SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
(Mark
One)
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x
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QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the quarterly period ended September 30, 2008
OR
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¨
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TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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For
the transition period from
to
Commission
file number 1-1070
Olin
Corporation
(Exact
name of registrant as specified in its charter)
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Virginia
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13-1872319
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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190
Carondelet Plaza, Suite 1530, Clayton, MO
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63105-3443
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(Address
of principal executive offices)
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(Zip
Code)
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(314)
480-1400
(Registrant’s
telephone number, including area code)
Indicate
by check mark whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes
x
No
¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
accelerated filer
x
Accelerated
filer
¨
Non-accelerated
filer
¨
(Do not check if a smaller reporting company)
Smaller
reporting company
¨
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes
¨
No
x
As of
September 30, 2008, 76,883,897 shares of the registrant’s common stock were
outstanding.
Part I —
Financial Information
Item 1.
Financial Statements.
OLIN
CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed
Balance Sheets
(In
millions, except per share data)
(Unaudited)
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September
30,
2008
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December
31,
2007
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September
30,
2007
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ASSETS
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Current
Assets:
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Cash
and Cash Equivalents
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Current
Deferred Income Taxes
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Current
Assets of Discontinued Operations
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Property,
Plant and Equipment (less Accumulated Depreciation of $950.3, $912.6 and
$903.1)
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Assets
of Discontinued Operations
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LIABILITIES AND
SHAREHOLDERS’ EQUITY
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Current
Installments of Long-Term Debt
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Current
Liabilities of Discontinued Operations
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Total
Current Liabilities
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Accrued
Pension Liability
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Liabilities
of Discontinued Operations
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Commitments
and Contingencies
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Common
Stock, Par Value $1 Per Share: Authorized, 120.0
Shares;
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Issued
and Outstanding 76.9, 74.5 and 74.2 Shares
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Additional
Paid-In Capital
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Accumulated
Other Comprehensive Loss
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Retained
Earnings (Accumulated Deficit)
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Total
Shareholders’ Equity
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Total
Liabilities and Shareholders’ Equity
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The
accompanying Notes to Condensed Financial Statements are an integral part of the
condensed financial statements.
OLIN
CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed
Statements of Income
(In
millions, except per share data)
(Unaudited)
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Three Months Ended
September
30,
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Nine
Months Ended
September
30,
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2008
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2007
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2008
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2007
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Selling
and Administration
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Earnings
of Non-consolidated Affiliates
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Income
from Continuing Operations before Taxes
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Income
from Continuing Operations
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Income
from Discontinued Operations, Net
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Loss
on Disposal of Discontinued Operations, Net
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Net
Income (Loss) per Common Share:
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Basic
Income (Loss) per Common Share:
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Income
from Continuing Operations
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Income
from Discontinued Operations, Net
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Loss
on Disposal of Discontinued Operations, Net
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Diluted
Income (Loss) per Common Share:
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Income
from Continuing Operations
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Income
from Discontinued Operations, Net
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Loss
on Disposal of Discontinued Operations, Net
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Dividends
per Common Share
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Average
Common Shares Outstanding:
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The
accompanying Notes to Condensed Financial Statements are an integral part of the
condensed financial statements.
OLIN
CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed
Statements of Shareholders’ Equity
(In
millions, except per share data)
(Unaudited)
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Common
Stock
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Shares
Issued
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Par
Value
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Additional
Paid-In
Capital
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Accumulated
Other
Comprehensive
Loss
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Retained
Earnings
(Accumulated
Deficit)
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Total
Shareholders’
Equity
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Balance
at January 1, 2007
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Amortization
of Prior Service Costs and Actuarial Losses, Net
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Common
Stock ($0.60 per share)
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Cumulative
Effect of Accounting Change
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Balance
at September 30, 2007
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Balance
at January 1, 2008
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Amortization
of Prior Service Costs and Actuarial Losses, Net
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Common
Stock ($0.60 per share)
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Balance
at September 30, 2008
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The
accompanying Notes to Condensed Financial Statements are an integral part of the
condensed financial statements.
OLIN
CORPORATION AND CONSOLIDATED SUBSIDIARIES
Condensed
Statements of Cash Flows
(In
millions)
(Unaudited)
|
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Nine Months Ended
September
30,
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2008
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2007
|
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Operating
Activities
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Loss
from Discontinued Operations, Net
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Adjustments
to Reconcile Net Income (Loss) to Net Cash and Cash Equivalents (Used for)
Provided by Operating Activities:
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Earnings
of Non-consolidated Affiliates
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Depreciation
and Amortization
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Qualified
Pension Plan Contribution
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Qualified
Pension Plan (Income) Expense
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Impairment
of Investment in Corporate Debt Securities
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Common
Stock Issued under Employee Benefit Plans
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Accounts
Payable and Accrued Liabilities
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Other
Noncurrent Liabilities
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Other
Operating Activities
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Cash
(Used for) Provided by Continuing Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from Discontinued Operations, Net
|
|
|
|
|
|
|
|
|
Operating
Activities from Discontinued Operations
|
|
|
|
|
|
|
|
|
Cash
Provided by Discontinued Operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
Business
Acquired through Purchase Transaction
|
|
|
|
|
|
|
|
|
Cash
Acquired through Business Acquisition
|
|
|
|
|
|
|
|
|
Proceeds
from Disposition of Property, Plant and Equipment
|
|
|
|
|
|
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|
|
Proceeds
from Sale of Short-Term Investments
|
|
|
|
|
|
|
|
|
Proceeds
from Sale/Leaseback of Equipment
|
|
|
|
|
|
|
|
|
Distributions
from Affiliated Companies, Net
|
|
|
|
|
|
|
|
|
Other
Investing Activities
|
|
|
|
|
|
|
|
|
Cash
Used for Continuing Operations
|
|
|
|
|
|
|
|
|
Investing
Activities from Discontinued Operations
|
|
|
|
|
|
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|
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|
|
Excess
Tax Benefits from Stock Options Exercised
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Deferred
Debt Issuance Costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Decrease in Cash and Cash Equivalents
|
|
|
|
|
|
|
|
|
Cash
and Cash Equivalents, Beginning of Period
|
|
|
|
|
|
|
|
|
Cash
and Cash Equivalents, End of Period
|
|
|
|
|
|
|
|
|
Cash
Paid for Interest and Income Taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
Taxes, Net of Refunds
|
|
|
|
|
|
|
|
|
The
accompanying Notes to Condensed Financial Statements are an integral part of the
condensed financial statements.
OLIN
CORPORATION AND CONSOLIDATED SUBSIDIARIES
Notes to
Condensed Financial Statements
(Tabular
amounts in millions, except per share data)
(Unaudited)
1.
|
Olin
Corporation is a Virginia corporation, incorporated in 1892. We are a
manufacturer concentrated in two business segments: Chlor Alkali Products
and Winchester. Chlor Alkali Products, with nine U.S. manufacturing
facilities and one Canadian manufacturing facility, produces chlorine and
caustic soda, sodium hydrosulfite, hydrochloric acid, hydrogen, bleach
products and potassium hydroxide. Winchester, with its principal
manufacturing facility in East Alton, IL, produces and distributes
sporting ammunition, reloading components, small caliber military
ammunition and components, and industrial
cartridges.
|
|
On
October 15, 2007, we announced we entered into a definitive agreement to
sell the Metals business to a subsidiary of Global Brass and Copper
Holdings, Inc. (Global), an affiliate of KPS Capital Partners, LP, a New
York-based private equity firm. The transaction closed on
November 19, 2007. Accordingly, for all periods presented prior
to the sale, Metals’ assets and liabilities are classified as “held for
sale” and presented separately in the Condensed Balance Sheets, and the
related operating results and cash flows are reported as discontinued
operations in the Condensed Statements of Income and Condensed Statements
of Cash Flows, respectively.
|
|
On
August 31, 2007, we acquired Pioneer Companies, Inc. (Pioneer), whose
earnings were included in the accompanying financial statements since the
date of acquisition.
|
|
We
have prepared the condensed financial statements included herein, without
audit, pursuant to the rules and regulations of the Securities and
Exchange Commission (SEC). The preparation of the consolidated financial
statements requires estimates and assumptions that affect amounts reported
and disclosed in the financial statements and related notes. In our
opinion, these financial statements reflect all adjustments (consisting
only of normal accruals), which are necessary to present fairly the
results for interim periods. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or omitted
pursuant to such rules and regulations; however, we believe that the
disclosures are appropriate. We recommend that you read these condensed
financial statements in conjunction with the financial statements,
accounting policies, and the notes thereto and Management’s Discussion and
Analysis of Financial Condition and Results of Operations included in our
Annual Report on Form 10-K for the year ended December 31, 2007.
Certain reclassifications were made to prior year amounts to conform to
the 2008 presentation.
|
2.
|
Allowance
for doubtful accounts receivable consisted of the
following:
|
|
|
Nine
Months Ended
September
30,
|
|
|
|
2008
|
|
|
2007
|
|
Balance
at beginning of year
|
|
|
|
|
|
|
|
|
Provisions
charged (credited)
|
|
|
|
|
|
|
|
|
Write-offs,
net of recoveries
|
|
|
|
|
|
|
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|
|
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|
|
|
|
Currency
translation adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provisions
charged to operations for the three months ended September 30, 2008 were $1.7
million. Provisions credited to operations for the three months ended
September 30, 2007 were $0.6 million.
3.
|
Inventories
consisted of the following:
|
|
|
September
30,
2008
|
|
|
December 31,
2007
|
|
|
September
30,
2007
|
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|
|
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|
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|
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|
In
conjunction with the acquisition of Pioneer, we obtained inventories with a fair
value of $25.1 million as of August 31, 2007. Inventories are valued
at the lower of cost or market, with cost being determined principally by the
dollar value last-in, first-out (LIFO) method of inventory
accounting. Cost for other inventories has been determined
principally by the average cost method, primarily operating supplies, spare
parts, and maintenance parts. Elements of costs in inventories included raw
materials, direct labor, and manufacturing overhead. Inventories
under the LIFO method are based on annual estimates of quantities and costs as
of year-end; therefore, the condensed financial statements at September 30,
2008, reflect certain estimates relating to inventory quantities and costs at
December 31, 2008. If the first-in, first-out (FIFO) method of inventory
accounting had been used, inventories would have been approximately $69.0
million, $53.4 million and $62.5 million higher than reported at September 30,
2008, December 31, 2007, and September 30, 2007,
respectively.
4.
|
Basic
and diluted income (loss) per share was computed by dividing net income
(loss) by the weighted average number of common shares outstanding.
Diluted income (loss) per share reflects the dilutive effect of
stock-based compensation.
|
|
|
Three
Months Ended
September
30,
|
|
|
Nine
Months Ended
September
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Computation of Basic
Income (Loss) per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from discontinued operations, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
on disposal of discontinued operations, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from discontinued operations, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
on disposal of discontinued operations, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Computation of Diluted
Income (Loss) per Share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
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|
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|
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|
|
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|
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|
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|
|
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|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from discontinued operations, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss
on disposal of discontinued operations, net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
5.
|
We
are party to various government and private environmental actions
associated with past manufacturing operations and former waste disposal
sites. Environmental provisions charged to income amounted to $6.4 million
and $16.2 million for the three months ended September 30, 2008 and 2007,
respectively, and $21.2 million and $29.3 million for the nine months
ended September 30, 2008 and 2007, respectively. Charges to
income for investigatory and remedial efforts were material to operating
results in 2007 and have been material to operating results in 2008. The
condensed balance sheets included reserves for future environmental
expenditures to investigate and remediate known sites amounting to $161.1
million at September 30, 2008, $155.6 million at December 31, 2007,
and $137.0 million at September 30, 2007, of which $126.1 million, $120.6
million, and $102.0 million were classified as other noncurrent
liabilities, respectively. In conjunction with the acquisition
of Pioneer, as of August 31, 2007 we assumed $57.5 million of
environmental liabilities associated with their current and past
manufacturing operations and former waste disposal
sites.
|
Environmental
exposures are difficult to assess for numerous reasons, including the
identification of new sites, developments at sites resulting from investigatory
studies, advances in technology, changes in environmental laws and regulations
and their application, changes in regulatory authorities, the scarcity of
reliable data pertaining to identified sites, the difficulty in assessing the
involvement and financial capability of other potentially responsible parties
(PRPs), our ability to obtain contributions from other parties, and the lengthy
time periods over which site remediation occurs. It is possible that some of
these matters (the outcomes of which are subject to various uncertainties) may
be resolved unfavorably to us, which could have a material adverse affect on our
financial position or results of operations.
6.
|
Our
board of directors, in April 1998, authorized a share repurchase program
of up to 5 million shares of our common stock. We have repurchased
4,845,924 shares under the April 1998 program. There were no share
repurchases during the nine-month periods ended September 30, 2008 and
2007. At September 30, 2008, 154,076 shares remained authorized to be
purchased.
|
7.
|
We
issued 1.8 million shares and 0.1 million shares with a total value of
$38.1 million and $1.5 million, representing stock options exercised for
the nine months ended September 30, 2008 and 2007, respectively. In
addition, we issued 0.5 million and 0.7 million shares with a total value
of $11.3 million and $12.9 million for the nine months ended September 30,
2008 and 2007, respectively, in connection with our Contributing Employee
Ownership Plan (CEOP).
|
8.
|
We
define segment results as income (loss) from continuing operations before
interest expense, interest income, other income, and income taxes, and
include the operating results of non-consolidated
affiliates.
|
|
|
Three
Months Ended
September
30,
|
|
|
Nine
Months Ended
September
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
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|
|
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations before taxes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chlor
Alkali Products
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
income (expense)
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
corporate and unallocated costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
(expense) income
(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations before taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Earnings
of non-consolidated affiliates were included in the Chlor Alkali Products
segment results consistent with management’s monitoring of the operating
segments. The earnings from non-consolidated affiliates were $12.0 million
and $14.1 million for the three months ended September 30, 2008 and 2007,
respectively, and $31.1 million and $34.4 million for the nine months
ended September 30, 2008 and 2007,
respectively.
|
|
(2)
|
The
service cost and the amortization of prior service cost components of
pension expense related to the employees of the operating segments are
allocated to the operating segments based on their respective estimated
census data. All other components of pension costs are included in
Corporate/Other and include items such as the expected return on plan
assets, interest cost, and recognized actuarial gains and
losses. Pension income for the nine months ended September 30,
2008 included a curtailment charge of $0.8 million resulting from the
conversion of our McIntosh, AL chlor alkali hourly workforce from a
defined benefit pension plan to a defined contribution pension
plan.
|
|
(3)
|
Other
(expense) income for the three and nine months ended September 30, 2008
included an impairment charge of the full value of a $26.6 million
investment in corporate debt securities. We are currently
unable to utilize the capital loss resulting from the impairment of these
corporate debt securities; therefore, no tax benefit was recognized during
the period for the impairment loss.
|
9.
|
Stock-based
compensation granted included stock options, performance stock awards,
restricted stock awards, and deferred directors’
compensation. Stock-based compensation expense totaled $0.4
million and $3.2 million for the three months ended September 30, 2008 and
2007, respectively, and $7.9 million and $7.3 million for the nine months
ended September 30, 2008 and 2007,
respectively.
|
In 2008,
we granted 523,350 stock options with an exercise price of
$20.29. The fair value of each stock option granted, which typically
vests ratably over three years, was estimated on the date of grant, using the
Black-Scholes option-pricing model with the following weighted-average
assumptions used:
Grant
date
|
|
2008
|
|
|
2007
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
fair value (per option)
|
|
|
|
|
|
|
|
|
Dividend
yield for 2008 and 2007 was based on a historical average. Risk-free interest
rate is based on zero coupon U.S. Treasury securities rates for the expected
life of the options. Expected volatility is based on our historical stock price
movements, and we believe that historical experience is the best available
indicator of the expected volatility. Expected life of the option grant is based
on historical exercise and cancellation patterns, and we believe that historical
experience is the best estimate of future exercise patterns.
In 2007,
a reclassification totaling $3.5 million from Additional Paid-In Capital to
Other Liabilities was made for deferred directors’ compensation that could be
settled in cash. This reclassification conforms to the accounting
treatment for stock-based compensation in Statement of Financial Accounting
Standards (SFAS) No. 123 (Revised 2004), “Share-Based Payment.”
10.
|
We
have a 50% ownership interest in SunBelt Chlor Alkali Partnership
(SunBelt), which was accounted for using the equity method of accounting.
The condensed financial positions and results of operations of SunBelt in
its entirety were as follows:
|
100%
Basis
|
|
September
30,
2008
|
|
|
December
31,
2007
|
|
|
September
30,
2007
|
|
Condensed
Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three
Months Ended
September
30,
|
|
Nine
Months Ended
September
30,
|
|
|
2008
|
|
2007
|
|
2008
|
|
|
2007
|
Condensed
Income Statement Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
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|
|
|
The
amount of cumulative unremitted earnings of SunBelt was $23.6 million, $6.6
million and $10.9 million at September 30, 2008, December 31, 2007, and
September 30, 2007, respectively. We received distributions from SunBelt
totaling $18.3 million and $22.5 million in the nine months ended September 30,
2008 and 2007, respectively. We have not made any contributions in
2008 or 2007. We received net settlements of advances of $20.9
million and $24.5 million in the nine months ended September 30, 2008 and 2007,
respectively.
In
accounting for our ownership interest in SunBelt, we adjust the reported
operating results for additional depreciation expense in order to conform
SunBelt’s plant and equipment useful lives to ours. Beginning January
1, 2007, the original machinery and equipment of SunBelt had been fully
depreciated in accordance with our useful asset lives, thus resulting in lower
depreciation expense. The lower depreciation expense increased our
share of SunBelt’s operating results by $1.0 million and $0.9 million for the
three months ended September 30, 2008 and 2007, respectively, and $3.3 million
and $2.8 million for the nine months ended September 30, 2008 and 2007,
respectively. The operating results from SunBelt included interest
expense of $1.1 million and $1.2 million for the three months ended September
30, 2008 and 2007, respectively, and $3.3 million and $3.6 million for the nine
months ended September 30, 2008 and 2007, respectively, on the SunBelt
Notes. Finally, we provide various administrative, management and
logistical services to SunBelt for which we received fees totaling
$2.2 million in the three months ended September 30, 2008 and 2007,
and $6.5 million and $6.2 million in the nine months ended September 30, 2008
and 2007, respectively.
Pursuant
to a note purchase agreement dated December 22, 1997, SunBelt sold $97.5
million of Guaranteed Senior Secured Notes due 2017, Series O, and $97.5 million
of Guaranteed Senior Secured Notes due 2017, Series G. We refer to these notes
as the SunBelt Notes. The SunBelt Notes bear interest at a rate of 7.23% per
annum, payable semiannually in arrears on each June 22 and December
22.
We have
guaranteed the Series O Notes, and PolyOne, our partner in this venture, has
guaranteed the Series G Notes, in both cases pursuant to customary guaranty
agreements. Our guarantee and PolyOne’s guarantee are several, rather than
joint. Therefore, we are not required to make any payments to satisfy the Series
G Notes guaranteed by PolyOne. An insolvency or bankruptcy of PolyOne will not
automatically trigger acceleration of the SunBelt Notes or cause us to be
required to make payments under our guarantee, even if PolyOne is required to
make payments under its guarantee. However, if SunBelt does not make timely
payments on the SunBelt Notes, whether as a result of a failure to pay on a
guarantee or otherwise, the holders of the SunBelt Notes may proceed against the
assets of SunBelt for repayment. If we were to make debt service payments under
our guarantee, we would have a right to recover such payments from
SunBelt.
Beginning
on December 22, 2002 and each year through 2017, SunBelt is required to
repay $12.2 million of the SunBelt Notes, of which $6.1 million is attributable
to the Series O Notes. Our guarantee of these SunBelt Notes was $60.9
million at September 30, 2008. In the event SunBelt cannot make any of these
payments, we would be required to fund the payment on the Series O Notes. In
certain other circumstances, we may also be required to repay the SunBelt Notes
prior to their maturity. We and PolyOne have agreed that, if we or PolyOne
intend to transfer our respective interests in SunBelt and the transferring
party is unable to obtain consent from holders of 80% of the aggregate principal
amount of the indebtedness related to the guarantee being transferred after good
faith negotiations, then we and PolyOne will be required to repay our respective
portions of the SunBelt Notes. In such event, any make whole or similar
penalties or costs will be paid by the transferring party.
11.
|
In
October 2007, we announced that we were freezing our defined benefit
pension plan for salaried and certain non-bargaining hourly
employees. Affected employees were eligible to accrue pension
benefits through December 31, 2007, but are not accruing any additional
benefits under the plan after that date. Employee service after
December 31, 2007 does count toward meeting the vesting requirements for
such pension benefits and the eligibility requirements for commencing a
pension benefit, but not toward the calculation of the pension benefit
amount. Compensation earned after 2007 similarly does not count
toward the determination of the pension benefit amounts under the defined
benefit pension plan. In lieu of continuing pension benefit
accruals for the affected employees under the pension plan, starting in
2008, we provide a contribution to an individual retirement contribution
account maintained with the CEOP equal to 5% of the employee’s eligible
compensation if such employee is less than age 45, and 7.5% of the
employee’s eligible compensation if such employee is age 45 or
older. Most of our employees now participate in defined contribution
pension plans. Expenses of the defined contribution pension
plans were $2.8 million and $0.6 million for the three months ended
September 30, 2008 and 2007, respectively, and $8.7 million and $1.9
million for the nine months ended September 30, 2008 and 2007,
respectively.
|
|
A
portion of our bargaining hourly employees continue to participate in our
domestic defined benefit pension plans, which are non-contributory
final-average-pay or flat-benefit plans. Our funding policy for the
defined benefit pension plans is consistent with the requirements of
federal laws and regulations. Our foreign subsidiaries maintain pension
and other benefit plans, which are consistent with statutory practices.
Our defined benefit pension plans provide that if, within three years
following a change of control of Olin, any corporate action is taken or
filing made in contemplation of, among other things, a plan termination or
merger or other transfer of assets or liabilities of the plan, and such
termination, merger, or transfer thereafter takes place, plan benefits
would automatically be increased for affected participants (and retired
participants) to absorb any plan surplus (subject to applicable collective
bargaining requirements).
|
|
We
also provide certain postretirement health care (medical) and life
insurance benefits for eligible active and retired domestic employees. The
health care plans are contributory with participants’ contributions
adjusted annually based on medical rates of inflation and plan
experience.
|
|
|
Pension
Benefits
|
|
|
Other Postretirement
Benefits
|
|
|
|
Three Months Ended
September
30,
|
|
|
Three Months Ended
September
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Components
of Net Periodic Benefit (Income) Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected
return on plans’ assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of prior service cost
|
|
|
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
Recognized
actuarial loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
periodic benefit (income) cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pension
Benefits
|
|
|
Other Postretirement
Benefits
|
|
|
|
Nine Months Ended
September
30,
|
|
|
Nine Months Ended
September
30,
|
|
|
|
2008
|
|
|
2007
|
|
|
2008
|
|
|
2007
|
|
Components
of Net Periodic Benefit (Income) Cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected
return on plans’ assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization
of prior service cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recognized
actuarial loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
periodic benefit (income) cost
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The
service cost and the amortization of prior service cost components of pension
expense related to the employees of the operating segments were allocated to the
operating segments based on their respective estimated census
data. Therefore, the allocated portion of net periodic benefit costs
for the Metals business of $2.1 million and $6.4 million for the three and nine
months ended September 30, 2007, respectively, were included in income from
discontinued operations. The allocated portion of other
postretirement benefit costs for the Metals business of $1.2 million and $3.8
million for the three and nine months ended September 30, 2007, respectively,
were included in income from discontinued operations.
In June
2008, we recorded a curtailment charge of $0.8 million resulting from the
conversion of our McIntosh, AL chlor alkali hourly workforce from a defined
benefit pension plan to a defined contribution pension plan. In
September 2007, we recorded a curtailment charge of $6.6 million related to the
sale of the Metals business which was included in the loss on disposal of
discontinued operations. In June 2007, we recorded a curtailment
charge of $0.5 million resulting from the conversion of a portion of the Metals
hourly workforce from a defined benefit pension plan to a defined contribution
pension plan. The June 2007 curtailment charge was included in income
from discontinued operations.
We
account for our defined benefit pension plans using actuarial models required by
SFAS No. 87, “Employers’ Accounting for Pensions.” This model uses an
attribution approach that generally spreads the financial impact of changes to
the plan and actuarial assumptions over a period of time. Changes in
liabilities/assets due to changes in actuarial assumptions such as discount
rate, rate of compensation increases and mortality, as well as annual deviations
between what was assumed and what was experienced by the plan are treated as
gains or losses. The principle underlying the required attribution approach is
that employees render service over their average remaining service lives on a
relatively smooth basis and, therefore, the accounting for benefits earned under
the pension or non-pension postretirement benefits plans should follow the same
relatively smooth pattern. With the freezing of our defined benefit
pension plan for salaried and certain non-bargained hourly employees that became
effective January 1, 2008 and the sale of the Metals business, substantially all
defined benefit pension plan participants were inactive; therefore, actuarial
gains and losses are now being amortized based upon the remaining life
expectancy of the inactive plan participants rather than the future service
period of the active participants, which was the amortization period used prior
to 2008. At December 31, 2007, the average remaining life expectancy
of the inactive participants in the defined benefit pension plan was 19.0 years;
compared to the average remaining service lives of the active employees in the
defined benefit pension plan of 10.7 years.
In May
2007, we made a voluntary contribution to our defined benefit pension plan of
$100 million. In addition, during 2007 the asset allocation in the defined
benefit pension plan was adjusted to insulate the plan from discount rate risk
and reduce the plan’s exposure to equity investments.
12.
|
In
July 2006, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (FIN
No. 48). This interpretation clarified the accounting for
uncertainty in income taxes recognized in the financial statements in
accordance with FASB Statement No. 109, “Accounting for Income
Taxes.” FIN No. 48 prescribed a recognition threshold and
required a measurement of a tax position taken or expected to be taken in
a tax return. This interpretation also provided guidance on the
treatment of derecognition, classification, interest and penalties,
accounting in interim periods, and
disclosure.
|
|
We
adopted the provisions of FIN No. 48 on January 1, 2007. As a
result of the implementation, we recognized a $0.1 million increase in the
liability for unrecognized tax benefits, which was accounted for as a
decrease to Retained Earnings (Accumulated Deficit). In
addition, FIN No. 48 required a reclassification of unrecognized tax
benefits and related interest and penalties from deferred income taxes to
current and long-term liabilities. At January 1, 2007, we
reclassified $19.8 million from Deferred Income Taxes to Accrued
Liabilities ($3.1 million) and Other Liabilities ($16.7
million).
|
As of
January 1, 2007, we had $16.5 million of gross unrecognized tax benefits, of
which $11.9 million would impact the effective tax rate, if
recognized. As of January 1, 2007, the remainder of $4.6 million
would have been a reduction to goodwill, if recognized. Upon
completion of the Metals sale, the potential reduction to goodwill would instead
be recognized as income from discontinued operations.
During
the three months ended September 30, 2008, we favorably resolved $7.6 million of
Pioneer unrecognized tax benefits associated with certain tax audits, which was
recorded as a reduction in goodwill. We acquired $30.1 million of
gross unrecognized tax benefits as part of the Pioneer acquisition, all of which
would be a reduction to goodwill, if recognized during 2008. The
unrecognized tax benefit, net of federal income tax benefit, totaled $29.4
million. If these tax benefits are not recognized, the result as of
September 30, 2008 would have been cash tax payments of $8.4
million. After adopting SFAS No. 141R, “Business Combinations” (SFAS
No. 141R) in 2009, any remaining balance of unrecognized tax benefits would
affect our effective tax rate instead of goodwill, if
recognized.
As of
September 30, 2008, we had $51.1 million of gross unrecognized tax benefits
(including Pioneer), of which $21.0 million would impact the effective tax rate,
if recognized. After adopting SFAS No. 141R, in 2009, the entire
gross unrecognized tax benefit would affect our effective tax rate instead of
goodwill, if recognized. A reconciliation of the beginning and ending
amounts of unrecognized tax benefits is as follows:
Balance
at December 31, 2007
|
|
|
|
|
Increase
for prior year tax positions
|
|
|
|
|
Decrease
for prior year tax positions
|
|
|
|
|
|
|
|
|
|
Increase
for current year tax positions
|
|
|
|
|
Reductions
due to statute of limitations
|
|
|
|
|
Balance
at September 30, 2008
|
|
|
|
|
As of
September 30, 2008, it was reasonably possible that our total amount of
unrecognized tax benefits would decrease by approximately $4.8 million over the
next twelve months. The reduction primarily relates to settlements
with tax authorities and the lapse of federal, state, and foreign statutes of
limitation.
On July
10, 2006, we finalized a settlement with the Internal Revenue Service (IRS),
which included the periods 1996 to 2002 and related primarily to the tax
treatment of capital losses generated in 1997. We made payments of
$46.7 million in 2006. We made payments of $0.6 million in 2007
and expect to make payments of approximately $1.5 million in 2008 to
various state and local jurisdictions in conjunction with the IRS
settlement. We have filed both federal and state amended income tax
returns for years 2002 and prior to report changes to taxable income per IRS
examinations. Such tax years remain subject to examination to the
extent of the changes reported.
In 2006,
the IRS commenced an examination of our U.S. income tax return for
2004. In June 2007, we reached an agreement in principle with the IRS
for the 2004 tax examination. The settlement resulted in a reduction
of income tax expense of $0.6 million in 2007 related primarily to a favorable
adjustment to our extraterritorial income exclusion. In connection
with the settlement, we paid $3.2 million to the IRS in June 2007.
Our
federal income tax returns for 2004 to 2007 are open tax years under statute of
limitations. We file in numerous state and foreign jurisdictions with
varying statutes of limitation open from 2003 through 2007 depending on each
jurisdiction’s unique statute of limitation. Pioneer filed income tax
returns in the U.S., various states, Canada, and various Canadian
provinces. Pioneer tax returns for the years 2002 and forward are
open for examination. Pioneer is currently under examination by the
Canada Revenue Agency for its 2002 through 2004 tax years. We have
been notified by the IRS that it will commence an audit of Pioneer’s 2006 tax
year.
13.
|
On
August 31, 2007, we acquired Pioneer, a manufacturer of chlorine, caustic
soda, bleach, sodium chlorate, and hydrochloric acid. Pioneer
owned and operated four chlor-alkali facilities and several bleach
manufacturing facilities in North America. Under the merger
agreement, each share of Pioneer common stock was converted into the right
to receive $35.00 in cash, without interest. The aggregate
purchase price for all of Pioneer’s outstanding shares of common stock,
together with the aggregate payment due to holders of options to purchase
shares of common stock of Pioneer, was $426.1 million, which included
direct fees and
expenses.
|
We
finalized our purchase price allocation during the three months ended September
30, 2008. The adjustments to the purchase price allocation were
primarily the result of finalizing estimates for environmental expenditures to
investigate and remediate known sites and asset retirement obligations,
partially offset by a resolution of certain tax audit issues. These
adjustments resulted in an increase in goodwill of $1.8 million. The
following table summarizes the final allocation of the purchase price to
Pioneer’s assets and liabilities:
|
|
August
31, 2007
|
|
|
|
|
|
|
Property,
plant and equipment
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
current liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities assumed
|
|
|
|
|
|
|
|
|
|
Included
in total current assets is cash and cash equivalents of $126.4
million. Included in other liabilities are liabilities for future
environmental expenditures to investigate and remediate known sites of $57.5
million, liabilities for unrecognized tax benefits of $29.6 million, accrued
pension and postretirement liabilities of $15.0 million, asset retirement
obligations of $22.0 million and other liabilities of $7.8 million.
On March
12, 2008, we announced that, in connection with our plans to streamline our
Chlor Alkali Products manufacturing operations in Canada in order to serve our
customer base in a more cost effective manner, we would close the acquired
Dalhousie, New Brunswick, Canada chlorine, caustic soda, sodium chlorate, and
sodium hypochlorite operations. We substantially completed the closure of
the Dalhousie facility by June 30, 2008. We expect to incur cash
expenditures of $2.5 million in 2008 associated with the shutdown, which were
previously included in current liabilities on the August 31, 2007 balance
sheet.
The
following pro forma summary presents the condensed statement of operations as if
the acquisition of Pioneer had occurred at the beginning of the period
(unaudited):
|
|
Three
Months Ended
|
|
|
Nine
Months Ended
|
|
|
|
September
30, 2007
|
|
|
September
30, 2007
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss per common share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The pro
forma statements of operations included an increase to interest expense of $1.1
million and $4.3 million for the three and nine months ended September 30, 2007,
respectively. This adjustment was calculated assuming that our borrowings
of $110 million, at an interest rate of 5.76% at the time of the merger, were
outstanding from January 1, 2007. The pro forma statements of
operations used estimates and assumptions based on information available at the
time. Management believes the estimates and assumptions to be
reasonable; however, actual results may differ significantly from this pro forma
financial information. The pro forma information does not reflect any
cost savings that might be achieved from combining the operations and is not
intended to reflect the actual results that would have occurred had the
companies actually been combined during the periods
presented.
14.
|
On
October 15, 2007, we announced we entered into a definitive agreement to
sell the Metals business to Global for $400 million, payable in
cash. The price received was subject to a customary working
capital adjustment. The transaction closed on November 19,
2007. The final loss recognized related to this
transaction will be dependent upon the final determination of the value of
working capital in the business. Based on an estimated working
capital adjustment, net cash proceeds from the transaction were $380.8
million.
|
The
Metals business was a reportable segment comprised of principal manufacturing
facilities in East Alton, IL and Montpelier, OH. Metals produced and
distributed copper and copper alloy sheet, strip, foil, rod, welded tube,
fabricated parts, and stainless steel and aluminum strip. Sales for
the Metals business were $521.8 million and $1,604.9 million for the three and
nine months ended September 30, 2007, respectively. Intersegment
sales for the three and nine months ended September 30, 2007 were $20.2 million
and $69.0 million, respectively, representing the sale of ammunition cartridge
case cups to Winchester from Metals, at prices that approximate market, and have
been eliminated from Metals sales. In conjunction with the sale of
the Metals business, Winchester agreed to purchase the majority of its
ammunition cartridge case cups and copper-based strip requirements from Global
under a multi-year agreement with pricing, terms, and conditions which
approximate market. As the criteria to treat the related assets and
liabilities as “held for sale” were met in the third quarter of 2007, for all
periods presented prior to the sale, the related assets and liabilities were
classified as “held for sale,” and the results of operations from the Metals
business have been reclassified as discontinued operations.
The major
classes of assets and liabilities of the Metals business included in assets
“held for sale” in the Condensed Balance Sheet were as follows:
|
September
30, 2007
|
|
Receivables
|
$
|
224.0
|
|
Inventories
|
|
150.0
|
|
Other
current assets
|
|
11.7
|
|
Current
assets of discontinued operations
|
|
385.7
|
|
Property,
plant, and equipment
|
|
188.0
|
|
Other
assets
|
|
7.9
|
|
Assets
of discontinued operations
|
|
195.9
|
|
Accounts
payable
|
|
(141.4
|
)
|
Accrued
liabilities
|
|
(38.5
|
)
|
Current
liabilities of discontinued operations
|
|
(179.9
|
)
|
Liabilities
of discontinued operations
|
|
(9.0
|
)
|
Net
assets held for sale
|
$
|
392.7
|
|
In
conjunction with the sale of the Metals business, we retained certain assets and
liabilities including certain assets co-located with our Winchester business in
East Alton, IL, assets and liabilities associated with former Metals
manufacturing locations, pension assets and pension and postretirement
healthcare and life insurance liabilities associated with Metals employees for
service earned through the date of sale, and certain environmental obligations
existing at the date of closing associated with current and past Metals
manufacturing operations and waste disposal sites.
15.
|
In
February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for
Financial Assets and Financial Liabilities,” (SFAS No. 159), which
permitted an entity to measure certain financial assets and liabilities at
fair value. The statement’s objective was to improve financial
reporting by allowing entities to mitigate volatility in reported earnings
caused by the measurement of related assets and liabilities using
different attributes, without having to apply complex hedge accounting
provisions. This statement became effective for fiscal years
beginning after November 15, 2007 and was to be applied
prospectively. We adopted the provisions of SFAS No.
159 on January 1, 2008. As we did not elect to measure
existing assets and liabilities at fair value, the adoption of this
statement did not have an effect on our financial
statements.
|
In
September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements,”
(SFAS No. 157). This statement did not require any new fair value
measurements, but rather, it provided enhanced guidance to other pronouncements
that require or permit assets or liabilities to be measured at fair value. The
changes to current practice resulting from the application of this statement
related to the definition of fair value, the methods used to estimate fair
value, and the requirement for expanded disclosures about estimates of fair
value. This statement became effective for fiscal years beginning after
November 15, 2007, and interim periods within those fiscal years. The
effective date for this statement for all nonfinancial assets and nonfinancial
liabilities, except for items that are recognized or disclosed at fair value in
the financial statements on a recurring basis, has been delayed by one
year. Nonfinancial assets and nonfinancial liabilities that could be
impacted by this deferral include assets and liabilities initially measured at
fair value in a business combination, and intangible assets and goodwill tested
annually for impairment. We adopted the provisions of SFAS No. 157
related to financial assets and financial liabilities on January 1,
2008. The partial adoption of this statement did not have a material
impact on our financial statements. It is expected that the remaining provisions
of this statement will not have a material effect on our financial
statements.
In
October 2008, the FASB issued FASB Staff Position SFAS No. 157-3, “Determining
the Fair Value of a Financial Asset When the Market for That Asset Is Not
Active,” (SFAS No. 157-3). This position clarifies the application of
FASB No. 157 in a market that is not active and provides an example to
illustrate key considerations in determining the fair value of a financial asset
when the market for that financial asset is not active. This position
was effective for us on September 30, 2008. The adoption of this
position did not have an effect on our financial statements.
Fair
value is defined as the price at which an asset could be exchanged in a current
transaction between knowledgeable, willing parties or the amount that would be
paid to transfer a liability to a new obligor, not the amount that would be paid
to settle the liability with the creditor. Where available, fair value is based
on observable market prices or parameters or derived from such prices or
parameters. Where observable prices or inputs are not available, valuation
models are applied. These valuation techniques involve some level of management
estimation and judgment, the degree of which is dependent on the price
transparency for the instruments or market and the instruments’
complexity.
Assets
and liabilities recorded at fair value in the condensed balance sheets are
categorized based upon the level of judgment associated with the inputs used to
measure their fair value. Hierarchical levels, defined by SFAS No. 157 and
directly related to the amount of subjectivity associated with the inputs to
fair valuation of these assets and liabilities, are as follows:
Level 1 —
Inputs were unadjusted, quoted prices in active markets for identical assets or
liabilities at the measurement date.
Level 2 —
Inputs (other than quoted prices included in Level 1) were either directly or
indirectly observable for the asset or liability through correlation with market
data at the measurement date and for the duration of the instrument’s
anticipated life.
Level 3 —
Inputs reflected management’s best estimate of what market participants would
use in pricing the asset or liability at the measurement date. Consideration was
given to the risk inherent in the valuation technique and the risk inherent in
the inputs to the model.
Determining
which hierarchical level an asset or liability falls within requires significant
judgment. We will evaluate our hierarchy disclosures each
quarter. The following table summarizes the financial instruments
measured at fair value in the Condensed Balance Sheet as of September 30,
2008:
|
Fair
Value Measurements
|
|
Level
1
|
Level
2
|
Level
3
|
|
Total
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commodity
forward contracts
|
|
|
|
|
|
|
|
|
Short-term
investments
We
classified our marketable securities as available-for-sale which were reported
at fair market value. Unrealized gains and losses, to the extent such
losses are considered temporary in nature, are included in Accumulated Other
Comprehensive Loss, net of applicable taxes. At such time as the
decline in fair market value and the related unrealized loss is determined to be
a result of impairment of the underlying instrument, the loss is recorded as a
charge to earnings. Fair values for marketable securities are based
upon prices and other relevant information observable in market transactions
involving identical or comparable assets or liabilities or prices obtained from
independent third-party pricing services. The third-party pricing
services employ various models that take into consideration such market-based
factors as recent sales, risk-free yield curves, prices of similarly rated
bonds, and direct discussions with dealers familiar with these types of
securities.
As of
June 30, 2008, we held corporate debt securities totaling $26.6 million of par
value with a fair value of $20.5 million. For the three months ended
June 30, 2008, a temporary unrealized after-tax loss of $3.7 million ($6.1
million pretax) was recorded in Accumulated Other Comprehensive
Loss. As of June 30, 2008, we concluded no other-than-temporary
impairment losses had occurred. The AA-rated issuer of these debt
securities had funded all redemptions at par and maintained short-term A1/P2
credit ratings. We entered into this structured investment vehicle in
March 2006 as part of an approved cash management portfolio. Given
our liquidity and capital structure, we had the ability to hold these debt
securities until maturity on April 1, 2009.
Through
September 30, 2008, the issuer of these debt securities had continued to fund
all redemptions at par but was downgraded to short-term A3/P2 credit
ratings. On October 1, 2008, the issuer of these debt securities
announced it would cease trading and appoint a receiver as a result of financial
market turmoil. The decline in the market value of the assets
supporting these debt securities negatively impacted the liquidity of the
issuer. On October 1, subsequent to the issuer’s announcement, the
Moody’s rating for these debt securities was downgraded from A3 to
Ca.
As of
September 30, 2008, we continued to hold corporate debt securities totaling
$26.6 million of par value. We determined that these debt securities
had no fair market value due to the actions taken by the issuer, turmoil in the
financial markets, the lack of liquidity of the issuer, and the lack of trading
in these debt securities. These factors have led management to
believe the recovery of the asset value, if any, is highly
unlikely.
Because
of the unlikelihood that these debt securities will recover in value, we
recorded an after-tax impairment loss of $26.6 million in Other (Expense) Income
for the three months ended September 30, 2008. We are currently
unable to utilize the capital loss resulting from the impairment of these
corporate debt securities; therefore, no tax benefit was recognized during the
period for the impairment loss.
Interest
rate swaps
The fair
value of the interest rate swaps was included in Other Assets and Long-Term Debt
as of September 30, 2008. These financial instruments were valued
using the “income approach” valuation technique. This method used
valuation techniques to convert future amounts to a single present
amount. The measurement was based on the value indicated by current
market expectations about those future amounts. We use interest rate
swaps as a means of managing interest rates on our outstanding fixed-rate debt
obligations.
Commodity
forward contracts
The fair
value of the commodity forward contracts was classified in Accrued Liabilities
as of September 30, 2008, with unrealized gains and losses included in
Accumulated Other Comprehensive Loss, net of applicable taxes. These
financial instruments were valued primarily based on prices and other relevant
information observable in market transactions involving identical or comparable
assets or liabilities including both forward and spot prices for
commodities. We use commodity forward contracts for certain raw
materials and energy costs such as copper, zinc, lead, and natural gas to
provide a measure of stability in managing our exposure to price
fluctuations.
SFAS No.
157 requires separate disclosure of assets and liabilities measured at fair
value on a recurring basis, as documented above, from those measured at fair
value on a nonrecurring basis. As of September 30, 2008, no assets or
liabilities were measured at fair value on a nonrecurring basis.
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of
Operations
Business
Background
Our
manufacturing operations are concentrated in two business segments: Chlor Alkali
Products and Winchester. Both are capital intensive manufacturing businesses
with operating rates closely tied to the general economy. Each segment has a
commodity element to it, and therefore, our ability to influence pricing is
quite limited on the portion of the segment’s business that is strictly
commodity. Our Chlor Alkali Products segment is a commodity business where all
supplier products are similar and price is the major supplier selection
criterion. We have little or no ability to influence prices in this large,
global commodity market. Cyclical price swings, driven by changes in
supply/demand, can be abrupt and significant and, given the capacity in our
Chlor Alkali Products business, can lead to very significant changes in our
overall profitability. Winchester also has a commodity element to its business,
but a majority of Winchester ammunition is sold as a branded consumer product
where there are opportunities to differentiate certain offerings through
innovative new product development and enhanced product performance. While
competitive pricing versus other branded ammunition products is important, it is
not the only factor in product selection. The Metals business was
classified as discontinued operations during 2007 and was excluded from the
segment results.
Executive
Summary
Chlor
Alkali Products segment income improved 47% and 42% compared with the three and
nine months ended September 30, 2007, respectively, which reflects the
contributions and synergies from the Pioneer acquisition and improved
pricing. Operating rates in Chlor Alkali Products for the three and
nine months ended September 30, 2008 were negatively impacted by
hurricane-related outages at our St. Gabriel, LA facility and our SunBelt joint
venture.
During
the nine months ended September 30, 2008, demand for caustic soda remained
strong. However, caustic soda supply was constrained because of
reduced operating rates driven by weakness in chlorine demand, resulting in a
significant supply and demand imbalance for caustic soda. This
imbalance, along with increased freight and energy costs, resulted in
unprecedented caustic soda price increase announcements.
On March
12, 2008, we announced that, in connection with our plans to streamline Chlor
Alkali manufacturing operations in Canada in order to serve our customer base in
a more cost effective manner, we would close the acquired Dalhousie, New
Brunswick, Canada chlorine, caustic soda, sodium chlorate, and sodium
hypochlorite operations. We substantially completed the closure of
the Dalhousie facility by June 30, 2008. We expect to incur cash
expenditures of $2.5 million in 2008 associated with the shutdown, which were
previously included in current liabilities on the Pioneer acquisition balance
sheet. This action is expected to generate $8.0 million to $10.0
million of annual pretax savings.
Winchester
segment income was $9.8 million and $29.3 million for the three and nine months
ended September 30, 2008, respectively. Winchester segment income for
the nine months ended September 30, 2008, which represented record earnings for
the Winchester business, improved 24% compared with the prior
year. Winchester’s results for the nine months ended September 30,
2008, reflected the combination of improved pricing and increased
volumes.
For the
three months ended September 30, 2008, other (expense) income included an
impairment charge of the full value of a $26.6 million investment in corporate
debt securities. On October 1, 2008, the issuer of these debt
securities announced it would cease trading and appoint a receiver as a result
of financial market turmoil. The decline in the market value of the
assets supporting these debt securities negatively impacted the liquidity of the
issuer. We determined that these debt securities had no fair market
value due to the actions taken by the issuer, turmoil in the financial markets,
the lack of liquidity of the issuer, and the lack of trading in these debt
securities. We are currently unable to utilize the capital loss
resulting from the impairment of these corporate debt securities; therefore, no
tax benefit was recognized during the period for the impairment
loss. Previously, at June 30, 2008, a temporary unrealized after-tax
loss for these corporate debt securities of $3.7 million ($6.1 million pretax)
was recorded in accumulated other comprehensive loss.
For the
nine months ended September 30, 2008, the defined benefit pension plan’s
investment portfolio declined by approximately 8%. The decline
reflected the weakness in the domestic and international equity markets and
interest rate increases that reduced the value of fixed income
investments. During the same period, interest rates on corporate
bonds, used to determine the defined benefit pension plan’s liability discount
rate, have increased resulting in an estimated 125-basis point increase in the
discount rate. The combination of the plan’s investment performance
and the change in the discount rate have preserved the over funded position that
existed at December 31, 2007.
Consolidated
Results of Operations
($
in millions, except per share data)
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Three
Months Ended
September
30,
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Nine
Months Ended
September
30,
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2008
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2007
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2008
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2007
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Selling
and Administration
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Earnings
of Non-consolidated Affiliates
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Income
from Continuing Operations before Taxes
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Income
from Continuing Operations
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Income
from Discontinued Operations, Net
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Loss
on Disposal of Discontinued Operations, Net
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Net
Income (Loss) per Common Share:
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Basic
Income (Loss) per Common Share:
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Income
from Continuing Operations
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Income
from Discontinued Operations, Net
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Loss
on Disposal of Discontinued Operations, Net
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Diluted
Income (Loss) per Common Share:
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Income
from Continuing Operations
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Income
from Discontinued Operations, Net
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Loss
on Disposal of Discontinued Operations, Net
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—
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Three
Months Ended September 30, 2008 Compared to Three Months Ended September 30,
2007
Sales for
the three months ended September 30, 2008 were $502.9 million compared with
$350.3 million last year, an increase of $152.6 million, or 44
%.
Chlor Alkali Products
sales increased $140.8 million, or 64%, primarily due to higher ECU prices and
increased Pioneer sales of $110.3 million. The combined Olin and
Pioneer ECU netbacks increased 20% compared to the ECU netback in the prior
year, which included Pioneer for September only. Winchester sales
were higher by $11.8 million, or 9%, primarily due to increased selling prices
and higher volumes to law enforcement customers.
Gross
margin increased $53.7 million, or 78%, over the three months ended September
30, 2007, as a result of improved Chlor Alkali Products gross margin, primarily
due to higher ECU prices and the contribution from Pioneer. Gross
margin was also positively impacted by decreased environmental costs in 2008 of
$9.8 million primarily associated with a charge in the prior year related to
costs at a former waste disposal site based on revised remediation estimates
resulting from negotiations with a government agency and the reduction in
defined benefit pension expense of $4.4 million, which was partially offset by
an increase in defined contribution pension expense of $1.7
million. Gross margin as a percentage of sales was 24% in 2008 and
20% in 2007.
Selling
and administration expenses for the three months ended September 30, 2008
increased $4.6 million from the three months ended September 30, 2007 primarily
due to increased expenses associated with the acquired Pioneer operations, net
of synergies, of $3.1 million, a higher level of legal and legal-related
settlement costs of $3.4 million, a higher provision for doubtful customer
accounts receivable of $2.1 million, increased consulting costs of $0.5 million
and increased expenses arising from certain non-income tax audits of $0.5
million. These increases were partially offset by lower management
incentive compensation costs of $3.3 million primarily resulting from lower
mark-to-market adjustments on stock-based compensation and decreased defined
benefit pension expense of $2.8 million, partially offset by increased defined
contribution pension expense of $0.5 million. Selling and
administration expenses as a percentage of sales were 7% in 2008 and 9% in
2007.
Other
operating income of $0.4 million for the three months ended September 30, 2008
represented the impact of the gain realized in 2007 on an intangible asset sale
in Chlor Alkali Products, which is recognized ratably through March 2012 and the
impact of a gain realized on the sale of equipment, which is recognized ratably
through June 2009.
The
earnings of non-consolidated affiliates were $12.0 million for the three months
ended September 30, 2008, a decrease of $2.1 million from $14.1 million for the
three months ended September 30, 2007. Lower volumes at SunBelt due
to a production outage caused by the impact of Hurricane Ike on its customers
were partially offset by higher ECU selling prices in the three months ended
September 30, 2008.
Interest
expense decreased by $2.7 million from 2007, primarily due to the effect of
higher borrowings in 2007 related to the Pioneer acquisition and capitalizing
$1.2 million of interest in 2008 associated with our St. Gabriel, LA Chlor
Alkali facility conversion and expansion project.
The lower
interest income of $1.7 million for the three months ended September 30, 2008
was due to lower short-term interest rates.
Other
(expense) income for the three months ended September 30, 2008 included an
impairment charge of the full value of a $26.6 million investment in corporate
debt securities.
The
effective tax rate for continuing operations for the three months ended
September 30, 2008 included expense of $10.4 million for a valuation allowance
applied against the deferred tax benefit resulting from the $26.6 million
capital loss carryforward generated from the impairment of corporate debt
securities. The effective tax rate for continuing operations for the
three months ended September 30, 2008 also included a $2.5 million reduction in
expense primarily associated with the finalization of the 2007 income tax
returns, which resulted in an increased benefit for the domestic manufacturing
deduction. The effective tax rate for continuing operations for the
three months ended September 30, 2008 of 35.1%, which was increased by the
affect of these two items of $7.9 million, was higher than the 35% U.S. federal
statutory rate primarily due to state income taxes, which were offset in part by
the benefit of the domestic manufacturing deduction and the utilization of
certain state tax credits. The effective tax rate for continuing
operations for the three months ended September 30, 2007 of 32.7% was lower than
the 35% U.S. federal statutory rate primarily due to the benefit of the domestic
manufacturing deduction, and the utilization of certain state tax credits, which
were offset in part by state income taxes and income in certain foreign
jurisdictions being taxed at higher rates.
Income
from discontinued operations, net for the three months ended September 30, 2007,
was $9.5 million. The Metals pretax income for the three months ended
September 30, 2007 included a LIFO inventory liquidation gain of $8.9 million as
part of a Metals inventory reduction program initiated in 2007. The
effective tax rate was 35.9% for the three months ended September 30,
2007.
Loss on
disposal of discontinued operations, net for the three months ended September
30, 2007, was $125.4 million. Based on the September 30, 2007 Metals
assets held for sale, we recognized a pretax loss of $151.8 million offset by a
$26.4 million income tax benefit.
Nine
Months Ended September 30, 2008 Compared to Nine Months Ended September 30,
2007
Sales for
the nine months ended September 30, 2008 were $1,330.3 million compared with
$872.0 million last year, an increase of $458.3 million, or 53%
.
Chlor Alkali
Products sales increased $419.6 million, or 77%, primarily due to the inclusion
of Pioneer sales totaling $376.0 million and higher ECU prices. The
combined Olin and Pioneer ECU netbacks increased 17% compared to the ECU netback
in the prior year, which included Pioneer for September
only. Winchester sales were higher by $38.7 million, or 12%, due to
increased selling prices and higher volumes to law enforcement
customers.
Gross
margin increased $116.4 million, or 68%, over the nine months ended September
30, 2007, as a result of improved Chlor Alkali Products gross margin primarily
due to the contribution from Pioneer and improved Winchester gross margin from
higher selling prices and improved volumes. Gross margin was also
positively impacted by decreased environmental costs in 2008 of $8.1 million
primarily associated with a charge in the prior year related to costs at a
former waste disposal site based on revised remediation estimates resulting from
negotiations with a government agency and the reduction in defined benefit
pension expense of $13.4 million, which was partially offset by an increase in
defined contribution pension expense of $5.8 million. Gross margin as
a percentage of sales was 22% in 2008 and 20% in 2007.
Selling
and administration expenses for the nine months ended September 30, 2008
increased $9.5 million from the nine months ended September 30, 2007 primarily
due to increased expenses associated with the acquired Pioneer operations, net
of synergies, of $11.9 million, increased consulting costs of $2.7 million,
increased salary and benefits costs of $2.5 million, and a higher provision for
doubtful customer accounts receivable of $2.7 million. These
increases were partially offset by decreased defined benefit pension expense of
$9.6 million, partially offset by increased defined contribution pension expense
of $1.0 million, and a lower level of legal and legal-related settlement costs
of $2.1 million. Selling and administration expenses as a percentage
of sales were 8% in 2008 and 11% in 2007.
Other
operating income of $1.5 million for the nine months ended September 30, 2008
represented the gain on the disposition of land associated with a former
manufacturing facility, the impact of the gain realized in 2007 on an intangible
asset sale in Chlor Alkali Products, which is recognized ratably through March
2012 and the impact of a gain realized on the sale of equipment, which is
recognized ratably through June 2009.
The
earnings of non-consolidated affiliates were $31.1 million for the nine months
ended September 30, 2008, a decrease of $3.3 million from $34.4 million for the
nine months ended September 30, 2007. Lower volumes at SunBelt due to
a production outage caused by the impact of Hurricane Ike on its customers were
partially offset by higher ECU selling prices in the nine months ended September
30, 2008.
Interest
expense decreased by $4.4 million from 2007, primarily due to the effect of
higher borrowings in 2007 related to the Pioneer acquisition and capitalizing
$2.2 million of interest in 2008 associated with our St. Gabriel, LA Chlor
Alkali facility conversion and expansion project.
The lower
interest income of $4.0 million in the nine months ended September 30, 2008 was
due to lower short-term interest rates.
Other
(expense) income for the nine months ended September 30, 2008 included an
impairment charge of the full value of a $26.6 million investment in corporate
debt securities.
The
effective tax rate for continuing operations for the nine months ended September
30, 2008 included expense of $10.4 million for a valuation allowance applied
against the deferred tax benefit resulting from the $26.6 million capital loss
carryforward generated from the impairment of corporate debt
securities. The effective tax rate for continuing operations for the
nine months ended September 30, 2008 also included a $2.5 million reduction in
expense primarily associated with the finalization of the 2007 income tax
returns, which resulted in an increased benefit for the domestic manufacturing
deduction. The effective tax rate for continuing operations for the
nine months ended September 30, 2008 of 35.7%, which was increased by the affect
of these two items of $7.9 million, was higher than the 35% U.S. federal
statutory rate primarily due to state income taxes, which were offset in part by
the benefit of the domestic manufacturing deduction and the utilization of
certain state tax credits. The effective tax rate for continuing
operations for the nine months ended September 30, 2007 of 32.4% was lower than
the 35% U.S. federal statutory rate primarily due to the benefit of the domestic
manufacturing deduction, and the utilization of certain state tax credits,
offset in part by state income taxes and income in certain foreign jurisdictions
being taxed at higher rates.
Income
from discontinued operations, net for the nine months ended September 30, 2007,
was $29.7 million. The Metals pretax income for the nine months ended
September 30, 2007 included a LIFO inventory liquidation gain of $22.0 million
as part of a Metals inventory reduction program initiated in
2007. The effective tax rate was 36.3% for the nine months ended
September 30, 2007.
Loss on
disposal of discontinued operations, net for the nine months ended September 30,
2007, was $125.4 million. Based on the September 30, 2007 Metals
assets held for sale, we recognized a pretax loss of $151.8 million offset by a
$26.4 million income tax benefit.
We define
segment results as income (loss) from continuing operations before interest
expense, interest income, other income, and income taxes, and include the
operating results of non-consolidated affiliates.
($
in millions)
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Three
Months Ended
September
30,
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Nine
Months Ended
September
30,
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2008
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2007
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2008
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2007
|
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Sales:
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Income
from continuing operations before taxes:
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Chlor
Alkali Products
(1)
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Pension
income (expense)
(2)
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Other
corporate and unallocated costs
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Other
(expense) income
(3)
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Income
from continuing operations before taxes
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(1)
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Earnings
of non-consolidated affiliates were included in the Chlor Alkali Products
segment results consistent with management’s monitoring of the operating
segments. The earnings from non-consolidated affiliates were $12.0 million
and $14.1 million for the three months ended September 30, 2008 and 2007,
respectively, and $31.1 million and $34.4 million for the nine months
ended September 30, 2008 and 2007,
respectively.
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(2)
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The
service cost and the amortization of prior service cost components of
pension expense related to the employees of the operating segments are
allocated to the operating segments based on their respective estimated
census data. All other components of pension costs are included in
Corporate/Other and include items such as the expected return on plan
assets, interest cost, and recognized actuarial gains and
losses. Pension income for the nine months ended September 30,
2008 included a curtailment charge of $0.8 million resulting from the
conversion of our McIntosh, AL chlor alkali hourly workforce from a
defined benefit pension plan to a defined contribution pension
plan.
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(3)
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Other
(expense) income for the three and nine months ended September 30, 2008
included an impairment charge of the full value of a $26.6 million
investment in corporate debt securities. We are currently
unable to utilize the capital loss resulting from the impairment of these
corporate debt securities; therefore, no tax benefit was recognized during
the period for the impairment loss.
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Chlor
Alkali Products
Three
Months Ended September 30, 2008 Compared to Three Months Ended September 30,
2007
Chlor
Alkali Products’ sales for the three months ended September 30, 2008 were $362.1
million compared to $221.3 million for the three months ended September 30,
2007, an increase of $140.8 million, or 64%. The acquisition of
Pioneer contributed to an increase in sales of $110.3 million. Chlor
Alkali Products’ sales, excluding Pioneer, increased $30.5 million, or
17%. The sales increase was due to increased ECU pricing, partially
offset by lower volumes. The combined Olin and Pioneer chlorine and
caustic soda ECU netback, excluding SunBelt, was approximately $660 for the
three months ended September 30, 2008 compared to approximately $550 for the
same period in 2007, which included Pioneer for September
only. Freight costs included in the ECU netback increased by 27% in
the three months ended September 30, 2008 compared to same period in the prior
year. The combined Olin and Pioneer operating rate for the three
months ended September 30, 2008 was 89%, compared to the operating rate of 97%
for the three months ended September 30, 2007. The operating rate for
2008 was negatively affected by two hurricanes, which caused production and
customer outages and disruptions to the transportation system. During
the three months ended September 30, 2007, we were building inventory to support
our customers during a planned ten-day maintenance outage at our McIntosh, AL
facility, including the SunBelt facility, and shorter outages at four other
facilities in the fourth quarter of 2007.
Chlor
Alkali posted segment income of $103.6 million for the three months ended
September 30, 2008 compared to $70.7 million for the same period in
2007. Chlor Alkali segment income included Pioneer income of $31.7
million and $8.3 million for the three months ended September 30, 2008 and 2007,
respectively. Chlor Alkali segment income, excluding Pioneer, was
higher in 2008 by $9.5 million, or 15%, primarily because of increased selling
prices ($32.2 million), partially offset by decreased volumes ($4.1 million),
higher operating costs ($16.1 million), and lower SunBelt results ($2.4
million). Operating expenses increased primarily due to increases in
distribution costs and manufacturing costs, which included higher electricity
prices.
