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Washington, D.C. 20549
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FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Year Ended Commission File Number
December 31, 1996 0-17124
GRANITE CONSTRUCTION INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware 77-0239383
(State of incorporation) (I.R.S. Employer
Identification Number)
585 West Beach Street
Watsonville, California 95076
(Address of principal executive offices)
Telephone: (408) 724-1011
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $0.01
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
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Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to
this Form 10-K. X
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The aggregate market value of voting stock held by nonaffiliates of the
registrant was approximately $211,488,200 as of March 20, 1997 based upon the
average of the high and low sales prices per share of the registrant's Common
Stock as reported on the NASDAQ National Market System on such date. Shares of
Common Stock held by each officer and director and by each person who owns 5%
or more of the outstanding Common Stock have been excluded in that such persons
may be deemed to be affiliates. This determination of affiliates status is not
necessarily a conclusive determination for other purposes.
At March 20, 1997, 18,111,784 shares of Common Stock, par value $0.01 of the
registrant were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
<TABLE>
<CAPTION>
Documents Form 10-K Reference
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<S> <C>
Proxy Statement for the Annual Meeting of Stockholders on May 19, 1997 Part III, Items 10-13
</TABLE>
This report, including all exhibits and attachments, contains 197 pages. The
exhibit index is on pages 23-24.
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
No.
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<S> <C> <C>
PART I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 1. BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Item 2. PROPERTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 3. LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
PART II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED
STOCKHOLDER MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 6. SELECTED CONSOLIDATED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Item 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA . . . . . . . . . . . . . . . . . . . . . . . . . 18
Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES . . . . . . . . . . . 18
PART III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Item 11. EXECUTIVE COMPENSATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT . . . . . . . . . . . . . . . . . . . . . . 19
Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
PART IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . . . . . . . . 20
</TABLE>
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PART I
ITEM 1. BUSINESS
This report contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. Actual results could differ materially from those
projected in the forward-looking statements as a result of the changes in the
composition of applicable federal and state legislation appropriation
committees; federal and state appropriation changes for infrastructure
spending; the general state of the economy; competition and pricing pressures;
state referendums and initiatives; and other risks detailed from time to time
in the Company's filings with the Securities and Exchange Commission.
INTRODUCTION
Granite Construction Incorporated, the "Company", is one of the largest
heavy civil construction contractors in the United States. Granite operates
throughout the United States, focusing primarily in the west, southwest and
southeast and serves both public and private sector clients. Within the public
sector, the Company concentrates on infrastructure projects, including the
construction of roads, highways, bridges, dams, tunnels, canals, mass transit
facilities and airports. Within the private sector, the Company performs site
preparation services for buildings, plants, subdivisions and other facilities.
Granite's participation in both the public and private sectors and its diverse
mix of project types and sizes have contributed to the Company's revenue growth
and profitability in various economic environments.
Granite also owns and leases substantial aggregate reserves and owns 108
construction materials processing plants and one of the largest heavy
construction contractor equipment fleets in the United States. The Company
believes that the ownership of these assets enables it to compete more
effectively by ensuring availability of these resources at a favorable cost.
Granite operates primarily through its wholly owned subsidiary, Granite
Construction Company. In addition, other minor wholly-owned subsidiaries are
G.G.&R., Inc. and Desert Aggregates Inc., incorporated in Utah and California,
respectively, and there are four wholly-owned, non-operating subsidiaries.
RECENT DEVELOPMENT
At year-end 1996, the Company initiated the purchase of a 30% minority
interest in T.I.C. Holdings Inc. ("TIC") as part of its diversification
strategy (See Business Strategy). The transaction included a 10% ownership
interest acquired directly from the corporation on December 30, 1996 and a yet
to be completed 20% ownership interest to be acquired through a tender offer to
the TIC employee stockholders once the 1996 TIC audited financial statements
are complete and a price determined. The acquisition is expected to be
completed in the second quarter of 1997.
TIC, founded in 1974, is one of the leading merit shop, general heavy
industrial contractors in the U.S. The company is ranked in both the Top 20
industrial and power marketplaces by Engineering News-Record Magazine. TIC
performs all major disciplines including civil, structural steel erection,
heavy mechanical, process piping and electrical/instrumentation. TIC has
offices in Colorado, Georgia, California, Texas, Louisiana, Kansas, Nevada,
Oregon and Wyoming.
TIC operates both nationally and internationally. The Company had annual
revenues of $467 million in 1995. By market sector, 59% of its 1995 revenue
came from industrial/petrochemical projects, 23% from power-related projects,
16% from water/sewer/wastewater projects and the remaining 2% derived from
transportation-related work. The Company employs over 4,000 people nationwide.
OPERATING STRUCTURE
The principal operating company, Granite Construction Company, is
organized into two operating divisions. The Branch Division is comprised of
branch offices which serve local markets, while the Heavy Construction Division
pursues major infrastructure projects throughout the nation. The Heavy
Construction Division ("HCD") generally has large heavy civil projects with
contract amounts in excess of $15 million and contract durations greater than
two years, while the Branch Division projects are typically smaller in size and
shorter in duration.
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The two divisions complement each other in a variety of ways. The Heavy
Construction Division is a major user of large construction equipment and
employs sophisticated techniques on complex projects. The branches draw on
these resources which are generally not available to smaller, local
competitors. Conversely, the Branch Division has greater knowledge of local
markets and provides the Heavy Construction Division with valuable information
regarding larger projects in the branches' areas. The two divisions sometimes
jointly perform projects when a project in a particular region exceeds the
local branch's capabilities.
As decentralized profit centers, the branch offices and the Heavy
Construction Division independently estimate, bid and complete contracts. Both
divisions are supported by centralized functions, including finance,
accounting, tax, human resources, labor relations, safety, legal, insurance,
surety and management information services. The Company believes that
centralized support for decentralized profit centers results in a more market
responsive business with effective controls and reduced overhead.
In addition to cost and profitability estimates, Granite considers several
factors when determining whether to bid on a project, including the client, the
geographic location, Granite's competitive advantages and disadvantages
relative to likely competitors for the project, current and projected workload,
and the likelihood of follow-up work. Both operating divisions use a
proprietary computer-based project estimating system which reflects Granite's
significant accumulated experience. Granite believes that an exhaustive,
detailed approach to a project's estimate and bid is important in order to best
identify the project's risks and opportunities. The Company's estimates are
comprehensive in nature, sometimes totaling hundreds of pages of analysis.
Each project is broken into phases and line items, for which separate labor,
equipment and material estimates are made. Once a project begins, the estimate
provides Granite with a budget against which actual project cost is regularly
measured, enabling Granite to manage its projects more effectively.
The Branch Division. In 1996, Branch Division contract revenue and sales
of aggregate products were $715.6 million (77% of Company revenue) as compared
with $676.0 million (76% of Company revenue) in 1995. The Branch Division has
both public and private sector clients. Public sector activities include both
new construction and improvement of streets, roads, highways and bridges. For
example, the branches widen and repave roads and modify and replace bridges.
Major private sector contracts include site preparation for housing, including
excavation, grading and street paving, and installation of curbs, gutters,
sidewalks and underground utilities.
The Company currently has 11 branch offices with 9 satellite operations.
The Company's branch offices in California are located in Bakersfield, Hanford,
Monterey Bay Area, Palm Springs (Southern California Region), Sacramento, San
Jose, Santa Barbara and Stockton. The Company's branch offices outside of
California are located in Arizona, Nevada and Utah. Each branch effectively
operates as a local or regional construction company and its management is
encouraged to participate actively in the local community. While individual
branch revenues vary from year to year, in 1996 these revenues ranged from $22
million to $118 million.
As part of the Company's strategy, many of Granite's branches mine
aggregates and operate plants which process aggregates into construction
materials for internal use and for sale to others. These activities provide
both a source of profits and a competitive advantage to the Company's
construction business. More than half of the aggregate products are used in
the Company's construction projects. The remainder is sold to unaffiliated
parties and accounted for $93.5 million of revenue in 1996, representing 10.1%
of the Company's total 1996 revenue. The Company has significant aggregate
reserves which it has acquired by ownership in fee or through long-term leases.
It is the Company's objective to continue to own or lease adequate aggregate
reserves.
Heavy Construction Division. In 1996, revenue from HCD was $213.2 million
(23% of Company revenue) as compared with $218.8 million (24% of Company
revenue) in 1995. HCD projects are usually larger and more complex than those
performed by the Branch Division. The Division has completed projects
throughout the nation, including mass transit projects in the metropolitan
areas of Atlanta, Baltimore, Los Angeles, San Francisco and Washington, D.C.,
and 27 major dam and tunnel projects in eight states.
HCD builds infrastructure projects, including major highways, large dams,
mass transit facilities, bridges, pipelines, canals, tunnels, waterway locks
and dams, and airport runways, and has engaged in contract mine stripping and
reclamation and large site preparation. It also performs activities such as
demolition, clearing, excavation, dewatering, drainage, embankment fill,
structural concrete, concrete and asphalt paving, and tunneling.
The Division markets, estimates, bids and provides management overview of
its projects from its Watsonville headquarters and satellite estimating offices
in Texas and Georgia. Project staffs located at jobsites have the managerial,
technical, and clerical capacity to meet on-site project management
requirements. HCD has the ability, if appropriate, to process locally sourced
aggregates into construction materials using its own portable crushing,
concrete and asphalt processing plants.
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HCD participates in joint ventures with other large construction companies
from time to time. Joint ventures are used for large, technically complex
projects where it is desirable to share risk and resources. Joint ventures
provide independently prepared estimates, and shared financing, equipment and
expertise.
Privatization as a new market sector for the Division has emerged as the
Company pioneers the use of public/private partnerships to fund the
construction of public infrastructure projects which are not supported by
traditional tax-based revenue sources. Two such projects have been
successfully completed - in 1996, the joint venture to build the San Joaquin
Hills Transportation Corridor and, in 1995, the SR91 tollroad project. The
Company continues its participation in the SR91 project as an investor in the
partnership that will operate the tollroad under a 35 year franchise agreement
with the State of California. The Division continues to pursue opportunities
to bid in the privatization market.
BUSINESS STRATEGY
Granite's fundamental objective is to increase long-term shareholder value
with an emphasis on profitability and revenue growth and stability. It is
measured with the appreciation of the value of Granite stock over a period of
years, and to a minor degree, a return from dividends. Further, it is a
specific measure of the Company's financial success to achieve a Return on Net
Assets ("RONA") greater than the cost of capital, creating "Granite Value
Added". To accomplish this objective, Granite employs the following
strategies:
Heavy/Highway Construction Focus - Granite concentrates on selected facets
of the construction industry: the building of roads, highways, bridges,
dams and tunnels, mass transit facilities and site preparation. This
focus emphasizes the Company's specialized strengths which include earth
moving, paving and concrete structures.
Selective Bidding - Granite carefully selects projects to bid which it
believes offer an opportunity to meet the Company's profitability
objectives.
Diversification - Granite pursues projects (i) in both the public and
private sectors; (ii) for a wide range of customers within each sector
(from the federal government to small municipalities and from large
corporations to individual home owners); (iii) in diverse geographic
markets; (iv) of various sizes, durations and complexity; and (v) in the
heavy industrial market segment in conformity with the above
diversification strategies.
Decentralized Profit Centers - Granite positions itself to be responsive
to changes in its markets through its decentralized structure. Each of
Granite's branches and the Heavy Construction Division are individual
profit centers.
Management Incentives - The Company compensates its profit center managers
with lower-than-market fixed salaries coupled with a substantial variable
cash and restricted stock incentive element based on the annual profit
performance of their respective profit centers.
Ownership of Material and Equipment Assets - Granite owns aggregate
reserves and processing plants and maintains a fleet of heavy construction
equipment to compete more effectively by ensuring availability of these
resources at favorable cost.
Controlled Expansion - The Company intends to continue its geographic
expansion by selectively adding branches in the western United States, by
pursuing major infrastructure projects throughout the nation and expanding
into other construction market segments through acquisitions.
Accident Prevention - Granite believes that the prevention of accidents is
both a moral obligation and good business. By identifying potential
accidental losses and preventing them the Company continues to
significantly reduce the costs associated with accidents.
Environmental Affairs - Granite believes it benefits all parties to
maintain environmentally responsible operations. The Company is committed
to effective air quality control measures and reclamation at its plant
sites and to waste reduction and recycling of the environmentally
sensitive products used in its operations.
Quality and High Ethical Standards - Granite emphasizes the importance of
performing high quality work and maintaining high ethical standards.
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CUSTOMERS
The Company has customers in both the public and private sectors. The
Branch Division's principal customers are state departments of transportation
in California, Arizona, Nevada and Utah. In 1996, contracts with the
California Department of Transportation represented 11.2% of the Company's
revenue. Other Branch Division clients include county and city public works
departments and developers and owners of industrial, commercial and residential
sites. The principal clients of the Heavy Construction Division are in the
public sector and currently include the U.S. Army Corps of Engineers, the U.S.
Bureau of Reclamation, the State Departments of Highways and Public
Transportation in Texas, Georgia and Florida and the Transportation Corridor
Agencies (See Note 10 of Notes to Consolidated Financial Statements).
A breakdown of the Company's revenues for the last three years by market
sector is as follows (in thousands):
<TABLE>
<CAPTION>
1996 1995 1994
------------------- -------------------- --------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------------------- -------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Contract revenues . . . . .
Federal agencies . . . . $ 32,825 3.5% $ 53,018 5.9% $ 57,664 8.3%
State agencies . . . . . 345,505 37.2 283,272 31.7 245,221 35.4
Local public agencies . 278,917 30.0 338,350 37.8 244,757 35.3
Private sector . . . . . 178,053 19.2 129,028 14.4 87,067 12.6
Construction materials 93,499 10.1 91,128 10.2 58,679 8.4
sales . . . . . . . . . . . ------------------- -------------------- --------------------
Total . . . . . . . . $928,799 100.0% $894,796 100.0% $693,388 100.0%
=================== ===================== =====================
</TABLE>
BACKLOG
The Company's backlog (anticipated revenue from uncompleted portions of
existing contracts) was $597.9 million at December 31, 1996, up from $590.1
million at December 31, 1995. The Company's backlog was $550.2 million at the
end of 1994, and $659.7 million at the end of 1993. Approximately $180 million
of the December 31, 1996 backlog will remain at December 31, 1997. The Company
includes a construction project in its backlog at such time as a contract is
awarded or a firm letter of commitment is obtained. (See "Management's
Discussion and Analysis of Financial Condition and Results of Operations".)
The Company believes the backlog figures are firm, subject only to the
cancellation and modification provisions contained in various contracts.
Substantially all of the contracts in the backlog may be canceled or modified
at the election of the client. However, the Company has not been materially
adversely affected by contract cancellations or modifications in the past.
(See "Business-Contract Provisions and Subcontracting.") A substantial
percentage of the Company's anticipated revenue in any year is not reflected in
its backlog at the start of the year due to the short duration of smaller
Branch Division projects that are initiated and completed during such year
("Turn Business"). The following is a breakdown of backlog as of December 31,
1996 (in millions):
<TABLE>
<CAPTION>
1996 1995 1994
------------------- --------------------- --------------------
AMOUNT PERCENT AMOUNT PERCENT AMOUNT PERCENT
------------------- --------------------- --------------------
<S> <C> <C> <C> <C> <C> <C>
By Geographic Area:
California . . . . . . . . . . . $247.5 41.4% $227.9 38.6% $320.8 58.3%
West . . . . . . . . . . . . . . 72.6 12.1 79.2 13.4 83.1 15.1
Southeast . . . . . . . . . . . . 277.8 46.5 283.0 48.0 146.3 26.6
------------------ ------------------ -------------------
$597.9 100.0% $590.1 100.0% $550.2 100.0%
================== ================== ===================
By Market Sector:
Federal government . . . . . . . $ 28.7 4.8% $ 17.5 3.0% $ 49.7 9.0%
State agencies . . . . . . . . . 374.8 62.7 354.3 60.0 240.9 43.8
Local public agencies . . . . . . 123.0 20.6 152.6 25.9 245.3 44.6
Private companies . . . . . . . . 71.4 11.9 65.7 11.1 14.3 2.6
------------------ ------------------ -------------------
$597.9 100.0% $590.1 100.0% $550.2 100.0%
================== ================== ===================
</TABLE>
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EQUIPMENT
The Company purchases and maintains many pieces of equipment, including
cranes, bulldozers, scrapers, graders, loaders, trucks, pavers, rollers, and
construction materials processing plants. In 1996 and 1995, the Company spent
approximately $40.3 million and $35.4 million, respectively, for construction
equipment, plants and vehicles. The breakdown of the Company's construction
equipment, plants and vehicles at December 31, 1996 is as follows:
<TABLE>
<S> <C> <C>
Heavy construction equipment . . . . . . . . . . . 1,936 units
Trucks, truck-tractors and trailers and vehicles . 2,842 units
Aggregate crushing plants . . . . . . . . . . . . . 38 plants
Asphalt concrete plants . . . . . . . . . . . . . . 43 plants
Portland cement concrete batch plants . . . . . . . 25 plants
Thermal Soil Remediation Plants . . . . . . . . . . 2 plants
</TABLE>
The Company believes that ownership of equipment is preferable to leasing
because ownership ensures the equipment is available as needed and normally
results in lower equipment costs. The Company attempts to keep its equipment
as fully utilized as possible by pooling equipment for use by both the Branch
Division and the Heavy Construction Division. From time to time, the Company
leases or rents equipment on a short- term basis.
EMPLOYEES
On December 31, 1996, Granite employed 931 salaried employees, who work in
management, estimating and clerical capacities, and 2,344 hourly employees.
The total number of hourly personnel employed by the Company is subject to the
volume of construction in progress. During 1996, the number of hourly
employees ranged from 1,871 to 3,794 and averaged approximately 3,079. The
Company is a party to craft collective bargaining agreements in many areas in
which it is working.
The Company believes its employees are its most valuable resource and that
its workforce possesses a strong feeling of dedication to and pride in the
Company. Among salaried and non-union hourly employees, this dedication is
reinforced by 32% equity ownership through the Employee Stock Ownership Plan
("ESOP") and performance-based incentive compensation arrangements. The
Company's 324 managerial and supervisory personnel have an average of 10 years
of service with Granite.
COMPETITION
Factors influencing the Company's competitiveness are price, reputation
for quality, the availability of aggregate materials, machinery and equipment,
financial strength, knowledge of local markets and conditions and estimating
abilities. The Company believes that it competes favorably on the basis of the
foregoing factors. Branch Division competitors range from small local
construction companies to large regional construction companies. While the
market areas of these competitors overlap with several of the markets served by
the Company's branches, few, if any, compete in all of the Company's market
areas. The Heavy Construction Division normally competes with large regional
and national construction companies. Although the construction business is
highly competitive, particularly for competitively bid projects in the public
sector, the Company believes it is well positioned to compete effectively.
CONTRACT PROVISIONS AND SUBCONTRACTING
The Company's revenue is substantially derived from contracts that are
"fixed unit price" contracts under which the Company is committed to provide
materials or services required by a project at fixed unit prices (for example,
dollars per cubic yard of concrete or cubic yards of earth excavated). While
the fixed unit price contract shifts the risk of estimating the quantity of
units required for a particular project to the customer, any increase in the
Company's unit cost over the unit price bid, whether due to inflation,
inefficiency, faulty estimates or other factors, is borne by the Company unless
otherwise provided in the contract. The Company's contracts are obtained
primarily through competitive bidding in response to advertisements by federal,
state and local government agencies and private parties.
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All federal government contracts and many of the Company's other contracts
provide for termination of the contract for the convenience of the party
contracting with the Company. In addition, many of the Company's contracts are
subject to certain completion schedule requirements with liquidated damages in
the event schedules are not met. The Company has not been materially adversely
affected by these provisions in the past.
The Company acts as prime contractor on most of the construction projects
it undertakes. The Company accomplishes the majority of its projects with its
own resources and subcontracts specialized activities such as electrical and
mechanical work. As prime contractor, the Company is responsible for the
performance of the entire contract, including subcontract work. Thus, the
Company is subject to increased costs associated with the failure of one or
more subcontractors to perform as anticipated. The Company generally requires
its subcontractors to furnish bonds guaranteeing their performance.
Affirmative action regulations require the Company to use its best efforts to
employ certain types of subcontractors for a specified portion (historically
ranging up to 25%) of contract work done for governmental agencies. Some of
these subcontractors may not be able to obtain surety bonds. The Company has
not incurred any significant loss or liability on work performed by
subcontractors to date.
INSURANCE AND BONDING
The Company maintains general and excess liability, construction
equipment, and workers' compensation insurance, all in amounts consistent with
industry practices. Management believes its insurance programs are adequate.
In connection with its business, the Company generally is required to
provide various types of surety bonds guaranteeing its performance under
certain public and private sector contracts. The Company's ability to obtain
surety bonds depends upon its capitalization, working capital, past
performance, management expertise and other factors. Surety companies consider
such factors in light of the amount of surety bonds then outstanding for the
Company and their current underwriting standards, which may change from time to
time. The Company has been bonded by the same surety for more than 60 years
and has never been refused a bond.
GOVERNMENT REGULATIONS
The Company's operations are subject to compliance with regulatory
requirements of federal, state and municipal agencies and authorities,
including regulations concerning labor relations, affirmative action and the
protection of the environment. While compliance with applicable regulatory
requirements has not adversely affected the Company's operations in the past
relative to its competitive position within its industry sector, there can be
no assurance that these requirements will not change and that compliance will
not adversely affect the Company's operations. In addition, the aggregate
materials operations of the Company require operating permits granted by
governmental agencies. The Company believes that tighter regulations for the
protection of the environment and other factors will make it increasingly
difficult to obtain new permits and renewal of existing permits may be subject
to more restrictive conditions than currently exist.
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ITEM 2. PROPERTIES
The Company owns and leases real property for use in its construction and
aggregate mining and processing activities. The Company owns approximately
358,300 square feet of office and shop space and leases, pursuant to leases
expiring in the year 2000, an additional 63,700 square feet of office and shop
space. The Company owns approximately 7,650 acres of land of which 1,500 acres
are unpermitted reserves available for future use and leases approximately
5,300 additional acres of land at sites in California, Nevada, Arizona and
Utah. A majority of the land owned or leased by the Company is intended to
serve as aggregate reserves. There are no encumbrances against owned property.
The Company's leases for aggregate reserves generally limit the Company's
interest in the reserves to the right to mine the reserves. These leases range
from month-to-month leases to leases with expiration dates ranging from January
1997 to January 2038. The Company considers its available and future aggregate
reserves adequate to meet operating needs. The company pursues a plan of
acquiring new sources of aggregate reserves to replenish those depleted and to
assure future growth.
ITEM 3. LEGAL PROCEEDINGS
The Company is a party to a number of legal proceedings. The Company
believes that the nature and number of these proceedings are typical for a
construction firm of its size and scope and that none of these proceedings is
material to the Company's financial position.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company has not submitted any matters to a vote of security holders
during the fourth quarter of the year ended December 31, 1996.
EXECUTIVE OFFICERS OF THE REGISTRANT.
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
Age Position
--- --------
<S> <C> <C>
David H. Watts 58 President, Chief Executive Officer and Director
William E. Barton 52 Vice President, Chief Financial Officer
Patrick M. Costanzo 58 Senior Vice President and Manager, Heavy Construction Division
William G. Dorey 52 Senior Vice President and Manager, Branch Division
</TABLE>
Granite Construction Incorporated was incorporated in Delaware in January,
1990 as the holding company for Granite Construction Company, which was
incorporated in California in 1922. All dates of service for the executive
officers of the registrant include the periods in which they served for Granite
Construction Company.
Mr. Watts joined the Company in 1987 as President and Chief Executive
Officer and has served as a director since 1988. From 1984 until 1987, Mr.
Watts served as President, Chief Executive Officer and a director of Ford,
Bacon & Davis, Inc., an industrial engineering and construction firm. From
1965 until 1984, Mr. Watts was employed by an underwater services and
construction firm in various capacities, including as President and Chief
Operating Officer. He received a B.A. degree in economics from Cornell
University in 1960.
Mr. Barton has been an employee of the Company since 1980 and has served
in various capacities, including Vice President and Chief Financial Officer
since 1990, Controller in 1989, Treasurer in 1988 and Cash Manager from 1980
until 1988. He received a B.S. degree in accounting and finance from San Jose
State University in 1967 and an M.B.A. degree from the University of Santa
Clara in 1973.
9
<PAGE> 10
Mr. Costanzo has been an employee of the Company since 1970 and has served
in various capacities, including Senior Vice President and Manager, Heavy
Construction Division, since 1990, Vice President and Assistant Manager, Heavy
Construction Division, from 1988 to 1989, and an Area or Project Manager with
the Heavy Construction Division from 1972 to 1987. He received a B.S. degree
in civil engineering from the University of Connecticut in 1960 and a M.S.
degree in civil engineering from Stanford University in 1961.
Mr. Dorey has been an employee of the Company since 1968 and has served in
various capacities, including Senior Vice President and Manager, Branch
Division since 1987, and as Vice President and Assistant Manager, Branch
Division from 1983 to 1987. He received a B.S. degree in construction
engineering from Arizona State University in 1967.
10
<PAGE> 11
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
The Company's Common stock is traded on the NASDAQ National Market System
under the symbol GCCO. See Quarterly Results in Item 7 for a two-year summary
of quarterly dividends and high and low closing sales prices of the Company's
stock.
The Company expects to pay a quarterly cash dividend of $0.06 plus a
special dividend of $0.12 per share of Common Stock to stockholders of record
as of March 31, 1997 payable on April 18, 1997 (See Note 12 of Notes to
Consolidated Financial Statements). Declaration and payment of dividends is
within the sole discretion of the Company's Board of Directors, subject to
limitations imposed by Delaware law, and will depend on the Company's earnings,
capital requirements and financial conditions and such other factors as the
Board of Directors deems relevant. As of March 20, 1997 there were 18,111,784
shares of Common Stock outstanding held by approximately 322 stockholders of
record of the Company.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
The selected Operations and Balance Sheet data set forth below have been
derived from Consolidated Financial Statements of the Company, which have been
audited by Coopers & Lybrand L.L.P., independent accountants.
11
<PAGE> 12
SELECTED CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1996 1995 1994 1993
----------- ------------ ------------ ------------
OPERATING SUMMARY
<S> <C> <C> <C> <C>
Revenue $ 928,799 $ 894,796 $ 693,388 $ 570,379
Gross profit 110,655 111,963 89,988 50,743
As a percent of revenue 11.9% 12.5% 13.0% 8.9%
General and administrative expenses 71,587 69,610 62,795 47,107
As a percent of revenue 7.7% 7.8% 9.1% 8.3%
Income before cumulative effect of change
in accounting principle * 27,348 28,542 19,488 3,492
Net income 27,348 28,542 19,488 4,492
As a percent of revenue 2.9% 3.2% 2.8% 0.8%
Income per share before cumulative effect
of change in accounting principle * 1.51 1.60 1.10 0.20
Net income per share $ 1.51 $ 1.60 $ 1.10 $ 0.26
Weighted average shares of common and
common stock equivalents outstanding 18,126 17,820 17,660 17,556
----------- ------------ ------------ ------------
FINANCIAL POSITION SUMMARY
Total assets $ 473,045 $ 454,744 $ 349,098 $ 319,416
Cash, cash equivalents and short-term
investments 72,230 66,992 48,638 48,810
Working capital 92,542 77,179 65,537 64,619
Current maturities of long-term debt 10,186 13,948 10,070 10,060
Long-term debt 43,602 39,494 17,237 28,585
Stockholders' equity 233,605 209,905 182,692 164,338
Book value per share 12.89 11.74 10.37 9.37
Dividends per share $ 0.37 $ 0.29 $ 0.13 $ 0.13
Common shares outstanding 18,126 17,885 17,622 17,534
----------- ------------ ------------ ------------
BACKLOG $ 597,876 $ 590,075 $ 550,166 $ 659,738
----------- ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1992 1991 1990 1989
----------- ------------ ------------ ------------
OPERATING SUMMARY
<S> <C> <C> <C> <C>
Revenue $ 518,312 $ 564,060 $ 557,996 $ 504,084
Gross profit 50,578 69,502 70,646 60,837
As a percent of revenue 9.8% 12.3% 12.7% 12.1%
General and administrative expenses 46,906 46,541 44,466 41,915
As a percent of revenue 9.0% 8.3% 8.0% 8.3%
Income before cumulative effect of change
in accounting principle * 3,924 17,622 18,811 14,211
Net income 3,924 17,622 18,811 14,211
As a percent of revenue 0.8% 3.1% 3.4% 2.8%
Income per share before cumulative effect
of change in accounting principle * 0.22 1.01 1.13 0.95
Net income per share $ 0.22 $ 1.01 $ 1.13 $ 0.95
Weighted average shares of common and
common stock equivalents outstanding 17,534 17,460 16,622 15,000
----------- ------------ ------------ ------------
FINANCIAL POSITION SUMMARY
Total assets $ 316,978 $ 277,426 $ 260,426 $ 245,880
Cash, cash equivalents and short-term
investments 54,139 54,973 50,451 46,306
Working capital 66,329 55,186 52,352 34,902
Current maturities of long-term debt 15,469 7,669 7,887 14,228
Long-term debt 38,618 14,816 19,084 39,707
Stockholders' equity 158,594 153,159 131,026 86,552
Book value per share 9.07 8.81 7.60 5.77
Dividends per share $ 0.13 $ 0.13 $ 0.10 $ -
Common shares outstanding 17,477 17,385 17,250 15,000
----------- ------------ ------------ ------------
BACKLOG $ 245,234 $ 292,017 $ 368,384 $ 377,529
----------- ------------ ------------ ------------
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1988 1987 1986
----------- ------------ ------------
OPERATING SUMMARY
<S> <C> <C> <C>
Revenue $ 437,230 $ 380,519 $ 374,489
Gross profit 55,614 46,621 55,836
As a percent of revenue 12.7% 12.3% 14.9%
General and administrative expenses 33,702 32,381 33,064
As a percent of revenue 7.7% 8.5% 8.8%
Income before cumulative effect of change
in accounting principle * 15,009 8,594 11,502
Net income 15,009 8,594 11,502
As a percent of revenue 3.4% 2.3% 3.1%
Income per share before cumulative effect
of change in accounting principle * 1.00 0.57 0.77
Net income per share $ 1.00 $ 0.57 $ 0.77
Weighted average shares of common and
common stock equivalents outstanding 15,000 15,000 15,000
----------- ------------ ------------
FINANCIAL POSITION SUMMARY
Total assets $ 205,847 $ 178,846 $ 168,328
Cash, cash equivalents and short-term
investments 44,911 41,959 34,824
Working capital 39,656 31,036 30,803
Current maturities of long-term debt 12,497 10,806 6,992
Long-term debt 44,328 49,542 50,229
Stockholders' equity 69,033 50,756 39,642
Book value per share 4.60 3.38 2.64
Dividends per share $ - $ - $ -
Common shares outstanding 15,000 15,000 15,000
----------- ------------ ------------
BACKLOG $ 231,338 $ 255,858 $ 178,014
----------- ------------ ------------
</TABLE>
* Effective January 1, 1993, the Company adopted Statement of Financial
Accounting Standards No. 109, "Accounting for Income Taxes".
12
<PAGE> 13
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following "Management's Discussion and Analysis of Financial
Condition and Results of Operations" section contains forward-looking
statements which are made in reliance on the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Investors are cautioned that
such forward-looking statements involve risks and uncertainties, including,
without limitation, changes in the composition of applicable federal and state
legislation appropriation committees; federal and state appropriation changes
for infrastructure spending; the general state of the economy; competition and
pricing pressures; state referendums and initiatives; and other risks detailed
from time to time in the Company's filings with the Securities and Exchange
Commission.
GENERAL
Granite is one of the largest heavy civil contractors in the United
States and is engaged in the construction of highways, dams, airports, mass
transit facilities and other infrastructure-related projects. The Company has
offices in California, Texas, Georgia, Nevada, Arizona and Utah.
The Company's contracts are obtained primarily through competitive
bidding in response to advertisements by federal, state and local agencies and
private parties. The Company's bidding activity is affected by such factors as
backlog, current utilization of equipment and other resources, ability to
obtain necessary surety bonds and competitive considerations. Bidding
activity, backlog and revenue resulting from the award of new contracts to the
Company may vary significantly from period to period.
Revenue from construction contracts including construction joint
ventures is recognized using the percentage-of-completion method of accounting,
based upon costs incurred and projected costs. Revenue in an amount equal to
cost incurred is recognized prior to contracts reaching 25% completion. The
related earnings are not recognized until the period in which such percentage
completion is attained. Cost of revenue consists of direct costs on contracts,
including labor and materials, amounts payable to subcontractors, direct
overhead costs, equipment expense (primarily depreciation, maintenance and
repairs) and insurance costs. Depreciation is provided using accelerated
methods for construction equipment. Contracts frequently extend over a period
of more than one year and revisions in cost and profit estimates during
construction are reflected in the accounting period in which the facts that
require the revision become known. Losses on contracts, if any, are provided
in total when determined, regardless of the degree of project completion.
Claims and change orders for additional contract revenue are recognized to the
extent of costs incurred in the period when it is probable that the claim will
result in additional revenue and the amount can be reliably estimated. The
foregoing as well as weather, stage of completion, and mix of contracts at
different margins may cause fluctuations in gross profit between periods.
The Company's compensation strategy for selected management personnel
is to rely heavily on a variable cash and restricted stock performance-based
incentive element. Thus, the Company may experience an increase in general and
administrative expenses in a very profitable year and a decrease in less
profitable years. Further, the Company does not utilize incentives, such as
stock options, that are not reflected in current earnings. The Company's
pension contribution in excess of the 401K matching contributions is at the
discretion of the Board of Directors based on the Company reaching certain
levels of profitability each year.
CURRENT YEAR
REVENUE AND BACKLOG. During the year ended December 31, 1996, revenue
increased $34.0 million (3.8%) to $928.8 million. The increase in revenue is
associated with higher levels of bidding opportunities and awards in our Branch
Division and a full year of Utah Branch activity in 1996. The Branch Division
revenue increased $39.6 million to $715.6 million in 1996, from $676.0 million
in 1995. Heavy Construction Division (HCD) revenue decreased $5.6 million to
$213.2 million in 1996, from $218.8 million in 1995. The Company's revenue
from private sector contracts increased $49.1 million to $178.1 million, and
went from 14.4% of total revenue in 1995 to 19.2% of total revenue in 1996.
Revenue from public sector contracts decreased to $657.2 million, or 70.7% of
the Company's revenue in 1996, from $674.7 million, or 75.4% in 1995.
13
<PAGE> 14
The Company's backlog at December 31, 1996 was $597.9 million, up $7.8
million, or 1.3% over the same period in 1995. Management expects that
approximately 70% of the work in the backlog at December 31, 1996 will be
recognized as revenue during 1997. The Company believes its bidding
opportunities in its major marketplaces remain strong (see "Outlook").
GROSS PROFIT. For the year ended December 31, 1996, gross profit
reached $110.7 million, a $1.3 million decrease from 1995. As a percentage of
revenue, gross profit decreased in 1996 to 11.9% from 12.5% in 1995.
GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative
expenses include salaries, incentive compensation, ESOP contribution, costs
associated with the Company's estimating and bidding activities, and other
administrative costs. General and administrative expenses increased from $69.6
million, or 7.8% of revenue in 1995, to $71.6 million, or 7.7% of revenue in
1996. The increase reflects a full year of Utah Branch activity as well as an
approximately $3.0 million increase to bad debt expense relating to one
project.
OTHER INCOME (EXPENSES). Other income increased $1.4 million to $4.3
million in 1996. The increase was influenced by $2.0 million of gain on sales
of joint venture owned equipment which cannot be expected to be repeated in
future years.
PROVISION FOR INCOME TAXES. The provision for income taxes in 1996
remained the same as 1995 at 37.0% of income before taxes. (See Note 9 of
Notes to Consolidated Financial Statements.)
OUTLOOK. This "Outlook" section contains forward-looking statements
which are made in reliance on the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. Investors are cautioned that such
forward-looking statements involve risks and uncertainties, including, without
limitation, changes in the composition of applicable federal and state
legislation appropriation committees; federal and state appropriation changes
for infrastructure spending; the general state of the economy; competition and
pricing pressures; state referendums and initiatives; and other risks detailed
from time to time in the Company's filings with the Securities and Exchange
Commission.
Looking forward, 1997 will be a pivotal year for transportation
funding, particularly at the federal level, where Congress takes up
reauthorization of the Intermodal Surface Transportation Efficiency Act
(ISTEA). The bill, signed by then-President Bush in December, 1991, was a
six-year, $158 billion program providing federal monies for highway and transit
construction. The bill expires October 1, 1997. Any changes in actual
appropriations will not impact the Company or the industry until 1998 and
beyond.
Four reauthorization proposals have been submitted to the House
Subcommittee on Surface Transportation. The first proposal, "ISTEA Works", is
essentially a status quo of the existing legislation, albeit it does call for
the maximum level of federal investment possible over the next five years in
our nation's multi-modal transportation systems.
The second proposal, the "ISTEA Integrity Restoration Act", seeks to
simplify and reduce some of the complex funding formulas under ISTEA and would
specify that federal fuel taxes in the federal Highway Trust Fund be used
solely for highway construction, and not for deficit reduction or other
non-highway related purposes.
The third and perhaps most controversial proposal is the
"Transportation Empowerment Act", also known as "Devolution". This bill would
substantially reduce federal fuel taxes and shift the bulk of the
responsibility for levying fuel taxes and maintaining transportation systems to
the states. We believe this bill could prompt a reduction in total
transportation expenditures as states would find it extremely difficult to
raise taxes, even if the taxes merely replaced what was previously being levied
by the federal government.
The last transportation plan is that of the Clinton Administration's,
a proposal to fund the program at $175 billion over six years, which would be
approximately 11% more money than was authorized in the 1991 act.
In fact, there appears to be growing support on Capitol Hill for
substantial increases in highway spending. Senator John Warner (R- VA), is
proposing approximately $10 billion in increases in the highway program over
the next five years.
14
<PAGE> 15
Efforts also continue in Washington to redirect the 4.3 cents of the
federal fuel tax being used for deficit reduction to the federal Highway Trust
Fund and to remove the trust fund from the Unified Federal Budget.
Furthermore, legislation was recently introduced to allow private developers to
issue tax-exempt bonds to finance public infrastructure projects.
Looking ahead in California, legislators in Sacramento this year will
resume the debate over how to pay for the unanticipated increase in cost to
retrofit the San Francisco-Oakland Bay Bridge as well as whether to retrofit
the eastern span or build a new bridge. Bay Area legislators are looking to
the state highway account to make up the shortfall while highway builders and
Southern California legislators argue that increasing bridge tolls is the
appropriate way to pay for the additional costs. In a recent survey by the San
Francisco Chronicle of Bay Area residents, 63% were said to favor raising the
bridge toll to finance a new bridge. Such support could make a toll increase
more politically palatable for Bay Area legislators and temper their zeal to
siphon monies out of the highway account. Maintaining a viable highway program
is vital to the state's economy and important to Granite's business. However
funded, Granite expects to bid on much of the bridge retrofit or replacement
projects.
Cautious optimism describes our outlook for private sector
opportunities in California. The California economy outpaced the nation in
income and job growth in 1996, according to the Center for the Continuing Study
of the California Economy. Moreover, the factors that created the strong
economy in 1996 - a leadership position in technology, foreign trade,
entertainment and tourism, and professional services - is expected to bring
continued growth in 1997 and the decade ahead. It is apparent to us, though,
that the real estate sector of the economy continues to lag the recovery and
has yet to translate into a big increase in bidding opportunities for
residential site development projects.
Looking at our concerns for 1997, our industry is confronted with a
shortage of skilled labor, which affects companies like ours in a number of
ways. Lack of skilled labor limits our ability to take on additional work,
impacts productivity and ultimately leads to higher wage rates. In response,
Granite has increased its investment in craft and technical training and will
continue to focus on education and training for all its employees. Recently we
have seen fuel prices creeping up as crude oil supplies recently hit a 19-year
low. Furthermore, we have witnessed increases in certain construction
materials such as Portland cement.
It is unclear at this point in time whether we could be successful in
raising margins to offset any additional costs. One way to gain insight into
this issue is examining the spread between the high and low bidders.
Historically, during competitive times, spreads are typically very narrow but
as demand increases and capacity tightens, spreads usually begin to widen and
margins improve. According to a recent study by Dr. Thomas C. Schleifer, a
noted industry economist, spreads, on an industry-wide basis, are starting to
widen but not to the point where pricing is necessarily improving.
Granite continues to be pleased with the bidding opportunities
available, both in the number and size of the potential projects to pursue.
Very large, technically complex projects, contracted using the design-build
contract delivery method, play to our strengths. Examples of opportunities
include, or have included, the Hudson Bergen Railroad in New Jersey, the
Interstate 15 rehabilitation in Salt Lake City, Utah, and the JFK light rail
system in New York. We have identified additional bidding opportunities in
Boston (large highway and tunnel projects - part of the city's Central Artery
program), the Foothill Transportation Corridor in Orange County, and
concurrently, we anticipate bidding on numerous highway and bridge projects in
all our geographic markets. Bidding, in general, is up and is expected to
remain robust. As a reminder, while these are attractive projects, if awarded,
their impact on Granite's earnings will be felt in 1998 and beyond due to their
size and the time it takes to reach the 25% threshold of completion for profit
recognition.
On March 26, 1997, the Company announced that Wasatch Constructors, a
joint venture of Kiewit Pacific Company, Granite Construction Company and
Morrison Knudsen Corp., was awarded a contract by the Utah Department of
Transportation for the I-15 Corridor Reconstruction Project in Salt Lake City,
Utah. The value of the project is approximately $1.4 billion. The Company's
share of the joint venture is 23 percent, or about $320 million. Work is
scheduled to start in late spring of 1997 and will be completed in late 2001.
In the first half of 1997, Granite expects to complete its 30%
investment in TIC through a tender offer to their employee stockholders for the
remaining 20%. The TIC investment provides an opportunity to diversify our
risks through geographical expansion, increased private work and entry into a
different but related construction industry sector.
Finally, our 1997 financial expectations are similar to 1996. On the
negative side, we will not have the successful San Joaquin Hills Toll Road in
our mix of business this year, as the project was completed in the fourth
quarter of 1996. We do, however, expect a positive earnings boost from
emergency flood-related work done early in the year in northern California and
Nevada. We expect the level of competition in our branch-related business to
be on par with last year but we are very bullish on this year's prospects for
the branch division's Turn Business.
15
<PAGE> 16
PRIOR YEARS
REVENUE AND BACKLOG. During the year ended December 31, 1995, revenue
increased $201.4 million (29.0%) to $894.8 million. The increase in revenue
reflected a strong quality backlog, healthy Turn Business and the addition of
the Company's new branch in Utah. The Branch Division revenue increased $165.1
million to $676.0 million in 1995, from $510.9 million in 1994. Heavy
Construction Division (HCD) revenue increased $36.3 million to $218.8 million
in 1995, from $182.5 million in 1994. The Company's revenue from private
sector contracts increased $41.9 million to $129.0 million, and went from 12.6%
of total revenue in 1994 to 14.4% of total revenue in 1995. Revenue from
public sector contracts increased to $674.7 million, or 75.4% of the Company's
revenue in 1995, from $547.6 million or 79.0% in 1994. Revenues for the year
ended December 31, 1994 represented a $123.0 million, or 21.6%, increase over
1993.
The Company's backlog at December 31, 1995 was $590.1 million, up
$39.9 million, or 7.3%, from $550.2 million at December 31, 1994.
GROSS PROFIT. For the year ended December 31, 1995, gross profit
reached $112.0 million, a $22.0 million increase from 1994. As a percentage of
revenue, gross profit decreased in 1995 to 12.5% from 13.0% in 1994. The
decrease primarily reflected the 1994 recovery of significant claims revenue
without the associated costs that were recognized in years prior to 1994. For
the year ended December 31, 1994, gross profit reached $90.0 million, a $39.3
million increase from 1993, and as a percentage of revenue went from 8.9% in
1993 to 13.0% in 1994. The increase primarily reflected profits recognized on
contracts meeting the 25% complete threshold in 1994 and the recovery of
outstanding claims.
GENERAL AND ADMINISTRATIVE EXPENSES. For the year ended December 31,
1995, general and administrative expenses increased from the 1994 amount of
$62.8 million, or 9.1% of revenue, to $69.6 million, or 7.8% of revenue. The
increases primarily reflected the addition of the new branch in Utah plus
increased incentive compensation and retirement contribution expenses due to
higher profits and other increases in support of the Company's higher volume of
work. The 1994 general and administrative expenses represented an increase as
a percent of revenue from 8.3% or $47.1 million in 1993 to 9.1%, or $62.8
million, in 1994.
OTHER INCOME (EXPENSES). Other income decreased $0.3 million to $3.0
million in 1995.
PROVISION FOR INCOME TAXES. The provision for income taxes in 1995
increased to 37.0% of income before taxes from 36.0% in 1994. (See Note 9 of
Notes to Consolidated Financial Statements.)
LIQUIDITY AND CAPITAL RESOURCES
<TABLE>
<CAPTION>
Dollars in thousands 1996 1995 1994
-------- ---------- ---------
<S> <C> <C> <C>
Cash and cash equivalents $38,663 $22,410 $17,649
Net cash provided (used) by:
Operating activities 58,226 68,860 48,158
Investing activities (35,900) (48,977) (37,949)
Financing activities (6,073) (15,122) (13,457)
Capital expenditures 46,139 36,006 39,098
Working Capital 92,542 77,179 65,537
</TABLE>
During 1996, cash provided from operations of $58.2 million was
primarily used to purchase $46.1 million of property and equipment, to repay
$14.7 million of long-term debt and to pay dividends of $6.6 million. Changes
in cash provided by operating activities primarily reflect normal variations in
the cash flow on contracts and payables.
The Company's policy has been to replace and replenish its equipment
fleet with cash generated from operations. Purchases of property, plants and
equipment increased $10.1 million from 1995 and $7.0 million over 1994
primarily reflecting the Company's purchase of the Utah Branch in 1995.
16
<PAGE> 17
During 1996, the Company purchased 10% of T.I.C. Holdings, Inc. for
$8.0 million. The investment was financed under the Company's revolving line
of credit at 6.125% annual interest rate until June 30, 1997 with principal
payable semi-annually beginning December 31, 1998. The Company has an
agreement with T.I.C. Holdings, Inc. to acquire an additional 20% of its
outstanding stock during 1997 for approximately $13.0 million although the
final price is still to be determined. The transaction is expected to be
completed in the second quarter of 1997 and will be financed under the
Company's revolving line of credit.
Dividend payments for 1996 increased $1.8 million over 1995 and $4.2
million over 1994 reflecting the increase during the first quarter of 1996 in
the quarterly dividend amount from $0.05 per share to $0.06 per share plus the
payment of a special dividend of $0.13 per share in the second quarter of 1996.
On March 13, 1997, the Board of Directors declared a special dividend of $0.12
per share of common stock in addition to a $0.06 per share quarterly dividend,
payable on April 18, 1997 to stockholders of record as of March 31, 1997.
On March 13, 1997, the Board of Directors authorized the Company to
repurchase at management's discretion up to 500,000 shares of its own common
stock on the open market. The purchases will be made using the Company's own
cash resources. Shares repurchased will be held in the corporate treasury and
will be used to cover contributions to the current Employee Stock Ownership
Plan or for other corporate purposes.
The Company has budgeted $55.0 million for capital expenditures in
1997, which includes amounts for construction equipment, aggregate and asphalt
plants, buildings, leasehold improvements and the purchase of land and
aggregate reserves. The Company anticipates that cash generated internally and
amounts available under its existing credit facilities, as renegotiated during
1997, will be sufficient to meet its capital and other requirements, including
contributions to employee benefit plans, for the foreseeable future. The
Company currently has access to funds under its revolving credit agreement
which allow borrowings of up to $50.0 million, of which $25.9 million was
available at December 31, 1996.
QUARTERLY RESULTS
The following table sets forth selected unaudited financial
information for the Company for the eight quarters in the period ended December
31, 1996. This information has been prepared on the same basis as the audited
financial statements and, in the opinion of management, contains all
adjustments necessary for a fair presentation thereof.
