Document:

exhibit-10_7.htm

EXHITIB 10.7

 

Award Number:    ______________________                                   

Grantee Name:    _______________________                                  

 

 

KINETIC CONCEPTS, INC.

2008 OMNIBUS STOCK INCENTIVE PLAN

INTERNATIONAL RESTRICTED STOCK UNIT AWARD AGREEMENT

THIS RESTRICTED STOCK UNIT AWARD AGREEMENT (the “Award Agreement”) is made and entered into as of _________________________ (the “Date of Grant”), by and between Kinetic Concepts, Inc., a Texas corporation (the “Company”), and [______________________] (the “Grantee”).  Capitalized terms not defined herein shall have the meaning ascribed to them in the Company’s 2008 Omnibus Stock Incentive Plan (the “Plan”).  Where the context permits, references to the Company or any of its Subsidiaries (or Affiliates) shall include the successors to the foregoing.

 

Pursuant to the Plan, the Administrator has determined that the Grantee is to be granted Restricted Stock Units, subject to the terms and conditions set forth in the Plan and herein (including Appendices A and B), and hereby grants such Restricted Stock Units.  Each Restricted Stock Unit represents a hypothetical share of Stock and will, at all times the Award Agreement is in effect, be equal in value to one share of Stock.

 

1. Grant of Restricted Stock Units.  The Company hereby grants to the Grantee [______________] Restricted Stock Units (the “Award”) on the terms and conditions set forth in the Award Agreement and as otherwise provided in the Plan.

 

2. Terms and Conditions of Award.  The Award shall be subject to the following terms, conditions and restrictions:

 

	
(a)  

	
Vesting.  The Restricted Stock Units shall vest at such time or times, and/or upon the occurrence of such events as are set forth in Appendix A hereto.  Unless otherwise provided on Appendix A, if any Restricted Stock Units do not vest at such time or times and/or upon occurrence of the events specified in Appendix A, then the Grantee shall immediately forfeit any rights to those Restricted Stock Units and the Grantee shall have no further rights thereto and such Restricted Stock Units shall immediately terminate.

 

	
(b)  

	
Nontransferability.  Restricted Stock Units and any interest therein may not be sold, transferred, pledged, hypothecated, assigned or otherwise encumbered or disposed of, except by will or the laws of descent and distribution, to the extent applicable.  Any attempt to dispose of any Restricted Stock Units in contravention of any such restrictions shall be null and void and without effect.

 

	
(c)  

	
Rights as a Shareholder.  Restricted Stock Units represent only hypothetical shares; therefore, the Grantee is not entitled to any of the rights or benefits generally accorded to stockholders with respect thereto, except upon vesting, to the extent provided in Paragraph 2(d).

 

	
(d)  

	
Benefit Upon Vesting.  Upon the vesting of a Restricted Stock Unit, the Grantee shall be entitled to receive, within 30 days of the date on which such Restricted Stock Unit vests, an amount in cash, Stock or a combination of the foregoing, as determined by the Administrator in its sole discretion equal, per Restricted Stock Unit, to the sum of (1) the Fair Market Value of a share of Stock on the date on which such Restricted Stock Unit vests and (2) the aggregate amount of cash dividends paid with respect to a share of Stock during the period commencing on the Date of Grant and terminating on the date on which such unit vests.  If the Restricted Stock Unit is to be settled in Stock, the Company may either (i) issue to the Grantee or the Grantee's personal representative a stock certificate or (ii) deposit Stock with an online broker or other service provider contracted by the Company for such purpose.

 

	
(e)  

	
Effect of Termination of Employment or Service; or Change in Control.

 

	
(i)  

	
If the Grantee’s employment with or service to the Parent, the Company or any of its Subsidiaries (or Affiliates) terminates for any reason, other than by reason of the Grantee’s death or Disability, the Grantee shall immediately forfeit any rights to the Restricted Stock Units that have not vested as of the date of termination, if any, the Grantee shall have no further rights thereto and such Restricted Stock Units shall immediately terminate.

 

	
(ii)  

	
If the Grantee’s employment with or service to the Parent, the Company or any of its Subsidiaries (or Affiliates) terminates by reason of the Grantee’s death or Disability, with respect to Restricted Stock Units that vest based on the passage on time, all outstanding unvested Restricted Stock Units shall immediately vest and, with respect to Restricted Stock Units that vest based on the attainment of specified performance conditions, all outstanding unvested Restricted Stock Units shall immediately vest as if the target performance goals were met.

 

	
(iii)  

	
If the Grantee’s employment with or service to the Parent, the Company or any of its Subsidiaries (or Affiliates) is terminated by the Company other than for "cause" (as defined in the Plan) within 24 months following a Change in Control, with respect to Restricted Stock Units that vest based on the passage on time, all outstanding unvested Restricted Stock Units shall immediately vest and, with respect to Restricted Stock Units that vest based on the attainment of specified performance conditions, all outstanding unvested Restricted Stock Units shall immediately vest as if the target performance goals were met.

 

	
(f) 

	
Taxes in Connection With the Grant or Vesting of the Award.  Regardless of any action the Company or the Grantee’s employer (“Employer”) takes with respect to any or all income tax, social insurance, payroll tax, payment on account or other tax-related items related to the Grantee’s participation in the Plan and legally applicable to the Grantee or deemed by the Company or the Employer to be an appropriate charge to the Grantee even if technically due by the Company or the Employer (“Tax-Related Items”), the Grantee acknowledges that the ultimate liability for all Tax-Related Items is and remains the Grantee’s responsibility and may exceed the amount actually withheld by the Company or the Employer.  The Grantee further acknowledges that that the Company and/or the Employer (1) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the Restricted Stock Units, including, but not limited to, the grant, vesting or settlement of the Restricted Stock Units, the issuance of Stock upon settlement of the Restricted Stock Units, the subsequent sale of Stock acquired pursuant to such issuance and the receipt of any dividends; and (2) do not commit to structure the terms of the grant or any aspect of the Restricted Stock Units to reduce or eliminate the Grantee’s liability for Tax-Related Items or achieve any particular tax result.  Further, if the Grantee has become subject to tax in more than one jurisdiction between the date of grant and the date of any relevant taxable event, the Grantee acknowledges that the Company and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

 

Prior to the relevant taxable event, the Grantee shall pay or make adequate arrangements satisfactory to the Company and/or the Employer to satisfy all Tax-Related Items.  In this regard, the Grantee authorizes the Company and/or the Employer, at their discretion, to satisfy the obligations with regard to all Tax-Related Items by one or a combination of the following:

 

	
(i)  

	
withholding from the Grantee’s wages or other cash compensation paid to the Grantee by the Company and/or the Employer; or

 

	
(ii)  

	
withholding from proceeds of the sale of Stock acquired upon vesting/settlement of the Restricted Stock Units either though a voluntary sale or through a mandatory sale arranged by the Company (on the Grantee’s behalf pursuant to this authorization); or

 

	
(iii)  

	
withholding in Stock to be issued upon vesting/settlement of the Restricted Stock Units.

 

To avoid negative accounting treatment, the Company may withhold or account for Tax-Related Items by considering applicable minimum statutory withholding amounts or other applicable withholding rates.  If the obligation for Tax-Related Items is satisfied by withholding in Stock, for tax purposes, the Grantee is deemed to have been issued the full number of shares of Stock subject to the vested Restricted Stock Units, notwithstanding that a number of the shares of Stock are held back solely for the purpose of paying Tax-Related Items due as a result of any aspect of the Grantee’s participation in the Plan.

 

Finally, the Grantee shall pay to the Company or the Employer any amount of Tax-Related Items that the Company or the Employer may be required to withhold as a result of the Grantee’s participation in the Plan that cannot be satisfied by the means previously described.  The Company may refuse to issue or deliver the Stock or the proceeds of the sale of Stock, if the Grantee fails to comply with the Grantee’s obligations in connection with the Tax-Related Items.

 

3. Adjustments.  The Award and all rights and obligations under the Award Agreement are subject to Section 3 of the Plan.

 

4. Notice.  Whenever any notice is required or permitted hereunder, such notice shall be in writing and shall be given by personal delivery, facsimile, first class mail, certified or registered with return receipt requested.  Any notice required or permitted to be delivered hereunder shall be deemed to have been duly given on the date that it is personally delivered or, whether actually received or not, on the fifth business day after depositing in the post or 24 hours after transmission by facsimile to the respective parties named below.

 

	 If to the Company:	
Kinetic Concepts, Inc.

Attn.:  Chief Financial Officer

8023 Vantage Drive

San Antonio, TX  78230

U.S.A.

 

	 	
Phone: (210) 255-6494

Fax: (210) 255-6997

	 If to the Grantee:	
[Name of Grantee]  ________________________________________

	 	
[Address]  _______________________________________________

	 	
Facsimile: ________________________________________________

 

Either party may change such party’s address for notices by duly giving notice pursuant hereto.

 

5. Compliance with Laws.

 

(a) Stock (to the extent payable hereunder) shall not be issued pursuant to the Award granted hereunder unless the issuance and delivery of such Stock pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the U.S. Securities Act of 1933, as amended, the U.S. Exchange Act and the requirements of any stock exchange upon which the Stock may then be listed, and any applicable local laws, and shall be further subject to the approval of counsel for the Company with respect to such compliance.  The Company shall be under no obligation to effect the registration pursuant to the U.S. Securities Act of 1933, as amended, of any interests in the Plan or any Stock to be issued hereunder or to effect similar compliance under any state laws.

 

(b) All certificates for Stock delivered under the Plan (to the extent applicable) shall be subject to such stock-transfer orders and other restrictions as the Administrator may deem advisable under the rules, regulations, and other requirements of the U.S. Securities and Exchange Commission, any stock exchange upon which the Stock may then be listed, and any applicable federal, state or local securities law, and the Administrator may cause a legend or legends to be placed on any such certificates to make appropriate reference to such restrictions.  The Administrator may require, as a condition of the issuance and delivery of certificates evidencing Stock pursuant to the terms hereof, that the recipient of such Stock make such agreements and representations as the Administrator, in its sole discretion, deems necessary or desirable.

