EXHIBIT 10.4
================================================================================
FORM OF
EMPLOYEE
BENEFITS
ALLOCATION AGREEMENT
BETWEEN
OLIN CORPORATION
AND
ARCH CHEMICALS, INC.
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TABLE OF CONTENTS
ARTICLE I
Definitions
-----------
Section 1.1. General.............................................. 1
ARTICLE II
U.S. Plans and Stock Plans
--------------------------
Section 2.1. Qualified Retirement Plan............................ 8
Section 2.2. Supplemental Retirement Plans and
Employment Agreements................................ 11
Section 2.3. Qualified Defined Contribution Plan.................. 13
Section 2.4. Welfare Plans........................................ 14
Section 2.5. Options.............................................. 17
Section 2.6. Executive and Director Compensation
Plans.............................................. 20
ARTICLE III
Foreign Plans
-------------
Section 3.1. General Principles................................... 22
Section 3.2. Exceptions to General Principles..................... 22
ARTICLE IV
General Provisions
------------------
Section 4.1. Employment Transfers; Severance Pay.................. 23
Section 4.2. Recognition of Olin Employment
Service, Etc......................................... 23
Section 4.3. Workers' Compensation................................ 24
ARTICLE V
Miscellaneous
-------------
Section 5.1. Guarantee of Subsidiaries'
Obligations.......................................... 24
Section 5.2. Disputes............................................. 24
Section 5.3. Sharing of Information............................... 24
Section 5.4. Termination.......................................... 25
Section 5.5. Rights to Amend or Terminate Plans;
No Third Party Beneficiaries......................... 25
Section 5.6. Complete Agreement................................... 25
Section 5.7. Governing Law........................................ 25
Section 5.8. Notices.............................................. 26
Section 5.9. Amendment and Modification........................... 26
Section 5.10. Successors and Assigns............................... 26
Section 5.11. Consent to Jurisdiction.............................. 27
Section 5.12. Counterparts......................................... 27
Section 5.13. Interpretation....................................... 27
Section 5.14. Legal Enforceability................................. 28
Section 5.15. References, Construction............................. 28
EMPLOYEE BENEFITS ALLOCATION AGREEMENT, dated as of
February 8, 1999, by and between Olin Corporation, a Virginia
corporation ("Olin"), and Arch Chemicals, Inc., a Virginia
corporation ("Arch").
W I T N E S S E T H:
WHEREAS Olin and Arch have entered into that certain Distribution Agreement dated as of the date hereof, between Olin and Arch (the "Distribution Agreement"), providing for the distribution to the holders of the issued and outstanding shares of common stock, par value $1.00 per share, of Olin ("Olin Common Stock") all of the issued and outstanding shares of common stock, par value $1.00 per share, of Arch ("Arch Common Stock");
WHEREAS the Distribution is intended to qualify as a tax-free transaction under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code of 1986, as amended (the "Code");
WHEREAS the Distribution Agreement, among other things, sets forth the principal corporate transactions required to effect the Distribution and sets forth other agreements that will govern certain other matters prior to and following the Distribution; and
WHEREAS in connection with the Distribution and pursuant to the Distribution Agreement, Olin and Arch desire to provide for the allocation of assets and Liabilities and other matters relating to employee benefit plans and compensation arrangements.
NOW, THEREFORE, in consideration of the premises and the mutual covenants herein contained and intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I
Definitions
-----------
Section 1.1. General. Any capitalized terms that are used in this
-------- Agreement but not defined herein (other than the names of Olin employee benefit plans) shall have the meanings set forth in the Distribution Agreement, and, as used herein, the following terms shall have the following meanings (such meanings to be equally applicable to both the singular and plural forms of the terms defined):
"Agreement": this Employee Benefits Allocation Agreement.
---------
"Alternate Payee": an alternate payee under a domestic relations
--------------- order which has been determined by the appropriate Plan administrator to be qualified under Section 414(p) of the Code and Section 206(d) of ERISA and which creates or recognizes an alternate payee's right to, or assigns to an alternate payee, all or a portion of the benefits payable to a participant under any Plan, or an alternate recipient under a medical child support order which has been determined by the appropriate Plan administrator to be qualified under Section 609(a) of ERISA and which creates or recognizes the existence of an alternate recipient's right to, or assigns to an alternate recipient the right to, receive benefits for which a participant or beneficiary is eligible under any Plan.
"Arch": defined in the preamble.
----
"Arch Common Stock": defined in the recitals.
