As filed with the Securities and Exchange Commission on October 28, 1999
Registration No. 333-______
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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Sun Bancorp, Inc.
----------------
(Exact Name of Registrant as Specified in Its Charter)
New Jersey 52-1382541
- -------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
226 Landis Avenue
Vineland, New Jersey 08360
(609) 691-7700
----------------
(Address of Principal Executive Offices)
Sun National Bank
401(k) Plan
-----------
(Full Title of the Plan)
Richard Fisch, Esq.
Evan M. Seigel, Esq.
Malizia Spidi & Fisch, PC
1301 K Street, N.W.
Suite 700 East
Washington, D.C. 20005
(202) 434-4660
----------------
(Name, Address and Telephone Number of Agent for Service)
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<CAPTION>
CALCULATION OF REGISTRATION FEE
========================================================================================================================
Proposed
Title of Proposed Maximum Amount of
Securities To Amount To Maximum Offering Aggregate Offering Registration
Be Registered(1) Be Registered(2) Price Per Share(3) Price(4) Fee
---------------- ---------------- ------------------ -------- ---
<S> <C> <C> <C> <C>
Common Stock
$1.00 par value 273,995 $12.44 $3,408,498 $947.56
========================================================================================================================
</TABLE>
(1) In addition, pursuant to Rule 416(c) under the Securities Act of 1933, this
registration statement also covers an indeterminate amount of interests to
be offered or sold pursuant to the Sun National Bank 401(k) Plan (the
"Plan"), as described herein.
(2) Estimates the maximum number of shares expected to be issued under the Plan
assuming that all employer and employee contributions to the Plan are used
to purchase shares of Common Stock of Sun Bancorp, Inc. (the "Company"),
together with an indeterminate number of shares which may be necessary to
adjust the number of additional shares of Common Stock reserved for
issuance pursuant to the Plan and being registered herein, as the result of
a stock split, stock dividend, reclassification, recapitalization, or
similar adjustment(s) of the Common Stock of the Company.
(3) Estimated solely for the purpose of calculating the registration fee and
calculated pursuant to Rule 457(c) based on the average of the high and low
prices of the Common Stock reported in the Nasdaq National Market System on
October 27, 1999.
(4) Estimated based on (2) and (3) above.
Under Rule 462 of the 1933 Act, the Registration Statement on Form S-8
shall be effective upon filing with the SEC.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(a) PROSPECTUS
Item 1. Plan Information. *
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Item 2. Registrant Information and Employee Plan Annual Information. *
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*This Registration Statement relates to the registration of 273,995
shares of Common Stock, $1.00 par value per share, of Sun Bancorp, Inc. (the
"Company") reserved for issuance and delivery under the Sun National Bank 401(k)
Plan (the "Plan"). Documents containing the information required by Part I of
this Registration Statement will be sent or given to participants in the Plan as
specified by Rule 428(b)(1). Such documents are not filed with the Securities
and Exchange Commission (the "Commission") either as part of this Registration
Statement or as prospectuses or prospectus supplements pursuant to Rule 424, in
reliance on Rule 428.
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Certain Documents by Reference.
- -------
The Company became subject to the informational requirements of the
Securities Exchange Act of 1934 (the "1934 Act") on June 28, 1996 and,
accordingly, files periodic reports and other information with the Commission.
Reports, proxy statements and other information concerning the Company filed
with the Commission may be inspected and copies may be obtained (at prescribed
rates) at the Commission's Public Reference Section, Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549.
The following documents filed by the Company are incorporated in this
Registration Statement and the Prospectus constituting Part I of this
Registration Statement:
(1) The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998, as filed with the Commission;
(2) The Company's Quarterly Report on Form 10-Q for the quarters ended
June 30, 1999 and March 31, 1999, respectively, as filed with the Commission;
(3) Current Report on Form 8-K/A (Date of Event: September 9, 1999), as
filed with the Commission on September 24, 1999;
(4) Current Report on Form 8-K (Date of Event: May 20, 1999), as filed
with the Commission on May 21, 1999;
(5) Current Report on Form 8-K (Date of Event: May 10, 1999), as filed
with the Commission on May 17, 1999;
(6) Current Report on Form 8-K/A (Date of Event: December 17, 1998), as
filed with the Commission on January 15, 1999; and
1
<PAGE>
(7) The Company's Registration Statement on Form 10-A, as filed with
the Commission on June 28, 1996.
All documents filed by the Company pursuant to Sections 13, 14, or
15(d) of the 1934 Act after the date hereof and prior to the termination of the
offering of the shares of Common Stock shall be deemed to be incorporated by
reference into this Registration Statement and to be a part hereof from the date
of filing of such documents.
Item 4. Description of Securities.
- -------
Not Applicable.
Item 5. Interests of Named Experts and Counsel.
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Not Applicable.
Item 6. Indemnification of Directors and Officers.
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Section 14A:3-5 of the New Jersey Business Corporation Act describes those
circumstances under which directors, officers, employees and agents may be
insured or indemnified against liability which they may incur in their
capacities as such.
Article VI of the Bylaws of the Company, require indemnification of
directors, officers, employees or agents of the Company to the full extent
permissible under New Jersey law.
The registrant believes that these provisions assist the registrant in,
among other things, attracting and retaining qualified persons to serve the
registrant and its subsidiary. However, a result of such provisions could be to
increase the expenses of the registrant and effectively reduce the ability of
stockholders to sue on behalf of the registrant because certain suits could be
barred or amounts that might otherwise be obtained on behalf of the registrant
could be required to be repaid by the registrant to an indemnified party.
Under a directors' and officers' liability insurance policy, directors and
officers of the Company are insured against certain liabilities, including
certain liabilities under the Securities Act of 1933.
The Company may purchase and maintain insurance on behalf of any person who
is or was a director, officer, employee, or agent of the Company or is or was
serving at the request of the Company as a director, officer, employee, or agent
of another corporation, partnership, joint venture, trust, or other enterprise
against any liability asserted against the person and incurred by the person in
any such capacity or arising out of his status as such, whether or not the
Company would have the power to indemnify the person against such liability
under the provisions of the Articles of Incorporation or the Bylaws.
Additionally, the Company has in force a directors and officers liability
policy underwritten by Saint Paul Insurance Company with a $2 million aggregate
limit of liability and an aggregate deductible of $50,000 per loss both for
claims directly against officers and directors and for claims where the Company
is required to indemnify directors and officers.