QUARTERLY FINANCIAL DATA
(Unaudited - In Thousands, Except for Per Share Data)
<TABLE>
<CAPTION>
1996 Quarters Ended Dec. 31 Sept. 30 June 30 March 31
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue $223,905 $302,646 $248,499 $153,749
Gross profit 25,979 40,816 29,218 14,642
As a percent of revenue 11.6% 13.5% 11.8% 9.5%
Net income 2,798 15,053 9,131 366
As a percent of revenue 1.2% 5.0% 3.7% 0.2%
Net income per share $ 0.15 $ 0.83 $ 0.51 $ 0.02
-------- -------- -------- --------
Dividends per share $ 0.06 $ 0.06 $ 0.06 $ 0.19
Market price
High $ 21.25 $ 23.50 $ 27.25 $ 21.83
Low 18.00 18.25 19.00 18.00
-------- -------- -------- --------
</TABLE>
<TABLE>
<CAPTION>
1995 Quarters Ended Dec. 31 Sept. 30 June 30 March 31
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue $256,251 $306,588 $226,684 $105,273
Gross profit 27,998 40,549 29,705 13,711
As a percent of revenue 10.9% 13.2% 13.1% 13.0%
Net income 5,788 13,194 8,332 1,228
As a percent of revenue 2.3% 4.3% 3.7% 1.2%
Net income per share $ 0.32 $ 0.74 $ 0.47 $ 0.07
-------- -------- -------- --------
Dividends per share $ 0.05 $ 0.05 $ 0.15 $ 0.04
Market price
High $ 21.25 $ 18.59 $ 15.25 $ 13.83
Low 17.00 14.25 12.17 12.00
-------- -------- -------- --------
</TABLE>
17
<PAGE> 18
ITEM 8. CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The following consolidated financial statements of the Registrant and
auditor's report are included in Item 8 and appear following Item 14:
Report of Independent Accountants
Consolidated Balance Sheets - At December 31, 1996 and 1995
Consolidated Statements of Income - Years Ended December 31,
1996, 1995 and 1994
Consolidated Statements of Stockholders' Equity - Years Ended
December 31, 1996, 1995 and 1994
Consolidated Statements of Cash Flows - Years Ended December
31, 1996, 1995 and 1994
Notes to Consolidated Financial Statements
Additionally, a two-year Summary of Quarterly Results is included in
Item 7 under "Quarterly Results".
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES
Not applicable.
18
<PAGE> 19
PART III
Certain information required by Part III is omitted from this Report
in that the Company will file its definitive proxy statement (the "Proxy
Statement") pursuant to Regulation 14A not later than 120 days after the end of
the fiscal year covered by this report, and certain information included
therein is incorporated herein by reference.
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
Information relating to the directors of the Company is set forth
under the caption "Information about Granite - Management, Directors" in the
Company's definitive Proxy Statement in connection with the Annual Meeting of
Stockholders to be held May 19, 1997. Such information is incorporated herein
by reference. Information relating to the executive officers of the Company is
set forth in Part I of this report under the caption "Executive Officers of the
Registrant."
ITEM 11. EXECUTIVE COMPENSATION
Information relating to executive compensation is set forth under the
caption "Information about Granite - Compensation of Directors and Executive
Officers" in the Company's definitive Proxy Statement in connection with the
Annual Meeting of Stockholders to be held May 19, 1997. Such information is
incorporated herein by reference.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Information relating to ownership of equity securities of the Company
by certain beneficial owners and Management is set forth under the caption
"Information about Granite - Stock Ownership of Certain Beneficial Owners and
Management" in the Company's definitive Proxy Statement in connection with the
Annual Meeting of Stockholders to be held May 19, 1997. Such information is
incorporated herein by reference.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information relating to certain relationships and related transactions
is set forth under the caption "Information about Granite - Management, Certain
Transactions with Management" in the Company's definitive Proxy Statement in
connection with the Annual Meeting of Stockholders to be held May 19, 1997.
Such information is incorporated herein by reference.
19
<PAGE> 20
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
FORM 8-K
The following documents are filed as part of this Report:
(a) 1. FINANCIAL STATEMENTS. The following consolidated financial
statements are filed as part of this Report:
<TABLE>
<CAPTION>
Form 10-K
Pages
----------
<S> <C>
Report of Independent Accountants . . . . . . . . . . . . . . . . . . . . . F-1
Consolidated Balance Sheets at December 31, 1996 and 1995 . . . . . . . . . F-2
Consolidated Statements of Income for the Years Ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . F-3
Consolidated Statements of Stockholders' Equity for the
Years Ended December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . F-4
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1996, 1995 and 1994 . . . . . . . . . . . . . . . . . . . . F-5
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . F-6 to F-15
</TABLE>
2. FINANCIAL STATEMENT SCHEDULES. The following financial
statement schedule of Granite Construction Incorporated for the years
ended December 31, 1996, 1995 and 1994 is filed as part of this
Report and should be read in conjunction with the consolidated
financial statements of Granite Construction Incorporated.
<TABLE>
<CAPTION>
Form 10-K
Pages
-----------
<S> <C>
Report of Independent Accountants on Financial Statement Schedules . . . . . . . S-1
Schedule
--------
Schedule II - Schedule of Valuation and Qualifying Accounts . . . . . . S-2
</TABLE>
Schedules not listed above have been omitted because the information
required to be set forth therein is not applicable or is shown in the
financial statements or notes thereto.
3. EXHIBITS. The Exhibits listed in the accompanying Exhibit Index
are filed or incorporated by reference as part of this Report.
(b) REPORTS ON FORM 8-K. The registrant was not required to file any
reports on Form 8-K during the fourth quarter of fiscal 1996.
20
<PAGE> 21
INDEPENDENT ACCOUNTANTS' REPORT
To the Stockholders and Board of Directors
Granite Construction Incorporated
Watsonville, California
We have audited the accompanying consolidated balance sheets of Granite
Construction Incorporated and Subsidiaries as of December 31, 1996 and 1995,
and the related consolidated statements of income, stockholders' equity and
cash flows for each of the three years in the period ended December 31, 1996.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Granite
Construction Incorporated and Subsidiaries as of December 31, 1996 and 1995,
and the consolidated results of their operations and their cash flows for each
of the three years in the period ended December 31, 1996 in conformity with
generally accepted accounting principles.
San Jose, California
February 14, 1997, except
Note 12, as to which the
date is March 13, 1997
F-1
<PAGE> 22
GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
DECEMBER 31, 1996 1995
-------- --------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 38,663 $ 22,410
Short-term investments 33,567 44,582
Accounts receivable 124,124 142,055
Costs and estimated earnings in excess of billings 29,494 16,147
Inventories 13,493 10,180
Deferred income taxes 13,060 16,717
Equity in joint ventures 5,371 210
Other current assets 6,033 5,953
-------- --------
Total current assets 263,805 258,254
-------- --------
Property and equipment 178,515 175,220
-------- --------
Other assets 30,725 21,270
-------- --------
$473,045 $454,744
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Current maturities of long-term debt $ 10,186 $ 13,948
Accounts payable 64,058 68,056
Billings in excess of costs and estimated earnings 45,352 43,730
Accrued expenses and other current liabilities 51,667 55,341
-------- --------
Total current liabilities 171,263 181,075
-------- --------
Long-term debt 43,602 39,494
-------- --------
Deferred income taxes 24,575 24,270
-------- --------
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.01 par value, authorized 3,000,000 shares,
none outstanding - -
Common stock, $0.01 par value, authorized 27,000,000 shares;
1996-issued 18,161,611 shares, outstanding 18,121,253 shares;
1995-issued 17,897,018 shares, outstanding 17,884,268 shares 182 179
Additional paid-in capital 37,642 32,715
Retained earnings 201,663 180,341
-------- --------
239,487 213,235
Unearned compensation (5,141) (3,115)
Treasury Stock (741) (215)
-------- --------
233,605 209,905
-------- --------
$473,045 $454,744
======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-2
<PAGE> 23
GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1996 1995 1994
-------- -------- --------
<S> <C> <C> <C>
Revenue $928,799 $894,796 $693,388
Cost of revenue 818,144 782,833 603,400
-------- -------- --------
GROSS PROFIT 110,655 111,963 89,988
General and administrative expenses 71,587 69,610 62,795
-------- -------- --------
OPERATING INCOME 39,068 42,353 27,193
Other income (expense)
Interest income 6,330 6,395 4,332
Interest expense (4,367) (3,443) (2,532)
Gain on sales of property and equipment 3,458 31 1,332
Other, net (1,080) (32) 125
-------- -------- --------
4,341 2,951 3,257
-------- -------- --------
INCOME BEFORE PROVISION FOR INCOME TAXES 43,409 45,304 30,450
Provision for income taxes 16,061 16,762 10,962
-------- -------- --------
NET INCOME $ 27,348 $ 28,542 $ 19,488
======== ======== ========
Net income per share $ 1.51 $ 1.60 $ 1.10
Weighted average shares of common and
common stock equivalents outstanding 18,126 17,820 17,660
Dividends per share $ 0.37 $ 0.29 $ 0.13
======== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-3
<PAGE> 24
GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Additional
Common Paid-in Retained Unearned Treasury
YEARS ENDED DECEMBER 31, 1994, 1995 AND 1996 Stock Capital Earnings Compensation Stock Total
------ -------- -------- ------------ -------- --------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, DECEMBER 31, 1993 $177 $27,856 $138,883 $(2,363) $(215) $164,338
Net income - - 19,488 - - 19,488
Restricted stock issued - 79,706 shares 1 1,287 - (1,288) - -
Amortized restricted stock - - - 1,122 - 1,122
Employee stock options exercised - 8,234 shares - 93 - - - 93
Repurchase of common stock - (990) - - - (990)
Common stock contributed to ESOP - 990 - - - 990
Cash dividends on common stock - - (2,349) - - (2,349)
---- ------- -------- ------- ----- --------
BALANCES, DECEMBER 31, 1994 178 29,236 156,022 (2,529) (215) 182,692
Net income - - 28,542 - - 28,542
Restricted stock issued - 163,611 shares 1 2,134 - (2,135) - -
Amortized restricted stock - - - 1,549 - 1,549
Employee stock options exercised and
related tax benefit - 98,517 shares 1,345 - - - 1,345
Repurchase of common stock - (762) - - - (762)
Common stock contributed to ESOP - 762 - - - 762
Cash dividends on common stock - (5,049) - - (5,049)
Tax benefit from ESOP dividends - - 826 - - 826
---- ------- -------- ------- ----- --------
BALANCES, DECEMBER 31, 1995 179 32,715 180,341 (3,115) (215) 209,905
Net income - - 27,348 - - 27,348
Restricted stock issued - 182,089 shares, net 1 3,993 - (3,994) - -
Purchase of treasury stock - 27,608 shares - - - - (526) (526)
Amortized restricted stock - - - 1,968 - 1,968
Employee stock options exercised and
related tax benefit- 59,350 shares 2 934 - - - 936
Repurchase of common stock - (1,550) - - - (1,550)
Common stock contributed to ESOP - 1,550 - - - 1,550
Cash dividends on common stock - - (6,760) - - (6,760)
Tax benefit from ESOP dividends - - 734 - - 734
---- ------- -------- ------- ----- --------
BALANCES, DECEMBER 31, 1996 $182 $37,642 $201,663 $(5,141) (741) $233,605
==== ======= ======== ======= ===== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-4
<PAGE> 25
GRANITE CONSTRUCTION INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1996 1995 1994
-------------- -------------- --------------
<S> <C> <C> <C>
Operating Activities
Net income $ 27,348 $ 28,542 $ 19,488
Add (deduct) noncash items included in net income:
Depreciation, depletion and amortization 37,775 32,481 25,723
Gain on sales of property and equipment (3,458) (31) (1,332)
Deferred income taxes 3,962 (5,825) 3,442
Decrease in unearned compensation 1,968 1,549 1,122
Cash provided by (used in):
Accounts and notes receivable 15,990 (24,092) (12,141)
Inventories (3,313) 1,541 (741)
Equity in joint ventures (5,161) 3,225 (3,108)
Other assets (277) (1,239) 2,127
Accounts payable (3,998) 17,483 6,484
Billings in excess of costs and estimated
earnings, net (9,739) 11,684 (431)
Accrued expenses (2,871) 3,542 7,525
-------------- -------------- --------------
Net cash provided by operating activities 58,226 68,860 48,158
-------------- -------------- --------------
Investing Activities
Additions to property and equipment (46,139) (36,006) (39,098)
Proceeds from sales of property and equipment 8,027 3,364 5,506
Acquisition, net of cash acquired - (1,280) -
Investment in TIC Holdings, Inc. - 10% (8,022) - -
Additions to notes receivable (874) (1,083) (1,018)
Repayments of notes receivable 618 1,588 687
Additions to investments and other assets (525) (1,967) (950)
Purchases of short-term investments (45,639) (56,324) (54,184)
Maturities of short-term investments 56,654 42,731 51,108
-------------- -------------- --------------
Net cash used by investing activities (35,900) (48,977) (37,949)
-------------- -------------- --------------
Financing Activities
Additions to long-term debt 15,000 - -
Repayments of long-term debt (14,654) (11,497) (11,204)
Employee stock options exercised 673 1,117 93
Purchase of Treasury Stock (526) - -
Dividends paid (6,566) (4,742) (2,346)
-------------- -------------- --------------
Net cash used by financing activities (6,073) (15,122) (13,457)
-------------- -------------- --------------
Increase (decrease) in cash and cash equivalents 16,253 4,761 (3,248)
Cash and cash equivalents at beginning of year 22,410 17,649 20,897
-------------- -------------- --------------
Cash and cash equivalents at end of year $ 38,663 $ 22,410 $ 17,649
============= ============= ============
Supplementary Information
Cash paid during the year for:
Interest $ 4,367 $ 3,445 $ 2,534
Income taxes 10,258 20,040 16,253
Noncash investing and financing activity:
Financed acquisition of Gibbons Company $ - $ 31,750 $ -
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE> 26
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
DESCRIPTION OF BUSINESS: The accompanying consolidated financial
statements include the accounts of the Company and its wholly-owned
subsidiaries. All significant intercompany transactions and accounts have been
eliminated.
The Company is a heavy civil contractor engaged in the construction of
highways, dams, airports, mass transit facilities, real estate site
developments and other infrastructure related projects. The Company has
offices in California, Texas, Georgia, Nevada, Arizona and Utah.
USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS: The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
CONSTRUCTION CONTRACTS: Earnings on construction contracts including
construction joint ventures are recognized on the percentage of completion
method in the ratio of costs incurred to estimated final costs. Revenue in an
amount equal to cost incurred is recognized prior to contracts reaching 25%
completion. The related earnings are not recognized until the period in which
such percentage completion is attained. Revisions in contract revenue and cost
estimates are reflected in the accounting period when known. Provision for the
entire amount of estimated losses on uncompleted contracts is made in the
period such losses are determined. Claims for additional contract revenue are
recognized to the extent of costs incurred if it is probable that the claim
will result in additional revenue and the amount can be reliably estimated.
EQUITY IN JOINT VENTURES: Investments in joint ventures are accounted for
by the equity method. The Company's proportionate share of joint venture
revenue, cost of revenue and operating income is included in the consolidated
statements of income.
BALANCE SHEET CLASSIFICATIONS: The Company includes in current assets and
liabilities amounts receivable and payable under construction contracts which
may extend beyond one year. A one-year time period is used as the basis for
classifying all other current assets and liabilities.
CASH AND CASH EQUIVALENTS: Cash equivalents are securities held for cash
management purposes having maturities of three months or less from the date of
purchase.
SHORT-TERM INVESTMENTS: Short-term investments that are deemed by
management to be held-to-maturity are reported at amortized cost. Short-term
investments that are considered available-for-sale are carried at market value.
Unrealized gains and losses, if material, are reported net of tax as a separate
component of stockholders' equity until realized. Realized gains and losses,
if any, are determined using the specific identification method.
FINANCIAL INSTRUMENTS: The carrying value of short-term investments
approximates their fair value as determined by market quotes. All significant
debt obligations carry variable interest rates and their carrying value is
considered to approximate fair value. The carrying value of receivables and
other amounts arising out of normal contract activities, including retentions
which may be settled beyond one year, is estimated to approximate fair value.
INVENTORIES: Inventories consist primarily of quarry products valued at
the lower of average cost or market.
F-6
<PAGE> 27
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
PROPERTY AND EQUIPMENT: Property and equipment are stated at cost.
Depreciation is provided using accelerated methods for construction equipment
and the straight-line method for the remaining depreciable assets. Depletion
of quarry property is based on the usage of depletable reserves. The cost and
accumulated depreciation and depletion of property sold or retired are removed
from the accounts and gains or losses, if any, are reflected in earnings for
the period.
INTANGIBLE ASSETS: Intangible assets consist primarily of covenants not
to compete amortized on a straight-line basis over five years.
INCOME TAXES: Deferred taxes are provided on a liability method whereby
deferred tax assets are recognized for deductible temporary differences and
operating loss carryforwards and deferred tax liabilities are recognized for
taxable temporary differences. Temporary differences are the differences
between the reported amounts of assets and liabilities and their tax bases.
Deferred tax assets are reduced by a valuation allowance when, in the opinion
of management, it is more likely than not that some portion or all of the
deferred tax assets will not be realized. Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of
enactment.
COMPUTATION OF EARNINGS PER SHARE: Earnings per share computations are
based on the weighted average common and common equivalent shares outstanding
during each period. Common equivalent shares include the dilution from the
potential exercise of stock options when the effect is dilutive.
STOCK SPLIT: On March 5, 1996, the Board of Directors approved a three
for two stock split in the form of a 50% stock dividend payable on April 19,
1996. All references in the financial statements to number of shares, per
share amounts and market prices have been retroactively restated to reflect the
stock split. In addition, an amount equal to the $0.01 par value of the shares
outstanding after the split has been transferred from additional paid in
capital to common stock.
RECLASSIFICATIONS: Certain financial statement items have been
reclassified to conform to the current year's format.
F-7
<PAGE> 28
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
2. SHORT-TERM INVESTMENTS
The carrying and market values of short-term investments are as follows at
December 31, 1996 and 1995:
<TABLE>
<CAPTION>
Held-To-Maturity Held-To-Maturity
December 31, 1996 December 31, 1995
Carrying Unrealized Unrealized Fair Carrying Unrealized Unrealized Fair
Value Gains Losses Value Value Gains Losses Value
------------------------------------------- --------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Government and
Agency Obligations $ 2,993 $ - $ - $ 2,993 $ 8,938 $ 6 $ - $ 8,944
Commercial Paper 3,977 - - 3,977 10,897 3 (6) 10,894
Municipal Bonds 6,011 6 - 6,017 2,012 4 - 2,016
Foreign Banker's
Acceptances 7,420 1 - 7,421 8,703 2 - 8,705
Domestic Banker's
Acceptances - - - - 1,996 4 - 2,000
------------------------------------------- --------------------------------------------
20,401 7 - 20,408 32,546 19 (6) 32,559
=========================================== ============================================
</TABLE>
<TABLE>
<CAPTION>
Available-For-Sale Available-For-Sale
December 31, 1996 December 31, 1995
Carrying Unrealized Unrealized Fair Carrying Unrealized Unrealized Fair
Value Gains Losses Value Value Gains Losses Value
------------------------------------------- ----------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
U.S. Government and
Agency Obligations 9,146 3 (14) 9,135 4,859 45 - 4,904
Municipal Bonds 4,020 23 - 4,043 5,226 74 (32) 5,268
Foreign Banker's
Acceptances - - - - - - - -
Domestic Banker's
Acceptances - - - - 1,951 13 - 1,964
------------------------------------------- -----------------------------------------------
13,166 26 (14) 13,178 12,036 132 (32) 12,136
------------------------------------------- -----------------------------------------------
Total Short-Term
Investments $33,567 $ 33 $(14) $33,586 $44,582 $151 $ (38) $44,695
=========================================== ===============================================
</TABLE>
There were no sales of investments classified as available-for-sale for
the year ended December 31, 1996. At December 31, 1996, scheduled
maturities of investments are as follows:
<TABLE>
<CAPTION>
Held-To- Available-
Maturity For-Sale Total
---------------------------------------------
<S> <C> <C> <C>
Within one year $20,401 $ 5,117 $25,518
After one year through five
years - 8,049 8,049
---------------------------------------------
$20,401 $13,166 $33,567
=============================================
</TABLE>
For the years ended December 31, 1996 and 1995, purchases and
maturities were as follows:
<TABLE>
<CAPTION>
Held-To- Available Held-To- Available
Maturity For Sale Total Maturity For Sale Total
----------------------------------- ---------------------------------
<S> <C> <C> <C> <C> <C> <C>
Purchases $ 35,315 $ 10,324 $ 45,639 $43,751 $ 12,573 $56,324
Maturities 43,300 13,354 56,654 27,900 14,831 42,731
----------------------------------- ---------------------------------
Net change $ (7,985) $ (3,030) $(11,015) $15,851 $ (2,258) $13,593
=================================== =================================
</TABLE>
F-8
<PAGE> 29
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
3. ACCOUNTS RECEIVABLE
<TABLE>
<CAPTION>
DECEMBER 31, 1996 1995
---------------------------
<S> <C> <C>
Construction Contracts
Completed and in progress $ 59,764 $ 81,240
Retentions 47,956 41,777
---------------------------
107,720 123,017
Construction material sales 12,651 12,380
Other 4,446 7,556
---------------------------
124,817 142,953
Less allowance for doubtful
accounts 693 898
---------------------------
$124,124 $142,055
===========================
</TABLE>
The balances billed but not paid by customers pursuant to retainage provisions
in construction contracts generally become due upon completion of the
contracts and acceptance by the owners. Retainage amounts at December 31,
1996 are expected to be collected as follows: $38,470 in 1997; $6,507 in 1998;
$191 in 1999 and $2,788 in 2000.
4. INVESTMENTS AND EQUITY IN JOINT VENTURES
The Company participates in various construction joint venture
partnerships. Generally, each construction joint venture is formed to
accomplish a specific project and is dissolved upon completion of the project.
The combined assets, liabilities and net assets of these ventures are as
follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 1995
-----------------------------
<S> <C> <C>
Assets
Total $96,760 $125,019
Less other venturers' interest 69,175 87,513
-----------------------------
Company's interest 27,585 37,506
-----------------------------
Liabilities
Total 75,408 124,319
Less other venturers' interest 53,194 87,023
-----------------------------
Company's interest 22,214 37,296
-----------------------------
Company's interest in net assets $ 5,371 $ 210
=============================
</TABLE>
F-9
<PAGE> 30
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
4. INVESTMENTS AND EQUITY IN JOINT VENTURES, CONTINUED
The revenue and costs of revenue of joint ventures are as follows:
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1996 1995 1994
---------------------------------------
<S> <C> <C> <C>
Revenue
Total $234,824 $321,388 $160,865
Less other venturers' interest 164,676 224,972 112,606
---------------------------------------
Company's interest 70,148 96,416 48,259
---------------------------------------
Cost of Revenue
Total 160,056 267,650 145,351
Less other venturers' interest 112,313 187,355 101,746
---------------------------------------
Company's interest 47,743 80,295 43,605
---------------------------------------
$ 22,405 $ 16,121 $ 4,654
=======================================
</TABLE>
Additionally, the Company has a 22.2% limited partnership interest in a
partnership which constructed and operates a private toll road. At December
31, 1996 the Company's investment was $2,600 plus a commitment supported by a
letter of credit for $3,800. The Company completed construction under the
contract in 1995 and is participating in the operating results of the tollroad.
5. PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31, 1996 1995
--------------------------
<S> <C> <C>
Land $ 15,328 $ 14,019
Quarry property 34,408 35,194
Buildings and leasehold
improvements 12,973 11,657
Equipment and vehicles 388,697 361,676
Office furniture and equipment 5,485 4,570
--------------------------
456,891 427,116
Less accumulated depreciation,
depletion and amortization 278,376 251,896
--------------------------
$178,515 $175,220
==========================
</TABLE>
6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1996 1995
--------------------------
<S> <C> <C>
Payroll and related employee
benefits $21,627 $21,371
Accrued insurance 19,997 19,957
Income taxes 53 2,425
Other 9,990 11,588
--------------------------
$51,667 $55,341
==========================
</TABLE>
F-10
<PAGE> 31
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
7. LONG-TERM DEBT AND CREDIT ARRANGEMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996 1995
-------------------------
<S> <C> <C>
Bank revolving credit notes $ 18,000 $ 3,000
Notes payable to bank 35,000 48,133
Other notes payable 788 2,309
-------------------------
53,788 53,442
Less current maturities 10,186 13,948
-------------------------
$43,602 $39,494
=========================
</TABLE>
The aggregate minimum principal maturities of long-term debt for each of the
five years following December 31, 1996 are as follows: 1997 - $10,186; 1998 -
$12,135; 1999 - $13,607; 2000 - $8,860; and 2001 - $3,600.
The Company has a bank revolving line of credit of $50,000 which
allows for unsecured borrowings for up to five years through June 30, 1998,
with interest rate options. Outstanding borrowings under the revolving line of
credit at December 31, 1996 are at the IBOR interest rate plus margin (6.143%
weighted average at December 31, 1996) with principal payable semiannually
beginning December 1998 through June 2003 and interest payable quarterly.
The Company has standby letters of credit totaling approximately
$10,000 outstanding at December 31, 1996 of which $6,100 reduces the amount
available under the line of credit and $3,800 supports the commitment by the
Company related to its investment in a limited partnership. The unused and
available portion of the line of credit at December 31, 1996 was $25,859.
Notes payable to bank are unsecured with principal payable
semiannually and interest payable quarterly at primarily the IBOR rate plus
margin (6.262% at December 31, 1996) through June 2000.
Restrictive covenants under the terms of the debt agreements include
the maintenance of certain levels of working capital and cash flow. Other
covenants prohibit capital expenditures in excess of specified limits and
require the maintenance of tangible net worth (as defined) of approximately
$174,000.
8. EMPLOYEE BENEFIT AND COMPENSATION PLANS
EMPLOYEE STOCK OWNERSHIP PLAN: The Company's Employee Stock Ownership
Plan ("ESOP") covers all employees not included in collective bargaining
agreements. As of December 31, 1996, the ESOP owned 5,780,211 shares of the
Company's common stock. Dividends on shares held by the ESOP are charged to
retained earnings and all shares held by the ESOP are treated as outstanding in
computing the Company's earnings per share.
Contributions to the ESOP are at the discretion of the Board of
Directors. Contributions for the years ended December 31, 1996, 1995 and 1994
were approximately $1,550, $762 and $990, respectively.
F-11
<PAGE> 32
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
8. EMPLOYEE BENEFIT AND COMPENSATION PLANS, CONTINUED
PROFIT SHARING PLAN: The Profit Sharing Plan is a defined
contribution plan covering all employees not included in collective bargaining
agreements. The plan receives annual contributions at the discretion of the
Board of Directors. On January 1, 1995, the Company amended the Profit Sharing
Plan to create the Granite Construction Profit Sharing and 401K Plan, beginning
for the year ended December 31, 1995. The amended plan is also a defined
contribution plan covering all employees not included in collective bargaining
agreements. Each employee can elect to have up to 3% of gross pay contributed
to the plan on a before-tax basis. The plan allows for Company matching and
additional contributions at the discretion of the Board of Directors.
Contributions to the Profit Sharing Plan for the years ended December
31, 1996 and 1995 were $4,608 and $5,681, respectively. Included in the 1996
contributions were 401K matching contributions of $1,196. There was no
contribution for the year ended December 31, 1994.
1990 OMNIBUS STOCK AND INCENTIVE PLAN: Under the Company's 1990
Omnibus Stock and Incentive Plan (the "Stock Plan") a total of 1,000,000 shares
of the Company's common stock are reserved to grant key employees of the
Company restricted common stock, incentive and nonqualified stock options,
performance units and performance shares. Restricted common stock is issued
for services to be rendered and may not be sold, transferred or pledged for
such period as determined by the compensation committee.
Restricted shares outstanding under the Plan at December 31, 1996 were
594,667 shares. Unearned compensation is amortized over the restriction
periods of generally five years. Compensation expense related to restricted
shares for the years ended December 31, 1996, 1995 and 1994 was $1,968, $1,549
and $1,122, respectively.
The exercise price for incentive and nonqualified stock options
granted under the Stock Plan may not be less than 100% and 85%, respectively,
of the fair market value at the date of the grant. Options granted will be
exercisable at such times and be subject to such restrictions and conditions,
as determined by the compensation committee, but no option shall be exercisable
later than ten years from the date of grant. Options generally vest one third
after 3 years of service from the date of grant and one third during each of
the following two years. Stock option transactions during 1996, 1995 and 1994
are summarized as follows:
<TABLE>
<CAPTION>
December 31, 1996 1995 1994
--------------------------------------
<S> <C> <C> <C>
Options outstanding, beginning of year 186,000 284,517 296,501
Options exercised (59,350) (98,517) (8,234)
Options canceled - - (3,750)
--------------------------------------
Options outstanding, end of year 126,650 186,000 284,517
======================================
</TABLE>
At December 31, 1996, all options are 100% vested. All shares have
been granted, exercised and canceled at $11.00 per share.
OTHER: The Company also contributes to various multi-employer pension
plans on behalf of union employees. Contributions to these plans for the years
ended December 31, 1996, 1995 and 1994 were approximately $10,406, $10,705 and
$9,200 respectively.
F-12
<PAGE> 33
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
9. INCOME TAXES
Provision for income taxes:
<TABLE>
<CAPTION>
Years Ended December 31, 1996 1995 1994
----------------------------------------
<S> <C> <C> <C>
Federal
Current $ 9,727 $18,785 $ 6,113
Deferred 3,470 (5,108) 2,769
----------------------------------------
13,197 13,677 8,882
----------------------------------------
State
Current 2,372 3,802 1,407
Deferred 492 (717) 673
----------------------------------------
2,864 3,085 2,080
----------------------------------------
$16,061 $16,762 $10,962
========================================
</TABLE>
Reconciliation of statutory to effective tax rate:
<TABLE>
<CAPTION>
Years Ended December 31, 1996 1995 1994
-------------------------------------
<S> <C> <C> <C>
Federal statutory tax rate 35.0 % 35.0 % 35.0 %
State taxes, net of federal tax benefit 4.3 4.4 4.4
Percentage depletion deduction (1.3) (1.3) (3.4)
Other (1.0) (1.1) -
-------------------------------------
37.0 % 37.0 % 36.0 %
======================================
</TABLE>
Deferred tax assets and liabilities:
<TABLE>
<CAPTION>
DECEMBER 31, 1996 1995
-------------------------
<S> <C> <C>
DEFERRED TAX ASSETS:
Accounts receivable $ 2,041 $ 1,581
Inventory 1,050 788
Property and equipment 2,319 2,429
Insurance accruals 7,529 7,222
Deferred compensation 1,879 1,851
Contract recognition (240) 4,011
Other accrued liabilities 3,012 2,866
Other 613 1,192
Valuation allowance - -
-------------------------
18,203 21,940
-------------------------
DEFERRED TAX LIABILITIES:
Property and equipment 28,553 28,032
Contract recognition (41) 484
Other 1,206 890
-------------------------
29,718 29,406
-------------------------
$(11,515) $(7,466)
=========================
</TABLE>
F-13
<PAGE> 34
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
10. DISCLOSURE OF SIGNIFICANT RISKS AND UNCERTAINTIES
DISCLOSURE OF SIGNIFICANT ESTIMATES - REVENUE RECOGNITION: As
outlined in the Summary of Significant Accounting Policies, the Company's
construction revenue is recognized on the percentage of completion basis.
Consequently, construction revenue and gross margin for each reporting period
is determined on a contract by contract basis by reference to estimates by the
Company's engineers of expected costs to be incurred to complete each project.
These estimates include provisions for known and anticipated cost overruns, if
any exist or are expected to occur. These estimates may be subject to revision
in the normal course of business.
DISCLOSURE OF SIGNIFICANT ESTIMATES - LITIGATION: The Company has
been named as defendants in legal proceedings wherein substantial damages are
claimed. Such proceedings are not uncommon in the Company's business and
usually involve claims against multiple defendants who were involved in the
project which is the subject of the proceeding. Historically, the Company has
been successful in defending such actions or have settled them within insured
limits.
CONCENTRATIONS: The Company maintains the majority of cash balances
and all of its short-term investments with ten financial institutions. The
Company invests with high credit quality financial institutions, and, by
policy, limits the amount of credit exposure to any financial institution.
Substantially all of the Company's labor force is subject to collective
bargaining agreements. Collective bargaining agreements covering 35.2% of the
Company's labor force at December 31, 1996 will expire during 1997.
The Company operates in a single industry segment encompassing the
construction of infrastructure assets and has no foreign operations. Revenue
received from federal, state and local government agencies amounted to $657,247
(70.8%) in 1996, $674,640 (75.4%) in 1995 and $547,642 (79.0%) in 1994. One
customer, California Department of Transportation, represented $104,171 (11.2%)
in 1996, $88,970 (9.9%) in 1995 and $88,262 (12.7%) in 1994 of total revenue.
During the year and at December 31, 1996, the Company had significant amounts
receivable from these agencies and customer. The Company performs ongoing
credit evaluations of its customers and generally does not require collateral
although the law provides the Company the ability to file mechanics liens on
real property improved for private customers in the event of non- payment by
such customers. The Company maintains reserves for potential credit losses and
such losses have been within management's expectations.
11. LEASES
Minimum rental commitments under all noncancellable operating leases,
primarily quarry property and construction equipment, in effect at December 31,
1996 were:
<TABLE>
<CAPTION>
Years Ending December 31,
<S> <C>
1997 $ 3,206
1998 2,710
1999 1,478
2000 832
2001 411
Later years (through 2039) 3,570
-------
Total minimum rental commitment $12,207
=======
</TABLE>
Operating lease rental expense was $3,593 in 1996, $4,261 in 1995 and
$2,299 in 1994.
F-14
<PAGE> 35
GRANITE CONSTRUCTION INCORPORATED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
12. SUBSEQUENT EVENT
On March 13, 1997, the Board of Directors declared a cash dividend of
$0.06 plus a one-time special cash dividend of $0.12 per share of common stock
to stockholders of record as of March 31, 1997, payable on April 18, 1997.
F-15
<PAGE> 36
REPORT OF INDEPENDENT ACCOUNTANTS
To the Stockholders and Board of Directors
Granite Construction Incorporated
Watsonville, California
Our report on the consolidated financial statements of Granite Construction
Incorporated is included on page F-1 of this 10-K. In connection with our
audits of such financial statements, we have also audited the related financial
statement schedule listed in the index on page 20 of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
San Jose, California
February 14, 1997, except
Note 12, as to which the
date is March 13, 1997
S-1
<PAGE> 37
SCHEDULE II
GRANITE CONSTRUCTION INCORPORATED
--------
SCHEDULE OF VALUATION AND QUALIFYING ACCOUNTS
(In Thousands of Dollars)
<TABLE>
<CAPTION>
ADDITIONS
-------------------------
BALANCE AT ADJUSTMENTS BALANCE AT
BEGINNING BAD DEBT AND END OF
DESCRIPTION OF YEAR EXPENSE COLLECTIONS DEDUCTIONS(1) PERIOD
- ------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
YEAR ENDED DECEMBER 31, 1996
Allowance for doubtful accounts......... $ 898 $3,614 $1,576 $(5,395) $693
============================================================================
Allowance for notes receivable.......... $ 68 $ - $ - $ - $ 68
============================================================================
YEAR ENDED DECEMBER 31, 1995
Allowance for doubtful accounts(2)...... $ 655 $ 743 $ 531 $(1,031) $898
============================================================================
Allowance for notes receivable.......... $ 309 $ 68 $ (309) $ - $ 68
============================================================================
YEAR ENDED DECEMBER 31, 1994
Allowance for doubtful accounts......... $ 698 $ 178 $ 662 $ (883) $655
============================================================================
Allowance for notes receivable.......... $ - $ 309 $ - $ - $309
============================================================================
YEAR ENDED DECEMBER 31, 1993
Allowance for doubtful accounts......... $ 592 $ 17 $1,435 $(1,346) $698
============================================================================
</TABLE>
(1) Accounts deemed to be uncollectible and (2) $542 of adjustments
related to the acquisition of Gibbons and Reed.
S-2
<PAGE> 38
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of Granite Construction Incorporated on Form S-8 (File No. 33-36482
and 33-36485) of our report dated February 14, 1996 (except Note 12, as to
which the date is March 13, 1997) on our audits of the consolidated financial
statements and the financial statement schedule of Granite Construction
Incorporated, as of December 31, 1996 and 1995, and the years ended December
31, 1996, 1995 and 1994, which report is included in the Annual Report on Form
10-K on Page F-1.
San Jose, California
March 20, 1997
S-3
<PAGE> 39
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Date: March 20, 1997 GRANITE CONSTRUCTION INCORPORATED
By: /s/ William E. Barton
-----------------------------------
[William E. Barton, Vice President
and Chief Financial Officer]
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed below on March 20, 1997, by the following persons in the
capacities indicated.
<TABLE>
<S> <C>
/s/ Richard C. Solari Chairman of the Board
- ----------------------------------- and Director
[Richard C. Solari]
/s/ David H. Watts President, Chief Executive Officer,
- ----------------------------------- and Director
[David H. Watts]
/s/ William E. Barton Vice President and Chief Financial Officer
- ----------------------------------- [Principal Accounting and Financial Officer]
[William E. Barton]
/s/ Joseph J. Barclay Director
- -----------------------------------
[Joseph J. Barclay]
/s/ Richard M. Brooks Director
- -----------------------------------
[Richard M. Brooks]
/s/ Brian C. Kelly Director
- -----------------------------------
[Brian C. Kelly]
/s/ Rebecca A. McDonald Director
- -----------------------------------
[Rebecca A. McDonald]
/s/ Denman K. McNear Director
- -----------------------------------
[Denman K. McNear]
/s/ Raymond E. Miles Director
- -----------------------------------
[Raymond E. Miles]
</TABLE>
22
<PAGE> 40
INDEX TO FORM 10-K EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
No. Description No.
- ------- ----------- -----
<S> <C> <C>
3.1 Certificate of Incorporation of Granite Construction Incorporated [a]
3.2 Bylaws of Granite Construction Incorporated (as amended and restated effective
February 27, 1991) [b]
10.1 Granite Construction Incorporated Employee Stock Ownership Plan, through amendments
and Trust Agreement (**as to Trust Agreements only) [b]
10.1.a Amendment 3 to the Granite Construction Incorporated Employee Stock Ownership Plan,
through amendments and Trust Agreement (**as to Trust Agreements only) [c]
10.1.b Amendment 4 to the Granite Construction Incorporated Employee Stock Ownership Plan
as of May 21, 1993 [d]
10.1.c Amendment 5 to the Granite Construction Incorporated Employee Stock Ownership Plan
adopted December 16, 1993 and effective January 1, 1994 [d]
10.1.d Amendment 6 to the Granite Construction Incorporated Employee Stock Ownership Plan
adopted December 15, 1994 and effective January 1, 1995 [e]
10.1.e Amendment 7 to Granite Construction Incorporated Employee Stock Ownership Plan and
Amendment 1 to the Trust Agreement adopted December 19, 1995, effective January 1, 1996 [g]
10.2 Amendment to and Restatement of the Granite Construction Company Profit Sharing and
401K Plan adopted December 15, 1994 and effective January 1, 1995 [e]
10.2.a Amendment to and Restatement of Granite Construction Incorporated Profit Sharing and
401K Plan and Trust Agreement adopted and effective as of December 15, 1994 [e]
10.2.b Amendment 2 to the Granite Construction Incorporated Profit Sharing and 401K Plan and
Amendment 2 to the Trust Agreement adopted March 20, 1995 and effective January 1, 1996 [g]
10.2.c Amendment 3 to the Granite Construction Incorporated Profit Sharing and 401K Plan adopted
August 23, 1996 and effective January 1, 1997 25
10.3 1995 Granite Construction Company Incentive Compensation Plan [g]
10.4 Restated and Amended Granite Construction Incorporated 1990 Omnibus Stock and
Incentive Plan effective December 31, 1994 [g]
10.5 Second Amended and Restated Credit Agreement dated and effective June 15, 1995 [g]
10.5.a First Amendment to the Second Amended and Restated Credit Agreement adopted
May 31, 1996 and effective June 30, 1996 28
10.5.b Second Amendment to the Second Amended and Restated Credit Agreement adopted and
effective December 31, 1996 38
10.6 Form of Director and Officer Indemnification Agreement [a]
</TABLE>
S-23
<PAGE> 41
<TABLE>
<S> <C> <C>
10.7 Form of Executive Officer Employment Agreement [a]
10.8 Stock Purchase Agreement among Granite Construction Incorporated, Gibbons
Company and all of the Shareholders of Gibbons Company, dated March 17, 1995 [f]
10.9 Restated Gibbons Company Profit Sharing and Retirement Plan adopted December
30, 1994 and effective January 1, 1989 47
10.9.a First Amendment to the Restated Gibbons Company Profit Sharing and Retirement Plan
adopted March 29, 1995 and effective January 1, 1989 151
10.9.b Second Amendment to the Restated Gibbons Company Profit Sharing and Retirement Plan
adopted April 27, 1995 and effective May 8, 1995 and May 31, 1995 159
10.9.c Third Amendment to the restated Gibbons Company Profit Sharing and Retirement Plan
adopted June 23, 1995 and effective July 1, 1995 161
10.9.d Fourth Amendment to the Restated Gibbons Company Profit Sharing and Retirement Plan
adopted December 1, 1995 163
10.9.e Fifth Amendment to the Restated Gibbons Company Profit Sharing and Retirement Plan
adopted July 16, 1996 and effective January 1, 1995 165
10.10 Granite Construction Incorporated Key Management Deferred Compensation Plan
adopted and effective January 1, 1996 167
10.11 Granite Construction Incorporated Key Management Deferred Incentive Compensation
Plan adopted and effective January 1, 1996 173
11.1 Computation of Net Income per Share 179
21.1 List of Subsidiaries of Granite Construction Incorporated 180
24.1 Consent of Coopers & Lybrand L.L.P. is contained on page 21 of this Report
</TABLE>
[A] Incorporated by reference to the exhibits filed with the Company's
Registration Statement on Form S-1 (No. 33-33795).
[B] Incorporated by reference to the exhibits filed with the Company's
Form 10-K for the year ended December 31, 1991.
[C] Incorporated by reference to the exhibits filed with the Company's
Form 10-K for the year ended December 31, 1992.
[D] Incorporated by reference to the exhibits filed with the Company's
Form 10-K for the year ended December 31, 1993.
[E] Incorporated by reference to the exhibits filed with the Company's
Form 10-K for the year ended December 31, 1994.
[F] Incorporated by reference to the exhibits filed with the Company's 8-K
dated May 8, 1995.
[G] Incorporated by reference to the exhibits filed with the Company's
10-K for the year ended December 31, 1995.
S-24
<PAGE> 1
GRANITE CONSTRUCTION
PROFIT SHARING AND 401(k) PLAN
Amendment No. 3 to Amended and Restated Plan
WHEREAS, Granite Construction Incorporated ("Granite") maintains the
Granite Construction Profit Sharing and 401(k) Plan (the "Plan") for the
benefit of eligible employees of Granite and its subsidiaries and affiliates;
and
WHEREAS, it is desirable to amend the provisions of the Plan to
provide that participants may direct the investment of their Profit Sharing
Accounts;
NOW, THEREFORE, the Plan is hereby amended as follows effective as of
January 1, 1997:
1. Section 5(a) is amended by restating the first paragraph
thereof to read as follows:
(a) Each Participant shall direct the investment of his
401(k) Account, Matching Account, Profit Sharing Account, QNEC/QMAC
Account, Rollover Account and ESOP Diversification Account, if any,
among such investment funds as the Committee shall from time to time
cause to be made available, including a fund consisting of Stock (the
"Stock Fund").
2. Section 6 is amended to read as follows:
Profit Sharing Account - A Profit Sharing Account shall be
maintained to reflect the interest of each Participant under the Plan
who is eligible to receive Profit Sharing Contributions or who had a
prior profit sharing account under the Plan. The
25
<PAGE> 2
Profit Sharing Account maintained for a Participant shall be credited,
as of the date received with respect to the prior Allocation Date,
with his share of any Profit Sharing Contributions and related
Forfeitures. The Profit Sharing Account shall be credited throughout
each Plan Year with its share of the net income (or loss) of the
Trust. Subaccounts of the Profit Sharing Account may be maintained to
reflect the portion of the Profit Sharing Account invested in each
investment fund.
3. Section 6(f) is amended to read as follows:
(f) Net Income (or Loss) of the Trust - The net income
(or loss) of the Trust for each Plan Year attributable to
Participants' 401(k) Accounts, Matching Accounts, Profit Sharing
Accounts, QNEC/QMAC Accounts, Rollover Accounts and ESOP
Diversification Accounts shall be determined separately on a daily
basis for each investment fund and allocated among such Accounts in
proportion to the respective balances of such Accounts invested in
such funds.
4. Section 12(d) is amended to read as follows:
(d) If a Participant's Capital Accumulation is retained in the
Trust after his Service ends, his Accounts shall continue to be treated as
described in Section 6 and he shall continue to be able to direct the
investment of his 401(k) Account, vested Matching Account, vested Profit
Sharing Account, QNEC/QMAC Account, Rollover Account and ESOP Diversification
Account in accordance with Section 5. However, except as otherwise provided in
Section 3 (b), his Accounts shall not be credited with any additional Employer
Contributions and Forfeitures.
If a Participant's Service terminates and he does not have any vested
and nonforfeitable interest in his Matching Account or his Profit Sharing
Account, the Participant shall continue to direct the Trustee as to the
investment of such Accounts until the date such Participant becomes eligible to
receive a Plan distribution in accordance with Sections 12(b)
26
<PAGE> 3
(1) or (2). After such date, the Committee shall direct the Trustee as to the
investment of such Accounts.
5. Section 14(c) is amended restating subparagraph (4) thereof to
read as follows:
(4) selecting the investment funds to be offered to
Participants for investment of their 401(k) Matching,
Profit Sharing, QNEC/QMAC, Rollover and ESOP
Diversification Accounts;
6. Section 14(d) is amended by restating the second sentence
thereof to read as follows:
A Participant's Accounts may be charged with any expenses that are
incurred by the Participant in connection with any investment
transaction with respect to the Participant's 401(k), Matching, Profit
Sharing, QNEC/QMAC, Rollover or ESOP Diversification Accounts.
To record the adoption of this Amendment No. 3 to the amended and
restated Plan, Granite Construction Incorporated has caused it to be executed
this 23 day of August, 1996.
GRANITE CONSTRUCTION INCORPORATED
By __________________________________________
David H. Watts, President & CEO
By __________________________________________
William E. Barton, Vice President & CFO
27
<PAGE> 1
FIRST AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT
(the "Amendment"), dated as of May 31, 1996, effective on June 30, 1996, is
entered into by and among GRANITE CONSTRUCTION INCORPORATED the "Company", BANK
OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, as agent for itself and the
Banks (the "Agent"), and the several financial institutions party to the Credit
Agreement (collectively, the "Banks").
RECITALS
A. The Company, Banks, and Agent are parties to a Second Amended
and Restated Credit Agreement dated as of June 15, 1995 (the "Credit
Agreement") pursuant to which the Agent and the Banks have extended certain
credit facilities to the Company.
B. Pursuant to Section 2.15 of the Credit Agreement, the
Revolving Termination Date has been extended to June 30, 1998.
C. The Company has requested that the Banks agree to certain
amendments of the Credit Agreement.
D. The Banks are willing to amend the Credit Agreement including
a confirmation of the extension of the Revolving Termination Date and certain
related amendments, subject to the terms and conditions of this Amendment.
NOW, THEREFORE, for valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings, if any assigned to them in the
Credit Agreement.
