SUMMARY PLAN DESCRIPTION OF THE PENSION PLAN FOR EMPOLOYEES OF FIRSTMERIT CORPORATION AND AFFILATIES

Transcription

1 SUMMARY PLAN DESCRIPTION OF THE PENSION PLAN FOR EMPOLOYEES OF FIRSTMERIT CORPORATION AND AFFILATIES describing benefits for certain former employees of Citizens Republic Bancorp As of January 1, 2014

2 TABLE OF CONTENTS Page INTRODUCTION... 1 IMPORTANT INFORMATION... 1 A. Type of Plan... 1 B. Plan Sponsor... 1 C. Plan Administrator... 2 D. Trustee... 2 E. Plan Number... 2 F. Military Service... 2 G. Agent for Service of Process... 2 H. Plan Year... 2 PARTICIPATION IN THE PLAN... 2 A. Eligibility... 2 B. What Participation Means... 2 PLAN TERMS... 3 A. Hour of Service... 3 B. Year of Service... 3 C. Compensation... 3 RETIREMENT AND PLAN BENEFITS... 4 A. Accrued Benefit... 4 B. Grandfathered Benefit... 5 C. Normal Retirement... 5 D. Delayed Retirement... 6 E. Early Retirement... 6 F. Deferred Vested Benefit... 6 G. Benefit Limitations... 7 H. Latest Payment Date for Benefits... 7 I. Benefit Freeze... 7 PAYMENT OPTIONS AND DEATH BENEFITS... 7 A. General... 7 B. Available Payment Options... 7 C. Example... 9 D. Restrictions for Accrued Benefits of $5,000 or Less... 9 E. Federal Income Tax and Withholding i

3 F. How To Elect Your Payment Option G. Postretirement Survivor s Benefit H. Preretirement Survivor s Benefit ADMINISTRATION OF THE PLAN AND CLAIMS A. Plan Administration B. Claims Procedures OTHER THINGS YOU SHOULD KNOW A. Cost of the Plan B. Continuance of the Plan C. PBGC Insurance D. Reemployment E. Employer s Rights F. Assignment of Benefits G. Divorce and Distributions to Alternate Payees H. Payments for Your Benefit I. Top-Heavy Plan Rules J. Possible Loss of Benefits K. Your Rights under ERISA ii

4 INTRODUCTION Citizens Banking Corporation initially established a defined benefit pension plan for the benefit of its employees effective on and after January 1, Citizens Republic Bancorp subsequently became the sponsor of the plan, and the plan became known as The Citizens Republic Bancorp Amended and Restated Cash Balance Pension Plan for Employees. Effective on April 12, 2013, FirstMerit Corporation became the sponsor of the plan, and the plan was renamed The FirstMerit Corporation Cash Balance Pension Plan for Employees. Effective on and after December 31, 2013, the Plan was merged into the Pension Plan for Employees of FirstMerit Corporation and Affiliates as a separate benefit structure. This summary plan description describes the retirement benefits provided to the eligible employees of Citizen Banking Corporation, and its successor, Citizens Republic Bancorp, who were employed with the bank on or prior December 31, 2006, and who have accrued a benefit under the defined benefit plan established for their benefit. This separate benefit structure may also be referred to in this summary as the Plan as it applies to the eligible employees of Citizens Banking Corporation and Citizens Republic Bancorp. THIS BOOKLET SUMMARIZES THE PROVISIONS OF THE PLAN AS IN EFFECT ON AND AFTER JANUARY 1, SOME POINTS IN WHICH YOU MAY BE INTERESTED ARE NOT COVERED BY THIS BOOKLET. IN THE CASE OF ANY ITEM NOT COVERED BY THIS BOOKLET, OR IN THE EVENT OF ANY CONFLICT BETWEEN THIS BOOKLET AND THE PLAN, THE PLAN ALWAYS WILL CONTROL. YOU SHOULD NOT RELY ON ANY ORAL EXPLANATION, DESCRIPTION, OR INTERPRETATION OF THE PLAN BY ANY OFFICER OR EMPLOYEE OF THE EMPLOYER, BECAUSE THE WRITTEN TERMS OF THE PLAN ALWAYS WILL GOVERN. Effective December 31, 2006, the Plan was amended to freeze both participation and benefit accruals. Basically, the freeze means that new employees will not be eligible to participate in the plan and that employees who qualified to participate in the Plan prior to the freeze will earn no additional benefits except for interest credits on their frozen Plan amounts. The entire Plan is contained in the plan document, which you may examine in the office of the Plan Administrator, c/o Administrative Committee, FirstMerit Corporation, III Cascade Plaza, Akron, Ohio ; phone (330) You may obtain a copy of the Plan and other material relating to the Plan for your own, but there will be a copying charge. If you have any questions about this booklet or about the Plan, you should contact the Plan Administrator. IMPORTANT INFORMATION A. Type of Plan. The Plan is a defined benefit pension plan, which means that it describes retirement benefits in terms of a formula and that your employer makes contributions to pay for these benefits. B. Plan Sponsor. The Plan Sponsor is FirstMerit Corporation, III Cascade Plaza, Akron, Ohio ; (330) ; Employer Identification Number

