exv10w1



 











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



12









 







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



13









 







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



14









 







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.



15









 





     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



16









 







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



17









 







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:



18









 





          (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



19









 







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;



20









 





               (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



21









 







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



22









 







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:



25









 





          (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



26









 





          (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



27









 







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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