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EXHIBIT 10.1
SOUTHERN ARIZONA BANK
401(K) PROFIT SHARING PLAN
Eligibility
Service - 1 year of service (12 consecutive months with at least 1000 hours.)
Age - Minimum age 21
Exclusions - none
Contribution Formula
1. EMPLOYEE DEFERRALS - Voluntary pre-tax up to max by law, no after-tax
contributions allowed.
2. EMPLOYER MATCHING - Discretionary. Will be declared at the beginning
of each year; (?) on the dollar up to (?%) of compensation for 1992.
3. DISCRETIONARY PROFIT SHARING - Employer has the option to make an
additional contribution at its discretion. You must be employed on the last day
of the plan year and have a year of service (1000 hours) in order to receive an
allocation.
4. QUALIFIED ROLLOVERS - allowed for any employee.
Plan Entry
First day of the current plan year (1/1) if eligibility requirement are met in
first 6 months; first day of subsequent year of eligibility requirements are met
in last 6 months.
Vesting
100% immediate on Employee Deferrals. The following vesting schedule will apply
to the Employer Matching and Profit Sharing contribution:
# of Yrs. % Vested
- --------- --------
0-1 0
2 20
3 40
4 60
5 80
6 100
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SOUTHERN ARIZONA BANK
Forfeitures
Reallocated to active participants.
In-Service Distributions
Hardship withdrawals - limited elective deferrals only.
Loans
Yes - the greater of 50% of the vested balance or $10,000 with a maximum loan of
$50,000.
Other Plans
Yes ESOP.
Miscellaneous
Salary reduction agreements for modifying contributions or investment
allocations will only be accepted
.
Compensation is defined as total compensation less contributions made to a
Section 125 plan.
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SOUTHERN ARIZONA BANK
401(K) PROFIT SHARING PLAN
SUMMARY PLAN DESCRIPTION
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TABLE OF CONTENTS
Page
I - INTRODUCTION TO YOUR PLAN.............................................. 1
II - GENERAL INFORMATION ABOUT YOUR PLAN................................... 2
1. General Plan Information............................... 2
2. Employer Information................................... 2
3. Plan Administrator Information......................... 2
4. Plan Trustee Information............................... 3
5. Service of Legal Process............................... 3
III - PARTICIPATION IN YOUR PLAN........................................... 3
1. Eligibility Requirements............................... 4
2. Participation Requirements............................. 4
IV - CONTRIBUTIONS TO YOUR PLAN............................................ 4
1. Employer Contributions to the Plan..................... 4
2. Employee Salary Reduction Election..................... 4
3. Your Share of Employer Contributions................... 6
4. Compensation........................................... 7
5. Forfeitures............................................ 7
6. Your Voluntary Contributions to the Plan............... 8
7. Transfers From Qualified Plans (Rollovers)............. 8
V - BENEFITS UNDER YOUR PLAN............................................... 9
1. Distribution of Benefits Upon Normal
Retirement............................................. 9
2. Distribution of Benefits Upon Late Retirement.......... 9
3. Distribution of Benefits Upon Death.................... 9
4. Distribution of Benefits Upon Disability............... 11
5. Distribution of Benefits Upon Termination of
Employment............................................. 11
6. Vesting in Your Plan................................... 11
7. Benefit Payment Options................................ 12
8. Treatment of Distributions From Your Plan.............. 13
9. Domestic Relations Order............................... 14
10. Pension Benefit Guaranty Corporation................... 14
VI - YEAR OF SERVICE RULES................................................. 14
1. Year of Service and Hour of Service.................... 15
2. 1-Year Break in Service................................ 15
VII - YOUR PLAN'S "TOP HEAVY RULES"........................................ 17
1. Explanation of "Top Heavy Rules"....................... 17
VIII - LOANS .............................................................. 17
1. Loan Requirements...................................... 18
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IX - CLAIMS BY PARTICIPANTS AND BENEFICIARIES............................. 18
1. The Claims Review Procedure........................... 19
X - STATEMENT OF ERISA RIGHTS............................................. 20
1. Explanation of Your ERISA Rights...................... 20
XI - AMENDMENT AND TERMINATION OF YOUR PLAN............................... 22
1. Amendment............................................. 22
2. Termination........................................... 22
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SOUTHERN ARIZONA BANK
401(K) PROFIT SHARING PLAN
SUMMARY PLAN DESCRIPTION
I
INTRODUCTION TO YOUR PLAN
Southern Arizona Bank wishes to recognize the efforts its employees
have made to its success and to reward them by adopting a 401(k) Profit Sharing
Plan and Trust. This 401(k) Profit Sharing Plan will be for the exclusive
benefit of eligible employees and their beneficiaries.
Your Plan is a "salary reduction plan." It is also called a "401(k)
plan." Under this type of plan, you may choose to reduce your compensation and
have these amounts contributed to this Plan on your behalf.
The purpose of this Plan is to reward eligible employees for long
and loyal service by providing them with retirement benefits.