Nine
Months Ended September 30, 2008 Compared to Nine Months Ended September 30,
2007
Chlor
Alkali Products’ sales for the nine months ended September 30, 2008 were $962.6
million compared to $543.0 million for the nine months ended September 30, 2007,
an increase of $419.6 million, or 77%. The acquisition of Pioneer
contributed to an increase in sales of $376.0 million. Chlor Alkali
Products’ sales, excluding Pioneer, increased $43.6 million, or
9%. The sales increase was due to increased ECU pricing, partially
offset by lower volumes. The combined Olin and Pioneer chlorine and
caustic soda ECU netback, excluding SunBelt, was approximately $610 for the nine
months ended September 30, 2008 compared to approximately $520 for the same
period in 2007, which included Pioneer for September only. Freight
costs included in the ECU netback increased by 30% in the nine months ended
September 30, 2008 compared to same period in the prior year. The
combined Olin and Pioneer operating rate for the nine months ended September 30,
2008 was 87%, compared to the operating rate of 94% for the nine months ended
September 30, 2007. The lower operating rate for 2008 resulted from
lower chlorine demand and was negatively affected by two hurricanes, which
caused production and customer outages and disruptions to the transportation
system.
Chlor
Alkali posted segment income of $241.0 million for the nine months ended
September 30, 2008 compared to $169.2 million for the same period in
2007. Chlor Alkali segment income included Pioneer income of $72.7
million and $8.3 million for the nine months ended September 30, 2008 and 2007,
respectively. Chlor Alkali segment income, excluding Pioneer, was
higher in 2008 by $7.4 million, or 5%, primarily because of increased selling
prices ($58.2 million), partially offset by decreased volumes ($22.3 million),
higher operating costs ($27.4 million), and lower SunBelt results ($3.3
million). Chlor Alkali segment income for the nine months ended
September 30, 2008 also included a $2.6 million gain from a litigation
recovery. Operating expenses increased primarily due to increases in
distribution costs and manufacturing costs, which included higher electricity
prices.
Winchester
Three
Months Ended September 30, 2008 Compared to Three Months Ended September 30,
2007
Sales
were $140.8 million for the three months ended September 30, 2008 compared to
$129.0 million for the three months ended September 30, 2007, an increase of
$11.8 million, or 9%. Shipments to law enforcement agencies increased
$5.9 million for the three months ended September 30, 2008 compared to the same
period in 2007. Sales of ammunition to domestic commercial customers
increased $2.4 million primarily due to higher selling
prices. Shipments to international commercial customers and military
customers increased $1.6 million and $0.7 million, respectively.
Winchester
reported segment income of $9.8 million for the three months ended September 30,
2008 compared to $10.0 million for the three months ended September 30, 2007, a
decrease of $0.2 million. The decrease was due to increased commodity and other
material costs and higher operating costs ($15.2 million) and lower volumes
primarily with commercial customers ($4.8 million), which were primarily offset
by the impact of higher selling prices and increased volumes to law enforcement
agencies ($19.5 million).
Nine
Months Ended September 30, 2008 Compared to Nine Months Ended September 30,
2007
Sales
were $367.7 million for the nine months ended September 30, 2008 compared to
$329.0 million for the nine months ended September 30, 2007, an increase of
$38.7 million, or 12%. Shipments to law enforcement agencies
increased $16.0 million for the nine months ended September 30, 2008 compared to
the same period in 2007. Sales of ammunition to domestic commercial
customers increased $14.2 million primarily due to higher selling
prices. Shipments to international commercial customers and military
customers increased $5.6 million and $0.4 million, respectively.
Winchester
reported segment income of $29.3 million for the nine months ended September 30,
2008 compared to $23.7 million for the nine months ended September 30, 2007, an
increase of $5.6 million. The increase was due to the impact of higher selling
prices and increased volumes ($39.4 million), which were partially offset by
increased commodity and other material costs and higher operating costs ($34.2
million).
Corporate/Other
Three
Months Ended September 30, 2008 Compared to Three Months Ended September 30,
2007
For the
three months ended September 30, 2008, pension income included in
Corporate/Other was $5.2 million compared to pension expense of $0.6 million for
the three months ended September 30, 2007. The $5.8 million decrease in
corporate pension expense was due to the combination of a required 25-basis
point increase in the discount rate, the $100 million
voluntary contribution made to our defined benefit pension plan in May
2007, the favorable performance on plan assets in 2007, the benefits of the
plan freeze for salary and non-bargained hourly employees, which became
effective January 1, 2008, and the increase in the amortization period of
actuarial losses.
On a
total company basis, defined benefit pension income for the three months ended
September 30, 2008 was $2.9 million compared to defined benefit pension expense
of $13.0 million for the three months ended September 30, 2007. The
decrease in total company pension expense reflected a curtailment charge of $6.6
million for the three months ended September 30, 2007 resulting from the sale of
the Metals business which was included in the loss on disposal of discontinued
operations. This defined benefit pension cost reduction was partially
offset by higher defined contribution pension costs. Total company
defined contribution pension expense for the three months ended September 30,
2008 was $2.8 million compared to $0.6 million for the three months ended
September 30, 2007.
For the
three months ended September 30, 2008, charges to income for environmental
investigatory and remedial activities were $6.4 million compared with $16.2
million in 2007. This provision related primarily to expected future
investigatory and remedial activities associated with past manufacturing
operations and former waste disposal sites. The decrease of $9.8
million was primarily due to a $7.8 million charge in the prior year related to
costs at a former waste disposal site based on revised remediation estimates
resulting from negotiations with a government agency.
For the
three months ended September 30, 2008, other corporate and unallocated costs
were $13.6 million compared with $12.3 million in 2007, an increase of $1.3
million, or 11%. Increased legal and legal-related settlement
expenses of $3.0 million, higher asset retirement obligation charges of $0.4
million, and increased expenses arising from certain non-income tax audits of
$0.4 million were partially offset by decreased stock-based compensation expense
of $3.3 million primarily resulting from lower mark-to-market adjustments.
Nine
Months Ended September 30, 2008 Compared to Nine Months Ended September 30,
2007
For the
nine months ended September 30, 2008, pension income included in Corporate/Other
was $13.3 million compared to pension expense of $4.1 million for the nine
months ended September 30, 2007. The $17.4 million decrease in corporate pension
expense was due to the combination of a required 25-basis point increase in the
discount rate, the $100 million voluntary contribution made to our defined
benefit pension plan in May 2007, the favorable performance on plan assets
in 2007, the benefits of the plan freeze for salary and non-bargained hourly
employees, which became effective January 1, 2008, and the increase in the
amortization period of actuarial losses. This decrease was partially
offset by a curtailment charge of $0.8 million resulting from the conversion of
our McIntosh, AL chlor alkali hourly workforce from a defined benefit pension
plan to a defined contribution pension plan.
On a
total company basis, defined benefit pension income for the nine months ended
September 30, 2008 was $7.8 million compared to defined benefit pension expense
of $28.7 million for the nine months ended September 30, 2007. The
decrease in total company pension expense reflected curtailment charges of $7.1
million for the nine months ended September 30, 2007 relating to the Metals
business which was included in discontinued operations. This defined
benefit pension cost reduction was partially offset by higher defined
contribution pension costs. Total company defined contribution
pension expense for the nine months ended September 30, 2008 was $8.7 million
compared to $1.9 million for the nine months ended September 30,
2007.
For the
nine months ended September 30, 2008, charges to income for environmental
investigatory and remedial activities were $21.2 million compared with $29.3
million in 2007. This provision related primarily to expected future
investigatory and remedial activities associated with past manufacturing
operations and former waste disposal sites. The decrease of $8.1
million was primarily due to a $7.8 million charge in the prior year related to
costs at a former waste disposal site based on revised remediation estimates
resulting from negotiations with a government agency.
For the
nine months ended September 30, 2008, other corporate and unallocated costs were
$47.5 million compared with $48.2 million in 2007, a decrease of $0.7 million,
or 1%. Legal and legal-related settlement expenses decreased $3.0
million, partially offset by higher asset retirement obligation charges of $1.3
million and increased expenses arising from certain non-income tax audits of
$0.7 million.
Outlook
Earnings
from continuing operations in the fourth quarter of 2008 are projected to be in
the $0.65 per diluted share range.
Chlor
Alkali Products earnings in the fourth quarter of 2008 are expected to improve
compared to last year, due to improved ECU netbacks partially offset by lower
volumes. The normal seasonal weakness of the industrial bleach
business and lower overall economic activity levels are contributing to the
expected lower operating rates. We expect Chlor Alkali Products
operating rates in the fourth quarter of 2008 to decline from the three months
ended September 30, 2008 level of 89% to the low 80% range.
While we
have seen improvements in caustic soda pricing for eight consecutive quarters,
we have continued to experience weaker chlorine prices. Chlorine
prices have declined for the last four consecutive quarters and we expect the
decline to continue through the balance of 2008 and into the first half of 2009.
The impact of the two hurricanes, which caused approximately 75% of North
American Chlor Alkali capacity to be shutdown for some period of time, makes it
likely that a significant portion of the $130 caustic soda price increase that
was announced during the third quarter of 2008 will be realized in our
system. We expect our ECU netbacks in the fourth quarter 2008 to
increase from the third quarter, and to continue to increase into the first half
of 2009.
Winchester
earnings in the fourth quarter of 2008 are expected to be approximately
breakeven in this seasonally weak quarter.
Winchester
continues to work towards completion of the relocation of its military packing
operations from its East Alton, IL facility to its Oxford, MS
facility. This relocation, which involves approximately 100
employees, is now expected to be completed by December 31, 2008 and is expected
to generate annual cost savings of approximately $3 million.
We expect
the fourth quarter 2008 charges for environmental investigatory and remedial
activities will be lower than the fourth quarter of 2007 level of $8.6
million. We currently estimate charges to income for environmental
investigatory and remedial activities for the full year 2008 will be
approximately 25% lower than the full year 2007 charges of $37.9
million.
We
believe the 2008 effective tax rate will be in the 39% range. The
effective tax rate includes an expense of $10.4 million as we are currently
unable to utilize the capital loss resulting from the impairment of the
corporate debt securities. The effective tax rate for 2008 also includes a $2.5
million reduction in expense primarily associated with the finalization of the
2007 income tax returns, which resulted in an increased benefit for the domestic
manufacturing deduction.
Environmental
Matters
($
in millions)
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September
30,
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2008
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2007
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Reserve
for Environmental Liabilities:
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Balance
at Beginning of Year
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Remedial
and Investigatory Spending
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Currency
Translation Adjustments
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Environmental
investigatory and remediation activities spending was associated with former
waste disposal sites and past manufacturing operations. Spending in 2008 for
investigatory and remedial efforts, the timing of which is subject to regulatory
approvals and other uncertainties, is estimated to be in the $25 million range.
Expected spending for investigatory and remedial efforts in 2008 is lower than
previously estimated by $10 million primarily due to delayed regulatory
approvals which effectively deferred spending into future
periods. Cash outlays for remedial and investigatory activities
associated with former waste disposal sites and past manufacturing operations
were not charged to income, but instead, were charged to reserves established
for such costs identified and expensed to income in prior periods. Associated
costs of investigatory and remedial activities are provided for in accordance
with generally accepted accounting principles governing probability and the
ability to reasonably estimate future costs. Our ability to estimate future
costs depends on whether our investigatory and remedial activities are in
preliminary or advanced stages. With respect to unasserted claims, we accrue
liabilities for costs that, in our experience, we may incur to protect our
interest against those unasserted claims. Our accrued liabilities for unasserted
claims amounted to $2.0 million at September 30, 2008. With respect to asserted
claims, we accrue liabilities based on remedial investigation, feasibility
study, remedial action, and Operation, Maintenance and Monitoring (OM&M)
expenses that, in our experience, we may incur in connection with the asserted
claims. Required site OM&M expenses are estimated and accrued in their
entirety for required periods not exceeding 30 years, which reasonably
approximates the typical duration of long-term site OM&M.
Charges to income for investigatory and remedial efforts were material to
operating results in 2007 and have been material to operating results in 2008
and are expected to be material to operating results in future
years.
Our
condensed balance sheets included liabilities for future environmental
expenditures to investigate and remediate known sites amounting to $161.1
million at September 30, 2008, $155.6 million at December 31, 2007, and
$137.0 million at September 30, 2007, of which $126.1 million, $120.6 million,
and $102.0 million were classified as other noncurrent liabilities,
respectively. As part of the Pioneer acquisition, as of August 31,
2007, we assumed $57.5 million of environmental liabilities associated with
their current and past manufacturing operations and former waste disposal
sites. These amounts do not take into account any discounting of
future expenditures or any consideration of insurance recoveries or advances in
technology. These liabilities are reassessed periodically to
determine if environmental circumstances have changed and/or remediation efforts
and our estimate of related costs have changed. As a result of these
reassessments, future charges to income may be made for additional
liabilities.
Annual
environmental-related cash outlays for site investigation and remediation,
capital projects, and normal plant operations are expected to range between
approximately $50 million to $60 million over the next several years, $20
million to $40 million of which is for investigatory and remedial efforts, which
are expected to be charged against reserves recorded on our balance sheet. While
we do not anticipate a material increase in the projected annual level of our
environmental-related cash outlays, there is always the possibility that such an
increase may occur in the future in view of the uncertainties associated with
environmental exposures. Environmental exposures are difficult to assess for
numerous reasons, including the identification of new sites, developments at
sites resulting from investigatory studies, advances in technology, changes in
environmental laws and regulations and their application, changes in regulatory
authorities, the scarcity of reliable data pertaining to identified sites, the
difficulty in assessing the involvement and financial capability of other PRPs,
and our ability to obtain contributions from other parties, and the lengthy time
periods over which site remediation occurs. It is possible that some of these
matters (the outcomes of which are subject to various uncertainties) may be
resolved unfavorably to us, which could have a material adverse affect on our
financial position or results of operations.
Legal
Matters and Contingencies
We, and
our subsidiaries, are defendants in various legal actions (including proceedings
based on alleged exposures to asbestos) incidental to our past and current
business activities. While we believe that none of these legal actions will
materially adversely affect our financial position, in light of the inherent
uncertainties of litigation, we cannot at this time determine whether the
financial impact, if any, of these matters will be material to our results of
operations.
During
the ordinary course of our business, contingencies arise resulting from an
existing condition, situation, or set of circumstances involving an uncertainty
as to the realization of a possible gain contingency. In certain instances such
as environmental projects, we are responsible for managing the cleanup and
remediation of an environmental site. There exists the possibility of recovering
a portion of these costs from other parties. We account for gain contingencies
in accordance with the provisions of SFAS No. 5, “Accounting for
Contingencies,” and therefore do not record gain contingencies and recognize
income until it is earned and realizable.
Liquidity,
Investment Activity and Other Financial Data
Cash
Flow Data
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Nine Months Ended
September
30,
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Provided
By (Used For) ($ in millions)
|
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2008
|
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2007
|
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Qualified
pension plan contribution
|
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$
|
―
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$
|
(100.0
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)
|
Cash
(used for) provided by continuing operations
|
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(0.5
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)
|
|
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8.7
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Cash
provided by discontinued operations
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|
―
|
|
|
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100.5
|
|
Net
operating activities
|
|
|
(0.5
|
)
|
|
|
109.2
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|
Capital
expenditures
|
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|
(123.4
|
)
|
|
|
(40.1
|
)
|
Business
acquired through purchase transaction
|
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―
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|
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|
(426.1
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)
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Cash
acquired through business acquisition
|
|
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―
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|
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|
126.4
|
|
Net
investing activities
|
|
|
(102.6
|
)
|
|
|
(261.7
|
)
|
Net
financing activities
|
|
|
(2.7
|
)
|
|
|
(5.2
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)
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Operating
Activities
For the
nine months ended September 30, 2008, cash used for operating activities from
continuing operations increased by $9.2 million from 2007 primarily due to
increased working capital. In the nine months ended September 30,
2008, working capital increased $154.8 million compared with an increase of
$51.7 million in 2007. Receivables increased from December 31, 2007
by $60.9 million, primarily as a result of increased selling prices in both the
Chlor Alkali and Winchester businesses. Our days sales outstanding
decreased by approximately four days from prior year. Inventories
increased from December 31, 2007 by $39.7 million due to a seasonal increase and
higher raw material costs in Winchester. The increase in working
capital was partially offset by the $100 million voluntary contribution to our
defined benefit pension plan made in 2007 and higher earnings in
2008. The 2008 cash from operations was also affected by a $42.9
million increase in cash tax payments.
Investing
Activities
Capital
spending of $123.4 million in the nine months ended September 30, 2008 was $83.3
million higher than in the corresponding period in 2007. The increase was
primarily due to spending of $75.8 million for the St. Gabriel, LA Chlor Alkali
facility conversion and expansion project. For the total year, we
expect our capital spending to be approximately $190 million to $200
million. We expect depreciation to be in the $70 million range for
full-year 2008.
On
January 31, 2007, we entered into a sale/leaseback agreement for chlorine
railcars in our Chlor Alkali Products segment that were acquired in 2005 and
2006. We received proceeds from the sale of $14.8
million.
On August
31, 2007 we acquired Pioneer and paid cash of $426.1 million. We also
acquired cash of $126.4 million with the Pioneer acquisition.
During
the nine months ended September 30, 2007, we sold $50.0 million of
short-term investments.
The 2008
decrease in distributions from affiliated companies primarily reflected the
impact of SunBelt’s lower operating results and net cash advanced from
SunBelt
.
Financing
Activities
In March
2008, we repaid industrial development and environmental improvement tax exempt
bonds, which matured totaling $7.7 million that were issued through the parish
of Calcasieu, LA and the town of McIntosh, AL. In January 2008, we
repaid the remaining $2.1 million of the 2.75% Convertible Senior Subordinated
Notes due 2027 acquired from Pioneer.
We issued
0.5 million and 0.7 million shares of common stock with a total value of $11.3
million and $12.9 million to the CEOP for the nine months ended September 30,
2008 and 2007, respectively. These shares were issued to satisfy the
investment in our common stock resulting from employee contributions, our
matching contributions and re-invested dividends. We issued 1.8 million shares
and 0.1 million shares with a total value of $38.1 million and $1.5 million
representing stock options exercised for the nine months ended September 30,
2008 and 2007, respectively.
The
percent of total debt to total capitalization decreased to 24.2% at September
30, 2008, from 28.1% at December 31, 2007. The decrease was due primarily to the
higher shareholders’ equity resulting from the net income for the nine months
ended September 30, 2008 and a lower level of outstanding debt at September 30,
2008.
In
the first three quarters of 2008 and 2007, we paid a quarterly dividend of
$0.20 per share. Dividends paid for the nine months ended September
30, 2008 and 2007 were $45.1 million and $44.3 million,
respectively. In October 2008, our board of directors declared a
dividend of $0.20 per share on our common stock, payable on December 10,
2008 to shareholders of record on November 10, 2008.
The
payment of cash dividends is subject to the discretion of our board of directors
and will be determined in light of then-current conditions, including our
earnings, our operations, our financial condition, our capital requirements, and
other factors deemed relevant by our board of directors. In the future, our
board of directors may change our dividend policy, including the frequency or
amount of any dividend, in light of then-existing conditions.
Liquidity
and Other Financing Arrangements
Our
principal sources of liquidity are from cash and cash equivalents, cash flow
from operations, and short-term borrowings under our revolving credit
facility and borrowings under our accounts receivable securitization facility
(Accounts Receivable Facility). We also have access to the debt and equity
markets.
Cash flow
from operations is variable as a result of both the seasonal and the cyclical
nature of our operating results, which have been affected by seasonal and
economic cycles in many of the industries we serve, such as vinyls, urethanes,
and pulp and paper. Cash flow from operations is affected by changes in ECU
selling prices caused by changes in the supply/demand balance of chlorine and
caustic, resulting in the chlor alkali business having significant leverage on
our earnings and cash flow. For example, assuming all other costs remain
constant and internal consumption remains approximately the same, a $10 per ECU
selling price change equates to an approximate $17 million annual change in our
revenues and pretax profit when we are operating at full capacity, including the
capacity acquired with Pioneer.
As of
September 30, 2008, we held corporate debt securities with a par value of $26.6
million. On October 1, 2008, the issuer of these debt securities
announced it would cease trading and appoint a receiver as a result of financial
market turmoil. The decline in the market value of the assets
supporting these debt securities negatively impacted the liquidity of the
issuer. We determined that these debt securities had no fair market
value due to the actions taken by the issuer, turmoil in the financial markets,
the lack of liquidity of the issuer, and the lack of trading in these debt
securities. Because of the unlikelihood that these debt securities
will recover in value, we recorded an after-tax impairment loss of $26.6 million
in other (expense) income for the three months ended September 30,
2008. We are currently unable to utilize the capital loss resulting
from the impairment of these corporate debt securities; therefore, no tax
benefit was recognized during the period for the impairment loss.
In August
2007, we entered into a $35 million letter of credit facility to assume the
various Pioneer letters of credit issued principally to support the acquisition
of equipment and materials for the St. Gabriel, LA Chlor Alkali facility
conversion and expansion project.
On
October 29, 2007, we entered into a new five-year senior revolving credit
facility of $220 million, which replaced a $160 million senior revolving credit
facility. During the first quarter of 2008, we increased our senior
revolving credit facility by $20 million to $240 million by adding a new lending
institution. The credit facility will expire in October
2012. We have the option to expand the $240 million senior revolving
credit facility by an additional $60 million by adding a maximum of two
additional lending institutions each year. At September 30, 2008, we
had $195.1 million available under this senior revolving credit facility,
because we had issued $44.9 million of letters of credit under a $110 million
subfacility. Under the senior revolving credit facility, we may
select various floating rate borrowing options. The facility includes
various customary restrictive covenants, including restrictions related to the
ratio of debt to earnings before interest expense, taxes, depreciation and
amortization (leverage ratio) and the ratio of earnings before interest expense,
taxes, depreciation and amortization to interest expense (coverage
ratio).
At
September 30, 2008, we had total letters of credit of $58.6 million outstanding,
of which $44.9 million were issued under our $240 million senior revolving
credit facility. These letters of credit were used to support certain
long-term debt, capital expenditure commitments, workers compensation insurance
policies, and plant closure and post-closure obligations.
On July
25, 2007, we established a 364-day Accounts Receivable Facility, renewable
annually for five years, which expires in July 2012. The $75 million
Accounts Receivable Facility provides for the sale of our eligible trade
receivables to third party conduits through a wholly-owned, bankruptcy-remote,
special purpose entity that is consolidated for financial statement
purposes. As of September 30, 2008, we had nothing drawn under the
Accounts Receivable Facility. At September 30, 2008, we had $75
million available under the Accounts Receivable Facility based on eligible trade
receivables.
Our
current debt structure is used to fund our business operations. As of September
30, 2008, we had borrowings of $249.7 million, of which $4.7 million was issued
at variable rates. We have entered into interest rate swaps on $101.6 million of
our underlying fixed-rate debt obligations, whereby we agree to pay variable
rates to a counterparty who, in turn, pays us fixed rates. The counterparty to
these agreements is Citibank, N.A., a major financial institution. We have
designated the swap agreements as fair value hedges of the risk of changes in
the value of fixed-rate debt due to changes in interest rates for a portion of
our fixed-rate borrowings. Accordingly, the swap agreements have been recorded
at their fair market value of $7.0 million and are included in other assets on
the accompanying Condensed Balance Sheets, with a corresponding increase in the
carrying amount of the related debt. No gain or loss has been recorded as the
contracts met the criteria to qualify for hedge accounting treatment with no
ineffectiveness. Commitments from banks under our revolving credit facility and
Accounts Receivable Facility are additional sources of liquidity.
On
December 31, 1997, we entered into a long-term, sulfur dioxide supply
agreement with Alliance Specialty Chemicals, Inc. (Alliance), formerly known as
RFC S0
2
, Inc. Alliance has
the obligation to deliver annually 36,000 tons of sulfur dioxide. Alliance owns
the sulfur dioxide plant, which is located at our Charleston, TN facility and is
operated by us. The price for the sulfur dioxide is fixed over the life of the
contract, and under the terms of the contract, we are obligated to make a
monthly payment of approximately $0.2 million regardless of the amount of sulfur
dioxide purchased. Commitments related to this agreement are approximately $2.4
million per year for 2008 through 2011 and $0.6 million in 2012. This supply
agreement expires in 2012.
We, and
our partner, PolyOne, own equally SunBelt. Oxy Vinyls is
required to purchase 250,000 tons of chlorine from SunBelt based on a formula
related to its market price. Prior to July 2007, PolyOne had an ownership
interest in Oxy Vinyls. We market the excess chlorine and all of the
caustic soda produced. The construction of this plant and equipment was financed
by the issuance of $195.0 million of Guaranteed Senior Secured Notes due 2017.
SunBelt sold $97.5 million of Guaranteed Senior Secured Notes due 2017, Series
O, and $97.5 million of Guaranteed Senior Secured Notes due 2017, Series G. We
refer to these notes as the SunBelt Notes. The SunBelt Notes bear interest at a
rate of 7.23% per annum payable semiannually in arrears on each
June 22 and December 22.
We have
guaranteed the Series O Notes, and PolyOne has guaranteed the Series G Notes, in
both cases pursuant to customary guaranty agreements. Our guarantee and
PolyOne’s guarantee are several, rather than joint. Therefore, we are not
required to make any payments to satisfy the Series G Notes guaranteed by
PolyOne. An insolvency or bankruptcy of PolyOne will not automatically trigger
acceleration of the SunBelt Notes or cause us to be required to make payments
under our guarantee, even if PolyOne is required to make payments under its
guarantee. However, if SunBelt does not make timely payments on the SunBelt
Notes, whether as a result of a failure to pay on a guarantee or otherwise, the
holders of the SunBelt Notes may proceed against the assets of SunBelt for
repayment. If we were to make debt service payments under our guarantee, we
would have a right to recover such payments from SunBelt.
Beginning
on December 22, 2002 and each year through 2017, SunBelt is required to
repay $12.2 million of the SunBelt Notes, of which $6.1 million is attributable
to the Series O Notes. Our guarantee of these notes was $60.9 million at
September 30, 2008. In the event SunBelt cannot make any of these payments, we
would be required to fund the payment on the Series O Notes. In certain other
circumstances, we may also be required to repay the SunBelt Notes prior to their
maturity. We and PolyOne have agreed that, if we or PolyOne intend to transfer
our respective interests in SunBelt and the transferring party is unable to
obtain consent from holders of 80% of the aggregate principal amount of the
indebtedness related to the guarantee being transferred after good faith
negotiations, then we and PolyOne will be required to repay our respective
portions of the SunBelt Notes. In such event, any make whole or similar
penalties or costs will be paid by the transferring party.
We
guarantee debt and other obligations under agreements with our affiliated
companies. In the normal course of business, we guarantee the
principal and interest under a $0.3 million line of credit of one of our
wholly-owned foreign affiliates. At September 30, 2008, December 31,
2007, and September 30, 2007, our wholly-owned foreign affiliate had no
borrowings outstanding under this line of credit, which would be utilized for
working capital purposes.
New
Accounting Standards
In March
2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments
and Hedging Activities,” (SFAS No. 161), an amendment to SFAS No. 133,
“Accounting for Derivative Instruments and Hedging Activities,” (SFAS No.
133). The statement requires enhanced disclosures that expand the
disclosure requirements in SFAS No. 133 about an entity’s derivative instruments
and hedging activities. It will require more robust qualitative
disclosures and expanded quantitative disclosures. This statement
will be effective for financial statements issued for fiscal years and interim
periods beginning after November 15, 2008, with early application
encouraged. It is expected that this statement will not have a
material effect on our financial statements.
In
December 2007, the FASB issued SFAS No. 141R. This statement requires
the acquiring entity in a business combination to recognize all (and only) the
assets acquired and liabilities assumed in the transaction, establishes the
acquisition-date fair value as the measurement objective for all assets acquired
and liabilities assumed, and requires additional disclosures by the
acquirer. Under this statement, all business combinations will be
accounted for by applying the acquisition method. This statement will
be effective for us on January 1, 2009 and will be applied to business
combinations occurring after the effective date. Earlier application
is prohibited. We are continuing to evaluate the effect of this
statement on our financial statements.
In
December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in
Consolidated Financial Statements,” (SFAS No. 160). This statement
will require noncontrolling interests (previously referred to as minority
interests) to be treated as a separate component of equity, not as a liability
or other item outside of permanent equity. The statement applies to
the accounting for noncontrolling interests and transactions with noncontrolling
interest holders in consolidated financial statements. This statement
will be effective for us on January 1, 2009. Earlier application is
prohibited. This statement will be applied prospectively to all
noncontrolling interests, including any that arose before the effective date
except that comparative period information must be recast to classify
noncontrolling interests in equity, attribute net income and other comprehensive
income to noncontrolling interests, and provide additional required
disclosures. It is expected that this statement will not have a
material effect on our financial statements.
In
February 2007, the FASB issued SFAS No. 159, which permitted an entity to
measure certain financial assets and liabilities at fair value. The
statement’s objective was to improve financial reporting by allowing entities to
mitigate volatility in reported earnings caused by the measurement of related
assets and liabilities using different attributes, without having to apply
complex hedge accounting provisions. This statement became effective
for fiscal years beginning after November 15, 2007 and was to be applied
prospectively. We adopted the provisions of SFAS No. 159 on January
1, 2008. As we did not elect to measure existing assets and
liabilities at fair value, the adoption of this statement did not have an effect
on our financial statements.
In
September 2006, the FASB issued SFAS No. 157. This statement did not
require any new fair value measurements, but rather, it provided enhanced
guidance to other pronouncements that require or permit assets or liabilities to
be measured at fair value. The changes to current practice resulting
from the application of this statement related to the definition of fair value,
the methods used to estimate fair value, and the requirement for expanded
disclosures about estimates of fair value. This statement became
effective for fiscal years beginning after November 15, 2007, and interim
periods within those fiscal years. The effective date for this
statement for all nonfinancial assets and nonfinancial liabilities, except for
items that are recognized or disclosed at fair value in the financial statements
on a recurring basis has been delayed by one year. Nonfinancial
assets and nonfinancial liabilities that could be impacted by this deferral
include assets and liabilities initially measured at fair value in a business
combination, and intangible assets and goodwill tested annually for
impairment. We adopted the provisions of SFAS No. 157 related to
financial assets and financial liabilities on January 1,
2008. The partial adoption of this statement did not have a material
impact on our financial statements. It is expected that the remaining
provisions of this statement will not have a material effect on our financial
statements.
In
October 2008, the FASB issued SFAS No. 157-3. This position clarifies
the application of FASB No. 157 in a market that is not active and provides an
example to illustrate key considerations in determining the fair value of a
financial asset when the market for that financial asset is not
active. This position was effective for us on September 30,
2008. The adoption of this position did not have an effect on our
financial statements.
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
We are
exposed to market risk in the normal course of our business operations due to
our purchases of certain commodities, our ongoing investing and financing
activities, and our operations that use foreign currencies. The risk of loss can
be assessed from the perspective of adverse changes in fair values, cash flows,
and future earnings. We have established policies and procedures governing our
management of market risks and the uses of financial instruments to manage
exposure to such risks.
Energy
costs, including electricity used in our Chlor Alkali Products segment, and
certain raw materials and energy costs, namely copper, lead, zinc, electricity,
and natural gas used primarily in our Winchester segment, are subject to price
volatility. Depending on market conditions, we may enter into futures contracts
and put and call option contracts in order to reduce the impact of commodity
price fluctuations. As of September 30, 2008, we maintained open positions on
futures contracts totaling $77.9 million ($66.4 million at December 31,
2007 and $38.8 million at September 30, 2007). Assuming a hypothetical 10%
increase in commodity prices which are currently hedged, we would experience a
$7.8 million ($6.6 million at December 31, 2007 and $3.9 million at
September 30, 2007) increase in our cost of inventory purchased, which would be
partially offset by a corresponding increase in the value of related hedging
instruments.
We are
exposed to changes in interest rates primarily as a result of our investing and
financing activities. The effect of interest rates on our investing activity is
not material to our consolidated financial position, results of operations, or
cash flows. Our current debt structure is used to fund business
operations and commitments from banks under our revolving credit facility and
our Accounts Receivable Facility are sources of liquidity. As of September 30,
2008, December 31, 2007, and September 30, 2007, we had long-term
borrowings of $249.7 million, $259.0 million, and $430.7 million, respectively,
of which $4.7 million at September 30, 2008 and December 31, 2007 and $34.7
million at September 30, 2007, were issued at variable rates. As a result of our
fixed-rate financings, we entered into floating interest rate swaps in order to
manage interest expense and floating interest rate exposure to optimal levels.
We have entered into $101.6 million of such swaps, whereby we agree to pay
variable rates to a counterparty who, in turn, pays us fixed rates. The
counterparty to these agreements is Citibank, N.A., a major financial
institution. In all cases, the underlying index for the variable
rates is the six-month London InterBank Offered Rate (LIBOR). Accordingly,
payments are settled every six months and the terms of the swaps are the same as
the underlying debt instruments.
Assuming
no changes in the $106.3 million of variable-rate debt levels from December 31,
2007, we estimate that a hypothetical change of 100-basis points in the LIBOR
interest rates from 2007 would impact interest expense by $1.1 million on an
annualized pretax basis.
The
following table reflects the swap activity related to certain debt obligations
as of September 30, 2008:
Underlying
Debt Instrument
|
|
Swap
Amount
|
|
Date of Swap
|
|
September
30,
2008
Floating Rate
|
|
|
|
|
($ in millions)
|
|
|
|
|
|
|
|
|
$
|
50.0
|
|
|
|
|
6.598
|
%
|
|
|
|
$
|
25.0
|
|
|
|
|
6.0-8.0
|
%
|
|
Industrial
development and environmental improvement obligations at fixed interest
rates of 6.625 % to 6.75%, due 2016-2017
|
|
$
|
21.1
|
|
|
|
|
2.89
|
%
|
|
|
|
$
|
5.5
|
|
|
|
|
3.03
|
%
|
|
(a)
Actual
rate is set in arrears. We project the rate will fall within the range
shown.
These
interest rate swaps reduced interest expense by $1.6 million and $0.4 million
for the nine months ended September 30, 2008 and 2007,
respectively.
If the
actual change in interest rates or commodities pricing is substantially
different than expected, the net impact of interest rate risk or commodity risk
on our cash flow may be materially different than that disclosed
above.
We do not
enter into any derivative financial instruments for speculative
purposes.
Item 4.
Controls and Procedures
Our chief
executive officer and our chief financial officer evaluated the effectiveness of
our disclosure controls and procedures as of September 30,
2008. Based on that evaluation, our chief executive officer and chief
financial officer have concluded that, as of such date, our disclosure controls
and procedures were effective to ensure that information Olin is required to
disclose in the reports that it files or submits with the SEC under the
Securities Exchange Act of 1934 is recorded, processed, summarized, and reported
within the time periods specified in the Commission’s rules and forms, and to
ensure that information we are required to disclose in such reports is
accumulated and communicated to our management, including our chief executive
officer and chief financial officer, as appropriate to allow timely decisions
regarding required disclosure.
There
have been no changes in our internal control over financial reporting that
occurred during the quarter ended September 30, 2008, that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
Item
4T. Controls and Procedures
Not
applicable.
Cautionary
Statement Regarding Forward-Looking Statements
This
quarterly report on Form 10-Q includes forward-looking statements. These
statements relate to analyses and other information that are based on
management’s beliefs, certain assumptions made by management, forecasts of
future results, and current expectations, estimates and projections about the
markets and economy in which we and our various segments operate. The statements
contained in this quarterly report on Form 10-Q that are not statements of
historical fact may include forward-looking statements that involve a number of
risks and uncertainties.
We have
used the words “anticipate,” “intend,” “may,” “expect,” “believe,” “should,”
“plan,” “estimate,” “project,” and variations of such words and similar
expressions in this quarterly report to identify such forward-looking
statements. These statements are not guarantees of future performance and
involve certain risks, uncertainties and assumptions, which are difficult to
predict and many of which are beyond our control.
Therefore,
actual outcomes and results may differ materially from those matters expressed
or implied in such forward looking-statements. We undertake no obligation to
update publicly any forward-looking statements, whether as a result of future
events, new information or otherwise.
The
risks, uncertainties and assumptions involved in our forward-looking statements
many of which are discussed in more detail in our filings with the SEC,
including our Annual Report on Form 10-K for the year ended December 31,
2007, include, but are not limited to the following:
|
•
|
sensitivity
to economic, business and market conditions in the United States and
overseas, including economic instability or a downturn in the sectors
served by us, such as ammunition, housing, vinyls and pulp and paper, and
the migration by United States customers to low-cost foreign
locations;
|
|
•
|
the
cyclical nature of our operating results, particularly declines in average
selling prices in the chlor alkali industry and the supply/demand balance
for our products, including the impact of excess industry capacity or an
imbalance in demand for our chlor alkali
products;
|
|
•
|
economic
and industry downturns that result in diminished product demand and excess
manufacturing capacity in any of our segments and that, in many cases,
result in lower selling prices and
profits;
|
|
•
|
costs
and other expenditures in excess of those projected for environmental
investigation and remediation or other legal
proceedings;
|
|
•
|
unexpected
litigation outcomes;
|
|
•
|
the
effects of any declines in global equity markets on asset values and any
declines in interest rates used to value the liabilities in our pension
plan;
|
|
•
|
the
occurrence of unexpected manufacturing interruptions and outages,
including those occurring as a result of labor disruptions and production
hazards;
|
|
•
|
new
regulations or public policy changes regarding the transportation of
hazardous chemicals and the security of chemical manufacturing
facilities;
|
|
•
|
higher-than-expected
raw material, energy, transportation, and/or logistics
costs;
|
|
•
|
an
increase in our indebtedness or higher-than-expected interest rates,
affecting our ability to generate sufficient cash flow for debt service;
and
|
|
•
|
adverse
conditions in the credit market, limiting or preventing our ability to
borrow.
|
You
should consider all of our forward-looking statements in light of these factors.
In addition, other risks and uncertainties not presently known to us or that we
consider immaterial could affect the accuracy of our forward-looking
statements.
Part II -
Other Information
Item 1.
Legal Proceedings.
Not
Applicable.
Item 1A.
Risk Factors.
Not
Applicable.
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds.
(a) Not
applicable.
(b) Not
applicable.
(c)
Issuer
Purchases of Equity Securities
Period
|
|
Total Number of
Shares (or Units)
Pu
r
chased
(1)
|
|
Average Price
Paid per Share
(or
Unit)
|
|
Total Number of
Shares (or Units)
Purchased as
Part of
Publicly
Announced
Plans
or Programs
|
|
|
Maximum
Number of
Shares
(or Units) that
May Yet Be
Purchased
Under the Plans or
Programs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
On
April 30, 1998, the issuer announced a share repurchase program
approved by the board of directors for the purchase of up to
5 million shares of common stock. Through September 30, 2008,
4,845,924 shares had been repurchased, and 154,076 shares remain available
for purchase under that program, which has no termination
date.
|
Item 3.
Defaults Upon Senior Securities.
Not
Applicable.
Item 4.
Submission of Matters to a Vote of Security Holders.
Not
Applicable.
Item 5.
Other Information
Amendment
and Restatement of the Senior Plan and Supplemental Plan
On
October 24, 2008, Olin Corporation adopted amended and restated versions of the
Olin Senior Executive Pension Plan (the “Senior Plan”) and the Olin
Supplementary and Deferral Benefit Pension Plan (the “Supplemental Plan”)
(collectively, the “SERPs”). As previously disclosed, new benefit
accruals under the SERPs were frozen as of December 31, 2007. The
amendment to each SERP primarily provides for changes that are intended to
comply with, or secure exemption from, the applicable requirements of Section
409A of the Internal Revenue Code of 1986, as amended, and the applicable
Treasury regulations and guidance issued thereunder (“Code Section
409A”).
In
summary, the SERPs were amended as follows:
·
|
The
various plan provisions relating to the form and timing of SERP payments
and allowable payment elections for active participants were amended to
comply with the requirements of Code Section 409A; in particular, the
distribution elections for such participants are irrevocable after 2008,
with limited exceptions.
|
·
|
For
SERP participants who are specified employees as defined in Code
Section 409A, SERP benefits that are payable upon termination of
employment and subject to Code Section 409A may not be paid in the first
six months after retirement, but the first six months of benefits will be
paid in a lump sum as soon as practicable
thereafter.
|
·
|
For
SERP benefits that are payable upon a change of control and which are
subject to Code Section 409A, the change of control definition keying such
payment has been modified to be compliant with Code Section
409A.
|
·
|
The
$100,000 actuarial present value benefit threshold for receiving SERP
benefits in a lump sum payment form has been eliminated, and subject to
any six-month delay required by Code Section 409A, the lump sum (if
elected) shall be payable at retirement (or at age 65 if the participant
was not eligible for early
retirement).
|
Subject
to the preceding, the benefits, terms and conditions of the SERPs are generally
consistent with previous disclosures. The foregoing description of
the Senior Plan is qualified in its entirety by reference to the complete text
of the Senior Plan, which is attached hereto as Exhibit 10.1 and incorporated by
reference herein. The foregoing description of the Supplemental Plan
is qualified in its entirety by reference to the complete text of the
Supplemental Plan, which is attached hereto as Exhibit 10.2 and incorporated by
reference herein.
Amendment
and Restatement of the Supplemental CEOP
On
October 24, 2008, Olin Corporation adopted the amendment and restatement of the
Olin Corporation Supplemental Contributing Employee Ownership Plan (the
“Supplemental CEOP”). The amended and restated Supplemental CEOP is
intended to comply with the applicable requirements of Code Section 409A,
including the form and timing of Supplemental CEOP payments and allowable
payment elections for participants. The benefits, terms and
conditions of the Supplemental CEOP are generally consistent with previous
disclosures. The foregoing is qualified in its entirety by reference
to the complete text of the Supplemental CEOP, which is attached hereto as
Exhibit 10.3 and incorporated by reference herein.
Amendment
and Restatement of the Senior MICP
On
October 24, 2008, Olin Corporation adopted the amendment and restatement of the
Olin Senior Management Incentive Compensation Plan (the “SMICP”). The
amended and restated SMICP is intended to secure exemption from the applicable
requirements of Code Section 409A. The benefits, terms and conditions
of the SMICP are generally consistent with previous disclosures. The
foregoing is qualified in its entirety by reference to the complete text of the
SMICP, which is attached hereto as Exhibit 10.4 and incorporated by reference
herein.
Item 6.
Exhibits.
10.1
|
Olin
Senior Executive Pension Plan as amended and restated effective October
24, 2008
|
|
|
10.2
|
Olin
Supplementary and Deferral Benefit Pension Plan as amended and restated
effective October 24, 2008
|
|
|
10.3
|
Olin
Supplemental Contributing Employee Ownership Plan as amended and restated
effective October 24, 2008
|
|
|
10.4
|
Olin
Senior Management Incentive Compensation Plan as amended and restated
effective October 24, 2008
|
|
|
10.5
|
Amended
and Restated 1997 Stock Plan for Non-employee Directors as amended
effective as of October 23, 2008
|
|
|
10.6
|
Olin
Corporation 2000 Long Term Incentive Plan as amended and restated
effective October 22, 2008
|
|
|
10.7
|
Olin
Corporation 2003 Long Term Incentive Plan as amended and restated
effective October 22, 2008
|
|
|
10.8
|
Olin
Corporation 2006 Long Term Incentive Plan as amended and restated
effective October 22, 2008
|
|
|
10.9
|
2006
Performance Share Program as amended and restated effective October 22,
2008
|
|
|
10.10
|
Performance
Share Program as amended and restated effective October 22,
2008
|
|
|
10.11
|
First
Amendment, dated as of August 28, 2007, to the Purchase and Contribution
Agreement dated as of July 25, 2007 (as amended from time to time), among
A.J. Oster Co., A.J. Oster Foils, Inc., A.J. Oster West, Inc., Bryan
Metals, Inc., Chase Brass & Copper Company, Inc., and Olin
Corporation, as sellers, Olin Funding Company LLC, as purchaser, and Olin
Corporation, as collection agent
|
|
|
10.12
|
Second
Amendment, dated as of November 15, 2007, to the Purchase and Contribution
Agreement dated as of July 25, 2007 (as amended from time to time), among
A.J. Oster Co., A.J. Oster Foils, Inc., A.J. Oster West, Inc., Bryan
Metals, Inc., Chase Brass & Copper Company, Inc., and Olin
Corporation, as sellers, Olin Funding Company LLC, as purchaser, and Olin
Corporation, as collection agent
|
|
|
10.13
|
Third
Amendment, dated as of September 30, 2008, to the Purchase and
Contribution Agreement dated as of July 25, 2007 (as amended from time to
time), among A.J. Oster Co., A.J. Oster Foils, Inc., A.J. Oster West,
Inc., Bryan Metals, Inc., Chase Brass & Copper Company, Inc., and Olin
Corporation, as sellers, Olin Funding Company LLC, as purchaser, and Olin
Corporation, as collection agent
|
|
|
10.14
|
First
Amendment, dated as of August 28, 2007, to the Receivables Purchase
Agreement dated as of July 25, 2007 (as amended from time to time), among
Olin Funding Company LLC, as seller, CAFCO, LLC and Variable Funding
Capital Company LLC, as investors, Citibank, N.A. and Wachovia Bank,
National Association, (“Wachovia Bank”) as banks, Citicorp North America,
Inc. (“CNAI”) as program agent, CNAI and Wachovia Bank, as investor
agents, and Olin Corporation, as collection agent
|
|
|
10.15
|
Second
Amendment, dated as of November 15, 2007, to the Receivables Purchase
Agreement dated as of July 25, 2007 (as amended from time to time), among
Olin Funding Company LLC, as seller, CAFCO, LLC and Variable Funding
Capital Company LLC, as investors, Citibank, N.A. and Wachovia Bank,
National Association, (“Wachovia Bank”) as banks, Citicorp North America,
Inc. (“CNAI”) as program agent, CNAI and Wachovia Bank, as investor
agents, and Olin Corporation, as collection agent
|
|
|
10.16
|
Third
Amendment, dated as of July 23, 2008, to the Receivables Purchase
Agreement dated as of July 25, 2007 (as amended from time to time), among
Olin Funding Company LLC, as seller, CAFCO, LLC and Variable Funding
Capital Company LLC, as investors, Citibank, N.A. and Wachovia Bank,
National Association, (“Wachovia Bank”) as banks, Citicorp North America,
Inc. (“CNAI”) as program agent, CNAI and Wachovia Bank, as investor
agents, and Olin Corporation, as collection agent
|
|
|
10.17
|
Fourth
Amendment, dated as of September 30, 2008, to the Receivables Purchase
Agreement dated as of July 25, 2007 (as amended from time to time), among
Olin Funding Company LLC, as seller, CAFCO, LLC, as an investor, Citibank,
N.A. as a bank, Citicorp North America, Inc. (“CNAI”) as program agent,
CNAI as an investor agent, and Olin Corporation, as collection
agent
|
|
|
12
|
Computation
of Ratio of Earnings to Fixed Charges (Unaudited)
|
|
|
31.1
|
Section
302 Certification Statement of Chief Executive Officer
|
|
|
31.2
|
Section
302 Certification Statement of Chief Financial Officer
|
|
|
32
|
Section
906 Certification Statement of Chief Executive Officer and Chief Financial
Officer
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
OLIN
CORPORATION
|
|
(Registrant)
|
|
|
|
|
By:
|
/s/ John E.
Fischer
|
|
Vice President and Chief Financial Officer
(Authorized
Officer)
|
Date:
October 27, 2008
EXHIBIT
INDEX
Exhibit
No.
|
Description
|
10.1
|
Olin
Senior Executive Pension Plan as amended and restated effective October
24, 2008
|
|
|
10.2
|
Olin
Supplementary and Deferral Benefit Pension Plan as amended and restated
effective October 24, 2008
|
|
|
10.3
|
Olin
Supplemental Contributing Employee Ownership Plan as amended and restated
effective October 24, 2008
|
|
|
10.4
|
Olin
Senior Management Incentive Compensation Plan as amended and restated
effective October 24, 2008
|
|
|
10.5
|
Amended
and Restated 1997 Stock Plan for Non-employee Directors as amended
effective as of October 23, 2008
|
|
|
10.6
|
Olin
Corporation 2000 Long Term Incentive Plan as amended and restated
effective October 22, 2008
|
|
|
10.7
|
Olin
Corporation 2003 Long Term Incentive Plan as amended and restated
effective October 22, 2008
|
|
|
10.8
|
Olin
Corporation 2006 Long Term Incentive Plan as amended and restated
effective October 22, 2008
|
|
|
10.9
|
2006
Performance Share Program as amended and restated effective October 22,
2008
|
|
|
10.10
|
Performance
Share Program as amended and restated effective October 22,
2008
|
|
|
10.11
|
First
Amendment, dated as of August 28, 2007, to the Purchase and Contribution
Agreement dated as of July 25, 2007 (as amended from time to time), among
A.J. Oster Co., A.J. Oster Foils, Inc., A.J. Oster West, Inc., Bryan
Metals, Inc., Chase Brass & Copper Company, Inc., and Olin
Corporation, as sellers, Olin Funding Company LLC, as purchaser, and Olin
Corporation, as collection agent
|
|
|
10.12
|
Second
Amendment, dated as of November 15, 2007, to the Purchase and Contribution
Agreement dated as of July 25, 2007 (as amended from time to time), among
A.J. Oster Co., A.J. Oster Foils, Inc., A.J. Oster West, Inc., Bryan
Metals, Inc., Chase Brass & Copper Company, Inc., and Olin
Corporation, as sellers, Olin Funding Company LLC, as purchaser, and Olin
Corporation, as collection agent
|
|
|
10.13
|
Third
Amendment, dated as of September 30, 2008, to the Purchase and
Contribution Agreement dated as of July 25, 2007 (as amended from time to
time), among A.J. Oster Co., A.J. Oster Foils, Inc., A.J. Oster West,
Inc., Bryan Metals, Inc., Chase Brass & Copper Company, Inc., and Olin
Corporation, as sellers, Olin Funding Company LLC, as purchaser, and Olin
Corporation, as collection agent
|
|
|
10.14
|
First
Amendment, dated as of August 28, 2007, to the Receivables Purchase
Agreement dated as of July 25, 2007 (as amended from time to time), among
Olin Funding Company LLC, as seller, CAFCO, LLC and Variable Funding
Capital Company LLC, as investors, Citibank, N.A. and Wachovia Bank,
National Association, (“Wachovia Bank”) as banks, Citicorp North America,
Inc. (“CNAI”) as program agent, CNAI and Wachovia Bank, as investor
agents, and Olin Corporation, as collection agent
|
|
|
10.15
|
Second
Amendment, dated as of November 15, 2007, to the Receivables Purchase
Agreement dated as of July 25, 2007 (as amended from time to time), among
Olin Funding Company LLC, as seller, CAFCO, LLC and Variable Funding
Capital Company LLC, as investors, Citibank, N.A. and Wachovia Bank,
National Association, (“Wachovia Bank”) as banks, Citicorp North America,
Inc. (“CNAI”) as program agent, CNAI and Wachovia Bank, as investor
agents, and Olin Corporation, as collection agent
|
|
|
10.16
|
Third
Amendment, dated as of July 23, 2008, to the Receivables Purchase
Agreement dated as of July 25, 2007 (as amended from time to time), among
Olin Funding Company LLC, as seller, CAFCO, LLC and Variable Funding
Capital Company LLC, as investors, Citibank, N.A. and Wachovia Bank,
National Association, (“Wachovia Bank”) as banks, Citicorp North America,
Inc. (“CNAI”) as program agent, CNAI and Wachovia Bank, as investor
agents, and Olin Corporation, as collection agent
|
|
|
10.17
|
Fourth
Amendment, dated as of September 30, 2008, to the Receivables Purchase
Agreement dated as of July 25, 2007 (as amended from time to time), among
Olin Funding Company LLC, as seller, CAFCO, LLC, as an investor, Citibank,
N.A. as a bank, Citicorp North America, Inc. (“CNAI”) as program agent,
CNAI as an investor agent, and Olin Corporation, as collection
agent
|
12
|
Computation
of Ratio of Earnings to Fixed Charges (Unaudited)
|
|
|
31.1
|
Section
302 Certification Statement of Chief Executive Officer
|
|
|
31.2
|
Section
302 Certification Statement of Chief Financial Officer
|
|
|
32
|
Section
906 Certification Statement of Chief Executive Officer and Chief Financial
Officer
|
Exhibit
10.1
OLIN
SENIOR EXECUTIVE PENSION PLAN
(Amended
and Restated as of October 24, 2008)
Table of
Contents
|
Page
|
|
1
|
|
1
|
|
1
|
|
1
|
|
1
|
|
2
|
2.1 Participation
|
2
|
2.2 Transfer
of Arch Employees and Reserves
|
2
|
|
3
|
|
3
|
Article
IV. Payment of Benefits
|
4
|
|
4
|
|
6
|
|
7
|
|
7
|
Article
V. Funding
|
9
|
|
9
|
|
9
|
|
9
|
|
9
|
Article
VI. Plan Administration
|
10
|
|
10
|
|
10
|
|
10
|
|
10
|
|
11
|
|
11
|
Article
VII. Termination and Amendment
|
12
|
|
12
|
Article
VIII. Miscellaneous
|
13
|
|
13
|
|
13
|
|
13
|
|
13
|
8.5 No
Enlargement of Employee Rights
|
13
|
8.6 Incompetency
|
13
|
8.7 Olin
Employees Pension Plan
|
13
|
8.8 Unclaimed
Benefit
|
14
|
8.9 Limitations
on Liability
|
14
|
8.10
Duties of Participants and Surviving Spouses
|
14
|
8.11
Taxes and Withholding
|
14
|
8.12
Treatment for other Compensation Purposes
|
14
|
ARTICLE
I. INTRODUCTION
1.1
Establishment and
Restatement of Plan
. Olin
Corporation (the “Company” or “Olin”) hereby amends and restates its Olin Senior
Executive Pension Plan (the “Plan”). The Plan was originally adopted
by Olin’s Board of Directors on September 27, 1984, amended from time to time
thereafter and is now amended and restated, effective as of October 24,
2008. The provisions of this restated Plan are generally only
applicable to Participants in the employ of the Company on or after the
effective date of such provisions. Participants who terminated prior to that
date (or the Surviving Spouses of such Participants) shall be eligible for
benefits, if any, under the terms of the Plan then in effect, or as subsequently
amended such that the amended terms apply to such persons.
1.2
Purpose
. The
purpose of this Plan is to attract and retain a management group capable of
assuring Olin’s future success by providing them with supplemental retirement
income under this Plan. This Plan is intended to be an unfunded,
nonqualified deferred compensation plan for a select group of management or
highly compensated employees.
1.3
Freeze of the Plan as of
December 31, 2007
. Notwithstanding
anything in the Plan (including, without limitation, Article III) to the
contrary, the Plan is hereby frozen with respect to Participants effective as of
December 31, 2007. Participants will be eligible to accrue benefits
under the Plan through December 31, 2007 but will not accrue any additional
benefits under the Plan after that date. Service by Participants
after December 31, 2007 will count toward meeting the eligibility requirements
for commencing a Plan benefit (including early retirement benefits), but not
toward the determination of any benefit amount under the
Plan. Additionally, compensation earned by Participants after 2007
will not count toward the determination of any benefit amounts under the
Plan. Benefits (if any) will be paid to Participants at such time a
Participant is eligible to begin to receive benefits under the applicable terms
of the Plan, and shall be subject to any applicable early retirement reductions,
payment form adjustments or other adjustments as otherwise provided
herein.
1.4
Code Section
409A
. This
restatement of the Plan set forth herein is intended to comply with the
applicable requirements of Code Section 409A, as set out by the American Jobs
Creation Act of 2004 and supplemented by the additional guidance provided by the
Treasury Department. As of the restatement date, the Participants in
the Plan can be split into three categories:
(i)
Participants
(or Surviving Spouses) who have already commenced Plan benefits (including those
who have been paid in full) (the “Retired Participants”),
(ii)
terminated
vested Participants not yet in pay status whose Plan benefits are determined
under Code Section 409A to be completely (x) attributable to amounts deferred in
taxable years beginning before January 1, 2005, and (y) not subject to
Code Section 409A (the “Grandfathered Participants”), and
(iii)
all other
Participants (the “409A Participants”).
Retired
Participants shall be unaffected by the restatement and shall continue to
receive Plan benefits, if any, pursuant to the prior terms of the Plan
applicable to them. Grandfathered Participants and 409A Participants
(and their applicable Surviving Spouses) shall be paid Plan benefits, if any, in
the time and form of payment as determined under the terms of the restated
Plan.
ARTICLE
II. ELIGIBILITY
2.1
Participation
. Participation
in the Plan was frozen as of December 31, 2007 and no new Participants shall be
permitted after such date. As provided hereinafter, the Compensation
Committee of the Company’s Board of Directors (“Compensation Committee”) shall
have the power to remove any Participant from the Plan, whether or not he or she
has begun to receive benefits hereunder.
Any
Participant may be removed from the Plan by the Compensation Committee at any
time “for cause”, as determined by the Compensation Committee in its sole
discretion, whether or not the Participant has begun to receive payments under
the Plan, and whether or not the Participant’s employment has been
terminated. “Cause” shall include, without limitation, rendering
services in any capacity to a competitor of the Company without the consent of
the Compensation Committee. Neither the Participant nor his spouse
shall be entitled to receive any payments from the Plan from and after the date
of the removal of the Participant nor have any cause of action as a result of
such removal. The Participant (or his spouse) shall not be required
to return any payments made prior to removal of the Participant from the
Plan.
2.2
Transfer of Arch Employees
and Reserves
. As
of February 8, 1999, the effective date of the spin-off of Arch Chemicals, Inc.
(“Arch”) from the Company (the “Arch Spin-off Date”), the employment of certain
Company employees, who were defined as “Arch Employees” within the meaning of
the Employee Benefits Allocation Agreement as of the same date, was transferred
to Arch or its affiliated companies. Those Arch Employees who had been
participating in this Plan immediately commenced participation in a
non-qualified pension plan of Arch (the “Arch Plan”), and Olin transferred to
Arch the reserves reflecting the value of the accrued liabilities of such
employees under this Plan. From and after the Arch Spin-off Date,
neither Olin nor this Plan shall have any liability with respect to the former
participation by such Arch Employees in this Plan. References to the
Arch Plan in this Plan are descriptive only, and neither the Company nor this
Plan guaranties any payments or rights under the Arch Plan.
ARTICLE
III. BENEFITS
3.1
Benefit
Formula
. Upon
retirement, as hereinafter provided and subject to Section 1.3, a Participant
shall be entitled to receive an annual “Retirement Allowance Benefit” equal to
the lesser of (a) and (b) below:
(a)
three
percent (3%) of the Participant’s Average Compensation, multiplied by his Years
of Benefit Service credited while the employee was a Participant in this Plan,
plus one and one-half percent (1.5%) of the Participant’s Average Compensation
multiplied by his Years of Benefit Service credited under all qualified plans of
Olin Corporation or its affiliates while the employee was not a Participant in
this Plan, provided that the resulting percentage of Average Compensation shall
be reduced by one-third of one percent (1/3%) for each month by which the
Participant’s benefits begin prior to his sixty-second (62nd) birthday;
reduced
by the sum of
(i)
the
Participant’s annual retirement allowance payable from all Olin qualified and
nonqualified defined benefit pension plans of the Company and all Employing
Companies, including, without limitation, the Olin Corporation Employees Pension
Plan which was previously known as the Nonbargaining Employees’ Pension Plan of
Olin Corporation and prior to that as the Olin Salaried Pension Plan (all such
plans being collectively referred to in this Plan as the “Olin Employees Pension
Plan”), and the equivalent actuarial value of any other arrangement with the
Company which the Plan Administrator, in its sole discretion, determines to be a
pension supplement (collectively referred to hereinafter as the “Other Olin
Plans”) ; and
(ii)
fifty
percent (50%) of the Participant’s Primary Social Security Benefit.
(b)
fifty
percent (50%) of the Participant’s Average Compensation, reduced by the sum
of
(i)
the
amount of annual retirement benefits from the Olin Employees Pension Plan and
all Other Olin Plans and all qualified and non-qualified deferred compensation
plans of the Participant’s previous and subsequent employers; and
(ii)
fifty
percent (50%) of the Participant’s Primary Social Security Benefit.