-----------------
"Arch Employee": any individual who is, as of the Distribution Date,
------------- identified on the records of Arch as being, an Employee of any member of the Arch Group (including an individual who is receiving long-term disability benefits on the Distribution Date and whose most recent active employment was with any member of the Pre-Distribution Group in the Arch Business). If such an individual has received notice of layoff or termination from Olin or any of its Affiliates prior to the Distribution Date, he or she shall not be considered to be an Arch Employee on the Distribution Date if he or she is listed on Schedule A hereto. Individuals who are leased to Arch by Olin as of the Distribution Date are not considered Arch Employees.
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"Arch Foreign Plan": a Foreign Plan provided by, contributed to or
----------------- sponsored by one or more members of the Arch Group.
"Arch Former Employee": any individual who is, as of the Distribution
-------------------- Date, identified on the records of Olin as being an Arch Former Employee, which identification shall have been made based upon a good faith determination by Olin and Arch that (i) such individual was, at any time before the Distribution Date, an employee of any member of the Pre-Distribution Group, (ii) such individual is not an Olin Employee or an Arch Employee, and (iii) such individual's most recent active employment was with any such member of the Arch Business; provided that, if at any time on or before December 31, 1999, Arch and
-------- Olin determine that any one or more individuals were identified as Arch Former Employees in error and should have been identified as Olin Former Employees and agree to correct such error, such individuals shall be considered Olin Former Employees and Arch and Olin shall use their reasonable best efforts to implement the terms of this Agreement as they apply to such individuals as if such individuals had been correctly identified as of the Distribution Date.
"Arch Group": Arch and its Subsidiaries after the Distribution.
----------
"Arch Option": an option to purchase from Arch shares of Arch Common
----------- Stock provided to an Arch Participant or an Olin Participant pursuant to Section 2.5.
"Arch Participant": any individual who is an Arch Employee, an Arch
---------------- Former Employee, or a Beneficiary of such an individual.
"Arch Ratio": the amount obtained by dividing (i) the opening price
---------- on the first day of regular way trading of the Arch Common Stock on the NYSE Composite Tape, as reported in The Wall Street Journal, by (ii) the closing price on the last day of trading of Olin Common Stock with due bills on the NYSE Composite Tape, as reported in The Wall Street Journal.
"Arch Restricted Stock Units": units representing shares of Arch
--------------------------- Common Stock granted pursuant to an Arch Plan.
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"Arch SAR": a stock appreciation right granted with respect to Arch
-------- Common Stock in accordance with Section 2.5.
"Arch SIP": the Qualified Plan established by Arch pursuant to
-------- Section 2.3(a).
"Arch U.S. Welfare Plan": an Arch Welfare Plan that is a U.S. Plan.
----------------------
"Arch Welfare Plan": a Welfare Plan sponsored by one or more members
----------------- of the Arch Group.
"Assigned Split Dollar Policies": defined in Section 2.4(c).
------------------------------
"Beneficiary": a beneficiary, dependent or Alternate Payee or estate
----------- of a participant in a Plan, in each case in his, her or its capacity as such a beneficiary, dependent, Alternate Payee or estate.
"Code": defined in the recitals.
----
"Deferred Compensation Plan": a Plan, other than a Qualified Plan or
-------------------------- a Supplemental Retirement Plan, providing deferred compensation.
"Distribution Agreement": defined in the recitals.
----------------------
"Distribution Ratio": the ratio of one share of Arch Common Stock to
------------------ two shares of Olin Common Stock.
"Employee": with respect to any entity, an individual who is
-------- considered, according to the payroll and other records of such entity, to be employed by such entity, regardless of whether such individual is, at the relevant time, actively at work or on leave of absence (including vacation, holiday, sick leave, family and medical leave, disability leave, military leave, jury duty, and any other leave of absence or similar interruption of active employment that is not considered, according to the policies or practices of such entity, to have resulted in a permanent termination of such individual's employment).
"Enrolled Actuary": with respect to all U.S. Plans, The Segal
---------------- Company, and, with respect to all Foreign Plans, an enrolled actuary or other party making actuarial
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or similar determinations pursuant to this Agreement with respect to assets or Liabilities relating to a particular employee benefit plan selected by Olin with the approval of Arch, which approval shall not be unreasonably withheld.
"ERISA": the Employee Retirement Income Security Act of 1974, as
----- amended, or any successor legislation, and the regulations promulgated thereunder.
"Foreign Plan": any Plan maintained outside of the United States
------------ primarily for the benefit of individuals substantially all of whom are nonresident aliens with respect to the United States.
"New Olin Option": defined in Section 2.5(b).
---------------
"Olin": defined in the preamble.
----
"Olin CEOP": the Olin Corporation Contributing Employee Ownership
--------- Plan.