Between now and your retirement, your Employer intends to make
contributions for you and other eligible employees. When you retire, you will be
eligible to receive the value of the amounts which have accumulated in your
account.
Your Employer has the right to submit this Plan to the Internal
Revenue Service for approval. The Internal Revenue Service will issue a
"determination letter" to your Employer approving this Plan as a "qualified"
retirement plan, if this Plan meets specific legal requirements.
This Summary Plan Description is a brief description of your Plan
and your rights, obligations, and benefits under that Plan. Some of the
statements made in this Summary Plan Description are dependent upon this Plan
being "qualified" under the provisions of the Internal Revenue Code. This
Summary Plan Description is not meant to interpret, extend, or change the
provisions of your Plan in any way. The provisions of your Plan may only be
determined accurately by reading the actual Plan document.
A copy of your Plan is on file at your Employer's office and may be
read by you, your beneficiaries, or your legal representatives at any reasonable
time. If you have any questions regarding either your Plan or this Summary Plan
Description, you should ask your Plan's Administrator. In the event of any
discrepancy between,this Summary Plan Description and the actual provisions of
the Plan, the Plan shall govern.
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II
GENERAL INFORMATION ABOUT YOUR PLAN
There is certain general information which you may need to know
about your Plan. This information has been summarized for you in this section.
1. General Plan Information
Southern Arizona Bank 401(k) Profit Sharing Plan is the name of
your Plan.
Your Employer has assigned Plan Number 002 to your Plan.
The provisions of your Plan become effective on January 1, 1987,
which is called the Effective Date of the Plan.
Your Plan's records are maintained on a twelve-month period of
time. This is known as the Plan Year. The Plan Year begins on January 1st and
ends on December 31st.
Certain valuations and distributions are made on the Anniversary
Date of your Plan. This date is December 31.
The contributions made to your Plan by your Employer shall be held
and invested by the Trustee of your Plan.
Your Plan and Trust shall be governed by the laws of the State of
Arizona.
2. Employer Information
Your Employer's name, address and identification number are:
Southern Arizona Bank
1800 South Fourth Avenue
Yuma, Arizona 85364
86-0412154
3. Plan Administrator Information
The name, address and business telephone number of your Plan's
Administrator are:
Southern Arizona Bank
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1800 South Fourth Avenue
Yuma, Arizona 85364
(602) 782-750
Your Plan's Administrator keeps the records for the Plan and is
responsible for the administration of the Plan. Your Plan's Administrator will
also answer any questions you may have about your Plan.
4. Plan Trustee Information
The names of your Plan's Trustees are:
Stephen P. Shadle
John E. Byrd
F.C. Braden
Robert W. Kennerly
The Trustees shall collectively be referred to as Trustee
throughout this Summary Plan Description.
The principal place of business of your Plan's Trustee is:
1800 South Fourth Avenue
Yuma, Arizona 85364
Your Plan's Trustee has been designated to hold and invest Plan
assets for the benefit of you and other Plan participants.
5. Service of Legal Process
The name and address of your Plan's agent for service of legal
process are:
Southern Arizona Bank
1800 South Fourth Avenue
Yuma, Arizona 85364
Service of legal process may also be made upon the Trustee or
Administrator.
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III
PARTICIPATION IN YOUR PLAN
Before you become a member or a "participant" in the Plan, there
are certain eligibility and participation rules which you must meet. These rules
are explained in this section.
1. Eligibility Requirements
You will be eligible to participate in the Plan if you have
completed one (1) Year of Service and have reached your 21st birthday.
You should review the Article in this Summary entitled "YEAR OF
SERVICE RULES" for a further explanation of these eligibility requirements.
2. Participation Requirements
Once you have satisfied your Plan's eligibility requirements, your
next step will be to actually become a member or a "participant" in the Plan.
You will become a participant on a specified day of the Plan Year. This day is
called the Effective Date of Participation.
You will become a participant on the first day of the Plan Year
during which you satisfy the eligibility requirements if you meet the
requirement during the first six months of the Plan Year. If you satisfy the
requirements in the last six months of the Plan Year, you will become a
participant on the first day of the Plan Year following the date you satisfy
eligibility requirements.
IV
CONTRIBUTIONS TO YOUR PLAN
1. Employer Contributions to the Plan
Each year, your Employer will contribute to your Plan the following
amounts:
(a) The total amount of the salary reduction you elected
to defer. (See the Section in this Article entitled
"Employee Salary Reduction Election.")
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(b) A contribution equal to 1/4 of 1% of your
compensation.
(c) A discretionary amount determined each year by your
Employer.
2. Employee Salary Reduction Election
As a participant, you may elect to defer a percentage of your
compensation each year instead of receiving that amount in cash. This
percentage, however, may not exceed the limitations prescribed by law.
Additionally, your total deferrals in any calendar year may not exceed $7,000.
This $7,000 limit will be increased in the future for cost of living changes.
Your Employer's contribution will be added to the amount you defer
to provide additional benefits when you retire.