 

6. Termination for Cause.  If the Grantee's employment with or service to the Parent, the Company or any of its Affiliates is terminated for "Cause," as defined in the Plan or in any employment agreement, retention agreement, stock grant or award agreement, or other applicable agreement between the Company (or any of its Affiliates or the Parent) and the Grantee (including, without limitation, for violation of any non-compete, non-solicit, non-disclosure, non-disparagement, or other restrictive covenant or agreement), the Grantee shall forfeit, upon written notice from the Company, any Restricted Stock Units (including any securities, cash or other property issued upon exercise or other settlement of such awards) granted to him or her under this Award Agreement, including, without limitation, vested Restricted Stock Units and any securities issued upon any vesting or other settlement of the Restricted Stock Units that occurs after the action, omission, event, or otherwise that resulted in a termination for Cause, which securities the Grantee shall be required to return to the Company.  The forfeiture obligations of the Grantee under this Paragraph shall continue to apply, in accordance with their terms, following termination of the Grantee's employment or service (for any reason).  The Grantee's employment with or service to the Parent, the Company or any of its Affiliates shall be deemed to be terminated for Cause under this Paragraph if, within twelve (12) months after the Grantee's employment or service has terminated, facts and circumstances are discovered that would have justified a termination for Cause.

 

7. Protections Against Violations of the Award Agreement.  No purported sale, assignment, mortgage, hypothecation, transfer, pledge, encumbrance, gift, transfer in trust (voting or other) or other disposition of, or creation of a security interest in or lien on, any of the Stock underlying the Award by any holder thereof in violation of the provisions of the Award Agreement, the Plan or the Articles of Incorporation or the Bylaws of the Company, will be valid, and the Company will not transfer any such Stock on its books nor will any such Stock be entitled to vote, nor will any dividends be paid thereon, unless and until there has been full compliance with such provisions to the satisfaction of the Company.  The foregoing restrictions are in addition to and not in lieu of any other remedies, legal or equitable, available to enforce said provisions.

 

8. Nature of Award.  By accepting the grant of the Restricted Stock Units, the Grantee acknowledges, understands and agrees that:

 

	
(a)  

	
The Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time;

 

	
(b)  

	
The grant of the Award is voluntary and occasional and does not create any contractual or other right to receive future grants of Restricted Stock Units, or benefits in lieu of Restricted Stock Units, even if Restricted Stock Units have been granted repeatedly in the past;

 

	
(c)  

	
All decisions with respect to future grants of Restricted Stock Units, if any, will be at the sole discretion of the Company;

 

	
(d)  

	
The Grantee’s participation in the Plan shall not create a right to further employment with the Employer and shall not interfere with the ability of the Employer to terminate the Grantee’s employment relationship at any time;

 

	
(e)  

	
The Grantee is voluntarily participating in the Plan;

 

	
(f)  

	
The Award and the Stock subject to the Award are an extraordinary item that do not constitute compensation of any kind for services of any kind rendered to the Company or the Subsidiary (or Affiliate), and which is outside the scope of the Grantee’s employment contract, if any;

 

	
(g)  

	
The Award and the Stock subject to the Award are not intended to replace any pension rights or compensation;

 

	
(h)  

	
The Award and the Stock subject to the Award are not a part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, pension or retirement or welfare benefits or similar payments and in no event shall be considered as compensation for, or relating in any way to, past services for the Company, the Employer or any Subsidiary (or Affiliate) of the Company;

 

	
(i)  

	
The Award and the Grantee’s participation in the Plan will not be interpreted to form an employment contract or relationship with the Company or any Subsidiary (or Affiliate) of the Company

 

	
(j)  

	
The future value of the underlying Stock is unknown and cannot be predicted with certainty;

 

	
(k)  

	
No claim or entitlement to compensation or damages shall arise from the forfeiture of the Award resulting from termination of the Grantee’s employment with the Company or the Employer (for any reason whatsoever and whether or not in breach of local labor laws) and in consideration of the grant of Restricted Stock Units to which the Grantee is not otherwise entitled, the Grantee irrevocably agrees never to institute any claim against the Company or the Employer, waives the Grantee’s ability, if any, to bring such claim, and releases the Company and the Employer from any such claim; if, notwithstanding the foregoing, any such claim is allowed by a court of competent jurisdiction, then, by participating in the Plan and electronically accepting the Award, the Grantee shall be deemed irrevocably to have agreed not to pursue such claim and agreed to execute any and all documents necessary to request dismissal or withdrawal of such claims;

 

	
(l)  

	
In the event of termination of the Grantee’s employment (whether or not in breach of local labor laws), the Grantee’s right to vest in the Restricted Stock Units under the Plan, if any, will terminate effective as of the date that the Grantee is no longer actively employed and will not be extended by any notice period mandated under local law (e.g., active employment would not include a period of “garden leave” or similar period pursuant to local law); the Administrator shall have the exclusive discretion to determine when the Grantee is no longer actively employed for purposes of the Award; and

 

	
(m)  

	
The Restricted Stock Units and benefits under the Plan, if any, will not automatically transfer to another company in the case of a merger, take-over or transfer of liability.

 

9. No Advice Regarding Grant.  The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding the Grantee’s participation in the Plan, or the Grantee’s acquisition or sale or the underlying Stock.  The Grantee is hereby advised to consult with his or her own personal tax, legal and financial advisors regarding the Grantee’s participation in the Plan before taking any action related to the Plan.

 

10. Data Privacy:  The Grantee explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Grantee’s personal data as described in this document by and among, as applicable, the Company and the Subsidiaries and Affiliates for the exclusive purpose of implementing, administering and managing the Grantee’s participation in the Plan.

 

The Grantee understands that the Company and the Employer may hold certain personal information about the Grantee, including, but not limited to, the Grantee’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any shares of Stock or directorships held in the Company, details of all options or any other entitlement to shares of Stock awarded, canceled, exercised, vested, unvested or outstanding in the Grantee’s favor, for the purpose of implementing, administering and managing the Plan (“Data”).  The Grantee understands that Data will be transferred to E*TRADE or such other stock plan service provider as may be selected by the Company in the future, which is assisting the Company  in the implementation, administration and management of the Plan.  The Grantee understands that these recipients may be located in the United States or elsewhere, and that the recipient’s country (e.g., the United States) may have different data privacy laws and protections than the Grantee’s country.  The Grantee understands that the Grantee may request a list with the names and addresses of any potential recipients of the Data by contacting the Grantee’s local human resources representative.  The Grantee authorizes the Company, E*TRADE and any other possible recipients which may assist the Company (presently or in the future) with implementing, administering, and managing the Plan  to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Grantee’s participation in the Plan.

 

 The Grantee understands that Data will be held only as long as is necessary to implement, administer and manage the Grantee’s participation in the Plan.  The Grantee understands that the Grantee may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Grantee’s local human resources representative.  The Grantee  understands, however, that refusing or withdrawing the Grantee’s consent may affect the Grantee’s ability to participate in the Plan.  For more information on the consequences of the Grantee’s refusal to consent or withdrawal of consent, the Grantee understands that the Grantee may contact his or her local human resources representative.

 

11. Failure to Enforce Not a Waiver.  The failure of the Company to enforce at any time any provision of the Award Agreement shall in no way be construed to be a waiver of such provision or of any other provision hereof.

 

12. Governing Law.  The Award Agreement shall be governed by and construed according to the laws of the State of Texas without regard to its principles of conflict of laws.  For purposes of litigating any dispute that arises under this Award or Award Agreement, the parties hereby submit to and consent to the jurisdiction of the State of Texas, agree that such litigation shall be conducted in the courts of San Antonio, Texas, or the federal courts for the United States for the Western District of Texas, and no other courts, where this Award grant is made and/or performed.

 

13. Incorporation of the Plan.  The Plan, as it exists on the date of the Award Agreement and as amended from time to time, is hereby incorporated by reference and made a part hereof, and the Award and the Award Agreement shall be subject to all terms and conditions of the Plan.  In the event of any conflict between the provisions of the Award Agreement and the provisions of the Plan, the terms of the Plan shall control, except as expressly stated otherwise.  The term “Section” generally refers to provisions within the Plan (except where denoted otherwise); provided, however, the term “Paragraph” shall refer to a provision of the Award Agreement.

 

14. Amendments.  The Award Agreement may be amended or modified at any time, but only by an instrument in writing signed by each of the parties hereto.

 

15. Award Agreement Not a Contract of Employment.  Neither the Plan, the granting of the Award, the Award Agreement nor any other action taken pursuant to the Plan shall constitute or be evidence of any agreement or understanding, express or implied, that the Grantee has a right to continue to be employed by, or to provide services as a director, consultant or advisor to, the Company, any Subsidiary or Affiliate thereof for any period of time or at any specific rate of compensation.

 

16. Authority of the Administrator.  The Administrator shall have full authority to interpret and construe the terms of the Plan and the Award Agreement.  The Administrator shall have the exclusive discretion to determine when the Grantee is no longer actively employed for purposes of the Award.  The determination of the Administrator as to any such matter of interpretation or construction shall be final, binding and conclusive.

 

17. Binding Effect.  The Award Agreement shall apply to and bind the Grantee and the Company and their respective permitted assignees or transferees, heirs, legatees, executors, administrators and legal successors.

 

18. Tax Representation.  The Grantee has reviewed with his or her own tax advisors the federal, state, local and worldwide tax consequences of the transactions contemplated by the Award Agreement.  The Grantee is relying solely on such advisors and not on any statement or representations of the Company or any of its agents.  The Grantee understands that he or she (and not the Company) shall be responsible for any tax liability that may arise as a result of the transactions contemplated by the Award Agreement.

