WADDELL & REED FINANCIAL, INC. RETIREMENT INCOME PLAN SUMMARY PLAN DESCRIPTION

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1 WADDELL & REED FINANCIAL, INC. RETIREMENT INCOME PLAN SUMMARY PLAN DESCRIPTION January 1, 2014

2 TABLE OF CONTENTS INTRODUCTION TO THE PENSION PLAN...1 Your 401(k) Plan... 1 Your Social Security... 1 Your Pension... 1 Your Other Savings... 2 THE PLAN AND THE PEOPLE WHO OPERATE IT...3 Identification of the Plan... 3 The Plan Sponsors... 3 Those Responsible for Plan Operations... 5 PARTICIPATION IN THE PLAN...6 Eligibility Requirements... 6 Hour of Service... 7 Termination of Participation... 7 HOW TO DETERMINE YOUR BENEFITS UNDER THE PLAN...8 Normal Retirement Date... 8 Normal Retirement Benefit... 8 Minimum Normal Retirement Benefit to Accrue for Top Heavy Plan Years for Non- Key Employee Participants... 9 Special Rules for Certain Former Employees of Torchmark Corporation... 9 Definitions of Terms Used in Computing Your Normal Retirement Benefit... 9 RETIREMENT BENEFIT PAYMENT FORMS...14 Automatic Forms of Payment Elective Optional Forms Early Retirement Date Early Retirement Benefit Early Retirement Benefit Payment Forms Postponed Retirement Benefits Postponed Retirement Benefit Payment Forms Information About Your Retirement Benefits Rollovers DEATH BENEFITS...18 Death Benefit Payment Forms Automatic Death Benefit Payment Form for Married Participants whose Death Benefit exceeds $1, Automatic Death Benefit Payment Form for Unmarried Participants and Participants whose Death Benefit is $1,000 or less BENEFITS AFTER TERMINATION OF YOUR EMPLOYMENT...20 Page i

3 DISABILITY BENEFITS...21 LOSS OF BENEFITS...22 CLAIMING BENEFITS AND RIGHTS OF APPEAL...23 Claim Procedures Retirement Benefits Death Benefits Beneficiary Designation Remedies for Claim Denial CLAIMING BENEFITS AND RIGHTS OF APPEAL...25 Claims Review Procedures Appeal Procedures MISCELLANEOUS INFORMATION...27 Plan Year Effective Date Federal Pension Benefit Insurance Terms and Conditions of Employment Plan Changes and Termination Controlling Law Non-Assignment of Benefits STATEMENT OF ERISA RIGHTS...29 Receive Information About Your Plan and Benefits Prudent Actions by Plan Fiduciaries Enforcing Your Rights Assistance with Your Questions ii

4 INTRODUCTION TO THE PENSION PLAN This Summary Plan Description ( SPD ) provides you with important facts about the Waddell & Reed Financial, Inc. Retirement Income Plan (the Pension Plan or Plan ), as most recently amended and restated including amendments effective as of January 1, (For purposes of this summary you or your refers to Plan participants and Company refers to Waddell & Reed Financial, Inc.) This summary is one basic source of the information you ll need. Other sources are explained in these pages. In addition, you should feel free to discuss your benefits under the Pension Plan, Waddell & Reed Financial, Inc. 401(k) and Thrift Plan (the 401(k) Plan ) and Social Security with the Administrative Committee or the Human Resources Department. In many cases the answers to your questions can be found in this summary. We urge you to read it all, and to share it with members of your family. The Pension Plan and the 401(k) Plan work together to provide your retirement benefits. You should be familiar with both of them. You can find information about the 401(k) Plan in the Summary Plan Description for that plan. Copies of SPDs for both the 401(k) Plan and this Plan are available through the internet at or by contacting the Company s Human Resources Department. This summary does not change the Plan or the Trust (including any amendments to either of them). The wording of the Plan and Trust control if there is a conflict between their wording and the wording of the summary. You may examine the Plan, the Trust and all amendments to them, along with other related documents and records, during regular business hours or by appointment at a mutually convenient time in Company's Human Resources Department, as may your beneficiaries and your, or their, legal representatives. You may obtain a copy of the Plan and the Trust by asking the Administrative Committee, and by paying a reasonable charge. The Pension Plan is one of four main sources of retirement income Company employees may receive. They are: Your 401(k) Plan Your interest under the 401(k) Plan may be used as a source of retirement income or as a means of accumulating funds that you can draw upon, with certain limitations and restrictions, prior to your retirement. Your Social Security Your Social Security benefits are based on your taxable earnings up to a certain amount that is increased from time to time by law. You and the Company both pay equal Social Security taxes to support this government program. Your Pension The Pension Plan provides retirement income based on your earnings and services. Your benefits under the Pension Plan are integrated with your Social Security benefits and are offset 1

