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EXHIBIT 4(a)
ESENJAY EMPLOYEE SAVINGS PLAN
SUMMARY PLAN DESCRIPTION
OCTOBER 1, 1998
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SUMMARY PLAN DESCRIPTION
TABLE OF CONTENTS
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PAGE
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I INTRODUCTION...................................................................................1
II PLAN DATA......................................................................................1
Agent For Service Of Legal Process.............................................................1
Effective Date.................................................................................1
Employer.......................................................................................1
Plan Administrator.............................................................................1
Plan Year......................................................................................1
Trustee........................................................................................1
Type Of Administration.........................................................................1
III DEFINITIONS...................................................................................1
Break In Service...............................................................................1
Compensation...................................................................................2
Disability.....................................................................................2
Early Retirement...............................................................................2
Effective Date.................................................................................2
Elective Deferral..............................................................................2
Entry Date.....................................................................................2
Family Member..................................................................................2
Highly Compensated Employee....................................................................2
Hour Of Service................................................................................3
Maternity/Paternity Leave......................................................................3
Normal Retirement Age..........................................................................3
Spouse.........................................................................................3
Year Of Service................................................................................4
IV ELIGIBILITY REQUIREMENTS AND PARTICIPATION....................................................4
V EMPLOYEE CONTRIBUTIONS.........................................................................4
Elective Deferrals.............................................................................4
Voluntary Contributions........................................................................5
Rollover And Transfer Contributions............................................................5
VI EMPLOYER CONTRIBUTIONS.........................................................................5
Contribution Formula...........................................................................5
Eligibility For Allocation.....................................................................6
VII GOVERNMENT REGULATIONS.......................................................................6
VIII PARTICIPANT ACCOUNTS........................................................................7
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IX VESTING........................................................................................8
Determining Vested Benefit.....................................................................8
Payment Of Vested Benefit......................................................................8
Loss Of Benefits...............................................................................9
Timing Of Forfeitures..........................................................................9
Reemployment...................................................................................9
X TOP-HEAVY RULES...............................................................................10
XI RETIREMENT BENEFITS AND DISTRIBUTIONS.........................................................11
Retirement Benefits...........................................................................11
Distributions During Employment...............................................................11
Hardship Withdrawals..........................................................................11
Beneficiary...................................................................................12
Death Benefits................................................................................13
Form Of Payment...............................................................................13
Rollover of Payment...........................................................................13
Time Of Payment...............................................................................14
Joint and Survivor Annuity Rules..............................................................14
XII INVESTMENTS.................................................................................15
Trust Fund....................................................................................15
Investment Responsibility.....................................................................15
Employee Investment Direction.................................................................16
Participant Loans.............................................................................16
XIII ADMINISTRATION.............................................................................16
Plan Administrator............................................................................16
XIV AMENDMENT AND TERMINATION...................................................................17
XV LEGAL PROVISIONS..............................................................................18
Rights Of Participants........................................................................18
Fiduciary Responsibility......................................................................18
Employment Rights.............................................................................19
Benefit Insurance.............................................................................19
Claims Procedure..............................................................................19
Assignment....................................................................................19
Questions.....................................................................................20
Conflicts With Plan...........................................................................20
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I. INTRODUCTION
Your Employer has established a retirement plan to help supplement your
retirement income. Under the program, the Employer makes contributions
to a Trust Fund which will pay you a benefit at retirement. Details
about how the Plan works are contained in this summary. While the
summary describes the principal provisions of the Plan, it does not
include every limitation or detail. If there is a discrepancy between
this booklet and the official Plan document, the Plan document shall
govern. You may obtain a copy of the Plan document from the Plan
Administrator. The Plan Administrator may charge a reasonable fee for
providing you with the copy.
II. PLAN DATA
A. AGENT FOR SERVICE OF LEGAL PROCESS: The Employer or Trustee.
B. EFFECTIVE DATE: The Effective Date of the original Plan was
April 1, 1994; the Effective Date of the amended Plan is
October 1, 1998.
C. EMPLOYER: Esenjay Exploration, Inc.
Address: 500 Dallas, Suite 2920
One Allen Center
Houston, Tx 77002
Telephone No.: (713)739-7100
Tax I.D. No.: 73-1421000
Plan No.: 001
D. PLAN ADMINISTRATOR: The Employer is the Plan Administrator.
E. PLAN YEAR: The 12-month period beginning on January 1 and
ending on December 31.