The amount you elect to defer will be deducted from your pay in
accordance with the written procedure established by your Employer.
The amount you elect to defer, and any earnings on that amount,
will not be subject to income tax until it is actually distributed to you. This
money will, however, be subject to Social Security taxes at all times.
You should also be aware that the $7,000 limit is an aggregate
limit which applies to all deferrals you may make under this plan or other cash
or deferred arrangements (including tax-sheltered 403(b) annuity contracts,
simplified employee pensions or other 401(k) plans in which you may be
participating). Generally, if your total deferrals under all cash or deferred
arrangements for a calendar year exceed the $7,000 limit, the excess must be
included in your income for the year. If you participate in another cash or
deferred arrangement and your total deferrals exceed the $7,000 limit, it is
desirable to request in writing that these excess deferrals be returned to you.
Failure to request such a return may result in your being taxed a second time
when the excess deferral is ultimately distributed from the Plan. You must
decide which plan or arrangement you would like to have return the excess. If
you decide that the excess should be distributed from this Plan, you should
communicate this in writing to the Administrator no later than the March 1st
following the close of the calendar year in which such excess deferrals were
made. The Administrator will then return the excess deferral and any earnings to
you by April 15th.
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You will always be 100% vested in the amount you deferred. This
means that you will always be entitled to all of the deferred amount. This money
will, however, be affected by any investment gains or losses. If the Trustee
invested this money and there was a gain, the balance in your account would
increase. Of course, if there were a loss, the balance in your account would
decrease. Your interest in this account cannot be forfeited for any reason.
Distributions from your deferred account are not permitted before
age 59 1/2 EXCEPT in the event of:
(a) death;
(b) disability;
(c) termination of employment; or
(d) reasons of proven financial hardship resulting from
accident to or sickness of you or your dependents; or financial
hardship resulting from the establishing or preserving of your home
in which you reside, provided funds are not available to you from
any other financial resources. Any withdrawals for proven financial
hardship after December 31, 1988, will be limited to the amount you
have deferred under the Plan. Income or earnings on your deferrals
is not eligible for hardship distribution.
3. Your Share of Employer Contributions
Your Employer will allocate the amount you elect to defer to an
account maintained by the Trustee on your behalf.
Your Employer will also allocate to your account the 1/4 of 1% of
compensation contribution made to the Plan on your behalf. (See the Section in
this Article entitled "Employer Contributions to the Plan.")
You must complete a Year of Service in each Plan Year to share in
this contribution.
Your Employer's discretionary contribution will be "allocated" or
divided among participants eligible to share in the contribution for the Plan
Year.
Your share of your Employer's discretionary contribution is
determined by the following fraction:
Your Compensation
Employer's X
--------------------------------
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Discretionary Contribution Total Compensation of All
Participants Eligible to
Share
For example:
Suppose the Employer's discretionary contribution for the Plan
Year is $20,000.
Employee A's compensation for the Plan Year is $25,000.
The total compensation of all participants eligible to
share, including Employee A, is $250,000.
Employee A's share will be:
$25,000
$20,000 X -------- or $2,000
$250,000
As a participant, you will share in your Employer's discretionary
contribution for any Plan Year if you:
(a) retire during the Plan Year;
(b) die during the Plan Year;
(c) become disabled during the Plan Year;
(d) are employed on the last day of the Plan Year, which
is December 31st and have completed a Year of Service during the Plan
Year.
In addition to the Employer's contributions made to your account, your
account will be credited annually with a share of the investment earnings or
losses of the trust fund.
4. Compensation
For the purposes of your Plan, compensation has a special meaning.
Compensation is defined as your total salary and wages paid during a Plan Year.
For the first year of your participation in the Plan, your compensation
will be recognized for benefit purposes for the entire Plan Year.
For Plan Years starting in 1989, the Plan by law cannot recognize
compensation in excess of $200,000.
5. Forfeitures
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Forfeitures are created when participants terminate employment before
becoming entitled to their full benefits under the Plan. Your account may grow
from the forfeitures of other participants. Forfeitures will be "allocated" or
divided among participants eligible to share for a Plan Year.
6. Your Voluntary Contributions to the Plan
You may, at the discretion of the Administrator, make voluntary
contributions to your Plan for each year you are a participant. These
contributions may not exceed 10% of your compensation while a participant. There
are also other limitations imposed by law, but these will change from year to
year depending upon the level of voluntary contributions made by other
participants during the year. If your voluntary contributions exceed this limit,
the Administrator will return the excess contributions to you.
You will always be "100% vested" in your voluntary contributions. This
means that you will always be entitled to all of your voluntary contributions.
Your voluntary contributions will, however, be affected by any investment gains
or losses. If the Trustee invested this money and there was a gain, the balance
in your account would increase. Of course, if there were a loss from an
investment, the balance in your account would decrease.
There is no requirement that you make voluntary contributions to your
Plan. Voluntary contributions are not tax deductible. Any investment income
earned on these contributions, however, is not currently taxable to you. You
will be taxed on investment income and gains when you withdraw them from your
account.
