EXHIBIT 10.19
TANISYS TECHNOLOGY, INC. 401(K) PLAN
SUMMARY PLAN DESCRIPTION
SUMMARY PLAN DESCRIPTION
TABLE OF CONTENTS
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PAGE
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I INTRODUCTION 1
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II PLAN DATA
Agent for Service Of Legal Process 1
Effective Date 1
Employer 1
Plan Administrator 1
Plan Year 1
Trustee 1
Type of Administration 1
Type of Plan 1
III DEFINITIONS
Allocation Date(s) 1
Break In Service 2
Compensation 2
Disability 2
Early Retirement 2
Effective Date 2
Elective Deferral 2
Entry Date 2
Family Member 2
Highly Compensated Employee 3
Hour Of Service 3
Maternity/Paternity Leave 3
Normal Retirement Age 3
Spouse 3
Taxable Wage Base 3
Year Of Service 4
IV ELIGIBILITY REQUIREMENTS AND PARTICIPATION 4
V EMPLOYEE CONTRIBUTIONS 4
Elective Deferrals 4
Rollover And Transfer Contributions 5
VI EMPLOYER CONTRIBUTIONS 5
Contribution Formula 5
Eligibility For Allocation 6
VII GOVERNMENT REGULATIONS 7
VIII PARTICIPANT ACCOUNTS 7
IX VESTING 7
Determining Vested Benefit 7
Payment of Vested Benefit 8
Loss Of Benefits 8
Reallocation of Forfeiture 8
Reemployment 9
X TOP-HEAVY RULES 10
XI RETIREMENT BENEFITS AND DISTRIBUTIONS 10
Retirement Benefits 10
Distributions During Employment 11
Hardship Withdrawals 11
Beneficiary 12
Death Benefits 12
Form Of Payment 12
Rollover of Payment 12
Time Of Payment 13
XII INVESTMENTS 13
Alternative Investments/Investment Direction Under A Trust Fund 13
Investment Responsibility 13
Employee Investment Direction 14
Participant Loans 14
XIII ADMINISTRATION 14
Plan Administrator 14
Trustee 15
Recordkeeper 15
XIV AMENDMENT AND TERMINATION 16
XV LEGAL PROVISIONS 16
Rights Of Participants 16
Fiduciary Responsibility 17
Employment Rights 17
Benefit Insurance 17
Claims Procedure 17
Assignment 18
Questions 18
Conflicts With Plan 18
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INTRODUCTION
Your Employer has established a retirement plan to help supplement your
retirement income. Under the program, the Employer makes contributions to
a Trust Fund which will pay you a benefit at retirement. Details about how
the Plan works are contained in this summary. While the summary describes
the principal provisions of the Plan, it does not include every limitation
or detail. If there is a discrepancy between this booklet and the official
Plan document, the Plan document shall govern. You may obtain a copy of
the Plan document from the Plan Administrator. The Plan Administrator may
charge a reasonable fee for providing you with the copy.
II PLAN DATA
A. AGENT FOR SERVICE OF LEGAL PROCESS: The Employer or Trustee.
B. EFFECTIVE DATE: January 1, 1995
C. EMPLOYER: Tanisys Technology, Inc.
Address: 12201 Technology Blvd., #130
Austin, TX 78727
Telephone No.: (512) 258-3570
Tax I.D. No.: 74-2656846
Plan No.: 002
D. PLAN ADMINISTRATOR: The Employer has been designated to serve as Plan
Administrator.
E. PLAN YEAR: The 12-month period beginning on January 1 and ending on
December 31.
F. TRUSTEE: Capital Guardian Trust Company
Address: P.O. Box 2226
Brea, CA 92622-2226
Telephone No.: (714) 671-7000
G. TYPE OF ADMINISTRATION: Trust Fund
H. TYPE OF PLAN: Cash or Deferred [401(k)] Plan
III DEFINITIONS
A. ALLOCATION DATE(S). The date(s) on which a Participant's account is
adjusted to reflect increases and decreases in the value. This Plan
will use monthly Allocation Dates.
B. BREAK IN SERVICE. A Plan Year during which you are not credited with
or are not paid for more than 500 hours. If you go into the military
service of the United States, you are considered terminated as long as
you return to work within the time required by law. If you separate
from employment and incur a Break in Service, all contributions to
your various accounts are suspended. [See special rules relating to
maternity and paternity leave below. Also see Section VI(B) to
determine your eligibility to share in the Employer's Contribution if
you separate from employment, but do not incur a Break in Service.]