5 C. Plan Administrator. The Plan is administered by an administrative committee appointed by the Plan Sponsor. The address, telephone number, and identifying number are Administrative Committee, FirstMerit Corporation, III Cascade Plaza, Akron, Ohio ; phone (330) D. Trustee. Funds contributed to the Plan by the Sponsor are held, managed, and invested by the Trustee in a trust fund. The current Trustee is FirstMerit Bank, National Association; 106 South Main Street, 6th Floor; Akron, Ohio (330) Copies of the trust agreement are available for your inspection at the office specified in the Introduction to this booklet. You may obtain a copy of the trust agreement for your own, but there will be a copying charge. E. Plan Number. The Plan Number assigned to the Plan is 001. F. Military Service. If you leave employment for qualified military service your benefits under the Plan will comply with the requirements of the Uniformed Services Employment and Reemployment Rights Act of G. Agent for Service of Process. The person currently named as the Agent for Service of Process is Administrative Committee, c/o FirstMerit Corporation, III Cascade Plaza, Akron, Ohio Process also may be served upon the Trustee or upon the Plan Administrator at their respective addresses given above. H. Plan Year. The Plan Year is the calendar year. PARTICIPATION IN THE PLAN A. Eligibility. If you are a salaried or hourly employee and you are not covered by a collective bargaining agreement under which retirement benefits were the subject of bargaining between your employer and a union, then you were eligible to participate in the Plan. To actually start participation, though, you must first complete 1,000 or more Hours of Service during your first twelve months of employment with the bank or within any Plan Year commencing after your hire date. For an explanation of what constitutes an Hour of Service, see the section of this booklet below titled Plan Terms. Note that so-called leased employees who work for your employer, but who actually are employed by a leasing organization, are not eligible to participate in the Plan. Also, independent contractors who perform services for your employer but who are not employees are not eligible. Notwithstanding the foregoing, an employee who had not met the eligibility requirements of this section by December 31, 2006 will not be eligible to participate in the Plan. B. What Participation Means. Once you have become a participant in the Plan, you will begin to earn a pension benefit. You also will be entitled to request a calculation of the pension benefit that you have earned to date. However, merely becoming a participant does not mean that you are guaranteed a benefit from the Plan. You will be entitled to a benefit only if you eventually qualify for a vested benefit, as explained later in this booklet. The term vested generally means that the benefit is nonforfeitable when you leave employment. 2

6 PLAN TERMS To understand how the Plan works, you need to know the following Plan terms: A. Hour of Service. Generally, an Hour of Service means each hour that you are paid for work with a participating employer. However, your Hours of Service also can include hours for which you are paid or entitled to payment for a period during which no work is performed, such as during a paid vacation, holiday, illness, layoff, jury duty, or authorized leave of absence. You also will receive Hour of Service credit for times you are engaged in service in the armed forces of the United States in accordance with the Uniformed Service and Reemployment Rights Act of 1994, as amended. You also may receive Hour of Service credit for hours for which back pay is awarded to you. If you are not paid on an hourly basis, or do not work a fixed number of hours for any period of time, your employer automatically will credit you with 45 Hours of Service per week for each week in which you have at least one Hour of Service. In addition, you will receive up to 501 Hour of Service credit for each child-related absence, that is, absence from work on account of your pregnancy, or the birth or adoption of a child, if that credit is necessary to prevent a Break in Service. The Plan defines Break in Service as a Plan Year in which you are credited with 500 or fewer Hours of Service. If you need these special child-related absence hours to prevent a Break in Service during the Plan Year in which your absence began, the hours will be credited to you in that initial Plan Year, but in all other cases, the hours will be credited to you in the immediately following Plan Year. B. Year of Service. This measure of your length of employment is used to determine your right to a benefit. Generally, you will earn one Year of Service for each Plan Year in which you are credited with 1,000 or more Hours of Service. If you are credited with fewer than 1,000 Hours of Service in any Plan Year, you normally will not be credited with a Year of Service credit for that year. Example 1. Example 2. An employee has 700 Hours of Service in Plan Year 1 and 1,200 in Plan Year 2. He does not earn a Year of Service in Plan Year 1 because he failed to complete at least 1,000 Hours of Service. He earns one Year of Service in Plan Year 2 by completing at least 1,000 Hours of Service. Another employee has 2,000 Hours of Service in Plan Year 1 and 1,500 in Plan Year 2. He earns one Year of Service in Plan Year 1 because he has over 1,000 Hours of Service. He does not earn any extra credit for his second 1,000 Hours of Service in Plan Year 1, because the maximum credit for any Plan Year is one year. He earns another Year of Service in Plan Year 2, for a total of 2 Years of Service in the two Plan Years. C. Compensation. The amount of your benefit is also dependent upon your Compensation, which is defined generally as the sum of your wages, salary, performance incentives, overtime, commissions and other amounts received for services rendered in the course of your employment with a participating employer. Your Compensation also includes any contributions you make to a 401(k) plan or a 125 plan sponsored by your employer, but 3