 

19. Language.  If the Grantee has received this or any other document related to the Plan translated into a language other than English and if the translated version is different than the English version, the English version will control.

 

20. Electronic Delivery.  The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic or other means.  The Grantee hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic systems established and maintained by the Company or a third-party designated by the Company.

 

21. Acceptance.  The Grantee hereby acknowledges receipt of a copy of the Plan and the Award Agreement.  The Grantee has read and understands the terms and provisions thereof, and accepts the Award subject to all the terms and conditions of the Plan and the Award Agreement.

 

22. Severability.  The provisions of this Award Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

 

23. Appendix.  Notwithstanding any provision in this Award Agreement or the Plan to the contrary, the Award shall be subject to the special terms and provisions set forth in the Appendix B to this Award Agreement for the Grantee’s country.  Moreover, if the Grantee relocates to one of the countries included in the Appendix B, the special terms and conditions for such country will apply to the Grantee, to the extent the Company determines that the application of such terms and conditions is necessary or advisable in order to comply with local law or facilitate the administration of the Plan.  The Appendix B constitutes part of this Award Agreement.

 

24. Imposition of Other Requirements.  The Company reserves the right to impose other requirements in the Grantee’s participation in the Plan, on the Restricted Stock Units and on any Stock acquired under the Plan, to the extent the Company determines it is necessary or advisable in order to comply with local law or facilitate the administration of the Plan, and to require the Grantee to sign or electronically accept any additional agreements or undertakings that may be necessary to accomplish the foregoing.

Grantee, by his or her electronic acceptance of this Award Agreement, agrees to be bound by the terms and conditions set forth above on the day and year first written above.

	
 

DATE OF GRANT

 

	
 

NUMBER OF RESTRICTED STOCK UNITS

	  	  

SEE APPENDIX A FOR VESTING SCHEDULE.

 

 

 

 

 

 

APPENDIX B

KINETIC CONCEPTS, INC.

2008 OMNIBUS STOCK INCENTIVE PLAN

INTERNATIONAL RESTRICTED STOCK UNIT AWARD AGREEMENT

This Appendix B includes additional terms and conditions that govern the Restricted Stock Units granted to the Grantee under the Kinetic Concepts, Inc. 2008 Omnibus Stock Incentive Plan (the “Plan”) if the Grantee resides in one of the countries listed below.  This Appendix B forms part of the Award Agreement.  Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Award Agreement and the Plan.

 

This Appendix B also includes information based on the securities, exchange control and other laws in effect in the Grantee’s country as of February 2010.  Such laws are often complex and change frequently.  As a result, the Company strongly recommends that the Grantee not rely on the information noted herein as the only source of information relating to the consequences of the Grantee’s participation in the Plan because the information may be out of date at the time the Grantee vests in the Restricted Stock Units or sells Stock acquired under the Plan.

 

In addition, the information is general in nature.  The Company is not providing the Grantee with any tax advice with respect to the Grantee’s Restricted Stock Units.  The information provided below may not apply to the Grantee’s particular situation, and the Company is not in a position to assure the Grantee of any particular result. Accordingly, the Grantee is strongly advised to seek appropriate professional advice as to how the tax or other laws in the Grantee’s country apply to the Grantee’s situation.  The Grantee must consult the Grantee’s personal tax or legal advisors for the most current information.

 

If the Grantee is a citizen or resident of a country other than the one the Grantee is working, or if the Grantee transfers employment after the Restricted Stock Units are granted to the Grantee, the information contained in this Appendix B may not be applicable to the Grantee.

AUSTRALIA

 

Restricted Stock Units Settled in Stock

 

The Grantee understands and agrees that by accepting the Award, the benefit the Grantee receives upon the vesting of the Restricted Stock Units will be settled in Stock only, and not in cash, notwithstanding the terms of Paragraph 2(d) of the Award Agreement.

 

AUSTRIA

 

Consumer Protection Notice

 

The Grantee may be entitled to revoke acceptance of the Award Agreement on the basis of the Austrian Consumer Protection Act (the “Act”) under the conditions listed below, if the Act is considered to be applicable to the Award Agreement and the Plan:

 

(i) If the Grantee accepts the Restricted Stock Units outside the business premises of the Company, the Grantee may be entitled to revoke the Grantee’s acceptance of the Award Agreement, provided the revocation is made with one (1) week after such acceptance of the Award Agreement.

 

(ii) The revocation must be in written form to be valid.  It is sufficient if the Grantee returns the Award Agreement to the Company or the Company’s representative with language which can be understood as a refusal to conclude or honor the Award Agreement, provided the revocation is sent within the period discussed above.

 

BELGIUM

 

There are no country-specific provisions.

 

CANADA

 

Restricted Stock Units Settled in Stock

 

The Grantee understands and agrees that by accepting the Award, the benefit the Grantee receives upon the vesting of the Restricted Stock Units will be settled in Stock only, and not in cash, notwithstanding the terms of Paragraph 2(d) of the Award Agreement.

 

Language Consent for Grantees in Quebec

 

The parties acknowledge that it is their express wish that the Award Agreement, as well as all documents, notices and legal proceedings entered into, given or instituted pursuant hereto or relating directly or indirectly hereto, be drawn up in English.

 

Les parties reconnaissent avoir exigé la rédaction en anglais de cette convention, ainsi que de tous documents, avis et procédures judiciaires, exécutés, donnés ou intentés en vertu de, ou liés directement ou indirectement à, la présente convention.

 

Data Privacy Notice and Consent

This provision supplements the Paragraph 9 of the Award Agreement:

 

The Grantee hereby authorizes the Company and the Company’s representatives to discuss with and obtain all relevant information from all personnel, professional or not, involved in the administration and operation of the Plan.  The Grantee further authorizes the Company and any Subsidiary (or Affiliate) and the administrator of the Plan to disclose and discuss the Plan with their advisors.  The Grantee further authorizes the Company and any Subsidiary (or Affiliate) to record such information and to keep such information in the Grantee’s employee file.

 

Securities Law Information

 

The Grantee is permitted to sell Stock acquired through the Plan through the designated broker appointed under the Plan, if any, provided the resale of Stock acquired under the Plan takes place outside of Canada through the facilities of a stock exchange on which the Stock is listed.  The Stock is currently listed on the New York Stock Exchange.

CHINA

 

Restricted Stock Units Settled in Cash

 

The Grantee understands and agrees that upon the vesting of the Restricted Stock Units, the Grantee will receive only a cash payment in an amount equal to the value of the  Stock underlying the vested Restricted Stock Units on each vesting date notwithstanding the terms of Paragraph 2(d) of the Award Agreement.  Any provisions in the Award Agreement referring to issuance of Stock shall not be applicable to the Grantee as long as the Grantee resides in China.

 

The Grantee understands and agrees that, pursuant to local exchange control requirements, the Grantee may be required to repatriate the cash payment issued upon the vesting of the Restricted Stock Units to China.  The Grantee further understands that, under local law, such repatriation of the Grantee’s cash proceeds may need to be effectuated through a special exchange control account established by the Company, Subsidiary or Affiliate, or the Employer, and the Grantee hereby consents and agrees that any cash payment may be transferred to such special account prior to being delivered to the Grantee.  In addition, the Grantee understands that, if the proceeds are converted to local currency, there may be delays in delivering the proceeds to the Grantee, and the Company does not guarantee any particular exchange rate and/or date on which funds will be converted.  The Grantee further agrees to comply with any other requirements that may be imposed by the Company in the future to facilitate compliance with exchange control laws in China.

DENMARK

 

There are no country-specific provisions.

 

GERMANY

 

There are no country-specific provisions.

 

IRELAND

 

Director Notification Requirements

 

If the Grantee is a director, shadow director or secretary of an Irish Subsidiary or Affiliate of the Company, pursuant to Section 53 of the Irish Company Act 1990, he or she must notify the Irish Subsidiary (or Affiliate) of the Company in writing within five (5) business days of receiving or disposing of an interest in the Company (e.g., Restricted Stock Units, Stock, etc.), or within five (5) business days of becoming aware of the event giving rise to the notification requirement, or within five (5) days of becoming a director, shadow director or secretary if such an interest exists at that time.  This notification requirement also applies with respect to the interests of a spouse or minor child, whose interests will be attributed to the director, shadow director or secretary.

 

ITALY

 

Data Privacy

 

This provision replaces Paragraph 9 of the Award Agreement:

 

The Grantee hereby explicitly and unambiguously consents to the collection, use, processing and transfer, in electronic or other form, of the Grantee’s personal data as described below by and among, as applicable, the Employer, the Company, and any Subsidiary (or Affiliate), for the exclusive purpose of implementing, administering, and managing the Grantee’s participation in the Plan.

 

The Grantee understands that the Employer, the Company, and any Subsidiary (or Affiliate) may hold certain personal information about the Grantee, including, but not limited to, the Grantee’s name, home address and telephone number, date of birth, social insurance or other identification number, salary, nationality, job title, any Stock or directorships held in the Company or any Subsidiary (or Affiliate), details of all Awards, or any other entitlement to Stock awarded, canceled, exercised, vested, unvested or outstanding in the Grantee’s favor, for the exclusive purpose of implementing, managing and administering the Plan (“Data”).

 

The Grantee also understands that providing the Company with Data is necessary for the performance of the Plan and that the Grantee’s refusal to provide Data would make it impossible for the Company to perform its contractual obligations and may affect the Grantee’s ability to participate in the Plan.  The controller of personal data processing is Kinetic Concepts, Inc., with its registered address at 8023 Vantage Drive, San Antonio, Texas 78230, United States of America, its representative in Italy is KCI Italia-Senior HR Manager with registered offices at KCI Medical S.r.l.; Via A. Meucci, 1; 20090 Assago (M) Italy.

