exv10w8






Exhibit 10.8









KB HOME




PERFORMANCE-BASED INCENTIVE PLAN FOR SENIOR MANAGEMENT




(as amended and restated on October 2, 2008)




     SECTION 1. Purpose. The purposes of the KB Home Performance-Based Incentive Plan for Senior
Management (the “Plan”) are to promote the interests of KB Home and its stockholders by (i)
attracting and retaining exceptional executive personnel and other key employees of the Company and
its Affiliates, as defined below; (ii) motivating such employees by means of performance-related
incentives to achieve long-range performance goals; (iii) enabling such employees to participate in
the long-term growth and financial success of the Company; and (iv) qualifying compensation paid
under the Plan for deductibility under Section 162(m) of the Internal Revenue Code of 1986, as
amended. The Plan is an amendment and restatement of the Kaufman and Broad Home Corporation
Performance-Based Incentive Plan for Senior Management which shall be effective as of October 2,
2008 (the “Amendment Date”).



     SECTION 2. Definitions. As used in the Plan, the following terms shall have the meanings set
forth below:



     “Affiliate” shall mean (i) any entity that, directly or indirectly, is controlled by the
Company and (ii) any entity in which the Company has a significant equity interest, in either case
as determined by the Committee.



     “Amendment Date” shall have the meaning set forth in Section 1 hereof.



     “Award” shall mean any Performance-Based Bonus opportunity granted under the Plan, as well as
any Option, Stock Appreciation Right, award of Restricted Stock, or Other Stock-Based Award granted
under the Plan or granted in payment or settlement of a Performance-Based Bonus.



     “Award Agreement” shall mean any written agreement, contract, or other instrument or document
(which may include, if so designated by the Committee, an Employment Agreement, as defined herein)
evidencing any Award, which may, but need not, be executed or acknowledged by a Participant.



     “Board” shall mean the Board of Directors of the Company.



     “Change of Ownership” shall be deemed to have occurred if either (1) individuals who, as of
the Effective Date of this Plan, constitute the Board of the Company (as of the Effective Date, the
“Incumbent Board”) cease for any reason to constitute at least a majority of the directors
constituting the Board, provided that any person becoming a director subsequent to the



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Effective Date of this Plan whose election, or nomination for election by the Company’s
stockholders, was approved by a vote of at least three-quarters (3/4) of the then directors who are
members of the Incumbent Board (other than an election or nomination of an individual whose initial
assumption of office is (A) in connection with the acquisition by a third person, including a
“group” as such term is used in Section 13(d)(3) of the Exchange Act, of beneficial ownership,
directly or indirectly, of 20% or more of the combined voting securities ordinarily having the
right to vote for the election of directors of the Company (unless such acquisition of beneficial
ownership was approved by a majority of the Board who are members of the Incumbent Board), or (B)
in connection with an actual or threatened election contest relating to the election of the
directors of the Company, as such terms are used in Rule 14a-11 of Regulation 14A promulgated under
the Exchange Act) shall be, for purposes of this Plan, considered as though such person were a
member of the Incumbent Board, or (2) the Board (a majority of which shall consist of directors who
are members of the Incumbent Board) has determined that a Change of Ownership, for purposes of this
Plan, shall have occurred. If any of the events enumerated in clauses (1) or (2) occur, the Board
shall determine the effective date of the Change of Ownership resulting therefrom, for purposes of
the Plan.



     “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time. All
references to the Code or any section thereof shall include the Treasury Regulations and other
Department of Treasury guidance issued thereunder.



     “Committee” shall mean a committee of the Board designated by the Board to administer the Plan
and composed of not less than the minimum number of persons from time to time required by Rule
16b-3, each of whom (i) to the extent necessary to comply with Rule 16b-3 only, is a “disinterested
Person” within the meaning of Rule 16b-3 and (ii) to the extent necessary to comply with Section
162(m) only, is an “outside director” within the meaning of Section 162(m). Until otherwise
determined by the Board, the Compensation Committee designated by the Board shall be the Committee
under the Plan.



     “Company” shall mean KB Home, together with any successor thereto.



