Exhibit 10.12
ARCH SENIOR EXECUTIVE PENSION
PLAN
Originally Effective as of February 8,
1999
Amended and Restated as of October 23,
2003
Amended on November 3, 2005
Amended and Restated on December 30,
2008
Effective as of January 1, 2005
Article I. The
Plan
1.1 Establishment of Plan .
Effective as of February 8, 1999 (the “Original
Effective Date”) Arch Chemicals, Inc. (the
“Company” or “Arch”) established a
non-qualified deferred compensation plan known as the Arch Senior
Executive Pension Plan (the “Plan”) for the benefit of
certain salaried employees of Arch and other Employing Companies
who may be eligible to participate.
1.2 Purpose . The purpose of
this Plan is to attract and retain a management group capable of
assuring Arch’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 select management employees, as described in Sections 201(2)
and 301(a)(3) of the Employee Retirement Income Security Act
(“ERISA”). The Plan is also intended to be a
non-qualified deferred compensation plan which meets the
requirements of Code §409A(a)(2), (3) and (4).
1.3 Eligibility and
Participation . Any Arch Employee whose job is rated at 2,000
Hay Points (or the equivalent) or more and who is selected by the
Board of Directors of the Company or the Compensation Committee of
the Board (referred to in this Plan as the “Selection
Committee”) shall participate in the Plan (a
“Participant”). As provided hereinafter, the Selection
Committee shall also have the power to remove any Participant from
the Plan, whether or not he or she has begun to receive benefits
hereunder. Participation shall be effective as of the date
designated by the Selection Committee.
1.4 Plan Document . This Plan
document describes the terms of the Plan as of January 1, 2005
and as amended through December 30, 2008. Prior Plan documents
govern Plan administration for periods prior to January 1,
2005 and for all purposes for Participants or former Participants
who commenced benefits under the Plan prior to January 1,
2005.
Article II.
Definitions
2.1 “Arch Qualified Pension
Plans” means The Pension Plan of Arch Chemicals and any other
qualified defined benefit plans maintained by Arch, provided that
no amendment to an Arch Qualified Pension Plan shall be given
effective for purposes of this Plan
to the extent such amendment may or will result
in a direct or indirect change to the time or form of any payment
hereunder, except as permitted under Code §409A and related
regulations.
2.2 A “Change in Control
” with respect to a Participating Employer that is
organized as a corporation occurs on the date on which any of the
following events occur (i) a change in the ownership of the
Participating Employer; (ii) a change in the effective control
of the Participating Employer; (iii) a change in the ownership
of a substantial portion of the assets of the Participating
Employer.
(a) A change in the ownership of the
Participating Employer occurs on the date on which any one person,
or more than one person acting as a group, acquires ownership of
stock of the Participating Employer 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 the stock of the
Participating Employer. A change in the effective control of the
Participating Employer occurs on the date on which either
(i) a person, or more than one person acting as a group,
acquires ownership of stock of the Participating Employer
possessing 30% or more of the total voting power of the stock of
the Participating Employer, taking into account all such stock
acquired during the 12-month period ending on the date of the most
recent acquisition, or (ii) a majority of the members of the
Participating Employer’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 such Board
of Directors prior to the date of the appointment or election, but
only if no other corporation is a majority shareholder of the
Participating Employer. A change in the ownership of a substantial
portion of assets occurs on the date on which any one person, or
more than one person acting as a group, other than a person or
group of persons that is related to the Participating Employer,
acquires assets from the Participating Employer that have a total
gross fair market value equal to or more than 80% of the total
gross fair market value of all of the assets of the Participating
Employer immediately prior to such acquisition or acquisitions,
taking into account all such assets acquired during the 12-month
period ending on the date of the most recent
acquisition.
(b) An event constitutes a Change in
Control with respect to a Participant only if the Participant
performs services for the Participating Employer that has
experienced the Change in Control, or the Participant’s
relationship to the affected Participating Employer otherwise
satisfies the requirements of Treasury Regulation
Section 1.409A-3(2)(i)(5)(ii).