(c)
For
purposes of this benefit formula, “Average Compensation”, “Years of Benefit
Service”, and “Primary Social Security Benefit” shall have the same definition
as that contained in the Olin Employees Pension Plan; provided, however, that
(i) Average Compensation under this Plan shall include deferred amounts of
regular salary and deferrals under management incentive plans (other than the
Performance Share Programs and other long-term incentive and long-term bonus
plans); (ii) in calculating Average Compensation, executive severance which is
payable to certain Participants under employment agreements shall be treated as
if paid over the number of months used to calculate the amount of such
severance, even if such severance is received in a lump sum; (iii) Average
Compensation shall be calculated without regard to the dollar limitations
imposed by Section 401(a)(17) of the Internal Revenue Code; and (iv) Years of
Benefit Service shall include service imputed as a result of treating executive
severance as having been received over the number of months used to calculate
such severance. Notwithstanding the preceding, the Plan was frozen as
of December 31, 2007, and Average Compensation, Years of Benefit Service and
Primary Social Security Benefit shall all be determined as of December 31, 2007
(or such earlier date as applicable).
(d)
The
annual retirement allowances payable under the Olin Employees Pension Plan,
Other Olin Plans and from the qualified and non-qualified deferred compensation
plans of the Participant’s previous and subsequent employers, which are to be
used to reduce the benefit payable under (a) or (b) above, shall be determined
assuming (i) that the Participant selected a 50% joint and survivor annuity
under such plans, (ii) began receiving benefits thereunder at their actual or
estimated commencement date (rather than the commencement date for benefits
under this Plan), and (iii) using the actuarial equivalent factors specified in
the plans which are the subject of the offset or, if such factors are not
reasonably available, such reasonable factors as may, from time to time, be
elected by the Plan Administrator.
ARTICLE
IV. PAYMENT OF BENEFITS
4.1
409A
Participants
.
(a)
Benefit Commencement
Date
. A 409A Participant shall commence Retirement Allowance
Benefits upon termination of employment with the Company if such 409A
Participant is at least age 55 at time of termination, or shall commence at age
65 if such 409A Participant is less than age 55 at time of
termination. Notwithstanding the preceding sentence, any 409A
Participant who has completed at least seven (7) Years of Creditable Service (as
defined in the Olin Employees Pension Plan) and who is at least age fifty-two
(52) and less than age fifty-five (55) on the date his service is terminated by
the Company (without taking into account any severance period) other than (i)
for cause or (ii) as a result of a voluntary termination, shall commence
Retirement Allowance Benefits upon the later of (i) age 55 or (ii) the date such
409A Participant would have obtained ten (10) Years of Creditable Service had
such person continued working.
In the
case of 409A Participants who transfer directly at the time of the applicable
sale to Global Brass and Copper Acquisition Co. (“Global”), “termination of
employment with the Company” or “terminated by the Company” under the prior
paragraph shall be construed to mean termination of service from or by Global
(and their affiliates, and/or any successor thereto). Service with
Global (and their affiliates, and/or any successor thereto) shall be credited
toward Years of Creditable Service for purposes of determining benefit
commencement timing, but shall not be treated as “Years of Benefit Service” for
the purpose of calculating the amount of the benefit under this
Plan.
(b)
Form of Payment
Election.
For the transition period beginning January 1, 2008
and ending December 31, 2008, any 409A Participant may elect to have his
Retirement Allowance Benefits payable in (i) a single lump sum or (ii) any
annuity optional form of payment then currently available to the 409A
Participant (assuming he was retirement eligible) under the Olin Employees
Pension Plan. Such payment election shall be made in accordance with
Code Section 409A (and applicable Internal Revenue Service transition relief)
and subject to the following provisions. After December 31, 2008, any
then effective payment election shall be irrevocable for the duration of a 409A
Participant’s participation in the Plan except as set forth in paragraph (d)
below. No payment election made in 2008 under this transition relief
will apply to Retirement Allowance Benefits that would otherwise be payable in
2008, nor may such election cause Retirement Allowance Benefits to be paid in
2008 that would not otherwise be payable in 2008. No payment election
under this transition relief may be made retroactively, or when Retirement
Allowance Benefits payments are imminent.
(c)
Timely Election
Failure.
Failure to make a timely form of payment election as
provided in paragraph (b) above will result in such 409A Participant being
deemed to have elected a single lump sum payment with respect to his Retirement
Allowance Benefits. Such deemed election shall be irrevocable for the
duration of a 409A Participant’s participation in the Plan except as set forth
in paragraph (d) below. To the extent that a 409A Participant
elects to receive an annuity optional form of payment, but does not timely elect
the specific annuity optional form of payment as provided herein, such 409A
Participant shall be deemed to have elected a single life annuity if single or
shall be deemed to have elected a 50% joint and survivor annuity if married
(with the spouse as beneficiary).
(d)
Subsequent Change in Form of Payment
Election.
A 409A Participant may change the form of payment
election with respect to the his Retirement Allowance Benefits so long as: (i)
the new payment election is made at least twelve (12) months before the original
payment commencement date, (ii) the new payment election does not take effect
until at least twelve (12) months after the date on which such election is made,
and (iii) the original payment commencement date as determined in paragraph (a)
is deferred for a period of five (5) years.
Notwithstanding
the foregoing, to the extent that a 409A Participant’s payment form election
with respect to his Retirement Allowance Benefits is a “life annuity” (as
defined under Code Section 409A), the 409A Participant may change such election
to any annuity optional form of payment then currently available to the
Participant (assuming he was retirement eligible) under the Olin Employees
Pension Plan provided that:
(1)
such
optional form is also a “life annuity” (as defined under Code Section 409A)
which is actuarially equivalent (as determined under Code Section
409A);
(2)
such
election to change is timely made before the first scheduled annuity payment
date of the original election; and
(3)
such
first scheduled annuity payment date does not change as a result of the new
election.
(e)
Election
Forms
. The elections with respect to a 409A Participant’s
Retirement Allowance Benefits (including the change in payment election
provisions under paragraph (d) above) shall be made on a form approved by the
Committee and filed with the Committee in the time and manner prescribed by the
Committee.
(f)
Six Month Delay
Rule
. If, at the time the 409A Participant becomes entitled to
Retirement Allowance Benefit payments under the Plan, the 409A Participant is a
Specified Employee (as defined and determined under Code Section 409A), then,
notwithstanding any other provision in the Plan to the contrary, the following
provision shall apply. No Retirement Allowance Benefit payments
considered deferred compensation under Code Section 409A, which are payable upon
a 409A Participant’s termination as determined under Code Section 409A and not
subject to an exception or exemption thereunder, shall be paid to the 409A
Participant until the date that is six (6) months after the 409A Participant’s
termination. Any such Retirement Allowance Benefit payments that
would otherwise have been paid to the 409A Participant during this six-month
period shall instead be aggregated and paid to the 409A Participant on the date
that is six (6) months after the 409A Participant’s termination. Any
Retirement Allowance Benefit payments to which the 409A Participant is entitled
to be paid after the date that is six (6) months after the 409A Participant’s
termination shall be paid to the 409A Participant in accordance with the
applicable terms of this Plan.
(g)
Payments
. Notwithstanding
anything in the foregoing, a Retirement Allowance Benefit payment shall be paid
(or commence to be paid) on or as soon as practicable after the date determined
pursuant to the above but not later than 60 days after such date.
(h)
Adjustments.
A
409A Participant’s Retirement Allowance Benefits shall be subject to early
retirement reductions based upon the applicable benefit commencement date and
shall also be subject to any applicable actuarial adjustments based on the
applicable optional form of payment chosen by such 409A
Participant. Such early retirement reduction factors,
conversion factors and actuarial adjustments shall be the same as those
specified in the Olin Employees Pension Plan; provided, however, that in the
case of a 409A Participant who elects the single lump sum payment form, the
single lump sum payment shall be determined using an annuity purchase rate based
upon a discount rate equal to the rate for a zero coupon Treasury strip
(determined approximately at the time that the single lump sum payment is to be
made) with a maturity that approximates the 409A Participant’s life expectancy
determined as of the date the payment is scheduled to be made (and such single
lump sum payment shall be adjusted for married participants to reflect the
subsidy provided in the following proviso); provided, further, that in the case
of a 409A Participant who elects a joint and 50% survivor annuity with the 409A
Participant’s spouse as the joint annuitant, there shall be no actuarial
reduction for the death benefit protection; and provided, further, that in the
case of a 409A Participant who elects one of the other joint and survivor
annuity options with the 409A Participant’s spouse as the joint annuitant, the
benefit amounts payable shall be actuarial equivalent to the joint and 50%
survivor annuity determined under the previous proviso.
4.2
Grandfathered
Participants
. Any
Grandfathered Participant shall commence benefits under this Plan at age 65 and
may elect at such time to have his Retirement Allowance Benefits payable in any
annuity optional form of payment then currently available to the
Grandfathered Participant (assuming he was then retirement eligible) under the
Olin Employees Pension Plan; provided, however, that his Retirement Allowance
Benefits will be calculated assuming that the Grandfathered Participant did not
commence benefits under the Olin Employees’ Pension Plan until reaching age 65,
even though his actual commencement date under the Olin Employees Pension Plan
may have been earlier. The election of the form of annuity shall be
made anytime prior to the scheduled commencement date. A
Grandfathered Participant’s Retirement Allowance Benefits shall be subject to
any applicable actuarial adjustments based on the applicable annuity optional
form of payment chosen by such Grandfathered Participant. Such
conversion factors and actuarial adjustments shall be the same as those
specified in the Olin Employees Pension Plan; provided, however, that in the
case of a 409A Participant who elects a joint and 50% survivor annuity with the
Participant’s spouse as the joint annuitant, there shall be no actuarial
reduction for the death benefit protection; and provided, further, that in the
case of a Grandfathered Participant who elects one of the other joint and
survivor annuity options with the Grandfathered Participant’s spouse as the
joint annuitant, the benefit amounts payable shall be actuarial equivalent to
the joint and 50% survivor annuity determined under the previous
proviso.
4.3
Surviving Spouse
Benefit
.
(a)
The
Surviving Spouse of a Participant who dies after commencing Retirement Allowance
Benefit payments under Sections 4.1 or 4.2 of this Plan shall receive a death
benefit under this Plan only if the form of payment selected by, or in force
with respect to, the Participant under this Plan provides for a death
benefit. No death benefit shall be payable to a Surviving Spouse if
the Participant received a single lump sum payment of his Retirement Allowance
Benefits. Notwithstanding the foregoing, to the extent that a
Participant dies during the six month delay period imposed under Section 4.1(f),
the amount the Participant would have otherwise received prior to his death
absent such delay shall be paid to his Surviving Spouse (or estate if
applicable). For purposes of this Section 4.3, whether a Participant
has “commenced” benefits shall be determined without regard to Section
4.1(f).
(b)
The
Surviving Spouse of any Participant who dies prior to commencing Retirement
Allowance Benefit payments shall be entitled to receive a benefit equal to 50%
of the benefit that the Participant would have been entitled to had he survived
to the earliest date on which he could commence benefits hereunder, and retired
and commenced monthly benefits (in the form of a single life annuity) under the
Plan.
(c)
Notwithstanding
(a) or (b) above, if the Surviving Spouse is more than four years younger than
the Participant, then the “joint and survivor annuity” benefit payable to the
Participant (and the Surviving Spouse’s portion of such benefit) shall be
calculated by using the Participant’s actual age, and the Surviving Spouse’s
actual age increased by four (4) years.
(d)
For
purposes of this Plan, the term “Surviving Spouse” shall mean the person to whom
a Participant is validly married at the date of his death, as evidenced by a
marriage certificate issued in accordance with state law; provided however, that
(i) if a Participant’s spouse at his or her death was not the Participant’s
spouse at least 12 months prior to the Participant’s death, such person shall
not constitute a Surviving Spouse and no benefits to such person shall be paid
under Section 4.3(b), (ii) common law marriages shall not be recognized
hereunder, and (iii) the term “spouse” for purposes of this Plan shall include a
“Domestic Partner” as such term is defined and determined under the Olin
Employees Pension Plan. The Plan does not permit any beneficiary
other than a spouse (as defined in the preceding sentence) to be designated
under the Plan.
4.4
Benefit Upon a Change in
Control or 409A Change in Control
.
(a)
Lump Sum Payment
.
The sale
or spin-off, as applicable, of the Olin Brass division, Chase Brass and Copper
Company, Primex Technologies, Inc. and Arch from Olin shall not be deemed to be
a Change in Control or 409A Change in Control entitling any Participant or
Surviving Spouse herein to benefits under this Plan.
Notwithstanding
any other provision of the Plan, upon a Change in Control, each Grandfathered
Participant and Retired Participant (or if applicable, their Surviving Spouses)
covered by the Plan shall automatically be paid a single lump sum amount in cash
by the Company sufficient to purchase an annuity which shall provide such person
with the same monthly after-tax benefit as he would have received under the Plan
based on the benefits accrued (or payable) to such person hereunder as of the
date of the Change in Control.
Notwithstanding
any other provision of the Plan, upon a 409A Change in Control, each 409A
Participant (or if applicable, his Surviving Spouse) covered by the Plan shall
automatically be paid a single lump sum amount in cash by the Company sufficient
to purchase an annuity which shall provide such person with the same monthly
after-tax benefit as he would have received under the Plan based on the benefits
accrued (or payable) to such person hereunder as of the date of the 409A Change
in Control.
Payment
under this Section shall not in and of itself terminate the Plan, but such
payment shall be taken into account (as an actuarially equivalent offset) in
calculating benefits under the Plan which may otherwise become due the
Participant (or if applicable, his Surviving Spouse) thereafter.
(b)
No Divestment
.
If a
Participant is removed from participation in the Plan after a Change of Control
or 409A Change of Control has occurred, in no event shall his benefit accrued
prior thereto be adversely affected.
Following
a Change-of-Control or 409A Change-of-Control, no action shall be taken under
the Plan that will cause any benefits payable to a Grandfathered Participant or
Retired Participant (or their applicable Surviving Spouses) to be subject to
Code Section 409A coverage, or cause any benefits payable to a 409A Participant
(or his Surviving Spouse) to fail to comply in any respect with Code Section
409A, in either case without the written consent of the Participant or
Surviving Spouse (as applicable).
(c)
Change in Control
Defined
. For purposes of the Plan, a “Change in Control” shall
be deemed to have occurred if
(i)
the
Company ceases to be, directly or indirectly, owned of record by at least 1,000
stockholders; or
(ii)
a person,
partnership, joint venture, corporation or other entity, or two or more of any
of the foregoing acting as “person” within the meaning of Section 13(d)(3) of
the Securities Exchange Act of 1934, as amended (the “Act”), other than the
Company, a majority-owned subsidiary of the Company or an employee benefit plan
of the Company or such subsidiary (or such plan’s related trust), become(s) the
“beneficial owner” (as defined in Rule 13d-3 of the Act) of 20% or more of the
then outstanding voting stock of the Company; or
(iii)
during
any period of two consecutive years, individuals who at the beginning of such
period constitute the Company’s Board of Directors (together with any new
Director whose election by the Company’s Board of Directors or whose nomination
for election by the Company’s stockholders, was approved by a vote of at least
two-thirds of the Directors of the Company then still in office who either were
Directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Directors then in office; or
(iv)
all or
substantially all of the business of the Company is disposed of pursuant to a
merger, consolidation or other transaction in which the Company is not the
surviving corporation or the Company combines with another company and is the
surviving corporation (unless the shareholders of the Company immediately
following such merger, consolidation, combination, or other transaction
beneficially own, directly or indirectly, more than 50% of the aggregate voting
stock or other ownership interests of (x) the entities, if any, that succeed to
the business of the Company or (y) the combined company); or
(v)
the
shareholders of the Company approve a sale of all or substantially all of the
assets of the Company or a liquidation or dissolution of the
Company.
(d)
409A Change in Control
Defined
. For purposes of the Plan, a “409A Change in Control”
shall have the same meaning ascribed to “Change of Control” under the Olin
Corporation Supplemental Contributing Employee Ownership Plan.
(e)
Arbitration
. Any
dispute or controversy arising under or in connection with the Plan subsequent
to a Change in Control or 409A Change in Control shall be settled exclusively by
arbitration at Olin’s headquarters, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on
the arbitrator’s award in any court having jurisdiction.
ARTICLE
V. FUNDING
5.1
Unfunded
Plan
. This
Plan shall be unfunded at all times. All payments under this Plan
shall be made from the general assets of the Company. No provision
shall at any time be made with respect to segregating any assets of the Company
for payment of benefits hereunder. No Participant or Surviving Spouse
shall have any interest in any particular assets of the Company by reason of the
right to receive a benefit under this Plan and shall have the rights only of a
general unsecured creditor of the Company with respect to any rights under the
Plan.
5.2
Liability for
Payment.
The
Company shall pay the benefits provided under this Plan with respect to
Participants who are employed, or were formerly employed by it during their
participation in the Plan. The obligations of the Company shall not
be funded in any manner.
5.3
No Guaranty of
Payment
. Nothing
contained in the Plan (or any Plan communication) shall constitute a guaranty by
the Company or any other entity or person that the assets of the Company will be
sufficient to pay any benefit hereunder.
5.4
Anti-alienation
. No
interest of any person or entity in, or right to receive a benefit under, the
Plan shall be subject in any manner to sale, transfer, assignment, pledge,
attachment, garnishment, or other alienation or encumbrance of any kind; nor may
such interest or right to receive a benefit be taken, either voluntarily or
involuntarily, for the satisfaction of the debts of, or other obligations or
claims against, such person or entity, including claims for alimony, support,
separate maintenance and claims in bankruptcy proceedings.
ARTICLE
VI. PLAN ADMINISTRATION
6.1
Plan
Administrator
. The
Company hereby appoints the Benefit Plan Review Committee (or any successor or
replacement committee) as the Plan Administrator (the “Plan Administrator” or
“Committee”).
6.2
Powers, Duties and
Responsibilities
. Except
for those powers expressly reserved to Olin’s Board of Directors or Compensation
Committee, the Plan Administrator shall have all power to administer the Plan in
accordance with the terms of the Plan. The Plan Administrator shall
have the absolute discretion and power to determine all questions arising in
connection with the administration and application of the Plan. The
Plan Administrator shall have the sole discretion and authority to decide all
questions about the interpretation of the Plan provisions, rules and regulations
and to resolve any claims for Plan benefits. As such, benefits under
the Plan shall be paid only if the Plan Administrator decides in its sole
discretion that the applicant is entitled to them. Any such
determinations by the Plan Administrator shall be conclusive and binding upon
all persons. The Plan Administrator may correct any defect or
reconcile any inconsistency in such manner and to such extent as shall be deemed
necessary or advisable to carry out the purposes of the Plan; provided, however,
that such interpretation or construction shall be consistent with the intent of
the Plan.
The Plan
Administrator shall:
(a)
compute
the amount and kind of benefits (if any) to which any Participant or Surviving
Spouse shall be entitled hereunder;
(b)
determine
all questions relating to eligibility of Company employees to participate or
continue participation in the Plan;
(c)
maintain
all necessary records for the administration of the Plan;
(d)
interpret
the provisions of the Plan;
(e)
assist
any Participant or Surviving Spouse regarding his rights, benefits or elections
available under the Plan;
(f)
communicate
to Participants and Surviving Spouses concerning the provisions of the Plan;
and
(g)
prescribe
such rules (including applicable claim procedures) and forms as it shall deem
necessary or proper for the administration of the Plan.
6.3
Records and
Reports
. The
Plan Administrator shall keep a record of all actions taken and shall keep such
other books of account, records and other information that the Committee may
deem necessary or desirable for proper administration of the Plan.
6.4
Appointment of
Advisors
. The
Plan Administrator may appoint accountants, actuaries, counsel, advisors and
other persons that it deems necessary or desirable in connection with the
administration of the Plan. For purposes of this Plan, the Plan
Administrator shall be entitled to rely conclusively upon all tables,
valuations, certificates, opinions and reports furnished by any actuary,
accountant, controller, counsel or other person employed or engaged by the
Company with respect to the Plan or Olin Employees Pension Plan (or any other
arrangement contemplated herein).
6.5
Indemnification of
Members
. The
Company shall indemnify and hold harmless any member of the Committee from any
liability incurred in his or her capacity as such for acts which he or she
undertakes in good faith as a member of such Committee.
6.6
409A
Compliance
. To
the extent any provision of the Plan or action by the Committee or Company would
subject any Participant to liability for interest or additional taxes under Code
Section 409A, or make Retirement Allowance Benefits payable to Grandfathered
Participants and Retired Participants subject to Code Section 409A, it will be
deemed null and void, to the extent permitted by law and deemed advisable by the
Committee. It is intended that the Plan will comply with Code Section
409A to the extent applicable, and that the Retirement Allowance Benefits
payable to Grandfathered Participants and Retired Participants be exempt from
Code Section 409A coverage, and the Plan shall be interpreted and construed on a
basis consistent with such intent. The Plan may be amended in any
respect deemed necessary (including retroactively) by the Committee in order to
preserve compliance with Code Section 409A and to maintain Code Section 409A
exemption for the Retirement Allowance Benefits payable to Grandfathered
Participants and Retired Participants.
For
purposes of this Plan with respect to Retirement Allowance Benefits payable to
409A Participants, a “termination of employment”, “termination”, “retirement” or
“separation from service” (or other similar term having a similar import) under
this Plan shall have the same meaning as a “separation from service” as defined
in Code Section 409A (provided that no separation of service shall be deemed to
occur on result of an individual’s death).
The
preceding shall not be construed as a guarantee of any particular tax effect for
Plan benefits. A Participant (or Surviving Spouse) is solely
responsible and liable for the satisfaction of all taxes and penalties that may
be imposed on such person in connection with any distributions to such person
under the Plan (including any taxes and penalties under Code Section 409A), and
the Company shall have no obligation to indemnify or otherwise hold a
Participant (or Surviving Spouse) harmless from any or all of such taxes or
penalties.
ARTICLE
VII. TERMINATION AND AMENDMENT
7.1
Amendment or
Termination
. The
Company may amend or terminate the Plan at any time, in whole or in part, by
action of its Board of Directors or any duly authorized committee or
officer. No amendment or termination of the Plan shall adversely
affect the vested benefits payable hereunder to any Participant for service
rendered prior to the effective date of such amendment or
termination.
ARTICLE
VIII. MISCELLANEOUS
8.1
Gender and
Number
. Whenever
any words are used herein in the masculine, feminine or neuter gender, they
shall be construed as though they were also used in another gender in all cases
where such would apply, and whenever any words are used herein in the singular
or plural form, they shall be construed as though they were also used in another
form in all cases where they would so apply.
8.2
Action by the
Company
. Whenever
the Company under the terms of this Plan is permitted or required to do or
perform any act or thing, it shall be done and performed by an officer or
committee duly authorized by the Board of Directors of the Company.
8.3
Headings
. The
headings and subheadings of this Plan have been inserted for convenience of
reference only and shall not be used in the construction of any of the
provisions hereof.
8.4
Governing
Law
. To
the extent that state law has not been preempted by the provisions of ERISA or
any other laws of the United States heretofore or hereafter enacted, this Plan
shall be construed and administered under the laws of the Commonwealth of
Virginia (without giving effect to its principles of conflicts of
law).
8.5
No Enlargement of Employee
Rights
. No
Participant or Surviving Spouse shall have any right to a benefit under the Plan
except in accordance with the terms of the Plan. Establishment of the
Plan shall not be construed to give any Participant the right to be retained in
the service of the Company, nor to create or confer on any Participant the right
to receive future benefit accruals hereunder with respect to any future period
of service with the Company. Nothing in the Plan shall interfere in
any way with the right of the Company to terminate a Participant’s service at
any time with or without cause or notice, whether or not such termination
results in any adverse effect on the Participant’s interests under the
Plan.
8.6
Incompetency
. In
the event that the Plan Administrator determines that a Participant is unable to
care for his affairs because of illness or accident or any other reason, any
amounts payable under this Plan may, unless claim shall have been made therefor
by a duly appointed guardian, conservator, committee or other legal
representative, be paid by the Plan Administrator to the spouse, child, parent
or other blood relative or to any other person deemed by the Plan Administrator
to have incurred expenses for such Participant, and such payment so made shall
be a complete discharge of the liabilities of the Plan therefor.
8.7
Olin Employees Pension
Plan
. Any
other benefit payable under the Olin Employees Pension Plan (or other applicable
plan) shall be paid solely in accordance with the terms and conditions of the
Olin Employees Pension Plan (or other applicable plan), and nothing in this Plan
shall operate or be construed in any way to modify, amend or affect the terms
and provisions of the Olin Employees Pension Plan (or other applicable
plan).
8.8
Unclaimed
Benefit
. Each
Participant shall keep the Company informed of his current address and the
current address of his spouse. The Company shall not be obligated to
search for the whereabouts of any person. If the location of a
Participant is not made known to the Company within three (3) years after
the date on which payment of the Participant’s Retirement Allowance Benefit
would otherwise be made or commence, payment may be made as though the
Participant had died at the end of the three-year period. If, within
one additional year after such three-year period has elapsed, or, within three
years after the actual death of a Participant, the Company is unable to locate
any Surviving Spouse for the Participant, then the Company shall have no further
obligation to pay any benefit hereunder to such Participant, Surviving Spouse or
any other person and such benefit shall be irrevocably forfeited.
8.9
Limitations on
Liability
. Notwithstanding
any other provision of the Plan, neither the Company, the Committee nor any
individual acting as an employee or agent of the Company shall be liable to any
Participant, former Participant, Surviving Spouse, or any other person for any
claim, loss, liability or expense incurred in connection with the
Plan.
8.10
Duties of Participants and
Surviving Spouses
. A
Participant or Surviving Spouse shall, as a condition of receiving benefits
under this Plan, be obligated to provide the Committee with such information as
the Committee shall require in order to calculate benefits under this Plan or
otherwise administer the Plan.
8.11
Taxes and
Withholding
. As
a condition to any payment or distribution pursuant to the Plan, the Company may
require a Participant (or as applicable, the Surviving Spouse) to pay such sum
to the Company as may be necessary to discharge its obligations with respect to
any taxes, assessments or other governmental charges imposed on property or
income received by the Participant (or as applicable, the Surviving Spouse)
thereunder. The Company may deduct or withhold such sum from any
payment or distribution to the Participant (or as applicable, the Surviving
Spouse).
8.12
Treatment for other
Compensation Purposes
. Payments
received by a Participant (or as applicable, the Surviving Spouse) under the
Plan shall not be deemed part of a Participant’s regular, recurring compensation
for purposes of any termination, indemnity or severance pay laws and shall not
be included in, nor have any effect on, the determination of benefits under any
other employee benefit plan, contract or similar arrangement provided by the
Company, unless expressly so provided by such other plan, contract or
arrangement.
Exhibit
10.2
OLIN
SUPPLEMENTARY AND DEFERRAL BENEFIT PENSION PLAN
(As
Amended and Restated as of October 24, 2008)
Table of
Contents
|
Page
|
Article
I. INTRODUCTION
|
1
|
1.1 Restatement
of Plan
|
1
|
|
|
1.2 Purpose
of Plan
|
1
|
|
|
1.3 Nature
of Plan
|
1
|
|
|
1.4 Freeze
of the Plan as of December 31, 2007
|
1
|
|
|
1.5 Code
Section 409A
|
2
|
|
|
Article
II. Eligibility
|
3
|
2.1 Participation
|
3
|
|
|
2.2 Transfer
of Arch Employees and Reserves
|
3
|
|
|
Article
III. Calculation of Benefits
|
4
|
3.1 Amount
of Benefit
|
4
|
|
|
Article
IV. Payment of Benefits
|
5
|
4.1 409A
Participants
|
5
|
|
|
4.2 Grandfathered
Participants
|
7
|
|
|
4.3 Death
Benefits
|
8
|
|
|
4.4 Benefit
Upon a Change in Control or 409A Change in Control
|
9
|
|
|
Article
V. Funding
|
12
|
5.1 Unfunded
Plan
|
12
|
|
|
5.2 Liability
for Payment
|
12
|
|
|
5.3 No
Guaranty of Payment
|
12
|
|
|
5.4 Anti-alienation
|
12
|
|
|
Article
VI. Plan Administration
|
13
|
6.1 Plan
Administrator
|
13
|
|
|
6.2 Powers,
Duties and Responsibilities
|
13
|
|
|
6.3 Records
and Reports
|
13
|
|
|
6.4 Appointment
of Advisors
|
14
|
|
|
6.5 Indemnification
of Members
|
14
|
|
|
6.6 Construction
of Plan Terms
|
14
|
|
|
6.7 409A
Compliance
|
14
|
|
|
Article
VII. Termination and Amendment
|
15
|
7.1 Amendment
or Termination
|
15
|
|
|
Article
VIII. Miscellaneous
|
16
|
8.1 Gender
and Number
|
16
|
|
|
8.2 Action
by the Company
|
16
|
|
|
8.3 Headings
|
16
|
|
|
8.4 Governing
Law
|
16
|
|
|
8.5 No
Enlargement of Employee Rights
|
16
|
|
|
8.6 Incompetency
|
16
|
|
|
8.7 Qualified
Plan
|
16
|
|
|
8.8 Unclaimed
Benefit
|
17
|
|
|
8.9 Limitations
on Liability
|
17
|
|
|
8.10 Duties
of Participants, Beneficiaries, and Surviving Spouses
|
17
|
|
|
8.11 Taxes
and Withholding
|
17
|
|
|
8.12 Treatment
for other Compensation Purposes
|
17
|
ARTICLE
I. INTRODUCTION
1.1
Restatement of
Plan
. Olin
Corporation (the “Company”) hereby amends and restates the Olin Supplementary
and Deferral Benefit Pension Plan effective as of October 24,
2008. The provisions of this restated Plan are generally only
applicable to Participants in the employ of the Company on or after the
effective date of such provisions. Participants who terminated prior to that
date (or the Surviving Spouses or Beneficiaries of such Participants) shall be
eligible for benefits, if any, under the terms of the Plan then in effect, or as
subsequently amended such that the amended terms apply to such
persons.
1.2
Purpose of
Plan
. The
purpose of this Plan is to provide benefits to certain current and former
salaried employees of the Company and other Employing Companies whose benefits
(“Qualified Plan Benefits”) under the Olin Corporation Employees Pension Plan
(the “Qualified Plan”) are limited (i) by Section 415 of the Internal Revenue
Code of 1986, as amended (the “Code”), (ii) by the limitations on compensation
that can be taken into account in calculating Qualified Plan Benefits under
Section 401(a)(17) of the Code, and (iii) by the inability to include in
compensation for Qualified Plan Benefits any salary and awards of management
incentive compensation that have been deferred by Participants into
non-qualified plans or arrangements. These limitations are
collectively referred to herein as “Benefit Limitations”. This Plan is
intended to provide such Participants and their Beneficiaries with benefits
(“Supplemental Pension Benefits”) equal to the difference between what
their Qualified Plan Benefits would be absent the Benefit Limitations, and
what their Qualified Plan Benefits would be with the imposition of the
Benefit Limitations.
1.3
Nature of
Plan
. This
Plan is divisible into two components: that portion which provides for benefits
in excess of the Code Section 415 limits and, therefore, is intended to qualify
for the “excess benefit plan” exemption from the Employee Retirement Income
Security Act of 1974, as amended (“ERISA”), and that portion which provides for
benefits in excess of applicable compensation limits and applicable compensation
exclusions under the Qualified Plan, and is intended to be a supplemental
executive retirement plan for a select group of management or highly compensated
employees.
1.4
Freeze of the Plan as of
December 31, 2007
. Notwithstanding
anything in the Plan (including, without limitation, Article III) to the
contrary, the Plan was frozen with respect to Participants effective as of
December 31, 2007. The freeze of the Plan corresponded to a similar
freeze of the Qualified Plan as of the same date. Participants will
be eligible to accrue benefits under the Plan through December 31, 2007 but will
not accrue any additional benefits under the Plan after that
date. Service by Participants after December 31, 2007 will count
toward meeting the eligibility requirements for commencing a Plan benefit
(including early retirement benefits), but not toward the determination of any
benefit amount under the Plan. Additionally, compensation earned by
Participants after 2007 will not count toward the determination of any benefit
amounts under the Plan.
Benefits
(if any) will be paid to Participants at such time a Participant is eligible to
begin to receive benefits under the applicable terms of the Plan, and shall be
subject to any applicable early retirement reductions, payment form adjustments
or other adjustments as otherwise provided herein.
Notwithstanding
the preceding paragraphs and the general freeze of the Plan, certain
Participants who transferred to Primex Technologies, Inc. or its affiliates
(“Primex”) will continue to accrue benefits after December 31, 2007, due to
compensation with Primex (or, after January 25, 2001, General Dynamics
Corporation and its affiliates (or any successor thereafter)) earned after 2007
being required to be taken into consideration under the Qualified Plan for such
persons.
1.5
Code Section
409A
. This
restatement of the Plan set forth herein is intended to comply with the
applicable requirements of Code Section 409A, as set out by the American Jobs
Creation Act of 2004 and supplemented by the additional guidance provided by the
Treasury Department. As of the restatement date, the Participants in
the Plan can be split into three categories:
(i)
Participants
(or Surviving Spouses or Beneficiaries) who have already commenced Supplemental
Pension Benefits (including those who have been paid in full) (the “Retired
Participants”),
(ii)
terminated
vested Participants not yet in pay status whose Supplemental Pension Benefits
are determined under Code Section 409A to be completely (x) attributable to
amounts deferred in taxable years beginning before January 1, 2005, and (y) not
subject to Code Section 409A (the “Grandfathered Participants”),
and
(iii)
all other
Participants (the “409A Participants”).
Retired
Participants shall be unaffected by the restatement and shall continue to
receive Plan benefits, if any, pursuant to the prior terms of the Plan
applicable to them. Grandfathered Participants and 409A Participants
(and their applicable Surviving Spouses or Beneficiaries) shall be paid Plan
benefits, if any, in the time and form of payment as determined under the terms
of the restated Plan.
ARTICLE
II.
ELIGIBILITY
2.1
Participation
. Any
Employee who is eligible to receive a Qualified Plan Benefit from the Company,
the amount of which is reduced by reason of the application of a Benefit
Limitation shall be eligible to receive a Supplemental Pension Benefit as
provided in this Plan. Notwithstanding the foregoing, participation
in the Plan was frozen as of December 31, 2007 and no new Participants shall be
permitted after such date.
2.2
Transfer of Arch Employees
and Reserves.
As
of February 8, 1999, the effective date of the spin-off of Arch Chemicals, Inc.
(“Arch”) from the Company (the “Arch Spin-off Date”), the employment of certain
Company employees, who were defined as “Arch Employees” within the meaning of
the Employee Benefits Allocation Agreement as of the same date, was transferred
to Arch or its affiliated companies. Those Arch Employees who had been
participating in this Plan immediately commenced participation in a
non-qualified pension plan of Arch (the “Arch Plan”), and Olin transferred to
Arch the reserves reflecting the value of the accrued liabilities of such
employees under this Plan; provided however that no transfer occurred with
respect to an Arch Employee until such Employee released Olin and its
affiliates, and the Plan, from any liability or claim for benefits with respect
to such Employee’s participation in this Plan. From and after the
Arch Spin-off Date, neither Olin nor this Plan shall have any liability with
respect to the former participation by such Arch Employees in this
Plan. References to the Arch Plan in this Plan are descriptive only,
and neither the Company nor this Plan guaranties any payments or rights under
the Arch Plan.
ARTICLE
III. CALCULATION OF BENEFITS.
3.1
Amount of
Benefit
. The
Supplemental Pension Benefit payable to a Participant shall be a monthly amount
equal to the difference between (a) and (b) below:
(a)
the
monthly amount of the Qualified Plan Benefit to which the Participant would have
been entitled had such benefit been calculated (i) with the applicable
compensation including deferrals of regular salary and awards under the
management incentive plan into non-qualified plans, and (ii) without regard to
the Benefit Limitations imposed by Sections 415 and 401(a)(17) of the Code;
and
(b)
the
monthly amount of the Qualified Plan Benefit actually payable to the
Participant.
The
amounts described in (a) shall be calculated as of the date that the Participant
terminates service with the Company and all other Employing Companies (or
December 31, 2007, if earlier), in the form of a single life annuity payable
over the lifetime of the Participant commencing at his Normal Retirement Date
(or, if later, his actual retirement date); provided, however, that the
applicable calculation date for a Participant who transferred to Primex who
continues to accrue benefits under the Qualified Plan after December 31, 2007
shall be the date such Participant terminates with Primex.
ARTICLE
IV.
PAYMENT OF BENEFITS.
4.1
409A
Participants
.
(a)
Benefit Commencement
Date
. A 409A Participant shall commence Supplemental Pension
Benefits upon the later of (i) termination of employment with the Company and
(ii) age 55 if the 409A Participant has at least ten (10) Years of Creditable
Service (as defined in the Qualified Plan) at the time of such termination or
age 65 if the 409A Participant has less than ten (10) Years of Creditable
Service at the time of such termination. Notwithstanding the
preceding sentence, any 409A Participant who has completed at least seven (7)
Years of Creditable Service and who is at least age fifty-two (52) and less than
age fifty-five (55) on the date his service is terminated by the Company
(without taking into account any severance period) other than (i) for cause or
(ii) as a result of a voluntary termination, shall commence Supplemental Pension
Benefits upon the later of (i) age 55 or (ii) the date such 409A Participant
would have obtained ten (10) Years of Creditable Service had such person
continued working.
In the
case of 409A Participants who transfer directly at the time of the applicable
sale to Global Brass and Copper Acquisition Co. (“Global”) or spin-off of Primex
(or who, in the case of Primex only, transfer directly to Primex within five (5)
years of the spin-off of Primex), “termination of employment with the Company”
or “terminated by the Company” under the prior paragraph shall be construed to
mean termination of service from or by the transferee
employer. Service with Global (and their affiliates, and/or any
successor thereto) or Primex (or, after January 25, 2001, General Dynamics
Corporation and its affiliates (or any successor thereafter)) shall be credited
toward Years of Creditable Service for purposes of determining benefit
commencement timing, but shall not be considered for the purpose of calculating
the amount of the benefit under this Plan.
(b)
Form of Payment
Election.
For the transition period beginning January 1, 2008
and ending December 31, 2008, any 409A Participant may elect to have his
Supplemental Pension Benefits payable in (i) a single lump sum or (ii) any
annuity optional form of payment then currently available to the 409A
Participant (assuming he was retirement eligible) under the Qualified
Plan. Such payment election shall be made in accordance with Code
Section 409A (and applicable Internal Revenue Service transition relief) and
subject to the following provisions. After December 31, 2008, any
then effective transition payment election shall be irrevocable for the duration
of a 409A Participant’s participation in the Plan except as set forth in
paragraph (d) below. No payment election made in 2008 under this
transition relief will apply to Supplemental Pension Benefits that would
otherwise be payable in 2008, nor may such election cause Supplemental Pension
Benefits to be paid in 2008 that would not otherwise be payable in
2008. No payment election under this transition relief may be made
retroactively, or when Supplemental Pension Benefit payments are
imminent.
(c)
Timely Election
Failure.
Failure to make a timely form of payment election as
provided in paragraph (b) above will result in such 409A Participant being
deemed to have elected a single lump sum payment with respect to his
Supplemental Pension Benefits. Such deemed election shall be
irrevocable for the duration of a 409A Participant’s participation in the Plan
except as set forth in paragraph (d) below. To the extent that
a 409A Participant elects to receive an annuity optional form of payment, but
does not timely elect the specific annuity optional form of payment as provided
herein, such 409A Participant shall be deemed to have elected a single life
annuity if single or shall be deemed to have elected a 50% joint and survivor
annuity if married (with the spouse as beneficiary).
(d)
Subsequent Change in Form of Payment
Election.
A 409A Participant may change the form of payment
election with respect to the his Supplemental Pension Benefits so long as: (i)
the new payment election is made at least twelve (12) months before the original
payment commencement date, (ii) the new payment election does not take effect
until at least twelve (12) months after the date on which such election is made,
and (iii) the original payment commencement date as determined in paragraph (a)
is deferred for a period of five (5) years.
Notwithstanding
the foregoing, to the extent that a 409A Participant’s payment form election
with respect to his Supplemental Pension Benefits is a “life annuity” (as
defined under Code Section 409A), the 409A Participant may change such election
to any annuity optional form of payment then currently available to the 409A
Participant (assuming he was retirement eligible) under the Qualified Plan
provided that:
(1)
such
optional form is also a “life annuity” (as defined under Code Section 409A)
which is actuarially equivalent (as determined under Code Section
409A);
(2)
such
election to change is timely made before the first scheduled annuity payment
date of the original election; and
(3)
such
first scheduled annuity payment date does not change as a result of the new
election.
(e)
Election
Forms
. The elections with respect to a 409A Participant’s
Supplemental Pension Benefits (including the change in payment election
provisions under paragraph (d) above) provided shall be made on a form approved
by the Committee and filed with the Committee in the time and manner prescribed
by the Committee.
(f)
Six Month Delay
Rule
. If, at the time the 409A Participant becomes entitled to
Supplemental Pension Benefit payments under the Plan, the 409A Participant is a
Specified Employee (as defined and determined under Code Section 409A), then,
notwithstanding any other provision in the Plan to the contrary, the following
provision shall apply. No Supplemental Pension Benefit payments
considered deferred compensation under Code Section 409A, which are payable upon
a 409A Participant’s termination as determined under Code Section 409A and not
subject to an exception or exemption thereunder, shall be paid to the 409A
Participant until the date that is six (6) months after the 409A Participant’s
termination. Any such Supplemental Pension Benefit payments that
would otherwise have been paid to the 409A Participant during this six-month
period shall instead be aggregated and paid to the 409A Participant on the date
that is six (6) months after the 409A Participant’s termination. Any
Supplemental Pension Benefit payments to which the 409A Participant is entitled
to be paid after the date that is six (6) months after the 409A Participant’s
termination shall be paid to the 409A Participant in accordance with the
applicable terms of this Plan.
(g)
Payments
. Notwithstanding
anything in the foregoing, a Supplemental Pension Benefit payment
shall be paid (or commence to be paid) on or as soon as practicable after the
date determined pursuant to the above but not later than 60 days after such
date.
(h)
Adjustments.
A
409A Participant’s Supplemental Pension Benefits shall be subject to early
retirement reductions based upon the applicable benefit commencement date and
shall also be subject to any applicable actuarial adjustments based on the
applicable optional form of payment chosen by such 409A
Participant. Such early retirement reduction factors,
conversion factors and actuarial adjustments shall be the same as those
specified in the Qualified Plan for Qualified Plan Benefits; provided, however,
that in the case of a 409A Participant who elects the single lump sum payment
form, the single lump sum payment shall be determined using an annuity purchase
rate based upon a discount rate equal to the rate for a zero coupon Treasury
strip (determined approximately at the time that the single lump sum payment is
to be made) with a maturity that approximates the 409A Participant’s life
expectancy determined as of the date the payment is scheduled to be
made.
In the
case of a 409A Participant whose Qualified Plan Benefits commence at a date
later than his Supplemental Pension Benefits, the Plan shall provide for the
payment of the 409A Participant’s estimated Qualified Plan Benefits until such
time as the 409A Participant actually commences his Qualified Plan Benefits, at
which time the amount of the 409A Participant’s Supplemental Pension Benefits
shall be reduced dollar for dollar, but not below $0, by the amount of the
Qualified Plan Benefits ultimately payable to the 409A Participant.
4.2
Grandfathered
Participants
. Any
Grandfathered Participant shall commence benefits under this Plan at the same
time and in the same form of payment as his Qualified Plan Benefits; provided,
however, that his benefit hereunder shall subject to the actuarial
reductions that would be applicable under the Qualified Plan.
4.3
Death
Benefits
.
(a)
The
Beneficiary of a Participant who dies after commencing Supplemental Pension
Benefit payments under Sections 4.1 or 4.2 of this Plan shall receive a death
benefit under this Plan only if the form of payment selected by, or in force
with respect to, the Participant under this Plan provides for a death
benefit. No death benefit shall be payable to a Beneficiary if the
Participant received a single lump sum payment of his Supplemental Pension
Benefits. Notwithstanding the foregoing, to the extent that a
Participant dies during the six month delay period imposed under Section 4.1(f),
the amount the Participant would have otherwise received prior to his death
absent such delay shall be paid to his Beneficiary.
For
purposes of this Plan, a Participant’s Beneficiary shall be the beneficiary
designated or determined under the terms of the under the Qualified Plan;
provided, however, a 409A Participant may, by filing with the Plan Administrator
prior to death on a form supplied by the Plan Administrator, designate a
different individual or entity to be the designated beneficiary of such 409A
Participant for purposes of this Plan, in which case the subsequent designation
will supersede any designation of a beneficiary under the Qualified Plan for
purposes of this Plan. A Grandfathered Participant shall not be
permitted to designate a beneficiary pursuant to the preceding
proviso.
For
purposes of this Section 4.3, whether a Participant has “commenced” benefits
shall be determined without regard to Section 4.1(f).
(b)
If a
Grandfathered Participant dies prior to commencement of his Qualified Plan
Benefits (and, consequently, his Supplemental Pension Benefits) under
circumstances in which a pre-retirement survivor annuity is payable under the
Qualified Plan, then a benefit shall be payable under this Plan to a Surviving
Spouse in a monthly amount that shall be equal to the difference
between
(i)
the
monthly amount of the Qualified Plan pre-retirement survivor benefit to which
the Surviving Spouse would have been entitled under the Qualified Plan had such
benefit been calculated (i) with the applicable compensation including deferrals
of regular salary and awards under the management incentive plan into
non-qualified plans, and (ii) without regard to the Benefit Limitations imposed
by Sections 415 and 401(a)(17) of the Code; and
(ii)
the
monthly amount of the Qualified Plan pre-retirement survivor benefit that is
actually payable to the Surviving Spouse.
Such
benefits to the Surviving Spouse under this Plan shall be paid at the same time
and in the same form of payment as the Qualified Plan pre-retirement survivor
benefit to such person; provided, however, that such benefit hereunder shall
subject to the early retirement reduction factors, conversion factors and
actuarial adjustments that would be applicable under the Qualified
Plan.
(c)
If a 409A
Participant dies prior to commencement of his Supplemental Pension Benefits, his
Surviving Spouse shall receive a monthly benefit for life commencing as of the
first day of the month following month in which the 409A Participant’s death
occurs, or if later, commencing as of the first day of the month following month
in which the 409A Participant would have turned age 55. The monthly
amount shall be equal to the benefit the Surviving Spouse would have received
assuming the 409A Participant had elected a 50% joint and survivor annuity with
his spouse as the beneficiary, terminated employment on his date of death, lived
to and commenced benefits on the benefit commencement date, and then died
immediately after commencement.
(d)
For
purposes of this Plan, the term “Surviving Spouse” shall mean the person to whom
a Participant is validly married at the date of his death, as evidenced by a
marriage certificate issued in accordance with state law; provided however, that
(i) if a Participant’s spouse at his or her death was not the Participant’s
spouse at least 12 months prior to the Participant’s death, such person shall
not constitute a Surviving Spouse and no benefits to such person shall be paid
under Sections 4.3(b) and (c), (ii) common law marriages shall not be recognized
hereunder, and (iii) the term “spouse” for purposes of this Plan shall include a
“Domestic Partner” as such term is defined and determined under the Qualified
Plan.
4.4
Benefit Upon a Change in
Control or 409A Change in Control
.
(a)
Lump Sum
Payment.
The sale
or spin-off, as applicable, of the Olin Brass division, Chase Brass and Copper
Company, Primex and Arch from Olin shall not be deemed to be a Change in
Control or 409A Change in Control entitling any Participant, Surviving Spouse or
Beneficiary herein to benefits under this Plan.
Notwithstanding
any other provision of the Plan, upon a Change in Control, each Grandfathered
Participant and Retired Participant (or if applicable, their Surviving Spouses
or Beneficiaries) covered by the Plan shall automatically be paid a single lump
sum amount in cash by the Company sufficient to purchase an annuity which shall
provide such person with the same monthly after-tax benefit as he would have
received under the Plan based on the benefits accrued (or payable) to such
person hereunder as of the date of the Change in Control.
Notwithstanding
any other provision of the Plan, upon a 409A Change in Control, each 409A
Participant (or if applicable, his Surviving Spouse or Beneficiaries) covered by
the Plan shall automatically be paid a single lump sum amount in cash by the
Company sufficient to purchase an annuity which shall provide such person with
the same monthly after-tax benefit as he would have received under the Plan
based on the benefits accrued (or payable) to such person hereunder as of the
date of the 409A Change in Control.
Payment
under this Section shall not in and of itself terminate the Plan, but such
payment shall be taken into account (as an actuarially equivalent offset) in
calculating benefits under the Plan which may otherwise become due the
Participant (or if applicable, his Surviving Spouse or Beneficiaries)
thereafter.
(b)
No
Divestment.
If a
Participant is removed from participation in the Plan after a Change of Control
or 409A Change of Control has occurred, in no event shall his benefit accrued
prior thereto be adversely affected.
Following
a Change-of-Control or 409A Change-of-Control, no action shall be taken under
the Plan that will cause any benefits payable to a Grandfathered Participant or
Retired Participant (or their applicable Surviving Spouses or Beneficiaries) to
be subject to Code Section 409A coverage, or cause any benefits payable to a
409A Participant (or his Surviving Spouse or Beneficiary) to fail to comply in
any respect with Code Section 409A, in either case without the written
consent of the Participant, Surviving Spouse, or Beneficiary (as
applicable).
(c)
Change of Control
Defined
. For purposes of the Plan, a “Change in Control” shall
be deemed to have occurred if
(i)
the
Company ceases to be, directly or indirectly, owned of record by at least 1,000
stockholders;
(ii)
a person,
partnership, joint venture, corporation or other entity, or two or
more of any of the foregoing acting as “person” within the meaning of
Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the “Act”), other than the Company, a majority-owned subsidiary of the Company
or an employee benefit plan of the Company or such subsidiary (or such plan’s
related trust), become(s) the “beneficial owner” (as defined in Rule 13d-3 of
the Act) of 20% or more of the then outstanding voting stock of the
Company; or
(iii)
during
any period of two consecutive years, individuals who at the beginning of such
period constitute the Company’s Board of Directors (together with any new
Director whose election by the Company’s Board or whose nomination for election
by the Company’s stockholders, was approved by a vote of at least two-thirds of
the Directors of the Company then still in office who either were Directors at
the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Directors then in office; or
(iv)
all or
substantially all of the business of the Company is disposed of pursuant to a
merger, consolidation or other transaction in which the Company is not the
surviving corporation or the Company combines with another company and is the
surviving corporation (unless the shareholders of the Company immediately
following such merger, consolidation, combination, or other transaction
beneficially own, directly or indirectly, more than 50% of the aggregate voting
stock or other ownership interests of (x) the entities, if any, that
succeed to the business of the Company or (y) the combined company);
or
(v)
the
shareholders of the Company approve a sale of all or substantially all of the
assets of the Company or a liquidation or dissolution of the
Company.
(d)
409A Change in Control
Defined
. For purposes of the Plan, a “409A Change in Control”
shall have the same meaning ascribed to “Change of Control” under the Olin
Corporation Supplemental Contributing Employee Ownership Plan.
(e)
Arbitration
. Any
dispute or controversy arising under or in connection with the Plan subsequent
to a Change in Control or 409A Change in Control shall be settled exclusively by
arbitration at Olin’s headquarters, in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered on
the arbitrator’s award in any court having jurisdiction.
ARTICLE
V. FUNDING
5.1
Unfunded
Plan
. This
Plan shall be unfunded at all times. All payments under this Plan
shall be made from the general assets of the Company. No provision
shall at any time be made with respect to segregating any assets of the Company
for payment of benefits hereunder. No Participant, Surviving Spouse
or any other Beneficiary shall have any interest in any particular assets of the
Company by reason of the right to receive a benefit under this Plan and shall
have the rights only of a general unsecured creditor of the Company with respect
to any rights under the Plan.
5.2
Liability for
Payment
. The
Company shall pay the benefits provided under this Plan with respect to
Participants who are employed, or were formerly employed by it during their
participation in the Plan. The obligations of the Company shall not
be funded in any manner.
5.3
No Guaranty of
Payment
. Nothing
contained in the Plan (or any Plan communication) shall constitute a guaranty by
the Company or any other entity or person that the assets of the Company will be
sufficient to pay any benefit hereunder.
5.4
Anti-alienation
. No
interest of any person or entity in, or right to receive a benefit under, the
Plan shall be subject in any manner to sale, transfer, assignment, pledge,
attachment, garnishment, or other alienation or encumbrance of any kind; nor may
such interest or right to receive a benefit be taken, either voluntarily or
involuntarily, for the satisfaction of the debts of, or other obligations or
claims against, such person or entity, including claims for alimony, support,
separate maintenance and claims in bankruptcy proceedings.
ARTICLE
VI. PLAN ADMINISTRATION
6.1
Plan
Administrator
. The
Company hereby appoints the Benefit Plan Review Committee (or any successor or
replacement committee) as the Plan Administrator (the “Plan Administrator” or
“Committee”).
6.2
Powers, Duties and
Responsibilities
. Except
for those powers expressly reserved to the Board of Directors (or committee
thereof), the Plan Administrator shall have all power to administer the Plan for
the exclusive benefit of the Participants, Surviving Spouses and Beneficiaries,
in accordance with the terms of the Plan. The Plan Administrator
shall have the absolute discretion and power to determine all questions arising
in connection with the administration and application of the
Plan. The Plan Administrator shall have the sole discretion and
authority to decide all questions about the interpretation of the Plan
provisions, rules and regulations and to resolve any claims for Plan
benefits. As such, benefits under the Plan shall be paid only if the
Plan Administrator decides in its sole discretion that the applicant is entitled
to them. Any such determinations by the Plan Administrator shall be
conclusive and binding upon all persons. The Plan Administrator may
correct any defect or reconcile any inconsistency in such manner and to such
extent as shall be deemed necessary or advisable to carry out the purposes of
the Plan; provided, however, that such interpretation or construction shall be
consistent with the intent of the Plan.
The Plan
Administrator shall:
(a)
compute
the amount and kind of benefits (if any) to which any Participant, Surviving
Spouse or Beneficiary shall be entitled hereunder;
(b)
determine
all questions relating to eligibility of Company employees to participate or
continue participation in the Plan;
(c)
maintain
all necessary records for the administration of the Plan;
(d)
interpret
the provisions of the Plan;
(e)
assist
any Participant, Surviving Spouse or Beneficiary regarding his rights, benefits
or elections available under the Plan;
(f)
communicate
to Participants, Surviving Spouses and Beneficiaries concerning the provisions
of the Plan; and
(g)
prescribe
such rules (including applicable claim procedures) and forms as it shall deem
necessary or proper for the administration of the Plan.
6.3
Records and
Reports
. The
Plan Administrator shall keep a record of all actions taken and shall keep such
other books of account, records and other information that the Committee may
deem necessary or desirable for proper administration of the
Plan.
6.4
Appointment of
Advisors
. The
Plan Administrator may appoint accountants, actuaries, counsel, advisors and
other persons that it deems necessary or desirable in connection with the
administration of the Plan. For purposes of this Plan, the Plan
Administrator shall be entitled to rely conclusively upon all tables,
valuations, certificates, opinions and reports furnished by any actuary,
accountant, controller, counsel or other person employed or engaged by the
Company with respect to the Plan or Qualified Plan.
6.5
Indemnification of
Members
. The
Company shall indemnify and hold harmless any member of the Committee from any
liability incurred in his or her capacity as such for acts which he or she
undertakes in good faith as a member of such Committee.
6.6
Construction of Plan
Terms
. All
terms not specifically defined under this Plan shall have the meaning ascribed
to such term under the Qualified Plan where applicable.
6.7
409A
Compliance
. To
the extent any provision of the Plan or action by the Committee or Company would
subject any Participant to liability for interest or additional taxes under Code
Section 409A, or make Supplemental Pension Benefits payable to Grandfathered
Participants and Retired Participants subject to Code Section 409A, it will be
deemed null and void, to the extent permitted by law and deemed advisable by the
Committee. It is intended that the Plan will comply with Code Section
409A to the extent applicable, and that the Supplemental Pension Benefits
payable to Grandfathered Participants and Retired Participants be exempt from
Code Section 409A coverage, and the Plan shall be interpreted and construed on a
basis consistent with such intent. The Plan may be amended in any
respect deemed necessary (including retroactively) by the Committee in order to
preserve compliance with Code Section 409A and to maintain Code Section 409A
exemption for the Supplemental Pension Benefits payable to Grandfathered
Participants and Retired Participants.
For
purposes of this Plan with respect to Supplemental Pension Benefits payable to
409A Participants, a “termination of employment”, “termination”, “retirement” or
“separation from service” (or other similar term having a similar import) under
this Plan shall have the same meaning as a “separation from service” as defined
in Code Section 409A (provided that no separation of service shall be deemed to
occur on result of an individual’s death).
The
preceding shall not be construed as a guarantee of any particular tax effect for
Plan benefits. A Participant (or Surviving Spouse or Beneficiary) is
solely responsible and liable for the satisfaction of all taxes and penalties
that may be imposed on such person in connection with any distributions to such
person under the Plan (including any taxes and penalties under Code Section
409A), and the Company (or any Affiliate) shall have no obligation to indemnify
or otherwise hold a Participant (or Surviving Spouse or Beneficiary) harmless
from any or all of such taxes or penalties.
ARTICLE
VII. TERMINATION AND AMENDMENT
7.1
Amendment or
Termination
. The
Company may amend or terminate the Plan at any time, in whole or in part, by
action of its Board of Directors or any duly authorized committee or
officer. No amendment or termination of the Plan shall adversely
affect the vested benefits payable hereunder to any Participant (or Surviving
Spouse or Beneficiary) for service rendered prior to the effective date of such
amendment or termination.
ARTICLE
VIII. MISCELLANEOUS
8.1
Gender and
Number
. Whenever
any words are used herein in the masculine, feminine or neuter gender, they
shall be construed as though they were also used in another gender in all cases
where such would apply, and whenever any words are used herein in the singular
or plural form, they shall be construed as though they were also used in another
form in all cases where they would so apply.
8.2
Action by the
Company
. Whenever
the Company under the terms of this Plan is permitted or required to do or
perform any act or thing, it shall be done and performed by an officer or
committee duly authorized by the Board of Directors of the Company.
8.3
Headings
. The
headings and subheadings of this Plan have been inserted for convenience of
reference only and shall not be used in the construction of any of the
provisions hereof.
8.4
Governing
Law
. To
the extent that state law has not been preempted by the provisions of ERISA or
any other laws of the United States heretofore or hereafter enacted, this Plan
shall be construed and administered under the laws of the Commonwealth of
Virginia (without giving effect to its principles of conflicts of
law).
8.5
No Enlargement of Employee
Rights
. No
Participant, Surviving Spouse, or Beneficiary shall have any right to a benefit
under the Plan except in accordance with the terms of the
Plan. Establishment of the Plan shall not be construed to give any
Participant the right to be retained in the service of the Company, nor to
create or confer on any Participant the right to receive future benefit accruals
hereunder with respect to any future period of service with the
Company. Nothing in the Plan shall interfere in any way with the
right of the Company to terminate a Participant’s service at any time with or
without cause or notice, whether or not such termination results in any adverse
effect on the Participant’s interests under the Plan.
8.6
Incompetency
. In
the event that the Plan Administrator determines that a Participant is unable to
care for his affairs because of illness or accident or any other reason, any
amounts payable under this Plan may, unless claim shall have been made therefor
by a duly appointed guardian, conservator, committee or other legal
representative, be paid by the Plan Administrator to the spouse, child, parent
or other blood relative or to any other person deemed by the Plan Administrator
to have incurred expenses for such Participant, and such payment so made shall
be a complete discharge of the liabilities of the Plan therefor.
8.7
Qualified
Plan
. Any
Qualified Plan Benefit or any other benefit payable under the Qualified Plan
shall be paid solely in accordance with the terms and conditions of the
Qualified Plan, and nothing in this Plan shall operate or be construed in any
way to modify, amend or affect the terms and provisions of the Qualified
Plan.
8.8
Unclaimed
Benefit
. Each
Participant shall keep the Company informed of his current address and the
current address of his spouse and/or Beneficiary. The Company shall
not be obligated to search for the whereabouts of any person. If the
location of a Participant is not made known to the Company within three
(3) years after the date on which payment of the Participant’s Supplemental
Retirement Benefit would otherwise be made or commence, payment may be made as
though the Participant had died at the end of the three-year
period. If, within one additional year after such three-year period
has elapsed, or, within three years after the actual death of a Participant, the
Company is unable to locate any Surviving Spouse or Beneficiary for the
Participant, then the Company shall have no further obligation to pay any
benefit hereunder to such Participant, Surviving Spouse, Beneficiary or any
other person and such benefit shall be irrevocably forfeited.
8.9
Limitations on
Liability
. Notwithstanding
any other provision of the Plan, neither the Company, the Committee nor any
individual acting as an employee or agent of the Company shall be liable to any
Participant, former Participant, Surviving Spouse, Beneficiary, or any other
person for any claim, loss, liability or expense incurred in connection with the
Plan.