5 by any benefits payable to you under any other pension plan sponsored or maintained by the Company or an affiliate of the Company. Your benefits under the Pension Plan are in the form of an annuity payable monthly for as long as you or your spouse lives, an annuity payable monthly for a different period that you select, or cash in a lump sum. The Company pays the entire cost of any benefits payable under the Pension Plan. The Company s contribution is actuarially determined. Your Other Savings Participants of the Pension Plan may create for themselves greater financial security through their own personal investments as well as through the 401(k) Plan, the Pension Plan and Social Security. 2

6 Identification of the Plan THE PLAN AND THE PEOPLE WHO OPERATE IT The name of the Plan is the Waddell & Reed Financial, Inc. Retirement Income Plan. The Plan Sponsors The name, address and Employer Identification Number of the sponsoring Employer is: Waddell & Reed Financial, Inc Lamar Avenue Overland Park, Kansas EIN: As of January 1, 2014, the names, addresses and Employer Identification Numbers of the participating Employers are: Waddell & Reed, Inc Lamar Avenue Overland Park, Kansas EIN: Waddell & Reed Services Company 6300 Lamar Avenue Overland Park, Kansas EIN: Waddell & Reed Investment Management Company 6300 Lamar Avenue Overland Park, Kansas EIN: Ivy Funds Distributor, Inc Lamar Avenue Overland Park, Kansas EIN: W & R Corporate LLC 6300 Lamar Avenue Overland Park, Kansas EIN: W & R Capital Management Group, Inc Lamar Avenue Overland Park, Kansas EIN:

7 NOTE: Effective as of January 1, 1996, Torch Energy Advisors, Incorporated ( Torch Energy ) ceased to be a sponsoring or participating Employer in the Plan and service with Torch Energy on or after that date does not count as Credited Service under the Plan. Participation in the Plan of all employees of Torch Energy ended, and those employees became fully vested in their accrued benefit under the Plan, as of December 31, Effective as of March 1, 1998, Waddell & Reed Asset Management Company ( WRAMCO ) ceased to be a sponsoring or participating Employer in the Plan. An employee who was employed by Waddell & Reed, Inc. as of June 30, 1998, transferred his employment to WRAMCO as of July 1, 1998, and transferred his employment from WRAMCO to the Company on January 1, 2000, will have his service recognized for the period July 1, 1998 to December 31, 1999 when determining the Employee s Hours of Service, Credited Service, Years of Service for determining accrued benefits and Vesting Service under the Plan. Service with Advisory Services Corp. or any of its participating employers prior to April 1, 2000 is not recognized for any purpose under the Plan, including determining Hours of Service, Credited Service, Years of Service for determining accrued benefits, or Vesting Service. Service with Mackenzie Investment Management, Inc. or any of its affiliates prior to December 16, 2002 is not recognized for any purpose under the Plan, including determining Hours of Service, Credited Service, Years of Service for determining accrued benefits, or Vesting Service. Effective January 1, 2013, Advisory Service Corp. ceased to be a sponsoring or participating Employer in the Plan. Please see the SPD sections entitled Participation In The Plan, How to Determine Your Benefits Under the Plan, and Benefits After Termination of Your Employment for determinations regarding Hours of Service, Credited Service, Years of Service, and Vesting Service. As required by Department of Labor Regulations Sections b-1 and b- 30, you may examine or obtain a complete list of the Employers participating in the Plan by mailing a written request to the Administrative Committee. The Company has assigned the following plan number to the Pension Plan: 001. This is a defined benefit pension plan. You can calculate the amount of your monthly retirement benefit on the basis of your Final Average Compensation, Special Average Earnings, Social Security Offset Percentage and your years of Credited Service. The calculations are explained in the section of the SPD entitled How to Determine Your Benefits Under the Plan. Your Employer contributes to the Trust established in connection with the Pension Plan the amount of money required to provide your benefits under the Pension Plan. The type of plan administration is employer administration. 4

8 The Pension Benefit Guaranty Corporation (the PBCG ), an agency of the United States Government, insures your benefits under the Pension Plan up to a certain amount. Your Employer pays the premiums for this insurance. Benefits under the Plan are paid from Plan assets, which are held in a trust established in connection with the Plan. Those Responsible for Plan Operations Fiduciary Trust Company of New Hampshire, 6300 Lamar Avenue, Overland Park, Kansas (telephone number (913) ) is the Trustee and has been appointed to receive contributions into the Trust and hold and invest such funds. The Investment Committee is responsible for selecting the investment options under the Plan. The members of the Investment Committee are appointed by the Board of Directors. The Plan is administered by the Administrative Committee. The Administrative Committee keeps the Plan records, determines questions of eligibility for participation and benefits, interprets the Plan, communicates with participants and their beneficiaries, and is otherwise generally responsible for Plan operations. The Administrative Committee is also the agent for service of process; that is, the person to receive papers, such as a summons, in lawsuits involving the Plan. Service of process may also be made on the Trustee. The members of the Administrative Committee are appointed by the Board. You may contact the Administrative Committee at Waddell & Reed Financial, Inc., 6300 Lamar Avenue, Overland Park, Kansas 66202, Attention: Pension Plan Administrative Committee. The Administrative Committee may delegate the day-to-day administration of the Plan to the Daily Administrator. The Human Resources Department will serve as the Plan s Daily Administrator. If you have any questions about the day-to-day operations of the Plan, please contact Karen Bulk, Senior Benefits Specialist, of Waddell & Reed Financial, Inc., 6300 Lamar Avenue, Overland Park, Kansas Her telephone number is (913) Or you may contact Sara Kircher, Vice President, at the same address. Her telephone number is (913)

