SC HOLDINGS, INC. EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST SUMMARY PLAN DESCRIPTION

Transcription

1 SC HOLDINGS, INC. EMPLOYEE STOCK OWNERSHIP PLAN AND TRUST SUMMARY PLAN DESCRIPTION

2 TABLE OF CONTENTS I. Introduction and General Information...3 II. Eligibility and Participation in the Plan...3 III. Benefit Allocations Under the Plan IV. Vesting 5 V. Distribution and Diversification 5 VI. Special ESOP Provisions VII. Top-Heavy Rules..7 VIII. Plan Administration.7 IX. Amendment and Termination..7 X. Claim Provisions. 8 XI. Rights of a Participant...8 2

3 ARTICLE I: INTRODUCTION AND GENERAL INFORMATION SC Holdings, Inc. (the Company or Employer ) has established the SC Holdings, Inc. Employee Stock Ownership Plan and Trust (the ESOP or Plan ). The ESOP Trust currently holds 100% of the stock of the Company. As a Company employee, you will be eligible to participate in the ESOP and have stock allocated to your account. When you terminate, retire, become disabled or die, cash equal to the value of your allocated stock will be distributed to you/your beneficiaries. The purpose of this summary is to describe the main provisions of the Plan. If you are interested in more detail, the Company will provide you with a copy of the ESOP Plan Document or you may contact the Company with your questions. General information about the ESOP follows: A. Agent for Service of Legal Process: the Trustee of the ESOP or the Company, as plan administrator ( Administrator or Plan Administrator ). B. Effective Date: The ESOP was adopted on April 30, C. Employer Information: SC Holdings, Inc. P O Box 435, 378 Bennoch Road, Stillwater, ME The employer ID number is D. Three-Digit Plan Number: 003. E. Plan Administrator: The Plan Administrator is the Employer. F. Plan Year. The Plan Year is the consecutive twelve (12) month period beginning on January 1 and ending on December 31. G. Trustee(s). The Trustee is the ESOP Trust Committee; the members of the Trustee Committee are selected by the Company s Board of Directors. H. Plan Assets. Plan assets are held in a Trust Fund. ARTICLE II: ELIGIBILITY AND PARTICIPATION IN THE PLAN A. Eligibility Requirements for Participation in the Plan: To participate in this Plan, you must complete 1,000 Hours of Service and have worked for 6 months within a plan year. 3

4 B. Determination of Service for Eligibility to Participate in the Plan. If you are employed on the original Effective Date of the Plan, you will be a Participant if you complete the requirements indicated above. This Plan uses the Hour of Service method. For eligibility purposes, 6 months of work refers to a 6-month period starting with your first day of work. After the end of this 6-month period, you will be eligible to participate once you have completed 1,000 Hours of Service within a plan year. You will receive credit for each hour for which you are paid or entitled to be paid, even if you are not at work or hours for which you receive back pay if hours were not already counted. A maximum of 501 hours will be credited to you in any year for periods that you are not at work but are paid. Hours will be calculated using actual hours. Whether you meet the Year of Service requirement will be determined by the number of Hours of Service credited to you during your initial year of employment. C. Determination of Eligible Employees. All employees who meet the initial eligibility requirements will be eligible to participate in the Plan. However, the Plan excludes leased employees, employees who (directly or through their families) have other, substantial stock-based benefits (called disqualified persons ) and employees covered by a collective bargaining agreement (unionized employees). D. Entry Date(s) for Participation in the Plan. After you have met all of the eligibility requirements, you will immediately begin participation in the Plan. E. Re-employment. If you terminate service with the Employer after becoming a Participant in the ESOP, you will resume participation upon your rehire after you have completed 1 Hour of Service. ARTICLE III: BENEFIT ALLOCATIONS UNDER THE PLAN A. Stock allocations under the Plan. There are two ways for stock or other assets to be allocated to your account under the Plan. First, stock or cash can be contributed to the Plan by the Employer and directly allocated to participant accounts. Second, stock acquired by the Plan through borrowed funds (via a stock acquisition loan) can be released and allocated to participant accounts as the loan is repaid. In the latter case, the law permits an ESOP to acquire stock from the Company or shareholders using debt. Stock acquired with loan proceeds are immediately placed in a special suspense account. When the Employer makes contributions to the ESOP, the debt is repaid and a proportionate number of shares are released from the suspense account and allocated to participant accounts. Participants have no liability for ESOP stock acquisition loans; further, the stock or other assets in their accounts cannot be used to repay such a loan. B. Method for Allocating Shares to Participant Accounts. Shares of stock that are contributed or released are allocated in proportion to each Participant s annual compensation as of the last day of the Plan Year to the 4