F. TRUSTEE(S): Frost National Bank
Address: P. O. Box 1315, Houston, Texas 77251
Telephone No.: (713) 652-7852
G. TYPE OF ADMINISTRATION: Trust Fund.
III. DEFINITIONS
A. BREAK IN SERVICE. A Plan Year during which you are not
credited with or are not paid for more than 500 hours. If
you go into the military service of the United States, you
are not considered terminated as long as you return to work
within the time required by law. If you separate from
employment and incur a Break in
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Service, all contributions to your various accounts are
suspended. [See special rules relating to maternity and
paternity leave below. Also, see Section VI(B) to determine
your eligibility to share in the Employer's Contribution if
you separate from employment, but do not incur a Break in
Service.] If a Break in Service occurs and you return to
full time employment with the Employer, your rights are
explained in the section entitled "Vesting".
B. COMPENSATION. Your total salary, pay, or earned income from
the Employer, as reflected on tax Form W-2, even if not
subject to withholding taxes when earned. Compensation will
include amounts received by you during the calendar year.
Compensation shall include amounts deferred under 401(k) plans
and Section 125 cafeteria plans. Compensation shall be limited
to $150,000 as adjusted for inflation.
C. DISABILITY. A potentially permanent illness or injury, as
certified to by a physician who is approved by the Employer,
which prevents you from engaging in work for which you are
qualified for a period of at least 12 months.
D. EARLY RETIREMENT. You may retire early upon reaching age 55
and completion of 5 Years of Service. If you terminate
employment after completing the required number of Years of
Service, but before attaining the required age, you may
elect Early Retirement after attaining the required age.
E. EFFECTIVE DATE. The date on which the Plan starts or an
amendment is effective.
F. ELECTIVE DEFERRAL. Employer contributions made to the Plan at
your election, instead of being given to you in cash as part
of your salary. You can elect to defer a portion of your
salary, instead of receiving it in cash, and your Employer
will contribute it to the Plan on your behalf.
G. ENTRY DATE. The date on which you enter the Plan. Your Entry
Date will be the first day of the Plan Year, or the first
day of the fourth month, the first day of the seventh month,
or the first day of the tenth month of the Plan Year
coinciding with or following the date you satisfy the
eligibility requirements.
H. FAMILY MEMBER. The Spouse or lineal ascendant or descendant
(or Spouse thereof) of either a more than 5% owner of the
Employer or one of the ten highest compensated Highly
Compensated Employees of the Employer.
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I. HIGHLY COMPENSATED EMPLOYEE. Any Employee who during the
current or prior Plan Year (1) was a more than 5% owner, (2)
received more than $75,000 in Compensation as adjusted for
inflation (3) received more than $50,000 in Compensation as
adjusted for inflation and was in the top 20% of Employees
when ranked by Compensation, or (4) was an officer receiving
more than $45,000 in Compensation as adjusted for inflation.
Family Members of any 5% owner, or Highly Compensated
Employee in the group of the ten Employees with the greatest
Compensation, will be combined as if they were one person
for purposes of Compensation and contributions. If you are
not currently or never were Highly Compensated, or a Family
Member of a Highly Compensated Employee, you are a
Non-highly Compensated Employee.
J. HOUR OF SERVICE. You will receive credit for each hour you are
(1) paid for being on your job, (2) paid even if you are not
at work (vacation, sickness, leave of absence, or
disability), or (3) paid for back pay if hours were not
already counted. A maximum of 501 hours will be credited in
any year for periods during which you are not at work but
are paid. Hours of Service will be calculated based on
actual hours you are entitled to payment. Your Hours of
Service with Esenjay Petroleum Corp. are included for
eligibility and vesting in this Plan.
K. MATERNITY/PATERNITY LEAVE. You may be eligible for additional
Hours of Service if you leave employment, even if
temporarily, due to childbirth or adoption. If this is the
case, you will be credited with enough hours (up to 501) of
service to prevent a Break in Service, either in the year
you leave employment or the following year. For example, if
you have 750 Hours of Service in the year that your child is
born, you would not get any more hours credited for that
Plan Year since you do not have a Break in Service.
Therefore, if you do not return to employment the following
year, you will get 501 Hours of Service so you will not have
a Break in Service in that year. Alternatively, if you do
return the following year, but work only 300 hours, you will
receive an additional 201 hours in order to prevent a break.
These Hours of Service for maternity or paternity leave must
all be used in one Plan Year. They are used only to prevent
a Break in Service and not for calculating your Years of
Service for eligibility, vesting or benefits.
L. NORMAL RETIREMENT AGE. The attainment of age 65, or, if later,
the 5 anniversary of the first day of the Plan Year during
which you entered the Plan.
M. SPOUSE. The person to whom you are or were legally married, or
your common law Spouse if common law marriage is recognized
by the state in which you live. In order for your Spouse to
receive a benefit under this Plan, he or she may not
predecease you. A
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former Spouse may be treated as a "Spouse" under this
definition if recognized as such under a Qualified Domestic
Relations Order as explained at Section XV(F) of this
Summary Plan Description.