     “Effective Date” shall have the meaning set forth in Section 14(a) hereof.



     “Employment Agreement” shall mean (i) with respect to Awards relating to performance in fiscal
year 1995, an agreement between the Company and a Participant, the effectiveness or continuing
effectiveness of which is contingent upon approval, or approval of the Plan, by the Company’s
stockholders, which approval shall satisfy all applicable requirements of Section 162(m) and (ii)
with respect to Awards relating to performance in any fiscal year of the Company after fiscal year
1995, an agreement between the Company and a Participant entered into prior to the end of the first
fiscal quarter of such fiscal year.



     “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.



     “Fair Market Value” shall mean the fair market value of the property or other item being
valued, as determined by the Committee in its sole discretion.



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     “Incentive Stock Option” shall mean a right to purchase Shares from the Company that is
granted under Section 7 of the Plan and that is intended to meet the requirements of Section 422 of
the Code or any successor provision thereto.



     “Non-Qualified Stock Option” shall mean a right to purchase Shares from the Company that is
granted under Section 7 of the Plan and that is not intended to be an Incentive Stock Option.



     “Officer” shall mean, at any time, an individual who is an officer of the Company or any of
its subsidiaries.



     “Option” shall mean an Incentive Stock Option or a Non-Qualified Stock Option.



     “Other Stock-Based Award” shall mean any right granted under Section 11 of the Plan.



     “Participant” shall mean any Officer selected by the Committee to receive an Award under the
Plan.



     “Performance-Based Bonus” shall mean a bonus opportunity awarded in accordance with Section 6
of the Plan.



     “Person” shall mean any individual, corporation, partnership, association, joint-stock
company, trust, unincorporated organization, government or political subdivision thereof or other
entity.



     “Plan” shall mean this KB Home Performance-Based Incentive Plan for Senior Management.



     “Restricted Stock” shall mean any Share granted under Section 9 of the Plan.



     “Rule 16b-3” shall mean Rule 16b-3 as promulgated and interpreted by the SEC under the
Exchange Act, or any successor rule or regulation thereto as in effect from time to time.



     “Section 162(m)” shall mean Section 162(m) of the Code and, for the avoidance of doubt only,
the Treasury Regulations and other Department of Treasury guidance issued thereunder.



     “Section 409A” shall mean Section 409A of the Code and, for the avoidance of doubt only, the
Treasury Regulations and other Department of Treasury guidance issued thereunder.



     “SEC” shall mean the Securities and Exchange Commission or any successor thereto and shall
include the Staff thereof.



     “Shares” shall mean shares of the Common Stock, $1 par value, of the Company, or such other
securities of the Company as may be designated by the Committee from time to time.



     “Stock Appreciation Right” shall mean any right granted under Section 8 of the Plan.



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     “Substitute Awards” shall mean Awards granted in assumption of, or in substitution for,
outstanding awards previously granted by a company acquired by the Company or with which the
Company combines.



     SECTION 3. Administration.



     (a) Authority of Committee. The Plan shall be administered by the Committee. Subject to the
terms of the Plan and applicable law, and in addition to other express powers and authorizations
conferred on the Committee by the Plan, the Committee shall have full power and authority to: (i)
designate Participants; (ii) determine the type or types of Awards to be granted to an eligible
Officer; (iii) determine the number of Shares to be covered by, or with respect to which payments,
rights, or other matters are to be calculated in connection with, Awards; (iv) determine the terms
and conditions of any Award; (v) determine whether, to what extent, and under what circumstances
Awards may be settled or exercised in cash, Shares, other securities, or other property, or
canceled, forfeited, or suspended and the method or methods by which Awards may be settled,
exercised, canceled, forfeited, or suspended, provided that Options may be settled only in cash and
Shares; (vi) determine whether, to what extent, and under what circumstances cash, Shares, other
securities, other Awards, other property, and other amounts payable with respect to an Award shall
be deferred either automatically or at the election of the holder thereof or of the Committee,
provided that such determinations shall not cause a violation of the requirements of Section 409A;
(vii) interpret and administer the Plan and any instrument or agreement relating to, or Award made
under, the Plan; (viii) recommend to the Board any amendment, alteration, suspension,
discontinuance or termination of the Plan, and subject to the shareholder approval requirement set
forth in Section 12(a), to take any such action not required by applicable law to be taken by the
Board, (ix) establish, amend, suspend, or waive such rules and regulations and appoint such agents
as it shall deem appropriate for the proper administration of the Plan; and (x) make any other
determination and take any other action that the Committee deems necessary or desirable for the
administration of the Plan.



