<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------
Form 10-K
(Mark One)
[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 1998
OR
[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 1-1070
Olin Corporation
(Exact name of registrant as specified in its charter)
Virginia 13-1872319
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
06856-4500
501 Merritt 7 (Zip Code)
P.O. Box 4500
Norwalk, CT
(Address of principal executive
offices)
Registrant's telephone number, including area code: (203) 750-3000
---------------
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
Name of each exchange
Title of each class on which registered
------------------- -----------------------
<S> <C>
Common Stock, New York Stock Exchange
par value $1 per share Chicago Stock Exchange
Pacific Stock Exchange
Series A Participating Cumulative Preferred New York Stock Exchange
Stock Purchase Rights
Chicago Stock Exchange
Pacific Stock Exchange
</TABLE>
---------------
Securities registered pursuant to Section 12(g) of the Act: None
---------------
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 if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. X
---------------
As of January 31, 1999, the aggregate market value of registrant's common
stock, par value $1 per share ("Common Stock") held by non-affiliates of
registrant was approximately $1,073,761,590.
---------------
As of January 31, 1999, 45,963,259 shares of the registrant's common stock
were outstanding.
---------------
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference in this Form
10-K as indicated herein:
<TABLE>
<CAPTION>
Part of 10-K
Document into which incorporated
-------- -----------------------
<S> <C>
Proxy Statement relating to Olin's 1999
Annual Meeting of Shareholders Part III
</TABLE>
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<PAGE>
PART I
Item 1. Business
General
Olin Corporation is a Virginia corporation, incorporated in 1892, having its
principal executive offices in Norwalk, Connecticut. It is a manufacturer
concentrated in three business segments: Chlor Alkali Products, Metals and
Winchester. Chlor Alkali Products include chlorine and caustic soda, sodium
hydrosulfite and high strength bleach products. Metals products include copper
and copper alloy sheet, strip, welded tube and fabricated parts, and stainless
steel strip. The Metals segment also includes a network of metals service
centers in the continental U. S. and Puerto Rico. Winchester products include
sporting ammunition, canister powder, reloading components, small caliber
military ammunition and industrial cartridges. The Winchester segment also
manages government arsenals.
The terms "Olin" and the "Company" as used herein mean Olin Corporation and
its subsidiaries, unless the context indicates otherwise.
Effective February 8, 1999, Olin distributed to its shareholders all of the
outstanding common stock of Arch Chemicals, Inc. ("Arch Chemicals"), a
Virginia corporation formed to hold all of Olin's specialty chemical
businesses (the "Spin-Off").
Products and Services
The following is a list of the principal and certain other products and
services provided by Olin and its affiliates after the Spin-Off within each
industry segment. Principal products on the basis of annual sales are
highlighted in bold face.
CHLOR ALKALI PRODUCTS
<TABLE>
<CAPTION>
Major Raw
Materials
Products & Plants & & Components for
Services Major End-Uses Facilities* Products/Services
- ---------- ---------------------------------- ---------------- -----------------
<S> <C> <C> <C>
CHLORINE/CAUSTIC Pulp & paper processing, chemical Augusta, GA salt, electricity
SODA manufacturing, water purification, Charleston, TN
manufacture of vinyl chloride, McIntosh, AL
bleach, swimming pool chemicals & Niagara Falls,
urethane chemicals NY
- ------------------------------------------------------------------------------------------
Sodium Paper, textile & clay bleaching Augusta, GA caustic soda,
Hydrosulfite Charleston, TN sulfur dioxide
Salto, Brazil
- ------------------------------------------------------------------------------------------
HyPure(TM) Industrial & institutional Charleston, TN chlorine, caustic
products cleaners, textile bleaching soda
</TABLE>
- -------------------------------------------------------------------------------
* If site is not operated by Olin or a majority-owned, direct or indirect
subsidiary, name of joint venture, affiliate or operator is indicated.
Sites manufacture, distribute or market one or more of the identified
products or services.
2
<PAGE>
METALS
<TABLE>
<CAPTION>
Major Raw
Materials
Products & Plants & & Components for
Services Major End-Uses Facilities* Products/Services
- ---------- ---------------------------------- ---------------- -----------------
<S> <C> <C> <C>
COPPER & COPPER Electronic connectors, lead Bryan, OH copper, zinc &
ALLOY SHEET & frames, electrical components, East Alton, IL other nonferrous
STRIP (STANDARD & communications, automotive, Indianapolis, IN metals
HIGH PERFORMANCE) builders' hardware, coinage, Waterbury, CT
ammunition Iwata, Japan
(Yamaha-Olin
Metal
Corporation)
- ------------------------------------------------------------------------------------------
Network of metals Electronic connectors, electrical Allentown, PA copper & copper
service centers components, communications, Alliance, OH alloy sheet,
automotive, builders' hardware, Caguas, PR strip, tube &
household products Carol Stream, IL steel & aluminum
Warwick, RI strip
Watertown, CT
Yorba Linda, CA
- ------------------------------------------------------------------------------------------
POSIT-BOND(R) CLAD Coinage strip & blanks East Alton, IL cupronickel,
METAL copper &
aluminum
- ------------------------------------------------------------------------------------------
ROLLED COPPER Printed circuit boards, electrical Waterbury, CT copper, zinc &
FOIL, & electronic, automotive other nonferrous
COPPERBOND(R) metals,
FOIL, STAINLESS stainless steel
STEEL STRIP
- ------------------------------------------------------------------------------------------
COPPER ALLOY Utility condensers, industrial Cuba, MO copper, zinc &
WELDED TUBE heat exchangers, refrigeration & other nonferrous
air conditioning, builders' metals
hardware, automotive
- ------------------------------------------------------------------------------------------
Fabricated Builders' hardware, cartridge East Alton, IL brass &
products cases, shaped charge cones, stainless steel
transportation, household & strip
recreational products
- ------------------------------------------------------------------------------------------
Olin Aegis: High All industry market segments; New Bedford, MA all metals,
performance, high computer, communications, medical, metal alloys,
reliability, industrial, instrumentation, metal matrix
hermetic metal automotive, consumer, aerospace composites,
packages for and military special alloys
microelectronics and glasses
industry
</TABLE>
- --------------------------------------------------------------------------------
* If site is not operated by Olin or a majority-owned, direct or indirect
subsidiary, name of joint venture, affiliate or operator is indicated. Sites
manufacture, distribute or market one or more of the identified products or
services.
3
<PAGE>
WINCHESTER
<TABLE>
<CAPTION>
Major Raw
Materials &
Products & Plants & Components for
Services Major End-Uses Facilities* Products/Services
- ---------- ---------------------------------- ---------------- -----------------
<S> <C> <C> <C>
WINCHESTER(R) Hunters & recreational shooters, East Alton, IL brass, lead,
SPORTING law enforcement agencies Geelong, steel, plastic,
AMMUNITION (SHOT- Australia propellant,
SHELLS, SMALL explosives
CALIBER CENTERFIRE
& RIMFIRE
AMMUNITION)
- ------------------------------------------------------------------------------------------
Small caliber Infantry and mounted weapons East Alton, IL brass, lead,
military propellant,
ammunition explosives
- ------------------------------------------------------------------------------------------
Government-owned Maintenance and operation of U.S. Independence, MO brass, lead,
arsenal operation Army small caliber military propellant,
(GOCO) ammunition production plant explosives,
government-
supplied
components
-------------------------------------------------------------------------
Maintenance of U.S. Army laid-away Baraboo, WI subcontracted &
Production plant government-
supplied
components
- ------------------------------------------------------------------------------------------
Industrial Maintenance applications in power East Alton, IL brass, lead,
products (8 gauge & concrete industries, powder- Geelong, plastic,
loads & powder- actuated tools in construction Australia propellant,
actuated tool industry explosives
loads)
</TABLE>
- --------------------------------------------------------------------------------
* If site is not operated by Olin or a majority-owned, direct or indirect
subsidiary, name of joint venture, affiliate or operator is indicated. Sites
manufacture, distribute or market one or more of the identified products or
services.
4
<PAGE>
Spin-Off of Arch Chemicals
On July 29, 1998 the Board of Directors of Olin approved in principle a plan
to distribute Olin's specialty chemical businesses to its shareholders as a
separate public company, Arch Chemicals, which was incorporated on August 25,
1998. The Spin-Off was effective on February 8, 1999, when Olin distributed to
its shareholders one share of Arch Chemicals Common Stock for each two shares
of Olin Common Stock held of record on February 1, 1999.
The businesses transferred by Olin to Arch Chemicals fall within three
segments: microelectronic chemicals, water chemicals and performance
chemicals. The microelectronic chemicals segment consists of the manufacture
and supply of a range of products and services to semiconductor manufacturers
and to flat panel display manufacturers. The microelectronic chemicals segment
includes a variety of high purity acids, bases, oxidizers, etchants and
solvents. The microelectronic chemicals segment has also manufactured a wide
range of photoresist and ancillary products encompassing negative, g-line, I-
line and 248nm deep UV technologies to meet the needs of the semiconductor
industry.
The water chemicals segment includes chemicals manufactured and sold and
equipment distributed on a worldwide basis for the sanitization and
recreational use of residential and commercial pool water and the purification
of potable water, including calcium hypochlorite and chlorinated
isocyanurates.
The performance chemicals segment consists of the manufacture and sale of a
broad range of products with diverse end uses. The performance chemicals
segment manufactures flexible polyols, specialty polyols, urethane systems and
glycol and glycol ethers, biocides that control the growth of micro-organisms,
hydrazine hydrates as well as propellant grade hydrazine and hydrazine
derivatives and supplies sulfuric acid regeneration services and virgin
sulfuric acid sales.
1998 Developments
In April 1998, the Board of Directors of Olin authorized the purchase of up
to 5 million shares, or approximately 10%, of the then-outstanding Common
Stock of Olin. During 1998, Olin repurchased 1.9 million shares under this
program and repurchased an additional 1.2 million shares under a repurchase
program authorized by the Board of Directors in October 1997.
In September 1998, Olin recorded a $42 million pretax charge ($0.55 diluted
earnings per share) related to the sale of the microelectronic packaging unit
at Manteca, California for $4 million in cash, and the restructuring of its
rod, wire and tube businesses at Indianapolis, Indiana.
In December 1998, Olin recorded a $21 million pretax charge ($.32 diluted
earnings per share) related to the Spin-Off of Arch Chemicals.
International Operations
Olin has sales offices and subsidiaries in various countries which support
the worldwide export of products from the United States as well as overseas
production facilities. In addition, Olin has manufacturing interests in
Brazil.
Yamaha-Olin Metal Corporation, a joint venture with Yamaha Corporation,
manufactures high-performance copper alloys in Japan for sale to the
electronics industry throughout the Far East. An Olin subsidiary loads and
packs sporting and industrial ammunition in Australia. See the Note "Segment
Information" of the Notes to Consolidated Financial Statements in Item 8, for
geographic segment data which are incorporated by reference.
Customers and Distribution
During 1998, no single customer accounted for more than 2.4% of Olin's total
consolidated sales. Products which Olin sells to industrial or commercial
users or distributors for use in the production of
5
<PAGE>
other products constitute a major part of Olin's total sales. Some of its
products, such as sporting ammunition and brass, are sold to a large number of
users or distributors, while others, such as chlorine and caustic soda, are
sold in substantial quantities to a relatively small number of industrial
users.
Most of Olin's products and services are marketed primarily through its
sales force and sold directly to various industrial customers, the U.S.
Government and its prime contractors, to wholesalers and other distributors.
Chlor Alkali Products. Principal customers of Olin's Chlor Alkali products
include the pulp and paper industries, vinyl chloride and urethane
manufacturers and household and industrial cleaner suppliers.
Metals. Principal customers of Olin's copper and copper alloy strip, sheet
and welded tube include producers of electrical and electronic equipment,
builders' hardware and appliances, the plumbing, automotive and air-
conditioning industries and manufacturers of a variety of consumer goods.
Olin manufactures cartridge brass for its ammunition business and for other
ammunition makers. Olin also serves numerous high-technology markets through a
thin-gauge reroll operation that produces stainless steels, high-temperature
alloys and glass sealing alloys, in addition to copper and copper alloys.
Posit-Bond(R) clad metal has made Olin a major supplier of metal to the U.S.
Mint. Olin also sells various alloys to foreign governments for coinage
purposes.
The Metals business is also focused on the electronics market, providing
high performance and high-quality materials needed by the electronics industry
and other advanced technology customers. These materials include Olin-
developed proprietary alloys and Copperbond(R) treated copper foil marketed to
the printed circuit industry.
Fabricated products are principally sold to ammunition manufacturers, the
U.S. Armed Forces, building product suppliers, household product manufacturers
and automotive manufacturers.
Winchester. The principal users of the Winchester products are recreational
shooters, hunters, law enforcement agencies, the power and concrete
industries, the construction industry, the U.S. Armed Forces and certain
allied governments.
Because Olin engages in some government contracting activities and makes
sales to the U.S. Government, it is subject to extensive and complex U.S.
Government procurement laws and regulations. These laws and regulations
provide for ongoing government audits and reviews of contract procurement,
performance and administration. Failure to comply, even inadvertently, with
these laws and regulations and with laws governing the export of munitions and
other controlled products and commodities could subject Olin or one or more of
its businesses to civil and criminal penalties, and under certain
circumstances, suspension and debarment from future government contracts and
the exporting of products for a specified period of time.
Competition
Olin is in active competition with businesses producing the same or similar
products, as well as, in some instances, with businesses producing different
products designed for the same uses. With respect to certain product groups,
such as ammunition and copper alloys, and with respect to certain chlor alkali
products, Olin is among the large manufacturers or distributors in the United
States. Olin encounters competition in price, delivery, service, performance,
product innovation, product recognition and quality, depending on the product
involved.
6
<PAGE>
Employees
As of December 31, 1998, after adjusting for the effects of the Spin-off,
Olin had approximately 6,400 employees (excluding approximately 1,000
employees at Government-owned, contractor-operated facilities and excluding
employees of disposed businesses, including Arch Chemicals), approximately
6,300 of whom were working in the United States and approximately 100 of whom
were working in foreign countries. A majority of the hourly-paid employees are
represented, for purposes of collective bargaining, by various labor unions.
Some labor contracts extend for as long as five years, but during most years
new agreements must be negotiated in a number of Olin's plants, although Olin
has no major labor contracts scheduled to expire in 1999. While relations
between Olin and its employees and their various representatives are generally
considered satisfactory, there can be no assurance that new labor contracts
can be concluded without work stoppages. No major work stoppages have occurred
in the last three years.
Research Activities; Patents
Olin's research activities are conducted on a product-group basis at a
number of facilities. Company-sponsored research expenditures were
approximately $10 million during 1998, $8 million during 1997 and $20 million
during 1996.
Olin owns, or is licensed under, a number of patents, patent applications
and trade secrets covering its products and processes. Olin believes that, in
the aggregate, the rights under such patents and licenses are important to its
operations, but does not consider any patent or license or group thereof
related to a specific process or product to be of material importance when
viewed from the standpoint of Olin's total business.
Raw Materials and Energy
Olin purchases the major portion of its raw material requirements. The
principal basic raw materials purchased by Olin for its production of chlor
alkali products are salt, electricity, and sulfur. Copper, zinc and various
other nonferrous metals are required for the metals business. Lead, brass and
propellant are the principal raw materials used in the Winchester business.
Olin's principal basic raw materials are typically purchased pursuant to
multiyear contracts. In the manufacture of ammunition, Olin uses a substantial
percentage of its own output of cartridge brass. Additional information with
respect to specific raw materials is set forth in the table above under the
caption entitled "Products and Services."
Electricity is the predominant energy source for Olin's manufacturing
facilities. Most of Olin's facilities are served by utilities which generate
electricity principally from coal, hydro and nuclear power.
Environmental and Toxic Substances Controls
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
($ in millions)
<S> <C> <C> <C>
Cash Outlays:
Remedial and Investigatory Spending................... $20 $31 $30
Capital Spending...................................... 2 2 3
Plant Operations...................................... 17 15 16
--- --- ---
Total Cash Outlays...................................... $39 $48 $49
=== === ===
</TABLE>
The establishment and implementation of federal, state and local standards
to regulate air, water and land quality has affected and will continue to
affect substantially all of Olin's manufacturing
7
<PAGE>
locations. Federal legislation providing for regulation of the manufacture,
transportation, use and disposal of hazardous and toxic substances has imposed
additional regulatory requirements on industry, particularly the chemicals
industry. In addition, implementation of environmental laws, such as the
Resource Conservation and Recovery Act and the Clean Air Act, has required and
will continue to require new capital expenditures and will increase operating
costs. Olin is enrolled in the United States Environmental Protection Agency's
Voluntary Industrial Toxics Reduction Program. Olin employs waste minimization
and pollution prevention programs at its manufacturing sites.
Olin is party to various governmental and private environmental actions
associated with waste disposal sites and manufacturing facilities. 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. Charges to income for
investigatory and remedial efforts were material to operating results in the
past three years and may be material to net income in future years. Such
charges to income were $16 million, $17 million and $70 million in 1998, 1997
and 1996, respectively.
Cash outlays for remedial and investigatory activities associated with
former waste sites and past operations were not charged to income but instead
were charged to reserves established for such costs identified and expensed to
income in prior years. Cash outlays for normal plant operations for the
disposal of waste and the operation and maintenance of pollution control
equipment and facilities to ensure compliance with mandated and voluntarily
imposed environmental quality standards were charged to income. Historically,
Olin has funded its environmental capital expenditures through cash flow from
operations and expects to do so in the future.
Olin's estimated environmental liability is attributable to 51 sites, 16 of
which were on the National Priority List ("NPL"). Ten sites accounted for
approximately 79% of such liability and, of the remaining sites, no one site
accounted for more than 2% of such liability. Two of these ten sites were in
the investigatory stage of the remediation process. In this stage, remedial
investigation and feasibility studies are conducted by either Olin, the United
States Environmental Protection Agency ("EPA") or other potentially
responsible parties ("PRP's") and a Record of Decision ("ROD") or its
equivalent has not yet been issued. At another six of the ten sites, a ROD or
its equivalent has been issued by either the EPA or responsible state agency
and Olin, either alone or as a member of a PRP group, was engaged in
performing the remedial measures required by that ROD. At the remaining two of
the ten sites, part of the site is subject to a ROD and another part is still
in the investigative stage of remediation. All ten sites were either former
manufacturing facilities or waste sites containing contamination generated by
those facilities.
The Company's consolidated balance sheets included liabilities for future
environmental expenditures to investigate and remediate known sites amounting
to $129 million at December 31, 1998 and $133 million at December 31, 1997, of
which $99 million and $103 million were classified as other noncurrent
liabilities, respectively. Those amounts did not take into account any
discounting of future expenditures or any consideration of insurance
recoveries or advances in technology. Those liabilities are reassessed
periodically to determine if environmental circumstances have changed and/or
remediation efforts and their costs can be better estimated. As a result of
these reassessments, future charges to income may be made for additional
liabilities.
Total environmental-related cash outlays for 1999 are estimated to be $54
million, of which $30 million is expected to be spent on remedial and
investigatory efforts, $7 million on capital projects and $17 million on
normal plant operations.
Annual environmental-related cash outlays for site investigation and
remediation, capital projects and normal plant operations are expected to
range between $50-$60 million over the next several years. While Olin does not
anticipate a material increase in the projected annual level of its
environmental-
8
<PAGE>
related costs, there is always the possibility that such increases 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, the scarcity of
reliable data pertaining to identified sites, the difficulty in assessing the
involvement and financial capability of other potentially responsible parties
and Olin's 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 against Olin. At December 31, 1998, Olin had estimated
additional environmental contingent liabilities of $40 million.
See also Item 3, "Legal Proceedings" below, the Note "Environmental" of the
Notes to Consolidated Financial Statements contained in Item 8, and Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."
Item 2. Properties
Olin has manufacturing sites at 15 separate locations in 12 states and
Puerto Rico and two manufacturing sites in two foreign countries. Most
manufacturing sites are owned although a number of small sites are leased.
Listed under Item 1 above in the table set forth under the caption "Products
and Services" are the locations at or from which Olin's products and services
are manufactured, distributed or marketed by segment.
Olin leases warehouses, terminals and distribution offices and space for
executive and branch sales offices and service departments throughout the
country and overseas.
Item 3. Legal Proceedings
(a) In 1979, an action was commenced in the U.S. District Court in New York
by the United States against Occidental Chemical Corporation (then known as
Hooker Chemical & Plastics Corporation) ("Oxychem"), certain related
companies, Olin and the City of Niagara Falls, New York, alleging that
chemical wastes were migrating in violation of environmental laws or
regulations from a site in Niagara Falls where Oxychem and Olin own adjacent,
inactive chemical waste landfills. The United States sought injunctive relief
and an order requiring Oxychem and Olin, among other things, to secure the
landfill site, install a leachate collection system and treat whatever
leachate is collected, as well as an order requiring Oxychem and Olin to place
$16.5 million in trust or provide a bond to ensure that the site will be
secured. The United States also sought civil penalties for each day of alleged
violation of the Clean Water Act which currently has a maximum daily penalty
of $27,500.
In 1980, the State of New York (the "State") filed a complaint as co-
plaintiff in the same action based upon essentially the same factual
allegations as in the suit brought by the United States. The State is seeking
$100 million in compensatory damages and $100 million in punitive damages. The
State also requested a court order to abate the alleged nuisance and penalties
of $10,000 per day for alleged violations of each of four provisions of New
York's Environmental Conservation Law. In 1983, the State filed a motion to
amend its complaint to include a count under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended ("CERCLA")
alleging damage to natural resources. In 1986, the Department of Justice filed
a motion to amend its complaint to include a CERCLA and SARA (Superfund
Amendments and Reauthorization Act of 1986) count. Oxychem and Olin have filed
an opposition to the motions and the court deferred a ruling on both motions.