 

The Grantee understands that Data will not be publicized, but it may be transferred to banks, other financial institutions, or brokers involved in the management and administration of the Plan.  The Grantee understands that Data may also be transferred to the independent registered public accounting firm engaged by the Company.  The Grantee further understands that the Company and/or its Subsidiaries (or Affiliates) will transfer Data among themselves as necessary for the purpose of implementing, administering and managing the Grantee’s participation in the Plan, and that the Company and its Subsidiaries (or Affiliates) may each further transfer Data to third parties assisting the Company in the implementation, administration, and management of the Plan, including any requisite transfer of Data to a broker or other third party with whom the Grantee may elect to deposit any Stock acquired at settlement of the Restricted Stock Units.  Such recipients may receive, possess, use, retain, and transfer Data in electronic or other form, for the purposes of implementing, administering, and managing the Grantee’s participation in the Plan.  The Grantee understands that these recipients may be located in or outside the European Economic Area, such as in the United States or elsewhere.  Should the Company exercise its discretion in suspending all necessary legal obligations connected with the management and administration of the Plan, it will delete Data as soon as it has completed all the necessary legal obligations connected with the management and administration of the Plan.

 

The Grantee understands that Data processing related to the purposes specified above shall take place under automated or non-automated conditions, anonymously when possible, that comply with the purposes for which Data is collected and with confidentiality and security provisions, as set forth by applicable laws and regulations, with specific reference to Legislative Decree no. 196/2003.

 

The processing activity, including communication, the transfer of Data abroad, including outside of the European Economic Area, as herein specified and pursuant to applicable laws and regulations, does not require the Grantee’s consent thereto, as the processing is necessary for the performance of contractual obligations related to the implementation, administration, and management of the Plan.  The Grantee understands that, pursuant to Section 7 of the Legislative Decree no. 196/2003, the Grantee has the right to, including but not limited to, access, delete, update, correct, or terminate, for legitimate reason, the Data processing.

 

Furthermore, the Grantee is aware that Data will not be used for direct-marketing purposes.  In addition, Data provided can be reviewed and questions or complaints can be addressed by contacting the Grantee’s local human resources representative.

 

Plan Document Acknowledgment

 

In accepting the grant of the Award, the Grantee acknowledges that the Grantee has received a copy of the Plan and the Award Agreement and has reviewed the Plan and the Award Agreement, including this Appendix B, in their entirety and fully understands and accepts all provisions of the Plan and the Award Agreement, including this Appendix B.

 

The Grantee further acknowledges that the Grantee has read and specifically and expressly approves the following Paragraphs of the Award Agreement and this Appendix B:  Paragraph 2: Terms and Conditions of Award; Paragraph 5: Compliance with laws; Paragraph 7:  Nature of Award; Paragraph 10:  Governing Law; Paragraph 18: Electronic Delivery; Paragraph 21: Appendix; Paragraph 22: Imposition of Other Requirements; and the Data Privacy section in this Appendix B.

JAPAN

 

There are no country-specific provisions.

 

NETHERLANDS

 

Insider Trading Notification

 

The Grantee should be aware of the Dutch insider-trading rules, which may impact the sale of Stock acquired upon vesting/settlement of the Restricted Stock Units.  In particular, the Grantee may be prohibited from effectuating certain transactions involving Stock if the Grantee has inside information about the Company.  If the Grantee is uncertain whether the insider-trading rules apply to him or her, he or she should consult his or her personal legal advisor.

 

NEW ZEALAND

 

There are no country-specific provisions.

 

PUERTO RICO

 

There are no country-specific provisions.

 

SINGAPORE

 

Securities Law Information

 

The Award is being made in reliance on section 273(1)(f) of the Securities and Futures Act (Cap. 289) (“SFA”) for which it is exempt from the prospectus and registration requirements under the SFA.  The Plan has not been lodged or registered as a prospectus with the Monetary Authority of Singapore.  The Grantee should note that the Restricted Stock Units are subject to section 257 of the SFA and the Grantee will not be able to make (i) any subsequent sale of Stock in Singapore or (ii) any offer of such subsequent sale of Stock subject to the Restricted Stock Units in Singapore, unless such sale or offer in is made pursuant to the exemptions under Part XIII Division (1) Subdivision (4) (other than section 280) of the SFA (Chapter 289, 2006 Ed.).

 

Director Notification Obligation

 

If the Grantee is a director, associate director or shadow director of a Subsidiary (or Affiliate) of the Company in Singapore, the Grantee is subject to certain notification requirements under the Singapore Companies Act.  Among these requirements is an obligation to notify the Singaporean Subsidiary (or Affiliate) in writing when the Grantee receives an interest (e.g., Restricted Stock Units, Stock) in the Company or any Subsidiary (or Affiliate).  In addition, the Grantee must notify the Singapore Subsidiary (or Affiliate) when the Grantee sells Stock of the Company or any Subsidiary (or Affiliate) (including when the Grantee sell Stock acquired through the vesting of the Grantee’s Restricted Stock Units).  These notifications must be made within two days of acquiring or disposing of any interest in the Company or any Subsidiary (or Affiliate).  In addition, a notification must be made of the Grantee’s interests in the Company or any Subsidiary (or Affiliate) within two days of becoming a director.

 

SOUTH AFRICA

 

Taxes in Connection with the Grant or Vesting of the Award

 

By accepting the Restricted Stock Units, the Grantee agrees that, immediately upon vesting and settlement of the Restricted Stock Units, the Grantee will notify the Employer of the amount of any gain realized.  If the Grantee fails to advise the Employer of the gain realized upon vesting and settlement, he/she may be liable for a fine.  The Grantee will be solely responsible for paying any difference the actual tax liability and the amount withheld.

 

SPAIN

 

Labor Law Acknowledgement

 

This section supplements Paragraph 7(e) of the Award Agreement.

 

In accepting the Award, the Grantee acknowledges that he or she consents to participation in the Plan and has received a copy of the Plan and the Award Agreement.  The Grantee understands that the Company has unilaterally, gratuitously and discretionally decided to grant Restricted Stock Units under the Plan to individuals who may be employees of the Company or its Subsidiaries (or Affiliates) throughout the world.  The decision is a limited decision that is entered into upon the express assumption and condition that the grant will not bind the Company or any of its Subsidiaries or Affiliates.  Consequently, the Grantee understands that the Restricted Stock Units are granted on the assumption and condition that the Restricted Stock Units or the Stock acquired pursuant to the Award shall not become a part of any employment contract (either with the Company or any of its Subsidiaries (or Affiliates)) and shall not be considered a mandatory benefit, salary for any purposes (including severance compensation) or any other right whatsoever.  In addition, the Grantee understands that the Award would not be made to the Grantee but for the assumptions and conditions referred to above; thus, the Grantee acknowledges and freely accepts that should any or all of the assumptions be mistaken or should any of the conditions not be met for any reason, then the Restricted Stock Units and any right to the underlying Stock shall be null and void.

 

SWITZERLAND

 

Securities Law Information

The Award is considered a private offering in Switzerland and is therefore not subject to registration in Switzerland.

 

UNITED ARAB EMIRATES

 

There are no country-specific provisions.

 

UNITED KINGDOM

 

Restricted Stock Units Settled in Stock

 

The Grantee understands and agrees that by accepting the Award, the benefit Grantee receives upon the vesting of the Restricted Stock Units will be settled in Stock only, and not in cash, notwithstanding the terms of Paragraph 2(d) of the Award Agreement.

 

Withholding Taxes 

This provision supplements the Paragraph 2(f) of the Award Agreement:

 

If payment or withholding of the Tax-Related Items is not made within ninety (90) days of the event giving rise to the Tax-Related Items, or such other period specified in Section 222(1)(c) of the U.K. Income Tax (Earnings and Pensions) Act 2003 (the “Due Date”), the amount of any uncollected Tax-Related Items shall constitute a full recourse loan owed by the Grantee to the Employer, effective on the Due Date.  The Grantee agrees that the loan will bear interest at a fixed rate based on the market rate on the date the loan is made, and it will be due and repayable to the Company or the Employer six months from the date the loan is made.  Payment may be made by any of the means referred to in the “Taxes in Connection With the Grant or Vesting of the Award” Paragraph of the Award Agreement as long as any immature Stock withheld do not exceed minimum required tax withholding amounts.

 

Notwithstanding the foregoing, if the Grantee is a director or executive officer of the Company (within the meaning of Section 13(k) of the U.S. Securities and Exchange Act of 1934, as amended), the Grantee shall not be eligible for a loan from the Company to cover the Tax-Related Items.  In the event that the Grantee is a director or executive officer and the amount of Tax-Related Items is not collected from or paid by the Grantee by the Due Date, any uncollected amounts of Tax-Related Items will constitute a benefit to the Grantee on which additional income tax and National Insurance Contributions (“NICs”) will be payable.  The Grantee acknowledges that the Company or the Employer may recover such additional income tax and NICs at any time thereafter by any of the means referred to in Paragraph 2(f) of the Award Agreement.  The Grantee understands that he or she ultimately will be responsible for reporting any income tax and NICs due on this additional benefit directly to HM Revenue & Customs (“HMRC”) under the self-assessment regime.