     (b) Committee Discretion Binding. Unless otherwise expressly provided in the Plan, all
designations, determinations, interpretations, and other decisions under or with respect to the
Plan or any Award shall be within the sole discretion of the Committee, may be made at any time and
shall be final, conclusive, and binding upon all Persons, including the Company, any Affiliate, any
Participant, any holder or beneficiary of any Award, any stockholder and any Officer.



     SECTION 4. Award Limits.



     (a) Plan Shares. Subject to adjustment as provided in Section 4(c), the number of Shares
with respect to which Awards may be granted under the Plan shall be 1,000,000. If, after the
Effective Date of the Plan, any Shares covered by an Award denominated in Shares granted under the
Plan, or to which such an Award relates, are forfeited, or if such an Award is settled for cash or
otherwise terminates or is canceled without the delivery of Shares, then the Shares covered by such
Award, or to which such Award relates, or the number of Shares otherwise counted against the
aggregate number of Shares with respect to which Awards may be granted,



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to the extent of any such settlement, forfeiture, termination or cancellation, shall again become
Shares with respect to which Awards may be granted. In the event that any Option or other Award
granted hereunder is exercised through the delivery of Shares or in the event that withholding tax
liabilities arising from such Award are satisfied by the withholding of Shares by the Company, the
number of Shares available for Awards under the Plan shall be increased by the number of Shares so
surrendered or withheld.



     (b) Individual Stock-Based Awards. Subject to adjustment as provided in Section 4(c), no
Participant may receive stock-based Awards under the Plan in any calendar year that relate to more
than 100,000 Shares; provided, however, that such number may be increased with respect to any
Participant by any Shares available for grant to such Participant in accordance with this Paragraph
4(b) in any prior years that were not granted in such prior years. No provision of this Paragraph
4(b) shall be construed as limiting the amount of any cash-based Award which may be granted to any
Participant.



     (c) Adjustments. In the event of any dividend or other distribution (whether in the form of
cash, Shares, other securities, or other property, and other than normal cash dividends),
recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,
split-up, spin-off, combination, repurchase, or exchange of Shares or other securities of the
Company, issuance of warrants or other rights to purchase Shares or other securities of the
Company, or other similar corporate transaction or event affecting the Shares or the price of the
Shares, the Committee shall make appropriate proportionate adjustments to reflect such change with
respect to any or all of (i) the number of Shares or other securities of the Company (or number and
kind of other securities or property) with respect to which Awards may be granted, (ii) the number
of Shares or other securities of the Company (or number and kind of other securities or property)
subject to outstanding Awards, and (iii) the grant or exercise price with respect to any Award, or,
if deemed appropriate, make provision for a cash payment to the holder of an outstanding Award;
provided, in each case, that (A) with respect to Awards of Incentive Stock Options no such
adjustment shall be authorized to the extent that such authority would cause the Plan to fail to
qualify under Section 422(b)(1) of the Code, as from time to time amended, (B) with respect to any
Award no such adjustment shall be authorized to the extent that such authority would be
inconsistent with the Plan’s meeting the requirements of Section 162(m) of the Code, as from time
to time amended, and (C) with respect to any Award under the Plan no such adjustment shall be
authorized to the extent that such authorization or adjustment would cause a violation of the
requirements of Section 409A.



     (d) Substitute Awards. Any Shares underlying Substitute Awards shall not, except in the case
of Shares with respect to which Substitute Awards are granted to individuals who are officers or
directors of the Company for purposes of Section 16 of the Exchange Act or any successor section
thereto, be counted against the Shares available for Awards under the Plan; provided that any
assumption or substitution under this Section 4(d) must comply with the requirements of Section
409A.