If a Break in Service occurs and you return to full time employment
with the Employer, your rights are explained in the section entitled
"Vesting".
C. COMPENSATION. Your total salary, pay, or earned income from the
Employer, as reflected on tax Form W-2, which is subject to
withholding when earned. Compensation will include amounts received
by you during the Plan Year. Compensation shall be limited to
$150,000 as adjusted for inflation.
Compensation shall include amounts deferred under 401(k) plans,
Section 125 cafeteria plans and certain other plans of deferred
compensation. Compensation shall be limited to Compensation earned
while a Participant.
D. DISABILITY. A potentially permanent illness or injury, as certified
to by a physician who is approved by the Employer, which prevents you
from engaging in work for which you are qualified for a period of at
least 12 months.
E. EARLY RETIREMENT. You may retire early upon reaching age 55 and
completion of 0 Years of Service. If you terminate employment after
completing the required number of Years of Service, but before
attaining the required age, you may elect Early Retirement after
attaining the required age.
F. EFFECTIVE DATE. The date on which the Plan starts or an amendment is
effective.
G. ELECTIVE DEFERRAL. Employer contributions made to the Plan at your
election, instead of being given to you in cash as part of your
salary. You can elect to defer a portion of your salary, instead of
receiving it in cash, and your Employer will contribute it to the Plan
on your behalf.
H. ENTRY DATE. The date on which you enter the Plan. Your Entry Date
will be the earlier of the first day of the Plan Year or the first day
of the seventh month of the Plan Year coinciding with or following the
date on which you satisfy the eligibility requirements.
I. FAMILY MEMBER. The Spouse or lineal ascendant or descendant (or
Spouse thereof) of either a more than 5% owner of the Employer or one
of the ten highest compensated Highly Compensated Employees of the
Employer.
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J. HIGHLY COMPENSATED EMPLOYEE. Any Employee who during the current or
prior Plan Year (1) was a more than 5% owner, (2) received more than
$75,000 in Compensation as adjusted for inflation (3) received more
than $50,000 in Compensation as adjusted for inflation and was in the
top 20% of Employees when ranked by Compensation, or (4) was an
officer receiving more than $45,000 in Compensation as adjusted for
inflation. Family Members of any 5% owner, or Highly Compensated
Employee in the group of the ten Employees with the greatest
Compensation, will be combined as if they were one person for purposes
of Compensation and contributions. If you are not currently or never
were Highly Compensated, or a Family Member of a Highly Compensated
Employee, you are a non-Highly Compensated Employee.
K. HOUR OF SERVICE. You will receive credit for each hour you are (1)
paid for being on your job, (2) paid even if you are not at work
(vacation, sickness, leave of absence, or Disability), or (3) paid for
back pay if hours were not already counted. A maximum of 501 hours
will be credited in any year for periods during which you are not at
work but are paid. Hours of Service will be calculated based on
actual hours.
L. MATERNITY/PATERNITY LEAVE. You may be eligible for additional Hours
of Service if you leave employment, even if temporarily, due to
childbirth or adoption. If this is the case, you will be credited
with enough hours (up to 501) of service to prevent a Break in
Service, either in the year you leave employment or the following
year. For example, if you have 750 Hours of Service in the year that
your child is born, you would not get any more hours credited for that
Plan Year since you do not have a Break in Service. Therefore, if you
do not return to employment the following year, you will get 501 Hours
of Service so you will not have a Break in Service in that year.
Alternatively, if you do return the following year, but work only 300
hours, you will receive an additional 201 hours in order to prevent a
break. These Hours of Service for maternity or paternity leave must
all be used in one Plan Year. They are used only to prevent a Break
in Service and not for calculating your Years of Service for
eligibility, vesting or benefits.
M. NORMAL RETIREMENT AGE. The attainment of age 65.
N. SPOUSE. The person to whom you are or were legally married, or your
common law spouse if common law marriage is recognized by the state in
which you live. In order for your Spouse to receive a benefit under
this Plan, he or she may not predecease you. A former spouse may be
treated as a "Spouse" under this definition if recognized as such
under a Qualified Domestic Relations Order as explained at Section
XV(F) of this Summary Plan Description.
O. TAXABLE WAGE BASE. The amount of your Compensation subject to FICA
tax on the first day of each Plan Year.
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P. YEAR OF SERVICE.