2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 ("1933 Act") may be permitted to directors, officers, or persons
controlling the Company pursuant to the foregoing provisions, the Company has
been informed that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the 1933 Act and is
therefore unenforceable.
Item 7. Exemption from Registration Claimed.
- -------
Not Applicable.
Item 8. Exhibits.
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For a list of all exhibits filed or included as part of this Registration
Statement, see "Index to Exhibits" at the end of this Registration Statement.
In lieu of an opinion of counsel concerning the Plan's compliance with the
requirements of ERISA, the Company hereby undertakes that it has submitted the
Plan and any amendment thereto to the Internal Revenue Service ("IRS") in a
timely manner and will make all changes required by the IRS in order to qualify
the Plan.
Item 9. Undertakings.
- -------
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information
set forth in the Registration Statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the Registration
Statement or any material change to such information in the
Registration Statement;
provided however, that paragraphs (a)(1)(i) and (a)(1)(ii) do no apply if the
Registration Statement is on Form S-3, Form S-8, and the information required to
be included in a post-effective amendment by those paragraphs is contained in
periodic reports filed by the registrant pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3
<PAGE>
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
(d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
1933 Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy expressed in the 1933 Act and
will be governed by the final adjudication of such issue.
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-8 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Vineland in the State of New Jersey, on the 28th day
of October 1999.
SUN BANCORP, INC.
By:/s/ Philip W. Koebig, III
--------------------------------------------
Philip W. Koebig, III
President and Chief Executive Officer
(Duly Authorized Representative)
POWER OF ATTORNEY
We, the undersigned directors and officers of Sun Bancorp, Inc., do hereby
severally constitute and appoint Philip W. Koebig, III as our true and lawful
attorney and agent, to do any and all things and acts in our names in the
capacities indicated below and to execute any and all instruments for us and in
our names in the capacities indicated below which said Philip W. Koebig, III may
deem necessary or advisable to enable Sun Bancorp, Inc. to comply with the
Securities Act of 1933, as amended, and any rules, regulations and requirements
of the Securities and Exchange Commission in connection with the Registration
Statement on Form S-8 relating to the registrant, including specifically, but
not limited to, power and authority to sign, for any of us in our names in the
capacities indicated below, this Registration Statement and any and all
amendments (including post-effective amendments) thereto; and we hereby ratify
and confirm all that said Philip W. Koebig, III shall do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
<S> <C>
/s/ Bernard A. Brown /s/ Philip W. Koebig, III
- ---------------------------------- -----------------------------------------------
Bernard A. Brown Philip W. Koebig, III
Chairman of the Board of Directors President, Chief Executive Officer and Director
Date: October 28, 1999 Date: October 28, 1999
/s/ Adolph F. Calovi /s/ Sidney R. Brown
- ---------------------------------- -----------------------------------------------
Adolph F. Calovi Sidney R. Brown
Director Vice Chairman, Secretary and Treasurer
Date: October 28, 1999 Date: October 28, 1999
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
<S> <C>
/s/ Peter Galetto, Jr.
- ---------------------------------- -----------------------------------------------
Peter Galetto, Jr. Anne E. Koons
Director Director
Date: October 28, 1999 Date:
/s/ Robert F. Mack
- ---------------------------------- -----------------------------------------------
Ike Brown Robert F. Mack
Director Executive Vice President
(Principal Financial and Accounting Officer)
Date: Date: October 28, 1999
- ----------------------------------
Jeffrey S. Brown
Director
Date:
</TABLE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
plan administrator of the Sun National Bank 401(k) Plan has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Vineland, State of New Jersey, on this 28th day
of October, 1999.
Sun National Bank 401(k) Plan
By /s/ Marjorie H. Hart
------------------------------------
Its Plan Administrator
--------------------------------
As Plan Administrator on behalf of
Sun National Bank
<PAGE>
INDEX TO EXHIBITS
Exhibit Description
- ------- -----------
4.1 Summary Plan Description of the Plan
4.2 Financial Statements for the Plan for the plan years ending December 31,
1998 and 1997; supplemental schedules for the plan year ended December 31,
1998, and independent auditor's report
5.1 Favorable determination letter dated April 16, 1998, confirming that the
Plan is qualified under Section 401 of the Internal Revenue Code of 1986,
as amended
23.1 Consent of Deloitte & Touche LLP
SUN NATIONAL BANK
401 (K) PLAN
SUMMARY PLAN DESCRIPTION
<PAGE>
TABLE OF CONTENTS
INTRODUCTION TO YOUR PLAIN
II
GENERAL INFORMATION ABOUT YOUR PLAN
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
1. Eligibility Requirements..............................................3
2. Participation Requirements............................................4
3. Excluded Employees....................................................4
IV
CONTRIBUTIONS TO YOUR PLAN
1. Employer Contributions to the Plan....................................4
2. Participant Salary Reduction Election.................................5
3. Your Share of Employer Contributions..................................6
4. Compensation..........................................................7
<PAGE>
5. Forfeitures...........................................................8
6. Transfers From Qualified Plans (Rollovers)............................8
7. Directed Investments..................................................8
V
BENEFITS UNDER YOUR PLAN
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. Hardship Distribution of Benefits....................................13
9. Treatment of Distributions From Your Plan............................15
10. Domestic Relations Order.............................................15
11. Pension Benefit Guaranty Corporation.................................16
VI
SERVICE RULES
1. Year of Service......................................................16
2. Hour of Service......................................................17
3. 1-Year Break in Service..............................................17
<PAGE>
VII
YOUR PLAN'S "TOP HEAVY RULES"
Explanation of "Top Heavy Rules...............................................17
VIII
LOANS
Loan Requirements.............................................................18
IX
CLAIMS BY PARTICIPANTS AND BENEFICIARIES
1. The Claims Review Procedure.............................................20
X
STATEMENT OF ERISA RIGHTS
1. Explanation of Your ERISA Rights........................................21
XI
AMENDMENT AND TERMINATION OF YOUR PLAN
1. Amendment............................................................22
2. Termination..........................................................23
<PAGE>
SUN NATIONAL BANK
401(K) PLAN
SUMMARY PLAIN DESCRIPTION
I
INTRODUCTION TO YOUR PLAN
Sun National Bank has amended your Profit Sharing Plan as of January 1,
1997. Sun National Bank continues to recognize the efforts you have made to its
success. This amended Profit Sharing Plan is 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 will govern.