     (e) Sources of Shares Deliverable Under Awards. Any Shares delivered pursuant to an Award
may consist, in whole or in part, of authorized and unissued Shares or of Shares acquired by the
Company on the open market or otherwise.



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     (f) Cash Award Limits. (i) Any Participant who is the Chief Executive Officer at the time of
payment of an Award (other than a stock-based Award) shall be eligible to be paid in any calendar
year an amount not in excess of $5,000,000 in respect of any such cash Award under the Plan, and
(ii) no Participant other than a Participant described in clause (i) of this Paragraph 4(f) shall
be eligible to be paid in any calendar year more than $2,000,000 in respect of any such cash Award.
No provision of this Paragraph 4(f) shall be construed as limiting the number of stock-based
Awards that a Participant may receive.



     SECTION 5. Eligibility. Any Officer, including any Officer who is a director of the Company
or any Affiliate, who is not a member of the Committee, shall be eligible to be designated a
Participant.



     SECTION 6. Performance-Based Bonuses.



     (a) At such times and in such manner as may be prescribed by Section 162(m), the Committee
may select Participants and award to such Participants the opportunity to earn a Performance-Based
Bonus, which will be contingent upon the Company’s attainment of performance goals selected by the
Committee.



     (b) Performance goals which may be employed by the Committee for purposes of a
Performance-Based Bonus awarded under Paragraph (a) will include pre-tax income, after-tax income,
cash flow, return on equity, return on capital, earnings per share, unit volume, net sales or
service quality, as determined in accordance with GAAP, if applicable, which goals may relate to
the Company as a whole or, if applicable, to the performance of one or more specific divisions or
Affiliates.



     (c) Notwithstanding Paragraphs (a) and (b), the formula for determining a Performance-Based
Bonus to any Participant may, if so determined by the Committee, be governed by the terms of an
Employment Agreement applicable to such Participant.



     (d) Performance-Based Bonuses awarded under Paragraph (a) may be paid in cash, other Awards
or any combination thereof, and the form of payment may be governed, as to any Participant, by an
Employment Agreement applicable to such Participant.



     SECTION 7. Stock Options.



     (a) Grant. Subject to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Officers to whom Options shall be granted, the number of Shares to be
covered by each Option, the exercise price therefor and the conditions and limitations applicable
to the exercise of the Option, provided, however, that the Committee shall not amend an Option to
reduce the per Share exercise price (except as permitted by Section 4(c)) or otherwise modify an
Option or add any feature for the deferral of compensation in any manner that would cause a
violation of the requirements of Section 409A. The Committee shall have the authority to grant
Incentive Stock Options, or to grant Non-Qualified Stock Options, or to grant both types of
options. In the case of Incentive Stock Options, the terms and conditions of such



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grants shall be subject to and comply with such rules as may be prescribed by Section 422 of the
Code, as from time to time amended, and any regulations implementing such statute.



     (b) Exercise Price. The Committee in its sole discretion shall establish the exercise price
at the time each Option is granted, which exercise price shall be not less than the Fair Market
Value of the Shares subject to the Option on the date of grant of the Option.



     (c) Exercise. Each Option shall be exercisable at such times and subject to such terms and
conditions as the Committee may, in its sole discretion, specify in the applicable Award Agreement
or thereafter, provided, however, that the Committee shall not extend the exercise period of an
Option beyond the earlier of the latest date upon which the Option could have expired by its
original terms under any circumstances or the tenth anniversary of the date of grant of such
Option. The Committee may impose such conditions with respect to the exercise of Options,
including without limitation, any relating to the application of federal or state securities laws,
as it may deem necessary or advisable.