N. YEAR OF SERVICE.
ELIGIBILITY
For purposes of determining your eligibility to participate in
the Plan, a Year of Service is a 12-consecutive month period
beginning on your date of hire during which you are credited
with at least 1 Hours of Service.
CONTRIBUTION
For purposes of determining whether or not you are entitled to
have a contribution allocated to your account, a Year of
Service is a 12-consecutive month period, which is the same as
the Plan Year, during which you are credited with at least 1
Hours of Service.
VESTING
For purposes of determining the extent to which you are vested
in your account balance, a Year of Service is a 12-consecutive
month period, which is the same as the Plan Year, during which
you are credited with 1000 Hours of Service.
IV. ELIGIBILITY REQUIREMENTS AND PARTICIPATION
You are eligible to participate in this Plan upon completing 6 mos.
Years of Service and attaining age 21. You are considered to have
completed 1 Year of Service for purposes of eligibility on the
aniversary of your first day of employment, provided that you worked at
least 1 hours during that 12-month period. The subsequent measuring
periods will be based on your employment year and anniversaries
thereof.
Your participation in the Plan will begin on the Entry Date defined at
Section III.
V. EMPLOYEE CONTRIBUTIONS
A. ELECTIVE DEFERRALS
You, as an eligible Employee, may authorize the Employer to
withhold from 1% up to 10% of your Compensation plus up to
100% of any Employer paid cash bonus, not to exceed $7,000 as
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adjusted for inflation, and to deposit such amount in the Plan
fund. If you participate in a similar plan of an unrelated
employer and your Elective Deferrals under this Plan and the
other plan exceed the $7,000 limit, for a given year you must
designate one of the Plans as receiving an excess amount. If
you choose this Plan as the one receiving the excess, you must
notify the Plan Administrator by March 1 of the following year
so that the excess and any income thereon may be returned to
you by April 15. You may terminate your Elective Deferrals at
any time. You may increase or decrease your Elective Deferral
percentage upon 30 days notice to the Employer.
If you terminate contributions, you may not reinstate payroll
withholding for a period of three(3) months. The Employer may
also reduce or terminate your withholding if required to
maintain the Plan's qualified status.
B. VOLUNTARY CONTRIBUTIONS
You may not make personal after-tax contributions to the Plan.
C. ROLLOVER AND TRANSFER CONTRIBUTIONS
Rollover and Transfer Contributions are permitted. You may
make a Rollover or Transfer Contribution prior to becoming a
Participant.
A rollover or transfer of your retirement benefits may
originate from another qualified retirement plan or special
individual retirement arrangement (known as a `conduit' IRA)
to this Plan. If you have already received a lump-sum payment
from another qualified retirement plan, or if you received
payment from another qualified plan and placed it in a
separate `conduit' IRA, you may be eligible to redeposit that
payment to this Plan. The last day you may make a Rollover
Contribution to this Plan is the 60th day after you receive
the distribution from the other plan or IRA. A transfer occurs
when the trustee of the old plan transfers your assets to this
Plan. If you believe you qualify for a transfer or rollover,
see the Plan Administrator for more details.
VI. EMPLOYER CONTRIBUTIONS
A. CONTRIBUTION FORMULA
ELECTIVE DEFERRALS:
The Employer will contribute all Compensation which you elect
to defer to the Plan within the limits outlined in Section
V(A).
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MATCHING CONTRIBUTIONS:
The Employer may make a Matching Contribution to each
Participant based on his or her Elective Deferrals in a
percentage set by the Employer prior to the end of each Plan
Year. The Employer shall not match your Elective Deferrals
that are in excess of 10% of your Compensation. The time
period which will be used for determining the amount of
Matching Contributions owed shall be monthly. Employer
Matching Contributions will only be made on Elective Deferrals
made to the Plan.
QUALIFIED NON-ELECTIVE CONTRIBUTIONS:
The Employer may also contribute an additional amount
determined in its sole judgement. This additional
contribution, if any, will be allocated to only Non-highly
Compensated Participants, in proportion to each eligible
Employee's Compensation as a ratio of all eligible Employees'
Compensation. These Contributions will be non-forfeitable and
subject to withdrawal restrictions.
DISCRETIONARY:
The Employer may also contribute an additional amount
determined in its sole judgement. Such additional
contribution, if any, shall be allocated to each Participant
in proportion to his or her Compensation for the calendar
year.
B. ELIGIBILITY FOR ALLOCATION
The Employer's Contribution will be made to all Participants
who are employed at the end of the Plan Year provided that the
Participant has completed 1 Hours of Service during the Plan
Year. The Employer shall also make matching and other related
contributions as indicated below to Employees who terminate
during the Plan Year as a result of:
MATCHING OTHER
x x Retirement.
x x Disability.
x x Death.
x x Other termination of employment
without regard to the number of Hours
of Service the Participant has
completed.