(c) The determination as to the
occurrence of a Change in Control shall be based on objective facts
and in accordance with the requirements of Code
Section 409A.
2.3 “Code” means the
Internal Revenue Code of 1986, as amended from time to
time.
2.4 “Company” means Arch
Chemicals, Inc., a Virginia corporation.
2.5 “Disabled” or
“Disability” shall mean, for purposes of crediting
service under this Plan as provided in Section 3.5 hereof, the
same as “Disabled” for purposes of The Pension Plan of
Arch Chemicals.
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2.6 “Employing Company”
means any company which has adopted this Plan and is included
within the definition of an Employing Company under the terms of
The Pension Plan of Arch Chemicals.
2.7 “Married” means the
Participant has a Spouse, as defined below.
2.8 “Olin” means Olin
Corporation, a predecessor in interest to Arch Chemicals. In
conjunction with establishing this Plan, Arch assumed the
liabilities of Olin for the provision of benefits to Participants
who, immediately prior to February 8, 1999 (the
“Distribution Date”) were participants in the Olin
Senior Executive Pension Plan as in effect on the Distribution Date
and who, as of the Original Effective Date of this Plan transferred
to, and became employed by, Arch or an affiliated
company.
2.8 “Olin Senior Executive
Pension Plan” means a certain non-qualified deferred
compensation plan of Olin. As of the Distribution Date, each
Eligible Employee who, immediately prior to the Distribution Date,
was a participant in the Olin Senior Executive Pension Plan, was
credited in this Plan with an accrued benefit equal to that
credited to such individual under the Olin Senior Executive Pension
Plan as of the Distribution Date (based upon the Eligible
Employee’s Average Compensation and service with
Olin).
2.10 “Other Arch Plans”
means any nonqualified defined benefit pension plan of the Company
(or an Employing Company) other than this Plan, and the equivalent
actuarial value of any other arrangement of the Company (or an
Employing Company) which the Plan Administrator, in its sole
discretion, determines to be a pension supplement; provided that no
amendment to an Other Arch Plan shall be given effective for
purposes of this Plan to the extent such amendment may or will
result in a direct or indirect change to the time or form of any
payment hereunder, except as permitted under Code §409A and
related regulations.
2.11 “Pension Plan of Arch
Chemicals” means the Pension Plan of Arch Chemicals as in
effect on January 1, 2005 and thereafter, provided that no
amendment to the Pension Plan of Arch Chemicals shall be given
effect for purposes of this Plan to the extent such amendment may
or will result in a direct or indirect change to the time or form
of any payment hereunder.
2.12 “Plan
Administrator” shall mean the Pension Administration and
Review Committee of Arch Chemicals, Inc.
2.13 “Plan Year” shall
mean each calendar year.
2.14 “Retires” or
“Retirement” means the Participant has had a Normal
Retirement Date or a Deferred Vested Retirement Date, as further
described in Article III, below.
2.15 “Separation from
Service” means a termination of employment with the Company,
as defined for purposes of Code §409A.
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(a) Except as noted below with
respect to asset sales, the Plan Administrator will determine, in
accordance with Code Section 409A, whether a Separation from
Service has occurred. Except in the case of a Participant on a bona
fide leave of absence as provided below, a Participant is deemed to
have incurred a Separation from Service if the Company and the
Participant reasonably anticipated that the level of services to be
performed by the Participant after a date certain would be reduced
to 20% or less of the average services rendered by the Participant
during the immediately preceding 36-month period (or the total
period of employment, if less than 36 months), disregarding periods
during which the Participant was on a bona fide leave of
absence.