National Insurance Contributions

As a condition to the vesting of the Restricted Stock Units, the Grantee agrees to accept any liability for any secondary Class 1 NICs that may be payable by the Company and/or the Employer with respect to the Due Date.  The Grantee further agrees that the Company and/or the Employer may collect the secondary Class 1 NICs by any of the means set out in Paragraph 2(f) above.  Finally, the Grantee agrees to execute a joint election with the Company and/or the Employer, and any other consents or elections required to accomplish the above; if the Grantee fails to do so, the Restricted Stock Units shall become null and void without liability to the Company, the local Employer and/or any Subsidiary (or Affiliate) of the Company and the Grantee will not be permitted to vest in the Restricted Stock Units.ex10_1.htm

    
      Exhibit
10.1

       

       

       

      GRANITE
CONSTRUCTION INCORPORATED

       

      KEY
MANAGEMENT DEFERRED COMPENSATION PLAN II

       

      
        
        

        1. Introduction.

         

        (a) The
purpose of the Plan is to provide deferred compensation to a select group of
executive employees and non-employee directors of the Company in recognition of
their contributions to the Company and its affiliates.  This document
constitutes the written instrument under which the Plan is
maintained.

         

        (b) This Plan
is the successor plan to the Granite Construction Incorporated Key Management
Deferred Compensation Plan, as amended through December 31, 2004 and the Key
Management Deferred Incentive Compensation Plan, as amended through December 31,
2004 (collectively, the “Prior Plans”).  Effective December 31, 2004,
the Prior Plans are frozen and no new deferrals or Company contributions will be
made to them; provided, however, that any deferrals or Company contributions
made under the Prior Plans before January 1, 2005 shall continue to be governed
by the terms and conditions of the Prior Plans as in effect on December 31,
2004.

         

        (c) Any
deferrals and Company contributions made under the Prior Plans after December
31, 2004 are deemed to have been made under this Plan and all such deferrals and
Company contributions shall be governed by the terms and conditions of this Plan
as it may be amended from time to time; provided, however, that deferrals and
Company contributions made in 2005 through 2007 are governed by the terms and
conditions of this Plan along with the terms and conditions set forth in the
Appendix.

         

        (d) This Plan
is intended to be a plan that is unfunded and that is maintained by Granite
Construction Incorporated primarily for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
within the meaning of the Employee Retirement Income Security Act and for the
benefit of the Company’s non-employee directors.  This Plan also is
intended to comply with the requirements of Section 409A of the
Code.

         

        (e) The Board
approved the amendment and restatement of this Plan effective January 1,
2010.

         

        2. Definitions.

         

        (a) “Account” means as to
any Participant the separate account(s) established and maintained by the
Company in order to reflect his or her interest in the Plan.  Each
Participant’s Account or Accounts will reflect (i) allocations and earnings
credited (or debited) thereto in accordance with Section 5 and (ii) amounts
payable at different times and in different forms.

         

        (b) “Beneficiary” means
the person or persons designated by the Participant or by the Plan under Section
7(g) to receive payment of the Participant’s Account in the event of the
Participant’s death.

         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        (c) “Board” means the
Board of Directors of Granite Construction Incorporated.

         

        (d) “Bonus” means any cash
bonus earned by a Participant, including, but not limited to, (i) the cash bonus
payable under the Granite Construction Profit Sharing Cash Bonus Plan, if any
and (ii) the Participant’s usual and customary annual cash incentive, if
any.

         

        (e) “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 of 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:

         

        (i) 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

         

        (ii) 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

         

        (iii) 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 (i), (ii),
and (iii) above.

         

        (f) “Code” means the
Internal Revenue Code of 1986, as amended.

         

        (g) “Committee” means the
Compensation Committee of the Company’s Board of Directors and its delegatee, as
applicable.

         

        (h) “Company” means
Granite Construction Incorporated, a Delaware corporation, and any other
affiliated entity that is designated from time to time by the
Board.  As to a particular Participant, “Company” refers to the
corporate entity which is his or her employer. For purposes of
Sections 2(e) and (g), 5 and 10, “Company” refers only to Granite
Construction Incorporated.

         

        
          
            
            

          

          
            2

            
              

            

          

          
            
            

          

        

         

        (i) “Disability” means
that an individual is (i) unable to engage in any substantial gainful activity
by reason of any medically determinable physical or mental impairment that can
be expected to result in death or can be expected to last for a continuous
period of not less than 12 months or (ii) by reason of any medically
determinable physical o mental impairment that can be expected to result in
death or can be expected to last for a continuous period of not less than three
months under an accident and health plan covering employees of the
Company.

         

        (j) “Equity Incentive
Plan” means the Granite Construction Incorporated Amended and Restated
1999 Equity Incentive Plan, as amended from time to time.

         

        (k) “ERISA” means the
Employee Retirement Income Security Act of 1974, as amended.

         

        (l) “Identification Date”
means each December 31.

         

        (m) “Key Employee” means a
Participant who, on an Identification Date, is:

         

        (i) An
officer of the Company having annual compensation greater than the compensation
limit in Section 416(i)(1)(A)(i) of the Code, provided that no more than fifty
officers of the Company shall be determined to be Key Employees as of any
Identification Date;

         

        (ii) A five
percent owner of the Company; or

         

        (iii) A one
percent owner of the Company having annual compensation from the Company of more
than $150,000.

         

        If a
Participant is identified as a Key Employee on an Identification Date, then such
Participant shall be considered a Key Employee for purposes of the Plan during
the period beginning on the first April 1 following the Identification Date and
ending on the next March 31.

         

        (n) “Participant” means
each employee and non-employee director of the Company who is designated as such
from time to time by the Committee.

         

        (o) “Performance Units”
means an award granted pursuant to a Performance Unit Agreement under the Equity
Incentive Plan.

         

        (p) “Plan” means the
Granite Construction Incorporated Key Management Deferred Compensation Plan II,
as set forth in this instrument and as hereafter amended.

         

        (q) “Plan Year” means the
calendar year.

         

        (r) “Prior Plans” means
the Granite Construction Incorporated Key Management Deferred Compensation Plan
and the Granite Construction Incorporated Key Management Deferred Incentive
Compensation Plan.

         

        (s) “Restricted Stock
Units” means an award granted pursuant to a Restricted Stock Units
Agreement under the Equity Incentive Plan.

         

        
          
            
            

          

          
            3

            
              

            

          

          
            
            

          

        

         

        (t) “Retirement” means an
employee-Participant’s Separation from Service at or after the earlier of (i)
age 55 with ten years of service or (ii) age 65 with five years of
service.  Retirement means a non-employee director-Participant’s
Separation from Service at any time.

         

        (u) “Separation from
Service” means termination of employment with the Company, other than by
reason of death.

         

        (i) A
Participant shall not be deemed to have Separated from Service if the
Participant continues to provide services to the Company in a capacity other
than as an employee and if the former employee is providing services at an
annual rate that is fifty percent (50%) or more of the services rendered, on
average, during the immediately preceding three full calendar years of
employment with the Company (or if employed by the Company less than three
years, such lesser period).

         

        (ii) A
Participant shall be deemed to have Separated from Service if a Participant’s
service with the Company is reduced to an annual rate that is less than twenty
percent (20%) of the services rendered, on average, during the immediately
preceding three full calendar years of employment with the Company (or if
employed by the Company less than three years, such lesser period).

         

        (v) “Unforeseeable
Emergency” means a severe financial hardship to the Participant or
Beneficiary resulting from:

         

        (i) An
illness or accident of the Participant or Beneficiary, the Participant’s or
Beneficiary’s spouse, or the Participant’s or Beneficiary’s dependent (as
defined in Section 152(a) of the Code); or

         

        (ii) Loss of
the Participant’s or Beneficiary’s property due to casualty (including the need
to rebuild a home following damage to a home not otherwise covered by
insurance); or

         

        (iii) Other
similar extraordinary and unforeseeable circumstances arising as a result of
events beyond the control of the Participant or Beneficiary.

         

        Hardship
shall not constitute an Unforeseeable Emergency under the Plan to the extent
that it is, or may be, relieved by:

         

        (i) Reimbursement
or compensation, by insurance or otherwise;

         

        (ii) Liquidation
of the Participant’s or Beneficiary’s assets to the extent that the liquidation
of such assets would not itself cause severe financial hardship. Such assets
shall include but not be limited to stock options, Company stock, and 401(k)
plan balances; or

         

        (iii) Cessation
of deferrals under the Plan.

         

        An
Unforeseeable Emergency under the Plan does not include (among other
events):

         

        (i) Sending a
child to college; or

         

        (ii) Purchasing
a home.

         

        
          
            
            

          

          
            4

            
              

            

          

          
            
            

          

        

         

        3. Eligibility to
Participate.  The Committee will, from time to time, designate
Company employees to be Participants.  Each employee-Participant
selected by the Committee must belong to a select group of management or highly
compensated employees of the Company. In addition, non-employee directors of the
Company will become Participants upon notification of eligibility from the
Committee.  Non-employee directors are not eligible for In-Service
Distributions described in Section 7(c) or the survivor benefit under Section
8.

         

        4. Vesting.  Each
Participant will always be 100% vested in his or her Account; provided, however,
that if a Participant is Separated from Service for “Cause” (as such term is
defined in Section 2.1(d) of the Equity Incentive Plan), the Participant will
forfeit all amounts other than his or her own Bonus, Performance Units and
Restricted Stock Units deferrals, if any.

         

        5. Additions to
Accounts.

         

        (a) Participant Bonus
Deferrals.  Each Participant may annually elect to defer the
receipt of a whole percentage (up to 100% or such other percentage as may be
determined by the Board) of his or her Bonus(es).

         

        (b) Participant Performance Unit
Deferrals.  Effective June 15, 2007, each Participant who is at
least 62 years of age on the last day of the performance period applicable to of
his or her Performance Units award may elect to defer the receipt of the 100% of
the stock payable under his or her Performance Unit agreement.

         

        (c) Participant Dividend
Deferrals.  Each Participant may annually elect to defer the
receipt of the full amount of the quarterly cash dividends that are paid to the
Participant under Section 13(a) of the Granite Construction Employee Stock
Ownership Plan.

