1
EXHIBIT 10.2
GRANITE CONSTRUCTION
PROFIT SHARING AND 401(k) PLAN
As Amended and Restated Effective as of January 1, 1999
2
TABLE OF CONTENTS
Section Page
1. Nature of the Plan 1
2. Definitions 2
3. Eligibility and Participation 8
4. Contributions 11
5. Investment of Trust Assets 19
6. Allocations to Participants' Accounts 21
7. Allocation Limitation 24
8. Frozen Gibbons Accounts 25
9. Disclosure to Participants 28
10. Vesting and Forfeitures 29
11. Years of Vesting Service and Break in Service 30
12. When Capital Accumulation Will Be Distributed 32
13. Hardship Withdrawals 34
14. How Capital Accumulation Will Be Distributed 37
15. No Assignment of Benefits 39
16. Administration 39
17. Claims Procedure 43
18. Limitation on Participants' Rights 44
19. Future of the Plan 45
20. "Top-Heavy" Contingency Provisions 46
21. Governing Law 48
22. Execution 48
3
GRANITE CONSTRUCTION
PROFIT SHARING AND 401(k) PLAN
As Amended and Restated Effective As of January 1, 1999
Section 1. Nature of the Plan.
The purpose of this Plan is to enable participating Employees to save
funds on a tax-favored basis and to provide Participants with an opportunity to
accumulate capital for their future economic and retirement security.
The Plan, which was originally adopted effective as of January 1, 1995,
as an amendment and restatement of the Granite Construction Company Profit
Sharing Plan Trust Agreement (originally effective January 1, 1976), is hereby
amended and restated effective as of January 1, 1999. The Plan is a profit
sharing plan under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"), that contains a "cash or deferred arrangement" under
Section 401(k) of the Code. In order to satisfy applicable requirements of the
Code, as amended by the Small Business Job Protection Act of 1996, the second
sentence in the first paragraph of Section 4(b)(5) and the third sentence in the
first paragraph of Section 4(c)(3) are amended effective as of January 1, 1997.
All Trust Assets held under the Plan will be administered, distributed,
forfeited and otherwise governed by the provisions of this Plan and the related
Trust Agreement. The Plan is administered by an Administrative Committee for the
exclusive benefit of Participants (and their Beneficiaries).
4
Section 2. Definitions.
In this Plan, whenever the context so indicates, the singular or plural
number and the masculine, feminine or neuter gender shall be deemed to include
the other, the terms "he," "him" and "his" shall refer to a Participant, and the
capitalized terms shall have the following meanings:
Account One of several accounts maintained to
record the interest of a Participant.
See Section 6.
Additional
401(k) Contributions Employer Contributions made pursuant to
Participant elections under Section
4(b)(2).
Affiliate Any corporation which is a member of a
controlled group of corporations (within
the meaning of Section 414(b) of the
Code) of which the Company is also a
member or any trade or business (whether
or not incorporated) which is under
common control with the Company (within
the meaning of Section 414(c) of the
Code).
Allocation Date December 31st of each year (the
last day of each Plan Year).
Beneficiary The person (or persons) entitled to
receive any benefit under the Plan in
the event of a Participant's death. See
Section 14(b).
Board of Directors The Board of Directors of the Company.
Break in Service A Plan Year in which an Employee is not
credited with more than 500 Hours of
Service as a result of his termination
of Service. See Section 11(b).
Capital Accumulation A Participant's vested, nonforfeitable
interest in his Accounts under the Plan.
Each Participant's Capital Accumulation
shall be determined in accordance
-2-
5
with the provisions of Section 10 and
distributed as provided in Sections 12,
13 and 14.
Code The Internal Revenue Code of 1986, as
amended.
Committee The Administrative Committee appointed
by the Board of Directors to administer
the Plan. See Section 16.
Company Granite Construction Incorporated, a
Delaware corporation.
Compensation The Statutory Compensation paid to an
Employee by his Employer, but excluding
(1) reimbursements or other expense
allowances (including travel expense
allowances), (2) fringe benefits (cash
and noncash), (3) moving expenses, (4)
welfare benefits, (5) any amount in
excess of $160,000 (as adjusted
periodically after 1998 for increases in
the cost of living pursuant to Section
401(a)(17) of the Code), and (6) any
amount paid to an Employee pursuant to
the terms of a collective bargaining
agreement.
Disability Any mental or physical incapacity of an
Employee that, in the opinion of a
licensed physician selected by the
Company, renders the Employee totally
and permanently incapable of performing
his assigned duties with an Employer and
results in his termination of Service.
Employee Any individual who is treated by an
Employer as a common law employee. A
leased Employee, as described in Section
414(n) of the Code, is not an Employee
for purposes of this Plan.
Employer The Company and each Affiliate which is
designated as an Employer by the Board
of Directors and which adopts the Plan
for the benefits of its Employees.
-3-
6
Employer Contributions Payments made to the Trust by an
Employer (other than Rollover
Contributions) as described in Sections
4(a), (b) and (c).
ERISA The Employee Retirement Income Security
Act of 1974, as amended.
ESOP The Granite Construction Employee Stock
Ownership Plan, an employee stock
ownership plan under Section 4975(e)(7)
of the Code.
ESOP Diversification
Account The Account which reflects a
Participant's interest attributable to
amounts transferred from the ESOP
pursuant to the diversification election
procedures of the ESOP.
401(k) Account The Account which reflects a
Participant's interest under the Plan
attributable to 401(k) Contributions.
See Section 6.
401(k) Contributions Employer Contributions made pursuant to
Participant elections under Section
4(b). Any reference made to 401(k)
Contributions in the Plan shall
generally include a Participant's
Additional 401(k) Contributions, except
for purposes of Sections 3(b) and 4(c)
with respect to Matching Contributions.
Forfeiture The portion of a Participant's Accounts
which does not become a part of his
Capital Accumulation and which is
forfeited under Section 10(b).
Frozen Elective Deferral
Account The Account which reflects a
Participant's interest in his "elective
deferral account" under the Gibbons Plan
that was transferred to the Plan on May
1, 1998. See Section 8(a).
Frozen General
Account The Account which reflects a
Participant's interest in his "rollover
account," "employer matching
contribution account" and "employer
profit-sharing
-4-
7
contribution account" under the Gibbons
Plan that was transferred to this Plan
on May 1, 1998. See Section 8(a).
Gibbons Employee A Participant who became an
Employee as a result of the Company's
acquisition of G. G. & R., Inc.
(formerly known as the Gibbons Company)
and its affiliates on May 8, 1995.
Gibbons Plan The Gibbons Company Profit Sharing and
Retirement Plan, a qualified defined
contribution that was terminated,
effective as of March 31, 1998,
(excluding the portion of the plan that
was a "cash or deferred arrangement"
under Section 401(k) of the Code).
Amounts attributable to the portion of
the plan that was a "cash or deferred
arrangement" were transferred from the
Gibbons Plan to this Plan on the behalf
of Gibbons Employees on May 1, 1998.
Highly Compensated
Employee An Employee who (1) was a "5% owner" at
any time during the Plan Year or
preceding Plan Year, or (2) received
Statutory Compensation in excess of
$80,000 in the preceding Plan Year and
was in the top-paid 20% group of
Employees for such preceding Plan Year.
The $80,000 amount shall be adjusted
after 1998 for increases in the cost of
living pursuant to Section 414(q)(1) of
the Code.
Hour of Service Each hour of Service for which an
Employee is credited under the Plan, as
described in Section 3(d).
Matching Account The Account which reflects each
Participant's interest attributable to
Matching Contributions. See Section 6.
Matching Contributions Employer Contributions made under the
Plan in amounts related to the 401(k)
Contributions on behalf of each
Participant. See Section 4(c).
-5-
8
Participant Any Employee or former Employee who has
met the applicable eligibility
requirements of Section 3 and who has
not yet received a complete distribution
of his Capital Accumulation.
Plan The Granite Construction Profit Sharing
and 401(k) Plan, which includes this
Plan and the Trust Agreement.
Plan Year The 12-month period ending on each
Allocation Date (and coinciding with
each calendar year, which is the taxable
year of the Company).
Profit Sharing
Account The Account which reflects a
Participant's interest under the Plan
attributable to Profit Sharing
Contributions. See Section 6.
Profit Sharing
Contributions Employer Contributions made pursuant to
Section 4(a).
Retirement Termination of Service on or after
attaining age 55 or, if later, the
completion of ten Years of Vesting
Service (but not later than the date he
attains age 65 or, if later, the fifth
anniversary of the date he became a
Participant).