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VII. GOVERNMENT REGULATIONS
The federal government sets certain limitations on the level of
contributions which may be made to a Plan such as this. There is also a
"percentage" limitation which means that the percentage of Compensation
which you may contribute (Elective Deferrals) depends on the average
percentage of Compensation that the other Participants are
contributing. Simply stated, all Participants are divided into 2
categories: Highly Compensated and Non-highly Compensated and the
average for each group is calculated. The average contribution that the
Highly Compensated may make is based on the average contribution that
the Non-highly Compensated make. If a Highly Compensated Participant is
contributing more than he or she is allowed, the excess, plus or minus
any gain or loss, will be returned. Keep in mind that if you are a 5%
owner of the business or one of the ten highest paid Highly Compensated
employees, your Family Member's contribution percentages and
Compensations will be combined with yours for purposes of determining
your contributions under the Plan.
VIII. PARTICIPANT ACCOUNTS
The Employer will set up a record keeping account in your name to show
the value of your retirement benefit. The Employer will make the
following additions to your account:
A. your allocated share of the Employer's Contribution (including
your Elective Deferrals),
B. your share of investment earnings and appreciation in the
value of investments,
C. the amount of your personal Transfer Contributions and
Rollover Contributions, if any
The Employer will make the following subtractions from your account:
D. any withdrawals or distributions made to you,
E. your share of investment losses and depreciation in the value
of investments, and
F. your share of administrative fees and expenses paid out of the
Plan, if applicable,
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The Employer will value the following types of contributions in your
account as indicated below:
TYPE OF CONTRIBUTION VALUATION DATE(S)
Elective Deferrals ((i))
Matching ((i))
Qual. Non-Elective ((i))
Non-Elective ((i))
Valuation Date Options: (i) Daily (ii) Weekly (iii) Monthly (iv)
Bi-Monthly (v) Quarterly (vi) Semi-Annually (vii) Annually
The Employer will provide you with a statement of account activity at
least once annually.
IX. VESTING
A. DETERMINING VESTED BENEFIT
Vesting refers to your earning or acquiring a non-forfeitable
right to the full amount of your account. Any Elective
Deferrals, Qualified Non-Elective Contributions, Rollover
Contributions, Transfer Contributions, plus or minus any
earnings or losses, are always 100% vested and cannot be
forfeited for any reason. Any contribution not listed in the
previous sentence, and the earnings or losses thereon, will
vest in accordance with the following table:
YEARS OF SERVICE
-------------------------------------------------------
1 2 3 4 5 6 7
--- --- --- --- --- --- ---
20% 40% 60% 80% 100%
You are considered to have completed 1 Year of Service for
purposes of vesting upon the completion of 1000 Hours of
Service at any time during a Plan Year.
You automatically become fully vested, regardless of the
vesting table, upon attainment of Normal Retirement Age, Early
Retirement Age, upon retirement due to Disability, upon death,
and upon termination of the Plan.
B. PAYMENT OF VESTED BENEFIT
If you separate from Service before your retirement, death or
Disability, you may request early payment of your vested
benefit by submitting a written request to the Plan
Administrator. If your vested account balance at the time of
termination or at the time of any prior distributions exceeds
or exceeded $3,500, you may defer
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the payment of your benefit until April 1 of the calendar
year following the calendar year during which you attain
age 70 1/2.
The portion of your account balance to which you are not
vested is called a `forfeiture' and remains in the Plan to pay
Plan administration expenses.
C. LOSS OF BENEFITS
There are only two events which can cause the loss of all or a
portion of your account. One is termination of employment
before you are 100% vested according to the vesting provisions
described at IX(A) and the other is a decrease in the value of
your account from investment losses or administrative expenses
and other costsof maintaining the Plan.
D. TIMING OF FORFEITURES
If you terminate employment and receive payment of the vested
portion of your account the non-vested portion of your account
will be forfeited at the time you receive your payment. If you
have not received a distribution of your entire vested
balance, your non-vested portion will be forfeited at the end
of the Plan Year during which you incur your fifth consecutive
1-year Break in Service.
E. REEMPLOYMENT
If you terminate service with your Employer, then are later
reemployed, you will become a Participant as of the earlier of
the next Valuation Date or the next Entry Date [see Section
III] following your return to employment. If you are not a
member of a class of employees eligible to participate in the
Plan and later become a member of the eligible class, you will
participate immediately if you have satisfied the minimum age
and service requirements. Should you become ineligible to
share in future Contributions and forfeitures because you are
no longer a member of an eligible class, you shall again share
upon your return to an eligible class. All years of prior
Service will be counted when calculating your vested
percentage in your new account balance. The following rules
apply in connection with reemployed Participants.