2. Amendments to Credit Agreement.
(a) Section 1.01 of the Credit Agreement shall be amended
at the defined term "Applicable Margin" by amending and restating such defined
term in its entirety as follows:
"'Applicable Margin' means the per annum rates of interest
specified in the chart below:
28
<PAGE> 2
<TABLE>
<CAPTION>
Revolving Commitment
Term Revolving
Commitment Period Term Period
<S> <C> <C> <C>
Reference Rate Loans +0% +0% +0%
Eurodollar Rate Loans +0.500% +0.500% +0.750%
CD Rate Loans +0.725% +0.625% +0.875%
</TABLE>
Where:
'Revolving Period' means the period from the Closing Date to the
Revolving Termination Date; and
'Term Period' means the period from the Revolving Termination Date to
the date of the final semi-annual payment under Section 2.07(b)."
(b) Subsection 2.09(b) of the Credit Agreement shall be
amended and restated in its entirety as follows:
"(b) Commitment Fees. The Company shall pay to the Agent for
the account of each Bank a commitment fee on the average daily unused
portion of such Bank's Revolving Commitment equal to 0.250% per annum
from the Closing Date through June 30, 1996 and thereafter equal to
0.1875% per annum. Such commitment fee shall accrue from the Closing
Date to the Revolving Termination Date and shall be payable quarterly
in arrears on the last day of each calendar quarter commencing on June
30, 1995, and on the Revolving Termination Date. The Company shall
also pay, on June 30, 1995, to the Agent for the account of each Bank,
any unpaid commitment fees due and owing under subsection 2.09(b) of
the Original Credit Agreement through and including the Closing Date."
(c) Subsection 2.15(b) of the Credit Agreement shall be amended
and restated in its entirety as follows:
(b) In each instance that the Revolving Termination Date
shall have been extended pursuant to subsection (a) of this Section,
the date on which the first installment of principal is due under
clause (i) of subsection 2.07(b) shall be extended to the December 31
of the year in which the Revolving Termination Date (as so extended)
occurs (such December 31, the "First Principal Payment Date"), and the
date on which the last installment of principal is due under clause
(ii) of subsection 2.07(b) shall be extended to June 30 of the year
which is five years after the year in which the First Principal
Payment Date occurs."
29
<PAGE> 3
(d) Subsection 3.08 of the Credit Agreement shall be amended and
restated in its entirety as follows:
"3.08 Letter of Credit Fees. The Company shall pay to the
Agent for the benefit of the Banks letter of credit fees equal to i)
0.550% per annum from the Closing Date through June 30, 1996 and
thereafter 0.500% per annum, in each case of the face amount of
outstanding Letters of Credit other than Retention Letters of Credit,
and (ii) 0.375% per annum from the Closing Date through June 30, 1996
and thereafter 0.325% per annum, in each case of the face amount of
outstanding Retention Letters of Credit. Such fees shall be payable
quarterly in arrears on the last day of each calendar quarter. The
Company shall pay BofA, in its capacity as Issuing Bank, a letter of
credit fronting fee in the amount and at the times as set forth in a
letter agreement between the Company and BofA, as Issuing Bank, dated
June 15, 1995, and shall pay any other Issuing Bank a letter of credit
fronting fee as agreed to from time to time by the Company and such
Issuing Bank."
3. Amendments to Credit Agreement Confirming Extension of
Revolving Termination Date. The following amendments confirm the extension of
the Revolving Termination Date pursuant to Section 2.15 as requested by the
Company's letter to the Agent dated as of April 30, 1996 and agreed to
previously by all the Banks.
(a) Section 1.01 of the Credit Agreement shall be amended
at the defined term "Revolving Termination Date" by amended and restating in
its entirety such defined term as follows:
"'Revolving Termination Date' means the earlier to occur of:
(a) June 30, 1998; and
(b) the date on which the Commitments shall
terminate in accordance with the provisions of this Agreement.
Subject to clause (b) of this definition, the term "Revolving
Termination Date" shall be deemed to refer to any such Revolving
Termination Date as extended from time to time pursuant to, and
subject to the conditions of, Section 2.15."
(b) Subsection 2.07(b) of the Credit Agreement shall be
amended and restated in its entirety as follows:
"(b) The Revolving Credit. The Company agrees to repay
the principal amount outstanding as of the Revolving Termination Date
of the Revolving Loans in ten equal semi annual installments (i)
beginning on December 31, 1998 (as such date may be extended pursuant
to the terms of and subject to the conditions of subsection 2.15(b)),
and (ii) thereafter on June 30 and December 31 of each year
thereafter,
30
<PAGE> 4
through and including June 30, 2003 (as such date may be extended
pursuant to the terms of and subject to the conditions of subsection
2.15(b)).
4. Representations and Warranties. The Company hereby represents
and warrants to the Agent and the Banks as follows:
(a) No Default or Event of Default has occurred and is
continuing.
(b) The execution, delivery and performance by the
Company of this Amendment have been duly authorized by all necessary corporate
and other action and do not and will not require any registration with, consent
or approval of, notice to or action by, any Person (including any Governmental
Authority) in order to be effective and enforceable. The Credit Agreement as
amended by this Amendment constitutes the legal, valid and binding obligations
of the Company, enforceable against it in accordance with its respective terms.
without defense, counterclaim or offset.
(c) All representations and warranties of the Company
contained in the Credit Agreement are true and correct.
(d) The Company is entering into this Amendment on the
basis of its own investigation and for its own reasons, without reliance upon
the Agent and the Banks or any other Person.
5. Effective Date. This Amendment will become effective on June
30, 1996 (the "Effective Date"), provided that the Agent has received from the
Company, each Guarantor, and each of the Banks a duly executed original (or, if
elected by the Agent, an executed facsimile copy) of this Amendment.
6. Reservation of Rights. The Company acknowledges and agrees
that the execution and delivery by the Agent and the Banks of this Amendment
shall not be deemed to create a course of dealing or otherwise obligate the
Agent or the Banks to execute or agree to similar amendments under the same or
similar circumstances in the future.
7. Miscellaneous.
(a) Except as herein expressly amended, all terms,
covenants and provisions of the Credit Agreement are and shall remain in full
force and effect and all references therein to such Credit Agreement shall
henceforth refer to the Credit Agreement as amended by this Amendment. This
Amendment shall be deemed incorporated into, and a part of, the Credit
Agreement.
(b) This Amendment shall be binding upon and inure to the
benefit of the parties hereto and thereto and their respective successors and
assigns. No third party beneficiaries are intended in connection with this
Amendment.
31
<PAGE> 5
(c) This Amendment shall be governed by and construed in
accordance with the law of the State of California.
(d) This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument. Each
of the parties hereto understands and agrees that this document (and any other
document required herein) may be delivered by any party thereto either in the
form of an executed original or an executed original sent by facsimile
transmission to be followed promptly by mailing of a hard copy original, and
that receipt by the Agent of a facsimile transmitted document purportedly
bearing the signature of a Bank or the Company shall bind such Bank or the
Company, respectively, with the same force and effect as the delivery of a hard
copy original. Any failure by the Agent to receive the hard copy executed
original of such document shall not diminish the binding effect of receipt of
the facsimile transmitted executed original of such document of the party whose
hard copy page was not received by the Agent.
(e) This Amendment, together with the Credit Agreement,
contains the entire and exclusive agreement of the parties hereto with
reference to the matters discussed herein and therein. This Amendment
supersedes all prior drafts and communications with respect thereto. This
Amendment may not be amended except in accordance with the provisions of
Section 11.01 of the Credit Agreement.
(f) If any term or provision of this Amendment shall be
deemed prohibited by or invalid under any applicable law, such provision shall
be invalidated without affecting the remaining provisions of this Amendment or
the Credit Agreement, respectively.
(g) The Company covenants to pay to or reimburse the
Agent and the Banks, upon demand, for all costs and expenses (including
allocated costs of in-house counsel) incurred in connection with the
development, preparation, negotiation, execution and delivery of this
Amendment.
32
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Amendment as of the date first above written.
GRANITE CONSTRUCTION INCORPORATED
By:
--------------------------------
Title: William E. Barton
--------------------------------
Vice President & Chief Financial
Officer
By:
--------------------------------
Title: R.C. Allbritton
--------------------------------
Vice President & Treasurer
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
As Agent
By:
----------------------------------
Title: Vice President
----------------------------------
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as a Bank and as Issuing Bank
By:
----------------------------------
Title: Vice President
----------------------------------
33
<PAGE> 7
UNION BANK
a division of Union Bank of California, N.A.
By:
-----------------------------------------
Title: Vice President
--------------------------------------
By:
-----------------------------------------
Title:
--------------------------------------
BANQUE NATIONALE DE PARIS
By:
-----------------------------------------
Title: Katherine Wolfe
--------------------------------------
Vice President
By:
-----------------------------------------
Title: Debra Hermsmeyer
--------------------------------------
Vice President
ARN-ANRO BANK N.V.,
San Francisco International Branch
By:
-----------------------------------------
Title: Bradford H. Leahy
--------------------------------------
Officer
By:
-----------------------------------------
Title: Jeffrey A. French
--------------------------------------
Vice President
34
<PAGE> 8
The following Guarantors acknowledge and consent to this Amendment, and agree
that their respective Guaranties remain in full force and effect.
GRANITE CONSTRUCTION COMPANY
By:
------------------------------
Title: William E. Barton
------------------------------
Vice President, Chief Financial Officer
By:
------------------------------
Title: R.C. Allbritton
------------------------------
Vice President, Treasurer
GRANITE SR9l CORPORATION
By:
------------------------------
Title: David H. Watts
------------------------------
President, Chief Executive Officer
By:
------------------------------
Title: William E. Barton
------------------------------
Vice President, Chief Financial Officer
WILCOTT CORPORATION
By:
------------------------------
Title: David H. Watts
------------------------------
President, Chief Executive Officer
------------------------------
By:
Title: William E. Barton
------------------------------
Vice President, Chief Financial Officer
------------------------------
DESERT AGGREGATES. INC.
By:
------------------------------
Title: William E. Barton
------------------------------
Authorized Representative
By:
------------------------------
Title: R.C. Allbritton
------------------------------
Authorized Representative
35
<PAGE> 9
G.G. & R., Inc.
By:
------------------------------
Title: David H. Watts
----------------------
President
By:
------------------------------
Title: William E. Barton
----------------------
Vice President
GIBBONS AND REED COMPANY
By:
------------------------------
Title:
----------------------
By:
------------------------------
Title:
----------------------
INTERMOUNTAIN SLURRY SEAL, INC.
By:
------------------------------
Title: William E. Barton
----------------------
Authorized Representative
By:
------------------------------
Title: R.C. Allbritton
------------------------
Authorized Representative
BEAR RIVER CONTRACTORS
By:
------------------------------
Title: William E. Barton
----------------------
Authorized Representative
By:
------------------------------
Title: R.C. Allbritton
------------------------
Authorized Representative
36
<PAGE> 10
POZZOLAN PRODUCTS COMPANY (P.P.C.)
By:
------------------------------
Title: William E. Barton
----------------------
Authorized Representative
By:
------------------------------
Title: R.C. Allbritton
------------------------
Authorized Representative
GILC INCORPORATED
By:
------------------------------
Title: William E. Barton
----------------------
Authorized Representative
By:
------------------------------
Title: R.C. Allbritton
------------------------
Authorized Representative
GILC, L.P.
By: GILC INCORPORATED
By:
------------------------------
Title: William E. Barton
----------------------
Authorized Representative
By:
------------------------------
Title: R.C. Allbritton
------------------------
Authorized Representative
GRANITE SR9l, L.P.
By: GRANITE SR9l CORPORATION
By:
------------------------------
Title: David H. Watts
----------------------
President, Chief Executive Officer
By:
------------------------------
Title: William E. Barton
----------------------
Vice President, Chief Financial Officer
37
<PAGE> 1
December 20, 1996
Granite Construction Incorporated
585 West Beach Street
Watsonville, CA 95076
Attention: Mr. William E. Barton
Vice President & Chief Financial Officer
Re: SECOND AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT DATED AS OF
MARCH 31, 1995 AMONG GRANITE CONSTRUCTION INCORPORATED, BANK OF
AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION, AS AGENT, AND THE
OTHER FINANCIAL INSTITUTIONS PARTY THERETO, AS AMENDED BY A FIRST
AMENDMENT DATED AS OF MAY 31, 1996 (THE "CREDIT AGREEMENT")
Ladies and Gentlemen:
We are writing regarding the captioned Credit Agreement. Capitalized
terms not defined in this letter shall have the meanings assigned to them in
the Credit Agreement.
You have advised us that the Company is considering an acquisition of
30% of the capital stock of TIC Holdings, Inc. for a purchase price expected to
be not more than $21,000,000 (the "TIC Acquisition"). You have advised as well
that a part of the TIC Acquisition may be concluded in 1996; to the extent not
concluded in 1996, the TIC Acquisition will be concluded in 1997. You have
requested that we amend the Credit Agreement to provide that the TIC
Acquisition, to the extent closed in 1997, and to the extent not in excess of
such 30% or $21,000,000 amounts, not be considered a usage of the basket for
equity investments set forth in subsection 8.04(d) of the Credit Agreement.
The Banks are willing to amend the Credit Agreement, subject to the
terms and conditions of this letter agreement (the "Amendment").
1. For valuable consideration, the receipt and adequacy of which
are hereby acknowledged, the parties hereby agree that the Credit Agreement
shall be amended as follows:
(a) Section 8.04 of the Credit Agreement shall be amended
and restated in its entirety to read as follows:
8.04 Loans and Investments. The Company shall not,
directly or indirectly,
38
<PAGE> 2
Granite Construction Incorporated
December 20, 1996
Page 2
purchase or acquire, or permit any of its Subsidiaries to purchase or acquire,
or make any commitment therefor, any capital stock, equity interest, assets,
obligations or other securities of or any interest in, any Person, or make any
advance, loan, extension of credit or capital contribution to or any other
investment in, any Person including, without limitation, any Affiliates of the
Company, except for: (a) investments in accordance with Schedule 8.04; (b)
extensions of credit in the nature of accounts receivable or notes receivable
arising from the sale or lease of goods or services in the Ordinary Course of
Business; (c) extensions of credit by the Company to any of its wholly-owned
Subsidiaries or by any of its wholly-owned Subsidiaries to another of the
wholly-owned Subsidiaries of the Company; (d) investments in up to 30% (when
aggregated with the amount of any such investments made in 1996) of the capital
stock of TIC Holdings, Inc., not to exceed in aggregate amount (when aggregated
with the amount of any such investments made in 1996) the amount of
$21,000.000; provided, that, such investments are made during the calendar year
1997; or (e) additional purchases of or investments in the stock of
Subsidiaries or the capital stock, assets, obligations or other securities of
or interest in other Persons not exceeding in any fiscal year 10% of the
Company's consolidated Tangible Net Worth as of the last day of the immediately
preceding fiscal year.
(b) All cross-references in the Credit Agreement (including in any
exhibit thereto) to subsection 8.04(d) shall be amended to refer to subsection
8.04(e).
2. This Amendment will become effective as of the date first
above Written, provided that the Agent has received from the Company and the
Majority Banks a duly executed Original of this Amendment and from each
Guarantor an executed Guarantor Acknowledgment and Consent in the form attached
hereto.
3. The Company hereby represents and warrants to the Bank that:
(a) no Default or Event of Default has occurred and is
continuing;
(b) the execution, delivery and performance by the
Company of this Amendment have been duly authorized by all necessary corporate
and other action and do not and will not require any registration with, consent
or approval of, notice to or action by, any Person (including any Governmental
Authority) in order to be effective and enforceable;
(c) the Credit Agreement, as amended by this Amendment
constitutes the legal, valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms,
without defense, counterclaim or offset;
39
<PAGE> 3
Granite Construction Incorporated
December 20, 1996
Page 3
(d) all representations and warranties of the Company
contained in the Credit Agreement are true and correct as of the date first
above written (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they are true and correct as
of such earlier date); and
(e) the Company is entering into this Amendment on the
basis of its own investigation and for its own reasons, without reliance upon
the Agent, any Bank or any other Person.
4. The Company acknowledges and agrees that the execution and
delivery by the Agent and the Banks of this Amendment shall not be deemed to
create a course of dealing or otherwise obligate Agent or the Banks to execute
similar amendments under the same or similar circumstances in the future.
5. Except as herein expressly amended, all terms, covenants and
provisions of the Credit Agreement are and shall remain in full force and
effect, and all references thereto shall henceforth refer to such documents as
amended by this Amendment. This Amendment shall be deemed incorporated into,
and a part of, the Credit Agreement.
6. This Amendment, together with the Credit Agreement, contains
the entire and exclusive agreement of the parties hereto with reference to the
matters discussed herein and therein. This Amendment Supersedes all prior
drafts and communications with respect thereto. This Amendment may not be
amended except in writing executed and delivered by both parties hereto.
Please indicate your acceptance of this Amendment by signing and
returning the duplicate copy hereof, whereupon this Amendment will constitute a
binding agreement between the Company, the Agent and the Banks, and their
respective successors and assigns, which shall be governed by and construed in
accordance with the law of the State of California. This Amendment may be
signed in one or more counterparts. No third party beneficiaries are intended
in connection with this Amendment.
Sincerely,
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
As Agent
By:
--------------------------------------
Title: Vice President
40
<PAGE> 4
Granite Construction Incorporated
December 20, 1996
Page 4
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION,
as a Bank
and as Issuing Bank
By:
---------------------------------------
Title: Vice President
UNION BANK OF CALIFORNIA, N.A.
By:
---------------------------------------
Title: Vice President
------------------------------------
BANQUE NATIONALS DE PARIS
By:
---------------------------------------
Title: Jennifer Y. Cho
------------------------------------
Vice President
By:
---------------------------------------
Title: Charles H. Day
------------------------------------
Assistant Vice President
ABN-AMRO BANK N.V.
San Francisco International Branch
By: ABN AMRO North America, Inc.,
as agent
By:
---------------------------------------
Title: Bradford H. Leahy
------------------------------------
Officer
By:
---------------------------------------
Title: L.T. Osborne
------------------------------------
Group Vice President
41
<PAGE> 5
Granite Construction Incorporated
December 20, 1996
Page 5
Accepted and agreed this 20 day of December, 1996:
GRANITE CONSTRUCTION INCORPORATED
By:
-----------------------------------------------
Title: W.E. Barton, Vice President & CFO
--------------------------------------------
By:
------------------------------------------------
Title: R.C. Allbritton, Vice President & Treasurer
---------------------------------------------
42
<PAGE> 6
Granite Construction Incorporated
December 20, 1936
Page 6
GUARANTOR ACKNOWLEDGMENT
AND CONSENT
The undersigned, each a guarantor with respect to the Company's
obligations to the Agent and the Banks under the Credit Agreement, each hereby
(i) acknowledge and consent to the execution, delivery and performance by
Company of the foregoing letter amendment to the Credit Agreement (the
"Amendment"), and (ii) reaffirm and agree that the respective guaranty to which
the undersigned is party and all other documents and agreements executed and
delivered by the undersigned to the Agent and the Banks in Connection with the
Credit Agreement are in full force and effect, without defense, offset or
counterclaim. (Capitalized terms used herein have the meanings specified in the
Amendment.)
GRANITE CONSTRUCTION COMPANY
By:
--------------------------------------
Title: W.E. Barton, Vice President & CFO
--------------------------------------
By:
---------------------------------------
Title: R.C. Allbritton, Vice Pres. & Treasurer
---------------------------------------
Dated December 20, 1996
GRANITE SR91 CORPORATION
By:
---------------------------------------
Title: W.E. Barton, Vice President & CFO
---------------------------------------
By:
---------------------------------------
Title: R.C. Allbritton, Vice Pres. & Treasurer
---------------------------------------
Dated December 20 , 1996
43
<PAGE> 7
Granite Construction Incorporated
December 20, 1996
Page 7
WILCOTT CORPORATION
By:
---------------------------------------
Title: D.H. Watts, President & CEO
------------------------------------
By:
---------------------------------------
Title: W.E. Barton, Vice President & CFO
------------------------------------
Dated December 20 , 1996
DESERT AGGREGATES, INC.
By:
---------------------------------------
Title: D.J. Brunton, CFO, Treasurer &
------------------------------------
Assistant Secretary
By:
---------------------------------------
Title: K. Kenan, Assistant Secretary
------------------------------------
Dated December 20 , 1996
GG&R, Inc.
By:
---------------------------------------
Title: D.H. Watts, President & CEO
------------------------------------
By:
---------------------------------------
Title: W.E. Barton, Vice President & CFO
------------------------------------
Dated December 20 , 1996
INTERMOUNTAIN SLURRY SEAL, INC.
By:
---------------------------------------
Title: D.J. Brunton, CFO, Treasurer &
------------------------------------
Assistant Secretary
By:
---------------------------------------
Title: K. Kenan, Assistant Secretary
------------------------------------
Dated December 20 , 1996
44
<PAGE> 8
Granite Construction Incorporated
December 20, 1996
Page 8
BEAR RIVER CONTRACTORS
By:
---------------------------------------
Title: D.J. Brunton, CFO, Treasurer &
------------------------------------
Assistant Secretary
By:
---------------------------------------
Title: K. Kenan, Assistant Secretary
------------------------------------
Dated December 20 , 1996
POZZOLAN PRODUCTS COMPANY
By:
---------------------------------------
Title: D.J. Brunton, CFO, Treasurer &
------------------------------------
Assistant Secretary
By:
---------------------------------------
Title: K. Kenan, Assistant Secretary
------------------------------------
Dated December 20 , 1996
GILC INCORPORATED
By:
---------------------------------------
Title: W.E. Barton, President & CEO
------------------------------------
By:
---------------------------------------
Title:R.C. Allbritton, Vice President & CFO
-------------------------------------
Dated December 20 , 1996
45
<PAGE> 9
Granite Construction Incorporated
December 20, 1996
Page 9
GRANITE SR91, L.P.
By: GRANITE SR91 CORPORATION
By:
---------------------------------------
Title: D.H. Watts, President & CEO
------------------------------------
By:
---------------------------------------
Title: W.E. Barton, Vice President & CFO
------------------------------------
Dated December 20 , 1996
GTC, INC.
By:
---------------------------------------
Title: W.E. Barton, President & Treasurer
------------------------------------
By:
---------------------------------------
Title: R.C. Allbritton, Vice President,
------------------------------------
Assistant Secretary & Assistant
Treasurer
Dated December 20 , 1996
46
<PAGE> 1
GIBBONS COMPANY PROFIT SHARING
AND RETIREMENT PLAN
RESTATED EFFECTIVE
FOR ALL PLAN YEARS COMMENCING ON OR AFTER JANUARY 1, 1989
47
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
ARTICLE TITLE PAGE NO.
- ------- ----- --------
<S> <C>
LIST OF DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii
ARTICLE I - ESTABLISHMENT AND RESTATEMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.01 Establishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.02 History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.03 Intent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.04 Limitation on Applicability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II- DEFINITIONS OF TERMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.01 "Account" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.02 "Accrued Benefit" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.03 "Administrator or Plan Administrator" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
2.04 "Affiliated Service Group" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.05 "Age" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.06 "Anniversary Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.07 "Annual Compensation" or "Compensation" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
2.08 "Annuity Starting Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.09 "Beneficiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.10 "Board of Directors" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.11 "Code" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.12 "Contingent Beneficiary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.13 "Controlled Group" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.14 "Disability" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
2.15 "Effective Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.16 "Elective Deferral" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.17 "Eligible Employee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.18 "Employee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.19 "Employer" or "Gibbons Employer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.20 "Entry Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.21 "ERISA" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.22 "Excluded Employee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.23 "Family Member" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.24 "Fiduciary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.25 "Former Participant" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.26 "Group Under Common Control" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.27 "Highly Compensated Employee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.28 "Investment Fund" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
2.29 "Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
</TABLE>
48
<PAGE> 3
<TABLE>
<CAPTION>
ARTICLE TITLE PAGE NO.
- -------- ----- --------
<S> <C>
2.30 "K-Test Average Contribution Percentage" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.31 "K-Test Contribution Percentage" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.32 "K-Test Contributions" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.33 "Leased Employee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.34 "Limitation Year" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
2.35 "M-Test Average Contribution Percentage" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.36 "M-Test Contribution Percentage" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.37 "M-Test Contributions" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.38 "Matching Contribution" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.39 "Named Fiduciary" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.40 "Net Profit" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.41 "Non-Highly Compensated Employee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.42 "Normal Retirement Age" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.43 "Normal Retirement Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.44 "Participant" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
2.45 "Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.46 "Plan Sponsor" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.47 "Plan Year" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.48 "Prior Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.49 "Qualified Matching Contribution" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.50 "Qualified Non-Elective Contribution" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.51 "Trust" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.52 "Trust Fund" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.53 "Trustee" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.54 "Valuation Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.55 "Vested Interest" or "Vested Accrued Benefit" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III- SERVICE DEFINITIONS AND RULES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.01 "Eligibility Computation Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.02 "Eligibility Service" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.03 "Employment Commencement Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.04 "Hour of Service" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.05 "One Year Break in Service" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
3.06 "Re-employment Commencement Date" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.07 "Termination of Employment" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.08 "Vesting Computation Period" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.09 "Year of Service" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.10 "Year of Eligibility Service" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
3.11 "Year of Vesting Service" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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ARTICLE IV - ELIGIBILITY AND PARTICIPATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.01 Age and Service Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
4.02 Plan Administrator to Furnish Eligibility Information . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.03 Information to be Provided by Employee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.04 Reclassification of an Eligible Employee or Excluded Employee . . . . . . . . . . . . . . . . . . . . . . 17
4.05 Re-employment and Commencement of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.06 Election Not To Participate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
4.07 Effect of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
ARTICLE V - PARTICIPANT AND EMPLOYER CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.01 Elective Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
5.02 Payment to Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.03 Suspension of Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.04 No Voluntary Contributions by Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.05 Rollover Contributions by Participants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.06 Employer Matching Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.07 Employer Profit Sharing Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
5.08 Employer Davis-Bacon Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.09 Time and Method of Payment of Employer Matching and
Profit Sharing Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.10 Time and Method of Payment of Employer Davis-Bacon Contributions . . . . . . . . . . . . . . . . . . . . . 21
5.11 Employer Contribution Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
5.12 Limitations on Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
5.13 Excess Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.14 Correction of Excess Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
ARTICLE VI - ALLOCATIONS TO ACCOUNT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.01 Revaluation of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.02 Allocation of Contributions and Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
6.03 Adjustment of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
6.04 Eligibility for Allocation of Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.05 Participant Directed Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.06 Establishment of Separate Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VII- LIMITATIONS ON ALLOCATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.01 Special Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.02 Coordination With Defined Benefit Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.03 Order of Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
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7.04 Aggregation of Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
7.05 Suspense Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VI - IN-SERVICE AND HARDSHIP WITHDRAWALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.01 Withdrawals Due to Attainment of Age 55, Disability or Hardship . . . . . . . . . . . . . . . . . . . . . 39
8.02 Financial Hardship Distribution Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.03 Determination of Immediate and Heavy Financial Need . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
8.04 Withdrawal of Voluntary Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE IX - RETIREMENT BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.01 Normal or Late Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.02 Disability Retirement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.03 Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
9.04 Time of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.05 Required Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
9.06 Qualified Joint and Survivor Annuity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE X - DEATH BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.01 Death Benefits Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.02 Designation of Beneficiary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.03 Death Benefit Payment Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
10.04 Required Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
10.05 Qualified Pre-retirement Survivor Annuity and Related Matters . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE XI- BENEFITS UPON OTHER TERMINATION OF EMPLOYMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.01 Vested Amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.02 Distribution of Vested Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.03 Eligible Rollover Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
11.04 Breaks in Service and Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.05 No Increase in Pre-break Vesting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.06 Disposition of Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
11.07 Distribution to Participants Who Are Less Than 100% Vested . . . . . . . . . . . . . . . . . . . . . . . . 55
11.08 Repayment of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.09 Restoration of Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
11.10 Amendments to the Vesting Schedule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE XII - FIDUCIARY DUTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
12.01 General Fiduciary Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
12.02 Allocation of Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
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12.03 Delegation of Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
12.04 Liability for Allocation or Delegation of Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . 58
12.05 Liability for Co-Fiduciaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
12.06 Same Person May Serve in More than One Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
ARTICLE XIII - THE PLAN ADMINISTRATOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.01 Appointment of Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.02 Acceptance by Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.03 Signature of Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.04 Appointment of an Investment Manager . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.05 Duties of the Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
13.06 Claims Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
13.07 Claims Review Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
13.08 Compensation and Expenses of Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
13.09 Removal or Resignation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
13.10 Records of Plan Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
13.11 Other Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE XIV - THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
14.01 Appointment of Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
14.02 Acceptance by Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
14.03 Investment Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
14.04 Payment From the Trust Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE XV - THE EMPLOYER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
15.01 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
15.02 Record Keeping . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
15.03 Bonding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
15.04 Signature of Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
15.05 Plan Counsel and Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
15.06 Other Responsibilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
15.07 Controlled Groups/Affiliated Service Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
15.08 Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
ARTICLE XVI- PLAN AMENDMENT OR MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
16.01 Power to Amend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
16.02 Limitations on Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
16.03 Method of Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
16.04 Notice of Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
16.05 Merger or Consolidation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
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ARTICLE XVII- TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
17.01 Right to Terminate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
17.02 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
17.03 Manner of Distribution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69
17.04 No Reversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
17.05 Termination of an Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
17.06 Partial Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
17.07 Effect of Partial Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE XVIII - FUNDING POLICY FOR PLAN BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
18.01 Funding Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
18.02 Investment Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
18.03 No Purchase of Life Insurance Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
18.04 Investment Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
18.05 Non-transferability of Annuity Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE XIX - TOP-HEAVY PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
19.01 Application . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
19.02 Special Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
19.03 Top-Heavy Minimum Required Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
19.04 Super Top-Heavy Minimum Required Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
19.05 Non-forfeitability of Minimum Top-Heavy Allocation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
19.06 Compensation Limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
19.07 Minimum Vesting Provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
19.08 Adjustments to Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79
19.09 Participant Elective Deferrals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE XX - PROVISIONS AFFECTING BENEFITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
20.01 Availability of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
20.02 Loan Administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
20.03 Amount of Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81
20.04 Collateral Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
20.05 Loan Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
20.06 Accounting for Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
20.07 Effect of Termination of Employment or Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
20.08 Spousal Consent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
20.09 Anti-Alienation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
20.10 Qualified Domestic Relations Orders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
20.11 QDRO Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84
20.12 Additional QDRO Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
</TABLE>
53
<PAGE> 8
<TABLE>
<S> <C>
ARTICLE XXI- MULTIPLE EMPLOYER PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
21.01 Adoption by Other Gibbons Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
21.02 Requirements of Participating Gibbons Employers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
21.03 Designation of Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
21.04 Employee Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 87
21.05 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
21.06 Discontinuance of Participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
21.07 Administrator's Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
21.08 Participating Employer Contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88
ARTICLE XXII- MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
22.01 Participant's Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
22.02 Actions Consistent with Terms of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
22.03 Performance of Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
22.04 Validity of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
22.05 Legal Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
22.06 Gender and Number . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
22.07 Uniformity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
22.08 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
22.09 Receipt and Release for Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
22.10 Payments to Minors, Incompetents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
22.11 Missing Persons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
22.12 Transfer of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
22.13 Prohibition Against Diversion of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
22.14 Period of the Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
22.15 Applicability of Plan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
22.16 Misstatement of Age . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
22.17 Return of Contributions to the Employer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
22.18 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
</TABLE>
54
<PAGE> 9
LIST OF DEFINITIONS
<TABLE>
<CAPTION>
Definition Section Page Definition Section Page
<S> <C> <C> <C> <C> <C>
Account 2.01 2 Investment Fund 2.28 8
Accrued Benefit 2.02 3 Investment Manager 2.29 8
Administrator 2.03 3 K-Test Average Contribution Percentage 2.30 8
Affiliated Service Group 2.04 3 K-Test Contribution Percentage 2.31 9
Age 2.05 3 K-Test Contributions 2.32 9
Anniversary Date 2.06 3 Key Employee 19.02(d) 84
Annual Compensation 2.07 3 Late Retirement 9.01 49
Annual Additions 7.01(a) 38 Leased Employee 2.33 9
Annuity Starting Date 2.08 4 Limitation Year (Special 415 Def.) 7.01(j) 43
Beneficiary 2.09 4 Limitation Year 2.34 10
Board of Directors 2.10 4 M-Test Contributions 2.37 10
Code 2.11 4 M-Test Average Contribution Percentage 2.35 10
Compensation 2.07 3 M-Test Contribution Percentage 2.36 10
Compensation (Special 413 Def.) 7.01(b) 38 Matching Contribution 2.38 10
Contingent Beneficiary 2.12 4 Maximum Permissible Amount 7.01(k) 43
Controlled Group 2.13 4 Named Fiduciary 2.39 10
Davis-Bacon Employee 2.18 5 Net Profit 2.40 10
Davis-Bacon Account 2.01(f) 2 Non-Highly Compensated Employee 2.41 11
Davis-Bacon Contribution Schedule 5.08 24 Non-Key Employee 19.02(d) 84
Defined Contribution Dollar Limitation 7.01(e) 41 Normal Retirement Age 2.42 11
Defined Benefit Fraction 7.01(d) 40 Normal Retirement Date 2.43 11
Defined Benefit Dollar Limitation 7.01(c) 40 Normal Retirement 9.01 49
Defined Contribution Fraction 7.01(f) 41 One Percent Owner 19.02(e) 85
Determination Period 19.02(b) 84 One Year Break in Service 3.05 16
Determination Date 19.02(a) 84 Participant Rollover Account 2.01(c) 2
Disability 2.14 4 Participant Elective Deferral Account 2.01(a) 2
Disability Retirement 9.02 49 Participant Voluntary Contri. Account 2.01 2
Effective Date 2.15 5 Participant 2.44 11
Elective Deferral 2.16 5 Permissive Aggregation Group 19.02(f) 85
Eligibility Service 3.02 13 Plan Year 2.47 11
Eligibility Computation Period 3.01 13 Plan Sponsor 2.48 11
Eligible Employee 2.17 5 Plan Administrator 2.03 3
Employee 2.18 4 Plan 2.45 11
Employer Matching Contribution Account 2.01(d) 2 Present Value 19.02(g) 86
Employer Profit-Sharing Cont. Account 2.01(e) 2 Prevailing Wage Law 5.08 25
Employer 2.18 5 Prior Plan 2.48 11
Employer (Special 415 Def.) 7.01(g) 42 Projected Annual Benefit 7.01(l) 44
Employment Commencement Date 3.03 13 QDRO: Domestic Relations Order 20.11(b) 99
Entry Date 2.20 5 QDRO: Alternate payee 20.11(a) 99
ERISA 2.21 6 QDRO: Qualified Domestic Relations Order 20.11(c) 99
Excess M-Test Contributions 5.013(c) 28 Qualified Matching Contribution 2.49 11
Excess Amount 7.01(h) 42 Qualified Non-Elective Contribution 2.50 11
Excess Deferrals 5.13(a) 28 Re-employment Commencement Date 3.06 16
Excess K-Test Contributions 5.13(b) 28 Required Aggregation Group 19.02(h) 86
Excess Combined-Test Contributions 5.13(d) 29 Salaried Employee 2.18 5
Excluded Employee 2.22 6 Salary Reduction Agreement (Def.) 5.01(a) 21
Family Member 2.23 6 Subsequent Eligibility Computation Period 3.01(b) 13
Fiduciary 2.24 6 Super Top-Heavy Minimum Required Alloc. 19.04 91
Financial Hardship 8.02 46 Super Top-Heavy 19.02(i) 86
Five Percent Owner 19.02(c) 84 Termination of Employment 3.07 16
Former Participant 2.25 7 Top-Heavy 19.02(j) 86
Gibbons Employer 2.19 5 Top-Heavy Minimum Required Allocation 19.03 89
Group Under Common Control 2.26 7 Top-Heavy Compensation 19.02(l) 87
Highly Compensated Employee 2.27 7 Top-Heavy Ratio 19.02(m) 87
Hourly Employee 2.19 5 Top-Heavy Valuation Date 19.02(n) 89
Hours of Service 3.04 13 Top-Heavy Average Monthly Comp. 19.02(k) 86
Immediate and Heavy Financial Need 80.3 47 Trust 2.51 11
</TABLE>
55
<PAGE> 10
<TABLE>
<S> <C> <C> <C> <C> <C>
Individual Medical Benefit Account 7.01(i) 42 Trust Fund 2.52 12
Initial Eligibility Computation Period 3.01(a) 13 Trustee 2.53 12
Valuation Date 2.54 12
Definition Section Page
Valuation Date 2.54 12
Vested Accrued Benefit 2.55 12
Vested Amounts 11.01 61
Vested Interest 2.55 12
Vesting Computation Period 3.08 17
Year of Eligibility Service 3.10 17
Year of Service 3.09 17
Year of Vesting Service 3.11 17
</TABLE>
56
<PAGE> 11
ARTICLE I
ESTABLISHMENT AND RESTATEMENT
1.01 ESTABLISHMENT: This Plan is signed and executed on the day
set forth at the end of this Plan, effective for all purposes (except as
specifically set forth hereafter) as of January 1, 1989. This Plan is by and
between Gibbons & Reed Company, a corporation organized and existing under the
laws of the State of Utah, with principal offices located at Salt Lake City,
Utah, hereinafter referred to as the "Plan Sponsor", and Gibbons & Reed Company
as the Plan Administrator. With the consent of Gibbons & Reed Company this Plan
may be adopted by other affiliated Employers.
1.02 HISTORY: This Plan is an amended plan in restated form, the
original plan having been adopted effective on December 30, 1955, and having
been most recently amended and restated in its entirety effective January 1,
1987, as the Gibbons Company Profit Sharing and Retirement Plan ("Prior Plan").
1.03 INTENT: Gibbons & Reed Company intends by this Plan to amend
and restate the Prior Plan for the benefit of its Employees who shall meet the
eligibility requirements hereinafter set forth and for the benefit of the
beneficiaries of such Employees, respectively, as hereinafter provided.
Gibbons & Reed Company further intends that this Plan meet all the requirements
of the Internal Revenue Code of 1986 ("Code") and the Employee Retirement
Income Security Act of 1974 ("ERISA"). The Plan shall be interpreted, wherever
possible, to comply with the terms of the Code and ERISA and all formal
regulations and rulings issued thereunder.
1.04 LIMITATION ON APPLICABILITY: The provisions of this Plan
shall apply only to persons who are or who become Participants in this Plan on
or after the Effective Date. Except as specifically provided in this Plan, the
provisions of the Prior Plan will continue to apply to persons who are Former
Participants on the Effective Date, unless and until such time as such persons
may again become Participants in this Plan.
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<PAGE> 12
ARTICLE II
DEFINITIONS OF TERMS
As used in this Plan and Trust Agreement, the following words and
phrases shall have the meanings indicated, unless the context clearly requires
another meaning.
2.01 "ACCOUNT" shall mean the Account established and maintained by
the Plan Administrator for a Participant with respect to any interest in the
Investment Fund. Each Participant's Account shall be credited or charged with
contributions, distributions, earnings and losses as provided herein. The
following separate sub-accounts shall be established for each Participant, as
applicable, and in the aggregate they shall constitute the Participant's
Account:
(a) "PARTICIPANT ELECTIVE DEFERRAL ACCOUNT" shall mean the Account
which is attributable to the contributions made by the
Employer pursuant to an election by the Participant under
Section 5.01
(b) "PARTICIPANT VOLUNTARY CONTRIBUTION ACCOUNT" shall mean the
Account which is attributable to after-tax contributions made
by the Participant to the Plan after December 31, 1986, if
any.
(c) "PARTICIPANT ROLLOVER ACCOUNT" shall mean the Account which is
attributable to contributions received pursuant to Section
5.05.
(d) "EMPLOYER MATCHING CONTRIBUTION ACCOUNT" shall mean the
Account which is attributable to matching contributions made
by the Employer pursuant to Section 5.06.
(e) "EMPLOYER PROFIT-SHARING CONTRIBUTION ACCOUNT" shall mean the
Account which is attributable to the Profit-Sharing
contributions made by the Employer pursuant to Section 5.07.
This Account shall also include (but separately account for)
all after-tax voluntary contributions made by the Participant
prior to January 1, 1987.
(f) "DAVIS-BACON ACCOUNT" shall mean the Account which is
attributable to Employer Davis-Bacon Contributions, together
with all assets transferred from any predecessor Davis-Bacon
Plan.
The maintenance of separate sub-accounts is for accounting purposes only and
segregation of the assets of the Plan shall not be required.
2.02 "ACCRUED BENEFIT" shall mean, as of any date, the sum of the
values in each of a Participant's Accounts as of the most recent preceding
Valuation Date, plus any contributions to and minus any distributions from the
Accounts since the Valuation Date, plus the cash surrender value of all
Insurance Contracts and allocated annuity contracts purchased for a
Participant.
58
<PAGE> 13
2.03 "ADMINISTRATOR OR PLAN ADMINISTRATOR" shall mean the person,
persons, or corporation administering this Plan, as provided in Article XIII
hereof, and any successor or successors thereto.
2.04 "AFFILIATED SERVICE GROUP" shall mean a group of corporations,
partnerships, or other organizations which is an affiliated service group as
defined in Code Section 414(m).
2.05 "AGE" shall mean a person's attained age in completed years
and months as of the date determined.
2.06 "ANNIVERSARY DATE" shall be the first day of each Plan Year.
2.07 "ANNUAL COMPENSATION" OR "COMPENSATION" shall mean the amount
of all salary payments and wages for personal services rendered which is paid to
an Employee during the Plan Year by a Gibbons Employer, including overtime pay,
commissions and bonuses. Compensation shall be determined before deductions for
federal income taxes, state income taxes and Social Security (FICA) taxes,
before deductions for contributions by salary reduction to this Plan or any
other plan that meets the requirements of Code Sections 401(k) or 125 and are
sponsored by a Gibbons Employer, before deductions for Participant contributions
to any insurance program sponsored by a Gibbons Employer and before deferral
pursuant to any written contract of deferred compensation between the
Participant and a Gibbons Employer. Compensation shall not include director's
fees, allowances or reimbursements for expenses, relocation payments,
merchandise and service discounts, the value of insurance coverage, automobile
or mileage allowances, parking, public transportation payments, or benefits in
the form of property or the use of property or other fringe benefits. Unless
specifically included by this Section, payments or contributions to or for the
benefit of a Participant under any deferred compensation plan, pension, profit
sharing, group life or health insurance, hospitalization or other employee
benefit plan and any lump sum amounts paid at termination of employment (on
account of such termination), such as severance pay, vacation and sick leave
cash-outs, shall not be included in Compensation. For purposes of a contribution
or an allocation under the Plan based on compensation, Annual Compensation shall
only include amounts actually paid an Employee during the period he is a
Participant in the Plan and shall be further apportioned according to the period
the Employee is designated in a sub-category under Section 2.18.
If a Participant is credited with at least one (1) Hour of Service in a Plan
Year beginning after December 31, 1988, the Participant's Annual Compensation
taken into account for that Plan Year and any succeeding Plan Year shall not
exceed two hundred thousand dollars ($200,000), or such greater amount adjusted
at the same time and in the same manner as the benefit limitation for defined
benefit plans under Code Section 415(b)(1)(A). For Plan Years beginning after
December 31, 1993, the Plan shall substitute the amount "one hundred fifty
thousand dollars ($150,000)" for the amount "two hundred thousand dollars
($200,000)" wherever it appears in this Section. The one hundred fifty
thousand dollar amount shall be adjusted each Plan Year as provided in Code
Section 401(a)(17(B). For any short Plan Year the Annual Compensation limit
shall be an amount equal to the Annual Compensation limit for the calendar year
in which the Plan Year begins, multiplied by the ratio obtained by dividing the
number of full months in the short Plan Year by twelve (12).
In applying the limitations of this Section the family group of a Highly
Compensated Employee who is
59
<PAGE> 14
subject to the Family Member aggregation rules of Code Section 414(q)(6)
because the Employee is either a "five percent owner" of the Employer or one of
the ten (10) Highly Compensated Employees paid the greatest Compensation (as
defined in Section 7.01(b)) during the Plan Year shall be treated as a single
Participant, except that Family Members shall include only the Participant's
spouse and any lineal descendants who have not attained the age of nineteen
(19) before the close of the Plan Year. If, upon application of the above
family aggregation rules, the Annual Compensation limitation is exceeded, then
the limitation shall be prorated among the affected Family Members in
proportion to each Family Member's Annual Compensation prior to the application
of this limitation, or the limitation shall be adjusted pursuant to any other
method permitted by regulations.
2.08 "ANNUITY STARTING DATE" shall mean the first day of the first
month for which an amount is payable, or the date on which a benefit is
actually paid or begins to be paid.
2.09 "BENEFICIARY" shall mean any person, persons, or trust
designated by a Participant on a form as the Plan Administrator may prescribe
to receive any death benefit that may be payable hereunder if such person or
persons survive the Participant. This designation may be revoked at any time
in similar manner and form. In the event of the death of the designated
Beneficiary prior to the death of the Participant, the Contingent Beneficiary
shall be entitled to receive any death benefit.
2.10 "BOARD OF DIRECTORS" shall mean:
(a) In the case of a corporation, its Board of Directors; or
(b) In the case of a partnership or joint venture, its controlling
partners.
2.11 "CODE" shall mean the Internal Revenue Code of 1986, as
amended.
2.12 "CONTINGENT BENEFICIARY" shall mean the person, persons, or
trust duly designated by the Participant to receive any death benefit from the
Plan in the event the designated Beneficiary does not survive the Participant.
2.13 "CONTROLLED GROUP" shall mean a group of corporations which
constitutes a controlled group of corporations as defined in Code Section
414(b).
2.14 "DISABILITY" shall mean the resignation or dismissal prior to
Normal Retirement Age of a Participant whom the Administrator determines to
have become permanently unable to discharge his assigned duties as a result of
mental or physical disease or condition which can be expected to result in
death or which can be expected to last for a continuous period of indefinite
duration. In making such determination, the Administrator shall employ a
doctor who is licensed and qualified to practice medicine in any State to
examine the Participant and then issue an opinion as to the disability of the
Participant involved. In the event a difference shall arise between the
Participant and the Administrator as to the existence of such total and
permanent disability, the issue concerning such disability shall be resolved by
a majority decision of three doctors, one to be appointed by the Administrator,
one by the Participant
60
<PAGE> 15
claiming such disability, and the third by the two thus first appointed. The
decision of the majority of such three doctors as to the existence of such
total and permanent disability shall be final and conclusive. Notwithstanding
the foregoing, a Participant who is eligible to receive Social Security
disability payments shall be deemed to be disabled without further proof.
2.15 "EFFECTIVE DATE" shall mean January 1, 1989, the effective
date of this restated Plan. All provisions of this Plan shall be effective as
of that date unless an alternative date is specifically provided.
2.16 "ELECTIVE DEFERRAL" shall mean a contribution to the Plan
under a cash or deferred arrangement as defined in Code Section 401(k) to the
extent not includable in gross income, which is made pursuant to an Employee
Deferral Election.
2.17 "ELIGIBLE EMPLOYEE" shall mean any Employee who is not an
Excluded Employee.
2.18 "EMPLOYEE" shall mean any person who is employed by a Gibbons
Employer in a capacity other than solely as a director. The term "Employee"
shall also include a Leased Employee of a Gibbons Employer. For purposes of
this Plan an "Employee" shall be further designated as a "Salaried Employee,"
"Hourly Employee" or "Davis-Bacon Employee." "Salaried Employee" shall mean an
Employee who is compensated on a salary basis and "Hourly Employee" shall mean
an Employee who is compensated on an hourly basis. "Davis-Bacon Employee"
shall mean an Employee who renders services to the Employer pursuant to a
contract or contracts subject to a Prevailing Wage Law (as that term is defined
in Section 5.08). Each Employee shall be designated under one or more of the
above sub-categories, however no Employee shall be designated in the "Salaried
Employee" sub-category and any other sub-category at the same time.
2.19 "EMPLOYER" OR "GIBBONS EMPLOYER" shall mean the Plan Sponsor
and any other entity who, with the authorization of the Plan Sponsor, may adopt
this Plan. Solely for purposes of determining Eligibility Service, Years of
Vesting Service and One Year Breaks in Service, any entity not adopting this
Plan which, together with the Plan Sponsor, is a member of a Controlled Group,
Group Under Common Control, or Affiliated Service Group shall also be treated
as an Employer for the period of time during which such entity was a member of
such group. Gibbons Employers may, at the option of the Plan Sponsor, be
identified by a list attached as an addendum to this Plan, or through separate
participation agreements, which reflect adoption by the Gibbons Employer of
this Plan.