5 accounts of eligible Participants. Compensation includes pre-tax contributions that you make to other plans maintained by the Employer. (In some cases, the law limits the amount of your compensation that can be taken into account and/or the amount that can be allocated to your account.) C. Participant Contributions. The ESOP does not accept or permit employee contributions or rollover contributions. D. Participant Accounts. The Company will set up a recordkeeping account in your name to show the value of your retirement benefits; this is called your (participant) Account. The stock attributable to your account will be valued at least once a year by an outside valuation expert. ARTICLE IV: VESTING All ESOP benefits are vested in accordance with a 6-year, graded vesting schedule. Years of Service for Vesting Percentage Vested Less than 2 years 0% 2 years 20% 3 years 40% 4 years 60% 5 years 80% 6 years [fully vested] 100% Prior years of service accumulated before the ESOP became effective will be counted in the ESOP vesting calculation. A participant shall receive a Year of Service for vesting purposes on each One-Year anniversary of his/her employment. ARTICLE V: DISTRIBUTION AND DIVERSIFICATION A. Timing of Benefit Distributions. Participants or their beneficiaries are eligible to receive their benefits in the following circumstances: termination of employment, death, disability, attainment of retirement age (age 59 ½), and termination of the ESOP. B. Special Distributions for Diversification. The ESOP provides that Participants who have completed 10 years of Service and attained age 55 are permitted to transfer 25% of their ESOP account to the Sargent Corporation 401(k) Retirement Plan for five years (and 50% in the sixth year). Earlier diversification may be permitted at the sole discretion of the Company. 5

6 C. Form of Distributions. Benefits from the ESOP will be distributed in the form of cash. Distributions are typically paid over a 5-year period. Distributions of large accounts may occur over a longer period; distributions of less than $5,000 may occur in a single year. D. Rollovers. Distributions shall be eligible for rollover treatment. E. Mandatory Distributions. Participants must generally begin receiving ESOP benefits when they have attained age 70 ½. F. Other. Participant loans are not permitted under the ESOP, and, except for distributions pursuant to qualified domestic relations orders (relating to the provision of child support, alimony payments, or marital property rights) your interest under the ESOP cannot be sold, assigned or transferred prior to distribution. Further, prior to distribution, your interest is generally not subject to any debts or claims against you, except for federal tax levies or collections by the IRS on judgments arising from unpaid tax assessments. ARTICLE VI: SPECIAL ESOP PROVISIONS A. Voting Rights. In general, participants do not have the ability to vote their shares and make decisions about how the Company is run or managed. However, in certain events (merger, liquidation, sale of substantially all assets, etc.), participants may generally vote the shares attributable to their Accounts. The Trustee will then generally vote the allocated and unallocated shares (in the suspense account, if any) based upon the directions received by the participants. B. Dividends. If dividends are paid with respect to ESOP shares, such dividends shall either be used to repay ESOP debt (causing shares to be released and allocated to Participant Accounts) allocated directly to Participant Accounts or paid to participants directly. C. Put Rights and Rights of First Refusal. Currently, the Company is an electing Subchapter S corporation and, as a result, ESOP distributions are made in the form of cash (equal to the value of stock allocated to your account). However, in the event that the Company s status changes and stock distributions are made from the ESOP, the shares distributed to you would be subject to (1) a right of first refusal (meaning that they would have to be offered to the ESOP and the Company before being sold to a third party buyer) and (2) a put right (meaning that the Company must be willing to purchase the shares from you following distribution). 6

7 ARTICLE VII: TOP-HEAVY RULES A. Top-Heavy Plan Description. A Top-Heavy Plan is one in which the total account balances of certain highly paid employees ( Key Employees ) are more than 60% of the total account balances of all Participants in the Plan. B. Required Features of Top-Heavy Plans. If the Plan becomes top-heavy, the Plan will provide for a minimum contribution to be allocated to each non- Key Employee equal to 3% of compensation. ARTICLE VIII: PLAN ADMINISTRATION A. Trustee. The Trustee (or ESOP Trust Committee) owns the stock in the ESOP and has responsibility for the investment of the Plan s assets. It also has responsibility for receiving contributions and making distributions when appropriate. It has responsibility for keeping records regarding ESOP holdings and disseminating annual reports regarding these holdings. B. Plan Administrator. The Plan Administrator administers the ESOP and has overall control and authority to administer the Plan. The Plan Administrator may retain and appoint professional advisors or third party administrators (TPA) to provide services to the Plan. The TPA instructs the Trustee regarding payments to/from the Plan and communicates with Employees regarding participation, benefits, claims, etc. The TPA has responsibility for completing and submitting annual returns and reports to governmental agencies. The Plan Administrator shall resolve all questions regarding Plan operation and interpretation. ARTICLE IX: AMENDMENT AND TERMINATION The Company s Board of Directors reserves the right to amend or terminate the ESOP at any time in the future. No amendment may retroactively reduce your benefits under the ESOP. If the ESOP is terminated before your benefits have been fully distributed, your benefits will be distributed as soon as practicable following the termination. If there is debt remaining on a stock acquisition loan, the shares held in the suspense account (that have not been allocated to any Participant Accounts) can be used to repay the debt. If the value of the shares exceeds the outstanding debt, the residual amount will be allocated to Participant Accounts. If the value is less, there will be no recourse against Participants Accounts; the lender cannot collect anything more from the ESOP than the value of the unallocated shares. ARTICLE X: CLAIM PROVISIONS A. Claims. When you are entitled to a distribution, you will be directed to file a form. However, if you do not believe you are receiving the benefits to which you are entitled, you may file a claim with the TPA or Company at the 7