Your voluntary contributions may be invested by the Trustee in
segregated, interest-bearing accounts or as part of the general trust fund.
You may withdraw the balance of your voluntary contributions and any
gains from your voluntary contribution account. If you make this withdrawal,
however, you will not be allowed to make additional voluntary contributions for
one Plan Year. Your spouse, however, must consent to any withdrawal you make.
When you retire or otherwise become eligible for Plan benefits, the
value of your voluntary contribution account will be used to provide additional
benefits for you or your beneficiaries.
7. Transfers From Qualified Plans (Rollovers)
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At the discretion of the Administrator, you may be permitted to deposit
into your Plan distributions you have received from other plans. Such a deposit
is called a "rollover" and may result in tax savings to you. You should consult
qualified counsel to determine if a rollover is in your best interest.
Your rollover will be placed in a separate account called a
"participant's rollover account." The Administrator may establish rules for
investment.
You will always be 100% vested in your "rollover account." This means
that you will always be entitled to all of your rollover contributions. Rollover
contributions will be affected by any investment gains or losses. If the Trustee
invested this money and there was a gain, the balance in your account would
increase. of course, if there were a loss from an investment, the balance in
your account would decrease.
V
BENEFITS UNDER YOUR PLAN
1. Distribution of Benefits Upon Normal Retirement
Your Normal Retirement Date is the first day of the month coinciding
with or next following your 60th birthday (Normal Retirement Age).
At your Normal Retirement Age, you will be entitled to 100% of your
account balance. Payment of your benefits will begin as soon as practicable
following your Normal Retirement Date.
2. Distribution of Benefits Upon Late Retirement
Your Late Retirement Date is the first day of the month coinciding with
or next following your actual retirement date after reaching your Normal
Retirement Date.
On your Late Retirement Date, you will be entitled to 100% of your
account balance. Payments of your Late Retirement benefits will begin as soon as
practicable following your Late Retirement Date.
3. Distribution of Benefits Upon Death
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Your beneficiary will be entitled to 100% of your account balance upon
your death.
The Administrator may elect to purchase life insurance on your behalf
with a portion of your Employer's contribution. Any life insurance purchased
shall be used to provide a death benefit for your beneficiaries.
If a life insurance policy is purchased on your behalf with a portion
of your Employer's contribution made to your account, your account will be
reduced by the amount of the premiums and credited with any policy dividends.
If you are married at the time of your death, your spouse will be the
beneficiary of the death benefit, unless you otherwise elect in writing on a
form to be furnished to you by the Administrator. IF YOU WISH TO DESIGNATE A
BENEFICIARY OTHER THAN YOUR SPOUSE, HOWEVER, YOUR SPOUSE MUST IRREVOCABLY
CONSENT TO WAIVE ANY RIGHT TO THE DEATH BENEFIT. YOUR SPOUSE'S CONSENT MUST BE
IN WRITING, BE WITNESSED BY A NOTARY OR A PLAN REPRESENTATIVE AND ACKNOWLEDGE
THE SPECIFIC NONSPOUSE BENEFICIARY.
If no valid waiver is in effect, the death benefit payable to your
spouse shall be in the form of a survivor annuity, that is, periodic payments
over the life of your spouse. Your spouse may direct that payments begin within
a reasonable period of time after your death. The size of the monthly payments
will depend on the value of your account at the time of your death. The death
benefit may be distributed in an alternative method, such as a single lump sum
or in installments, provided your spouse consents in writing to an alternative
form.
The period during which you and your spouse may waive this survivor
annuity begins as of the first day of the Plan Year in which you reach age 35
and ends when you die. The Administrator must provide you with a detailed
explanation of the survivor annuity. This explanation must be given to you
during the following period of time: beginning on the first day of the Plan Year
in which you will reach age 32 and ending on the first day of the Plan Year in
which you reach age 35.
It is, therefore, important that you inform the Administrator when you
turn age 32 so that you may receive this information.
If, however,
(a) your spouse has validly waived any right to the death
benefit in the manner outlined above,
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(b) your spouse cannot be located; or
(c) you are not married at the time of your death,
then your death benefit will be paid to the beneficiary of your own choosing in
installments or as a single lump sum, as you or your beneficiary may elect. You
may designate the beneficiary on a form to be supplied to you by the
Administrator. If you change your designation, your spouse must again consent to
the change.
Since your spouse participates in these elections and has certain
rights in the death benefit, you should immediately report any change in your
marital status to the Administrator.
4. Distribution of Benefits Upon Disability
Under your Plan, disability is defined as a physical or mental
condition resulting from bodily injury, disease, or mental disorder which
renders you incapable of continuing your usual and customary employment with
your Employer. Your disability shall be determined by a licensed physician
chosen by the Administrator.
If you become disabled while a participant, you will be entitled to
100% of your account balance. Payment of your disability benefits will begin on
or before the Anniversary Date following the date you become disable. (See the
Section in this Article entitled "Benefit Payment Options.")