2.20 "ENTRY DATE" shall mean, solely for purposes of participation
under Article IV, the date an Employee became or becomes a Participant in the
Plan. Entry Dates occur on the each January 1 and July 1. For all other Plan
purposes, including benefit accrual and amendment to Salary Reduction
Agreements "Entry Date" shall mean the first day of each calendar quarter. The
Plan shall also provide for a one-time special Entry Date of August 1, 1993,
for Hourly Employees who execute written Salary Reduction Agreements by the
time required in Section 4.01(e).
2.21 "ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended.
2.22 "EXCLUDED EMPLOYEE" shall mean a member of that class of
Employees who are not eligible
61
<PAGE> 16
to participate in the Plan or accrue any benefit under the Plan, regardless of
the number of hours worked. The class of such Employees includes:
(a) Employees whose employment is governed by the terms of a
collective bargaining agreement between Employee
representatives and the Employer under which retirement
benefits were the subject of good faith bargaining between
said Employee representatives and the Employer.
(b) Individuals who are employed by the Employer in the following
classifications:
(i) consultant, or
(ii) independent contractor.
2.23 "FAMILY MEMBER" shall mean, with respect to any Employee, the
Employee's spouse and lineal ascendants or descendants and the spouses of such
lineal ascendants and descendants.
2.24 "FIDUCIARY" shall mean and include the Trustee, Plan
Administrator, Plan Sponsor, Investment Manager, and any other person or
corporation who:
(a) Exercises any discretionary authority or discretionary control
respecting management of the Plan or exercises any authority
or control respecting management or disposition of its assets;
(b) Renders investment advice for a fee or other compensation,
direct or indirect, with respect to any moneys or other
property of the Plan, or has any authority or responsibility
to do so;
(c) Has any discretionary authority or discretionary
responsibility in the administration of the Plan; or
(d) Is described as a "fiduciary" in Sections 3(14) or (21) of
ERISA or is designated to carry out fiduciary responsibilities
pursuant to this agreement to the extent permitted by Section
405(c)(1)(B) of ERISA.
2.25 "FORMER PARTICIPANT" shall mean an individual who was an
active Participant in the Plan and who retains and is entitled to receive an
Accrued Benefit under the Plan.
2.26 "GROUP UNDER COMMON CONTROL" shall mean a group of trades or
businesses (whether or not incorporated) which are under common control as
defined in Code Section 414(c).
2.27 "HIGHLY COMPENSATED EMPLOYEE" shall mean, for any Plan Year,
an Employee, other than a non-resident alien receiving no earned income from
the Employer from sources within the United States, who, during such year or
the preceding year:
(a) Was at any time a Five Percent Owner (as defined in Section
19.02(c)); or
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(b) Received Compensation from the Employer in excess of
seventy-five thousand dollars ($75,000); or
(c) Received Compensation from the Employer in excess of fifty
thousand dollars ($50,000) and was in the group consisting of
the top twenty percent (20%) of the Employees when ranked on
the basis of Compensation paid during such year; or
(d) Was at any time an officer and received Compensation greater
than fifty percent (50%) of the amount in effect under Code
Section 415(b)(1)(A) for such year or was the highest paid
officer if no officer received compensation greater than that
level. For purposes of this Paragraph, no more than fifty
(50) Employees (or, if lesser, the greater of three (3) or ten
percent (10%) of the number of Employees) shall be treated as
officers.
A former Employee who was a Highly Compensated Employee upon separation from
service or at any time after attaining Age fifty-five (55) shall be treated as
a Highly Compensated Employee.
For purposes of the above, an Employee not described in (b), (c) or (d) for the
preceding year shall not be treated as described in (b),(c) or (d) unless such
Employee is in the group consisting of the top one hundred (100) Employees when
ranked on the basis of Compensation paid during the Plan Year.
For purposes of the above, with respect to an Employee who is a Family Member
of a Five Percent Owner or of one of the ten (10) most Highly Compensated
Employees, such Family Member and the Five Percent Owner or top-ten Highly
Compensated Employee shall be treated as a single employee receiving the
Compensation and plan contributions or benefits of both the Family Member and
the Five Percent Owner or top-ten Highly Compensated Employee.
For purposes of the above, Compensation is defined as in Section 7.01(b) of
this Plan, but shall include contributions made by the Employer to a plan of
deferred compensation otherwise excluded in Section 7.01(b). The dollar
amounts in paragraphs (b) and (c) shall be adjusted at the same time and in the
same manner as the benefit limitation for defined benefit plans under Code
Section 415(b)(1)(A).
For purposes of determining the number of Employees in (c) and (d) above, the
following shall be excluded: Employees who have not completed six (6) months
of service; Employees who normally work less than seventeen and one-half (17
1/2) hours per week; Employees who normally work not more than six (6) months
per year; Employees who have not attained Age twenty-one (21); and Employees
described in Section 2.21(a) and (b), except as provided in Regulations issued
under Code Section 414(q).
The Employer may, at his discretion, elect to use the calendar year calculation
method for determining who is a Highly Compensated Employee, as described in
Regulations issued under Code Section 414(q), provided that such method is
uniformly applied for all Plan Years and for all plans of the Employer. The
Employer may, at his discretion, elect to use the transition rules for
determining who is a Highly Compensated Employee for the Plan Years beginning
in 1987 and 1988, as described in Regulations issued under Code Section 414(q),
provided that such rules are uniformly applied for all plans of the Employer.
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2.28 "INVESTMENT FUND" shall mean all assets of the Trust Fund.
2.29 "INVESTMENT MANAGER" shall mean any Fiduciary (other than a
Trustee or Named Fiduciary) who:
(a) Has the power to manage, acquire or dispose of any asset of
the Plan;
(b) Is (i) registered as an investment advisor under the
Investment Advisors Act of 1940; (ii) a bank as defined in
that Act; or (iii) is an insurance company qualified to
perform services described in Subsection (a) above under the
laws of more than one state; and
(c) Has acknowledged in writing that he is a Fiduciary with
respect to the Plan.
2.30 "K-TEST AVERAGE CONTRIBUTION PERCENTAGE" shall mean the
average (expressed as a percentage) of the K-Test Contribution Percentages of
the Participants in a group.
2.31 "K-TEST CONTRIBUTION PERCENTAGE" shall mean the ratio
(expressed as a percentage) of a Participant's K-Test Contributions for a Plan
Year to the Participant's Compensation for the Plan Year, provided that, if a
Participant is a Highly Compensated Employee for whom the family aggregation
rules in Section 2.22 apply, the K-Test Contribution Percentage shall be
determined by combining the K-Test Contributions and compensation of all
eligible Family Members. For this purpose, Compensation is defined as in
Section 7.01(b) of the Plan.
2.32 "K-TEST CONTRIBUTIONS" shall mean, for any Plan Year, a
Participant's Elective Deferrals, less any of the Participant's Elective
Deferrals included as M-Test Contributions, plus, if so elected by the
Employer, part or all of the Qualified Non-Elective Contributions and Qualified
Matching Contributions allocated to the Participant for such year, provided
that, any Qualified Non-Elective Contributions included as K-Test Contributions
shall not increase the difference between the K-Test Average Contribution
Percentage for Highly Compensated Employees and the K-Test Average Contribution
Percentage for Non-Highly Compensated Employees; and, further provided that, no
Qualified Non-Elective Contributions or Qualified Matching Contributions
included as K-Test Contributions shall be included as M-Test Contributions.
2.33 "LEASED EMPLOYEE" shall mean any person who, pursuant to an
agreement between the Gibbons Employer and any other person or organization
(leasing organization) has performed services for the Employer (or for the
Gibbons Employer and related persons determined in accordance with Code Section
414(n)(6)) on a substantially full time basis for a period of at least one (1)
year and such services are of a type historically performed by employees in the
business field of the Gibbons Employer.
Contributions or benefits provided by the leasing organization which are
attributable to services performed for the Employer shall be treated as
provided by the Employer. If such leased employees constitute not more than
twenty percent (20%) of the Gibbons Employer's non-highly compensated work
force within the meaning of Code Section 414(n)(5)(C)(ii), the preceding
sentence shall not apply to any Leased Employee who is covered by a money
purchase pension plan providing:
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(a) A non-integrated employer contribution rate of at least ten
percent (10%) of compensation; and
(b) Immediate participation with respect to any person who has
received compensation from the leasing organization of at
least one thousand dollars ($1,000) in any one of the four
most recent plan years of such plan; and
(c) Full and immediate vesting.
2.34 "LIMITATION YEAR" shall mean the Plan Year, unless the
Employer elects a different twelve (12) month period.
2.35 "M-TEST AVERAGE CONTRIBUTION PERCENTAGE" shall mean the
average (expressed as a percentage) of the M-Test Contribution Percentages of
the Participants in a group.
2.36 "M-TEST CONTRIBUTION PERCENTAGE" shall mean the ratio
(expressed as a percentage) of a Participant's M-Test Contributions for a Plan
Year to the Participant's Compensation for the Plan Year, provided that, if a
Participant is a Highly Compensated Employee for whom the family aggregation
rules in Section 2.22 apply, the M-Test Contribution Percentage shall be
determined by combining the M-Test Contributions and compensation of all
eligible Family Members. For this purpose, Compensation is defined as in
Section 7.01(b) of the Plan.
2.37 "M-TEST CONTRIBUTIONS" shall mean, for any Plan Year, a
Participant's Employee Contributions, Matching Contributions and
Recharacterized Contributions, less any of the Participant's Qualified Matching
Contributions included as K-Test Contributions, plus, if so elected by the
Employer, part or all of the Qualified Non-Elective Contributions and Elective
Deferrals allocated to the Participant for such year, provided that, any
Qualified Non-Elective Contributions included as M-Test Contributions shall not
increase the difference between the M-Test Average Contribution Percentage for
Highly Compensated Employees and the M-Test Average Contribution Percentage for
Non-Highly Compensated Employees; and, further provided that, no Qualified
Non-Elective Contributions or Elective Contributions included as M-Test
Contributions shall be included as K-Test Contributions.
2.38 "MATCHING CONTRIBUTION" shall mean any Employer contribution
made to the Plan on behalf of an Employee on account of an Employee's Elective
Deferral, but excluding, for Plan Years beginning after December 31, 1988, any
contribution used to meet the minimum required allocation under Section 19.03
or 19.04.
2.39 "NAMED FIDUCIARY" shall mean the Plan Administrator and any
Committee appointed and so designated by the Plan Administrator.
2.40 "NET PROFIT" shall mean the current and accumulated earnings
of the Employer as reflected by its books of account for the particular fiscal
year according to generally accepted accounting principles, consistently
applied, prior to the provision for federal and state income tax, without
increase or decrease due to corrections or adjustments subsequently made, but
excluding the cost of contributions made under
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this Plan or any other qualified plan.
2.41 "NON-HIGHLY COMPENSATED EMPLOYEE" shall mean an Employee who
is neither a Highly Compensated Employee nor a Family Member of a Highly
Compensated Employee required to be aggregated under the family aggregation
rules in Section 2.22.
2.42 "NORMAL RETIREMENT AGE" shall mean Age 65.
2.43 "NORMAL RETIREMENT DATE" shall mean the first day of the
calendar month coinciding with or next following a Participant's Normal
Retirement Age.
2.44 "PARTICIPANT" shall mean any Employee who on or after the
Effective Date meets the requirements for participation hereunder. An Employee
who has satisfied such requirements, has not become an Excluded Employee and
has not terminated employment shall be considered to be an "active" Participant
so long as there is in effect a Salary Reduction Agreement whereby the
Participant has agreed to have contributions made to this Plan through Elective
Deferrals or the Participant qualifies as a Davis-Bacon Employee or Salaried
Employee and has not executed an election not to participate pursuant to
Section 4.06.
2.45 "PLAN" shall mean the Plan as stated herein and as may be
amended from time to time, denominated the "Gibbons Company Profit Sharing and
Retirement Plan.
2.46 "PLAN SPONSOR" shall mean Gibbons & Reed Company.
2.47 "PLAN YEAR" shall mean the one year period commencing January
1 and ending December 31.
2.48 "PRIOR PLAN" shall mean this Plan as it existed prior to the
Effective Date.
2.49 "QUALIFIED MATCHING CONTRIBUTION" shall mean a Matching
Contribution with respect to which the requirements of Code Section Section
401(k)(2)(B) and (C) are met.
2.50 "QUALIFIED NON-ELECTIVE CONTRIBUTION" shall mean any Employer
contribution to the Plan other than a Matching Contribution with respect to
which the Employee may not elect to have the contribution paid to the Employee
in cash instead of being contributed to the Plan and the requirements of Code
Section Section 401(k)(2)(B) and (C) are met.
2.51 "TRUST" shall mean the Trust created under the Prior Plan,
designated as the Gibbons Company Profit Sharing and Retirement Plan Trust, and
continued through a restated and amended Trust Agreement, effective July 1,
1993, with INVESCO Trust Company as Trustee.
2.52 "TRUST FUND" shall mean all cash, securities, annuity
contracts, Insurance Contracts, real estate and any other property held by the
Trustee pursuant to the terms of this Agreement, together with investment
earnings or losses thereon, less any applicable expenses of the Plan and Trust.
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2.53 "TRUSTEE" shall mean the bank, trust company or other
corporation possessing trust powers under applicable State or Federal law, or
one or more individuals, or any combination thereof named as parties hereto, or
any successor Trustee or Trustees hereunder.
2.54 "VALUATION DATE" shall mean the date on which the Trust Fund
and Accounts are valued, as provided in this Plan. The following shall be
Valuation Dates:
(a) the last day of each Plan Year (the "Anneal Valuation Date");
(b) the last day of each month during the Plan Year:
(c) any other day designated by the Plan Administrator and set
forth in a written notice to the Trustee as the Plan
Administrator may consider necessary or advisable to provide
for the orderly and equitable administration of the Plan.
2.55 "VESTED INTEREST" or "VESTED ACCRUED BENEFIT" shall mean the
portion of a Participant's Accrued Benefit which is non-forfeitable.
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ARTICLE III
SERVICE DEFINITIONS AND RULES
3.01 "ELIGIBILITY COMPUTATION PERIOD" shall mean the period used to
measure Eligibility Service and Breaks in Service for purposes of eligibility
to begin and maintain participation in the Plan.
(a) "INITIAL ELIGIBILITY COMPUTATION PERIOD" shall mean, for any
Employee in any Plan Year in which a Year of Eligibility
Service is required, the twelve (12) consecutive month period
which begins on the Employee's Employment Commencement Date or
Re-employment Commencement Date.
(b) "SUBSEQUENT ELIGIBILITY COMPUTATION PERIOD" shall mean, for
any Employee in any Plan Year in which a Year of Eligibility
Service is required, the Plan Year beginning with or within
the Initial Eligibility Computation Period and succeeding Plan
Years.
For any Plan Year in which less than a Year of Eligibility Service is required
for participation, the Eligibility Computation Period shall be determined from
the Employee's Employment Commencement Date or Re-employment Commencement Date.
3.02 "ELIGIBILITY SERVICE" shall mean service for any period during
which an Employee receives credit for Hours of Service for a Gibbons Employer.
3.03 "EMPLOYMENT COMMENCEMENT DATE" shall mean the date on which
the Employee first performs an Hour of Service for a Gibbons Employer.
3.04 "HOUR OF SERVICE" shall mean and be determined as follows:
(a) Each hour for which an Employee is paid, or entitled to
payment, for the performance of duties for the Employer.
These hours shall be credited to the Employee for the year or
years in which the duties are performed.
(b) Each hour for which an Employee is paid, or entitled to
payment, by the Employer on account of a period of time during
which no duties are performed (irrespective of whether the
employment relationship has terminated) due to vacation,
holiday, illness, incapacity (including disability), layoff,
jury duty, military duty or Leave of Absence. Notwithstanding
the preceding sentence:
(1) No more than five hundred and one (501) Hours of
Service are required to be credited under this
paragraph during which the Employee performs no
duties (whether or not such period occurs in a single
computation period);
(2) An hour for which an Employee is directly or
indirectly paid, or entitled to payment,
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<PAGE> 23
on account of a period during which no duties are
performed is not required to be credited to the
Employee if such payment is made or due under a plan
maintained solely for the purpose of complying with
applicable workmen's compensation or unemployment
compensation or disability insurance laws; and
(3) Hours of Service are not required to be credited for
a payment which solely reimburses an Employee for
medical or medically related expenses incurred by the
Employee.
For purposes of this paragraph (b), a payment shall be deemed
to be made by or due from an Employer regardless of whether
such payment is made by or due from the Employer directly, or
indirectly through, among others, a trust fund or insurer to
which Employer contributes or pays premiums and regardless of
whether contributions made or due to the trust fund, insurer
or other entity are for the benefit of particular Employees or
are on behalf of a group of Employees in the aggregate. Hours
under this paragraph (b) shall be calculated and credited
pursuant to DOL Reg. Section 2530.200b-2, paragraphs (b) and
(c), which are incorporated herein by this reference.
(c) Each hour for which back pay, irrespective of mitigation of
damages, is either awarded or agreed to by the Employer. The
same Hours of Service shall not be credited both under
paragraph (a) or paragraph (p), as the case may be, and under
this paragraph (c). These hours shall be credited to the
Employee for the year or years to which the award or agreement
pertains rather than the year in which the award, agreement or
payment is made.
(d) Hours of Service shall be determined on the basis of actual
hours for which an Employee is paid, entitled to payment or
for which back pay is awarded or agreed to.
(e) For Plan Years beginning after December 31, 1984, in the case
of an Employee who is absent from work for any period:
(1) By reason of the pregnancy of the Employee;
(2) By reason of the birth of a child of the Employee;
(3) By reason of the placement of a child with the
Employee in connection with the adoption of such
child by such Employee; or
(4) For purposes of caring for such child for a period
beginning immediately following such birth or
placement;
Hours of Service shall include the Hours of Service which
otherwise would normally have been credited to such Employee
but for such absence; or in any case in which the Plan is
unable to determine the Hours of Service to be credited, eight
(8) Hours of Service for each regularly scheduled work day of
such absence. The total number of hours treated as Hours
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of Service under this Section by reason of any pregnancy or
placement shall not exceed five hundred and one (501) hours
less the number of Hours of Service credited to an Employee
pursuant to Subsections (a) through (e) above, for an absence
described in this Subsection (f). The hours described in this
Subsection (f) shall be treated as Hours of Service only in
the computation period in which the absence from work begins,
if an Employee would be prevented from incurring a One-Year
Break in Service in such computation period solely because the
period of absence is treated as Hours of Service as provided
herein; or in any other case, in the immediately following
computation period. Notwithstanding the foregoing, no credit
will be given pursuant to this Subsection (f) unless the
Employee furnishes to the Plan Administrator such timely
information as the Plan Administrator may reasonably require
to establish that the absence from work is for reasons
referred to herein, and the number of days for which there was
such an absence.
(f) Hours of Service shall be aggregated for service with all
Gibbons Employers, however, in no event shall duplicate credit
be given for the same Hours of Service.
(g) The Plan Administrator may use any records to determine Hours
of Service which it considers an accurate reflection of the
facts.
(h) When crediting Hours of Service for Employees who are paid on
an hourly basis the Plan Administrator shall use the "actual"
method. For purposes of the Plan, "actual" method shall mean
the determination of Hours of Service from records of hours
worked and hours for which the Employer makes payment or for
which payment is due from the Employer. When crediting Hours
of Service for Employees who are not paid on an hourly basis,
the Plan Administrator shall use the "salaried earnings"
method. With respect to an Employee whose Compensation
consists primarily of periodic salary payments, "salaried
earnings" method shall mean the determination of Hours of
Service from records showing payments made to the Employee or
payments due to the Employee from the Employer. In applying
the "salaried earnings" method, an Employee who receives
credit for four hundred thirty-five (435) hours and for eight
hundred seventy (870) hours shall be deemed to have received
credit for the equivalent of five hundred (500) Hours of
Service and one thousand (1,000) Hours of Service
respectively.
3.05 "ONE YEAR BREAK IN SERVICE" shall mean a twelve (12)
consecutive month period during which an Employee has not completed more than
five hundred (500) Hours of Service, regardless of whether the Employee has
incurred a Termination of Employment. For purposes of vesting, such twelve
(12) consecutive month periods shall be measured on the same basis as Years of
Vesting Service. For purposes of eligibility to participate, the Plan shall
not apply any break in service rule. The following types of absence shall not
constitute a One-Year Break in Service:
(a) Temporary leave of absence granted by the Employer for
sickness, or extended vacation, provided that persons under
similar circumstances shall be treated alike;
(b) Absence due to illness or accident while regular remuneration
is paid;
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(c) Absence for military service or significant civilian service
for the United States, provided the absent Employee returns to
service with the Employer within thirty (30) days of his
release from such active military duty or service or any
longer period during which his right to re-employment is
protected by law.
3.06 "REEMPLOYMENT COMMENCEMENT DATE" shall mean the date on which
an Employee, who has both incurred a Termination of Employment from the
Employer and has had a One Year Break in Service as a result of that
termination, first performs an Hour of Service for the Employer following such
Break in Service.
3.07 "TERMINATION OF EMPLOYMENT" with respect to any Employee or
Participant shall occur upon the resignation, discharge, death, retirement,
failure to return to active work at the end of an authorized leave of absence
or the authorized extension(s) thereof, failure to return to active work when
duly called following a temporary layoff, or upon the happening of any other
event or circumstance which, under the then current policy of the Gibbons
Employer results in the termination of the employer-employee relationship.
Termination of Employment shall not be deemed to occur merely because of a
transfer between Gibbons Employers.
3.08 "VESTING COMPUTATION PERIOD" shall mean the twelve (12)
consecutive month period used to measure Years of Vesting Service and Breaks in
Service for purposes of vesting. The twelve (12) consecutive month period used
for the Vesting Computation Period shall be the Plan Year, provided however,
with respect to the short Plan Year during the period from the day after the
last Saturday in October, 1990 to December 31, 1991, a Participant shall
receive credit for the Year of Vesting Service if he completes 1,000 Hours of
Service during the fiscal year measured from October 28, 1990 to October 26,
1991, and an additional Year of Vesting Service if he completes 1,000 Hours of
Service during the Plan Year period measured from January 1, 1991 to December
31, 1991.
3.09 "YEAR OF SERVICE" shall mean a twelve (12) consecutive month
period during which an Employee has completed at least one thousand (1000)
Hours of Service.
3.10 "YEAR OF ELIGIBILITY SERVICE" shall mean for Plan Years
commencing prior to 1988 an Eligibility Computation Period during which an
Employee has completed at least one thousand (1000) Hours of Service.
3.11 "YEAR OF VESTING SERVICE" shall mean a Vesting Computation
Period during which an Employee has completed at least one thousand (1000)
Hours of Service. A Participant's Years of Vesting Service shall be determined
based on all Vesting Computation Periods containing or beginning after his
Employment Commencement Date or Re-employment Commencement Date.
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ARTICLE IV
ELIGIBILITY AND PARTICIPATION
4.01 AGE AND SERVICE REQUIREMENTS:
(a) Effective July 1, 1993, an Eligible Employee shall be eligible
to participate in this Plan on the first Entry Date coincident with or next
following the date on which he satisfies all of the following requirements:
(i) attains the Age of twenty-one (21) years; and
(ii) completes a Year of EligibIlity Service; and
(iii) is employed on the Entry Date.
(b) Effective July 1, 1993, an Eligible Employee who is also a
Davis-Bacon Employee shall be eligible to participate in this Plan for the
purpose of receiving allocations of Employer Davis-Bacon Contributions only, on
his Employment Commencement Date or his Re-employment Commencement Date.
(c) Prior to July 1, 1993, but after the Effective Date, only an
Eligible Employee who is a Salaried Employee and who on the first Entry Date
coincident with or next following the date on which he satisfies all of the
following requirements, shall be eligible to participate in this Plan:
(i) attains the Age of twenty-one (21) years;
(ii) completes a Year of Eligibility Service; and
(iii) is employed on the Entry Date.
(d) Prior to the Effective Date an Eligible Employee shall be
eligible to participate as provided in the Prior Plan.
(e) An Eligible Employee shall commence participation in the Plan
as an active Participant only upon execution prior to the applicable Entry Date
of a written Salary Reduction Agreement in the manner set forth in procedures
issued by the Plan Administrator. Notwithstanding the foregoing, an Eligible
Employee who is also a Salaried Employee shall commence participation in the
Plan as an active Participant for purposes of allocations of Employer Profit
Sharing Contributions only, on the Plan Entry Date coincident with or
immediately preceding the date the Salaried Employee satisfies the requirements
of Section 4.01(a) or (c), as applicable. An Eligible Employee who is also a
Davis-Bacon Employee shall commence participation in the Plan as an active
Participant for purposes of allocations of Employer Davis-Bacon Contributions
only, upon satisfaction of the requirements of Section 4.01(6). An Employee
who was a Participant in the Prior Plan on the day before The Effective Date
shall continue as a Participant
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in this Plan on that date.
4.02 PLAN ADMINISTRATOR TO FURNISH ELIGIBILITY INFORMATION: As
soon as practicable after each Employee's Employment Commencement Date, the
Plan Administrator shall determine The Entry Date when the Employee shall first
become eligible to participate in the Plan and shall notify each Employee of
his/her eligibility, and of any application or other requirements for
participation.
4.03 INFORMATION TO BE PROVIDED BY EMPLOYEE: At the request of the
Plan Administrator, each Eligible Employee shall furnish such information as is
not available from the Employer. As a condition to participation in the Plan,
the Employee shall first complete, execute and deliver a written Salary
Reduction Agreement as reasonably required by the Plan Administrator.
4.04 RECLASSIFICATION OF AN ELIGIBLE EMPLOYEE OR EXCLUDED EMPLOYEE:
Any Eligible Employee, whether or not he has previously participated in the
Plan, who was previously classified as an Excluded Employee and is reclassified
as an Eligible Employee shall be eligible to enter the Plan as an active
Participant on the later of the date of his reclassification or the date he
would otherwise join if he had not been classified as an Excluded Employee,
provided he has otherwise satisfied the requirements of Section 4.01.
Any Participant who is reclassified as an Excluded Employee and who, prior to
the reclassification completed one thousand (1000) Hours of Service in the Plan
Year in which such reclassification occurred, shall be treated for purposes of
determining his eligibility for any Employer Contributions to the Plan,
allocation of which is contingent upon such Service, as though the
reclassification had not occurred until the first day of the following Plan
Year.
4.05 Reemployment and Commencement of Participation: An Eligible
Employee who had met the requirements of Section 4.01(a), (b) or (c) but
terminated employment prior to his Entry Date shall be eligible to become a
Participant on the date he is re-employed by the Employer, but in no event
earlier than the Entry Date he would have joined had he not ceased employment.
An Eligible Employee who was a Participant shall again become a Participant on
the date he is re-employed by the Employer. The Eligible Employee shall become
an active Participant and commence Elective Deferrals immediately upon
execution of the Salary Deferral Agreement, if it is executed within the time
period specified by the Plan Administrator pursuant to a uniform and
nondiscriminatory policy. If not so executed, the Participant may become an
active Participant as of the first day of subsequent calendar quarter
thereafter.
4.06 ELECTION NOT TO PARTICIPATE: At any time after the Plan
Administrator notifies an Eligible Employee of his eligibility to participate
in this Plan, the Eligible Employee may elect not to become an active
Participant by not executing a Salary Reduction Agreement or (with respect to
Employer Profit Sharing Contributions and Employer Davis-Bacon Contributions)
by indicating on the enrollment form his election not to participate. The
Employee may later become an active Participant as of the next Entry Date, if
the Employee is then an Eligible Employee, meets the requirements for
participation under this Article IV and completes the appropriate enrollment
form or properly executes a Salary Reduction Agreement.
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4.07 EFFECT OF PARTICIPATION: A Participant who has executed a
Salary Reduction Agreement shall be conclusively deemed to have assented to
this Plan and to any subsequent amendments, and shall be bound thereby with the
same force and effect as if he had formally executed this Plan.
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ARTICLE V
PARTICIPANT AND EMPLOYER CONTRIBUTIONS
5.01 ELECTIVE DEFERRALS:
(a) Each Participant may elect to defer any whole percentage of
the Participant's salary or wages (including overtime pay),
subject to a minimum of one percent (1%) and to a maximum
percentage established by the Plan Administrator. Deferral
shall be contingent on the Participant completing and
executing a written Salary Reduction Agreement. The Salary
Reduction Agreement shall be filed with the Administrator on a
form prescribed for this purpose and shall be subject to the
following rules:
(1) The Salary Reduction Agreement shall apply to each
payroll period during which an effective Salary
Reduction Agreement is on file with the
Administrator. Except as provided in paragraph (b)
below, the Salary Reduction Agreement shall apply to
salary and waged paid, including overtime pay. It
shall not apply to commissions or bonuses. However,
at the Participant's election the Salary Reduction
Agreement may apply solely to salary and wages,
without regard to overtime pay.
(2) The amount by which the Participant's salary or wages
is reduced under the Salary Reduction Agreement may
be changed by a Participant no more than quarterly
during the Plan Year. Any change shall be made in
writing in accordance with the rules and procedures
established by the Administrator.
(3) Salary Reduction Agreements and Amendments to Salary
Reduction Agreements shall be effective as of the
Entry Date following the date the Salary Reduction
Agreement or the Amendment is executed by the
Participant and received by the Administrator.
(4) The Administrator may amend or revoke a Salary
Reduction Agreement with any Participant at any time
if the Administrator determines that a revocation or
amendment is necessary to ensure that the
Participant's Elective Deferral for any Plan Year
will not exceed any Plan limitations.
(5) The Administrator may revoke its Salary Reduction
Agreements with all Participants or amend its Salary
Reduction Agreements with all Participants on a
uniform basis if it determines the Employer will not
have sufficient monies to make contributions to the
Plan required by the Salary Reduction Agreements.
(b) Each Participant may elect by a separate one-time Salary
Reduction Agreement to defer and have allocated for a Plan
Year all or a portion of any cash bonus attributable to
services performed by the Participant for the Employer during
the Plan Year and which would be received by the Participant
on or before the end of the Plan Year but for the deferral
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election. A deferral election may not be made with respect to
cash bonuses which are currently available on or before the
date the Participant executes the election. Cash bonuses
attributable to services performed by the Participant during
the Plan Year but which are paid to the Participant after the
close of the Plan year shall be subject to the separate Salary
Reduction Agreement as elected by the Participant for that
cash bonus and in effect at the time the cash bonus would have
otherwise been received.
(c) The Elective Deferral amounts designated by the Participant in
the Salary Reduction Agreement shall be withheld and
contributed to the Plan by the Employer without regard to Net
Profits to the Participant's Participant Elective Deferral
Account. Unless otherwise authorized by the Plan
Administrator, contributions made through payroll deductions
shall be pursuant to the executed Salary Reduction Agreement
form provided by the Plan Administrator.
5.02 PAYMENT TO TRUSTEE: The Employer shall transmit to the
Trustee the amounts withheld by it pursuant to Section 5.01 above within thirty
(30) days after the date the amount is withheld. However, the Employer shall
not transmit to the Trustee any amounts withheld by it during the last quarter
of any Plan Year or pursuant to a deferral election under Section 5.01(b),
which in the Plan Administrator's opinion would cause the Plan to fail to meet
the limitations described in Section 5.12 for that Plan Year. Such amounts, to
the extent that they will not cause the Plan to fail to meet the limitations
described in Section 5.12, may be transmitted to the Trustee at any time up to
two and one-half (21/2) months after the end of the Plan Year. Amounts
withheld and not transmitted to the Trustee shall be returned by the Employer
to the respective Participants.
5.03 SUSPENSION OF DEFERRALS: Upon written notice filed with the
Plan Administrator at least ten (10) days (or such shorter period determined by
the Plan Administrator) prior to the first day of the payroll period for which
the notice is to be effective, a Participant may suspend his election to have a
portion of his Annual Compensation deferred. The suspension shall be effective
for the payroll period next following the effective date of the notice. The
Participant shall nevertheless be considered a Participant hereunder for all
other purposes if his employment continues, however, he shall not be considered
to be an active Participant.
5.04 NO VOLUNTARY CONTRIBUTIONS BY PARTICIPANTS: From and after
the Effective Date of this Plan, a Participant shall not be permitted to make
voluntary after-tax contributions to the Plan. Voluntary after-tax
contributions made prior to the Effective Date shall be allowed as provided in
the Prior Plan, but shall be administered and maintained as provided in this
Plan.
5.05 ROLLOVER CONTRIBUTIONS BY PARTICIPANTS: A Participant (or an
Employee who is expected to become a Participant) may rollover directly to this
Plan (or indirectly through an individual retirement account, annuity or bond)
the cash or cash proceeds from the sale of property distributed to the
Participant in the form of a lump sum distribution (and after December 31,1992,
an "eligible rollover distribution" as that term is defined under Code Section
401(a)(31)) from another plan qualified under Code Section 401(a). For this
purpose after December 31, 1992 this Plan shall be an "eligible retirement
plan" as that term is defined in Code Section 401(a)(31)(D). The amount shall
be credited to his Participant Rollover Contribution Account,
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<PAGE> 31
provided:
(a) The Participant provides adequate evidence to the Plan
Administrator that the amount satisfies the requirements of
Code Section 402(a)(5) (Code Section 402(c) after December 31,
1992) regarding amounts that may be rolled over;
(b) If the amount is rolled over indirectly to this Plan through
an individual retirement account, annuity, or bond, the amount
does not include life insurance policies, amounts contributed
(or deemed to have been contributed) by the Participant or
amounts distributed from a Plan not qualified under Code
Section 401(a); and
(c) If the amount to be rolled over to this Plan was distributed
after December 31, 1992, it is received by this Plan as a
direct transfer pursuant to Code Section 402(e)(6) or rolled
over after distribution to the Participant within sixty (60)
days following its distribution.
5.06 EMPLOYER MATCHING CONTRIBUTIONS: For each Plan Year the
Employer shall contribute to the Plan an amount, determined without regard to
Net Profits, which will be sufficient to credit the Employer Matching
Contribution Account of each Participant who satisfies the requirements of
Section 6.04, with amounts which, when determined as a percentage of the
Participant's Compensation for the Plan Year, are in total equal to the
percentage amounts shown in the following table:
<TABLE>
<CAPTION>
Participant's elective Percentage of Employer
deferral percentage: Matching Contribution:
<S> <C>
0% 0.00%
1% 0.50%
2% 1.00%
3% 1.50%
4% 2.00%
5% 2.25%
6% or more 2.50%
</TABLE>
In no event shall the Employer Matching Contribution exceed two and one-half
percent (2.50%) of the Participant's Annual Compensation for the Plan Year;
provided however, that if the Employer makes a Matching Contribution to the
Plan at any time during the Plan Year (such as on a calendar quarter basis),
the two and one-half percent (2.50%) limit of this Section 5.05 shall not be
determined by reference to Annual Compensation for the Plan Year,but by
reference to Compensation paid only during the period to which the Matching
Contribution relates. Notwithstanding the previous sentence, no contribution
in excess of the maximum amount which would constitute an allowable deduction
for Federal income tax purposes under the applicable provisions of the Code, as
now in force or hereafter amended, shall be required to be made by the Employer
under this Section.
5.07 EMPLOYER PROFIT SHARING CONTRIBUTIONS: In addition to the
Employer Matching Contributions made pursuant to Section 5.06 for each Plan
Year, the Employer may contribute, without regard to Net Profits, an amount
determined by its Board of Directors as an Employer Profit Sharing
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<PAGE> 32
Contribution to the Accounts of Salaried Employees only. The Employer reserves
the right to increase or decrease the amount of the Employer Profit Sharing
Contribution from year to year, as determined by the Board of Directors.
The amount of the contribution to be credited to the Employer Profit Sharing
Contribution Accounts of the Participants who are Salaried Employees may be
stated in terms of a gross contribution, in which case the amount shall be
reduced by any non-vested forfeitures from Employer Profit-Sharing Contribution
Accounts of the Participants to be allocated during the Plan Year pursuant to
Section 11.05; or the amount may be stated in terms of a net contribution, in
which ease the amount shall be in addition to any such non-vested forfeitures.
In the absence of a direction as to whether the amount of the contribution is
in terms of a gross contribution or a net contribution, it shall be deemed to
be a net contribution.
5.08 EMPLOYER DAVIS-BACON CONTRIBUTIONS: The Employer shall
contribute for each Plan Year to the Accounts of all Davis-Bacon Employees,
without regard to net profits, an amount determined according to the most
recent Davis-Bacon Contribution Schedule adopted and approved by the Employer
from time to time. The Employer shall attach a copy of each such Schedule to
this Plan as adopted, which shall then become a part of this Plan. If the
Employer has Employees working on more than one project at a time subject to a
Prevailing Wage Law, the Employer may attach a separate Davis-Bacon
Contribution Schedule for each project and designate the Davis-Bacon Employees
for each project in order to comply with the Prevailing Wage Law applicable to
that project. For purposes of this Section 5.08, "Davis-Bacon Contribution
Schedule" shall mean the schedule of payments required under a Prevailing Wage
Law. "Prevailing Wage Law" means the Davis-Bacon Act (40 U.S.C. Section 267a,
et seq.), Service Contract Act or any other statute, ordinance or other
enforceable enactment that requires the Employer to pay its Employees working
on public contracts at wage rates (including fringe benefit payments) not less
than those determined, pursuant to such law, to be prevailing wages for workers
in the geographic area where the contract is being performed who perform
similar tasks.
5.09 TIME AND METHOD OF PAYMENT OF EMPLOYER MATCHING AND PROFIT SHARING
CONTRIBUTIONS: All payments of Employer Matching and Profit Sharing
Contributions shall be made directly to the Trustee and shall be paid no later
than the time prescribed by law (including any extensions thereof) for filing
the Employer's Federal income tax return for the Plan Year for which they are
made. The Employer may in its sole discretion, at any time during the Plan
Year, make one or more partial payments to the Trustee on an estimated basis.
Any amount so paid in advance shall be applied against the amount thereafter
determined to be payable by the Employer and shall be credited by the Plan
Administrator to the Participants' respective Employer Contribution Accounts as
of the end of the calendar quarter for which the payment is made.
5.10 TIME AND METHOD OF PAYMENT OF EMPLOYER DAVIS-BACON
CONTRIBUTIONS: All payments of Employer Davis-Bacon Contributions shall be
made directly to the Trustee and shall be paid no later than the time
prescribed by law (including any extensions thereof) for filing the Employer's
Federal income tax return for the Plan Year for which they are made. The
Employer may in its sole discretion, at any time during the Plan Year, make one
or more partial payments to the Trustee on an estimated basis. Any amount so
paid in advance shall be applied against the amount thereafter determined to be
payable by the Employer and shall be credited at the Employer's direction by
the Plan Administrator to the Participants'
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<PAGE> 33
Davis-Bacon Accounts as of the end of the calendar quarter (or shorter time,
such as the end of the payroll period) for which the payment is made.
5.11 EMPLOYER CONTRIBUTION ACCOUNTS: The Plan Administrator shall
establish and maintain an Employer Matching Contribution Account, as defined in
Section 2.01(d), an Employer Profit Sharing Account as defined in Section
2.01(e) and a Davis-Bacon Account as defined in Section 2.01(f) for each
Participant eligible to receive an Employer Matching Contribution, Employer
Profit Sharing Contribution or Employer Davis-Bacon Contribution. The
establishment of the Accounts is for record keeping purposes only, and a
physical segregation of assets shall not be required.
5.12 LIMITATIONS ON CONTRIBUTIONS: Notwithstanding any other
provisions of this Plan, contributions shall be subject to the following
limitations:
(a) A Participant's Elective Deferral during any calendar year to
this Plan and to all other plans maintained by the Employer or
any member of a Controlled Group or Affiliated Service Group
to which the Employer belongs shall not exceed seven thousand
dollars ($7,000), which amount shall be indexed at the same
time and in the same manner as the dollar limitation for
defined benefit plans in Code Section 415(b)(1)(A).
(b) The K-Test Average Contribution Percentage for Participants
who are Highly Compensated Employees shall not exceed in any
Plan Year the greater of:
(1) The K-Test Average Contribution Percentage for
Participants who are Non-Highly Compensated Employees
multiplied by 1.25; or
(2) The lesser of the K-Test Average Contribution
Percentage for Participants who are Non-Highly
Compensated Employees multiplied by two (2) or the
K-Test Average Contribution Percentage for
Participants who are Non-Highly Compensated Employees
plus two (2).
(c) The M-Test Average Contribution Percentage for Participants
who are Highly Compensated Employees shall not exceed in any
Plan Year the greater of:
(1) The M-Test Average Contribution Percentage for
Participants who are Non-Highly Compensated Employees
multiplied by 1.25; or
(2) The lesser of the M-Test Average Contribution
Percentage for Participants who are Non-Highly
Compensated Employees multiplied by two (2) or the
M-Test Average Contribution Percentage for
Participants who are Non-Highly Compensated Employees
plus two (2).
(d) In any Plan Year in which the requirements of both (b)(1) and
(c)(1) above are not met, the sum of the K-Test Average
Contribution Percentage and the M- Test Average Contribution
Percentage for Participants who are Highly Compensated
Employees shall not exceed the greater of:
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<PAGE> 34
(1) The sum of:
(i) The greater of the K-Test Average
Contribution Percentage or the M-Test Average
Contribution Percentage for Participants who
are Non-Highly Compensated Employees
multiplied by 1.25; and
(ii) The lesser of the K-Test Average Contribution
Percentage or the M-Test Average Contribution
Percentage for Participants who are
Non-Highly Compensated Employees plus two
(2), but in no event greater than the lesser
of the K-Test Average Contribution Percentage
or the M-Test Average Contribution Percentage
for Participants who are Non-Highly
Compensated Employees multiplied by two (2);
or
(2) The sum of:
(i) The lesser of the K-Test Average Contribution
Percentage or the M-Test Average Contribution
Percentage for Participants who are
Non-Highly Compensated Employees multiplied
by 1.25; and
(ii) The greater of the K-Test Average
Contribution Percentage or the M-Test Average
Contribution Percentage for Participants who
are Non-Highly Compensated Employees plus two
(2), but in no event greater than the lesser
of the K-Test Average Contribution Percentage
or the M-Test Average Contribution Percentage
for Participants who are Non-Highly
Compensated Employees multiplied by two (2).
For this purpose, the K-Test Average Contribution Percentage
and M-Test Average Contribution Percentage for Participants
who are Highly Compensated Employees shall be determined after
any distributions or recharacterizations pursuant to Section
5.14(a), (b) and (c).
The Employer may aggregate this Plan with one or more other plans for purposes
of applying the tests in (b), (c) and (d) above, in which ease all K-Test
Contributions and M-Test Contributions to all such plans shall be treated as
made under this Plan, provided that, for Plan Years beginning after December
31, 1988, the aggregated plans may not include an Employee Stock Ownership
Plan, and, further provided that, for Plan Years badgering after December 31,
1989, all such aggregated plans must have the same plan year.
5.13 EXCESS CONTRIBUTIONS: In accordance with the limitations on
contributions described in Section 5.12, the following amounts shall be treated
as excess contributions under this Plan:
(a) EXCESS DEFERRALS: with respect to any calendar year, amounts
designated by Participants in writing as Excess Deferrals not
later than the first March 1 following the end of the calendar
year, in accordance with such procedures as the Plan
Administrator shall specify, less any Excess K-Test
Contributions previously distributed or recharacterized for
the Plan Year
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<PAGE> 35
beginning in the calendar year in which the Excess Deferral is
made, pursuant to Section 5.14(b).
(b) Excess K-Test Contributions: with respect to any Plan Year,
the excess of the aggregate amount of K-Test Contributions
actually made on behalf of Highly Compensated Employees for
such Plan Year over the maximum amount of such contributions
permitted under Section 5.12(b). The Excess K-Test
Contributions of an individual Highly Compensated Employee
shall be determined by subtracting from his K-Test
Contributions the amount determined by reducing the K-Test
Contributions made on behalf of Highly Compensated Employees
in order of their K-Test Contribution Percentages beginning
with the highest such percentages until the limitations of
Section 5.12(b) are met. If the K-Test Contribution
Percentage of a Participant is determined according to Section
2.30, the Excess K-Test Contributions shall be allocated among
the aggregated Family Members in proportion to the Elective
Deferrals of such Family Members. The Excess K-Test
Contributions allocated to a Participant shall be reduced by
any Excess Deferrals previously distributed for the calendar
year ending with or within the Plan Year in which the Excess
K-Test Contributions arose, pursuant to Section 5.14(a).
(c) EXCESS M-TEST CONTRIBUTIONS: with respect to any Plan Year,
the excess of the aggregate amount of M-Test Contributions
actually made on behalf of Highly Compensated Employees for
such Plan Year over the maximum amount of such contributions
permitted under Section 5.12(c). The Excess M-Test
Contributions of an individual Highly Compensated Employee
shall be determined by subtracting from his M-Test
Contributions the amount determined by reducing the M-Test
Contributions made on behalf of Highly Compensated Employees
in order of their M-Test Contribution Percentages beginning
with the highest such percentages until the limitations of
Section 5.12(c) are met. If the M-Test Contribution
Percentage of a Participant is determined according to Section
2.35, the Excess M-Test Contributions shall be allocated among
the aggregated Family Members in proportion to the Employee
Contributions and Matching Contributions of such Family
Members included as M-Test Contributions.
(d) EXCESS COMBINED-TEST CONTRIBUTIONS: with respect to any Plan
Year, the excess of the aggregate amount of the K-Test
Contributions actually made on behalf of Highly Compensated
Employees for such Plan Year over the maximum amount of such
contributions permitted under Section 5.12(d), provided that
M-Test Contributions are not reduced. The Excess
Combined-Test Contributions of an individual Highly
Compensated Employee shall be determined in the same manner as
Excess K-Test Contributions under (b) above, except
disregarding the provision for taking into account
distributions of Excess Deferrals.
(e) EXCESS COMBINED-TEST CONTRIBUTIONS: with respect to any Plan
Year, the excess of the aggregate amount of the M-Test
Contributions actually made on behalf of Highly Compensated
Employees for such Plan Year over the maximum amount of such
contributions permitted under Section 5.12(d), provided that
K-Test Contributions are not reduced. The Excess Combined-Test
Contributions of an individual Highly Compensated Employee
shall
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<PAGE> 36
be determined in the same manner as Excess M-Test Contributions
under (c) above.
5.14 CORRECTION OF EXCESS CONTRIBUTIONS: The Plan provides the
following methods for correcting excess contributions as described in Section
5.13:
(a) EXCESS DEFERRALS: The Plan Administrator shall direct the
Trustee to distribute to a Participant from his Participant
Elective Deferral Account an amount equal to the Participant's
Excess Deferral plus income, if any, allocable thereto. Such
distribution shall be designated by the Plan Administrator as
a distribution of an Excess Deferral and shall be made not
earlier than the date on which the Trustee receives the Excess
Deferral and not later than the first April 15 following the
end of the calendar year in which the Excess Deferral is made.
(b) EXCESS K-TEST CONTRIBUTIONS: The Plan Administrator shall
direct the Trustee to distribute to a Participant his Excess
K-Test Contribution plus income, if any, allocable thereto.
Such distribution shall be designated by the Plan
Administrator as a distribution of an excess contribution and
shall be made after the end of the Plan Year in which the
excess contribution arose and within twelve (12) months after
the end of such Plan Year.
If the Employer has made a Matching Contribution attributable
to any portion of the Participant's Excess K-Test Contribution
distributed to the Participant pursuant to the above, the Plan
Administrator shall treat such Matching Contribution in the
same manner as an Excess M-Test Contribution in accordance
with (c) below.
(c) EXCESS M-TEST CONTRIBUTIONS: The Plan Administrator shall
direct the Trustee to distribute to a Participant any portion
of the Participant's Excess M-Test Contribution, plus income,
if any, allocable thereto. Such distribution shall be
designated by the Plan Administrator as a distribution of
excess contributions and shall be made after the end of the
Plan Year in which the excess contribution arose and within
twelve (12) months after the end of such Plan Year.