<PAGE>
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
Sun National Bank 401(k) 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, 1997. 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 31st.
The contributions made to your Plan will be held and invested by the
Trustee of your Plan.
Your Plan and Trust will be covered by the laws of the State of New
Jersey.
2. Employer Information
Your Employer's name, address and identification number are:
Sun National Bank
226 Landis Avenue
Vineland, New Jersey 08360
22-2458313
3. Plan Administrator Information
The name, address and business telephone number of your Plan's
Administrator are:
Sun National Bank
226 Landis Avenue Vineland
New Jersey 08360
(609) 691-7700
Your Plan's Administrator keeps the records for the Plan and is
responsible for the administration of the Plan. The Administrator has
discretionary authority to construe the terms of the Plan and make
determinations on questions which may affect your eligibility for benefits. Your
Plan's Administrator will also answer any questions you may have about your
Plan.
2
<PAGE>
4. Plan Trustee Information
The name of your Plan's Trustee is:
Tracey Heun Brennan & Company and Majorie Hart
The principal place of business of your Plan's Trustee is:
2520 Highway 35, Suite 203
Manasquan, New Jersey 08736
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 from 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:
Sun National Bank
226 Landis Avenue
Vineland, New Jersey 08360
Service of legal process may also be made upon the Trustee or
Administrator.
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 for purposes of your
salary reduction elections when you have completed 90 days of service and have
reached your 21st birthday. You will be eligible to participate in the Plan for
purposes of your Employer's matching contribution and your Employer's
discretionary contribution if you have completed one (1) Year of Service and
have reached your 21st birthday.
You should review the Article in this Summary entitled "SERVICE RULES"
for a further explanation of these eligibility requirements.
3
<PAGE>
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 month coinciding
with or next following the date you satisfy the eligibility requirements.
3. Excluded Employees
There are certain employees of Sun National Bank who will not be
eligible to participate in your Plan. Those employees are:
(a) employees whose employment is governed by a collective
bargaining agreement under which retirement benefits were the
subject of good faith bargaining, unless such agreement
expressly provides for participation in this Plan.
(b) certain nonresident aliens who have no earned income from
sources within the United States.
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 "Participant Salary
Reduction Election.")
(b) A matching contribution equal to 50% of the amount of the salary
reduction you elected to defer.
In applying this matching percentage, however, only salary reductions
up to 6% of your annual compensation will be considered.
You will share in this matching contribution if you are actively
employed during the Plan Year.
(c) A discretionary amount determined each year by your Employer.
You must complete a Year of Service during the Plan Year and be
actively employed on the last day of the Plan Year to share in this
contribution.
4
<PAGE>
In determining your eligibility to share in contributions for the year,
there are special rules which apply if your employment terminates due to your
Retirement (Normal or Late), Total and Permanent Disability or death.
In such cases, you will be eligible to share in the contributions made
by your Employer in accordance with the following:
If the reason your employment terminated is due to our Retirement
(Normal or Late), Total and Permanent Disability or death, then you will be
eligible to share in the contribution for the year without regard to whether you
satisfied the requirements explained above.
2. Participant Salary Reduction Election
As a participant, you may elect to defer up to 15% of your compensation
each year instead of receiving that amount in cash. However, your total
deferrals in any taxable year may not exceed a dollar limit which is set by law.
The limit for 1996 is $9,500. This limit will be increased in future years for
cost of living changes.
The amount you elect to defer will be deducted from your pay in
accordance with a procedure established by your Employer and Administrator. The
procedure will require that you enter into a written salary reduction agreement
after you satisfy the Plan's eligibility requirements. You will be permitted to
modify your election during the Plan Year. However, changes to a salary
reduction election are only permitted twice each year, prior to the first day of
a Plan Year and the first day of the seventh month of a Plan Year. You are also
permitted to revoke your election any time during the Plan Year.
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 annual dollar 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 annual dollar limit, the excess must
be included in your income for the year. For this reason, it is desirable to
request in writing that these excess deferrals be returned to you. If you fail
to request such a return, you may be 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. If the entire dollar limit is exceeded in this Plan or any
other plan maintained by the Employer, you will be deemed to have notified the
5
<PAGE>
Administrator of the excess. The Administrator will then return the
excess deferral and any earnings to you by April 15th.
In the event you receive a hardship distribution from your deferrals to
this Plan pursuant to your certification and agreement that certain conditions
are satisfied or any other plan maintained by your Employer, you will not be
allowed to make additional salary reductions for a period of twelve (12) months
after you receive the distribution. Furthermore, the dollar limitation set by
law with respect to your taxable year following the year in which you received
the distribution, will be reduced by your salary reductions, if any, for the
taxable year of the distribution.
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 was 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 (including any offset of
loans) are not permitted before age 59 1/2 EXCEPT in the event of:
(a) death;
(b) disability;
(c) separation from service; or
(d) reasons of proven financial hardship (See the Section in the
Article entitled "Hardship Distribution of Benefits").
In addition, if you are a highly compensated employee (Generally
owners, officers or individuals receiving wages in excess of certain amounts
established by law), a distribution from your deferred account of certain excess
contributions may be required to comply with the law. The Administrator will
notify you when a distribution is required.
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.
If you are eligible, your Employer will also allocate the matching
contribution made to the Plan on your behalf. (See the Section in this Article
entitled "Employer Contributions to the Plan.")
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 the contribution
6
<PAGE>
will depend upon how much compensation you received during the year and the
compensation received by other eligible participants.
The contribution will be allocated to your account in the same
proportion that your compensation in excess of the Social Security Taxable Wage
Base (also called "excess compensation") plus your compensation bears to the
total "excess compensation" plus compensation of all eligible participants.
However, the maximum amount which can be allocated to you in this first step is
5.7% of your "excess compensation" plus your compensation.
If after the first step of the allocation process there still remains a
portion of your Employer's contribution which has not yet been allocated, then
the remainder will be allocated to you in the same proportion that your
compensation bears to the total compensation of all participants.
If your Employer maintains two or more plans providing for an
allocation or benefit in excess of a portion of your compensation, then the
allocation above may be adjusted. The Administrator will notify you if your
allocation will be affected.
For any short Plan Year, the Social Security Taxable Wage Base will be
prorated.