5. Distribution of Benefits Upon Termination of Employment
Your Plan is designed to encourage you to stay with your Employer until
retirement. Payment of your account balance under your Plan is only available
upon your death, disability or retirement.
If your employment terminates for reasons other than those listed
above, you will be entitled to receive only your "vested percentage" of your
account balance and the remainder of your account will be forfeited. Only
contributions made by your Employer are subject to forfeiture. (See the Section
in this Article entitled "Vesting in Your Plan.")
If you so elect, the Administrator will direct the Trustee to
distribute your vested benefit to you before the date it would normally be
distributed (upon your death, disability or retirement). Your spouse's written
consent to this distribution must be given for amounts in excess of $3,500.
Amounts of $3,500 or less will be distributed early without the need for
consent.
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6. Vesting in Your Plan
Your "vested percentage" in your account is determined under the
following schedule and is based on vesting Years of Service. You will always,
however, be 100% vested upon your Normal Retirement Age. (See the Section in
this Article entitled "Distribution of Benefits Upon Normal Retirement.")
Vesting Schedule
Years of Service Percentage
3 20 %
4 40 %
5 60 %
6 80 %
7 100 %
Regardless of this vesting schedule, you are always 100% vested in your
salary reduction amounts contributed to the Plan.
Your vested benefit will normally be distributed to you or your
beneficiary upon your death, disability or retirement. If you terminate
employment before any of these events, however, your unpaid vested benefit may
be segregated in a special account.
7. Benefit Payment Options
There are various methods that benefits may be distributed to you from
your Plan. The method depends on your marital status, as well as the elections
you and your spouse make. All methods of distribution, however, have equivalent
values.
If you are married on the date your benefits are to begin, however, you
will automatically receive a 50% joint and survivor annuity, unless you
otherwise elect. This means that if you die and are survived by a spouse, your
spouse will receive a monthly benefit for the remainder of his life equal to 50%
of the benefit you were receiving at the time of your death. You may elect a 75%
or 100% joint and survivor annuity instead of the standard 50% joint and
survivor annuity. It should be noted that a joint and survivor annuity may
provide a lower monthly benefit than other forms of payment. You should consult
qualified tax counsel before making such election.
If you are not married on the date your benefits are to begin, you will
automatically receive a life annuity, which means you will receive payments for
as long as you live.
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You may, however, elect to waive these forms of payment, subject to the
following rules.
When you are about to retire, the Administrator will explain the joint
and survivor annuity or the life annuity to you in greater detail. You will be
given the option of waiving the joint and survivor annuity or the life annuity
form of payment during the 90 day period before the annuity is to begin. IF YOU
ARE MARRIED, YOUR SPOUSE MUST IRREVOCABLY CONSENT IN WRITING TO THE WAIVER IN
THE PRESENCE OF A NOTARY OR A PLAN REPRESENTATIVE. You may revoke any waiver.
The Administrator will provide you with forms to make these elections. Since
your spouse participates in these elections, you must immediately inform the
Administrator of any change in your marital status.
If you and your spouse elect not to take a joint and survivor annuity
or if you are not married when your benefits are scheduled to begin, and have
elected not to take a life annuity, you may elect an alternative form of
payment. This payment may be made in one of the following methods:
(a) a single lump-sum payment;
(b) the purchase of a different form of annuity;
(c) equal installments over a period of not more than your
assumed life expectancy (or you and your beneficiary's assumed life
expectancies) at the time of distribution.
Regardless of the form of payment you receive, its value to you will be the same
value as each alternative form of payment.
GENERALLY, WHENEVER A DISTRIBUTION OF PAYMENTS IS TO BE MADE TO YOU ON
OR BEFORE AN ANNIVERSARY DATE, IT MAY BE POSTPONED FOR A PERIOD UP TO 180 DAYS,
FOR ADMINISTRATIVE CONVENIENCE. HOWEVER, UNLESS YOU ELECT IN WRITING TO DEFER
THE RECEIPT OF BENEFITS, NO DISTRIBUTION MAY BEGIN LATER THAN THE 60TH DAY AFTER
THE CLOSE OF THE PLAN YEAR IN WHICH THE LATEST OF THE FOLLOWING EVENTS OCCURS:
(a) the date on which you reach the age of 65 or your
Normal Retirement Age;
(b) the 10th anniversary of the year in which you became a
participant in the Plan;
(c) the date you terminated employment with your Employer.
8. Treatment of Distributions From Your Plan
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Whenever you receive a distribution from your Plan, it will normally be
subject to income taxes. You may, however, reduce, or defer entirely, the tax
due on your distribution through use of one of the following methods:
(a) The rollover of all or a portion of the distribution to an
Individual Retirement Account (IRA) or another qualified employer plan.
This will result in no tax being due until you begin withdrawing funds
from the IRA or other qualified employer plan. The rollover of the
distribution, however, MUST be made within strict time frames
(normally, within 60 days after you receive your distribution). In
addition, under certain circumstances all or a portion of a
distribution may not qualify for this rollover treatment.