         

        (d) Company Matching
Contributions.  Effective January 1, 2008, the Company will
credit, in accordance with the Company’s regular payroll schedule, each
employee-Participant's Account with an amount equal to six percent of the first
$100,000 a Participant defers under Section 5(a) or Section 5(c) of the Plan in
the applicable Plan Year.

         

        (e) Deemed
Investments.  For each Plan Year, the balance of each
Participant’s Account (except that portion of the Account consisting of deferred
Performance Units or Restricted Stock Units awards) will be credited with
earnings based upon the Participant’s investment allocation among a menu of
investment options selected in advance by the Company’s Vice President and
Director of Human Resources, Treasurer and Director of Compensation and Benefits
(collectively, the “Investment Committee).

         

        (i) Investment
options will be determined by the Investment Committee. The Investment
Committee, in its sole discretion, shall be permitted to add or remove
investment options from the Plan menu from time to time, provided that any such
additions or removals of investment options shall not be effective with respect
to any period prior to the effective date of such change.

         

        
          
            
            

          

          
            5

            
              

            

          

          
            
            

          

        

         

        (ii) A
Participant’s investment allocation constitutes a deemed, not actual, investment
among the investment options comprising the investment menu. At no time shall a
Participant have any real or beneficial ownership in any investment option
included in the investment menu, nor shall the Company or any trustee acting on
its behalf have any obligation to purchase actual securities as a result of a
Participant’s investment allocation. A Participant’s investment allocation shall
be used solely for purposes of adjusting the value of a Participant’s
Account.

         

        A Participant shall specify an
investment allocation for his Account, or components thereof, in accordance with
procedures established by the Committee.  Allocation among the
investment options must be designated in increments of 1%. The Participant’s
investment allocation will become effective in accordance with procedures
established by the Committee.

         

        A Participant may change an investment
allocation, both with respect to future credits to the Plan and with respect to
existing Accounts, and such changes shall become effective, in accordance with
procedures adopted by the Committee.

         

        (iii) If the
Participant fails to make an investment allocation with respect to an Account,
such Account shall be invested in an investment option, the primary objective of
which is the preservation of capital, as determined by the Investment
Committee.

         

        (iv) Dividend
equivalents shall be credited in respect of the deferred Performance Units and
Restricted Stock Units.  Such dividend equivalents shall be converted
into additional deferred common stock equivalents covered by the deferred awards
by dividing (1) the aggregate amount or value of the dividends paid with respect
to that number of stock equivalents covered by the deferred award by (2) the
Fair Market Value (as defined in the Equity Incentive Plan) per share of Company
common stock on the payment date for such dividend.  Any additional
stock equivalents covered by the deferred Performance Units or Restricted Stock
Units credited by reason of such dividend equivalents shall be deferred and
subject to all the terms and conditions of this Plan.

         

        (v) 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 share equivalents subject to the deferred Performance
Units and Restricted Stock Units awards.  Subject to Section 11(c)
below, if a majority of the shares which are of the same class as the shares the
underlie the share equivalents subject to deferred Performance Units and
Restricted Stock Units awards are exchanged for, converted into, or otherwise
become shares of another corporation (the “New Shares”), the Committee may
unilaterally amend the deferred awards to provide that shares that underlie the
share equivalents subject to such deferred awards are New Shares.  In
the event of any such amendment, the number of share equivalents subject to
deferred awards shall be adjusted in a fair and equitable manner as determined
by the Committee, in its discretion.  Notwithstanding the foregoing,
any fractional share equivalents resulting from an adjustment pursuant to this
Section 5(e)(v) shall be rounded down to the nearest whole share
equivalent.  The adjustments determined by the Committee pursuant to
this Section 5(e)(v) shall be final, binding and conclusive.

         

        
          
            
            

          

          
            6

            
              

            

          

          
            
            

          

        

         

        (f) Non-Employee Director
Deferrals.  Each Participant who is a non-employee director may
annually elect to defer the receipt of a whole percentage (up to 100% or such
other percentage as may be determined by the Board) of his or her annual
retainer and meeting fees.

         

        (g) Participant Restricted Stock
Unit Deferrals.  Effective for Restricted Stock Units granted
and earned on or after January 1, 2010, each Participant may elect to defer the
receipt of a whole percentage (up to 100% or such other percentage as may be
determined by the Board) of his or her Restricted Stock Units award under his or
her Restricted Stock Units agreement.

         

        6. Deferral
Elections.  Each Participant must complete a deferral form for
each Plan Year.  To be effective, each such deferral form must satisfy
the following rules:

         

        (a) Content and Form
Requirements.  The deferral election form must be signed and
dated by the Participant, and must specify the form(s) of payment and date(s) of
distribution of the Participant’s Account.  A Participant’s deferral
election is irrevocable on the first day of the Plan Year following the Plan
Year in which it is made; provided, however, that a Participant’s election shall
be suspended for the remainder of any Plan Year in which the such Participant
receives a distribution on account of an Unforeseeable Emergency and thereafter
the Participant must submit a new deferral election to resume participant in the
Plan; provided further, however, that a Participant’s deferral election will
terminate on the date the Participant Separates from Service.

         

        (b) Timing of Deferral
Elections.  Except as provided in subsections (i) through (iii)
below, a Participant’s deferral election must be received by the Committee
before the beginning of the Plan Year in which the amount to be deferred is
earned.  Any such deferral election must be accompanied by an election
as to the time and form of payment of the Participant’s Account.

         

        (i) A
Participant’s election to defer Performance Units must be received by the
Committee at least six months prior to the date on which the Performance Units
are no longer subject to a substantial risk of forfeiture (the vesting date);
provided, however, that such election shall be made prior to the date that the
Performance Units are substantially certain to be paid or the number of
Performance Units is readily ascertainable.

         

        (ii) A
Participant’s deferral election may be received by the Committee both
(i) within 30 days of the date on which the employee is notified of
his or her eligibility to participate in the Plan, and (ii) before
the date on which the amount subject to the deferral election is
earned.

         

        (iii) To the
extent permitted by the Committee, a Participant’s deferral election pursuant to
which the Participant defers “performance-based compensation” as defined in
Section 409A(a)(4)(b)(iii) of the Code and the regulations promulgated
thereunder, may be received by the Committee no later than six months before the
end of the applicable performance period.

         

        
          
            
            

          

          
            7

            
              

            

          

          
            
            

          

        

         

        (c) Special Distribution
Election on or before December 31, 2007.  Each Participant may
make a special distribution election to receive a distribution of their Accounts
in calendar year 2008 or later, provided that the distribution election is made
at least twelve months in advance of the newly elected distribution date (and
the previously scheduled distribution date, if any) and the election is made no
later than December 31, 2007.  An election made pursuant to this
Section 6(c) shall be subject to any special administrative rules imposed by the
Committee including rules intended to comply with Section 409A of the Code,
Notice 2005-1, A-19 and any subsequent guidance published
thereunder.  No election under this Section 6(c) shall (i) change the
payment date of any distribution otherwise scheduled to be paid in 2007 or cause
a payment to be paid in 2007, or (ii) be permitted after December 31,
2007.

         

        7. Distribution of
Accounts.

         

        (a) Distribution prior to
Retirement.  If a Participant Separates from Service prior to
the time such Participant is eligible for Retirement and not on account of his
or her death or Disability, the Participant will receive a distribution of the
balance of his or her Account in a lump sum at least six months (but not more
than seven months) following the date he or she Separates from
Service.

         

        (b) Form of Distribution Upon
Retirement.  Subject to the provisions of this Section 7
and Section 10, each Participant who Separates from Service on account of
Retirement, Disability or death will receive a distribution of the balance of
his or her Account in the form specified in the Participant’s election form,
which may be a lump sum payment and/or annual install­ments of substantially
equal amounts payable over a period of years certain not to exceed
ten.  Distributions made pursuant to this Section 7(b) shall be made,
or shall begin, at least six months (but not more than seven months) following
the date the Participant Separates from Service on account of Retirement,
Disability or death.  Participants who elect to defer Restricted Stock
Units may make a separate distribution election applicable only  to
the deferred Restricted Stock Units.  Distribution elections made with
respect to distributions made on account of Retirement are irrevocable when
made.

         

        (c) Form of In-Service
Distribution.

         

        (i) Subject
to the provisions of this Section 7 and Section 10, each Participant may elect
to receive one or more in-service distributions of his or her Accounts in the
form specified in the Participant’s election form, which may be a lump sum
payment and/or annual installments of substantial equal amounts payable over a
period of years certain not to exceed ten.  Any such in-service
distribution may be scheduled for any month and year prior to the Participant’s
Separation from Service (as described below) and must be scheduled at least two
years from the year in which the deferred amount is earned.  Any
in-service distribution will commence on the first day of the month following
the month designated by the Participant as the distribution
month.  Notwithstanding the foregoing, in-service distributions shall
be made only prior to Separation from Service.  To the extent that a
Participant Separates from Service, a distribution of the Participants
Account(s) shall be made in accordance with Section 7(a) or Section 7(b);
provided, however, that if an in-service distribution is an installment
distribution and if it is in pay status, then such in-service distribution
installments shall be paid in accordance with the Participant’s in-service
distribution election and not in accordance with Section 7(a) or Section
7(b).

         

        
          
            
            

          

          
            8

            
              

            

          

          
            
            

          

        

         

        (ii) A
Participant who elects an in-service distribution may make a re-deferral
election with respect to the in-service distribution election if the following
conditions are met:  (1) the re-deferral election does not take effect
until twelve months after the date the re-deferral election is made, (2) the new
in-service distribution date is at least five years after the scheduled
distribution date in effect on the date the re-deferral election is made, and
(3) the re-deferral election is made not less than twelve months prior to the
scheduled distribution date in effect on the date the re-deferral election is
made.