Under stipulations, Olin and Oxychem conducted a remedial investigation and
feasibility study. In 1990, the EPA issued a Proposed Remedial Action Plan
followed by a ROD. In 1991, the EPA issued
9
<PAGE>
an administrative order directing Olin and Oxychem to implement the remedy
identified in the ROD. Remediation of the site has been completed. Olin and
Oxychem have negotiated the terms of a settlement agreement with the EPA and
the State of New York, under which Olin and Oxychem will pay oversight costs
on the project. Olin believes, but there can be no assurance, that the
settlement agreement will be executed and submitted to the court for approval
in 1999. See "Environmental Matters" contained in Item 7--Management's
Discussion and Analysis of Financial Condition and Results of Operations.
(b) In 1987, the EPA issued a ROD recommending remedial actions and
ecological studies with respect to mercury contamination at the site of Olin's
former mercury cell Chlor Alkali plant in Saltville, Virginia. The EPA, under
Section 122 of CERCLA, asked Olin to undertake the work called for in the ROD,
and Olin agreed to do so. In November 1988, Olin submitted to the EPA, a work
plan for remedial action, including additional stormwater run-off control
around Pond #5 and construction of a wastewater treatment plant for the
outfall from Pond #5. Olin then implemented that remedial action.
Olin completed the remedial investigation and feasibility study of the
former chlorine plant site, including Ponds # 5 and 6, in 1994. The EPA issued
a ROD in 1995, calling for covering the former waste ponds, treatment of
runoff from the ponds, and additional monitoring and investigation. In 1997,
Olin negotiated a consent decree with the EPA under which Olin is implementing
the ROD. The ROD does not address remediation of the former chlorine plant
site or the Holston River, which are the subject of the additional studies.
Olin has completed clean-up activities at two small locations near Olin's
former plant site, the Graveyard Dump Site and the former power plant.
In October 1996, Olin met with the site's Natural Resources Trustees at the
Trustee's request. At that time, Olin indicated a willingness to cooperate in
assessing whether there are any natural resource damages to the Holston River
associated with releases from the site.
Olin believes that any liability incurred by it in this matter will not be
materially adverse to its financial condition or liquidity. See "Environmental
Matters" contained in Item 7--Management's Discussion and Analysis of
Financial Condition and Results of Operations.
(c) As part of the continuing environmental investigation by federal, state
and local governments of waste disposal sites, Olin has entered into a number
of settlement agreements requiring it to contribute to the cost of the
investigation and cleanup of a number of sites. This process of investigation
and cleanup is expected to continue. See "Environmental Matters" contained in
Item 7--Management's Discussion and Analysis of Financial Condition and
Results of Operations.
(d) Olin and its subsidiaries are defendants in various other legal actions
arising out of their normal business activities, none of which is considered
by management to be material.
10
<PAGE>
Item 4. Submission of Matters to a Vote of Security Holders
No matter was submitted to a vote of security holders during the three
months ended December 31, 1998.
Executive Officers of Olin Corporation as of March 1, 1999
<TABLE>
<CAPTION>
Served as
an Olin
Officer
Name and Age Office Since
------------ ------ ---------
<C> <S> <C>
Donald W. Griffin (62)........... Chairman of the Board, 1983
President and Chief
Executive Officer
Anthony W. Ruggiero (57)......... Executive Vice President and 1995
Chief Financial Officer
Peter C. Kosche (56)............. Senior Vice President, 1993
Corporate Affairs
George B. Erensen (55)........... Vice President and General Tax 1990
Counsel
Thomas M. Gura (53).............. Vice President and President, 1997
Winchester Division
Johnnie M. Jackson, Jr. (53)..... Vice President, General Counsel 1995
and Secretary
John L. McIntosh (44)............ Vice President and President, 1999
Chlor Alkali Products Division
Janet M. Pierpont (51)........... Vice President and Treasurer 1990
Joseph D. Rupp (48).............. Vice President and President, 1996
Brass Division
</TABLE>
No family relationship exists between any of the above named executive
officers or between any of them and any Director of Olin. Such officers were
elected to serve as such, subject to the By-laws, until their respective
successors are chosen.
Each of the above-named executive officers, except T.M. Gura, J.M. Jackson,
J.L. McIntosh, A.W. Ruggiero, and J.D. Rupp, has served Olin as an executive
officer for not less than the past five years.
Thomas M. Gura was elected a Corporate Vice President on September 25, 1997.
He was appointed President of the Winchester Division on August 19, 1997.
Prior to that time, he served as Vice President, Marketing and Sales of the
Brass Division.
Johnnie M. Jackson, Jr. was elected a Corporate Vice President on April 27,
1995 and Corporate Secretary on April 29, 1993. Prior to that time, since
1989, he has served Olin in the following capacities: General Counsel--
Corporate Resources and Secretary, Associate General Counsel--Corporate
Resources and Secretary and Deputy General Counsel.
John L. McIntosh was elected a Corporate Vice President on February 1, 1999.
Prior to that time, since 1997, he served as Vice President, Operations for
Olin's specialty chemicals operations. He also served as Vice President,
Manufacturing and Engineering for Chlor Alkali and was Director of
Manufacturing, Engineering and Purchasing for that division from 1991 through
1997.
Anthony W. Ruggiero joined Olin on August 30, 1995 and was elected a
Corporate Senior Vice President and Chief Financial Officer on September 29,
1995, and became Executive Vice President on January 1, 1999. From 1990 to
1995, he served as Senior Vice President and Chief Financial Officer of The
Reader's Digest Association, Inc. He joined Squibb Corporation in 1969 and
served as Senior Vice President and Chief Financial Officer and a director
from 1983 to 1990.
Joseph D. Rupp was elected a Corporate Vice President on January 1, 1996 and
also serves as President, Brass Division. Prior to that time, since 1985, he
served as Vice President, Manufacturing and Engineering for the Brass
Division.
11
<PAGE>
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
As of January 31, 1999, there were approximately 9,100 record holders of
Olin Common Stock.
Olin Common Stock is traded on the New York Stock Exchange, Chicago Stock
Exchange and Pacific Exchange.
Set forth in the Note "Other Financial Data" to the Notes to Consolidated
Financial Statements in Item 8 is information concerning the high and low
sales prices of Olin Common Stock and dividends paid on Olin Common Stock
during each quarterly period in 1998 and 1997.
Following the Spin-Off, the annual Olin dividend is expected to be $.80 per
share, and the annual Arch Chemicals dividend is expected to be $.40 per
equivalent Olin share ($.80 per Arch share). Initially, this would result in
the same annual total dividend of $1.20 per Olin share as before the Spin-Off,
although the Board of Directors of either Olin or Arch Chemicals, may change
the dividend rate for that company at any time in the future.
12
<PAGE>
Item 6. Selected Financial Data
Six-Year Financial Summary
<TABLE>
<CAPTION>
($ and shares in millions, 1998 1997 1996 1995 1994 1993
except per share data) ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Operations
Sales..................... $1,426 $1,499 $1,758 $1,827 $1,620 $1,446
Cost of Goods Sold........ 1,161 1,203 1,396 1,482 1,359 1,386
Selling and
Administration........... 123 132 155 153 139 135
Research and Development.. 10 8 20 17 18 21
Interest Expense.......... 17 24 27 33 27 29
Interest and Other Income
(Expense)................ 7 15 13 (5) -- --
Gain (Loss) on Sales and
Restructurings
of Businesses and Spin-
off Costs................ (63) -- 179 -- -- (26)
------ ------ ------ ------ ------ ------
Income (Loss) from
Continuing Operations
Before Taxes............. 59 147 352 137 77 (151)
Income Tax Provision
(Benefit)................ 21 50 125 47 26 (60)
------ ------ ------ ------ ------ ------
Income (Loss) from
Continuing Operations.... 38 97 227 90 51 (91)
Discontinued Operations... 40 56 53 50 40 (1)
------ ------ ------ ------ ------ ------
Net Income (Loss)......... 78 153 280 140 91 (92)
====== ====== ====== ====== ====== ======
Financial Position
Working Capital........... 225(/1/) 273(/1/) 385(/1/) 24 88 (15)
Property, Plant and
Equipment, Net........... 475 517 400 580 540 534
Total Assets.............. 1,577 1,707 2,118 1,963 1,749 1,685
Capitalization:
Short-Term Debt......... 1(/1/) 8(/1/) 137(/1/) 122 29 113
Long-Term Debt.......... 230(/1/) 262(/1/) 271(/1/) 406 418 449
Shareholders' Equity.... 790 879 946 841 749 596
------ ------ ------ ------ ------ ------
Total Capitalization...... 1,021 1,149 1,354 1,369 1,196 1,158
====== ====== ====== ====== ====== ======
Per Share Data
Net Income (Loss):
Basic:
Continuing Operations. 0.79 1.91 4.30 1.71 0.87 (2.82)
Discontinued
Operations........... 0.85 1.11 1.04 1.04 0.96 (0.03)
------ ------ ------ ------ ------ ------
Net Income (Loss)..... 1.64 3.02 5.34 2.75 1.83 (2.85)
====== ====== ====== ====== ====== ======
Diluted:
Continuing Operations. 0.79 1.90 4.26 1.70 0.87 (2.82)
Discontinued
Operations........... 0.84 1.10 1.01 0.97 0.96 (0.03)
------ ------ ------ ------ ------ ------
Net Income (Loss)..... 1.63 3.00 5.27 2.67 1.83 (2.85)
====== ====== ====== ====== ====== ======
Cash Dividends:
Common.................. 1.20 1.20 1.20 1.20 1.10 1.10
ESOP Preferred (annual
rate).................. -- -- 5.97 5.97 5.97 5.97
Series A Preferred
(annual rate).......... -- -- -- 3.64 3.64 3.64
Shareholders' Equity(/2/). 17.25 17.98 18.13 17.03 15.43 13.62
Market Price of Common
Stock:
High.................... 49 5/16 51 3/8 48 38 5/8 30 1/8 25 1/4
Low..................... 23 7/8 35 3/8 34 7/8 24 1/4 23 20
Year End................ 28 5/16 46 7/8 37 5/8 37 1/8 25 3/4 24 3/4
Other
Capital Expenditures...... 78 76 74 116 80 80
Depreciation.............. 76 76 84 77 78 74
Common Dividends Paid..... 58 61 60 57 44 42
Purchases of Common Stock. 112 163 -- -- -- --
Current Ratio............. 1.8 1.8 1.6 1.0 1.2 1.0
Total Debt to Total
Capitalization(/3/)...... 22.6% 23.5% 30.0% 37.9% 36.5% 46.8%
Effective Tax Rate........ 35.6% 34.0% 35.5% 34.3% 33.2% 40.0%
Average Common Shares
Outstanding.............. 47.9 50.5 50.0 47.6 41.0 38.2
Shareholders.............. 9,200 10,600 11,300 12,000 12,100 13,000
Employees(/4/)............ 6,400 6,600 6,200 7,200 7,500 7,100
</TABLE>
- --------
In December 1996, the company sold its isocyanates business for $565 in
cash. 1996 and prior include the operating results of the isocyanates
business. See Management's Discussion and Analysis of Financial Condition and
Results of Operations on page 14.
(1) Working Capital includes $50 ($157 in 1997, $518 in 1996) of Cash and Cash
Equivalents and $25 ($28 in 1997, $87 in 1996) of Short-Term Investments
in 1998.
(2) In 1994 and 1993, calculation is based on common shares and Series A
Conversion Preferred Stock outstanding.
(3) Excluding reduction to equity for the Employee Stock Ownership Plan from
1993 through 1996.
(4) Employee data exclude employees who work at government-owned/contractor-
operated facilities.
13
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Consolidated Results of Operations(/1/)
<TABLE>
<CAPTION>
1998(/2/) 1997 1996(/3/)
-------------- ---------- -----------
($ in millions, except per share data)
<S> <C> <C> <C>
Sales................................ $ 1,426 $ 1,499 $ 1,758
Gross Margin......................... 265 296 362
Selling and Administration........... 123 132 155
Interest Expense, net................ 14 14 25
Gain (Loss) on Sales and
Restructurings of Businesses and
Spin-Off Costs...................... (63) -- 179
Income from Continuing Operations.... 38 97 227
Net Income........................... 78 153 280
Per Common Share:
Basic
Income from Continuing
Operations...................... $ 0.79 $ 1.91 $ 4.30
Net Income....................... $ 1.64 $ 3.02 $ 5.34
Diluted
Income from Continuing
Operations...................... $ 0.79 $ 1.90 $ 4.26
Net Income....................... $ 1.63 $ 3.00 $ 5.27
</TABLE>
- --------
(1)Results of operations have been restated to reflect the Spin-Off of Arch
Chemicals.
(2) Includes the charge for the sale of the microelectronic packaging unit at
Manteca, CA and the restructuring of the rod, wire and tube businesses at
Indianapolis, IN ($42 pretax, $26 after tax and $0.55 diluted earnings per
share) and non-recurring costs associated with the Spin-Off of Arch
Chemicals ($21 pretax, $15 after tax and $0.32 diluted earnings per
share).
(3) Includes the operating results of the isocyanates business, which was sold
in December 1996. Sales, gross margin, selling and administration and net
income of the isocyanates business in 1996 was $296, $71, $16 and $33,
respectively.
1998 Compared to 1997
Sales decreased 5% due to a decrease in selling prices and lower metal
values. The decrease in selling prices was primarily related to lower
Electrochemical Unit ("ECU") prices in the Chlor Alkali Products segment.
Gross margin percentage was 19% in 1998 compared to 20% in 1997 due to the
decrease in Chlor Alkali margins as a result of lower ECU prices.
Selling and Administration as a percentage of sales in 1998 and 1997 was 9%.
Selling and Administration was $9 million lower than in 1997 due to lower
corporate administrative expenses, primarily pension costs and management
incentive compensation.
Interest expense, net of interest income, was equal to 1997. Lower interest
expense was due to the repayment of debt in 1997 and 1998 offset by less
interest income due to lower average cash, cash equivalent and short-term
investment balances.
The effective tax rate increased to 35.6% from 34.0% due to lower foreign
tax credits and higher non-deductible expenses related to the spin-off costs.
At December 31, 1998, the Company had net deferred tax liabilities of $25
million, primarily comprised of temporary differences between financial
statement and tax bases of assets and liabilities.
In the third quarter of 1998, the Company recorded a $42 million pretax
charge ($0.55 diluted EPS) related to the sale of the microelectronic
packaging unit at Manteca, CA for $4 million in cash, and the restructuring of
the rod, wire and tube businesses at Indianapolis, IN.
14
<PAGE>
On February 8, 1999, the Company completed the Spin-Off of its specialty
chemicals businesses as Arch Chemicals. Under the terms of the Spin-Off, the
Company distributed to its holders of common stock of record at the close of
business on February 1, 1999, one Arch Chemicals common share for every two
shares of Olin common stock. The results of operations have been restated to
reflect Arch Chemicals as discontinued operations for all periods presented.
In the fourth quarter of 1998, the Company recorded a $21 million pretax
charge ($0.32 diluted EPS) for non-recurring costs associated with the Spin-
Off (primarily severance, investment banking and legal fees).
1997 Compared to 1996
In December of 1996, the Company sold its isocyanates business to ARCO
Chemical Company ("ARCO") for $565 million in cash. In connection with this
transaction the Company recorded a pretax gain of $188 million. The following
comparison of operating results of 1997 to 1996 excludes the sales, gross
margin, selling and administration expenses, research and development expenses
and net income of the isocyanates businesses in 1996. On December 31, 1996,
the Company completed the spin-off of its Ordnance and Aerospace businesses as
Primex Technologies, Inc. ("Primex"). Under the terms of that spin-off, the
Company distributed to its holders of common stock of record at the close of
business on December 19, 1996, one Primex common share for every ten shares of
Olin common stock. The 1996 results of operations reflect Primex as
discontinued operations. In the fourth quarter of 1996, the Company recorded a
$9 million pretax charge for non-recurring costs associated with the Primex
spin-off (primarily pension curtailment, investment banking and legal fees).
Sales increased 3% due to higher volumes and the inclusion of the sales from
the Niachlor acquisition, offset in part by a drop in selling prices and metal
values.
Gross margin percentage was 20% in 1997 and 1996 as lower fixed costs per
unit associated with higher volumes offset the impact of lower selling prices.
Selling and administration expenses as a percentage of sales were 9% in 1997
and 1996. Selling and administrative expenses decreased because of lower
corporate administration expenses and lower incentive compensation costs.
Interest expense, net of interest income, decreased due to lower interest
expense due to the repayment of the $125 million subordinated notes in 1997,
and higher interest income due to higher average cash, cash equivalent and
short-term investment balances in 1997.
Other income decreased due to the gain on the sale of the Company's
corporate headquarters in 1996.
The effective tax rate decreased to 34.0% from 35.5%. Excluding the impact
of the gain on the sale of the isocyanates business, the effective tax rate in
1997 increased 2.3% due to lower foreign tax benefits as a result of the sale
of the isocyanates business.
In February of 1997, the Company completed the purchase of the remaining 50%
of Niachlor with a final payment of $2 million to E.I. du Pont de Nemours and
Company (DuPont). In December 1996, the Company made an advance payment of $75
million to DuPont.
In October 1997 the Company and Asahi Glass Company established separate
ownership of two former joint ventures the companies had previously formed in
polyols and microelectronic packaging systems. The Company became the sole
owner of Aegis, Inc., a manufacturer of metal hermetic packages that was
established in 1986. Conversely, Asahi Glass Company became the sole owner of
the former Asahi-Olin joint venture in polyols that was established in 1974.
These transactions did not have a material effect on the Company's results of
operations.
15
<PAGE>
Segment Operating Results
Segment operating income is defined as earnings before interest, other
income and income taxes and includes earnings of non-consolidated affiliates
which is included in other income in the Consolidated Statements of Income.
Segment operating income includes an allocation of corporate operating
expenses. Segment operating results in 1998 exclude the charge for the sale of
the microelectronic packaging unit at Manteca, CA and the restructuring of the
rod, wire and tube businesses at Indianapolis, IN ($42 million pretax) and
non-recurring costs associated with the Spin-Off of Arch Chemicals ($21
million pretax). Segment operating income in 1996 excludes the gain on the
sale of the isocyanates business ($188 million pretax) and non-recurring costs
associated with the Spin-Off of Primex ($9 million pretax).
Chlor Alkali Products
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
($ in millions)
<S> <C> <C> <C>
Sales...................................................... $366 $411 $397
Operating Income........................................... 55 99 86
</TABLE>
1998 Compared to 1997
Sales were lower than 1997 due to lower pricing and lower volumes. Including
the Company's share of the sales volumes from the Sunbelt joint venture, which
is accounted for on an equity basis, total volumes were higher than 1997.
Operating income decreased due to the lower pricing, lower operating rates,
and higher manufacturing costs. Average ECU prices in 1998 were in the $340
range compared to the $360 range in 1997. Operating rates in 1998 were in the
90% range compared with 100% range in 1997. Lower operating rates were a
result of lower demand for chlorine as a result of the Asian financial crisis,
unusually hot weather in the southeast which caused higher electricity costs,
and restricted salt availability. Manufacturing costs were higher as a result
of the lower operating rates, higher depreciation and higher power costs.
1997 Compared to 1996
Sales increased due to the inclusion of the sales from Niachlor and higher
volumes as a result of increased demand offset in part by lower caustic
pricing. Average ECU prices in 1997 were in the $360 range compared to the
$400 range in 1996. Operating income increased due to higher volumes, lower
manufacturing and administrative costs and the impact of the Niachlor
acquisition. Operating rates were in the 100% range in 1997 and 1996.
Metals
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
($ in millions)
<S> <C> <C> <C>
Sales...................................................... $799 $836 $809
Operating Income........................................... 64 62 60
</TABLE>
1998 Compared to 1997
Sales were down 4% due to lower metal values offset in part by higher
volumes. Strip volumes were up as a result of strong housing, automotive, and
coinage markets. Operating income was higher due to lower administrative
expenses, higher strip volumes and improved earnings at A.J. Oster Company
("Oster"). At Indianapolis, profits were lower due to higher costs in the rod,
wire and tube businesses.
16
<PAGE>
1997 Compared to 1996
Sales were 3% higher than 1996 due to higher volumes offset in part by lower
metal values. Increased demand for strip products, particularly from the
automotive and electronics markets, along with record specialty product
shipments led to higher volumes. Operating income improved as a result of the
higher volumes and improved earnings at Oster, which was partially offset by
higher manufacturing costs at Indianapolis, IN.
Winchester
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
($ in millions)
<S> <C> <C> <C>
Sales.................................................. $261 $252 $256
Operating Income (Loss)................................ 13 (4) (2)
</TABLE>
1998 Compared to 1997
Sales in 1998 were 4% higher than 1997 due to higher volumes offset slightly
by lower prices in the centerfire rifle category. Domestic commercial volume
growth was driven by improved market share in a modestly growing overall
market. Domestic and international military sales were lower as were sales in
Australia which has been negatively impacted by the implementation of
restrictive government legislation on the sales of firearms and ammunition.
Operating income improved significantly from 1997 due to the impact of the
higher commercial volumes, lower manufacturing costs, lower commodity costs
and lower selling and administrative expenses. In Australia, profits were
lower due to the impact of the lower volumes as a result of the restrictive
legislation.