Rollover Account The Account which reflects a
Participant's interest under the Plan
attributable to Rollover Contributions.
See Section 6.
Rollover Contributions Payments made to the Trust by a
Participant under Section 4(e).
Service Employment with the Company and or any
Affiliate. For any corporation or other
business entity which is designated as
an Employer whose Employees are eligible
to participate in the Plan and for the
employees of any other business
substantially all the assets of which
are acquired by an Employer, the Board
of Directors may grant the Employees of
such entity credit for their years of
-6-
9
service with such entity (prior to the
date that such entity became an
Affiliate) for purposes of eligibility
and vesting under the Plan. Such grant
shall be evidenced by action of the
Board of Directors and attached to and
made a part of this Plan.
Statutory Compensation The total remuneration paid to an
Employee by an Employer during the Plan
Year for personal services rendered,
plus the amount of his 401(k)
Contributions and any amounts that are
contributed by an Employer on his behalf
that are not included in gross income
under Section 125 of the Code, but
excluding employer contributions to a
plan of deferred compensation, amounts
realized in connection with stock
options and amounts which receive
special tax benefits.
Stock Shares of common stock issued by the
Company.
Stock Fund The investment fund held by the Trust
consisting of shares of Stock.
Trust The Granite Construction Profit Sharing
and 401(k) Plan Trust, created by the
Trust Agreement entered into between the
Company and the Trustee.
Trust Agreement The Agreement between the Company and
the Trustee establishing the Trust and
specifying the duties of the Trustee.
Trust Assets The Stock (and other assets) held in the
Trust for the benefit of Participants.
See Section 5.
Trustee The Trustee (and any successor Trustee)
appointed by the Board of Directors to
hold the Trust Assets.
Year of Vesting Service Each Plan Year in which an Employee is
credited with at least 1000 Hours of
Service. See Section 11(a).
-7-
10
Section 3. Eligibility and Participation.
(a) Each Employee who was a Participant on December 31, 1998, shall
continue as a Participant. Each other Employee shall become a Participant as of
the Allocation Date of the Plan Year in which his Service began if he is
credited with at least 1000 Hours of Service during that Plan Year and is still
an Employee on the Allocation Date; provided, however, that an Employee who
incurs a Disability during that Plan Year while an Employee shall become a
Participant on the date of Disability and an Employee who dies during that Plan
Year while an Employee shall become a Participant on the day prior to his date
of death. Each other Employee who does not become a Participant pursuant to the
preceding sentence shall become a Participant as of the June 30th or December
31st coinciding with or next following the date on which he is credited with at
least 1000 Hours of Service over a period that does not exceed 12 consecutive
months, provided that he is still an Employee on such June 30th or December
31st. For this purpose, the eligibility computation period for determining the
1,000 Hours of Service requirement in the preceding sentence shall initially be
the period of 12 consecutive months beginning on the Employee's initial date of
Service and thereafter shall be the period of 12 consecutive months beginning on
the anniversary date of the Employee's initial date of Service.
Employees whose terms of employment are covered by a collective
bargaining agreement shall not be eligible to participate in the Plan unless the
collective bargaining agreement specifically provides for such Employees to
participate in the Plan. Employees who are nonresident aliens who receive no
earned income from the Company or an Affiliate that constitutes income from
sources within the United States shall not be eligible to participate in the
Plan. An Employee who ceases to be ineligible to participate in the Plan shall
become a
-8-
11
Participant as of the later of the date he ceases to be ineligible or the date
described in the preceding paragraph.
(b) A Participant shall be entitled to share in the allocation of
Matching Contributions for each Plan Year in which he elects to make 401(k)
Contributions; provided, however, that a Participant shall not be entitled to
share in the allocation of Matching Contributions with respect to any Additional
401(k) Contributions that are made to the Trust on his behalf. A Participant is
entitled to share in the allocation of Profit Sharing Contributions and
Forfeitures for each Plan Year in which he is credited with at least 1000 Hours
of Service and in which he is an Employee on the Allocation Date. A Participant
shall also entitled to share in the allocation of Profit Sharing Contributions
and Forfeitures for the Plan Year of his Retirement, Disability or death.
(c) A former Participant who is reemployed by an Employer shall become
a Participant as of the date of his reemployment. A former Employee who is
reemployed by an Employer and who previously satisfied the service requirement
described in Section 3(a) shall become a Participant as of the later of the date
of his reemployment or the date described in Section 3(a). Notwithstanding any
provision of the Plan to the contrary, contributions, benefits and service
credit with respect to qualified military service will be provided in accordance
with Section 414(u) of the Code.
(d) Hours of Service - For purposes of determining the Hours of Service
to be credited to an Employee under the Plan, the following rules shall be
applied:
(1) Hours of Service shall include each hour of Service
for which an Employee is paid (or entitled to
payment) for the performance of duties;
-9-
12
each hour of Service for which an Employee is paid
(or entitled to payment) for a period during which no
duties are performed (irrespective of whether Service
has terminated) due to vacation, holiday, illness,
incapacity (including Disability), layoff, jury duty,
military duty or paid leave of absence; and each
additional hour of Service for which back pay is
either awarded or agreed to (irrespective of
mitigation of damages); provided, however, that not
more than 501 Hours of Service shall be credited for
a single continuous period during which an Employee
does not perform any duties (whether or not such
period occurs in a single Plan Year or 12 month
period, with respect to an Employee's initial
eligibility computation period).
(2) The crediting of Hours of Service shall be determined
in accordance with the rules set forth in paragraphs
(b) and (c) of Section 2530.200b-2 of the regulations
prescribed by the Department of Labor, which rules
shall be consistently applied with respect to all
Employees within the same job classification.
(3) Hours of Service shall not be credited to an Employee
for a period during which no duties are performed if
payment is made or due under a plan maintained solely
for the purpose of complying with applicable worker's
compensation, unemployment compensation or disability
insurance laws, and Hours of Service shall not be
credited on account of any payment made or due an
Employee solely in reimbursement of medical or
medically-related expenses.
(4) Hours of Service that are credited for the
performance of duties shall be determined from
records maintained by the Employer; provided,
however, that, in the case of an Employee whose
Compensation is not determined on the basis of
certain amounts for each hour worked and whose hours
are not required to be counted and recorded by any
Federal law (such as the Fair Labor Standards Act),
such Employee's Hours of Service need not be
determined from employment records, and such Employee
shall be credited with ten Hours of Service for each
day in which he would be credited with any Hours of
Service. Hours of Service that are credited for
periods during which no duties are performed or for
back pay shall be credited on the basis of 40 Hours
of Service for each week or eight Hours of Service
for each day.
-10-
13
Section 4. Contributions.
(a) Profit Sharing Contributions - Profit Sharing Contributions may be
paid to the Trustee for each Plan Year in such amounts (or under such formula)
as may be determined by the Board of Directors. Profit Sharing Contributions
shall be paid to the Trustee not later than the due date (including extensions)
for filing the Company's Federal income tax return for that Plan Year.
(b) 401(k) Contributions -
(1) Each Participant may elect as of the first business day of
each month (or as soon as administratively feasible) to have a whole percentage
(up to 10% or such other percentage as may be determined by the Board of
Directors) of his Compensation per pay period withheld by his Employer and
contributed to the Trust as 401(k) Contributions in lieu of receiving such
amount as Compensation. A Participant's 401(k) Contributions may not exceed
$10,000 (as adjusted periodically after 1998 for increases in the cost of living
pursuant to Section 402(g)(5) of the Code) for any Plan Year.
(2) Additional 401(k) Contributions. Under rules established
by the Committee, an eligible Participant may elect to have an additional
portion of his Compensation withheld by his Employer and contributed to the
Trust as Additional 401(k) Contributions equal to the full amount of the
quarterly cash dividends that are paid to him under Section 13(a) of the ESOP.
An Additional 401(k) Contribution may be made for a Participant under the
preceding sentence with respect to a calendar quarter only if he is an Employee
on the last day of such calendar quarter and if he is not a participant in a
non-qualified deferred compensation plan maintained by an Employer for such
calendar quarter. An eligible Participant who is not a
-11-
14
participant in a non-qualified deferred compensation plan maintained by an
Employer may also elect to have any portion of his Compensation contributed to
the Plan as Additional 401(k) Contributions under the terms of the Employer's
"cafeteria plan" under Section 125 of the Code. A Participant who is an Employee
and is not a participant in a non-qualified deferred compensation plan
maintained by an Employer may also elect to have up to 90% of his cash bonus (in
10% increments) under the Granite Construction Profit Sharing Cash Bonus Plan
contributed to the Plan as Additional 401(k) Contributions, less such amounts as
may be required to be withheld to satisfy tax withholding obligations.