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.
You should also be aware that the law imposes certain limits on how much
money may be allocated to your account for a year. These limits are extremely
complex but generally no more than the lesser of $30,000 or 25% of your
compensation may be allocated to you (excluding earnings or losses) in any year.
The Administrator will inform you if these limits have affected you.
4. Compensation
For the purposes of your Plan, compensation has a special meaning.
Compensation is defined as your total compensation that is subject to income
tax, that is, all of your compensation paid to you by your Employer during a
Plan Year, but
-- excluding your salary reduction contributions to any plan or
arrangement maintained by your Employer.
Your compensation will be recognized for benefit purposes from your
date of entry into the Plan.
The Plan, by law, cannot recognize compensation in excess of $150,000.
This amount will be adjusted in future years 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.
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For any short Plan Year, the adjusted $150,000 limit will be prorated
based upon the number of full months in the short Plan Year.
5. 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. Forfeitures will be "allocated" or
divided among participants eligible to share for a Plan Year.
6. 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.
7. Directed Investments
Your Employer has established procedures to permit you to direct the
investment of contributions made by you or on your behalf to the Plan. These are
called the "Participant Direction Procedures." You should request a copy of
these Procedures from the Administrator. You need to follow these Procedures
when you direct investments by giving instructions to the Administrator. You
should review the information in these Procedures carefully before you give
investment directions. In addition, the Procedures indicate how you can obtain
other important information available from the Administrator on directed
investments.
The Plan is intended to be a plan described in Section 404(c) of the
Employee Retirement Income Security Act of 1974. If the Plan complies with this
Section, which it intends to do, then the fiduciaries of the Plan, including the
Employer, the Administrator and the Trustee, will be relieved of any legal
liability for any losses which are the direct and necessary result of the
investment directions that you give. The Participant Direction Procedures must
be followed in giving investment directions. If you fail to do so, then your
investment directions need not be followed. You are not required to direct
investments. If you choose not to direct investments, then the Trustee is
responsible for investing your accounts in a prudent manner.
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When you direct investments, your accounts are segregated for purposes
of determining the gains, earnings or losses on these investments. Your account
does not share in the investment performance for other Participants who have
directed their own investments.
In directing your investments, you should remember that the amount of
your benefits under the Plan will depend in part upon your choice of investments
which will include your Employer's stock. If you choose investments which
produce gains and other earnings, your benefits will tend to increase in value
over the period your investments perform accordingly. Conversely, if you choose
investments that have losses, your benefits will tend to decrease in value over
the period your investments perform accordingly. Losses can occur. There are no
guarantees of performance, and neither the Employer, the Administrator, the
Trustee, nor any of their representatives provide investment advice or insure or
otherwise guarantee the value or performance of any investment you choose.
You may direct the Trustee as to the investment of your entire interest
in the Plan.
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 Normal Retirement Age.
You will attain your Normal Retirement Age when you reach your 65th
birthday.
At your Normal Retirement Age, you will be entitled to 100% of your
account balance. Payment of your benefits will, at your election, begin as soon
as practicable following your actual retirement but not prior to your Normal
Retirement Date. If you continue working after your Normal Retirement Age, your
benefits may not be deferred past the April 1st following the end of the year in
which you attain age 70 1/2.
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. 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 50% of the death benefit, unless you otherwise elect in writing
on a form to be furnished to you by
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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
SPOUSE'S 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 will 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 spouse's
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.
Generally, 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 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
reach 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,
(b) your spouse cannot be located; or
(c) you are not married at the time of your death,
then your spouse's 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. Also, since your death benefit is your entire account balance, you
may, at any time, designate the beneficiary for amounts in excess of the
spouse's death benefit without your spouse's consent.
Under a special rule, you and your spouse may waive the survivor
annuity form of payment any time before you turn age 35. However, any waiver
will become invalid at the beginning of the Plan Year in which you turn age 35,
and you and your spouse will be required to make another waiver.
Regardless of the method of distribution selected, your entire death
benefit must be paid to your beneficiaries within five years after your death.
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Since your spouse 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 any gainful occupation with your Employer.
This condition must constitute total disability under the federal Social
Security Acts.
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 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). If your vested benefit
under the Plan at the time of any prior distribution exceeded $3,500 or
currently exceeds $3,500, you (and your spouse, if you are married) must give
written consent before the distribution may be made. Also, if you want the
distribution to be in a form other than an annuity payment, you and your spouse
must first waive the annuity form of payment. (See the Section in this Article
entitled "Benefit Payment Options" for a further explanation of how benefits are
paid from the Plan.)
If your vested benefit under the Plan at the time of any prior
distribution did not exceed $3,500 and currently does not exceed $3,500, 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). This earlier distribution will be made within a reasonable time
after you terminate employment.
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.")
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Vesting Schedule
Years of Service Percentage
1 25%
2 50%
3 75%
4 100%
However, matching contributions attributable to either salary reduction
amounts in excess of $9,500, or salary reduction amounts that are distributed in
a corrective distribution, will be forfeited.
Regardless of the vesting schedule above, you are always 100% vested in
your salary reduction amounts contributed to the Plan.
Your vested percentage will not be less than your vested percentage
under the Plan before this amendment and restatement.
Years of Service prior to the January 1, 1996, which is the Effective
Date of your Plan, and Years of Service prior to the time you reached age 18
will not be counted for vesting purposes.
Your vested benefit will normally be distributed to you or your
beneficiary upon your death, disability, or retirement.
7. Benefit Payment Options
There are various methods by which 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. The rules under this Section apply to all distributions you
will receive from the plan, whether by reason of retirement, termination, or any
other event which may result in a distribution of benefits.
If you are married on the date your benefits are to begin, you will
automatically receive a joint and 50% 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 joint and
75% or 100% survivor annuity instead of the standard joint and 50% survivor
annuity. It should be noted that 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.
You may, however, elect to waive these forms of payment, subject to the
following rules.
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When you are about to receive any distribution, 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 in cash;
(b) the purchase of a different form of annuity.
(c) installments over a period of not more than your assumed life
expectancy (or your and your beneficiary's assumed life
expectancies) determined at the time of distribution. 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 distributions are to begin. Failure to make this
election will result in life expectancies not being
recalculated.
Regardless of the form of pavement you receive, its value to you will
be the same value as each alternative form of payment.