TERMINATED PARTIALLY VESTED PARTICIPANTS. If you terminate
employment and receive payment of the vested portion of your
account the non-vested portion of your account will be
forfeited at the time you receive your payment. If you are
reemployed prior to incurring five consecutive 1-year Breaks
in Service you may have the Plan restore your forfeiture by
repaying the amount of the distribution you received
attributable to Employer contributions. This repayment right
applies only if you do not incur five
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consecutive 1-year Breaks in Service. You must make this
repayment within five years of your date of reemployment.
If you do not repay the amount you received, the forfeited
portion will not be restored to your account. Whether you
repay or not, your prior Service will count toward vesting
service for future Employer contributions.
FOR EXAMPLE, assume that you terminate your job with your
current Employer. At the time of termination you had accrued a
total benefit of $10,000 under the retirement Plan. Although
this amount had been allocated to your account, you were only
40% vested in that amount when you left. You decided to take a
distribution of your vested account balance (40% of $10,000,
or $4,000) when you quit. The non-vested balance of your
account ($6,000) was forfeited. Three years later, you became
reemployed by the same Employer. Since you were reemployed
within 5 years, you have the right to repay the $4,000
distribution you received when you quit. You would have to
repay the $4,000 within 5 years of being rehired. If you do
so, the non-vested portion of your account ($6,000) will be
restored to your account. After restoration, you will be
vested in 40% of this account, but your vested percentage will
increase based on your Years of Service after your
reemployment. Your prior Service will ALWAYS count towards
vesting of Employer Contributions which you receive after
reemployment, whether or not you decide to repay and restore
your prior account.
TERMINATED NON-VESTED PARTICIPANTS. If you were not vested in
any portion of your Employer Contribution account prior to
your separation from service and are reemployed before
incurring five consecutive one-year Breaks in Service, you
will be credited for vesting with all pre-break and post-break
service. Your prior unpaid account balance will automatically
be restored and you will continue to vest in that account. If
you are reemployed after incurring five consecutive one-year
Breaks in Service, you will lose your prior account balance,
but your pre-break Years of Service will count towards
vesting, in your new account balance.
X. TOP-HEAVY RULES
A `top-heavy' plan is one in which more than 60% of the contributions
or benefits are attributable to certain `key employees', such as
owners, officers and stockholders. The Plan Administrator is
responsible for determining each year if the Plan is `top-heavy'. If
the Plan becomes top-heavy special rules apply to the allocation of the
Employer's contribution. These special rules require that only
Participants who are not key employees will generally receive an
allocation of the Employer's contribution equal to 3% of compensation,
or if less, the greatest percentage allocated to the account of any key
employee. All participants are entitled to receive a minimum allocation
upon completing at least one
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Hour of Service in the top-heavy Plan Year provided they are
employed on the last day of the Plan Year. The Employer's minimum
contribution can be satisfied by another Employer sponsored
retirement plan, if so elected by the Employer. The following
vesting schedule shall apply for the Plan Year the Plan becomes
top-heavy, for any type of Employer Contribution, unless the
Employer has already elected a faster schedule:
YEARS OF SERVICE
-----------------------------------------------------
1 2 3 4 5 6
----- ----- ----- ----- ----- -----
0% 20% 40% 60% 80% 100%
XI. RETIREMENT BENEFITS AND DISTRIBUTIONS
A. RETIREMENT BENEFITS
The full value of your account balance is payable at your
Normal Retirement Age, even if you continue to work, or you
may defer payment until April 1 following the year you reach
age 70-1/2. If you work beyonD your Normal Retirement Age, you
will continue to fully participate in the Plan.
B. DISTRIBUTIONS DURING EMPLOYMENT
Upon attainment of age 59-1/2, benefits attributable to
EmployeR contributions, allocated to your account(s) in excess
of two years, are available for withdrawal if you are 100%
vested in those benefits.
If applicable, benefits attributable to your Voluntary
Contributions under the Plan plus any rollovers are available
for withdrawal upon request to the Plan Administrator.
Transfer Contributions may be withdrawn only if they originate
from plans meeting certain safe harbor provisions.
C. HARDSHIP WITHDRAWALS
You may file a written request for a hardship withdrawal of
the portion of your account balance attributable to Elective
Deferrals and certain Employer Contributions. Earnings on
Elective Deferrals up to the last day of the Plan Year prior
to July 1, 1989 may be included in any hardship withdrawal,
but earnings on Elective Deferrals after that date may not be
included. You must generally have your Spouse's written
consent for a hardship withdrawal unless you are advised
otherwise by the Plan Administrator. Prior to receiving a
hardship distribution, you must take any other distribution
and borrow the maximum non-taxable loan amount allowed under
this and any other plans of the Employer. Note, however, that
if the effect of the loan would be to increase the amount of
your financial need, you are not required to
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take the loan. For example, if you need funds to purchase a
principal residence, and a plan loan would disqualify you
from obtaining other necessary financing, you do not have
to take the loan. Hardship withdrawals may be authorized by
the Employer for the following reasons:
1. to assist you in purchasing a personal residence
which is your primary place of residence (not
including mortgage payments),
2. to assist you in paying tuition and any other
educational expenses for you, your Spouse, or your
dependents, for the next twelve months of
post-secondary education,
3. to assist you in paying expenses incurred or
necessary on behalf of you, your Spouse, or your
dependents for hospitalization, doctor or surgery
expenses which are not covered by insurance, or
4. to prevent your eviction from or foreclosure on your
principal residence.