     (d) Payment. No Shares shall be delivered pursuant to any exercise of an Option until
payment in full of the exercise price therefor is received by the Company. Such payment may be
made in cash, or its equivalent, or, if and to the extent permitted by the Committee, by exchanging
Shares owned by the Participant (which are not the subject of any pledge or other security
interest), or by a combination of the foregoing, provided that the combined value of all cash and
cash equivalents and the Fair Market Value of any such Shares so tendered to the Company as of the
date of such tender is at least equal to such exercise price plus the related amount of any taxes
required to be withheld by the Company in connection with such exercise, to the extent such
withholding taxes are then ascertainable. If the amount of such taxes is not ascertainable at the
time of the notice of exercise, such amount shall be tendered by you to the Company as soon as the
same shall become ascertainable and shall be communicated to you by the Company.



     SECTION 8. Stock Appreciation Rights.



     (a) Grant. Subject to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Officers to whom Stock Appreciation Rights shall be granted, the number
of Shares to be covered by each Stock Appreciation Right Award, the grant price thereof and the
conditions and limitations applicable to the exercise thereof. Stock Appreciation Rights may be
granted in tandem with another Award, in addition to another Award, or freestanding and unrelated
to another Award. Stock Appreciation Rights granted in tandem with or in addition to an Award may
be granted either at the same time as the Award or at a later time.



     (b) Exercise and Payment. A Stock Appreciation Right shall entitle the Participant to
receive an amount equal to the excess of the Fair Market Value of a Share on the date of exercise
of the Stock Appreciation Right over the grant price thereof, provided that the Committee may for
administrative convenience determine that, with respect to any Stock Appreciation Right which is
not related to an Incentive Stock Option and which can only be exercised for cash during limited
periods of time in order to satisfy the conditions of Rule 16b-3, the exercise of



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such Stock Appreciation Right for cash during such limited period shall be deemed to occur for all
purposes hereunder on the day during such limited period on which the Fair Market Value of the
Shares is the highest. Any such determination by the Committee may be changed by the Committee
from time to time and may govern the exercise of Stock Appreciation Rights granted prior to such
determination as well as Stock Appreciation Rights thereafter granted. The Committee shall
determine whether a Stock Appreciation Right shall be settled in cash, Shares or a combination of
cash and Shares.



     (c) Other Terms and Conditions. Subject to the terms of the Plan and any applicable Award
Agreement, the Committee shall determine, at or after the grant of a Stock Appreciation Right, the
term, methods of exercise, methods and form of settlement, and any other terms and conditions of
any Stock Appreciation Right. Any such determination by the Committee may be changed by the
Committee from time to time and may govern the exercise of Stock Appreciation Rights granted or
exercised prior to such determination as well as Stock Appreciation Rights granted or exercised
thereafter. The Committee may impose such conditions or restrictions on the exercise of any Stock
Appreciation Right as it shall deem appropriate.



     SECTION 9. Restricted Stock.



     (a) Grant. Subject to the provisions of the Plan, the Committee shall have sole and complete
authority to determine the Officers to whom Shares of Restricted Stock shall be granted, the number
of Shares of Restricted Stock to be granted to each Participant, the duration of the period during
which, and the conditions under which, the Restricted Stock may be forfeited to the Company, and
the other terms and conditions of such Awards. Notwithstanding any other provision of this Plan to
the contrary, the period during which such Awards may be forfeited to the Company shall not
terminate prior to the third anniversary of the date of grant of such Award; provided, however,
that the Committee may determine to have such period terminate after the first anniversary of the
date of grant of any such Award if the Committee has established conditions for the earning of such
Award that relate to performance of the Company or one or more divisions or units thereof. Subject
to the preceding sentence, once established, such performance vesting criteria may be changed,
adjusted or amended during the term of an Award.



     (b) Transfer Restrictions. Shares of Restricted Stock may not be sold, assigned,
transferred, pledged or otherwise encumbered, except as provided in the Plan or the applicable
Award Agreements. Certificates issued in respect of Shares of Restricted Stock shall be registered
in the name of the Participant and deposited by such Participant, together with a stock power
endorsed in blank, with the Company. Upon the lapse of the restrictions applicable to such Shares
of Restricted Stock, the Company shall deliver such certificates to the Participant or the
Participant’s legal representative.