8 Company s address. B. Notice of Claim Resolution. Your claim will generally be reviewed within 60 days and you will receive a notification within 90 days. If your claim is wholly or partially denied, you will be notified in writing of such denial and it will include: the specific reasons for the denial; the specific provisions of the ESOP on which the denial was based; any additional material or information necessary for you to perfect your claim and an explanation of why such material or information is necessary; and the steps which you must take to have your claim for benefits reviewed. C. Request for Further Review. If you receive a denial, you will have the opportunity to file a written request for a full and fair review of your claim provided that you submit your request within 60 days of receiving notices of your denial. The Administrator will make a decision within 60 days after receiving your request for review. If there are special circumstances (such as a need for a hearing) that require an extension of time for completing the review, the Administrator will render a decision not later than 120 days after receipt of a request for review. The decision will be in writing and will set out the specific reasons and ESOP provision on which the decision was based. ARTICLE XI: RIGHTS OF A PARTICIPANT A. Your Rights to Information. ESOP s are plans that are subject to the Employee Retirement and Income Security Act of 1974 (as amended). As a participant in an ERISA plan, you are entitled to certain information: i. You may examine, without charge, at the Administrator s office and other specified locations, all documents governing the ESOP, including insurance contracts and collective bargaining agreements, a copy of the ESOP s procedures concerning qualified domestic relations orders, and a copy of the latest annual report (Form 5500 series) filed with the US Department of Labor and available at the Public Disclosure Room of the Employee Benefits Security Administration. ii. You may obtain, upon written request to the Administrator, copies of documents governing the operation of the ESOP, including insurance contracts and collective bargaining agreements, and copies of the latest annual report (Form 5500 Series) and updated summary plan description. The Administrator may make a reasonable charge for the copies. You may obtain a copy (without charge) of the ESOP s procedures concerning qualified domestic relations orders. iii. You may receive a summary of the ESOP s annual financial report. The plan administrator is required by law to furnish each participant with a copy of this summary annual report. iv. You may obtain a statement telling you whether you have a right to receive a retirement plan distribution at normal retirement age (age 59 ½) and, if so, what your benefits would be at normal retirement age assuming you 8

9 stopped working at the time of the request. This statement must be requested in writing and is not required to be given more than once every twelve (12) months. The Administrator must provide the statement free of charge. B. Prudent Actions by Plan Fiduciaries. In addition to creating rights for ERISA plan participants, ERISA imposes duties upon the people who are responsible for the operation of their plans. The people who operate your ESOP, called fiduciaries of the ESOP, have a duty to do so prudently and in the interest of you and other ESOP participants and beneficiaries. No one, including the Employer, your union, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining your ESOP benefit or exercising your rights under ERISA. C. Enforcing Your Rights. If your claim for your ESOP benefit is denied or ignored, in whole or in part, you have a right to know why this was done, to obtain copies of documents relating to the decision without charge, and to appeal any denial, all within certain time schedules. These were discussed in detail above under the Claims section. If you feel that these rights are being ignored or disregarded, there are steps you can take to enforce the rights under ERISA. For instance, if you request a copy of ESOP documents or the latest annual report for the ESOP and do not receive them within 30 days, you may file a lawsuit in a Federal court. In such a case, the court may require the Administrator to provide the materials and pay you up to $110 a day until you receive the materials, unless the materials were not sent because of a reasons beyond the control of the Administrator. If you have a claim for benefits that is denied or ignored, in whole or in part, you may file a lawsuit in a state or Federal court. In addition, if you disagree with the Administrator s decision or lack thereof concerning the qualified status of a domestic relations order, you may file a lawsuit in Federal court. If it should happen that ESOP fiduciaries misuse the ESOP s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file a lawsuit in a Federal court. The court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay costs and fees, for example, if it finds your claim is frivolous. D. Assistance With Your Questions. If you have any questions about your Plan, you should contact the Administrator. If you have any questions about this statement or about your rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator, you should contact the nearest office of the Employee Benefits Security Administration of the U.S. Department of Labor listed in your telephone directory or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue, N.W., Washington, DC You may also obtain certain publications about your rights and 9

10 responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration. This Summary is not the Plan document; it is a summary description that states principal provisions of the Plan in a manner that can be easily understood by most Employees. Although it is not intended to include every limit or detail, this description has been drafted to provide concise and accurate information. However, if there is a discrepancy between this Summary Plan Description and the official Plan document, the Plan document shall apply. 10