(d) EXCESS COMBINED-TEST CONTRIBUTIONS: The Plan Administrator
shall correct the Excess Combined-Test Contributions in the
same manner as for Excess K-Test and M-Test Contributions in
(p) and (c) above.
For purposes of the above, income shall include realized and
unrealized gains and losses and shall be allocated to excess
contributions in accordance with Regulations issued by the Secretary.
Distributions pursuant to the above shall be made without regard to
any consent by the Participant or Spouse otherwise required under this
Plan.
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<PAGE> 37
ARTICLE VI
ALLOCATIONS TO ACCOUNTS
6.01 REVALUATION OF ASSETS: Not less frequently than as of the
Annual Valuation Date each year, the Plan Administrator shall re-value the net
assets of the Investment Fund at their then current fair market value. At the
Plan Administrator's discretion, applied on a consistent basis, the Plan
Administrator may similarly re-value the net assets of the Investment Fund or
of any of the Accounts in the Investment Fund at the end of a semi-annual,
quarterly, monthly or more frequent period; the last day of such period shall
be referred to as an Interim Valuation Date. The net investment income or loss
on the Investment Fund since the previous Annual or Interim Valuation Date
shall then be determined.
6.02 ALLOCATION OF CONTRIBUTIONS AND FORFEITURES: Contributions
and forfeitures for any period shall be credited to the Accounts of
Participants in the following manner:
(a) With respect to Elective Deferral contributions made pursuant
to Section 5.01, an amount equal to the Participant's Elective
Deferral since the previous Annual or Interim Valuation Date
shall be allocated and credited to his Participant Elective
Deferral Account.
(b) Matching Contributions made pursuant to Section 5.06 shall be
allocated on each Annual Valuation Date (and if the Employer
makes Matching Contributions on a calendar quarter or other
periodic basis, on the last day of each calendar quarter or
other period) to each Participant's Account who satisfies the
requirements of Section 6.04, in an amount equal to the
percentage shown on the table in Section 5.06, but not to
exceed two and one-half percent (2.50%) of the Participant's
Annual Compensation for the Plan Year. If the Employer makes
a Matching Contribution to the Plan at any time during the
Plan Year, the two and one-half percent (2.50%) limit of this
Section 6.02(b) shall not be determined by reference to Annual
Compensation for the Plan Year, but by reference to
Compensation paid only during the period to which the Matching
Contribution relates.
(c) Forfeitures from Participants' Employer Matching Contribution
Accounts to be reallocated pursuant to Section 11.06, shall be
allocated on each Annual Valuation Date to each Participant
who satisfies the requirements of Section 6.04, based upon the
Employer Matching Contribution formula in Section 5.06. The
amount so allocated shall be credited to each Participant's
Employer Matching Contribution Account.
(d) Employer Profit-Sharing Contributions made pursuant to Section
5.07, shall be allocated on each Annual Valuation Date to the
Account of each Participant who is a Salaried Employee and who
satisfies the requirements of Section 6.04. The Employer
Profit-Sharing Contribution shall be credited to the Employer
Profit-Sharing Contribution Accounts of such Participants
according to the following formula:
(1) First, the Employer Profit Sharing Contribution shall
be allocated in the same ratio that each
Participant's Compensation plus Excess Compensation
for the Plan Year
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<PAGE> 38
bears to the total Compensation plus Excess Compensation of all
Participants for the Plan Year. The allocation under this
sub-paragraph 6.02(d)(1) shall not exceed five and seven-tenths
percent (5.7%) (or such applicable old age percentage rate as
provided under the Social Security Act) of each Participant's
Compensation plus Excess Compensation for the Plan Year. For
purposes of the above allocation formula, "Excess
Compensation" shall mean Compensation in excess of the taxable
wage base, as determined under Social Security Act Section
230, in effect on the first day of the Plan Year.
(2) Second, any Employer Profit Sharing Contribution
remaining after allocation of all amounts in
sub-paragraph 6.02(d)(1) shall be allocated in the
same proportion that each Participant's Annual
Compensation for the Plan Year bears to the total
Annual Compensation of all Participants for the Plan
Year.
At the time the Employer makes its Profit-Sharing
Contribution, the Employer shall designate to the
Administrator the Plan Year for which the Profit-Sharing
Contribution shall be deemed to have been made (which may be
the current Plan Year or the immediately prior or subsequent
Plan Year, as the Employer deems appropriate). If the
Employer makes no designation, the Employer Profit-Sharing
Contribution shall be deemed to have been made for the Plan
Year which begins concurrent with or within the taxable year
of the Employer for which the Employer claims a deduction
under Code Section 404.
(e) Forfeitures from Employer Profit-Sharing Contribution Accounts
to be reallocated pursuant to Section 11.05, shall be
allocated on each Annual Valuation Date to each Participant
who satisfies the requirements of Section 6.04 along with and
in the same manner as Employer Profit Sharing Contributions.
Such allocated amounts shall be credited to the Employer
Profit-Sharing Contribution Accounts of such Participants.
(f) Employer Davis-Bacon Contributions made pursuant to Section
5.08 shall be allocated to the Account of each Participant who
is a Davis-Bacon Employee and who satisfies the requirements
of Section 6.04. The Davis-Bacon Contribution shall be
credited to the Accounts of eligible Participants according to
the contribution schedule provided under Section 5.08.
(g) With respect to contributions made pursuant to Sections 5.04
and 5.05, an amount equal to the Participant's voluntary or
rollover contributions since the previous Annual or Interim
Valuation Date shall be credited to the Participant's
Voluntary Contribution Account or Rollover Contribution
Account, as the case may be.
6.03 ADJUSTMENT OF ACCOUNTS: As of each Annual or Interim
Valuation Date all Participants' and Former Participants' Accounts shall be
adjusted to reflect the contributions and income received, profits and losses,
and distributions and expenses of the Trust Fund since the previous Annual or
Interim Valuation Date. The adjustments shall be made in the following manner
and order:
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<PAGE> 39
(a) Each Account shall be credited with the contributions
allocated to it pursuant to Section 6.02 since the previous
Annual or Interim Valuation Date.
(b) Each Account shall be charged with any withdrawals or
distributions from such Account since the previous Annual or
Interim Valuation Date.
(c) Each Account which has a non-zero balance after the
application of (a) and (b) above, shall be credited (or
charged) with its proportionate share of the net investment
income (or loss) and expenses since the previous Annual or
Interim Valuation Date and interest on any participant loan(s)
in the name of the Participant, which has been paid by the
Participant since the previous Valuation Date. The amount to
be credited or charged to each Account shall be determined
based on the ratio that: (i) the balance in the Account on the
previous Annual or Interim Valuation Date less any withdrawals
or distributions from the Account since that date bears to
(ii) the total of such amounts determined for all Accounts.
Notwithstanding the previous sentence, in the sole discretion
of the Plan Administrator, the method of allocating the net
investment income (or loss) of the Investment Fund may be
adjusted to reflect the effect of cash flows into and out of
such Accounts (such as contributions, payments on Participant
loans, distributions, etc.) based on the length of time
between the date of such cash flow and the current Annual or
Interim Valuation Date. Any such adjustment pursuant to the
previous sentence shall be made in a uniform and
non-discriminatory manner among Participants and/or the types
of Accounts.
6.04 ELIGIBILITY FOR ALLOCATION OF EMPLOYER CONTRIBUTIONS: The
eligibility of Participants to receive allocations of Employer Matching, Profit
Sharing and Davis-Bacon Contributions for each Plan Year shall be determined in
the following manner:
(a) Except as otherwise provided in this Section 6.04, the
Administrator shall determine allocations of Employer Matching
Contributions on the basis of the Plan Year unless the
Employer makes its Matching Contributions on a more frequent
periodic basis, such as quarterly. Matching Contributions made
on a periodic basis during the Plan Year shall also be
allocated on the same periodic basis. In allocating Matching
Contributions to a Participant's Account, the Administrator
shall take into account only the Compensation paid the
Employee during the period to which the allocation applies and
he is a Participant in the Plan with a valid, executed Salary
Reduction Agreement in effect and on file with the
Administrator. Employer Matching Contributions for the Plan
Year shall be allocated without regard to completion by the
Participant during the Plan Year of any minimum Hours of
Service.
(b) The Administrator shall determine allocations of Employer
Profit Sharing Contributions on the basis of the Plan Year.
In allocating Profit Sharing Contributions to a Participant's
Account, the Administrator shall take into account only the
Compensation paid to the Employee during the period he is a
Salaried Employee and he is a Participant in the Plan. Except
as provided in Article XIX or unless the Participant
terminates employment during the Plan Year because of death,
disability or attaining Normal Retirement Age, Employer
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<PAGE> 40
Profit Sharing Contributions shall be allocated only to the
Accounts of eligible Participants who complete a minimum of
1,000 Hours of Service during the Plan Year and who are
employed by the Employer on the last day of the Plan Year.
(c) Upon becoming eligible to receive an allocation of Employer
Profit-Sharing and/or Matching Contributions, a Participant
shall be entitled to an allocation of Employer Profit-Sharing
and/or Matching Contributions for the Plan Year and subsequent
Plan Years according to the rules in Sections 6.04(a) and (b)
above.
(d) The Administrator shall allocate Employer Davis-Bacon
Contributions to the Account of each Davis Bacon Employee who
completes at least one (1) Hour of Service during the Plan
Year according to the contribution schedule attached to the
Plan pursuant to Section 5.08. No other minimum service or
employment requirement shall apply as a prerequisite to an
allocation of Davis-Bacon Contributions.
6.05 PARTICIPANT DIRECTED INVESTMENTS: With the prior written
approval of the Employer, a Participant, Former Participant or Beneficiary may
direct the Trustee to invest all or part of any Account so designated by the
Employer in such specific assets as are permitted under the terms of the Trust
Agreement. However, the Participant may not direct the Trustee to use any
portion of his Account to acquire any property which would be classified as a
"collectible" and result in the investment being considered a distribution to
the Participant under Code Section 408(m) and Regulations thereunder. That
portion of the Account so directed shall be credited (charged) solely with all
investment earnings (losses) and appreciation (depreciation) thereon, and
charged with any fees or expenses incurred by the Trustee in investing or
administering that portion of the Account. The portion so directed shall also
be credited with any contributions thereto and charged with any withdrawals or
payments made therefrom.
Any portion of the Account, the investment of which is not directed by the
Participant, shall be invested with other Trust assets pursuant to the
Trustee's discretion. That portion shall be credited (charged) with its
proportionate share of investment earnings (losses) and appreciation
(depreciation) on the total non-directed assets of the Trust Fund, and charged
with any specific or proportionate share of expenses incurred by the Trustee in
investing or administering that portion of the Account as provided in Section
6.03. The non-directed portion shall also be credited with any contributions
thereto and charged with any withdrawals or payments therefrom.
For purposes of Section 6.03, any transfers from the non-directed portion of an
Account to the directed portion of the account shall be treated as a withdrawal
from the non-directed portion and a contribution to the directed portion, and
vice versa for transfers from the directed portion to the non-directed portion.
The Plan Administrator and Trustee may establish a reasonable policy regarding
the types of Accounts eligible, minimum balance required, and other reasonable
criteria which must be satisfied in determining whether this option of directed
investments shall be available to a Participant. The policy shall be in
writing and shall be administered in a uniform and non-discriminatory manner.
6.06 ESTABLISHMENT OF SEPARATE FUNDS: There is hereby reserved to
the Plan Administrator the
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right to direct the Trustee to establish separate investment funds so that the
Plan Administrator may follow different investment policies with respect to
each Fund. If such Funds are established:
(a) Income and gains from investments in each Fund will be
reinvested in the same Fund and credited only to those
Accounts which have a balance in such Fund, in a manner
consistent with Section 6.03.
(b) At least one such Fund shall be a fund invested in cash
equivalent securities. "Cash Equivalent Securities" as used
herein, shall include, but shall not be limited to, U.S.
Government obligations maturing within one (1) year of date of
purchase, prime commercial paper, certificates of deposits,
and/or guaranteed investment contracts, bank investment
contracts or their equivalents and savings accounts in banks
or savings and loan associations and any pooled fund invested
exclusively in any of the foregoing, maintained by the Trustee
exclusively for the investment of assets held by it in trust.
(c) Each Participant upon the occurrence of any event which
deletes any of the Funds described in this Section, which
replaces any such Fund with another Fund, or which adds a new
Fund, and each new Participant upon entry in the Plan shall
direct the Plan Administrator in writing as to the portion of
the contributions made to his accounts which are to be
invested in each of the funds available. If such specific
direction is not made, all such contributions shall be
invested in the Fund described in (b) above.
(d) Each Participant shall have the right to change the portion of
succeeding contributions to be invested in each Fund. Changes
shall be made effective on the first pay date following
receipt by the Plan Administrator of the Participant's request
or at other times during the Plan Year with the approval of
the Plan Administrator and Trustee.
(e) Each Participant shall also have the right to direct that the
asset balance in any of his Accounts in any of such Funds as
of the first day of the month following the month in which the
request is received be liquidated and the proceeds thereof be
transferred to any other Fund for reinvestment.
(f) The Plan Administrator may establish reasonable rules
regarding:
(1) The number and types of Funds which shall be
available to different types of Accounts.
(2) The maximum number of Funds which may be utilized by
an individual Participant or by an individual
Account.
(3) The minimum, maximum and incremental percentages of
contributions which may be invested in a particular
Fund.
(4) The minimum, maximum and incremental percentages of
the current balance in any
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Account in any Fund which may be transferred to
another Fund.
Such rules shall be in writing and shall be administered in a
uniform and non-discriminatory manner.
(g) All requests for changes in the allocation of contributions
and for the liquidation and transfer of amounts held in one of
the Funds shall be made and executed as provided in the Trust
Agreement. If not so provided therein, then such requests
shall be addressed in writing to the Plan Administrator. The
Plan Administrator shall without undue delay forward
appropriate directions to the Trustee for execution and the
Trustee will carry out such directions as expeditiously as
practicable.
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ARTICLE VII
LIMITATIONS OF ALLOCATIONS
7.01 SPECIAL DEFINITIONS: For purposes of this Article, the
following terms shall be defined as follows:
(a) "ANNUAL ADDITIONS" shall mean the sum of the following amounts
allocated on behalf of a Participant for a Limitation Year:
(1) Employer contributions; and
(2) Employee contributions; and
(3) Forfeitures available for reallocation, if
applicable.
For Limitation Years beginning before January 1, 1987,
Employee contributions shall be included as Annual Additions
only to the extent of the lesser of one-half of all Employee
contributions or the amount of all Employee contributions in
excess of six percent (6%) of the Participant's Compensation.
For this purpose, Participant Elective Deferrals shall be
considered to be Employer contributions. Amounts reapplied to
reduce Employer contributions and amounts reapplied from a
suspense account (if any) under Section 7.02 as well as
contributions for Plan Years beginning after March 31, 1984
allocated to any Individual Medical Benefit Account which is
part of a defined benefit plan shall also be included as
Annual Additions.
For purposes of this Article, an Annual Addition is credited
to the Account of a Participant for a particular Limitation
Year if it is allocated to the Participant's Account as of any
day within such Limitation Year. Employer contributions will
not be deemed credited to a Participant unless the
contributions are actually made to the Plan no later than
thirty (30) days after the end of the period described in Code
Section 404(a)(6) applicable to the taxable year with or
within which the particular Limitation Year ends.
(b) "COMPENSATION" for purposes of this Article only and for
compliance with Code Section 415 shall mean and be determined
as follows:
(1) The term "Compensation" shall include:
(A) The Participant's wages, salaries, fees for
professional service and other amounts
received (whether or not paid in cash) for
personal services actually rendered in the
course of employment with an Employer
maintaining the plan (including, but not
limited to, commissions paid to salesmen,
compensation for services on the basis of a
percentage of profits, commissions on
insurance
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premiums, tips, bonuses, fringe benefits,
reimbursements and expense allowances).
(B) In the case of a Participant who is an
employee within the meaning of Code Section
401(c)(l), the Participant's earned income as
described in Code Section 401(c)(2).
(2) The term "Compensation" does not include items such
as:
(A) Contributions made by the Employer to a plan
of deferred compensation to the extent that
before the application of the Code Section
415 limitations to that plan the
contributions are not includable in the gross
income of the Participant for the taxable
year in which contributed. To the extent
this paragraph (A) is deemed to refer to
contributions by an Employer pursuant to a
written elective deferral or salary reduction
agreement, this paragraph shall not apply to
determine "Compensation" when applying any
non- discrimination test under the Plan,
including the K-Test and M-Test described in
Section 5.12.
(B) Employer contributions made on behalf of a
Participant to a simplified employee pension
described in Code Section 408(k) to the
extent such contributions are deductible by
the Employer under Code Section 219(b)(7).
(C) Distributions from a plan of deferred
compensation, regardless of whether such
amounts are includable in the gross income of
the Participant when distributed, except that
any amount received by a Participant pursuant
to an unfunded non-qualified plan shall be
considered as Compensation to the extent such
amounts are includable in the gross income of
the Participant for the Limitation Year.
(D) Amounts realized from the exercise of a
non-qualified stock option, or when
restricted stock (or property) held by a
Participant either becomes freely
transferable or is no longer subject to a
substantial risk of forfeiture (see Code
Section 83 and the regulations thereunder).
(E) Amounts realized from the sale, exchange, or
other disposition of stock acquired under a
qualified stock option.
(F) Other amounts which receive special tax
benefits, such as premiums for group term
life insurance (but only to the extent that
the premiums are not includable in the gross
income of the Participant).
(G) Amounts that would otherwise be excluded from
a Participant's gross income by reason of the
application of Code Section 125, 402(a)(8),
402(h)(1)(B) and in the case of contributions
made pursuant to a salary reduction
agreement, Code Section 403(b). The
provisions of this subparagraph (G) shall not
apply to the extent
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"Compensation" is being determined for the
purpose of applying any non-discrimination
test under the Plan, including the K-Test and
M-Test described in Section 5.12.
(3) Compensation actually paid or made available to a
Participant within the Limitation Year shall be the
Compensation used for the purposes of applying the
limitations of this Article and Code Section 415. In
the case of a group of employers which constitutes a
controlled group of corporations (as defined in Code
Section 414(b) as modified by Code Section 415(h)),
or which constitutes trades or businesses (whether or
not incorporated) which are under common control (as
defined in Code Section 414(c) as modified by Code
Section 415(h)), or which constitutes an affiliated
service group (as defined in Code Section 414(m)),
all such employers shall apply this same rule.
(4) For Limitation Years beginning after December 31,
1988, Compensation shall not include in any
Limitation Year compensation in excess of two hundred
thousand dollars ($200,000). This dollar limitation
shall be adjusted annually at the same time and in
the same manner as the Defined Benefit Dollar
Limitation. For Plan Years beginning after December
31, 1993, the Plan shall substitute the amount "one
hundred fifty thousand dollars ($150,000)" for the
amount "two hundred thousand dollars ($200,000)"
wherever it appears in this sub-section. The one
hundred fifty thousand dollar amount shall be
adjusted each Plan Year as provided in Code Section
401(a)(17)(B).
(c) "DEFINED BENEFIT DOLLAR LIMITATION" shall mean $90,000,
adjusted annually for Limitation Years beginning after
December 31, 1987 for increases in the cost of living in
accordance with regulations prescribed by the Secretary of the
Treasury.
(d) "DEFINED BENEFIT FRACTION" for a given Limitation Year shall
mean a fraction:
(1) The numerator of which is the sum of the Projected
Annual Benefits of the Participant under all the
defined benefit plans (whether or not terminated)
ever maintained by the Employer (determined as of the
close of the Limitation Year); and
(2) The denominator of which is the lesser of:
(A) The product of one hundred twenty-five percent
(125%) multiplied by the Defined Benefit
Dollar Limitation; or
(B) The product of one hundred forty percent
(140%) multiplied by the percentage of a
Participant's average Compensation which may
be taken into account under Code Section
415(b)(1)(B) with respect to such Participant
for such Limitation Year.
Notwithstanding the above, if the Participant was a
participant in one or more defined benefit plans maintained by
the Employer which were in existence on May 6, 1986 and such
plans,
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individually and in the aggregate, satisfied the requirements
of Code Section 415 for the last Limitation Year beginning
before January 1, 1987, the denominator of this fraction will
not be less than the product of one hundred twenty-five
percent (125%) multiplied by the sum of the annual benefits
under such plans which the Participant had accrued as of the
close of the last Limitation Year beginning before January 1,
1987.
(e) "DEFINED CONTRIBUTION DOLLAR LIMITATION" shall mean $30,000
or, if greater, one-fourth of the Defined Benefit Dollar
Limitation in effect for the Limitation Year.
(f) "DEFINED CONTRIBUTION FRACTION" shall mean a fraction:
(1) The numerator of which is the sum of the Annual
Additions to the Participant's accounts under all
defined contribution plans (whether or not
terminated) ever maintained by the Employer for the
current and all prior Limitation Years; and
(2) The denominator of which is the sum of the lesser of
the following amounts determined for such Limitation
Year and for each prior Year of Service with the
Employer (regardless of whether a defined
contribution plan was maintained by the Employer):
(A) The product of one hundred twenty-five
percent (125%) multiplied by the Defined
Contribution Dollar Limitation; or
(B) Thirty-five percent (35%) of the Participant's
Compensation for such Limitation Year.
If the Participant was a participant in one or more defined
contribution plans maintained by the Employer which were in
existence on May 6, 1986 and such plans, individually and in
the aggregate, satisfied the requirements of Code Section 415
for the last Limitation Year beginning before January 1, 1987,
the numerator of this fraction shall be adjusted if the sum of
this fraction and the Defined Benefit Fraction would otherwise
exceed one hundred percent (100%) under the terms of this
Plan. Under the adjustment, an amount equal to the product
of:
(1) The excess of the sum of the fractions over one
hundred percent (100%); times
(2) The denominator of this fraction shall be permanently
subtracted from the numerator of this fraction. The
adjustment is calculated using the fractions as they
would be computed as of the close of the last
Limitation Year beginning before January 1, 1987.
At the election of the Plan Administrator, the denominator of
the Defined Contribution Fraction of each Participant may be
determined in accordance with Code Section 415(e)(6).
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(g) "EMPLOYER" shall mean the Employer that adopts this Plan and,
in the case of a group of employers which constitutes a
controlled group of corporations (as defined in Code Section
414(b) as modified by Code Section 415(h)) or which
constitutes trades or businesses (whether or not incorporated)
which are under common control (as defined in Code Section
414(c) as modified by Code Section 415(h)), or which
constitutes an affiliated service group, (as defined in Code
Section 414(m)), all such employers shall be considered a
single Employer for purposes of applying the limitations of
this Article.
(h) "EXCESS AMOUNT" shall mean the excess of the Participant's
Annual Additions for the Limitation Year over the Maximum
Permissible Amount for such Limitation Year.
(i) "INDIVIDUAL MEDICAL BENEFIT ACCOUNT" shall mean any separate
account which is established for a Participant under a defined
benefit plan and from which benefits described in Code Section
401(h) are payable solely to such Participant, his spouse or
his dependents.
(j) "LIMITATION YEAR" shall mean the twelve (12) consecutive month
period specified in Article II.
The Limitation Year may be changed by amending the election
previously made by the Employer. Any change in the Limitation
Year must be a change to a twelve (12) month period commencing
with any day within the current Limitation Year. The
limitations of this Article (and Code Section 415) are to be
separately applied to a limitation period which begins with
the first day of the current Limitation Year and which ends on
the day before the first day of the first Limitation Year for
which the change is effective.
The dollar limitation on Annual Additions with respect to this
limitation period is determined by multiplying the applicable
dollar limitation for the calendar year in which the
limitation period ends by a fraction, the numerator of which
is the number of months (computed to the nearest whole month)
in the limitation period and the denominator of which is
twelve (12).
The Limitation Year for all years prior to the effective date
of Code Section 415 shall, as applied to this Plan, be the
twelve (12) consecutive month period selected as the
Limitation Year for the first Limitation Year after the
effective date of Code Section 415.
(k) "MAXIMUM PERMISSIBLE AMOUNT" shall mean, for a given
Limitation Year, the lesser of:
(1) The Defined Contribution Dollar Limitation; or
(2) Twenty-five percent (25%) of the Participant's
Compensation for such Limitation Year.
The percentage limitation in (2) above shall not apply to any
contribution for medical benefits after separation from
service which is treated as an Annual Addition, or to any
amount allocated to an Individual Medical Benefit Account
which is treated as an Annual Addition.
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If a short Limitation Year is created because of an amendment
changing the Limitation Year to a different twelve (12)
consecutive month period, the Maximum Permissible Amount for
such short Limitation Year shall not exceed the amount in (1)
above multiplied by a fraction, the numerator of which is the
number of months in the short Limitation Year (computed to the
nearest whole month) and the denominator of which is twelve
(12).
(l) "PROJECTED ANNUAL BENEFIT" shall mean the annual retirement
benefit (adjusted to an actuarially equivalent life annuity if
such benefit is expressed in a form other than a straight life
annuity or qualified joint and survivor annuity) to which the
Participant would be entitled under the terms of the defined
benefit plan assuming:
(1) The Participant will continue employment until normal
retirement age under the plan (or current age, if
later); and
(2) The Participant's Compensation for the current
Limitation Year and all other relevant factors used
to determine benefits under the plan will remain
constant for all future Limitation Years.
7.02 COORDINATION WITH DEFINED BENEFIT PLAN: If the Employer
maintains a qualified defined benefit plan covering Participants in this Plan,
the sum of the Participant's Defined Benefit Plan Fraction and Defined
Contribution Plan Fraction shall not exceed one hundred percent (100%) in any
Limitation Year. In the event the sum would otherwise exceed one hundred
percent (100%), the Plan Administrator shall adjust the numerator of the
Defined Benefit Plan Fraction to an amount (not less than zero) that would
result in the Participant's Defined Benefit Fraction being equal to the
difference between one hundred percent (100%) and the Participant's Defined
Contribution Fraction.
7.03 ORDER OF LIMITATIONS: If, pursuant to this Article, it is
necessary to limit or reduce the amount of Contributions credited to a
Participant under this Plan during a Limitation Year, the limitation or
reduction shall be made in the following order:
(a) First, Unmatched Participant Elective Deferrals;
(b) Second, Employer Matching Contributions;
(c) Third, Matched Participant Elective Deferrals;
(d) Fourth, Employer Profit Sharing Contributions; and
(e) Fifth, Employer Davis-Bacon Contributions.
7.04 AGGREGATION OF PLANS: For purposes of applying the
limitations of this Article applicable to a Participant for a particular
Limitation Year, all qualified defined benefit plans ever maintained by the
Employer shall be treated as one defined benefit plan, all defined contribution
plans ever maintained by the Employer shall be treated as one defined
contribution plan and any Employee contributions to a defined
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benefit plan shall be treated as a defined contribution plan.
7.05 SUSPENSE ACCOUNT: If, as a result of the allocation of
forfeitures, a reasonable error in estimating a Participant's Compensation for
the Limitation Year, or under other limited facts and circumstances allowed
under Reg. Section 1.415-6(b), the Annual Additions to this Plan would cause an
allocation to the Account of a Participant in excess of the Maximum Permissible
Amount for the Limitation Year, the Plan Administrator shall dual with the
Excess Amount as follows:
(a) First, the Plan Administrator shall distribute to the
Participant his Elective Deferrals for the Limitation Year to
the extent that the distribution reduces the Excess Amount,
provided that the Plan Administrator shall not distribute any
Elective Deferral to the Participant which would cause the
Plan to make a concurrent reduction in the amount of Employer
Matching Contributions allocated to the Participant's Account.
A distribution under this provision shall include earnings or
gains attributable to the returned Elective Deferrals. All
distributions shall be made no later than and in the manner
provided in Section 5.12(d).
(b) Second, to the extent there remains an Excess Amount after
application of Section 7.05(a), the Plan Administrator shall
hold the Excess Amount in a suspense account and allocate and
reallocate the amount in the suspense account in the following
Limitation Year (and in succeeding Limitation Years, if
necessary) to reduce Employer Davis-Bacon Contributions,
Employer Profit Sharing Contributions, Employer Matching
Contributions and Elective Deferrals (in that order) to the
Account of that Participant if that Participant is covered by
the Plan as of the end of the Limitation Year. If the
Participant is not covered, the excess amount shall be
allocated and reallocated in the next Limitation Year to all
Participants' Accounts in the Plan before any Employer
Davis-Bacon Contributions, Employer Profit Sharing
Contributions, Employer Matching Contributions and Elective
Deferrals (in that order) which would constitute Annual
Additions are made to the Plan for the Limitation Year, or at
the option of the Gibbons Employer, the Excess Amount shall be
used to reduce Employer Davis-Bacon Contributions, Employer
Profit Sharing Contributions and Employer Matching
Contributions to the Plan for the Limitation Year by the
amount in the suspense account which is allocated and
reallocated during the Limitation Year. The suspense account
shall be an unallocated account equal to the sum of all Excess
Amounts for all Participants in the Plan during The Limitation
Year. The suspense account shall not share in any earnings or
losses of the Trust Fund. The Plan may not distribute any
amounts in the suspense account to any Participant whether
before or after termination of employment or termination of
The Plan.
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ARTICLE VIII
IN-SERVICE AND HARDSHIP WITHDRAWALS
8.01 WITHDRAWALS DUE TO ATTAINMENT OF AGE 55, AGE 59 1/2, DISABILITY
OR HARDSHIP: Except as otherwise provided in this Section 8.01 and in Section
8.04, no amounts may be withdrawn by a Participant from any Account held for
his benefit prior to termination of employment with the Employer, unless the
Employee has attained his Normal RetIrement Date.
(a) A Participant who has attained Age 55 and who is one hundred
percent (100%) vested may withdraw all or any portion of his
Account except that portion attributable to Participant
Elective Deferrals and Employer Davis-Bacon Contributions.
The Participant may only make one (1) withdrawal in any Plan
Year.
(b) A Participant who has attained Age 59 1/2 and who is one
hundred percent (100%) vested may withdraw all or any portion
of his Account except that portion attributable to Employer
Davis-Bacon Contributions. The Participant may only make one
(1) withdrawal in any Plan Year.
(c) A Participant who suffers a Disability as defined in Section
2.14 may withdraw all or any portion of his Account, without
regard to the Participant's Age or whether he has incurred a
Termination of Employment.
(d) An active Participant may elect to withdraw an amount credited
to Ms Participant Elective Deferral Account without regard to
the Participant's Age, but only if he obtains prior approval
from the Plan Administrator, which approval shall be granted
only upon a determination of Financial Hardship. In the case
of a withdrawal due to Financial Hardship, the amount of the
withdrawal shall be limited to the total amount of the
Participant's Elective Deferrals, including income allocable
thereto as of December 31, 1988. Upon granting approval, the
Plan Administrator shall direct the Trustee to distribute the
indicated portion of the Participant's Elective Deferral
Account to the Participant.
8.02 FINANCIAL HARDSHIP DISTRIBUTION RULES: The Plan adopts the
deemed hardship distribution standards set forth in Reg. Section
1.401(k)-1(d)(2)(iv). As a consequence, the Plan Administrator shall not
approve any distribution on account of Financial Hardship unless the
distribution is determined by the Administrator to be necessary to meet an
immediate and heavy financial need of the Participant. The distribution will
be deemed necessary if:
(a) The distribution is not in excess of the amount of the
immediate and heavy financial need of the Participant,
including amounts necessary to pay any federal, state or local
income taxes or penalties reasonably anticipated to result
from the distribution; and
(b) Other resources of the Participant are not reasonably
available to meet this need.
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For Plan Years beginning after December 31, 1988, the condition in (b) above is
deemed to be met if the Participant has obtained all distributions, other than
hardship distributions, and all nontaxable loans currently available under all
plans maintained by the Employer. If a Participant receives a distribution on
account of Financial Hardship during a Plan Year beginning after December 31,
1988, his Elective Deferrals to this Plan and his employee contributions to all
other plans maintained by the Employer (including qualified and non-qualified
plans of deferred compensation), shall be suspended for twelve (12) months
after receipt of the hardship distribution. Further, his Elective Deferrals to
this Plan and his employee deferral contributions to all other plans maintained
by the Employer for the calendar year immediately following the calendar year
of the distribution shall not exceed the applicable limit under Section 5.08(a)
for that calendar year less the amount of his Elective Deferrals for the
calendar year of the hardship distribution.
8.03 DETERMINATION OF IMMEDIATE AND HEAVY FINANCIAL NEED: For
purposes of Section 8.02, a distribution shall be deemed to be on account of an
immediate and heavy financial need if the distribution is for:
(a) Expenses for medical care described in Code Section 213(d)
incurred by the Participant, the Participant's spouse or any
dependent of the Participant or expenses necessary for these
persons to obtain such medical care;
(b) Payment of tuition and related educational fees for the next
twelve (12) months of post-secondary education for the
Participant, the Participant's spouse or any dependent of the
Participant;
(c) Costs directly related to purchase (excluding mortgage
payments) a principal residence for the Participant; or
(d) Payments necessary to prevent the eviction of the Participant
from his principal residence or foreclosure of the mortgage on
that residence.
8.04 WITHDRAWAL OF VOLUNTARY CONTRIBUTIONS: A Participant who has
previously made after-tax voluntary contributions to the Plan and who satisfies
the requirements of Section 8.01(a), (b) or (c) may withdraw, upon written
notice to the Plan Administrator and subject to the restrictions described
below, first, any amount up to the balance of after-tax contributions held in
the Employer Profit-Sharing Contribution Account and, second, the amount held
in his Participant Voluntary Contribution Account. Such withdrawals shall have
no effect upon any benefits provided under any other provisions of this Plan.
The Plan Administrator and Trustee may establish a reasonable policy regarding
the minimum amount which may be withdrawn and the frequency with which
withdrawals may be made. Such policy shall be in writing and shall be
administered in a uniform and nondiscriminatory manner.
If the Participant's Accrued Benefit at the time he requests a withdrawal of
voluntary contributions, or at any prior time has been greater than $3,500, no
such withdrawal may be made prior to the Participant's Normal Retirement Age
unless the Participant first consents in writing. The amount withdrawn shall
be
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distributed to the Participant in the manner and form provided in Section 11.02
as if the amount were distributed on account of the Participant's termination
of employment or, if the Participant is eligible for Normal Retirement or Early
Retirement, in the manner and form provided in Article IX as if the amount were
distributed on account of the Participant's Retirement.
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ARTICLE IX
RETIREMENT BENEFITS
9.01 NORMAL OR LATE RETIREMENT: A Participant shall be eligible
for Normal Retirement on reaching his Normal Retirement Date. A Participant
may continue in the service of the Employer as a Participant hereunder beyond
his Normal Retirement Date. In the event such a Participant continues in the
service of the Employer, he shall continue to be treated in all respects as a
Participant until his actual retirement. When any Participant has a Termination
of Employment following his Normal Retirement Date he shall be considered a
retired Participant and he shall be entitled to receive the entire amount of
his Accrued Benefit, distributed as set forth below.
9.02 DISABILITY RETIREMENT: Upon any Participant incurring a
Termination of Employment on account of Disability, he shall be considered a
disabled Participant and entitled to begin receiving his Accrued Benefit. Such
amount shall be distributed as provided in Section 9.03, or deferred until such
later date as elected by the disabled Participant and then distributed as
provided in Section 9.03.
9.03 METHOD OF PAYMENT: Subject to the provisions of Section 9.06,
upon receipt of a claim for benefits a retired or disabled Participant's
Accrued Benefit shall be payable, as elected in writing by the Participant, in
one or a combination of the following forms:
(a) A single lump sum payment. The amount of the lump sum payment
shall be equal to the Participant's Accrued Benefit on the
date payment is made. Payment shall be made by the Trustee in
cash only.
(b) Substantially equal monthly, quarterly or annual cash
installments over any period not exceeding the life expectancy
of the Participant and the Participant's spouse, until the
Participant's Accrued Benefit has been fully distributed. The
minimum installment amount, regardless of the periodic method
chosen, must be at least one hundred dollars ($100.00).
If a Participant falls to elect a form of payment, payment of the Participant's
benefits shall be in a single lump sum in accordance with (a) above. Except as
provided in Section 9.04, no payment shall be made to a Participant prior to
his Normal Retirement Age unless the Participant consents in writing to the
payment not more than ninety (90) days prior to his Annuity Stating Date.
If the lump sum amount that would be payable to a disabled Participant is not
more than three thousand five hundred dollars ($3,500) and the amount in the
Participant's Account has never exceeded that amount at the time of any prior
distribution, the benefit shall be paid as a single lump sum payment as soon as
administratively feasible following the end of the calendar month in which his
Termination of Employment occurs without regard to any Participant consent
requirement or the requirements of Section 9.06. However, a single lump sum
payment shall not be made to a Participant after his Annuity Starting Date
unless the Participant consents in writing to the payment. If the Participant
dies prior to the complete distribution of the Participant's Accrued Benefit to
him, then the Plan Administrator, upon notice of the
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Participant's death, shall direct the Trustee to make payment in accordance
with the provisions of Article X.
9.04 TIME OF PAYMENT: Payment of the retired or disabled
Participant's Accrued Benefit shall commence as soon as administratively
feasible following the end of the calendar month in which a claim for benefits
is submitted to the Plan Administrator. Unless a Participant elects otherwise
(and failure to submit a claim for benefits shall be deemed such an election)
payment of benefits under this Plan will commence not later than sixty (60)
days after the close of the Plan Year in which the latest of the following
events occurs:
(a) The attainment by the Participant of Age sixty-five (65) or,
if earlier, his Normal Retirement Age; or
(b) The tenth (10th) anniversary of the Participant's Entry Date;
or
(c) The date the Participant terminates employment with the
Employer.
If the amount of the payment required to commence on the date determined above
cannot be ascertained by such date, or if it is not possible to make such
payment on such date because the Plan Administrator has been unable to locate
the Participant after making reasonable efforts to do so, a payment retroactive
to such date may be made no later than sixty (60) days after the earliest date
on which the amount of such payment can be ascertained or the date the
Participant is located, whichever is applicable.
9.05 REQUIRED DISTRIBUTIONS: Notwithstanding any other provisions
of this Article and except as provided in this Section 9.05, in no event shall
payments commence later than April 1st of the calendar year following the Plan
Year in which the Participant attains Age 70 1/2. However, if the Participant,
prior to incurring a Termination of Employment, attained age 70 1/2 by January
1, 1988, and for the five Plan Year period ending in the calendar year in which
he attained age 70 1/2 and for all subsequent years the Participant was not a
more than 5% owner, then payment of benefits shall commence not later than
April 1st of the calendar year following the Plan Year in which the Participant
terminates employment or, if earlier, April 1st of the calendar year following
the Plan Year in which the Participant becomes a more than 5% owner.
Furthermore, if a Participant who was not a more than 5% owner attained age
70 1/2 during 1988 and did not terminate employment prior to January 1, 1989,
payment of benefits for such Participant shall commence not later than January
1, 1990. For purposes of this Section 9.05 "5% owner" shall have the meaning
set forth in I.R. Prop. Reg. Section 1.401(a)(9)-1, Q&A B-2. If payment of the
Participant's Accrued Benefit commences under this Section 9.05, it shall be
distributed to the Participant (consistent with the Participant's election and
the requirements of Section 9.03):
(a) In the form of a cash lump sum payment; or
(b) In the form of cash installment payments over a period not
extending beyond the life expectancy of the Participant, or
the joint life expectancy of the Participant and his
Beneficiary.
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For purposes of paragraph (b) above and at the election of the Participant, the
life expectancy of the Participant and his spouse, but not of his non-spouse
Beneficiary, may be redetermined annually. Notwithstanding the above, any
distribution required under the incidental death benefit requirements of Code
Section 401(a) shall be treated as a required distribution. The provisions of
this Section 9.05 shall be interpreted to conform to regulations issued by the
Commissioner under Code Section 401(a)(9).
9.06 QUALIFIED JOINT AND SURVIVOR ANNUITY: This Section shall
apply only to a Participant or Former Participant who has a Davis-Bacon Account
in the Plan or with respect to whom this Plan is a direct or indirect
transferee of a defined benefit pension plan, money purchase pension plan, or
other qualified plan to which Code Section 401(a)(11)(B)(iii) applies.
Furthermore, this Section shall only apply to that portion of the Participant's
Accrued Benefit attributable to such transfer and/or Davis-Bacon Account (his
"Annuity Eligible Accrued Benefit").
(a) AUTOMATIC QUALIFIED JOINT AND SURVIVOR ANNUITY: A Participant
or Former Participant who is married on the date his benefits
commence shall receive his Annuity Eligible Accrued Benefit in
the form of an Automatic Qualified Joint and Survivor Annuity,
unless he elects otherwise as provided in Subsection (b)
below. The monthly amount of the Automatic Qualified Joint
and Survivor Annuity shall be that amount which can be
purchased from an Insurer with the Annuity Eligible Accrued
Benefit of the Participant on the date his benefits commence.
A Participant or Former Participant who is not married on the
date his benefits commence shall receive his Annuity Eligible
Accrued Benefit in the form of a life annuity unless he elects
otherwise as provided in Subsection (b) below. The life
annuity shall provide monthly payments for the life of the
Participant and terminate with the last payment due prior to
his death. The annuity shall be purchased from an Insurer in
an amount that can be provided by the Participant's Annuity
Eligible Accrued Benefit.
(b) NOTICE AND ELECTION OF FORM OF BENEFIT: Each Participant or
Former Participant with an Annuity Eligible Accrued Benefit
shall be provided a written notification by the Plan
Administrator. The notification shall be in non-technical
language and shall include:
(1) A general description or explanation of the terms and
conditions of the Automatic Qualified Joint and
Survivor Annuity;
(2) The circumstances in which it will be provided unless
the Participant elects otherwise;
(3) The Participant's right to make, and the effect of,
an election to waive the Automatic Qualified Joint
and Survivor Annuity form of benefit;
(4) The rights of the Participant's spouse under
Subsection (c);
(5) The right to make, and the effect of, a revocation of
an election to waive the Automatic Qualified Joint
and Survivor Annuity form of benefit;
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<PAGE> 56
(6) A general explanation of the relative financial
effect of the election on a Participant's benefits;
and
(7) A general explanation of the eligibility conditions
and other material features of the optional forms of
retirement benefit and sufficient additional
information to explain the relative values of the
optional forms of retirement benefit.
The notification shall also inform the Participant that a
specific written explanation in non-technical language of the
terms and conditions of the Automatic Qualified Joint and
Survivor Annuity and the financial effect upon the particular
Participant's benefits of making an election against the
Automatic Qualified Joint and Survivor Annuity is available
upon written request by the Participant. The notification
shall be provided not less than thirty (30) days nor more than
ninety (90) days before the Annuity Starting Date. If the
Participant requests a specific written explanation, the
explanation shall be provided within thirty (30) days of the
Participant's request. The Plan Administrator need not comply
with more than one such request made by a particular
Participant.
During the Joint and Survivor Election Period, as hereinafter
defined, a Participant eligible to make the election to waive
the Automatic Qualified Joint and Survivor Annuity of
Subsection (a) shall be eligible to elect to receive his
benefits as provided in Section 9.03. The election shall be
in writing and may be revoked at any time during the Joint and
Survivor Election Period. New elections and revocations may
be made any number of times during the Joint and Survivor
Election Period after a previous election or revocation. For
purposes of this paragraph, the term "Joint and Survivor
Election Period" shall mean the ninety (90) day period ending
on the Annuity Staring Date.
(c) CONSENT OF SPOUSE: Notwithstanding any other provision of
this Article, any election by a Participant or Former
Participant to waive the Automatic Qualified Joint and
Survivor Annuity pursuant to Subsection (b) shall not be given
effect unless:
(1) (i) The spouse of the Participant consents in
writing to such election
(ii) The spouse acknowledges the form of benefit
payment elected by the Participant and, if
applicable, the Beneficiary designated by the
Participant, or the spouse relinquishes the
right to specify the form of benefit payment
and name the Beneficiary, and the spouse's
consent acknowledges the effect of such
election and is witnessed by the Plan
Administrator (or representative thereof) or
a Notary Public; or
(2) It is established to the satisfaction of the Plan
Administrator that the consent required under (1)
above may not be obtained because there is no spouse,
because the spouse cannot be located, or because of
such other circumstances as the Secretary of the
Treasury may by Regulation prescribe; or
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<PAGE> 57
(3) The lump sum benefit otherwise payable to the
Participant is less than three thousand five hundred
dollars ($3,500) and a lump sum payment will be made
pursuant to Section 9.03.
A waiver of the Automatic Qualified Joint and Survivor Annuity
made pursuant to Subsection (b) shall be automatically revoked
upon the marriage of the Participant, prior to his Annuity
Stating Date, to a person who has not consented to the waiver
pursuant to Subsection (1) above or from whom consent was not
required by reason of Subsection (2) above; or upon a change
in the form of benefit payment or in the Beneficiary
designated by the Participant pursuant to Subsection (1)(ii)
above, unless the spouse has relinquished the right to
specify the form of benefit payment and to name the
Beneficiary.
If the requirements of the preceding paragraphs are not
satisfied, the Participant shall receive his Annuity Eligible
Accrued Benefit in the form of the Automatic Qualified Joint
and Survivor Annuity.
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<PAGE> 58
ARTICLE X
DEATH BENEFITS
10.01 DEATH BENEFITS PAYABLE: If a Participant or Former
Participant who has not received a distribution of his entire Vested Interest
dies (whether before or after his Annuity Staring Date), the death benefit
payable to the Beneficiary, Contingent Beneficiary, surviving spouse or estate
(as the case may be) of the Participant or Former Participant shall be all
remaining amounts credited (or to be credited) to his Accounts then held by the
Trustee for the Participant's benefit.
10.02 DESIGNATION OF BENEFICIARY: Each Participant or Former
Participant shall be given the opportunity to designate a Beneficiary and
Contingent Beneficiary and from time to time the Participant or Former
Participant may file with the Plan Administrator a new or revised designation,
provided that his spouse shall be his Beneficiary unless his spouse has
consented in writing to the designation of a Beneficiary other than his spouse
or it is established to the satisfaction of the Plan Administrator that the
consent of the spouse may not be obtained because there is no spouse, the
spouse cannot be located or because of such other circumstances as may be set
forth in Regulations issued pursuant to Code Section 417(a)(2)(B). Each
Participant or Former Participant may also designate any form of payment
available under Section 9.03 to the Beneficiary or Contingent Beneficiary.
Designations shall be in writing on a form provided by the Plan Administrator.
If upon the Participant's death his designated Beneficiary does not survive
him, the Contingent Beneficiary shall become the Beneficiary and any death
benefits shall be paid to him or her. If a deceased Participant is not
survived by a designated Beneficiary or Contingent Beneficiary, or if no
Beneficiary was designated, the benefits shall be paid to the Participant's
surviving spouse or if there is no surviving spouse, then to the executor or
administrator of the Participant's estate. For purposes of determining the
right of a Beneficiary, Contingent Beneficiary or surviving spouse to receive a
benefit on account of the death of a Participant, he or she shall not be deemed
to have survived the Participant unless he or she shall survive the Participant
by at least thirty (30) days.
If the Beneficiary, Contingent Beneficiary or surviving spouse survives the
Participant and is entitled to receive benefits under this Section 10.02, but
dies prior to receiving the entire death benefit payable to him or her, the
remaining portion of the death benefit shall be paid to the person's named
beneficiary or, if none, to the person's estate subject to the right of
commutation.
10.03 DEATH BENEFIT PAYMENT PROCEDURE: Upon receipt of a claim for
benefits, the Participant's death benefit shall be paid by the Trustee to the
Beneficiary designated by the Participant pursuant to Section 10.02. The
Beneficiary of a Participant may elect to receive any death benefits payable
hereunder in any Optional Form of Payment provided in Article Ix other than a
Joint and Survivor Annuity. The election shall be in writing and shall be
filed with the Plan Administrator.
