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EXHIBIT 10.2
SOUTHERN ARIZONA BANK
EMPLOYEES' STOCK OWNERSHIP PLAN
SUMMARY PLAN DESCRIPTION
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TABLE OF CONTENTS
Page
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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 . . . . . . . . . . . . . . . 3
4. Plan Trustee Information . . . . . . . . . . . . . . . . . . 3
5. Service of Legal Process . . . . . . . . . . . . . . . . . . 3
III - PARTICIPATION IN YOUR PLAN . . . . . . . . . . . . . . . . . . . . . . . 4
1. Eligibility Requirements . . . . . . . . . . . . . . . . . . 4
2. Participation Requirements . . . . . . . . . . . . . . . . . 4
IV - CONTRIBUTIONS TO YOUR PLAN . . . . . . . . . . . . . . . . . . . . . . . . 4
1. Employer Contributions to the Plan . . . . . . . . . . . . . 4
2. Your Share of Employer Contributions . . . . . . . . . . . . 5
3. Compensation . . . . . . . . . . . . . . . . . . . . . . . . 6
4. Forfeitures . . . . . . . . . . . . . . . . . . . . . . . . 6
5. Transfers From Qualified Plans (Rollovers) . . . . . . . . . 7
6. Directed Investments . . . . . . . . . . . . . . . . . . . . 7
V - BENEFITS UNDER YOUR PLAN . . . . . . . . . . . . . . . . . . . . . . . . . 7
1. Distribution of Benefits Upon Normal Retirement . . . . . . 7
2. Distribution of Benefits Upon Late Retirement . . . . . . . 8
3. Distribution of Benefits Upon Death . . . . . . . . . . . . 8
4. Distribution of Benefits Upon Disability . . . . . . . . . . 9
5. Distribution of Benefits Upon Termination of Employment . . 9
6. Vesting in Your Plan . . . . . . . . . . . . . . . . . . . . 10
7. Benefit Payment Options . . . . . . . . . . . . . . . . . . 10
8. Treatment of Distributions From Your Plan . . . . . . . . . 11
9. Domestic Relations Order . . . . . . . . . . . . . . . . . . 12
10. Pension Benefit Guaranty Corporation . . . . . . . . . . . . 12
VI - INFORMATION REGARDING COMPANY STOCK . . . . . . . . . . . . . . . . . . . 12
1. Voting of Company Stock . . . . . . . . . . . . . . . . . . 12
2. Right of First Refusal . . . . . . . . . . . . . . . . . . . 13
3. Put Option . . . . . . . . . . . . . . . . . . . . . . . . . 13
VII - YEAR OF SERVICE RULES . . . . . . . . . . . . . . . . . . . . . . . . . . 13
1. Year of Service and Hour of Service . . . . . . . . . . . . 13
2. 1-Year Break in Service . . . . . . . . . . . . . . . . . . 14
VIII - YOUR PLAN'S "TOP HEAVY RULES" . . . . . . . . . . . . . . . . . . . . . 15
1. Explanation of "Top Heavy Rules" . . . . . . . . . . . . . . 15
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Page
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IX - LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
1. Loan Requirements . . . . . . . . . . . . . . . . . . . . . 16
X - CLAIMS BY PARTICIPANTS AND BENEFICIARIES . . . . . . . . . . . . . . . . . 17
1. The Claims Review Procedure . . . . . . . . . . . . . . . . 18
XI - STATEMENT OF ERISA RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . 19
1. Explanation of Your ERISA Rights . . . . . . . . . . . . . . 19
XII - AMENDMENT AND TERMINATION OF YOUR PLAN . . . . . . . . . . . . . . . . . 21
1. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 21
2. Termination . . . . . . . . . . . . . . . . . . . . . . . . 21
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SOUTHERN ARIZONA BANK
EMPLOYEES' STOCK OWNERSHIP PLAN
SUMMARY PLAN DESCRIPTION
I
INTRODUCTION TO YOUR PLAN
Southern Arizona Bank has amended your Employee Stock Ownership Plan
as of January 1, 1989. Southern Arizona Bank continues to recognize the efforts
you have made to its success. This amended Employee Stock Ownership Plan is for
the exclusive benefit of eligible employees and their beneficiaries.
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. Contributions to the Plan
will be invested primarily in Company Stock. Your efforts added to the efforts
of all other employees contribute to the profitability and growth of the
Employer and thereby increase the value of Company Stock and your benefits in
the Plan. When you retire, you will be entitled to receive the value of the
amounts which have accumulated in your account in the form of Company Stock.
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 Employees' Stock Ownership Plan is the name of
your Plan.
Your Employer has assigned Plan Number 001 to your Plan.
The amended and restated provisions of your Plan become effective on
January 1, 1989.
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 4th Avenue
Yuma, Arizona 85364
86-0412154
Your Plan allows other employers to adopt its provisions. You or
your beneficiaries may examine or obtain a complete list of employers, if any,
who have adopted your Plan by making a written request to the Administrator.