7 excludes any other plan contributions and certain other special payments. Also, by law, any compensation that exceeds an annual amount will not be considered for Plan purposes. RETIREMENT AND PLAN BENEFITS A. Accrued Benefit. Your Accrued Benefit, expressed as a current lump sum amount, is equal to the sum of: (1) a cumulative account value equal to 4% of your Compensation for each Plan Year after December 31, 2001 and through December 31, 2006 in which you have 1,000 or more Hours of Service, credited on the last day of each such Plan Year (even if you are no longer employed on that date), and increased by interest at the applicable 30- year Treasury Rate from the end of each such Plan Year (including after 2006) to the end of the calendar month prior to Normal Retirement Age; plus (2) if you were an employee with a participating employer on or before December 31, 2001, an amount equal to (i) 105% if you were an active employee on December 31, 2001 (excluding F&M employees described below), or (ii) 100% in other cases, of the present value of any monthly pension benefit (payable at age 65) that you had earned under the Plan as of that date, increased by interest at the applicable 30- year Treasury Rate from December 31, 2001 to the end of the calendar month prior to Normal Retirement Age. Note: If you were an employee of F&M Bancorporation, Inc. ( F&M ) prior to January 1, 2000, replace December 31, 2001 above with December 31, 1999 The applicable 30-year Treasury Rate means the published federal annual rate in effect for the month of November of each calendar year and applied to the following calendar year. Also note that the requirement for having at least 1,000 Hours of Service in a Plan Year, generally needed to earn an additional benefit for that year, is waived in the Plan Year of your Normal, Delayed, or Early Retirement, death, or termination under a separation/severance agreement. Finally, if you were participating in the Plan on December 31, 2001, working for a participating employer (excluding F&M employees) and at least age 35 with 10 or more Years of Service as of that date, and employed with a participating employer continuously thereafter, there will be added to the 4% in (1) above, the following percentage: Your Age as of December 31, or older Additional Percentage 0.5% 1.5% 2.5% 3.0% 4

8 Example. Assume a participant who was under age 35 on December 31, 2001 earned $45,000 in Compensation in His allocation on December 31 of that year is $1,800 (4% of $45,000). No earnings would be allocated for the first year of participation. In 2003, the participant earns $46,575 in Compensation. His allocation on December 31, 2003 is $1,863 (4% of $46,575). Assuming a 30-year Treasury Rate of 6.00%, the participant would have $108 of earnings allocated to his account for 2003, based on the balance from the previous year. His account activity for the two years is summarized as follows: Year Participant s Compensation Account Allocation on December 31 Assumed 30-Year Treasury Rate Earnings Credit Cumulative Account Value at Year End 2002 $45,000 $1,800 N/A $ 0 $1, $46,575 $1, % $108 $3,771 Now assume the participant above was age 50 and had 10 Years of Service on December 31, 2001, and he qualifies for the additional percentage allocation above (3%) plus the normal 4%. The participant s account activity for the two years now would be: Year Participant s Compensation Account Allocation on December 31 Assumed 30-Year Treasury Rate Earnings Credit Cumulative Account Value at Year End 2002 $45,000 $3,150 N/A $ 0 $3, $46,575 $3, % $189 $6,559 In either case, the participant also would be entitled to the present value of any pension earned as of December 31, 2001, increased to 105% of that value if he was actively employed by the Employer on December 31, 2001, and credited with interest at the 30-year Treasury rate for each year after that date. B. Grandfathered Benefit. If you were hired by a participating employer prior to January 1, 2002 (January 1, 2000 for former F&M employees), the Plan also guarantees that your benefit, expressed as a life annuity at age 65, will not be less than what you would have earned if the pre-2002 pension formula of the Plan had remained in effect through the earlier of December 31, 2006 or the date of your retirement or other termination of employment. Consult the Plan Administrator to determine if this grandfathered benefit amount applies to you. C. Normal Retirement. Eligibility. Normal Retirement Age is the later of age 65 or the fifth anniversary of the date that you commenced participation in the Plan. At your Normal Retirement Age, you will have a vested right to a Normal Retirement Benefit. 5

