall be a valid and binding obligation of the
Company unless evidenced by a fully executed Award Agreement. Such Award
Agreements may incorporate all or any of the terms of the Plan by reference and
shall comply with and be subject to the terms and conditions set forth in
Sections 10.6(a) through 10.6(g) below:
          (a) Payment. No additional cash consideration shall be required upon
settlement of a Stock Unit Award.
          (b) Number of Stock Units Subject to Stock Unit Award. The number of
Stock Units subject to a Stock Unit Award shall be determined by the following
formula (with any resulting fractional Stock Unit being disregarded):
          X=A/B
     where,
          “X” is the number of Stock Units subject to the Stock Unit Award;
          “A” is the amount of Quarterly Director Fees in lieu of which the
Stock Units Payment is made; and
          “B” is the average of the Fair Market Values of a share of Stock for
the ten (10) trading days preceding the effective date of grant of the Stock
Unit Award.

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          (c) Voting and Dividend Equivalent Rights. Participants shall have no
voting rights with respect to shares of Stock represented by Stock Units until
the date of the issuance of a certificate for such shares (as evidenced by the
appropriate entry on the books of the Company or of a duly authorized transfer
agent of the Company). Prior to settlement of a Stock Unit Award, such Award
shall include the right to Dividend Equivalents, pursuant to which the
Participant shall be credited with additional whole and/or fractional Stock
Units as of the record date of any payment of cash dividends with respect to the
Stock occurring prior to such settlement date. Such additional Stock Units shall
be subject to the same terms and conditions and shall be settled in the same
manner and at the same time as the Stock Units originally subject to the Stock
Unit Award. The number of such whole and/or fractional Stock Units to be
credited with respect to any Stock Unit Award on the record date of any cash
dividend paid on the Stock shall be determined by the following formula:
          X = (A x B) / C
          where,
          “X” is the number of whole and/or fractional Stock Units to be
credited with respect to the Stock Unit Award;
          “A” is the amount of cash dividends paid on one share of Stock;
          “B” is the number of whole and fractional Stock Units subject to the
Stock Unit Award as of the cash dividend record date; and
          “C” is the Fair Market Value of a share of Stock on the cash dividend
record date.
          (d) Settlement of Stock Units. Subject to the provisions of
Section 12.1 below, the Company shall issue to the Participant a number of whole
shares of Stock equal to the number of whole Stock Units subject to the Stock
Unit Award. Such shares of Stock shall not be subject to any restriction on
transfer other than any such restriction as may be required pursuant to
Section 12.1 or any applicable law, rule or regulation. Payment may be made in a
lump sum or in up to four annual installments beginning within thirty (30) days
following the earlier of (i) the Early Settlement Date elected by the
Participant with respect to the Stock Unit Award or (ii) the date of termination
of the Participant’s Service as a Director. If a Director elects installment
payments, the first installment will be paid on the settlement date described in
the preceding sentence and each additional annual installment will be paid on
the first, second and third anniversaries of the settlement date, as applicable.
Installment payments for purposes of the Plan shall be treated as a single form
of distribution under Section 409A of the Code. On each settlement date, the
Company shall pay to the Participant cash in lieu of any fractional Stock Unit
subject to the Stock Unit Award in an amount equal to the Fair Market Value on
the settlement date of such fractional share of Stock.
          (e) Special Distribution Election. Notwithstanding any other provision
of the Plan to the contrary, a Director may elect to receive distribution of his
or her Stock in respect of any Stock Unit Award granted prior to January 1, 2007
in up to four annual installments, provided that the election is made at least
twelve months in advance of any originally scheduled distribution date and the
election is made no later than December 31 2006. An election made