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3. Plan Administrator Information
The name, address and business telephone number of your Plan's
Administrator are:
Temple T. Moore
1800 4th 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
Donald S. Olsen
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 4th 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. The trust fund
established by the Plan's Trustee will be the funding medium used for the
accumulation of assets through which benefits will be distributed.
5. Service of Legal Process
The name and address of your Plan's agent for service of legal
process are:
Plan Administrator of Southern Arizona Bank
Employees' Stock Option Plan
1800 4th Avenue
Yuma, Arizona 85364
Service of legal process may also be made upon the Trustee.
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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 attained age 21.
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.
IV
CONTRIBUTIONS TO YOUR PLAN
1. Employer Contributions to the Plan
As a participant, you may be eligible to share in and benefit from
the contributions made by your Employer. Each year, your Employer's
contribution, if any, will be placed into a trust fund for the benefit of Plan
participants. The Administrator of your Plan will then establish and maintain a
separate account for you and all other participants, into which the
contributions will be placed.
Each year, your Employer will determine the amount to contribute to
your Plan. This contribution is discretionary.
As a participant, you will share in your Employer's contribution for
any Plan Year if you:
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(a) 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.
(b) retire during the Plan Year, provided you complete a Year
of Service.
(c) become disabled during the Plan Year, provided you
complete a Year of Service.
(d) die during the Plan Year, provided you complete a Year of
Service.
2. Your Share of Employer Contributions
Your Employer's contribution will be "allocated" or divided among
participants eligible to share in the contribution for the Plan Year. Your share
of the contribution will depend upon how much compensation you received during
the year and the compensation received by other eligible participants.
Your share of your Employer's discretionary contribution is
determined by the following fraction:
Your Compensation
Employer's X -------------------------
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
If, however, your Plan has a loan outstanding, the proceeds of which
were used to acquire Company Stock, instead of allocating your Employer's
contributions directly to your account as provided above, such amounts may be
applied to repay the current installment due on the loan.
All Company Stock acquired by the Plan with the proceeds of a loan are
maintained in a suspense account and are withdrawn and allocated to
participants' accounts as the loan is paid.
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Company Stock withdrawn from the suspense account will be allocated
among participants eligible to share in the Employer contribution for the year.
Your share of the Company Stock withdrawn is determined by the following
fraction:
Your Compensation
Number of Shares of X -------------------------
Company Stock Withdrawn Total Compensation of All
Participants Eligible to
Share
In addition, cash dividends on Company Stock in your account may be
used to repay a loan to the Plan. Company Stock withdrawn from the suspense
account having a fair market value equal to or greater than the amount of cash
dividends which would have been allocated to your account will be allocated to
you in the same proportion that the number of your shares of Company Stock
sharing in cash dividends bears to the total number of shares of all
participants' Company Stock sharing in cash dividends.
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 fund.
3. 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.
Compensation will not include your salary reduction contributions to a
cafeteria plan and to a cash or deferred arrangement maintained by your
Employer.
For the first year of your participation in the Plan, your compensation
will be recognized for benefit purposes for the entire Plan Year.
The Plan, by law, cannot recognize compensation in excess of $200,000.
This amount will be adjusted for cost of living increases. It will also be
applied to certain highly compensated employees and their family members as if
they were a single participant. If you or a member of your family may be
affected by this rule, ask your Administrator for further details.
4. Forfeitures
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.
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Forfeitures will be "allocated" or divided among participants eligible to share
for a Plan Year.
5. Transfers From Qualified Plans (Rollovers)
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.
6. Directed Investments
When you have completed ten (10) Plan Years of Service as a participant
and have attained age fifty-five (55), you will have the right to direct the
investment of a portion of your account attributable to Company Stock. The
Administrator will advise you of any such rights.
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 65 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.
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2. Distribution of Benefits Upon Late Retirement
You may remain employed past your Plan's Normal Retirement Date and
retire instead on your Late Retirement Date. Your Late Retirement Date is the
first day of the month coinciding with or next following the date you choose to
retire, after first having reached your Normal Retirement Date. On your Late
Retirement Date, you will be entitled to 100% of your account balance. Actual
benefit payments will begin as soon as practicable following your Late
Retirement Date.
3. Distribution of Benefits Upon Death
Your beneficiary will be entitled to 100% of your account balance upon
your death.
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, however,
(a) your spouse has validly waived any right to the death
benefit in the manner outlined above,
(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.
Regardless of the method of distribution selected, your entire death
benefit must generally be paid to your beneficiaries within five years after
your death (the "5-year rule"). However, if your designated beneficiary is a
person (instead of your estate or most trusts), then you or your beneficiary may
elect to have minimum distributions begin within one year of your death and it
may be paid over the designated beneficiary's life expectancy (the "1-year
rule") . If your spouse is the beneficiary, then under the "1-year rule", the
start of payments may be delayed until the year in which you would have attained
age 70 1/2. The election to have death benefits distributed under the "1-year
rule" instead of the "5-year
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rule" must be made no later than the time at which minimum distributions must
commence under the "1-year rule" (or, in the case of a surviving spouse, the
"5-year rule", if earlier).
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 be made
to you as if you had retired. (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), but not until after you
incur a 1-Year Break in Service. Your 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.