1997 Compared to 1996
Sales were lower and the operating loss increased. Reduced military
ammunition shipments due to the absence of a U.S. government contract along
with lower commercial ammunition sales to distributors were the main
contributors to the sales decrease. The profit impact from the lower volumes
and increased advertising and selling expenses more than offset higher Lake
City Army Ammunition facility management fees.
1999 Outlook
Consolidated
The Company's 1999 operating results are expected to be significantly lower
than 1998. 1999 diluted earnings per share are expected to be in the $0.50
range, assuming Chlor Alkali's ECU pricing average for the year remains at
approximately current levels.
Chlor Alkali Products
Sales and operating income are expected to decrease due to significantly
lower ECU pricing. Capacity additions in the industry combined with lower
demand will keep ECU pricing at depressed levels. Operating rates are expected
to be in the 90% range, which is consistent with the rest of the industry.
Operating results from the Sunbelt joint venture will be lower due to the
lower ECU pricing.
Metals
Sales are expected to increase slightly due to higher strip volumes and
higher metal values which will more than offset the loss of revenue associated
with the rod, wire and tube businesses which were shut down at the end of
1998. Over capacity in the industry and strong competition will keep pricing
relatively flat. Operating income is expected to improve due to the cost
benefits of the shutdown of the rod, wire and tube businesses, higher volumes
and other cost reduction initiatives.
17
<PAGE>
Winchester
Sales are expected to be higher due to an increase in domestic commercial
channels. Operating income is expected to be higher because of the higher
sales.
Cautionary Statement under Federal Securities Laws: The information
contained in the 1999 Outlook section (and subsections thereof), the
Environmental Matters section, the Liquidity, Investment Activity and Other
Financial Data section, and the Environmental and Commitments and
Contingencies notes to the Consolidated Financial Statements contains forward-
looking statements that are based on management's beliefs, certain assumptions
made by management and current expectations, estimates and projections about
the markets and economy in which the Company and its various divisions
operate. Words such as "expects," "believes," "should," "plans," "will,"
"estimates," and variations of such words and similar expressions are intended
to identify such forward-looking statements. These statements are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions ("Future Factors") which are difficult to predict. Therefore,
actual outcomes and results may differ materially from what is expected or
forecasted in such forward-looking statements. The Company undertakes no
obligation to update publicly any forward-looking statements, whether as a
result of future events, new information or otherwise. Future Factors which
could cause actual results to differ materially from those discussed in these
sections and notes include but are not limited to: general economic and
business and market conditions; lack of moderate growth in the U.S. economy or
even a slight recession in 1999; worsening business conditions as a result of
the Asian and Latin American financial turmoil; competitive pricing pressures;
declines in Chlor Alkali's ECU prices below those projected; Chlor Alkali
operating rates below the 90% range; higher-than-expected raw material costs;
a downturn in many of the markets the Company serves such as the electronics,
automotive, ammunition and housing; the supply/demand balance for the
Company's products, including the impact of excess industry capacity; failure
to achieve targeted cost reduction programs; capital expenditures, such as
cost overruns, in excess of those scheduled; environmental costs in excess of
those projected; and the occurrence of unexpected manufacturing
interruptions/outages.
Discontinued Operations
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ------
($ in millions)
<S> <C> <C> <C>
Sales.................................................... $863 $930 $1,385
Net Income............................................... 40 56 53
</TABLE>
1998 Compared to 1997
Sales decreased 7% due to a decrease in prices and lower volumes due to the
sale of the surfactants business in 1997 and the conversion of the flexible
polyol business to a tolling operation. Net income decreased due to the lower
volumes and higher selling and administrative expenses. Selling and
administrative expenses were higher due to an increase in information
technology spending related to the SAP implementation and increased
international operating expenses.
1997 Compared to 1996
Operating results in 1996 include Primex which was spun-off in December
1996. Primex sales were $471 million with a net loss of $8 million in 1996.
Excluding Primex, the sales of the discontinued operations increased 2% while
net income decreased 8%. The sales increase was attributable to a 1% increase
in both prices and volumes. Net income decreased due to lower gross margins as
a result of higher raw material and manufacturing costs offset in part by
lower selling and administrative expenses.
18
<PAGE>
Environmental Matters
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
($ in millions)
<S> <C> <C> <C>
Cash Outlays:
Remedial and Investigatory Spending.................. $20 $31 $30
Capital Spending..................................... 2 2 3
Plant Operations..................................... 17 15 16
--- --- ---
Total Cash Outlays..................................... $39 $48 $49
=== === ===
</TABLE>
The establishment and implementation of federal, state and local standards
to regulate air, water and land quality has affected and will continue to
affect substantially all of the Company's manufacturing locations. Federal
legislation providing for regulation of the manufacture, transportation, use
and disposal of hazardous and toxic substances has imposed additional
regulatory requirements on industry, particularly the chemicals industry. In
addition, implementation of environmental laws, such as the Resource
Conservation and Recovery Act and the Clean Air Act, has required and will
continue to require new capital expenditures and will increase operating
costs. The Company employs waste minimization and pollution prevention
programs at its manufacturing sites.
The Company is party to various governmental and private environmental
actions associated with waste disposal sites and manufacturing facilities.
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. Charges to income for
investigatory and remedial efforts were material to operating results in 1998,
1997, and 1996 and may be material to net income in future years. Such charges
to income were $16 million, $17 million and $70 million in 1998, 1997, and
1996 respectively. In 1996, in connection with the sale of the isocyanates
business at the Company's Lake Charles, LA facility, a $53 million provision
was recorded to provide for contractual liabilities related to future
environmental spending at the Lake Charles site.
Cash outlays for remedial and investigatory activities associated with
former waste sites and past operations were not charged to income but instead
were charged to reserves established for such costs identified and expensed to
income in prior years. Cash outlays for normal plant operations for the
disposal of waste and the operation and maintenance of pollution control
equipment and facilities to ensure compliance with mandated and voluntarily
imposed environmental quality standards were charged to income. Historically,
the Company has funded its environmental capital expenditures through cash
flow from operations and expects to do so in the future.
The Company's estimated environmental liability at the end of 1998 was
attributable to 51 sites, 16 of which were on the National Priority List
(NPL). Ten sites accounted for approximately 79% of such liability and, of the
remaining sites, no one site accounted for more than 2% of such liability. Two
of these ten sites were in the investigatory stage of the remediation process.
In this stage, remedial investigation and feasibility studies are conducted by
either the Company, the United States Environmental Protection Agency (EPA) or
other potentially responsible parties (PRPs) and a Record of Decision (ROD) or
its equivalent has not been issued. At six of the ten sites, a ROD or its
equivalent has been issued by either the EPA or responsible state agency and
the Company either alone, or as a member of a PRP group, was engaged in
performing the remedial measures required by that ROD. At the remaining two of
the ten sites, part of the site is subject to a ROD and another part is still
in the investigative stage of remediation. All ten sites were either former
manufacturing facilities or waste sites containing contamination generated by
those facilities.
The Company's consolidated balance sheets included liabilities for future
environmental expenditures to investigate and remediate known sites amounting
to $129 million at December 31, 1998 and $133 million at December 31, 1997, of
which $99 million and $103 million were classified as
19
<PAGE>
other noncurrent liabilities, respectively. Those amounts did not take into
account any discounting of future expenditures or any consideration of
insurance recoveries or advances in technology. Those liabilities are
reassessed periodically to determine if environmental circumstances have
changed and/or remediation efforts and their costs can be better estimated. As
a result of these reassessments, future charges to income may be made for
additional liabilities.
Total environmental-related cash outlays for 1999 are estimated to be $54
million, of which $30 million is expected to be spent on investigatory and
remedial efforts, $7 million on capital projects and $17 million on normal
plant operations.
Annual environmental-related cash outlays for site investigation and
remediation, capital projects, and normal plant operations are expected to
range between $50-$60 million over the next several years. While the Company
does not anticipate a material increase in the projected annual level of its
environmental-related costs, there is always the possibility that such
increases 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, the scarcity of
reliable data pertaining to identified sites, the difficulty in assessing the
involvement and financial capability of other potentially responsible parties
and the Company's 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 against the Company. At December
31, 1998, the Company had estimated additional contingent environmental
liabilities of $40 million.
Liquidity, Investment Activity and Other Financial Data
Cash Flow Data
<TABLE>
<CAPTION>
Provided By (Used For) 1998 1997 1996
---------------------- ----- ----- ----
($ in millions)
<S> <C> <C> <C>
Net Cash and Cash Equivalents
Provided by (Used for) Operating
Activities from Continuing Operations............... $ 178 $ (33) $178
Net Operating Activities............................... 180 (12) 223
Capital Expenditures................................... (78) (76) (74)
Net Investing Activities............................... (78) (4) 324
Purchases of Olin Common Stock......................... (112) (163) --
Net Financing Activities............................... (209) (345) (31)
</TABLE>
Cash flows from operations and cash and cash equivalents on hand were used
to finance the Company's working capital requirements, long-term debt
payments, capital and investment projects, dividends and the purchase of the
Company's common stock.
Operating Activities
In 1998, the increase in cash flow from operating activities of continuing
operations was primarily attributable to lower investment in working capital
and lower tax payments. In 1997, the Company paid approximately $110 million
of taxes related to the sale of the isocyanates business. In 1998 the Company
received approximately $80 million as a result of a refund of taxes paid on
capital gains in prior years.
In 1997, the decrease in cash flow from operating activities of continuing
operations was due to lower earnings (due to the sale of the isocyanates
business in 1996), taxes paid on the sale of the
20
<PAGE>
isocyanates business and increased investment in working capital. The
discontinuation of an ammunition prepayment program in 1997 and unusually low
accounts receivable levels in the metals segment at year-end 1996 contributed
to the investment in working capital in 1997.
Capital Expenditures
Capital spending of $78 million in 1998 was $2 million higher than 1997 and
approximated depreciation in both years. Excluding the capital spending ($10
million) and depreciation ($22 million) associated with the isocyanates
business in 1996, capital spending in 1996 was slightly higher than
depreciation because of capital spending in support of the Brass Mill 2000
project.
Investing Activities
In 1998, the Company sold its microelectronic packaging unit at Manteca, CA,
for $4 million in cash.
In February 1997, the Company completed its purchase of the remaining 50% of
Niachlor with a final payment of $2 million to E.I. du Pont de Nemours and
Company (DuPont). In December 1996, the Company made an advance payment of $75
million to DuPont, which was included in Investment and Advances-Affiliated
Companies at Equity in the December 31, 1996 Balance Sheet. This acquisition
was accounted for as a purchase in 1997 and consists primarily of property,
plant and equipment.
In October 1997 the Company and Asahi Glass Company established separate
ownership of two former joint ventures the companies had previously formed in
polyols and microelectronic packaging systems. The Company became the sole
owner of Aegis, Inc., a manufacturer of metal hermetic packages that was
established in 1986. Conversely, Asahi Glass Company became the sole owner of
the Asahi-Olin joint venture in polyols that was established in 1974. The net
proceeds of this transaction were $5 million and did not have a material
effect on the Company's results of operations.
Investment spending in 1997 was primarily attributable to the Sunbelt
project, a joint venture formed by the Geon Company and the Company in 1996 to
construct and operate a Chlor Alkali facility at the Company's McIntosh, AL
site. The facility started operations in December 1997. Also in December, the
Company was repaid $98 million of its original advances to the venture, as a
result of a long-term financing undertaken by this venture. The Company has
guaranteed its share of the venture's long-term debt. In 1996, the Company
invested approximately $27 million in this venture.
In December 1996, the Company sold its isocyanates business for $565 million
in cash. The sale included all assets at the Company's Lake Charles, LA
facility used in the manufacture and sale of toluene diisocyanate, aliphatic
isocyanates and nitric acid. Proceeds of $23 million in 1996 from the
disposition of property, plant and equipment related primarily to the sale of
the corporate headquarters.
Financing Activities
At December 31, 1998, the Company maintained committed credit facilities
with banks of $254 million, all of which were available. Included in the $254
million committed credit facility is an unsecured revolving credit agreement
with a group of banks which provided a maximum borrowing of $250 million.
During 1997, the Company amended the revolving credit agreement, extending the
expiration date to October 2002. As a result of the Spin-Off of Arch
Chemicals, in February of 1999, the Company amended the revolving credit
agreement reducing the aggregate commitments from $250 million to $165
million. The Company may select various floating rate borrowing options. The
Company believes that the credit facility is adequate to satisfy its liquidity
needs for the near future.
21
<PAGE>
The credit facility includes various customary restrictive covenants including
restrictions related to the ratio of debt to earnings before interest, taxes,
depreciation and amortization and the ratio of earnings before interest,
taxes, depreciation and amortization to interest.
In May 1998, the Company repaid $38 million of 7.97% notes. In June 1997,
the Company repaid $125 million of 9.5% subordinated notes.
During 1998 and 1997, the Company used $112 million and $163 million to
repurchase 3.1 and 3.8 million shares of the Company's stock, respectively.
The Board of Directors has approved two share repurchase programs to
repurchase 10 million shares of the Company's stock. It is expected that this
program will be completed during 1999.
Prior to the Spin-Off of Arch Chemicals in February, 1999, the Company
borrowed $75 million under a credit facility which liability was assumed by
Arch Chemicals. The Company intends to use these funds for general corporate
purposes, which may include share repurchases and future acquisitions. Prior
to being spun-off from the Company, Primex assumed a $160 million credit
facility established by the Company, under which the Company had borrowed $125
million. The Company used these funds to reduce its own borrowings in 1997.
The percent of total debt to total capitalization (excluding the reduction
in equity for the Contributing Employee Ownership Plan (ESOP)) decreased to
23% at December 31, 1998, from 24% at year-end 1997 and 30% at year-end 1996.
Contributing to the decrease in 1997 was the repayment of the 9.5%
subordinated notes.
In 1989 the Company established an ESOP. The ESOP trust borrowed $100
million ($40 million from the Company) to purchase 1.3 million shares of the
Company's convertible preferred stock. The ESOP trust has repaid in full its
original loan from the Company. This loan to the ESOP was financed by the
Company through a long-term credit facility and was repaid in July 1996. In
December 1996, the Board of Directors approved the redemption of all
outstanding ESOP preferred stock with common stock of equivalent value.
Approximately 1.87 million shares of common stock at a per share value of
$40.19 were issued in exchange for approximately .9 million shares of ESOP
preferred stock at a per share value of $85.75. The annual fixed dividend rate
was $5.97 per share and during 1996, dividends were paid in the first three
quarters.
Dividends per common share were $1.20 in 1998, 1997 and 1996. Total
dividends paid on common stock amounted to $58 million in 1998, $61 million in
1997 and $60 million in 1996, while ESOP preferred dividends amounted to $4
million in 1996. The Company will pay a first quarter 1999 dividend of $0.30
per share on March 10, 1999 to shareholders of record on January 19, 1999.
Following the Spin-Off of Arch Chemicals, the annual Olin dividend is expected
to be $0.80 per share to reflect the effect of the Spin-Off. The annual Arch
Chemicals dividend is expected to be $0.40 per equivalent Olin common share
($0.80 per Arch Chemicals common share). Initially, this would result in the
same annual total dividend of $1.20 per Olin share, although the Board of
Directors of either Olin or Arch Chemicals could change the dividend rate for
that company at any time in the future.
During 1992, the Company swapped interest payments on $50 million principal
amount of its 8% notes due 2002, to a floating rate (5.15602% at December 31,
1998). In June 1995, the Company offset this transaction by swapping interest
payments to a fixed rate of 6.485%.
New Accounting Standards
In 1998 the Company adopted SFAS No 130, "Reporting Comprehensive Income,"
which establishes standards for the reporting and display of comprehensive
income and its components in the financial statements.
22
<PAGE>
In 1998 the Company adopted SFAS No 131, "Disclosure about Segments of an
Enterprise and Related Information," which establishes standards for the way
that segment information is to be disclosed in financial statements along with
additional information on products and services, geographic areas and major
customers.
In 1998, the Company adopted SFAS No. 132, "Employers' Disclosures about
Pensions and Other Postretirement Benefits, an amendment to FASB Statements
No. 87, 88, and 106," which modifies the disclosure requirements related to
pensions and other postretirement benefits.
In 1998, the Financial Accounting Standards Board issued Statement No. 133
("Statement 133") "Accounting for Derivative Instruments and Hedging
Activities." It requires an entity to recognize all derivatives as either
assets or liabilities in the statement of financial position and measure those
instruments at fair value. This statement is effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. The Company is currently
evaluating the effect this statement will have on its financial position and
results of operations in the period of adoption. After determining the effect
of Statement 133, the Company may consider early adoption of this
pronouncement.
In 1998, the American Institute of Certified Public Accountants ("AICPA")
issued Statement of Position 98-1 ("SOP 98-1"), "Accounting for the Costs of
Computer Software Developed or Obtained for Internal Use." SOP 98-1 is
effective for fiscal years beginning after December 15, 1998. The Company is
currently evaluating the effect this Statement of Position will have on its
financial position and results of operations in the period of adoption, but
does not believe it will have a material effect.
Also in 1998, the AICPA issued Statement of Position 98-5 ("SOP 98-5"),
"Reporting on the Costs of Start-up Activities." This Statement of Position
requires the expensing of certain costs such as pre-operating expenses and
organizational costs associated with the Company's start-up activities, and is
effective for fiscal years beginning after December 15, 1998. The effect of
adoption is required to be accounted for as a cumulative effect of change in
accounting principle. The Company is still evaluating the effect of this
statement on results of operations and financial position. The Company does
not expect however that the amount recognized as a cumulative effect of change
in accounting principle, if any, would be material.
Euro Conversion
On January 1, 1999, eleven of the fifteen member countries of the European
Union adopted the Euro as their common legal currency and established fixed
conversion rates between their existing sovereign currencies and the Euro. The
Company does not expect the conversion to the Euro to have a material impact
on its business, operations, or financial position.
Derivative Financial Instruments
The Company enters into forward sales and purchase contracts and currency
options to manage currency risk resulting from purchase and sale commitments
denominated in foreign currencies (principally Australian dollar and Canadian
dollar) and relating to particular anticipated but not yet committed purchases
and sales expected to be denominated in those currencies. All of the currency
derivatives expire within one year and are for United States dollar
equivalents. At December 31, 1998, the Company had forward contracts to sell
foreign currencies with face values of $4 million (1997-$1 million) and
forward contracts to buy foreign currencies with face values of $1 million in
1997. The fair market value of the forward contracts to sell at December 31,
1998 and 1997 and the forward contracts to buy at December 31, 1997
approximated the carrying value. The Company had no outstanding option
contracts at December 31, 1998 and 1997.
In accordance with Statement of Financial Accounting Standards No. 52,
("SFAS 52"), "Foreign Currency Translation," a transaction is classified as a
hedge when the foreign currency is designated
23
<PAGE>
as, and is effective as, a hedge of a foreign currency commitment and the
foreign currency commitment is firm. A hedge is considered by the Company to
be effective when the transaction reduces the currency risk on its foreign
currency commitments. If a transaction does not meet the criteria to qualify
as a hedge, it is considered to be speculative. For a foreign currency
commitment that is classified as a hedge, any gain or loss on the commitment
is deferred and included in the basis of the underlying instrument. Any
realized and unrealized gains or losses associated with foreign currency
commitments that are classified as speculative are recognized in the current
period and are included in Selling and Administration in the consolidated
statements of income. If a foreign currency transaction previously considered
as a hedge is terminated before the transaction date of the related
commitment, any deferred gain or loss shall continue to be deferred and
included in the basis of the underlying investment. Premiums paid for currency
options and gains or losses on forward sales and purchase contracts are not
material to operating results.
Depending on market conditions, the Company may enter into futures contracts
and put and call option contracts in order to reduce the impact of metal price
fluctuations, principally in copper, lead and zinc. In accordance with SFAS
No. 80, "Accounting for Futures Contracts," futures contracts are classified
as a hedge when the item to be hedged exposes the Company to price risk and
the futures contract reduces that risk exposure. Futures contracts that relate
to transactions that are expected to occur are accounted for as a hedge when
the significant characteristics and expected terms of the anticipated
transaction are identified and it is probable that the anticipated transaction
will occur. If a transaction does not meet the criteria to qualify as a hedge,
it is considered to be speculative. Any gains or losses associated with
futures contracts which are classified as speculative are recognized in the
current period. If a futures contract that has been accounted for as a hedge
is closed or matures before the date of the anticipated transaction, the
accumulated change in value of the contract is carried forward and included in
the measurement of the related transaction. Option contracts are accounted for
in the same manner that futures contracts are accounted for.
Year 2000 Computer Systems
The Company views the impact of the Year 2000 as a critical business issue.
It manages the process by having each business segment identify its own Year
2000 issues and develop appropriate corrective action steps, while instituting
a series of management processes that coordinate and manage the process across
business segment boundaries and the corporate center. The process includes
corporate oversight and provides for consistent attention to progress made
against planned activities and a forum for issue resolution at the business
segment and corporate levels with periodic assessments made by independent
parties which are reported to the Board. As a result of the Spin-Off of Arch
Chemicals, the Company entered into an information technology services
agreement with Arch Chemicals stipulating that Arch Chemicals will provide
various technology related services including maintenance of the centralized
computer center and the wide area network as well as provide services in
support of the Company's Year 2000 initiative.