9 Amount of Benefit. Your Normal Retirement Benefit is equal to your Accrued Benefit. Benefit Payment Date. Your Normal Retirement Benefit is payable on the first day of the month coincident with or following the date that you reach your Normal Retirement Age (provided that you have retired), which is called your Normal Retirement Date. D. Delayed Retirement. Eligibility. If you continue to work past Normal Retirement Age, your date of actual retirement is called your Delayed Retirement Date. Upon retirement, you will have a vested right to a Delayed Retirement Benefit. Amount of Benefit. Your Delayed Retirement Benefit is equal to your Accrued Benefit computed as of your Delayed Retirement Date. Benefit Payment Date. Your Delayed Retirement Benefit is payable as of the first day of the month coincident with or following the date of your actual retirement. E. Early Retirement. Eligibility. If you have 3 or more Years of Service (and terminate employment after December 31, 2007) and are at least age 55 but not 65, you may retire early with a vested right to an Early Retirement Benefit. The first day of the month coincident with or following your date of actual retirement is called your Early Retirement Date. Amount of Benefit. Your Early Retirement Benefit is equal to your Accrued Benefit computed as of your Early Retirement Date. Benefit Payment Date. Your Early Retirement Benefit is payable as of your Early Retirement Date or on the first day of any subsequent month as you may elect. F. Deferred Vested Benefit. Eligibility. If you are not eligible for a Normal, Delayed, or Early Retirement Benefit, but have 3 or more Years of Service when you leave employment, you will be eligible for a Deferred Vested Benefit. This benefit will be calculated and paid as described below. If you terminate employment prior to your Normal Retirement Age and before having completed at least 3 Years of Service, you will not have any vested right to a benefit from the Plan. Amount of Benefit. Your Deferred Benefit is equal to your Accrued Benefit computed as of the date of your termination of employment, but credited with earnings at the Plan s rate through date of payment. Benefit Payment Date. Your Deferred Vested Benefit is payable as of the first day of the month coincident with or following your attainment of age 65. Alternatively, if you have 3 or more Years of Service (and terminate employment after December 31, 2007), and are not age 55 at the time you leave employment, such that you are not 6

10 yet eligible for Early Retirement, you may elect to have your Deferred Vested Benefit paid to you as of the first day of any month between what would have been your Early Retirement Date and Normal Retirement Date. If you have at least 10 Years of Service, you may start your benefit at any time after your termination of employment, even if you have not reach age 55; however, if you are under age 55 at the benefit starting date, you only may elect a 50% Joint and Survivor Annuity, 75% Joint and Survivor Annuity, a Lifetime Annuity, or in a single Lump Sum Payment. G. Benefit Limitations. The law imposes certain limitations on the amount of retirement benefits that you may receive. Current law provides that you may not receive a benefit, expressed as an annual amount payable for your lifetime, that exceeds 100% of your average compensation for the three year period that you were paid the most by your Employer, or a specified dollar amount, whichever is less. The limit is reduced for any participant with fewer than 10 Years of Service and for commencement of benefits before age 62; it is increased for benefits that start after age 65. Similar restrictions apply to lump sum payments and other benefit options. You will be advised if any benefit limitation applies to you. H. Latest Payment Date for Benefits. Your benefit generally must begin by April 1st of the year following the year in which you reach age 70-1/2 or in which you retire, whichever is later. I. Benefit Freeze. Without regard to any other provision in this summary plan description, all benefit accruals under the Plan ceased as of December 31, 2006, and no participant s benefit determined as of that date shall be increased or decreased after December 31, 2006 for changes in your Compensation, service or any other item occurring after that date. PAYMENT OPTIONS AND DEATH BENEFITS A. General. Payment options for your retirement benefit and available death benefits for your survivors are discussed together in this part. This is because the payment option you select usually will determine any available death benefit. B. Available Payment Options. If you are eligible for a benefit, generally you may elect to have that benefit paid in any one of the following ways: (1) Lifetime Annuity Option. Under this option, you will receive monthly benefit payments for your lifetime, but no further payments will be made to your estate or to your survivors upon your death, no matter how few payments you received before your death. There is no minimum number of guaranteed payments nor a guaranteed amount that you will receive. The longer you live, the more monthly payments you will receive. The amount of your monthly benefit is based on the value of your Accrued Benefit, your age at the time benefit payments start, and prevailing long-term interest rates at that time. (2) 50% Joint and Survivor Annuity Option. This option is like the Lifetime Annuity option in that there is no minimum number of guaranteed monthly payments. 7