(3) A Participant may change the amount of 401(k)
Contributions to be withheld or cease to have any 401(k) Contributions withheld
as of the first business day of each month or as soon as administratively
feasible. A Participant who elects to cease to have any 401(k) Contributions
withheld may not make a new election to have 401(k) Contributions withheld until
the beginning of the following Plan Year. Each such election (and any changes
thereof) shall be made on the payroll deduction authorization form supplied by
the Participant's Employer and in accordance with administrative rules and
procedures established by the Committee. 401(k) Contributions shall be paid by a
Participant's Employer to the Trustee as soon as practicable but in no event
later than the 15th business day of the month following the month in which such
amounts are withheld from the Participant's Compensation.
(4) 401(k) Contributions made under this Section 4(b) shall be
treated as automatically satisfying the nondiscrimination requirements of
Section 401(k)(3)(A)(ii) of the Code for any Plan Year in which Matching
Contributions are made at the rates described in Section 4(c)(1), in accordance
with Section 401(k)(12)(B)(iii) of the Code. For this purpose, the
-12-
15
Committee shall provide each eligible Employee with a written notice informing
such Employee of the amount he will be entitled to receive as a Matching
Contribution under Section 4(c)(l) for the subsequent Plan Year (if he elects to
make 401(k) Contributions to the Plan during such subsequent Plan Year),
including a description of the Employee's rights and obligations under the Plan,
as described in Internal Revenue Service Notice 98-52. For Employees who have
satisfied the requirements of Section 3(a) prior to the beginning of a Plan Year
(other than those Employees who terminate Service as a result of Disability or
death), such notice shall be provided to such Employees at least 30 days (and no
more than 90 days) prior to the first day of each Plan Year for which the Board
has determined to make Matching Contributions at rates described in Section
4(c)(1). For Employees (other than those Employees who terminate Service as a
result of Disability or death) who satisfy the requirements of Section 3(a) and
(c) during a Plan Year in which the Board has determined to make Matching
Contributions at rates described in Section 4(c)(1), the written notice shall be
provided no more than 90 days prior to the date that such Employees will become
eligible under Section 3(a) (and no later than the date that such Employees
become eligible).
(5) 401(k) Contributions for Highly Compensated Employees
shall be limited for any Plan Year in which no Matching Contributions are made
to the Plan to the extent necessary to satisfy one of the deferral percentage
tests described in Section 401(k)(3) of the Code and Section 1.401(k)-1(b) of
the regulations thereunder. Such deferral percentage requirements shall be
satisfied based upon the "current Plan Year testing method," as described in
Internal Revenue Service Notice 98-1.
-13-
16
The Committee may take any of the following corrective actions to
satisfy the deferral percentage tests:
(i) Prospectively limit the amount of 401(k)
Contributions for some or all Highly Compensated Employees for such
Plan Year, provided, however, that the Committee shall first limit the
amount of Additional 401(k) Contributions for some or all Highly
Compensated Employees for such Plan Year before limiting the amount of
such Highly Compensated Employees' 401(k) Contributions; or
(ii) Distribute all or a portion of the 401(k)
Contributions made on behalf of a Highly Compensated Employee (together
with any income attributable thereto) to him which are determined to be
"excess contributions" within the meaning of Section 1.401(k)-1(g)(7)
of the regulations. Such "excess contributions" are determined by
reducing 401(k) Contributions made on behalf of Highly Compensated
Employees in order of the actual deferral percentages beginning with
the highest of such percentages. The actual deferral percentage of the
Highly Compensated Employee with the highest such percentage shall be
reduced until it equals that of the Highly Compensated Employee with
the next highest percentage. This process shall be repeated until one
of the tests described in Section 40l(k)(3) of the Code and Section
1.40l(k)-l(b) is passed. The amount of excess contributions to be
distributed to Highly Compensated Employees under this Section
4(b)(5)(ii) shall be deemed attributable first to those Highly
Compensated Employees who have the greatest dollar amount of 401(k)
Contributions. Such excess contributions shall be reduced by any excess
deferrals previously distributed under Section 4(b)(6) for the calendar
year ending with the Plan Year. The amount of
-14-
17
excess contributions to be distributed to an affected Highly
Compensated Employee shall be taken first from the affected Highly
Compensated Employee's Additional 401(k) Contributions, if any.
To the extent practicable, the Committee shall take such corrective action by
March 15th of the following Plan Year; but in no event shall such action be
taken later than the Allocation Date of the following Plan Year.
(6) If during a Plan Year a Participant participates in more
than one qualified cash or deferred arrangement described in Section 401(k) of
the Code and the Participant notifies the Committee no later than the March 1st
following any calendar year that all or a specified portion of the 401(k)
Contributions made on the Participant's behalf for that calendar year should be
paid to the Participant (together with any income attributable thereto) because
such 401(k) Contributions constitute "excess deferrals," as described in Section
402(g)(2)(A) of the Code, distribution of such amounts to the Participant shall
occur no later than the April 15th following the calendar year in which the
"excess deferral" occurred.
(7) Any determination and distribution of income attributable
to 401(k) Contributions under Sections 4(b)(5)(ii) and (6) shall be made in
accordance with Section 1.401(k)-1(f) of the regulations under the Code.
(c) Matching Contributions -
(1) Matching Contributions shall be paid by an Employer to the
Trust together with the payment of the 401(k) Contributions to which the
Matching Contributions relate. With respect to each Participant, the rate of
Matching Contribution shall be equal to (1) 2% for 1% of Compensation deferred
as 401(k) Contributions, (2) 2.5% for 2% of Compensation deferred as 401(k)
Contributions, (3) 3% for 3% of Compensation deferred as
-15-
18
401(k) Contributions, (4) 3.5% for 4% of Compensation deferred as 401(k)
Contributions, or (5) 4% for 5% of Compensation deferred as 401(k)
Contributions. No Matching Contribution shall be made with respect to any
Additional 401(k) Contributions or for amounts contributed as 401(k)
Contributions by a Participant during any Plan Year in an amount that exceeds 5%
of such Participant's Compensation.
(2) Matching Contributions made under Section 4(c)(1) shall be
treated as automatically satisfying the nondiscrimination requirements of
Section 401(m)(2) of the Code in accordance with Section 40l(k)(12)(B)(iii) of
the Code. For this purpose, the Committee shall provide each Employee who has
satisfied the requirements of Section 3(a) with a written notice in the manner
described in Section 4(b)(4).
(3) Matching Contributions shall be subject to the
nondiscrimination testing requirements described in this Section 4(c)(3) if the
rate of Matching Contributions is changed for any Plan Year to be a rate that
does not satisfy Section 40l(m)(11) of the Code. For this purpose, Matching
Contributions for Highly Compensated Employees shall be limited to the extent
necessary to satisfy one of the contribution percentage requirements described
in Section 401(m)(2) of the Code and Section 1.40l(m)-1(b) of the regulations
thereunder. Such contribution percentage requirements shall be satisfied based
upon the "current Plan Year testing method," as described in Internal Revenue
Service Notice 98-1.
The Committee may take any of the following corrective actions to
satisfy one of the contribution percentage tests:
-16-
19
(i) Prospectively limit the amount of Matching
Contributions for some or all Highly Compensated Employees for such
Plan Year; or
(ii) Forfeit all or a portion of the Matching
Contributions made on behalf of a Highly Compensated Employee
attributable to 401(k) Contributions that are distributed under Section
4(b)(5)(ii) above.
(iii) Distribute all or a portion of the Matching
Contributions made on behalf of a Highly Compensated Employee (together
with any income attributable thereto) to him which are determined to be
"excess aggregate contributions" within the meaning of Section
1.401(m)-1(f)(8) of the regulations. Such "excess aggregate
contributions" are determined by reducing Matching Contributions made
on behalf of Highly Compensated Employees in order of the actual
contribution percentages beginning with the highest of such
percentages. The actual contribution percentage of the Highly
Compensated Employee with the highest such percentage shall be reduced
until it equals that of the Highly Compensated Employee with the next
highest percentage. This process shall be repeated until one of the
tests described in Section 401(m)(2) of the Code and Section
l.401(m)-l(b) of the regulations is passed. The amount of excess
aggregate contributions to be distributed to Highly Compensated
Employees under this Section 4(c)(3)(iii) shall be deemed attributable
first to those Highly Compensated Employees who have the greatest
dollar amount of Matching Contributions.