If the lump sum benefit otherwise payable to the Beneficiary is not more than
three thousand five hundred dollars ($3,500) and payment of benefits to the
deceased Participant has not previously commenced, the
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benefit shall be paid as a single lump sum payment. Payment of any death
benefits under this Plan shall commence, unless otherwise designated by the
Participant or elected by the Beneficiary, as soon as administratively feasible
following the Participant's date of death and the end of the calendar month in
which the Plan Administrator receives a claim for benefits. However, if the
amount of the payment required to commence on the date determined above cannot
be ascertained by such date, or if it is not possible to make such payment on
such date because the Plan Administrator has been unable to locate the
Beneficiary after making reasonable efforts to do so, a payment retroactive to
such date may be made as soon as administratively feasible after the earliest
date on which the amount of such payment can be ascertained or the date the
Beneficiary is located, whichever is applicable.
10.04 REQUIRED DISTRIBUTIONS: Notwithstanding any other provisions
of this Article, payment of death benefits shall be subject to the following:
(a) If payments have commenced to a Participant or Former
Participant in accordance with Article XI and the Participant
dies before his entire Accrued Benefit has been distributed to
him, the death benefit payable to his Beneficiary shall be
distributed at least as rapidly as under the method of
distribution under which such payments were being made as of
the date of his death.
(b) If a Participant or Former Participant dies before payment of
his Accrued Benefit has commenced, the entire death benefit
payable to the Beneficiary shall be distributed within five
(5) years after the death of such Participant. However, if:
(1) Any portion of the death benefit is payable to (or
for the benefit of) a Beneficiary who is a natural
person; and
(2) The Participant has elected or the Beneficiary elects
to have the portion distributed over the life of the
Beneficiary or over a period certain not exceeding
the life expectancy of the Beneficiary; and
(3) Distribution begins not later than one (1) year after
the date of the Participant's death, or such later
date as the Secretary of the Treasury may by
regulations prescribe;
then for purposes of the preceding sentence, the portion
referred to in paragraph (1) above shall be treated as
distributed on the date on which such distribution began.
Further provided, if the Beneficiary referred to in paragraph
(1) above is the surviving spouse of the Participant, the
requirements of paragraph (3) above shall be deemed to be
satisfied if such distributions begin not later than the date
on which the Participant would have attained age seventy and
one-half (7011/2). If the surviving spouse dies before
distribution to said spouse begins, this paragraph shall be
applied as if the surviving spouse were the Participant.
For purposes of the preceding paragraph, under Regulations
prescribed by the Secretary of the Treasury, any amount paid
to a child of a Participant shall be treated as if it had been
paid to the surviving spouse of such Participant if such
amount will become payable to the
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surviving spouse upon such child reaching the age of majority
(or other designated event permitted under Regulations).
(c) The provisions of this Section 10.04 shall be interpreted to
conform to regulations issued under Code Section 401(a)(9).
10.05 QUALIFIED PRE-RETIREMENT SURVIVOR ANNUITY AND RELATED MATTERS:
This Section shall apply only to a Participant or Former Participant who has a
Davis-Bacon Account in the Plan or with respect to whom this Plan is a direct
or indirect transferee of benefits that were held on or after January 1, 1985,
by a defined benefit pension plan, money purchase pension plan, or other
qualified plan to which Code Section 401(a)(11)(B)(iii) applies. Furthermore,
this Section shall apply only to that portion of each Participant's Accrued
Benefit attributable to such transfer and/or Davis-Bacon Account (his "Annuity
Eligible Accrued Benefit").
If a Participant or Former Participant who has an Annuity Eligible Accrued
Benefit dies prior to his Annuity Starting Date and is survived by a spouse, a
Qualified Pre-retirement Survivor Annuity (based only on the benefits subject
to this Section) shall be paid to the surviving spouse in accordance with, and
except as otherwise provided by the following provisions:
(a) A Participant may elect to waive the Qualified Pre-retirement
Survivor Annuity provided under this Section during the
election period described in Subsection (d). The waiver may
be revoked by the Participant during the election period by
filing with the Plan Administrator on a form approved by the
Plan Administrator an executed revocation of such waiver.
Following revocation a Participant may again waive the
Qualified Pre-retirement Survivor Annuity and subsequently
revoke the waiver any number of times during the election
period.
(b) A waiver pursuant to Subsection (a) shall not be effective
unless:
(1) (i) The spouse, to whom the Participant is
married at the time such waiver is executed,
consents in writing to such waiver;
(ii) The spouse acknowledges the form of the death
benefit payable in lieu of the Qualified
Pre-retirement Survivor Annuity and the
Beneficiary designated by the Participant, or
the spouse relinquishes the right to specify
the form of the death benefit and name the
Beneficiary; and
(iii) The consent acknowledges the effect of the
waiver and is witnessed by the Plan
Administrator (or representative thereof) or
a Notary Public; or
(2) It is established to the satisfaction of the Plan
Administrator that the consent of the spouse required
by this Section may not be obtained because there is
no spouse, the spouse cannot be located or because of
such other circumstances as may be set forth in
Regulations issued pursuant to Section 417(a)(2)(B)
of the Code; and
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<PAGE> 61
(3) The waiver is made on a form approved by the Plan
Administrator and executed by the Participant and, if
required, the spouse of the Participant.
(c) A waiver made pursuant to Subsection (a) shall be
automatically revoked:
(1) Upon the marriage of the Participant to a person who
has not consented to the waiver pursuant to
Subsection (b)(1) or from whom consent was not
required by reason of Subsection (b)(2); or
(2) Upon a change in the form of the death benefit or in
the Beneficiary designated by the Participant, unless
the spouse has relinquished the right to specify the
form of the death benefit and to name the
Beneficiary.
(d) The election period shall begin on the first day of the Plan
Year in which the Participant attains Age thirty-five (35) and
shall end on the date such Participant dies. Notwithstanding
the foregoing, in the case of a Participant who incurs a
Termination of Employment before the Participant attains Age
thirty-five (35), the election period shall begin on the date
of Termination of Employment and shall end on the date the
Participant dies.
(e) Notwithstanding anything in this Section to the contrary, an
election to waive the Qualified Pre-retirement Survivor
Annuity made by a Participant before the first day of the Plan
Year in which he attains Age thirty-five (35) shall only be
effective until the first day of the Plan Year in which he
attains Age thirty-five (35), at which time such election
shall be automatically revoked.
(f) The Plan Administrator shall provide to each Participant
within the period beginning on the first day of the Plan Year
in which the Participant attains Age thirty-two (32), but not
earlier than the first day of the one-year period ending on
the date he becomes a Participant, and ending on the last day
of the Plan Year preceding the Plan Year in which the
Participant attains Age thirty-five (35), but not earlier than
the last day of the one-year period beginning on the date he
becomes a Participant, a written explanation of the Qualified
Pre-retirement Survivor Annuity containing the following:
(1) The terms and conditions of the Qualified
Pre-retirement Survivor Annuity;
(2) The Participant's right to make, and the effect of,
an election to waive the Qualified Pre-retirement
Survivor Annuity;
(3) The rights of the Participant's spouse under
Subsection (b)(1); and
(4) The right of the Participant to make, and the effect
of, a revocation of an election pursuant to
Subsection (a).
The Plan Administrator shall also provide an explanation to
each Participant who incurs a
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separation from service prior to receiving the explanation no later
than the earlier of the end of the one-year period beginning on the
date of his separation from service or the end of the period described
above.
(g) Notwithstanding anything herein to the contrary, a surviving
spouse entitled to a benefit under this Section, may elect to
receive payment of the Qualified Pre-retirement Survivor
Annuity in a lump sum or any other form of payment permitted
under Section 10.04. Upon request, the Plan Administrator
shall furnish the spouse with an explanation of the Qualified
Pre-retirement Survivor Annuity and with information
concerning the financial effect of receiving benefits in any
form selected. An election under this Subsection must be
filed with the Plan Administrator before benefit payments
commence, unless the Plan Administrator determines otherwise.
(h) Notwithstanding anything herein to the contrary, a surviving
spouse may delay the commencement of benefit payments pursuant
hereto, provided such delay satisfies the requirement of
Article IX by deeming the surviving spouse to be the
Participant.
(i) If the lump sum amount of the Qualified Pre-retirement
Survivor Annuity otherwise payable to the surviving spouse is
less than three thousand five hundred dollars ($3,500), such
benefit shall be paid as a single lump sum payment.
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ARTICLE XI
BENEFITS UPON OTHER TERMINATION OF EMPLOYMENT
11.01 VESTED AMOUNTS: Prior to his Normal Retirement Age a
Participant shall have a Vested Interest in his Accrued Benefit equal to the
sum of the following:
(a) One hundred percent (100%) of the balances in his Participant
Elective Deferral Account, Participant Voluntary Contribution
Account, Participant Rollover Account, Davis-Bacon Account, if
any, as adjusted for any contributions or distributions since
the preceding Valuation Date; and
(b) His vested percentage of the balance in his Employer Matching
Contribution Account, as adjusted for any contributions or
distributions since the preceding Valuation Date, according to
the Participant's Years of Vesting Service, and consistent
with the following schedule:
<TABLE>
<CAPTION>
Percent of Vested
Years of Vesting Service Accrued Benefit
------------------------ ---------------
<S> <C>
Less than five (5) years none
At least five (5) or more years 100%
</TABLE>
(c) His vested percentage of the balance in his Employer
Profit-Sharing Contribution Account (except for voluntary
contributions made before January 1, 1987, which shall be 100%
vested), as adjusted for any contributions or distributions
since the preceding Valuation Date, according to the
Participant's Years of Vesting Service, and consistent with
the following schedule:
<TABLE>
<CAPTION>
Percent of Vested
Years of Vesting Service Accrued Benefit
------------------------ ---------------
<S> <C>
Less than three (3) years none
At least three (3) years 20%
At least four (4) years 40%
At least five (5) years 60%
At least six (6) years 80%
At least seven (7) or more years 100%
</TABLE>
The percentage of his Accrued Benefit attributable to The Participant's
Employer Contribution Accounts in which he is not vested shall be forfeited by
him as provided in Section 11.06.
11.02 DISTRIBUTION OF VESTED INTEREST: Subject to the provisions of
Section 9.06, a Participant
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who incurs a Termination of Employment for any reason other than retirement or
death may elect one of the following forms of distribution of his Vested
Interest:
(a) A single lump sum payment equal to The Participant's Vested
Interest as of the date payment is made. Payment shall be
made by the Trustee in cash only.
(b) Substantially equal monthly, quarterly or annual cash
installments over any period not exceeding the life expectancy
of the Participant and the Participant's spouse, until the
Participant's Accrued Benefit has been fully distributed. The
minimum installment amount, regardless of the periodic method
chosen must be at least one hundred dollars ($100.00).
If a Participant fails to elect a form or time of payment or elects a deferred
payment, then payment of the Participant's Accrued Benefit shall be deferred to
the subsequent date elected by the Participant, which may be no later than the
latest date permitted under Section 9.05, and then distributed in accordance
with the provisions of Section 9.03. However, if the lump sum amount that
would be payable to a Participant is not more than three thousand five hundred
dollars ($3,500) and the amount in the Participant's Account has never exceeded
that amount at the time of any prior distribution, then the benefit shall be
paid as a single lump sum payment, subject to the limitations of this Section
11.02, as though the Participant had elected immediate distribution.
If the Participant elects immediate distribution following Termination of
Employment, whether as a single lump sum payment or term certain payments,
payment shall commence as soon as administratively feasible after the later of
the calendar month in which the Participant makes the distribution request (by
filing a claim for benefits) or terminates employment. In no event shall the
Plan Administrator defer commencement of distribution to complete
administration of the Participant's distribution request longer than sixty (60)
days after the Entry Date following the distribution date designated by the
Participant. If the Former Participant dies or incurs a Disability before his
Normal Retirement Date, the Plan Administrator, upon notice of the death or
Disability, shall direct the Trustee to make payment of the Participant's
Vested Interest to him (or to his Beneficiary if the Participant is deceased)
in accordance with the provisions of Article X in the case of death, or Section
9.02 in the case of Disability.
Notwithstanding the above, if a terminated Participant is re-employed by the
Employer prior to distribution of his Vested Interest, such distribution shall
not be made until his employment is again terminated or until the occurrence of
another event permitting distribution under the terms of the Plan.
11.03 ELIGIBLE ROLLOVER DISTRIBUTIONS: Notwithstanding any
provision of this Plan to the contrary, with respect to distributions made on
or after January 1, 1993, a Distributee may elect, at the time and in the
manner prescribed by the Plan Administrator, to have any portion of an Eligible
Rollover Distribution paid directly to an Eligible Retirement Plan specified by
the Distributee in a Direct Rollover. For purposes of this Section 11.03 the
following definitions shall apply:
(a) "Eligible Rollover Distribution" shall mean any distribution
of all or any portion of the
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balance to the credit in the Account of the Distributee, except that
an Eligible Rollover Distribution does not include: any distribution
that is one of a series of substantially equal periodic payments (not
less frequently than annually) made for the life (or life expectancy)
of the distributee or the joint lives (or joint life expectancies) of
the Distributee and the Distributee's designated beneficiary, or for a
specified period of ten years or more; any distribution to the extent
such distribution is required under Code Section 401(a)(9), and the
portion of any distribution that is not includable in gross income
(determined without regard to the exclusion for net unrealized
appreciation with respect to employer securities).
(b) "Eligible Retirement Plan" shall mean an individual retirement
account described in Code Section 408(a), an individual
retirement annuity described in Code Section 408(6), an
annuity plan described in Code Section 403 (a), or a qualified
trust described in Code Section 401(a), that accepts the
Distributee's Eligible Rollover Distribution. However, in the
case of an Eligible Rollover Distribution to the surviving
spouse, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
(c) "Distributee" shall mean an Employee or former Employee. In
addition, the Employee's or former Employee's surviving spouse
and the Employee's or former Employee's spouse or former
spouse who is the alternate payee under a qualified domestic
relations order, as defined in Code Section 414(p), are
Distributees with regard to the interest of the spouse or
former spouse.
(d) "Direct Rollover" shall mean a payment by the Plan to the
Eligible Retirement Plan specified by the Distributee.
11.04 BREAKS IN SERVICE AND VESTING: If a Participant has a One
Year Break in Service, the Participant's Years of Vesting Service before the
One Year Break in Service shall not be included in computing Years of Vesting
Service until the Participant shall have completed one Year of Vesting Service
after the One Year Break in Service. If an Employee terminated employment
prior to becoming a Participant and incurred a One Year Break in Service, or if
a Participant did not have any Vested Interest derived from Employer
contributions prior to a One Year Break in Service, Years of Vesting Service
before a One Year Break in Service shall not be included in Years of Vesting
Service calculated after the Participant's One Year Break in Service if the
number of consecutive One Year Breaks in Service equals or exceeds the greater
of five (5) or the aggregate number of such Years of Vesting Service before the
One Year Break in Service.
Solely for the purpose of determining the vested percentage of a Participant's
Accrued Benefit derived from Employer contributions which accrued prior to a
five (5) consecutive one (1) year Break in Service period, the Plan shall
disregard any Year of Service subsequent to such five (5) consecutive one (1)
year Breaks in Service period.
If a Participant has a One Year Break in Service, and the break does not arise
on account of Termination of Employment, the Participant shall not be credited
with a Year of Vesting Service for That Plan Year. However, no amounts in the
Participant's Accounts shall be forfeited.
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11.05 NO INCREASE IN PRE-BREAK VESTING: For purposes of Section
11.01, Years of Vesting Service after a Termination of Employment which
resulted in five (5) consecutive One Year Breaks in Service shall not increase
the vested percentage of a Participant's Account which was earned before such
five (5) consecutive One Year Breaks in Service.
11.06 DISPOSITION OF FORFEITURES: Amounts forfeited by terminated
Participants from their Employer Matching Contribution Accounts shall be used
to reduce the Employer's contribution otherwise required pursuant to Section
5.06 and shall be allocated in the same manner as Employer Matching
Contributions in accordance with Section 6.02(c). Amounts forfeited by
terminated Participants from Their Employer Profit Sharing Contribution
Accounts shall be allocated in addition to and in the same manner as Employer
Profit Sharing Contributions.
Forfeiture of any non-vested interest with respect to any Participant shall
occur:
(a) In the case of a Participant who receives a lump sum
distribution of his Vested Interest on account of Termination
of Employment, on the day the Participant receives the
distribution.
(b) In the case of a Participant who has a Vested Interest derived
from Employer Contributions and does not receive a
distribution of such Vested Interest, on the last day of the
Plan Year in which the Participant incurs five (5) consecutive
One Year Breaks in Service.
(c) In the case of a Participant who has no Vested Interest
derived from Employer Contributions, on the last day of the
Plan Year in which the Participant terminates employment.
Non-vested interests of terminated Participants shall be held by the Trustee in
the respective Accounts of the Participant until the date determined above and
shall then be forfeited by the Participant and allocated in accordance with
this Section.
11.07 DISTRIBUTION TO PARTICIPANTS WHO ARE LESS THAN 100% VESTED:
In the event a Participant who is less than one hundred percent (100%) vested
hereunder incurs a Termination of Employment and returns to the employ of the
Employer before a forfeiture of his non-vested interest shall have occurred,
and prior to his re-employment was paid a portion of his Vested Interest, a
separate account for the Participant's remaining interest in the Plan as of the
time of the distribution shall be maintained. At any relevant time, the
Participant's vested portion of the separate account shall be an amount "X"
determined by the following formula:
X = P (AB+(RxD)) - (RxD)
For purposes of applying the formula:
P is the vested percentage at the relevant time;
AB is the account balance at the relevant time;
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D is the amount of the distribution;
R is the ratio of the account balance at the relevant
time to the account balance after distribution.
In the event a Participant who is less than one hundred percent (100%) vested
hereunder incurs a Termination of Employment and returns to the employ of the
Employer after a forfeiture of his non-vested interest but prior to incurring
five (5) consecutive One Year Breaks in Service, and prior to his re-employment
was paid his Vested Interest, the non- vested portion of his Accrued Benefit
which was forfeited by the Participant shall be disregarded in computing his
Accrued Benefit after reentry into the Plan, unless the Participant repays,
pursuant to Section 11.08, the amounts distributed from his Account from which
an amount was forfeited. If a Participant does repay the distribution, the
balance in such Account shall be restored as provided in Section 11.09.
In the event a Participant who had no Vested Interest in his Employer Regular
Contribution Account separated from service and returns to the employ of the
Employer after a forfeiture of his non-vested interest but prior to incurring
five (5) consecutive One Year Breaks in Service, any non-vested amounts
forfeited by the Participant shall be restored, as provided in Section 11.09,
to The Account from which an amount was forfeited.
11.08 REPAYMENT OF DISTRIBUTION: A Participant described in the
second paragraph of Section 11.07 who received a lump sum distribution of less
than one hundred percent (100%) of his Accrued Benefit shall be entitled to
repay the amount so distributed from the Employer Contribution Account in which
he was less than one hundred percent (100%) vested. The repayment must be for
the fun amount distributed from The Account and must be made not later than the
earlier of:
(a) The date on which the Participant incurs five (5) consecutive
One Year Breaks in Service after the date of distribution.
(b) The end of the five (5) year period beginning with the date
the Participant is re-employed by the Employer.
Any repayment shall not be included in applying The limitations of Article V or
Article VIII hereunder.
11.09 RESTORATION OF ACCOUNTS: Any amount repaid pursuant to
Section 11.08 shall be credited to the Participant's Accounts for which it is
repaid, with credit to be made as of the date of repayment. The Account shall
also be credited with the amount previously forfeited from the Account, with
credit to be made as of the last day of the Plan Year in which repayment is
made.
In the case of a Participant to whom the third paragraph of Section 11.07
applies, the Participant's Accounts from which amounts were previously
forfeited shall be credited with the amount so forfeited, with credit to be
made as of the last day of the Plan Year in which the Participant resumes
participation in The Plan.
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Any previously forfeited amounts which are credited to Participants' Accounts
pursuant to this Section shall be derived from the following sources in the
following order of priority:
(a) First, the amount, if any, to be credited to such types of
Accounts for the Plan Year pursuant to Section 11.05;
(b) Second, Employer contributions for the Plan Year, if any,
which are not required to be credited to such types of
Accounts for other Participants; and
(c) Third, an additional Employer contribution for the Plan Year,
regardless of whether the Employer has any Net Profits for the
year.
If for any Plan Year, the Accounts of more than one Participant are required to
be restored, then restorations shall be derived from the above sources in the
same proportion that the amount to be restored to each Participant bears to the
total amount to be restored to all such Participants for The Plan Year. Any
such amounts credited to a Participant's Accounts shall not be included in
applying the limitations of Article V or Article VIII hereunder.
11.10 AMENDMENTS TO THE VESTING SCHEDULE: No amendment to the
vesting schedule or provisions of Section 11.01, or to this Plan which directly
or indirectly affects the computation of a Participant's Accrued Benefit, shall
deprive a Participant of a vested right to the benefits accrued to the
effective date of the amendment. Furthermore, if the vesting schedule or
provisions of Section 11.01 are amended, each Participant with at least three
(3) Years of Vesting Service (determined as of the later of the date the
amendment is adopted or the date the amendment is effective) may elect to have
his vesting percentage computed under the Plan without regard to the amendment.
The period during which the election may be made shall commence with the date
the amendment is adopted and shall end on the latest of:
(a) Sixty (60) days after the amendment is adopted;
(b) Sixty (60) days after the amendment becomes effective; or
(c) Sixty (60) days after the Participant is issued written notice
of the amendment by The Employer or Plan Administrator.
In the absence of any written notice under (c) above, any Participant who has
at least three (3) Years of Vesting Service (as determined above) shall at all
times receive a Vested Interest under whichever vesting schedule provides the
greatest Vested Interest.
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ARTICLE XII
FIDUCIARY DUTIES
12.01 GENERAL FIDUCIARY DUTY: A Fiduciary, whether or not a Named
Fiduciary, shall discharge his duties solely in the interest of the
Participants and their Beneficiaries hereunder. All assets of this Plan shall
be devoted to the exclusive purpose of providing benefits to Participants and
their Beneficiaries and defraying the reasonable expenses of administering the
Plan. Each Fiduciary, whether or not a Named Fiduciary, shall discharge his
duties with the care, skill, prudence and diligence under the circumstances
then prevailing that a prudent man acting in a like capacity and familiar with
such matters would use in the conduct of an enterprise of a like character and
with like aims. Each Fiduciary shall also discharge his duties in a manner
consistent with the documents and instruments governing the Plan to the extent
such documents and instruments are consistent with law. No Fiduciary, whether
or not a Named Fiduciary, shall engage in any of the prohibited transactions
with disqualified persons or parties-in-interest as those terms and
transactions are defined by the Code and ERISA, as passed and as it may be
amended, and regulations thereunder.
12.02 ALLOCATION OF RESPONSIBILITIES: Each Named Fiduciary shall
have only those duties and responsibilities expressly allocated under the terms
of this Plan. No other duties or responsibilities shall be implied.
12.03 DELEGATION OF RESPONSIBILITIES: Each Named Fiduciary may
delegate the fiduciary responsibilities other than Trustee responsibilities
allocated to such Fiduciary under this Plan to any person other than a Named
Fiduciary. If any duties or responsibilities are delegated under this section,
the person to whom the duties or responsibilities are delegated shall
acknowledge the fact in writing and shall specify in writing the duties and
responsibilities so delegated. All other duties and responsibilities shall be
deemed not to have been delegated.
12.04 LIABILITY FOR ALLOCATION OR DELEGATION OF RESPONSIBILITIES: A
Named Fiduciary shall not be liable for the acts or omissions of a person to
whom responsibilities or duties are allocated or delegated in accordance with
Section 12.02 or Section 12.03 except to the extent such Named Fiduciary
breaches his obligation under Section 12.01:
(a) With respect to the allocation or delegation;
(b) With respect to establishing or implementing a procedure for
allocation or delegation; or
(c) By continuing the allocation or delegation.
Nothing in this section shall relieve a Fiduciary from liability incurred under
Section 12.05.
12.05 LIABILITY FOR CO-FIDUCIARIES: In addition to the liability a
Fiduciary may incur for the breach of his duty under Section 12.01 or 12.04, a
Fiduciary shall be liable for a breach of Fiduciary duty
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committed by another Fiduciary in the following circumstances:
(a) If he participates knowingly in, or knowingly undertakes to
conceal, an act or omission of such other Fiduciary knowing
such act or omission is a breach;
(b) If, by his failure to comply with Section 12.01 he has enabled
such other Fiduciary to commit a breach;
(c) If he has knowledge of a breach by such other Fiduciary,
unless he makes reasonable efforts under the circumstances to
remedy the breach.
12.06 SAME PERSON MAY SERVE IN MORE THAN ONE CAPACITY:
Nothing herein shall prevent any person from serving in more than one Fiduciary
capacity.
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ARTICLE XIII
THE PLAN ADMINISTRATOR
13.01 APPOINTMENT OF PLAN ADMINISTRATOR: The Board of Directors of
the Plan Sponsor shall appoint the Plan Administrator, which may be the Plan
Sponsor. If the Plan Sponsor is appointed as Plan Administrator, the Plan
Sponsor may appoint one or more Committees to carry out the duties of the Plan
Administrator under this Plan. In that event all references in the Plan to the
Plan Administrator shall be deemed to refer to the appointed Committee. The
duties of the Committees shall be divided as the Plan Administrator deems
appropriate and may be designated by separate instrument. The Committees shall
act by majority vote except that they shall act by unanimous vote at any time
when there are only two members comprising the Committee.
13.02 ACCEPTANCE BY PLAN ADMINISTRATOR: The Plan Administrator
shall accept its appointment by joining with the Employer in the execution of
this Agreement.
13.03 SIGNATURE OF PLAN ADMINISTRATOR: All persons dealing with the
Plan Administrator may rely on any document executed by the Plan Administrator:
or, in the event of appointment of a Committee or Committees, such persons may
rely on any document executed by at least one member of the appropriate
Committee as being the act of the Plan Administrator.
13.04 APPOINTMENT OF AN INVESTMENT MANAGER: The Plan Administrator
shall appoint an Investment Manager or Managers to manage, acquire and dispose
of any assets of the Plan. In the event responsibility for appointment of
Investment Managers is delegated by the Plan Administrator to a named
Committee, that delegation shall carry with it the authority of the Committee
to act as a Named Fiduciary for purposes of ERISA in appointing an Investment
Manager. The Investment Manager shall accept his appointment by written
agreement executed by the Plan Administrator and Investment Manager. This
written agreement shall specify the Plan assets for which the Investment
Manager is responsible and such written instrument shall be kept with the other
documents governing the operation of the Plan. The Trustee shall be entitled
to rely on written instructions from the Investment Manager and shall be under
no obligation to invest or otherwise manage any asset of the Plan subject to
the management of the Investment Manager.
13.05 DUTIES OF THE PLAN ADMINISTRATOR: The Plan Administrator
shall be responsible for the general administration of the Plan including, but
not limited to, the following:
(a) To prepare an annual report, summary plan description and
modifications thereto, and summary annual report;
(b) To complete and file the various reports and tax forms with the
appropriate government agencies as required by law;
(c) To distribute to Plan Participants and/or their Beneficiaries
the summary plan description and
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reports sufficient to inform such Participants or Beneficiaries
of their Accrued Benefit and their Vested Accrued Benefit as
required by law;
(d) To determine annually, or more frequently if necessary, which
Employees are eligible to participate in the Plan;
(e) To determine the benefits to which Participants and their
Beneficiaries are entitled and to approve or deny claims for
benefits;
(f) To provide Plan Participants with a written explanation of the
effect of electing an optional form of benefit payment;
(g) To retain copies of all documents or instruments under which
the Plan operates in its own office, the principal place of
business of the Plan Sponsor and such other place as the
Secretary of Labor or his delegate may by regulation
prescribe; to make all such documents and instruments
governing the operation of the Plan available for inspection
by Plan Participants and/or their Beneficiaries; and to
furnish copies of such documents or instruments to Plan
Participants and/or their Beneficiaries on request, charging
only the cost thereof as prescribed by regulation of the
Secretary of Labor or his delegate;
(h) To interpret Plan provisions as needed and in this regard to
have complete and total discretion in the interpretation of
the Plan; and
(i) To act as the Plan's agent for the service of legal process,
unless another agent is designated by the Plan Sponsor and to
act on behalf of the Plan in all matters in which the Plan is
or may be a party.
13.06 CLAIMS PROCEDURE: Claims for benefits under the Plan may be
filed with the Plan Administrator on forms supplied by the Plan Sponsor.
Written notice of the disposition of a claim shall be furnished to the claimant
within sixty (60) days after the application thereof is filed. In the event
the claim is denied, the reasons for the denial shall be specifically set forth
in the notice in language calculated to be understood by the claimant,
pertinent provisions of the Plan shall be cited, and, where appropriate, an
explanation as to how the claimant may perfect the claim shall be provided. In
addition, the claimant shall be furnished with an explanation of the Plan's
claim review procedure.
13.07 CLAIMS REVIEW PROCEDURE: Any Employee, former Employee, or
Beneficiary of either, who has been denied a benefit by a decision of the Plan
Administrator pursuant to Section 13.06 shall be entitled to request the Plan
Administrator to give further consideration to his claim by filing with the
Plan Administrator (on a form which may be obtained from the Plan
Administrator) a request for a hearing. Such request, together with a written
statement of the reasons why the claimant believes his claim should be allowed,
shall be filed with the Plan Administrator no later than sixty (60) days after
receipt of the written notification provided for in Section 13.06. The Plan
Administrator shall then conduct a hearing within the next sixty (60) days, at
which the claimant may be represented by an attorney or any other
representative of his choosing and at which the claimant shall have an
opportunity to submit written
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and oral evidence and arguments in support of his claim. At the hearing (or
prior thereto upon five (5) business days written notice to the Plan
Administrator) the claimant or his representative shall have an opportunity to
review all documents in the possession of the Plan Administrator which are
pertinent to the claim at issue and its disallowance. A final decision as to
the allowance of the claim shall be made by the Plan Administrator within sixty
(60) days of receipt of the appeal unless there has been an extension of sixty
(60) days and shall be communicated in writing to the claimant. Such
communication shall be written in a manner calculated to be understood by the
claimant and shall include specific reasons for the decision and specific
references to the pertinent Plan provisions on which the decision is based.
13.08 COMPENSATION AND EXPENSES OF PLAN ADMINISTRATOR: The Plan
Administrator may engage the services of any person, including counsel, whose
services, in the opinion of the Plan Administrator, are necessary to assist it
in carrying out its responsibilities under the Plan. The Employer may direct
the Trustee to pay any expenses properly and actually incurred for such
services from the Trust Fund, including such reasonable compensation for
services provided by the Plan Administrator as shall have been agreed upon
between them, or, alternatively, the Employer may pay such expenses or
compensation directly; provided, however, that no individual acting as Plan
Administrator shall receive any compensation if he already receives full-time
pay from the Employer.
13.09 REMOVAL OR RESIGNATION: A Plan Administrator may be removed
by the Board of Directors of the Plan Sponsor upon thirty (30) days written
notice, and may resign upon thirty (30) days written notice to the Beard of
Directors. Upon such removal or resignation, or the inability of the Plan
Administrator for any other reason to act as Plan Administrator, the Board of
Directors shall appoint a successor Plan Administrator. The successor Plan
Administrator, upon written acceptance, shall have all the duties and
responsibilities of a Plan Administrator herein. The former Plan Administrator
shall deliver to the successor Plan Administrator all records and documents
which it holds relating to the Plan upon removal or resignation.
13.10 RECORDS OF PLAN ADMINISTRATOR: The Plan Sponsor shall have
access, upon request, to all the records of the Plan Administrator that relate
to the Plan.
13.11 OTHER RESPONSIBILITIES: Nothing in this Article shall be
construed to limit the responsibilities and duties allocated to the Plan
Administrator in other Articles of this Plan.
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ARTICLE XIV
THE TRUSTEE
14.01 APPOINTMENT OF TRUSTEE: The Beard of Directors of the Plan
Sponsor shall appoint the Trustee. Nothing in this Plan shall prevent the Plan
Sponsor from appointing multiple Trustees or creating multiple Trust Funds,
each with separate Trustees. If more thin one person is appointed as Trustee
of a single Trust Fund, they shall act by majority vote; provided, however,
that they shall act by unanimous vote at any time when there are only two
Trustees. In the event there is more than one Trustee, the reference to
Trustee shall be deemed to refer to all the Trustees.
14.02 ACCEPTANCE BY TRUSTEE: Effective July 1, 1993, the Trustee
shall accept its appointment by executing a separate trust agreement in a form
acceptable to the Trustee and Employer. The provisions of the separate Trust
Agreement shall control over those in this Plan, to the extent such provisions
define the duties of the Trustee with respect to the Plan and Trust Fund.
Prior to July 1. 1993, the provisions of the Prior Plan concerning the Trustee
and its duties shall apply.
14.03 INVESTMENT COMMITTEE: In the event of appointment of an
Investment Committee by the Plan Administrator, then except to the extent
responsibility for certain Plan assets has been allocated to an Investment
Manager as provided in Section 13.04, the Investment Committee is authorized
and empowered to direct investment of the Trust Fund, consistent with the terms
of the separate Trust Agreement. The Investment Committee shall direct
investment and reinvestment of the Trust Fund to keep the Trust Fund invested
without distinction between principal and income and in such securities or
property, real or personal, wherever situated, as the Committee shall deem
advisable consistent with the investment policy of the Plan established under
Article XVIII. The Committee shall give due regard to any limitations imposed
by the Code or ERISA so that at all times this Plan may qualify as a qualified
Plan and Trust.
14.04 PAYMENT FROM THE TRUST FUND: At the direction of the Plan
Administrator, the Trustee shall, from time to time, in accordance with the
terms of the Plan, make payments out of the Trust Fund. The Trustee shall not
be responsible in any way for the application of such payments.
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ARTICLE XV
THE EMPLOYER
15.01 NOTIFICATION: The Plan Sponsor shall notify the Plan
Administrator and the Trustee in writing if a new Plan Administrator or Trustee
has been appointed hereunder.
15.02 RECORD KEEPING: Each participating Gibbons Employer shall
maintain records with respect to each Employee sufficient to enable the Plan
Administrator and Trustee to fulfill their duties and responsibilities under
the Plan.
15.03 BONDING: The Plan Administrator shall procure bonding to
insure the Plan against risk of loss. The persons to be bonded and the amount
necessary shall be determined in accordance with ERISA and regulations
thereunder. No bonding shall be required pursuant to state law.
15.04 SIGNATURE OF EMPLOYER: All persons dealing with the Plan may
rely on any document executed in the name of the Plan Sponsor by its corporate
President, Vice-President, or other duly authorized corporate officer, or by
any other individual duly authorized by its Board of Directors, whether
retroactive or prospective.
15.05 PLAN COUNSEL AND EXPENSES: The Plan Sponsor may engage the
service of any person or organization, including counsel, whose services, in
the opinion of the Plan Sponsor are necessary for the establishment or
maintenance of this Plan. The expenses incurred or charged by a person or
organization engaged by the Plan Sponsor pursuant to the previous sentence
shall be paid by the Plan Sponsor, or alternatively, the Plan Sponsor may
direct the Trustee to pay such expenses from the Trust Fund.
15.06 OTHER RESPONSIBILITIES: Nothing in this Article shall be
construed to limit the responsibilities or duties allocated to the Plan Sponsor
and Gibbons Employers in other Articles of the Plan.
15.07 CONTROLLED GROUPS/AFFILIATED SERVICE GROUPS:
(a) For purposes of crediting Hours of Service, all employees of
all corporations which are members of a Controlled Group of
corporations, all employees of all trades or businesses
(whether or not incorporated) which are a Group Under Common
Control, all employees of an Affiliated Service Group and all
employees of any other entity required to be aggregated with
the Employer pursuant to regulations under Code Section 414(o)
shall be treated as employed by a single Employer for purposes
of Article III (Service), Article IV (Eligibility), Article V
(Contributions) and Article XI, (Vesting). Except as provided
in Section 7.01, all employees of all corporations which are
members of a Controlled Group of corporations, all employees
of all trades or businesses (whether incorporated or not)
which are a Group Under Common Control, all employees of an
Affiliated Service Group and all employees of any other entity
required to be aggregated with the Employer pursuant to
regulations under Code Section 414(o) shall be treated as
employed by a single Employer.
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(b) If the Employer adopting this Plan and Trust is a member of a
Controlled Group, Group Under Common Control, or Affiliated
Service Group and other employer-members of the group have
adopted a profit sharing plan containing language identical to
the language of this Subsection 15.07(b), then:
(1) If a Participant in this Plan and Trust is
transferred to the employ of another member of said
group and is eligible to participate in its profit
sharing plan and trust, the total Accrued Benefit of
said Participant (including both vested and
non-vested amounts) may be transferred to the profit
sharing plan and trust of said transferee employer,
provided that the vesting provisions of the
transferor plan and trust and the transferee plan and
trust are similar; and
(2) If a Participant in this Plan is a transferee from
the employ of another member of said group, and if
the transferor employer maintained a profit sharing
plan and trust with vesting provisions similar to
those of this Plan, then the total accrued benefit of
said Participant (including both vested and
non-vested amounts) under that plan may be
transferred to this Plan and Trust.
In the event that the Participant terminates, any forfeited
amounts shall be allocated to plans of members of the group on
a ratio of total contributions made by each employer who is a
member of the group for the Participant to the total
contributions made by all employers who are members of the
group for the Participant.
(c) If the Employer is a member of a Controlled Group, Group Under
Common Control, or Affiliated Service Group and if such group
maintains more than one qualified retirement plan that is
integrated with Social Security, only a single integration
level shall be applicable to each Participant who is a
Participant in one or more integrated plans. The integration
level for each Participant shall be prorated in each
integrated plan in the ratio that the Annual Compensation
received by the Participant from the member of the group
maintaining the integrated plan bears to the Annual
Compensation received by the Participant from all members of
the group maintaining all such integrated plans.
(d) If more than one Employer has adopted this Plan and if all
such Employers are members of the same Controlled Group, Group
Under Common Control, or Affiliated Service Group:
(1) The provisions of Articles XVI and XVII shall be
applicable to each adopting Employer as an individual
Employer;
(2) The provisions of Section 15.07(a) through (c) shall
not be applicable to such adopting Employers; and
(3) The "effective date" for any adopting Employer who
adopts this Plan on other than the Effective Date
shall be the first day of the Plan Year in which such
adopting Employer shall first elect to be covered by
this Plan.
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15.08 EMPLOYER CONTRIBUTIONS: Each participating Gibbons Employer
shall contribute to the Plan that Employer's share of Elective Deferral and
Employer Matching Contributions according to the elections of the Participants
employed by that Employer, as well as that Employer's share of Employer Profit
Sharing Contributions and Davis-Bacon Contributions, as determined by the Plan
Administrator. At the election of the Plan Sponsor Davis-Bacon Contributions
may be made solely by the Plan Sponsor or other designated Gibbons Employer and
charged back to the other Gibbons Employers.
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ARTICLE XVI
PLAN AMENDMENT OR MERGER
16.01 POWER TO AMEND: The Plan Sponsor reserves the power to amend,
alter, or wholly revise the Plan, prospectively or retrospectively, at any
time, and the interest of every Participant is subject to the power so
reserved.
16.02 LIMITATIONS ON AMENDMENTS: Upon execution of any amendment,
the Employer, Plan Administrator, Trustees, Participants and their
Beneficiaries shall be bound thereby; provided, however, that no amendment:
(a) Shall enlarge the duties or responsibilities of the Plan
Administrator or Trustee without its consent; or
(b) Shall cause any part of the assets contributed to the Plan to
be diverted to any use or purpose other than for the exclusive
benefit of the Participants and their Beneficiaries (including
the reasonable cost of administering the Plan) prior to the
satisfaction of all liabilities (Fixed and contingent) under
the Plan to Participants and their Beneficiaries; or
(c) Shall reduce the vesting percentage of any Participant, Former
Participant, or Beneficiary; or
(d) Shall reduce or restrict the Account Balance of any
Participant, Former Participant or Beneficiary; or
(e) Shall eliminate an optional form of benefit, with respect to
benefits attributable to service before the amendment.
Notwithstanding the above, any amendment may be made which may be or become
necessary in order that the Plan will conform to the requirements of Code
Section 401(a), or of any generally similar successor provision, or in order
that all of the provisions of the Plan will conform to all valid requirements
of applicable federal and state laws.
16.03 METHOD OF AMENDMENT: Each amendment shall be stated in an
instrument in writing signed in the name of the Plan Sponsor by its Corporate
President or Vice-President or other duly authorized corporate officer, or by
any other individual duly authorized by its Board of Directors, whether
retroactive or prospective.
16.04 NOTICE OF AMENDMENT: Written notice of each amendment shall
be given promptly by the Plan Sponsor to any other Employers, the Plan
Administrator and the Trustee.
16.05 MERGER OR CONSOLIDATION: This Plan and Trust may be merged or
consolidated with, or its assets or liabilities may be transferred to, any
other plan only if the benefits which would be received by
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each Participant of this Plan, in the event of a termination of the Plan
immediately after such merger, consolidation or transfer, are at least equal to
the benefits the Participant would have received if the Plan had terminated
immediately before the merger, consolidation or transfer. The Trustee
possesses the specific authority to enter into merger agreements or direct
transfer of assets agreements with the Trustees of other retirement plans
described in Code Section 401(a) and to accept the direct transfer of Plan
assets, or to transfer Plan assets, as a party to any such agreement.
The Trustee may accept a direct transfer of Plan assets on behalf of an
Employee prior to the date the Employee satisfies the Plan's eligibility
condition(s). If the Trustee accepts such a direct transfer of Plan assets,
the Advisory Committee and Trustee shall treat the Employee as a Participant
for all purposes of the Plan except the Employee may not make Elective Deferral
contributions under Article V nor shall the Employee share in Employer
contributions or Participant forfeitures under Article VI until he actually
becomes a Participant in the Plan.
The Trustee shall hold, administer and distribute the transferred assets as a
part of the Trust Fund and the Trustee shall maintain a separate Predecessor
Plan Account for the benefit of the Employee on whose behalf the Trustee
accepted the transfer in order to reflect the value of the transferred assets.
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ARTICLE XVII
TERMINATION OR DISCONTINUANCE OF CONTRIBUTIONS
17.01 RIGHT TO TERMINATE: The Plan Sponsor may terminate the Plan
at any time by a written resolution by the Board of Directors specifying the
termination date. The Plan Sponsor shall promptly notify the Plan
Administrator, Trustee and any other Employers of such action. Further, the
Plan Sponsor shall notify all Participants and Former Participants of such
action, and shall file all required reports with Federal agencies, in
accordance with applicable regulations.
17.02 EFFECT OF TERMINATION: In the event of a Plan termination,
the rights of all affected Participants to their Accrued Benefits as of the
date of such termination shall be fully vested and shall not thereafter be
subject to forfeiture, except to the extent that law or regulation may preclude
such vesting in order to prohibit discrimination in favor of officers,
shareholders, or highly compensated Employees. For purposes of the preceding
sentence, a Participant who has terminated employment with the Employer and
incurred five consecutive One Year Breaks in Service as of the termination date
shall not be considered to be affected by such Plan termination, and shall be
vested in his Accrued Benefit only to the extent provided in the other
applicable Articles of this Plan.
17.03 MANNER OF DISTRIBUTION: In the event of a Plan termination,
the Plan Administrator shall direct the Trustee to distribute the Accrued
Benefits of all Participants, Former Participants, and Beneficiaries in
accordance with Article IX or Article XI.
Notwithstanding the above, no payment shall be made to a Participant from his
Participant Elective Deferral Account (or any other Account the contributions
to which have been included in the Deferral Account for the Participant) unless
or until such time as the Participant:
(a) is eligible for Retirement Benefits as provided in Article IX;
(b) Dies;
(c) Separates from the service of the Employer;
(d) Attains the age of fifty-nine and one-half (59 1/2); or
(e) Incurs a Financial Hardship.
All Elective Deferral Accounts shall be maintained by the Trustee and
distributed at such time and in such manner as previously provided herein.
Alternatively, the balance in such Accounts may be transferred to another plan
maintained or established by the Employer which qualifies under Code Section
401(a) as provided above, but only if such other plan contains the same
restrictions on the distribution of such transferred amounts as described in
the preceding paragraph.
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However, the above restrictions on distributions to a Participant shall not
apply in the event of:
(a) The termination of the Plan without establishment of a
successor plan; or
(b) The sale or other disposition to an unrelated corporation of
at least eighty-five percent (85%) of the assets of the Plan
Sponsor or of an Employer used by the Plan Sponsor or Employer
in its trade or business. This paragraph applies only with
respect to a Participant who continues employment with the
acquiring corporation; or
(c) The sale or other disposition by the Plan Sponsor or an
Employer to an unrelated entity of the Plan Sponsor's or
Employer's interest in a subsidiary. This paragraph applies
only with respect to a Participant who continues employment
with such subsidiary.
For Plan Years beginning prior to 1989, paragraphs (b) and (c) above shall
apply only if the acquiring corporation or entity does not maintain the Plan.
No payment of benefits (or provisions therefor) shall actually be made by the
Trustee until alter it is advised by the Employer in writing that applicable
requirements, if any, of ERISA governing termination of this Plan have been, or
are being, complied with or that appropriate authorizations, waivers,
exemptions or variances have been, or are being, obtained. The actual payment
of benefits (or provision therefor) shall be in conformity with the applicable
requirements, methods and procedures, if any, of ERISA governing the
termination of the Plan.
17.04 NO REVERSION: No termination or amendment of this Plan and
Trust and no other action shall divert any part of the funds to any purpose
other than the exclusive benefit of Participants, Former Participants or their
Beneficiaries except, and notwithstanding any other provision of this Plan to
the contrary, any amount held in an unallocated suspense account which cannot
be allocated to any Participant due to the limitations of Article VIII may be
returned to the Employer upon termination of the Plan.
17.05 TERMINATION OF AN EMPLOYER: An Employer, other than the Plan
Sponsor, may terminate its participation in the Plan at any time by a written
resolution by the Board of Directors specifying the termination date. The
Employer shall promptly notify the Plan Sponsor, Plan Administrator and Trustee
of any such action or direction. The participation of an Employer in the Plan
shall also terminate in the event of a complete discontinuance of contributions
by such Employer.
17.06 PARTIAL TERMINATION: A partial termination of the Plan may be
deemed to have occurred if a substantial number of Participants are excluded
from coverage by reason of amendment of the Plan, severance by an Employer or
termination of an Employer, or if the Plan is amended to adversely affect the
rights of employees to vest in benefits under the Plan or to reduce or
eliminate future benefit accruals under the Plan. The determination of whether
a partial termination has occurred shall be made on the basis of the facts and
circumstances in a particular case.
17.07 EFFECT OF PARTIAL TERMINATION: In the event of a partial
termination of the Plan, the provisions of Section 17.02 shall apply to those
Participants affected by the partial termination.
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ARTICLE XVIII
FUNDING POLICY FOR PLAN BENEFITS
18.01 FUNDING METHOD: The benefits provided by this Plan shall be
funded by contributions of the Employer and Participants. The contribution
amount shall be determined as provided in this Plan.
18.02 INVESTMENT POLICY: This Plan has been established for the
sole purpose of providing benefits to the Participants and their Beneficiaries.
In determining investment directions hereunder, the Investment Committee shall
take into account the advice provided by the Plan Administrator as to funding
policy and the short and long-range needs of the Plan based on the evident and
probable requirements of the Plan as to the time benefits shall be payable and
the requirements therefor. Benefits may be provided through any combination of
investment media designed to provide the requisite liquidity, growth and
security appropriate to this Plan.
Benefits for Participants may be provided through any investment media
offered by the Trustee or through the purchase of shares in any regulated
investment company as defined in Code Section 851(a), or through any investment
proper and appropriate to be made by the Trustee in accordance with Article
XIV, or through any combination of such investments.
18.03 NO PURCHASE OF LIFE INSURANCE CONTRACTS: Unless authorized by
the Plan Sponsor pursuant to amendment to this Article XVIII, no insurance
contracts shall be purchased by the Trustee on the life of any Participant.
18.04 INVESTMENT FUND: The Employer shall contribute to an
Investment Fund, which shall be established by the Trustee to provide such
additional benefits, in addition to the proceeds or surrender values of any
allocated annuity contracts, for Participants and their Beneficiaries provided
by this Plan.