The Company recognizes that the Year 2000 issue is not limited to computer
programs normally associated with the processing of business information, but
can also be found in certain equipment and processes used in manufacturing and
operation of facilities. It also recognizes that the potential exists for Year
2000 issues within the supply chain. The Company's approach was to subdivide
the program into four distinct areas: 1) Business Systems; 2) Manufacturing;
3) Supply Chain; and 4) Infrastructure.
In the business systems area, the Company has positioned itself very
favorably with respect to software and equipment that is Year 2000 compliant.
In 1994, the Company began implementing a Year 2000 compliant client-server
system, Peoplesoft, to address payroll and human resource needs and it
presently uses such system in all businesses. In 1993, the Company began
implementing for all domestic businesses, except the Metals segment, a client-
server system, SAP, for core business requirements as a vehicle to obtain
certain improvements in the business processes. With the
24
<PAGE>
exception of the Metals segment, SAP is currently utilized in a majority of
its domestic businesses. Since SAP was also a certified Year 2000 compliant
solution, migration plans were adjusted to take advantage of the business
benefit while eliminating the cost of remediating old legacy system code.
Deployment has been aggressive with all domestic functions and locations
(except Metals) transferred to SAP. In the few instances where SAP is not
utilized, replacement systems are scheduled for June 1999. Offshore processing
systems will continue using existing systems. All systems have been examined
with Year 2000 upgrades targeted for completion by the second quarter of 1999.
The Metals segment is addressing the Year 2000 issue by converting existing
programs to be compliant. It has completed code converting its entire software
portfolio, and is currently heavily engaged in the testing phase of its plan.
Completion of all systems is targeted for June 1999.
In the manufacturing area, plant level employees and independent assessments
were used to identify places where embedded systems exist and categorize them
by the potential impact to the business. Sixteen items, which have the
potential for causing process shutdowns or unsafe conditions, remain to be
remediated or replaced. The plan, which takes maximum advantage of "planned
outages" in order to minimize the impact on operations, targets completion by
May 1999.
The supply chain area has seen much activity in terms of assessing vendor
Year 2000 preparedness, identifying alternate sources, as well as insertion of
certain Year 2000 compliance language in all purchase orders issued. The
Company has completed a review of single source and critical suppliers. During
1999, the Company will continue to re-evaluate its suppliers on a periodic
basis.
Personal computers, networks, and PBX's represent the majority of items in
the Company's infrastructure area. The Company has deployed new Pentium Year
2000 compliant equipment in large numbers to support its SAP deployment
program and for internal standards compliance. In addition, the Company is
currently utilizing software tools to test the entire PC inventory for Year
2000 compliance and this is expected to be completed by the first quarter of
1999. The Company's wide area network is already Year 2000 compliant as is
most of its PBX and voice mail systems. The non-compliant equipment is planned
to be replaced with compliant versions as leases expire, but no later than
June 1999.
The Company believes its Year 2000 initiative is on track to address all
significant Year 2000 issues by the middle of 1999, and is supported by the
findings of an independent assessment completed in December 1998. Plans
include additional assessments throughout 1999.
Plans for a worst case scenario in the unlikely event of a major failure due
to a Year 2000 problem which causes significant disruptions to business
operations have been formulated. In the area of business systems, management
believes that the Company, with most of its operating units already migrated
to Year 2000 compliant solutions, has already significantly reduced its
potential risk. As added protection, software migration plans to new releases
of SAP and Peoplesoft, which are planned in 1999, include Year 2000 testing
scenarios. The Company will continue to monitor progress in the system testing
of the converted legacy systems and will redirect existing resources and / or
utilize outside assistance in the event of slippage against plans.
The Company continues to focus attention on the manufacturing area. It has
deployed several independent initiatives to identify embedded systems, develop
comprehensive equipment lists, and obtain vendor certifications of Year 2000
compliance. It has developed plans for further testing with respect to key
manufacturing equipment and systems, during periods of scheduled outages.
The Company will continue to monitor progress against plans in the business
systems, manufacturing, infrastructure, and supply chain areas, and take
corrective action should slippage
25
<PAGE>
occur. The use of vendor-supplied Year 2000 compliant solutions, coupled with
substantive pre-testing of key systems and a strong management commitment and
oversight are the cornerstone of the Company's Year 2000 program.
Nonetheless, in the unlikely occurrence of some unforeseen event, emergency
teams skilled in each of the disciplines will be formed during the last half
of 1999. They will be deployed to assist local personnel in the event of a
Year 2000 issue at the turn of the millennium.
The Company does not expect Year 2000 initiative costs to exceed $5 million
inclusive of the cost for deploying SAP and Peoplesoft and related
infrastructure over the next 12 months.
The dates on which the Company believes the Year 2000 Project will be
completed and the SAP computer systems will be implemented are based on
management's best estimates, which are derived utilizing numerous assumptions
of future events, including the continued availability of certain resources,
third-party modification plans and other factors. However, there can be no
guarantee that these estimates will be achieved, or that there will not be a
delay in, or increased costs associated with, the implementation of the Year
2000 Project. Specific factors that might cause differences between the
estimates and actual results include, but are not limited to, the availability
and cost of personnel trained in these areas, the ability to locate and
correct all relevant computer codes, timely responses to and corrections by
third-parties and suppliers, the ability to implement interfaces between the
new systems and the systems not being replaced, and similar uncertainties. Due
to the general uncertainty inherent in the Year 2000 problem, resulting in
part from the uncertainty of the Year 2000 readiness of third parties and the
interconnection of global businesses, the Company cannot ensure its ability to
timely and cost-effectively resolve the problems associated with the Year 2000
issue that may affect its operations and business, or expose it to third-party
liability.
Risk Management
The Company periodically evaluates risk retention and insurance levels for
product liability, property damage and other potential areas of risk. Based on
the cost and availability of insurance and the likelihood of a loss occurring,
management decides the amount of insurance coverage to purchase from
unaffiliated companies and the appropriate amount of risk to retain. The
current levels of risk retention are believed to be appropriate and are
consistent with those of other companies in the various industries in which
the Company operates.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to market risk in the normal course of its business
operations due to its operations in different foreign currencies, its
purchases of certain commodities, and its ongoing investing and financing
activities. The risk of loss can be assessed from the perspective of adverse
changes in fair values, cash flows and future earnings. The Company has
established policies and procedures governing its management of market risks
and the use of financial instruments to manage exposure to such risks.
The primary purpose of the Company's foreign currency hedging activities is
to manage currency risk resulting from purchase and sale commitments
denominated in foreign currencies (principally Australian dollar and Canadian
dollar) and relating to particular anticipated purchases and sales expected to
be denominated in those same foreign currencies. Foreign currency hedging
activity is not material to the Company's consolidated financial position,
results of operations, or cash flow.
Certain raw materials, namely copper, lead, and zinc used primarily in the
Company's Metals and Winchester segments products are subject to price
volatility. Depending on market conditions, the Company may enter into futures
contracts and put and call option contracts in order to reduce the
26
<PAGE>
impact of metal price fluctuations. As of December 31, 1998, the Company
maintained open positions on futures contracts totalling $44 million. Assuming
a hypothetical 10% increase in commodity prices which are currently hedged,
the Company would experience a $4.4 million increase in its cost of inventory
purchased, which would be offset by a corresponding increase in the value of
related hedging instruments.
The Company is exposed to changes in interest rates primarily as a result of
its investing and financing activities. Investing activity is not material to
the Company's consolidated financial position, results of operations, or cash
flow. The financing activities of the Company are comprised primarily of long-
term fixed rate debt utilized to fund business operations and maintain
liquidity. As of December 31, 1998, the Company had long-term borrowings of
$230 million outstanding at varying fixed rates. Assuming a decrease of 100
basis points in the interest rate for borrowings of a similar nature which the
Company becomes unable to capitalize on in the short-term as a result of the
structure of its fixed rate financings, future cash flows would be affected by
approximately $2.3 million. The Company has interest rate swaps to hedge
underlying debt obligations. Interest rate swap activity is not material to
the Company's consolidated financial position, results of operations, or cash
flow.
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 the Company's cash flow may be materially different than
that disclosed above.
The Company does not enter into any derivative financial instruments for
trading purposes.
27
<PAGE>
Item 8. Consolidated Financial Statements and Supplementary Data
Management Report on Financial Statements
Management is responsible for the preparation and integrity of the
accompanying consolidated financial statements. These financial statements
have been prepared in conformity with generally accepted accounting principles
and, where necessary, involve amounts based on management's best judgments and
estimates. Management also prepared the other information in this annual
report and is responsible for its accuracy and consistency with the financial
statements.
The Company's system of internal controls is designated to provide
reasonable assurance as to the integrity and reliability of the financial
statements, the protection of assets from unauthorized use or disposition, and
the prevention and detection of fraudulent financial reporting. This system,
which is reviewed regularly, consists of written policies and procedures, an
organizational structure providing delegation of authority and segregation of
responsibility and is monitored by an internal audit department. The Company's
independent auditors also review and test the internal control system along
with tests of accounting procedures and records to the extent that they
consider necessary in order to issue their opinion on the financial
statements. Management believes that the system of internal accounting
controls meets the objectives noted above.
Management also recognizes its responsibility for fostering a strong ethical
climate so that the Company's affairs are conducted according to the highest
standards of personal and corporate conduct. This responsibility is
communicated to all employees in a variety of ways, including personal
training sessions.
The Ethics Program is based upon a document called "The Standards of Ethical
Business Practices." The standards address, among other things, the necessity
of ensuring open communication within the Company; potential conflicts of
interest; compliance with all domestic and foreign laws, including those
relating to financial disclosure; and the confidentiality of proprietary
information. The Company maintains a systematic program to assess compliance
with these standards and has established confidential ways, including a
confidential telephone help-line (1-800-362-8348), for employees and suppliers
to ask questions and share concerns.
The Audit Committee of the Board of Directors, composed solely of outside
directors, meets periodically with the independent auditors, management and
the Company's internal auditors to review the work of each and to evaluate
accounting, auditing, internal controls and financial reporting matters. The
Audit Committee annually recommends to the Board of Directors the appointment
of independent auditors, subject to shareholder approval. The independent
auditors and the Company's internal audit department have independent and free
access to the Audit Committee.
/s/ Donald W. Griffin /s/ Anthony W. Rugglero
Donald W. Griffin Anthony W. Ruggiero
Chairman, Executive Vice President and
President and Chief Financial Officer
Chief Executive Officer
28
<PAGE>
Independent Auditors' Report
To the Board of Directors and Shareholders of Olin Corporation
We have audited the accompanying consolidated balance sheets of Olin
Corporation and subsidiaries as of December 31, 1998 and 1997 and the related
consolidated statements of income, shareholders' equity and cash flows for
each of the years in the three-year period ended December 31, 1998. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on
a test basis, evidence supporting the amounts and disclosures in the
consolidated financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as
well as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements, referred to above,
present fairly, in all material respects, the financial position of Olin
Corporation and subsidiaries as of December 31, 1998 and 1997, and the results
of their operations and their cash flows for each of the years in the three-
year period ended December 31, 1998 in conformity with generally accepted
accounting principles.
/s/ KPMG LLP
Stamford, Connecticut
January 26, 1999
29
<PAGE>
Consolidated Balance Sheets
December 31
($ in millions except share data)
<TABLE>
<CAPTION>
1998 1997
------ ------
<S> <C> <C>
Assets
Current Assets:
Cash and Cash Equivalents.................................... $ 50 $ 157
Short-Term Investments....................................... 25 28
Receivables, Net:
Trade...................................................... 162 166
Other...................................................... 30 23
Inventories, Net of LIFO Reserve of $63 ($86 in 1997)........ 199 208
Income Taxes Receivable...................................... 33 --
Other Current Assets......................................... 18 20
------ ------
Total Current Assets....................................... 517 602
Investments and Advances--Affiliated Companies at Equity....... 12 10
Property, Plant and Equipment, Net............................. 475 517
Other Assets................................................... 68 122
Net Assets of Discontinued Operations.......................... 505 456
------ ------
Total Assets................................................... $1,577 $1,707
====== ======
Liabilities and Shareholders' Equity
Current Liabilities:
Current Installments of Long-Term Debt....................... $ 1 $ 8
Accounts Payable............................................. 118 137
Income Taxes Payable......................................... 5 5
Accrued Liabilities.......................................... 168 179
------ ------
Total Current Liabilities.................................. 292 329
Long-Term Debt................................................. 230 262
Other Liabilities.............................................. 265 237
------ ------
Total Liabilities.......................................... 787 828
------ ------
Commitments and Contingencies
Shareholders' Equity:
Common Stock, Par Value $1 Per Share:
Authorized, 120,000,000 Shares
Issued and Outstanding 45,922,864 Shares (48,840,234 in
1997)..................................................... 46 49
Additional Paid-In Capital................................... 243 348
Accumulated Other Comprehensive Loss......................... (25) (24)
Retained Earnings............................................ 526 506
------ ------
Total Shareholders' Equity................................. 790 879
------ ------
Total Liabilities and Shareholders' Equity..................... $1,577 $1,707
====== ======
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
financial statements.
30
<PAGE>
Consolidated Statements of Income
Years ended December 31
($ in millions, except per share data)
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Sales..................................................... $1,426 $1,499 $1,758
Operating Expenses:
Cost of Goods Sold...................................... 1,161 1,203 1,396
Selling and Administration.............................. 123 132 155
Research and Development................................ 10 8 20
Interest Expense.......................................... 17 24 27
Interest Income........................................... 3 10 2
Other Income.............................................. 4 5 11
Gain (Loss) on Sales and Restructurings of Businesses
and Spin-off Costs....................................... (63) -- 179
------ ------ ------
Income from Continuing Operations Before Taxes............ 59 147 352
Income Taxes.............................................. 21 50 125
------ ------ ------
Income from Continuing Operations......................... 38 97 227
Income from Discontinued Operations, Net of Taxes......... 40 56 53
------ ------ ------
Net Income................................................ 78 153 280
Preferred Dividends....................................... -- -- 4
------ ------ ------
Net Income Available to Common Shareholders............... $ 78 $ 153 $ 276
====== ====== ======
Net Income Per Common Share:
Basic:
Continuing Operations................................... $ 0.79 $ 1.91 $ 4.30
Discontinued Operations................................. 0.85 1.11 1.04
------ ------ ------
Total Net Income...................................... $ 1.64 $ 3.02 $ 5.34
====== ====== ======
Diluted:
Continuing Operations................................... $ 0.79 $ 1.90 $ 4.26
Discontinued Operations................................. 0.84 1.10 1.01
------ ------ ------
Total Net Income...................................... $ 1.63 $ 3.00 $ 5.27
====== ====== ======
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
financial statements.
31
<PAGE>
Consolidated Statements of Shareholders' Equity
($ in millions, except share data)
<TABLE>
<CAPTION>
Common Stock Accumulated ESOP
----------------- Additional Other Preferred Total
Shares Par Paid-In Comprehensive Retained Stock Par ESOP Shareholders'
Issued Value Capital Loss Earnings Value Obligations Equity
---------- ----- ---------- ------------- -------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1,
1996................... 49,418,410 $49 $ 398 $ (4) $ 343 $ 77 $(22) $ 841
Comprehensive Income:
Net Income............. -- -- -- -- 280 -- -- 280
Translation Adjustment. -- -- -- (5) -- -- -- (5)
Comprehensive Income... -- -- -- -- -- -- -- 275
Dividends Paid:
Common Stock ($1.20 per
share)................ -- -- -- -- (60) -- -- (60)
ESOP Preferred Stock
($5.97 per share)..... -- -- -- -- (4) -- -- (4)
Issuance of ESOP
Preferred Stock........ -- -- -- -- -- 9 -- 9
Redemption of ESOP
Preferred Stock........ 2,343,401 2 84 -- -- (86) -- --
Spin-off of Primex
Technologies, Inc...... -- -- -- -- (145) -- -- (145)
Reduction in ESOP
Obligations............ -- -- -- -- -- -- 17 17
Stock Options Exercised. 347,232 1 10 -- -- -- -- 11
Other Transactions...... 93,716 -- 2 -- -- -- -- 2
---------- --- ----- ---- ----- ---- ---- -----
Balance at December 31,
1996................... 52,202,759 52 494 (9) 414 -- (5) 946
Comprehensive Income:
Net Income............. -- -- -- -- 153 -- -- 153
Translation Adjustment. -- -- -- (15) -- -- -- (15)
Comprehensive Income... -- -- -- -- -- -- -- 138
Dividends Paid:
Common Stock ($1.20 per
share)................ -- -- -- -- (61) -- -- (61)
Reduction in ESOP
Obligations............ -- -- -- -- -- -- 5 5
Stock Options Exercised. 413,258 -- 13 -- -- -- -- 13
Stock Repurchase........ (3,827,100) (3) (160) -- -- -- -- (163)
Other Transactions...... 51,317 -- 1 -- -- -- -- 1
---------- --- ----- ---- ----- ---- ---- -----
Balance at December 31,
1997................... 48,840,234 49 348 (24) 506 -- -- 879
Comprehensive Income:
Net Income............. -- -- -- -- 78 -- -- 78
Translation Adjustment. -- -- -- 1 -- -- -- 1
Minimum Pension
Liability Adjustment.. -- -- -- (2) -- -- -- (2)
Comprehensive Income... -- -- -- -- -- -- -- 77
Dividends Paid:
Common Stock ($1.20 per
share)................ -- -- -- -- (58) -- -- (58)
Stock Options Exercised. 84,528 -- 3 -- -- -- -- 3
Stock Repurchase........ (3,096,100) (3) (109) -- -- -- -- (112)
Other Transactions...... 94,202 -- 1 -- -- -- -- 1
---------- --- ----- ---- ----- ---- ---- -----
Balance at December 31,
1998................... 45,922,864 $46 $ 243 $(25) $ 526 $ -- $ -- $ 790
========== === ===== ==== ===== ==== ==== =====
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
financial statements.
32
<PAGE>
Consolidated Statements of Cash Flows
Years ended December 31 ($ in millions)
<TABLE>
<CAPTION>
1998 1997 1996
----- ---- ----
<S> <C> <C> <C>
Operating Activities
Income from Continuing Operations.......................... $ 38 $ 97 $227
Adjustments to Reconcile Income from Continuing Operations
to Net Cash and Cash Equivalents Provided by Operating
Activities:
Earnings of Non-consolidated Affiliates.................. -- (1) (2)
Depreciation............................................. 76 76 84
Amortization of Intangibles.............................. 2 2 2
Deferred Taxes........................................... 104 41 (78)
Loss (Gain) on Sales and Restructurings of Businesses and
Spin-off Costs......................................... 63 -- (188)
Change in Assets and Liabilities Net of Purchases and
Sales of Businesses:
Receivables............................................ (5) (19) 26
Inventories............................................ 7 (14) 18
Other Current Assets................................... 4 (5) 3
Accounts Payable and Accrued Liabilities............... (57) (45) (38)
Income Taxes Payable................................... (33) (122) 122
Other Noncurrent Liabilities........................... (8) (36) (11)
Other Operating Activities............................... (13) (7) 13
----- ---- ----
Net Cash and Cash Equivalents Provided by Operating
Activities from Continuing Operations..................... 178 (33) 178
Discontinued Operations:
Net Income................................................ 40 56 53
Change in Net Assets...................................... (38) (35) (8)
----- ---- ----
Net Operating Activities............................... 180 (12) 223
----- ---- ----
Investing Activities
Capital Expenditures....................................... (78) (76) (74)
Disposition of Property, Plant and Equipment............... -- -- 23
Business Acquired in Purchase Transactions................. -- (2) --
Proceeds from Sales of Businesses.......................... 4 5 565
Purchases of Short-Term Investments........................ (25) (126) (87)
Proceeds from Sale of Short-Term Investments............... 28 185 --
Investments and Advances--Affiliated Companies at Equity... (3) (84) (103)
Repayments of Advances From a Joint Venture................ -- 98 --
Other Investing Activities................................. (4) (4) --
----- ---- ----
Net Investing Activities............................... (78) (4) 324
----- ---- ----
Financing Activities
Long-Term Debt Repayments.................................. (39) (137) (62)
Short-Term Debt Repayments................................. -- -- (58)
Borrowings under Line of Credit Assumed by Primex
Technologies, Inc........................................ -- -- 125
Purchase of Olin Common Stock.............................. (112) (163) --
Repayment from ESOP........................................ -- 5 17
Stock Options Exercised.................................... 3 13 11
Dividends Paid............................................. (58) (61) (64)
Other Financing Activities................................. (3) (2) --
----- ---- ----
Net Financing Activities............................... (209) (345) (31)
----- ---- ----
Net (Decrease) Increase in Cash and Cash Equivalents... (107) (361) 516
Cash and Cash Equivalents, Beginning of Year............... 157 518 2
----- ---- ----
Cash and Cash Equivalents, End of Year................. $ 50 $157 $518
===== ==== ====
Cash Paid (Received) for Interest and Income Taxes:
Interest $ 17 $ 27 $ 40
Income Taxes, Net of Refunds............................. $ (31) $166 $104
===== ==== ====
</TABLE>
The accompanying Notes to Financial Statements are an integral part of the
financial statements.
33
<PAGE>
Notes to Financial Statements
($ in millions, except share data)
Accounting Policies
The preparation of the consolidated financial statements requires estimates
and assumptions that affect amounts reported and disclosed in the financial
statements and related notes. Actual results could differ from those
estimates. Certain reclassifications were made to prior year amounts to
conform with the 1998 presentation. In addition, the financial statements have
been restated to reflect Arch Chemicals, Inc. ("Arch Chemicals") as a
discontinued operation as a result of its spin-off which occurred on February
8, 1999.