     (c) Dividends and Distributions. Dividends and other distributions paid on or in respect of
any Shares of Restricted Stock may be paid directly to the Participant, or may be reinvested in
additional Shares of Restricted Stock, as determined by the Committee in its sole discretion.



     SECTION 10. Change of Ownership. Notwithstanding anything to the contrary in this



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Plan, unless otherwise specifically determined by the Committee at the time of grant, all Options
theretofore granted and not fully exercisable shall become exercisable in full and the restrictions
on any other outstanding Awards shall lapse upon the occurrence of a Change of Ownership.



     SECTION 11. Other Stock-Based Awards. The Committee shall have authority to grant to any
Officer an “Other Stock-Based Award”, which shall consist of any right which is (i) not an Award
described in Sections 6 through 9 above and (ii) an Award of Shares or an Award denominated or
payable in, valued in whole or in part by reference to, or otherwise based on or related to, Shares
(including, without limitation, securities convertible into Shares), as deemed by the Committee to
be consistent with the purposes of the Plan; provided that any such rights must comply, to the
extent deemed desirable by the Committee, with Rule 16b-3 and applicable law. Subject to the terms
of the Plan and any applicable Award Agreement, the Committee shall determine the terms and
conditions of any such Other Stock-Based Award.



     SECTION 12. Amendment and Termination.



     (a) Amendments to the Plan. Subject to the authority of the Committee as set forth in
Section 3, and subject to the requirements of Section 409A and of Section 13(p) hereof, if
applicable, the Board may amend, alter, suspend, discontinue, or terminate the Plan or any portion
thereof at any time; provided that no such amendment, alteration, suspension, discontinuation or
termination shall be made without shareholder approval if such approval is necessary to comply with
any tax or regulatory requirement, including for these purposes any approval requirement which is a
prerequisite for exemptive relief from Section 16(b) of the Exchange Act, for which or with which
the Board deems it necessary or desirable to qualify or comply. Notwithstanding anything to the
contrary herein, the Committee may amend the Plan in such manner as may be necessary so as to have
the Plan conform with local rules and regulations in any jurisdiction outside the United States,
subject to the requirements of Section 409A and of Section 13(p) hereof, if applicable.



     (b) Amendments to Awards. Subject to the requirements of Section 409A and of Section 13(p)
hereof, if applicable, the Committee may waive any conditions or rights under, amend any terms of,
or alter, suspend, discontinue, cancel or terminate, any Award theretofore granted, prospectively
or retroactively; provided that any such waiver, amendment, alteration, suspension, discontinuance,
cancellation or termination that would adversely affect the rights of any Participant or any holder
or beneficiary of any Award theretofore granted shall not to that extent be effective without the
consent of the affected Participant, holder or beneficiary; and provided further that no
outstanding Option may be amended to decrease the per Share exercise price or extend the exercise
period thereof, or otherwise modified in any manner, except in accordance with Sections 4(c), 7(a),
and 7(c) hereof.



     (c) Adjustment of Awards Upon the Occurrence of Certain Unusual or Nonrecurring Events. The
Committee is hereby authorized to make adjustments in the terms and conditions of, and the criteria
included in, Awards in recognition of unusual or nonrecurring events (including, without
limitation, the events described in Section 4(c) hereof) affecting the Company, any Affiliate, or
the financial statements of the Company or any Affiliate, or of changes in applicable laws,
regulations, or accounting principles, whenever the Committee determines that such



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adjustments are appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan; provided that no such adjustment
shall be authorized to the extent that such authority would be inconsistent with the Plan’s meeting
the requirements of Section 162(m) of the Code, as from time to time amended, or to the extent that
such authority or adjustment would cause a violation of the requirements of Section 409A.



     (d) Cancellation. Any provision of this Plan or any Award Agreement to the contrary
notwithstanding, the Committee may cause any Award granted hereunder to be canceled in
consideration of a cash payment or alternative Award made to the holder of such canceled Award
equal in value to the Fair Market Value of such canceled Award; provided, however, that except as
permitted by Sections 4(c) and 12(c) hereof, no Option may be granted in exchange for, or in
connection with, the cancellation or surrender of an Option having a higher per Share exercise
price, and no alternative Award may be made if such action would cause a violation of Section 409A.