(b) An Employee who is absent from
work due to military leave, sick leave, or other bona fide leave of
absence shall incur a Separation from Service on the first date
immediately following the later of (i) the six-month
anniversary of the commencement of the leave, or (ii) the
expiration of the Employee’s right, if any, to reemployment
under statute or contract. Notwithstanding the preceding, however,
with respect to an Employee who is absent from work due to a
physical or mental impairment that is expected to result in death
or last for a continuous period of at least six months and that
prevents the Employee from performing the duties of his or her
position of employment or a similar position, the twenty-nine-month
anniversary of the commencement of leave shall be substituted for
the six-month anniversary in (i) in the preceding
sentence.
(c) For purposes of determining
whether a Separation from Service has occurred, the Company means
the Company and any Affiliate, except that for purposes of
determining whether another organization is an Affiliate of the
Company, common ownership of at least 50% shall be determinative.
Affiliate means a corporation, trade or business that, together
with the Company, is treated as a single employer under Code
§414(b) or (c).
(d) The Company specifically
reserves the right to determine whether a sale or other disposition
of substantial assets to an unrelated party constitutes a
Separation from Service with respect to a Participant providing
services to the seller immediately prior to the transaction and
providing services to the buyer after the transaction. Such
determination shall be made in accordance with the requirements of
Code §409A.
2.16 “Specified
Employee” means an employee who, as of the date of his or her
Separation from Service, is a “key employee” of the
Company or any Affiliate, any stock of which is actively traded on
an established securities market or otherwise. An employee is a key
employee if he or she meets the requirements of Code
§416(i)(1)(A)(i), (ii), or (iii) (applied in accordance
with applicable regulations thereunder and without regard to Code
§416(i)(5)) at any time during the 12-month period ending on
the Specified Employee Identification Date. Such Employee shall be
treated as a key employee for the entire 12-month period beginning
on the Specified Employee Effective Date.
For purposes of determining whether
an Employee is a Specified Employee, the compensation of the
Employee shall be determined in accordance with the definition of
compensation provided under Treas. Reg.
Section 1.415(c)-2(d)(3) (wages within the meaning of Code
section 3401(a) for purposes of income tax withholding at the
source, plus amounts excludible from gross income
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under section 125(a), 132(f)(4), 402(e)(3),
402(h)(1)(B), 402(k) or 457(b), without regard to rules that limit
the remuneration included in wages based on the nature or location
of the employment or the services performed); provided, however,
that, with respect to a nonresident alien who is not a Participant
in the Plan, compensation shall not include compensation that is
not includible in the gross income of the Employee under Code
Sections 872, 893, 894, 911, 931 and 933, provided such
compensation is not effectively connected with the conduct of a
trade or business within the United States.
Notwithstanding anything in this
paragraph to the contrary, (i) if a different definition of
compensation has been designated by the Company with respect to
another nonqualified deferred compensation plan in which a key
employee participates, the definition of compensation shall be the
definition provided in Treas. Reg. §1.409A-1(i)(2), and
(ii) the Company may through action that is legally binding
with respect to all nonqualified deferred compensation plans
maintained by the Company, elect to use a different definition of
compensation. In the event of corporate transactions described in
Treas. Reg. Section 1.409A-1(i)(6), the identification of
Specified Employees shall be determined in accordance with the
default rules described therein, unless the Employer elects to
utilize the available alternative methodology through designations
made within the timeframes specified therein. Specified Employee
Effective Date means the first day of the fourth month following
the Specified Employee Identification Date, or such earlier date as
is selected by the Plan Administrator. Specified Employee
Identification Date means December 31, unless the Employer has
elected a different date through action that is legally binding
with respect to all nonqualified deferred compensation plans
maintained by the Employer.
2.17 “Spouse” shall mean
the person to whom a Participant is validly married at the date of
the Participant’s death, as evidenced by a marriage
certificate issued in accordance with state law and as recognized
under federal law; provided, however, that if a Participant’s
Spouse at his or her death was not the Participant’s Spouse
for at least 12 months immediately prior to the Participant’s
death, no surviving Spouse’s pre-retirement benefit shall be
paid. Common law marriages shall not be recognized
hereunder.