"Olin CEOP Trust": the trust established to fund the Olin CEOP.
---------------
"Olin Common Stock": defined in the recitals.
-----------------
"Olin Employee": any individual who is, as of the Distribution Date,
------------- identified on the records of Olin as being an Employee of any member of the Olin Group (excluding an individual who is receiving long-term disability benefits on the Distribution Date and whose most recent active employment was with any member of the Pre-Distribution Group in the Arch Business); provided, however,
-------- ------- that an Employee of Olin or its Affiliates on the Distribution Date who becomes a Subsequent Arch Employee shall not be considered an Olin Employee once he or she becomes a Subsequent Arch Employee.
"Olin Foreign Plan": a Foreign Plan provided by, contributed to or
----------------- sponsored by one or more members of the Olin Group.
"Olin Former Employee": any individual who was, at any time before
-------------------- the Distribution Date, an Employee of any member of the Pre-Distribution Group, and who is not an Olin Employee, an Arch Employee or an Arch Former Employee; provided that, if at any time on or before December 31, 1999, Arch and Olin determine that any one or more
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individuals were identified as Olin Former Employees in error and should have been identified as Arch Former Employees, and agree to correct such error, such individuals shall be considered Arch Former Employees, and Arch and Olin shall use their reasonable best efforts to implement the terms of this Agreement as they apply to such individuals as if such individuals had been correctly identified as of the Distribution Date.
"Olin Group": Olin and its Subsidiaries after the Distribution.
----------
"Olin Incentive Plans": collectively, the 1980 Stock Option Plan for
-------------------- Key Employees of Olin Corporation and Subsidiaries (the "1980 Olin Stock Option Plan"); the 1988 Stock Option Plan for Key Employees of Olin Corporation and Subsidiaries (the "1988 Olin Stock Option Plan"); the 1996 Stock Option Plan for Key Employees of Olin Corporation and Subsidiaries (the "1996 Olin Stock Option Plan"); and the Olin 1991 Long-Term Incentive Plan, each as in effect on the Distribution Date.
"Olin Option": an option to purchase shares of Olin Common Stock
----------- granted pursuant to any of the Olin Incentive Plans.
"Olin Participant": any individual who is an Olin Employee, an Olin
---------------- Former Employee, or a Beneficiary of such an individual.
"Olin Pension Plan": the Olin Corporation Employees Pension Plan.
-----------------
"Olin Ratio": the amount obtained by dividing (i) the opening price
---------- of Olin Common Stock on the first day of trading ex-dividend (the trading day after due bill trading ends) on the NYSE Composite Tape, as reported in The Wall Street Journal, by (ii) the closing price on the last day of trading of Olin Common Stock with due bills on the NYSE Composite Tape, as reported in The Wall Street Journal.
"Olin Restricted Stock Units": units representing restricted shares
--------------------------- of Olin Common Stock granted pursuant to, and subject to forfeiture under, any of the Olin Incentive Plans.
"Olin Supplemental Plans": collectively, the Olin Corporation Senior
----------------------- Executive Benefit Plan, the Olin
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Supplementary Pension Plan, Olin Deferral Benefit Pension Plan and the Olin Supplemental Contributory Employee Ownership Plan, each as in effect on the Distribution Date.
"Olin U.S. Welfare Plan": any Olin Welfare Plan that is a U.S. Plan.
----------------------
"Olin Welfare Plan": any Welfare Plan of one or more members of the
----------------- Olin Group.
"Plan": any written or unwritten plan, policy, program, payroll
---- practice, ongoing arrangement, trust, fund, contract, insurance policy or other agreement or funding vehicle provided by, contributed to or sponsored by one or more members of the Olin Group or the Arch Group, providing benefits to Olin Participants or Arch Participants, regardless of whether it is mandated under local law or negotiated or agreed to as a term or condition of employment or otherwise, and regardless of whether it is governmental, private, funded, unfunded, financed by the purchase of insurance, contributory or noncontributory.
"Pre-Adjustment Option": defined in Section 2.5(b).
---------------------
"Pre-Distribution Group": the Olin Group and the Arch Group together,
---------------------- as in effect immediately prior to the Distribution Date.
"Qualified Plan": a Plan that is an "employee pension benefit plan"
-------------- as defined in Section 3(2) of ERISA that constitutes, or is intended in good faith to constitute, a qualified plan under Section 401(a) of the Code.
"Retained Arch Inactive Participant": any Arch Former Employee who is
---------------------------------- a retired or terminated vested participant in the Olin Pension Plan whose termination under the Olin Pension Plan occurred prior to the Distribution Date, or a Beneficiary of any such Arch Former Employee.