9 PARTICIPATION IN THE PLAN Eligibility Requirements To become a participant in the Plan you must: (1) be an employee (which term does not include sales representatives but does include an individual receiving differential wage payments) of the Employer; (2) complete one Year of Service with the Employer (or an affiliate of the Employer if you have transferred your employment to the Employer from such affiliate of the Employer); (3) be at least 21 years old; (4) not be employed as a leased employee; and (5) not be covered by a collective bargaining agreement with respect to your Employer, unless such collective bargaining agreement provides for your participation in the Plan. For purposes of eligibility, you complete a Year of Service when you complete 1,000 or more Hours of Service during either: the 12-month period following the date of your employment; the first full calendar year beginning after your employment; or the 12-month period following any anniversary of the date of your employment. For purposes of determining your benefits, a Year of Service is defined differently, as explained in the SPD section entitled Definitions Used in Computing Your Normal Retirement Benefit. If you terminate your employment with an Employer after you have become a participant in the Plan, are re-employed by an Employer before you have a One Year Break in Service, and if your employment meets requirements 1, 4 and 5 above, you become a full participant in the Plan immediately. If you are re-employed by an Employer after you have a One Year Break in Service, you become a participant in the Plan only when you complete a Year of Service after your reemployment and meet the other requirements above. The same rule applies if you cannot reasonably expect to complete 501 Hours of Service between the most recent anniversary of your previous employment and the next anniversary of your previous employment. A One Year Break in Service is defined as a period of 12 consecutive months, beginning with the date of your employment by the Employer, or with any anniversary of that employment, in which you complete less than 501 Hours of Service for the Employer. However, if you complete less than 501 Hours of Service for the Employer in a 12 consecutive month period as a 6

10 result of your pregnancy, the birth of your child or your adoption of a minor child (for the purpose of caring for such child) you will receive service credit for either (but not both) the year in which your absence begins or the year immediately following the year in which your absence begins in an amount necessary for your service credit in such year to equal a total of 501 Hours of Credited Service. In order to receive service credit under these circumstances, you must provide timely information (to the satisfaction of the Administrative Committee) that includes the reasons for your absence and the number of days of such absence. Hour of Service An Hour of Service, for eligibility, vesting and benefit purposes, generally includes an hour for which you are either directly or indirectly compensated by your Employer. You will not receive service credit by reason of payments made to you pursuant to a plan that provides severance benefits. Each hour of overtime counts as a single Hour of Service, even if the overtime pay rate is more than the regular pay rate. In addition, contributions, benefits, and service credit with respect to qualified military service will be provided in accordance with the Internal Revenue Code of 1986, as amended, Section 414(u). You will be credited with 45 Hours of Service for any week during which you are regularly employed by an Employer. Termination of Participation Your participation in the Plan will terminate under the following circumstances: (1) upon payment to you of all benefits due to you under the Plan at a time when you are no longer eligible for future benefit accruals under the Plan; (2) upon 5 consecutive One Year Breaks in Service before you have 5 years of Credited Service for vesting purposes; (3) upon your death; or (4) upon transfer of your accrued benefit to another plan. 7

11 Normal Retirement Date HOW TO DETERMINE YOUR BENEFITS UNDER THE PLAN Your Normal Retirement Age and Normal Retirement Date under the Plan is the day you attain age 65. Normal Retirement Benefit The amount of your retirement benefit under the Plan is first computed on the basis of monthly payments beginning on your Normal Retirement Date and continuing only as long as you live. This form of payment is known as a single life annuity. However, as explained in the section of this SPD entitled Retirement Benefit Payment Forms, if you are married on your retirement date, your monthly retirement benefit will be paid in a different form and in a different amount unless you elect otherwise and your spouse consents to such election. The amount of your monthly retirement benefit in the form of a single life annuity is determined as follows: (1) Multiply the number of your years of Credited Service, up to and including 30 years, by 2% of your Final Average Compensation and divide the result by 12. The terms Credited Service and Final Average Compensation are defined later in this section. (2) Multiply the number equal to the difference between 30 and your years of Credited Service, up to and including 40 years, by 1% of your Final Average Compensation and divide the result by 12. (3) Add the amounts calculated in steps 1 and 2. (4) Subtract an amount equal to your Social Security Offset, which is the lesser of: (i) 50% of the amount calculated in steps 1 through 3 above but substituting your Special Average Earnings for Final Average Compensation, or (ii) 1/12 th of your Special Average Earnings multiplied by your Social Security Offset Percentage multiplied by your years of Credited Service, up to and including 35 years. Special Average Earnings and Social Security Offset Percentage are defined later in this section. (5) Subtract an amount equal to 1/12 th of the amount of any annual retirement benefit, determined on the basis of payments in the form of a single life annuity that you receive under the comparable plan (such as a pension plan) of an affiliate of the Employer or any corporation merged into the Employer or whose assets were acquired by the Employer, and any annual retirement income benefit under any non-comparable plan (such as a profit sharing plan) of such affiliate to the extent that such benefit is an offset under any comparable plan of such affiliate. Such benefit is to be calculated on either an immediate or deferred basis as indicated in the context of this Plan. 8