8.10
Duties of Participants,
Beneficiaries, and Surviving Spouses
. A
Participant, Surviving Spouse or Beneficiary shall, as a condition of receiving
benefits under this Plan, be obligated to provide the Committee with such
information as the Committee shall require in order to calculate benefits under
this Plan or otherwise administer the Plan.
8.11
Taxes and
Withholding
. As
a condition to any payment or distribution pursuant to the Plan, the Company may
require a Participant (or as applicable, the Surviving Spouse or Beneficiary) to
pay such sum to the Company as may be necessary to discharge its obligations
with respect to any taxes, assessments or other governmental charges imposed on
property or income received by the Participant (or as applicable, the Surviving
Spouse or Beneficiary) thereunder. The Company may deduct or withhold
such sum from any payment or distribution to the Participant (or as applicable,
the Surviving Spouse or Beneficiary).
8.12
Treatment for other
Compensation Purposes
. Payments
received by a Participant (or as applicable, the Surviving Spouse or
Beneficiary) under the Plan shall not be deemed part of a Participant’s regular,
recurring compensation for purposes of any termination, indemnity or severance
pay laws and shall not be included in, nor have any effect on, the determination
of benefits under any other employee benefit plan, contract or similar
arrangement provided by the Company, unless expressly so provided by such other
plan, contract or arrangement.
Exhibit
10.3
Olin
Corporation
Supplemental
Contributing Employee Ownership Plan
As
amended and restated effective October 24, 2008
Table of
Contents
|
Page
|
INTRODUCTION
|
1
|
ARTICLE
I DEFINITIONS AND GENERAL PROVISIONS
|
2
|
1.1 Definitions
|
2
|
(a) “Arch"
|
2
|
(b) “Beneficiary
|
2
|
(c) “Board”
|
2
|
(d) “Change
of Control”
|
2
|
(e) “Committee”
|
2
|
(f) “Company”
or “Olin”
|
2
|
(g) “Compensation”
|
2
|
(h) “Dividend
Equivalents”
|
2
|
(i) “Eligible
Employee”
|
2
|
(j) “Excess
Company Matching Contribution”
|
2
|
(k) “Excess
Performance Contribution”
|
2
|
(l) “Excess
Retirement Contribution”
|
3
|
(m) “Global”
|
3
|
(n) “Gross
Fair Market Value”
|
3
|
(o) “Group”
|
3
|
(p) “Interest
Bearing Fund”
|
3
|
(q) “Maximum
Eligible Compensation”
|
4
|
(r) “Olin
Phantom Units”
|
4
|
(s) “Plan
Administrator”
|
4
|
(t) “Plan
Year”
|
4
|
(u) “Primex”
|
4
|
(v) “SCEOP
Account”
|
4
|
(w) “SCEOP
Participant”
|
4
|
(x) “SCEOP
Participant Contribution”
|
4
|
(y) “SCEOP
Percentage
|
4
|
(z) “Specified
Employee”
|
4
|
1.2 Gender,
Numbers and Headers
|
4
|
|
|
ARTICLE
II ELIGIBILITY AND PARTICIPATION
|
5
|
2.1 Eligibility
|
5
|
2.2 Salary
Reduction Elections
|
5
|
2.3 Maximum
Compensation Threshold
|
6
|
2.4 Ceasing
to Be Eligible
|
6
|
|
|
ARTICLE
III CONTRIBUTIONS AND ACCOUNTS
|
7
|
3.1 SCEOP
Account
|
7
|
3.2 Dividend
Equivalents
|
7
|
3.3 Crediting
of Dividend Equivalents
|
7
|
3.4 Vesting
|
8
|
3.5 Olin
Phantom Unit Adjustments
|
8
|
3.6 Excess
Performance Contributions
|
8
|
|
|
ARTICLE
IV DISTRIBUTIONS
|
9
|
4.1 Payment
Timing
|
9
|
4.2 Special
Payment Rules Regarding Primex & Global
|
9
|
4.3 Payment
Form
|
10
|
4.4 Payment
Made in Cash
|
11
|
4.5 Beneficiary
|
11
|
|
|
ARTICLE
V LIABILITY FOR PAYMENT
|
12
|
5.1 Liability
for Payment
|
12
|
|
|
ARTICLE
VI ADMINISTRATION OF THE PLAN
|
13
|
6.1 Plan
Administrator
|
13
|
6.2 Administrative
Duties
|
14
|
6.3 Code
Section 409A
|
14
|
|
|
ARTICLE
VII AMENDMENT, TERMINATION AND CHANGE OF CONTROL
|
15
|
7.1 Amendment
or Termination
|
15
|
7.2 Effect
of Amendment or Termination
|
15
|
7.3 Change
of Control
|
15
|
|
|
ARTICLE
VIII GENERAL PROVISIONS
|
18
|
8.1 Unfunded
Plan
|
18
|
8.2 No
Guaranty
|
18
|
8.3 No
Enlargement of Employee Rights
|
18
|
8.4 Spendthrift
Provision
|
18
|
8.5 Governing
Law
|
18
|
8.6 Incapacity
of Recipient
|
18
|
8.7 Successor
Effect
|
19
|
8.8 Unclaimed
Benefit
|
19
|
8.9 Entire
Agreement
|
19
|
8.10 Limitations
on Liabilities
|
19
|
8.11 Duties
of SCEOP Participants and Beneficiaries
|
19
|
8.12 Taxes
and Withholding
|
19
|
8.13 Treatment
for Other Compensation Purposes
|
20
|
8.14 Right
to Offset
|
20
|
8.15 CEOP
Benefits
|
20
|
INTRODUCTION
Olin
Corporation (“Olin” or “Company”) hereby amends and restates the Olin
Corporation Supplemental Contributing Employee Ownership Plan (the “Plan” or
“SCEOP”), generally effective October 24, 2008. The Plan was
originally adopted as of January 1, 1990, and has been amended from time to time
prior to its amendment and restatement herein. The Plan is intended
to be an unfunded, nonqualified deferred compensation plan for a select group of
management and highly compensated employees, as described in Section 201(2) and
301(a)(3) of the Employee Retirement Income Security Act of 1974, as amended
(“ERISA”).
The
primary purpose of this Plan is to permit certain executive employees of Olin
whose contributions to the Olin Corporation Contributing Employee Ownership Plan
(the “CEOP”) are limited under Section 401(a)(17) of the Internal Revenue Code
of 1986, as amended, and the regulations and guidance promulgated thereunder
(the “Code”), with certain supplemental benefits to make up for such
Code-imposed limitations.
ARTICLE
I
DEFINITIONS
AND GENERAL PROVISIONS
1.1
Definitions
. The
following terms shall have the meanings hereinafter set forth whenever used in
the Plan. To the extent not otherwise provided in the Plan, the terms
shall have the meanings ascribed to them in the CEOP.
(a)
“Arch”
means
Arch Chemicals, Inc.
(b)
“Beneficiary”
has
the meaning set out in Section 4.5.
(c)
“Board”
means
the board of directors of the Company.
(d)
“Change
of Control”
has
the meaning set out in Section 7.3.
(e)
“Committee”
means
the Compensation Committee of the Board, or such other committee from time to
time designated by the Board or Compensation Committee of the
Board.
(f)
“Company”
or “Olin”
means
Olin Corporation and its affiliated companies.
(g)
“Compensation”
has
the same meaning as under the CEOP, except that it is not subject to the maximum
dollar limitation on compensation taken into account for purposes of the CEOP
under Section 401(a)(17) of the Code.
(h)
“Dividend
Equivalents”
means
with respect to the Olin Phantom Units held in a SCEOP Account of a SCEOP
Participant, the dollar amount of regular or special dividends actually paid in
cash from time to time on the actual number of shares of Olin Common Stock
reflected in such Olin Phantom Units.
(i)
“Eligible
Employee”
has
the meaning set out in Section 2.1.
(j)
“Excess
Company Matching Contribution”
means,
with respect to a SCEOP Participant for a Plan Year, an amount derived by
multiplying (i) the percentage used in calculating the Company Matching
Contribution (currently, the percentage is set at 50% on the first 6% of
eligible pay contributed to the CEOP) under the CEOP for the applicable Plan
Year, as such percentage changes from time to time, by (ii) the annual SCEOP
Participant Contribution for that SCEOP Participant; provided that, if the SCEOP
Participant’s SCEOP Percentage exceeds six percent (6%), the SCEOP Participant
Contribution will be calculated using six percent (6%) for the SCEOP Percentage
when calculating the Excess Company Matching Contribution.
(k)
“Excess
Performance Contribution”
means,
with respect to a SCEOP Participant for a Plan Year, the amount derived by
multiplying (i) the percentage used in calculating the Performance Matching
Contribution under the formula contained in the CEOP that is applicable to a
SCEOP Participant for that year, if any, by (ii) the SCEOP Participant
Contribution of that SCEOP Participant for such year; provided that, if such
SCEOP Participant’s SCEOP Percentage exceeds six percent (6%), the SCEOP
Participant Contribution will be calculated using six percent (6%) for the SCEOP
Percentage when calculating the Excess Performance Contribution. No
Excess Performance Contributions shall be made on or after January 1,
2005.
(l)
“Excess
Retirement Contribution”
means,
with respect to a SCEOP Participant for a Plan Year, an amount derived by
multiplying (i) the percentage used in calculating his or her Retirement
Contribution (if any) under the CEOP for the applicable Plan Year, as such
percentage changes from time to time, by (ii) the excess of such SCEOP
Participants Compensation over his or her Maximum Eligible Compensation for such
Plan Year.
Prior to
2008, the applicable percentage under clause (i) above was set at 5% for SCEOP
Participants hired on or after January 1, 2005, and 0% for SCEOP Participants
hired before January 1, 2005 as such individuals were not eligible to receive
Retirement Contributions under the CEOP. As of January 1, 2008, the applicable
percentage under clause (i) is set at 5% for SCEOP Participants who are younger
than age 45, and 7.5% for SCEOP Participants who are age 45 or older. The
applicable contribution percentage indicated under the preceding sentence will
change the month following the month in which a SCEOP Participant becomes age
45.
(m)
“Global”
means
Global Brass and Copper Acquisition Co.
(n)
“Gross
Fair Market Value”
means the
value of Olin assets determined without regard to any liabilities associated
with such Olin assets.
(o)
“Group”
means
persons acting together for the purpose of acquiring Olin stock and includes
owners of a corporation that enters into a merger, consolidation, purchase or
acquisition of stock, or similar business transaction with Olin. If a person
owns stock in both Olin and another corporation that enter into a merger,
consolidation purchase or acquisition of stock, or similar transaction, such
person is considered to be part of a Group only with respect to ownership prior
to the merger or other transaction giving rise to the change and not with
respect to the ownership interest in the other corporation. Persons will not be
considered to be acting as a Group solely because they purchase assets of the
same corporation at the same time, or as a result of the same public
offering.
(p)
“Interest
Bearing Fund”
means
a phantom fund that pays interest at a rate, determined quarterly as of the end
of the quarter for the following quarter, equal to (i) the Company’s before-tax
cost of borrowing as determined from time to time by the Chief Financial
Officer, Controller or Treasurer (or in the event there is no such borrowing,
the Federal Reserve A1/P1 Composite rate for 90-day commercial paper plus 10
basis points as determined by such officer) or (ii) such other rate as the Board
or Committee, or any delegate thereof, may select prospectively from time to
time.
(q)
“Maximum
Eligible Compensation”
means
the annual maximum amount of Compensation under Section 401(a)(17) of the Code
from which a SCEOP Participant is permitted to make contributions to the CEOP,
as such maximum amount is adjusted from time to time under the
Code.
(r)
“Olin
Phantom Units”
means
phantom shares of the CEOP’s Olin Common Stock Fund credited under the
SCEOP.
(s)
“Plan
Administrator”
means
the person or committee referenced in Section 6.1.
(t)
“Plan
Year”
means
a twelve-month period from January 1 to December 31.
(u)
“Primex”
means
Primex Technologies, Inc.
(v)
“SCEOP
Account”
means
the account established under the SCEOP for a SCEOP Participant holding Olin
Phantom Units, phantom investments in the Interest Bearing Fund, and/or any
other phantom investments, securities or units created herein.
(w)
“SCEOP
Participant”
means
an Eligible Employee who has filed an election to participate in the SCEOP with
the Plan Administrator or is otherwise entitled to receive an Excess Retirement
Contribution under the SCEOP.
(x)
“SCEOP
Participant Contribution”
means,
with respect to a SCEOP Participant, the annual amount by which the SCEOP
Participant has elected to reduce his Compensation under this Plan, such amount
being equal to the SCEOP Percentage multiplied by the difference between (i)
such SCEOP Participant’s Compensation and (ii) his Maximum Eligible
Compensation.
(y)
“SCEOP
Percentage”
means
the rate at which a SCEOP Participant elects to reduce his Compensation under
this Plan pursuant to the salary reduction agreements described in Section
2.2.
(z)
“Specified
Employee”
shall
have the meaning ascribed to it under Code Section 409A and shall be determined
in accordance with Code Section 409A.
1.2
Gender
, Numbers and
Headers
. Whenever
any words are used herein in the masculine, feminine or neuter gender, they
shall be construed as though they were also used in another gender in all cases
where such would apply, and whenever any words are used herein in the singular
or plural form, they shall be construed as though they were also used in another
form in all cases where they would so apply. Any headings used herein
are included for ease of reference only, and are not to be construed so as to
alter the terms hereof.
ARTICLE
II
ELIGIBILITY
AND PARTICIPATION
2.1
Eligibility
. Any
employee of the Company shall be eligible to participate in this Plan
who:
(a)
|
is
a management employee;
|
(b)
|
is
a “highly compensated employee” within the meaning of Code Section
414(q);
|
(c)
|
is
participating in the CEOP; and
|
(d)
|
whose
Compensation is in excess of the limitation contained in Section
401(a)(17) of the Code.
|
An
employee of the Company meeting such criteria is referred to herein as an
“Eligible Employee”.
2.2
Salary Reduction
Elections
. Each
Eligible Employee wishing to make SCEOP Participant Contributions under this
Plan must execute and file a salary reduction agreement in a form acceptable to
the Plan Administrator.
In the
case of the first Plan Year in which an individual becomes an Eligible Employee,
the salary reduction agreement must be filed within thirty (30) days following
the date the individual became an Eligible Employee, and such salary reduction
agreement shall apply only to Compensation earned after the election is made and
effective. If no salary reduction agreement is filed within such
time, the Eligible Employee shall not be able to make SCEOP Participant
Contributions for such Plan Year but will be able to do so (to the extent
eligible) for subsequent Plan Years as provided in the following
paragraph.
To the
extent that an Eligible Employee does not have an effective salary reduction
agreement filed and such Eligible Employee wishes to make SCEOP Participant
Contributions under the Plan for a Plan Year, an Eligible Employee must file a
salary reduction agreement to reduce Compensation by December 31 (or such other
date set by the Plan Administrator) of the calendar year prior to the beginning
of the Plan Year for which it will be effective and prior to the calendar year
in which such Compensation would otherwise be earned. Once filed,
salary reduction agreements to reduce Compensation shall remain in effect for
subsequent Plan Years unless revoked or changed by the SCEOP Participant in
writing in a form acceptable to the Plan Administrator. Any
revocation or change made with regard to the salary reduction agreement shall be
effective only for subsequent Plan Years (and not the Plan Year in which such
revocation or change is made).
Notwithstanding
the preceding paragraph, the Plan Administrator may (but is not required to)
provide, in accordance with Code Section 409A, alternative salary reduction
election procedures for performance-based compensation based on services
performed over a period of at least 12 months, provided that such election may
be made no later than six (6) months before the end of the period.
Notwithstanding
the preceding paragraphs, a SCEOP Participant’s salary reduction agreement shall
be cancelled upon the SCEOP Participant having his deferrals under the CEOP
suspended due to receiving a hardship distribution under the
CEOP. Such cancellation shall be effective for the remainder of the
then current Plan Year and subsequent Plan Years; provided, however, that once
the suspension of deferrals under the CEOP ceases, a SCEOP Participant may file
a salary reduction agreement for the next eligible Plan Year as provided
above.
2.3
Maximum Compensation
Threshold
. No
salary reduction election shall be given effect under this Plan until the SCEOP
Participant has received Compensation equal to the Maximum Eligible Compensation
for the Plan Year to which such salary reduction election relates.
2.4
Ceasing to Be
Eligible
. If
a SCEOP Participant ceases to meet the Eligible Employee criteria under Section
2.1 during a Plan Year, SCEOP Participant Contributions, Excess Company Matching
Contributions and Excess Retirement Contributions shall cease as of end of such
Plan Year.
ARTICLE
III
CONTRIBUTIONS
AND ACCOUNTS
3.1
SCEOP
Account
. Each
SCEOP Participant who so elects (in accordance with Section 2.2 above) for a
Plan Year shall make SCEOP Participant Contributions on a pre-tax
basis.
For each
SCEOP Participant, a SCEOP Account will be established. The SCEOP
Account will contain sub-accounts for each type of contribution credited to the
SCEOP Account and for each type of phantom investment option available to and
invested in under his SCEOP Account. For each Plan Year during which
a person is a SCEOP Participant and making deferrals and/or receiving
contributions, the Company (or other Participating Employer) will credit to the
SCEOP Account of each SCEOP Participant Olin Phantom Units and/or phantom
investments in the Interest Bearing Fund (or other phantom investment options if
applicable), in accordance with the SCEOP Participant’s investment allocation,
equal in value to the sum of such SCEOP Participant’s (1) SCEOP Participant
Contribution (if any), (2) Excess Company Matching Contribution (if any) and (3)
Excess Retirement Contribution (if any). Such crediting shall occur
periodically in accordance with the timing of similar deferrals and
contributions to the CEOP.
Subject
to administrative feasibility and rules set out by the Plan Administrator, the
SCEOP Account balances of each SCEOP Participant may be transferred daily
without limit to the Interest Bearing Fund and/or the Olin Phantom Units (or
other phantom investment options if applicable). To the extent a
SCEOP Participant has not provided an effective investment allocation direction,
such SCEOP Participant shall be deemed to have directed that his deferrals
and/or contributions be invested in the Interest Bearing Fund.
From time
to time and at any time, the Plan Administrator may add to, freeze, eliminate or
change in any way the phantom investment options available under the
Plan. If a phantom investment option is eliminated, the Plan
Administrator may map investments into other phantom investment options at its
discretion. The Plan Administrator may establish such guidelines and
rules for the phantom investment options under the Plan as it deems necessary or
desirable.
3.2
Dividend
Equivalents
. A
SCEOP Participant’s SCEOP Account will also be credited with Dividend
Equivalents when the applicable cash dividends are paid and such Dividend
Equivalents will be reinvested according to the SCEOP Participant’s investment
allocation that is then in effect for the SCEOP Participant
Contributions.
3.3
Crediting of Dividend
Equivalents
. For
purposes of calculating the number of Olin Phantom Units to be credited to a
SCEOP Participant’s SCEOP Account as a result of crediting Dividend Equivalents
or contributions, the SCEOP shall use the Current Market Value for valuing units
in the Olin Common Stock Fund as defined under the CEOP.
3.4
Vesting
. A
SCEOP Participant shall at all times be fully vested in his SCEOP Participant
Contribution SCEOP Account balance, and shall vest in his Excess Company
Matching Contribution, Excess Performance Contribution and Excess Retirement
Contribution SCEOP Account balances in accordance with the applicable vesting
schedule contained in the CEOP for Company Matching Contributions, Performance
Matching Contributions and Retirement Contributions. A SCEOP
Participant shall be fully vested in his SCEOP Account balance upon his death,
upon his termination of service from the Company and all affiliates after
reaching a retirement date under the CEOP, or upon his termination of service
due to his Total and Permanent Disability as defined in the CEOP.
3.5
Olin Phantom Unit
Adjustments
. In
the event that the Committee determines that any dividend or other distribution,
recapitalization, stock split, reverse stock split, reorganization, merger,
consolidation, split-up, spin-off, combination, repurchase or exchange of Olin
Common Stock, or any other securities of Olin, issuance of warrants or other
rights to purchase Olin Common Stock, or other securities of Olin, or other
similar corporate transaction or event occurs that affects Olin Common Stock
such that the Committee determines an adjustment in Olin Phantom Units under the
Plan is appropriate in order to prevent dilution or enlargement of the benefits
intended to be made available under this Plan, then the Committee shall, in such
manner as it deems equitable, adjust SCEOP Participants’ SCEOP
Accounts. In the case of a spin-off, split-up, issuance of an
extraordinary stock dividend, or similar transaction, such adjustment, in the
Committee’s discretion, may result in creation of phantom shares in a separate
phantom stock fund and reinvestment of such phantom shares in Olin Phantom Units
or such other reinvestment as otherwise determined by the
Committee. Notwithstanding the foregoing, a SCEOP Participant to whom
Dividend Equivalents have been allocated shall not be entitled to receive a
non-cash special or extraordinary dividend or distribution unless the Committee
expressly authorizes such receipt.
3.6
Excess Performance
Contributions
. Notwithstanding
anything in the Plan to the contrary, effective as of January 1, 2005, Excess
Performance Contributions shall cease to be made under the Plan.
ARTICLE
IV
DISTRIBUTIONS
4.1
Payment
Timing
.
(a)
No
amounts credited to a SCEOP Participant’s SCEOP Account under this Plan may be
withdrawn or distributed prior to the SCEOP Participant’s termination of
employment with the Company and all affiliates thereof, including, but not
limited to any other corporation in the same controlled group with Olin (within
the meaning of Section 414(b), (c) and (m) of the Code). Amounts
credited to a SCEOP Participant’s SCEOP Account under this Plan may not be
loaned to such SCEOP Participant.
Subject
to Section 4.3(d), a SCEOP Participant’s SCEOP Account will be distributed in
the form elected under Section 4.3 upon the earliest to occur of the SCEOP
Participant’s death, termination of service due to Total and Permanent
Disability, retirement or termination of active service from the Company and all
affiliates. Subject to Section 4.1(b), SCEOP payments shall be made
(in the case of a single lump sum payment) or commence (in the case of annual
installments) on or as soon as administratively feasible after the date
described in the prior sentence, but not later than 60 days after such
date. In the case of the subsequent annual installments, such
installments shall be paid on or as soon as administratively feasible after the
applicable anniversary date of the date described in the first sentence, but not
later than 60 days after such anniversary date.
(b)
If, at
the time the SCEOP Participant becomes entitled to payments under the Plan, the
SCEOP Participant is a Specified Employee, then, notwithstanding any other
provision in the Plan to the contrary, the following provision shall
apply. SCEOP payments considered deferred compensation under Code
Section 409A which are determined to be payable upon a SCEOP Participant’s
termination of employment as determined under Code Section 409A and not subject
to an exception or exemption thereunder, shall be paid to the SCEOP Participant
on or as soon as administratively feasible after the date that is six months
after the SCEOP Participant’s termination of employment but not later than 60
days after such date. Any such SCEOP payments that would otherwise
have been paid to the SCEOP Participant during this six-month period shall
instead be aggregated (subject to the earnings, gains and losses credited to the
SCEOP Account during such time) and paid to the SCEOP Participant pursuant to
the preceding sentence. Any SCEOP payments to which the SCEOP
Participant is entitled to be paid after the date that is six (6) months after
the SCEOP Participant’s termination of employment shall be paid to the SCEOP
Participant in accordance with the applicable terms of this Plan and shall not
be subject to this provision.
4.2
Special Payment Rules
Regarding Primex & Global
. Each
SCEOP Participant whose employment transferred from the Company to Primex, in
connection with the spin-off of Primex, shall be fully vested in his SCEOP
Account balance. Notwithstanding anything in the Plan to the
contrary, such SCEOP Account balance may not be distributed until such SCEOP
Participant terminates active service with Primex or, after January 25, 2001,
General Dynamics Corporation and its affiliates (or any successor
thereafter).
Each
SCEOP Participant whose employment transferred directly from the Company to
Global, in connection with the spin-off of the Olin Brass division and Chase
Brass and Copper Company, shall be fully vested in his SCEOP Account balance.
Notwithstanding anything in the Plan to the contrary, such SCEOP Account balance
may not be distributed until such SCEOP Participant terminates active service
with Global and its affiliates (or any successor thereto).
Notwithstanding
anything to the contrary in Section 4.1 or this Section 4.2, if a SCEOP
Participant transfers employment from Primex (or its successor, General Dynamics
Corporation, or any successor thereafter) or Global (or any successor thereto)
back to the Company, such SCEOP Participant will not be eligible for
distribution until such SCEOP Participant has terminated his employment with the
Company and its affiliates.
4.3
Payment
Form
.
(a)
Each
SCEOP Participant shall elect to receive the value of his SCEOP Account balance
either (i) in a single lump sum, or (ii) in annual installments for a period not
to exceed fifteen (15) years, commencing and paid at such time as provided under
Section 4.1. Such election shall be made no later than thirty (30)
days after such individual becomes an Eligible Employee (or by such later time
as may be permitted under Code Section 409A).
(b)
Notwithstanding
the foregoing, for the transition period beginning January 1, 2005 and ending
December 31, 2008, any SCEOP Participant may make a payment election in
accordance with Code Section 409A (and applicable IRS transition relief), in the
time and manner prescribed by the Plan Administrator and subject to the
following provisions. As of December 31, 2008, any then effective transition
payment election shall be irrevocable for the duration of a SCEOP Participant’s
participation in the Plan except as set forth in paragraph (d)
below. No payment election made in 2006 under this transition relief
will apply to amounts that would otherwise be payable in 2006, nor may such
election cause an amount to be paid in 2006 that would not otherwise be payable
in 2006. No payment election made in 2007 under this transition relief will
apply to amounts that would otherwise be payable in 2007, nor may such election
cause an amount to be paid in 2007 that would not otherwise be payable in
2007. No payment election made in 2008 under this transition relief
will apply to amounts that would otherwise be payable in 2008, nor may such
election cause an amount to be paid in 2007 that would not otherwise be payable
in 2008. No election under this transition relief may be made
retroactively, when Plan payments are imminent, or after a SCEOP Participant has
terminated active service from the Company.
(c)
Failure
to make a timely form of payment election as provided in paragraph (a) or (b)
above will result in such SCEOP Participant being deemed to have elected a
single lump sum payment for his SCEOP Account, to be paid at such time as
provided under Section 4.1. Such deemed election shall be irrevocable
for the duration of a SCEOP Participant’s participation in the Plan except as
set forth in paragraph (d) below.
(d)
A SCEOP
Participant may change his payment election (made or determined pursuant to the
above) upon written notice in a form acceptable to the Plan Administrator,
provided such change complies with the following: (i) the new payment
election is made at least twelve (12) months before the original payment
commencement date, (ii) the new payment election does not take effect until at
least twelve (12) months after the date on which such election is made, and
(iii) the original payment commencement date as determined under Section 4.1 is
deferred for a period of five (5) years.
4.4
Payment Made in
Cash
. Distributions
to a SCEOP Participant of his SCEOP Account balance shall be made only in the
form of cash. Except as provided in Section 7.3, upon distribution,
the value of Olin Phantom Units shall be equal to the average of the daily
closing prices of the Olin common stock on the New York Stock Exchange for the
month preceding the distribution.
4.5
Beneficiary
. Any
benefit payable under this Plan on account of the death of a SCEOP Participant
shall be paid to the SCEOP Participant’s beneficiary as designated or determined
under the terms of the CEOP; however, a SCEOP Participant may, by filing with
the Plan Administrator prior to death on a form supplied by the Plan
Administrator, designate a different individual or entity to be the designated
beneficiary of such SCEOP Participant for purposes of this Plan, in which case
the subsequent designation will supersede any designation of a beneficiary under
the CEOP for purposes of this Plan. Such designated beneficiary
pursuant to the preceding sentence is referred herein as
“Beneficiary”.
ARTICLE
V
LIABILITY
FOR PAYMENT
5.1
Liability for
Payment
. The
Company (and each other Participating Employer) shall pay the benefits provided
hereunder with respect to SCEOP Participants who are employed or were formerly
employed by it during their participation in the Plan. In the case of
a SCEOP Participant who was employed by more than one Participating Employer,
the Plan Administrator shall allocate the cost of such benefits among such
Participating Employers in such manner as it deems equitable. The
obligations of any Participating Employer hereunder shall not be funded in any
manner. The rights of any person to receive benefits under this Plan
are limited to those of a general unsecured creditor of the Participating
Employer liable for such benefits hereunder.
ARTICLE
VI
ADMINISTRATION
OF THE PLAN
6.1
Plan
Administrator
. The
Benefit Plan Review Committee (or any successor or replacement committee) shall
be the Plan Administrator of this Plan.
Except
for those powers expressly reserved to the Board or Committee, the Plan
Administrator shall administer the Plan in accordance with the terms of the
Plan. The Plan Administrator shall have the absolute discretion and
power to determine all questions arising in connection with the administration
and application of the Plan. The Plan Administrator shall have the
sole discretion and authority to decide all questions about the interpretation
of the Plan provisions, rules and regulations and to resolve any claims for Plan
benefits. As such, benefits under the Plan shall be paid only if the
Plan Administrator decides in its sole discretion that the applicant is entitled
to them. Any such determinations by the Plan Administrator shall be
conclusive and binding upon all persons. The Plan Administrator may
correct any defect or reconcile any inconsistency in such manner and to such
extent as shall be deemed necessary or advisable to carry out the purposes of
the Plan.
The Plan
Administrator shall:
(a)
determine
all questions relating to eligibility of Company employees to participate or
continue participation in the Plan;
(b)
compute
the amount and kind of benefits (if any) to which any SCEOP Participant or
Beneficiary shall be entitled hereunder;
(c)
maintain
all necessary records for the administration of the Plan;
(d)
interpret
the provisions of the Plan;
(e)
assist
any SCEOP Participant or Beneficiary regarding his rights, benefits or elections
available under the Plan;
(f)
communicate
to Eligible Employees, SCEOP Participants and their Beneficiaries concerning the
provisions of the Plan; and
(g)
prescribe
such rules (including applicable claim procedures) and forms as it shall deem
necessary or proper for the administration of the Plan.
The Plan
Administrator shall keep a record of all actions taken and shall keep such other
books of account, records and other information that the Plan Administrator
deems necessary or desirable for proper administration of the
Plan. The Plan Administrator may appoint accountants, actuaries,
counsel, advisors and other persons that it deems necessary or desirable in
connection with the administration of the Plan. For purposes of this
Plan, the Plan Administrator shall be entitled to rely conclusively upon all
tables, valuations, certificates, opinions and reports furnished by any actuary,
accountant, controller, counsel or other person employed or engaged by the
Company with respect to the CEOP or SCEOP.
The
Company shall indemnify and hold harmless any member of the Benefit Plan Review
Committee (or any successor or replacement committee) from any liability
incurred in his or her capacity as such for acts which he or she undertakes in
good faith as a member of such committee.
6.2
Administrative
Duties
. Except
as otherwise provided herein, all provisions set forth in the CEOP with respect
to the administration of that plan shall also be applicable with respect to this
Plan; provided that this Section 6.2 shall not make (or be construed or
interpreted to make) the Plan Administrator, Company or any employee or agent of
the Company subject to any fiduciary responsibilities under ERISA, or the Plan
subject to any applicable requirements of ERISA, that it would not otherwise
have in the absence of this Section 6.2.
6.3
Code Section
409A
. To
the extent any provision of the Plan or action taken with respect to the Plan,
would subject any SCEOP Participant to liability for interest or additional
taxes under Code Section 409A, it will be deemed null and void, to the extent
permitted by law and deemed advisable by the Board or Committee. It
is intended that the Plan will comply with Code Section 409A, and the Plan shall
be interpreted and construed on a basis consistent with such
intent. The Plan may be amended in any respect deemed necessary
(including retroactively) by the Board or Committee, in order to preserve
compliance with Code Section 409A. For purposes of this Plan, a
“termination of employment”, “termination”, “retirement” or “separation from
service” (or other similar term having a similar import) under this Plan shall
have the same meaning as a “separation from service” as defined in Code Section
409A.
Nothing
in this Plan (including, without limitation, the preceding) shall be construed
as a guarantee of any particular tax effect for Plan benefits. A
SCEOP Participant (or Beneficiary) is solely responsible and liable for the
satisfaction of all taxes and penalties that may be imposed on such person in
connection with any distributions to such person under the Plan (including any
taxes and penalties under Code Section 409A), and the Company (or any
Participating Employer) shall have no obligation to indemnify or otherwise hold
a SCEOP Participant (or Beneficiary) harmless from any or all of such taxes or
penalties.
ARTICLE
VII
AMENDMENT,
TERMINATION AND CHANGE OF CONTROL
7.1
Amendment or
Termination
. The
Company reserves the right to amend or terminate this Plan at any time, by
action of the Board or Committee, and without the consent of any employee or
other person.
7.2
Effect of Amendment or
Termination
. Notwithstanding
Section 7.1 above, no amendment or termination of the Plan shall directly or
indirectly reduce the balance to the credit of any SCEOP Participant hereunder
as of the effective date of such amendment or termination. Upon
termination of the Plan, no additional amounts shall be credited under the terms
of the Plan. Notwithstanding the termination of this Plan, amounts
credited hereunder shall not be distributed to SCEOP Participants except as
provided in Article IV, above.
7.3
Change of
Control
. Upon
a Change of Control, the Plan shall terminate and the SCEOP Account balance of a
SCEOP Participant shall be paid in cash to such SCEOP Participant as promptly as
practicable, but in no event later than 30 days following the Change in
Control. The spin-off of Arch from Olin Corporation shall not be
deemed to be a change of control entitling any SCEOP Participant herein to
benefits under this Plan. The sale of the Olin Brass division and
Chase Brass and Copper Company from Olin Corporation shall not be deemed to be a
change of control entitling any SCEOP Participant herein to benefits under this
Plan.
Following
a Change of Control, no action shall be taken under the Plan that will cause any
benefits payable to a SCEOP Participant to fail to comply in any respect with
Code Section 409A without the written consent of the SCEOP Participant or
Beneficiary (as applicable).
Any
dispute or controversy arising under or in connection with the Plan subsequent
to a Change in Control shall be settled exclusively by arbitration at the
Company’s headquarters, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the
arbitrator’s award in any court having jurisdiction
“Change
of Control” means the occurrence of any of the following events:
(a)
|
any
person or Group acquires ownership of Olin’s stock that, together with
stock held by such person or Group, constitutes more than 50% of the total
fair market value or total voting power of Olin’s stock, (including an
increase in the percentage of stock owned by any person or Group as a
result of a transaction in which Olin acquires its stock in exchange for
property, provided that the acquisition of additional stock by any person
or Group deemed to own more than 50% of the total fair market value or
total voting power of Olin’s stock on January 1, 2005, shall not
constitute a Change of Control); or
|
(b)
|
any
person or Group acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or Group)
ownership of Olin stock possessing 30% or more of the total voting power
of Olin stock; or
|
(c)
|
a
majority of the members of the Board is replaced during any 12-month
period by directors whose appointment or election is not endorsed by a
majority of the members of the Board prior to the date of the appointment
or election; or
|
(d)
|
any
person or Group acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or Group)
assets from Olin that have a total Gross Fair Market Value equal to 40% or
more of the total Gross Fair Market Value of all Olin assets immediately
prior to such acquisition or acquisitions, provided that there is no
Change of Control when Olin’s assets are transferred
to:
|
(i)
|
a
shareholder of Olin (immediately before the asset transfer) in exchange
for or with respect to Olin stock;
|
(ii)
|
an
entity, 50% or more of the total value or voting power of which is owned,
directly or indirectly, by Olin;
|
(iii)
|
a
person or Group that owns, directly or indirectly, 50% or more of the
total value or voting power of all outstanding Olin stock;
or
|
(iv)
|
an
entity, at least 50% of the total value or voting power of which is owned,
directly or indirectly, by a person described in paragraph
(iii).
|
For
purposes of this paragraph (d) a person’s status is determined immediately after
the transfer of the assets. For example, a transfer to a corporation in which
Olin has no ownership interest before the transaction, but which is a
majority-owned subsidiary of Olin after the transaction is not a Change of
Control.
For
purposes of computing the payout under this Section 7.3, the cash value of the
SCEOP Account of a SCEOP Participant shall be determined by:
(i)
|
multiplying
the actual number of shares of Olin Common Stock reflected in a SCEOP
Participant’s Olin Phantom Units by the greater of (a) the highest Current
Market Value of the Common Stock (as defined in the CEOP Plan) on any date
within the period commencing thirty (30) days prior to such Change in
Control and ending on the date of the Change in Control, or (b) if the
Change in Control occurs as a result of a tender or exchange offer or
consummation of a corporate transaction, then the highest price paid per
share of Common Stock pursuant
thereto;
|
(ii)
|
adding
any cash portion attributable to a SCEOP Participant’s Olin Phantom Units
held in his SCEOP Account; then
|
(iii)
|
adding
the then Current Market Value of that portion of a SCEOP Participant’s
SCEOP Account which is deemed invested in any other phantom investment
option established in the SCEOP by the Plan Administrator);
then
|
(iv)
|
adding
the then current value of that portion of a SCEOP Participant’s SCEOP
Account which is deemed invested in the Interest Bearing Fund, with
interest added through the day prior to
payment.
|
ARTICLE
VIII
GENERAL
PROVISIONS
8.1
Unfunded
Plan
. The
Plan at all times shall be entirely unfunded and no provision shall at any time
be made with respect to segregating any assets of the Company for payment of any
distribution hereunder. The right of a SCEOP Participant or his
designated Beneficiary to receive a distribution hereunder shall be an unsecured
claim against the general assets of the Company, and neither the SCEOP
Participant nor a designated Beneficiary shall have any rights in or against any
specific assets of the Company. All amounts credited to the SCEOP
Accounts of SCEOP Participants shall constitute general assets of the Company
and may be disposed of by the Company at such time and for such purposes as it
may deem appropriate.
8.2
No
Guaranty
. Nothing
contained in the Plan (or any Plan communication) shall constitute a guaranty by
the Company or any other person or entity that the assets of the Company will be
sufficient to pay any benefit hereunder.
8.3
No Enlargement of Employee
Rights
. No
SCEOP Participant (or designated Beneficiary) shall have any right to receive a
distribution of contributions made under the Plan except in accordance with the
terms of the Plan. Establishment of the Plan shall not be construed
to give any SCEOP Participant the right to be retained in the service of the
Company, nor to create or confer on any SCEOP Participant the right to defer
compensation or receive contribution credits with respect to any future period
of service with the Company. Nothing in the Plan shall interfere in
any way with the right of the Company to terminate a SCEOP Participant’s service
at any time with or without cause or notice, whether or not such termination
results in any adverse effect on the SCEOP Participant’s interests under the
Plan.
8.4
Spendthrift
Provision
. No
interest of any person or entity in, or right to receive a distribution under,
the Plan shall be subject in any manner to sale, transfer, assignment, pledge,
attachment, garnishment or other alienation or encumbrance of any kind; nor may
such interest or right to receive a distribution be taken, either voluntarily or
involuntarily for the satisfaction of the debts of, or other obligations or
claims against, such person or entity, including claims for alimony, support,
separate maintenance and claims in bankruptcy proceedings.
8.5
Governing
Law
. The
Plan shall be construed and administered under the laws of the Commonwealth of
Virginia (without giving effect to its principles of conflicts of law), to the
extent not preempted by federal law.
8.6
Incapacity of
Recipient
. If
any person entitled to a distribution under the Plan is deemed by the Company to
be incapable of personally receiving and giving a valid receipt for such
payment, then, unless and until claim therefor shall have been made by a duly
appointed guardian or other legal representative of such person, the Company may
provide for such payment or any part thereof to be made to any other person or
institution then contributing toward or providing for the care and maintenance
of such person. Any such payment shall be a payment for the account
of such person and a complete discharge of any liability of the Company and the
Plan therefor.
8.7
Successor
Effect
. The
Plan shall not be automatically terminated by a transfer or sale of all or
substantially all of the assets of the Company or by the merger or consolidation
of the Company into or with any other corporation or other entity, but the Plan
shall be continued after such sale, merger or consolidation only if and to the
extent that the transferee, purchaser or successor entity agrees to continue the
Plan. In the event that the Plan is not continued by the transferee,
purchaser or successor entity, then the Plan shall terminate, subject to the
provisions of Section 7.2.
8.8
Unclaimed
Benefit
. Each
SCEOP Participant shall keep the Company informed of his current address and the
current address of his designated Beneficiary. The Company shall not
be obligated to search for the whereabouts of any person. If the
location of a SCEOP Participant is not made known to the Company within three
(3) years after the date on which payment of any or all of the SCEOP
Participant’s SCEOP Account would otherwise be made or commence, payment may be
made as though the SCEOP Participant had died at the end of the three-year
period. If, within one additional year after such three-year period
has elapsed, or, within three years after the actual death of a SCEOP
Participant, the Company is unable to locate any designated Beneficiary of the
SCEOP Participant, then the Company shall have no further obligation to pay any
benefit hereunder to such SCEOP Participant or designated Beneficiary and such
benefit shall be irrevocably forfeited.
8.9
Entire
Agreement
. This
Plan shall constitute the entire agreement between the Company and the SCEOP
Participants concerning the provision of Plan benefits.
8.10
Limitations on
Liabilities
. Notwithstanding
any other provision of the Plan, neither the Company, Plan Administrator, nor
any individual acting as employee or agent of the Company shall be liable to any
SCEOP Participant, former SCEOP Participant, Beneficiary or other person for any
claim, loss, liability or expense incurred in connection with the
Plan.
8.11
Duties of SCEOP Participants
and Beneficiaries
. A
SCEOP Participant and any Beneficiaries shall, as a condition of receiving
benefits under this Plan, be obligated to provide the Plan Administrator with
such information as the Plan Administrator shall require in order to determine
SCEOP Account balances, calculate benefits under this Plan, or otherwise
administer the Plan.
8.12
Taxes and
Withholding
. As
a condition to any payment or distribution pursuant to the Plan, the Plan
Administrator may require a SCEOP Participant to pay such sum to the Company as
may be necessary to discharge its obligations with respect to any taxes,
assessments or other governmental charges imposed on property or income received
by the SCEOP Participant thereunder. The Company may deduct or
withhold such sum from any payment or distribution to the SCEOP
Participant. For each calendar year in which a SCEOP Participant
defers Compensation or receives a contribution credit, the Company shall
withhold from that portion of the SCEOP Participant’s Compensation that is not
being deferred, in a manner determined by the Company, the SCEOP Participant’s
share of FICA and other employment taxes due; provided, however, that the
Company may reduce the applicable amount deferred if necessary to comply with
applicable withholding requirements.
8.13
Treatment for Other
Compensation Purposes
. Payments
received by a SCEOP Participant under the Plan shall not be deemed part of a
SCEOP Participant’s regular, recurring compensation for purposes of any
termination, indemnity or severance pay laws and shall not be included in, nor
have any effect on, the determination of benefits under any other employee
benefit plan, contract or similar arrangement provided by the Company, unless
expressly so provided by such other plan, contract or arrangement.
8.14
Right to
Offset
. Notwithstanding
any provisions of the Plan to the contrary and to the extent permitted under
Code Section 409A, the Company may offset any amounts to be paid to a SCEOP
Participant (or Beneficiary) under the Plan against any amounts that such SCEOP
Participant may owe to the Company.
8.15
CEOP
Benefits
. Any
benefit payable under the CEOP shall be paid solely in accordance with the terms
and conditions of the CEOP, and nothing in this Plan shall operate or be
construed in any way to modify, amend or affect the terms and provisions of the
CEOP.
Exhibit
10.4
OLIN
SENIOR MANAGEMENT INCENTIVE COMPENSATION PLAN
(Amended
and Restated as of October 24, 2008)
Section
1.
Purpose
. The
purposes of the Olin Senior Management Incentive Compensation Plan (the “Plan”)
are (i) to compensate certain members of senior management of Olin
Corporation (the “Company”) on an individual basis for significant contributions
to the Company and its subsidiaries and (ii) to stimulate the efforts of
such members by giving them a direct financial interest in the performance of
the Company.
Section
2.
Definitions
. The
following terms utilized in this Plan shall have the following
meanings:
“Committee”
shall mean the Compensation Committee of the Board of Directors of the Company
or such other committee of such Board as such Board may from time to time
designate.
“Economic
Value Added” means the Company’s consolidated sales less its operating costs
(including tax) less a capital charge based on the Company’s cost of capital on
assets employed in the business.
“Participant”
shall mean for a fiscal year each salaried employee who is designated as a
Participant by the Committee on or before March 30 of such fiscal year (or
such later date, if any, as permitted by Section 162(m)).
“Performance
Measures” shall mean for a fiscal year one or more of the following criteria, as
designated by the Committee for such fiscal year, on an absolute or relative
basis:
·
Cash
flow,
·
Earnings
per share,
·
EBITDA,
·
Economic
Value Added/EVA(R)
·
Net
income,
·
Operating
profit,
·
Pre-tax
profit,
·
Return on
capital,
·
Return on
equity,
·
Return on
net assets,
·
Revenues
and
·
Total
shareholder return,
provided
such designation would not subject any Incentive Award to Section
162(m).
“Section
162(m)” shall mean Section 162(m) of the Internal Revenue Code of 1986, and the
regulations promulgated thereunder, all as amended from time to
time.
“Section
409A” shall mean Section 409A of the Internal Revenue Code of 1986 and the
regulations promulgated thereunder, all as amended from time to
time.
Section
3.
Term
. The
Plan, as amended, shall be applicable for all future fiscal years of the Company
unless amended or terminated by the Company pursuant to Section
7.
Section
4.
Incentive
Award
.
4.1
For each
fiscal year of the Company, each Participant may be entitled to receive an award
payable in cash (“Incentive Award”) in an amount determined by the Committee as
provided in this Plan. On or before March 30 of such fiscal year
(or such later date, if any, as permitted by Section 162(m)), for the Incentive
Awards for such fiscal year, the Committee will designate or approve
(i) the individuals who will be Participants in the Plan, if any,
(ii) the Performance Measures, (iii) if there is more than one
Performance Measure, the weighting of the Performance Measures in determining
the Incentive Award, (iv) the performance goals and payout matrix or
formula for each Performance Measure and (v) the incentive standard award
(the cash component of a Participant’s total targeted compensation tied to the
Performance Measures) for each Participant. Following the end of
fiscal year, the Committee shall determine the Incentive Award for each
Participant based upon the payout matrix or formula for each Performance Measure
designated, applying the pre-determined weighting for each Performance Measure,
if more than one.
Notwithstanding
anything contained in this Plan to the contrary, the Committee in its sole
discretion may reduce any Incentive Award to any Participant to any amount,
including zero, prior to the certification by resolution of the Committee of the
amount of such Incentive Award.
As a
condition to the right of a Participant to receive an Incentive Award, the
Committee shall first certify by resolution of the Committee, that the Incentive
Award has been determined in accordance with the provisions of this
Plan.
Incentive
Awards for fiscal year shall be determined as soon as practicable after such
fiscal year and shall be paid no later than the 15th day of the third month
following such fiscal year. The maximum Incentive Award paid a
Participant under this Plan with respect to a fiscal year may not exceed 200% of
such Participant’s annual base salary in effect on December 1 of such
fiscal year.
4.2
A
Participant whose employment terminates with cause or without the Committee’s
written consent during a fiscal year shall forfeit such Participant’s Incentive
Award for such fiscal year.
4.3
Incentive
Awards shall be payable in a single lump sum.
4.4
The
Company shall withhold from any Incentive Award or payments made or to be made
under this Plan any amount of withholding taxes due in respect of an Incentive
Award.
4.5
Participation
in this Plan does not exclude Participants from participation in any other
benefit or compensation plans or arrangements of the Company, including other
bonus or incentive plans.
Section
5.
Administration and
Interpretation
. The Plan shall be administered by the
Committee, which shall have the sole authority to make rules and regulations for
the administration of the Plan. The interpretations and decisions of
the Committee with regard to the Plan shall be final and
conclusive. The Committee may request advice or assistance or employ
such persons (including, without limitation, legal counsel and accountants) as
it deems necessary for the proper administration of the Plan.
Section
6.
Administrative
Expenses
. Any expense incurred in the administration of the
Plan shall be borne by the Company out of its general funds.
Section
7.
Amendment or
Termination
. The Committee of the Company may from time to
time amend the Plan in any respect or terminate the Plan in whole or in part,
provided that no such action shall increase the amount of any Incentive Award
for which performance goals have been established but which has not yet been
earned or paid; provided further that such action will not cause an Incentive
Award to become subject to the deduction limitations contained in
Section 162(m).
Section
8.
No
Assignment
. The rights hereunder, including without limitation
rights to receive an Incentive Award, shall not be pledged, assigned,
transferred, encumbered or hypothecated by an employee of the Company, and
during the lifetime of any Participant any payment of an Incentive Award shall
be payable only to such Participant.
Section
9.
The
Company
. For purposes of this Plan, the “Company” shall
include the successors and assigns of the Company, and this Plan shall be
binding on any corporation or other person with which the Company is merged or
consolidated.
Section
10.
Stockholder
Approval
. This Plan, as then amended, was re-approved by the
stockholders of the Company in April 2005, and such stockholder approval was a
condition to the right of a Participant to receive any benefits hereunder for
any fiscal year beginning after such meeting date.
Section
11.
No Right to
Employment
. The designation of an employee as a Participant or
grant of an Incentive Award shall not be construed as giving a Participant the
right to be retained in the employ of the Company or any affiliate or
subsidiary.
Section
12.
Governing
Law
. The validity, construction and effect of the Plan and any
rules and regulations relating to the Plan shall be determined in accordance
with the laws of the State of Missouri and applicable federal law.
Section
13.
No
Trust
. Neither the Plan nor any Incentive Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company or any Participant. To the extent
any Participant acquires a right to receive payments from the Company in respect
to any Incentive Award, such right shall be no greater than the right of any
unsecured general creditor of the Company.
Section
14.
Section 162(m) and Section
409A
. It is the intention of the Company that all payments
made under the Plan be excluded from the deduction limitations contained in
Section 162(m). Therefore, if any Plan provision is found not to
be in compliance with the “performance-based” compensation exception contained
in Section 162(m), that provision shall be deemed amended so that the Plan does
so comply to the extent permitted by law and deemed advisable by the Committee,
and in all events the Plan shall be construed in favor of its meeting the
“performance-based” compensation exception contained in
Section 162(m).
To the
extent any provision of the Plan or action by the Committee would subject
any Participant to liability for interest or additional taxes under Section
409A, it will be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee. It is intended that the Plan will be
exempt from Section 409A, and the Plan shall be interpreted and construed on a
basis consistent with such intent. The Plan may be amended in any
respect deemed necessary (including retroactively) by the Committee in order to
preserve exemption from Section 409A. The preceding shall not be
construed as a guarantee of any particular tax effect for Plan
payments. A Participant is solely responsible and liable for the
satisfaction of all taxes and penalties that may be imposed on such person in
connection with any distributions to such person under the Plan (including any
taxes and penalties under Section 409A), and the Company shall have no
obligation to indemnify or otherwise hold a Participant harmless from any or all
of such taxes or penalties.
Exhibit
10.5
OLIN
CORPORATION
AMENDED
AND RESTATED
1997
STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
(As
Amended and Restated Effective October 23, 2008)
1.
Purpose. The
purpose of the Olin Corporation 1997 Stock Plan for Non-employee Directors the
(“Plan”) is to promote the long-term growth and financial success of Olin
Corporation by attracting and retaining non-employee directors of outstanding
ability and by promoting a greater identity of interest between its non-employee
directors and its shareholders.
2.
Definitions. The
following capitalized terms utilized herein have the following
meanings:
“Board”
means the Board of Directors of the Company.
“Cash
Account” means an account established under the Plan for a Non-employee Director
to which cash meeting fees, Board Chairman fees, Lead Director Fees, Committee
Chair fees and retainers, or other amounts under the Plan, have been or are to
be credited in the form of cash.
“Change
in Control” means the occurrence of any of the following events:
(a)
any
person or Group acquires ownership of Olin’s stock that, together with stock
held by such person or Group, constitutes more than 50% of the total fair market
value or total voting power of Olin’s stock, (including an increase in the
percentage of stock owned by any person or Group as a result of a transaction in
which Olin acquires its stock in exchange for property, provided that the
acquisition of additional stock by any person or Group deemed to own more than
50% of the total fair market value or total voting power of Olin’s stock on
January 1, 2005, shall not constitute a Change in Control); or
(b)
any
person or Group acquires (or has acquired during the 12-month period ending on
the date of the most recent acquisition by such person or Group) ownership of
Olin stock possessing 30% or more of the total voting power of Olin stock;
or
(c)
a
majority of the members of Olin’s board of directors is replaced during any
12-month period by directors whose appointment or election is not endorsed by a
majority of the members of Olin’s board of directors prior to the date of the
appointment or election; or
(d)
any
person or Group acquires (or has acquired during the 12-month period ending on
the date of the most recent acquisition by such person or Group) assets from
Olin that have a total Gross Fair Market Value equal to 40% or more of the total
Gross Fair Market Value of all Olin assets immediately prior to such acquisition
or acquisitions, provided that there is no Change in Control when Olin’s assets
are transferred to:
(i)
a
shareholder of Olin (immediately before the asset transfer) in exchange for or
with respect to Olin stock;
(ii)
an
entity, 50% or more of the total value or voting power of which is owned,
directly or indirectly, by Olin;
(iii)
a person
or Group that owns, directly or indirectly, 50% or more of the total value or
voting power of all outstanding Olin stock; or
(iv)
an
entity, at least 50% of the total value or voting power of which is owned,
directly or indirectly, by a person described in paragraph (iii).
For
purposes of this paragraph (d) a person’s status is determined immediately after
the transfer of the assets. For example, a transfer to a corporation
in which Olin has no ownership interest before the transaction, but which is a
majority-owned subsidiary of Olin after the transaction is not a Change in
Control.
“Code”
means the Internal Revenue Code of 1986, as amended from time to time, and any
applicable rules, regulations and/or other guidance thereunder. A
reference to any provision of the Code shall include reference to any successor
provision of the Code.
“Committee”
means the Compensation Committee (or its successor) of the Board.
“Common
Stock” means the Company’s Common Stock, $1.00 par value per share.
“Company”
means Olin Corporation, a Virginia corporation, and any successor.
“Credit
Date” means the second Thursday in February, May, August and November and one
week after the regularly scheduled board meeting in December or, in the event
the December board meeting extends for more than one day, one week after the
first day of such regularly scheduled board meeting held in
December.
“Disability”
means the Non-employee Director:
(a)
is unable
to engage in any substantial gainful activity by reason of any medically
determinable physical or mental impairment which can be expected to result in
death or can be expected to last for a continuous period of not less than 12
months, or
(b)
is, by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits for a period
of not less than 3 months under an accident and health plan from the
Non-employee Director’s employer.
“Excess
Retainer” means with respect to a Non-employee Director the amount of the full
annual cash retainer payable to such Non-employee Director from time to time by
the Company for service as a director in excess of $25,000, if any; provided
that in the event the annual cash retainer is prorated to reflect that such
Non-employee Director did not serve as such for the full calendar year, the
$25,000 shall be similarly prorated.
“Fair
Market Value” means, with respect to a date, on a per share basis, with respect
to phantom shares of Common Stock or Spin-Off Company Common Stock, the average
of the high and the low price of a share of Common Stock or Spin-Off Company
Common Stock, as the case may be, as reported on the consolidated tape of the
New York Stock Exchange on such date or if the New York Stock Exchange is closed
on such date, the next succeeding date on which it is open.
“Gross
Fair Market Value” means the value of assets determined without regard to any
liabilities associated with such assets.
“Group”
means persons acting together for the purpose of acquiring Olin stock and
includes owners of a corporation that enters into a merger, consolidation,
purchase or acquisition of stock, or similar business transaction with
Olin. If a person owns stock in both Olin and another corporation
that enter into a merger, consolidation purchase or acquisition of stock, or
similar transaction, such person is considered to be part of a Group only with
respect to ownership prior to the merger or other transaction giving rise to the
change and not with respect to the ownership interest in the other
corporation. Persons will not be considered to be acting as a Group
solely because they purchase assets of the same corporation at the same time, or
as a result of the same public offering.
“Interest
Rate” effective as of January 1, 2005, means the rate of interest equal to the
Federal Reserve A1/P1 Composite rate for 90 day commercial paper plus 10 basis
points, or such other specified, non-discretionary interest rate (or formula
describing such rate) established by the Committee on a prospective
basis.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time.
“Non-employee
Director” means a member of the Board who is not an employee of the Company or
any subsidiary thereof.
“Olin
Stock Account” means the Stock Account to which phantom shares of Common Stock
are credited from time to time.
“Plan”
means this Olin Corporation 1997 Stock Plan for Non-employee Directors as
amended from time to time.
“Prior
Plans” means the 1994 Plan and all of the Corporation’s other directors’
compensation plans, programs, or arrangements which provided for a deferred cash
or stock account.
“Retirement
Date” means the date the Non-employee Director (i) ceases to be a member of the
Board for any reason and (ii) effective as of January 1, 2005, has experienced a
“separation from service” as that term is used in Code Section
409A.
“Spin-Off
Company” means Arch Chemicals, Inc., a Virginia corporation and any
successor.
“Spin-Off
Company Common Stock” means shares of common stock of the Spin-Off Company, par
value $1.00 per share.
“Spin-Off
Company Stock Account” means the Stock Account to which phantom shares of
Spin-Off Company Common Stock are credited.
“Stock
Account” means an account established under the Plan for a Non-employee Director
to which shares of Common Stock and Spin-Off Company Common Stock have been or
are to be credited in the form of phantom stock, which shall include the Olin
Stock Account and the Spin-Off Company Stock Account.
3.
Term. The
Plan originally became effective January 1, 1997, and was last amended and
restated effective as of December 7, 2006 and amended on January 25, 2008. The
Plan is Amended and Restated as of October 23, 2008, except as otherwise
provided for herein. Notwithstanding the foregoing, those provisions
required for compliance with Code Section 409A shall be generally effective as
of January 1, 2005 or as otherwise specifically set forth herein.
4.
Administration. Full
power and authority to construe, interpret and administer the Plan shall be
vested in the Committee. Decisions of the Committee shall be final,
conclusive and binding upon all parties.
5.
Participation. All
Non-employee Directors shall participate in the Plan.
6.
Grants
and Deferrals.
(a)
Annual
Stock Grant. Subject to the terms and conditions of the Plan, on the
first Credit Date each year, each Non-employee Director shall be credited with a
number of shares of Common Stock with an aggregate Fair Market Value on such
Credit Date equal to $65,000, rounded to the nearest 100 shares. To
be entitled to such credit in any calendar year, a Non-employee Director must be
serving as such on January 1 of such year; provided, however, that in the event
a person becomes a Non-employee Director subsequent to January 1 of a calendar
year, such Non-employee Director, on the Credit Date next following his or her
becoming such, shall be credited with that number of shares of Common Stock
equal to one-twelfth of the number of shares issued to each other Non-employee
Director as the Annual Stock Grant for such year, multiplied by the number of
whole calendar months remaining in such calendar year following the date he or
she becomes a Non-employee Director (rounded up to the next whole share in the
event of a fractional share). Actual receipt of shares shall be
deferred and each eligible Non-employee Director shall receive a credit to his
or her Olin Stock Account for such shares on the date of such
credit. A Non-employee Director may elect in accordance with Section
6(f) to defer to his or her Olin Stock Account receipt of all or any portion of
such shares after such Non-employee Director’s Retirement
Date. Except with respect to any shares the director has so elected
to defer, certificates representing such shares shall be delivered to the
Non-employee Director (or in the event of death, to his or her beneficiary
designated pursuant to Section 6(i)) on or as soon as practicable, but no later
than thirty (30) days, following such Non-employee Director’s Retirement
Date.
(b)
Annual
Retainer Stock Grant. Subject to the terms and conditions of the
Plan, each Non-employee Director who is such on January 1 of that year shall
receive that number of shares (rounded up to the next whole share) of Common
Stock having an aggregate Fair Market Value of $25,000 on the first Credit Date
in such year. In the event a person becomes in a calendar year a
Non-employee Director subsequent to January 1 and has not received the annual
stock retainer for such calendar year, such person, on the Credit Date next
following his or her becoming such, shall receive that number of shares of
Common Stock equal to one-twelfth of the number of shares issued to each other
Non-employee Director as the Annual Retainer Stock Grant for such year,
multiplied by the number of whole calendar months remaining in such calendar
year following the date he or she becomes a Non-employee Director (rounded up to
the next whole share in the event of a fractional share). The annual
cash retainer payable to the Non-employee Director shall be payable on the first
Credit Date of each year, and shall be reduced by the aggregate Fair Market
Value of the shares the Non-employee Director receives or defers as the Annual
Retainer Stock Grant (excluding any rounding of fractional shares) on the date
such Fair Market Value is calculated. A Non-employee Director may
elect to defer receipt of all or any portion of such shares in accordance with
Section 6(f). Except with respect to any shares the director has so
elected to defer, certificates representing such shares shall be delivered to
such Non-employee Director (or in the event of death, to his or her beneficiary
designated pursuant to Section 6(i)) as soon as practicable, but no later than
thirty (30) days, following the applicable Credit Date.