-17-
20
To the extent practicable, the Committee shall take such corrective action by
March 15th of the following Plan Year; but in no event shall such action be
taken later than the Allocation Date of the following Plan Year.
(d) Additional Provisions - Employer Contributions shall not be made
for any Plan Year in amounts which can be allocated to no Participant's Accounts
by reason of the allocation limitation described in Section 7 or in amounts
which are not deductible under Section 404(a) of the Code. Any Employer
Contributions which are not deductible under Section 404(a) of the Code may be
returned to the Employer by the Trustee (upon the direction of the Company)
within one year after the deduction is disallowed or after it is determined that
the deduction is not available. In the event that Employer Contributions are
paid to the Trust by reason of a mistake of fact, such Employer Contributions
may be returned to the Employer by the Trustee (upon the direction of the
Company) within one year after the payment to the Trust. The Employer shall pay
any amounts attributable to 401(k) Contributions which are not deductible under
Section 404(a) of the Code to the affected Participants as Compensation. In the
event that 401(k) Contributions are paid to the Trust by reason of a mistake of
fact, such 401(k) Contributions shall be returned to the Employer by the Trustee
(upon the direction of the Company) within one year after the payment to the
Trust. The Employer shall pay any amounts attributable to 401(k) Contributions
which are paid to the Trust by reason of a mistake of fact to the affected
Participants as Compensation.
(e) Rollover Contributions - Subject to such terms and conditions as
may be established from time to time by the Committee, an Employee who is in the
class of Employees that is eligible to participate in the Plan in accordance
with Section 3(a) may make a Rollover
-18-
21
Contribution to the Trust by delivering such contribution in cash to the
Trustee, together with a written certification, satisfactory to the Committee,
that the contribution qualifies as a Rollover Contribution under Section
402(c)(4) of the Code. Such Employee's Rollover Contributions shall be allocated
to his Rollover Account.
(f) Participant Contributions - Except as provided in Sections 4(b) and
4(e), no Participant shall be required or permitted to make contributions to the
Trust.
Section 5. Investment of Trust Assets.
(a) Each Participant shall direct the investment of his Accounts among
such investment funds as the Committee shall from time to time cause to be made
available, including the Stock Fund.
The Stock Fund shall be made available only if the offering of such
fund complies with the registration and/or qualification requirements of
applicable Federal or state securities laws. The Stock Fund shall be invested in
shares of Stock purchased by the Trustee from time to time in accordance with
the provisions of the Trust Agreement. All dividends (whether cash or stock)
with respect to the Stock in the Stock Fund shall be reinvested in the fund.
(b) Investment elections by Participants shall be made in such
increments and at such times as the Committee shall permit, in accordance with
administrative rules and procedures established from time to time by the
Committee, and shall be subject to such reasonable guidelines and limitations as
the Committee shall deem to be appropriate for the efficient administration of
the Plan. Each Participant shall bear the sole responsibility for the investment
of such Accounts, and the Committee shall not have any responsibility or
liability for any losses
-19-
22
that may occur in connection with such investment. No Participant who is subject
to the provisions of Section 16 of the Securities Exchange Act of 1934 may
invest in the Stock Fund. In addition, no portion of a Participant's ESOP
Diversification Account may be invested in the Stock Fund.
(c) Each Participant (or Beneficiary) shall be entitled to direct the
Trustee as to the manner in which shares of Stock then allocated to his Accounts
will be voted. Each Participant (or Beneficiary) who is entitled to direct the
Trustee as to the manner in which shares of Stock will be voted shall be
provided with the proxy statement and other materials provided to Company
shareholders in connection with each shareholder meeting, together with a form
or forms upon which the Participant (or Beneficiary) shall have the right to
give confidential voting instructions to the Trustee. A Participant (or
Beneficiary) who does not give instructions to the Trustee shall be treated as
having authorized the Committee to direct the Trustee as to the voting of his
shares of Stock.
In the event that there should be a tender or exchange offer for Stock,
each Participant (or Beneficiary) will be entitled to direct the Trustee as to
the manner in which to respond to such offer with respect to shares of Stock
then allocated to his Accounts. Each Participant (or Beneficiary) who is
entitled to direct the Trustee as to the manner in which the Trustee will
respond to any such offer shall be provided with the tender offer materials and
the Participant (or Beneficiary) shall have the right to provide confidential
instructions to the Trustee as to the manner in which to respond to such offer
with respect to the shares of Stock then allocated to his Accounts. A
Participant (or Beneficiary) who does not give instructions to the Trustee shall
be treated as having directed the Trustee not to tender.
-20-
23
Each Participant (or Beneficiary) shall be a named fiduciary of the
Plan for the purpose of providing directions as to the voting or tendering of
the shares of Stock allocated to his Accounts.
Section 6. Allocations to Participants' Accounts.
Profit Sharing Account - A Profit Sharing Account shall be maintained
to reflect the interest of each Participant who is eligible to receive Profit
Sharing Contributions or who had a prior profit sharing account under the Plan.
The Profit Sharing Account maintained for a Participant shall be credited
annually with his share of any Profit Sharing Contributions and 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 a Participant's
Profit Sharing Account may be maintained to reflect the portion of the Profit
Sharing Account that is invested in each investment fund.
401(k) Account - A 401(k) Account shall be maintained to reflect the
interest of each Participant under the Plan who makes 401(k) Contributions. The
401(k) Account maintained for a Participant shall be credited throughout each
Plan Year with his 401(k) Contributions and with its share of the net income (or
loss) of the Trust. Subaccounts of a Participant's 401(k) Account may be
maintained to reflect Additional 401(k) Contributions and the portion of the
401(k) Account that is invested in each investment fund.
Matching Account - A Matching Account shall be maintained to reflect
the interest of each Participant who is eligible to receive Matching
Contributions. The Matching Account maintained for a Participant shall be
credited throughout each Plan Year with his share of any
-21-
24
Matching Contributions. The Matching Account maintained for a Participant shall
be credited throughout each Plan Year with its share of the net income (or loss)
of the Trust. Subaccounts of a Participant's Matching Account may be maintained
to reflect the portion of the Matching Account that is invested in each
investment fund.
Rollover Account - A Rollover Account shall be maintained to reflect
the interest of each Employee who makes Rollover Contributions. The Rollover
Account maintained for an Employee shall be credited throughout each Plan Year
with the Employee's Rollover Contributions and with its share of the net income
(or loss) of the Trust. Subaccounts of a Participant's Rollover Account may be
maintained to reflect the portion of the Rollover Account that is invested in
each investment fund.
ESOP Diversification Account - An ESOP Diversification Account shall be
maintained to reflect the interest of each Participant who elects have a portion
of his "stock account" under the ESOP transferred to the Plan in order to
satisfy the diversification election requirements of Section 401(a)(28)(B) of
the Code. The ESOP Diversification Account maintained for a Participant shall be
credited annually with any amounts that are so transferred on behalf of a
Participant. The ESOP Diversification Account shall be credited throughout each
Plan Year with its share of the net income (or loss) of the Trust. Subaccounts
of a Participant's ESOP Diversification Account may be maintained to reflect the
portion of the ESOP Diversification Account that is invested in each investment
fund. No portion of a Participant's ESOP Diversification Account may be invested
in the Stock Fund.
-22-
25
The allocations to Participants' Accounts for each Plan Year shall be
made as follows:
(a) Profit Sharing Contributions and Forfeitures - Profit Sharing
Contributions under Section 4(a) and Forfeitures under Section 10(b) for each
Plan Year shall be allocated as of the Allocation Date among the Profit Sharing
Accounts of Participants so entitled under Section 3(b) in the ratio that the
Compensation of each such Participant bears to the total Compensation of all
such Participants, subject to the allocation limitations described in Section 7.
(b) 401(k) Contributions - 401(k) Contributions under Section 4(b) for
each Plan Year shall be allocated to the 401(k) Accounts of the Participants on
whose behalf they were made, subject to the allocation limitations described in
Section 7.
(c) Matching Contributions - Matching Contributions under Section 4(c)
for each Plan Year shall be allocated to the Matching Accounts of the
Participants on whose behalf they were made, subject to the allocation
limitations described in Section 7.
(d) Rollover Contributions and ESOP Diversification Transfers -
Rollover Contributions and transfers from the ESOP (pursuant to the ESOP's
diversification election provisions) for each Plan Year shall be allocated to
the Rollover Accounts and ESOP Diversification Accounts, respectively, of those
Employees or Participants who made them.
