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GRANITE CONSTRUCTION INCORPORATED
KEY MANAGEMENT DEFERRED INCENTIVE COMPENSATION PLAN
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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.
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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
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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
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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
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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:
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David H. Watts
Its: President
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Dated: 6-12-96
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By:
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Michael Futch
Its: Vice President
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Dated: 6-12-96
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