If you elect to delay the receive 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. Hardship Distribution of Benefits
The Administrator may direct the Trustee to distribute up to 100% of
your vested account balance in the event of immediate and heavy
financial need. This hardship distribution is not in addition to your
other benefits and will therefore reduce the value of the benefits you
will receive at normal retirement.
Withdrawal will be authorized only if the distribution is to be used
for one of the following purposes:
(a) The payment of expenses for medical care (described in Section
213(d) of the Internal Revenue Code) previously incurred by
you or your dependent or necessary for you or your dependent
to obtain medical care;
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(b) The costs directly related to the purchase of your principal
residence (excluding mortgage payments);
(c) The payment of tuition, related educational fees, and room and
board expenses for the next twelve (12) months of post-secondary education for
yourself, your spouse or dependent;
(d) The payment necessary to prevent your eviction from your principal
residence or foreclosure on the mortgage of your principal residence.
A distribution will be made from your account, but only if you certify
and agree that all of the following conditions are satisfied:
(a) The distribution is not in excess of the amount of your
immediate and heavy financial need. The amount of your
immediate and heavy financial need may include any amounts
necessary to pay any federal, state, or local income taxes or
penalties reasonably anticipated to result from the
distribution;
(b) You have obtained all distributions, other than hardship
distributions, and all nontaxable (at the time of the loan)
loans currently available under all plans maintained by your
Employer;
(c) That your elective contributions and employee contributions
will be suspended for at least twelve (12) months after your
receipt of the hardship distribution; and
(d) That you will not make elective contributions for your taxable
year immediately following the taxable year of the hardship
distribution, except to the extent permitted by the Plan.
In addition to these rules, there are restrictions placed on hardship
distributions which are made from certain accounts. These accounts are generally
the accounts which receive your salary reduction contributions and other
Employer contributions which are used to satisfy special rules that apply to
401(k) plans. Any hardship distribution from these accounts will be limited, as
of the date of distribution, to the balance of such accounts as of the end of
the last Plan Year ending before July 1, 1989, plus your total salary reduction
contributions after such date, reduced by the amount of any previous
distributions made to you from these accounts. Ask your Administrator if you
need further details.
If you wish to receive a hardship distribution from the Plan in a
single payment from your account, you (and your spouse, if you are married) must
first waive the annuity form of payment. (See the Section in this Article
entitled "Benefit Payment Options" for a further explanation of how benefits are
paid from the Plan.)
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9. 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). Under certain circumstances all or a portion
of a distribution may not qualify for this rollover treatment. In
addition, most distributions will be subject to mandatory federal
income tax withholding at a rate of 20%. This will reduce the
amount you actually receive. For this reason, if you wish to
rollover all or a portion of your distribution amount, the direct
transfer option described in paragraph (b) below would be the
better choice.
(b) You may request for most distributions that a direct transfer of
all or a portion of your distribution amount be made to either an
Individual Retirement Account (IRA) or another qualified employer
plan willing to accept the transfer. A direct transfer will
result in no tax being due until you withdraw funds from the IRA
or other qualified employer plan. Like the rollover, under
certain circumstances all or a portion of the amount to be
distributed may not qualify for this direct transfer, e.g., a
distribution of less than $500 will not be eligible for a direct
transfer. If you elect to actually receive the distribution
rather than request a direct transfer, then in most cases 20% of
the distribution amount will be withheld for federal income tax
purposes. If you decide to directly transfer all or a portion of
your distribution amount, you (and your spouse, if you are
married) must first waive the annuity form of payment. (See the
Section in this Article entitled "Benefit Payment Options" for a
further explanation of this waiver requirement.)
(c) 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. YOU SHOULD CONSULT WITH QUALIFIED TAX
COUNSEL BEFORE MAKING A CHOICE.
10. 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.
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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.
11. 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
SERVICE RULES
1. Year of Service
The term "Year of Service" is used in this Summary Plan Description and
in 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.
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.
For purposes of determining whether you have completed a Year of
Service where the computation period is based upon a short Plan Year, your
Administrator will notify you of the number of the Hours of Service that are
required and the method of calculating a Year of Service.
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2. Hour of Service
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).
3. 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 may
require you to furnish proof that your absence qualifies as a maternity or
paternity absence.
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.
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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 and key
employees will 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 to your
account in order to provide you with at least "top heavy
minimum benefits."
(b) If you are a participant in more than one Plan, you may not be
entitled to "top heavy minimum benefits" under both Plans.
VIII
LOANS
You may apply to the Administrator for a loan from the Plan. Your
application must be in writing on forms which the Administrator will provide to
you. The Administrator may also request that you provide additional information,
such as financial statements, tax returns and credit reports. After considering
your application, the Administrator may, in its discretion, determine that you
qualify for the loan. The Administrator will inform the Trustee that you
qualify. The Trustee may then review the Administrator's determination and make
a loan to you if it is a prudent investment for the Plan.
1. Loan Requirements
There are various rules and requirements that apply for any loan. These
rules are outlined in this section. In addition, your Employer has
established a written loan program which explains these requirements in
more detail. You can request a copy of the loan program from the
Administrator. Generally, the rules for loans include the following:
(a) Loans must be made available to all participants and their
beneficiaries on a uniform and non-discriminatory basis.
(b) All loans must be adequately secured. You may use up to
one-half (1/2) of your vested account balance under the Plan
as security for the loan. If more security is required, your
principal residence may be used, if permitted by State law.
The Plan may also require that repayments on the loan
obligation be by payroll deduction.
(c) All loans must bear a reasonable rate of interest. The
interest rate must be one a bank or other professional lender
would charge for making a loan in a similar circumstance.
(d) All loans must have a definite repayment period 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 exceed five (5) years.
However,
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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 (5) years.
(e) All loans will be considered a directed investment from your
account under the Plan. All payments of principal and interest by
you on a loan shall be credited to your account.
(f) The amount the Plan may loan to you is limited by rules under the
Internal Revenue Code. All loans, when added to the outstanding
balance of all other loans from the Plan, will 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) 1/2 of your vested account balance.
Also, no loan in an amount less than $1,000 will be made.
(g) Your spouse must consent to any loan before it can be made if you
use your vested interest as security for the loan. This rule only
applies if the vested interest used as security exceeds $3,500.