12 (6) Reduce your benefit by the actuarial equivalent of any prior benefit payments that you have received under the Plan. Minimum Normal Retirement Benefit to Accrue for Top Heavy Plan Years for Non-Key Employee Participants The Plan contains rules that will take effect automatically for any year in which the Plan becomes Top-Heavy. A Top-Heavy plan is one in which the total of accrued benefits for certain key employees (officers and certain major shareholders) exceeds 60% of the total of accrued benefits for all participants under the plan. The Top-Heavy plan rules provide for, among other things, minimum retirement benefits (unreduced by Social Security Offsets) and faster vesting of benefits. Special Rules for Certain Former Employees of Torchmark Corporation If you are a former employee of Torchmark Corporation, and you became an employee of the Company in connection with the initial public offering of the Company s common stock, and if the assets and liabilities relating to your benefits under the Torchmark Corporation Pension Plan were transferred to this Plan in connection with the public offering, then your accrued benefit under this Plan will be calculated using a so-called A plus B approach, pursuant to which your total accrued benefit under this Plan will be equal to the benefit you accrued under the Torchmark Corporation Pension Plan plus your accrued benefit under this Plan calculated using Credited Service from your date of hire with the Company. Definitions of Terms Used in Computing Your Normal Retirement Benefit Except as discussed below for field personnel, Annual Compensation means the total cash compensation paid to you during a calendar year by your Employer, including any differential wage payments, any amounts not paid directly and currently in cash to you but paid for your benefit through a salary reduction agreement in conjunction with one or more welfare plans of an Employer, and the total amount deferred pursuant to your election under a cash or deferred arrangement in conjunction with one or more qualified retirement plans of an Employer, but excluding the following items: (1) Annual or periodic performance bonus payments and commissions; (2) Deferred compensation accrued under any non-qualified deferred compensation agreement or contract or any amendment or replacement thereof; (3) Director s fees; (4) Employer contributions to the Plan or any other public or private employee benefit plan or deferred compensation arrangement; (5) Any reimbursement of or allowance for expenses and travel; (6) Annual service awards and other non-cash prizes and awards; 9

13 (7) Payments made to any employee after such employee s separation from service, in the form of severance benefits; and (8) Any amounts in excess of the maximum amount allowed by the Secretary of the Treasury of your compensation for any Plan Year (for the 2013 Plan Year, the maximum amount is $255,000). For Plan Years prior to January 1, 2014, if you are a Regional Vice President, Annual Compensation means overrides, service payments, and annual or periodic performance bonus payments; if you are a Managing Principal, Associate Managing Principal, District Manager or District Branch Manager, Annual Compensation means overrides, annual or periodic performance bonus payments and financing payments. For Plan Years beginning on and after January 1, 2014, if you are a Regional Vice President, Managing Principal or Associate Managing Principal, Annual Compensation means overrides and the net amount of any guaranteed minimum non-recoverable draw, as applicable; if you are a District Manager or District Branch Manager, Annual Compensation will be as defined above for non-field personnel. Notwithstanding the preceding sentence, for individuals participating in a guarantee financing program, Annual Compensation means the financing amount set forth in the applicable financing agreement for the term of such agreement, including additional non-bonus amounts paid pursuant to the terms of such agreement, if any; for individuals participating in any financing program that is not a guarantee financing program, Compensation means the financing amount set forth in the applicable financing agreement for the term of such agreement, overrides, salary, and the net amount of any guaranteed minimum non-recoverable draw, as applicable. Credited Service for benefit purposes generally means the sum of (a) and (b) where: (a) (b) is your years of Accrual Service prior to March 1, 1998 under the terms of the Plan as of December 31, 1988 (for more information regarding this calculation please contact the Administrative Committee); and is your Years of Service as defined below. Credited Service excludes your service prior to age 21 and any period of employment in which you did not qualify as an Eligible Employee. If you are vested in your accrued benefit under the Pension Plan when you separate from the service of the Employer, your Years of Service for benefit accrual purposes (as defined below) before your separation from service will be counted as Credited Service under the Plan after you have completed a Year of Service for eligibility purposes (as defined in the section entitled Eligibility Requirements ) following your re-employment by the Employer, if: (1) you are re-employed as an employee (which term does not include sales representatives); (2) you are not re-employed as a leased employee; and 10