(c)
One-time
Stock Grant. Subject to the terms and conditions of the Plan, receipt
of all shares of Olin Stock credited under the one-time grants to certain
Non-employee Directors that the Company made as of January 15, 1997, shall be
deferred. Such Non-employee Directors may elect in accordance with
Section 6(f) to defer receipt of all or any portion of such shares to a date or
dates following such Non-employee Director’s Retirement Date. Except
with respect to any shares so deferred, certificates representing such shares
shall be delivered to such Non-employee Directors (or in the event of death, to
his or her beneficiary designated pursuant to Section 6(i)) on or as soon as
practicable, but no later than thirty (30) days, following his or her Retirement
Date.
(d)
Payment
of Meeting Fees, Chairman of the Board Fees, Lead Director Fees, Committee Chair
Fees and Excess Retainer and Election to Receive Fees in Stock in Lieu of
Cash. Cash payments of meeting fees shall be made on the first Credit
Date following the meeting date, cash payments of Committee Chair fees shall be
made on the second Credit Date of each year, and cash payments of Chairman of
the Board fees and Lead Director fees shall be made in four equal payments on
the first four Credit Dates of each year. Except with respect to any
cash payments the director has elected to defer in accordance with Section 6(f),
such payment shall be delivered to the Non-employee Director on or as soon as
practicable, but no later than thirty (30) days, following the applicable Credit
Date. Subject to the terms and conditions of the Plan, a Non-employee
Director may elect to receive all or a portion of the director meeting fees,
fees as Chairman of the Board, fees as Lead Director, fees as a Committee Chair
and the Excess Retainer payable in cash by the Company for his or her service as
a director for the calendar year in the form of shares of Common
Stock. Such election shall be made in accordance with Section
6(f). A Non-employee Director who so elects to receive all or a
portion of the Excess Retainer or other fees in the form of shares for such year
shall be paid on the Credit Date on which the cash portion of the Excess
Retainer or the other fees, as the case may be, would have been
paid. The number of shares (rounded up to the next whole share in the
event of a fractional share) payable to a Non-employee Director who so elects to
receive the Excess Retainer or meeting fees, Board Chairman fees, Lead Director
fees or Committee Chair fees in the form of shares shall be equal to the
aggregate Fair Market Value on the relevant Credit Date. Except with
respect to any shares the director has elected to defer in accordance with
Section 6(f), certificates representing such shares shall be delivered to the
Non-employee Director on or as soon as practicable, but no later than thirty
(30) days, following the applicable Credit Date.
(e)
Deferral
of Meeting Fees, Chairman of the Board Fees, Lead Director Fees, Committee Chair
Fees and Excess Retainer. Subject to the terms and conditions of the
Plan, a Non-employee Director may elect to defer all or a portion of the shares
payable under Section 6(d) and all or a portion of the director meeting fees,
fees as Chairman of the Board, fees as Lead Director, fees as a Committee Chair
and Excess Retainer payable in cash by the Company for his or her service as a
director for the calendar year. Such election shall be made in
accordance with Section 6(f). A Non-employee Director who elects to
so defer shall have any deferred shares deferred in the form of shares of Common
Stock and any deferred cash fees and retainer deferred in the form of
cash.
(f)
Elections.
(1)
Deferrals. Effective
as of January 1, 2005, all elections to defer payment of compensation under this
Plan shall:
·
|
be
made in writing and delivered to the Secretary of the
Company,
|
·
|
be
irrevocable once the year to which the election relates
commences,
|
·
|
be
made before January 1 of the year in which the shares of Common Stock or
director’s fees and retainer are to be earned (or, in the case of an
individual who becomes a Non-employee Director during a calendar year,
within 30 days of the date of his or her election as a director;
notwithstanding the foregoing no amounts earned prior to an election shall
be deferred by new participants),
and
|
·
|
specify
the portions (in 25% increments) to be
deferred.
|
(2)
Stock and
Cash Account Payments. Effective as of January 1, 2005, Stock and
Cash Accounts shall be paid in a single lump sum payment within 30 days of the
Non-employee Director’s Retirement Date unless the Non-employee Director makes
an election as set forth below:
·
|
a
payment election, if any, shall be made on or before the earlier
of:
|
°
|
the
time such individual makes any deferral election under the Plan,
or
|
°
|
the
end of the 30 day period following the date an individual first becomes a
Non-employee Director.
|
·
|
a
payment election may specify a payment date (month and year), provided
such date is after the Non-employee Director’s Retirement
Date.
|
·
|
a
payment election may specify the method of payment (lump sum or annual
installments (up to 10)).
|
Notwithstanding
any election, Plan payments will be made (or annual installments will begin)
upon a Non-employee Director’s death. All payments shall be made (or
each annual installment shall be paid) within 30 days of the prescribed payment
date, and any payment election shall be irrevocable except as permitted in
Section 6(f)(4) below.
(3)
Dividends
and Interest on Stock and Cash Accounts. Dividends and interest on
Stock and Cash Accounts shall be paid as provided in Section 6(f)(8) unless the
Non-employee Director makes an election to have such amounts deferred and
credited back to the appropriate account (and shall be payable in accordance
with Sections 6(f)(2) and (4) herein), provided that such election is made
within the time prescribed by Section 6(f)(1) above.
(4)
Change in
Payment Election. Any change with respect to a Non-employee
Director’s payment election under the Plan will not be effective for one year,
must be made at least one (1) year in advance of the first date payment is
scheduled and must further defer all payments by at least five (5) years from
the prior scheduled payment date. Notwithstanding the foregoing, for
the transition period beginning January 1, 2005 and ending December 31, 2008,
any Non-employee Director may make a payment election in accordance with Code
Section 409A (and applicable IRS transition relief), in the time and manner
prescribed by the Committee and subject to the following
provisions. As of December 31, 2008, any then effective transition
payment elections shall be irrevocable for the duration of a Non-employee
Director’s participation in the Plan except as set forth in the first sentence
of this Section 6(f)(4). No election made in 2008 under this
transition relief will apply to amounts that would otherwise be payable in 2008,
nor may such election cause an amount to be paid in 2008 that would not
otherwise be payable in 2008. No election under this transition
relief may be made retroactively, when Plan payments are imminent, or after a
Non-employee Director has left the Board.
(5)
Olin
Stock Account. On the Credit Date (or in the case of a proration, on
the first day of the appropriate calendar month), a Non-employee Director who
has elected to defer shares under Sections 6(b) or 6(e) shall receive a credit
to his or her Olin Stock Account. The amount of such credit shall be
the number of shares so deferred (rounded to the next whole share in the event
of a fractional share). A Non-employee Director may elect to defer
the cash dividends paid on his or her Stock Account in accordance with Section
6(f)(3).
(6)
Cash
Account. On the Credit Date or in the case of the Excess Retainer, on
the day on which the Non-employee Director is entitled to receive such Excess
Retainer, a Non-employee Director who has elected to defer cash fees and/or the
Excess Retainer under Section 6(e) in the form of cash shall receive a credit to
his or her Cash Account. The amount of the credit shall be the dollar
amount of such Director’s meeting fees, Board Chairman fees, Lead Director fees
or Committee Chair fees earned during the immediately preceding quarterly period
or the amount of the Excess Retainer to be paid for the calendar year, as the
case may be, and in each case, specified for deferral in cash. A
Non-employee Director may elect to defer interest paid on his or her Cash
Account in accordance with Section 6(f)(3).
(7)
Installment
Payments. Installment payments from an Account shall be equal to the
Account balance (expressed in shares in the case of the Stock Account, otherwise
the cash value of the Account) at the time of the installment payment times a
fraction, the numerator of which is one and the denominator of which is the
number of installments not yet paid. Fractional shares to be paid in
any installment shall be rounded up to the next whole share. In the
event of an election under Section 6(d) for director meeting fees, Board
Chairman fees, Lead Director fees, Committee Chair fees or Excess Retainer to be
paid in shares of Common Stock, the election shall specify the portion (in 25%
increments) to be so paid.
(8)
Dividends
and Interest. Each time a cash dividend is paid on Common Stock or
Spin-Off Company Common Stock, a Non-employee Director who has shares of such
stock credited to his or her Stock Account shall be paid on the dividend payment
date such cash dividend in an amount equal to the product of the number of
shares credited to the Non-employee Director’s Olin Stock Account or Spin-Off
Company Stock Account, as the case may be, on the record date for such dividend
times the dividend paid per applicable share unless the director has elected to
defer such dividend to his or her applicable Stock Account as provided
herein. If the Non-employee Director has elected to defer such
dividend, he or she shall receive a credit for such dividends on the dividend
payment date to his or her Olin Stock Account or Spin-Off Company Stock Account,
as the case may be. The amount of the dividend credit shall be the
number of shares (rounded to the nearest one-thousandth of a share) determined
by multiplying the dividend amount per share by the number of shares credited to
such director’s applicable Stock Account as of the record date for the dividend
and dividing the product by the Fair Market Value per share of Common Stock or
Spin-Off Company Common Stock, as the case may be, on the dividend payment
date. A Non-employee Director who has a Cash Account shall be paid
interest directly on such account’s balance at the end of each calendar quarter,
payable at a rate equal to the Interest Rate in effect for such quarter unless
such Non-employee Director has elected to defer such interest to his or her Cash
Account, in which case such interest shall be credited to such Cash Account at
the end of each calendar quarter. All amounts paid pursuant to this
subsection (8) shall be paid on or as soon as practicable, but no later than
thirty (30) days, following the applicable payment date (i.e., the applicable
dividend payment date or end date of the fiscal quarter).
(9)
Payouts. Cash
Accounts and the Spin-Off Company Stock Account will be paid out in cash and
Olin Stock Accounts shall be paid out in shares of Common Stock unless the
Non-employee Director elects at the time the payment is due to take the Olin
Stock Account in cash.
(g)
No Stock
Rights. Except as expressly provided herein, the deferral of shares
of Common Stock or Spin-Off Company Common Stock into a Stock Account shall
confer no rights upon such Non-employee Director, as a shareholder of the
Company or of the Spin-Off Company or otherwise, with respect to the shares held
in such Stock Account, but shall confer only the right to receive such shares
credited as and when provided herein.
(h)
Change in
Control. Notwithstanding anything to the contrary in this Plan or any
election, in the event a Change in Control occurs, amounts and shares credited
to Cash Accounts (including interest accrued to the date of payout) and Stock
Accounts shall be promptly (but no later than thirty (30) days following the
Change in Control) distributed to Non-employee Directors except the Olin Stock
Account shall be paid out in cash and not in the form of shares of Common
Stock. For this purpose, the cash value of the amount in the Stock
Account shall be determined by multiplying the number of shares held in the Olin
Stock Account or the Spin-Off Company Stock Account by the higher of (i) the
highest Fair Market Value of Common Stock or Spin-Off Company Common Stock, as
appropriate, on any date within the period commencing thirty (30) days prior to
such Change in Control and ending on the date of the Change in Control, or (ii)
if the Change in Control occurs as a result of a tender or exchange offer or
consummation of a corporate transaction, then the highest price paid per share
of Common Stock or Spin-Off Company Common Stock, as appropriate, pursuant
thereto.
(i)
Beneficiaries. A
Non-employee Director may designate at any time and from time to time a
beneficiary for his or her Stock and Cash Accounts in the event his or her Stock
or Cash Account may be paid out following his or her death. Such
designation shall be in writing and must be received by the Company prior to the
death to be effective.
(j)
Prior
Plan Accounts. Any transfers made to a Cash Account or a Stock
Account from Prior Plans shall be maintained and administered pursuant to the
terms and conditions of this Plan; provided that prior annual 100- or 204-share
grant deferrals shall be treated as deferrals of 204-share grants under this
Plan, the $25,000 annual share grant under the 1994 Plan shall be treated as
deferrals under Paragraph 6(b) hereof and deferrals of meeting fees under all
Prior Plans and of the Excess Retainer under the 1994 Plan shall be treated as
deferrals under Paragraph 6(d) hereof. Prior elections and
beneficiary designations under the 1994 Plan and this Plan shall govern this
Plan unless changed subsequent to October 2, 1997.
(k)
Stock
Account Transfers. A Non-employee Director may elect from time to
time to transfer all or a portion (in 25% increments) of his or her Spin-Off
Company Stock Account to his or her Olin Stock Account. The amount of
phantom shares of Common Stock to be credited to a Non-employee Director’s Olin
Stock Account shall be equal to the number of shares of Common Stock that could
be purchased if the number of phantom shares of Spin-Off Company Common Stock in
his or her Spin-Off Company Stock Account being transferred were sold and the
proceeds reinvested in Common Stock based on the Fair Market Value of
each. Except as provided in Section 6(f)(8) with respect to dividends
or in Section 8, no additional contributions or additions may be made to a
Non-employee Director’s Spin-Off Company Stock Account after the Distribution
Date.
7.
Limitations
and Conditions.
(a)
Total
Number of Shares. The total number of shares of Common Stock that may
be issued to Non-employee Directors under the Plan is 550,000, which may be
increased or decreased by the events set forth in Section 8. Such
total number of shares may consist, in whole or in part, of authorized but
unissued shares. If any shares granted under this Plan are not
delivered to a Non-employee Director or a beneficiary because the payout of the
grant is settled in cash, such shares shall not be deemed to have been delivered
for purposes of determining the maximum number of shares available for delivery
under the Plan. No fractional shares shall be issued
hereunder. In the event a Non-employee Director is entitled to a
fractional share, such share amount shall be rounded upward to the next whole
share amount.
(b)
No
Additional Rights. Nothing contained herein shall be deemed to create
a right in any Non-employee Director to remain a member of the Board, to be
nominated for reelection or to be reelected as such or, after ceasing to be such
a member, to receive any cash or shares of Common Stock under the Plan which are
not already credited to his or her accounts.
8.
Stock
Adjustments. In the event of any merger, consolidation, stock or
other non-cash dividend, extraordinary cash dividend, split-up, spin-off,
combination or exchange of shares or recapitalization or change in
capitalization, or any other similar corporate event, the Committee may make
such adjustments in (i) the aggregate number of shares of Common Stock that may
be issued under the Plan as set forth in Section 7(a) and the number of shares
that may be issued to a Non-employee Director with respect to any year as set
forth in Section 6(a) and the number of shares of Olin Common Stock or Spin-Off
Company Common Stock, as the case may be, held in a Stock Account, (ii) the
class of shares that may be issued under the Plan and (iii) the amount and type
of payment that may be made in respect of unpaid dividends on shares of Spin-Off
Company Common Stock or Common Stock whose receipt has been deferred pursuant to
Section 6(f), as the Committee shall deem appropriate in the
circumstances. The determination by the Committee as to the terms of
any of the foregoing adjustments shall be final, conclusive and binding for all
purposes of the Plan.
9.
Amendment
and Termination. This Plan may be amended, suspended or terminated by
action of the Board, except to the extent that amendments are required to be
approved by the Company’s shareholders under applicable law or the rules of the
New York Stock Exchange or any other exchange or market system on which the
Common Stock is listed or traded. No termination of the Plan shall
adversely affect the rights of any Non-employee Director with respect to any
amounts otherwise payable or credited to his or her Cash Account or Stock
Account.
10.
Nonassignability. No
right to receive any payments under the Plan or any amounts credited to a
Non-employee Director’s Cash or Stock Account shall be assignable or
transferable by such Non-employee Director other than by will or the laws of
descent and distribution or pursuant to a domestic relations
order. The designation of a beneficiary under Section 6(i) by a
Non-employee Director does not constitute a transfer.
11.
Unsecured
Obligation. Benefits payable under this Plan shall be an unsecured
obligation of the Company.
12.
Rule
16b-3 Compliance. It is the intention of the Company that all
transactions under the Plan be exempt from liability imposed by Section 16(b) of
the Exchange Act. Therefore, if any transaction under the Plan is
found not to be in compliance with an exemption from such Section 16(b), the
provision of the Plan governing such transaction shall be deemed amended so that
the transaction does so comply and is so exempt, to the extent permitted by law
and deemed advisable by the Committee, and in all events the Plan shall be
construed in favor of its meeting the requirements of an
exemption. Scheduled Plan payments will be delayed where the
Committee reasonably anticipates that the making of the payment will violate
Federal securities laws or other applicable law; provided that such payment
shall be made at the earliest date at which the Committee reasonably anticipates
that the making of the payment will not cause such violation.
13.
Code
Section 409A Compliance. To the extent any provision of the Plan or
action by the Board or Committee would subject any Non-employee Director to
liability for interest or additional taxes under Code Section 409A, it will be
deemed null and void, to the extent permitted by law and deemed advisable by the
Committee. It is intended that the Plan will comply with Code Section
409A, and the Plan shall be interpreted and construed on a basis consistent with
such intent. The Plan may be amended in any respect deemed necessary
(including retroactively) by the Committee in order to preserve compliance with
Code Section 409A. If, regardless of the foregoing, any Non-employee
Director is liable for interest or additional taxes under Code Section 409A with
respect to his or her Account (or a portion thereof), such Account (or
applicable portion thereof) shall be paid at such time. The preceding
shall not be construed as a guarantee of any particular tax effect for any
benefits or amounts deferred or paid out under the Plan.
Exhibit
10.6
OLIN
CORPORATION
2000
LONG TERM INCENTIVE PLAN
(Codified
as of October 22, 2008)
The
general purposes of the Olin Corporation 2000 Long Term Incentive Plan (the
“Plan”) are to (i) attract and retain persons eligible to participate in the
Plan; (ii) motivate Participants, by means of appropriate incentives, to achieve
long-range goals; (iii) provide incentive compensation opportunities that are
competitive with those of other similar companies; and (iv) further identify
Participants’ interests with those of other shareholders of Olin Corporation
(together with any successor, “Olin”) through compensation that is based on
Olin’s common stock; and thereby promote the long-term financial interest of
Olin and its Affiliates, including growth in the value of Olin’s equity and
enhancement of long-term shareholder return.
As used
in the Plan:
(a)
“Affiliate”
means any corporation, partnership, joint venture or other entity during any
period in which Olin owns, directly or indirectly, at least 50% of the total
voting or profits interest.
(b)
“Award”
means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock
Unit, Performance Share or Dividend Equivalent granted under the
Plan.
(c)
“Award
Agreement” means any written agreement or other instrument or document
evidencing an Award granted under the Plan. The terms of any plan or
guideline adopted by the Board or the Committee and applicable to an Award shall
be deemed incorporated in and a part of the related Award
Agreement.
(d)
“Board”
means the Board of Directors of Olin.
(e)
“Cash
Flow” means consolidated net income of Olin, before the after-tax effect of any
special charge or gain or cumulative effect of any change in accounting, plus
depreciation and amortization, less capital and investment spending and plus or
minus changes in working capital.
(f)
“Code”
means the Internal Revenue Code of 1986, as amended. A reference to
any provision of the Code shall include reference to any successor provision of
the Code.
(g)
“Committee”
means a committee of the Board designated by the Board to administer the Plan,
each member of which is an “outside director” for purposes of Section 162(m) of
the Code and a “non-employee director” for the purpose of Rule 16b-3, and, to
the extent the Committee delegates authority to one or more individuals in
accordance with the Plan, such individual(s).
(h)
“Dividend
Equivalent” means any right granted under Section 6(c)(ii) of the
Plan.
(i)
“Earnings
Per Share” means, for a fiscal year, consolidated net income of Olin before the
after-tax effect of any special charge or gain or cumulative effect of a change
in accounting, divided by the weighted average number of shares of common stock
outstanding, on a fully diluted basis.
(j)
“Economic
Value Added” means Olin’s consolidated sales less its operating costs (including
tax) less a capital charge based on Olin’s cost of capital on assets employed in
the business.
(k)
“Employee”
means any employee of Olin or of an Affiliate.
(l)
“Fair
Market Value” means, with respect to shares of Olin common stock, the mean of
the high and low per share sales prices of such common stock as reported on the
consolidated transaction reporting system for New York Stock Exchange issues as
of the relevant date, or the last preceding trading date, if such Shares were
not traded on such date, and, with respect to any other property (including,
without limitation, securities other than Shares), the fair market value of such
property determined by such methods or procedures as shall be established from
time to time by the Committee.
(m)
“Family
Member” means any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationship, or any person sharing the Participant’s household, other than a
tenant or employee.
(n)
“Incentive
Stock Option” means an option to purchase Shares granted under the Plan that is
intended to meet the requirements of Section 422 of the Code.
(o)
“Non-Qualified
Stock Option” means an option to purchase Shares granted under the Plan that is
not intended to be an Incentive Stock Option.
(p)
“Option”
means an Incentive Stock Option or a Non-Qualified Stock Option.
(q)
“Participant”
means an Employee granted an Award under the Plan.
(r)
“Performance
Share” means any grant of a right to receive Shares which is contingent on the
achievement of performance or other objectives during a specified
period.
(s)
“Person”
means any individual, corporation, partnership, limited liability company,
association, joint venture, stock company, trust, unincorporated organization,
or government or political subdivision thereof.
(t)
“Pre-Tax
Profit” means, for a fiscal year, the consolidated income before taxes of Olin,
before any special charges or gains.
(u)
“Released
Securities” means securities that were Restricted Securities with respect to
which all applicable restrictions imposed under the terms of the relevant Award
have expired, lapsed or been waived or satisfied.
(v)
“Restricted
Securities” means Awards of Restricted Stock or other Awards under which
outstanding Shares are held subject to certain restrictions.
(w)
“Restricted
Stock” means any grant of Shares, and “Restricted Stock Unit” means the grant of
a right to receive Shares in the future, with such Shares or right to future
delivery of Shares subject to a risk of forfeiture or other restrictions that
will lapse upon the achievement of one or more goals relating to completion of
service by the Participant, or achievement of performance or other objectives,
as determined by the Committee.
(x)
“Return
on Capital” means consolidated net income of Olin plus after-tax interest
expense and the after-tax effect of any special charge or gain and any
cumulative effect of a change in accounting, divided by average consolidated
total assets of Olin less total non-interest-bearing liabilities.
(y)
“ROE”
shall mean the consolidated net income of Olin before the after tax effect of
any special charge or gain and any cumulative effect of any change in
accounting, divided by average shareholders equity.
(z)
“RONA”
means Pre-tax Profit before interest expense divided by average consolidated
total assets of Olin less total non-interest-bearing liabilities.
(aa)
“Rule
16b-3” means Rule 16b-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, or any successor
rule.
(bb)
“Shares”
means the common stock of Olin and such other securities or property as may
become the subject of Awards pursuant to an adjustment made under Section 4(b)
of the Plan.
(cc)
“Stock
Appreciation Right” or “SAR” means any such right granted under Section 6(b) of
the Plan.
Section
3.
|
Ad
m
inistration.
|
(a)
Powers of
Committee
. The Plan shall be administered by the Committee
which shall have full power and authority to: (i) designate
Participants; (ii) determine the Awards to be granted to Participants; (iii)
determine the number of Shares (or securities convertible into Shares) to be
covered by Awards; (iv) determine the terms and conditions of any Award; (v)
determine whether, to what extent, and under what circumstances Awards may be
settled or exercised in cash, Shares, other securities, other Awards, or other
property, or canceled, substituted, forfeited or suspended, and the method or
methods by which Awards may be settled, exercised, canceled, substituted,
forfeited or suspended, provided that no such action will result in repricing of
Options prohibited by Section 6(f)(ii); (vi) determine whether, to what extent,
and under what circumstances cash, Shares, other securities, other Awards, other
property and other amounts payable with respect to an Award under the Plan shall
be deferred either automatically or at the election of the Participant or of the
Committee; (vii) interpret and administer the Plan and any instrument or
agreement relating to, or Award made under, the Plan; (viii) establish, amend,
suspend or waive such rules and guidelines and appoint such agents as it shall
deem appropriate for the administration of the Plan; and (ix) make any other
determination and take any other action that it deems necessary or desirable for
such administration.
(b)
Committee
Discretion
. All designations, determinations, interpretations
and other decisions with respect to the Plan or any Award shall be within the
sole discretion of the Committee and shall be final, conclusive and binding upon
all Persons, including Olin, any Affiliate, any Participants, any holder or
beneficiary of any Award, any shareholder and any employee of Olin or of any
Affiliate. The Committee’s powers include the adoption of
modifications, amendments, procedures, subplans and the like as are necessary to
comply with provisions of the laws of other countries in which Olin or an
Affiliate may operate in order to assure the viability of Awards granted under
the Plan and to enable Participants employed in such other countries to receive
benefits under the Plan and such laws, provided that no such action results in
repricing of Options prohibited by Section 6(f)(ii).
(c)
Board
Authority
. If the Committee does not exist, or for any other
reason determined by the Board, the Board may take any action under the Plan
that would otherwise be the responsibility of the Committee.
(d)
Delegation
. Notwithstanding
any provision of the Plan to the contrary, except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the Committee may
delegate to one or more officers or managers of Olin or any Affiliate, or a
committee of such officers or managers, the authority, subject to such terms and
limitations as the Committee shall determine, to grant Awards to, or to cancel,
modify, waive rights or conditions with respect to, alter, discontinue, suspend,
or terminate Awards held by, Employees who are not officers or directors of Olin
for purposes of Section 16 of the Securities Exchange Act of 1934, as amended,
provided that no such action shall result in repricing of Options prohibited by
Section 6(f)(ii).
(e)
Prohibition on Option
Repricing
. Notwithstanding any other provision of the Plan,
neither the Board nor the Committee may reprice, replace or regrant any Option
granted under the Plan or any other plan of Olin, (i) through cancellation and
replacement or regrant with lower priced options or (ii) by lowering the option
exercise price of a previously granted award, without the prior approval of
Olin’s shareholders.
Section
4.
|
Shares Available for
Awards.
|
(a)
Shares
Available
. Subject to adjustment as provided in Section 4(b)
of the Plan:
(i)
|
The
aggregate number of Shares available for granting Awards under the Plan
shall be 2,250,000. If an Award is denominated in or relates to
a security of Olin convertible into its Common Stock, the number of shares
of Common Stock into which such security shall be convertible (calculated
as of the date of grant of the Award, subject to adjustment as provided in
Section 4(b) hereof or under the terms of such security) shall be deemed
denominated in Shares and counted against the aggregate number of Shares
available for the granting of Awards under the
Plan.
|
(ii)
|
For
purposes of this Section 4(a) and of Section
4(c)(iv):
|
(A)
|
If
any Shares covered by an Award are not delivered to a Participant or
beneficiary because the Award is forfeited or canceled, or if the Shares
are not delivered because the Award is settled in cash or used to satisfy
the applicable tax withholding obligation, such Shares shall not be deemed
to have been delivered for purposes of determining the maximum number of
Shares available for delivery under the Plan;
and
|
(B)
|
If
the exercise price of any Option granted under the Plan is satisfied by
tendering Shares (by either actual delivery or by attestation), only the
number of Shares issued net of the Shares tendered shall be deemed
delivered for purposes of determining the maximum number of Shares
available for delivery under the
Plan.
|
(b)
Adjustments
. In
the event of any change in the Shares by reason of stock dividends, stock
splits, recapitalization, mergers, consolidations, combinations or exchanges of
shares, split-ups, split-offs, spin-offs, liquidations or other similar changes
in capitalization, or any distributions to shareholders other than cash
dividends, (i) the numbers, class and prices of Shares covered by outstanding
Awards under the Plan (provided that no such adjustment shall result in
repricing of Options prohibited by Section 6(f)(ii) of the Plan), (ii) the
aggregate number and class of Shares available under the Plan, and (iii) the
numbers and class of Shares that may be the subject of Awards pursuant to
Section 4(c), shall be adjusted by the Committee, whose determination shall be
conclusive.
(i)
|
Without
limiting the foregoing, in the event of any split-up, split-off, spin-off
or other distribution to shareholders of shares representing apart of
Olin’s business, properties and assets, the Committee may modify an
outstanding Award so that such Award shall thereafter relate to Shares of
Olin and shares of capital stock of the corporation owning the business,
properties and assets so split-up, split-off, spun-off or otherwise
distributed to shareholders of Olin in the same ratio in which holders of
the Shares became entitled to receive shares of capital stock of the
corporation owning the business, properties and assets so split-up,
split-off or spun-off or otherwise distributed, provided that no such
action results in repricing of Options prohibited by Section
6(f)(ii).
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(ii)
|
With
respect to Awards of Incentive Stock Options, no such adjustment shall be
authorized to the extent that such authority would cause the Plan to
violate Section 422 of the Code or any successor provision thereto, unless
the holder of such Award of Incentive Stock Options agrees to convert such
options to Non-qualified Stock
Options.
|
(iii)
|
Notwithstanding
the foregoing, a Participant to whom Dividend Equivalents or dividend
units have been awarded shall not be entitled to receive a special or
extraordinary dividend or distribution unless the Committee shall have
expressly authorized such receipt.
|
(c)
Additional
Restrictions
. Subject to adjustment as provided in Section
4(b), the following additional maximums are imposed under the Plan:
(i)
|
The
maximum number of Shares that may be issued for Options intended to be
Incentive Stock Options shall be 900,000
Shares.
|
(ii)
|
The
maximum number of Shares that may be covered by Awards granted to any one
individual shall be 300,000 Shares during any calendar
year.
|
(iii)
|
No
more than 100,000 Shares may be subject to Restricted Stock Awards,
Restricted Stock Unit Awards and Performance Share Awards, and no more
than 300,000 Shares may be subject to Options and Stock Appreciation
Rights, granted to any one individual during any calendar-year period
(regardless of when such Shares are deliverable) for any Award intended to
be “performance-based compensation” (as that term is used for purposes of
Code Section 162(m)).
|
(iv)
|
No
more than 450,000 Shares may be subject to Restricted Stock Awards,
Restricted Stock Unit Awards and Performance Share
Awards.
|
Any
Employee, including any officer or employee-director, of Olin or an Affiliate
shall be eligible to be designated a Participant, subject to any restrictions
imposed by applicable law. An Award may be granted to an Employee prior to the
date the Employee first performs services for the Company or the Affiliate,
provided that such Awards shall not become vested prior to the date the Employee
first performs such services.
(a)
Options
. The
Committee is authorized to grant Options to Participants with the following
terms and conditions and with such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall
determine:
(i)
|
Exercise
Price
. The per Share exercise price shall be determined
by the Committee; provided, however, that such exercise price shall not be
less than the Fair Market Value of a Share on the date of the Option
grant.
|
(ii)
|
Option
Term
. The term of each Option shall be fixed by the
Committee, provided that in no event shall the term of an Option be more
than a period of ten years from the date of its
grant.
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(iii)
|
Exercise
. The
Committee shall determine the time or times at which an Option may be
exercised in whole or in part, and the method or methods by which, and the
form or forms in which payment of the exercise price with respect thereto
may be made.
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(iv)
|
Incentive Stock
Options
. The terms of any Incentive Stock Option granted
under the Plan shall comply in all respects with the provisions of Section
422 of the Code, or any successor provision thereto, and any regulations
promulgated thereunder. Without limiting the preceding sentence, the
aggregate Fair Market Value (determined at the time an option is granted)
of Shares with respect to which Incentive Stock Options are exercisable
for the first time by a Participant during any calendar year (under the
Plan and any other plan of the Participant’s employer corporation and its
parent and subsidiary corporations providing for Options) shall not exceed
such dollar limitation as shall be applicable to Incentive Stock Options
under Section 422 of the Code or a successor
provision.
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(v)
|
Termination of
Employment
. In the event the employment of a Participant
to whom an Option has been granted under the Plan shall be terminated
(other than by reason of the Participant’s death or disability), such
Option may, subject to the provisions of the next to last sentence of
Section 6(a)(vi) be exercised (to the extent of the number of shares that
the Participant was entitled to purchase under such Option at the
termination of employment) at any time within three months after such
termination (which three-month period may be extended by the Committee),
but in no event shall such three-month period or any such extension permit
the exercise of an Option after the expiration date of the Option. Options
granted under the Plan shall not be affected by any change of duties or
position so long as the Participant continues to be an
Employee.
|
(vi)
|
Agreement to
Service
. Each Participant receiving an Option shall, by
accepting the Option, agree that he or she will, during employment, devote
his or her entire time, energy and skill to the service of Olin and the
promotion of its interests, subject to vacations, sick leave and other
absences in accordance with the regular policies of, or other reasons
satisfactory to, Olin and its Affiliates. Such employment shall (subject
to the terms of any contract between Olin or any such Affiliate and such
Participant) be at the pleasure of Olin or such Affiliate, and shall be at
such compensation as Olin or such Affiliate shall determine from time to
time. Upon termination of such Participant’s employment either (a) for
cause, or (b) voluntarily on the part of the Participant and without the
written consent of Olin, any Awards held by him or her under the Plan, to
the extent not theretofore exercised or vested, shall forthwith terminate.
Retirement pursuant to any retirement plan of Olin or of an Affiliate
shall be deemed to be a termination of employment with Olin’s
consent.
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(vii)
|
Death
. If
a Participant to whom an Option has been granted shall die while an
Employee, such Option may be exercised by the Participant’s executors,
administrators, personal representatives or distributees or permitted
transferees at any time within a period of one year after the
Participant’s death (which period may be extended by the Committee),
regardless of whether or not such Option had vested at the time of death.
If a Participant to whom an Option has been granted shall die after his or
her employment has terminated but while the Option remains exercisable,
the Option may be exercised by the persons described above at any time
within the longer of (a) the period that the Participant could have
exercised the Option had he or she not died, or (b) one year after the
date of death (which period may be extended by the Committee), but only to
the extent the Option was exercisable at the time of the Participant’s
death.
|
(viii)
|
Disability
. If
a Participant to whom an Option has been granted shall become totally and
permanently disabled, as that term is defined in Section 22(e)(3) of the
Code (or a successor provision), and the Participant’s employment is
terminated as a result, such option may be exercised by the Participant or
permitted transferee within one year after the date of termination of
employment, to the extent that the Option was exercisable at the time of
termination of employment.
|
(b)
Stock Appreciation
Rights
. The Committee is authorized to grant Stock
Appreciation Rights to Participants which may but need not relate to a specific
Option granted under the Plan. Subject to the terms of the Plan and any
applicable Award Agreement, each Stock Appreciation Right granted under the Plan
shall confer on the holder thereof a right to receive, upon exercise thereof, up
to the excess of (i) the Fair Market Value of one Share on the date of exercise
over (ii) the exercise price of the right as specified by the Committee, which
shall not be less than the Fair Market Value of one Share on the date of grant
of the Stock Appreciation Right. Subject to the terms of the Plan and any
applicable Award Agreement, the exercise price, term, methods of exercise,
methods of payment or settlement and any other terms and conditions of any Stock
Appreciation Right shall be as determined by the Committee, but in no event
shall the term of a Stock Appreciation Right exceed a period of ten years from
the date of its grant.
(c)
Other Stock
Awards
.
(i)
|
Issuance
. The
Committee is authorized to grant Awards of Restricted Stock, Restricted
Stock Units and Performance Shares to
Participants.
|
(ii)
|
Dividends and Dividend
Equivalents
. An Award (including without limitation an
Option or Stock Appreciation Right) may provide the Participant with the
right to receive dividend payments or dividend equivalent payments with
respect to Shares subject to the Award (both before and after the Shares
subject to the Award are earned, vested, or acquired), which payments may
be either made currently or credited to an account for the Participant,
and may be settled in cash or Shares as determined by the Committee;
provided, however that, no dividend payments or dividend equivalent
payments shall be provided, permitted or credited to the extent that such
payments would cause an Option or Stock Appreciation Right to be subject
to Code Section 409A. Any such settlements, and any such
crediting of dividends or dividend equivalents or reinvestment in Shares,
may be subject to such conditions, restrictions and contingencies as the
Committee shall establish, including the reinvestment of such credited
amounts in Share equivalents.
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(iii)
|
Restrictions
. Any
such Award shall be subject to such conditions, restrictions and
contingencies as the Committee may impose (including, without limitation,
any limitation on the right to vote Restricted Stock or the right to
receive any dividend or other right or property), which may lapse
separately or in combination at such time or times, as the Committee may
deem appropriate, provided that in order for a Participant to vest in
Awards of Restricted Stock, the Participant must remain in the employ of
Olin or an Affiliate for a period of not less than one (1) year after the
grant of a performance-based Restricted Stock Award, and not less than
three (3) years after the grant of a Restricted Stock Award that is not
performance-based, in each case, subject to Section 9 hereof and subject
to relief for specified reasons as may be approved by the
Committee. Notwithstanding the foregoing, the Committee may
grant Awards for Restricted Stock for an aggregate number of Shares not to
exceed 45,000 which vest in less than one (1) year after the date of
grant, including immediate vesting.
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(iv)
|
Forfeiture
. Except
as otherwise determined by the Committee, upon termination of employment
for any reason during the applicable restriction period, all Shares of
Restricted Stock still subject to restriction shall be forfeited and
reacquired by Olin.
|
(v)
|
Performance-Based
Awards
. The Committee may designate whether any such
Awards being granted to a Participant is intended to be “performance-based
compensation” as that term is used in Section 162(m) of the Code. Any
Award so designated shall be conditioned on the achievement of one or more
performance measures. Performance measures that may be used by the
Committee for such purpose shall be based on one or more of the following:
Pre-Tax Profit and/or Earnings Per Share, Cash Flow, Economic Value Added,
ROE, Return on Capital or RONA. For Awards intended to be
“performance-based compensation,” the grant of the Awards and the
establishment of the performance measures shall be made during the period
required under Code Section 162(m) and in accordance with Code Section
409A to the extent applicable.
|
(d)
Forms of Payment Under
Awards
. Subject to the terms of the Plan and of any applicable
Award agreement, payments to be made by Olin or an Affiliate upon the grant,
exercise, or payment of an Award may be made in such form or forms as the
Committee shall determine, including, without limitation, cash, Shares, other
securities, other Awards, or other property or any combination thereof, and may
be made in a single payment or transfer, in installments, or on a deferred
basis, in each case in accordance with rules and procedures established by the
Committee and in accordance with Code Section 409A to the extent
applicable. Notwithstanding the foregoing, the payment of the
exercise price of an Option shall be subject to the following:
(i)
|
Subject
to the following provisions of this subsection the full exercise price for
Shares purchased upon the exercise of any Option shall be paid at the time
of such exercise (except that, in the case of an exercise arrangement
approved by the Committee and described below, payment may be made as soon
as practicable after the exercise).
|
(ii)
|
The
exercise price shall be payable in cash or by tendering, by either actual
delivery of Shares or by attestation, Shares acceptable to the Committee,
which Shares were either acquired at least six months before the exercise
date or purchased on the open market, and valued at Fair Market Value as
of the day of exercise, or in any combination thereof, as determined by
the Committee.
|
(iii)
|
The
Committee may permit a Participant to elect to pay the exercise price upon
the exercise of an Option by irrevocably authorizing a third party to sell
Shares (or a sufficient portion of the Shares) acquired upon exercise of
an Option and remit to Olin a sufficient portion of the sale proceeds to
pay the entire exercise price and any tax withholding resulting from such
exercise.
|
(e)
Limits on Transfer of
Awards
. No Award (other than Released Securities) or right
thereunder shall be assignable or transferable by a Participant, other
than:
(i)
|
by
will or the laws of descent and distribution (or, in the case of an Award
of Restricted Securities, to Olin);
or
|
(ii)
|
in
the case of Awards other than Incentive Stock Options, to the extent
permitted under the terms of the Award, by a gift or domestic relations
order to any Family Member, to a trust in which the Participant and/or his
or her Family Members hold more than 50% of the beneficial interest, to a
foundation in which the Participant and/or Family Members control the
management of assets, and any other entity in which the Participant and/or
his or her Family Members own more than 50% of the voting
interests.
|
For
purposes of this provision, a transfer to an entity in exchange for an interest
in that entity shall constitute a gift.
(f)
General
.
(i)
|
No Cash Consideration
for Awards
. Participants shall not be required to make
any cash payment for the granting of an Award except for such minimum
consideration as may be required by applicable
law.
|
(ii)
|
Awards May Be Granted
Separately or Together
. Awards may be granted either
alone or in addition to, in tandem with, or in substitution for any other
Award or any award or benefit granted under any other plan or arrangement
of Olin or any Affiliate, or as payment for or to assure payment of an
award or benefit granted under any such other such plan or arrangement,
provided that the purchase or exercise price under an Option or other
Award encompassing the right to purchase Shares shall not be reduced by
the cancellation of such Award and the substitution of another Award.
Awards so granted may be granted either at the same time as or at a
different time from the grant of such other Awards or awards or
benefits.
|
(iii)
|
General
Restrictions
. Delivery of Shares or other amounts under
the Plan shall be subject to the
following:
|
(A)
|
Notwithstanding
any other provision of the Plan, Olin shall have no liability to deliver
any Shares under the Plan or make any other distribution of benefits under
the Plan unless such delivery or distribution would comply with all
applicable laws (including, without limitation, the requirements of the
Securities Act of 1933), and the applicable requirements of any securities
exchange or similar entity.
|
(B)
|
To
the extent that the Plan provides for issuance of stock certificates to
reflect the issuance of Shares the issuance may be effected on a
non-certificated basis, to the extent not prohibited by applicable law or
the applicable rules of any stock
exchange.
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(iv)
|
Agreement With
Olin
. An Award under the Plan shall be subject to such
terms and conditions, not inconsistent with the Plan, as the Committee
shall, in its sole discretion, prescribe. The terms and conditions of any
Award to any Participant may be reflected in such form of written document
as is determined by the Committee. A copy of such document shall be
provided to the Participant, and the Committee may, but need not, require
the Participant to sign a copy of such document, (an “Award Agreement”
regardless of whether any Participant signature is
required).
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(v)
|
Beneficiary
. A
Participant may, in the manner established by the Committee, designate a
beneficiary or beneficiaries with respect to any Award to exercise the
rights of the Participant, and to receive any property distributable, upon
the death of the Participant. Each Award, and each right under any Award,
shall be exercisable, during the Participant’s lifetime, only by the
Participant or a permitted transferee, or, if permissible under applicable
law by the Participant’s guardian or legal
representative.
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(vi)
|
No Lien or Security
Interest
. No Award (other than Released Securities), and
no right under any such Award, may be pledged, attached or otherwise
encumbered other than in favor of Olin, and any purported pledge,
attachment, or encumbrance thereof other than in favor of Olin shall be
void and unenforceable against Olin or any
Affiliate.
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(vii)
|
No Rights to
Awards
. No Employee, Participant or other Person shall
have any claim to be granted an Award, and there is no obligation for
uniformity of treatment of Employees, Participants or beneficiaries of
Awards under the Plan. The terms and conditions of Awards need not be the
same with respect to each recipient. The prospective recipient of any
Award under the Plan shall not, with respect to such Award, be deemed to
have become a Participant, or to have any rights with respect to such
Award, until and unless such recipient shall have executed an agreement or
other instrument accepting the Award required by the Committee and
delivered a fully executed copy thereof to Olin, and otherwise complied
with the then applicable terms and
conditions.
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(viii)
|
Withholding
. All
distributions under the Plan are subject to withholding of all applicable
taxes, and, except as otherwise provided by the Committee, the delivery of
any Shares or other benefits under the Plan to a Participant are
conditioned on satisfaction of the applicable withholding requirements.
The Committee, in its discretion, and subject to such requirements as the
Committee may impose prior to the occurrence of such withholding, may
permit such withholding obligations to be satisfied through cash payment
by the Participant, through the surrender of Shares which the Participant
already owns, or through the surrender of Shares to which the Participant
is otherwise entitled under the
Plan.
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(ix)
|
Other Compensation
Arrangements
. Nothing contained in the Plan shall
prevent Olin or any Affiliate from adopting or continuing in effect other
or additional compensation arrangements, and such arrangements may be
either generally applicable or applicable only in specific
cases.
|
(x)
|
No Right to
Employment
. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of Olin or
any Affiliate. Nothing in the Plan or any Award Agreement shall limit the
right of Olin or an Affiliate at any time to dismiss a Participant from
employment, free from any liability or any claim under the Plan or the
Award Agreement.
|
(xi)
|
Governing
Law
. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Connecticut, excluding any
conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of this Plan or any award Agreement to the
substantive law of another
jurisdiction.
|
(xii)
|
Severability
. If
any provision of the Plan or any Award is determined to be invalid,
illegal or unenforceable, or as to any Person or Award, or would
disqualify the Plan or any Award, such provision shall be construed or
deemed amended to conform to applicable laws, or, if it cannot be so
construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such Person or Award, and the remainder
of the Plan and any such Award shall remain in full force and
effect.
|
(xiii)
|
No Trust or Fund
Created
. Neither the Plan nor any Award shall create or
be construed to create a trust or separate fund of any kind or a fiduciary
relationship between Olin or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to receive payments
from Olin or any Affiliate pursuant to an Award, such right shall be no
greater than the right of any unsecured general creditor of Olin or any
Affiliate.
|
(xiv)
|
No Fractional
Shares
. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities or other property shall be paid
or transferred in lieu of any fractional Shares, or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.
|
(xv)
|
Share
Certificates
. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other securities
are then listed, and any applicable Federal or state securities laws, and
the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such
restrictions.
|
(xvi)
|
Conflict with
Plan
. In the event of any inconsistency or conflict
between the terms of the Plan and an Award Agreement, the terms of the
Plan shall govern.
|
Section
7.
|
Amendment and
Termination.
|
(a)
Amendments to the
Plan
. The Board or the Committee may amend, suspend,
discontinue or terminate the Plan, including, without limitation, any amendment,
suspension, discontinuation or termination that would impair the rights of any
Participant, or any other holder or beneficiary of any Award theretofore
granted, without the consent of any shareholder, Participant, other holder or
beneficiary of an Award, or other Person; provided, however, that,
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the shareholders of Olin, no such amendment, suspension,
discontinuation or termination shall be made that would:
(i)
|
increase
the total number of Shares available for Awards under the Plan or the
total number of Shares subject to one or more categories of Awards
pursuant to Section 4(c), in either case except as provided in Section
4(b);
|
(ii)
|
reduce
the minimum Option exercise price, except as provided in Section 4(b);
or
|
(iii)
|
permit
repricing of Options prohibited by Section 6(f)(ii);
and
|
provided further
that
no amendment, suspension, discontinuation or termination (i) that would impair
the rights of such Participant, holder or beneficiary shall be made with respect
to Section 9 of the Plan after a Change in Control, as defined therein and (ii)
may increase the amount of payment of any Award to any Participant.
(b)
Amendments to
Awards
. The Committee may waive any conditions or rights with
respect to, or amend, alter, suspend, discontinue, or terminate, any unexercised
Award theretofore granted, prospectively or retroactively, without the consent
of any relevant Participant or holder or beneficiary of an Award, provided that
no amendment, alteration, suspension, discontinuation or termination of an Award
that would impair the rights of such Participant, holder or beneficiary shall be
made after a Change in Control, as defined in Section 9; provided further that
the Committee may not increase the payment of any Award granted any
Participant.
(c)
Adjustments of Awards Upon
Certain Acquisitions
. In the event Olin or any Affiliate shall
assume outstanding employee awards or the right or obligation to make future
such awards in connection with the acquisition of another business or another
Person, the Committee may make such adjustments, not inconsistent with the terms
of the Plan, in the terms of Awards as it shall deem appropriate.
(d)
Adjustments of Awards Upon
the Occurrence of Certain Unusual or Nonrecurring Events
. The
Committee may make adjustments in the terms and conditions of Awards in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4(b) hereof) affecting Olin, any Affiliate, or
the financial statements of Olin or any Affiliate, or of changes in applicable
laws, regulations, or accounting principles, whenever the Committee determines
that statements of Olin or any Affiliate, or of changes in applicable laws,
regulations, or accounting principles, whenever the Committee determines that
such adjustments are appropriate in order to prevent dilution or enlargement of
the benefits to be made available under the Plan.
(e)
409A
Compliance
. To the extent any provision of the Plan (or any
Award) or action by the Board or Committee would subject any Participant to
liability for interest or additional taxes under Code Section 409A, it will be
deemed null and void, to the extent permitted by law and deemed advisable by the
Committee. It is intended that the Plan (and any Award) will comply
with Code Section 409A, and the Plan (and any Award) shall be interpreted and
construed on a basis consistent with such intent. The Plan (and any
Award) may be amended in any respect deemed necessary (including retroactively)
by the Committee in order to preserve compliance with Code Section
409A. The preceding shall not be construed as a guarantee of any
particular tax effect for Plan benefits or Awards. Except as
specifically provided in Section 9, a Participant (or beneficiary) is solely
responsible and liable for the satisfaction of all taxes and penalties that may
be imposed on the Participant (or beneficiary) in connection with any
distributions to such Participant (or beneficiary) under the Plan (including any
taxes and penalties under Code Section 409A), and neither Olin nor any Affiliate
shall have any obligation to indemnify or otherwise hold a Participant (or
beneficiary) harmless from any or all of such taxes or penalties.
Section
8.
|
Additional Conditions
to Enjoyment of Awards.
|
(a)
The
Committee may cancel any unexpired, unpaid or deferred Awards if at any time the
Participant is not in compliance with all applicable provisions of the Award
Agreement, the Plan and the following conditions:
(i)
|
A
Participant shall not render services for any Person or engage, directly
or indirectly, in any business which, in the judgment of the Committee is
or becomes competitive with Olin or any Affiliate, or which is or becomes
otherwise prejudicial to or in conflict with the interests of Olin or any
Affiliate. Such judgment shall be based on the Participant’s positions and
responsibilities while employed by Olin or an Affiliate, the Participant’s
post employment responsibilities and position with the other Person or
business, the extent of past, current and potential competition or
conflict between Olin or an Affiliate and the other Person or business,
the effect on customers, suppliers and competitors of the Participant’s
assuming the post employment position, the guidelines established in the
then current edition of Olin’s Standards of Ethical Business Practices,
and such other considerations as are deemed relevant given the applicable
facts and circumstances. The Participant shall be free, however, to
purchase as an investment or otherwise, stock or other securities of such
Person or business so long as they are listed upon a recognized securities
exchange or traded over the counter, and such investment does not
represent a substantial investment to the Participant or a greater than 1%
equity interest in the organization or
business.
|
(ii)
|
Participant
shall not, without prior written authorization from Olin, disclose to
anyone outside Olin, or use in other than Olin’s business, any secret or
confidential information, knowledge or data, relating to the business of
Olin or an Affiliate in violation of his or her agreement with Olin or the
Affiliate.
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(iii)
|
A
Participant, pursuant to his or her agreement with Olin or an Affiliate,
shall disclose promptly and assign to Olin or the Affiliate all right,
title and interest in any invention or idea, patentable or not, made or
conceived by the Participant during employment by Olin or the Affiliate,
relating in any manner to the actual or anticipated business, research or
development work of Olin or the Affiliate and shall do anything reasonably
necessary to enable Olin or the Affiliate to secure a patent where
appropriate in the United States and in foreign
countries.
|
(b)
Notwithstanding
any other provision of the Plan, the Committee in its sole discretion may cancel
any Award at any time prior to the exercise thereof, if the employment of the
Participant shall be terminated, other than by reason of death, unless the
conditions in this Section 8 are met.
(c)
Failure
to comply with the conditions of this Section 8 prior to, or during the six
months after, any exercise, payment or delivery pursuant to an Award shall cause
the exercise, payment or delivery to be rescinded. Olin shall notify the
Participant in writing of any such rescission within two years after such
exercise payment or delivery and within 10 days after receiving such notice, the
Participant shall pay to Olin the amount of any gain realized or payment
received as a result of the exercise, payment or delivery rescinded. Such
payment shall be made either in cash or by returning to Olin the number of
Shares that the Participant received in connection with the rescinded exercise,
payment or delivery.
(d)
Upon
exercise, payment or delivery pursuant to an Award, the Committee may require
the Participant to acknowledge the terms and conditions of the Plan and to
certify on a form acceptable to the Committee, that he or she is in compliance
with the terms and conditions of the Plan.
(e)
Nothing
herein shall be interpreted to limit the obligations of a Participant under his
or her employee agreement or any other agreement with Olin.
Section
9.
|
Change in
Control.
|
(a)
Except as
the Board or the Committee may expressly provide otherwise prior to a Change in
Control of Olin (as defined in Section 9(b)) in the event of a Change in Control
of Olin:
(i)
|
all
Options and Stock Appreciation Rights then outstanding shall become
immediately and fully exercisable, notwithstanding any provision therein
for the exercise in installments;
|
(ii)
|
all
restrictions and conditions of all Restricted Stock then outstanding shall
be deemed satisfied as of the date of the Change in
Control;
|
(iii)
|
to
the extent that Performance Share Awards and Restricted Stock Units are
not subject to Code Section 409A, such awards shall become vested, deemed
earned or satisfied in full, and promptly paid to Participants, cash units
in cash and phantom stock units in the Shares represented thereby or such
other securities, property or cash as may be deliverable in respect of
Shares as a result of a Change in Control, without regard to payment
schedules and notwithstanding that the applicable performance cycle,
retention cycle or restriction conditions shall not have been completed or
met; and
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(iv)
|
to
the extent that Performance Share Awards and Restricted Stock Units are
subject to Code Section 409A, such awards shall become vested and deemed
earned or satisfied in full, notwithstanding that the applicable
performance cycle, retention cycle or restriction conditions shall not
have been completed or met. Such Performance Share Awards and
Restricted Stock Units shall be paid, cash units in cash and phantom stock
units in the Shares represented thereby or such other securities, property
or cash as may be deliverable in respect of Shares as a result of a Change
in Control, to the Participant at the time or schedule applicable to such
awards (assuming for these purposes that no such Change in Control had
occurred), provided that in the event of a 409A Change in Control of Olin
(as defined in Section 9(e), and which 409A Change in Control may occur
concurrently with or after the Change in Control), such awards shall be
paid to the Participants on or as soon as administratively feasible after
such 409A Change in Control of Olin, but no later than ten (10) business
days following such 409A Change in
Control.
|
(b)
“Change
in Control” means the occurrence of any one of the following
events:
(i)
|
individuals
who, on November 1, 2002, constitute the Board (the “Incumbent Directors”)
cease for any reason to constitute at least a majority of the Board;
provided
that
any individual becoming a director subsequent to November 1, 2002, whose
election or nomination for election was approved (either by a specific
vote or by approval of the proxy statement of Olin in which such
individual is named as a nominee for director, without written objection
to such nomination) by a vote of at least two-thirds of the directors who
were, as of the date of such approval, Incumbent Directors, shall be an
Incumbent Director;
provided
,
however
, that
no individual initially appointed, elected or nominated as a director of
Olin as a result of an actual or threatened election contest with respect
to directors or as a result of any other actual or threatened solicitation
of proxies or consents by or on behalf of any Person other than the Board
shall be deemed to be an Incumbent
Director;
|
(ii)
|
any
“person” (as such term is defined in Section 3(a)(9) of the Securities
Exchange Act of 1934 (the “Act”) and as used in Sections 13(d)(3) and
14(d)(2) of the Act) is or becomes a “beneficial owner” (as defined in
Rule 13d-3 under the Act), directly or indirectly, of securities of Olin
representing 20% or more of the combined voting power of Olin’s then
outstanding securities eligible to vote for the election of the Board (the
“Olin Voting Securities”);
provided
,
however
, that
the event described in this paragraph (ii) shall not be deemed to be a
Change in Control if such event results from any of the following: (A) the
acquisition of Olin Voting Securities by Olin or any of its subsidiaries,
(B) the acquisition of Olin Voting Securities by any employee benefit plan
(or related trust) sponsored or maintained by Olin or any of its
subsidiaries, (C) the acquisition of Olin Voting Securities by any
underwriter temporarily holding securities pursuant to an offering of such
securities, or (D) the acquisition of Olin Voting Securities pursuant to a
Non-Qualifying Transaction (as defined in paragraph
(iii));
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(iii)
|
the
consummation of a merger, consolidation, statutory share exchange or
similar form of corporate transaction involving Olin or any of its
subsidiaries (a “Reorganization”) or sale or other disposition of all or
substantially all of the assets of Olin to an entity that is not an
affiliate of Olin (a “Sale”), unless immediately following such
Reorganization or Sale: (A) more than 50% of the total voting power (in
respect of the election of directors, or similar officials in the case of
an entity other than a corporation) of (x) the entity resulting from such
Reorganization, or the entity which has acquired all or substantially all
of the assets of Olin (in either case, the “Surviving Entity”), or (y) if
applicable, the ultimate parent entity that directly or indirectly has
beneficial ownership of more than 50% of the total voting power (in
respect of the election of directors, or similar officials in the case of
an entity other than a corporation) of the Surviving Entity (the “Parent
Entity”), is represented by Olin Voting Securities that were outstanding
immediately prior to such Reorganization or Sale (or, if applicable, is
represented by shares into which such Olin Voting Securities were
converted pursuant to such Reorganization or Sale), and such voting power
among the holders thereof is in substantially the same proportion as the
voting power of such Olin Voting Securities among the holders thereof
immediately prior to the Reorganization or Sale, (B) no Person (other than
any employee benefit plan (or related trust) sponsored or maintained by
the Surviving Entity or the Parent Entity), is or becomes the beneficial
owner, directly or indirectly, of 20% or more of the total voting power
(in respect of the election of directors, or similar officials in the case
of an entity other than a corporation) of the outstanding voting
securities of the Parent Entity (or, if there is no Parent Entity, the
Surviving Entity) and (C) at least a majority of the members of the board
of directors (or similar officials in the case of an entity other than a
corporation) of the Parent Entity (or, if there is no Parent Entity, the
Surviving Entity) following the consummation of the Reorganization or Sale
were, at the time of the approval by the Board of the execution of the
initial agreement providing for such Reorganization or Sale, Incumbent
Directors (any Reorganization or Sale which satisfies all of the criteria
specified in (A), (B) and (C) above being deemed to be a “Non-Qualifying
Transaction”);
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(iv)
|
the
stockholders of Olin approve a plan of complete liquidation or dissolution
of Olin.
|
Notwithstanding
the foregoing, the acquisition by any Person of beneficial ownership of 20% or
more of the combined voting power of Olin Voting Securities solely as a result
of the acquisition of Olin Voting Securities by Olin which reduces the number of
Olin Voting Securities outstanding shall be deemed not to result in a Change in
Control;
provided
,
however
, that if such
Person subsequently becomes the beneficial owner of additional Olin Voting
Securities that increases the percentage of outstanding Olin Voting Securities
beneficially owned by such Person, a Change in Control of Olin shall then be
deemed to occur.
(c)
In the
event that a Participant participates or agrees to participate by loan or equity
investment (other than through ownership of less than I% of publicly traded
securities of another company) in a transaction (“acquisition”) which would
result in an event described in Section 9(b)(i) or (ii), the Participant must
promptly disclose such participation or agreement to Olin. If the Participant so
participates or agrees to participate, no benefits or payments due under the
Plan or by virtue of the Change in Control provisions contained in any
compensation or benefit plan of Olin will be paid to the Participant until the
acquiring group in which the Participant participates or agrees to participate
has completed the acquisition. In the event the Participant so participates or
agrees to participate and fails to disclose his participation or agreement, the
Participant will not be entitled to any benefits or payments under the Plan or
by virtue of Change in Control provisions in any Olin compensation or benefit
plan, notwithstanding any of the terms hereof or thereof.
(d)
Anything
in the Plan to the contrary notwithstanding, in the event that it shall be
determined that any benefit, payment or distribution by Olin to or for the
benefit of the Participant (whether paid or payable or distributed or
distributable) pursuant to the terms of the Plan but determined without regard
to any additional payments required under this Section 9(d), would be subject to
the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as
amended, the Participant shall be entitled to receive an additional payment (the
“Gross-Up Payment”) in an amount equal to (i) the amount of the excise tax
imposed on the Participant in respect of the benefits or payments received
pursuant to the Plan (the “Excise Tax”) plus (ii) all federal, state and local
income, employment and excise taxes (including any interest or penalties imposed
with respect to such taxes) imposed on the Participant in respect of the
Gross-Up Payment, such that after payments of all such taxes (including any
applicable interest or penalties) on the Gross-Up Payment, the Participant
retains a portion of the Gross-Up Payment equal to the Excise Tax, provided
that, if the Participant receives a Gross-Up Payment with respect to benefits or
payments received under the Plan pursuant to another benefit or compensation
plan or agreement, the Gross-Up Payment under this Section 9(d) shall be reduced
by the amount of such other Gross-Up Payments paid in respect to the Excise Tax
due as the result of the benefits or payments received under the
Plan. The payment of any Gross-up Payment by Olin to the Participant
shall be made within 5 days of its determination and in no event shall such date
be later than the last day of the calendar year after the calendar year in which
the applicable Excise Tax is paid.