However, unless you elect in writing a later date, distribution of your
account balance attributable to Company Stock will commence no later than one
year after the close of the Plan Year which is the fifth Plan Year following the
Plan Year in which you terminate employment. If you are reemployed within such
five year period, or such distribution includes Company Stock acquired
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with the proceeds of a loan which has not been repaid in full, the commencement
of your distribution will be postponed.
Under the Plan's administrative procedures, if the value of your vested
account is zero, any non-vested account balance will be forfeited immediately.
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
2 40 %
3 60 %
4 80 %
5 100 %
Your vested percentage shall not be less than your vested percentage
under the Plan before this amendment and restatement.
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
The Administrator, in accordance with your election, will direct the
Trustee to pay your benefits to you under one or more of the following options:
(a) a single lump-sum payment;
(b) installments over a period not extending beyond the earlier
of your assumed life expectancy (or you and your beneficiary's assumed
life expectancies) determined at the time of distribution or, unless
you elect in writing a longer distribution period, a period not longer
than five years, or in certain cases, not longer than ten years. You
may also elect to have your life expectancy and the life expectancy of
a designated beneficiary who is your spouse recalculated each year. You
must make this election before the time that
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distributions are to begin. Failure to make this election will result
in life expectancies not being recalculated.
Distribution of your account at retirement will be in the form of cash
or Company Stock or both. However, you or your beneficiary may demand
distribution of your entire account in the form of Company Stock. Cash may be
paid (1) in lieu of partial shares of Company Stock, or (2) in certain
circumstances where it may not be possible for the Plan to purchase Company
Stock for distribution.
GENERALLY, WHENEVER A DISTRIBUTION IS TO BE MADE TO YOU ON OR BEFORE AN
ANNIVERSARY DATE, IT MAY BE POSTPONED BY THE PLAN FOR A PERIOD OF 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.
Regardless of whether you elect to delay the receipt of benefits, there
are other rules which generally require minimum payments to begin no later than
the April 1st following the year in which you reach age 70 1/2. You should see
the Administrator if you feel you may be affected by this rule.
8. Treatment of Distributions From Your Plan
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.
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(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
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
INFORMATION REGARDING COMPANY STOCK
1. Voting of Company Stock
The Trustee of the Plan will vote all Company Stock held by it as a
part of the Plan assets, provided that you or your beneficiary will be entitled
to direct the Trustee as to the manner in which
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voting rights on shares of Company Stock which are allocated to your account are
to be exercised (i) with respect to any corporate matter which involves the
voting of such shares with respect to the approval or disapproval of any
corporate merger or consolidation, recapitalization, reclassification,
liquidation, dissolution, sale of substantially all assets of a trade or
business, or such similar transaction, and (ii) with respect to all corporate
matters if, at the time of the vote thereon, the Company Stock is a
"registration-type" class of securities.
2. Right of First Refusal
Company Stock distributed by the Plan to you or your beneficiary may be
subject to a right of first refusal in favor of the Employer. In other words the
Employer must be given an opportunity to purchase at the same price and same
terms as you or your beneficiary may offer to sell to a third party.
3. Put Option
If the Company Stock distributed to you or your beneficiary cannot be
readily sold, then you or your beneficiary will have two put options to the
Employer. In other words you may require the Employer to purchase the stock at a
price equal to its value, and to pay you for the stock in cash or in
installments over a period of time (not in excess of five (5) years and in
certain cases not in excess of ten (10) years). The first 60 day put option
period will begin on the day following the date your Company Stock is
distributed, and if not exercised, the second 60 day option period will begin as
of the first day of the fifth month of the Plan Year next following the date
your Company Stock was distributed.
VII
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
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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.
You will have completed a Year of Service for purposes of sharing in
Employer contributions if you are credited with 1000 Hours of Service during a
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.
You will not be credited for the same Hours of Service both under (a)
or (b), as the case may be, and under (c).
2. 1-Year Break in Service
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.
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
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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 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.
VIII
YOUR PLAN'S "TOP HEAVY RULES"
1. Explanation of "Top Heavy Rules"
A Plan that primarily benefits "key employees" is called a "top heavy
plan." Key employees are certain owners or officers of
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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 will be limited to $200,000. This
amount will be increased each year for cost of living adjustments.
However, for Plan Years beginning prior to January 1, 1989, the
$200,000 limit shall apply only for Top Heavy Plan Years and shall not
be adjusted.
(c) If you are a participant in more than one Plan, you may
not be entitled to minimum benefits under both Plans.
IX
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) when added to the outstanding balance of all other loans
from the plan be limited to the lesser of:
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(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.
X
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;
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(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.
(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.
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(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.
XI
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 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:
(1) insurance contracts;
(2) collective bargaining agreements; and
(3) 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 of the Employer. (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 retirement benefit,
the statement will tell
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you how many years you have to work to get a right to a retirement
benefit. 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 retirement benefit is denied in whole or in part,
you must receive a written explanation of the reason for 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.
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XII
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
(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. A
complete discontinuance of contributions by your Employer shall constitute a
termination.
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