Any hardship distribution is limited to the amount needed to
meet the financial need. Hardship withdrawals must be approved
by the Employer and will be administered in a
non-discriminatory manner. Such withdrawals will not affect
your eligibility to continue to participate in Employer
Contributions to the Plan, although, your right to make
Voluntary Contributions and Elective Deferrals will be
suspended for twelve months. Any withdrawals you receive under
these rules may not be recontributed to the Plan and may be
subject to taxation, as well as an additional 10% penalty tax
if the withdrawal is received before you reach age 59-1/2.
These payments shall also be subject to a mandatory 20%
withholding for income tax purposes.
D. BENEFICIARY
Every Participant or former Participant with Plan benefits may
designate a person or persons who are to receive benefits
under the Plan in the event of his or her death. The
designation must be made on a form provided by and returned to
the Plan Administrator. You may change your designation at any
time. If you are married, your beneficiary will automatically
be your Spouse. If you and your Spouse wish to waive this
automatic designation, you must complete a beneficiary
designation form. The form must be signed by you and, if
applicable, your Spouse in front of a Plan representative or a
Notary Public.
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E. DEATH BENEFITS
In the event of your death, the full value of your account is
payable to your beneficiary in a lump sum, or in installments
payable over any period which does not exceed the life
expectancy of your beneficiary. The benefit may also be paid
in the form of an annuity. If you die after benefit payments
have started under an installment option and after the
attainment of age 70-1/2, your beneficiary will continue tO
receive payments in accordance with the payment option you
selected.
F. FORM OF PAYMENT
When benefits become due, you or your representative should
apply to the Employer requesting payment of your account and
specifying the manner of payment. If you are married and your
account balance exceeds $3,500, the normal or automatic form
of payment is a joint and survivor annuity with a percentage
of your benefit continuing to your Spouse upon your death. If
you are not married, the normal form of benefit is a life
annuity based on your life. If you do not wish to receive the
normal form of payment whenyour payments are due to start, you
may request to receive your benefit in any of the optional
forms indicated:
>> lump sum.
>> installment payments.
G. ROLLOVER OF PAYMENT
If your benefits qualify as eligible rollovers, you have the
option of having them paid directly to you, when they become
due, or having them directly rolled over to another qualified
plan or an IRA. If you do not choose to have the benefits
directly rolled over, the Plan is required to automatically
withhold 20% of your payment for tax purposes. If you do
choose to have the payment made to you, you still have the
option of rolling over the payment yourself to a qualified
plan or an IRA within sixty days (first check with a tax
advisor to make sure it is an eligible rollover). However, 20%
of your payment will still be withheld. The following example
illustrates how this works:
For example, if you have $100,000 in your vested account
balance and choose to have the payment of your benefits made
directly to an IRA or another qualified plan, the entire
$100,000 will be transferred to the trustee of the other plan
or the IRA, and you will treat the entire amount as a rollover
on your tax return so that you will not pay taxes on the
entire amount. If you choose NOT to have the account
transferred directly to an IRA or qualified plan, 20% or
$20,000 will automatically be withheld from your payment.
Thus,
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you will receive only $80,000 as a distribution of your
benefits. In order to roll the entire amount over into your
IRA, you would have to come up with $20,000 out of your own
pocket to make up the difference. If this is done, the $20,000
which was withheld may be returned when you file your taxes at
the end of the year. However, if you are unable to produce the
extra cash, the rollover amount will only be $80,000, and the
other $20,000 which was withheld will be treated as taxable
income to you. If you are under age 59 1/2 when you receive
your benefit payment, the withheld amount will alSO be subject
to the 10% early distribution penalty.
Certain benefit payments are not eligible for rollover and
therefore will also not be subject to the 20% mandatory
withholding. They are as follows:
1. annuities paid over life;
2. installments for a period of at least 10
years; and
3. minimum required distributions at age
70 1/2.
There are also several operational exceptions and a "de
minimis" exception for payments of less than $200. Also
Employee Voluntary contributions are not eligible for
rollover.
H. TIME OF PAYMENT
If you retire, become disabled, or die, payments will start as
soon as administratively feasible following the date on which
a distribution is requested by you or is otherwise payable.