(h) If you fail to make payments when they are due under the loan,
you will be considered to be "in default." The Trustee would then
have authority to take all reasonable actions to collect the
balance owing on the loan. This could include filing a lawsuit or
foreclosing on the security for the loan. Under certain
circumstances, a loan that is in default may be considered a
distribution from the Plan, and could result in taxable income to
you. In any event, your failure to repay a loan will reduce the
benefit you would otherwise be entitled to from the Plan.
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 will 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:
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(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 will 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.
(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, OR IF NO WRITTEN DENIAL OF YOUR CLAIM WAS
PROVIDED, NO LATER THAN 60 DAYS AFTER THE DEEMED DENIAL OF
YOUR CLAIM.
(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 will be
communicated to you in writing and will 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
will be deemed denied on review.
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<PAGE>
(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 will 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 Security Act of 1974, also
called ERISA. ERISA provides that all Plan participants are 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 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
21
<PAGE>
"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 Regional Office of the U.S.
Department of Labor's Pension and Welfare Benefits Administration.
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, will 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; or
(b) cause any reduction in the amount credited to your account.
22
<PAGE>
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
will constitute a termination.
23
EXHIBIT 4.2
<PAGE>
- --------------------------------------------------------------------------------
Sun National Bank 401(k) Plan
Financial Statements as of and for the
Years Ended December 31, 1998 and 1997,
Supplemental Schedules as of and for the
Year Ended December 31, 1998 and
Independent Auditors' Report
<PAGE>
SUN NATIONAL BANK 401(k) PLAN
TABLE OF CONTENTS
- --------------------------------------------------------------------------------
Page
INDEPENDENT AUDITORS' REPORT 1
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1998 AND 1997
AND FOR THE YEARS THEN ENDED:
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3
Notes to Financial Statements 4-7
SUPPLEMENTAL SCHEDULES AS OF DECEMBER 31, 1998
AND FOR THE YEAR THEN ENDED:
Item 27a - Schedule of Assets Held for Investment Purposes 8
Item 27d - Schedule of Reportable Transactions 9
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Trustees and Participants of the
Sun National Bank 401(k) Plan
Vineland, New Jersey
We have audited the accompanying statements of net assets available for benefits
of the Sun National Bank 401(k) Plan as of December 31, 1998 and 1997, and the
related statements of changes in net assets available for benefits for the years
then ended. These financial statements are the responsibility of the Plan's
management. Our responsibility is to express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, such financial statements present fairly, in all material
respects, the net assets available for benefits of the Plan at December 31, 1998
and 1997, and the changes in net assets available for benefits for the years
then ended in conformity with generally accepted accounting principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedules
of (1) assets held for investment purposes as of December 31, 1998 and (2)
reportable transactions for the year ended December 31, 1998 are presented for
the purpose of additional analysis and are not a required part of the basic
financial statements, but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These schedules are the
responsibility of the Plan's management. Such schedules have been subjected to
the auditing procedures applied in our audit of the basic 1998 financial
statements and, in our opinion, are fairly stated in all material respects when
considered in relation to the basic financial statements taken as a whole.
The schedule of assets held for investment purposes and the schedule of
reportable transactions that accompany the Plan's financial statements do not
disclose the historical cost of certain plan assets held by the Plan trustee and
the historical cost of assets sold, respectively. Disclosure of this information
is required by the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974.
/s/ Deloitte & Touche LLP
July 14, 1999
<PAGE>
SUN NATIONAL BANK 401(k) PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
1998 1997
ASSETS:
Investments, at fair value $ 2,920,975 $ 1,048,258
Participant loans receivable 21,389 3,576
----------- -----------
Total assets 2,942,364 1,051,834
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS $ 2,942,364 $ 1,051,834
=========== ===========
See notes to financial statements.
-2-
<PAGE>
SUN NATIONAL BANK 401(k) PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEARS ENDED DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
1998 1997
<S> <C> <C>
ADDITIONS:
Employer contributions $ 155,935 $ 87,717
Employee contributions 493,310 277,314
Rollover contributions and transfers in 1,390,615 31,936
Net (depreciation) appreciation in fair value of investments (73,393) 360,926
Investment income 216 40
Loan repayments 352 259
----------- -----------
Total additions 1,967,035 758,192
----------- -----------
DEDUCTIONS:
Benefits paid to participants 72,331 59,975
Administrative expenses 4,174 8,454
----------- -----------
Total deductions 76,505 68,429
----------- -----------
INCREASE IN NET ASSETS AVAILABLE FOR BENEFITS 1,890,530 689,763
NET ASSETS AVAILABLE FOR BENEFITS, BEGINNING OF YEAR 1,051,834 362,071
----------- -----------
NET ASSETS AVAILABLE FOR BENEFITS, END OF YEAR $ 2,942,364 $ 1,051,834
=========== ===========
</TABLE>
See notes to financial statements
-3-
<PAGE>
SUN NATIONAL BANK 401(k) PLAN
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1998 AND 1997
- --------------------------------------------------------------------------------
1. DESCRIPTION OF THE PLAN
The Sun National Bank 401(k) Plan is a defined contribution plan which was
initiated on January 1, 1996. The following description of the Sun National
Bank (the "Bank") 401(k) Plan (the "Plan") provides only general
information. Participants should refer to the Plan agreement for a more
complete description of the Plan's provisions.
a. General - The Plan is a defined contribution plan covering all
full-time employees of the Bank who have 90 days of service and are
age twenty-one or older. It is subject to the provisions of the
Employee Retirement Income Security Act of 1974 (ERISA).
b. Contributions - Each year, participants may contribute up to 15
percent of pretax annual compensation, as defined in the Plan.
Participants may also contribute amounts representing distributions
from other qualified plans. The Bank contributes 50 percent of the
first 6 percent of base compensation that a participant contributes to
the Plan. Additional amounts may be contributed at the option of the
Bank's board of directors.
c. Participant Accounts - Each participant's account is credited with the
participant's contribution and allocations of the Bank's contribution
and, Plan earnings, and charged with an allocation of administrative
expenses. Allocations are based on participant earnings or account
balances, as defined. The benefit to which a participant is entitled
is the benefit that can be provided from the participant's vested
account.
d. Vesting - Participants are immediately vested in their contributions
plus actual earnings thereon. Vesting in the Bank's matching and
discretionary contribution portion of their accounts plus actual
earnings thereon is based on years of contribution service. A
participant is 100 percent vested after four years of credited
service.
e. Investment Options - Upon enrollment in the Plan, a participant may
direct employee contributions among available investment funds (see
Note 6). Employer contributions are invested in Sun Bancorp, Inc.