14 (3) upon your re-employment, you are not covered by a collective bargaining agreement with respect to the Employer, unless such collective bargaining agreement provides for your participation in the Plan; provided that, if you received a distribution of your vested accrued benefit at the time of your prior separation from service, any further benefit payments to you will be reduced by the equivalent actuarial value of benefits paid at your prior separation from service. If you have no vested interest under the Pension Plan when you separate from service of the Employer, your Years of Service for benefit accrual purposes (as defined below) before your separation from service will be counted as Credited Service under the Pension Plan after you have completed a Year of Service for eligibility purposes (as defined in the section of the SPD entitled Eligibility Requirements ) following your re-employment by the Employer if: (1) you are re-employed as an employee (which term does not include sales representatives); (2) you are not re-employed as a leased employee; (3) upon your re-employment, you are not covered by a collective bargaining agreement with respect to the Employer, unless such collective bargaining agreement provides for your participation in the Plan; or (4) the total number of your consecutive One Year Breaks in Service immediately before your re-employment is less than the greater of 5 or the number of years of Credited Service for vesting purposes that you had earned when your earlier employment terminated. Credited Service also includes any period during which you are on a leave of absence approved in writing by your Employer, or on military leave, if you enter military service directly from employment with an Employer or a predecessor of an Employer, and do not voluntarily enlist or re-enlist after you first enter military service. Final Average Compensation means the highest average of your Annual Compensation, as earlier defined for any 5 consecutive full calendar years of your employment for an Employer during the 10 consecutive calendar years of your employment (disregarding partial years of employment) immediately before your termination of employment. If you have not been employed by an Employer for at least 5 calendar years, to determine your Final Average Compensation, average your Annual Compensation in the number of years you have been employed by an Employer. Your Annual Compensation, without annualization, during the part of the calendar year preceding your termination of employment will be treated as Annual Compensation for a full calendar year if that produces a higher average. If you are entitled to count your Credited Service during your earlier employment by an Employer in your Final Average Compensation, your Final Average Compensation means the highest average of your Annual Compensation for any 5 consecutive full calendar years of your employment (disregarding any One Year Break in Service, as earlier defined, or partial years of employment) during the last 10 calendar years of your employment. Your Annual 11

15 Compensation, without annualization, during any partial years of employment will be treated as Annual Compensation for a full calendar year if that produces a higher average. Social Security Offset Percentage means the offset percentage utilized in determining the Social Security offset in calculating your benefit. Your offset percentage is based on your Social Security Retirement Age, which is the earliest age at which you could receive your full benefit under the Social Security Act, and your age when your benefits under the Plan commence. You can determine your social security retirement age and offset percentage from the following tables: (1) The appropriate Social Security Retirement Ages are as follows: Calendar Year of Birth Social Security Retirement Age 1937 and Before Age to 1954 Age and after Age 67 (2) The appropriate offset percentages are as follows: Benefit Commencement Age Social Security Retirement Age Age 65 Age 66 Age 67 (Interpolate for months) % 0.688% 0.632% % 0.703% 0.645% % 0.706% 0.662% % 0.708% 0.667% % 0.711% 0.671% % 0.712% 0.675% % 0.682% 0.648% % 0.688% 0.625% % 0.692% 0.635% % 0.696% 0.643% % 0.700% 0.650% % 0.750% 0.700% % 0.750% 0.750% Special Average Earnings means the average of your annual Compensation for the 3 completed consecutive calendar year periods (disregarding any One Year Break in Service or partial years of employment unless such partial year of employment without annualization produces a higher average) during your last 5 complete consecutive calendar years of Employment (that yields the highest average, or if employed less than 3 complete consecutive calendar years, the amount obtained by converting your compensation for the most recent period of Employment to an annual rate. Your annual Compensation used in the calculation of Special Average Earnings for any year cannot exceed the Social Security wage base for that year. In addition, your Special Average Earnings cannot exceed the average of the annual Social Security wage bases for the 35 year period ending in the year you reach Social Security Retirement Age. 12

16 For purposes of determining your accrued benefits under the Plan, Year of Service means: (1) A 12 consecutive month period beginning on the date of your employment or reemployment or the anniversary of such date during which: (a) (b) (c) you had at least 2,000 Hours of Service for an Employer or an affiliate of the Employer in employment covered by the similar pension plan of such affiliate (in the event your employment was transferred from such affiliate to an Employer) in a classification designated by the Employer as covered employment; you were not covered by a collective bargaining agreement with respect to the Employer, unless such collective bargaining agreement provides for your participation in the Plan; and you had passed the first anniversary of your employment or reemployment following your 20 th birthday. (2) If in a 12-month period that otherwise meets the applicable requirements in paragraph (1) above, you have between 1,000 and 2,000 Hours of Service that meet the applicable requirements in paragraph (1) above, you will have a fraction of a Year of Service in that period for purposes of determining your benefit under the Plan. The fraction will be equal to the number of your Hours of Service that meet the applicable requirements in paragraph (1) in that period divided by 2,