If you terminate for a reason other than death, Disability, or
retirement, payments will start as soon as administratively
feasible following the date on which a distribution is
requested by you or is otherwise payable.
I. JOINT AND SURVIVOR ANNUITY RULES
RETIREMENT BENEFITS
If the benefit under the Plan is payable in the form of an
annuity, the Plan is subject to the joint and survivor annuity
rules. Under these rules, there are two automatic methods of
payment for vested Participants depending on your marital
status. If you do not choose another form of payment (such as
a lump sum or installments), the normal form of payment is a
straight life annuity if you are not married at the
commencement of your benefit, or a qualified joint and
survivor annuity if you are married. Under a straight life
annuity, you will receive equal monthly payments for as long
as you live. No further payments will be made after your
death. Under a
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qualified joint and survivor annuity, you will receive
a reduced benefit each month for your lifetime. After
you die, % of that amount will be paid each month to your
Spouse for his or her lifetime. The amount of your monthly
benefit is reduced under a joint and survivor annuity because
it is expected that payments will be made over two lifetimes
instead of one. You may choose another form of payment by
filling out the proper form and returning it to the Plan
Administrator. In order to choose another form of payment or a
beneficiary other than your Spouse, you must make a proper
election, with your Spouse's written consent. Your Spouse's
consent must be witnessed by a Plan representative or Notary
Public. Written notice of these rules will be provided to you
on a timely basis.
DEATH BENEFITS
If you die while still employed by the Employer, or die after
you retire or terminate employment but before benefit payments
start, your surviving Spouse will be entitled to a life
annuity based on the full value of your account. These
payments will continue for your spouse's lifetime unless he or
she chooses to accelerate such payments. Again, you and your
Spouse can waive this coverage by obtaining the proper form
from the Plan Administrator and completing it.
XII. INVESTMENTS
A. TRUST FUND
The monies contributed to the Plan may be invested in any
security or form of property considered prudent for a
retirement plan. Such investments include, but are not limited
to, common and preferred stocks, exchange traded put and call
options, bonds, money market instruments, mutual funds,
savings accounts, certificates of deposit, Treasury bills, or
insurance contracts. An institutional Trustee may invest in
its own deposits or those of affiliates which bear a
reasonable interest rate, or in a group or collective trust
maintained by such Trustee.
B. INVESTMENT RESPONSIBILITY
The Plan's assets are held by the Trustee who is identified in
Section II of this Summary. The Trustee is responsible for the
safekeeping of Plan assets and for the investment management
of such assets unless the Employer elects to direct
investments, appoints an outside investment manager or permits
Participants to direct the investment of their individual
accounts.
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C. EMPLOYEE INVESTMENT DIRECTION
Participants may direct the investments of their accounts
among any allowable investments. The investment funds
available to you and the procedures for making an election are
shown in a separate Investment Election Form which can be
obtained from the Plan Administrator. You may change your
investment selection and move monies from one fund to another
in accordance with the rules established by the Plan
Administrator.
D. PARTICIPANT LOANS
Participant loans are permitted under the Plan. In order to
get a loan from the Plan, you must make application to the
Plan Administrator. Loans must be approved by the Plan
Administrator and are subject to a strict set of rules
established by law. The rules are covered in a separate Loan
Application Form and Promissory Note Form. These Forms are
available from the Plan Administrator.
XIII. ADMINISTRATION
The Plan will be administered by the following parties:
A. PLAN ADMINISTRATOR
1. The Employer is the party who has established the
Plan and who has overall control and authority over
administration of the Plan. The Employer's duties as
Plan Administrator include:
2. appointing the Plan's professional advisors needed to
administer the Plan including, but not limited to, an
accountant, attorney, actuary, or administrator,
3. directing the Trustee with respect to payments from
the Fund,
4. communicating with Employees regarding their
participation and benefits under the Plan, including
the administration of all claims procedures and
domestic relations orders,
5. filing any returns and reports with the Internal
Revenue Service, Department of Labor, or any other
governmental agency,
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6. reviewing and approving any financial reports,
investment reviews, or other reports prepared by any
party appointed by the Employer,
7. establishing a funding policy and investment
objectives consistent with the purposes of the Plan
and the Employee Retirement Income Security Act of
1974, and
8. construing and resolving any question of Plan
interpretation. The Plan Administrator's
interpretation and application thereof is final.
B. TRUSTEE
The Trustee shall be responsible for the administration of
investments held in the Fund. These duties shall include:
1. receiving contributions under the terms of the Plan,
2. investing Plan assets unless investment
responsibility is delegated to another party by the
Employer,
3. making distributions from the Fund in accordance with
written instructions received from the Plan
Administrator,
4. keeping accounts and records of the financial
transactions of the Fund, and
5. rendering an annual report of the Fund showing the
financial transactions for the Plan Year.