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pursuant to this Section 10.6(e) shall be treated as an initial distribution
election and shall be subject to any special administrative rules imposed by the
Committee including rules intended to comply with Section 409A of the Code and
Notice 2005-1, A-19. No election under this Section 10.6(e) shall (i) result in
an Early Settlement Date that is prior to the third calendar year following the
year in which the Stock Units are granted, (ii) change the payment date of any
distribution otherwise scheduled to be paid in 2006 or cause a payment to be
paid in 2006, or (iii) be permitted after December 31, 2006. Any election made
pursuant to this Section 10.6(e) shall be irrevocable after December 31, 2006.
          (f) Effect of Termination of Service. No Participant shall be granted
a Stock Unit Award following the date on which such Participant’s Service as a
Director terminates for any reason. All of such Participant’s Director Fees with
respect to which Director Fee Awards have not been granted prior to the
Participant’s termination of Service as a Director shall be paid in cash in
accordance with the Company’s normal Director Fee payment procedures.
          (g) Nontransferability of Stock Units. Prior to their settlement
pursuant to Section 10.6(d), no Stock Units granted to a Participant shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or garnishment by creditors of the Participant or the
Participant’s beneficiary, except by will or by the laws of descent and
distribution.
     10.7 Fractional Shares. No fractional shares of Stock shall be issued upon
the exercise of any Nonemployee Director Option or settlement of any Stock
Units. Any portion of a Participant’s Quarterly Director Fees subject to the
Participant’s election under Section 10.2 representing a fractional share amount
that would otherwise be paid in the form of an Option Payment or a Stock Units
Payment shall instead be carried over and combined with the Quarterly Director
Fees for the following quarter of the Plan Year (or Initial Plan year, as the
case may be) or the subsequent Plan Year. Any such fractional share amount
remaining upon termination of a Participant’s Service as a Director shall be
paid to the Participant in cash, without interest.
SECTION 11. CHANGE IN CONTROL
     11.1 Effect of Change in Control. In the event of a Change in Control of
the Company as defined in Section 11.3 below, the surviving, continuing,
successor, or purchasing corporation or parent corporation thereof, as the case
may be (the “Acquiring Corporation”), shall either assume all outstanding Awards
or substitute new Awards having an equivalent value for such outstanding Awards.
In the event the Acquiring Corporation elects not to assume or substitute for
such outstanding Awards, and provided that the Participant’s Service has not
terminated prior to the effective date of the Change in Control (unless, with
respect to Performance Shares or Performance Units, the Participant’s Service
terminated by reason of the death, Disability or Retirement of the Participant),
all unexercisable, unvested or unpaid portions of such outstanding Awards shall
become immediately exercisable and vested in full immediately prior to the
effective date of the Change in Control and immediately payable, as applicable,
within ten (10) days following the effective date of the Change in Control. For
purposes of the preceding sentence:

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          (a) the value of Performance Shares and Performance Units shall be
determined and paid based upon the greater of (i) the extent to which the
applicable Performance Goals have been attained during the Performance Period up
to the effective date of the Change in Control or (ii) the pre-established 100%
of target level with respect to each Performance Target comprising the
applicable Performance Goals;
          (b) any outstanding Stock Unit Award not assumed or substituted for by
the Acquiring Corporation shall be settled in accordance with Section 10.6(d)
within ten (10) days following the effective date of the Change in Control; and
          (c) any Director Fees with respect to which the Company has not made
either an Option Payment or a Stock Units Payment pursuant to Section 10 prior
to the effective date of the Change in Control shall be paid in cash immediately
prior to such effective date.
Any Options which are neither assumed or substituted for by the Acquiring
Corporation nor exercised as of the date of the Change in Control shall
terminate as of the effective date of the Change in Control.
     11.2 Termination of Service After a Change in Control. The Committee may,
in its discretion, provide in any Award Agreement that if the Participant’s
Service is terminated within twelve (12) months (or such other period specified
by the Committee) following a Change in Control by reason of (a) the involuntary
termination by the Participating Company Group of the Participant’s Service for
any reason other than “Cause” (as such term is defined in the Award Agreement)
or the Participant’s death or Disability, or (b) the Participant’s resignation
for “Good Reason” (as such term is defined in the Award Agreement) from all
capacities in which the Participant is then rendering Service to the
Participating Company Group, then (i) the exercisability, vesting and payment of
the outstanding Award held by such Participant shall be accelerated effective as
of the date on which the Participant’s Service terminated to such extent, if
any, as shall have been specified by the Committee and set forth in the Award
Agreement, and (ii) the outstanding Option held by such Participant, to the
extent unexercised and exercisable on the date on which the Participant’s
Service terminated, may be exercised by the Participant (or the Participant’s
guardian or legal representative) at any time prior to the expiration of six (6)
months (or such other period of time specified by the Committee) after the date
on which the Participant’s Service terminated, but in any event no later than
the Option Expiration Date.
     11.3 Definition. A “Change in Control” means the effective date of any one
of the following events but only to the extent that such change in control
transaction is a change in the ownership or effective control the Company or a
change in the ownership of a substantial portion of the assets of the Company as
defined in the regulations promulgated under Section 409A of the Code:
          (a) an acquisition, consolidation, or merger of the Company with or
into any other corporation or corporations, unless the stockholders of the
Company retain, directly or indirectly, at least a majority of the beneficial
interest in the voting stock of the surviving or acquiring corporation or
corporations; or