Basis of Presentation
The consolidated financial statements include the accounts of Olin
Corporation ("Olin" or "Company") and all majority-owned subsidiaries.
Investments in 20-50% owned affiliates are accounted for on the equity method.
Accordingly, the Company's share of earnings or losses of these affiliates is
included in consolidated net income.
Foreign Currency Translation
Foreign affiliates' balance sheet amounts are translated at the exchange
rates in effect at year-end, and income statement amounts are translated at
the average rates of exchange prevailing during the year. Translation
adjustments are included in Accumulated Other Comprehensive Loss. Where
foreign affiliates operate in highly inflationary economies non-monetary
amounts are translated at historical exchange rates while monetary assets and
liabilities are translated at the current rate with the related adjustments
reflected in the Consolidated Statements of Income.
Cash and Cash Equivalents
All highly liquid investments with a maturity of three months or less at the
date of purchase are considered to be cash equivalents.
Short-Term Investments
Marketable debt securities are accounted for in accordance with Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." Accordingly, the Company has
classified its marketable debt securities as available-for-sale which are
reported at fair market value with unrealized gains and losses included in
Shareholders' Equity net of applicable taxes. The fair value of marketable
securities is determined by quoted market prices. Unrealized gains and losses
in 1998 and 1997 were insignificant. Realized gains and losses on sales of
investments, as determined on the specific identification method and declines
in value of securities judged to be other-than-temporary are included in Other
Income in the Consolidated Statements of Income. Interest and dividends on all
securities are included in Interest Income and Other Income, respectively.
All investments which have original maturities between three and twelve
months are considered short-term investments and consist of debt securities
such as commercial paper, time deposits, certificates of deposit, bankers
acceptances, repurchase agreements, and marketable direct obligations of the
United States Treasury.
Inventories
Inventories are valued principally by the dollar value last-in, first-out
(LIFO) method of inventory accounting; in aggregate, such valuations are not
in excess of market. Cost for other inventories have
34
<PAGE>
been determined principally by the average-cost and first-in, first out (FIFO)
methods. Elements of costs in inventories include raw materials, direct labor
and manufacturing overhead.
Property, Plant and Equipment
Property, plant and equipment are recorded at cost. Depreciation is computed
on a straight-line basis over the estimated useful lives of the related
assets. Leasehold improvements are amortized over the term of the lease or the
estimated useful life of the improvement, whichever is shorter. Start-up costs
are expensed as incurred.
Comprehensive Income
As of January 1, 1998, the Company adopted SFAS No. 130, "Reporting
Comprehensive Income," which established standards for the reporting and
display of comprehensive income and its components in the financial
statements. Accumulated Other Comprehensive Loss at December 31, 1998 includes
cumulative translation adjustments of $23 ($24 at December 31, 1997) and $2 of
minimum pension liability. The Company does not provide for U.S. income taxes
on foreign currency translation adjustments since it does not provide for such
taxes on undistributed earnings of foreign subsidiaries.
Goodwill
Goodwill, the excess of the purchase price of the acquired businesses over
the fair value of the respective net assets, is amortized principally over 30
years on a straight-line basis. The Company periodically reviews the value of
its goodwill to determine if any impairment has occurred. The Company assesses
the potential impairment of recorded goodwill and other long-lived assets by
comparing the undiscounted value of expected future operating cash flows in
relation to the book value of the goodwill and related long-lived assets. An
impairment would be recorded based on the estimated fair value.
Environmental Liabilities and Expenditures
Accruals for environmental matters are recorded when it is probable that a
liability has been incurred and the amount of the liability can be reasonably
estimated, based upon current law and existing technologies. These amounts,
which are not discounted and exclusive of claims against third parties, are
adjusted periodically as assessment and remediation efforts progress or
additional technical or legal information becomes available. Environmental
remediation costs are charged to expense. Environmental costs are capitalized
if the costs increase the value of the property and/or mitigate or prevent
contamination from future operations.
Income Taxes
Deferred taxes are provided for differences between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect for
the year in which the differences are expected to reverse.
Derivative Financial Instruments
The Company enters into forward sales and purchase contracts and currency
options to manage currency risk resulting from purchase and sale commitments
denominated in foreign currencies (principally Australian dollar and Canadian
dollar) and relating to particular anticipated but not yet committed purchases
and sales expected to be denominated in those currencies. All of the currency
derivatives expire within one year and are for United States dollar
equivalents. At December 31, 1998,
35
<PAGE>
the Company had forward contracts to sell foreign currencies with face values
of $4 (1997-$1) and no forward contracts to buy (1997-$1). The fair market
value of the forward contracts to sell was $4 and $1 at December 31, 1998 and
1997, respectively. The fair market value of the forward contracts to buy was
$1 at December 31, 1997. The Company had no outstanding option contracts at
December 31, 1998 and 1997. The counterparties to the options and contracts
are major financial institutions. The risk of loss to the Company in the event
of nonperformance by a counterparty is not significant.
In accordance with SFAS No. 52, "Foreign Currency Translation," a
transaction is classified as a hedge when it is designated as, and is
effective as, a hedge of a foreign currency commitment and the foreign
currency commitment is firm. A hedge is considered by the Company to be
effective when the transaction reduces the currency risk on its foreign
currency commitments. If a transaction does not meet the criteria to qualify
as a hedge, it is considered to be speculative. For a foreign currency
commitment that is classified as a hedge, any gain or loss on the commitment
is deferred and included in the basis of the underlying item. Any unrealized
gains or losses associated with foreign currency commitments that are
classified as speculative are recognized in the current period. Foreign
currency gains and losses realized are included in the Consolidated Statements
of Income in Selling and Administration. If a foreign currency transaction
previously considered as a hedge is terminated before the transaction date of
the related commitment, any deferred gain or loss shall continue to be
deferred and included in the basis of the underlying item. Premiums paid for
currency options and gains or losses on forward sales and purchase contracts
were not material to operating results.
Foreign currency exchange gains (losses), net of taxes, were $(1) in 1998,
$1 in 1997, and less than $(1) in 1996.
Depending on market conditions, the Company may enter into futures contracts
and put and call option contracts in order to reduce the impact of metal price
fluctuations, principally in copper, lead and zinc. In accordance with SFAS
No. 80, "Accounting for Futures Contracts," futures contracts are classified
as a hedge when the item to be hedged exposes the Company to price risk and
the futures contract reduces that risk exposure. Futures contracts that relate
to transactions that are expected to occur are accounted for as a hedge when
the significant characteristics and expected terms of the anticipated
transaction are identified and it is probable that the anticipated transaction
will occur. If a transaction does not meet the criteria to qualify as a hedge,
it is considered to be speculative. Any gains or loses associated with futures
contracts which are classified as speculative are recognized in the current
period. If a futures contract that has been accounted for as a hedge is closed
or matures before the date of the anticipated transaction, the accumulated
change in value of the contract is carried forward and included in the
measurement of the related transaction. Option contracts are accounted for in
the same manner that futures contracts are accounted for. At December 31,
1998, the Company has open positions in futures contracts totaling $44 (1997-
$37). If these futures contracts had been settled on December 31, 1998, the
Company would have incurred a loss of $3. Gains (losses) on futures contracts,
net of taxes, were $(2) in 1998 and $1 in 1997 and 1996.
Financial Instruments
The carrying values of cash and cash equivalents, accounts receivable and
accounts payable approximated fair values due to the short-term maturities of
these instruments. The fair value of the Company's long-term debt was
determined based on current market rates for debt of the same risk and
maturities. At December 31, 1998, the estimated fair value of debt was $235
(1997-$277). The fair values of currency forward contracts were estimated
based on quoted market prices for contracts with similar terms.
Stock-Based Compensation
The Company accounts for stock-based compensation under SFAS No. 123,
"Accounting for Stock-Based Compensation." As allowed under SFAS No. 123, the
Company has chosen to continue to account for stock-based compensation cost in
accordance with Accounting Principles Board Opinion
36
<PAGE>
No. 25, "Accounting for Stock Issued to Employees." Under this option,
compensation cost is recorded when the fair market value of the Company's
stock at the date of grant for fixed options exceeds the exercise price of the
stock option. The Company's policy is to grant stock options at a value equal
to its common stock's fair market value on the date of the grant. Compensation
cost for restricted stock awards is accrued over the life of the award based
on the quoted market price of the Company's stock at the date of the award.
Earnings Per Share
Basic earnings per share are computed by dividing net income less the ESOP
preferred stock dividend requirement (to the date of its redemption in 1996),
and the redemption adjustment (excess of fair value over book value of ESOP
shares redeemed) by the weighted average number of common shares outstanding.
In December 1996, the Company redeemed the ESOP preferred stock with shares of
common stock of equivalent value.
Diluted earnings per share reflect the dilutive effect of stock options and
assumed the conversion of outstanding ESOP preferred stock, until its
redemption in December 1996, into an equivalent number of common shares at the
date of issuance. Net income was reduced by an additional ESOP contribution
(differential between the common and the ESOP preferred dividend rates under
an assumed conversion) necessary to satisfy the debt service requirement.
<TABLE>
<CAPTION>
Computation of Earnings per Share 1998 1997 1996
- --------------------------------- ------- ------- -------
<S> <C> <C> <C>
Basic earnings per share
Income from continuing operations...................... $ 38 $ 97 $ 227
Less ESOP preferred dividends, net of tax benefit...... -- -- (4)
Redemption adjustment.................................. -- -- (8)
------- ------- -------
$ 38 $ 97 $ 215
------- ------- -------
Basic shares (in thousands)............................ 47,643 50,519 49,992
------- ------- -------
Basic earnings per share-continuing operations......... $ 0.79 $ 1.91 $ 4.30
======= ======= =======
Diluted earnings per share
Income from continuing operations...................... $ 38 $ 97 $ 227
Less additional ESOP contribution...................... -- -- (4)
------- ------- -------
$ 38 $ 97 $ 223
------- ------- -------
Diluted Shares (in thousands):
Basic shares......................................... 47,643 50,519 49,992
Assumed conversion ESOP preferred stock.............. -- -- 1,950
Stock options........................................ 224 368 369
------- ------- -------
47,867 50,887 52,311
------- ------- -------
Diluted earnings per share-continuing operations....... $ 0.79 $ 1.90 $ 4.26
======= ======= =======
</TABLE>
The Board of Directors has authorized the Company to purchase up to 10
million shares of common stock of the Company under two share repurchase
programs which began in January of 1997. During 1998 and 1997 the Company
repurchased 3.1 million and 3.8 million shares, respectively. It is expected
that the programs will be completed during 1999.
37
<PAGE>
Short-term Investments
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Tax exempt...................................................... $20 $28
Certificates of deposit......................................... 4 --
U.S. Government and government agencies......................... 1 --
--- ---
Total......................................................... $25 $28
=== ===
</TABLE>
Trade Receivables
Allowance for doubtful items was $6 at December 31, 1998 and 1997.
Provisions charged to operations were $1 in 1998, 1997 and 1996. Bad debt
write-offs, net of recoveries were $1 in 1998 and $2 in 1997 and 1996.
Inventories
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Raw materials and supplies.................................... $113 $108
Work in process............................................... 102 113
Finished goods................................................ 47 73
---- ----
262 294
LIFO reserves................................................. (63) (86)
---- ----
Inventory, net.............................................. $199 $208
==== ====
</TABLE>
Inventories valued using the LIFO method comprised 79% and 78% of the total
inventories at December 31, 1998 and 1997, respectively. During 1998, LIFO
inventory quantities were reduced resulting in the liquidation of one LIFO
layer and part of another layer. The effect of this liquidation increased net
income by $1.
Property, Plant and Equipment
<TABLE>
<CAPTION>
Useful Lives 1998 1997
------------ ------ ------
<S> <C> <C> <C>
Land and improvements to land................. 10--20 Years $ 49 $ 49
Buildings and building equipment.............. 10--25 Years 172 169
Machinery and equipment....................... 3--12 Years 1,251 1,266
Leasehold improvements........................ 3 4
Construction in progress...................... 75 58
------ ------
Property, plant and equipment............... 1,550 1,546
Less accumulated depreciation................. 1,075 1,029
------ ------
Property, plant and equipment, net.......... $ 475 $ 517
====== ======
</TABLE>
Leased assets capitalized and included above are not significant.
Maintenance and repairs charged to operations amounted to $109, $92, and $114
in 1998, 1997 and 1996 respectively.
Short-Term Borrowings
At December 31, 1998 and 1997, the Company maintained committed credit
facilities with banks of $254 all of which was available in both years.
Included in the $254 committed credit facility is an unsecured revolving
credit agreement with a group of banks, which provides a maximum borrowing of
$250, and expires in October 2002. The Company may select various floating
rate borrowing options.
38
<PAGE>
Long-Term Debt
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Notes payable:
7.11%, due 2005.............................................. $ 50 $ 50
7.75%, due 2005.............................................. 11 11
7.97%, due 1999-2002......................................... -- 38
8%, due 2002................................................. 100 100
Industrial development and environmental improvement
obligations:
Payable at interest rates of 1% to 5% which vary with short-
term tax exempt rates, due 2004-2017........................ 35 35
Payable at interest rates of 6% to 7%, due 1999-2008......... 35 36
---- ----
Total senior debt.......................................... 231 270
Amounts due within one year.................................... 1 8
---- ----
Total long-term debt....................................... $230 $262
==== ====
</TABLE>
In June 1995, the Company sold $50 of 7.11% notes with a maturity date of
June 2005. The proceeds from this issue were used to reduce short-term debt
incurred for working capital purposes. At December 31, 1998, there remains
$248 unissued under the medium-term note program registered in May 1994.
During 1992, the Company swapped interest payments on $50 principal amount
of its 8% notes due 2002 to a floating rate (5.15602% at December 31, 1998).
In June 1995, the Company offset this transaction by swapping interest
payments to a fixed rate of 6.485%. The difference between interest paid and
interest received is included as an adjustment to interest expense. A
settlement of the fair market value of the interest rate swap as of December
31, 1998 would result in a receipt of approximately $2. Counterparties to
interest rate swap contracts are major financial institutions. The risk of
loss to the Company in the event of nonperformance by a counterparty is not
significant.
Annual maturities of long-term debt for the next five years are $1 in 1999,
2000 and 2001, and $101 in 2002 and $1 in 2003.
Interest expense incurred on short-term borrowings and long-term debt
totaled $18 in 1998, $25 in 1997 and $29 in 1996; of which $1 was capitalized
in 1998 and 1997 and $2 in 1996.
39
<PAGE>
Pension Plans and Retirement Benefits
Essentially all of the Company's domestic pension plans are non-contributory
final-average-pay or flat-benefit plans and all domestic employees are
covered. The Company's funding policy is consistent with the requirements of
federal laws and regulations. The Company provides certain postretirement
health care and life insurance benefits for eligible active and retired
domestic employees.
<TABLE>
<CAPTION>
Other
Pension Postretirement
Benefits Benefits
-------------- --------------
Change in Benefit Obligation 1998 1997 1998 1997
- ---------------------------- ------ ------ ------- -------
<S> <C> <C> <C> <C>
Benefit obligation at beginning of year..... $1,155 $1,021 $ 71 $ 62
Service cost................................ 15 21 1 1
Interest cost............................... 79 79 5 5
Amendments.................................. 1 4 -- --
Actuarial loss (gain)....................... 8 110 2 10
Benefits paid............................... (78) (85) (8) (8)
Acquisitions and divestitures............... -- 5 -- 1
------ ------ ------- -------
Benefit obligation at end of year........... $1,180 $1,155 $ 71 $ 71
====== ====== ======= =======
<CAPTION>
Pension
Benefits
--------------
Change in Plan Assets 1998 1997
- --------------------- ------ ------
<S> <C> <C> <C> <C>
Fair value of plan assets at beginning of
year....................................... $1,224 $1,111
Actual return on plan assets................ 146 178
Employer contribution....................... 3 14
Acquisition asset transfers................. -- 6
Benefits paid............................... (78) (85)
------ ------
Fair value of plan assets at end of year.... $1,295 $1,224
====== ======
<CAPTION>
Other
Pension Postretirement
Benefits Benefits
-------------- --------------
1998 1997 1998 1997
------ ------ ------- -------
<S> <C> <C> <C> <C>
Funded status............................... $ 115 $ 69 $ (71) $ (71)
Unrecognized actuarial (gain) loss.......... (146) (105) 13 11
Unrecognized transition obligation (asset).. (13) (19) -- --
Unrecognized prior service cost............. 29 30 (4) (5)
------ ------ ------- -------
Net amount recognized....................... $ (15) $ (25) $ (62) $ (65)
====== ====== ======= =======
Amounts recognized in the consolidated
balance sheet consist of:
Prepaid benefit cost...................... $ 12 $ 1 $ -- $ --
Accrued benefit liability................. (29) (26) (62) (65)
Accumulated other comprehensive income.... 2 -- -- --
------ ------ ------- -------
Net amount recognized..................... $ (15) $ (25) $ (62) $ (65)
====== ====== ======= =======
</TABLE>
<TABLE>
<CAPTION>
Principal Assumptions 1998 1997
- --------------------- ---- ----
<S> <C> <C>
Weighted average discount rate...................................... 7.0% 7.25%
Weighted average rate of compensation increase...................... 4.5% 4.5%
Long-term rate of return on assets.................................. 9.5% 9.5%
=== ====
</TABLE>
40
<PAGE>
<TABLE>
<CAPTION>
Other
Pension Postretirement
Benefits Benefits
---------------- ----------------
Components of Net Periodic Benefit Cost
(Income) 1998 1997 1996 1998 1997 1996
- --------------------------------------- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Service cost............................... $ 15 $ 21 $ 22 $ 1 $ 1 $ 2
Interest cost.............................. 79 79 74 5 5 4
Expected return on plan assets............. (99) (92) (87) -- -- --
Amortization of prior service cost......... 4 3 4 (1) (1) (1)
Recognized actuarial loss (gain)........... (6) (6) (6) 1 1 --
---- ---- ---- --- --- ---
Net periodic benefit cost (income)......... $ (7) $ 5 $ 7 $ 6 $ 6 $ 5
==== ==== ==== === === ===
</TABLE>
The Company's common stock represents approximately 2% of the plan assets at
December 31, 1998 and 1997.
The Company's foreign subsidiaries maintain pension and other benefit plans
which are consistent with statutory practices and are not significant.
The Pension Plan of Olin Corporation provides that if, within three years
following a change of control of the Company, 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.
In addition to the net pension expense above, during 1996 the Company
recorded a $6 curtailment loss in connection with the sale of the isocyanates
business and the spin-off of the Ordnance and Aerospace divisions as Primex
Technologies, Inc. ("Primex").
The accumulated postretirement benefit obligation was determined using the
projected unit credit method and an assumed discount rate of 7% in 1998, 7.25%
in 1997 and 8% in 1996. The assumed health care cost trend rate used for pre-
65 retirees was 8% in 1998, 9.7% in 1997 and 11% in 1996, declining one-half
percent per annum to 5.0%. For post-65 retirees, the Company provides a fixed
dollar benefit which is not subject to escalation.
Assumed health care cost trend rates have a significant effect on the
amounts reported for the postretirement health care plan. A one-percentage-
point increase (decrease) in assumed health care cost trend rates would have a
less than $1 increase (decrease) in total service and interest cost components
and a $3 increase (decrease) in the postretirement benefit obligation.
Subsequent to the spin-off of Arch Chemicals on February 8, 1999, Arch
Chemicals will become liable for the payment of all pension plan benefits
earned by Arch Chemicals employees prior to and following the spin-off who
retire after the spin-off. The Olin pension plan will transfer assets to the
Arch Chemicals pension plan and the amount of the assets will be calculated
based on the relative percentage of the Projected Benefit Obligation. Such
amount may be adjusted to comply with the asset allocation methodology set
forth in section 4044 of the Employee Retirement Income Security Act of 1974,
as amended, if necessary. Olin will remain liable for postretirement, medical
and death benefits provided to all employees who retire prior to the spin-off.
Arch Chemicals will become liable for the payment of all retiree medical and
death benefits earned by Arch Chemicals employees prior to and following the
spin-off who retire after the spin-off. The postretirement plan is an unfunded
plan, therefore no assets were transferred.
In connection with the spin-off of Arch Chemicals in the first quarter of
1999, the Company transferred $7 of postretirement benefit liability to Arch
Chemicals. During 1996 in connection with the spin-off of Primex Technologies,
Inc., the Company transferred $8 of postretirement benefit liability to Primex
Technologies, Inc.
41
<PAGE>
Income Taxes
<TABLE>
<CAPTION>
Components of Pretax Income from Continuing Operations 1998 1997 1996
- ------------------------------------------------------ ---- ---- ----
<S> <C> <C> <C>
Domestic...................................................... $ 54 $144 $347
Foreign....................................................... 5 3 5
---- ---- ----
Pretax income................................................. $ 59 $147 $352
==== ==== ====
<CAPTION>
Components of Income Tax Expense (Benefit)
- ------------------------------------------
<S> <C> <C> <C>
Currently payable:
Federal..................................................... $(88) $ 12 $171
State....................................................... 3 (4) 31
Foreign..................................................... 2 1 1
---- ---- ----
(83) 9 203
Deferred...................................................... 104 41 (78)
---- ---- ----
Income tax expense............................................ $ 21 $ 50 $125
==== ==== ====
</TABLE>
The following table accounts for the difference between the actual tax
provision and the amounts obtained by applying the statutory U.S. federal
income tax rate of 35% to the income from continuing operations before taxes.