(e)
A “409A
Change in Control of Olin” means the occurrence of any of the following
events:
(i)
|
any
person or Group acquires ownership of Olin’s stock that, together with
stock held by such person or Group, constitutes more than 50% of the total
fair market value or total voting power of Olin’s stock, (including an
increase in the percentage of stock owned by any person or Group as a
result of a transaction in which Olin acquires its stock in exchange for
property, provided that the acquisition of additional stock by any person
or Group deemed to own more than 50% of the total fair market value or
total voting power of Olin’s stock on January 1, 2005, shall not
constitute a 409A Change in Control);
or
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(ii)
|
any
person or Group acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or Group)
ownership of Olin stock possessing 30% or more of the total voting power
of Olin stock; or
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(iii)
|
a
majority of the members of Olin’s board of directors is replaced during
any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of Olin’s board of directors prior
to the date of the appointment or election;
or
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(iv)
|
any
person or Group acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or Group)
assets from Olin that have a total Gross Fair Market Value equal to 40% or
more of the total Gross Fair Market Value of all Olin assets immediately
prior to such acquisition or acquisitions, provided that there is no 409A
Change in Control when Olin’s assets are transferred
to:
|
(1)
|
a
shareholder of Olin (immediately before the asset transfer) in exchange
for or with respect to Olin stock;
|
(2)
|
an
entity, 50% or more of the total value or voting power of which is owned,
directly or indirectly, by Olin;
|
(3)
|
a
person or Group that owns, directly or indirectly, 50% or more of the
total value or voting power of all outstanding Olin stock;
or
|
(4)
|
an
entity, at least 50% of the total value or voting power of which is owned,
directly or indirectly, by a person described in paragraph
(iii).
|
For
purposes of the above sub-paragraph (iv), a person’s status is determined
immediately after the transfer of the assets. For example, a transfer
to a corporation in which Olin has no ownership interest before the transaction,
but which is a majority-owned subsidiary of Olin after the transaction is not a
409A Change in Control.
For
purposes of this Section 9(e), “Gross Fair Market Value” means the value of
assets determined without regard to any liabilities associated with such
assets.
For
purposes of this Section 9(e), “Group” means persons acting together for the
purpose of acquiring Olin stock and includes owners of a corporation that enters
into a merger, consolidation, purchase or acquisition of stock, or similar
business transaction with Olin. If a person owns stock in both Olin
and another corporation that enter into a merger, consolidation purchase or
acquisition of stock, or similar transaction, such person is considered to be
part of a Group only with respect to ownership prior to the merger or other
transaction giving rise to the change and not with respect to the ownership
interest in the other corporation. Persons will not be considered to
be acting as a Group solely because they purchase assets of the same corporation
at the same time, or as a result of the same public offering.
(f)
Following
a Change in Control or 409A Change of Control, no action shall be taken under
the Plan that will cause any Award that has previously been determined to be (or
is determined to be) subject to Code Section 409A to fail to comply in any
respect with Code Section 409A without the written consent of the
Participant.
Section
10.
|
Effective Date and
Term.
|
Subject
to the approval of Olin’s shareholders at the 2000 annual shareholders meeting
the Plan shall be effective as of January 27, 2000 (the “Effective Date”);
provided, however, that to the extent that Awards are granted under the Plan
prior to its approval by shareholders, the Awards shall be contingent on
approval of the Plan by the shareholders of Olin at such annual meeting. The
Plan shall be unlimited in duration and, in the event of Plan termination, shall
remain in effect as long as any Awards under it are outstanding; provided;
however, that, to the extent required by the Code, no Incentive Stock Option may
be granted under the Plan on a date that is more than ten years from the date
the Plan is adopted.
Exhibit
10.7
OLIN
CORPORATION
2003
LONG TERM INCENTIVE PLAN
(Codified
as of October 22, 2008)
Section
1.
Purpose
.
The
general purposes of the Olin Corporation 2003 Long Term Incentive Plan (the
“Plan”) are to (i) attract and retain persons eligible to participate in the
Plan; (ii) motivate Participants, by means of appropriate incentives, to achieve
long-range goals; (iii) provide incentive compensation opportunities that are
competitive with those of other similar companies; and (iv) further identify
Participants’ interests with those of other shareholders of Olin Corporation
(together with any successor, “Olin”) through compensation that is based on
Olin’s common stock; and thereby promote the long-term financial interest of
Olin and its Affiliates, including growth in the value of Olin’s equity and
enhancement of long-term shareholder return.
Section
2.
Definitions
.
As used
in the Plan:
(a)
“Affiliate”
means any corporation, partnership, joint venture or other entity during any
period in which Olin owns, directly or indirectly, at least 50% of the total
voting or profits interest.
(b)
“Award”
means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock
Unit, Performance Share or Dividend Equivalent granted under the
Plan.
(c)
“Award
Agreement” means any written agreement or other instrument or document
evidencing an Award granted under the Plan. The terms of any plan or
guideline adopted by the Board or the Committee and applicable to an Award shall
be deemed incorporated in and a part of the related Award
Agreement.
(d)
“Board”
means the Board of Directors of Olin.
(e)
“Code”
means the Internal Revenue Code of 1986, as amended. A reference to
any provision of the Code shall include reference to any successor provision of
the Code.
(f)
“Committee”
means a committee of the Board designated by the Board to administer the Plan,
each member of which is an “outside director” for purposes of Section 162(m) of
the Code and a “non-employee director” for the purpose of Rule 16b-3, and, to
the extent the Committee delegates authority to one or more individuals in
accordance with the Plan, such individual(s).
(g)
“Dividend
Equivalent” means any right granted under Section 6(c)(ii) of the
Plan.
(h)
“Employee”
means any employee of Olin or of an Affiliate.
(i)
“Exchange
Act” means the Securities Exchange Act of 1934.
(j)
“Fair
Market Value” means, with respect to shares of Olin common stock, the mean of
the high and low per share sales prices of such common stock as reported on the
consolidated transaction reporting system for New York Stock Exchange issues as
of the relevant date, or the last preceding trading date, if such Shares were
not traded on such date, and, with respect to any other property (including,
without limitation, securities other than Shares), the fair market value of such
property determined by such methods or procedures as shall be established from
time to time by the Committee.
(k)
“Family
Member” means any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationship, or any person sharing the Participant’s household, other than a
tenant or employee.
(l)
“Incentive
Stock Option” means an option to purchase Shares granted under the Plan that is
intended to meet the requirements of Section 422 of the Code.
(m)
“Incumbent
Directors” means the individuals who, on the date this Plan is approved by
shareholders, constitute the Board.
(n)
“Non-Qualified
Stock Option” means an option to purchase Shares granted under the Plan that is
not intended to be an Incentive Stock Option.
(o)
“Olin
Voting Securities” means Olin’s then outstanding securities eligible to vote for
the election of the Board.
(p)
“Option”
means an Incentive Stock Option or a Non-Qualified Stock Option.
(q)
“Participant”
means an Employee granted an Award under the Plan.
(r)
“Performance
Share” means any grant of a right to receive Shares which is contingent on the
achievement of performance or other objectives during a specified
period.
(s)
“Person”
has the meaning of such term in Section 3(a)(9) of the Exchange Act and as used
in Sections 13(d)(3) and 14(d)(2) of the Exchange Act.
(t)
“Released
Securities” means securities that were Restricted Securities with respect to
which all applicable restrictions imposed under the terms of the relevant Award
have expired, lapsed or been waived or satisfied.
(u)
“Restricted
Securities” means Awards of Restricted Stock or other Awards under which
outstanding Shares are held subject to certain restrictions.
(v)
“Restricted
Stock” means any grant of Shares, and “Restricted Stock Unit” means the grant of
a right to receive Shares in the future, with such Shares or right to future
delivery of Shares subject to a risk of forfeiture or other restrictions that
will lapse upon the achievement of one or more goals relating to completion of
service by the Participant, or achievement of performance or other objectives,
as determined by the Committee.
(w)
“Rule
16b-3” means Rule 16b-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, or any successor
rule.
(x)
“Shares”
means the common stock of Olin and such other securities or property as may
become the subject of Awards pursuant to an adjustment made under Section 4(b)
of the Plan.
(y)
“Stock
Appreciation Right” or “SAR” means any such right granted under Section 6(b) of
the Plan.
Section
3.
Administration
.
(a)
Powers of
Committee
. The Plan shall be administered by the Committee
which shall have full power and authority to: (i) designate Participants; (ii)
determine the Awards to be granted to Participants; (iii) determine the number
of Shares (or securities convertible into Shares) to be covered by Awards; (iv)
determine the terms and conditions of any Award; (v) determine whether, to what
extent, and under what circumstances Awards may be settled or exercised in cash,
Shares, other securities, other Awards, or other property, or canceled,
substituted, forfeited or suspended, and the method or methods by which Awards
may be settled, exercised, canceled, substituted, forfeited or suspended,
provided that no such action will result in repricing of Options prohibited by
Section 3(e); (vi) determine whether, to what extent, and under what
circumstances cash, Shares, other securities, other Awards, other property and
other amounts payable with respect to an Award under the Plan shall be deferred
either automatically or at the election of the Participant or of the Committee;
(vii) interpret and administer the Plan and any instrument or agreement relating
to, or Award made under, the Plan; (viii) establish, amend, suspend or waive
such rules and guidelines and appoint such agents as it shall deem appropriate
for the administration of the Plan; and (ix) make any other determination and
take any other action that it deems necessary or desirable for such
administration.
(b)
Committee
Discretion
. All designations, determinations, interpretations
and other decisions with respect to the Plan or any Award shall be within the
sole discretion of the Committee and shall be final, conclusive and binding upon
all Persons, including Olin, any Affiliate, any Participants, any holder or
beneficiary of any Award, any shareholder and any employee of Olin or of any
Affiliate. The Committee’s powers include the adoption of
modifications, amendments, procedures, subplans and the like as are necessary to
comply with provisions of the laws of other countries in which Olin or an
Affiliate may operate in order to assure the viability of Awards granted under
the Plan and to enable Participants employed in such other countries to receive
benefits under the Plan and such laws, provided that no such action results in
repricing of Options prohibited by Section 3(e).
(c)
Board
Authority
. If the Committee does not exist, or for any other
reason determined by the Board, the Board may take any action under the Plan
that would otherwise be the responsibility of the Committee.
(d)
Delegation
. Notwithstanding
any provision of the Plan to the contrary, except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the Committee may
delegate to one or more officers or managers of Olin or any Affiliate, or a
committee of such officers or managers, the authority, subject to such terms and
limitations as the Committee shall determine, to grant Awards to, or to cancel,
modify, waive rights or conditions with respect to, alter, discontinue, suspend,
or terminate Awards held by, Employees who are not officers or directors of Olin
for purposes of Section 16 of the Securities Exchange Act of 1934, as amended,
provided that no such action shall result in repricing of Options prohibited by
Section 3(e).
(e)
Prohibition on Option
Repricing
. Notwithstanding any other provision of the Plan,
neither the Board nor the Committee may reprice, replace or regrant any Option
granted under the Plan or any other plan of Olin, (i) through cancellation and
replacement or regrant with lower priced options or (ii) by lowering the option
exercise price of a previously granted award, without the prior approval of
Olin’s shareholders.
Section
4.
Shares Available for
Awards
.
(a)
Shares
Available
. Subject to adjustment as provided in Section 4(b)
of the Plan:
(i)
|
The
aggregate number of Shares available for granting Awards under the Plan
shall be 1,700,000.
|
(ii)
|
For
purposes of this Section 4, other than Sections 4(c)(ii) and
4(c)(iii):
|
(A)
|
If
any Shares covered by an Award are not delivered to a Participant or
beneficiary because the Award is forfeited or canceled, or if the Shares
are not delivered because the Award is settled in cash or used to satisfy
the applicable tax withholding obligation, such Shares shall not be deemed
to have been delivered for purposes of determining the maximum number of
Shares available for delivery under the Plan;
and
|
(B)
|
If
the exercise price of any Option granted under the Plan is satisfied by
tendering Shares (by either actual delivery or by attestation), only the
number of Shares issued net of the Shares tendered shall be deemed
delivered for purposes of determining the maximum number of Shares
available for delivery under the
Plan.
|
(b)
Adjustments
. In
the event of any change in the Shares by reason of stock dividends, stock
splits, recapitalization, mergers, consolidations, combinations or exchanges of
shares, split-ups, split-offs, spin-offs, liquidations or other similar changes
in capitalization, or any distributions to shareholders other than cash
dividends, (i) the numbers, class and prices of Shares covered by outstanding
Awards under the Plan (provided that no such adjustment shall result in
repricing of Options prohibited by Section 3(e) of the Plan), (ii) the aggregate
number and class of Shares available under the Plan, and (iii) the numbers and
class of Shares that may be the subject of Awards pursuant to Section 4(c),
shall be adjusted by the Committee, whose determination shall be
conclusive.
(i)
|
Without
limiting the foregoing, in the event of any split-up, split-off, spin-off
or other distribution to shareholders of shares representing a part of
Olin’s business, properties and assets, the Committee may modify an
outstanding Award so that such Award shall thereafter relate to Shares of
Olin and shares of capital stock of the corporation owning the business,
properties and assets so split-up, split-off, spun-off or otherwise
distributed to shareholders of Olin in the same ratio in which holders of
the Shares became entitled to receive shares of capital stock of the
corporation owning the business, properties and assets so split-up,
split-off or spun-off or otherwise distributed, provided that no such
action results in repricing of Options prohibited by Section
3(e).
|
(ii)
|
With
respect to Awards of Incentive Stock Options, no such adjustment shall be
authorized to the extent that such authority would cause the Plan to
violate Section 422 of the Code or any successor provision thereto, unless
the holder of such Award of Incentive Stock Options agrees to convert such
options to Non-qualified Stock
Options.
|
(iii)
|
Notwithstanding
the foregoing, a Participant to whom Dividend Equivalents or dividend
units have been awarded shall not be entitled to receive a special or
extraordinary dividend or distribution unless the Committee shall have
expressly authorized such receipt.
|
(c)
Additional
Restrictions
. Subject to adjustment as provided in Section
4(b), the following additional maximums are imposed under the Plan:
(i)
|
The
maximum number of Shares that may be issued for Options intended to be
Incentive Stock Options shall be 500,000
Shares.
|
(ii)
|
For
any Award intended to be “performance-based compensation” (as that term is
used for purposes of Code Section 162(m)), no more than 300,000 Shares may
be subject to Options and Stock Appreciation Rights granted to any one
individual during any calendar-year period (regardless of when such Shares
are deliverable).
|
(iii)
|
For
any Award intended to be “performance-based compensation” (as that term is
used for purposes of Code Section 162(m)) other than an Option or Stock
Appreciation Right payable in Shares, no more than 150,000 Shares plus no
more than $1,000,000 may be subject to such other Awards granted to any
one individual during any calendar-year period (regardless of when such
Shares or cash are deliverable).
|
(iv)
|
No
more than 800,000 Shares may be issued pursuant to Restricted Stock
Awards, Restricted Stock Unit Awards and Performance Share Awards under
this Plan.
|
Section
5.
Eligibility
.
Any
Employee, including any officer or employee-director, of Olin or an Affiliate
shall be eligible to be designated a Participant, subject to any restrictions
imposed by applicable law. An Award may be granted to an Employee
prior to the date the Employee first performs services for the Company or the
Affiliate, provided that such Awards shall not become vested prior to the date
the Employee first performs such services.
Section
6.
Awards
.
(a)
Options
. The
Committee is authorized to grant Options to Participants with the following
terms and conditions and with such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall
determine:
(i)
|
Exercise
Price
. The per Share exercise price shall be determined
by the Committee, provided that such exercise price shall not be less than
the Fair Market Value of a Share on the date of the Option
grant.
|
(ii)
|
Option
Term
. The term of each Option shall be fixed by the
Committee, provided that in no event shall the term of an Option be more
than a period of ten years from the date of its
grant.
|
(iii)
|
Exercise
. The
Committee shall determine the time or times at which an Option may be
exercised in whole or in part, and the method or methods by which, and the
form or forms in which payment of the exercise price with respect thereto
may be made.
|
(iv)
|
Incentive Stock
Options
. The terms of any Incentive Stock Option granted
under the Plan shall comply in all respects with the provisions of Section
422 of the Code, or any successor provision thereto, and any regulations
promulgated thereunder. Without limiting the preceding
sentence, the aggregate Fair Market Value (determined at the time an
option is granted) of Shares with respect to which Incentive Stock Options
are exercisable for the first time by a Participant during any calendar
year (under the Plan and any other plan of the Participant’s employer
corporation and its parent and subsidiary corporations providing for
Options) shall not exceed such dollar limitation as shall be applicable to
Incentive Stock Options under Section 422 of the Code or a successor
provision.
|
(v)
|
Termination of
Employment
. In the event the employment of a Participant
to whom an Option has been granted under the Plan shall be terminated
(other than by reason of the Participant’s death or disability), such
Option may, subject to the provisions of the next to last sentence of
Section 6(a)(vi) be exercised (to the extent of the number of shares that
the Participant was entitled to purchase under such Option at the
termination of employment) at any time within three months after such
termination (which three-month period may be extended by the Committee),
but in no event shall such three-month period or any such extension permit
the exercise of an Option after the expiration date of the
Option. Options granted under the Plan shall not be affected by
any change of duties or position so long as the Participant continues to
be an Employee.
|
(vi)
|
Agreement to
Service
. Each Participant receiving an Option shall, by
accepting the Option, agree that he or she will, during employment, devote
his or her entire time, energy and skill to the service of Olin and the
promotion of its interests, subject to vacations, sick leave and other
absences in accordance with the regular policies of, or other reasons
satisfactory to, Olin and its Affiliates. Such employment shall
(subject to the terms of any contract between Olin or any such Affiliate
and such Participant) be at the pleasure of Olin or such Affiliate, and
shall be at such compensation as Olin or such Affiliate shall determine
from time to time. Upon termination of such Participant’s
employment either (a) for cause, or (b) voluntarily on the part of the
Participant and without the written consent of Olin, any Awards held by
him or her under the Plan, to the extent not theretofore exercised or
vested, shall forthwith terminate. Retirement pursuant to any
retirement plan of Olin or of an Affiliate shall be deemed to be a
termination of employment with Olin’s
consent.
|
(vii)
|
Death
. If
a Participant to whom an Option has been granted shall die while an
Employee, such Option may be exercised by the Participant’s executors,
administrators, personal representatives or distributees or permitted
transferees at any time within a period of one year after the
Participant’s death (which period may be extended by the Committee),
regardless of whether or not such Option had vested at the time of
death. If a Participant to whom an Option has been granted
shall die after his or her employment has terminated but while the Option
remains exercisable, the Option may be exercised by the persons described
above at any time within the longer of (a) the period that the Participant
could have exercised the Option had he or she not died, or (b) one year
after the date of death (which period may be extended by the Committee),
but only to the extent the Option was exercisable at the time of the
Participant’s death.
|
(viii)
|
Disability
. If
a Participant to whom an Option has been granted shall become totally and
permanently disabled, as that term is defined in Section 22(e)(3) of the
Code (or a successor provision), and the Participant’s employment is
terminated as a result, such option may be exercised by the Participant or
permitted transferee within one year after the date of termination of
employment, to the extent that the Option was exercisable at the time of
termination of employment.
|
(b)
Stock Appreciation
Rights
. The Committee is authorized to grant Stock
Appreciation Rights to Participants which may but need not relate to a specific
Option granted under the Plan. Subject to the terms of the Plan and
any applicable Award Agreement, each Stock Appreciation Right granted under the
Plan shall confer on the holder thereof aright to receive, upon exercise
thereof, up to the excess of (i) the Fair Market Value of one Share on the date
of exercise over (ii) the exercise price of the right as specified by the
Committee, which shall not be less than the Fair Market Value of one Share on
the date of grant of the Stock Appreciation Right. Subject to the
terms of the Plan and any applicable Award Agreement, the exercise price, term,
methods of exercise, methods of payment or settlement, including whether such
SAR shall be paid in cash or Shares, and any other terms and conditions of any
Stock Appreciation Right shall be as determined by the Committee, but in no
event shall the term of a Stock Appreciation Right exceed a period of ten years
from the date of its grant.
(c)
Other Stock
Awards
.
(i)
|
Issuance
. The
Committee is authorized to grant Awards of Restricted Stock, Restricted
Stock Units and Performance Shares to
Participants.
|
(ii)
|
Dividends and Dividend
Equivalents
. An Award (including without limitation an
Option or Stock Appreciation Right) may provide the Participant with the
right to receive dividend payments or dividend equivalent payments with
respect to Shares subject to the Award (both before and after the Shares
subject to the Award are earned, vested, or acquired), which payments may
be either made currently or credited to an account for the Participant,
and may be settled in cash or Shares as determined by the Committee;
provided, however that, no dividend payments or dividend equivalent
payments shall be provided, permitted or credited to the extent that such
payments would cause an Option or Stock Appreciation Right to be subject
to Code Section 409A. Any such settlements, and any such
crediting of dividends or dividend equivalents or reinvestment in Shares,
may be subject to such conditions, restrictions and contingencies as the
Committee shall establish, including the reinvestment of such credited
amounts in Share equivalents.
|
(iii)
|
Restrictions
. Any
such Award shall be subject to such conditions, restrictions and
contingencies as the Committee may impose (including, without limitation,
any limitation on the right to vote Restricted Stock or the right to
receive any dividend or other right or property), which may lapse
separately or in combination at such time or times, as the Committee may
deem appropriate, provided that in order for a Participant to vest in
Awards of Restricted Stock, the Participant must remain in the employ of
Olin or an Affiliate for a period of not less than one (1) year after the
grant of a Restricted Stock Award that includes one or more performance
criteria, and not less than three (3) years after the grant of a
Restricted Stock Award that does not include one or more performance
criteria, in each case subject to Section 9 hereof and subject to relief
for specified reasons as may be approved by the
Committee. Notwithstanding the foregoing, the Committee may
grant Awards for Restricted Stock for an aggregate number of Shares not to
exceed 85,000 which vest in less than one (1) year after the date of
grant, including immediate vesting, with or without any performance
criteria.
|
(iv)
|
Forfeiture
. Except
as otherwise determined by the Committee, upon termination of employment
for any reason during the applicable restriction period, all Shares of
Restricted Stock still subject to restriction shall be forfeited and
reacquired by Olin.
|
(v)
|
Performance-Based
Awards
. The Committee may designate whether any such
Awards being granted to a Participant is intended to be “performance-based
compensation” as that term is used in Section 162(m) of the
Code. Any Award so designated shall be conditioned on the
achievement of one or more performance measures. Performance
measures that may be used by the Committee for such purpose shall be based
on one or more of the following criteria, on an absolute or a relative
basis:
|
(D)
|
Economic
Value Added/EVA
®
,
|
(J)
|
return
on net assets,
|
(L)
|
total
shareholder return.
|
For
Awards intended to be “performance-based compensation,” the grant of the Awards
and the establishment of the performance measures shall be made during the
period required under Code Section 162(m) and in accordance with Code Section
409A to the extent applicable.
(d)
Forms of Payment Under
Awards
. Subject to the terms of the Plan and of any applicable
Award agreement, payments to be made by Olin or an Affiliate upon the grant,
exercise, or payment of an Award may be made in such form or forms as the
Committee shall determine, including, without limitation, cash, Shares, other
securities, other Awards, or other property or any combination thereof, and may
be made in a single payment or transfer, in installments, or on a deferred
basis, in each case in accordance with rules and procedures established by the
Committee and in accordance with Code Section 409A to the extent
applicable. Notwithstanding the foregoing, the payment of the
exercise price of an Option shall be subject to the following:
(i)
|
Subject
to the following provisions of this subsection the full exercise price for
Shares purchased upon the exercise of any Option shall be paid at the time
of such exercise (except that, in the case of an exercise arrangement
approved by the Committee and described below, payment may be made as soon
as practicable after the exercise).
|
(ii)
|
The
exercise price shall be payable in cash or by tendering, by either actual
delivery of Shares or by attestation, Shares acceptable to the Committee,
which Shares were either acquired at least six months before the exercise
date or purchased on the open market, and valued at Fair Market Value as
of the day of exercise, or in any combination thereof, as determined by
the Committee.
|
(iii)
|
The
Committee may permit a Participant to elect to pay the exercise price upon
the exercise of an Option by irrevocably authorizing a third party to sell
Shares (or a sufficient portion of the Shares) acquired upon exercise of
an Option and remit to Olin a sufficient portion of the sale proceeds to
pay the entire exercise price and any tax withholding resulting from such
exercise.
|
(e)
Limits on Transfer of
Awards
. No Award (other than Released Securities) or right
thereunder shall be assignable or transferable by a Participant, other
than:
(i)
|
by
will or the laws of descent and distribution (or, in the case of an Award
of Restricted Securities, to Olin);
or
|
(ii)
|
in
the case of Awards other than Incentive Stock Options, to the extent
permitted under the terms of the Award, by a gift or domestic relations
order to any Family Member, to a trust in which the Participant and/or his
or her Family Members hold more than 50% of the beneficial interest, to a
foundation in which the Participant and/or Family Members control the
management of assets, and any other entity in which the Participant and/or
his or her Family Members own more than 50% of the voting
interests.
|
For
purposes of this provision, a transfer to an entity in exchange for an interest
in that entity shall constitute a gift.
(f)
General
.
(i)
|
No Cash Consideration
for Awards
. Participants shall not be required to make
any cash payment for the granting of an Award except for such minimum
consideration as may be required by applicable
law.
|
(ii)
|
Awards May Be Granted
Separately or Together
. Awards may be granted either
alone or in addition to, in tandem with, or in substitution for any other
Award or any award or benefit granted under any other plan or arrangement
of Olin or any Affiliate, or as payment for or to assure payment of an
award or benefit granted under any such other such plan or arrangement,
provided that the purchase or exercise price under an Option or other
Award encompassing the right to purchase Shares shall not be reduced by
the cancellation of such Award and the substitution of another
Award. Awards so granted may be granted either at the same time
as or at a different time from the grant of such other Awards or awards or
benefits.
|
(iii)
|
General
Restrictions
. Delivery of Shares or other amounts under
the Plan shall be subject to the
following:
|
(A)
|
Notwithstanding
any other provision of the Plan, Olin shall have no liability to deliver
any Shares under the Plan or make any other distribution of benefits under
the Plan unless such delivery or distribution would comply with all
applicable laws (including, without limitation, the requirements of the
Securities Act of 1933), and the applicable requirements of any securities
exchange or similar entity.
|
(B)
|
To
the extent that the Plan provides for issuance of stock certificates to
reflect the issuance of Shares the issuance may be effected on a
non-certificated basis, to the extent not prohibited by applicable law or
the applicable rules of any stock
exchange.
|
(iv)
|
Agreement With
Olin
. An Award under the Plan shall be subject to such
terms and conditions, not inconsistent with the Plan, as the Committee
shall, in its sole discretion, prescribe. The terms and
conditions of any Award to any Participant may be reflected in such form
of written document as is determined by the Committee. A copy
of such document shall be provided to the Participant, and the Committee
may, but need not, require the Participant to sign a copy of such
document, (an “Award Agreement” regardless of whether any Participant
signature is required).
|
(v)
|
Beneficiary
. A
Participant may, in the manner established by the Committee, designate a
beneficiary or beneficiaries with respect to any Award to exercise the
rights of the Participant, and to receive any property distributable, upon
the death of the Participant. Each Award, and each right under
any Award, shall be exercisable, during the Participant’s lifetime, only
by the Participant or a permitted transferee, or, if permissible under
applicable law by the Participant’s guardian or legal
representative.
|
(vi)
|
No Lien or Security
Interest
. No Award (other than Released Securities), and
no right under any such Award, may be pledged, attached or otherwise
encumbered other than in favor of Olin, and any purported pledge,
attachment, or encumbrance thereof other than in favor of Olin shall be
void and unenforceable against Olin or any
Affiliate.
|
(vii)
|
No Rights to
Awards
. No Employee, Participant or other Person shall
have any claim to be granted an Award, and there is no obligation for
uniformity of treatment of Employees, Participants or beneficiaries of
Awards under the Plan. The terms and conditions of Awards need
not be the same with respect to each recipient. The prospective
recipient of any Award under the Plan shall not, with respect to such
Award, be deemed to have become a Participant, or to have any rights with
respect to such Award, until and unless such recipient shall have executed
an agreement or other instrument accepting the Award required by the
Committee and delivered a fully executed copy thereof to Olin, and
otherwise complied with the then applicable terms and
conditions.
|
(viii)
|
Withholding
. All
distributions under the Plan are subject to withholding of all applicable
taxes, and, except as otherwise provided by the Committee, the delivery of
any Shares or other benefits under the Plan to a Participant are
conditioned on satisfaction of the applicable withholding
requirements. The Committee, in its discretion, and subject to
such requirements as the Committee may impose prior to the occurrence of
such withholding, may permit such withholding obligations to be satisfied
through cash payment by the Participant, through the surrender of Shares
which the Participant already owns, or through the surrender of Shares to
which the Participant is otherwise entitled under the
Plan.
|
(ix)
|
Other Compensation
Arrangements
. Nothing contained in the Plan shall
prevent Olin or any Affiliate from adopting or continuing in effect other
or additional compensation arrangements, and such arrangements may be
either generally applicable or applicable only in specific
cases.
|
(x)
|
No Right to
Employment
. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of Olin or
any Affiliate. Nothing in the Plan or any Award Agreement shall
limit the right of Olin or an Affiliate at any time to dismiss a
Participant from employment, free from any liability or any claim under
the Plan or the Award Agreement.
|
(xi)
|
Governing
Law
. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Connecticut, excluding any
conflicts or choice of law rule or principle that might otherwise refer
construction or interpretation of this Plan or any award Agreement to the
substantive law of another
jurisdiction.
|
(xii)
|
Severability
. If
any provision of the Plan or any Award is determined to be invalid,
illegal or unenforceable, or as to any Person or Award, or would
disqualify the Plan or any Award, such provision shall be construed or
deemed amended to conform to applicable laws, or, if it cannot be so
construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such Person or Award, and the remainder
of the Plan and any such Award shall remain in full force and
effect.
|
(xiii)
|
No Trust or Fund
Created
. Neither the Plan nor any Award shall create or
be construed to create a trust or separate fund of any kind or a fiduciary
relationship between Olin or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to
receive payments from Olin or any Affiliate pursuant to an Award, such
right shall be no greater than the right of any unsecured general creditor
of Olin or any Affiliate.
|
(xiv)
|
No Fractional
Shares
. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities or other property shall be paid
or transferred in lieu of any fractional Shares, or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.
|
(xv)
|
Share
Certificates
. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other securities
are then listed, and any applicable Federal or state securities laws, and
the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such
restrictions.
|
(xvi)
|
Conflict with
Plan
. In the event of any inconsistency or conflict
between the terms of the Plan and an Award Agreement, the terms of the
Plan shall govern.
|
Section
7.
Amendment and
Termination
.
(a)
Amendments to the
Plan
. The Board or the Committee may amend, suspend,
discontinue or terminate the Plan, including, without limitation, any amendment,
suspension, discontinuation or termination that would impair the rights of any
Participant, or any other holder or beneficiary of any Award theretofore
granted, without the consent of any shareholder, Participant, other holder or
beneficiary of an Award, or other Person; provided, however, that,
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the shareholders of Olin, no such amendment, suspension,
discontinuation or termination shall be made that would:
(i)
|
increase
the total number of Shares available for Awards under the Plan or the
total number of Shares subject to one or more categories of Awards
pursuant to Section 4(c), in either case except as provided in Section
4(b);
|
(ii)
|
reduce
the minimum Option exercise price, except as provided in Section 4(b);
or
|
(iii)
|
permit
repricing of Options prohibited by Section 3(e);
and
|
provided further
that
no amendment, suspension, discontinuation or termination (i) that would impair
the rights of such Participant, holder or beneficiary shall be made with respect
to Section 9 of the Plan after a Change in Control, as defined therein and (ii)
may increase the amount of payment of any Award to any Participant.
(b)
Amendments to
Awards
. The Committee may waive any conditions or rights with
respect to, or amend, alter, suspend, discontinue, or terminate, any unexercised
Award theretofore granted, prospectively or retroactively, without the consent
of any relevant Participant or holder or beneficiary of an Award, provided that
no amendment, alteration, suspension, discontinuation or termination of an Award
that would impair the rights of such Participant, holder or beneficiary shall be
made after a Change in Control, as defined in Section 9; provided further that
the Committee may not increase the payment of any Award granted any
Participant.
(c)
Adjustments of Awards Upon
Certain Acquisitions
. In the event Olin or any Affiliate shall
assume outstanding employee awards or the right or obligation to make future
such awards in connection with the acquisition of another business or another
Person, the Committee may make such adjustments, not inconsistent with the terms
of the Plan, in the terms of Awards as it shall deem appropriate.
(d)
Adjustments of Awards Upon
the Occurrence of Certain Unusual or Nonrecurring Events
. The
Committee may make adjustments in the terms and conditions of Awards in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4(b) hereof) affecting Olin, any Affiliate, or
the financial statements of Olin or any Affiliate, or of changes in applicable
laws, regulations, or accounting principles, whenever the Committee determines
that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits to be made available under the Plan.
(e)
409A
Compliance
. To the extent any provision of the Plan (or any
Award) or action by the Board or Committee would subject any Participant to
liability for interest or additional taxes under Code Section 409A, it will be
deemed null and void, to the extent permitted by law and deemed advisable by the
Committee. It is intended that the Plan (and any Award) will comply
with Code Section 409A, and the Plan (and any Award) shall be interpreted and
construed on a basis consistent with such intent. The Plan (and any
Award) may be amended in any respect deemed necessary (including retroactively)
by the Committee in order to preserve compliance with Code Section
409A. The preceding shall not be construed as a guarantee of any
particular tax effect for Plan benefits or Awards. Except as
specifically provided in Section 9, a Participant (or beneficiary) is solely
responsible and liable for the satisfaction of all taxes and penalties that may
be imposed on the Participant (or beneficiary) in connection with any
distributions to such Participant (or beneficiary) under the Plan (including any
taxes and penalties under Code Section 409A), and neither Olin nor any Affiliate
shall have any obligation to indemnify or otherwise hold a Participant (or
beneficiary) harmless from any or all of such taxes or penalties.
Section
8.
Additional Conditions to
Enjoyment of Awards
.
(a)
The
Committee may cancel any unexpired, unpaid or deferred Awards if at any time the
Participant is not in compliance with all applicable provisions of the Award
Agreement, the Plan and the following conditions:
(i)
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A
Participant shall not render services for any Person or engage, directly
or indirectly, in any business which, in the judgment of the Committee is
or becomes competitive with Olin or any Affiliate, or which is or becomes
otherwise prejudicial to or in conflict with the interests of Olin or any
Affiliate. Such judgment shall be based on the Participant’s
positions and responsibilities while employed by Olin or an Affiliate, the
Participant’s post employment responsibilities and position with the other
Person or business, the extent of past, current and potential competition
or conflict between Olin or an Affiliate and the other Person or business,
the effect on customers, suppliers and competitors of the Participant’s
assuming the post employment position, the guidelines established in the
then current edition of Olin’s Standards of Ethical Business Practices,
and such other considerations as are deemed relevant given the applicable
facts and circumstances. The Participant shall be free,
however, to purchase as an investment or otherwise, stock or other
securities of such Person or business so long as they are listed upon a
recognized securities exchange or traded over the counter, and such
investment does not represent a substantial investment to the Participant
or a greater than 1% equity interest in the organization or
business.
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(ii)
|
Participant
shall not, without prior written authorization from Olin, disclose to
anyone outside Olin, or use in other than Olin’s business, any secret or
confidential information, knowledge or data, relating to the business of
Olin or an Affiliate in violation of his or her agreement with Olin or the
Affiliate.
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(iii)
|
A
Participant, pursuant to his or her agreement with Olin or an Affiliate,
shall disclose promptly and assign to Olin or the Affiliate all right,
title and interest in any invention or idea, patentable or not, made or
conceived by the Participant during employment by Olin or the Affiliate,
relating in any manner to the actual or anticipated business, research or
development work of Olin or the Affiliate and shall do anything reasonably
necessary to enable Olin or the Affiliate to secure a patent where
appropriate in the United States and in foreign
countries.
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(b)
Notwithstanding
any other provision of the Plan, the Committee in its sole discretion may cancel
any Award at any time prior to the exercise thereof, if the employment of the
Participant shall be terminated, other than by reason of death, unless the
conditions in this Section 8 are met.
(c)
Failure
to comply with the conditions of this Section 8 prior to, or during the six
months after, any exercise, payment or delivery pursuant to an Award shall cause
the exercise, payment or delivery to be rescinded. Olin shall notify
the Participant in writing of any such rescission within two years after such
exercise payment or delivery and within 10 days after receiving such notice, the
Participant shall pay to Olin the amount of any gain realized or payment
received as a result of the exercise, payment or delivery
rescinded. Such payment shall be made either in cash or by returning
to Olin the number of Shares that the Participant received in connection with
the rescinded exercise, payment or delivery.
(d)
Upon
exercise, payment or delivery pursuant to an Award, the Committee may require
the Participant to acknowledge the terms and conditions of the Plan and to
certify on a form acceptable to the Committee, that he or she is in compliance
with the terms and conditions of the Plan.
(e)
Nothing
herein shall be interpreted to limit the obligations of a Participant under his
or her employee agreement or any other agreement with Olin.
Section
9.
Change in
Control
.
(a)
Except as
the Board or the Committee may expressly provide otherwise prior to a Change in
Control of Olin (as defined in Section 9(b)) in the event of a Change in Control
of Olin:
(i)
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all
Options and Stock Appreciation Rights then outstanding shall become
immediately and fully exercisable, notwithstanding any provision therein
for the exercise in installments;
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(ii)
|
all
restrictions and conditions of all Restricted Stock then outstanding shall
be deemed satisfied as of the date of the Change in
Control;
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(iii)
|
to
the extent that Performance Share Awards and Restricted Stock Units are
not subject to Code Section 409A, such awards shall become vested, deemed
earned or satisfied in full, and promptly paid to Participants, cash units
in cash and phantom stock units in the Shares represented thereby or such
other securities, property or cash as may be deliverable in respect of
Shares as a result of a Change in Control, without regard to payment
schedules and notwithstanding that the applicable performance cycle,
retention cycle or restriction conditions shall not have been completed or
met; and
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(iv)
|
to
the extent that Performance Share Awards and Restricted Stock Units are
subject to Code Section 409A, such awards shall become vested and deemed
earned or satisfied in full, notwithstanding that the applicable
performance cycle, retention cycle or restriction conditions shall not
have been completed or met. Such Performance Share Awards and
Restricted Stock Units shall be paid, cash units in cash and phantom stock
units in the Shares represented thereby or such other securities, property
or cash as may be deliverable in respect of Shares as a result of a Change
in Control, to the Participant at the time or schedule applicable to such
awards (assuming for these purposes that no such Change in Control had
occurred), provided that in the event of a 409A Change in Control of Olin
(as defined in Section 9(j), and which 409A Change in Control may occur
concurrently with or after the Change in Control), such awards shall be
paid to the Participants on or as soon as administratively feasible after
such 409A Change in Control of Olin, but no later than ten (10) business
days following such 409A Change in
Control.
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(b)
A Change
in Control of Olin means:
(i)
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the
Incumbent Directors cease for any reason to constitute at least a majority
of the Board;
provided
that
any person becoming a director subsequent to the date shareholders approve
this Plan, whose election or nomination for election was approved (either
by a specific vote or by approval of the proxy statement of Olin in which
such person is named as a nominee for director, without written objection
to such nomination) by a vote of at least two-thirds of the directors who
were, as of the date of such approval, Incumbent Directors, shall be an
Incumbent Director;
provided
,
however
, that
no individual initially appointed, elected or nominated as a director of
Olin as a result of an actual or threatened election contest with respect
to directors or as a result of any other actual or threatened solicitation
of proxies or consents by or on behalf of any person other than the Board
shall be deemed to be an Incumbent
Director;
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(ii)
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any
Person is or becomes a “beneficial owner” (as defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of Olin
representing 20% or more of the combined voting power of the Olin Voting
Securities;
provided
,
however
, that
the event described in this paragraph (ii) shall not be deemed to be a
Change in Control if such event results from any of the following: (A) the
acquisition of Olin Voting Securities by Olin or any of its subsidiaries,
(B) the acquisition of Olin Voting Securities by any employee benefit plan
(or related trust) sponsored or maintained by Olin or any of its
subsidiaries, (C) the acquisition of Olin Voting Securities by any
underwriter temporarily holding securities pursuant to an offering of such
securities, or (D) the acquisition of Olin Voting Securities pursuant to a
Non-Qualifying Transaction (as defined in paragraph
(iii));
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(iii)
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the
consummation of a merger, consolidation, statutory share exchange or
similar form of corporate transaction involving Olin or any of its
subsidiaries (a “Reorganization”) or sale or other disposition of all or
substantially all of the assets of Olin to an entity that is not an
affiliate of Olin (a “Sale”), unless immediately following such
Reorganization or Sale: (A) more than 50% of the total voting power (in
respect of the election of directors, or similar officials in the case of
an entity other than a corporation) of (x) the entity resulting from such
Reorganization, or the entity which has acquired all or substantially all
of the assets of Olin (in either case, the “Surviving Entity”), or (y) if
applicable, the ultimate parent entity that directly or indirectly has
beneficial ownership of more than 50% of the total voting power (in
respect of the election of directors, or similar officials in the case of
an entity other than a corporation) of the Surviving Entity (the “Parent
Entity”), is represented by Olin Voting Securities that were outstanding
immediately prior to such Reorganization or Sale (or, if applicable, is
represented by shares into which such Olin Voting Securities were
converted pursuant to such Reorganization or Sale), and such voting power
among the holders thereof is in substantially the same proportion as the
voting power of such Olin Voting Securities among the holders thereof
immediately prior to the Reorganization or Sale, (B) no person (other than
any employee benefit plan (or related trust) sponsored or maintained by
the Surviving Entity or the Parent Entity), is or becomes the beneficial
owner, directly or indirectly, of 20% or more of the total voting power
(in respect of the election of directors, or similar officials in the case
of an entity other than a corporation) of the outstanding voting
securities of the Parent Entity (or, if there is no Parent Entity, the
Surviving Entity) and (C) at least a majority of the members of the board
of directors (or similar officials in the case of an entity other than a
corporation) of the Parent Entity (or, if there is no Parent Entity, the
Surviving Entity) following the consummation of the Reorganization or Sale
were, at the time of the approval by the Board of the execution of the
initial agreement providing for such Reorganization or Sale, Incumbent
Directors (any Reorganization or Sale which satisfies all of the criteria
specified in (A), (B) and (C) above being deemed to be a “Non-Qualifying
Transaction”); or
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(iv)
|
the
stockholders of Olin approve a plan of complete liquidation or dissolution
of Olin.
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(c)
In the
event that a Participant participates or agrees to participate by loan or equity
investment (other than through ownership of less than 1% of publicly traded
securities of another company) in a transaction (“acquisition”) which would
result in an event described in Section 9(b)(i) or (ii), the Participant must
promptly disclose such participation or agreement to Olin. If the
Participant so participates or agrees to participate, no payments due under this
Plan or by virtue of any Change in Control provisions contained in any
compensation or benefit plan of Olin will be paid to the Participant until the
acquiring group in which the Participant participates or agrees to participate
has completed the acquisition. In the event the Participant so
participates or agrees to participate and fails to disclose his or her
participation or agreement, the Participant will not be entitled to any payments
under this Plan or by virtue of Change in Control provisions in any Olin
compensation or benefit plan, notwithstanding any of the terms hereof or
thereof.
(d)
Anything
in this Plan to the contrary notwithstanding and except as set forth below, in
the event it shall be determined that any Payment would be subject to the Excise
Tax, then the Participant shall be entitled to receive an additional payment
(the “Gross-Up Payment”) in an amount such that, after payment by the
Participant of all taxes (and any interest or penalties imposed with respect to
such taxes), including, without limitation, any income and employment taxes (and
any interest and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Participant retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(e)
Subject
to the provisions of Section 9(f), all determinations required to be made under
this Section 9, including whether and when a Gross-Up Payment is required, the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by KPMG LLP or such other nationally
recognized certified public accounting firm as may be designated by the
Participant (the “Accounting Firm”). The Accounting Firm shall
provide detailed supporting calculations both to Olin and the Participant within
15 business days of the receipt of notice from the Participant that there has
been a Payment or such earlier time as is requested by Olin. The
Accounting Firm shall not determine that no Excise Tax is payable by the
Participant unless it delivers to the Participant a written opinion that failure
to report the Excise Tax on the Participant’s applicable federal income tax
return would not result in the imposition of a negligence or similar
penalty. All fees and expenses of the Accounting Firm shall be borne
solely by Olin. Any Gross-Up Payment, as determined pursuant to this
Section 9(e), shall be paid by Olin to the Participant within 5 days of the
receipt of the Accounting Firm’s determination and in no event shall such date
be later than the last day of the calendar year after the calendar year in which
the applicable Excise Tax is paid. Any determination by the
Accounting Firm shall be binding upon Olin and the Participant. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments that will not have been made by Olin should have
been made (the “Underpayment”), consistent with the calculations required to be
made hereunder. In the event Olin exhausts its remedies pursuant to
Section 9(f) and the Participant thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine that amount of the Underpayment
that has occurred and any such Underpayment shall be paid by Olin to or for the
benefit of the Participant within 5 days of receipt of the Accounting Firm’s
determination.
(f)
The
Participant shall notify Olin in writing of any claims by the Internal Revenue
Service that, if successful, would require the payment by Olin of the Gross-Up
Payment. Such notification shall be given as soon as practicable but
not later than 30 days after the Participant actually receives notice in writing
of such claim and shall apprise Olin of the nature of such claim and the date on
which such claim is requested to be paid; provided, however, that the failure of
the Participant to notify Olin of such claim (or to provide any required
information with respect thereto) shall not affect any rights granted to the
Participant under this Section 9(f) except to the extent that Olin is materially
prejudiced in the defense of such claim as a direct result of such
failure. The Participant shall not pay such claim prior to the
expiration of the 30-day period following the date on which the Participant
gives such notice to Olin (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If Olin notifies
the Participant in writing prior to the expiration of such period that Olin
desires to contest such claim, the Participant shall:
(i)
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give
Olin any information reasonably requested by Olin relating to such
claim;
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(ii)
|
take
such action in connection with contesting such claim as Olin shall
reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by
an attorney selected by Olin and reasonably acceptable to the
Participant;
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(iii)
|
cooperate
with Olin in good faith in order to effectively contest such claim;
and
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(iv)
|
permit
Olin to participate in any proceedings relating to such
claim;
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provided, however
, that Olin
shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest, and shall
indemnify and hold the Participant harmless, on an after-tax basis, for any
Excise tax or income or employment tax (including interest and penalties)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 9(f), Olin shall control all proceedings taken in connection with such
contest, and, at its sole discretion, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the
applicable taxing authority in respect of such claim and may, at its sole
discretion, either direct the Participant to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Participant
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as Olin shall determine;
provided, however
, that, if
Olin directs the Participant to pay such claim and sue for a refund, Olin shall
advance the amount of such payment to the Participant, on an interest-free
basis, and shall indemnify and hold the Participant harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties)
imposed with respect to such advance or with respect to any imputed income in
connection with such advance; and
provided, further
, that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Participant with respect to which such contested amount is
claimed to be due is limited solely to such contested
amount. Furthermore, Olin’s control of the contest shall be limited
to issues with respect to which the Gross-Up Payment would be payable hereunder,
and the Participant shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any other taxing
authority.
(g)
If, after
the receipt by the Participant of an amount advanced by Olin pursuant to Section
9(f), the Participant becomes entitled to receive any refund with respect to
such claim, the Participant shall (subject to Olin’s complying with the
requirements of Section 9(f) promptly pay to Olin the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). If, after the receipt by the Participant of an amount
advanced by Olin pursuant to Section 9(f), a determination is made that the
Participant shall not be entitled to any refund with respect to such claim, and
Olin does not notify the Participant in writing of its intent to contest such
denial of refund prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
(h)
Notwithstanding
any other provision of this Section 9, Olin may, in its sole discretion,
withhold and pay over to the Internal Revenue Service or any other applicable
taxing authority, for the benefit of the Participant, all or any portion of the
Gross-Up Payment, and the Participant hereby consents to such
withholding.
(i)
Definitions
. The
following terms shall have the following meanings for purposes of this Section
9.
(A)
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“Excise
Tax” shall mean the excise tax imposed by Section 4999 of the Code,
together with any interest or penalties imposed with respect to such
excise tax.
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(B)
|
A
“Payment” shall mean any payment or distribution in the nature of
compensation (within the meaning of Section 280G(b)(2) of the Code) to or
for the benefit of the Participant, whether paid or payable pursuant to
this Plan or otherwise.
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(j)
A “409A
Change in Control of Olin” means the occurrence of any of the following
events:
(i)
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any
person or Group acquires ownership of Olin’s stock that, together with
stock held by such person or Group, constitutes more than 50% of the total
fair market value or total voting power of Olin’s stock, (including an
increase in the percentage of stock owned by any person or Group as a
result of a transaction in which Olin acquires its stock in exchange for
property, provided that the acquisition of additional stock by any person
or Group deemed to own more than 50% of the total fair market value or
total voting power of Olin’s stock on January 1, 2005, shall not
constitute a 409A Change in Control);
or
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(ii)
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any
person or Group acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or Group)
ownership of Olin stock possessing 30% or more of the total voting power
of Olin stock; or
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(iii)
|
a
majority of the members of Olin’s board of directors is replaced during
any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of Olin’s board of directors prior
to the date of the appointment or election;
or
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(iv)
|
any
person or Group acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or Group)
assets from Olin that have a total Gross Fair Market Value equal to 40% or
more of the total Gross Fair Market Value of all Olin assets immediately
prior to such acquisition or acquisitions, provided that there is no 409A
Change in Control when Olin’s assets are transferred
to:
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(1)
|
a
shareholder of Olin (immediately before the asset transfer) in exchange
for or with respect to Olin stock;
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(2)
|
an
entity, 50% or more of the total value or voting power of which is owned,
directly or indirectly, by Olin;
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(3)
|
a
person or Group that owns, directly or indirectly, 50% or more of the
total value or voting power of all outstanding Olin stock;
or
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(4)
|
an
entity, at least 50% of the total value or voting power of which is owned,
directly or indirectly, by a person described in paragraph
(iii).
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For
purposes of the above sub-paragraph (iv), a person’s status is determined
immediately after the transfer of the assets. For example, a transfer
to a corporation in which Olin has no ownership interest before the transaction,
but which is a majority-owned subsidiary of Olin after the transaction is not a
409A Change in Control.
For
purposes of this Section 9(j), “Gross Fair Market Value” means the value of
assets determined without regard to any liabilities associated with such
assets.
For
purposes of this Section 9(j), “Group” means persons acting together for the
purpose of acquiring Olin stock and includes owners of a corporation that enters
into a merger, consolidation, purchase or acquisition of stock, or similar
business transaction with Olin. If a person owns stock in both Olin
and another corporation that enter into a merger, consolidation purchase or
acquisition of stock, or similar transaction, such person is considered to be
part of a Group only with respect to ownership prior to the merger or other
transaction giving rise to the change and not with respect to the ownership
interest in the other corporation. Persons will not be considered to
be acting as a Group solely because they purchase assets of the same corporation
at the same time, or as a result of the same public offering.
(k)
Following
a Change in Control or 409A Change of Control, no action shall be taken under
the Plan that will cause any Award that has previously been determined to be (or
is determined to be) subject to Code Section 409A to fail to comply in any
respect with Code Section 409A without the written consent of the
Participant.
Section
10.
Effective Date and
Term
.
Subject
to the approval of Olin’s shareholders at the 2003 annual shareholders meeting
the Plan shall be effective as of January 30, 2003 (the “Effective Date”);
provided, however, that to the extent that Awards are granted under the Plan
prior to its approval by shareholders, the Awards shall be contingent on
approval of the Plan by the shareholders of Olin at such annual
meeting. The Plan shall be unlimited in duration and, in the event of
Plan termination, shall remain in effect as long as any Awards under it are
outstanding; provided; however, that, to the extent required by the Code, no
Incentive Stock Option may be granted under the Plan on a date that is more than
ten years from the date the Plan is adopted.
Exhibit
10.8
OLIN
CORPORATION
2006
LONG TERM INCENTIVE PLAN
(Codified
as of October 22, 2008)
Section
1.
Purpose
.
The
general purposes of the Olin Corporation 2006 Long Term Incentive Plan (the
“Plan”) are to (i) attract and retain persons eligible to participate in
the Plan; (ii) motivate Participants, by means of appropriate incentives,
to achieve long-range goals; (iii) provide incentive compensation
opportunities that are competitive with those of other similar companies; and
(iv) further align Participants’ interests with those of other shareholders of
Olin Corporation (together with any successor, “Olin”) through compensation that
is based on Olin’s common stock; and thereby promote the long-term financial
interest of Olin and its Affiliates, including growth in the value of Olin’s
equity and enhancement of long-term shareholder return.
Section
2.
Definitions
.
As used
in the Plan:
(a)
“Affiliate”
means any corporation, partnership, joint venture or other entity during any
period in which Olin owns, directly or indirectly, at least 50% of the total
voting or profits interest.
(b)
“Award”
means any Option, Stock Appreciation Right, Restricted Stock, Restricted Stock
Unit, Performance Share or Dividend Equivalent granted under the
Plan.
(c)
“Award
Agreement” means any written agreement or other instrument or document
evidencing an Award granted under the Plan. The terms of any plan or
guideline adopted by the Board or the Committee and applicable to an Award shall
be deemed incorporated in and a part of the related Award
Agreement.
(d)
“Board”
means the Board of Directors of Olin.
(e)
“Code”
means the Internal Revenue Code of 1986, as amended. A reference to
any provision of the Code shall include reference to any successor provision of
the Code.
(f)
“Committee”
means a committee of the Board designated by the Board to administer the Plan,
each member of which is an “outside director” for purposes of Section 162(m) of
the Code and a “non-employee director” for the purpose of Rule 16b-3, and, to
the extent the Committee delegates authority to one or more individuals in
accordance with the Plan, such individual(s).
(g)
“Dividend
Equivalent” means any right granted under Section 6(c)(ii) of the
Plan.
(h)
“Employee”
means any employee of Olin or of an Affiliate.
(i)
“Exchange
Act” means the Securities Exchange Act of 1934.
(j)
“Fair
Market Value” means, with respect to shares of Olin common stock, the mean of
the high and low per share sales prices of such common stock as reported on the
consolidated transaction reporting system for New York Stock Exchange issues as
of the relevant date, or the last preceding trading date, if such Shares were
not traded on such date, and, with respect to any other property (including,
without limitation, securities other than Shares), the fair market value of such
property determined by such methods or procedures as shall be established from
time to time by the Committee.
(k)
“Family
Member” means any child, stepchild, grandchild, parent, stepparent, grandparent,
spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law,
son-in-law, daughter-in-law, brother-in-law or sister-in-law, including adoptive
relationship, or any person sharing the Participant’s household, other than a
tenant or employee.
(l)
“Group”
means persons acting together for the purpose of acquiring Olin stock and
includes owners of a corporation that enters into a merger, consolidation,
purchase or acquisition of stock, or similar business transaction with
Olin. If a person owns stock in both Olin and another corporation
that enter into a merger, consolidation, purchase or acquisition of stock, or
similar transaction, such person is considered to be part of a Group only with
respect to ownership prior to the merger or other transaction giving rise to the
change and not with respect to the ownership interest in the other
corporation. Persons will not be considered to be acting as a Group
solely because they purchase assets of the same corporation at the same time, or
as a result of the same public offering.
(m)
“Incentive
Stock Option” means an option to purchase Shares granted under the Plan that is
intended to meet the requirements of Section 422 of the Code.
(n)
“Non-Qualified
Stock Option” means an option to purchase Shares granted under the Plan that is
not intended to be (or does not meet the requirements of) an Incentive Stock
Option.
(o)
“Option”
means an Incentive Stock Option or a Non-Qualified Stock Option.
(p)
“Participant”
means an Employee granted an Award under the Plan.
(q)
“Performance
Share” means any grant of a right to receive Shares which is contingent on the
achievement of performance or other objectives during a specified
period.
(r)
“Person”
has the meaning of such term in Section 3(a)(9) of the Exchange Act and as used
in Sections 13(d)(3) and 14(d)(2) of the Exchange Act.
(s)
“Released
Securities” means securities that were Restricted Securities with respect to
which all applicable restrictions imposed under the terms of the relevant Award
have expired, lapsed or been waived or satisfied.
(t)
“Restricted
Securities” means Awards of Restricted Stock or other Awards under which
outstanding Shares are held subject to certain restrictions.
(u)
“Restricted
Stock” means any grant of Shares, and “Restricted Stock Unit” means the grant of
a right to receive Shares in the future, with such Shares or right to future
delivery of Shares subject to a risk of forfeiture or other restrictions that
will lapse upon the achievement of one or more goals relating to completion of
service by the Participant, or achievement of performance or other objectives,
as determined by the Committee.
(v)
“Rule
16b-3” means Rule 16b-3 promulgated by the Securities and Exchange Commission
under the Securities Exchange Act of 1934, as amended, or any successor
rule.
(w)
“Shares”
means the common stock of Olin and such other securities or property as may
become the subject of Awards pursuant to an adjustment made under Section 4(b)
of the Plan.
(x)
“Stock
Appreciation Right or “SAR” means any such right granted under Section 6(b) of
the Plan.
Section
3.
Administration
.
(a)
Powers of
Committee
. The Plan shall be administered by the Committee
which shall have full power and authority to: (i) designate
Participants; (ii) determine the Awards to be granted to Participants;
(iii) determine the number of Shares (or securities convertible into
Shares) to be covered by Awards; (iv) determine the terms and conditions of
any Award; (v) determine whether, to what extent, and under what
circumstances Awards may be settled or exercised in cash, Shares, other
securities, other Awards, or other property, or canceled, substituted, forfeited
or suspended, and the method or methods by which Awards may be settled,
exercised, canceled, substituted, forfeited or suspended, provided that no such
action will result in repricing of Options prohibited by Section 3(e);
(vi) determine whether, to what extent, and under what circumstances cash,
Shares, other securities, other Awards, other property and other amounts payable
with respect to an Award under the Plan shall be deferred either automatically
or at the election of the Participant or of the Committee; (vii) interpret
and administer the Plan and any instrument or agreement relating to, or Award
made under, the Plan; (viii) establish, amend, suspend or waive such rules
and guidelines and appoint such agents as it shall deem appropriate for the
administration of the Plan; and (ix) make any other determination and take
any other action that it deems necessary or desirable for such
administration.
(b)
Committee
Discretion
. All designations, determinations, interpretations
and other decisions with respect to the Plan or any Award shall be within the
sole discretion of the Committee and shall be final, conclusive and binding upon
all Persons, including Olin, any Affiliate, any Participants, any holder or
beneficiary of any Award, any shareholder and any employee of Olin or of any
Affiliate. The Committee’s powers include the adoption of
modifications, amendments, procedures, subplans and the like as are necessary to
comply with provisions of the laws of other countries in which Olin or an
Affiliate may operate in order to assure the viability of Awards granted under
the Plan and to enable Participants employed in such other countries to receive
benefits under the Plan and such laws, provided that no such action results in
repricing of Options prohibited by Section 3(e).
(c)
Board
Authority
. If the Committee does not exist, or for any other
reason determined by the board, the Board may take any action under the Plan
that would otherwise be the responsibility of the Committee.
(d)
Delegation
. Notwithstanding
any provision of the Plan to the contrary, except to the extent prohibited by
applicable law or the applicable rules of a stock exchange, the Committee may
delegate to one or more officers or managers of Olin or any Affiliate, or a
committee of such officers or managers, the authority, subject to such terms and
limitations as the Committee shall determine, to grant Awards to, or to cancel,
modify, waive rights or conditions with respect to, alter, discontinue, suspend,
or terminate Awards held by, Employees who are not officers or directors of Olin
for purposes of Section 16 of the Securities Exchange Act of 1934, as amended,
provided that no such action shall result in repricing of Options prohibited by
Section 3(e).
(e)
Prohibition on Option
Repricing
. Notwithstanding any other provision of the Plan,
neither the Board nor the Committee may reprice, replace or regrant any Option
granted under the Plan or any other plan of Olin, (i) through cancellation
and replacement or regrant with lower priced options or (ii) by lowering
the Option exercise price of a previously granted Award, without the prior
approval of Olin’s shareholders.
Section
4.
Shares Available for
Awards
.