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          (b) the sale, exchange, or transfer of all or substantially all of the
assets of the Company to a transferee other than a corporation or partnership
controlled by the Company or the stockholders of the Company; or
          (c) a transaction or series of related transactions in which stock of
the Company representing more than thirty percent (30%) of the outstanding
voting power of the Company is sold, exchanged, or transferred to any single
person or affiliated persons leading to a change of a majority of the members of
the Board.
The Board shall have final authority to determine, in accordance with
Section 409A of the Code, whether multiple transactions are related and the
exact date on which a Change in Control has been deemed to have occurred under
subsections (a), (b), and (c) above.
SECTION 12. REQUIREMENTS OF LAW
     12.1 Compliance with Securities Law. The granting of Awards and the
issuance of shares of Stock pursuant to any Award shall be subject to compliance
with all applicable laws, rules, and regulations, and to such approvals by any
governmental agencies, securities exchanges or market systems as may be
required. In addition, no Option may be exercised unless (a) a registration
statement under the Securities Act shall at the time of exercise of the Option
be in effect with respect to the shares issuable upon exercise of the Option or
(b) in the opinion of legal counsel to the Company, the shares issuable upon
exercise of the Option may be issued in accordance with the terms of an
applicable exemption from the registration requirements of the Securities Act.
The inability of the Company to obtain from any regulatory body having
jurisdiction the authority, if any, deemed by the Company’s legal counsel to be
necessary to the lawful issuance and sale of any shares hereunder shall relieve
the Company of any liability in respect of the failure to issue or sell such
shares as to which such requisite authority shall not have been obtained. As a
condition to the issuance of any Stock, the Company may require the Participant
to satisfy any qualifications that may be necessary or appropriate, to evidence
compliance with any applicable law or regulation and to make any representation
or warranty with respect thereto as may be requested by the Company.
     12.2 Governing Law. The Plan, and all agreements hereunder, shall be
construed in accordance with and governed by the laws of the State of
California.
SECTION 13. TAX WITHHOLDING
     13.1 Tax Withholding In General. The Company shall have the power to
withhold, or require a Participant to remit to the Company, an amount sufficient
to satisfy the Federal, state, local and foreign tax withholding obligations, if
any, of any Participating Company with respect to any Award. The Company shall
have no obligation to deliver shares of Stock or make any payment of cash under
the Plan until such tax withholding obligations have been satisfied.
     13.2 Withholding of Shares. The Company shall have the right, but not the
obligation, to deduct from the shares of Stock issuable to a Participant upon
the exercise or settlement of an Award, or to accept from the Participant the
tender of a number of whole shares