(b) The election of favorable income tax treatment under
"10-year forward averaging", "5-year forward averaging" or, if you
qualify, "capital gains" method of taxation.
WHENEVER YOU RECEIVE A DISTRIBUTION, THE ADMINISTRATOR WILL DELIVER TO
YOU A MORE DETAILED EXPLANATION OF THESE OPTIONS. HOWEVER, THE RULES WHICH
DETERMINE WHETHER YOU QUALIFY FOR FAVORABLE TAX TREATMENT ARE VERY COMPLEX AND
HAVE BEEN GREATLY AFFECTED BY THE TAX REFORM ACT OF 1986. YOU SHOULD CONSULT
WITH QUALIFIED TAX COUNSEL BEFORE MAKING A CHOICE.
9. Domestic Relations Order
As a general rule, your interest in your account, including your
"vested interest," may not be alienated. This means that your interest may not
be sold, used as collateral for a loan, given away or otherwise transferred. In
addition, your creditors may not attach, garnish or otherwise interfere with
your account.
There is an exception, however, to this general rule. The Administrator
may be required by law to recognize obligations you incur as a result of court
ordered child support or alimony payments. The Administrator must honor a
"qualified domestic relations order." A "qualified domestic relations order" is
defined as a decree or order issued by a court that obligates you to pay child
support or alimony, or otherwise allocates a portion of your assets in the Plan
to your spouse, former spouse, child or other dependent. If a qualified domestic
relations order is received by the Administrator, all or a portion of your
benefits may be used to satisfy the obligation. The Administrator will determine
the validity of any domestic relations order received.
10. Pension Benefit Guaranty Corporation
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Benefits provided by your Plan are NOT insured by the Pension Benefit
Guaranty Corporation (PBGC) under Title IV of the Employee Retirement Income
Security Act of 1974 because the insurance provisions under ERISA are not
applicable to your Plan.
VI
YEAR OF SERVICE RULES
1. Year of Service and Hour of Service
The term "Year of Service" is used throughout this Summary Plan
Description and throughout your Plan. A Year of Service for eligibility purposes
is defined as follows:
You will have completed a Year of Service if, at the end of your first
twelve consecutive months of employment with your Employer, you have
been credited with 1000 Hours of Service.
If you have not been credited with 1000 Hours of Service by the end of
your first twelve consecutive months of employment, you will have
completed a Year of Service at the end of any following Plan Year
during which you were credited with 1000 Hours of Service.
You will have completed a Year of Service for vesting purposes if you
are credited with 1000 Hours of Service during a Plan Year, even if you were not
employed on the first or last day of the Plan Year.
An "Hour of Service" has a special meaning for Plan purposes. You will
be credited with an Hour of Service for:
(a) each hour for which you are directly or indirectly
compensated by your Employer for the performance of duties
during the Plan Year;
(b) each hour for which you are directly or indirectly
compensated by your Employer for reasons other than performance of
duties (such as vacation, holidays, sickness, disability, lay-off,
military duty, jury duty or leave of absence during the Plan Year); and
(c) each hour for back pay awarded or agreed to by your
Employer.
2. 1-Year Break in Service
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A 1-Year Break in Service is a computation period during which you have
not completed more than 500 Hours of Service with your Employer.
A 1-Year Break in Service does NOT occur, however, in the computation
period in which you enter or leave the Plan for reasons of:
(a) an authorized leave of absence;
(b) certain maternity or paternity absences.
For Plan Years beginning after December 31, 1984, the Administrator
will be required to credit you with Hours of Service for a maternity or
paternity absence. These are absences taken on account of pregnancy, birth, or
adoption of your child. No more than 501 Hours of Service shall be credited for
this purpose and these Hours of Service shall be credited solely to avoid your
incurring a 1-Year Break in Service. The Administrator may require you to
furnish him with proof that your absence qualifies as a maternity or paternity
absence.
These break in service rules may be illustrated by the following
examples:
Employee A works 300 hours in a Plan Year. At the end of the Plan Year,
Employee A will have a 1-Year Break in Service because he has worked
less than 501 hours in a Plan Year. Employee B works 300 hours in a
Plan Year and takes an authorized leave of absence for which he is
credited with an additional 250 hours. Employee B will NOT have a
1-Year Break in Service because he is credited with more than 500 hours
in a Plan Year.
If you are reemployed after a 1-Year Break in Service and were vested
in any portion of your account derived from Employer contributions, you will
receive credit for all Years of Service credited to you before your 1-Year Break
in service when you have completed another Year of Service. For example:
Suppose Employee A terminated employment with 4 Years of Service and
was vested in a portion of his account. Employee A was then reemployed
after a 1-Year Break in Service on January 1, 2002. On January 1, 2003
when Employee A completes 1 Year of Service, he will be credited with
his 4 years of pre-break service.