         

        (d) Rules for Installment
Distributions.  If, at any time after installment distributions
have begun, the amount of any installment would be less than $1,000, the
remainder of the Participant’s Account will be distributed in a lump
sum.  For purposes of the Plan, installment payments shall be treated
as a single distribution under Section 409A of the Code.  Participant
Accounts will continue to be credited with earnings under Section 5(e) while
they are in pay status.

         

        (e) [Reserved.]

         

        (f) Default Distribution
Election.  In the absence of an effective distribution election
as to the timing and/or form of distribution of a Participant’s Account,
including but not limited to a Participant’s failure to make a distribution
election in accordance with Section 6(c) above, distribution of the
Participant’s Account shall be made in a lump sum at least six months (but not
more than seven months) following the date he or she Separates from Service for
any reason.

         

        (g) Delayed Distribution to Key
Employees.  Notwithstanding any other provision of Section 7 to
the contrary, a distribution made on account of Separation from Service to a
Participant who is identified as a Key Employee shall be delayed for a minimum
of six months following the Participant’s Separation from
Service.  The determination of which Participants are Key Employees
shall be made by the Committee in its sole discretion in accordance with Section
2(m) of the Plan and Sections 416(i) and 409A of the Code and the regulations
promulgated thereunder.

         

        (h) Beneficiary
Designation.  Each Participant must designate a Beneficiary to
receive a distribution of his or her Account if the Participant dies before it
is distributed to him or her.  A Beneficiary designation form must be
signed, dated and delivered to the Committee to become effective.  In
the absence of a valid or effective Beneficiary designation, the Participant’s
surviving spouse will be his or her Beneficiary or if there is no such spouse,
the Participant’s children in equal shares, or if none, the Participant’s estate
will be his or her Beneficiary.

         

        (i) Performance Units and
Restricted Stock Units Distributions.  Notwithstanding any
other provision of the Plan to the contrary, that portion of the Participant’s
Account consisting of Performance Units or Restricted Stock Units deferrals
shall be distributed in shares of the Company’s Common Stock.

         

        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        

         

        (j) Hardship
Distributions.  In the event of an Unforeseeable Emergency, a
Participant may apply to the Committee for a distribution of part or all of his
or her Account prior to the date that it would otherwise be distributed under
this Section 7.  If the Committee approves such an application,
it will make such distribution as a lump sum payment. Payments due to a
Participant’s Unforeseeable Emergency shall be permitted only to the extent
reasonably required to satisfy the Participant’s need.

         

        (k) Prohibition on
Acceleration.  Notwithstanding any other provision of the Plan
to the contrary, no distribution shall be made from the Plan that would
constitute an impermissible acceleration of payment as defined in Section
409A(a)(3) of the Code and the regulations promulgated thereunder.

         

        8. Survivor
Benefit.  In addition to any other benefit provided under the
Plan, the Beneficiary of an employee-Participant who dies prior to his or her
Separation from Service and who consented to the purchase of insurance by the
Company on his or her life will be entitled to receive a payment equal to the
Participant’s annualized salary in the year of death. Such payment will be made
in a single lump sum within ninety days of the employee-Participant’s
death.

         

        9. Withholding.  The
Company will withhold from any Plan distribution all required federal, state,
local and other taxes and any other payroll deductions required.  Each
Participant agrees as a condition of participation in the Plan to have withheld
annually from his or her salary such amounts as are necessary to satisfy all
applicable taxes.

         

        10. Administration.  The
Plan is administered and interpreted by the Committee.  The Committee
has delegated to the Company’s Vice President and Director of Human Resources
its delegable responsibilities under the Plan.  The Committee (and its
delegatee) has the full and exclusive discretion to interpret and administer the
Plan.  All actions, interpretations and decisions of the Committee
(and its delegatee) are conclusive and binding on all persons, and will be given
the maximum possible deference allowed by law.  The Company agrees to
indemnify and hold harmless the members of the Committee and any employee to
whom the Committee delegates any responsibility under the Plan.

         

        11. Amendment or
Termination.

         

        (a) Amendment or
Suspension.                                                      The
Company reserves the right, in its sole and unlimited discretion, to amend the
Plan at any time, without prior notice to any Participant or
Beneficiary.  The Board may, at any time, suspend the
Plan.  Upon such suspension, Participants’ Accounts shall be paid in
accordance with Section 7 of the Plan.

         

        (b) Termination in
General.  The Board may terminate the Plan at any time and in
the Board’s discretion the Accounts of Participants may be distributed within
the period beginning twelve months after the date the Plan was terminated and
ending twenty-four months after the date the Plan was terminated, or pursuant to
Section 7, if earlier.  If the Plan is terminated and Accounts are
distributed, the Company shall terminate all account balance non-qualified
deferred compensation plans with respect to all participants and shall not adopt
a new account balance non-qualified deferred compensation plan for at least
three years after the date the Plan was terminated.

         

        (c) Change in
Control.  The Board, in its discretion, may terminate the Plan
thirty days prior to or within twelve months following a Change in Control and
distribute the Accounts of the Participants within the twelve-month period
following the termination of the Plan.  If the Plan is terminated and
Accounts are distributed, the Company shall terminate all substantially similar
non-qualified deferred compensation plans sponsored by the Company and all of
the benefits of the terminated plans shall be distributed within twelve months
following the termination of the plans.

         

        
          
            
            

          

          
            10

            
              

            

          

          
            
            

          

        

         

        (d) Dissolution or
Bankruptcy.  The Board, in its discretion, may terminate the
Plan upon a corporate dissolution of the Company that is taxed under Section 331
of the Code or with the approval of a bankruptcy court pursuant to 11 U.S.C.
Section 503(b)(1(A), provided that the Participants’ Accounts are distributed
and included in the gross income of the Participants by the latest of (i) the
calendar year in which the Plan terminates or (ii) the first calendar year in
which payment of the Accounts is administratively practicable.

         

        12. Claims and Review
Procedure.

         

        (a) Informal Resolution of
Questions.  Any Participant or Beneficiary who has questions or
concerns about his or her benefits under the Plan is encouraged to communicate
with the Committee.  If this discussion does not give the Participant
or Beneficiary satisfactory results, a formal claim for benefits may be made
within one year of the event giving rise to the claim in accordance with the
procedures of this Section 11.

         

        (b) Formal Benefits Claim –
Review by Committee.  A Participant or Beneficiary may make a
written request for review of any matter concerning his or her benefits under
this Plan.  The claim must be addressed to the Committee, Key
Management Deferred Compensation Plan II, Granite Construction Incorporated, 585
West Beach Street, PO Box 50085, Watsonville, California 95077.  The
Committee shall decide the action to be taken with respect to any such request
and may require additional information if necessary to process the
request.  The Committee shall review the request and shall issue its
decision, in writing, no later than 90 days after the date the request is
received, unless the circumstances require an extension of time.  If
such an extension is required, written notice of the extension shall be
furnished to the person making the request within the initial 90-day period, and
the notice shall state the circumstances requiring the extension and the date by
which the Committee expects to reach a decision on the request.  In no
event shall the extension exceed a period of 90 days from the end of the initial
period.

         

        (c) Notice of Denied
Request.  If the Committee denies a request in whole or in
part, it shall provide the person making the request with written notice of the
denial within the period specified in Section 11(b) above.  The notice
shall set forth the specific reason for the denial, reference to the specific
Plan provisions upon which the denial is based, a description of any additional
material or information necessary to perfect the request, an explanation of why
such information is required, and an explanation of the Plan’s appeal procedures
and the time limits applicable to such procedures, including a statement of the
claimant’s right to bring a civil action under Section 502(a) of ERISA following
an adverse benefit determination on review.

         

        
          
            
            

          

          
            11

            
              

            

          

          
            
            

          

        

         

        (d) Appeal to
Committee.

         

        (i) A person
whose request has been denied in whole or in part (or such person’s authorized
representative) may file an appeal of the decision in writing with the Committee
within 60 days of receipt of the notification of denial.  The appeal
must be addressed to:  Committee, Key Management Deferred Compensation
Plan II, Granite Construction Incorporated, 585 West Beach Street, PO Box 50085,
Watsonville, California 95077.  The Committee, for good cause shown,
may extend the period during which the appeal may be filed for another 60
days.  The appellant and/or his or her authorized representative shall
be permitted to submit written comments, documents, records and other
information relating to the claim for benefits.  Upon request and free
of charge, the applicant should be provided reasonable access to and copies of,
all documents, records or other information relevant to the appellant’s
claim.

         

        (ii) The
Committee’s review shall take into account all comments, documents, records and
other information submitted by the appellant relating to the claim, without
regard to whether such information was submitted or considered in the initial
benefit determination.  The Committee shall not be restricted in its
review to those provisions of the Plan cited in the original denial of the
claim.

         

        (iii) The
Committee shall issue a written decision within a reasonable period of time but
not later than 60 days after receipt of the appeal, unless special circumstances
require an extension of time for processing, in which case the written decision
shall be issued as soon as possible, but not later than 120 days after receipt
of an appeal.  If such an extension is required, written notice shall
be furnished to the appellant within the initial 60-day period.  This
notice shall state the circumstances requiring the extension and the date by
which the Committee expects to reach a decision on the appeal.

         

        (iv) If the
decision on the appeal denies the claim in whole or in part, written notice
shall be furnished to the appellant.  Such notice shall state the
reason(s) for the denial, including references to specific Plan provisions upon
which the denial was based.  The notice shall state that the appellant
is entitled to receive, upon request and free of charge, reasonable access to,
and copies of, all documents, records, and other information relevant to the
claim for benefits.  The notice shall describe any voluntary appeal
procedures offered by the Plan and the appellant’s right to obtain the
information about such procedures.  The notice shall also include a
statement of the appellant’s right to bring an action under Section 502(a) of
ERISA.

         

        (v) The
decision of the Committee on the appeal shall be final, conclusive and binding
upon all persons and shall be given the maximum possible deference allowed by
law.