(e) Net Income (or Loss) of the Trust - The net income (or loss) of the
Trust for each Plan Year attributable to Participants' 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.
-23-
26
(f) Accounting for Allocations - The Committee shall establish
accounting procedures for the purpose of making the allocations to Participants'
Accounts provided for in this Section 6. From time to time, the Committee may
modify the accounting procedures for the purposes of achieving equitable and
nondiscriminatory allocations among the Accounts of Participants in accordance
with the general concepts of the Plan, the provisions of this Section 6 and the
requirements of the Code and ERISA.
Section 7. Allocation Limitation.
The Annual Additions for each Plan Year with respect to any Participant
may not exceed the lesser of:
(1) 25% of the Participant's Statutory Compensation; or
(2) $30,000, as may be adjusted for increases in the cost
of living pursuant to Section 415(d)(1)(C) of the
Code.
For this purpose, "Annual Additions" shall be the total of the Employer
Contributions and Forfeitures (including any income attributable to Forfeitures)
allocated to the Accounts of a Participant for the Plan Year, plus the
allocations of employer contributions and forfeitures made on his behalf under
the ESOP. Annual Additions shall include 401(k) Contributions distributed to a
Participant pursuant to Sections 4(b)(5)(ii) or 4(b)(6), but shall exclude any
amounts paid to a Participant pursuant to the next paragraph of this Section 7.
If the aggregate amount that would be allocated to the accounts of a
Participant under this Plan and the ESOP in the absence of this limitation would
exceed the amount set forth in this
-24-
27
limitation, then, to the extent necessary, the Participant's Annual Additions
for the Plan Year shall be reduced and reallocated to the Accounts of
Participants not affected by this limitation for the Plan Year in the following
order: (1) any Profit Sharing Contributions made on the Participant's behalf for
the Plan Year shall be reduced, (2) any Additional 401(k) Contributions made on
the Participant's behalf for the Plan Year shall be returned to the Participant
as Compensation (together with any income attributable thereto), (3) any 401(k)
Contributions made on the Participant's behalf for the Plan Year shall be
returned to the Participant as Compensation (together with any income
attributable thereto), (4) any Matching Contributions made on the Participant's
behalf for the Plan Year shall be reduced and (5) any employer contributions
under the ESOP made on the Participant's behalf for the Plan Year shall be
reduced.
If, after such reductions, there are any Forfeitures which can be
allocated to no Participant's Accounts by reason of this limitation, such
Forfeitures shall be credited to a "Forfeiture Suspense Account" and allocated
as Forfeitures under Section 6(a) for the next succeeding Plan Year (prior to
the allocation of Employer Contributions for such succeeding Plan Year).
Section 8. Frozen Gibbons Accounts.
(a) Allocations to Gibbons Employee's Frozen Gibbons Accounts.
Frozen Elective Deferral Account - A Frozen Elective Deferral Account
shall be maintained to reflect the interest of each Gibbons Employee in his
"elective deferral account" under the Gibbons Plan that was transferred to this
Plan on May 1, 1998. The Frozen Elective
-25-
28
Deferral Account maintained for a Participant shall be credited throughout each
Plan Year with its share of the net income (or loss) of the Trust. Subaccounts
of a Participant's Frozen Elective Deferral Account may be maintained to reflect
the portion of the Frozen Elective Deferral Account that is invested in each
investment fund.
Frozen General Account - A Frozen General Account shall be maintained
to reflect the interest of each Gibbons Employee in his "rollover account,"
"employer profit-sharing contribution account" and "employer matching
contribution account" that was transferred to the Plan on May 1, 1998. The
Frozen General Account maintained for a Gibbons Employee shall be credited
throughout each Plan Year with its share of the net income (or loss) of the
Trust. Subaccounts of a Gibbons Employee's Frozen General Account may be
maintained to reflect the portion of the Frozen General Account that is invested
in each investment fund.
(b) Distributions From Frozen Accounts. All distributions from a
Gibbons Employee's Frozen Elective Deferral Account and Frozen General Account
(collectively referred to as "Frozen Accounts") shall be subject to the
provisions of Section 12, except as otherwise provided in this Section 8(b). For
purposes of Section 12(c), distribution to a Gibbons Employee from his Frozen
Accounts shall commence no later than the date provided in the first sentence in
Section 12(c), unless a Gibbons Employee elects to maintain his Frozen Accounts
in the Plan until they are required to be distributed under the second and third
sentences of Section 12(c). For this purpose, failure to submit a claim for a
distribution shall be deemed such an election. A Gibbons Employee may elect to
receive his Frozen Accounts in one or a combination of the following forms:
-26-
29
(i) A single lump sum cash payment.
(ii) Substantially equal monthly, quarterly or
annual cash installments over a period not
exceeding the life expectancy of the Gibbons
Employee and the Gibbons Employee's spouse.
The minimum installment amount, regardless
of the periodic method chosen, must be at
least $100.00.
If a Gibbons Employee fails to elect to a form of payment, payment shall be made
as a single lump sum cash payment.
(c) In-Service Distributions -
(1) Frozen Elective Deferral Account. Each Gibbons Employee
may request a withdrawal of all or a portion of his Frozen Elective Deferral
Account at any time after he attains age 59 1/2 in accordance with such rules as
may be prescribed by the Committee. A Gibbons Employee is entitled to make only
one such withdrawal from his Frozen Elective Deferral Account in any Plan Year.
Such withdrawals shall be distributed in the manner described in Section 8(b).
(2) Frozen General Account. Each Gibbons Employee may request
a withdrawal of all or a portion of his Frozen General Account at any time in
accordance with such rules as may be prescribed by the Committee. A Gibbons
Employee is entitled to make only one such withdrawal from his Frozen General
Account in any Plan Year. Such withdrawals shall be distributed in the manner
described in Section 8(b).
-27-
30
Section 9. Disclosure to Participants.
(a) Summary Plan Description - Each Participant shall be furnished with
a summary plan description of the Plan required by Sections 102(a)(l) and
104(b)(1) of ERISA. Such summary plan description shall be updated from time to
time as required under ERISA and Department of Labor regulations thereunder.
(b) Summary Annual Report - Within two months after the due date for
filing the annual return/report (Form 5500) for the Plan with the Internal
Revenue Service, each Participant shall be furnished with the summary annual
report of the Plan required by Section 104(b)(3) of ERISA, in the form
prescribed in regulations of the U.S. Department of Labor.
(c) Quarterly Statement - Each Participant shall be furnished with a
statement reflecting the following information:
(1) The balances (if any) in the Participant's Accounts
as of the beginning of the period.
(2) The amount of each type of Employer Contributions,
Rollover Contributions and ESOP Diversification
transfers allocated to each of the Participant's
Accounts for the period.
(3) The adjustments to the Participant's Accounts to
reflect the Participant's share of the net income (or
loss) of the Trust for that period.
(4) The new balances in the Participant's Accounts as of
the end of the period.
(5) His number of Years of Vesting Service and his vested
percentage in his Account balances (under Sections 10
and 11).
-28-
31
(d) Additional Disclosure - The Company shall make available for
examination by any Participant copies of the Plan, the Trust Agreement and the
latest annual report of the Plan filed (on Form 5500) with the Internal Revenue
Service. Upon written request of any Participant, the Company shall furnish
copies of such documents and may make a reasonable charge to cover the cost of
furnishing such copies, as provided in regulations of the U. S. Department of
Labor.
Section 10. Vesting and Forfeitures.
(a) Vesting -
(1) A Participant's interest in his 401(k) Account, Rollover
Account, Frozen Elective Deferral Account, Frozen General Account and ESOP
Diversification Account shall be 100% vested and nonforfeitable at all times.
Any Participant who is credited with an Hour of Service after December 31, 1998,
shall become 100% vested in his Matching Account.
(2) A Participant's interest in his Profit Sharing Account
shall become 100% vested and nonforfeitable if he (A) is eligible for Retirement
(whether or not he actually terminates Service), (B) terminates Service by
reason of Disability, (C) dies while employed by the Company or an Affiliate or
(D) completes five Years of Vesting Service.
(b) Forfeitures - Any portion of the final balances in a Participant's
Profit Sharing Account which is not vested (and does not become part of his
Capital Accumulation) shall become a Forfeiture as of the Allocation Date of the
Plan Year in which he incurs a five-consecutive-year Break in Service (or in
which he dies, if earlier). All Forfeitures will be reallocated to the Profit
Sharing Account of remaining Participants, as provided in Section 6, as
-29-
32
of the Allocation Date of the Plan Year in which a five-consecutive-year Break
in Service occurs (or in which the Participant dies, if earlier).