11 However, unlike the Lifetime Annuity option, the 50% Joint and Survivor Annuity option pays a monthly survivor s benefit to your spouse (by legal marriage). Under this option, you receive an adjusted monthly benefit for your life, and upon your death, your spouse, if he or she survives, will receive a monthly benefit for his or her life. The monthly payments to your surviving spouse, if any, are equal to 50% of the monthly benefit that you received during your lifetime. The monthly benefit you receive during your lifetime under the Joint and Survivor Annuity option will be less than the monthly amount you would receive under the Lifetime Annuity option. The exact reduction is determined by a formula in the Plan, based on your age and the age of your spouse. The reason for this reduction is that part of your benefit is being used to provide for the survivor s benefit. You should be aware that if your spouse should die before you do, the reduction in your benefit will not stop unless you have not yet begun to receive benefit payments. The option is canceled if your spouse dies before your benefit payments begin. (3) 75% and 100% Joint and Survivor Annuity Options. These options are the same as the 50% Joint and Survivor Annuity option, except that if your spouse survives, he or she will receive 75% or 100%, rather than 50%, as elected by you of the monthly benefit that you received during your lifetime. To pay for this increased survivor s benefit, however, your monthly lifetime benefit is further reduced, as determined by the Plan s formula. (4) 120 Month Certain and Life Option. If you elect this option, your benefit will be paid to you in monthly installments for your lifetime. If you should die before receiving 120 monthly payments, however, the remaining payments will be made to the beneficiary you designate, or if no beneficiary survives, to your estate. If you live more than 120 months after your benefit begins, benefit payments will continue only until your death. The 120 monthly payments are simply the minimum number of payments that are guaranteed. Because there is a cost for providing this guarantee, your monthly benefit payments under this option will be about 95% of those under the Lifetime Annuity option. (5) Lump Sum Payment Option. Under this option, you will receive a single lump sum payment equal to your Accrued Benefit. (6) Partial Lump Sum Options. Under this option, you may request two or three partial lump sum payments. If you elect the two payments option, the initial partial payment may not exceed one-half of your lump sum amount. Your second payment will equal the remaining lump sum amount credited, with interest, payable 12 months after the first payment. If you elect the three payment option, the initial partial payment may not exceed one-half of your lump sum amount, followed 12 months later by a second payment equal to one-half the remaining lump sum amount, credited with interest, and the third payment will be made 24 months from the date of the first payment for the remaining lump sum amount, credited with interest. 8

12 (7) Direct Rollover Option. This option is similar to the lump sum option, except that instead of the value of your Accrued Benefit being paid to you, it will be paid to your Individual Retirement Account ( IRA ) or another eligible retirement plan of a new employer, as you designate. Within certain limitations prescribed by Federal regulation, you generally may elect to have all or a portion of your benefit rolled over. Any portion not deposited to an IRA or another eligible retirement plan by means of the Direct Rollover Option will be paid to you, subject to Federal income tax and withholding described below. C. Example. A 65 year old employee has an Accrued Benefit equal to $104,661, computed as described earlier in this booklet. His wife is also 65 years old. The retiree s options for payment of benefits, with his wife as his joint annuitant or designated beneficiary, are as follows, assuming a 30-year Treasury Rate of 6.00%. Retiree s Monthly Benefit Spouse s Monthly Survivor s Benefit Lifetime Annuity Option $802 $ 0 50% Joint and Survivor Annuity Option $740 $370 75% Joint and Survivor Annuity Option $712 $ % Joint and Survivor Annuity Option $686 $ Month Certain and Life Option $767 $767* * But only for remainder of 120 months following commencement of benefits to the retiree. Of course, the retiree also may elect a lump sum payment of $104,661 or a direct rollover of all or a portion of this amount. D. Restrictions for Accrued Benefits of $5,000 or Less. On and after March 28, 2005, payment options for Accrued Benefits of $5,000 or less are restricted by the Plan as follows: If your Accrued Benefit is $1,000 or less, it will be paid automatically to you in a single lump sum payment. If your Accrued Benefit exceeds $1,000 but not $5,000, it will be rolled over directly to an IRA established in your name and invested in a certificate of deposit or other suitable investment, unless you timely elect a direct rollover to a different IRA or to another employer s eligible retirement plan, or you request a lump sum payment to you. If your Accrued Benefit exceeds $5,000, and you are otherwise entitled to immediate distribution, you may elect a payment option as described previously in this booklet, including one of the annuity options, a lump sum payment to you, a direct rollover to an IRA or another employer s eligible retirement plan, or you may defer distribution to a future date, although not later than April 1 st following the year in which you reach age 70-1/2 or retire, whichever is later. (Any 9