Article III.
Benefits
3.1 Benefits; In General .
Benefits are payable hereunder upon the first to occur of the
following:
(a) a Participant’s Normal
Retirement Date, as provided in Section 3.3; or
(b) a Participant’s Deferred
Vested Retirement Date, as provided in Section 3.4.
In addition, (i) benefits may
be payable in the event of a Change of Control (see
Section 3.7, below), and (ii) pre-retirement survivor
benefits may be payable in the event a Married Participant dies
prior to qualifying for Retirement under subsections
(a) – (c), above (see Section 3.6(b),
below).
3.2 Benefit Formula
.
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(a) A Participant’s annual
Retirement Benefit, calculated as the Participant’s
Separation from Service date, shall equal the lesser of
(i) and (ii), below.
(i) three percent
(3%) of the Participant’s Average Compensation,
multiplied by the sum of the Participant’s Years of Benefit
Service credited while a Participant in this Plan and the Olin
Senior Executive Pension Plan, plus one and one-half percent
(1- 1 / 2 %) of the Participant’s
Average Compensation multiplied by his aggregate Years of Benefit
Service credited under all qualified defined benefit plans of Arch
(including Years of Benefit Service credited under the Olin
Employees Pension Plan) while the employee was not a Participant in
either this Plan or the Olin Senior Executive Pension 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 under this Plan begin prior to the
Participant’s sixty-second (62 nd ) birthday; reduced by the
sum of
( 1 ) the Participant’s
annual Retirement Allowance payable from the Arch Qualified Pension
Plans and the Other Arch Defined Benefit Plans; plus
( 2 ) fifty percent
(50%) of the Participant’s Primary Social Security
Benefit.
(ii) fifty percent (50%) of the
Participant’s Average Compensation, reduced by the sum
of
( 1 ) the amount of annual
retirement benefits from the Arch Qualified Pension Plans and the
Other Arch Defined Benefit Plans and all qualified and
non-qualified defined benefit plans of the Participant’s
previous and subsequent employers; and
( 2 ) fifty percent
(50%) of the Participant’s Primary Social Security
Benefit.
(b) For purposes of determining a
Participant’s “Average Compensation,”
“Years of Benefit Service,” “Retirement
Allowance” and “Primary Social Security Benefit”
under this Plan, except as otherwise provided in this paragraph
(b), such terms shall be as defined in The Pension Plan of Arch
Chemicals and take into account compensation and service (including
periods of Disability, but only to the extent provided in
Section 3.5 hereof) credited to such Participant while
employed by Arch and its affiliates, as well as by Olin and its
affiliates. In calculating a Participant’s Average
Compensation under this Plan, (i) “Average
Compensation” shall also include severance and deferred
amounts of regular salary and deferrals under management incentive
plans (other than the Performance Unit Plan, the EVA Bonus Bank or
similar bonus bank arrangements, and other long-term incentive and
long-term bonus plans of Olin and Arch); (ii) executive
severance which is payable to certain Participants under employment
agreements shall be treated as if paid over the number of months of
salary used to calculate the amount of such severance, even if such
severance is received in a lump sum; and (iii) Average
Compensation shall be calculated without regard to the dollar
limitations imposed by
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Section 401(a)(17) of the Internal Revenue
Code. In calculating a Participant’s “Years of Benefit
Service,” service imputed as a result of treating any
executive severance paid as having been received over the number of
months used to calculate such severance shall be
included.
(c) The annual retirement benefits
payable under The Pension Plan of Arch Chemicals, Other Arch Plans
and from pension plans of the Participant’s previous
employers, which are to be used to reduce the benefit payable under
(a)(i) or (ii), above, shall be determined assuming that the
Participant began receiving benefits thereunder at Normal
Retirement Date, and 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 factors as may,
from time to t