Section 11. Years of Vesting Service and Break in Service.
(a) Years of Vesting Service - An Employee's Years of Vesting Service
shall be the number of Plan Years in which he is credited with at least 1000
Hours of Service. Years of Vesting Service shall include such Service with the
Company or any Affiliate.
(b) Break in Service - A one-year Break in Service shall occur in a
Plan Year in which an Employee is not credited with more than 500 Hours of
Service as a result of his termination of Service. A five-consecutive-year Break
in Service shall be five consecutive one-year Breaks in Service.
For purposes of determining whether a Break in Service has occurred, if
an Employee begins a maternity/paternity absence described in Section
41l(a)(6)(E)(i) of the Code or a leave covered under the Family and Medical
Leave Act of 1993, the computation of his Hours of Service shall include the
Hours of Service that would have been credited if he had not been so absent (or
eight Hours of Service for each normal work day of such absence if the actual
Hours of Service cannot be determined). For purposes of this Section 11(b), a
"maternity/paternity absence" means an Employee's absence (A) by reason of (i)
the pregnancy of the Employee, (ii) birth of a child of the Employee or (iii)
placement of a child with the Employee in connection with the adoption of such
child by such Employee, or (B) for purposes of caring for a child described in
clause (A) for a period beginning immediately following such birth or placement.
An Employee shall be credited for such Hours of Service (up to a maximum of 501
Hours of
-30-
33
Service) in the Plan Year in which such absence begins (if such
crediting will prevent him from incurring a Break in Service in such Plan Year)
or in the next following Plan Year.
In addition, if an Employee is eligible for and is granted leave
pursuant to the Company's family care leave plan, a Break in Service shall not
occur if the Employee returns to Service with an Employer, without any
intervening employment with another employer, immediately following the
expiration of such leave and remains employed for a period of 90 days
thereafter. The Employee shall be credited with the Hours of Service that would
have been credited if he had not been so absent (or eight Hours of Service for
each normal work day of such absence if the actual Hours of Service cannot be
determined) up to a maximum of 501 Hours of Service for each Plan Year during
the period of such absence (if such crediting will prevent him from incurring a
Break in Service for any such Plan Year).
(c) Reemployment - If a former Employee is reemployed after a one-year
Break in Service, the following special rules shall apply in determining his
Years of Vesting Service:
(1) New Accounts may be established to reflect his
interest in the Plan attributable to Service after
the Break in Service.
(2) If he is reemployed after the occurrence of a
five-consecutive-year Break in Service, Years of
Vesting Service after the Break in Service will not
increase his vested interest in his Accounts
attributable to Service prior to the Break in
Service.
(3) After he completes one Year of Vesting Service
following reemployment, his Years of Vesting Service
will include his Years of Vesting Service accumulated
prior to the Break in Service.
-31-
34
Section 12. When Capital Accumulation Will Be Distributed.
(a) Except as otherwise provided in Sections 8(b), 8(c), 12(c) and 13,
a Participant's Capital Accumulation shall be distributed following his
termination of Service. If the value of a Participant's Capital Accumulation at
the time distribution would otherwise commence under this Section 12 exceeds
$5,000, no portion of his Capital Accumulation may be distributed to him before
he attains age 65 without his written consent.
(b) Timing of Distributions -
(1) If the value of a Participant's Capital Accumulation is
$5,000 or less, his Capital Accumulation shall be distributed as soon as
practicable after the date his Service terminates, upon the completion and
processing of the applicable distribution forms. A Participant whose Service has
terminated but who does not have any nonforfeitable interest in his Accounts
shall be deemed to have received a distribution of zero dollars ($0).
(2) If the value of a Participant's Capital Accumulation
exceeds $5,000 and the Participant terminates Service (whether or not on account
of Retirement or Disability), the Participant may elect to receive a
distribution of his Capital Accumulation as soon as practicable after the date
his Service terminates, upon the completion and processing of the applicable
distribution forms.
(3) In the event of the Participant's death, his Capital
Accumulation shall be distributed to his Beneficiary as soon as practicable
following his death, upon the completion and processing of the applicable
distribution forms.
(4) For purposes of determining the amount of any
distribution, the value of the Participant's Accounts shall be determined at the
time his distribution forms are processed.
-32-
35
(c) Distribution of a Participant's Capital Accumulation shall commence
not later than 60 days after the Allocation Date coinciding with or next
following the latest of (1) the date of his 65th birthday, (2) the 10th
anniversary of the date he became a Participant or (3) the date he terminates
Service. The distribution of the Capital Accumulation of any Participant who
attains age 70 1/2 in a calendar year and either has (1) terminated Service or
(2) is a "5% owner" (as defined in Section 4l6(i)(l)(B)(i) of the Code) must
occur not later than April 1st of the next calendar year and must be made in
accordance with the regulations under Section 401(a)(9) of the Code, including
Section 1.401(a)(9)-2. Distributions shall be offered to any other Participant
who attains age 70 1/2 before January 1, 1999, to the extent required under
Sections 401(a)(9) and 411(d)(6) of the Code and the regulations issued
thereunder. If the amount of a Participant's Capital Accumulation cannot be
determined (by the Committee) by the date on which a distribution is to occur,
or if the Participant cannot be located, distribution of his Capital
Accumulation shall occur within 60 days after the date on which his Capital
Accumulation can be determined or after the date on which the Committee locates
the Participant.
(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
Accounts (other than the nonvested portion of his Profit Sharing Account) in
accordance with Section 5. However, except as otherwise provided in Section
3(b), his Profit Sharing Account 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 Profit
Sharing Account, the Participant shall continue to direct the Trustee as to the
investment of such Account until the date such Participant becomes
-33-
36
eligible to receive a Plan distribution in accordance with Sections 12(b)(1) or
(2). After such date, the Committee shall direct the Trustee as to the
investment of such Account.
(e) Notwithstanding any other provision of this Plan, all or a portion
of a Participant's Capital Accumulation may be distributed at any time to the
Participant's former spouse or other alternate payee, even prior to the
Participant's "earliest retirement age" (as defined in Section 414(p) of the
Code), if such distribution is made pursuant to and in accordance with the terms
of a "qualified domestic relations order" ("QDRO"), (including QDROs which were
received prior to January 1, 1999). Such distribution will occur in a single
lump sum in cash as soon as practicable following the date that the Committee
determines that the order constitutes a QDRO. If the value of a Participant's
Capital Accumulation exceeds $5,000 (at the time a distribution to the
Participant's former spouse or other alternate payee would otherwise be
available under this Section 12(e)), no portion of such Capital Accumulation may
be distributed to his former spouse or other alternate payee, without the
written consent of such former spouse or other alternate payee.
Section 13. Hardship Withdrawals.
(a) A Participant who is an Employee shall be entitled to request a
hardship withdrawal of a portion of his Capital Accumulation attributable to his
Profit Sharing Account, 401(k) Account, Matching Account, Rollover Account and
ESOP Diversification Account (less the amount of any income attributable to his
401(k) Contributions and Matching Account), with the value available for
withdrawal determined at the time his hardship request is processed. Any
withdrawal attributable to the Participant's 401(k) Contributions and Matching
Contributions
-34-
37
(less the amount of any income attributable to his 401(k) Contributions and
Matching Account) shall be available only if necessary in light of immediate and
heavy financial needs of the Participant, as determined by the Committee in
accordance with nondiscriminatory standards and pursuant to Section
1.401(k)-1(d)(2) of the regulations under the Code. A hardship withdrawal shall
be available only to be used for the following:
(1) costs related directly to the purchase of a principal
residence for the Participant (excluding mortgage
payments);
(2) reimbursement of tuition and related educational
fees, including room and board and the costs of
textbooks, for post-secondary education of the
Participant, his spouse, his children or his
dependents (as defined in Section 152 of the Code);
provided that, a withdrawal of a Participant's 401(k)
Contributions and Matching Contributions shall not be
permitted for the costs of textbooks and shall be
limited to tuition, fees, and room and board for the
12 month-period following the withdrawal; or
(3) payments necessary to prevent the eviction of the
Participant from his principal residence or
foreclosure on the mortgage on that residence.