If you do not have a "vested interest" in the Employer contributions
allocated to your account when you terminate your employment, you will lose
credit for your pre-break Years of
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Service when your consecutive 1-Year Breaks in Service equal or exceed the
greater of 5 years, or your pre-break Years of Service.
For example:
Employee A terminated employment on January 1, 2000 with 2 Years of
Service. Employee A was not vested at the time of his termination of
employment. Employee A returns to work on January 1, 2003. Employee A
will be credited with his 2 pre- break Years of Service because his
period of termination (3 years) did not exceed 5 years.
VII
YOUR PLAN'S "TOP HEAVY RULES"
1. Explanation of "Top Heavy Rules"
A 401(k) Profit Sharing Plan that primarily benefits "key employees" is
called a "top heavy plan." Key employees are certain owners or officers of your
Employer. A Plan is a "top heavy plan" when more than 60% of the contributions
or benefits have been allocated to key employees.
Each year, the Administrator is responsible for determining
whether your Plan is a "top heavy plan."
If your Plan becomes top heavy in any Plan Year, then non-key employees
shall be entitled to certain "top heavy minimum benefits," and other special
rules will apply. Among these top heavy rules are the following:
(a) Your Employer may be required to make a contribution
equal to 3% of your compensation to your account;
(b) In determining benefits or contributions you are
entitled to under your Plan, compensation, for Plan Years beginning
prior to January 1, 1989, vill be limited to $200,000. Thereafter,
compensation will be limited to $200,000 in all Plan Years;
(c) If you are a participant in more than one Plan, you
may not be entitled to minimum benefits under both Plans.
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VIII
LOANS
You may apply to the Trustee for a loan. Your application must be in
writing. The Trustee may grant this loan if he believes it has merit.
1. Loan Requirements
All loans must:
(a) be made on a uniform and nondiscriminatory basis;
(b) be adequately secured;
(c) bear a reasonable rate of interest;
(d) have a definite repayment schedule which provides for
payments to be made not less frequently than quarterly and for the loan
to be amortized on a level basis over a reasonable period of time not
to extend beyond the earlier of five years or your Normal Retirement
Date;
(e) be consented to by your spouse if you use your Vested
interest in the plan as collateral for the loan;
(f) when added to the outstanding balance of all other
loans from the plan be limited to the lesser of:
(1) $50,000 reduced by the excess, if any, of your
highest outstanding balance of loans from the plan during the
one year period prior to the date of the loan over your
current outstanding balance of loans; or
(2) the greater of:
(i) 1/2 of your vested interest in your
account; or
(ii) $10,000.
The $50,000 limit stated in (1) above shall not be reduced for
loans made on or before December 31, 1986.
If you use the loan to acquire your principal residence you may repay
the loan over a reasonable period of time that may be longer than five years.
If the repayment period of your loan is five years and an amount
remains payable at the end of five years, that amount will be treated as a
distribution of money from the Plan to you and will be taxable income to you.
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IX
CLAIMS BY PARTICIPANTS AND BENEFICIARIES
Benefits will be paid to participants and their beneficiaries without
the necessity of formal claims. You or your beneficiaries, however, may make a
request for any Plan benefits to which you may be entitled. Any such request
must be made in writing, and it should be made to the Administrator. (See the
Article in this Summary entitled "GENERAL INFORMATION ABOUT YOUR PLAN.")
Your request for Plan benefits shall be considered a claim for Plan
benefits, and it will be subject to a full and fair review. If your claim is
wholly or partially denied, the Administrator shall furnish you with a written
notice of this denial. This written notice must be provided to you within a
reasonable period of time (generally 90 days) after the receipt of your claim by
the Administrator. The written notice must contain the following information:
(a) the specific reason or reasons for the denial;
(b) specific reference to those Plan provisions on which
the denial is based;
(c) a description of any additional information or
material necessary to correct your claim and an explanation of
why such material or information is necessary; and
(d) appropriate information as to the steps to be taken
if you or your beneficiary wishes to submit your claim for review.
If notice of the denial of a claim is not furnished to you in
accordance with the above within a reasonable period of time, your
claim shall be deemed denied. You will then be permitted to proceed to
the review stage described in the following paragraphs.
If your claim has been denied, and you wish to submit your claim for
review, you must follow the Claims Review Procedure.
1. The Claims Review Procedure
(a) Upon the denial of your claim for benefits, you may
file your claim for review, in writing, with the Administrator. The
form for this claim for review is available from the Employer or
Administrator.
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(b) YOU MUST FILE THE CLAIM FOR REVIEW NO LATER THAN 60
DAYS AFTER YOU HAVE RECEIVED WRITTEN NOTIFICATION OF THE DENIAL OF YOUR
CLAIM FOR BENEFITS.
(c) You may review all pertinent documents relating to
the denial of your claim and submit any issues and comments, in
writing, to the Administrator.