13 participant who owns 5% or more of your employer s stock must receive distribution after age 70-1/2, without regard to a later retirement date.) E. Federal Income Tax and Withholding. If you receive a lump sum payment, the Plan is required by law to withhold 20% of the distributable amount for Federal income taxes. You can avoid this tax withholding requirement and Federal income tax on the distribution by electing a direct rollover under option (7) described above. Under any of the annuity options, Federal income taxes will be withheld by the Plan in the same manner as from regular wages, in accordance with an election you make. However, unlike in the case of regular wage withholding, you may elect to have no Federal taxes withheld. In the latter case, or if you do not have enough Federal tax withheld, you may be required to make estimated quarterly tax payments. Generally, the Plan will not withhold state or local income taxes, and it is your obligation to make any required quarterly tax deposits. Check with the Plan Administrator for additional information on tax withholding. F. How To Elect Your Payment Option. The Plan Administrator will provide you with an explanation of the payment options available to you and, upon request, the specific amount of each option. The Plan Administrator also will provide you with an election form to complete and return. If you are single when you retire, you automatically will receive the Lifetime Annuity option unless you elect otherwise. If you are married when payments are scheduled to begin, the 50% Joint and Survivor Annuity option, with your spouse as the joint annuitant, automatically is provided in the absence of a different election by you. This is required by law. You need your spouse s written consent to waive the automatic 50% Joint and Survivor Annuity option and to elect any other form of pension payment. Your spouse s signature must be witnessed by a notary public. G. Postretirement Survivor s Benefit. The previous paragraphs of this part have described the various payment options for retirement benefits. If you die after you have retired and after starting to receive benefits, the Plan will pay your survivor according to the payment option you have selected. Benefits will be paid to your survivor under the Joint and Survivor Annuity or the 120 Month Certain and Life options. No death benefit is paid under the Lifetime Annuity or Lump Sum Payment options. If you elected a Direct Rollover, any death benefit is dependent on the terms of your IRA or other plan that received your retirement distribution. H. Preretirement Survivor s Benefit. The Plan also may provide death benefits if you die before your benefit payments have started. If you are legally married and have a vested right to a pension when you die, your surviving spouse will receive a Preretirement Survivor s Benefit. As long as you are vested (i.e., you have 3 or more Years of Service), you are covered. The normal form of the Preretirement Survivor s Benefit is a monthly annuity payable for the life of your surviving spouse, in an amount based on the value of your Accrued Benefit at the time of death. Payment will begin to your surviving spouse as of the later of (1) your date of death, or (2) the earliest date you would have been entitled to start receiving your pension if you had survived (i.e., age 55, unless you had 10 or more Years of Service). Alternatively, your spouse may elect a lump sum payment of your Accrued Benefit. 10

14 If you have no surviving spouse or if you have designated another beneficiary with your spouse s written notarized consent, the Plan will pay a preretirement lump sum death benefit, equal to your Accrued Benefit at date of death, to your designated beneficiary, provided you had at least 3 Years of Service. The payment date will be the later of (1) your date of death, or (2) the earliest date you would have been entitled to receive your pension if you had survived (i.e., age 55, unless you had 10 or more Years of Service). Although you may designate a beneficiary other than your spouse at any time, any designation you make prior to age 35 will be invalid and your spouse will be your beneficiary unless you make another beneficiary designation after you attain age 35. Preretirement survivor s coverage stops once you begin receiving retirement benefits, because death benefits then are controlled by the payment option that you select. Federal income taxes generally are withheld from the Preretirement Survivor s Benefit under the same rules as described above for retirement benefits. ADMINISTRATION OF THE PLAN AND CLAIMS A. Plan Administration. The Plan Administrator files various reports and documents with government agencies and supplies you with this booklet and other information regarding the Plan. The Plan Administrator also interprets the Plan, defines Plan procedures, gathers participant data, and generally operates the Plan. B. Claims Procedures. In order to receive a benefit from the Plan, you must make written application to the Plan Administrator. The Plan Administrator will supply you with the necessary forms upon request. If your claim for benefits is denied, you will receive a written statement explaining the reason that the claim was denied and making specific reference to the section or sections of the Plan which are relevant to the claim. The Plan Administrator also will provide you with a written explanation of how the claim denial may be appealed. Notification of the Plan s denial will be given within 90 days after receipt of the claim by the Plan. If special circumstances require an extension of time for processing the initial claim, the Plan Administrator will provide you with written notice of the extension and the reason before the end of the initial period. Generally, you may request a review of any denied claim by sending a written request for review to the Plan Administrator within 60 days of the date of the notice of denial. You may submit to the Plan Administrator any issues or comments, in writing or otherwise, as you consider relevant to a determination of your claim, and may request a hearing in person before the Plan Administrator. Prior to submitting your request for review, you may look at any documents that the Plan Administrator agrees are pertinent to your claim. The Plan Administrator will promptly respond in writing to all requests for review, and the decision will be mailed to you not later than 60 days following receipt of the request for review, unless special circumstances, such as the need to hold a hearing, prevent this. At all stages of review, you may be represented by counsel, legal or otherwise, but at your own expense. All inquiries and forms should be sent to the Plan Administrator at the 11