18.05 NON-TRANSFERABILITY OF ANNUITY CONTRACTS: In the event the
assets of the Trust Fund include allocated annuity contracts, all incidents of
ownership in such contracts may be exercised by the Trustee, as directed by the
Plan Administrator, except to the extent any death benefits payable thereunder
may be paid to the Beneficiary designated by the Participant. All such
contracts shall provide that the owner may not change the ownership of the
contract, nor may it be sold, assigned or pledged as collateral for a loan, as
security for the performance of an obligation, or for any other purpose to
anyone. No annuity contract held by the Trust as an investment asset may be
delivered to a Participant as a distribution from the Plan.
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<PAGE> 84
ARTICLE XIX
TOP-HEAVY PROVISIONS
19.01 APPLICATION: If this Plan is or becomes Top-Heavy for any
Plan Year, the provisions of this Article shall supersede any conflicting
provisions contained in any other Article of this Plan.
19.02 SPECIAL DEFINITIONS: For purposes of this Article and related
Plan provisions, the following terms shall have the following meanings unless a
different meaning is plainly required by the context:
(a) "DETERMINATION DATE" shall mean, for any plan year subsequent
to the first plan year, the last day of the preceding plan
year for such plan; for the first plan year of a plan, the
last day of that plan year.
(b) "DETERMINATION PERIOD" shall mean the plan year containing the
Determination Date and the four (4) preceding plan years for
such plan.
(c) "FIVE PERCENT OWNER" shall mean:
(1) If the Employer is a corporation, any person who owns
(or is considered as owning within the meaning of
Code Section 318) more than five percent (5%) of the
outstanding stock of the corporation or stock
possessing more than five percent (5%) of the total
combined voting power of all stock of the
corporation.
(2) If the Employer is not a corporation, any person who
owns more than five percent (5%) of the capital or
profits interest in the Employer.
(d) "KEY EMPLOYEE" shall mean any Employee or former Employee (and
any Beneficiary of such Employee) who at any time during the
Determination Period was:
(1) An officer of the Employer during a Plan Year in
which he received Top-Heavy Compensation greater than
fifty percent (50%) of the amount in effect under
Code Section 415(b)(1)(A) for such Plan Year. For
purposes of this Paragraph, no more than fifty (50)
Employees (or, if lesser, the greater of three (3) or
ten percent (10%) of the number of Employees) shall
be treated as officers; or
(2) One of the ten (10) Employees owning (or considered
as owning within the meaning of Code Section 318)
both more than one-half percent (1/2%) interest and
the largest interests in the Employer during a Plan
Year in which he received Top-Heavy Compensation
greater than the amount in effect under Code Section
415(c)(1)(A) for such Plan Year; or
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<PAGE> 85
(3) A Five Percent Owner of the Employer; or
(4) A One Percent Owner of the Employer during a plan
year in which he received Top-Heavy Compensation
greater than one hundred fifty thousand dollars
($150,000).
The determination of who is a Key Employee shall be made in
accordance with Code Section 416(i)(1) and the Regulations
thereunder. For purposes of determining who is a One Percent
Owner, Five Percent Owner, or ten largest owner, the rules of
Code Section 414(b), (c) and (m) shall not apply.
Beneficiaries of Employees shall be treated as a Key Employee
or Non-Key Employee based on the Key Employee status of such
Employee; inherited benefits shall retain the Key Employee or
Non-Key Employee status of the Employee.
The term "NON-KEY EMPLOYEE" shall mean any Employee or former
Employee (and any Beneficiary of such Employee) who is not a
Key Employee. Non-Key Employees include Employees who are
former Key Employees.
(e) "ONE PERCENT OWNER" shall mean:
(1) If the Employer is a corporation, any person who owns
(or is considered as owning within the meaning of
Code Section 318) more than one percent (1%) of the
outstanding stock of the corporation or stock
possessing more than one percent (1%) of the total
combined voting power of all stock of the
corporation; or
(2) If the Employer is not a corporation, any person who
owns more than one percent (1%) of the capital or
profits interest in the Employer.
(f) "PERMISSIVE AGGREGATION GROUP" shall mean the Required
Aggregation Group of plans plus any other plan or plans of the
Employer which, when considered as a group with the Required
Aggregation Group, would continue to satisfy the requirements
of Code Section 401(a)(4) and 410.
(g) "PRESENT VALUE" shall mean the actuarial present value of an
amount or series of amounts determined based on the Top-Heavy
determination provisions of a defined benefit plan that is
part of a Required Aggregation Group or Permissive Aggregation
Group with this Plan.
(h) "REQUIRED AGGREGATION GROUP" shall mean:
(1) Each qualified plan of the Employer including any
plan terminated within the last five years ending on
the determination date, in which at least one Key
Employee participates in the plan year containing the
determination date, or any of the four preceding plan
years; and
(2) Any other qualified plan of the Employer which
enables a Plan described in Item (1) to meet the
requirements of Code Section 401(a)(4) or 410.
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<PAGE> 86
(i) "SUPER TOP-HEAVY": This Plan is Super Top-Heavy if the Plan
would be Top-Heavy if "ninety percent (90%)" were substituted
for "sixty percent (60%)" each place it appears in Subsection
(j) below.
(j) "TOP-HEAVY": This Plan is Top-Heavy if any of the following
conditions apply:
(1) If the Top-Heavy Ratio for this Plan exceeds sixty
percent (60%) and this Plan is not part of any
Required Aggregation Group or Permissive Aggregation
Group of plans.
(2) If this Plan is a part of a Required Aggregation
Group of plans but not part of a Permissive
Aggregation Group and the Top-Heavy Ratio for the
Required Aggregation Group of plans exceeds sixty
percent (60%).
(3) If this Plan is a part of a Permissive Aggregation
Group of plans and the Top-Heavy Ratio for the
Permissive Aggregation Group exceeds sixty percent
(60%).
(k) "TOP HEAVY AVERAGE MONTHLY COMPENSATION" shall mean
one-twelfth (1/12th) of the average of a Participant's
Top-Heavy Compensation during the five (5) consecutive Plan
Years (or the total number of such years of the Participant's
employment, if less than five (5)) which produces the highest
average, but taking into account only Top-Heavy Compensation
for years that this Plan was Top-Heavy and any years preceding
a year that this Plan was Top-Heavy.
(l) "TOP-HEAVY COMPENSATION" shall have the same meaning as the
term 'Compensation' defined in Section 7.01(b), but shall
include contributions made by the Employer to a plan of
deferred compensation otherwise excluded in Section 7.01(b).
(m) "TOP-HEAVY RATIO" shall mean and be determined as follows:
(1) If the Employer maintains one or more defined
contribution plans (including any simplified employee
pension plan) and the Employer has never maintained
any defined benefit plan which has covered or could
cover a Participant in this Plan, the Top-Heavy Ratio
is a fraction, the numerator of which is the sum of
the account balances of all Key Employees as of the
Determination Date and the denominator of which is
the sum of all account balances of all Participants
as of the Determination Date. Both the numerator and
denominator of the Top- Heavy Ratio shall be adjusted
to reflect any part of any account balance
distributed in the five (5) year period ending on the
Determination Date and any contribution which is due
but unpaid as of the Determination Date. In the case
of a defined contribution plan which is not subject
to Code Section 412, the adjustment for contributions
due but unpaid is generally the amount of any
contributions actually made after the Top-Heavy
Valuation Date but on or before the Determination
Date; however, for the first plan year of such a
plan, the adjustment shall also reflect the amount of
any contributions made after the Top-Heavy Valuation
Date that are allocated as of a date in that first
plan year. In
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the case of a defined contribution plan that is subject to Code
Section 412, the account balances shall include contributions that
would be allocated as of a date not later than the Determination Date,
even though those amounts are not yet required to be contributed;
furthermore, the adjustment for contributions due but unpaid shall
reflect the amount of any contribution actually made (or due to be
made) after the Top-Heavy Valuation Date but before the expiration
date of the extended payment period in Code Section 412(c)(10).
(2) If the Employer maintains one or more defined
contribution plans (including any simplified employee
pension plan) and the Employer maintains or has
maintained one or more defined benefit plans which
have covered or could cover a Participant in this
Plan, the Top-Heavy Ratio is a fraction, the
numerator of which is the sum of account balances
under the defined contribution plans for all Key
Employees and the Present Value of accrued benefits
under the defined benefit plans for all Key
Employees, and the denominator of which is the sum
of the account balances under the defined
contribution plans for all Participants and the
Present Value of accrued benefits under the defined
benefit plans for all Participants. Both the
numerator and denominator of the Top-Heavy Patio are
adjusted for any part of any account balance or
accrued benefit distributed in the five (5) year
period ending on the Determination Date and any
contribution to a defined contribution plan due but
unpaid as of the Determination Date. In the case of
a defined contribution plan which is not subject to
Code Section 412, the adjustment for contributions
due but unpaid is generally the amount of any
contributions actually made alter the Top-Heavy
Valuation Date but on or before the Determination
Date; however, for the first plan year of such a
plan, the adjustment shall also reflect the amount of
any contributions made after the Top-Heavy Valuation
Date that are allocated as of a date in that first
plan year. In the case of a defined contribution
plan that is subject to Code Section 412, the account
balances shall include contributions that would be
allocated as of a date not later than the
Determination Date, even though those amounts are not
yet required to be contributed; furthermore, the
adjustment for contributions due but unpaid shall
reflect the amount of any contribution actually made
(or due to be made) alter the Top-Heavy Valuation
Date but before the expiration date of the extended
payment period in Code Section 412(c)(10).
(3) For purposes of (1) and (2) above, the value of
account balances and the Present Value of accrued
benefits shall be determined as of the most recent
Top-Heavy Valuation Date that falls within or ends
with the twelve month period ending on the
Determination Date. The account balances and accrued
benefits of a Participant who is not a Key Employee
but who was a Key Employee in a prior year shall be
disregarded. For Plan Years beginning after December
31, 1984, the account balances and accrued benefits
of any Participant who has not performed any service
for the Employer at any time during the five (5) year
period ending on the Determination Date shall be
disregarded. In the case of a defined benefit plan,
the Present Value of Accrued Benefits shall not
reflect any proportional subsidies and
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shall reflect any non-proportional subsidies provided by the plan.
The calculations of the Top-Heavy Patio, and the extent to which
distributions, rollovers and transfers are taken into account shall be
made in accordance with Code Section 416 and the Regulations
thereunder. In the case of unrelated rollovers and transfers: (1) the
plan making the distribution or transfer shall count the distribution
as part of an accrued benefit distributed; and (2) the plan accepting
the rollover or transfer shall not consider the rollover or transfer
as part of the accrued benefit if such rollover or transfer was
accepted after December 31, 1983, and shall consider the rollover or
transfer as part of the accrued benefit if such rollover or transfer
was accepted prior to January 1, 1984. In the case of related
rollovers and transfers, the plan making the distribution or transfer
shall not count the distribution or transfer as part of an accrued
benefit distributed, and the plan accepting the rollover or transfer
shall count the rollover or transfer as part of the accrued benefit.
Deductible employee contributions shall not be taken into account for
purposes of computing the Top-Heavy Ratio. When aggregating plans,
the value of account balances and accrued benefits will be calculated
with reference to the Determination Dates that fall within the same
calendar year.
For purposes of the above, a Participant's Accrued Benefit in a
defined benefit plan shall be determined under a uniform accrual
method which applies for all defined benefit plans maintained by the
Employer or, if there is no such method, under the method described in
Code Section 411(b)(1)(C) which provides the slowest rate of accrual.
(n) "TOP-HEAVY VALUATION DATE" shall mean the date as of which the
Present Value of accrued benefits under a defined benefit plan
or account balances under a defined contribution plan, which
is part of a Permissive Aggregation Group or Required
Aggregation Group, is determined for calculating the Top-Heavy
Ratio. For a defined benefit plan, such date shall be the
same as the actuarial valuation date used for computing plan
costs under Code Section 412, regardless of whether an
actuarial valuation is performed that year. For a defined
contribution plan, such date shall be the last day of the plan
year.
19.03 TOP-HEAVY MINIMUM REQUIRED ALLOCATION: For any Plan Year in
which the Plan is Top-Heavy but not Super Top-Heavy:
(a) Except as otherwise provided below, the Employer contributions
and forfeitures allocated on behalf of any Participant who is
a Non-Key Employee shall not be less than the lesser of:
(1) three percent (3%) of such Participant's Top-Heavy
Compensation; or
(2) In the case where the Employer has no defined benefit
plan which designates this Plan to satisfy Code
Section 401 and 416(c), the largest percentage of
Employer contributions and forfeitures, as a
percentage of the first two hundred thousand dollars
($200,000), (or such larger amount as may be
prescribed by the Secretary of the Treasury or his
delegate) of the Key Employee's Top-Heavy
Compensation, allocated on behalf of
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any Key Employee for that year. In calculating this
percentage, amounts contributed by the Employer,
pursuant to a salary reduction agreement, to a plan
which is qualified under Code Section 401(k) shall be
treated as Employer contributions.
(b) The minimum allocation shall be determined without regard to
any Social Security contribution by the Employer. This
minimum allocation shall be made even though, under other Plan
provisions, the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser
allocation for the Plan Year because of:
(1) The Participant's failure to complete one thousand
(1000) Hours of Service (or any equivalent provided
in the Plan);
(2) The Participant's failure to make mandatory employee
contributions to the Plan;
(3) Compensation less than a stated amount;
(4) The Employer having no Net Profits; or
(5) In the case of a plan qualified under Code Section
401(k), the Participant's failure to make elective
contributions to such plan.
If a Participant is required to receive a minimum allocation
under this Subsection and such amount exceeds the amount that
the Participant would receive under other Plan provisions, the
Employer shall make an additional contribution for such
Participant. Such additional contribution shall be allocated
to the Employer Contribution Account of such Participant in
the same manner as regular Employer contributions, pursuant to
Article VII.
(c) The provisions in Subsections (a) and (b) above shall not
apply to any Participant who was not employed by the Employer
on the last day of the Plan Year.
(d) The provisions in Subsections (a) and (b) above shall not
apply to a Participant if such Participant is covered under a
defined contribution plan designated by the Employer to
provide the Top-Heavy minimum benefits, and such Participant
receives an allocation of Employer contributions and
forfeitures under that plan during the subject Plan Year which
is at least as great as the amount otherwise required under
(a) and (b) above. If the amount of Employer contributions
and forfeitures allocated to such a Participant under that
plan during the subject Plan Year is less than the amount
required under (a) and (b) above, the amount otherwise
required under (a) and (b)above shall be reduced by the amount
so allocated under that plan.
19.04 SUPER TOP-HEAVY MINIMUM REQUIRED ALLOCATION: For any Plan
Year in which the Plan is Super Top-Heavy:
(a) Except as otherwise provided below, the Employer contributions
and forfeitures allocated on
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behalf of any Participant who is a Non-Key Employee shall not
be less than the lesser of:
(1) five percent (5%) of such Participant's Top-Heavy
Compensation; or
(2) In the case where the Employer has no defined benefit
plan which designates this Plan to satisfy Code
Section Section 401 and 416(c), the largest
percentage of Employer contributions and forfeitures,
as a percentage of the First two hundred thousand
dollars ($200,000), (or such larger amount as may be
prescribed by the Secretary of the Treasury or his
delegate) of the Key Employee's Top-Heavy
Compensation, allocated on behalf of any Key Employee
for that year. In calculating this percentage,
amounts contributed by the Employer, pursuant to a
salary reduction agreement, to a plan which is
qualified under Code Section 401(k) shall be treated
as Employer contributions.
The minimum allocation shall be determined without regard to
any Social Security contribution by the Employer. This
minimum allocation shall be made even though, under other Plan
provisions, the Participant would not otherwise be entitled to
receive an allocation, or would have received a lesser
allocation for the Plan Year because of:
(1) The Participant's failure to complete one thousand
(1000) Hours of Service (or any equivalent provided
in the Plan);
(2) The Participant's failure to make mandatory employee
contributions to the Plan;
(3) Compensation less than a stated amount;
(4) The Employer having no Net Profits; or
(5) In the case of a plan qualified under Section 401(k)
of the Code, the Participant's failure to make
elective contributions to such plan.
(b) If a Participant is required to receive a minimum allocation
under this Subsection and such amount exceeds the amount that
the Participant would receive under other Plan provisions, the
Employer shall make an additional contribution for such
Participant. Such additional contribution shall be allocated
to the Employer Contribution Account of such Participant in
the same manner as regular Employer contributions, pursuant to
Article VII.
(c) The provisions in Subsections (a) and (b) above shall not
apply to any Participant who was not employed by the Employer
on the last day of the Plan Year.
(d) The provisions in Subsections (a) and (b) above shall not
apply to a Participant if such Participant is covered under a
defined contribution plan designated by the Employer to
provide the Top-Heavy minimum benefits, and such Participant
receives an allocation of Employer contributions and
forfeitures under that plan during the subject Plan Year which
is at least as great as the amount otherwise required under
(a) and (b) above. If the amount of
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Employer contributions and forfeitures allocated to such a Participant
under that plan during the subject Plan Year is less than the amount
required under (a) and (b) above, the amount otherwise required under
(a) and (b) above shall be reduced by the amount so allocated under
that plan.
19.05 NON-FORFEITABILITY OF MINIMUM TOP-HEAVY ALLOCATION: The
minimum allocation of Employer contributions or forfeitures required under
Sections 19.03 or 19.04 (to the extent required to be non-forfeitable under
Code Section 416(b)) shall not be forfeited in the case of a suspension of
benefits under Code Section 411(a)(3)(B) or a withdrawal of mandatory employee
contributions under Code Section 411(a)(3)(D).
19.06 COMPENSATION LIMITATION: For any Plan Year in which the Plan
is Top-Heavy, only the first two hundred thousand dollars ($200,000), (or such
larger amount as may be prescribed by the Secretary of the Treasury or his
delegate), of a Participant's Annual Compensation or Top-Heavy Compensation
shall be taken into account for purposes of this Plan. Notwithstanding the
previous sentence, no such limitation shall be imposed for purposes of Sections
5.07 and 7.01.
19.07 MINIMUM VESTING PROVISION: For any Plan Year in which this
Plan is Top- Heavy, the following vesting schedules shall automatically apply
to each Participant in the Plan, unless under Section 11.01 the Participant
would be entitled to a larger vested benefit, in which case the vested benefit
as provided in Section 11.01 shall apply to such Participant:
Employer Profit-Sharing Contribution Accounts:
<TABLE>
<CAPTION>
Years of Vesting
Vesting Service Percentage
--------------- ----------
<S> <C>
Less than 2 0%
2 20%
3 40%
4 60%
5 80%
6 or more 100%
</TABLE>
Employer Matching Contribution Accounts:
<TABLE>
<CAPTION>
Years of Vesting
Vesting Service Percentage
--------------- ----------
<S> <C>
Less than 3 0%
3 or more 100%
</TABLE>
These vesting schedules apply to all accrued benefits within the meaning of
Code Section 411(a)(7), except those attributable to employee contributions,
including benefits accrued before the effective date of Code Section 416 and
benefits accrued before the Plan became Top-Heavy. Further, no reduction in
vested benefits may
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occur in the event the Plan's status as Top- Heavy changes for any Plan Year
and any change in the Plan's vesting schedule due to a change in Top-Heavy
status shall be subject to the provision of Section 11.10. However, this
Section does not apply to the Accrued Benefit of any Employee who does not have
an Hour of Service after the Plan has initially become Top-Heavy; such
Employee's Vested Interest attributable to Employer contributions and
forfeitures shall be determined without regard to this Section.
19.08 ADJUSTMENTS TO LIMITATIONS: For any Plan Year in which the
Plan is Top-Heavy, the following adjustments shall be made to the denominators
of the Defined Benefit Fraction and Defined Contribution Fraction as defined in
Section 7.01.
(a) SUPER TOP-HEAVY: In any Plan Year in which the Plan is Super
Top-Heavy the denominators shall be computed by substituting
"one hundred percent (100%)" for "one hundred twenty-five
percent (125%)" each place it appears in such definitions.
(b) Not Super Top-Heavy: In any Plan Year in which the Plan is
Top-Heavy but not Super Top-Heavy the denominators shall be
computed by substituting "one hundred percent (100%)" for "one
hundred twenty-five percent (123%)" each place it appears in
such definitions.
19.09 PARTICIPANT ELECTIVE DEFERRALS: For Plan Years beginning and
before January 1, 1989, Elective Deferrals shall be taken into account in
determining the amount of Employer contributions allocated to a Participant
under Sections 19.03 and 19.04 above. For Plan Years beginning after December
31, 1988, Elective Deferrals shall not be taken into account in determining the
amount of Employer contributions allocated to a Participant under Sections
19.03 and 19.04 above.
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ARTICLE XX
PROVISIONS AFFECTING BENEFITS
20.01 AVAILABILITY OF LOANS: At the written election of the Plan
Sponsor, the Plan may offer loans to Participants. In the event of such an
election, the terms of this Section 20.01 and the succeeding Sections of this
Article XX shall apply. Upon acceptance of an application by a Participant who
is an active Employee, the Plan Administrator shall direct the Trustee to make
a loan to the Participant from his Plan Accounts (including any Rollover
Accounts), subject to the provisions of this Article. In considering a
Participant's application for a loan, the Plan Administrator shall base its
decision whether to grant a loan on a uniform and non-discriminatory policy,
without regard to the race, color, religion, sex, age or national origin of the
applicant.
20.02 LOAN ADMINISTRATION: The Employer shall prepare and adopt a
written Participant Loan Administration Policy Statement, whose provisions
shall be made part of this Plan. The Policy Statement shall set forth:
(a) the identity of the person or persons authorized to administer
the loan program;
(b) the procedure for applying for a loan;
(c) the basis on which loans will be approved or denied;
(d) limitations, if any, on the types and amounts of loans
offered;
(e) the procedure for determining a reasonable rate of interest;
(f) the types of collateral which may secure a loan; and
(g) the events constituting default and the steps to be taken to
preserve plan assets in the event of a default.
20.03 AMOUNT OF LOAN: The amount of any loan to a Participant when
added to the outstanding balance of any previous loans made to him pursuant to
this Article or under any other qualified plan maintained by the Employer,
shall not exceed the lesser of:
(a) Fifty percent (50%) of the vested balance in his Plan Accounts
(including any Rollover Accounts); or
(b) $50,000, reduced by the excess (if any) of:
(1) the highest outstanding balance of loans from the
plan during the 1-year period ending on the day
before the date on which such loan was made, over
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(2) the outstanding balance of loans from the plan on the
date on which such loan was made.
20.04 COLLATERAL REQUIREMENTS: Any loan to a Participant shall be
secured solely by the balance in his Plan Account (including any Rollover
Account). In the event of default on the loan, however foreclosure and
attachment of such security shall not occur until a distributable event occurs
under the Plan.
20.05 LOAN TERMS: Any loan made to a Participant by the Trustee
shall be evidenced by a promissory note of the Participant drawn in favor of
the Trust. Such note shall bear a reasonable rate of interest and shall be
amortized in level installments payable at least quarterly within a specified
period of time not to exceed five (5) years, unless such loan is used to
acquire a dwelling unit which, within a reasonable period of time (determined
at the time the loan is made), will be used as the principal residence of the
Participant or Beneficiary, in which case the specified period of time shall
not exceed ten (10) years.
20.06 ACCOUNTING FOR LOANS: Any loan to a Participant pursuant to
this Article shall be treated as a directed investment of his Participant
Accounts (excluding his Rollover Account). For purposes of allocating the
general investment income of the Trust Fund pursuant to Section 6.03, the
balance in his Accounts shall be treated as equal to the actual balance in the
Accounts minus the outstanding balance of any loans. Furthermore, for purposes
of Section 6.03, repayments of principal and interest on such loan shall be
treated as deposits to the adjusted balance (determined pursuant to the
preceding sentence) of his Participant Accounts.
20.07 EFFECT OF TERMINATION OF EMPLOYMENT OR PLAN: If a Participant
terminates employment with the Employer for any reason, the outstanding balance
of any loans made to him shall become fully payable no later than ninety (90)
days following his termination of employment or, if earlier, on his Annuity
Starting Date. In the event of a termination of the Plan, any outstanding
loans shall be due and fully payable within ninety (90) days of the effective
date of such termination, or the date the Participant or Beneficiary is
notified of such termination. If the Participant or Beneficiary has not fully
repaid any loan as of the date full payment is due, any unpaid balance shall be
deducted from his Vested Accrued Benefit prior to determining the amount of any
immediate or deferred benefit payable to the Participant or Beneficiary, his
spouse or his Beneficiary and applied toward repayment of the loan.
20.08 SPOUSAL CONSENT: No loan shall be made to a Participant
unless the Participant consents to the loan and acknowledges the possible
reduction in Plan benefits which would occur in the event of default on the
loan. No spousal consent shall be required for any loan as long as no portion
of the Participant's Accrued Benefit may be distributed from the Plan in the
form of an annuity. If any portion of the Participant's Accrued Benefit may be
distributed in the form of an annuity, then no loan shall be made to that
Participant unless the Participant and his spouse (if any) consent to such loan
and acknowledge the possible reduction in Plan benefits which would occur in
the event of default on the loan. Such consent and acknowledgment shall be
provided in writing no earlier than ninety (90) days prior to the making of the
loan and witnessed by the Plan Administrator (or representative thereof) or a
Notary Public. In the event of the renegotiation, extension, renewal or other
revision of the loan, a new spousal consent shall be required.
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20.09 ANTI-ALIENATION: Except as specifically provided in Sections
20.04 and 20.10, no benefit which shall be payable out of the Trust Fund to any
person (including a Participant, Former Participant or Beneficiary) shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance, or charge, and any attempt to anticipate, alienate, sell,
transfer, assign, pledge, encumber, or charge the same shall be void. No
benefit shall in any manner be liable for or subject to the debts, contracts,
liabilities, engagements, or torts of any person, nor shall it be subject to
attachment or legal process for or against person, and the same shall not be
recognized by the Trustee, except to such extent as may be required by law.
20.10 QUALIFIED DOMESTIC RELATIONS ORDERS: Section 20.09 shall
apply to the creation, assignment, or recognition of a right to any benefit
payable with respect to a Participant, Former Participant or Beneficiary
pursuant to a Domestic Relations Order, unless such Domestic Relations Order is
determined to be a Qualified Domestic Relations Order. In the event the Plan,
the Trustee, or the Plan Administrator receives a Domestic Relations Order, the
Plan Administrator shall promptly notify the Participant, Former Participant or
Beneficiary whose benefit is the subject of such order and provide him with the
Plan's procedure for determining whether such order is a Qualified Domestic
Relations Order. Unless and until said order is set aside, the following
provisions shall apply:
(a) The Plan Administrator shall within a reasonable time
determine whether the order is a Qualified Domestic Relations
Order and shall notify the Participant, Former Participant or
Beneficiary whose benefit is the subject of such order, of
such determination.
(b) Until the determination is made as required by subsection (a),
the Plan Administrator shall establish a separate account in
the Plan in the amounts which would have been payable to a
person other than as required by this Plan if it had complied
with the order.
(c) If, within eighteen (18) months after the receipt of the order
by the Trustee or Plan Administrator, the Plan Administrator
determines that the order is a Qualified Domestic Relations
Order, the Plan Administrator shall direct the Trustee and the
Trustee shall pay the segregated amounts plus any other
amounts to the Alternative Payee(s) named in such order in
accordance with such order.
(d) If, within eighteen (18) months after the receipt of the order
by the Trustee or Plan Administrator, the Plan Administrator
determines that the order is not a Qualified Domestic
Relations Order, the Plan Administrator shall direct the
Trustee and the Trustee shall disregard the order and pay in
accordance with this Plan amounts required hereunder
(including segregated amounts and any interest thereon) to the
person to whom the payments would have been made if there had
been no such order.
(e) Notwithstanding Subsections (6), (c) and (d) above, if the
Trustee or Plan Administrator was a party to the proceedings
which issued the order or is otherwise bound by the order and
the Trustee or Plan Administrator is ordered by such order to
pay in accordance with said order, the Plan Administrator may
after notice to the Participant, Former Participant or
Beneficiary, direct the Trustee to and the Trustee shall, upon
such direction, pay in accordance with said
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order unless the Code or ERISA prohibits such payment.
(f) If, more than eighteen (18) months after the receipt of the
order by the Trustee or Plan Administrator, a determination is
made that such order is a Qualified Domestic Relations Order,
the Plan Administrator shall direct the Trustee and the
Trustee shall pay such amounts to the Alternate Payee(s) named
in such order in accordance with such order, but only with
respect to amounts which are payable after the date such
determination is made.
(g) The Plan Administrator shall establish reasonable procedures
to determine whether an order received by it or the Trustee is
a Qualified Domestic Relations Order and to administer
distributions pursuant to said order.
(h) Nothing in this Section 20.10 shall be deemed to allow payment
under a Qualified Domestic Relations Order to an Alternate
Payee of any benefit prior to the first day of the month
following the date the Participant or Former Participant whose
benefits are subject to the QDRO terminates employment or
attains age fifty (50).
20.11 QDRO DEFINITIONS: For purposes of Section 20.10 the following
definitions and rules shall apply:
(a) "ALTERNATE PAYEE" shall mean any spouse, former spouse, child
or other dependent of a Participant or Former Participant who
is recognized by a Qualified Domestic Relations Order as
having a right to receive all, or a portion of, the benefits
payable under this Plan with respect to such Participant or
Former Participant.
(b) "DOMESTIC RELATIONS ORDER" shall mean any judgment, decree, or
order (including approval of a property settlement agreement)
which:
(1) relates to the provision of child support, alimony
payments, or marital property rights to a spouse,
child, or other dependent of a Participant or Former
Participant and
(2) is made pursuant to a state domestic relations law
(including a community property law).
(c) "QUALIFIED DOMESTIC RELATIONS ORDER" shall mean any Domestic
Relations Order which meets the following requirements:
(1) Creates or recognizes the existence of an Alternate
Payee's right to, or assigns to an Alternate Payee
the right to, receive all or a portion of the
benefits payable with respect to a Participant or
Former Participant under this Plan;
(2) Specifies the name and the last known mailing address
(if any) of the Participant or Former Participant and
the name and mailing address of each Alternate Payee
covered by the order;
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(3) Specifies the amount or percentage of the
Participant's or Former Participant's benefits to be
paid to each Alternate Payee therein named, or the
manner in which such amount or percentage is to be
determined;
(4) Specifies the number of payments or period to which
such order applies;
(5) Specifies each plan to which such order applies;
(6) Does not require this Plan to provide any type or
form of benefit, or any option, not otherwise
provided under this Plan;
(7) Does not require this Plan to provide increased
benefits (determined on the basis of actuarial
value); and
(8) Does not require the payment of benefits to an
Alternate Payee which are required to be paid to
another Alternate Payee under another judgment,
decree, or order previously determined to be a
Qualified Domestic Relations Order.
20.12 ADDITIONAL QDRO RULES: The following additional rules shall
apply to the determination and application of any Domestic Relations Order.
(a) A Domestic Relations Order shall not be treated as failing to
satisfy the requirements of Section 20.11 solely because such
Domestic Relations Order requires that payment of benefits be
made to an Alternate Payee:
(1) On or after the date on which the Participant or
Former Participant attains (or would have attained)
his Earliest Retirement Age;
(2) As if the Participant or Former Participant had
retired on the date on which such payment is to begin
under such order (but taking into account only the
Actuarial Equivalent value of the benefits actually
accrued and not taking into account the Actuarial
Equivalent value of any Employer subsidy for early
retirement): or
(3) In any form in which such benefits may be paid under
this Plan to the Participant or Former Participant
(other than in the form of a joint and survivor
annuity with respect to the Alternate Payee and his
or her subsequent spouse).
Notwithstanding the foregoing, if the Participant dies before
attaining his Earliest Retirement Age, benefits shall be paid
to the Alternate Payee only if the order requires survivor
benefits to be paid to such Alternate Payee.
(b) A Domestic Relations Order shall not be treated as failing to
meet the requirements of Section 20.11(c)(2) merely because
the Domestic Relations Order does not specify the current
mailing address of the Participant or Former Participant or
Alternate Payee, if the
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Plan Administrator has reason to know such address or addresses
independently of the Domestic Relations Order.
(c) A Domestic Relations Order shall not be treated as failing to
meet the requirements of Section 20.11(c) merely because the
Domestic Relations Order provides that survivor benefits
required to be paid to a spouse be paid to an Alternate Payee
who is a former spouse of the Participant or Former
Participant and who was married to such Participant or Former
Participant for at least one (1) year.
(d) No Domestic Relations Order entered before January 1, 1985
shall be treated as a Qualified Domestic Relations Order
except that:
(1) If the Trust is paying benefits on January 1, 1985
pursuant to a Domestic Relations Order which complies
with Section 20.11(c), then such order shall be
deemed a Qualified Domestic Relations Order; and
(2) The Plan Administrator may, in its sole discretion,
treat any order entered before January 1, 1985 as a
Qualified Domestic Relations Order even though such
order does not comply with the requirements of
Section 20.11(c).
(e) To the extent provided in any Qualified Domestic Relations
Order, the former spouse of a Participant shall be treated as
a surviving spouse for purposes of this Plan.
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ARTICLE XXI
MULTIPLE EMPLOYER PROVISIONS
21.01 ADOPTION BY OTHER GIBBONS EMPLOYERS: With the consent of the
Sponsoring Employer and by a properly executed document evidencing the intent
and will of the adopting Gibbons Employer, any other Gibbons Employer may adopt
this Plan and all of the provisions hereof and participate herein and be known
as a Participating Employer.
21.02 REQUIREMENTS OF PARTICIPATING GIBBONS EMPLOYERS:
(a) Each Participating Gibbons Employer shall be required to use
the Trustee determined by the Plan Sponsor or Plan
Administrator.
(b) The Trustee may, but shall not be required to, commingle, hold
and invest as one Trust Fund all contributions made by
Participating Gibbons Employers, as well as all increments
thereof. The assets of the Plan shall, on an ongoing basis, be
available to pay benefits to all Participants and Beneficiaries
under the Plan without regard to the Participating Gibbons
Employer who contributed such assets.
(c) The transfer of any Participant from or to a Gibbons Employer
participating in this Plan, whether he is an Employee of the
Sponsoring Employer or a Participating Gibbons Employer, shall
not affect the Participant's rights under the Plan, and the
Participant's Accounts, as well as all accumulated service with
the transferor or predecessor, shall continue to his credit.
(d) Any expenses of the Trust and Plan which are to be paid by the
Employer or borne by the Trust Fund, including funding of
benefits, shall be paid by each Participating Gibbons Employer
in the same proportion that the total amount of the Accounts
standing to the credit of all Participants employed by such
Gibbons Employer bears to the total of the Accounts standing to
the credit of all Participants.
21.03 DESIGNATION OF AGENT: Each Participating Gibbons Employer
shall be deemed to be a part of this Plan. With respect to all of its relations
with the Trustee and Plan Administrator for the purpose of this Plan, each
Participating Gibbons Employer shall be deemed to have designated irrevocably
the Sponsoring Employer as its agent. Unless the context of the Plan clearly
indicates the contrary, the word "Employer" shall be deemed to include each
Participating Gibbons Employer as related to its adoption of the Plan.
21.04 EMPLOYEE TRANSFERS: It is anticipated that an Employee may be
transferred between Participating Gibbons Employers, and in the event of any
transfer, the Employee involved shall carry with him all of his accumulated
service and eligibility. No transfer shall effect a termination of employment
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hereunder, and the Participating Gibbons Employer to which the Employee is
transferred shall thereupon become obligated hereunder with respect to such
Employee in the same manner as was the Participating Gibbons Employer from whom
the Employee was transferred.
21.05 AMENDMENT: The Sponsoring Employer may amend this Plan at any
time without regard to whether there are Participating Gibbons Employers
hereunder. No written action of a Participating Gibbons Employer shall be
required to validate an amendment.
21.06 DISCONTINUANCE OF PARTICIPATION: A Participating Gibbons
Employer shall be permitted to discontinue or revoke its participation in the
Plan. At the time of any discontinuance or revocation, satisfactory evidence
thereof and of any applicable conditions imposed shall be delivered to the
Trustee. If so directed by the Plan Administrator, the Trustee shall transfer,
deliver and assign Contracts and other Fund assets allocable to the
Participants of such Participating Gibbons Employer to the new Trustee as shall
have been designated by the Participating Gibbons Employer. in the event that
it has established a separate pension plan for its Employees. No such transfer
shall be made if the result is the elimination or reduction of any Code Section
411(d)(6) protected benefits. If no successor is designated, the Trustee shall
retain the assets for the Employees of the Participating Gibbons Employer
pursuant to the provisions of the Plan. In no event shall any part of the
corpus or income of the Trust as it relates to the Participating Gibbons
Employer be used for or diverted for purposes other than for the exclusive
benefit of the Employees of the Participating Gibbons Employer.
21.07 ADMINISTRATOR'S AUTHORITY: The Plan Administrator shall have
authority to make any and all necessary rules or regulations, binding upon all
Participating Gibbons Employers and all Participants, to effectuate the
purposes of this Article.
21.08 PARTICIPATING EMPLOYER CONTRIBUTIONS: All contributions made
by a Participating Gibbons Employer, as provided for in this Plan, shall be
determined separately for each Participating Gibbons Employer, and shall be
allocated only among Participants eligible to share who are Employees of the
Participating Gibbons Employer making the contribution. The Administrator
shall keep separate books and records concerning the affairs of each
Participating Gibbons Employer hereunder and as to the accounts and credits of
the Employees of each Participating Gibbons Employer. The Trustee may, but
need not, register Contracts so as to evidence that a particular Participating
Gibbons Employer is the interested Employer hereunder. In the event of an
Employee transfer from one Participating Gibbons Employer to another, the
employing Employer shall immediately notify the Administrator.
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ARTICLE XXII
MISCELLANEOUS
22.01 PARTICIPANT'S RIGHTS: This plan shall not be deemed to
constitute a contract between the Employer and any Participant or to be a
consideration or an inducement for the employment of any Participant or
Employee. Nothing contained in this Plan shall be deemed to give any
Participant or Employee the right to be retained in the service of the Employer
or to interfere with the right of the Employer to discharge any Participant or
Employee at any time regardless of the effect which such discharge shall have
upon him as a Participant of this Plan.
22.02 ACTIONS CONSISTENT WITH TERMS OF PLAN: All actions taken by
the Employer, Plan Administrator or Trustee with respect to Trust assets shall
be in accordance with the terms of the Plan and Trust.
22.03 PERFORMANCE OF DUTIES: All parties to this Plan and Trust, or
those claiming any interest hereunder, agree to perform any and all acts and
execute any and all documents and papers which are necessary or desirable for
carrying out this Plan and Trust or any of its provisions.
22.04 VALIDITY OF PLAN: This Plan shall be construed in a way that
is consistent with ERISA and regulations thereunder, the Internal Revenue Code
and regulations thereunder, and, to the extent state law has not been preempted
by federal law, the laws of the State in which the Plan Sponsor has its
principal office. In case any provision of this Plan shall be held illegal or
invalid for any reason, such determination shall not affect the remaining
provisions of the Plan; but the Plan shall be construed and enforced as if such
provision had never been included therein.
22.05 LEGAL ACTION: In the event any claim, suit, or proceeding is
brought regarding the Trust and/or Plan established hereunder to which the
Trustee or the Plan Administrator may be a party, and such claim, suit, or
proceeding is resolved in favor of the Trustee or Plan Administrator, they
shall be entitled to be reimbursed from the Trust Fund for any and all costs,
attorney's fees, and other expenses pertaining thereto incurred by them for
which they shall have become liable.
22.06 GENDER AND NUMBER: Wherever any words are used herein in the
masculine, feminine or neuter gender, they shall be construed as though they
were also used in another gender in all cases where they would so apply, and
whenever any words are used herein in the singular or plural form, they shall
be construed as though they were also used in the other form in all cases where
they would so apply.
22.07 UNIFORMITY: All provisions of this Plan shall be interpreted
and applied in a uniform, nondiscriminatory manner.
22.08 HEADINGS: The headings and subheadings of this Agreement have
been inserted for convenience of reference and are to be ignored in any
construction of the provisions hereof.
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22.09 RECEIPT AND RELEASE FOR PAYMENTS: Any payment to any
Participant, his legal representative, Beneficiary, or to any guardian or
committee appointed for such Participant or Beneficiary in accordance with the
provisions of this Agreement, shall, to the extent thereof, be in full
satisfaction of all claims hereunder against the Trustee and the Employer,
either of whom may require such Participant, legal representative, Beneficiary,
guardian or committee, as a condition precedent to such payment, to execute a
receipt and release thereof in such form as shall be determined by the Trustee
or Employer.
22.10 PAYMENTS TO MINORS, INCOMPETENTS: In making a payment to or
for the benefit of any minor or incompetent Participant or Beneficiary who, in
the opinion of the Plan Administrator, is incapable of properly using,
expending, investing, or otherwise disposing such distribution, the Plan
Administrator, in his sole, absolute and uncontrolled discretion may, but need
not, order the Trustee to make such distribution to a legal or natural guardian
or other relative of such minor, or court appointed committee of any
incompetent, or to any adult with whom such person temporarily or permanently
resides; and any such guardian, committee, relative or other person shall have
full authority and discretion to expend such distribution for the use and
benefit of such person; and the receipt of such guardian, committee, relative
or other person shall be a complete discharge to the Trustee, without any
responsibility on its part or the part of the Plan Administrator to see to the
application thereof.
22.11 MISSING PERSONS: Notwithstanding any provision in this Plan
and Trust to the contrary, if the Plan Administrator is unable to locate any
Former Participant who is entitled to benefits under this Plan within three (3)
years of the date he becomes entitled to a distribution from the Trust Fund,
any amounts being held for his behalf shall be forfeited and used to reduce the
Employer's contributions to the Plan and Trust. The Plan Administrator shall
proceed with due diligence in attempting to locate any Former Participant.
Provided, however, no forfeiture shall occur until the Plan Administrator has
mailed the Former Participant a notice of the benefits and the provisions of
this section to his last known address, via U.S. Mail postage prepaid, return
receipt requested. And, provided further, if the Former Participant is located
subsequent to such forfeiture, the forfeited amount shall be reinstated and the
Former Participant shall receive a distribution of his Vested Interest in
accordance with the provisions of the Plan.
22.12 TRANSFER OF INTEREST: Notwithstanding any other provision
contained in this Plan, the Trustee at the direction of the Plan Administrator
shall transfer the lump sum amount otherwise payable to a Participant or Former
Participant to another trust forming part of a pension, profit sharing, or
stock bonus plan maintained by such Participant's new employer and represented
by said employer in writing as meeting the requirements of Code Section 401(a)
provided that the trust to which such transfers are made permits the transfer
to be made.
22.13 PROHIBITION AGAINST DIVERSION OF FUNDS: It shall be impossible
by operation of the Plan or of the Trust, by termination of either, by power of
revocation or amendment, by the happening of any contingency, by collateral
arrangement or by any other means, for any part of the corpus or income of any
trust fund maintained pursuant to the Plan or any funds contributed thereto to
be used for, or diverted to, purposes other than the exclusive benefit of
Participants, Former Participants or their Beneficiaries, except as provided in
Sections 17.04 and 21.19.
22.14 PERIOD OF THE TRUST: If it shall be determined that the
applicable State law requires a
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limitation on the period during which this Trust shall continue, then such
Trust shall not continue for a period longer than twenty-one (21) years
following the death of the last of those Participants, including future
Participants, who are living at the Effective Date hereof. At least one
hundred eighty (180) days prior to the end of the twenty-first (21st) year as
described in the first sentence of this Section, the Plan Sponsor, the Plan
Administrator and the Trustee shall provide for the establishment of a
successor Trust and transfer of Plan assets to the Trustee of such successor
Trust. If applicable State law places no such limitation, then this Section
shall not be operative.
22.15 APPLICABILITY OF PLAN: The provisions of this Plan shall
apply only to persons who are or who become Participants in this Plan on or
after the Effective Date or with respect to Plan provisions with alternate
effective dates, such alternate dates. Except as specifically provided in this
Plan, the provisions of the Prior Plan will continue to apply to persons who
are Former Participants or who are not employed by a Gibbons Employer on the
Effective Date or as applicable, alternate effective dates, unless and until
such time as such persons may again become Participants in this Plan.
22.16 MISSTATEMENT OF AGE: If a Participant or Beneficiary mistakes
or misrepresents his Age, date of birth or any other material information to
the Employer, Plan Administrator or Trustee, the amount, terms and conditions
of any benefits payable from the Plan which are attributable to periods prior
to the discovery of such misstatement or misrepresentation shall be limited to
the lesser (or more restrictive) of: the amount, terms and conditions
determined based on the misstated information; or the amount, terms and
conditions determined based on the correct information. The Plan Administrator
shall have sole and absolute authority for applying the preceding sentence.
22.17 RETURN OF CONTRIBUTIONS TO THE EMPLOYER: Notwithstanding any
provision of this Plan to the contrary, if any contribution (or portion
thereof) by the Employer to the Trust is made as a result of a mistake of fact,
or if any contribution (or part thereof) by the Employer to the Trust Fund that
is conditioned upon the deductibility of the contribution by the Employer under
the Code is disallowed, whether by agreement within the Internal Revenue
Service or by final decision of a court of competent jurisdiction, the Employer
may demand repayment of the mistaken or disallowed amount. The Trustee shall
return the mistaken or disallowed contribution within one (1) year following
the time the mistaken contribution was made or the disallowed contribution was
disallowed. Investment earnings attributable to the mistaken or disallowed
amount shall not be returned, but any investment losses attributable thereto
shall reduce the amount so returned.
22.18 COUNTERPARTS: This Plan and Trust may be executed in any
number of counterparts, each of which shall be deemed to be an original, and
the counterparts shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Plan Sponsor has caused this Plan to be
executed by its duly authorized representative and the Plan Administrator has
accepted the Plan this 30th day of December, 1994.
Gibbons & Reed Company
By:
---------------------------------
PLAN ADMINISTRATOR:
Gibbons & Reed Company
By:
---------------------------------
Secretary//Treasurer
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FIRST AMENDMENT TO THE
GIBBONS COMPANY PROFIT SHARING
AND RETIREMENT PLAN
This Amendment to the Gibbons Company Profit Sharing and Retirement Plan (the
"Plan") is made this 29th day of March, 1995, by Gibbons & Reed Company, the
Sponsoring Employer of the Plan, hereinafter referred to as the "Employer."
W I T N E S S E T H:
WHEREAS, the Employer has heretofore adopted the Plan (which plan has
been amended and restated in its entirety effective for Plan Years commencing
on or after January 1, 1989), and
WHEREAS, the Employer has reserved the right to amend the Plan in
whole or in part, and
WHEREAS, the Employer now desires to amend the Plan to conform to
changes in IRS Regulations and update the Plan for submission to the IRS;
NOW THEREFORE, in consideration of the foregoing premises and mutual
covenants herein contained, the Employer amends the Plan as follows:
1. The following designated Sections of the Plan are amended to
read as hereinafter set forth:
2.31 "K-TEST CONTRIBUTION PERCENTAGE" shall mean the ratio
(expressed as a percentage) of a Participant's K-Test Contributions for a Plan
Year to the Participant's Compensation for the Plan Year. THE K-TEST
CONTRIBUTION PERCENTAGE FOR A PARTICIPANT WHO IS A HIGHLY COMPENSATED EMPLOYEE
SHALL BE DETERMINED BY COMBINING ALL CASH OR DEFERRED ARRANGEMENTS UNDER WHICH
THE HIGHLY COMPENSATED EMPLOYEE IS ELIGIBLE TO PARTICIPATE (OTHER THAN THOSE
WHICH MAY NOT BE PERMISSIVELY AGGREGATED) WITH THIS PLAN AS THOUGH THEY WERE A
SINGLE ARRANGEMENT. IF A HIGHLY COMPENSATED EMPLOYEE IS ELIGIBLE TO
PARTICIPATE IN THIS PLAN AND THE FAMILY AGGREGATION RULES IN SECTION 2.27
APPLY, THEN THE K-TEST CONTRIBUTION PERCENTAGE SHALL BE DETERMINED BY COMBINING
THE K-TEST CONTRIBUTIONS AND COMPENSATION OF ALL ELIGIBLE FAMILY MEMBERS. For
this purpose, Compensation is defined as in Section 7.01(b) of the Plan. THE
K-TEST CONTRIBUTION PERCENTAGE FOR A PARTICIPANT WHO HAS MADE NO ELECTIVE
DEFERRAL CONTRIBUTIONS AND WHO IS NOT CREDITED WITH ANY K-TEST CONTRIBUTIONS
FOR THE PLAN YEAR SHALL BE ZERO (0).