ELIGIBILITY
For purposes of determining your eligibility to participate in the
Plan, a Year of Service is a 12-consecutive-month period beginning on
your date of hire during which you are credited with at least 1000
Hours of Service.
CONTRIBUTION
For purposes of determining whether or not you are entitled to have a
contribution allocated to your account, a Year of Service is a
12-consecutive-month period, which is the same as the Plan Year,
during which you are credited with at least 1000 Hours of Service.
VESTING
For purposes of determining the extent to which you are vested in your
account balance, a Year of Service is a 12-consecutive-month period,
which is the same as your employment year, during which you are
credited with 1000 Hours of Service.
IV ELIGIBILITY REQUIREMENTS AND PARTICIPATION
You are eligible to participate in this Plan upon completing 1 Year of
Service and attaining age 21.
Your participation in the Plan will begin on the Entry Date defined at
Section III. If you are employed on the Plan's Effective Date, you do not
have to satisfy the age and Service requirements specified above.
V EMPLOYEE CONTRIBUTIONS
A. ELECTIVE DEFERRALS
You, as an eligible Employee, may authorize the Employer to withhold
from 0% up to 15% of your Compensation, not to exceed $7,000 as
adjusted for inflation, and to deposit such amount in the Plan trust.
If you participate in a similar plan of an unrelated employer and your
Elective Deferrals under this Plan and the other plan exceed the
$7,000 limit, for a given year you must designate one of the Plans as
receiving an excess amount. If you choose this Plan as the one
receiving the excess, you must notify the Plan Administrator by March
1 of the following year so that the excess and any income thereon may
be returned to you by April 15. You may increase, decrease, or
terminate your Elective Deferral percentage on the first day of each
month of the Plan Year.
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If you stop your contributions, you may not start deferring again for
a period of 1 months. The Employer may also reduce or terminate your
withholdings if required to maintain the Plan's qualified status.
B. ROLLOVER AND TRANSFER CONTRIBUTIONS
Rollover and Transfer contributions are permitted. You may make a
Rollover or Transfer Contribution prior to becoming a Participant. An
Employer can refuse to allow Transfer Contributions to its
profit-sharing Plan if the transfer will affect the Plan's ability to
offer lump sum distributions as the normal form of distribution.
A rollover or transfer of your retirement benefits may originate from
another qualified retirement plan or special individual retirement
arrangement (known as a "conduit" IRA) to this Plan. If you have
already received a lump-sum payment from another qualified retirement
plan, or if you received payment from another qualified plan and
placed it in a separate "conduit" IRA, you may be eligible to
redeposit that payment to this Plan. The last day you may make a
Rollover Contribution to this Plan is the 60th day after you receive
the distribution from the other plan or IRA. A transfer occurs when
the trustee of the old plan transfers your assets to this Plan. If
you believe you qualify for a transfer or rollover, see the Plan
Administrator for more details.
VI EMPLOYER CONTRIBUTIONS
A. CONTRIBUTION FORMULA
ELECTIVE DEFERRALS:
The Employer will contribute all Compensation which you elect to defer
to the Plan within the limits outlined in Section V(A).
MATCHING CONTRIBUTIONS:
The Employer may make a Matching Contribution to each Participant
based on his or her Elective Deferrals in a percentage set by the
Employer prior to the end of each Plan Year. The Employer shall not
match your Elective Deferrals that are in excess of 6% of your
Compensation.
The time period which will be used for determining the amount of
Matching Contributions owed shall be annually.
The Employer has the right to designate all or a portion of the
Matching Contributions as "Qualified." To the extent Matching
Contributions are so
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designated, they are nonforfeitable and may not be withdrawn from the
Plan prior to separation from Service or attainment of age 59-1/2.
Employer Matching Contributions will only be made on Elective
Deferrals made to the Plan. Elective Deferrals withdrawn prior to the
end of the Plan Year will not receive Matching Contributions.
QUALIFIED NON-ELECTIVE CONTRIBUTIONS:
The Employer may also contribute an additional amount determined in
its sole judgment. This additional contribution, if any, will be
allocated to only non-Highly Compensated Participants, in proportion
to each eligible Employee's Compensation as a ratio of all eligible
Employees' Compensation. These Contributions will be nonforfeitable
and subject to withdrawal restrictions.
DISCRETIONARY:
The Employer may also contribute an additional amount determined in
its sole judgment. Such additional contribution, if any, shall be
allocated to each Participant in proportion to his or her Compensation
for the Plan Year earned while a Participant. A Participant will also
receive an allocation with respect to his or her Compensation in
excess of the Taxable Wage Base.