15 address given earlier in this booklet. In the event of your death, your beneficiary may follow the same procedures in filing a claim. OTHER THINGS YOU SHOULD KNOW A. Cost of the Plan. The entire cost of benefits is paid by the Plan. The annual contributions to the Plan are determined in accordance with the Plan s terms. You are not required or permitted to make contributions. Employer contributions are given to the Trustee named earlier in this booklet. The Trustee invests these funds and pays benefits to you from Employer contributions and from the income earned by the Plan s investments. You are required to receive annually a funding notice informing you of the funding status of the Plan. If the Plan s funding status falls below certain levels, the law may require restrictions on your ability to take a lump sum distribution. You will be notified if any restrictions apply to you. B. Continuance of the Plan. The Sponsor reserves the unilateral right to change or terminate the Plan. If the Plan terminates, benefits will be distributed to you as soon as practical after termination, in the form of cash or annuity contracts. If there are insufficient assets in the fund to pay all benefits, then benefits will be provided in a legally required order to participants and beneficiaries. In any event, your benefit will become 100% vested to the extent funded if the Plan terminates. C. PBGC Insurance. A government agency known as the Pension Benefit Guaranty Corporation insures certain retirement benefits under the Plan. The Employee Retirement Income Security Act requires that the following explanation be provided to you: Benefits under this Plan are insured by the Pension Benefit Guaranty Corporation ( PBGC ) if the Plan terminates. Generally, the PBGC guarantees most vested normal retirement age benefits, early retirement benefits, and certain survivor s pensions. However, the PBGC does not guarantee all types of benefits under covered plans, and the amount of benefit protection is subject to certain limitations. The PBGC guarantees vested benefits at the level in effect on the date of plan termination. However, if a plan has been in effect less than five years before it terminates, or if benefits have been increased within the five years before plan termination, the whole amount of the plan s vested benefits or the benefit increase may not be guaranteed. In addition, there is a ceiling on the amount of monthly benefit that the PBGC guarantees, which is adjusted periodically. 12

16 For more information on the PBGC insurance protection and its limitations, ask your Plan Administrator or the PBGC. Inquiries to the PBGC should be addressed to the Office of Communications, PBGC, P.O. Box , Alexandria, Virginia The PBGC Office of Communications also may be reached by calling (202) D. Reemployment. If you come back to work for your employer after you have left employment, your rights under the Plan depend upon whether you had a so-called Break in Service and, if so, how long it lasted. As explained earlier in this booklet, the Plan defines a Break in Service as a Plan Year in which you are credited with 500 or fewer Hours of Service. If you had a vested right to your benefit when you left employment (for example, if you had 3 or more Years of Service), or if the number of years of your Breaks in Service is less than your Years of Service earned before the break, then you may participate in the Plan immediately upon your reemployment, and you will not lose credit for any Years of Service earned before your break. E. Employer s Rights. Your employer maintains the right to discipline or discharge any employee. An employee s rights to keep his or her job or to other rights and benefits of employment are not affected by this Plan. F. Assignment of Benefits. For the protection of you and your dependents, your benefit generally cannot be assigned (that is, paid over at your direction) to any other person or organization, except as specifically provided by the Plan. Also, your benefit generally is not subject to garnishment or attachment, which means that your creditors cannot reach your benefit to satisfy your debts to them. The Plan and the law specifically provide, however, that a portion or all of your benefit may be paid to your spouse, former spouse or your child if ordered by a court under state domestic relations law pursuant to a qualified domestic relations order as described in paragraph G below. Your benefit also is subject to federal tax liens. G. Divorce and Distributions to Alternate Payees. In a divorce or separation situation, a court may order that part or all of your Accrued Benefit be paid to your spouse, former spouse, child or other dependent (called an alternate payee ). The order from the court is called a domestic relations order. The Plan can recognize and pay pursuant to the order only if the Plan Administrator determines the order is qualified, which means that it contains specific information required by law and that it meets other requirements. A qualified domestic relations order is referred to as a QDRO. Subject to the specific terms of the QDRO, an alternate payee generally may elect to receive a payment of the benefit awarded in one of the payment options available under the Plan. However, payment generally may not be made to an alternate payee unless you, the participant, either have ceased employment with your employer, or have reached the Plan s earliest retirement age. On the other hand, if the benefit awarded to the alternate payee under the QDRO has a value of $5,000 or less, the alternate payee automatically will receive an immediate lump sum payment from the Plan, subject to the direct rollover rules described above. 13