<TABLE>
<CAPTION>
Effective Tax Rate Reconciliation (Percent) 1998 1997 1996
- ------------------------------------------- ---- ---- ----
<S> <C> <C> <C>
Statutory federal tax rate.................................... 35.0 35.0 35.0
Foreign income tax............................................ (0.3) (0.9) (0.2)
State income taxes, net....................................... 1.7 0.2 3.5
Equity in net income of affiliates............................ (0.9) (0.4) (0.2)
Other, net.................................................... 0.1 0.1 (2.6)
---- ---- ----
Effective tax rate............................................ 35.6 34.0 35.5
==== ==== ====
</TABLE>
<TABLE>
<CAPTION>
Components of Deferred Tax Assets and Liabilities 1998 1997
- ------------------------------------------------- ---- ----
<S> <C> <C>
Deferred tax assets:
Pension and postretirement benefits................................. $ 30 $34
Environmental reserves.............................................. 50 51
Non-deductible reserves............................................. 46 36
Other miscellaneous items........................................... 22 15
---- ---
Total deferred tax assets............................................. 148 136
---- ---
Deferred tax liabilities:
Property, plant and equipment....................................... 69 45
Capital loss........................................................ 80 --
Other miscellaneous items........................................... 24 12
---- ---
Total deferred tax liabilities........................................ 173 57
---- ---
Net deferred tax asset (liability).................................... $(25) $79
==== ===
</TABLE>
Included in Other Current Assets at December 31, 1998 and 1997 are $12 and
$10, respectively, of net current deferred assets.
At December 31, 1998, the Company's share of the cumulative undistributed
earnings of foreign subsidiaries was approximately $25. No provision has been
made for U.S. or additional foreign taxes on the undistributed earnings of
foreign subsidiaries since the Company intends to continue to reinvest these
earnings. Foreign tax credits would be available to substantially reduce or
eliminate any amount of additional U.S. tax that might be payable on these
foreign earnings in the event of distributions or sale.
42
<PAGE>
Accrued Liabilities
Included in accrued liabilities are the following items:
<TABLE>
<CAPTION>
1998 1997
----- ----
<S> <C> <C>
Accrued compensation and employee benefits.................... $ 43 $ 50
Environmental................................................. 30 30
Accrued costs for sales and restructurings of businesses and
spin-off costs............................................... 30 --
Accrued insurance............................................. 21 22
Other......................................................... 44 77
----- ----
$ 168 $179
===== ====
</TABLE>
Contributing Employee Ownership Plan
The Contributing Employee Ownership Plan is a defined contribution plan
available to essentially all domestic employees which provides a match of
employee contributions. The plan purchased from the Company approximately 1.3
million shares ($100) of a newly authorized 1.75 million share series of the
Company's ESOP preferred stock, financed by $60 of notes guaranteed by the
Company and a $40 loan from the Company. This loan has been repaid in total to
the Company as of December 31, 1992. In December 1996, the Board of Directors
approved the redemption of all outstanding shares of ESOP preferred stock with
common stock of equivalent value. Upon redemption of the ESOP preferred stock,
the Company is matching employee contributions with common stock. The annual
fixed preferred dividend rate was $5.97 per share and during 1996, dividends
were paid in the first three quarters. Expenses related to the plan are based
on ESOP preferred and common stock allocated to participants. These costs
(primarily the Company's contributions) amounted to $8, $9 and $8 in 1998,
1997 and 1996, respectively. Interest incurred by the plan totaled $1 in 1996,
which was funded by ESOP preferred dividends.
43
<PAGE>
Stock Options
Under the stock option plans, options may be granted to purchase shares of
the Company's common stock at not less than fair market value at the date of
grant, and are exercisable for a period not exceeding ten years from that
date. Options granted under the 1996 stock option plan vest over three years.
The 1996 stock option plan is the only plan with stock options available for
future grants. At December 31, 1998, approximately 937,000 shares were
available for future grants. As a result of the spin-off of Arch Chemicals the
outstanding Olin options as of February 8, 1999 were converted into both an
option to purchase Olin common stock and an option to purchase Arch Chemicals
common stock with an adjustment of the exercise price designed to preserve the
"intrinsic value" at the time of the spin-off. Olin will be responsible for
delivering shares of the Olin common stock upon exercise, and Arch Chemicals
will be responsible for the delivering of shares of Arch Chemicals stock upon
exercise. The options maintain the original vesting schedule. The following
table has been restated to reflect the new option price of the Olin options as
a result of the transaction described above. Stock option transactions are as
follows:
<TABLE>
<CAPTION>
Weighted Average
Option Price Option Price
Shares Per Share Per Share
--------- -------------- ----------------
<S> <C> <C> <C>
Outstanding at January 1, 1996....... 1,554,268 $13.34--$20.48 $16.12
Granted............................ 1,441,641 24.68--25.49 24.68
Exercised.......................... (347,232) 13.63--17.53 15.79
Canceled........................... (250,958) 15.04--24.68 23.69
--------- -------------- ------
Outstanding at December 31, 1996..... 2,397,719 13.34--25.49 20.20
Granted............................ 599,200 24.34--29.69 24.43
Exercised.......................... (413,258) 13.34--24.68 18.08
Canceled........................... (137,198) 24.34--24.68 24.57
--------- -------------- ------
Outstanding at December 31, 1997..... 2,446,463 13.34--29.69 21.36
Granted............................ 835,700 18.33--29.38 27.12
Exercised.......................... (84,528) 13.34--24.68 19.12
Canceled........................... (84,486) 16.04--29.38 25.75
--------- -------------- ------
Outstanding at December 31, 1998..... 3,113,149 $13.34--$29.69 $22.85
========= ============== ======
</TABLE>
Of the outstanding options at December 31, 1998, options covering 1,667,408
shares are currently exercisable at a weighted average exercise price of
$20.19.
At December 31, 1998, common shares reserved for issuance under these plans
were 4,050,654 and under additional remuneration agreements were estimated to
be 130,000.
44
<PAGE>
In 1996, the Company adopted SFAS No. 123, "Accounting for Stock-Based
Compensation". As allowed by SFAS No. 123, the Company has not recognized
compensation cost for stock-based compensation arrangements. Pro forma net
income and earnings per share were calculated based on the following
assumptions as if the Company had recorded compensation expense for the stock
options granted during the year. The fair value of each option granted during
1998, 1997 and 1996 was estimated on the date of grant, using the Black-
Scholes option-pricing model with the following weighted-average assumptions
used: dividend yield of 3.2% in 1998, 2.8% in 1997 and 4.0% in 1996, risk-free
interest rate of 5.5% in 1998 and 1997 and 6.5% in 1996, expected volatility
of 27% in 1998, 21% in 1997 and 22% in 1996 and an expected life of 7 years.
The fair value of options granted during 1998, 1997 and 1996 was $11.77, $9.53
and $7.54, respectively. The following table shows the difference between
reported and pro forma net income and earnings per share as if the Company had
recorded compensation expense for the stock options granted during the year.
<TABLE>
<CAPTION>
($ in millions except per share data) 1998 1997 1996
- ------------------------------------- ---- ---- ----
<S> <C> <C> <C>
Net Income
As reported.................................................. $ 78 $153 $280
Pro forma.................................................... 72 149 277
Per Share Data:
Basic
As reported.................................................. 1.64 3.02 5.34
Pro forma.................................................... 1.52 2.96 5.29
Diluted
As reported.................................................. 1.63 3.00 5.27
Pro forma.................................................... 1.52 2.95 5.23
</TABLE>
Common Stock
In connection with the spin-off of Primex in 1996, its employees were
allowed to transfer their account balances from the Company's CEOP into
Primex's savings and retirement plan. The Company issued .3 million shares of
common stock at a value of $40.50 in exchange for .2 million shares of ESOP
preferred stock at a per share value of $85.63 at the time of the transfer.
In December 1996, the Company's board of directors approved the redemption
of all outstanding shares of ESOP preferred stock with common stock of
equivalent value. Approximately 1.87 million shares of common stock at a per
share value of $40.19 were issued in exchange for approximately .9 million
shares of ESOP preferred stock at a per share value of $85.75.
Shareholder Rights Plan
Effective February 1996, the Board of Directors adopted a new Shareholder
Rights Plan to replace the prior plan which had been adopted in 1986. Like the
former plan, the new plan is designed to prevent an acquiror from gaining
control of the Company without offering a fair price to all shareholders. Each
right entitles a shareholder (other than the acquiror) to buy one-five
hundredth share of Series A Participating Cumulative Preferred Stock at an
exercise price of one hundred twenty dollars. The rights are exercisable only
if a person acquires more than 15% of the Company's common stock or if the
Board of Directors so determines following the commencement of a tender or
exchange offer to acquire more than 15% of the Company's common stock. If any
person acquires more than 15% of the Company's common stock and in the event
of a subsequent merger or combination, each right will entitle the holder
(other than the acquiror) to purchase stock or other property of the acquiror
having a value of twice the exercise price. The Company can redeem the rights
at $.005 per right for a certain period of time. The rights will expire on
February 27, 2006, unless earlier redeemed by the Company.
45
<PAGE>
Segment Information
Segment operating income is defined as earnings before interest, other
income and income taxes and includes earnings of non-consolidated affiliates
which is included in other income in the Consolidated Statements of Income.
Segment operating results in 1998 exclude the charge for the sale of the
microelectronic packaging unit at Manteca, CA and the restructuring of the
rod, wire and tube businesses at Indianapolis, IN ($42 pretax); and non-
recurring costs associated with the spin-off of Arch Chemicals ($21 pretax).
Segment operating income in 1996 excludes the gain on the sale of the
isocyanates business ($188 pretax) and non-recurring costs associated with the
spin-off of Primex ($9 pretax). In 1996, the "other" segment includes the
operating results of the isocyanates business which was sold in December 1996.
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Sales:
Chlor Alkali Products............................. $ 366 $ 411 $ 397
Metals............................................ 799 836 809
Winchester........................................ 261 252 256
Other............................................. -- -- 296
------ ------ ------
Total sales............................................ $1,426 $1,499 $1,758
====== ====== ======
Operating Income (Loss) Before Loss/Gain on Sales and
Restructuring of Businesses and Spin-off Costs:
Chlor Alkali Products............................. $ 55 $ 99 $ 86
Metals............................................ 64 62 60
Winchester........................................ 13 (4) (2)
Other............................................. -- -- 46
------ ------ ------
Total Operating Income................................. $ 132 $ 157 $ 190
====== ====== ======
Equity Income in Affiliated Companies, Included in
Operating Income:
Chlor Alkali Products............................. $ (1) $ (2) $ --
Metals............................................ 1 3 2
------ ------ ------
Total Equity Income in Affiliated Companies............ $ -- $ 1 $ 2
====== ====== ======
Depreciation Expense:
Chlor Alkali Products................................. $ 32 $ 32 $ 19
Metals................................................ 31 30 29
Winchester............................................ 10 10 10
Other................................................. 3 4 26
------ ------ ------
Depreciation Expense................................... $ 76 $ 76 $ 84
====== ====== ======
Amortization Expense:
Metals................................................ $ 2 $ 2 $ 2
====== ====== ======
Capital Spending:
Chlor Alkali Products................................. $ 31 $ 22 $ 15
Metals................................................ 25 28 38
Winchester............................................ 12 9 7
Other................................................. 10 17 14
------ ------ ------
Total Capital Spending................................. $ 78 $ 76 $ 74
====== ====== ======
Investments in and Advances to Affiliated Companies at
Equity:
Chlor Alkali Products............................. $ 3 $ 84 $ 103
====== ====== ======
Assets:
Chlor Alkali Products................................. $ 297 $ 290 $ 287
Metals................................................ 440 487 455
Winchester............................................ 161 155 152
Other................................................. 174 319 938
Net Assets of Discontinued Operations................. 505 456 430
------ ------ ------
Total Consolidated Assets.............................. $1,577 $1,707 $2,262
====== ====== ======
Investments & Advances--Affiliated Companies at Equity:
Chlor Alkali Products................................. $ 7 $ 7 $ 122
Metals................................................ 5 3 5
Other................................................. -- -- 25
------ ------ ------
Total Investments & Advances--Affiliated Companies..... $ 12 $ 10 $ 152
====== ====== ======
</TABLE>
46
<PAGE>
Segment operating income includes an allocation of corporate charges based on
various allocation methodologies. Segment assets include only those assets
which are directly identifiable to a segment and do not include such items as
cash, deferred taxes and other assets. Sales by segment substantially represent
sales for the three product lines of the Company.
<TABLE>
<CAPTION>
Geographic Data: 1998 1997 1996
- ---------------- ------ ------ ------
<S> <C> <C> <C>
Sales
United States......................................... $1,388 $1,456 $1,593
Foreign............................................... 38 43 165
Transfers between areas
United States......................................... 10 9 101
Foreign............................................... -- -- 10
Eliminations.......................................... (10) (9) (111)
------ ------ ------
Total Sales............................................. $1,426 $1,499 $1,758
====== ====== ======
Assets
United States......................................... $1,084 $1,263 $1,808
Foreign............................................... 42 32 36
Investments........................................... 4 10 31
Eliminations.......................................... (58) (54) (43)
Net Assets of Discontinued Operations................. 505 456 430
------ ------ ------
Total Assets............................................ $1,577 $1,707 $2,262
====== ====== ======
</TABLE>
Transfers between geographic areas are priced generally at prevailing market
prices. Export sales from the United States to unaffiliated customers were $82,
$86, and $109 in 1998, 1997, and 1996, respectively.
47
<PAGE>
Acquisitions
In February 1997, the Company completed its purchase of the remaining 50% of
Niachlor with a final payment of $2 to E.I. du Pont de Nemours and Company
(DuPont). In December 1996, the Company made an advance payment of $75 to
DuPont, which was included in Investments and Advances-Affiliated Companies at
Equity in the December 31, 1996 Balance Sheet. This acquisition was accounted
for as a purchase and accordingly, the results of operations, which were not
material, are included in the consolidated financial statements from the date
of acquisition.
Supplemental cash flow information on businesses acquired is as follows:
<TABLE>
<CAPTION>
1997
-----
<S> <C>
Working capital.................................................... $ (5)
Property, plant and equipment...................................... 112
Other liabilities.................................................. (5)
Investments and advances--affiliated companies..................... (25)
-----
Purchase price..................................................... $ 77
=====
</TABLE>
Dispositions and Restructurings
During 1998 the Company recorded a pretax loss of $63 related to the sale of
Olin Interconnect Technologies ($8), the restructuring of the rod, wire, and
tube business at Indianapolis, IN ($34) and non-recurring costs associated
with the spin-off of Arch Chemicals ($21).
In October 1997, the Company and Asahi Glass Company established separate
ownership of two joint ventures the companies had previously formed in polyols
and microelectronic packaging systems. The Company became the sole owner of
Aegis, Inc., a manufacturer of metal hermetic packages that was established in
1986. Conversely, Asahi Glass Company became the sole owner of the former
Asahi-Olin joint venture in polyols that was established in 1974.
In December of 1996 the Company sold its isocyanates business for $565 in
cash. The sale included all assets at the Company's Lake Charles, LA facility
used in the manufacture and sale of toluene diisocyanate, aliphatic
isocyanates and nitric acid. In connection with the transaction, the Company
recorded a pre-tax gain of $188 ($115 after tax gain) which is included in
Gain (Loss) on Sales and Restructurings of Businesses and Spin-Off Costs. The
Company's results of operations for 1996 included sales of $296 and net income
of $33, from the isocyanates business.
Supplemental cash flow information on businesses disposed is as follows:
<TABLE>
<CAPTION>
1998 1997 1996
----- ----- -----
<S> <C> <C> <C>
Proceeds............................................. $ 4 $ 5 $ 571
Working capital...................................... (4) -- (123)
Property, plant and equipment........................ (8) -- (177)
Investments and advances............................. -- (11) --
Other assets......................................... -- 3 (5)
Other liabilities.................................... -- 3 (78)
----- ----- -----
Gain (Loss) on disposition of businesses............. $ (8) $ -- $ 188
===== ===== =====
</TABLE>
48
<PAGE>
The following table summarizes the major components of the 1998 charges and
the remaining balances as of December 31, 1998 excluding the non-cash asset
writedown described below:
<TABLE>
<CAPTION>
Accrued
Amounts Restructuring
Charge Utilized Costs
------ -------- -------------
<S> <C> <C> <C>
Employee termination and severance.......... $ 14 $ -- $ 14
Legal and investment banker fees............ 8 (1) 7
Exit costs.................................. 5 -- 5
Other....................................... 5 (1) 4
---- ----- ----
$ 32 $ (2) $ 30
==== ===== ====
</TABLE>
In September of 1998 the Company announced that it had offered its rod,
wire, and tube business at Indianapolis for sale. These businesses were not
profitable due to strong domestic and international competition and were not
expected to improve significantly. Since the Company was unable to sell the
rod, wire, and tube businesses the Company decided to shut down the
operations, which occurred on December 31, 1998. The Company will continue to
produce sheet and strip copper based alloys at the Indianapolis facility. The
assets of the rod, wire, and tube businesses include machinery and equipment
with a carrying value of $30. A valuation allowance has been recorded to
reflect the estimated net realizable value of the assets net of the amount
expected to be recovered in the sale of those assets of $7 over the next
twelve months. In 1998, the rod, wire, and tube businesses generated sales of
$26 and operating losses of $8.
Employee termination and severance costs relate to the termination of
approximately 450 of the 900 employees at the Indianapolis facility as well as
approximately 140 employees at the Company's corporate headquarters in
Norwalk, CT and various international subsidiaries. The Indianapolis
terminations were primarily manufacturing positions while the corporate and
international terminations included various corporate functions such as
finance, legal, human resources and information technology. The majority of
the termination and severance benefits will be paid over the next twelve
months.
Legal and investment banker fees relate to the spin-off of Arch Chemicals
and are expected to be paid in the next six months.
In connection with the spin-off of Primex in 1996, the Company recorded $9
in spin-off costs which related primarily to pension curtailment, investment
banker and legal fees.
Discontinued Operations
On February 8, 1999, the Company completed the spin-off of its specialty
chemicals businesses as Arch Chemicals, Inc. Under the terms of the spin-off,
the Company distributed to its holders of common stock as of the close of
business on February 1, 1999 one Arch Chemicals common share for every two
shares of Olin common stock. In February 1999 prior to the distribution, Olin
borrowed $75 under a credit facility, which liability was assumed by Arch
Chemicals.
On December 31, 1996 the Company completed the spin-off of its Ordnance and
Aerospace businesses as Primex. Under the terms of the spin-off, the Company
distributed to its holders of common stock as of the close of business on
December 19, 1996, one Primex common share for every ten shares of Olin common
stock. The spin-off distribution reduced shareholders' equity by $145 which
represents the book value of the net assets of Primex as of December 31, 1996.
The historical operating results of these businesses are shown net of tax as
discontinued operations in the consolidated statements of income. The
discontinued operations include an allocation
49
<PAGE>
of corporate overhead with the allocation based on either effort committed or
number of employees. Management believes that the allocation methods used to
allocate the costs and expenses are reasonable, however, such allocated
amounts may or may not necessarily be indicative of what those expenses would
have been had Arch Chemicals or Primex operated independently of Olin. Net
assets of discontinued operations in the consolidated balance sheet include
those assets and liabilities attributable to the Arch Chemicals business.
The historical results for the Primex discontinued operations include an
allocation of the Company's interest expense based on an assumed debt level
providing a debt to capital ratio similar to that of the Company as well as a
level of debt that Primex could maintain on an independent basis in the
future. The allocated debt of $125 represents the amount borrowed by the
Company under a credit facility established by the Company and assumed by
Primex prior to the distribution on December 31, 1996. The cash received by
the Company under this credit facility was used to liquidate its existing
debt.
The Company has entered into tax sharing agreements with both Arch Chemicals
and Primex effectively providing that the Company will be responsible for the
tax liability of Arch Chemicals and Primex for the years that Arch Chemicals
and Primex were included in the Company's consolidated income tax returns.
Income taxes have been allocated to Arch Chemicals and Primex based on their
pretax income and calculated on a separate company basis pursuant to the
requirements of Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes". Income taxes allocated to the discontinued
operations were $21, $30 and $35 in 1998, 1997 and 1996, respectively.
In addition, the Company entered into several other agreements with Arch
Chemicals and Primex which cover such matters as technology transfers,
transition services, covenants not to compete, chlorine and caustic supply and
powder and component supplies.
Condensed historical combined balance sheet and income statement data of the
discontinued operations are summarized below:
<TABLE>
<CAPTION>
1998 1997
----- -----
<S> <C> <C>
Combined Balance Sheets
Total assets.......................................... $ 722 $ 693
Total liabilities..................................... 217 237
Equity................................................ 505 456
<CAPTION>
1998 1997 1996
----- ----- ------
<S> <C> <C> <C>
Combined Statements of Income
Sales................................................. $ 863 $ 930 $1,385
Net income............................................ 40 56 53
</TABLE>
Environmental
The Company is party to various governmental and private environmental
actions associated with waste disposal sites and manufacturing facilities.
Environmental provisions charged to income amounted to $16 in 1998, $17 in
1997 and $70 in 1996. In 1996, in connection with the sale of the isocyanates
business a $53 provision was recorded to provide for contractual liabilities
related to future environmental spending at the Lake Charles, LA site. Charges
to income for investigatory and remedial efforts were material to operating
results in 1998, 1997 and 1996. The consolidated balance sheets include
reserves for future environmental expenditures to investigate and remediate
known sites amounting to $129 at December 31, 1998 and $133 at December 31,
1997, of which $99 and $103 are classified as other noncurrent liabilities,
respectively.