Stock.
f. Participant Loans Receivable - Participants may borrow from their fund
accounts up to a maximum equal to the lesser of $50,000 or 50 percent
of their vested account balance. Loan transactions are treated as a
transfer to the investment fund from the Participant Loans Receivable
fund. The loans are secured by the balance in the participant's
account and bear interest at a rate commensurate with local prevailing
rates as determined quarterly by the Plan administrator.
g. Payment of Benefits - On termination of service due to death,
disability or retirement, a participant will receive an amount equal
to the value of the participant's vested interest in his or her
account.
h. Forfeited Accounts - At December 31, 1998, forfeited nonvested
accounts totaled approximately $27,000. At December 31, 1997, there
were no forfeited nonvested accounts. These accounts will be allocated
to eligible participants.
-4-
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting - The accompanying financial statements have been
prepared on the accrual basis of accounting.
Valuation of Investments - The Plan's investments are stated at fair value.
Investments are recorded by the Plan as of their trade dates.
Recognition of Income - Dividends and interest are included in income when
earned based on the term of the investments and the periods during which
the investments are owned by the Plan.
Use of Estimates - The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported
amounts of revenues and expense during the reporting period. Actual results
may differ from those estimates and assumptions.
Financial Statement Presentation - The Plan has adopted Statement of
Position 99-3, Accounting for and Reporting of Certain Defined Contribution
Plan Investments and Other Disclosure Matters ("SOP 99-3"). As a result,
the reclassification of the prior year financial statements have been made
to eliminate the by fund disclosures.
3. TERMINATION OF THE PLAN
Although it has not expressed any intent to do so, the Bank reserves the
right, at any time, to discontinue permanently or temporarily its
contributions to the Plan and to terminate its participation in the Plan.
The interest of the members shall be nonforfeitable and fully vested in the
event the Plan is terminated.
4. TAX STATUS
The Bank has adopted a non-standardized defined contribution profit sharing
plan provided by Nationwide Life Insurance Company and the Bank. The
Internal Revenue Service has determined and informed the Bank by letter
dated April 16, 1998, that the Plan is designed in accordance with
applicable sections of the Internal Revenue Code.
5. PARTIES IN INTEREST
Plan Administrator Sun National Bank
Plan Trustee Benefits 21, Inc.
Plan Custodian Nationwide Life Insurance Company
6. SUMMARY OF INVESTMENTS BY TYPE
Upon enrollment in the Plan, a participant may select from any of the eight
investment options as described by the Plan Custodian and summarized below.
Nationwide invests the contributions consistent with the direction of the
participants.
Twentieth Century Ultra Investors Fund - The fund seeks capital growth over
time by investing primarily in common stocks that are considered by
management to have better-than-average prospects for appreciation.
-5-
<PAGE>
Fidelity Magellan Fund - The fund invests primarily in common stocks and
convertible securities, with a portion of its assets invested in debt
securities of all types and qualities.
Neuberger & Berman Guardian Fund - The fund is a growth and income fund and
emphasizes investments in stocks of high quality, established companies.
Fidelity Puritan Fund - The fund seeks income consistent with preservation
of capital by investing in common stocks, preferred stocks and bonds,
seeking to diversify in terms of both companies and industries.
Fidelity Advisory High Yield Fund A - The fund seeks a combination of a
high level of income and the potential for capital gains by investing in a
diversified portfolio consisting primarily of high-yielding, fixed income
and zero coupon securities, such as bonds, debentures and notes,
convertible securities and preferred stock.
Nationwide Money Market Fund - The fund provides as high a level of current
income as is consistent with the preservation of capital and maintenance of
liquidity. It invests in a diversified portfolio of high-quality money
market instruments.
Virtuoso 2 is a guaranteed return contract that provides an annual interest
guarantee, based on the investment yield realized on Nationwide's General
Account. The contract guarantees an interest rate for the first guarantee
period and a minimum rate for the following guarantee period.
Sun Bancorp, Inc. Stock - Contributions are invested in common stock of Sun
Bancorp, Inc., the holding company of Sun National Bank.
It should be noted that any forfeited funds (i.e., the non-vested portion
of employer matched contributions for which a participant forfeits upon
early withdrawal from the plan) are invested in the Virtuoso 2 account to
be applied to future employer contributions at the discretion of the Plan
Administrator.
7. INVESTMENTS
The following presents investments that represent 5% or more of the Plan's
net assets.
December 31,
-------------------------------
1998 1997
Twentieth Century Ultra Investors Fund $ 432,180 $ 91,846
Fidelity Magellan Fund 441,058 136,466
Neuberger & Berman Guardian Fund 255,045 89,917
Sun Bancorp, Inc. Stock 1,418,385 590,267
Nationwide Money Market Fund 73,024
-6-
<PAGE>
The following presents detail of the net (depreciation) appreciation in
fair value of investments.