B. ELIGIBILITY FOR ALLOCATION
The Employer's Contribution will be made to all Participants who are
employed at the end of the Plan Year provided that the Participant has
completed a Year of Service during the Plan Year. The Employer shall
also make matching and other related contributions as indicated below
to Employees who terminate during the Plan Year as a result of:
Matching Other
X X (i) Retirement.
X X (ii) Disability.
X X (iii) Death.
(iv) Other termination of employment provided
that the Participant has completed 1000
Hours of Service.
(v) Other termination of employment without
regard to the number of Hours of Service
the Participant has completed.
(vi) Termination of employment (for any
reason) provided that the Participant has
completed 1000 Hours of Service.
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VII GOVERNMENT REGULATIONS
The federal government sets certain limitations on the level of
contributions which may be made to a Plan such as this. There is also a
"percentage" limitation which means that the percentage of Compensation
which you may contribute (both Elective Deferrals and, if applicable,
Voluntary Contributions) depends on the average percentage of Compensation
that the other Participants are contributing. Simply stated, all
Participants are divided into 2 categories. Highly Compensated and
non-Highly Compensated. The average contribution for each group is
calculated and compared. If a Highly Compensated Participant is
contributing more than he or she is allowed, the excess plus or minus any
gain or loss will be returned. Keep in mind that if you are a 5% owner of
the business or one of the ten highest paid Highly Compensated employees,
you will be combined with your Family Members for the purpose of
calculating such percentages.
VIII PARTICIPANT ACCOUNTS
The Employer will set up a recordkeeping account in your name to show the
value of your retirement benefit. The Employer will make the following
additions to your account:
A. your allocated share of the Employer's Contribution (including your
Elective Deferrals).
B. the amount of your Transfer Contributions and Rollover Contributions,
if any, and
C. your share of investment earnings and appreciation in the value of
investments.
The Employer will make the following subtractions from your account:
D. any withdrawals or distributions made to you, and
E. your share of investment losses and depreciation in the value of
investments.
F. your share of administrative fees and expenses paid out of the Plan,
if applicable.
The Employer will value your account daily and will provide you with a
statement of account activity at least once annually.
IX VESTING
A. DETERMINING VESTED BENEFIT
Vesting refers to your earning or acquiring a nonforfeitable right to
the full amount of your account. Any Elective Deferrals, Qualified
Non-Elective Contributions, Qualified Matching Contributions, Rollover
Contributions,
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Transfer Contributions, plus or minus any earnings or losses, are
always 100% vested and cannot be forfeited for any reason. Any
contribution not listed in the previous sentence, and the earnings or
losses thereon, will vest in accordance with the following table:
YEARS OF SERVICE
----------------------------------------------------------------
1 2 3 4 5 6 7
---- ---- ---- ---- ---- ---- ----
10% 20% 40% 60% 100%
You are considered to have completed 1 Year of Service for purposes of
vesting upon the completion of 1000 Hours of Service at any time
during a Plan Year.
You automatically become fully vested, regardless of the vesting
table, upon attainment of Normal Retirement Age, Early Retirement Age,
upon retirement due to Disability, upon death, and upon termination of
the Plan.
B. PAYMENT OF VESTED BENEFIT
If you separate from Service before your retirement, death or
Disability, you may request early payment of your vested benefit by
submitting a written request to the Plan Administrator. If you vested
account balance at the time of termination or at the time of any prior
distributions exceeds or exceeded $3,500, you may defer the payment of
your benefit until April 1 of the calendar year following the calendar
year during which you attain age 70-1/2. The Employer will
immediately pay any vested benefit not in excess of $3,500. The
portion of your account balance to which you are not vested is called
a "forfeiture" and remains in the Plan to reduce the Employer's
Contribution for the year.
C. LOSS OF BENEFITS
There are only two events which can cause the loss of all or a portion
of your account. One is termination of employment before your are
100% vested according to the vesting provisions described at IX(A) and
the other is a decrease in the value of your account from investment
losses or administrative expenses and other costs of maintaining the
Plan.
D. REALLOCATION OF FORFEITURE
If you receive the vested portion of your account upon separation from
service, the Employer will forfeit and reallocate the nonvested
portion of your account. If you have not received a distribution of
your vested balance, your nonvested portion will be forfeited at the
end of the Plan Year during which you incur your fifth consecutive
1-year Break in Service.