(a)
Shares
Available
. Subject to adjustment as provided in Section 4(b)
of the Plan:
(i)
|
The
aggregate number of Shares available for granting Awards under the Plan
shall be 3,000,000.
|
(ii)
|
For
purposes of this Section 4, other than Sections 4(c)(ii) and 4(c)(iii), if
any Shares covered by an Award are not delivered to a Participant or
beneficiary because the Award is forfeited or canceled, such Shares shall
not be deemed to have been delivered for purposes of determining the
maximum number of Shares available for delivery under the
Plan.
|
(b)
Adjustments
. In
the event of any change in the Shares by reason of stock dividends, stock
splits, recapitalization, mergers, consolidations, combinations or exchanges of
shares, split-ups, split-offs, spin-offs, liquidations or other similar changes
in capitalization, or any distributions to shareholders other than cash
dividends, (i) the numbers, class and prices of Shares covered by
outstanding Awards under the Plan (provided that no such adjustment shall result
in repricing of Options prohibited by Section 3(e) of the Plan), (ii) the
aggregate number and class of Shares available under the Plan, and
(iii) the numbers and class of Shares that may be the subject of Awards
pursuant to Section 4(c), shall be adjusted by the Committee, whose
determination shall be conclusive.
(i)
|
Without
limiting the foregoing, in the event of any split-up, split-off, spin-off
or other distribution to shareholders of shares representing a part of
Olin’s business, properties and assets, the Committee may modify an
outstanding Award so that such Award shall thereafter relate to Shares of
Olin and shares of capital stock of the corporation owning the business,
properties and assets so split-up, split-off, spun-off or otherwise
distributed to shareholders of Olin in the same ratio in which holders of
the Shares became entitled to receive shares of capital stock of the
corporation owning the business, properties and assets so split-up,
split-off or spun-off or otherwise distributed, provided that no such
action results in repricing of Options prohibited by Section
3(e).
|
(ii)
|
With
respect to Awards of Incentive Stock Options, no such adjustment shall be
authorized to the extent that such authority would cause the Plan to
violate Section 422 of the Code or any successor provision thereto, unless
the holder of such Award of Incentive Stock Options agrees to convert such
options to Non-qualified Stock
Options.
|
(iii)
|
Notwithstanding
the foregoing, a Participant to whom Dividend Equivalents or dividend
units have been awarded shall not be entitled to receive a special or
extraordinary dividend or distribution unless the Committee shall have
expressly authorized such receipt.
|
(c)
Additional
Restrictions
. Subject to adjustment as provided in Section
4(b), the following additional maximums are imposed under the Plan:
(i)
|
The
maximum number of Shares that may be issued for Options intended to be
Incentive Stock Options shall be 900,000
Shares.
|
(ii)
|
For
any Award intended to be “performance-based compensation” (as that term is
used for purposes of Code Section 162(m)), no more than 550,000 Shares may
be subject to Options and Stock Appreciation Rights granted to any one
individual during any calendar-year period (regardless of when such Shares
are deliverable).
|
(iii)
|
For
any Award intended to be “performance-based compensation” (as that term is
used for purposes of Code Section 162(m)) other than an Option or Stock
Appreciation Right payable in Shares, no more than 300,000 Shares plus no
more than $1,775,000 may be subject to such other Awards granted to any
one individual during any calendar-year period (regardless of when such
Shares or cash are deliverable).
|
(iv)
|
No
more than 1,425,000 Shares may be issued pursuant to Restricted Stock
Awards, Restricted Stock Unit Awards and Performance Share Awards under
this Plan.
|
(v)
|
No Recycling of
Shares
. Except for cancelled or forfeited Shares and
Shares settled in cash, the Plan is intended to restrict the “recycling”
of Shares back into the Plan. This means that Shares exchanged
or withheld to pay the purchase or exercise price of an Award (including
Shares withheld to satisfy the exercise price of a Stock Appreciation
Right settled in stock) or to satisfy tax withholding obligations count
against the numerical limits of the
Plan.
|
Section
5.
Eligibility
.
Any
Employee, including any officer or employee-director, of Olin or an Affiliate
shall be eligible to be designated a Participant, subject to any restrictions
imposed by applicable law. An Award may be granted to an Employee
prior to the date the Employee first performs services for the Company or the
Affiliate, provided that such Awards shall not become vested prior to the date
the Employee first performs such services.
Section
6.
Awards
.
(a)
Options
. The
Committee is authorized to grant Options to Participants with the following
terms and conditions and with such additional terms and conditions, not
inconsistent with the provisions of the Plan, as the Committee shall
determine:
(i)
|
Exercise
Price
.
The per
Share exercise price shall be determined by the Committee, provided that
such exercise price shall not be less than the Fair Market Value of a
Share on the date of the Option
grant.
|
(ii)
|
Option
Term
. The term of each Option shall be fixed by the
Committee, provided that in no event shall the term of an Option be more
than a period of ten years from the date of its
grant.
|
(iii)
|
Exercise
. The
Committee shall determine the time or times at which an Option may be
exercised in whole or in part, and the method or methods by which, and the
form or forms in which payment of the exercise price with respect thereto
may be made.
|
(iv)
|
Incentive Stock
Options
. The terms of any Incentive Stock Option granted
under the Plan shall comply in all respects with the provisions of Section
422 of the Code, or any successor provision thereto, and any regulations
promulgated thereunder. Without limiting the preceding
sentence, the aggregate Fair Market Value (determined at the time an
Option is granted) of Shares with respect to which Incentive Stock Options
are exercisable for the first time by a Participant during any calendar
year (under the Plan and any other plan of the Participant’s employer
corporation and its parent and subsidiary corporations providing for
Options) shall not exceed such dollar limitation as shall be applicable to
Incentive Stock Options under Section 422 of the Code or a successor
provision.
|
(v)
|
Termination of
Employment Without Cause/With Olin Consent
. In the event
the employment of a Participant to whom an Option has been granted under
the Plan shall be terminated by Olin or an Affiliate without cause or by
the Participant with the consent of Olin or an Affiliate, such Option may
be exercised (to the extent of the number of shares that the Participant
was entitled to purchase under such Option at the termination of
employment) at any time within three months after such termination (which
three-month period may be extended by the Committee), but in no event
shall such three-month period or any such extension permit the exercise of
an Option after the expiration date of the Option. Options
granted under the Plan shall not be affected by any change of duties or
position so long as the Participant continues to be an
Employee.
|
(vi)
|
Termination for Cause
or Without Consent
. Upon termination of such
Participant’s employment either (a) for cause, or
(b) voluntarily on the part of the Participant and without the
written consent of Olin or an Affiliate, any Awards held by him or her
under the Plan, to the extent not exercised or paid, shall terminate
immediately.
|
(vii)
|
Termination due to
Retirement
. In the event the employment of a Participant
to whom an Option has been granted under the Plan shall be terminated due
to “retirement”, such Option may be exercised (to the extent of the number
of shares that the Participant was entitled to purchase under such Option
at the termination of employment) at any time until the expiration date of
the Option; provided, however, that such exercise period may be shortened
by the Committee in its discretion at the time of
termination. For these purposes, “retirement” refers to
retirement ( including any early retirement) pursuant to any applicable
retirement plan of Olin or of an Affiliate as provided under such
retirement plan and which retirement was not caused by the Participant
being terminated for cause by Olin or any
Affiliate.
|
(viii)
|
Death
. If
a Participant to whom an Option has been granted shall die while an
Employee, such Option may be exercised by the Participant’s executors,
administrators, personal representatives or distributes or permitted
transferees at any time within a period of one year after the
Participant’s death (which period may be extended by the Committee),
regardless of whether or not such Option had vested at the time of
death. If a Participant to whom an Option has been granted
shall die after his or her employment has terminated but while the Option
remains exercisable, the Option may be exercised by the persons described
above at any time within the longer of (a) the period that the Participant
could have exercised the Option had he or she not died, or (b) one year
after the date of death (which period may be extended by the Committee),
but only to the extent the Option was exercisable at the time of the
Participant’s death.
|
(ix)
|
Disability
. If
a Participant to whom an Option has been granted shall become totally and
permanently disabled, as that term is defined in Section 22(e)(3) of
the Code (or a successor provision), and the Participant’s employment is
terminated as a result, such option may be exercised by the Participant or
permitted transferee within one year after the date of termination of
employment, to the extent that the Option was exercisable at the time of
termination of employment.
|
(b)
Stock Appreciation
Rights
. The Committee is authorized to grant Stock
Appreciation Rights to Participants which may but need not relate to a specific
Option granted under the Plan. Subject to the terms of the Plan and
any applicable Award Agreement, each Stock Appreciation Right granted under the
Plan shall confer on the holder thereof a right to receive, upon exercise
thereof, up to the excess of (i) the Fair Market Value of one Share on the date
of exercise over (ii) the exercise price of the right as specified by the
Committee, which shall not be less than the Fair Market Value of one Share on
the date of grant of the Stock Appreciation Right. Subject to the
terms of the Plan and any applicable Award Agreement, the exercise price, term,
methods of exercise, methods of payment or settlement, including whether such
SAR shall be paid in cash or Shares, and any other terms and conditions of any
Stock Appreciation Rights shall be as determined by the Committee, but in no
event shall the term of a Stock Appreciation Right exceed a period of ten years
from the date of its grant.
(c)
Other Stock
Awards
.
(i)
|
Issuance
. The
Committee is authorized to grant Awards of Restricted Stock, Restricted
Stock Units and Performance Shares to
Participants.
|
(ii)
|
Dividends and Dividend
Equivalents
. An Award (including without limitation an
Option or Stock Appreciation Right) may provide the Participant with the
right to receive dividend payments or dividend equivalent payments with
respect to Shares subject to the Award (both before and after the Shares
subject to the Award are earned, vested, or acquired), which payments may
be either made currently or credited to an account for the Participant,
and may be settled in cash or Shares as determined by the Committee;
provided, however that, no dividend payments or dividend equivalent
payments shall be provided, permitted or credited to the extent that such
payments would cause an Option or Stock Appreciation Right to be subject
to Code Section 409A. Any such settlements, and any such
crediting of dividends or dividend equivalents or reinvestment in Shares,
may be subject to such conditions, restrictions and contingencies as the
Committee shall establish, including the reinvestment of such credited
amounts in Share equivalents.
|
(iii)
|
Restrictions
. Any
such Award shall be subject to such conditions, restrictions and
contingencies as the Committee may impose (including, without limitation,
any limitation on the right to vote Restricted Stock or the right to
receive any dividend or other right or property), which may lapse
separately or in combination at such time or times, as the Committee may
deem appropriate, provided that in order for a Participant to vest in
Awards of Restricted Stock, the Participant must remain in the employ of
Olin or an Affiliate for a period of not less than one (1) year after the
grant of a Restricted Stock Award that includes one or more performance
criteria, and not less than three (3) years after the grant of a
Restricted Stock Award that does not include one or more performance
criteria, in each case subject to Section 9 hereof and subject to
relief for specified reasons as may be approved by the
Committee. Notwithstanding the foregoing, the Committee may
grant Awards for Restricted Stock for an aggregate number of Shares not to
exceed 5% of the total number of shares available for issuance under this
Plan which vest in less than one (1) year after the date of grant,
including immediate vesting, with or without any performance
criteria.
|
(iv)
|
Forfeiture
. Except
as otherwise determined by the Committee, upon termination of employment
for any reason during the applicable restriction period, all Shares of
Restricted Stock still subject to restriction shall be forfeited and
reacquired by Olin.
|
(v)
|
Performance-Based
Awards
. The Committee may designate whether any such
Awards being granted to a Participant is intended to be “performance-based
compensation” as that term is used in Section 162(m) of the
Code. Any Award so designated shall be conditioned on the
achievement of one or more performance measures. Performance
measures that may be used by the Committee for such purpose shall be based
on one or more of the following criteria, on an absolute or a relative
basis:
|
(D)
|
Economic
Value Added/EVA
®
,
|
(J)
|
return
on net assets,
|
(L)
|
total
shareholder return.
|
For
Awards intended to be “performance-based compensation,” the grant of the Awards
and the establishment of the performance measures shall be made during the
period required under Code Section 162(m) and in accordance with Code
Section 409A to the extent applicable.
(d)
Forms of Payment Under
Awards
. Subject to the terms of the Plan and of any applicable
Award agreement, payments to be made by Olin or an Affiliate upon the grant,
exercise, or payment of an Award may be made in such form or forms as the
Committee shall determine, including, without limitation, cash, Shares, other
securities, other Awards, or other property or any combination thereof, and may
be made in a single payment or transfer, in each case in accordance with rules
and procedures established by the Committee and in accordance with Code Section
409A to the extent applicable. Notwithstanding the foregoing, the
payment of the exercise price of an Option shall be subject to the
following:
(i)
|
Subject
to the following provisions of this subsection the full exercise price for
Shares purchased upon the exercise of any Option shall be paid at the time
of such exercise (except that, in the case of an exercise arrangement
approved by the Committee and described below, payment may be made as soon
as practicable after the exercise).
|
(ii)
|
The
exercise price shall be payable in cash or by tendering, by either actual
delivery of Shares or by attestation, Shares acceptable to the Committee,
which Shares were either acquired at least six months before the exercise
date or purchased on the open market, and valued at Fair Market Value as
of the day of exercise, or in any combination thereof, as determined by
the Committee.
|
(iii)
|
The
Committee may permit a Participant to elect to pay the exercise price upon
the exercise of an Option by irrevocably authorizing a third party to sell
Shares (or a sufficient portion of the Shares) acquired upon exercise of
an Option and remit to Olin a sufficient portion of the sale proceeds to
pay the entire exercise price and any tax withholding resulting from such
exercise.
|
(e)
Limits on Transfer of
Awards
. No Award (other than Released Securities) or right
thereunder shall be assignable or transferable by a Participant, other
than:
(i)
|
by
will or the laws of descent and distribution (or, in the case of an Award
of Restricted Securities, to Olin);
or
|
(ii)
|
in
the case of Awards other than Incentive Stock Options, to the extent
permitted under the terms of the Award, by a gift or domestic relations
order to any Family Member, to a trust in which the Participant and/or his
or her Family Members hold more than 50% of the beneficial interest, to a
foundation in which the Participant and/or Family Members control the
management of assets, and any other entity in which the Participant and/or
his or her Family Members own more than 50% of the voting
interests.
|
For
purposes of this provision, a transfer to an entity in exchange for an interest
in that entity shall constitute a gift.
(f)
General
.
(i)
|
No Cash Consideration
for Awards
. Participants shall not be required to make
any cash payment for the granting of an Award except for such minimum
consideration as may be required by applicable
law.
|
(ii)
|
Awards May Be Granted
Separately or Together
. Awards may be granted either
alone or in addition to, in tandem with, or in substitution for any other
Award or any award or benefit granted under any other plan or arrangement
of Olin or any Affiliate, or as payment for or to assure payment of an
award or benefit granted under any such other such plan or arrangement,
provided that the purchase or exercise price under an Option or other
Award encompassing the right to purchase Shares shall not be reduced by
the cancellation of such Award and the substitution of another
Award. Awards so granted may be granted either at the same time
as or at a different time from the grant of such other Awards or awards or
benefits.
|
(iii)
|
General
Restrictions
. Delivery of Shares or other amounts under
the Plan shall be subject to the
following:
|
(A)
|
Notwithstanding
any other provision of the Plan, Olin shall have no liability to deliver
any Shares under the Plan or make any other distribution of benefits under
the Plan unless such delivery or distribution would comply with all
applicable laws (including, without limitation, the requirements of the
Securities Act of 1933), and the applicable requirements of any securities
exchange or similar entity.
|
(B)
|
To
the extent that the Plan provides for issuance of stock certificates to
reflect the issuance of Shares the issuance may be effected on a
non-certificated basis, to the extent not prohibited by applicable law or
the applicable rules of any stock
exchange.
|
(iv)
|
Agreement with
Olin
. An Award under the Plan shall be subject to such
terms and conditions, not inconsistent with the Plan, as the Committee
shall, in its sole discretion, prescribe. The terms and
conditions of any Award to any Participant may be reflected in such form
of written document as is determined by the Committee. A copy
of such document shall be provided to the Participant, and the Committee
may, but need not, require the Participant to sign a copy of such document
(an “Award Agreement” regardless of whether any Participant signature is
required).
|
(v)
|
Beneficiary
. A
Participant may, in the manner established by the Committee, designate a
beneficiary or beneficiaries with respect to any Award to exercise the
rights of the Participant, and to receive any property distributable, upon
the death of the Participant. Each Award, and each right under
any Award, shall be exercisable, during the Participant’s lifetime, only
by the Participant or a permitted transferee, or, if permissible under
applicable law by the Participant’s guardian or legal
representative.
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(vi)
|
No Lien or Security
Interest
. No Award (other than Released Securities), and
no right under any such Award, may be pledged, attached or otherwise
encumbered other than in favor of Olin, and any purported pledge,
attachment, or encumbrance thereof other than in favor of Olin shall be
void and unenforceable against Olin or any
Affiliate.
|
(vii)
|
No Rights to
Awards
. No Employee, Participant or other Person shall
have any claim to be granted an Award, and there is no obligation for
uniformity of treatment of Employees, Participants or beneficiaries of
Awards under the Plan. The terms and conditions of Awards need
not be the same with respect to each recipient. The prospective
recipient of any Award under the Plan shall not, with respect to such
Award, be deemed to have become a Participant, or to have any rights with
respect to such Award, until and unless such recipient shall have executed
an agreement or other instrument accepting the Award required by the
Committee and delivered a fully executed copy thereof to Olin, and
otherwise complied with the then applicable terms and
conditions.
|
(viii)
|
Withholding
. All
distributions under the Plan are subject to withholding of all applicable
taxes, and, except as otherwise provided by the Committee, the delivery of
any Shares or other benefits under the Plan to a Participant are
conditioned on satisfaction of the applicable withholding
requirements. The Committee, in its discretion, and subject to
such requirements as the Committee may impose prior to the occurrence of
such withholding, may permit such withholding obligations to be satisfied
through cash payment by the Participant, through the surrender of Shares
which the Participant already owns, or through the surrender of Shares to
which the Participant is otherwise entitled under the
Plan.
|
(ix)
|
Other Compensation
Arrangements
. Nothing contained in the Plan shall
prevent Olin or any Affiliate from adopting or continuing in effect other
or additional compensation arrangements, and such arrangements may be
either generally applicable or applicable only in specific
cases.
|
(x)
|
No Right to
Employment
. The grant of an Award shall not be construed
as giving a Participant the right to be retained in the employ of Olin or
any Affiliate. Nothing in the Plan or any Award Agreement shall
limit the right of Olin or an Affiliate at any time to dismiss a
Participant from employment, free from any liability or any claim under
the Plan or the Award Agreement.
|
(xi)
|
Governing
Law
. The validity, construction and effect of the Plan
and any rules and regulations relating to the Plan shall be determined in
accordance with the laws of the State of Missouri, excluding any conflicts
or choice of law rule or principle that might otherwise refer construction
or interpretation of this Plan or any award Agreement to the substantive
law of another jurisdiction.
|
(xii)
|
Severability
. If
any provision of the Plan or any Award is determined to be invalid,
illegal or unenforceable, or as to any Person or Award, or would
disqualify the Plan or any Award, such provision shall be construed or
deemed amended to conform to applicable laws, or, if it cannot be so
construed or deemed amended without, in the determination of the
Committee, materially altering the intent of the Plan or the Award, such
provision shall be stricken as to such Person or Award, and the remainder
of the Plan and any such Award shall remain in full force and
effect.
|
(xiii)
|
No Trust or Fund
Created
. Neither the Plan nor any Award shall create or
be construed to create a trust or separate fund of any kind or a fiduciary
relationship between Olin or any Affiliate and a Participant or any other
Person. To the extent that any Person acquires a right to
receive payments from Olin or any Affiliate pursuant to an Award, such
right shall be no greater than the right of any unsecured general creditor
of Olin or any Affiliate.
|
(xiv)
|
No Fractional
Shares
. No fractional Shares shall be issued or
delivered pursuant to the Plan or any Award, and the Committee shall
determine whether cash, other securities or other property shall be paid
or transferred in lieu of any fractional Shares, or whether such
fractional Shares or any rights thereto shall be canceled, terminated or
otherwise eliminated.
|
(xv)
|
Share
Certificates
. All certificates for Shares or other
securities delivered under the Plan pursuant to any Award or the exercise
thereof shall be subject to such stop transfer orders and other
restrictions as the Committee may deem advisable under the Plan or the
rules, regulations and other requirements of the Securities and Exchange
Commission, any stock exchange upon which such Shares or other securities
are then listed, and any applicable Federal or state securities laws, and
the Committee may cause a legend or legends to be put on any such
certificates to make appropriate reference to such
restrictions.
|
(xvi)
|
Conflict with
Plan
. In the event of any inconsistency or conflict
between the terms of the Plan and an Award Agreement, the terms of the
Plan shall govern.
|
(g)
Agreement to
Service
. Each Participant receiving an Award shall, by
accepting the Award, agree that he or she will, during employment, devote his or
her entire time, energy and skill to the service of Olin and the promotion of
its interests, subject to vacations, sick leave and other absences in accordance
with the regular policies of, or other reasons satisfactory to, Olin and its
Affiliates.
Section
7.
Amendment and
Termination
.
(a)
Amendments to the
Plan
. The Board or the Committee may amend, suspend,
discontinue or terminate the Plan, including, without limitation, any amendment,
suspension, discontinuation or termination that would impair the rights of any
Participant, or any other holder or beneficiary of any Award theretofore
granted, without the consent of any shareholder, Participant, other holder or
beneficiary of an Award, or other Person; provided, however, that,
notwithstanding any other provision of the Plan or any Award Agreement, without
the approval of the shareholders of Olin, no such amendment, suspension,
discontinuation or termination shall be made that would:
(i)
|
increase
the total number of Shares available for Awards under the Plan or the
total number of Shares subject to one or more categories of Awards
pursuant to Section 4(c), in either case except as provided in Section
4(b);
|
(ii)
|
reduce
the minimum Option exercise price, except as provided in Section 4(b);
or
|
(iii)
|
permit
repricing of Options prohibited by Section 3(e);
and
|
provided further
that no
amendment, suspension, discontinuation or termination (i) that would impair
the rights of such Participant, holder or beneficiary shall be made with respect
to Section 9 of the Plan after a Change in Control, as defined therein and
(ii) may increase the amount of payment of any Award to any
Participant.
(b)
Amendments to
Awards
. The Committee may waive any conditions or rights with
respect to, or amend, alter, suspend, discontinue, or terminate, any unexercised
Award theretofore granted, prospectively or retroactively, without the consent
of any relevant Participant or holder or beneficiary of an Award, provided that
no amendment, alteration, suspension, discontinuation or termination of an Award
that would impair the rights of such Participant, holder or beneficiary shall be
made after a Change in Control, as defined in Section 9; provided further that
the Committee may not increase the payment of any Award granted any
Participant.
(c)
Adjustments of Awards Upon
Certain Acquisitions
. In the event Olin or any Affiliate shall
assume outstanding employee awards or the right or obligation to make future
such awards in connection with the acquisition of another business or another
Person, the Committee may make such adjustments, not inconsistent with the terms
of the Plan, in the terms of Awards as it shall deem appropriate.
(d)
Adjustments of Awards Upon
the Occurrence of Certain Unusual or Nonrecurring Events
. The
Committee may make adjustments in the terms and conditions of Awards in
recognition of unusual or nonrecurring events (including, without limitation,
the events described in Section 4(b) hereof) affecting Olin, any Affiliate, or
the financial statements of Olin or any Affiliate, or of changes in applicable
laws, regulations, or accounting principles, whenever the Committee determines
that such adjustments are appropriate in order to prevent dilution or
enlargement of the benefits to be made available under the Plan.
(e)
409A
Compliance
. To the extent any provision of the Plan (or any
Award) or action by the Board or Committee would subject any Participant to
liability for interest or additional taxes under Code Section 409A(a)(1)(B), it
will be deemed null and void, to the extent permitted by law and deemed
advisable by the Committee. It is intended that the Plan (and any
Award) will comply with Code Section 409A, and the Plan (and any Award) shall be
interpreted and construed on a basis consistent with such intent. The
Plan (and any Award) may be amended in any respect deemed necessary (including
retroactively) by the Committee in order to preserve compliance with Code
Section 409A. The preceding shall not be construed as a guarantee of
any particular tax effect for Plan benefits or Awards. Except as
specifically provided in Section 9, a Participant (or beneficiary) is solely
responsible and liable for the satisfaction of all taxes and penalties that may
be imposed on the Participant (or beneficiary) in connection with any
distributions to such Participant (or beneficiary) under the Plan (including any
taxes and penalties under Code Section 409A), and neither Olin nor any Affiliate
shall have any obligation to indemnify or otherwise hold a Participant (or
beneficiary) harmless from any or all of such taxes or penalties.
Section
8.
Additional Conditions to
Enjoyment of Awards
.
(a)
The
Committee may cancel any unexpired, unpaid or deferred Awards if at any time the
Participant is not in compliance with all applicable provisions of the Award
Agreement, the Plan and the following conditions:
(i)
|
A
Participant shall not render services for any Person or engage, directly
or indirectly, in any business which, in the judgment of the Committee is
or becomes competitive with Olin or any Affiliate, or which is or becomes
otherwise prejudicial to or in conflict with the interests of Olin or any
Affiliate. Such judgment shall be based on the Participant’s
positions and responsibilities while employed by Olin or an Affiliate, the
Participant’s post employment responsibilities and position with the other
Person or business, the extent of past, current and potential competition
or conflict between Olin or an Affiliate and the other Person or business,
the effect on customers, suppliers and competitors of the Participant’s
assuming the post employment position, the guidelines established in any
ethical or business conduct standards of Olin then in effect, and such
other considerations as are deemed relevant given the applicable facts and
circumstances. The Participant shall be free, however, to
purchase as an investment or otherwise, stock or other securities of such
Person or business so long as they are listed upon a recognized securities
exchange or traded over the counter, and such investment does not
represent a substantial investment to the Participant or a greater than 1%
equity interest in the organization or
business.
|
(ii)
|
Participant
shall not, without prior written authorization from Olin, disclose to
anyone outside Olin, or use in other than Olin’s business, any secret or
confidential information, knowledge or data, relating to the business of
Olin or an Affiliate in violation of his or her agreement with Olin or the
Affiliate.
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(iii)
|
A
Participant, pursuant to his or her agreement with Olin or an Affiliate,
shall disclose promptly and assign to Olin or the Affiliate all right,
title and interest in any invention or idea, patentable or not, made or
conceived by the Participant during employment by Olin or the Affiliate,
relating in any manner to the actual or anticipated business, research or
development work of Olin or the Affiliate and shall do anything reasonably
necessary to enable Olin or the Affiliate to secure a patent where
appropriate in the United States and in foreign
countries.
|
(b)
Notwithstanding
any other provision of the Plan, the Committee in its sole discretion may cancel
any Award at any time prior to the exercise thereof, if the employment of the
Participant shall be terminated, other than by reason of death, unless the
conditions in this Section 8 are met.
(c)
Failure
to comply with the conditions of this Section 8 prior to, or during the six
months after, any exercise, payment or delivery pursuant to an Award shall cause
the exercise, payment or delivery to be rescinded. Olin shall notify
the Participant in writing of any such rescission within two years after such
exercise payment or delivery and within 10 days after receiving such notice, the
Participant shall pay to Olin the amount of any gain realized or payment
received as a result of the exercise, payment or delivery
rescinded. Such payment shall be made either in cash or by returning
to Olin the number of Shares that the Participant received in connection with
the rescinded exercise, payment or delivery.
(d)
Upon
exercise, payment or delivery pursuant to an Award, the Committee may require
the Participant to acknowledge the terms and conditions of the Plan and to
certify on a form acceptable to the Committee, that he or she is in compliance
with the terms and conditions of the Plan.
(e)
Nothing
herein shall be interpreted to limit the obligations of a Participant under his
or her employment agreement or any other agreement with Olin
Section
9.
Change in
Control
.
(a)
Except as
the Board or the Committee may expressly provide otherwise prior to a Change in
Control of Olin (as defined in Section 9(b)) in the event of a Change in
Control of Olin:
(i)
|
all
Options and Stock Appreciation Rights then outstanding shall become
immediately and fully exercisable, notwithstanding any provision therein
for the exercise in installments;
|
(ii)
|
all
restrictions and conditions of all Restricted Stock then outstanding shall
be deemed satisfied as of the date of the Change in Control;
and
|
(iii)
|
all
Performance Share Awards and Restricted Stock Units shall become vested
and deemed earned or satisfied in full, notwithstanding that the
applicable performance cycle, retention cycle or restriction conditions
shall not have been completed or met. Such Performance Share
Awards and Restricted Stock Units shall be paid, cash units in cash and
phantom stock units in the Shares represented thereby or such other
securities, property or cash as may be deliverable in respect of Shares as
a result of a Change in Control, to the Participant at the time or
schedule applicable to such awards (assuming for these purposes that no
such Change in Control had occurred), provided that in the event of a 409A
Change in Control of Olin (as defined in Section 9(j), and which 409A
Change in Control may occur concurrently with or after the Change in
Control), such awards shall be paid to the Participants on or as soon as
administratively feasible after such 409A Change in Control of Olin, but
no later than ten (10) business days following such 409A Change in
Control.
|
(b)
A “Change
in Control of Olin” means the occurrence of any of the following
events:
(i)
|
individuals
who, on the Effective Date (as defined in Section 10), constitute the
Board (the “Incumbent Directors”) cease for any reason to constitute at
least a majority of the Board; provided that any person becoming a
director subsequent to the Effective Date, whose election or nomination
for election was approved (either by a specific vote or by approval of the
proxy statement of Olin in which such person is named as a nominee for
director, without written objection to such nomination) by a vote of at
least two-thirds of the directors who were, as of the date of such
approval, Incumbent Directors, shall be an Incumbent Director; provided,
however, that no individual initially appointed, elected or nominated as a
director of Olin as a result of an actual or threatened election contest
with respect to directors or as a result of any other actual or threatened
solicitation of proxies or consents by or on behalf of any person other
than the Board shall be deemed to be an Incumbent Director;
or
|
(ii)
|
any
“person” (as such term is defined in Section 3(a)(9) of the Exchange Act
and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act) is or
becomes a “beneficial owner” (as such term is defined in Rule 13d-3 under
the Exchange Act), directly or indirectly, of securities of Olin
representing 20% or more of the combined voting power of Olin’s then
outstanding securities eligible to vote for the election of the Board (the
“Olin Voting Securities”); provided, however, that the event described in
this paragraph (ii) shall not be deemed to be a Change in Control if such
event results from any of the following: (A) the acquisition of Olin
Voting Securities by Olin or any of its subsidiaries, (B) the
acquisition of Olin Voting Securities by any employee benefit plan (or
related trust) sponsored or maintained by Olin or any of its subsidiaries,
(C) the acquisition of Olin Voting Securities by any underwriter
temporarily holding securities pursuant to an offering of such securities,
(D) the acquisition of Olin Voting Securities pursuant to a
Non-Qualifying Transaction (as defined in paragraph (iii)), or
(E) the acquisition of Olin Voting Securities by Executive or any
group of persons including Executive (or any entity controlled by
Executive or any group of persons including Executive);
or
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(iii)
|
the
consummation of a merger, consolidation, statutory share exchange or
similar form of corporate transaction involving (A) Olin or
(B) any of its wholly owned subsidiaries pursuant to which, in the
case of this clause (B), Olin Voting Securities are issued or issuable
(any event described in the immediately preceding clause (A) or (B), a
“Reorganization”) or the sale or other disposition of all or substantially
all of the assets of Olin to an entity that is not an affiliate of Olin (a
“Sale”), unless immediately following such Reorganization or Sale:
(1) more than 50% of the total voting power (in respect of the
election of directors, or similar officials in the case of an entity other
than a corporation) of (x) Olin (or, if Olin ceases to exist, the
entity resulting from such Reorganization), or, in the case of a Sale, the
entity which has acquired all or substantially all of the assets of Olin
(in either case, the “Surviving Entity”), or (y) if applicable, the
ultimate parent entity that directly or indirectly has beneficial
ownership of more than 50% of the total voting power (in respect of the
election of directors, or similar officials in the case of an entity other
than a corporation) of the Surviving Entity (the “Parent Entity”), is
represented by Olin Voting Securities that were outstanding immediately
prior to such Reorganization or Sale (or, if applicable, is represented by
shares into which such Olin Voting Securities were converted pursuant to
such Reorganization or Sale), (2) no person (other than any employee
benefit plan (or related trust) sponsored or maintained by the Surviving
Entity or the Parent Entity), is or becomes the beneficial owner, directly
or indirectly, of 20% or more of the total voting power (in respect of the
election of directors, or similar officials in the case of an entity other
than a corporation) of the outstanding voting securities of the Parent
Entity (or, if there is no Parent Entity, the Surviving Entity) and
(3) at least a majority of the members of the board of directors (or
similar officials in the case of an entity other than a corporation) of
the Parent Entity (or, if there is not Parent Entity, the Surviving
Entity) following the consummation of the Reorganization or Sale were, at
the time of the approval by the Board of the execution of the initial
agreement providing for such Reorganization or Sale, Incumbent Directors
(any Reorganization or Sale which satisfies all of the criteria specified
in (1), (2) and (3) above being deemed to be a “Non-Qualifying
Transaction”); or
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(iv)
|
the
stockholders of Olin approve a plan of complete liquidation or dissolution
of Olin.
|
Notwithstanding
the foregoing, if any person becomes the beneficial owner, directly or
indirectly, of 20% or more of the combined voting power of Olin Voting
Securities solely as a result of the acquisition of Olin Voting Securities by
Olin which reduces the number of Olin Voting Securities outstanding, such
increased amount shall be deemed not to result in a Change in Control; provided,
however, that if such person subsequently becomes the beneficial owner, directly
or indirectly, of additional Olin Voting Securities that increases the
percentage of outstanding Olin Voting Securities beneficially owned by such
person, a Change in Control of Olin shall then be deemed to occur.
(c)
In the
event that a Participant participates or agrees to participate by loan or equity
investment (other than through ownership of less than 1% of publicly traded
securities of another company) in a transaction (“acquisition”) which would
result in an event described in Section 9(b)(i) or (ii), the Participant must
promptly disclose such participation or agreement to Olin. If the
Participant so participates or agrees to participate, no payments due under this
Plan or by virtue of any Change in Control provisions contained in any
compensation or benefit plan of Olin will be paid to the Participant until the
acquiring group in which the Participant participates or agrees to participate
has complete the acquisition. In the event the Participant so
participates or agrees to participate and fails to disclose his or her
participation or agreement, the Participant will not be entitled to any payments
under this Plan or by virtue of Change in Control provisions in any Olin
compensation or benefit plan, notwithstanding any of the terms hereof or
thereof.
(d)
Anything
in this Plan to the contrary notwithstanding and except as set forth below, in
the event it shall be determined that any Payment would be subject to the Excise
Tax, then the Participant shall be entitled to receive an additional payment
(the “Gross-Up Payment”) in an amount such that, after payment by the
Participant of all taxes (and any interest or penalties imposed with respect to
such taxes), including, without limitation, any income and employment taxes (and
any interest and penalties imposed with respect thereto) and Excise Tax imposed
upon the Gross-Up Payment, the Participant retains an amount of the Gross-Up
Payment equal to the Excise Tax imposed upon the Payments.
(e)
Subject
to the provision sof Section 9(f), all determinations required to be made under
this Section 9, including whether and when a Gross-Up Payment is required, the
amount of such Gross-Up Payment and the assumptions to be utilized in arriving
at such determination, shall be made by KPMG LLP or such other nationally
recognized certified public accounting firm as may be designated by the
Participant (the “Accounting Firm”). The Accounting Firm shall
provide detailed supporting calculations both to Olin and the Participant within
15 business days of the receipt of notice from the Participant that there has
been a Payment or such earlier time as is requested by Olin. The
Accounting Firm shall not determine that no Excise Tax is payable by the
Participant unless it delivers to the Participant a written opinion that failure
to report the Excise Tax on the Participant’s applicable federal income tax
return would not result in the imposition of a negligence or similar
penalty. All fees and expenses of the Accounting Firm shall be borne
solely by Olin. Any Gross-Up Payment, as determined pursuant to this
Section 9(e), shall be paid by Olin to the Participant within 5 days of the
receipt of the Accounting Firm’s determination and in no event shall such date
be later than the last day of the calendar year after the calendar year in which
the applicable Excise Tax is paid. Any determination by the
Accounting Firm shall be binding upon Olin and the Participant. As a
result of the uncertainty in the application of Section 4999 of the Code at the
time of the initial determination by the Accounting Firm hereunder, it is
possible that Gross-Up Payments that will not have been made by Olin should have
been made (the “Underpayment”), consistent with the calculations required to be
made hereunder. In the event Olin exhausts its remedies pursuant to
Section 9(f) and the Participant thereafter is required to make a payment
of any Excise Tax, the Accounting Firm shall determine that amount of the
Underpayment that has occurred and any such Underpayment shall be paid by Olin
to or for the benefit of the Participant within 5 days of receipt of the
Accounting Firm’s determination.
(f)
The
Participant shall notify Olin in writing of any claims by the Internal Revenue
Service that, if successful, would require the payment by Olin of the Gross-Up
Payment. Such notification shall be given as soon as practicable but
not later than 30 days after the Participant actually receives notice in writing
of such claim and shall apprise Olin of the nature of such claim and the date on
which such claim is requested to be paid; provided, however, that the failure of
the Participant to notify Olin of such claim (or to provide any required
information with respect thereto) shall not affect any rights granted to the
Participant under this Section 9(f) except to the extent that Olin is
materially prejudiced in the defense of such claim as a direct result of such
failure. The Participant shall not pay such claim prior to the
expiration of the 30-day period following the date on which the Participant
gives such notice to Olin (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If Olin notifies
the Participant in writing prior to the expiration of such period that Olin
desires to contest such claim, the Participant shall:
(i)
|
give
Olin any information reasonably requested by Olin relating to such
claim;
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(ii)
|
take
such action in connection with contesting such claim as Olin shall
reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by
an attorney selected by Olin and reasonably acceptable to the
Participant;
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(iii)
|
cooperate
with Olin in good faith in order to effectively contest such claim;
and
|
(iv)
|
permit
Olin to participate in any proceedings relating to such
claim;
|
provided, however
, that Olin
shall bear and pay directly all costs and expenses (including additional
interest and penalties) incurred in connection with such contest, and shall
indemnify and hold the Participant harmless, on an after-tax basis, for any
Excise tax or income or employment tax (including interest and penalties)
imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this
Section 9(f), Olin shall control all proceedings taken in connection with
such contest, and, at its sole discretion, may pursue or forego any and all
administrative appeals, proceedings, hearings and conferences with the
applicable taxing authority in respect of such claim and may, at its sole
discretion, either direct the Participant to pay the tax claimed and sue for a
refund or contest the claim in any permissible manner, and the Participant
agrees to prosecute such contest to a determination before any administrative
tribunal, in a court of initial jurisdiction and in one or more appellate
courts, as Olin shall determine;
provided, however
, that, if
Olin directs the Participant to pay such claim and sue for a refund, Olin shall
advance the amount of such payment to the Participant, on an interest-free
basis, and shall indemnify and hold the Participant harmless, on an after-tax
basis, from any Excise Tax or income tax (including interest or penalties)
imposed with respect to such advance or with respect to any imputed income in
connection with such advance; and
provided, further
, that any
extension of the statute of limitations relating to payment of taxes for the
taxable year of the Participant with respect to which such contested amount is
claimed to be due is limited solely to such contested
amount. Furthermore, Olin’s control of the contest shall be limited
to issues with respect to which the Gross-Up Payment would be payable hereunder,
and the Participant shall be entitled to settle or contest, as the case may be,
any other issue raised by the Internal Revenue Service or any other taxing
authority.
(g)
If, after
the receipt by the Participant of an amount advanced by Olin pursuant to
Section 9(f), the Participant becomes entitled to receive any refund with
respect to such claim, the Participant shall (subject to Olin’s complying with
the requirements of Section 9(f) promptly pay to Olin the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Participant of an
amount advanced by Olin pursuant to Section 9(f), a determination is made
that the Participant shall not be entitled to any refund with respect to such
claim, and Olin does not notify the Participant in writing of its intent to
contest such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.
(h)
Notwithstanding
any other provision of this Section 9, Olin may, in its sole discretion,
withhold and pay over to the Internal Revenue Service or any other applicable
taxing authority, for the benefit of the Participant, all or any portion of the
Gross-Up Payment, and the Participant hereby consents to such
withholding.
(i)
Definitions
. The
following terms shall have the following meanings for purposes of this
Section 9.
(A)
|
‘Excise
Tax” shall mean the excise tax imposed by Section 4999 of the Code,
together with any interest or penalties imposed with respect to such
excise tax.
|
(B)
|
A
“Payment” shall mean any payment or distribution in the nature of
compensation (within the meaning of Section 280G(b)(2) of the Code)
to or for the benefit of the Participant, whether paid or payable pursuant
to this Plan or otherwise
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(j)
A “409A
Change in Control of Olin” means the occurrence of any
of the following
events:
(i)
|
any
person or Group acquires ownership of Olin’s stock that, together with
stock held by such person or Group, constitutes more than 50% of the total
fair market value or total voting power of Olin’s stock, (including an
increase in the percentage of stock owned by any person or Group as a
result of a transaction in which Olin acquires its stock in exchange for
property, provided that the acquisition of additional stock by any person
or Group deemed to own more than 50% of the total fair market
value or total voting power of Olin’s stock on January 1,
2005, shall not constitute a 409A Change in Control);
or
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(ii)
|
any
person or Group acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or Group)
ownership of Olin stock possessing 30% or more of the total voting power
of Olin stock; or
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(iii)
|
a
majority of the members of Olin’s board of directors is replaced during
any 12-month period by directors whose appointment or election is not
endorsed by a majority of the members of Olin’s board of directors prior
to the date of the appointment or election;
or
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(iv)
|
any
person or Group acquires (or has acquired during the 12-month period
ending on the date of the most recent acquisition by such person or Group)
assets from Olin that have a total Gross Fair Market Value equal to 40% or
more of the total Gross Fair Market Value of all Olin assets immediately
prior to such acquisition or acquisitions, provided that there is no 409A
Change in Control when Olin’s assets are transferred
to:
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(1)
|
a
shareholder of Olin (immediately before the asset transfer) in exchange
for or with respect to Olin stock;
|
(2)
|
an
entity, 50% or more of the total value or voting power of which is owned,
directly or indirectly, by Olin;
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(3)
|
a
person or Group that owns, directly or indirectly, 50% or more of the
total value or voting power of all outstanding Olin stock;
or
|
(4)
|
an
entity, at least 50% of the total value or voting power of which is owned,
directly or indirectly, by a person described in paragraph
(iii).
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For
purposes of the above sub-paragraph (iv), a person’s status is determined
immediately after the transfer of the assets. For example, a transfer
to a corporation in which Olin has no ownership interest before the transaction,
but which is a majority-owned subsidiary of Olin after the transaction is not a
409A Change in Control.
For
purposes of this Section 9(j), “Gross Fair Market Value” means the value of
assets determined without regard to any liabilities associated with such
assets.
(k)
Following
a Change in Control or 409A Change in Control, no action shall be taken under
the plan that will cause any Award that has previously been determined to be (or
is determined to be) subject to Code Section 409A to fail to comply in any
respect with Code Section 409A without the written consent of the
Participant.
Section
10.
Effective Date and
Term
.
The Plan
shall be effective as of the date of approval of Olin’s shareholders (the
“Effective Date”). The Plan shall be unlimited in duration and, in
the event of Plan termination, shall remain in effect as long as any Awards
under it are outstanding; provided, however, that, to the extent required by the
Code, no Incentive Stock Option may be granted under the Plan on a date that is
more than ten years from the date the Plan is adopted.
Exhibit
10.9
2006
PERFORMANCE SHARE PROGRAM
Codified
to reflect amendments
through
October 22, 2008
The terms
and conditions of the Performance Share Awards granted under this Program are
contained in the Performance Share Certificate evidencing such Award, this
Program and the LTIP.
“LTIP”
means the Olin Corporation 2003 Long Term Incentive Plan or the Olin Corporation
2000 Long Term Incentive Plan under which Performance Share Awards are granted
under this Program.
“Common
Stock” means the common stock of Olin, par value $1.00 per share.
“Final
Share Number” has the meaning specified in Section 3 of this
Program.
“Olin”
means Olin Corporation.
“Performance
Cycle” means, with respect to a Performance Share Award, a period of three
calendar years, beginning with the calendar year in which such Performance Share
Award is granted.
“Performance
Share Award” shall mean grants of “Performance Shares” and “Senior Performance
Shares.”
“Performance
Share” and “Senior Performance Share” mean a unit granted under the LTIP and
this Program, maintained on the books of the Company during the Performance
Cycle, denominated as one phantom share of Common Stock, and paid in cash or
Common Stock in accordance with this Program.
“Program”
means this 2006 Performance Share Program.
“S&P
ROC” shall mean the average annual return on capital (calculated in the same
manner as Olin’s Return on Capital) of a group composed of the Standard &
Poor’s 1000 Materials companies plus Mueller Industries, Inc.; Wolverine Tube,
Inc.; Occidental Petroleum Corporation; Alliant Techsystems Inc., PPG
Industries. Inc.; and The Dow Chemical Company broken out by
quintiles.
Capitalized
terns not otherwise defined in this Program shall have the meaning specified in
the LTIP.
3.
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Performance
Share Awards
|
a.
|
Awards
of Senior Performance Shares (category A) under this Program granted
pursuant to the LTIP are intended to be “performance-based compensation”
as that term is used in Section 162(m) of the Code. Each
Performance Share Award shall establish a target number of Performance
Shares or Senior Performance Shares awarded to the Participant named in
such Award.
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b.
|
The
target number of Performance Shares for each Participant shall be adjusted
based upon a comparison of Olin’s average annual Return on Capital during
the Performance Cycle with the S&P ROC during the Performance Cycle,
in accordance with the following
chart:
|
If
Olin’s Return on Capital for a Performance Cycle is in
the:
|
The
% of the target number of Performance Shares paid will
be:
|
5th
Quintile of the S&P ROC
|
150%
|
4th
Quintile of the S&P ROC
|
125%
|
3rd
Quintile of the S&P ROC
|
100%
|
2nd
Quintile of the S&P ROC
|
50%
|
1st
Quintile of the S&P ROC
|
25%
|
c.
|
The
target number of Senior Performance Shares for each Participant shall be
adjusted based upon a comparison of Olin’s average annual Return on
Capital during the Performance Cycle with the S&P ROC during the
Performance Cycle, in accordance with the following
chart:
|
If
Olin’s Return on Capital for a Performance Cycle is in
the:
|
The
% of the target number of Senior Performance Shares paid will
be:
|
|
|
|
5th
Quintile of the S&P ROC
|
150%
|
150%
|
4th
Quintile of the S&P ROC
|
125%
|
125%
|
3rd
Quintile of the S&P ROC
|
100.0%
|
100%
|
2nd
Quintile of the S&P ROC
|
33.33%
|
100%
|
1st
Quintile of the S&P ROC
|
0%
|
100%
|
d.
|
As
soon as practicable in the calendar year following the end of a
Performance Cycle, the Company shall calculate the appropriate adjustment,
if any, to the target number of Performance Shares and Senior Performance
Shares (the “Final Share Number”) for all Participants whose Performance
Share Awards have vested at the end of such Performance
Cycle.
|
4.
|
Vesting
and Forfeiture
|
a.
|
Except
as otherwise provided by the Committee, the LTIP, this Program or the
Performance Share Award certificate, an interest in a Performance Share
Award shall vest only if the Participant is an employee of the Company or
a subsidiary on the last day of the relevant Performance
Cycle.
|
b.
|
If
a Participant’s employment with the Company or a subsidiary terminates for
cause or without the Company’s consent (other than as the result of the
Participant’s death, disability or retirement) before a Performance Share
Award has vested, his or her Performance Share Award shall terminate and
all rights under such Award shall be
forfeited.
|
c.
|
If
a Participant’s employment with the Company or a subsidiary terminates as
the result of his or her disability, (as that term is defined in Section
409A of the Code or any successor provision), or retirement under any of
the Company’s retirement plans before a Performance Share Award has
vested, the Participant shall be entitled to a pro rata Performance Share
Award, payable solely in cash at the time that the Performance Share Award
would otherwise be payable under Section 5. The cash payment
shall be equal to the Final Share Number calculated in accordance with
Sections 3 and 5 of this Program, multiplied by the Fair Market Value on
the last day of the relevant Performance Cycle, multiplied by a fraction
with a numerator equal to the number of months during the Performance
Cycle the Participant was employed by the Company or a subsidiary (rounded
up to the nearest whole month) and a denominator of
36.
|
d.
|
If
a Participant’s employment with the Company or a subsidiary terminates as
the result of his or her death before a Performance Share Award has
vested, the Participant shall be entitled to a pro rata Performance Share
Award, payable solely in cash within ninety (90) days of the Participant’s
death. The cash payment shall be equal to the Participant’s
target number of Performance Shares or Senior Performance Shares, as the
case may be, multiplied by the Fair Market Value on the date of the
Participant’s death (or the next trading day, if the Common Stock was not
traded on such date), multiplied by a fraction with a numerator equal to
the number of months during the Performance Cycle the Participant was
employed by the Company or a subsidiary (rounded up to the nearest whole
month) and a denominator of 36.
|
e.
|
If
a Participant’s employment with the Company or a subsidiary terminates for
any other reason, the Company shall determine the portion, if any, of the
Performance Share Award that shall not be forfeited, and the form of
payment (cash or shares or a combination) that the Participant shall
receive. That determination shall be made by the Committee in
the case of any officer, and by the Chairman of the Board, President,
Chief Executive Officer, or any Vice President, in the case of any
non-officer employee. Notwithstanding this Section 4, payment
shall be made pursuant to Section
5.
|
a.
|
As
soon as is administratively practicable after the determination of the
Final Share Number, but not later than the last day of the calendar year
following the Performance Cycle, the Company will (i) issue to each
Participant a number of shares of the Common Stock equal to one-half of
the Final Share Number, rounded down to the nearest whole share if such
number is not a whole number, and (ii) pay the Participant an amount equal
to the Fair Market Value of one-half of the Final Share Number of shares
of Common Stock on the last day of the Performance Cycle, rounded up to
the nearest whole share if such number is not a whole
number.
|
b.
|
No
dividends or dividend equivalents shall be paid on any Performance Shares
or Senior Performance Shares.
|
a.
|
By
acceptance of the Performance Share Award, each Participant agrees that
such Award is special compensation, and that any amount paid will not
affect:
|
i.
|
the
amount of any pension under any pension or retirement plan in which he or
she participates as an employee of
Olin,
|
ii.
|
the
amount of coverage under any group life insurance plan in which he or she
participates as an employee of Olin,
or
|
iii.
|
the
benefits under any other benefit plan of any kind heretofore or hereafter
in effect, under which the availability or amount of benefits is related
to compensation.
|
b.
|
The
Company will withhold from the distribution of any cash pursuant to
Performance Share Awards the amount necessary to satisfy the Participant’s
federal, state and local withholding tax requirements. It is
the Company’s intention that all income tax liability on Performance Share
Awards be deferred in accordance with the applicable requirements of Code
Section 409A, until the Participant actually receives such shares or
payment thereof.
|
c.
|
To
the extent any provision of the Program (or any Performance Share Award)
or action by the Board of Directors or Committee would subject any
Participant to liability for interest or additional taxes under Code
Section 409A, it will be deemed null and void, to the extent permitted by
law and deemed advisable by the Committee. It is intended that
the Program (and any Performance Share Award) will comply with Code
Section 409A, and the Program (and any Performance Share Award) shall be
interpreted and construed on a basis consistent with such
intent. The Program (and any Performance Share Award) may be
amended in any respect deemed necessary (including retroactively) by the
Committee in order to preserve compliance with Code Section
409A. The preceding shall not be construed as a guarantee of
any particular tax effect for Program benefits or Performance Share
Awards. Except as specifically provided in the LTIP, a
Participant (or beneficiary) is solely responsible and liable for the
satisfaction of all taxes and penalties that may be imposed on the
Participant (or beneficiary) in connection with any distributions to such
Participant (or beneficiary) under the Program (including any taxes and
penalties under Code Section 409A), and neither Olin nor any Affiliate
shall have any obligation to indemnify or otherwise hold a Participant (or
beneficiary) harmless from any or all of such taxes or
penalties.
|
Exhibit
10.10
OLIN
CORPORATION
PERFORMANCE
SHARE PROGRAM
Codified
to reflect amendments
through
October 22, 2008
The terms
and conditions of the Performance Share Awards granted under this Program are
contained in the Performance Share Certificate evidencing such Award, this
Program and the LTIP.
“Common
Stock” means the common stock of Olin, par value $1.00 per share.
“Final
Share Number” has the meaning specified in Section 3 of this
Program.
“LTIP”
means the Olin Corporation benefit plan under which the relevant Performance
Share Award is granted, including the 2003 Long Term Incentive Plan, the 2006
Long Term Incentive Plan and any successor or similar plan.
“Olin”
means Olin Corporation.
“Performance
Cycle” means, with respect to a Performance Share Award, a period of three
calendar years, beginning with the calendar year in which such Performance Share
Award is granted.
“Performance
Share Award” shall mean grants of “Performance Shares” and “Senior Performance
Shares.”
“Performance
Share” and “Senior Performance Share” mean a unit granted under the LTIP and
this Program, maintained on the books of the Company during the Performance
Cycle, denominated as one phantom share of Common Stock, and paid in cash or
Common Stock in accordance with this Program.
“Program”
means this Performance Share Program.
“S&P
ROC” shall mean the average annual return on capital (calculated in the same
manner as Olin’s Return on Capital) of a group composed of the Standard &
Poor’s 1000 Materials companies plus Mueller Industries, Inc.; Wolverine Tube,
Inc.; Occidental Petroleum Corporation; Alliant Techsystems Inc.; PPG
Industries, Inc.; and The Dow Chemical Company, broken out by
quintiles.
Capitalized
terms not otherwise defined in this Program shall have the meaning specified in
the LTIP.
3.
|
Performance
Share Awards
|
a.
|
Awards
of Senior Performance Shares (category A) under this Program granted
pursuant to the LTIP are intended to be “performance-based compensation”
as that term is used in Section 162(m) of the Code. Each
Performance Share Award shall establish a target number of Performance
Shares or Senior Performance Shares awarded to the Participant named in
such Award.
|
b.
|
The
target number of Performance Shares for each Participant shall be adjusted
based upon a comparison of Olin’s average annual Return on Capital during
the Performance Cycle with the S&P ROC during the Performance Cycle,
in accordance with the following
chart:
|
If Olin’s Return on Capital for a Performance
Cycle is in the:
|
The
% of the target number of Performance
Shares paid will
be:
|
highest
Quintile of the S&P ROC
|
150%
|
2nd
Quintile of the S&P ROC
|
125%
|
3rd
Quintile of the S&P ROC
|
100%
|
4th
Quintile of the S&P ROC
|
50%
|
lowest
Quintile of the S&P ROC
|
25%
|
c.
|
The
target number of Senior Performance Shares for each Participant shall be
adjusted based upon a comparison of Olin’s average annual Return on
Capital during the Performance Cycle with the S&P ROC during the
Performance Cycle, in accordance with the following
chart:
|
|
The
% of the target number of Senior
Performance
Shares paid will be:
|
If Olin’s Return on Capital for a Performance
Cycle is in the:
|
A
Shares
|
B
Shares
|
highest
Quintile of the S&P ROC
|
150%
|
150%
|
2nd
Quintile of the S&P ROC
|
125%
|
125%
|
3rd
Quintile of the S&P ROC
|
100.0%
|
100%
|
4th
Quintile of the S&P ROC
|
33.33%
|
100%
|
lowest
Quintile of the S&P ROC
|
0%
|
100%
|
d.
|
As
soon as practicable in the calendar year following the end of the
Performance Cycle, the Company shall calculate the appropriate adjustment,
if any, to the target number of Performance Shares and Senior Performance
Shares (the “Final Share Number”) for all Participants whose Performance
Share Awards have vested during or at the end of such Performance
Cycle.
|
4.
|
Vesting
and Forfeiture
|
a.
|
Except
as otherwise provided by the Committee, the LTIP, this Program or the
Performance Share Award certificate, an interest in a Performance Share
Award shall vest only if the Participant is an employee of the Company or
a subsidiary on the last day of the relevant Performance
Cycle.
|
b.
|
If
a Participant’s employment with the Company or a subsidiary terminates for
cause or without the Company’s consent (other than as the result of the
Participant’s death, disability or retirement) before a Performance Share
Award has vested, his or her Performance Share Award shall terminate and
all rights under such Award shall be
forfeited.
|
c.
|
If
a Participant’s employment with the Company or a subsidiary terminates as
the result of his or her disability, (as that term is defined in Section
409A of the Code or any successor provision), or retirement under any of
the Company’s retirement plans before a Performance Share Award has
vested, the Participant shall be entitled to a pro rata Performance Share
Award, payable solely in cash at the time that the Performance Share Award
would otherwise be payable under Section 5. The cash payment
shall be equal to the Final Share Number calculated in accordance with
Sections 3 and 5 of this Program, multiplied by the Fair Market Value on
the last day of the relevant Performance Cycle, multiplied by a fraction
with a numerator equal to the number of months during the Performance
Cycle the Participantwas employed by the Company or a subsidiary (rounded
up to the nearest whole month) and a denominator of
36.
|
d.
|
If
a Participant’s employment with the Company or a subsidiary terminates as
the result of his or her death before a Performance Share Award has
vested, the Participant shall be entitled to a pro rata Performance Share
Award, payable solely in cash within ninety (90) days of the Participant’s
death. The cash payment shall be equal to the Participant’s
target number of Performance Shares or Senior Performance Shares, as the
case may be, multiplied by the Fair Market Value on the date of the
Participant’s death (or the next trading day, if the Common Stock was not
traded on such date), multiplied by a fraction with a numerator equal to
the number of months during the Performance Cycle the Participant was
employed by the Company or a subsidiary (rounded up to the nearest whole
month) and a denominator of 36.
|
e.
|
If
a Participant’s employment with the Company or a subsidiary terminates for
any other reason, the Company shalldetermine the portion, if any, of the
Performance Share Award that shall not be forfeited, and the form of
payment (cash or shares or a combination) that the Participant shall
receive. That determination shall be made by the Committee in
the case of any officer, and by the Chairman of the Board, President,
Chief Executive Officer, or any Vice President, in the case of any
non-officer employee. Notwithstanding this Section 4,
payment shall be made pursuant to Section
5.
|
a.
|
As
soon as is administratively practicable after the determination of the
Final Share Number, but not later than the last day of the calendar year
following the Performance Cycle, the Company will (i) issue to each
Participant a number of shares of the Common Stock equal to one-half of
the Final Share Number, rounded down to the nearest whole share if such
number is not a whole number, and (ii) pay the Participant an amount equal
to the Fair Market Value of one-half of the Final Share Number of shares
of Common Stock on the last day of the Performance Cycle, rounded up to
the nearest whole share if such number is not a whole
number.
|
b.
|
No
dividends or dividend equivalents shall be paid on any Performance Shares
or Senior Performance Shares.
|
a.
|
By
acceptance of the Performance Share Award, each Participant agrees that
such Award is special compensation, and that any amount paid will not
affect:
|
i.
|
the
amount of any pension under any pension or retirement plan in which he or
she participates as an employee of
Olin,
|
ii.
|
the
amount of coverage under any group life insurance plan in which he or she
participates as an employee of Olin,
or
|
iii.
|
the
benefits under any other benefit plan of any kind heretofore or hereafter
in effect, under which the availability or amount of benefits is related
to compensation.
|
b.
|
The
Company will withhold from the distribution of any cash pursuant to
Performance Share Awards the amount necessary to satisfy the Participant’s
federal, state and local withholding tax requirements. It is
the Company’s intention that all income tax liability on Performance Share
Awards be deferred in accordance with the applicable requirements of Code
Section 409A, until the Participant actually receives such shares or
payment thereof.
|
c.
|
To
the extent any provision of the Program (or any Performance Share Award)
or action by the Board of Directors or Committee would subject any
Participant to liability for interest or additional taxes under Code
Section 409A, it will be deemed null and void, to the extent permitted by
law and deemed advisable by the Committee. It is intended that
the Program (and any Performance Share Award) will comply with Code
Section 409A, and the Program (and any Performance Share Award) shall be
interpreted and construed on a basis consistent with such
intent. The Program (and any Performance Share Award) may be
amended in any respect deemed necessary (including retroactively) by the
Committee in order to preserve compliance with Code Section
409A. The preceding shall not be construed as a guarantee of
any particular tax effect for Program benefits or Performance Share
Awards. Except as specifically provided in the LTIP, a
Participant (or beneficiary) is solely responsible and liable for the
satisfaction of all taxes and penalties that may be imposed on the
Participant (or beneficiary) in connection with any distributions to such
Participant (or beneficiary) under the Program (including any taxes and
penalties under Code Section 409A), and neither Olin nor any Affiliate
shall have any obligation to indemnify or otherwise hold a Participant (or
beneficiary) harmless from any or all of such taxes or
penalties.
|
Exhibit 10.11
FIRST
AMENDMENT TO
PURCHASE
AND CONTRIBUTION AGREEMENT
FIRST
AMENDMENT, dated as of August 28, 2007 (this “
Amendment
”), to the
Purchase and Contribution Agreement, dated as of July 25, 2007 (as amended,
restated, modified or supplemented from time to time, the “
PCA
”), by and among
Olin Funding Company LLC (the “
Purchaser
”), Olin
Corporation (“
Parent
”), as
Collection Agent, A.J. Oster Co. (“
A.J. Oster Co.