17 Automatic Forms of Payment RETIREMENT BENEFIT PAYMENT FORMS Even though the amount of your monthly retirement benefit under the Pension Plan is first determined on the basis of payments in the form of a single life annuity, unless the present value of your benefit is $1,000 or less or you elect an optional form of benefit payment, as explained beginning in the section of this SPD entitled Elective Optional Forms, your benefit will be paid to you in one of the following two forms: (1) Qualified Joint and Surviving Spouse Annuity. If you are married on your retirement date, you will receive monthly payments for your life. Upon your death, if the person to whom you were married on the date your retirement payments began survives you, then beginning with your death and for as long as your surviving spouse lives, your surviving spouse will receive a monthly payment of 50% of the amount of the payment made to you while you were living. (2) Single Life Annuity with 10 Years Guaranteed. If you do not have a spouse on your retirement date, you will receive monthly payments for as long as you live, with payments guaranteed for 120 months whether you live that long or not. If the present value of your retirement benefit is $1,000 or less, it will automatically be paid in lump sum form and you will not be eligible to elect an optional form. Elective Optional Forms If, as of your retirement date, you are single or you are married and obtain the necessary written consent of your spouse, you may elect to have your retirement benefit paid in any of the optional forms of payment described below. All such forms are of equal actuarial value. How you make such an election and when you must make it are described below. (1) Single life annuity with no period certain. An annuity payable in equal monthly payments for your lifetime, with no payments after your death. (2) Single life annuity with a period certain. An annuity payable in equal monthly payments for your life with payments guaranteed for 5, 10, or 15 years. (3) Joint and 75% Spousal Annuity. If you are married on your retirement date, you will receive monthly payments for your life. Upon your death, if the person to whom you were married on the date your retirement payments began survives you, then beginning with your death and for as long as your surviving spouse lives, your surviving spouse will receive a monthly payment of 75% of the amount of the payment made to you while you were living. (4) Joint and 50%, 66 ⅔%, or 100% Survivor Annuity. Annuity payable in equal monthly payments so long as both you and your contingent beneficiary live. Under the 100% option, payments continue without reduction in amount for the 14

18 lifetime of the survivor. Under the 50% and 66 ⅔% options, payments are reduced to 50% or 66 ⅔%, as applicable, of the original payment upon the death of you or your contingent beneficiary, whoever dies first, and continue in the reduced amount for the lifetime of the survivor. You may elect to add a period certain of 10 years to this option. If you do, the payments will be made without reduction for the longer of the time that both you and your contingent beneficiary live or the period certain that you elect. (5) Lump Sum. A single sum payment of the present value of your accrued benefit. Any retirement benefit payment form that you elect under the Plan must result in your beginning to receive your benefit no later than the year in which you attain age 70½ or the year you actually retire, whichever is later. The benefit payment form must not extend the payment of the benefits over a period of time that would exceed either your life or the lives of you and your designated beneficiary, or your life expectancy or the life expectancy of you and your designated beneficiary. If you are among the 25 most highly compensated employees, your annual payments may not exceed the amount that would be payable to you in the form of a single life annuity unless the Plan s assets exceed 100% of the Plan s current liabilities or the value of your benefits is less than 1% of the value of the Plan s current liabilities. If you elect an optional benefit form, your election must be filed in writing with the Administrative Committee no earlier than 180 days after you have been furnished the following information in writing: an explanation of the terms and conditions of your normal form of benefit payment; the material features and financial values of the optional forms of benefit available to you; an explanation of your right to make and the effect of an election to waive the normal form of benefit payment; an explanation of your spouse s rights to consent to benefit elections; an explanation of your right to make and the effect of a revocation of a previous election to waive the normal form of benefit payment; and your right to defer commencement of your benefit and the consequences of failure to defer if you have not reached Normal Retirement Age. This information will be furnished to you within a reasonable period but in no event later than 30 days, nor earlier than 180 days, before the date on which payment of your benefits is to commence. 15

19 After you read the general information, you may request additional information giving the amounts that you will receive under the normal and optional benefit payment forms. You have 60 days after you receive this additional information to make the election. In any event, your election must be made no later than 30 days after your retirement date, 180 days after you receive the general information, or 60 days after you receive the additional specific information, whichever is later. You may revoke an election or change it by written notice to the Administrative Committee at any time until benefits are paid under the Plan by reason of your retirement or death. Early Retirement Date You are eligible for Early Retirement Benefits if you have at least 10 years of Credited Service (as hereinafter defined) for vesting purposes and are age 55 or older; such benefits will commence on the first day following your Early Retirement Date or a later date prior to your Normal Retirement as selected by you. Early Retirement Benefit If you want your retirement benefit payments to begin on your Early Retirement Date, you can determine the amount of the monthly retirement, in the form of a single life annuity, as follows: (1) Make the calculations in the first 4 steps as set out in the SPD section entitled Normal Retirement Benefit for determining your Normal Retirement Benefit. (2) Multiply the result by the Early Retirement Factor from the following table: Years by Which Your Early Retirement Date Precedes your Age 65 Early Retirement Factor (Interpolate for months) (3) Subtract the amount determined in step 5 as set out in the section entitled Normal Retirement Benefit from the result in (2) above. 16