"Subsequent Arch Employee": any individual who is identified as an
------------------------ Olin Employee as of the Distribution Date but who becomes an Employee of any member of the Arch Group after the Distribution Date but on or prior to February 8, 2000. An individual ceases to be an Olin Employee when he or she becomes a Subsequent Arch Employee.
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"Subsequent Olin Employee": any individual who is identified as an
------------------------ Arch Employee as of the Distribution Date but who becomes an Employee of any member of the Olin Group after the Distribution Date but on or prior to February 8, 2000. An individual ceases to be an Arch Employee when he or she becomes a Subsequent Olin Employee.
"Successor Plan": defined in Section 2.1(a).
--------------
"Supplemental Employment Agreement": any written enforceable
--------------------------------- agreement (other than Tier I Executive Agreements and Tier II Change in Control Agreements) between any member of the Pre-Distribution Group and any single Olin Employee, Olin Former Employee, Arch Employee or Arch Former Employee providing for post-retirement income, pension or welfare benefits (other than pursuant to a Welfare Plan, a Qualified Plan or a Supplemental Retirement Plan).
"Supplemental Retirement Plan": a U.S. Plan that is (i) an "employee
---------------------------- pension benefit plan" within the meaning of Section 3(2) or ERISA but is not a Qualified Plan, or (ii) an excess benefit plan under ERISA, including the Olin Supplementary Pension Plan, Olin Corporation Senior Executive Benefit Plan and the Olin Supplemental Contributing Employee Ownership Plan.
"U.S. Plan": any Plan that is not a Foreign Plan.
---------
"Welfare Plan": any Foreign Plan or U.S. Plan that is an "employee
------------ welfare benefit plan" as defined in Section 3(l) of ERISA (whether or not such plan is subject to ERISA).
ARTICLE II
U.S. Plans and Stock Plans
--------------------------
Section 2.1. Qualified Retirement Plan. Olin and Arch shall take all
-------------------------- steps necessary or appropriate so that the provisions of this Section 2.1 are implemented in a timely fashion, as more fully set forth below.
(a) Establishment of Successor Plan. On or prior to the Distribution
-------------------------------- Date, Arch shall establish a defined benefit pension plan that is a Qualified Plan (the "Successor Plan") that contains terms substantially similar to the terms in the Olin Pension Plan for the benefit of Arch Employees and Subsequent Arch Employees. Arch agrees
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that each Arch Employee or Subsequent Arch Employee shall (i) immediately become eligible to participate in the Successor Plan as of the Distribution Date (or in the case of a Subsequent Arch Employee, as of the date of transfer) and (ii) for all purposes (other than eligibility) under the Successor Plan, be entitled to service, compensation and the accrued benefit credited to such Arch Employee as of the Distribution Date (or in the case of a Subsequent Arch Employee, as of the date of transfer) under the terms of the Olin Pension Plan as if such service had been rendered to Arch, as if such compensation had been paid by Arch and as if such accrued benefit had originally been credited to such Arch Employee or Subsequent Arch Employee under the Successor Plan.
(b) Transfer of Assets and Liabilities to the Successor Plan.
--------------------------------------------------------- Subject to the completion of the asset transfer described in the next paragraph, Olin shall arrange for the transfer from the Olin Pension Plan to the Successor Plan and the Successor Plan shall assume and be responsible for all Liabilities of the Olin Pension Plan with respect to benefits accrued by Arch Employees and Subsequent Arch Employees (including disability pensions) through the Distribution Date (or through the date of transfer in the case of a Subsequent Arch Employee) and, effective upon such transfer, the members of the Olin Group shall have no further responsibility for such Liabilities. All Liabilities of the Olin Pension Plan attributable to Retained Arch Inactive Participants shall be retained by the Olin Pension Plan and the members of the Arch Group shall have no responsibility for such Liabilities.
As soon as practicable after the Distribution Date, Olin shall cause to be transferred from the trust established under the Olin Pension Plan to the trust established under the Successor Plan a portion of the assets thereof, as provided hereinbelow. As soon as practical following the Distribution Date, the Enrolled Actuary will estimate preliminarily the amount of assets to be transferred by multiplying the fair market value of the assets in the trust established under the Olin Pension Plan as of the last day of the month prior to the Distribution Date by the ratio of (x) the Liabilities attributable to Arch Employees which shall be equal to the projected benefit obligations determined as of the Distribution Date of Arch Employees who are participants in the Olin Pension Plan to (y) all Liabilities under the Olin Pension Plan which shall be equal to the projected benefit obligations determined as
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