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E. REEMPLOYMENT
If you terminate service with your Employer, then later become
reemployed, you will become a Participant as of the next Entry Date
[see Section III] upon returning to employment. If you are not a
member of an eligible class and later become a member of the eligible
class, you shall participate immediately if you have satisfied the
minimum age and service requirements. Should you become ineligible to
participate because you are no longer a member of an eligible class,
you shall participate upon your return to an eligible class. All
years of prior Service will be counted when calculating your vested
percentage in your new account balance. The following rules apply in
connection with reemployed Participants.
(a) TERMINATED PARTIALLY VESTED PARTICIPANTS. If you terminate
employment and receive payment of your partially vested interest
and are reemployed prior to incurring five consecutive one-year
Breaks in Service, you have the right to buy back the non vested
portion of your account if it was forfeited. If your non vested
balance was not forfeited it will still be part of your account
and the buy back is not necessary. If a buy back is necessary to
regain the forfeiture, you must redeposit the amount paid to you
without interest within five years of your date of reemployment.
If you do not repay the amount you received, the nonvested
portion of your Employer account will be permanently forfeited.
Whether you repay or not, your prior Service will count toward
vesting service for future Employer contributions.
FOR EXAMPLE, assume that you quit your job with your current
Employer. At the time of termination you had completed four
Years of Service and had accrued a total benefit of $10,000 under
the retirement play. Although this amount had been allocated to
your account, you were only 40% vested in that amount when you
left. You decided to take a distribution of your vested account
balance (40% of $10,000, or $4,000) when you quit. The nonvested
balance of your account ($6,000) was forfeited. Three years
later, you became reemployed by the same Employer. Since you
were reemployed within 5 years, you have the right to repay the
$4,000 distribution you received when you quit. You would have
to repay the $4,000 within 5 years of being rehired. If you do
so, the nonvested portion of your account ($6,000) which was
forfeited when you left will be restored to your account. After
restoration, you will be vested in 40% of this account, but your
vested percentage will increase based on your Years of Service
after your reemployment. Your prior Service will ALWAYS count
towards vesting of Employer Contributions which you will receive
after reemployment, whether or not you decide to repay and
restore your prior account.
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(b) Terminated Non-Vested Participants. If you were not vested
in any portion of your Employer Contribution account prior
to your separation from service and are reemployed before
incurring five consecutive one-year Breaks in Service, you
will be credited for vesting with all pre-break and
post-break service. Your prior account balance will
automatically be restored and will continue to vest in that
account. If you are reemployed after incurring five
consecutive one-year Breaks in Service, you will lose your
prior account balance, but your pre-break Years of Service
will count towards vesting, in your new account balance.
X. TOP HEAVY RULES
A "top-heavy" plan is one in which more than 60% of the contributions or
benefits are attributable to certain "key employees," such as owners,
officers and stockholders. The Plan Administrator is responsible for
determining each year if the Plan is "top-heavy." If the Plan becomes
top-heavy, special rules apply to the allocation of the Employer's
contribution. These special rules require that only Participants who are
not key employees will generally receive an allocation of the Employer's
contribution equal to 3% of Compensation, or if less, the greatest
percentage allocated to the account of any key employee. All participants
are entitled to receive a minimum allocation upon completing at least one
Hour of Service in the top-heavy Plan Year provided they are employed on
the last day of the Plan Year. The Employer's minimum contribution can be
satisfied by another Employer sponsored retirement plan, if so elected by
the Employer. The following vesting schedule shall apply for the Plan Year
the Plan becomes top-heavy, for any type of Employer Contribution, unless
the Employer has already elected a faster schedule:
YEARS OF SERVICE
1 2 3 4 5 6
---- ---- ---- ---- ---- ----
0% 20% 40% 60% 80% 100%
XI RETIREMENT BENEFITS AND DISTRIBUTIONS
A. RETIREMENT BENEFITS
The full value of your account balance is payable at your Normal
Retirement Age, even if you continue to work, or you may defer payment
until April 1 following the year you reach age 70-1/2. If you work
beyond your Normal Retirement Age, you will continue to fully
participate in the Plan.
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B. DISTRIBUTIONS DURING EMPLOYMENT
Upon the completion of five Years of Service, benefits attributable to
Employer contributions, allocated to your account(s), are available
for withdrawal.
If applicable, benefits attributable to your Voluntary contributions
under the Plan plus any rollovers are available for withdrawal upon
request to the Plan Administrator. Transfers Contributions may be
withdrawn only if they originate from plans meeting certain safe
harbor provisions.