     SECTION 13. General Provisions.



     (a) Dividend Equivalents. In the sole and complete discretion of the Committee, an Award,
whether made as an Other Stock-Based Award under Section 10 or as an Award granted pursuant to
Sections 6 through 9 hereof, may provide the Participant with dividends or dividend equivalents,
payable in cash, Shares, other securities or other property on a current or deferred basis.



     (b) Nontransferability. No Award shall be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by a Participant, except by will or the laws of descent and
distribution; provided, however, that an Award may be transferable, to the extent set forth in the
applicable Award Agreement, (i) if such Award Agreement provisions do not disqualify such Award for
exemption under Rule 16b-3, or (ii) if such Award is not intended to qualify for exemption under
such rule.



     (c) No Rights to Awards. Except as may be provided in an Employment Agreement, no Officer,
Participant or other Person shall have any claim to be granted any Award, and there is no
obligation for uniformity of treatment of Employees, Participants, or holders or beneficiaries of
Awards. The terms and conditions of Awards need not be the same with respect to each recipient.



     (d) Share Certificates. All certificates for Shares or other securities of the Company or
any Affiliate delivered under the Plan pursuant to any Award or the exercise thereof shall be
subject to such stop transfer orders and other restrictions as the Committee may deem advisable
under the Plan or the rules, regulations, and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other securities are then listed, and any
applicable Federal or state laws, and the Committee may cause a legend or legends to be put on any
such certificates to make appropriate reference to such restrictions.



     (e) Withholding. A Participant may be required to pay to the Company or any Affiliate,



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and the Company or any Affiliate shall have the right and is hereby authorized to withhold from any
Award, from any payment due or transfer made under any Award or under the Plan or from any
compensation or other amount owing to a Participant the amount (in cash, Shares, other securities,
other Awards or other property) of any applicable withholding taxes in respect of an Award, its
exercise, or any payment or transfer under an Award or under the Plan and to take such other action
as may be necessary in the opinion of the Company to satisfy all obligations for the payment of
such taxes. Notwithstanding any other provision of the Plan, the number of Shares which may be
withheld pursuant to this Section 13(e) shall be limited to the number of Shares which have a Fair
Market Value on the date of withholding or repurchase equal to the aggregate amount of the
liability for such withholding taxes based on the minimum applicable statutory withholding rates.



     (f) Award Agreements. Each Award hereunder shall be evidenced by an Award Agreement which
shall be delivered to the Participant and shall specify the terms and conditions of the Award and
any rules applicable thereto, including but not limited to the effect on such Award of the death,
retirement or other termination of employment of a Participant.



     (g) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent
the Company or any Affiliate from adopting or continuing in effect other compensation arrangements,
which may, but need not, provide for the grant of bonuses, options, restricted stock, Shares and
other types of Awards provided for hereunder (subject to shareholder approval if such approval is
required), and such arrangements may be either generally applicable or applicable only in specific
cases.



     (h) No Right to Employment. The grant of an Award shall not be construed as giving a
Participant the right to be retained in the employ of the Company or any Affiliate. Further, the
Company or an Affiliate may at any time dismiss a Participant from employment, free from any
liability or any claim under the Plan, unless otherwise expressly provided in the Plan or in any
Award Agreement.



     (i) No Rights as Stockholder. Subject to the provisions of the applicable Award, no
Participant or holder or beneficiary of any Award shall have any rights as a stockholder with
respect to any Shares to be distributed under the Plan until he or she has become the holder of
such Shares. Notwithstanding the foregoing, in connection with each grant of Restricted Stock
hereunder, the applicable Award shall specify if and to what extent the Participant shall not be
entitled to the rights of a stockholder in respect of such Restricted Stock.



     (j) Governing Law. The validity, construction, and effect of the Plan and any rules and
regulations relating to the Plan and any Award Agreement shall be determined in accordance with the
laws of the State of California, except to the extent that the General Corporation Law of the State
of Delaware shall be applicable to the Company.