(b) A withdrawal of less than $1,000 shall not be permitted, and no
more than two withdrawals shall be permitted in each Plan Year. The
determination of the amount of funds needed by the Participant may include any
amounts necessary to pay any Federal, state or local income taxes or penalties
reasonably anticipated to result from the withdrawal. The maximum aggregate
amount that may be withdrawn under this Section 13 shall be the lesser of 40% of
(1) the Participant's vested Profit Sharing Account, Matching Account, ESOP
Diversification Account and Rollover Account plus the Participant's 401(k)
Contributions, determined at the time the hardship request is processed, or (2)
$200,000 (reduced by any amount withdrawn as a
-35-
38
hardship withdrawal from the ESOP), and the Committee may establish such rules
as it deems appropriate in order to compute the amount that may be withdrawn by
a Participant.
(c) Prior to allowing a withdrawal of the Participant's 401(k)
Contributions and Matching Contributions (less the amount of any income
attributable to his 401(k) Contributions and Matching Account), the Committee
shall make the following findings:
(1) The distribution requested by the Participant is not
in excess of the amount of the immediate and heavy
financial need of the Participant.
(2) The Participant has obtained all distributions
(including hardship distributions under the ESOP and
from the Participant's other Accounts under the Plan)
and all nontaxable loans under all qualified plans of
the Company.
(3) The Participant has agreed that no 401(k)
Contributions will be made on his behalf under
Section 4(b) (or under any other qualified or
nonqualified plan of deferred compensation maintained
by an Employer) during the 12-month period commencing
upon his receipt of a hardship withdrawal.
(4) 401(k) Contributions to be made on behalf of the
Participant for the Plan Year immediately following
the Plan Year of the hardship withdrawal shall not
exceed the applicable limit under Section 402(g) of
the Code for such succeeding Plan Year, less the
amount of the Participant's 401(k) Contributions for
the Plan Year of the hardship withdrawal.
(d) A hardship withdrawal shall be disbursed first from the
Participant's Profit Sharing Account, Matching Account, Rollover Account and
ESOP Diversification Account and then from the Participant's 401(k) Account. The
amount withdrawn shall be taken prorata from the investment funds in which the
Account is invested at the time of the withdrawal.
-36-
39
Section 14. How Capital Accumulation Will Be Distributed.
(a) All distributions shall be made in a single lump sum in cash,
except as provided in Section 8(b).
(b) Distribution of a Participant's Capital Accumulation will be made
to the Participant if he is living, and if not, to his Beneficiary. In the event
of a Participant's death, the Participant's Beneficiary shall be the
Participant's surviving spouse, or if none, his estate. A Participant (with the
written consent of his spouse, if any, acknowledging the effect of the consent
and witnessed by a notary public or Plan representative) may designate a
different Beneficiary (and contingent Beneficiaries) from time to time by filing
a written designation with the Committee. A deceased Participant's entire
Capital Accumulation shall be distributed to his Beneficiary on or before the
December 31st of the calendar year that includes the fifth anniversary of his
death, except to the extent that distribution has previously commenced in
accordance with Section 8(b), as applicable.
(c) The Company shall furnish the recipient of a distribution with the
tax consequences explanation required by Section 402(f) of the Code and shall
comply with the withholding requirements of Section 3405 of the Code and of any
applicable state law with respect to distributions from the Trust. If the
Committee so elects for a Plan Year, distributions to Participants may commence
less than 30 days after the notice required under Section 1.411(a)-11(c) of the
regulations under the Code is given; provided, however, that no such
distribution to a Participant shall be made unless (1) the Participant is
informed that he has the right for a period of at least 30 days after receiving
the notice to consider whether or not to
-37-
40
consent to a distribution (or a particular distribution option), and (2) the
Participant affirmatively elects to receive a distribution after receiving the
notice.
(d) If a distribution of a Participant's Capital Accumulation is not
the minimum amount required to be distributed pursuant to the second and third
sentences of Section 12(c), the Committee shall notify the Participant (or any
spouse or former spouse who is his alternate payee under a "qualified domestic
relations order" (as defined in Section 414(p) of the Code)) of his right to
elect to have the "eligible rollover distribution" paid directly to an "eligible
retirement plan" (within the meaning of Section 401(a)(31) of the Code) that is
an individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, a
qualified trust described in Section 401(a) of the Code or a qualified annuity
plan described in Section 403(a) of the Code that accepts "eligible rollover
distributions." If such an "eligible rollover distribution" is to be made to the
Participant's surviving spouse, the Committee shall notify the surviving spouse
of his right to elect to have the distribution paid directly to an "eligible
retirement plan" that is either an individual retirement account described in
Section 408(a) of the Code or an individual retirement annuity described in
Section 408(b) of the Code. Any election under this Section 14(d) shall be made
and effected in accordance with such rules and procedures as may be established
from time to time by the Committee in order to comply with Section 401(a)(31) of
the Code.
-38-
41
Section 15. No Assignment of Benefits.
A Participant's interest in the Plan may not be anticipated, assigned
(either at law or in equity), alienated or subject to attachment, garnishment,
levy, execution or other legal or equitable process, except in accordance with a
"qualified domestic relations order" (as defined in Section 414(p) of the Code).
Section 16. Administration.
(a) Administrative Committee - The Plan will be administered by an
Administrative Committee composed of not fewer than three individuals appointed
by the Board of Directors to serve at its pleasure and without compensation. The
members of the Committee shall be the named fiduciaries with authority to
control and manage the operation and administration of the Plan. Members of the
Committee need not be Employees or Participants. Any Committee member may resign
by giving notice, in writing, to the Board of Directors.
(b) Committee Action - Committee action will be by vote of a majority
of the members at a meeting or in writing by all the members without a meeting.
A Committee member who is a Participant shall not vote on any question relating
specifically to himself.
The Committee shall choose from its members a Chairman and a Secretary.
The Chairman or the Secretary of the Committee shall be authorized to execute
any certificate or other written direction on behalf of the Committee. The
Secretary shall keep a record of the Committee's proceedings and of all dates,
records and documents pertaining to the administration of the Plan.
-39-
42
(c) Powers and Duties of the Committee - The Committee shall have all
powers necessary to enable it to administer the Plan and the Trust Agreement in
accordance with their provisions, including without limitation the following:
(1) resolving all questions relating to the eligibility
of Employees to become
Participants;
(2) determining the appropriate allocations to
Participants' Accounts pursuant to Section 6;
(3) determining the amount of benefits payable to a
Participant (or Beneficiary), and the time and manner
in which such benefits are to be paid;
(4) selecting the investment funds to be offered to
Participants for investment of their Accounts;
(5) authorizing and directing all disbursements of Trust
Assets by the Trustee;
(6) establishing procedures in accordance with Section
414(p) of the Code to determine the qualified status
of domestic relations orders and to administer
distributions under such qualified orders;
(7) engaging any administrative, legal, accounting,
clerical or other services that it may deem
appropriate;
(8) construing and interpreting the Plan and the Trust
Agreement and adopting rules for administration of
the Plan that are consistent with the terms of the
Plan documents and of ERISA and the Code;
(9) compiling and maintaining all records it determines
to be necessary, appropriate or convenient in
connection with the administration of the Plan;
(10) reviewing the performance of the Trustee with respect
to the Trustee's administrative duties,
responsibilities and obligations under the Plan and
Trust Agreement; and
-40-
43
(11) executing agreements and other documents on behalf of
the Plan and Trust.
The Committee shall perform its duties under the Plan and the Trust
Agreement solely in the interests of the Participants (and their Beneficiaries).
Any discretion granted to the Committee under any of the provisions of the Plan
or the Trust Agreement shall be exercised only in accordance with rules and
policies established by the Committee which shall be applicable on a
nondiscriminatory basis. The Committee shall have the full and exclusive
discretion to interpret and administer the Plan. All actions, interpretations
and decisions of the Committee are conclusive and binding on all persons, and
shall be given the maximum possible deference allowed by law.
(d) Expenses - All reasonable expenses of administering the Plan and
Trust may be charged to and paid out of the Trust Assets. 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
Accounts.
The Company may, however, pay all or any portion of such expenses of
the Plan and Trust directly, and payment of expenses by the Company shall not be
deemed to be Employer Contributions.
(e) Information to be Submitted to the Committee - To enable the
Committee to perform its functions, the Company shall supply full and timely
information to the Committee on all matters as the Committee may require, and
shall maintain such other records as the Committee may determine are necessary
or appropriate in order to determine the benefits due or which may become due to
Participants (or Beneficiaries) under the Plan.
-41-
44
(f) Delegation of Fiduciary Responsibility - The Committee from time to
time may allocate to one or more of its members and/or may delegate to any other
persons or organizations any of its rights, powers, duties and responsibilities
with respect to the operation and administration of the Plan that are permitted
to be so delegated under ERISA. Any such allocation or delegation shall be made
in writing, shall be reviewed periodically by the Committee and shall be
terminable upon such notice as the Committee in its discretion deems reasonable
and proper under the circumstances.