         

        (e) Exhaustion of
Remedies.  No legal or equitable action for benefits under the
Plan shall be brought unless and until the claimant has submitted a written
claim for benefits in accordance with Section 11(b) above, has been notified
that the claim is denied in accordance with Section 11(c) above, has filed a
written request for a review of the claim in accordance with Section 11(d)
above, and has been notified in writing that the Committee has affirmed the
denial of the claim in accordance with Section 11(d) above; provided, however,
that an action for benefits may be brought after the Committee has failed to act
on the claim within the time prescribed in Section 11(b) and Section 11(d),
respectively.

         

        
          
            
            

          

          
            12

            
              

            

          

          
            
            

          

        

         

        13. Source of
Payments.

         

        (a) No Plan
Assets.  Subject to Section 12(b), all cash payments under the
Plan will be paid in cash from the general funds of the Company.  No
separate fund will be established under the Plan, and the Plan will have no
assets.  Any right of any person to receive any payment under the Plan
is no greater than the right of any other unsecured creditor of the
Company.  The Plan constitutes a mere promise by the Company to pay
benefit payments in the future and is unfunded for purposes of both Title I
of ERISA and the Code.

         

        (b) Rabbi
Trust.  The Company will (i) establish a trust,
(ii) fund such trust in the event that it determines that a Change in
Control is imminent, and (iii) arrange to have such trust assume its
obligations to pay benefits under the Plan.  Any trust created by the
Company to assist it in meeting its obligations under the Plan will conform to
the terms of the model trust as described in Revenue Ruling 92-64.

         

        14. Inalienability.  A
Participant’s rights to benefits under the Plan are not subject in any manner to
anticipation, alienation, sale, transfer, assignment, pledge, encumbrance,
attachment, or garnishment by creditors of the Participant or the Participant’s
Beneficiary.  Notwithstanding the foregoing, the procedures
established by the Company for the determination of the qualified status of
domestic relations orders and for making distributions under qualified domestic
relations orders, as provided in Section 206(d) of ERISA, shall apply to the
Plan, to the extent pertinent.  Amounts awarded to an alternate payee
under a qualified domestic relations order shall be distributed in the form of a
lump sum distribution as soon as administratively feasible following the
determination of the qualified status of the domestic relations
order.

         

        15. Applicable
Law.  The provisions of the Plan will be construed,
administered and enforced in accordance with ERISA and, to the extent
applicable, the laws of the State of California.

         

        16. Severability.  If
any provision of the Plan is held invalid or unenforceable, its invalidity or
unenforceability will not affect any other provision of the Plan, and the Plan
will be construed and enforced as if such provision had not been
included.

         

        17. No Employment
Rights.  Neither the adoption nor maintenance of the Plan will
be deemed to constitute a contract of employment between the Company and any
employee, or to be a consideration for, or an inducement or condition of, any
employment.  Nothing contained in this Plan will be deemed to give an
employee the right to be retained in the service of the Company or to interfere
with the right of the Company to discharge, with or without cause, any employee
at any time.

         

        18. Status of Plan as ERISA “Top
Hat” Plan.  The Plan is intended to be an unfunded plan
maintained primarily for the purpose of providing deferred compensation for a
select group of management and highly compensated employees and will be
administered and construed to effectuate this intent.  Accordingly,
the Plan is subject to Title I of ERISA, but is exempt from Parts 2, 3
and 4 of such Title.

         

        
          
            
            

          

          
            13

            
              

            

          

          
            
            

          

        

         

        19. Execution.

         

        IN
WITNESS WHEREOF, Granite Construction Incorporated, by its duly authorized
officers, has executed the Plan on the date(s) indicated below.

         

        GRANITE
CONSTRUCTION INCORPORATED

         

        By           /s/ William G.
Dorey                                                  

        Its:  President
& CEO

         

        Dated   2-18-10                                                             

         

        By           /s/ Michael
Futch                                                   

        Its:  Vice
President & General Counsel

         

        Dated   2/18/10                                                             

         

        

         

        
          
            
            

          

          
            14

            
              

            

          

          
            
            

          

        

         

        APPENDIX

         

        Deferrals
and Company contributions made in Plan Years 2005 through 2007 are governed by
the terms and conditions of the Plan along with the terms and conditions set
forth in this Appendix.  Defined terms not defined in this Appendix A
but defined in the Plan will have the same definition as in the
Plan.

         

        1. Definitions.

         

        (a) “Compensation” means
“compensation” (as defined in the Company’s tax-qualified retirement plans) in
excess of $210,000 in 2005 (as indexed under Section 401(a)(17) of the Code) but
not in excess of $310,000 in 2005 (as indexed from time to time by the
Committee).

         

        (b) “Excess Cash
Incentive” means Compensation that exceeds a Participant’s usual and
customary Compensation (as determined by the Committee).

         

        2. Additions to
Accounts.

         

        (a) Participant Cafeteria Plan
Deferrals.  Effective for Plan Years 2005 through 2007, under
rules established by the Committee, each Participant may elect to defer the
amount payable to the Participant under the Company’s “cafeteria plan” under
Section 125 of the Code.

         

        (b) Participant Profit Sharing
Deferrals.  Effective for Plan Years 2005 through 2007, each
Participant may elect to defer an amount up to 85% of the Participant's cash
bonus (in 5% increments) payable under the Granite Construction Profit Sharing
Cash Bonus Plan.

         

        (c) Company Matching
Contributions.  Effective for Plan Years 2005 through 2007, the
Company will annually credit each Participant's Account with an amount equal to
a percentage of the Compensation deferred by the Participant, which percentage
will equal the matching contribution percentage determined under the Granite
Construction Profit Sharing and 401(k) Plan for such Plan Year.

         

        (d) Company Discretionary
Contributions.  Effective for Plan Years 2005 through 2007 in
which a Participant elects to defer a portion of his or her Compensation, the
Company will credit each Participant's Account with an amount equal to a
percentage of the Participant's Compensation that is equal to the total
discretionary contribution percentage determined by the Board for the Granite
Construction Profit Sharing and 401(k) Plan and the Granite Construction
Employee Stock Ownership Plan with respect to the Plan Year for which such
Compensation was deferred.

         

        (e) Hypothetical Investment
Experience.  Effective for Plan Years 2005 through 2007, the
balance of each Participant’s Excess Cash Incentive Compensation Account will be
credited quarterly with hypothetical earnings (or losses) equal to an amount
determined by the Committee as though such Account had been invested in shares
of Company common stock for such period.

         

        
          
            
            

          

          
            1

            
              

            

          

          
            
            

          

        

         

        3. Deferral
Elections.

         

        (a) Content and Form
Requirements.  Effective for Plan Years 2005 through 2007, each
annual Bonus deferral must be for a minimum amount of at least $1,000 and must
be for a period of at least five years.  Also effective for Plan Years
2005 through 2007, a Participant may extend (but not reduce) the length of his
or her deferral period for five-year periods, so long as such extensions are
made at least twelve months prior to an otherwise schedule distribution
date.

         

        (b) Special Elections in 2005
regarding Deferrals.  In accordance with IRS Notice 2005-1,
A-20, (i) on or before March 15, 2005, Participants were permitted to defer
Compensation earned on or before December 31, 2005.  Elections made
pursuant to this Section 3(b) 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-20.  No special election under this
Section 3(b) shall be permitted after December 31, 2005.

         

        (c) Distribution
Election.  Effective for Plan Years 2005 through 2007, any
deferral election under Section 6 of the Plan also shall include an election as
to the time and form of payment of the Compensation deferred and Company
contributions attributable to services performed in the Plan Year following the
Plan Year in which the distribution election is made.  Participants
shall be permitted to make a separate distribution election with respect to each
Plan Year.  A distribution election is irrevocable on the first day of
the Plan Year following the Plan Year in which it is made.

         

        (d) Special Distribution
Election on or before December 31, 2006.  Certain Participants
who are identified by the Committee in its sole discretion may make a special
distribution election to receive a distribution of their Accounts in calendar
year 2007 or later, provided that the distribution election is made at least
twelve months in advance of the newly elected distribution date (and the
previously scheduled distribution date, if any) and the election is made no
later than December 31, 2006.  An election made pursuant to this
Section 3(d) 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 3(d) shall (i)
change the payment date of any distribution otherwise scheduled to be paid in
2006 or cause a payment to be paid in 2006, or (ii) be permitted after December
31, 2006.

         

        4. Distribution of
Accounts.

         

        (a) Distribution upon
Retirement, Disability or Death.  Effective for Plan Years 2005
through 2007, if a Participant Separates from Service on account of Retirement,
Disability or death, the Participant will receive a distribution of the balance
of his or her Account, in accordance with his or her election described in
Section 7(b) of the Plan, at least six months (but not more than seven months)
following the date he or she Separates from Service; provided, however, that a
Participant may elect, in accordance with Section 6 of the Plan, to receive or
begin receiving his or her Account balance 13 months, 25 months, 37 months, 49
months or 61 months following the date he or she Separates from
Service.

         

        
          
            
            

          

          
            2

            
              

            

          

          
            
            

          

        

         

        (b) Delayed Distribution of
Excess Cash Incentive Account.  Effective for Plan Years 2005
through 2007, notwithstanding any other provision of Section 7 of the Plan to
the contrary, a Participant’s Excess Cash Incentive Account must be deferred for
a minimum of five years and distribution of this account shall be delayed until
such minimum deferral period has been satisfied regardless of the Participant’s
distribution election.  If distribution of the Excess Cash Incentive
Account is delayed in accordance with this Section 4(b), then any payment that
otherwise would have been made during such five-year deferral period, shall be
made in one lump sum payment within thirty days following the date that is at
least five years following the date that the Excess Cash Incentive was
deferred.

         

        

        
          
            
            

          

          
            3

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00172-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00172-of-00352.parquet"}]]