20 Early Retirement Benefit Payment Forms The rules outlined above for the payment of Normal Retirement Benefits also apply to the payment of Early Retirement Benefits. Postponed Retirement Benefits You are not required to retire at your Normal Retirement Date, which is the day you attain age 65. If you are a 5% owner of the Employer and retire after your Normal Retirement Date, the amount of your monthly retirement benefit under this Plan will be equal to your retirement benefit determined as of your actual retirement date. If you are not a 5% owner of the Employer and retire after your Normal Retirement Date, your monthly retirement benefit will be actuarially adjusted to reflect the shorter payout period. Postponed Retirement Benefit Payment Forms The rules outlined above for the payment of Normal Retirement Benefits also apply to the payment of Postponed Retirement Benefits. Information About Your Retirement Benefits When, or after, your employment terminates, the Administrative Committee will give you a written statement showing the amount of your retirement benefits, the date such payments will begin, and an explanation of the different forms of payment that you may choose. Rollovers Whenever you receive a distribution from the Plan it will normally be subject to income taxes. Moreover, the Trustee is required to withhold 20% of your distribution for federal income taxes. Depending upon the type of distribution you are receiving, you may, however, be able to partially or completely defer taxes on your distribution through the use of one of the following rollover methods: (1) You may elect to have any portion of your distribution paid directly to an eligible retirement plan, as defined by tax law, provided that plan accepts direct rollovers. (2) You may elect to receive a distribution from the Plan and roll it over yourself into another eligible retirement plan. A strict 60-day time frame applies for making this kind of rollover. Moreover, the Plan s trustee will have to withhold 20% of the distribution for federal income tax so you will only have 80% of the account balance available for rollover. You should be aware that the rollover rules are quite complicated and unforgiving to those who fail to follow them properly. For example, not all distributions can be rolled-over and not all recipients of distributions are eligible to make a rollover. If you plan to rollover a distribution from the Plan make sure you consult a current IRS publication or your tax adviser. Your Employer cannot be responsible for your compliance or non-compliance with the rollover rules. 17

21 DEATH BENEFITS A death benefit may be payable under the Plan if you die before you begin to receive retirement benefits under the Plan and if, as of your date of death, you were: (1) actively employed by the employer (including an individual performing qualified military service); (2) disabled; (3) terminated but eligible for Early Retirement benefits under the Pension Plan (that is, you had at least 10 years of Credited Service for vesting purposes and you had attained your 55 th birthday); or (4) married, separated from service with a vested accrued benefit under the Pension Plan (but not eligible for Early Retirement benefits under the Pension Plan). Your pre-retirement death benefit would be the larger of: (a) the present value, as of the day before your death, of your accrued Normal Retirement Benefit,; or (b) the present value, as of the day before your death, of the monthly benefit that would have been payable to your spouse had you (i) retired on the day before your death (if, as of that date, you were eligible for Early Retirement under the Plan), or (ii) separated from service of the Employer as of your date of death and survived until your earliest retirement age under the Plan (if, as of the date of your death, you were not eligible for Early Retirement under the Plan), retired on the date after your attainment of your earliest retirement age under the Plan and elected the Qualified Joint and Surviving Spouse Annuity as defined above. Death Benefit Payment Forms Even though the amount of your death benefit under the Pension Plan is computed as a lump sum, it will be paid as follows: Automatic Death Benefit Payment Form for Married Participants whose Death Benefit exceeds $1,000 Qualified Pre-Retirement Spousal Annuity - If, as of your date of death, your death benefit exceeds $1,000, you are married and are as described in (1), (2), or (3) above, the death benefit payable under the Pension Plan will be paid to your surviving spouse in the form of a life annuity for the life of your surviving spouse, unless you have obtained the written, notarized consent of your spouse to the designation of another beneficiary or the election of another death benefit payment form. Your surviving spouse may elect to have the benefit paid in another form by giving a written request to the Administrative Committee within 60 days after your death. If, as of your date of death, you are as described in (4) above and the amount of such death benefit exceeds $1,000, the death benefit will be paid to your surviving spouse in the form of a life annuity for the life of your surviving spouse beginning no earlier than the month you would have attained your earliest retirement age under the Pension Plan. Your surviving spouse must be alive on such date to receive this death benefit. Your surviving spouse may elect to have 18