(d) Your claim for review must be given a full and fair
review. If your claim is denied, the Administrator must provide you
with written notice of this denial within 60 days after the
Administrator's receipt of your written claim for review. There may be
times when this 60 day period may be extended. This extension may only
be made, however, where there are special circumstances which are
communicated to you in writing within the 60 day period. If there is an
extension, a decision shall be made as soon as possible, but not later
than 120 days after receipt by the Administrator of your claim for
review.
(e) The Administrator's decision on your claim for review
shall be communicated to you in writing and shall include specific
references to the pertinent Plan provisions on which the decision was
based.
(f) If the Administrator's decision on review is not
furnished to you within the time limitations described above, your
claim shall be deemed denied on review.
(g) If benefits are provided or administered by an
insurance company, insurance service, or other similar organization
which is subject to regulation under the insurance laws, the claims
procedure relating to these benefits may provide for review. If so,
that company, service, or organization shall be the entity to which
claims are addressed. If you have any questions regarding the proper
person or entity to address claims, you should ask the Administrator.
X
STATEMENT OF ERISA RIGHTS
1. Explanation of Your ERISA Rights
As a participant in this Plan you are entitled to certain rights and
protections under the Employee Retirement Income
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Security Act of 1974, also called ERISA. ERISA provides that all Plan
participants shall be entitled to:
(a) examine, without charge, all Plan documents,
including:
(i) insurance contracts;
(ii) collective bargaining agreements; and
(iii) copies of all documents filed by the
Plan with the U.S. Department of Labor, such as
detailed annual reports and Plan descriptions.
This examination may take place at the Administrator's office and at
other specified employment locations such as worksites and union halls.
(See the Article in this Summary entitled "GENERAL INFORMATION ABOUT
YOUR PLAN");
(b) obtain copies of all Plan documents and other Plan
information upon written request to the Plan Administrator.
The Administrator may make a reasonable charge for the copies;
(c) receive a summary of the Plan's annual financial
report. The Administrator is required by law to furnish each
participant with a copy of this summary annual report;
(d) obtain a statement telling you whether you have a
right to receive a retirement benefit at Normal Retirement Age and, if
so, what your benefits would be at Normal Retirement Age if you stop
working under the Plan now. If you do not have a right to a pension,
the statement will tell you how many years you have to work to get a
right to a pension. THIS STATEMENT MUST BE REQUESTED IN WRITING AND IS
NOT REQUIRED TO BE GIVEN MORE THAN ONCE A YEAR. The Plan must provide
the statement free of charge.
In addition to creating rights for Plan participants, ERISA imposes
duties upon the people who are responsible for the operation of the
Plan. The people who operate your Plan, called "fiduciaries" of the
Plan, have a duty to do so prudently and in the interest of you and
other Plan participants and beneficiaries. No one, including your
employer or any other person, may fire you or otherwise discriminate
against you in any way to prevent you from obtaining a pension benefit
or exercising your rights under ERISA.
If your claim for a pension benefit is denied in whole or in part, you
must receive a written explanation of the reason for
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the denial. You have the right to have the Administrator review and
reconsider your claim. (See the Article in this Summary entitled
"CLAIMS BY PARTICIPANTS AND BENEFICIARIES.")
Under ERISA, there are steps you can take to enforce the above rights.
For instance, if you request materials from the Plan and do not receive
them within 30 days, you may file suit in a federal court. In such a
case, the court may require the Administrator to provide the materials
and pay you up to $100.00 a day until you receive the materials, unless
the materials were not sent because of reasons beyond the control of
the Administrator.
If you have a claim for benefits which is denied or ignored, in whole
or in part, you may file suit in a state or federal court.
If the Plan's fiduciaries misuse the Plan's money, or if you are
discriminated against for asserting your rights, you may seek
assistance from the U.S. Department of Labor, or you may file suit in a
federal court. The court will decide who should pay court costs and
legal fees. If you are successful, the court may order the person you
have sued to pay these costs and fees. If you lose, the court may order
you to pay these costs and fees if, for example, it finds your claim is
frivolous.
If you have any questions about this statement, or about your rights
under ERISA, you should contact the nearest Area Office of the U.S.
Labor-Management Services Administration, Department of Labor.
XI
AMENDMENT AND TERMINATION OF YOUR PLAN
1. Amendment
Your Employer has the right to amend your Plan at any time. In no
event, however, shall any amendment:
(a) authorize or permit any part of the Plan assets to
be used for purposes other than the exclusive benefit of
participants or their beneficiaries;
(b) cause any reduction in the amount credited to your
account; or
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(c) cause any part of your Plan assets to revert to the
Employer.
2. Termination
Your Employer has the right to terminate the Plan at any time. Upon
termination, all amounts credited to your accounts will become 100% vested. Your
Employer may direct that either:
(a) benefits be distributed to you in any manner
permitted by the Plan as soon as practicable; or
(b) the Trust created by the Plan be continued and
benefits be distributed to you or your beneficiaries as if the
Plan had not terminated. (See the Article in this Summary
entitled "BENEFITS UNDER YOUR PLAN.")
A complete discontinuance of contributions by your Employer shall
constitute a termination.