     (k) Severability. If any provision of the Plan or any Award is or becomes or is deemed to be
invalid, illegal, or unenforceable in any jurisdiction or as to any Person or Award, or would
disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision
shall be construed or deemed amended to conform the applicable laws, or if it cannot



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be construed or deemed amended without, in the determination of the Committee, materially altering
the intent of the Plan or the Award, such provision shall be stricken as to such jurisdiction,
Person or Award and the remainder of the Plan and any such Award shall remain in full force and
effect.



     (l) Other Laws. The Committee may refuse to issue or transfer any Shares or other
consideration under an Award if, acting in its sole discretion, it determines that the issuance or
transfer of such Shares or such other consideration might violate any applicable law or regulation
or entitle the Company to recover the same under Section 16(b) of the Exchange Act, and any payment
tendered to the Company by a Participant, other holder or beneficiary in connection with the
exercise of such Award shall be promptly refunded to the relevant Participant, holder or
beneficiary. Without limiting the generality of the foregoing, no Award granted hereunder shall be
construed as an offer to sell securities of the Company, and no such offer shall be outstanding,
unless and until the Committee in its sole discretion has determined that any such offer, if made,
would be in compliance with all applicable requirements of the U.S. federal securities laws and any
other laws to which such offer, if made, would be subject.



     (m) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to
create a trust or separate fund of any kind or a fiduciary relationship between the Company or any
Affiliate and a Participant or any other Person. To the extent that any Person acquires a right to
receive payments from the Company or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of the Company or any Affiliate.



     (n) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the
Plan or any Award, and cash shall be paid in lieu of any fractional Shares, and such fractional
Shares shall be eliminated by rounding down.



     (o) Headings. Headings are given to the Sections and subsections of the Plan solely as a
convenience to facilitate reference. Such headings shall not be deemed in any way material or
relevant to the construction or interpretation of the Plan or any provision thereof.



     (p) Section 409A.



          (1) To the extent that the Committee determines that any Award granted under the Plan is
subject to Section 409A, the Award Agreement evidencing such Award shall comply with the
requirements of Section 409A. To the extent applicable, the Plan and Award Agreements shall be
interpreted in accordance with Section 409A, including without limitation any Treasury Regulations
or other Department of Treasury guidance that may be issued or amended after the Effective Date or
the Amendment Date. Notwithstanding any provision of the Plan to the contrary, in the event that
following the Effective Date the Committee determines that any Award may be subject to Section
409A, including such Department of Treasury guidance as may be issued after the Effective Date or
the Amendment Date, the Committee may adopt such amendments to the Plan and the applicable Award
Agreement or adopt other policies and procedures (including amendments, policies and procedures
with retroactive effect), or take any other actions, that the Committee determines are necessary or
appropriate to (A) exempt the




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Award from Section 409A and/or preserve the intended tax treatment of the benefits provided with
respect to the Award, or (B) comply with the requirements of Section 409A.




          (2) A Participant shall be solely responsible and liable for the satisfaction of all taxes,
interest, and penalties that may be imposed on such Participant or for such Participant’s account
in connection with an Award (including any taxes, interest, and penalties under Section 409A), and
neither the Company nor its affiliates shall have any obligation to indemnify or otherwise hold
such Participant harmless from any or all of such taxes, interest, or penalties.




     SECTION 14. Term of the Plan.



     (a) Effective Date. The Plan became effective as of December 1, 1994 (the “Effective Date”)
and was subsequently approved by the shareholders of the Company within one year thereafter. This
amendment and restatement shall be effective as of the Amendment Date as defined herein.



     (b) Expiration Date. The plan expired on November 30, 2004. No Award shall be granted under
the Plan after November 30, 2004. Unless otherwise expressly provided in the Plan or in an
applicable Award Agreement, any Award granted hereunder may, and the authority of the Board or the
Committee to amend, alter, adjust, suspend, discontinue, or terminate any such Award or to waive
any conditions or rights under any such Award shall, continue after the authority for grant of new
Awards hereunder has been exhausted.




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