(g) Bonding, Insurance and Indemnity - To the extent required under
Section 412 of ERISA, the Company shall secure fidelity bonding for the
fiduciaries of the Plan.
The Company (in its discretion) or the Trustee (as directed by the
Committee) may obtain a policy or policies of insurance for the Committee (and
other fiduciaries of the Plan) to cover liability or loss occurring by reason of
the act or omission of a fiduciary. If such insurance is purchased with Trust
Assets, the policy must permit recourse by the insurer against the fiduciary in
the case of a breach of a fiduciary obligation by such fiduciary. The Company
hereby agrees, to the maximum extent permitted by law, to indemnify and hold
harmless the Committee and each of its designees under Section 16(f), who is an
officer, director or employee of any Employer, against any and all claims, loss,
damages, liability, expenses, including legal fees, costs, judgments, fines,
settlements and other amounts actually and reasonably incurred, including in
connection with any proceeding, arising by reason of the fact that such person
is or was acting in such capacity.
(h) Notices, Statements and Reports - The Company shall be the "Plan
Administrator" (as defined in Section 3(16)(A) of ERISA and Section 414(g) of
the Code) for
-42-
45
purposes of the reporting and disclosure requirements of ERISA and
the Code. The Committee shall assist the Company, as requested, in complying
with such reporting and disclosure requirements. The Company shall be the
designated agent of the Plan for the service of legal process.
Section 17. Claims Procedure.
A Participant (or Beneficiary) who does not receive a distribution of
benefits to which he believes he is entitled may present a claim to the
Committee. The claim for benefits must be in writing and addressed to the
Committee or to the Company. If the claim for benefits is denied, the Committee
shall notify the Participant (or Beneficiary) in writing within 90 days after
the Committee initially received the benefit claim. If there are special
circumstances which require an extension of time for processing the claim for
benefits, the Committee's decision shall be rendered not later than 180 days
after receipt of a claim. Any notice of a denial of benefits shall advise the
Participant (or Beneficiary) of the basis for the denial, any additional
material or information necessary for the Participant (or Beneficiary) to
perfect his claim and the steps which the Participant (or Beneficiary) must take
to have his claim for benefits reviewed.
Each Participant (or Beneficiary) whose claim for benefits has been
denied may file a written request for a review of his claim by the Committee.
The request for review must be filed by the Participant (or Beneficiary) within
60 days after he receives the written notice denying his claim. The decision of
the Committee will be made within 60 days after receipt of a request for review
and shall be communicated in writing to the claimant. Such written notice shall
set forth the basis for the Committee's decision. If there are special
circumstances (such as the need to
-43-
46
hold a hearing) which require an extension of time for completing the review,
the Committee's decision shall be rendered not later than 120 days after receipt
of a request for review. All decisions and interpretations of the Committee
under this Section 17 shall be conclusive and binding upon all persons with an
interest in the Plan and shall be given the greatest deference permitted by law.
Section 18. Limitation on Participants' Rights.
A Participant's Capital Accumulation will be based solely upon his
vested interest in his Accounts and will be paid only from the Trust Assets. An
Employer, the Committee or the Trustee shall not have any duty or liability to
furnish the Trust with any funds, securities or other assets, except as
expressly provided in the Plan.
The adoption and maintenance of the Plan shall not be deemed to
constitute a contract of employment or otherwise between an Employer and any
Employee, or to be a consideration for, or an inducement or condition of, any
employment. Nothing contained in this Plan shall be deemed to give an Employee
the right to be retained in the Service of an Employer or to interfere with the
right of an Employer to discharge, with or without cause, any Employee at any
time.
-44-
47
Section 19. Future of the Plan.
The Company reserves the right to amend or terminate the Plan (in whole
or in part) and the Trust Agreement at any time, by action of the Board of
Directors. Neither amendment nor termination of the Plan shall retroactively
reduce the vested rights of Participants or permit any part of the Trust Assets
to be diverted to or used for any purpose other than for the exclusive benefit
of the Participants (and their Beneficiaries).
The Company specifically reserves the right to amend the Plan and the
Trust Agreement retroactively in order to satisfy any applicable requirements of
the Code and ERISA.
If the Plan is terminated (or partially terminated), participation of
Participants affected by the termination will end. If Employer Contributions are
not replaced by contributions to a comparable plan which satisfies the
requirements of Section 401(a) of the Code, the Accounts of only those
Participants who are Employees on the effective date of termination will become
nonforfeitable as of that date. A complete discontinuance of Employer
Contributions shall be deemed to be a termination of the Plan for this purpose.
The Capital Accumulation of those Participants whose Service terminated prior to
the effective date of Plan termination shall continue to be determined pursuant
to Section 10; and, to the extent that such Participants are not vested, the
nonvested balances in their Accounts will become Forfeitures to be reallocated
as of the effective date of Plan termination (even if they have not incurred a
five-consecutive-year Break in Service).
After termination of the Plan, the Trust will be maintained until the
Capital Accumulations of all Participants have been distributed. Capital
Accumulations shall be distributed as soon as practicable following termination
of the Plan.
-45-
48
In the event of the merger or consolidation of this Plan with another
plan, or the transfer of Trust assets (or liabilities) to another plan, the
Account balances of each Participant immediately after such merger,
consolidation or transfer must be at least as great as immediately before such
merger, consolidation or transfer (as if the Plan had then terminated).
Section 20. "Top-Heavy" Contingency Provisions.
(a) The provisions of this Section 20 are included in the Plan pursuant
to Section 40l(a)(10)(B)(ii) of the Code and shall become applicable only if the
Plan becomes a "top-heavy plan" under Section 416(g) of the Code for any Plan
Year.
(b) The determination as to whether the Plan becomes "top-heavy" for
any Plan Year shall be made as of the Allocation Date of the immediately
preceding Plan Year by considering the Plan together with the ESOP and any other
tax-qualified plan maintained by an Employer in which a "key employee"
participates. The Plan and the ESOP (and any other plan required to be
aggregated with the Plan) shall be "top-heavy" only if the total of the account
balances under the Plan and the ESOP and such other plan for "key employees" as
of the determination date exceeds 60% of the total of the account balances for
all Participants. For such purpose, account balances shall be computed and
adjusted pursuant to Section 4l6(g) of the Code. "Key employees" shall be
certain Participants (who are officers or shareholders of the Company) and
Beneficiaries described in Section 416(i)(1) or (5) of the Code.
(c) For any Plan Year in which the Plan is "top-heavy," each
Participant who is an Employee on the Allocation Date (and who is not a "key
employee") shall receive a minimum allocation of Employer Contributions and
Forfeitures which is equal to the lesser of:
-46-
49
(1) 3% of his Statutory Compensation; or
(2) the same percentage of his Statutory Compensation as
the allocation to the "key employee" for whom the
percentage is the highest for that Plan Year. 401(k)
Contributions made by key employees during a Plan
Year shall be included in determining the "key
employee" with the highest percentage for such Plan
Year.
For this purpose, Statutory Compensation of each Employee shall not take into
account any amount in excess of $160,000 (as adjusted periodically after 1998
for increases in the cost of living).
(d) As of the first day of any Plan Year in which the Plan has become
"top-heavy," the vesting provision in Section 10(a)(2) shall be amended (with
respect to any Employee who is credited with at least one Hour of Service after
the Plan has become "top-heavy") to provide for vesting upon completion of at
least three Years of Vesting Service.
If the Plan ceases to be "top-heavy," the Capital Accumulation of a
Participant who, at that time, has less than three years of Service shall
thereafter be determined under the vesting provision in Section 10(a)(2),
instead of under this Section 20(d), except that his nonforfeitable percentage
shall not be reduced below the nonforfeitable percentage that he had at the time
the Plan ceased to be "top-heavy." If the Plan ceases to be "top-heavy," the
Capital Accumulation of a Participant who, at that time, has three or more years
of Service shall continue to be determined under this Section 20(d).
-47-
50
Section 21. Governing Law.
The provisions of this Plan and the Trust Agreement shall be construed,
administered and enforced in accordance with the laws of the State of
California, to the extent such laws are not superseded by ERISA.
Section 22. Execution.
To record the amendment and restatement of the Plan, the Company has
caused this document to be executed on this _____ day of_____________, 199____.
GRANITE CONSTRUCTION
INCORPORATED
By
----------------------------------
Its
--------------------------------
By
----------------------------------
Its
--------------------------------
-48-