C. HARDSHIP WITHDRAWALS
You may file a written request for a hardship withdrawal of the
portion of your account balance attributable to Elective Deferrals and
certain Employer Contributions to the extent vested. You must
generally have your Spouse's written consent for a hardship withdrawal
unless you are advised otherwise by the Plan Administrator. Prior to
receiving a hardship distribution, you must take any other
distribution and borrow the maximum non-taxable loan amount allowed
under this and other plans of the Employer. Note, however, that if
the effect of the loan would be to increase the amount of your
financial need, you are not required to take the loan. For example,
if you needs funds to purchase a principal residence, and a plan loan
would disqualify you from obtaining other necessary financing, you do
not have to take the loan. Hardship withdrawals may be authorized by
the Employer for the following reasons:
(a) to assist you in purchasing a personal residence which is your
primary place of residence (not including mortgage payments),
(b) to assist you in paying tuition expenses for you, your Spouse, or
your dependents, for the next twelve months of post-secondary
education,
(c) to assist you in paying certain expenses incurred or necessary on
behalf of you, your Spouse, or your dependents for
hospitalization, doctor or surgery expenses which are not covered
by insurance, or
(d) to prevent your eviction from or foreclosure on your principal
residence.
Any hardship distribution is limited to the amount needed to meet the
financial need. Hardship withdrawals must be approved by the Employer
and will be administered in a non-discriminatory manner. Such
withdrawals will not affect your eligibility to continue to
participate in Employer Contributions to the Plan. Your right to make
Voluntary Contributions and Elective Deferrals will be suspended for
twelve months. Any withdrawals you receive under these rules may not
be recontributed to the Plan and may be subject to taxation, as well
as an additional 10% penalty tax if the withdrawal is received before
you reach age 59-
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1/2. These payments shall also be subject to a mandatory 20%
withholding for income tax purposes.
D. BENEFICIARY
Every Participant or former Participant with benefits may designate a
person or persons who are to receive benefits under the Plan in the
event of his or her death. The designation must be made on a form
provided by and returned to the Plan Administrator. You may change
your designation at any time. If you are married, your beneficiary
will automatically be your Spouse. If you and your Spouse wish to
waive this automatic designation, you must complete a beneficiary
designation form. The form must be signed by you and, if applicable,
your Spouse in front of a Plan representative or a Notary Public.
E. DEATH BENEFITS
In the event of your death, the full value of your account is payable
to your beneficiary in a lump sum.
F. FORM OF PAYMENT
When benefits become due, you or your representative should apply to
the Employer requesting payment of your account and specifying the
manner of payment. The normal or automatic form of payment is a lump
sum.
G. ROLLOVER OF PAYMENT
If your benefits qualify as eligible rollovers, you have the option of
having them paid directly to you, when they become due, or having them
directly rolled over to another qualified plan or an IRA. If you do
not choose to have the benefits directly rolled over, the Plan is
required to automatically withhold 20% of your payment for tax
purposes. If you do choose to have the payment made to you, you still
have the option of rolling over the payment yourself to a qualified
plan or an IRA within sixty days (first check with a tax advisor to
make sure it is an eligible rollover). However, 20% of your payment
will still be withheld. The following example illustrates how this
works:
For example, if you have $100,000 in your vested account balance and
choose to have the payment of your benefits made directly to an IRA or
another qualified play, the entire $100,000 will be transferred to the
trustee of the other plan or the IRA, and you will treat the entire
amount as a rollover on your tax return so that you will not pay taxes
on the entire amount. If you choose not to have the account
transferred directly to an IRA or qualified plan, 20% or $20,000 will
automatically be withheld from your payment. Thus, you will receive
only $80,000 as a distribution of your benefits. In order to roll the
entire amount over
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into your IRA, you would have to come up with $20,000 out of your own
pocket to make up the difference. If this is done, the $20,000 which
was withheld may be returned when you file your taxes at the end of
the year. However, if you are unable to produce the extra cash, the
rollover amount will only be $80,000, and the other $20,000 which was
withheld will be treated as taxable income to you. If you are under
age 59-1/2 when you receive your benefit payment, the withheld amount
will also be subject to the 10% early distribution penalty.
Certain benefit payments are not eligible for rollover and therefore
will also not be subject to the 20% mandatory withholding. They are
as follows:
1. installments paid over life;
2. installments for a period of at least 10 years; and
3. minimum required distributions at age 70-1/2.