50
<PAGE>
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, the scarcity of reliable data
pertaining to identified sites, the difficulty in assessing the involvement
and financial capability of other potentially responsible parties and the
Company's ability to obtain contributions from other parties and the length of
time 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 against the Company. At December 31, 1998, the Company
had estimated additional contingent environmental liabilities of $40.
Commitments and Contingencies
The Company leases certain properties, such as railroad cars, manufacturing,
warehousing and office space, data processing and office equipment. Leases
covering these properties generally contain escalation clauses based on
increased costs of the lessor, primarily property taxes, maintenance and
insurance and have renewal or purchase options. Total rent expense charged to
operations amounted to $38 in 1998, $33 in 1997 and $37 in 1996, (sublease
income is not significant). Future minimum rent payments under operating
leases having initial or remaining noncancelable lease terms in excess of one
year at December 31, 1998 are as follows: $17 in 1999; $15 in 2000; $12 in
2001; $10 in 2002; $8 in 2003; and $23 thereafter.
There are a variety of non-environmental legal proceedings pending or
threatened against the Company. Those matters that are probable have been
accrued for in the accompanying financial statements. Any contingent amounts
in excess of amounts accrued are not expected to have a material adverse
effect on results of operations, financial position or liquidity of the
Company.
51
<PAGE>
Other Financial Data
Quarterly Data (Unaudited)
<TABLE>
<CAPTION>
First Second Third Fourth
1998 Quarter Quarter Quarter(/1/) Quarter(/2/) Year(/1/)(/2/)
- ---- ------- ------- ------------ ------------ --------------
<S> <C> <C> <C> <C> <C>
Sales................... $ 359 $ 348 $ 383 $ 336 $ 1,426
Cost of goods sold...... 287 285 320 269 1,161
Income (loss) from
continuing operations.. 23 17 (11) 9 38
Net income (loss)....... 39 38 (7) 8 78
Per common share:
Basic
Income (loss) from
continuing
operations........... .47 .37 (.24) .19 .79
Net income (loss)..... .81 .81 (.15) .16 1.64
Diluted
Income (loss) from
continuing
operations........... .46 .37 (.24) .19 .79
Net income (loss)..... .80 .80 (.15) .16 1.63
Common dividends per
share.................. .30 .30 .30 .30 1.20
Market price of common
stock(/3/)
High.................. 49 5/16 48 3/4 41 5/8 30 7/8 49 5/16
Low................... 42 5/16 39 7/8 23 7/8 24 13/16 23 7/8
<CAPTION>
1997
- ----
<S> <C> <C> <C> <C> <C>
Sales................... $ 366 $ 368 $ 384 $ 381 $ 1,499
Cost of goods sold...... 294 301 301 307 1,203
Income from continuing
operations............. 25 18 28 26 97
Net income.............. 42 39 38 34 153
Per common share:
Basic
Income from continuing
operations........... .48 .36 .55 .53 1.91
Net income............ .81 .75 .76 .70 3.02
Diluted
Income from continuing
operations........... .47 .36 .54 .53 1.90
Net income............ .80 .75 .75 .70 3.00
Common dividends per
share ................. .30 .30 .30 .30 1.20
Market price of common
stock (/3/)
High.................. 43 1/4 43 48 7/8 51 3/8 51 3/8
Low................... 35 3/8 36 38 1/4 40 3/4 35 3/8
</TABLE>
- --------
(1) Operating results include a charge for the sale of the microelectronic
packaging unit at Manteca, CA and the restructuring of the rod, wire and
tube businesses at Indianapolis, IN ($42 pretax, $26 after tax and $.55
diluted earnings per share).
(2) Operating results include non-recurring costs associated with the spin-off
of Arch Chemicals, Inc. primarily severance, investment banking and legal
fees ($21 pretax, $15 after tax and $.32 diluted earnings per share).
(3) New York Stock Exchange composite transactions.
52
<PAGE>
Economic Value Added Performance Measure (Unaudited)
<TABLE>
<CAPTION>
1998 1997 1996
------ ------ ------
<S> <C> <C> <C>
Earnings before interest and taxes(/1/)
--continuing operations............................ $ 136 $ 161 $ 198
--discontinued operations.......................... 61 86 95
------ ------ ------
197 247 293
Adjustments(/2/).................................... 22 22 47
------ ------ ------
Operating profit before taxes....................... 219 269 340
Cash taxes at 35%................................... (77) (94) (119)
------ ------ ------
Net operating profit after taxes.................... 142 175 221
Strategic investment(/3/)........................... 3 -- --
Capital charge...................................... (121) (108) (158)
------ ------ ------
EVA................................................. $ 24 $ 67 $ 63
====== ====== ======
Average capital employed............................ $1,288 $1,162 $1,673
====== ====== ======
Return on capital................................... 11.3% 15.1% 13.2%
====== ====== ======
Cost of capital..................................... 9.4% 9.4% 9.4%
====== ====== ======
</TABLE>
- --------
(1) EBIT excludes (i) $63 charge in 1998 related to the sale of the
microelectronic packaging unit at Manteca, CA and the restructuring of the
rod, wire and tube businesses at Indianapolis, IN ($42) and non-recurring
costs associated with the spin-off of Arch Chemicals ($21) and; (ii) the
gain on sale of TDI and ADI businesses of $188 in 1996.
(2)Adjustments include principally environmental provisions and other
miscellaneous income
(3)Strategic investment relates to adjustment for investment with negative
short term EVA impact
53
<PAGE>
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure
Not applicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
The biographical information relating to Olin's Directors under the heading
"Item 1--Election of Directors" in the Proxy Statement relating to Olin's 1999
Annual Meeting of Shareholders (the "Proxy Statement") is incorporated by
reference in this Report. See also the list of executive officers following
Item 4 of this Report. The information regarding compliance with Section 16 of
the Securities Exchange Act of 1934, as amended, contained in the paragraph
entitled "Section 16(a) Beneficial Ownership Reporting Compliance" under the
heading "Security Ownership of Directors and Officers" in the Proxy Statement
is incorporated by reference in this Report.
Item 11. Executive Compensation
The information under the heading "Executive Compensation" in the Proxy
Statement (but excluding the Report of the Compensation Committee on Executive
Compensation appearing on pages 10 through 11 of the Proxy Statement and the
graph appearing on pages 14 and 15 of the Proxy Statement) is incorporated by
reference in this Report. The information under the heading "Additional
Information Regarding the Board of Directors--Compensation of Directors" in
the Proxy Statement is incorporated by reference in this Report.
Item 12. Security Ownership of Certain Beneficial Owners and Management
The information concerning holdings of Olin stock by certain beneficial
owners contained under the heading "Certain Beneficial Owners" in the Proxy
Statement and the information concerning beneficial ownership of Olin stock by
directors and officers of Olin under the heading "Security Ownership of
Directors and Officers" in the Proxy Statement are incorporated by reference
in this Report.
Item 13. Certain Relationships and Related Transactions
Not applicable.
PART IV
Item 14. Exhibits, Consolidated Financial Statement Schedules, and Reports on
Form 8-K
(a) 1. Consolidated Financial Statements
Included in Item 8 above.
2. Consolidated Financial Statement Schedules
Schedules not included herein are omitted because they are inapplicable or
not required or because the required information is given in the consolidated
financial statements and notes thereto.
54
<PAGE>
Separate consolidated financial statements of 50% or less owned subsidiaries
accounted for by the equity method are not summarized herein and have been
omitted because, in the aggregate, they would not constitute a significant
subsidiary.
3. Exhibits
Management contracts and compensatory plans and arrangements are listed as
Exhibits 10(a) through 10(s) below.
3(a) Olin's Restated Articles of Incorporation as amended effective
May 8, 1997--Exhibit 3 to Olin's Form 10-Q for the Quarter ended
March 31, 1997.*
(b) By-laws of Olin as amended effective February 8, 1999.
4(a) Articles of Amendment designating Series A Participating
Cumulative Preferred Stock, par value $1 per share--Exhibit 2 to
Olin's Form 8-A dated February 21, 1996, covering Series A
Participating Cumulative Preferred Stock Purchase Rights.*
(b) Rights Agreement dated as of February 27, 1996 between Olin and
Chemical Mellon Shareholder Services, LLP, Rights Agent--Exhibit
1 to Olin's Form 8-A dated February 21, 1996, covering Series A
Participating Cumulative Preferred Stock Purchase Rights.*
(c) Form of Senior Debt Indenture between Olin and Chemical Bank--
Exhibit 4(a) to Form 8-K dated June 15, 1992; Supplemental
Indenture dated as of March 18, 1994 between Olin and Chemical
Bank--Exhibit 4(c) to Registration Statement No. 33-52771;
Prospectus Supplement dated June 17, 1992 to Prospectus dated
June 16, 1992, with respect to Olin's 8% Senior Notes Due 2002
filed under Registration Statement No. 33-4479; and Prospectus
Supplement dated May 26, 1995 to Prospectus dated May 4, 1994
relating to Medium Term Notes, Series A filed under Registration
Statement No. 33-52771.*
(d) Form of Subordinated Debt Indenture between Olin and Bankers
Trust Company--Exhibit 4(i) to Registration No. 33-4479.*
(e) Amended and Restated Credit Agreement, dated as of September 30,
1993 and amended and restated as of February 22, 1999, among Olin
and the banks named therein.
Olin is party to a number of other instruments defining the rights of
holders of long-term debt. No such instrument authorizes an amount of
securities in excess of 10% of the total assets of Olin and its subsidiaries
on a consolidated basis. Olin agrees to furnish a copy of each instrument to
the Commission upon request.
10(a) 1980 Stock Option Plan for Key Employees of Olin Corporation and
Subsidiaries, as amended--Exhibit 10(a) to Olin's Form 10-K for
1991.*
(b) 1988 Stock Option Plan for Key Employees of Olin Corporation and
Subsidiaries as amended through February 23, 1995--Exhibit 10(b)
to Olin's Form 10-K for 1994.*
(c) Amended and Restated Employee Deferral Plan, effective November
1, 1997, as amended and restated effective as of February 8,
1999.
(d) Olin Senior Executive Pension Plan with amendments.
(e) Olin Supplemental Contributing Employee Ownership Plan, effective
January 1, 1990 as amended and restated as of September 24, 1998.
(f) Olin Corporation Key Executive Life Insurance Program--Exhibit
10(b) to Olin's Form 10-Q for Quarter ended March 31, 1986.*
(g) Form of Olin Corporation Endorsement Split Dollar Agreement
(effective January 1, 1993)--Exhibit 10(s) to Olin's Form 10-K
for 1992.*
(h) Form of executive agreement between Olin and certain executive
officers as amended December 10, 1998.
55
<PAGE>
(i) Form of special severance agreement provided to certain employees
to become operative upon a "change in control event"-Exhibit
10(n) to Olin's Form 10-K for 1997.*
(j) Olin 1991 Long Term Incentive Plan, as amended through February
23, 1995--Exhibit 10(u) to Olin's Form 10-K for 1994.*
(k) Description of 1991 Performance Unit Awards granted under the
Olin 1991 Long Term Incentive Plan--Exhibit 10(w) to Olin's Form
10-K for 1991.*
(l) Description of 1992 Performance Unit Awards granted under the
Olin 1991 Long Term Incentive Plan--Exhibit 10(z) to Olin's Form
10-K for 1992.*
(m) Description of Performance Share Awards granted under the Olin
1991 Long Term Incentive Plan--Exhibit 10 to Olin's Form 10-Q for
the quarter ended June 30, 1993.*
(n) Amended and Restated 1997 Stock Plan for Non-Employee Directors
as amended and restated effective as of February 8, 1999.
(o) Olin Senior Management Incentive Compensation Plan as amended
April 27, 1995--Exhibit 10(b) to Olin's Form 10-Q for Quarter
ended March 31, 1995.*
(p) Description of Restricted Stock Unit Awards granted under the
Olin 1991 Long Term Incentive Plan--Exhibit 10(bb) to Olin's Form
10-K for 1995.*
(q) Form of EVA Incentive Plan (Management Incentive Compensation
Plan)--Exhibit 10(dd) to Olin's Form 10-K for 1996.*
(r) 1996 Stock Option Plan for Key Employees of Olin Corporation and
Subsidiaries--Exhibit A to Olin's 1996 Proxy Statement dated
March 12, 1996.*
(s) Olin Supplementary and Deferral Benefit Pension Plan.
(t) Assumption of Liabilities and Indemnity Agreement, dated December
31, 1996, between Olin Corporation and Primex Technologies,
Inc.--Exhibit 10(ii) to Olin's Form 10-K for 1996.*
(u) Distribution Agreement between Olin Corporation and Arch
Chemicals, Inc., dated as of February 1, 1999 --Exhibit 2.1 to
Olin's Form 8-K filed February 23, 1999.*
(v) Form of Employee Benefits Allocation Agreement between Olin
Corporation and Arch Chemicals, Inc.
(w) 364-Day Credit Agreement dated as of January 27, 1999, among Arch
Chemicals, Inc., Olin Corporation, the Lenders party thereto,
Bank of America, National Trust and Savings Association, as
Syndication Agent, Wachovia Bank, N.A., as Documentation Agent,
The Chase Manhattan Bank, as Administrative Agent and Chase
Securities, Inc., as Arranger.--Exhibit 10.1 to Olin's Form 8-K
filed February 23, 1999.*
(x) Five-year Credit Agreement dated as of January 27, 1999, among
Arch Chemicals, Inc., Olin Corporation, the Lenders party
thereto, Bank of America, National Trust and Savings Association,
as Syndication Agent, Wachovia Bank, N.A., as Documentation
Agent, The Chase Manhattan Bank, as Administrative Agent and
Chase Securities, Inc., as Arranger.--Exhibit 10.2 to Olin's Form
8-K filed February 23, 1999.*
11. Computation of Per Share Earnings (included in the Note--"Earnings
Per Share" to Notes to Consolidated Financial Statements in Item 8.
12. Computation of Ratio of Earnings to Fixed Charges (unaudited).
21. List of Subsidiaries.
23. Consent of KPMG LLP dated March 16, 1999.
27(a) Financial Data Schedule.
27(b) Restated Financial Data Schedule.
27(c) Restated Financial Data Schedule.
- --------
* Previously filed as indicated and incorporated herein by reference. Exhibits
incorporated by reference are located in SEC File No. 1-1070 unless
otherwise indicated.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended December 31,
1998.
56
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
Date: March 16, 1999
/s/ Donald W. Griffin
By
-----------------------------------
Donald W. Griffin
Chairman of the Board, President
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the date indicated.
Signature Title Date
/s/ Donald W. Griffin Chairman of the March 16, 1999
- ------------------------------------- Board, President
Donald W. Griffin and Chief Executive
Officer and
Director (Principal
Executive Officer)
/s/ William W. Higgins Director March 16, 1999
- -------------------------------------
William W. Higgins
/s/ Robert Holland, Jr. Director March 16, 1999
- -------------------------------------
Robert Holland, Jr.
/s/ Suzanne Denbo Jaffe Director March 16, 1999
- -------------------------------------
Suzanne Denbo Jaffe
/s/ Randall W. Larrimore Director March 16, 1999
- -------------------------------------
Randall W. Larrimore
/s/ G. Jackson Ratcliffe, Jr. Director March 16, 1999
- -------------------------------------
G. Jackson Ratcliffe, Jr.
/s/ Richard M. Rompala Director March 16, 1999
- -------------------------------------
Richard M. Rompala
/s/ Anthony W. Ruggiero Executive Vice
- ------------------------------------- President and Chief
Anthony W. Ruggiero Financial Officer
(Principal
Financial Officer
and Principal
Accounting Officer)
57
<PAGE>
EXHIBIT INDEX
<TABLE>
<C> <S>
3(b) By-laws of Olin as amended effective February 8, 1999.
4(e) Amended and Restated Credit Agreement, dated as of September 30, 1993
and amended and restated as of February 22, 1999, among Olin and the
banks named therein.
10(c) Amended and Restated Employee Deferral Plan, effective November 1, 1997,
as amended and restated effective as of February 8, 1999.
10(d) Olin Senior Executive Pension Plan with amendments.
10(e) Olin Supplemental Contributing Employee Ownership Plan, effective
January 1, 1990 as amended and restated as of September 24, 1998.
10(h) Form of executive agreement between Olin and certain executive officers
as amended December 10, 1998.
10(n) Amended and Restated 1997 Stock Plan for Non-Employee Directors as
amended and restated effective as of February 8, 1999.
10(s) Olin Supplementary and Deferral Benefit Pension Plan.
10(v) Form of Employee Benefits Allocation Agreement between Olin Corporation
and Arch Chemicals, Inc.
12. Computation of Ratio of Earnings to Fixed Charges (unaudited).
21. List of Subsidiaries.
23. Consent of KPMG LLP dated March 16, 1999.
27(a) Financial Data Schedule.
27(b) Restated Financial Data Schedule.
27(c) Restated Financial Data Schedule.
</TABLE>
58
<PAGE>
PRINTED ON RECYCLED PAPER
<PAGE>
Exhibit 3(b)
- --------------------------------------------------------------------------------
BYLAWS
OF
OLIN CORPORATION
As Amended
Effective
February 8, 1999
- --------------------------------------------------------------------------------
<PAGE>
BY-LAWS
of
OLIN CORPORATION
-----------------------------
ARTICLE I.
MEETINGS OF SHAREHOLDERS.
SECTION 1. Place of Meetings. All meetings of the shareholders of Olin
------------------
Corporation (hereinafter called the "Corporation") shall be held at such place,
either within or without the Commonwealth of Virginia, as may from time to time
be fixed by the Board of Directors of the Corporation (hereinafter called the
"Board").
SECTION 2. Annual Meetings. The annual meeting of the shareholders of the
----------------
Corporation for the election of directors and for the transaction of such other
business as may properly come before the meeting shall be held on the last
Thursday in April in each year (or, if that day shall be a legal holiday, then
on the next succeeding business day), or on such other day and/or in such other
month as may be fixed by the Board, at such hour as may be specified in the
notice thereof.
SECTION 3. Special Meetings. A special meeting of the shareholders for any
-----------------
purpose or purposes, unless otherwise provided by law or in the Articles of
Incorporation of the Corporation as from time to time amended (hereinafter
called the "Articles"), may be held at any time upon the call of the Board, the
Chairman of the Board, the President or the holders of a majority of the shares
of the issued and outstanding stock of the Corporation entitled to vote at the
meeting.
SECTION 4. Notice of Meetings. Except as otherwise provided by law or the
-------------------
Articles, not less than ten nor more than sixty days' notice in writing of the
place, day, hour and purpose or purposes of each meeting of the shareholders,
whether annual or special, shall be given to each shareholder of record of the
Corporation entitled to vote at such meeting, either by the delivery thereof to
such shareholder personally or by the mailing thereof to such shareholder in a
postage prepaid envelope addressed to such shareholder at his address as it
appears on the stock transfer books of the Corporation; provided, however, that
in the case of a special meeting of shareholders called by the shareholders,
such notice shall be given at least fifty days before the date of the meeting.
Notice of any meeting of shareholders shall not be required to be given to any
shareholder who shall attend the meeting in person or by proxy, unless
attendance is for the express purpose of objecting to the transaction of any
business because the meeting was not lawfully called or convened, or who shall
waive notice thereof in writing signed by the shareholder before, at or after
such meeting. Notice of any adjourned meeting need not be given, except when
expressly required by law.
SECTION 5. Quorum. Shares representing a majority of the votes entitled to
-------
be cast on a matter by all classes or series which are entitled to vote thereon
and be counted
-2-
<PAGE>
together collectively, represented in person or by proxy at any meeting of the
shareholders, shall constitute a quorum for the transaction of business thereat
with respect to such matter, unless otherwise provided by law or the Articles.
In the absence of a quorum at any such meeting or any adjournment or
adjournments thereof, shares representing a majority of the votes cast on the
matter of adjournment, either in person or by proxy, may adjourn such meeting
from time to time until a quorum is obtained. At any such adjourned meeting at
which a quorum has been obtained, any business may be transacted which might
have been transacted at the meeting as originally called.
SECTION 6. Voting. Unless otherwise provided by law or the Articles, at
-------
each meeting of the shareholders each shareholder entitled to vote at such
meeting shall be entitled to one vote for each share of stock standing in his
name on the books of the Corporation upon any date fixed as hereinafter
provided, and may vote either in person or by proxy in writing. Unless demanded
by a shareholder present in person or represented by proxy at any meeting of the
shareholders and entitled to vote thereon or so directed by the chairman of the
meeting, the vote on any matter need not be by ballot. On a vote by ballot,
each ballot shall be signed by the shareholder voting or his proxy, and it shall
show the number of shares voted.
SECTION 7. Judges. One or more judges or inspectors of election for any
-------
meeting of shareholders may be appointed by the chairman of such meeting, for
the purpose of receiving and taking charge of proxies and ballots and deciding
all questions as to the qualification of voters, the validity of proxies and
ballots and the number of votes properly cast.
SECTION 8. Conduct of Meeting. The chairman of the meeting at each meeting
-------------------
of shareholders shall have all the powers and authority vested in presiding
officers by law or practice, without restriction, as well as the authority to
conduct an orderly meeting and to impose reasonable limits on the amount of time
taken up in remarks by any one shareholder.