22 the benefit paid, on such date, in another form by giving a written request to the Administrative Committee within 60 days after your death. Automatic Death Benefit Payment Form for Unmarried Participants and Participants whose Death Benefit is $1,000 or less Lump Sum - If, as of your date of death, you are not married or if you are married and the death benefit payable under the Pension Plan on account of your death is $1,000 or less, any death benefit payable under the Plan will be paid to your designated beneficiary in the form of a lump sum. If the death benefit exceeds $1,000, your beneficiary may elect to have the benefit paid in another form by giving a written request to the Administrative Committee within 60 days after your death. Pre-Retirement Death Benefit Payment Forms must result in the entire benefit being distributed within 5 years of your death unless: (1) the distribution is made to your designated beneficiary for such designated beneficiary s life or life expectancy and the distribution to your designated beneficiary begins within 1 year of your death; (2) the distribution is made to your surviving spouse for your surviving spouse s life or life expectancy and such distribution begins no later than the date you would have attained age 70½ or the date that is 1 year following your death, whichever is later; or (3) in the event your surviving spouse dies before the distribution (of your interest) to your surviving spouse had begun, the distribution is made to your surviving spouse s designated beneficiary for the life or life expectancy of your surviving spouse s designated beneficiary and such distribution begins within 1 year of the death of your surviving spouse. 19

23 BENEFITS AFTER TERMINATION OF YOUR EMPLOYMENT If your employment terminates for a reason other than your retirement, disability or death, and if you have at least 5 years of Vesting Service, as defined below, you may be entitled to a retirement benefit under the Plan beginning on your Normal Retirement Date, as earlier defined, or earlier as described below. You can determine the amount of the monthly retirement benefit, in the form of a single life annuity, as follows: (1) Determine your Normal Retirement Benefit. (2) Multiply the result by your Vested Percentage from the following table: Years of Vesting Service at Date of Your Termination Vested Percentage Less than 5 years 0 5 years or more 100 If you terminate due to death (including your death that occurs while performing qualified military), disability or upon or after attaining Normal Retirement Age, you will be 100% vested in your retirement benefit. If your employment terminates for a reason other than your retirement, disability or death, and you have at least 10 years of Vesting Service, you may at any time on or after your 55 th birthday elect to have your retirement benefit payments begin by making a written request to the Administrative Committee. You can determine the amount of the monthly retirement benefit, in the form of a single life annuity, by making the calculations described in the SPD section entitled Early Retirement Benefit. Vesting Service generally is calculated in the same manner as Credited Service as described in SPD section entitled Definitions of Terms Used in Computing Your Normal Retirement Benefit except that you will also receive Vesting Service for your Years of Service after attainment of age 18 where you only receive Credited Service for your Years of Service after attainment of age 21. If the amount of your Retirement Benefit expressed as a lump sum equals between $1,000 and $5,000 as of the date of your termination, you also may elect during a limited 90-day time period to have your benefit distributed as a lump sum or in a direct rollover as discussed above in the SPD section entitled Rollovers. If you elect to forego this voluntary cashout option, the earliest benefit commencement date that you may elect to receive your benefits will be on or after the earliest date that you were eligible for an Early Retirement Benefit. 20

24 DISABILITY BENEFITS If for 6 months, you have been totally and permanently disabled as defined in the group disability plan of the Employer, and if you were actively employed by the Employer when you became disabled, the following adjustments will be made in computing your retirement benefits at your Early or Normal Retirement Date: (1) The date on which you have been totally and permanently disabled for 6 months is your Disability Date. (2) Your Final Average Compensation will be determined on the basis of your earnings in the years before your Disability Date. (3) Your Credited Service for benefit purposes will include Years of Service for benefit purposes that you could have completed if you were not receiving a disability benefit under the group disability plan of the Employer and if you had remained in active employment until the earlier of: (i) your Early Retirement Date, (ii) your Normal Retirement Date, or (iii) the date on which you cease to be disabled. In the case of a Plan participant who is eligible for coverage under the group disability benefit plan maintained by the Employer, disability determinations by the group disability plan will be accepted by the Administrative Committee for the purpose of determining eligibility for disability benefits under the Plan. In the case of a Plan participant who is not eligible for coverage under the group disability benefit plan maintained by the Employer, the Administrative Committee will determine the required evidence of total disability. Such evidence may include a mental or physical examination by one or more qualified medical practitioners requested by the Administrative Committee. 21

25 LOSS OF BENEFITS There are several ways in which you could lose benefits under the Pension Plan. They include the following: (1) You may lose all of your benefits under the Pension Plan if you do not have a vested interest in the Plan you incur a number of consecutive One Year Breaks in Service that equal or exceed the greater of 5 or the number of your years of Accrual Service prior to such Breaks in Service. (2) You may lose all of your benefits under the Pension Plan if you are single and either: (a) (b) have less than 10 years of Credited Service for vesting purposes when your employment terminates and you die before age 65; or have 10 or more years of Credited Service for vesting purposes when your employment terminates and you die before your 55 th birthday. (3) You may lose a portion of your benefits under the Pension Plan if you are married as of your date of death and either: (a) (b) have less than 10 years of Credited Service for vesting purposes when your employment terminates and you die before age 65; or have 10 or more years of Credited Service for vesting purposes when your employment terminates and you die before your 55 th birthday. (4) In the unlikely event that there are not enough assets in the trust related to the Pension Plan to pay your benefits and if the benefits guaranteed by the PBGC do not fully pay your benefits, you could lose the balance of your benefits under the Pension Plan. 22