”),
A.J. Oster Foils, Inc. (“
A.J. Oster Foils
”),
A.J. Oster West, Inc. (“
A.J. Oster West
”),
Bryan Metals, Inc. (“
Bryan Metals
”) and
Chase Brass & Copper Company, Inc. (“
Chase
” and together
with Parent, A.J. Oster Co., A.J. Oster Foils, A.J. Oster West and Bryan Metals,
each a “
Seller
”
and collectively, the “
Sellers
”). Capitalized
terms used but not otherwise defined herein shall have the meanings ascribed to
such terms in the PCA.
WHEREAS,
pursuant to Section 9.01 of the PCA, the parties hereto have agreed to amend the
PCA as described herein.
NOW
THEREFORE, the parties hereto agree as follows:
1.
Amendments to the
PCA
. Effective as of the date on which all of the conditions
precedent set forth in
Section 3
hereof
shall have been satisfied, the PCA is hereby amended as follows:
a.
Section
4.01(s) of the PCA is hereby amended and restated in its entirety to read as
follows:
“(s)
Such Seller (or the partners of such Seller, if such Seller is a partnership)
does
not
carry on business in Canada
through a permanent establishment
for the purposes of the
Canada-U.S.
Convention.”
b.
Section
5.01(m) of the PCA is hereby amended and restated in its entirety to read as
follows:
“(m)
Business in
Canada
. Such Seller (or the partners of such Seller, if such
Seller
is
a partnership) will not carry
on business in Canada
through a permanent establishment for the purposes of the Canada-U.S.
Convention.”
c.
Exhibit B
to the PCA is hereby replaced in its entirety by
Exhibit B
attached to
this Amendment.
2.
The Stanley Works
Receivables
. Chase hereby notifies the Purchaser and the
Collection Agent that (a) all receivables financing and purchasing arrangements
pertaining to the accounts receivable due from The Stanley Works Co. described
in clause (a) of the definition of “Excluded Receivables” set forth in Section
1.01 of the PCA (“
The
Stanley Works Receivables
”) have been terminated and the UCC Financing
Statement filed in connection therewith has been terminated (an acknowledgment
copy of the termination of the UCC Financing Statement has been separately
delivered to the Purchaser and the Collection Agent), and (b) The Stanley Works
Receivables are free and clear of Adverse Claims (UCC search results indicating
the absence of Adverse Claims have been separately delivered to the Purchaser
and the Collection Agent), and Chase hereby authorizes the Program Agent (as
defined in the RPA) as the designee of the Purchaser to file an amendment of the
UCC Financing Statement filed against Chase in connection with the PCA to
reflect that The Stanley Works Receivables are no longer Excluded
Receivables. Notwithstanding the requirement set forth in the
definition of “Excluded Receivables” that thirty (30) days’ prior written notice
be delivered, effective as of August 31, 2007, The Stanley Works Receivables
shall no longer be deemed to be Excluded Receivables.
3.
Effectiveness
. This
Amendment shall become effective as of the date hereof at such time as executed
counterparts of this Amendment have been delivered by each party hereto to the
other parties hereto and the Program Agent and each of the Investor Agents (as
such terms are defined in the RPA) have executed and delivered the consent on
the signature pages hereto.
4.
Representations and
Warranties
.
a.
Each
Seller reaffirms and restates as to itself each of the representations and
warranties contained in Section 4.01of the PCA, as amended by this
Amendment.
b.
The
Sellers hereby represent and warrant that the names and addresses of all of the
Deposit Banks, together with the post office boxes and account numbers of the
Lock-Boxes
and
Deposit Accounts at such Deposit Banks, are as specified in
Exhibit B
attached
hereto, and that all of the information set forth on such
Exhibit B
is true and
correct as of
the date
hereof.
5.
C
o
nfirmation of the
PCA
. All references to the PCA in the PCA and the other
documents and instruments delivered pursuant to or in connection with the PCA
shall mean the PCA as amended by this Amendment, and as hereafter amended or
restated. Except as expressly provided herein, the PCA shall remain
unmodified and shall continue to be in full force and effect in accordance with
its terms.
6.
GOVERNING
LAW
. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PRINCIPLES THEREOF.
7.
Counterparts
. This
Amendment may be executed by the parties hereto on any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Amendment by facsimile or by electronic
mail in portable document format (pdf) shall be effective as delivery of a
manually executed counterpart of this Amendment.
[Signature
Pages Follow]
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the day and year first above written.
|
OLIN
FUNDING COMPANY LLC, as Purchaser
By:
/s/ Stephen C.
Curley
Name: Stephen
C. Curley
Title: Treasurer
|
OLIN
CORPORATION, as Parent, Collection Agent and a Seller
By:
/s/ Stephen C.
Curley
Name: Stephen
C. Curley
Title: Vice
President & Treasurer
|
|
A.J.
OSTER CO., as a Seller
By:
/s/ Daniel B.
Becker
Name: Daniel
B. Becker
Title: President
|
|
A.J.
OSTER FOILS, INC., as a Seller
By:
/s/ Daniel B.
Becker
Name: Daniel
B. Becker
Title: President
|
A.J.
OSTER WEST, INC., as a Seller
By:
/s/ Daniel B.
Becker
Name: Daniel
B. Becker
Title: President
|
|
BRYAN
METALS, INC., as a Seller
By:
/s/ Daniel B.
Becker
Name: Daniel
B. Becker
Title: President
|
CHASE
BRASS & COPPER COMPANY, INC., as a Seller
By:
/s/ Jeffrey J.
Haferkamp
Name:
Jeffrey J. Haferkamp
Title: President
|
|
Pursuant
to Section 5.01(m) of the RPA, each of the undersigned consents to the
foregoing First Amendment:
|
|
CITICORP
NORTH AMERICA, INC., as Program Agent and an Investor Agent under the
RPA
By:
/s/ Junette M.
Earl
Name: Junette
M. Earl
Title: Vice
President
|
|
|
|
WACHOVIA
BANK, NATIONAL ASSOCIATION, as an Investor Agent under the
RPA
By:
/s/ William P.
Rutkowski
Name: William
P. Rutkowski
Title: Vice
President
|
|
Exhibit
10.12
SECOND
AMENDMENT TO
PURCHASE
AND CONTRIBUTION AGREEMENT
SECOND
AMENDMENT, dated as of November 15, 2007 (this “
Amendment
”) to the
Purchase and Contribution Agreement, dated as of July 25, 2007 (as amended by
that certain first amendment dated as of August 28, 2007, and as further
amended, restated, modified or supplemented from time to time, the “
PCA
”), by and among
Olin Funding Company LLC (the “
Purchaser
”), Olin
Corporation (“
Parent
”), as
Collection Agent, A.J. Oster Co. (“
A.J. Oster Co.
”),
A.J. Oster Foils, LLC (successor-by-law to A.J. Oster Foils, Inc., a Delaware
corporation) (“
A.J.
Oster Foils
”), A.J. Oster West, Inc. (“
A.J. Oster West
”),
Bryan Metals, LLC (successor-by-law to Bryan Metals, Inc., an Ohio corporation)
(“
Bryan
Metals
”) and Chase Brass & Copper Company, LLC (successor-by-law to
Chase Brass & Copper, Inc., a Delaware corporation) (“
Chase
” and together
with Parent, A.J. Oster Co., A.J. Oster Foils, A.J. Oster West and Bryan Metals,
each a “
Seller
”
and collectively, the “
Sellers
”). Capitalized
terms used but not otherwise defined herein shall have the meanings ascribed to
such terms in the PCA.
WHEREAS,
pursuant to Section 9.01 of the PCA, the parties hereto have agreed to amend the
PCA as described herein in order to remove each of the Sellers other than Parent
as a party to the PCA (each Seller other than Parent is referred to herein as an
“
Exiting
Seller
”) .
NOW
THEREFORE, the parties hereto agree as follows:
1.
Amendments to the
PCA
. Effective as of the date on which all of the conditions
precedent set forth in
Section 2
hereof
shall have been satisfied, the PCA is hereby amended as follows:
a.
Each of
the Exiting Sellers shall cease to be a party to the PCA, and each of the
Exiting Sellers shall be removed from Schedule I. Accordingly,
Schedule I is deleted and replaced with Schedule I hereto.
b.
Exhibit A
is amended by deleting therefrom the document titled “A.J. Oster Company
Credit Policy & Procedure”.
c.
Exhibit B
is deleted and replaced with Exhibit B hereto.
d.
Exhibit E
is deleted and replaced with Exhibit E hereto.
e.
Exhibit F
is deleted and replaced with Exhibit F hereto.
f.
Section
1.01 is amended by deleting the definition of “Excluded Receivable” therein in
its entirety and replacing such definition as follows:
“
Excluded Receivable
”
means all indebtedness due to a Seller arising from the sale of consigned goods
by such Seller.
g.
Section
4.01(l) is amended by deleting such section in its entirety and replacing such
section as follows:
(l) Such
Seller is located in the jurisdiction of organization set forth for such Seller
in Exhibit F hereto for the purposes of Section 9-307 of the UCC as in effect in
the State of New York; and the office in the jurisdiction of organization of
such Seller in which a UCC financing statement is required to be filed in order
to perfect the security interest granted by such Seller hereunder is set forth
in
Exhibit F
hereto (in each case as such
Exhibit F
may be
amended from time to time pursuant to
Section
5.01(b)
). The office where such Seller keeps its records
concerning the Transferred Receivables is located at the address or addresses
referred to in
Section
5.01(b)
. The principal place of business and chief executive
office of such Seller were located during the period from July 25, 2002 to the
date hereof at the address or addresses set forth on
Exhibit E
hereto. Such Seller has not changed its name since July 25, 2002,
except as set forth on
Exhibit E
hereto.
h.
Section
9.01 is amended by deleting the final sentence thereof and replacing such final
sentence with the following: “Notwithstanding any other provision of this
Section 9.01
,
Exhibit B
and
Exhibit F
hereto may
be amended in accordance with the procedures set forth in Sections 5.01(g) and
5.01(b) respectively.”
2.
Effectiveness
. This
Amendment shall become effective as of the date hereof at such time as
(a) executed counterparts of this Amendment have been delivered by each
party hereto to the other parties hereto and the Program Agent and each of the
Investor Agents (as such terms are defined in the RPA) have executed and
delivered the consent on the signature pages hereto, and (b) all of the
conditions to effectiveness set forth in the Assignment and Release dated as of
the date hereof among the Sellers, the Purchaser, the Program Agent, the
Investor Agents and certain other parties have been satisfied and pursuant
thereto, the Purchaser shall have repurchased from the Program Agent all
interests in outstanding receivables originated by each Exiting Seller and
certain related assets and the Purchaser shall have sold all such receivables
and related assets to the applicable Exiting Seller.
3.
Representations and
Warranties
.
a.
Each
Seller reaffirms and restates as to itself each of the representations and
warranties contained in Section 4.01of the PCA, as amended by this Amendment,
and for the purpose of making such representations and warranties, each
reference in Section 4.01 of the PCA to “this Agreement” shall include this
Amendment.
b.
The
Sellers hereby represent and warrant that the names and addresses of all of the
Deposit Banks, together with the post office boxes and account numbers of the
Lock-Boxes and Deposit Accounts at such Deposit Banks, are as specified in
Exhibit B
attached
hereto, and that all of the information set forth on such
Exhibit B
is true and
correct as of the date hereof.
4.
No Further Sale of Metal
Business Receivables
. Notwithstanding any provision of the
PCA, Parent shall not sell or contribute and the Purchaser shall not purchase or
acquire receivables generated from the Metals Business (as defined below) of
Parent between the date hereof and the date upon which the Metals Business is
sold by Parent. “
Metals Business
”
means Parent’s copper, brass and other copper alloy sheet, strip, foil, rod,
welded tube, plate, fabricated parts and stainless steel and aluminum strip
manufacturing and distribution business and its related research and development
activities and excludes Parent’s ammunition and ammunition component
manufacturing and distribution business and its related research and development
activities.
5.
Confirmation of the
PCA
. All references to the PCA in the PCA and the other
documents and instruments delivered pursuant to or in connection with the PCA
shall mean the PCA as amended by this Amendment, and as hereafter amended or
restated. Except as expressly provided herein, the PCA shall remain
unmodified and shall continue to be in full force and effect in accordance with
its terms.
6.
GOVERNING
LAW
. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PRINCIPLES THEREOF.
7.
Counterparts
. This
Amendment may be executed by the parties hereto on any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Amendment by facsimile or by electronic
mail in portable document format (pdf) shall be effective as delivery of a
manually executed counterpart of this Amendment.
8.
Waiver
. Pursuant
to Section 9.01 of the PCA, the Purchaser hereby waives any Event of Termination
which may have occurred solely as a result of the following Sellers changing
their names, and, where applicable, their entity type and their jurisdiction of
incorporation/formation and Location (as defined in the PCA) on or about
November 13, 2007 without complying with the provisions of Section 5.01(b) of
the PCA:
i.
A.J.
Oster Foils, Inc., a Delaware corporation, changing its name and entity type to
A.J. Oster Foils, LLC, a Delaware limited liability company;
ii.
Bryan
Metals, Inc., an Ohio corporation, changing its name, entity type and
jurisdiction of incorporation/formation to Bryan Metals, LLC, a Delaware limited
liability company; and
iii.
Chase
Brass & Copper Company, Inc. changing its name and entity type to Chase
Brass & Copper Company, LLC, a Delaware limited liability
company.
[Remainder
of page intentionally blank]
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the day and year first above written.
|
OLIN
FUNDING COMPANY LLC, as Purchaser
By:
/s/ Todd A.
Slater
Name: Todd
A. Slater
Title: Vice
President
|
OLIN
CORPORATION, as Parent, Collection Agent and a Seller
By:
/s/ Todd A.
Slater
Name: Todd
A. Slater
Title: Vice
President and Controller
|
|
A.J.
OSTER CO., as an Exiting Seller
By:
/s/ Daniel B.
Becker
Name: Daniel
B. Becker
Title: President
|
|
A.J.
OSTER FOILS, LLC, as an Exiting Seller
By: Olin
Corporation, its Managing Member
By:
/s/ Todd A.
Slater
Name: Todd
A. Slater
Title: Vice
President and Controller
|
A.J.
OSTER WEST, INC., as an Exiting Seller
By:
/s/ Daniel B.
Becker
Name: Daniel
B. Becker
Title: President
|
|
BRYAN
METALS, LLC, as an Exiting Seller
By: Olin
Corporation, its Managing Member
By:
/s/ Todd A.
Slater
Name: Todd
A. Slater
Title: Vice
President and Controller
|
|
|
|
CHASE
BRASS & COPPER COMPANY, LLC, as an Exiting Seller
By: Olin
Corporation, its Managing Member
By:
/s/ Todd A.
Slater
Name: Todd
A. Slater
Title: Vice
President and Controller
|
|
|
|
Pursuant
to Section 5.01(m) of the RPA, each of the undersigned consents to the
foregoing Second Amendment:
|
|
CITICORP
NORTH AMERICA, INC., as Program Agent and an Investor Agent under the
RPA
By:
/s/ Junette M. Earl
Name: Junette
M. Earl
Title: Vice
President
|
|
|
|
WACHOVIA
BANK, NATIONAL ASSOCIATION, as an Investor Agent under the
RPA
By:
William P. Rutkowski
Name: William
P. Rutkowski
Title: Vice
President
|
|
SCHEDULE
I
SELLERS
OLIN CORPORATION, a Virginia
corporation
Exhibit
10.13
THIRD
AMENDMENT TO
PURCHASE
AND CONTRIBUTION AGREEMENT
THIRD
AMENDMENT, dated as of September 30, 2008 (this “
Amendment
”) among
Olin Funding Company LLC (the “
Purchaser
”), Olin
Corporation (“
Parent
”), as
Collection Agent and as a Seller and Pioneer Americas LLC, a Delaware limited
liability company (“
Pioneer
”), as a
Seller.
WHEREAS,
the Purchaser and the Parent, as Collection Agent and as a Seller are parties to
that certain Purchase and Contribution Agreement, dated as of July 25, 2007 (as
amended, restated, modified or supplemented from time to time, the “
PCA
”). Capitalized
terms used but not otherwise defined herein shall have the meanings ascribed to
such terms in the PCA.
WHEREAS,
the parties hereto wish to add Pioneer Americas LLC, a Delaware limited
liability company, to the PCA as a Seller.
WHEREAS,
pursuant to Section 9.01 of the PCA, the parties hereto have agreed to amend the
PCA as described herein.
NOW
THEREFORE, the parties hereto agree as follows:
1.
Amendments to the
PCA
. Effective as of the date on which all of the conditions
precedent set forth in
Section 3
hereof
shall have been satisfied (the “
Effective Date
”), the
PCA is hereby amended as follows:
a.
Schedule
I is deleted and replaced with Schedule I hereto;
b.
Exhibit B
is deleted and replaced with Exhibit B hereto;
c.
Exhibit E
is deleted and replaced with Exhibit E hereto;
d.
Exhibit F
is deleted and replaced with Exhibit F hereto;
2.
Pioneer Added as a
Seller
. Effective as of the Effective Date, Pioneer shall be a
party to the PCA, as a Seller, and shall have the rights and obligations of a
Seller thereunder. Pioneer hereby agrees that it shall perform all of
the duties and obligations that are required to be performed by it, as a Seller,
in accordance with the terms of the PCA.
3.
Effectiveness
. This
Amendment shall become effective as of the date hereof at such time
as:
a.
executed
counterparts of this Amendment have been delivered by each party hereto to the
other parties hereto and the Program Agent and the Investor Agent (as such terms
are defined in the RPA) have executed and delivered the consent on the signature
pages hereto;
b.
Pioneer shall have delivered to the
Program Agent e
ach of the deliverables with respect to Pioneer set forth
in Section 3.01 of the PCA (other than clause (f) thereof) and favorable
opinions as required by the Program Agent, in each case in form and substance
satisfactory to the Program Agent;
c.
Olin
Funding shall have delivered to Pioneer a Deferred Purchase Price Note in favor
of Pioneer, in the form of Exhibit C to the PCA.
4.
Representations and
Warranties
.
a.
Each
Seller (including Pioneer) reaffirms and restates as to itself each of the
representations and warranties contained in Section 4.01of the PCA, as amended
by this Amendment (except that the representation and warranty in Section
4.01(f) thereof is made only by Parent).
b.
The
Sellers hereby represent and warrant that (i) the names and addresses of
all of the Deposit Banks, together with the post office boxes and account
numbers of the Lock-Boxes and Deposit Accounts at such Deposit Banks, are as
specified in
Exhibit
B
attached hereto, and all of the information set forth on such
Exhibit B
is true and
correct as of the date hereof, and (ii) immediately after giving effect to
this Amendment, there shall exist no Event of Termination or Incipient Event of
Termination.
c.
Pioneer
represents and warrants that its Credit and Collection Policy is the same as the
Credit and Collection Policy of Chlor Alkali Products that is attached as
Exhibit A to the PCA.
5.
Confirmation of the
PCA
. All references to the PCA in the PCA and the other
documents and instruments delivered pursuant to or in connection with the PCA
shall mean the PCA as amended by this Amendment, and as hereafter amended or
restated. Except as expressly provided herein, the PCA shall remain
unmodified and shall continue to be in full force and effect in accordance with
its terms.
6.
GOVERNING
LAW
. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PRINCIPLES THEREOF.
7.
Counterparts
. This
Amendment may be executed by the parties hereto on any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Amendment by facsimile or by electronic
mail in portable document format (pdf) shall be effective as delivery of a
manually executed counterpart of this Amendment.
[Signature
Pages Follow]
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the day and year first above written.
|
OLIN
FUNDING COMPANY LLC, as Purchaser
By:
/s/ Todd
A. Sla
ter
Name: Todd
A. Slater
Title: Vice
President
|
OLIN
CORPORATION, as Parent, Collection Agent and a Seller
By:
/s/ Todd A.
Slater
Name: Todd
A. Slater
Title: Vice
President and Controller
|
|
PIONEER
AMERICAS LLC, as a Seller
By:
/s/ Larry P.
Kromidas
Name: Larry
P. Kromidas
Title: Assistant
Treasurer
|
Pursuant
to Section 5.01(m) of the RPA, the undersigned consents to the foregoing
Third Amendment:
|
|
CITICORP
NORTH AMERICA, INC., as Program Agent and an Investor Agent under the
RPA
By:
/s/ Junette M.
Earl
Name: Junette
M. Earl
Title: Vice
President
|
|
|
|
SCHEDULE
I
SELLERS
OLIN CORPORATION, a Virginia
corporation
PIONEER
AMERICAS LLC, a Delaware limited liability
company
Exhibit
10.14
FIRST
AMENDMENT TO
RECEIVABLES
PURCHASE AGREEMENT
FIRST
AMENDMENT, dated as of August 28, 2007 (this “
Amendment
”), to the
Receivables Purchase Agreement, dated as of July 25, 2007 (as amended, restated,
modified or supplemented from time to time, the “
RPA
”), by and among
Olin Funding Company LLC (the “
Seller
”), CAFCO, LLC
and Variable Funding Capital Company LLC, as Investors, Citibank, N.A. and
Wachovia Bank, National Association (“
Wachovia
”), as Banks,
Citicorp North America, Inc. (“
Citi
”), as the
Program Agent, Citi and Wachovia, as Investor Agents and Olin Corporation
(“
Parent
”), as
Collection Agent. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the RPA.
WHEREAS,
pursuant to Section 11.01 of the RPA, the parties hereto have agreed to amend
the RPA as described herein.
NOW
THEREFORE, the parties hereto agree as follows:
1.
Amendment to the
RPA
. Effective as of the date on which all of the conditions
precedent set forth in
Section 3
hereof
shall have been satisfied, Schedule I to the RPA is hereby replaced in its
entirety by
Schedule
I
attached to this Amendment.
2.
The Stanley Works
Receivables
. The Seller and Chase Brass & Copper Company,
Inc. have notified the Agents that (a) all receivables financing and purchasing
arrangements pertaining to the accounts receivable due from The Stanley Works
Co. described in clause (a) of the definition of “Excluded Receivables” set
forth in Section 1.01 of the RPA (“
The Stanley Works
Receivables
”) have been terminated and the UCC Financing Statement filed
in connection therewith has been terminated (an acknowledgment copy of the
termination of the UCC Financing Statement has been separately delivered to the
Agents), and (b) The Stanley Works Receivables are free and clear of Adverse
Claims (UCC search results indicating the absence of Adverse Claims have been
separately delivered to the Agents), and the Seller and Chase Brass & Copper
Company, Inc. hereby authorize the Program Agent to file an amendment of the UCC
Financing Statement filed against Chase Brass & Copper Company, Inc. in
connection with the Originator Purchase Agreement to reflect that The Stanley
Works Receivables are no longer Excluded Receivables. Notwithstanding
the requirement set forth in the definition of “Excluded Receivables” that
thirty (30) days’ prior written notice be delivered, effective as of August 31,
2007, The Stanley Works Receivables shall no longer be deemed to be Excluded
Receivables.
3.
Effectiveness
. This
Amendment shall become effective as of the date hereof at such time as (i)
executed counterparts of this Amendment have been delivered by each party hereto
to the other parties hereto and (ii) the Program Agent shall have received a
duly executed copy of the First Amendment to the Originator Purchase Agreement,
in form and substance satisfactory to it (the “
PCA
Amendment
”).
4.
Representations and
Warranties
.
a.
The
Seller reaffirms and restates each of the representations and warranties
contained in Section 4.01of the RPA, as amended by this
Amendment. The Collection Agent reaffirms and restates each of the
representations and warranties contained in Section 4.02 of the RPA, as amended
by this Amendment.
b.
The
Seller hereby represents and warrants that the names and addresses of all of the
Deposit Banks, together with the post office boxes and account numbers of the
Lock-Boxes and Deposit Accounts of the Seller at such Deposit Banks, are as
specified in
Schedule
I
attached hereto, and that all of the information set forth on such
Schedule I
is
true and correct as of the date hereof.
5.
Confirmation of the
RPA
. All references to the RPA in the RPA and in the other
Transaction Documents shall mean the RPA as amended by this Amendment, and as
hereafter amended or restated. Except as expressly provided herein,
the RPA shall remain unmodified and shall continue to be in full force and
effect in accordance with its terms.
6.
Confirmation of
Undertaking
. Parent confirms and agrees that, notwithstanding
the effectiveness of this Amendment and the PCA Amendment, the Undertaking
heretofore executed and delivered by it is, and shall continue to be, in full
force and effect, and the Undertaking is hereby ratified and
confirmed.
7.
GOVERNING
LAW
. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PRINCIPLES THEREOF.
8.
Counterparts
. This
Amendment may be executed by the parties hereto on any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Amendment by facsimile or by electronic
mail in portable document format (pdf) shall be effective as delivery of a
manually executed counterpart of this Amendment.
[Signature
Pages Follow]
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the day and year first above written.
|
OLIN
FUNDING COMPANY LLC, as Seller
By:
/s/ Stephen C.
Curley
Name: Stephen
C. Curley
Title: Treasurer
|
|
CAFCO,
LLC, as an Investor
By: Citicorp
North America, Inc.,
as
Attorney-in-Fact
By:
/s/ Junette M.
Earl
Name: Junette
M. Earl
Title: Vice
President
|
|
VARIABLE
FUNDING CAPITAL COMPANY LLC, as an Investor
By: Wachovia
Capital Markets, LLC,
as
Attorney-in-Fact
By:
/s/ Douglas R. Wilson,
Sr.
Name:
Douglas R. Wilson, Sr.
Title: Director
|
CITIBANK,
N.A., as a Bank
By:
/s/ Junette M.
Earl
Name: Junette
M. Earl
Title: Vice
President
|
WACHOVIA
BANK, NATIONAL ASSOCIATION, as a Bank and as an Investor
Agent
By:
/s/ William P.
Rutkowski
Name: William
P. Rutkowski
Title: Vice
President
|
CITICORP
NORTH AMERICA, INC., as the Program Agent and as an Investor
Agent
By:
/s/ Junette M.
Earl
Name: Junette
M. Earl
Title: Vice
President
|
OLIN
CORPORATION, as Collection Agent
By:
/s/ Stephen C.
Curley
Name: Stephen
C. Curley
Title: Vice
President & Treasurer
|
Exhibit
10.15
SECOND
AMENDMENT TO
RECEIVABLES
PURCHASE AGREEMENT
SECOND
AMENDMENT, dated as of November 15, 2007 (this “
Amendment
”), to the
Receivables Purchase Agreement, dated as of July 25, 2007 (as amended by that
certain first amendment dated as of August 28, 2007, and as further amended,
restated, modified or supplemented from time to time, the “
RPA
”), by and among
Olin Funding Company LLC (the “
Seller
”), CAFCO, LLC
and Variable Funding Capital Company LLC, as Investors, Citibank, N.A. and
Wachovia Bank, National Association (“
Wachovia
”), as Banks,
Citicorp North America, Inc. (“
Citi
”), as the
Program Agent, Citi and Wachovia, as Investor Agents, and Olin Corporation
(“
Parent
”), as
Collection Agent. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the RPA.
WHEREAS,
pursuant to Section 11.01 of the RPA, the parties hereto have agreed to amend
the RPA as described herein in order to reflect the removal of certain
Originators as “Sellers” under the Originator Purchase Agreement (each
Originator other than the Parent is referred to herein as an “
Exiting
Originator
”).
NOW
THEREFORE, the parties hereto agree as follows:
1.
Amendment to the
RPA
. Effective as of the date on which all of the conditions
precedent set forth in
Section 3
hereof
shall have been satisfied:
a.
Schedule
I (Lock-Boxes/Deposit Accounts) is deleted and replaced with Schedule I
hereto.
b.
Schedule II
(Credit and Collection Policy) is amended by deleting therefrom the document
titled “A.J. Oster Company Credit Policy & Procedure”.
c.
Schedule VI
(Originators) is deleted and replaced with Schedule VI hereto.
d.
Section 1.01
is amended by deleting the definitions of “
Bank Commitment
”,
“
Concentration
Limit
”, “
Credit
Agreement
”, “
Excluded Receivable
”,
“
Investor Purchase
Limit
”,
“
Maximum Percentage
Factor
”,
and
“
Purchase
Limit
” therein in their entirety and replacing such definitions as
follows:
“
Bank Commitment
” of
any Bank means, (a) with respect to Citibank, $50,000,000 or such amount as
reduced or increased by any Assignment and Acceptance entered into among
Citibank, another Bank, the Investor Agent for Citibank and the Program Agent,
(b) with respect to Wachovia, $50,000,000 or such amount as reduced or increased
by any Assignment and Acceptance entered into among Wachovia, another Bank, the
Investor Agent for Wachovia and the Program Agent or (c) with respect to a Bank
(other than Citibank or Wachovia) that has entered into an Assignment and
Acceptance, the amount set forth therein as such Bank’s Bank Commitment, in each
case as such amount may be reduced or increased by an Assignment and Acceptance
entered into among such Bank, an Eligible Assignee, the Investor Agent for such
Bank and the Program Agent, and as may be further reduced (or terminated)
pursuant to the next sentence. Any reduction (or termination) of the
Purchase Limit pursuant to the terms of this Agreement shall reduce ratably (or
terminate) each Bank’s Bank Commitment.
“
Credit Agreement
”
means the Credit Agreement, dated as of October 29, 2007, among the Parent, PCI
Chemicals Canada Company/Société PCI Chimie Canada, the lenders party thereto
from time to time, Citibank, N.A., as administrative agent, the other agents and
joint lead arrangers party thereto from time to time, and any credit facility
replacing or succeeding thereto, each as the same may be amended, amended and
restated, or modified or supplemented from time to time prior to the Credit
Agreement Freeze Date (it being understood and agreed that (i) prior to the
Credit Agreement Freeze Date, any amendments or waivers to any provision of the
Credit Agreement incorporated herein or referenced herein, if such amendment or
waiver is effective pursuant to the terms of the Credit Agreement, shall also be
effective hereunder with respect to any incorporation or reference to any
provision of the Credit Agreement, and (ii) on and after the Credit Agreement
Freeze Date, no amendment or waiver to any provision of the Credit Agreement
incorporated herein or referenced herein shall be effective hereunder unless a
separate approval has been executed by the Program Agent and the Investor Agents
hereunder).
“
Concentration Limit
”
for any Obligor means at any time 5.00% (“
Normal Concentration
Limit
”), or such other higher percentage (“
Special Concentration
Limit
”) for such Obligor as set forth on Schedule V hereto, and after the
date of this Agreement as designated by the Program Agent and each Investor
Agent in a writing delivered to the Seller;
provided
that in the
case of an Obligor with any Affiliated Obligor, the Concentration Limit shall be
calculated as if such Obligor and such Affiliated Obligor are one Obligor;
provided
further
that the
Program Agent or any Investor Agent may, in its sole discretion, reduce or
cancel any Special Concentration Limit upon three Business Days’ notice to the
Seller (with a copy to each of the other Agents).
“
Excluded Receivable
”
means all indebtedness due to an Originator arising from the sale of consigned
goods by such Originator.
“
Investor Purchase
Limit
” means (a) with respect to the CAFCO Group, $50,000,000, and (b)
with respect to the VFCC Group, $50,000,000. Any reduction (or
termination) of the Purchase Limit by Seller pursuant to Section 2.01(b) shall
reduce ratably (or terminate) each Group’s Investor Purchase Limit.
“
Maximum Percentage
Factor
” means 91.09% or, if Weekly Reports are required to be delivered
pursuant to Section 6.02(g)(ii), 95.86%.
“
Purchase Limit
” means
$100,000,000, as such amount may be reduced pursuant to Section
2.01(b). References to the unused portion of the Purchase Limit shall
mean, at any time, the Purchase Limit, as then reduced pursuant to Section
2.01(b), minus the then outstanding Capital of Receivable Interests under this
Agreement.
e.
Section 7.01
is amended by deleting clause (h) thereof in its entirety and replacing such
clause as follows:
(h) As
of the last day of any calendar month, (i) the 3 month rolling average Default
Ratio shall exceed 3.25%, (ii) the 3-month rolling average Delinquency Ratio
shall exceed 3.50%, (iii) the 3 month rolling average Dilution Ratio shall
exceed 7.25%, or (iv) the 3 month rolling average Loss-to-Liquidation Ratio
shall exceed 0.50%; or
2.
Waiver
. The
Program Agent, the Investor Agents, the Investors and the Banks hereby waives
compliance by the Seller with Section 5.01(d) of the RPA and any Event of
Termination or Incipient Event of Termination that shall have occurred or be
continuing or will result solely from the consummation of the transactions
contemplated by this Amendment, the Second Amendment to the Originator Purchase
Agreement dated as of the date hereof (the “
PCA Amendment
”) and
the Assignment and Release dated as of the date hereof (the “
Assignment and
Release
”) among the Originators, the Seller, the Program Agent , the
Investor Agents and the Investors.
3.
Effectiveness
. This
Amendment shall become effective as of the date hereof at such time as
(a) executed counterparts of this Amendment have been delivered by each
party hereto to the other parties hereto, (b) the Program Agent shall have
received a duly executed copy of the PCA Amendment, in form and substance
satisfactory to it and (c) all of the conditions to effectiveness set forth
in the Assignment and Release have been satisfied and pursuant thereto, the
Seller shall have repurchased from the Program Agent all interests in
outstanding receivables originated by each Exiting Originator and certain
related assets and the Seller shall have sold all such receivables and related
assets to the applicable Exiting Originator.
4.
Representations and
Warranties
.
a.
The
Seller reaffirms and restates each of the representations and warranties
contained in Section 4.01of the RPA, as amended by this Amendment, and for the
purpose of making such representations and warranties, each reference in
Section 4.01(b), (c) and (d) of the RPA to “this Agreement” shall include
this Amendment. The Collection Agent reaffirms and restates each of
the representations and warranties contained in Section 4.02 of the RPA, as
amended by this Amendment, and for the purpose of making such representations
and warranties, each reference in Section 4.02(b), (c) and (d) of the RPA
to “this Agreement” shall include this Amendment.
b.
The
Seller hereby represents and warrants that the names and addresses of all of the
Deposit Banks, together with the post office boxes and account numbers of the
Lock-Boxes and Deposit Accounts of the Seller at such Deposit Banks, are as
specified in
Schedule
I
attached hereto, and that all of the information set forth on such
Schedule I
is
true and correct as of the date hereof.
c.
The
Collection Agent and Parent hereby represents and warrants that each Originator
party to the PCA Amendment is either (i) the same Originator that executed the
Originator Purchase Agreement or, (ii) the successor-by-law to such Originator
that executed the Originator Purchase Agreement, in which case the Collection
Agent and the Parent further represents and warrants that each such successor
Originator, by operation of law, has acquired all assets, and assumed all
liabilities and obligations of the applicable Originator that executed the
Originator Purchase Agreement. For the purposes of Section 6.06 of
the RPA and Section 8.01 of the Originator Purchase Agreement, it is expressly
understood and agreed that this is a representation and warranty of the
Collection Agent and Parent made in connection with the RPA and the Originator
Purchase Agreement, respectively.
5.
C
onfirmation of the
RPA
. All references to the RPA in the RPA and in the other
Transaction Documents shall mean the RPA as amended by this Amendment, and as
hereafter amended or restated. Except as expressly provided herein,
the RPA shall remain unmodified and shall continue to be in full force and
effect in accordance with its terms.
6.
Undertaking
. Notwithstanding
the effectiveness of this Amendment and the PCA Amendment and the termination
(pursuant to the Assignment and Release) of all obligations of the Exiting
Originators under the Originator Purchase Agreement and the release of all
liability of the Existing Originators under the Originator Purchase Agreement,
the Undertaking heretofore executed and delivered by Parent shall continue to be
in full force and effect and shall apply to any liability that would have been a
liability of the Exiting Originators which may now exist or hereafter arise
under Article VIII of the Originator Purchase Agreement, to the same extent
as if such Exiting Originators had remained party to the Originator Purchase
Agreement and their obligations thereunder had not been terminated.
7.
GOVERNING
LAW
. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PRINCIPLES THEREOF.
8.
Counterparts
. This
Amendment may be executed by the parties hereto on any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Amendment by facsimile or by electronic
mail in portable document format (pdf) shall be effective as delivery of a
manually executed counterpart of this Amendment.
[Signature
Pages Follow]
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the day and year first above written.
|
OLIN
FUNDING COMPANY LLC, as Seller
By:
/s/ Todd A.
Slater
Name: Todd
A. Slater
Title: Vice
President
|
|
CAFCO,
LLC, as an Investor
By: Citicorp
North America, Inc.,
as
Attorney-in-Fact
By:
/s/ Junette M.
Earl
Name: Junette
M. Earl
Title: Vice
President
|
|
VARIABLE
FUNDING CAPITAL COMPANY LLC, as an Investor
By: Wachovia
Capital Markets, LLC,
as
Attorney-in-Fact
By:
/s/ Douglas R. Wilson,
Sr.
Name:
Douglas R. Wilson, Sr.
Title: Director
|
CITIBANK,
N.A., as a Bank
By:
/s/ Junette M.
Earl
Name: Junette
M. Earl
Title: Vice
President
|
WACHOVIA
BANK, NATIONAL ASSOCIATION, as a Bank and as an Investor
Agent
By:
/s/ William P.
Rutkowski
Name: William
P. Rutkowski
Title: Vice
President
|
CITICORP
NORTH AMERICA, INC., as the Program Agent and as an Investor
Agent
By:
/s/ Junette M.
Earl
Name: Junette
M. Earl
Title: Vice
President
|
OLIN
CORPORATION, as Collection Agent and Parent
By:
/s/ Todd A.
Slater
Name: Todd
A. Slater
Title: Vice
President and Controller
|
SCHEDULE
VI
Originators
Olin
Corporation
Exhibit
10.16
THIRD
AMENDMENT TO
RECEIVABLES
PURCHASE AGREEMENT
THIRD
AMENDMENT, dated as of July 23, 2008 (this “
Amendment
”), to the
Receivables Purchase Agreement, dated as of July 25, 2007 (as amended, restated,
modified or supplemented from time to time, the “
RPA
”), by and among
Olin Funding Company LLC (the “
Seller
”), CAFCO, LLC
and Variable Funding Capital Company LLC, as Investors, Citibank, N.A. and
Wachovia Bank, National Association (“
Wachovia
”), as Banks,
Citicorp North America, Inc. (“
Citi
”), as the
Program Agent, Citi and Wachovia, as Investor Agents, and Olin Corporation
(“
Parent
”), as
Collection Agent. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the RPA.
WHEREAS,
pursuant to Section 11.01 of the RPA, the parties hereto have agreed to amend
the RPA as described herein.
NOW
THEREFORE, the parties hereto agree as follows:
1.
Amendments to the
RPA
. Effective as of the date on which all of the conditions
precedent set forth in
Section 3
hereof
shall have been satisfied (the “
Effective
Date
”):
a.
Section
1.01 of the RPA is amended by adding the following new definition thereto in
proper alphabetical order:
“
Accounting Based
Consolidation Event
” means the consolidation, for financial and/or
regulatory accounting purposes, of all or any portion of the assets and
liabilities of any Investor that are the subject of this Agreement, the Asset
Purchase Agreement or any other Transaction Document with all or any portion of
the assets and liabilities of Citibank, the Program Agent or any Investor Agent
or any of their affiliates as the result of the existence of, or occurrence of
any change in, accounting standards or the issuance of any pronouncement,
interpretation or release, by any accounting body or any other body charged with
the promulgation or administration of accounting standards, including, without
limitation, the Financial Accounting Standards Board, the International
Accounting Standards Board, the American Institute of Certified Public
Accountants, the Federal Reserve Board of Governors and the Securities and
Exchange Commission, and shall occur as of the date that such consolidation
(i) shall have occurred with respect to the financial statements of
Citibank, the Program Agent or any Investor Agent or any of their affiliates or
(ii) shall have been required to have occurred, regardless of whether such
financial statements were prepared as of such date.
b.
The
definition of “Bank Commitment” set forth in Section 1.01 of the RPA is amended
and restated in its entirety to read as follows:
“
Bank Commitment
” of
any Bank means, (a) with respect to Citibank, $75,000,000 or such amount as
reduced or increased by any Assignment and Acceptance entered into among
Citibank, another Bank, the Investor Agent for Citibank and the Program Agent or
(b) with respect to a Bank (other than Citibank) that has entered into an
Assignment and Acceptance, the amount set forth therein as such Bank’s Bank
Commitment, in each case as such amount may be reduced or increased by an
Assignment and Acceptance entered into among such Bank, an Eligible Assignee,
the Investor Agent for such Bank and the Program Agent, and as may be further
reduced (or terminated) pursuant to the next sentence. Any reduction
(or termination) of the Purchase Limit pursuant to the terms of this Agreement
shall reduce ratably (or terminate) each Bank’s Bank Commitment.
c.
The
definition of “Commitment Termination Date” set forth in Section 1.01 of the RPA
is amended by deleting the date “July 23, 2008” appearing in clause (a) thereof
and replacing it with the date “July 22, 2009”.
d.
The
definition of “Investor Purchase Limit” set forth in Section 1.01 of the RPA is
amended and restated in its entirety to read as follows:
“
Investor Purchase
Limit
” means, with respect to the CAFCO Group,
$75,000,000. Any reduction (or termination) of the Purchase Limit by
Seller pursuant to Section 2.01(b) shall reduce ratably (or terminate) each
Group’s Investor Purchase Limit.
e.
The
definition of “Maximum Percentage Factor” set forth in Section 1.01 of the RPA
is amended and restated in its entirety to read as follows:
“
Maximum Percentage
Factor
” means 89.95% or, if Weekly Reports are required to be delivered
pursuant to Section 6.02(g)(ii), 95.86%.
f.
The
definition of “Purchase Limit” set forth in Section 1.01 of the RPA is amended
and restated in its entirety to read as follows:
“
Purchase Limit
” means
$75,000,000, as such amount may be reduced pursuant to Section
2.01(b). References to the unused portion of the Purchase Limit shall
mean, at any time, the Purchase Limit, as then reduced pursuant to Section
2.01(b), minus the then outstanding Capital of Receivable Interests under this
Agreement.
g.
Section 2.08(a)
of the RPA is amended and restated in its entirety to read as
follows:
“(a) If
CNAI, any Investor, any Investor Agent, any Bank, any entity (including any bank
or other financial institution providing liquidity and/or credit support to any
Investor in connection with such Investor’s commercial paper program) which
purchases or enters into a commitment to purchase Receivable Interests or
interests therein, or any of their respective Affiliates (each an “
Affected Person
”)
determines that due to any change in any law or regulation or any guideline or
request regarding the capital required or expected to be maintained by such
Affected Person from any central bank or other governmental authority (whether
or not having the force of law), in each case made subsequent to the date
hereof, or the occurrence of any Accounting Based Consolidation Event (i) the
amount of capital required or expected to be maintained by such Affected Person
is increased by or based upon the existence of any commitment under the
Transaction Documents or any Asset Purchase Agreement or the purchasing or
maintaining the ownership of Receivable Interests, (ii) there is an
increase in the cost of making or maintaining such commitment under the
Transaction Documents or any Asset Purchase Agreement or purchasing or
maintaining the ownership of Receivable Interests to any Affected Person or
(iii) there is a reduction in the return of an Affected Person in
connection with the Transaction Documents or any Asset Purchase Agreement, then,
upon demand by such Affected Person (with a copy to the Program Agent and the
Investor Agent for such Affected Person’s Group), the Seller shall immediately
pay to the Investor Agent for such Affected Person’s Group for the account of
such Affected Person (as a third-party beneficiary), from time to time as
specified by such Affected Person, additional amounts sufficient to compensate
such Affected Person for such increase in capital, increased cost and/or reduced
return in light of such circumstances. A certificate as to such
amounts submitted to the Seller and the Program Agent and the Investor Agent for
such Affected Person’s Group by such Affected Person shall specify in reasonable
detail the basis for the request for compensation of such additional amounts and
the basis for the calculation thereof and shall be conclusive and binding for
all purposes, absent manifest error.”
2.
Elimination of Wachovia and
VFCC as Parties to the RPA, the Facility Fee Agreement and the Other Transaction
Documents; Elimination of Term-Out Provisions; Elimination of Letter of Credit
Facility; Termination of Agent Fee Agreement
. Effective as of
the Effective Date, (a) Wachovia and VFCC shall cease to be parties to the
RPA, the Facility Fee Agreement and the other Transaction Document in any
capacity and shall have no further rights or obligations under the RPA, the
Facility Fee Agreement or any other Transaction Document, including, without
limitation, Wachovia shall have no obligation to issue Letters of Credit in
connection with the RPA or to fund the Collateral Advance Account pursuant to
Section 2.01(d) of the RPA; provided that all fees that are payable to Wachovia
that have accrued under the Facility Fee Agreement or the L/C Fee Agreement to
the Effective Date shall be paid to Wachovia on the Effective Date, (b) all
provisions contained in the RPA relating to the issuance of Letters of Credit
(including, without limitation, Sections 2.18 and 2.19 thereof) and all related
definitions (including, without limitation, the definitions “Drawing Date”, “L/C
Bank”, “L/C Collateral Account”, “L/C Facility Limit”, “L/C Fee Agreement”, “L/C
Receivable Interest”, “L/C Termination Date”, “Letter of Credit” and “Letter of
Credit Application”) shall be deleted and of no further force and effect, (c)
all “Term-Out” related provisions contained in the RPA (including, without
limitation, Sections 2.01(d), 2.14, 2.15, 2.16, 2.17, 6.07 and 6.08 thereof) and
all related definitions or portions of definitions (including, without
limitation, the definitions “Cash Secured Advance”, “Cash Secured Advance
Commencement Date”, “Collateral Advance Account”, “Collateral Advance Account
Agreement”, “Collateral Advance Account Bank”, “Collateral Advance Account
Direction”, “Excess Interest”, “Term-Out Bank”, “Term-Out Bank Collateral” and
“Term-Out Bank Purchase Date” and the proviso at the end of the definition of
“Commitment Termination Date”) shall be deleted and of no further force and
effect and (d) the Agent Fee Agreement shall be terminated and of no further
force and effect;
provided
, that all
fees that have accrued thereunder to the Effective Date shall continue to be due
and payable and shall be paid to the Program Agent on the Effective
Date.
3.
Effectiveness
. This
Amendment shall become effective as of the date hereof at such time as
(a) executed counterparts of this Amendment have been delivered by each
party hereto to the other parties hereto, (b) executed counterparts of an
amendment to the Facility Fee Agreement, in form and substance satisfactory to
the Program Agent, shall have been delivered by each party thereto to the other
parties thereto and (c) Wachovia and the Program Agent shall have received
payment of all fees payable to them pursuant to clauses (a) and (d) of Section 2
.
4.
Representations and
Warranties
. The Seller reaffirms and restates each of the
representations and warranties contained in Section 4.01 of the RPA, as amended
by this Amendment, and for the purpose of making such representations and
warranties, each reference in Section 4.01(b), (c) and (d) of the RPA to
“this Agreement” shall include this Amendment. The Collection Agent
reaffirms and restates each of the representations and warranties contained in
Section 4.02 of the RPA, as amended by this Amendment, and for the purpose of
making such representations and warranties, each reference in
Section 4.02(b), (c) and (d) of the RPA to “this Agreement” shall include
this Amendment.
5.
Covenants
. The
Parent and the Seller agree to (a) on or prior to August 8, 2008, cause The
Toronto-Dominion Bank to enter into an amendment of the Deposit Account
Agreement to add thereto account no. 359385 and any related lock box, such
amendment to be in form and substance satisfactory to the Program Agent and (b)
on or prior to September 30, 2008, either (i) notify all obligors of Pioneer
Americas LLC (“
Pioneer
”) to pay to a
lock box or bank account that is not a Lock Box or Deposit Account subject to a
Deposit Account Agreement and remove all receivables originated by Pioneer from
all Monthly Reports and Weekly Reports or (ii) cause Pioneer to become a
“Seller” under the Originator Purchase Agreement and in connection therewith
deliver to the Program Agent an amendment to the Originator Purchase Agreement
and the Undertaking, UCC searches against Pioneer, a UCC-1 financing statement
against Pioneer, officer’s certificates and opinions of counsel with respect to
Pioneer, in each case in form and substance satisfactory to the Program
Agent. The parties hereto agree that in no event shall the Seller
request, nor shall the Banks or Investors make, purchases of Receivable
Interests until such time as all of the items described in clause (b)(i) or
(b)(ii) of the preceding sentence have been completed to the Program Agent’s
satisfaction.
6.
Confirmation of the
RPA
. All references to the RPA in the RPA and in the other
Transaction Documents shall mean the RPA as amended by this Amendment, and as
hereafter amended or restated. Except as expressly provided herein,
the RPA shall remain unmodified and shall continue to be in full force and
effect in accordance with its terms.
7.
Confirmation of
Undertaking
. Parent confirms and agrees that, notwithstanding
the effectiveness of this Amendment, the Undertaking heretofore executed and
delivered by it is, and shall continue to be, in full force and effect, and the
Undertaking is hereby ratified and confirmed.
8.
GOVERNING
LAW
. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PRINCIPLES THEREOF.
9.
Counterparts
. This
Amendment may be executed by the parties hereto on any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Amendment by facsimile or by electronic
mail in portable document format (pdf) shall be effective as delivery of a
manually executed counterpart of this Amendment.
[Signature
Pages Follow]
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the day and year first above written.
|
OLIN
FUNDING COMPANY LLC, as Seller
By:
/s/ Todd A.
Slater
Name: Todd
A. Slater
Title: Vice
President
|
|
CAFCO,
LLC, as an Investor
By: Citicorp
North America, Inc.,
as
Attorney-in-Fact
By:
/s/ Junette M.
Earl
Name: Junette
M. Earl
Title: Vice
President
|
|
VARIABLE
FUNDING CAPITAL COMPANY LLC, as an Investor
By: Wachovia
Capital Markets, LLC,
as
Attorney-in-Fact
By:
/s/ Douglas R. Wilson,
Sr.
Name:
Douglas R. Wilson, Sr.
Title: Director
|
CITIBANK,
N.A., as a Bank
By:
/s/ Junette M.
Earl
Name: Junette
M. Earl
Title: Vice
President
|
WACHOVIA
BANK, NATIONAL ASSOCIATION, as a Bank and as an Investor
Agent
By:
/s/ William P.
Rutkowski
Name: William
P. Rutkowski
Title: Vice
President
|
CITICORP
NORTH AMERICA, INC., as the Program Agent and as an Investor
Agent
By:
/s/ Junette M.
Earl
Name: Junette
M. Earl
Title: Vice
President
|
OLIN
CORPORATION, as Collection Agent and Parent
By:
/s/ Todd A.
Slater
Name: Todd
A. Slater
Title: Vice
President and Controller
|
Exhibit
10.17
FOURTH
AMENDMENT TO
RECEIVABLES
PURCHASE AGREEMENT
FOURTH
AMENDMENT, dated as of September 30, 2008 (this “
Amendment
”), to the
Receivables Purchase Agreement, dated as of July 25, 2007 (as amended, restated,
modified or supplemented from time to time, the “
RPA
”), by and among
Olin Funding Company LLC (the “
Seller
”), CAFCO, LLC,
as an Investor, Citibank, N.A., as a Bank, Citicorp North America, Inc. (“
Citi
”), as the
Program Agent, Citi, as an Investor Agent, and Olin Corporation (“
Parent
”), as
Collection Agent. Capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to such terms in the RPA.
WHEREAS,
pursuant to Section 11.01 of the RPA, the parties hereto have agreed to amend
the RPA as described herein in order to reflect the addition of Pioneer Americas
LLC (“
Pioneer
)
as a “Seller” under the Originator Purchase Agreement and as an Originator under
the RPA.
NOW
THEREFORE, the parties hereto agree as follows:
1.
Amendment to the
RPA
. Effective as of the date on which all of the conditions
precedent set forth in
Section 2
hereof
shall have been satisfied:
a.
The
second sentence of the definition of “Originator” in Section 1.01 of the
RPA is amended by deleting the phrase “At the date of this Agreement,” and
replacing it with the phrase “At September 30, 2008.”
b.
The
definition of “Undertaking” in Section 1.01 of the RPA is amended and restated
in its entirety to read as follows:
“
Undertaking
” means,
collectively, each of the Undertaking Agreements made by the Parent in favor of
the Seller, and assigned to the Program Agent, and relating to the obligations
of one or more Originators (other than the Parent), substantially in the form of
Annex F hereto, as the same may be amended, modified or restated from time
to time.
c.
Schedule
I (Lock-Boxes/Deposit Accounts) is deleted and replaced with Schedule I
hereto.
d.
Schedule VI
(Originators) is deleted and replaced with Schedule VI hereto.
2.
Effectiveness
. This
Amendment shall become effective as of the date hereof at such time as
(a) executed counterparts of this Amendment have been delivered by each
party hereto to the other parties hereto, (b) the Program Agent shall have
received a duly executed copy of the Third Amendment to the Originator Purchase
Agreement, in form and substance satisfactory to it, (c) all of the
conditions to effectiveness set forth in the Third Amendment to the Originator
Purchase Agreement have been satisfied and (d) the Program Agent shall have
received a duly executed copy of an Undertaking Agreement, in the form of Annex
F to the RPA, with respect to Pioneer.
3.
Representations and
Warranties
.
a.
The
Seller reaffirms and restates each of the representations and warranties
contained in Section 4.01of the RPA, as amended by this Amendment, and for the
purpose of making such representations and warranties, each reference in
Section 4.01(b), (c) and (d) of the RPA to “the Transaction Documents”
shall include this Amendment. The Collection Agent reaffirms and
restates each of the representations and warranties contained in Section 4.02 of
the RPA, as amended by this Amendment, and for the purpose of making such
representations and warranties, each reference in Section 4.02(b), (c) and
(d) of the RPA to “this Agreement” shall include this Amendment.
b.
The
Seller hereby represents and warrants that the names and addresses of all of the
Deposit Banks, together with the post office boxes and account numbers of the
Lock-Boxes and Deposit Accounts of the Seller at such Deposit Banks, are as
specified in
Schedule
I
attached hereto, and that all of the information set forth on such
Schedule I
is
true and correct as of the date hereof.
c.
The
Collection Agent represents and warrants that the Credit and Collection Policy
of Pioneer is the same as the Credit and Collection Policy of Chlor Alkali
Products that is attached as Schedule II to the RPA.
4.
New Notice
Address
. Citi, as Program Agent and as an Investor Agent,
CAFCO, LLC and Citibank, N.A. hereby notify each of the other parties to the RPA
that their address for notices has been changed to: 750 Washington
Boulevard, 8
th
Floor,
Stamford, CT 06901, Attention: Global Securitized
Products, Facsimile No. 914-274-9038.
5.
Confirmation of the
RPA
. All references to the RPA in the RPA and in the other
Transaction Documents shall mean the RPA as amended by this Amendment, and as
hereafter amended or restated. Except as expressly provided herein,
the RPA shall remain unmodified and shall continue to be in full force and
effect in accordance with its terms.
6.
Confirmation of
Undertaking
. Parent confirms and agrees that, notwithstanding
the effectiveness of this Amendment, the Undertaking heretofore executed and
delivered by it is, and shall continue to be, in full force and effect, and the
Undertaking is hereby ratified and confirmed.
7.
GOVERNING
LAW
. THIS AMENDMENT SHALL BE GOVERNED BY, AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PRINCIPLES THEREOF.
8.
Counterparts
. This
Amendment may be executed by the parties hereto on any number of separate
counterparts and all of said counterparts taken together shall be deemed to
constitute one and the same instrument. Delivery of an executed
counterpart of a signature page to this Amendment by facsimile or by electronic
mail in portable document format (pdf) shall be effective as delivery of a
manually executed counterpart of this Amendment.
[Signature
Pages Follow]
IN
WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed and delivered as of the day and year first above written.
|
OLIN
FUNDING COMPANY LLC, as Seller
By:
/s/ Todd A.
Slater
Name: Todd
A. Slater
Title: Vice
President
|
|
CAFCO,
LLC, as an Investor
By: Citicorp
North America, Inc.,
as
Attorney-in-Fact
By:
/s/ Junette M.
Earl
Name: Junette
M. Earl
Title: Vice
President
|
|
CITIBANK,
N.A., as a Bank
By:
/s/ Junette M.
Earl
Name: Junette
M. Earl
Title: Vice
President
|
CITICORP
NORTH AMERICA, INC., as the Program Agent and as an Investor
Agent
By:
/s/ Junette M.
Earl
Name: Junette
M. Earl
Title: Vice
President
|
OLIN
CORPORATION, as Collection Agent and Parent
By:
/s/ Todd A.
Slater
Name: Todd
A. Slater
Title: Vice
President and Controller
|
SCHEDULE
VI
Originators
Olin
Corporation
Pioneer
Americas LLC
Exhibit
12
OLIN
CORPORATION AND CONSOLIDATED SUBSIDIARIES
Computation
of Ratio of Earnings to Fixed Charges
(In
millions)
(Unaudited)
|
|
Nine Months Ended
September
30,
|
|
|
|
2008
|
|
|
2007
|
|
Earnings:
|
|
|
|
|
|
|
Income
from continuing operations before taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
in income of non-consolidated affiliates
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fixed
charges as described below
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expensed and capitalized
|
|
|
|
|
|
|
|
|
Estimated
interest factor in rent expense
(1)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ratio
of earnings to fixed charges
|
|
|
|
|
|
|
|
|
(1)
Amounts represent those
portions of rent expense that are reasonable approximations of interest
costs.
Exhibit
31.1
CERTIFICATIONS
I, Joseph
D. Rupp, certify that:
1. I have
reviewed this quarterly report on Form 10-Q of Olin Corporation;
2. Based
on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
4. The
registrant’s other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The
registrant’s other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a) All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
b) Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial
reporting.
Date:
October 27, 2008
|
/s/
Joseph D. Rupp
|
|
Joseph
D. Rupp
|
|
Chairman,
President and Chief Executive
Officer
|
Exhibit
31.2
CERTIFICATIONS
I, John
E. Fischer, certify that:
1. I have
reviewed this quarterly report on Form 10-Q of Olin Corporation;
2. Based
on my knowledge, this report does not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading
with respect to the period covered by this report;
3. Based
on my knowledge, the financial statements, and other financial information
included in this report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and
for, the periods presented in this report;
4. The
registrant’s other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules
13a-15(e) and 15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a)
Designed such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to ensure that
material information relating to the registrant, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b)
Designed such internal control over financial reporting, or caused such internal
control over financial reporting to be designed under our supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c)
Evaluated the effectiveness of the registrant’s disclosure controls and
procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered
by this report based on such evaluation; and
d)
Disclosed in this report any change in the registrant’s internal control over
financial reporting that occurred during the registrant’s most recent fiscal
quarter (the registrant’s fourth fiscal quarter in the case of an annual report)
that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The
registrant’s other certifying officer and I have disclosed, based on our most
recent evaluation of internal control over financial reporting, to the
registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a) All
significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and
report financial information; and
b) Any
fraud, whether or not material, that involves management or other employees who
have a significant role in the registrant’s internal control over financial
reporting.
Date:
October 27, 2008
|
/s/ John E.
Fischer
|
|
John
E. Fischer
|
|
Vice
President and Chief Financial
Officer
|
Exhibit
32
CERTIFICATION
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT
TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In
connection with the Quarterly Report of Olin Corporation (the “Company”) on Form
10-Q for the period ended September 30, 2008 as filed with the Securities and
Exchange Commission (the “Report”), I, Joseph D. Rupp, Chairman, President and
Chief Executive Officer and I, John E. Fischer, Vice President and Chief
Financial Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
Act of 2002, that, to our knowledge: (1) the Report fully complies with the
requirements of Section 13(a) of the Securities Exchange Act of 1934; and
(2) the information contained in the Report fairly presents, in all
material respects, the financial condition and results of operations of the
Company.
A signed
original of this written statement required by Section 906 has been
provided to the Company and will be retained by the Company and furnished to the
Securities and Exchange Commission or its Staff upon request.
|
/s/ Joseph D.
Rupp
|
Joseph
D. Rupp
|
Chairman,
President and Chief Executive Officer
|
Dated:
October 27, 2008
|
|
/s/ John E.
Fischer
|
John
E. Fischer
|
Vice
President and Chief Financial Officer
|
Dated:
October 27,
2008
|