There are also several operational exceptions and a "de minimis"
exception for payments of less than $200. Also Employee Voluntary
contributions are not eligible for rollover.
H. TIME OF PAYMENT
If you retire, become disabled, or die, payments will start as soon as
administratively feasible following the date on which a distribution
is requested by you or is otherwise payable.
If you terminate for a reason other than death, Disability, or
retirement, payments will start as soon as administratively feasible
following the date on which a distribution is requested by you or is
otherwise payable.
XII INVESTMENTS
A. ALTERNATIVE INVESTMENTS/INVESTMENT DIRECTION UNDER A TRUST FUND
The monies contributed to the Plan may be invested in any security or
form of property considered prudent for a retirement plan. Such
investments include common and preferred stocks, exchange traded put
and call options, bonds, money market instruments, mutual funds,
savings accounts, certificates of deposit, Treasury bills, or
insurance contracts. An institutional Trustee may invest in its own
deposits or those of affiliates which bear a reasonable interest rate,
or in a group of collective trust maintained by such Trustee.
B. INVESTMENT RESPONSIBILITY
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The Plan's assets are held by the Trustee who is identified in Section
II of this Summary. The Trustee is responsible for the safekeeping of
plan assets and the investment of such assets at the direction of the
Plan Administrator.
C. EMPLOYEE INVESTMENT DIRECTION
Participants may direct the investments of their accounts among
alternative investment funds provided under the Plan. The investment
funds available to you and the procedures for making an election are
shown in a separate Investment Election Form which can be obtained
from the Plan Administrator. You may change your investment selection
and move monies from one fund to another in accordance with the rules
established by the Plan Administrator.
D. PARTICIPANT LOANS
Participant loans are permitted under the Plan. In order to get a
loan from the Plan, you must make application to the Plan
Administrator. Loans must be approved by the Plan Administrator and
are subject to a strict set of rules established by law. The rules
are covered in a separate Loan Application Form and Promissory Note
Form. These Forms are available from the Plan Administrator.
XIII ADMINISTRATION
The Plan will be administered by the following parties:
A. PLAN ADMINISTRATOR
The Employer is the party who has established the Plan and who has
overall control and authority over administration of the Plan. The
Employer's duties as Plan Administrator include:
(a) appointing the Plan's professional advisors needed to administer
the Plan including, but not limited to, an accountant, attorney,
actuary, or administrator,
(b) directing the Trustee or Recordkeeper with respect to payments
from the Fund,
(c) communicating with Employees regarding their participation and
benefits under the Plan, including the administration of all
claims procedures and domestic relations orders,
(d) filing any returns and reports with the Internal Revenue Service,
Department of Labor, or any other government agency,
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(e) reviewing and approving any financial reports, investment
reviews, or other reports prepared by any party appointed by the
Employer,
(f) ensuring that all Plan Loans are in compliance with legal
requirements,
(g) obtaining a legal determination of the qualified status of all
qualified domestic relations orders and complying with all legal
requirements,
(h) establishing a funding policy and investment objectives
consistent with the purposes of the Plan and the Employee
Retirement Income Security Act of 1974, and
(i) construing and resolving any question of Plan interpretation.
The Plan Administrator's interpretation and application thereof
is final.
B. TRUSTEE
The Trustee shall be responsible for the administration of investments
held in the Trust Fund. These duties shall include:
(a) receiving contributions under the terms of the Plan,
(b) safekeeping of plan assets and the investment of such assets at
the direction of the Plan Administrator,
(c) making distributions from the Fund in accordance with written
instructions received from the Plan Administrator, Recordkeeper
or another authorized Employer representative,
(d) keeping accounts and records of the financial transactions of the
Trust Fund, and
(e) rendering an annual report of the Trust Fund showing the
financial transactions for the Plan Year.
C. RECORDKEEPER
The Recordkeeper shall be responsible for maintaining Plan records.
These duties shall include:
(a) transmit Employer directives to the Trustee,
(b) keep accurate records regarding the Trust Fund administration,
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(c) account for any Participant Loans, and
(d) any other duties necessary and as agreed upon.