December 31,
----------------------------
1998 1997
Twentieth Century Ultra Investors Fund $ 47,257 $ 19,386
Fidelity Magellan Fund 61,045 30,034
Neuberger & Berman Guardian Fund (312) 12,793
Fidelity Puritan Fund 8,841 7,842
Fidelity Advisory High Yield Fund A 106 2,232
Nationwide Money Market Fund 2,718 1,733
Sun Bancorp, Inc. stock (193,048) 286,906
-------- ---------
$(73,393) $ 360,926
======== =========
8. RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits
according to the financial statements to Form 5500:
December 31,
1998
Net assets available for benefits per the financial statements $2,942,364
Refunds payable (3,372)
----------
Net assets available for benefits per Form 5500 $2,938,992
==========
******
-7-
<PAGE>
SUN NATIONAL BANK 401(k) PLAN
ITEM 27a - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Fair
Identity of Issue Description of Investment Cost Value
<S> <C> <C> <C>
*Nationwide Life Insurance Company Twentieth Century Ultra Investors Fund Not available $ 432,180
*Nationwide Life Insurance Company Fidelity Magellan Fund Not available 441,058
*Nationwide Life Insurance Company Neuberger & Berman Guardian Fund Not available 255,045
*Nationwide Life Insurance Company Fidelity Puritan Fund Not available 128,629
*Nationwide Life Insurance Company Fidelity Advisory High Yield Fund A Not available 125,592
*Nationwide Life Insurance Company Nationwide Money Market Fund Not available 115,214
*Nationwide Life Insurance Company Virtuosos 2 Not available 4,872
*Sun Bancorp, Inc. Common Stock Not available 1,418,385
Participant loans Loan rates ranged from 8.25% to 8.75% 0 21,389
------------- -----------
Not available $ 2,942,364
============= ===========
</TABLE>
*Indicates party-in-interest to the Plan
-8-
<PAGE>
SUN NATIONAL BANK 401(k) PLAN
ITEM 27d - SCHEDULE OF REPORTABLE TRANSACTIONS
YEAR ENDED DECEMBER 31, 1998
- --------------------------------------------------------------------------------
Single transactions of the same issue which exceed 5% of beginning total net
assets
<TABLE>
<CAPTION>
Description of Asset
Identity of (include Interest Rate
Party and Maturity in Case Number of Purchase Selling Cost of Net Gain
Involved of Loan Transactions Price Price Asset (Loss)
<S> <C> <C> <C> <C> <C> <C>
Nationwide Life Insurance Company Fidelity Advisory High Yield Fund A 1 $ 68,953 $ 68,953
Nationwide Life Insurance Company Fidelity Magellan Fund 1 55,656 55,656
Nationwide Life Insurance Company Fidelity Magellan Fund 1 111,142 111,142
Nationwide Life Insurance Company Neuberger & Berman Guardian Fund 1 76,108 76,108
Nationwide Life Insurance Company Twentieth Century Ultra Investors Fund 1 84,907 84,907
Nationwide Life Insurance Company Twentieth Century Ultra Investors Fund 1 182,272 182,272
Sun National Bank Sun National Bank Common Stock 1 592,662 592,662
</TABLE>
Series of transactions of the same issue which exceed 5% of beginning total
net assets
<TABLE>
<CAPTION>
Description of Asset
Identity of (include Interest Rate
Party and Maturity in Case Number of Purchase Selling Cost of Net Gain
Involved of Loan Transactions Price Price Asset (Loss)
<S> <C> <C> <C> <C> <C> <C>
Nationwide Life Insurance Company Fidelity Advisory High Yield Fund A 149 $ 109,256 $ 109,256
Nationwide Life Insurance Company Fidelity Magellan Fund 172 252,505 252,505
Nationwide Life Insurance Company Fidelity Puritan Fund 49 85,903 85,903
Nationwide Life Insurance Company Neuberger & Berman Guardian Fund 58 184,733 184,733
Nationwide Life Insurance Company Twentieth Century Ultra Investors Fund 155 332,365 332,365
Sun National Bank Sun National Bank Common Stock 4 989,410 989,410
</TABLE>
-9-
EXHIBIT 5.1
Favorable determination letter dated April 16,
1998, confirming that the Plan is qualified under
Section 401 of the Internal Revenue Code of 1986, as amended
<PAGE>
INTERNAL REVENUE SERVICE DEPARTMENT OF THE TREASURY
DISTRICT DIRECTOR
P.O. BOX 2508
CINCINNATI, OH 45201 Employer Identification Number:
22-2458313
Date: April 16, 1998 DLN:
17007258248007
SUN NATIONAL BANK Person to Contact:
C/O DAVID I. WADDINGTON CINDY PERRY
THBC Contact Telephone Number:
2520 HWY 35 STE 203 (513) 241-5199
MANASQUAN, NJ 08736 Plan Name:
401K PLAN
Plan Number: 001
Dear Applicant:
We have made a favorable determination on your plan, identified above,
based on the information supplied. Please keep this letter in your permanent
records.
Continued qualification of the plan under its present form will depend on
its effect in operation. (See section 1.401-1(b)(3) of the Income Tax
Regulations.) We will review the status of the plan in operation periodically.
The enclosed document explains the significance of this favorable
determination letter, points out some events that may affect the qualified
status of your employee retirement plan, and provides information on the
reporting requirements for your plan. It also describes some events that
automatically nullify it. it is very important that you read the publication.
This letter relates only to the status of your plan under the Internal
Revenue Code. It is not a determination regarding the effect of other federal or
local statutes.
This determination letter is applicable for the amendment(s) executed on
August 26, 1997.
This determination letter is also applicable for the amendment(s) dated on
March 16, 1998.
This determination letter is applicable for the plan adopted on January 31,
1996.
This plan has been mandatorily disaggregated, permissively aggregated, or
restructured to satisfy the nondiscrimination requirements.
This plan satisfies the nondiscrimination in amount requirement of section
1.401(a)(4)-1(b)(2) of the regulations on the basis of the design-based safe
harbor described in the regulations.
This plan satisfies the nondiscriminatory current availability requirements
of section 1.401(a)(4)-4(b) of the regulations with respect to those benefits,
rights and features that are currently available to all employees in the plan's
coverage group. For this purpose, the plan's coverage group
<PAGE>
-2-
SUN NATIONAL BANK
consists of those employees treated as currently benefitting for purposes of
demonstrating that the plan satisfies the minimum coverage requirements of
section 410(b) of the Code.
This letter considers the amendments required by the Tax Reform of 1986,
except as otherwise specified in this letter.
The information on the enclosed Publication 794 is an integral part of this
determination. Please be sure to read and keep it with this letter.
The requirement for employee benefits plans to file summary plan
descriptions (SPD) with the U.S. Department of Labor was eliminated effective
August 5, 1997. For more details, call 1-800-998-7542 for a free copy of the SPD
card.
We have sent a copy of this letter to your representative as indicated in
the power of attorney.
If you have questions concerning this matter, please contact the person
whose name and telephone number are shown above.
Sincerely yours,
/s/ C. Ashley Bullard
District Director
Enclosures:
Publication 794
Reporting & Disclosure Guide
for Employee Benefit Plans
EXHIBIT 23.1
Consent of Deloitte & Touche LLP
<PAGE>
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of Sun Bancorp, Inc. on Form S-8 of our report dated February 1, 1999,
incorporated by reference in the Annual Report on Form 10-K of Sun Bancorp, Inc.
for the year ended December 31, 1998.
/s/ Deloitte & Touche LLP
---------------------------------
Deloitte & Touche LLP
October 26, 1999
Philadelphia, Pennsylvania