XIV. AMENDMENT AND TERMINATION
The Employer may amend the Plan at any time, provided that no amendment
will divert any part of the Plan's assets to any purpose other than for
the exclusive benefit of you and the other Participants in the Plan or
eliminate an optional form of distribution. The Employer may also
terminate the Plan. In the event of an actual Plan termination, all
amounts credited to your account will be fully vested and will be paid
to you. Depending on the facts and circumstances, a partial termination
may be found to occur where a significant number of Employees are
terminated by the Employer or excluded from Plan participation. In case
of a partial termination, only those affected will become 100% vested.
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XV. LEGAL PROVISIONS
A. RIGHTS OF PARTICIPANTS
As a Plan Participant, you have certain rights and protection
under the Employee Retirement Income Security Act of 1974
(ERISA). The law says that you are entitled to:
1. Examine, without charge, all documents relating to
the operation of the Plan and any documents filed
with the U.S. Department of Labor. These documents
are available for review in the Employer's offices
during regular business hours.
2. Obtain copies of all Plan documents and other Plan
information upon written request to the Employer. The
Employer may impose a reasonable charge for producing
the copies.
3. Receive from the Employer at least once each year a
summary of the Plan's annual financial report.
4. Obtain, at least once a year, a statement of the
total benefits accrued for you, and your
non-forfeitable (vested) benefits, if any. The Plan
provides that you will receive this statement
automatically. If you are not vested, you may request
a statement showing the date when your account will
begin to become non-forfeitable.
5. File suit in a federal court, if any materials
requested are not received within 30 days of your
request, unless the materials were not sent because
of matters beyond the control of the Employer. If you
are improperly denied access to information you are
entitled to receive, the Employer may be required to
pay up to $100 for each day's delay until the
information is provided to you.
B. FIDUCIARY RESPONSIBILITY
ERISA also imposes obligations upon the persons who are
responsible for the operation of the Plan. These persons are
referred to as "fiduciaries." Fiduciaries must act solely in
your interest as a Plan Participant and they must exercise
prudence in the performance of their duties. Fiduciaries who
violate ERISA may be removed and required to reimburse any
losses they have caused you or other Participants in the Plan.
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C. EMPLOYMENT RIGHTS
Participation in the Plan is not a guarantee of employment.
However, the Employer may not fire you or discriminate against
you to prevent you from becoming eligible for the Plan or from
obtaining a benefit or exercising your rights under ERISA.
D. BENEFIT INSURANCE
Your benefits under this Plan are not insured by the Pension
Benefit Guaranty Corporation since the law does not require
plan termination insurance for this type of Plan.
E. CLAIMS PROCEDURE
If you feel you are entitled to a benefit under the Plan, mail
or deliver your written claim to the Plan Administrator. The
Plan Administrator will notify you, your beneficiary, or
authorized representative of the action taken within 60 days
of receipt of the claim. If you believe that you are being
improperly denied a benefit in full or in part, the Employer
must give you a written explanation of the reason for the
denial. If the Employer denies your claim, you may, within 60
days after receiving the denial, submit a written request
asking the Employer to review your claim for benefits. Any
such request should be accompanied by documents or records in
support of your appeal. You, your beneficiary, or your
authorized representative may review pertinent documents and
submit issues and comments in writing. If you get no
satisfaction from the Employer, you have the right to request
assistance from the U.S. Department of Labor or you can file
suit in a state or federal court. Service of legal process may
be made upon the Plan Trustee or the Plan Administrator. If
you are successful in your lawsuit, the court may require the
Employer to pay your legal costs, including your attorney's
fees. If you lose, and the court finds that your claim is
frivolous, you may be required to pay the Employer's legal
fees.
F. ASSIGNMENT
Your rights and benefits under this Plan cannot be assigned,
sold, transferred or pledged by you or reached by your
creditors or anyone else except under a qualified domestic
relations order or as provided by state law. A qualified
domestic relations order (QDRO) is a court order issued under
state domestic relations law relating to divorce, legal
separation, custody, or support proceedings. The QDRO
recognizes the right of someone other than you to receive your
Plan benefits. You will be notified if a QDRO relating to your
Plan benefits is received. Receipt of a qualified domestic
relations order shall allow for an earlier than
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normal distribution to the person(s) other than the
Participant listed in the order.
G. QUESTIONS
If you have any questions about this statement of your rights
under ERISA, please contact the Employer or the Pension and
Welfare Benefits Administration, Room N-5644, U.S. Department
of Labor, 200 Constitution Ave., N.W., Washington, D.C. 20210.
H. CONFLICTS WITH PLAN
This booklet is not the Plan document, but only a Summary Plan
Description of its principal provisions and not every
limitation or detail of the Plan is included. Every attempt
has been made to provide concise and accurate information.
However, if there is a discrepancy between this booklet and
the official Plan document, the Plan document shall prevail.
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