XIV AMENDMENT AND TERMINATION
The Employer may amend the Plan at any time, provided that no amendment
will divert any part of the Plan's assets to any purpose other than for the
exclusive benefit of you and the other Participants in the Plan or
eliminate an optional form of distribution. The Employer may also
terminate the Plan. In the event of an actual Plan termination, all
amounts credited to your account will be fully vested and will be paid to
you. Depending on the facts and circumstances, a partial termination may
be found to occur where a significant number of Employees are terminated by
the Employer or excluded from Plan participation. In case of a partial
termination, only those affected will become 100% vested.
XV LEGAL PROVISIONS
A. RIGHTS OF PARTICIPANTS
As a Plan Participant, you have certain rights and protection under
the Employee Retirement Income Security Act of 1974 (ERISA). The law
says that you are entitled to:
(a) Examine, without charge, all documents relating to the operation
of the Plan and any documents filed with the U.S. Department of
Labor. These documents are available for review in the
Employer's offices during regular business hours.
(b) Obtain copies of all Plan documents and the other Plan
information upon written request to the Employer. The Employer
may make a reasonable charge for producing the copies.
(c) Receive from the Employer at least once each year a summary of
the Plan's annual financial report.
(d) Obtain, at least once a year, a statement of the total benefits
accrued for you, and your nonforfeitable (vested) benefits, if
any. The Plan provides that you will receive this statement
automatically. If you are not vested, you may request a
statement showing the date when you will begin to vest in your
account.
(e) File suit in a federal court, if any materials requested are not
received within 30 days of your request, unless the materials
were not sent because of matters beyond the control of the
Employer. If you are improperly
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denied access to information you are entitled to receive, the
Employer may be required to pay up to $100 for each day's delay
until the information is provided to you.
B. FIDUCIARY RESPONSIBILITY
ERISA also imposes obligations upon the persons who are responsible
for the operation of the Plan. These persons are referred to as
"fiduciaries." Fiduciaries must act solely in you interest as a Plan
Participant and they must exercise prudence in the performance of
their duties. Fiduciaries who violate ERISA may be removed and
required to reimburse any losses they have caused you or other
Participants in the Plan.
C. EMPLOYMENT RIGHTS
Participation in the Plan is not a guarantee of employment. However,
the Employer may not fire you or discriminate against you to prevent
you from becoming eligible for the Plan or from obtaining a benefit or
exercising your rights under ERISA.
D. BENEFIT INSURANCE
Your benefits under this Plan are not insured by the Person Benefit
Guaranty Corporation since the law does not require plan termination
insurance for this type of plan.
E. CLAIMS PROCEDURE
If you feel you are entitled to a benefit under the Plan, mail or
deliver your written claim to the Plan Administrator. The Plan
administrator will notify you, your beneficiary, or authorized
representative of the action taken within 60 days of receipt of the
claim. If you believe that you are being improperly denied a benefit
in full or in part, the Employer must give you a written explanation
of the reason for the denial. If the Employer denies your claim, you
may, within 60 days after receiving the denial, submit a written
request asking the Employer to review your claim for benefits. Any
such request should be accompanied by documents or records in support
of your appeal. You, your beneficiary, or your authorized
representative may review pertinent documents and submit issues and
comments in writing. If you get no satisfaction from the Employer,
you have the right to request assistance from the U.S. Department of
Labor or you can file suit in a state or federal court. Service of
legal process may be made upon the Plan Trustee or the Plan
Administrator. If you are successful in your lawsuit, the court may
require the Employer to pay your legal costs, including your
attorney's fees. If you lose, and the court finds that your claim is
frivolous, you may be required to pay the Employer's legal fees.
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F. ASSIGNMENT
Your rights and benefits under this Plan cannot be assigned, sold,
transferred or pledged by you or reached by your creditors or anyone
else except under a qualified domestic relations order (QDRO) is a
court order issued under state domestic relations law relating to
divorce, legal separation, custody, or support proceedings. The QDRO
recognizes the right of someone other than you to receive your Plan
benefits. You will be notified if a QDRO relating to your Plan
benefits is received. Receipt of a qualified domestic relations order
shall allow for an earlier than normal distribution to the person(s)
other than the Participant listed in the order.
G. QUESTIONS
If you have any questions about this statement of your rights under
ERISA, please contact the Employer or the nearest Area Office of the
U.S. Labor-Management Service Administration, Department of Labor.
H. CONFLICTS WITH PLAN
This booklet is not the Plan document, but only a Summary Plan
Description of its principal provisions and not every limitation or
detail of the Plan is included. Every attempt has been made to
provide concise and accurate information. However, if there is a
discrepancy between this booklet and the official Plan document, the
Plan document shall prevail.
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