17 The Plan Administrator has established specific procedures concerning QDROs. If you (or your legal counsel) need information about this subject, you should request a copy of these procedures from the Plan Administrator. H. Payments for Your Benefit. If for some reason you should become physically or mentally unable to take care of your affairs, the Plan Administrator any payments to which you are entitled under the Plan to be paid to another son who is taking care of you and your family. I. Top-Heavy Plan Rules. Special rules apply if the Plan is determined to be topheavy under the tax laws. The Plan will be top-heavy for any Plan Year if more than 60% of the value of the Accrued Benefits for all employees in the Plan (and in any other plan or plans maintained by a participating employer) belongs to key employees. Key employees include certain officers and stockholders of a participating employer. It is unlikely that the Plan ever will be top-heavy. To determine if the Plan is top-heavy for any Plan Year, you should check with the Plan Administrator. J. Possible Loss of Benefits. The Plan is intended to provide you with a valuable retirement benefit. However some individuals may not qualify for a benefit and others may lose a benefit even if they once qualified. The following are some, but not all, of the possible reasons you may not receive part or all of a benefit: If you do not meet the requirements for eligibility to participate, you will not be entitled to a benefit. If you terminate employment before becoming vested, you will lose any benefit you have earned. If the Plan is terminated with insufficient assets to provide your benefit, and if the PBGC does not guarantee all of your benefit, then your benefit may be reduced or in some cases may be lost altogether. If the Plan should be disqualified by the Internal Revenue Service or if the tax law changes, you may lose all or part of your benefit. For a more complete picture of possible reasons for loss of benefit, you should review the Plan document. K. Your Rights under ERISA. The following statement is required by federal law and regulations in order that you might be informed of your rights under the Employee Retirement Income Security Act of 1974 ( ERISA ). As a participant in this Plan, you are entitled to certain rights and protections under ERISA, which provides that all participants shall be entitled to: (1) Receive Information about the Plan and Your Accrued Benefit 14

18 Examine, without charge, at the Plan Administrator s Office, all Plan documents and copies of all documents filed by the Plan with the U.S. Department of Labor, such as detailed annual reports and Plan descriptions. Obtain copies of all Plan documents and other Plan information upon written request to the Plan Administrator. The Plan Administrator may make a reasonable charge for the copies. Obtain a statement telling you whether you have a right to receive a pension at Normal Retirement Age and if so, what your benefits would be at Normal Retirement Age if you stop working under the Plan now. If you do not have a right to a pension, the statement will tell you how many more years you have to work to get a right to a pension. This statement must be requested in writing and is not required to be given more than once a year. The Plan must provide the statement free of charge. (2) Prudent Action by Fiduciaries In addition to creating rights for participants, ERISA imposes duties upon the people who are responsible for the operation of the employee benefit plan. The people who operate your Plan, called fiduciaries of the Plan, have a duty to do so prudently and in the interest of you and other participants and beneficiaries. No one, including your employer or any other person, may fire you or otherwise discriminate against you in any way solely to prevent you from obtaining a pension benefit to which you are entitled or from exercising your rights under ERISA. (3) Enforce Your Rights If your claim for a pension benefit is denied in whole or in part, you must receive a written explanation of the reason for the denial. You have the right to have the Plan review and reconsider your claim. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan to which you are entitled, and you do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan 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 reasons beyond the control of the Plan Administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court. In addition, if you disagree with the Plan s decision or lack thereof concerning the qualified status of a domestic relations order, you may file suit in federal court. If it should happen that Plan fiduciaries misuse the Plan s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The court will decide who should 15

19 pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees, for example, if it finds your claim is frivolous. (4) Assistance with Your Questions If you have any questions about your ERISA rights, you should contact the Plan Administrator. If you wish, you may contact the nearest area office of the United States Labor- Management Services Administration, 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, D.C. You also may obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration. 16 2/05/