2.32 "K-TEST CONTRIBUTIONS" shall mean, for any Plan Year, A
PARTICIPANT'S ELECTIVE DEFERRALS, PLUS, IF SO ELECTED BY THE EMPLOYER, PART OR
ALL OF THE QUALIFIED NON-ELECTIVE CONTRIBUTIONS AND QUALIFIED MATCHING
CONTRIBUTIONS ALLOCATED TO THE PARTICIPANT FOR SUCH YEAR, provided that, any
Qualified Non-Elective Contributions included as K-Test Contributions shall
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not increase the difference between the K-Test Average Contribution Percentage
for Highly Compensated Employees and the K-Test Average Contribution Percentage
for Non-Highly Compensated Employees; and, further provided that, no Qualified
Non-Elective Contributions or Qualified Matching Contributions included as
K-Test Contributions shall be included as M-Test Contributions. IN DETERMINING
THE AMOUNT OF A PARTICIPANT'S ELECTIVE DEFERRALS UNDER THIS SECTION THE PLAN
ADMINISTRATOR SHALL TAKE INTO ACCOUNT ELECTIVE DEFERRALS MADE BY THE
PARTICIPANT UNDER ANY OTHER PLAN WHICH IS AGGREGATED WITH THIS PLAN FOR
PURPOSES OF CODE Section 401(A)(4) OR CODE Section 410(B) (OTHER THAN CODE
Section 410(B)(2)(A)(II)) AND ANY OTHER PLAN SATISFYING CODE Section 401(K)(3)
AND REG. Section 1.401(K)-1(B)(3) WHICH THE EMPLOYER ELECTS TO PERMISSIVELY
AGGREGATE WITH THIS PLAN, BY TREATING ALL SUCH PLANS AND THIS PLAN AS A SINGLE
PLAN.
2.36 "M-TEST CONTRIBUTION PERCENTAGE" shall mean the ratio
(expressed as a percentage) of a Participant's M-Test Contributions for a Plan
Year to the Participant's Compensation for the Plan Year. THE M-TEST
CONTRIBUTION PERCENTAGE FOR A PARTICIPANT WHO IS A HIGHLY COMPENSATED EMPLOYEE
SHALL BE DETERMINED BY COMBINING ALL PLANS SUBJECT TO CODE Section 401(M) UNDER
WHICH THE HIGHLY COMPENSATED EMPLOYEE IS ELIGIBLE TO PARTICIPATE (OTHER THAN
THOSE WHICH MAY NOT BE PERMISSIVELY AGGREGATED) WITH THIS PLAN AS THOUGH THEY
WERE A SINGLE PLAN. IF A HIGHLY COMPENSATED EMPLOYEE IS ELIGIBLE TO
PARTICIPATE IN THIS PLAN AND THE FAMILY AGGREGATION RULES IN SECTION 2.27
APPLY, THEN THE M-TEST CONTRIBUTION PERCENTAGE SHALL BE DETERMINED BY COMBINING
THE M-TEST CONTRIBUTIONS AND COMPENSATION OF ALL ELIGIBLE FAMILY MEMBERS. For
this purpose, Compensation is defined as in Section 7.01(b) of the Plan. THE
M-TEST CONTRIBUTION PERCENTAGE FOR A PARTICIPANT WHO HAS MADE NO ELECTIVE
DEFERRAL CONTRIBUTIONS AND WHO IS NOT CREDITED WITH ANY M-TEST CONTRIBUTIONS
FOR THE PLAN YEAR SHALL BE ZERO (0).
2.37 "M-TEST CONTRIBUTIONS" shall mean for any Plan Year MATCHING
CONTRIBUTIONS MADE PURSUANT TO SECTION 5.06 less any of the Participant's
Qualified Matching Contributions included as K-Test Contributions, plus, if so
elected by the Employer, PART OR ALL OF THE QUALIFIED NON-ELECTIVE
CONTRIBUTIONS ALLOCATED TO THE PARTICIPANT FOR SUCH YEAR, provided that, any
Qualified Non-Elective Contributions included as M-Test Contributions shall not
increase the difference between the M-Test Average Contribution Percentage for
Highly Compensated Employees and the M-Test Average Contribution Percentage for
Non-Highly Compensated Employees; and, further provided that, NO QUALIFIED
NON-ELECTIVE CONTRIBUTIONS INCLUDED AS M-TEST CONTRIBUTIONS SHALL BE INCLUDED
AS K-TEST CONTRIBUTIONS. IN DETERMINING THE AMOUNT OF M-TEST CONTRIBUTIONS
UNDER THIS SECTION THE PLAN ADMINISTRATOR SHALL TAKE INTO ACCOUNT ALL EMPLOYEE
CONTRIBUTIONS MADE BY THE PARTICIPANT AND ALL MATCHING CONTRIBUTIONS MADE BY
THE EMPLOYER UNDER ANY
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<PAGE> 3
OTHER PLAN WHICH IS AGGREGATED WITH THIS PLAN FOR PURPOSES OF CODE Section
401(A)(4) OR CODE Section 410(B) (OTHER THAN CODE Section 410(B)(2)(A)(II)) AND
ANY OTHER PLAN SATISFYING CODE Section 401(K)(3) AND REG. Section
1.401(K)-1(B)(3) WHICH THE EMPLOYER ELECTS TO PERMISSIVELY AGGREGATE WITH THIS
PLAN, BY TREATING ALL SUCH PLANS AND THIS PLAN AS A SINGLE PLAN.
2.44 "PARTICIPANT" shall mean any ELIGIBLE Employee who HAS
SATISFIED ALL OF THE AGE AND SERVICE REQUIREMENTS OF SECTION 4.01. SUCH AN
EMPLOYEE SHALL BE DEEMED TO BE A PARTICIPANT IN THE PLAN FOR PURPOSES OF ANY
APPLICABLE NONDISCRIMINATION TEST, INCLUDING THE K-TEST AND M-TEST DEFINED IN
THIS PLAN, WITHOUT REGARD TO WHETHER HE HAS EXECUTED A SALARY REDUCTION
AGREEMENT AND AGREED TO HAVE CONTRIBUTIONS MADE TO THIS PLAN THROUGH ELECTIVE
DEFERRALS. A PARTICIPANT MAY NEVERTHELESS BE CONSIDERED "ACTIVE" OR "INACTIVE"
DEPENDING ON WHETHER HE HAS SIGNED A SALARY REDUCTION AGREEMENT OR WHETHER HE
QUALIFIES AS A DAVIS-BACON EMPLOYEE OR SALARIED EMPLOYEE.
2.49 "QUALIFIED MATCHING CONTRIBUTION" shall mean a Matching
Contribution with respect to which the requirements of REG. Section
1.401(K)-1(B)(5) AND Code Section Section 401(k)(2)(B) and (C) are met.
2.50 "QUALIFIED NON-ELECTIVE CONTRIBUTION" shall mean any Employer
contribution to the Plan other than a Matching Contribution with respect to
which the Employee may not elect to have the contribution paid to the Employee
in cash instead of being contributed to the Plan and (IF TREATED AS K-TEST
CONTRIBUTIONS) THE REQUIREMENTS OF REG. Section 1.401(K)-1(B)(5) AND CODE
Section Section 401(K)(2)(B) AND (C) ARE MET OR (IF TREATED AS M-TEST
CONTRIBUTIONS) THE REQUIREMENTS OF REG. Section 1.401(M)-1(B)(5) ARE MET.
4.01 AGE AND SERVICE REQUIREMENTS:
(a) Effective July 1, 1993, an Eligible Employee shall SHALL
BECOME A PARTICIPANT in this Plan on the first Entry Date coincident with or
next following the date on which he satisfies all of the following
requirements:
(i) attains the Age of twenty-one (21) years; and
(ii) completes a Year of Eligibility Service; and
(iii) is employed on the Entry Date.
(b) Effective July 1, 1993, an Eligible Employee who is also a
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<PAGE> 4
Davis-Bacon Employee shall SHALL BECOME A PARTICIPANT in this Plan for the
purpose of receiving allocations of Employer Davis-Bacon Contributions only, on
his Employment Commencement Date or his Re-employment Commencement Date.
(c) Prior to July 1, 1993, but after the Effective Date, only an
Eligible Employee who is a Salaried Employee and who on the first Entry Date
coincident with or next following the date on which he satisfies all of the
following requirements, SHALL BECOME A PARTICIPANT in this Plan:
(i) attains the Age of twenty-one (21) years;
(ii) completes a Year of Eligibility Service; and
(iii) is employed on the Entry Date.
(d) Prior to the Effective Date an Eligible Employee shall
participate as provided in the Prior Plan.
(e) An Eligible Employee WHO BECOMES A PARTICIPANT AND WHO ALSO
EXECUTES A WRITTEN SALARY REDUCTION AGREEMENT IN THE MANNER SET FORTH IN
PROCEDURES ISSUED BY THE PLAN ADMINISTRATOR SHALL BE CONSIDERED TO BE AN ACTIVE
PARTICIPANT. Notwithstanding the foregoing, an Eligible Employee who is also a
Salaried Employee shall commence participation in the Plan as an active
Participant for purposes of allocations of Employer Profit Sharing
Contributions only, on the Plan Entry Date coincident with or immediately
preceding the date the Salaried Employee satisfies the requirements of Section
4.01(a) or (c), as applicable. An Eligible Employee who is also a Davis-Bacon
Employee shall commence participation in the Plan as an active Participant for
purposes of allocations of Employer Davis-Bacon Contributions only, upon
satisfaction of the requirements of Section 4.01(b). An Employee who was a
Participant in the Prior Plan on the day before the Effective Date shall
continue as a Participant in this Plan on that date.
4.05 RE-EMPLOYMENT AND COMMENCEMENT OF PARTICIPATION: An Employee
who had met the requirements of Section 4.01(a), (b) or (c) but terminated
employment prior to his Entry Date SHALL BECOME A PARTICIPANT ON THE DATE HE IS
RE-EMPLOYED BY THE EMPLOYER, BUT IN NO EVENT EARLIER THAN THE ENTRY DATE HE
WOULD HAVE JOINED HAD HE NOT CEASED EMPLOYMENT. AN EMPLOYEE WHO WAS A
PARTICIPANT SHALL AGAIN BECOME A PARTICIPANT ON THE DATE HE IS RE-EMPLOYED BY
THE EMPLOYER. THE EMPLOYEE WHO BECOMES A PARTICIPANT MAY IMMEDIATELY ELECT TO
EXECUTE A SALARY DEFERRAL AGREEMENT AND COMMENCE ELECTIVE DEFERRALS, IF IT IS
EXECUTED WITHIN THE TIME PERIOD SPECIFIED BY THE PLAN ADMINISTRATOR PURSUANT TO
A UNIFORM AND NON-DISCRIMINATORY POLICY. IF NOT SO EXECUTED, THE PARTICIPANT
MAY ELECT TO
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<PAGE> 5
EXECUTE A SALARY DEFERRAL AGREEMENT AND COMMENCE ELECTIVE DEFERRALS AS OF THE
FIRST DAY OF ANY SUBSEQUENT CALENDAR QUARTER THEREAFTER.
5.12 LIMITATIONS ON CONTRIBUTIONS: Notwithstanding any other
provisions of this Plan, ALL contributions FOR PLAN YEARS COMMENCING AFTER
DECEMBER 31, 1986, shall be subject to the following limitations:
(a) THE TOTAL AMOUNT OF A PARTICIPANT'S ELECTIVE DEFERRALS DURING
ANY CALENDAR YEAR SHALL NOT EXCEED SEVEN THOUSAND DOLLARS
($7,000), WHICH AMOUNT SHALL BE INDEXED AT THE SAME TIME AND
IN THE SAME MANNER AS THE DOLLAR LIMITATION FOR DEFINED
BENEFIT PLANS IN CODE Section 415(B)(1)(A). FOR THIS PURPOSE
A PARTICIPANT'S ELECTIVE DEFERRALS TO THIS PLAN PLUS THE
PARTICIPANT'S ELECTIVE DEFERRALS PURSUANT TO ANY OTHER CODE
Section 401(K) ARRANGEMENT, ELECTIVE DEFERRALS UNDER A
SIMPLIFIED EMPLOYEE PENSION PLAN AND SALARY REDUCTION
CONTRIBUTIONS TO A TAX-SHELTERED ANNUITY, IRRESPECTIVE OF
WHETHER THE EMPLOYER OR ANY MEMBER OF A CONTROLLED GROUP OR
AFFILIATED SERVICE GROUP TO WHICH THE EMPLOYER BELONGS
MAINTAINS THE ARRANGEMENT, PLAN OR ANNUITY, SHALL BE
AGGREGATED.
5.14 CORRECTION OF EXCESS CONTRIBUTIONS: FOR PLAN YEARS COMMENCING
AFTER DECEMBER 31, 1986, the Plan provides the following methods for correcting
excess contributions as described in Section 5.13:
. . .
(b) EXCESS K-TEST CONTRIBUTIONS: The Plan Administrator shall
direct the Trustee to distribute to a Participant his Excess
K-Test Contribution plus income, if any, allocable thereto.
Such distribution shall be designated by the Plan
Administrator as a distribution of an excess contribution and
shall be made after the end of the Plan Year in which the
excess contribution arose and within twelve (12) months after
the end of such Plan Year.
If the Employer has made a Matching Contribution attributable
to any portion of the Participant's Excess K-Test Contribution
distributed to the Participant pursuant to the above, the Plan
Administrator shall treat such Matching Contribution in the
same manner as an Excess M-Test Contribution in accordance
with (c) below. FOR PLAN YEARS COMMENCING ON OR AFTER JANUARY
1, 1994, IF THE EMPLOYER HAS MADE A MATCHING CONTRIBUTION
ATTRIBUTABLE TO ANY PORTION OF THE PARTICIPANT'S EXCESS K-TEST
CONTRIBUTION DISTRIBUTED TO THE PARTICIPANT
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<PAGE> 6
PURSUANT TO THE ABOVE, THE PLAN ADMINISTRATOR SHALL TREAT SUCH
MATCHING CONTRIBUTION AS A FORFEITURE. THE FORFEITED AMOUNT
SHALL BE USED TO REDUCE THE EMPLOYER'S MATCHING CONTRIBUTION
OTHERWISE REQUIRED FOR THE PLAN YEAR OR FOR ANY SUBSEQUENT
PLAN YEAR.
6.02 ALLOCATION OF CONTRIBUTIONS: Contributions for any period
shall be credited to the Accounts of Participants in the following manner:
. . .
(b) Matching Contributions made pursuant to Section 5.06 shall be
allocated on each Annual Valuation Date (and if the Employer
makes Matching Contributions on a calendar quarter or other
periodic basis, on the last day of each calendar quarter or
other period) to each Participant's Account who satisfies the
requirements of Section 6.04, in an amount equal to the
percentage shown on the table in Section 5.06, but not to
exceed two and one-half percent (2.50%) of the Participant's
Annual Compensation for the Plan Year. If the Employer makes
a Matching Contribution to the Plan at any time during the
Plan Year, the two and one-half percent (2.50%) limit of this
Section 6.02(b) shall not be determined by reference to Annual
Compensation for the Plan Year, but by reference to
Compensation (SUBJECT TO THE LIMITATIONS ON ANNUAL
COMPENSATION IMPOSED UNDER SECTION 2.07) paid only during the
period to which the Matching Contribution relates.
7.01 SPECIAL DEFINITIONS: EFFECTIVE FOR PLAN YEARS COMMENCING
AFTER DECEMBER 31, 1986, (UNLESS A DIFFERENT DATE IS PROVIDED HEREIN) THE
FOLLOWING TERMS SHALL BE DEFINED FOR PURPOSES OF THIS ARTICLE, AS FOLLOWS:
19.03 TOP-HEAVY MINIMUM REQUIRED ALLOCATION: For any Plan Year in
which the Plan is Top-Heavy but not Super Top-Heavy:
(a) . . .
(2) In the case where the Employer has no defined benefit
plan which designates this Plan to satisfy Code
Section Section 401 and 416(c), the largest
percentage of Employer contributions and forfeitures,
as a percentage of the first two hundred thousand
dollars ($200,000), (or such larger amount as may be
prescribed by the Secretary of the Treasury or his
delegate) of the Key Employee's Top-Heavy
Compensation, allocated on behalf of any
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<PAGE> 7
Key Employee for that year. IN CALCULATING THIS
PERCENTAGE ALL AMOUNTS CONTRIBUTED BY THE EMPLOYER TO
THE KEY EMPLOYEE'S ELECTIVE DEFERRAL ACCOUNT PURSUANT
TO A SALARY REDUCTION AGREEMENT SHALL BE TREATED AS
EMPLOYER CONTRIBUTIONS. FOR PLAN YEARS BEGINNING
AFTER DECEMBER 31, 1993, THE PLAN SHALL SUBSTITUTE
THE AMOUNT "ONE HUNDRED FIFTY THOUSAND DOLLARS
($150,000) FOR THE AMOUNT "TWO HUNDRED THOUSAND
DOLLARS ($200,000) WHEREVER IT APPEARS IN THIS
SECTION. THE ONE HUNDRED FIFTY THOUSAND DOLLAR
AMOUNT SHALL BE ADJUSTED EACH PLAN YEAR AS PROVIDED
IN CODE Section 401(A)(17)(B).
19.04 SUPER TOP-HEAVY MINIMUM REQUIRED ALLOCATION: For any Plan
Year in which the Plan is Super Top-Heavy:
(a) . . .
(2) In the case where the Employer has no defined benefit
plan which designates this Plan to satisfy Code
Section Section 401 and 416(c), the largest
percentage of Employer contributions and forfeitures,
as a percentage of the first two hundred thousand
dollars ($200,000), (or such larger amount as may be
prescribed by the Secretary of the Treasury or his
delegate) of the Key Employee's Top-Heavy
Compensation, allocated on behalf of any Key Employee
for that year. IN CALCULATING THIS PERCENTAGE ALL
AMOUNTS CONTRIBUTED BY THE EMPLOYER TO THE KEY
EMPLOYEE'S ELECTIVE DEFERRAL ACCOUNT PURSUANT TO A
SALARY REDUCTION AGREEMENT SHALL BE TREATED AS
EMPLOYER CONTRIBUTIONS. FOR PLAN YEARS BEGINNING
AFTER DECEMBER 31, 1993, THE PLAN SHALL SUBSTITUTE
THE AMOUNT "ONE HUNDRED FIFTY THOUSAND DOLLARS
($150,000)" FOR THE AMOUNT "TWO HUNDRED THOUSAND
DOLLARS ($200,000)" WHEREVER IT APPEARS IN THIS
SECTION. THE ONE HUNDRED FIFTY THOUSAND DOLLAR
AMOUNT SHALL BE ADJUSTED EACH PLAN YEAR AS PROVIDED
IN CODE Section 401(A) (17)(B).
19.06 COMPENSATION LIMITATION: For any Plan Year in which the Plan
is Top-Heavy, only the first two hundred thousand dollars ($200,000), (or such
larger amount as may be prescribed by the Secretary of the Treasury or his
delegate), of a Participant's Annual Compensation or Top-Heavy Compensation
shall be taken into account for purposes of this Plan. FOR PLAN YEARS
BEGINNING AFTER DECEMBER 31, 1993, THE PLAN SHALL SUBSTITUTE THE AMOUNT "ONE
HUNDRED FIFTY THOUSAND DOLLARS ($150,000)" FOR THE AMOUNT
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<PAGE> 8
"TWO HUNDRED THOUSAND DOLLARS ($200,000)" WHEREVER IT APPEARS IN THIS SECTION.
THE ONE HUNDRED FIFTY THOUSAND DOLLAR AMOUNT SHALL BE ADJUSTED EACH PLAN YEAR
AS PROVIDED IN CODE Section 401(A)(17)(B).
19.09 PARTICIPANT ELECTIVE DEFERRALS: For Plan Years beginning and
before January 1, 1989, Elective Deferrals MAY BE TAKEN INTO ACCOUNT IN
DETERMINING UNDER SECTIONS 19.03(B) AND 19.04(B) THE AMOUNT OF EMPLOYER
CONTRIBUTIONS TO BE ALLOCATED TO A PARTICIPANT WHO IS A NON-KEY EMPLOYEE. FOR
PLAN YEARS BEGINNING AFTER DECEMBER 31, 1988, ELECTIVE DEFERRALS SHALL NOT BE
TAKEN INTO ACCOUNT IN DETERMINING UNDER SECTIONS 19.03(B) AND 19.04(B) THE
AMOUNT OF EMPLOYER CONTRIBUTIONS TO BE ALLOCATED TO A PARTICIPANT WHO IS A
NON-KEY EMPLOYEE.
2. Except as otherwise specified in the amendments above, this
Amendment shall be effective for Plan Years commencing on or after January 1,
1989, and shall apply to all employees who terminate employment on or after
that date.
3. In all other respects the Plan is ratified and approved.
IN WITNESS WHEREOF, the Employer has caused this Amendment to the Plan
to be duly executed as of the date and year first above written.
"EMPLOYER"
GIBBONS & REED COMPANY
By:
----------------------------------
Its: President
---------------------------------
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<PAGE> 1
SECOND AMENDMENT TO THE
GIBBONS COMPANY PROFIT SHARING
AND RETIREMENT PLAN
This Second Amendment to the Gibbons Company Profit Sharing and
Retirement Plan (the "Plan") is made and entered into this 27th day of April,
1995, by Gibbons & Reed Company, the Sponsoring Employer of the Plan,
hereinafter referred to as the "Employer."
W I T N E S S E T H:
WHEREAS, the Employer has heretofore entered into the Plan (which Plan
has been restated and amended in its entirety effective for Plan Years
commencing on or after January 1, 1989), and
WHEREAS, the Employer has reserved the right to amend the Plan in
whole or in part, and
WHEREAS, the Employer desires to amend the Plan to terminate the
portion of the Plan which provides benefits to employers working on projects
subject to prevailing wage laws ("Davis-Bacon Benefits") and to cease benefit
accruals for employees of the Employer who receive Davis-Bacon Benefits under
the Plan, and
WHEREAS, the Employer desires to further amend the Plan to cease
hardship withdrawals and to cease participant loans,
NOW THEREFORE, in consideration of the foregoing premises the Employer
amends the Plan as follows:
1. FOR THE PURPOSE OF TERMINATING THE PORTION OF THE PLAN
PROVIDING FOR DAVIS-BACON BENEFITS, THE FOLLOWING SECTIONS OF THE PLAN ARE
AMENDED, EFFECTIVE AS OF MAY 31, 1995:
Section 2.02 is amended by adding an additional paragraph at
the end thereof to read as follows:
From and after May 31, 1995, no Participant or Employee of Gibbons &
Reed Company shall accrue any further Employer Contributions under Section 5.08
(relating to Employer Davis-Bacon Contributions). All amounts in the
Davis-Bacon Accounts of Participants under the Gibbons Company Profit Sharing
and Retirement Plan shall be determined and calculated as of May 31, 1995, and
frozen as of that date. No Participant's Davis-Bacon Account shall be
increased by any Employer contributions after May 31, 1995.
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<PAGE> 2
Such Accounts shall increase only through appropriate attribution of earnings
(and losses) to the Accounts under Section 6.03.
Section 5.08 is amended by adding an additional sentence at
the end thereof to read as follows:
From and after May 31, 1995, the Employer shall make no
further Employer Davis-Bacon Contributions under this Section 5.08.
Section 5.10 is amended by adding an additional sentence at
the end thereof to read as follows:
From and after May 31, 1995, the Employer shall make no
further Employer Davis-Bacon Contributions under this Section 5.10.
Section 6.04(d) is amended by adding an additional sentence at
the end thereof to read as follows:
From and after May 31, 1995, no Employee or Participant shall
be eligible to receive any Employer Davis-Bacon Contributions under
Section 5.08.
2. FOR PURPOSES OF CEASING HARDSHIP WITHDRAWALS AND PARTICIPANT
LOANS, THE FOLLOWING SECTIONS OF THE PLAN ARE AMENDED, EFFECTIVE MAY 8, 1995:
Section 8.01(d) is amended by adding an new sentence at the end
thereof to read as follows:
From and after May 8, 1995, no Employee or Participant shall be
eligible to receive a hardship distribution from the Plan.
Section 20.01 is amended by adding an new sentence at the end thereof
to read as follows:
From and after May 8, 1995, the Plan shall not permit or make any
Participant Loan.
3. IN ALL OTHER RESPECTS THE PLAN IS RATIFIED AND APPROVED.
IN WITNESS WHEREOF, the parties have caused this Amendment to the Plan
to be duly executed as of the date and year first above written.
"EMPLOYER"
GIBBONS & REED COMPANY
By:
--------------------------------
Its:
----------------------------
160
<PAGE> 1
THIRD AMENDMENT TO
THE
GIBBONS COMPANY
PROFIT SHARING AND RETIREMENT PLAN
This Amendment to the Gibbons Company Profit Sharing and Retirement
Plan (the "Plan") is made and entered into this day of 23rd day of June ,
1995, by Gibbons & Reed Company, hereinafter referred to as the "Employer."
W I T N E S S E T H:
WHEREAS, the Employer has reserved the right to amend the Plan in
whole or in part, and
WHEREAS, the Employer has previously acted as the Plan Sponsor of the
Gibbons Company Profit Sharing and Retirement Plan (the "Plan"), in which the
Gibbons Company has previously participated as a Participating Employer; and
WHEREAS, the Gibbons Company, the Employer and its affiliated entities
have been recently acquired by Granite Construction Incorporated; and
WHEREAS, as a consequence of the acquisition, the Employer, as the
current Plan Sponsor, and the Gibbons Company deem it to be in the best
interests of the participants in the Plan and effective in promoting better
Plan administration to change the Plan Sponsor of the Plan to the Gibbons
Company; and
WHEREAS, the Employer, pursuant to Section 16.01 of the Plan, has
reserved the right to amend the Plan in whole or in part, including the right
to cease acting as Plan Sponsor, and to name the Gibbons Company as the new
Plan Sponsor;
NOW THEREFORE, in consideration of the foregoing premises and mutual
covenants herein contained, the Employer amends the Plan as follows:
1. Section 1.01 is amended by adding an additional paragraph to
read as follows:
Effective July 1, 1995, and for all Plan Years thereafter, the Gibbons
Company shall replace Gibbons & Reed Company as the "Plan Sponsor" and "Plan
Administrator" of the Plan.
2. Section 2.46 is amended to read as follows:
2.46 "PLAN SPONSOR" shall mean Gibbons & Reed Company. Effective
July 1, 1995, "Plan Sponsor" shall mean the Gibbons Company.
3. This Amendment shall be effective commencing July 1, 1995, and
for all Plan
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<PAGE> 2
Years thereafter.
4. In all other respects the Plan is ratified and approved.
IN WITNESS WHEREOF, the Employer has caused this Amendment to the Plan
to be duly executed as of the date and year first above written.
"EMPLOYER"
GIBBONS & REED COMPANY
By:
--------------------------------
Its: David H. Watts, President and CEO
---------------------------------
ATTEST:
- ------------------------------------
William E. Barton
Secretary
Acknowledged and accepted by the Gibbons Company this 23rd day of
June , 1995.
GIBBONS COMPANY
By:
------------------------------------
Its: David H. Watts, President and CEO
------------------------------------
Attest:
- ------------------------------------
William E. Barton
Secretary
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<PAGE> 1
FOURTH AMENDMENT TO
THE
GIBBONS COMPANY PROFIT SHARING
AND RETIREMENT PLAN
This Fourth Amendment to the Gibbons Company Profit Sharing and
Retirement Plan (the "Plan") is made and entered into this 19th day of
December, 1995, by G. G. & R., Inc. (formerly known as the Gibbons Company)
("G.G.&R."), the Sponsoring Employer of the Plan.
W I T N E S S E T H:
WHEREAS, GG&R has heretofore established the Plan (which plan has been
amended and restated in its entirety effective for all Plan Years commencing on
or after January 1, 1989); and
WHEREAS, GG&R has reserved the right to amend the Plan in whole or in
part; and
WHEREAS, GG&R now desires to amend the Plan, for the purpose of
ceasing all further Elective Deferrals, Employer Matching Contributions and
rollovers to the Plan;
NOW, THEREFORE, in consideration of the foregoing premises GG&R amends
the Plan as follows:
1. Section 5.01 is amended by adding a new sub-paragraph (d) at
the end thereof to read as follows:
(6) Effective for all payroll periods commencing after December
31, 1995, no Elective Deferral amounts shall be withheld from any Participant's
compensation or contributed to the Plan by the Employer for any Participant.
2. Section 5.05 is amended by adding a new sentence at the end
thereof to read as follows:
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<PAGE> 2
Effective after December 31, 1995, the Plan shall not accept
any rollover contribution from any Participant or Employee,
regardless of whether the contribution is an "eligible
rollover contribution," as defined in Code Section 401(a) (31).
3. Section 5.06 is amended by adding a new sentence at the end
thereof to read as follows:
Effective after all Employer Matching Contributions are made
with respect to Elective Deferrals contributed for payroll
periods beginning prior to January 1, 1996, no further
Employer Matching Contributions shall be made to the Plan.
4. This Amendment shall be effective as of December 1, 1995, and
shall apply to the current Plan Year and all Plan Years commencing thereafter.
5. In all other respects the Plan is ratified and approved.
IN WITNESS WHEREOF, GG&R has caused this Amendment to the Plan to be
duly executed as of the date and year first above written.
"EMPLOYER"
G. G. & R., Inc.
By:
-------------------------------
Its: David H. Watts, President
------------------------------
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<PAGE> 1
FIFTH AMENDMENT TO
THE
GIBBONS COMPANY PROFIT SHARING
AND RETIREMENT PLAN
This Fifth Amendment to the Gibbons Company Profit Sharing and
Retirement Plan (the "Plan") is made and entered into this 16th day of July,
1996, by G. G. & R., Inc. ("GG&R"), the Sponsoring Employer of the Plan.
W I T N E S S E T H:
WHEREAS, GG&R has heretofore established the Plan (which plan has been
amended and restated in its entirety effective for all Plan Years commencing on
or after January 1, 1989);
WHEREAS, GG&R has reserved the right to amend the Plan in whole or in
part;
NOW, THEREFORE, in consideration of the foregoing premises GG&R amends
the Plan as follows:
1. The second paragraph of Section 5.14(b) is amended to read as
follows, effective as of January 1, 1995:
If the Employer has made a Matching Contribution attributable to
any portion of the Participant's Excess K-Test Contribution distributed
to the Participant pursuant to the above, the Plan Administrator shall
treat such Matching Contribution in the same manner as an Excess M-Test
Contribution in accordance with (c) below. For the Plan Year commencing
on January 1, 1994, if the Employer has made a Matching Contribution
attributable to any portion of the Participant's Excess K-Test
Contribution distributed to the Participant pursuant to the above, the
Plan Administrator shall treat such Matching Contribution as a
forfeiture. The forfeited amount shall be used to reduce the Employer's
Matching Contribution otherwise required for the Plan Year.
2. Section 11.01(b) is amended by adding a new sub-paragraph at the
end thereof
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<PAGE> 2
to read as follows, effective as of January 1, 1996:
Each Participant who was not fully vested in his Employer
Matching Contribution Account as of January 1, 1996, shall be fully
vested in such Account as of such date.
3. Section 11.01(c) is amended by adding a new sub-paragraph at
the end thereof to read as follows, effective as of December 31, 1995:
Each Participant who was not fully vested in his Employer
Profit-Sharing Contribution Account as of December 31, 1995, shall be
fully vested in such Account as of such date.
4. This Amendment shall apply with respect to the Plan Years
specified above, and all Plan Years commencing thereafter.
5. In all other respects the Plan is ratified and approved.
IN WITNESS WHEREOF, GG&R has caused this Amendment to the Plan to be
duly executed as of the date and year first above written.
"EMPLOYER"
G. G. & R., Inc.
By:
-----------------------------------------
Its: David H. Watts, President and CEO
----------------------------------------
By:
-----------------------------------------
Its: William E. Barton, Vice President & CFO
----------------------------------------
166
<PAGE> 1
GRANITE CONSTRUCTION INCORPORATED
KEY MANAGEMENT DEFERRED COMPENSATION PLAN
167
<PAGE> 2
GRANITE CONSTRUCTION INCORPORATED
KEY MANAGEMENT DEFERRED COMPENSATION PLAN
1. Introduction. The Company hereby establishes the Plan,
effective as of January 1, 1996. The purpose of the Plan is to provide
deferred compensation to a select group of executive employees of the Company
in recognition of their contributions to the Company and its subsidiaries.
This document constitutes the written instrument under which the Plan is
maintained.
2. Definitions.
(a) "Account" means as to any Participant the separate
account established and maintained by the Company in order to reflect his or
her interest in the Plan. Each Participant's Account will reflect the
allocations and earnings credited (or debited) thereto in accordance with
Section 5.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Committee" means the Compensation Committee of the
Company's Board of Directors.
(d) "Company" means Granite Construction Incorporated, a
Delaware corporation, and any other affiliated entity that is designated from
time to time by the board of directors of Granite Construction Incorporated.
As to a particular Participant, "Company" refers to the corporate entity which
is his or her employer. For purposes of Sections 2(c), 5 and 10, "Company"
refers only to Granite Construction Incorporated.
(e) "Compensation" means "compensation" (as defined in
the Company's tax-qualified retirement plans) in excess of $150,000 (as indexed
under section 401(a)(17) of the Code) but not in excess of $250,000 (as
indexed from time to time by the Committee).
(f) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
(g) "Participant" means each employee of the Company who
is designated as such from time to time by the Committee.
(h) "Plan" means the Granite Construction Incorporated
Key Management Deferred Compensation Plan, as set forth in this instrument and
as hereafter amended.
(i) "Plan Year" means the calendar year.
3. Eligibility To Participate. The Committee will, from time to
time, designate Company employees to be Participants. Each Participant
selected by the Committee must belong to a select group of management and
highly compensated employees of the Company.
168
<PAGE> 3
4. Vesting. Each Participant will always be 100% vested in his or
her Account; provided, however, that if a Participant is terminated "for cause"
(as such term is defined in the Company's Ethics Policy Statement), the
Participant will forfeit all amounts other than his or her own Compensation
deferrals.
5. Additions To Accounts.
(a) Participant Compensation Deferrals. Each Participant
may annually elect to defer the receipt of a whole percentage (up to 3% or such
other percentage as may be determined by the Company's board of directors) of
his or her Compensation.
(b) Company Matching Contributions. The Company will
annually credit each Participant's Account with an amount equal to a percentage
of the Compensation deferred by the Participant under Section 5(a), which
percentage will equal the matching contribution percentage determined under the
Granite Construction Profit Sharing and 401(k) Plan for such Plan Year.
(c) Discretionary Contributions. Each Plan Year 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 Company's board of
directors with respect to such year for the Granite Construction Profit Sharing
and 401(k) Plan and the Granite Construction Employee Stock Ownership Plan.
(d) Hypothetical Investment Experience. For each Plan
Year, the balance of each Participant's Account will be credited quarterly with
hypothetical earnings equal to one-quarter of the sum of the 30-day average of
the Lehman Brothers long term bond index (as published in the Wall Street
Journal) determined as of the December 1 of the prior Plan Year, plus 100 basis
points, or as determined by the Committee.
6. Deferral Elections. Each Participant must complete a deferral
form for each Plan Year with respect to which he or she wishes to defer the
receipt of Compensation. To be effective, each such deferral form must satisfy
the following rules:
(a) Content And Form Requirements. The deferral form
must be signed and dated by the Participant, and must specify the method for
distribution of the Participant's Account. A Participant's election to defer
Compensation will be irrevocable and cannot be modified or amended by the
Participant.
(b) Timing Of Deferral Forms. In general, a
Participant's deferral form must be received by the Committee before the
beginning of the Plan Year for which the Compensation is payable. However, in
the case of Compensation payable with respect to the initial Plan Year, the
deferral form must be received by the Committee both (i) within 30 days of the
later of the date that the Company adopts the Plan or the date on which the
employee is notified of his or her eligibility to participate, and (ii) before
the date on which the Compensation subject to the deferral election would
otherwise be paid.
7. Distribution Of Accounts.
169
<PAGE> 4
(a) Form Of Distributions. Subject to Sections 7(b), 7(f)
and 10, each Participant 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 cash payment, or annual installments of substantially equal
amounts payable over a period of years certain not to exceed ten.
(b) 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. The Committee may, in its sole discretion,
accelerate the installment distribution of any Account for any reason.
Participant Accounts will continue to be credited with hypothetical earnings
under Section 5(d) while they are in pay status.
(c) Timing Of Distributions. Subject to Sections 7(f)
and 10, the distribution of the balance of a Participant's Account will be made
or begin as soon as practicable following the earliest of the following events:
o The Participant's disability, as determined under the
Company's Long Term Disability Plan;
o The Participant's "retirement" under the Company's
tax-qualified retirement plans; or
o The Participant's death.
(d) Timing Of Distribution To A Beneficiary. If a
Participant dies before receiving the distribution of his or her Account, the
distribution of such Account to his or her beneficiary will be made as
previously elected by the Participant.
(e) 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 surviving spouse, the Participant's estate will be his or her beneficiary.
(f) 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 cash payment.
8. 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 his or her FICA withholding requirements.
170
<PAGE> 5
9. 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 responsibilities under the Plan. The Committee
(and its delegatee) have 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.
10. Amendment Or Termination. The Company reserves the right, in
its sole and unlimited discretion, to amend or terminate the Plan at any time,
without prior notice to any Participant or beneficiary. Upon Plan termination,
the Account of each Participant will be distributed as a lump sum cash payment
as soon as practicable, without regard to Section 7 or the Participant's
deferral election.
11. Claims Procedure. Any person who believes that he or she is
entitled to any payment under the Plan may submit a claim in writing to the
Committee. If the claim is denied (either in full or in part), the claimant
will be provided a written notice explaining the specific reasons for the
denial and referring to the provisions of the Plan on which the denial is
based. The notice will describe any additional information needed to support
the claim. The denial notice will be provided within 90 days after the claim
is received. If special circumstances require an extension of time (up to 90
days), written notice of the extension will be given within the initial 90-day
period.
12. Appeal Procedure. If a claimant's claim is denied, the
claimant (or his or her authorized representative) may apply in writing to the
Committee for a review of the decision denying the claim. The claimant (or
representative) then has the right to review pertinent documents and to submit
issues and comments in writing. The Committee will provide written notice of
its decision on review within 60 days after it receives a review request. If
additional time (up to 60 days) is needed to review the request, the claimant
will be given written notice of the reason for the delay.
13. Source Of Payments.
(a) No Plan Assets. Subject to Section 13(b), all
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"
(as defined in the trust agreement) 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.
171
<PAGE> 6
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.
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 or 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.
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: David H. Watts
---------------------------------------
Its: President
--------------------------------------
Dated 6-12-96
-------------------------------------
By: Michael Futch
----------------------------------------
Its: Vice President
---------------------------------------
Dated 6-12-96
--------------------------------------
172
<PAGE> 1
GRANITE CONSTRUCTION INCORPORATED
KEY MANAGEMENT DEFERRED INCENTIVE COMPENSATION PLAN
173
<PAGE> 2
GRANITE CONSTRUCTION INCORPORATED
KEY MANAGEMENT DEFERRED INCENTIVE COMPENSATION PLAN
1. Introduction. The Company hereby establishes the Plan,
effective as of January 1, 1996. The purpose of the Plan is to provide
deferred compensation to a select group of executive employees of the Company
in recognition of their contributions to the Company and its subsidiaries.
This document constitutes the written instrument under which the Plan is
maintained.
2. Definitions.
(a) "Account" means as to any Participant the separate
account established and maintained by the Company in order to reflect his or
her interest in the Plan. Each Participant's Account will reflect the
allocations and earnings credited (or debited) thereto in accordance with
Section 5.
(b) "Code" means the Internal Revenue Code of 1986, as
amended.
(c) "Committee" means the Compensation Committee of the
Company's Board of Directors.
(d) "Company" means Granite Construction Incorporated, a
Delaware corporation, and any other affiliated entity that is designated from
time to time by the board of directors of Granite Construction Incorporated.
As to a particular Participant, "Company" refers to the corporate entity which
is his or her employer. For purposes of Sections 2(c) and 10, "Company" refers
only to Granite Construction Incorporated.
(e) "Compensation" means the annual cash incentive
compensation payable to a Participant.
(f) "ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
(g) "Participant" means each employee of the Company who
is designated as such from time to time by the Committee.
(h) "Plan" means the Granite Construction Incorporated
Key Management Deferred Incentive Compensation Plan, as set forth in this
instrument and as hereafter amended
(i) "Plan Year" means the calendar year.
3. Eligibility To Participate. The Committee will, from time to
time, designate Company employees to be Participants. Each Participant
selected by the Committee must belong to a select group of management and
highly compensated employees of the Company.
174
<PAGE> 3
4. Vesting. Each Participant will always be 100% vested in his or
her Account; provided, however, that if a Participant is terminated "for cause"
(as such term is defined in the Company's Ethics Policy Statement), the
Participant will forfeit all amounts other than his or her own Compensation
deferrals.
5. Additions To Accounts.
(a) Participant Compensation Deferrals. Each Participant
may annually elect to defer the receipt of up to and including 100% of his or
her Compensation.
(b) Hypothetical Investment Experience. For each Plan
Year, the balance of each Participant's Account will be credited quarterly with
hypothetical earnings equal to one-quarter of the sum of the 30-day average of
the Lehman Brothers long term bond index (as published in the Wall Street
Journal) determined as of the December 1 of the prior Plan Year, plus 100 basis
points, or as determined by the Committee.
6. Deferral Elections. Each Participant must complete a deferral
form for each Plan Year with respect to which he or she wishes to defer the
receipt of Compensation. To be effective, each such deferral form must satisfy
the following rules:
(a) Content And Form Requirements. The deferral form
must be signed and dated by the Participant, and must specify the payment date
and method for distribution of the Participant's Account. Each annual deferral
must be for a minimum amount of at least $1,000, and must be for a period of at
least five years. A Participant may extend (but not reduce) the length of his
or her deferral period for one-year periods, so long as such extensions are
made at least 12 months prior to an otherwise scheduled distribution date. A
Participant's election to defer Compensation will be irrevocable and cannot be
modified or amended by the Participant.
(b) Timing Of Deferral Forms. In general, a
Participant's deferral form must be received by the Committee before the
beginning of the Plan Year in which the Compensation is payable. However, in
the case of Compensation payable with respect to the initial Plan Year, the
deferral form must be received by the Committee both (i) within 30 days of the
later of the date that the Company adopts the Plan or the date on which the
employee is notified of his or her eligibility to participate, and (ii) before
the date on which the Compensation subject to the deferral election would
otherwise be paid.
7. Distribution Of Accounts.
(a) Form Of Distributions. Subject to Sections 7(b),
7(f) and 10, each Participant 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 cash payment or annual installments of substantially equal
amounts payable over a period of years certain not to exceed ten years.
(b) 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. The Committee
175
<PAGE> 4
may, in its sole discretion, accelerate the installment distribution of any
Account for any reason. Participant Accounts will continue to be credited with
hypothetical earnings under Section 5(b) while they are in pay status.
(c) Timing Of Distributions. Subject to Sections 7(f)
and 10, the distribution of the balance of a Participant's Account will be made
or begin as soon as practicable following the earliest of the following events:
o Occurrence of the date set forth in the Participant's deferral
form;
o The Participant's disability, as determined under the
Company's Long Term Disability Plan;
o The Participant's "retirement" under the Company's
tax-qualified retirement plans; or
o The Participant's death.
(d) Timing Of Distribution To A Beneficiary. If a
Participant dies before receiving the distribution of his or her Account, the
distribution of such Account to his or her beneficiary will be made as
previously elected by the Participant.
(e) 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 surviving spouse, the Participant's estate will be his or her beneficiary.
(f) 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 cash payment.
8. 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 his or her FICA withholding requirements.
9. 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) have 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
176
<PAGE> 5
employee to whom the Committee delegates any responsibility under the Plan.
10. Amendment Or Termination. The Company reserves the right, in
its sole and unlimited discretion, to amend or terminate the Plan at any time,
without prior notice to any Participant or beneficiary. Upon Plan termination,
the Account of each Participant will be distributed as a lump sum cash payment
as soon as practicable, without regard to Section 7 or the Participant's
deferral election.
11. Claims Procedure. Any person who believes that he or she is
entitled to any payment under the Plan may submit a claim in writing to the
Committee. If the claim is denied (either in full or in part), the claimant
will be provided a written notice explaining the specific reasons for the
denial and referring to the provisions of the Plan on which the denial is
based. The notice will describe any additional information needed to support
the claim. The denial notice will be provided within 90 days after the claim
is received. If special circumstances require an extension of time (up to 90
days), written notice of the extension will be given within the initial 90-day
period.
12. Appeal Procedure. If a claimant's claim is denied, the
claimant (or his or her authorized representative) may apply in writing to the
Committee for a review of the decision denying the claim. The claimant (or
representative) then has the right to review pertinent documents and to submit
issues and comments in writing. The Committee will provide written notice of
its decision on review within 60 days after it receives a review request. If
additional time (up to 60 days) is needed to review the request, the claimant
will be given written notice of the reason for the delay.
13. Source Of Payments.
(a) No Plan Assets. Subject to Section 13(b), all
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"
(as defined in the trust agreement) 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.
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
177
<PAGE> 6
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 or 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, an
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.
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:
---------------------------------------
David H. Watts
Its: President
--------------------------------------
Dated: 6-12-96
------------------------------------
By:
---------------------------------------
Michael Futch
Its: Vice President
--------------------------------------
Dated: 6-12-96
------------------------------------
178
<PAGE> 1
EXHIBIT 11.1
GRANITE CONSTRUCTION INCORPORATED
COMPUTATION OF NET INCOME PER COMMON AND
COMMON EQUIVALENT SHARE
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED DECEMBER 31, 1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
Weighted average common shares outstanding 18,060 17,770 17,598
Computation of incremental outstanding shares:
Net effect of dilutive stock options based
on treasury stock method 66 50 62
------------ ------------ ------------
Weighted average common shares outstanding,
as adjusted 18,126 17,820 17,660
=========== =========== ===========
Net income $ 27,348 $ 28,542 $ 19,488
=========== =========== ===========
Net income per common and common
equivalent share $ 1.51 $ 1.60 $ 1.10
=========== =========== ===========
</TABLE>
179
<PAGE> 1
EXHIBIT NO. 21
LIST OF SUBSIDIARIES OF GRANITE CONSTRUCTION INCORPORATED
<TABLE>
<CAPTION>
Name Under Which
Subsidiary State of Incorporation Subsidiary Does Business
- ---------- ---------------------- ------------------------
<S> <C> <C>
Granite Construction Company California Granite Construction Company
GILC Incorporated California GILC Incorporated
</TABLE>
180
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF INCOME, AND NOTES TO THE
CONSOLIDATED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FORM 10-K, DECEMBER 31, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 38,663
<SECURITIES> 33,567
<RECEIVABLES> 124,817
<ALLOWANCES> 693
<INVENTORY> 13,493
<CURRENT-ASSETS> 263,805
<PP&E> 456,891
<DEPRECIATION> 278,376
<TOTAL-ASSETS> 473,045
<CURRENT-LIABILITIES> 171,263
<BONDS> 43,602
0
0
<COMMON> 182
<OTHER-SE> 233,423
<TOTAL-LIABILITY-AND-EQUITY> 473,045
<SALES> 928,799
<TOTAL-REVENUES> 928,799
<CGS> 818,144
<TOTAL-COSTS> 889,731
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 4,367
<INCOME-PRETAX> 43,409
<INCOME-TAX> 16,061
<INCOME-CONTINUING> 27,348
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 27,348
<EPS-PRIMARY> 1.51
<EPS-DILUTED> 1.51
</TABLE>