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of Stock having a Fair Market Value, as determined by the Company, equal to all
or any part of the tax withholding obligations of the Participating Company
Group. The Fair Market Value of any shares of Stock withheld or tendered to
satisfy any such tax withholding obligations shall not exceed the amount
determined by the applicable minimum statutory withholding rates.
SECTION 14. AMENDMENT AND TERMINATION OF PLAN
     14.1 Amendment and Termination of Plan. The Committee at any time may
terminate, and from time to time, may amend, the Plan; provided, however, that
no such amendment may be made without approval of the stockholders of the
Company to the extent that the Committee deems such stockholder approval to be
necessary or advisable for compliance with applicable tax and securities laws or
other regulatory requirements, including the requirements of any stock exchange
or market system on which the Stock is then listed.
     14.2 Effect of Amendment or Termination. No termination or amendment of the
Plan shall affect any then outstanding Award unless expressly provided by the
Committee. In any event, no termination or amendment of the Plan shall in any
manner adversely affect any Award theretofore granted under the Plan, without
the consent of the Participant, unless such termination or amendment is
necessary to comply with any applicable law, regulation or rule.
SECTION 15. MISCELLANEOUS PROVISIONS
     15.1 Beneficiary Designation. Each Participant may name, from time to time,
any beneficiary or beneficiaries (who may be named contingently or successively)
to whom any benefit under the Plan is to be paid in case of such Participant’s
death before he or she receives any or all of such benefit. Each designation
will revoke all prior designations by the same Participant, shall be in a form
prescribed by the Company, and will be effective only when filed by the
Participant in writing with the Company during the Participant’s lifetime. In
the absence of any such designation, benefits remaining unpaid at the
Participant’s death shall be paid to his or her spouse, or if none, the
Participant’s children in equal shares, or if none, the Participant’s estate.
     15.2 Rights as an Employee or Director. No individual, even though eligible
pursuant to Section 3, shall have a right to be selected as a Participant, or,
having been so selected, to be selected again as a Participant. Nothing in the
Plan or any Award granted under the Plan shall confer on any Participant a right
to remain an Employee or Director, or interfere with or limit in any way the
right of a Participating Company to terminate the Participant’s Service at any
time.
     15.3 Rights as a Stockholder. A Participant shall have no rights as a
stockholder with respect to any shares covered by an Award until the date of the
issuance of a certificate for such shares (as evidenced by the appropriate entry
on the books of the Company or of a duly authorized transfer agent of the
Company). No adjustment shall be made for dividends, distributions or other
rights for which the record date is prior to the date such certificate is
issued, except as provided in Section 5.3 or another provision of the Plan.

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     15.4 Provision of Information. Each Participant shall be given access to
information concerning the Company equivalent to that information generally made
available to the Company’s common stockholders.
     15.5 Unfunded Obligation. Any amounts payable to Participants pursuant to
the Plan shall be unfunded obligations for all purposes, including, without
limitation, Title I of the Employee Retirement Income Security Act of 1974. No
Participating Company shall be required to segregate any monies from its general
funds, or to create any trusts, or establish any special accounts with respect
to such obligations. The Company shall retain at all times beneficial ownership
of any investments, including trust investments, which the Company may make to
fulfill its payment obligations hereunder. Any investments or the creation or
maintenance of any trust or any Participant account shall not create or
constitute a trust or fiduciary relationship between the Committee or any
Participating Company and a Participant, or otherwise create any vested or
beneficial interest in any Participant or the Participant’s creditors in any
assets of any Participating Company. The Participants shall have no claim
against any Participating Company for any changes in the value of any assets
which may be invested or reinvested by the Company with respect to the Plan.
     15.6 Indemnification. In addition to such other rights of indemnification
as they may have as members of the Committee or officers or employees of the
Participating Company Group, members of the Committee and any officers or
employees of the Participating Company Group to whom authority to act for the
Committee or the Company is delegated shall be indemnified by the Company
against all reasonable expenses, including attorneys’ fees, actually and
necessarily incurred in connection with the defense of any action, suit or
proceeding, or in connection with any appeal therein, to which they or any of
them may be a party by reason of any action taken or failure to act under or in
connection with the Plan, or any right granted hereunder, and against all
amounts paid by them in settlement thereof (provided such settlement is approved
by independent legal counsel selected by the Company) or paid by them in
satisfaction of a judgment in any such action, suit or proceeding, except in
relation to matters as to which it shall be adjudged in such action, suit or
proceeding that such person is liable for gross negligence, bad faith or
intentional misconduct in duties; provided, however, that within sixty (60) days
after the institution of such action, suit or proceeding, such person shall
offer to the Company, in writing, the opportunity at its own expense to handle
and defend the same.
     IN WITNESS WHEREOF, the undersigned Secretary of the Company certifies that
the foregoing sets forth the Granite Construction Incorporated Amended and
Restated 1999 Equity Incentive Plan as duly adopted by the Board on March 23,
2006 to be effective as of January 1, 2005.

              GRANITE CONSTRUCTION INCORPORATED
 
       
 
           /s/ William G. Dorey          
 
  By:   William G. Dorey
 
       
 
  Title:   CEO & President
 
       

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