SECTION 9. Business Proposed by a Shareholder. To be properly brought
-----------------------------------
before a meeting of shareholders, business must be (i) specified in the notice
of meeting (or any supplement thereto) given by or at the direction of the Board
of Directors, (ii) otherwise properly brought before the meeting by or at the
direction of the Board of Directors or (iii) in the case of an annual meeting of
shareholders or a special meeting called at the request of shareholders in
accordance with these By-laws, properly brought before the meeting by a
shareholder. In addition to any other applicable requirements, for business to
be properly brought before a meeting by a shareholder, the shareholder must have
given timely notice thereof in writing to the Secretary of the Corporation. To
be timely, a shareholder's notice must be given, either by personal delivery or
by United States registered or certified mail, postage prepaid, to the Secretary
of the Corporation in the case of an annual meeting, not later than 90 days
before the anniversary of the immediately preceding annual meeting and in the
case of a special meeting called at the request of shareholders, in accordance
with the procedures set forth in Section 10 of Article I of these By-laws. A
shareholder's notice to the Secretary shall set forth as to
-3-
<PAGE>
each matter the shareholder proposes to bring before the meeting (i) a brief
description of the business desired to be brought before the meeting, including
the complete text of any resolutions to be presented at the meeting with respect
to such business, and the reasons for conducting such business at the meeting,
(ii) the name and address of record of the shareholder proposing such business,
(iii) the class and number of shares of the Corporation that are beneficially
owned by the shareholder and any other person on whose behalf the proposal is
made, and (iv) any material interest of the shareholder and any other person on
whose behalf the proposal is made, in such business. In the event that a
shareholder attempts to bring business before a meeting without complying with
the foregoing procedure, the chairman of the meeting may declare to the meeting
that the business was not properly brought before the meeting and, if he shall
so declare, such business shall not be transacted.
SECTION 10. Special Meeting at Request of Shareholders.
-------------------------------------------
(a) Any holder or holders of record of a majority of the outstanding shares of
Common Stock requesting the Corporation to call a special meeting of
shareholders pursuant to Section 2 of Article Eighth of the Restated Articles of
Incorporation (collectively, the "Initiating Shareholder") shall give written
notice of such request to the Secretary of the Corporation at its principal
executive offices (the "Notice"). The Notice shall be sent in the manner and
contain all the information that would be required in a notice to the Secretary
given pursuant to Section 9 of this Article I.
(b) If the Initiating Shareholder owns of record a majority of the outstanding
Common Stock as determined by the Secretary of the Corporation, the Corporation
shall be required to call the special meeting of shareholders requested by the
Initiating Shareholder.
(c) The record date for determining the shareholders of record entitled to vote
at a special meeting called pursuant to this Section 10 shall be fixed by the
Board of Directors which record date will be within 60 days of the date the
Secretary of the Corporation determines the Corporation is required to call such
special meeting. Written notice of the meeting shall be mailed by the
Corporation to shareholders of record on such record date within 10 days after
the record date (or such longer period as may be necessary for the Corporation
to file its proxy materials with, and receive and respond to the comments of,
the Securities and Exchange Commission), and the meeting will be held within 50
days after the date of mailing of the notice, as determined by the Board of
Directors.
(d) The business to be conducted at a special meeting called pursuant to this
Section 10 shall be limited to the business set forth in the Notice and such
other business or proposals as the Board of Directors shall determine and shall
be set forth in the notice of meeting. The Board of Directors or the Chairman of
the Board of Directors may determine other rules and procedures for the conduct
of the meeting.
ARTICLE II.
BOARD OF DIRECTORS.
-4-
<PAGE>
SECTION 1. Number, Classification, Term, Election. The property, business
---------------------------------------
and affairs of the Corporation shall be managed under the direction of the Board
as from time to time constituted. The Board shall consist of seven directors,
but the number of directors may be increased to any number, not more than
eighteen directors, or decreased to any number, not less than three directors,
by amendment of these Bylaws. No director need be a shareholder. The Board
shall be divided into three classes, Class I, Class II and Class III, as nearly
equal in number as possible, with the members of each class to serve for the
respective terms of office provided in the Articles, and until their respective
successors shall have been duly elected or until death or resignation or until
removal in the manner hereinafter provided. In case the number of directors
shall be increased, the additional directors to fill the vacancies caused by
such increase shall be elected in accordance with the provisions of Section 4 of
Article VI of these By-laws. Any increase or decrease in the number of
directors shall be so apportioned among the classes by the Board as to make all
classes as nearly equal in number as possible.
Subject to the rights of holders of any Preferred Stock outstanding,
nominations for the election of directors may be made by the Board or a
committee appointed by the Board or by any shareholder entitled to vote in the
election of directors generally. However, any shareholder entitled to vote in
the election of directors generally may nominate one or more persons for
election as directors at a meeting only if it is an annual meeting and written
notice of such shareholder's intent to make such nomination or nominations has
been given, either by personal delivery or by United States registered or
certified mail, postage prepaid, to the Secretary of the Corporation not later
than 90 days before the anniversary of the immediately preceding annual
meeting. Each such notice shall set forth: (a) the name and address of the
shareholder who intends to make the nomination and of the person or persons to
be nominated; (b) a representation that the shareholder is a holder of record of
shares of the Corporation entitled to vote at such meeting (stating the class
and number thereof) and intends to appear in person or by proxy at the meeting
to nominate the person or persons specified in the notice; (c) a description of
all arrangements or understandings between the shareholder and each nominee and
any other person or persons (naming such person or persons) pursuant to which
the nomination or nominations are to be made by the shareholder; and (d) such
other information regarding each nominee proposed by such shareholder as would
be required to be included in a proxy statement filed pursuant to the proxy
rules of the Securities and Exchange Commission had the nominee been nominated
or intended to be nominated by the Board of Directors, and shall include a
consent signed by each such nominee to serve as a director of the Corporation if
so elected. The chairman of the meeting may refuse to acknowledge the
nomination by a shareholder of any person that is not made in compliance with
the foregoing procedure.
SECTION 2. Compensation. Each director, in consideration of his serving as
-------------
such, shall be entitled to receive from the Corporation such amount per annum or
such fees for attendance at Board and Committee meetings, or both, in cash or
other property, including securities of the Corporation, as the Board shall from
time to time determine, together with
-5-
<PAGE>
reimbursements for the reasonable expenses incurred by him in connection with
the performance of his duties. Nothing contained herein shall preclude any
director from serving the Corporation, or any subsidiary or affiliated
corporation, in any other capacity and receiving proper compensation therefor.
If the Board adopts a resolution to that effect, any director may elect to defer
all or any part of the annual and other fees hereinabove referred to for such
period and on such terms and conditions as shall be permitted by such
resolution.
SECTION 3. Place of Meetings. The Board may hold its meetings at such
------------------
place or places within or without the Commonwealth of Virginia as it may from
time to time by resolution determine or as shall be specified or fixed in the
respective notices or waivers of notice thereof.
SECTION 4. Organization Meeting. After each annual election of directors,
---------------------
as soon as conveniently may be, the newly constituted Board shall meet for the
purposes of organization. At such organization meeting, the newly constituted
Board shall elect officers of the Corporation and transact such other business
as shall come before the meeting. Notice of organization meetings of the Board
need not be given. Any organization meeting may be held at any other time or
place which shall be specified in a notice given as hereinafter provided for
special meetings of the Board, or in a waiver of notice thereof signed by all
the directors.
SECTION 5. Regular Meetings. Regular meetings of the Board may be held at
-----------------
such time and place as may from time to time be specified in a resolution
adopted by the Board then in effect; and, unless otherwise required by such
resolution, or by law, notice of any such regular meeting need not be given.
SECTION 6. Special Meetings. Special meetings of the Board shall be held
-----------------
whenever called by the Chief Executive Officer, or by the Secretary at the
request of any three directors. Notice of a special meeting shall be mailed to
each director, addressed to him at his residence or usual place of business, not
later than the second day before the day on which such meeting is to be held, or
shall be sent addressed to him at such place by telegraph, cable or wireless, or
be delivered personally or by telephone, not later than the day before the day
on which such meeting is to be held. Neither the business to be transacted at,
nor the purpose of, any regular or special meeting of the Board need be
specified in the notice of such meeting, unless required by the Articles.
SECTION 7. Quorum. At each meeting of the Board the presence of a majority
-------
of the number of directors fixed by these By-laws shall be necessary to
constitute a quorum. The act of a majority of the directors present at a
meeting at which a quorum shall be present shall be the act of the Board, except
as may be otherwise provided by law or by these By-laws. Any meeting of the
Board may be adjourned by a majority vote of the directors present at such
meeting. Notice of any adjourned meeting need not be given.
SECTION 8. Waivers of Notice of Meetings. Anything in these By-laws or in
------------------------------
any resolution adopted by the Board to the contrary notwithstanding, notice of
any meeting of
-6-
<PAGE>
the Board need not be given to any director if such notice shall be waived in
writing signed by such director before, at or after the meeting, or if such
director shall be present at the meeting. Any meeting of the Board shall be a
legal meeting without any notice having been given or regardless of the giving
of any notice or the adoption of any resolution in reference thereto, if every
member of the Board shall be present thereat. Except as otherwise provided by
law or these By-laws, waivers of notice of any meeting of the Board need not
contain any statement of the purpose of the meeting.
SECTION 9. Telephone Meetings. Members of the Board or any committee may
-------------------
participate in a meeting of the Board or such committee by means of a conference
telephone or other means of communications whereby all directors participating
may simultaneously hear each other during the meeting, and participation by such
means shall constitute presence in person at such meeting.
SECTION 10. Actions Without Meetings. Any action that may be taken at a
-------------------------
meeting of the Board or of a committee may be taken without a meeting if a
consent in writing, setting forth the action, shall be signed, either before or
after such action, by all of the directors or all of the members of the
committee, as the case may be. Such consent shall have the same force and
effect as a unanimous vote.
ARTICLE III.
INDEMNIFICATION AND LIMIT ON LIABILITY.
(a) Every person who is or was a director, officer or employee of the
Corporation, or who, at the request of the Corporation, serves or has served in
any such capacity with another corporation, partnership, joint venture, trust,
employee benefit plan, or other enterprise shall be indemnified by the
Corporation against any and all liability and reasonable expense that may be
incurred by him in connection with or resulting from any claim, action or
proceeding (whether brought in the right of the Corporation or any such other
corporation, entity, plan or otherwise), civil or criminal, in which he may
become involved, as a party or otherwise, by reason of his being or having been
a director, officer or employee of the Corporation, or such other corporation,
entity or plan while serving at the request of the Corporation, whether or not
he continues to be such at the time such liability or expense shall have been
incurred, unless such person engaged in willful misconduct or a knowing
violation of the criminal law.
As used in this Article III: (i) the terms "liability" and "expense" shall
include, but shall not be limited to, counsel fees and disbursements and amounts
of judgments, fines or penalties against, and amounts paid in settlement by, a
director, officer or employee; (ii) the terms "director," "officer" and
"employee," unless the context otherwise requires, include the estate or
personal representative of any such person; (iii) a person is considered to be
serving an employee benefit plan as a director, officer or employee of the plan
at the Corporation's request if his duties to the Corporation also impose duties
on, or otherwise involve services by, him to the plan or, in connection with the
plan, to
-7-
<PAGE>
participants in or beneficiaries of the plan; (iv) the term "occurrence" means
any act or failure to act, actual or alleged, giving rise to a claim, action or
proceeding; and (v) service as a trustee or as a member of a management or
similar committee of a partnership or joint venture shall be considered service
as a director, officer or employee of the trust, partnership or joint venture.
The termination of any claim, action or proceeding, civil or criminal, by
judgment, settlement, conviction or upon a plea of nolo contendere, or its
equivalent, shall not create a presumption that a director, officer or employee
did not meet the standards of conduct set forth in this paragraph (a). The
burden of proof shall be on the Corporation to establish, by a preponderance of
the evidence, that the relevant standards of conduct set forth in this paragraph
(a) have not been met.
(b) Any indemnification under paragraph (a) of this Article shall be made
unless (i) the Board, acting by a majority vote of those directors who were
directors at the time of the occurrence giving rise to the claim, action or
proceeding involved and who are not at the time parties to such claim, action or
proceeding (provided there are at least five such directors), finds that the
director, officer or employee has not met the relevant standards of conduct set
forth in such paragraph (a), or (ii) if there are not at least five such
directors, the Corporation's principal Virginia legal counsel, as last
designated by the Board as such prior to the time of the occurrence giving rise
to the claim, action or proceeding involved, or in the event for any reason such
Virginia counsel is unwilling to so serve, then Virginia legal counsel mutually
acceptable to the Corporation and the person seeking indemnification, deliver to
the Corporation their written advice that, in their opinion, such standards have
not been met.
(c) Expenses incurred with respect to any claim, action or proceeding of the
character described in paragraph (a) shall, except as otherwise set forth in
this paragraph (c), be advanced by the Corporation prior to the final
disposition thereof upon receipt of an undertaking by or on behalf of the
recipient to repay such amount if it is ultimately determined that he is not
entitled to indemnification under this Article III. No security shall be
required for such undertaking and such undertaking shall be accepted without
reference to the recipient's financial ability to make repayment.
Notwithstanding the foregoing, the Corporation may refrain from, or suspend,
payment of expenses in advance if at any time before delivery of the final
finding described in paragraph (b), the Board or Virginia legal counsel, as the
case may be, acting in accordance with the procedures set forth in paragraph
(b), find by a preponderance of the evidence then available that the officer,
director or employee has not met the relevant standards of conduct set forth in
paragraph (a).
(d) No amendment or repeal of this Article III shall adversely affect or
deny to any director, officer or employee the rights of indemnification provided
in this Article III with respect to any liability or expense arising out of a
claim, action or proceeding based in whole or substantial part on an occurrence
the inception of which takes place before or while this Article III, as adopted
by the shareholders of the Corporation at the 1986 Annual Meeting of the
Corporation, is in effect. The provisions of this paragraph (d) shall apply to
-8-
<PAGE>
any such claim, action or proceeding whenever commenced, including any such
claim, action or proceeding commenced after any amendment or repeal to this
Article III.
(e) The rights of indemnification provided in this Article III shall be in
addition to any rights to which any such director, officer or employee may
otherwise be entitled by contraction or as a matter of law.
(f) In any proceeding brought by or in the right of the Corporation or
brought by or on behalf of shareholders of the Corporation, no director or
officer of the Corporation shall be liable to the Corporation or its
shareholders for monetary damages with respect to any transaction, occurrence or
course of conduct, whether prior or subsequent to the effective date of this
Article III, except for liability resulting from such person's having engaged in
willful misconduct or a knowing violation of the criminal law or any federal or
state securities law.
(g) An amendment to this Article III shall be approved only by a majority of
the votes entitled to be cast by each voting group entitled to vote thereon.
ARTICLE IV.
COMMITTEES.
SECTION 1. Executive and Finance Committee. The Board may, by resolution
--------------------------------
or resolutions adopted by a majority of the number of directors fixed by these
By-laws, appoint two or more directors to constitute an Executive and Finance
Committee, each member of which shall serve as such during the pleasure of the
Board, and may designate for such Committee a Chairman, who shall continue as
such during the pleasure of the Board.
All completed action by the Executive and Finance Committee shall be
reported to the Board at its meeting next succeeding such action or at its
meeting held in the month following the taking of such action, and shall be
subject to revision or alteration by the Board; provided, that no acts or rights
of third parties shall be affected by any such revision or alteration.
The Executive and Finance Committee shall fix its own rules of procedure and
shall meet where and as provided by such rules or by resolution of the Board. At
all meetings of the Executive and Finance Committee, a majority of the full
number of members of such Committee shall constitute a quorum, and in every case
the affirmative vote of a majority of members present at any meeting of the
Executive and Finance Committee at which a quorum is present shall be necessary
for the adoption of any resolution.
During the intervals between the meetings of the Board, the Executive and
Finance Committee shall possess and may exercise all the power and authority of
the Board
-9-
<PAGE>
(including, without limitation, all the power and authority of the Board in the
management, control and direction of the financial affairs of the Corporation)
except with respect to those matters reserved to the Board by Virginia law, in
such manner as the Executive and Finance Committee shall deem best for the
interests of the Corporation, in all cases in which specific directions shall
not have been given by the Board.
SECTION 2. Other Committees. To the extent permitted by law, the Board may
-----------------
from time to time by resolution adopted by a majority of the number of directors
fixed by these By-laws create such other committees of directors, officers,
employees or other persons designated by it as the Board shall deem advisable
and with such limited authority, functions and duties as the Board shall by
resolution prescribe. The Board shall have the power to change the members of
any such committee at any time, to fill vacancies, and to discharge any such
committee, either with or without cause, at any time.
ARTICLE V.
OFFICERS.
SECTION 1. Number, Term, Election. The officers of the Corporation shall
-----------------------
be a Chief Executive Officer, a Chairman of the Board, a President, one or more
Vice Presidents, a Treasurer, a Controller and a Secretary. The Board may
appoint such other officers and such assistant officers and agents with such
powers and duties as the Board may find necessary or convenient to carry on the
business of the Corporation. Such officers and assistant officers shall serve
until their successors shall be chosen, or as otherwise provided in these By-
laws. Any two or more offices may be held by the same person.
SECTION 2. Chief Executive Officer. The Chief Executive Officer shall,
------------------------
subject to the control of the Board and the Executive and Finance Committee,
have full authority and responsibility for directing the conduct of the
business, affairs and operations of the Corporation. In addition to acting as
Chief Executive Officer of the Corporation, he shall perform such other duties
and exercise such other powers as may from time to time be prescribed by the
Board and shall see that all orders and resolutions of the Board and the
Executive and Finance Committee are carried into effect. In the event of the
inability of the Chief Executive Officer to act, the Board will designate an
officer of the Corporation to perform the duties of that office.
SECTION 3. Chairman of the Board. The Chairman of the Board shall preside
----------------------
at all meetings of the Board and of the shareholders and, in the absence of the
Chairman of the Executive and Finance Committee, at all meetings of the
Executive and Finance Committee. He shall perform such other duties and
exercise such other powers as may from time to time be prescribed by the Board
or, if he shall not be the Chief Executive Officer, by the Chief Executive
Officer.
-10-
<PAGE>
SECTION 4. President. The President shall have such powers and perform
----------
such duties as may from time to time be prescribed by the Board or, if he shall
not be the Chief Executive Officer, by the Chief Executive Officer.
SECTION 5. Vice Presidents. Each Vice President shall have such powers and
----------------
perform such duties as may from time to time be prescribed by the Board, the
Chief Executive Officer or any officer to whom the Chief Executive Officer may
have delegated such authority.
SECTION 6. Treasurer. The Treasurer shall have the general care and
----------
custody of the funds and securities of the Corporation. He shall perform such
other duties and exercise such other powers as may from time to time be
prescribed by the Board, the Chief Executive Officer or any officer to whom the
Chief Executive Officer may have delegated such authority. If the Board shall
so determine, he shall give a bond for the faithful performance of his duties,
in such sum as the Board may determine to be proper, the expense of which shall
be borne by the Corporation. To such extent as the Board shall deem proper, the
duties of the Treasurer may be performed by one or more assistants, to be
appointed by the Board.
SECTION 7. Controller. The Controller shall be the accounting officer of
-----------
the Corporation. He shall keep full and accurate accounts of all assets,
liabilities, receipts and disbursements and other transactions of the
Corporation and cause regular audits of the books and records of the Corporation
to be made. He shall also perform such other duties and exercise such other
powers as may from time to time be prescribed by the Board, the Chief Executive
Officer or any officer to whom the Chief Executive Officer may have delegated
such authority. If the Board shall so determine, he shall give a bond for the
faithful performance of his duties, in such sum as the Board may determine to be
proper, the expense of which shall be borne by the Corporation. To such extent
as the Board shall deem proper, the duties of the Controller may be performed by
one or more assistants, to be appointed by the Board.
SECTION 8. Secretary. The Secretary shall keep the minutes of meetings of
----------
shareholders, of the Board, and, when requested, of Committees of the Board; and
he shall attend to the giving and serving of notices of all meetings thereof.
He shall keep or cause to be kept such stock and other books, showing the names
of the shareholders of the Corporation, and all other particulars regarding
them, as may be required by law. He shall also perform such other duties and
exercise such other powers as may from time to time be prescribed by the Board,
the Chief Executive Officer or any officer to whom the Chief Executive Officer
may have delegated such authority. To such extent as the Board shall deem
proper, the duties of the Secretary may be performed by one or more assistants,
to be appointed by the Board.
-11-
<PAGE>
ARTICLE VI.
REMOVALS, RESIGNATIONS AND VACANCIES.
SECTION 1. Removal of Directors. Any director may be removed at any time
---------------------
but only with cause, by the affirmative vote of the holders of record of a
majority of the shares of the Corporation entitled to vote on the election of
directors, taken at an annual meeting of the shareholders.
SECTION 2. Removal of Officers. Any officer, assistant officer or agent of
--------------------
the Corporation may be removed at any time, either with or without cause, by the
Board in its absolute discretion. Any such removal shall be without prejudice to
the recovery of damages for breach of the contract rights, if any, of the
officer, assistant officer or agent removed. Election or appointment of an
officer, assistant officer or agent shall not of itself create contract rights.
SECTION 3. Resignation. Any director, officer or assistant officer of the
------------
Corporation may resign as such at any time by giving written notice of his
resignation to the Board, the Chief Executive Officer or the Secretary of the
Corporation. Such resignation shall take effect at the time specified therein
or, if no time is specified therein, at the time of delivery thereof, and,
unless otherwise specified therein, the acceptance of such resignation shall not
be necessary to make it effective.
SECTION 4. Vacancies. Any vacancy in the Board caused by death,
----------
resignation, disqualification, removal, an increase in the number of directors,
or any other cause, may be filled (a) by the holders of shares of the
Corporation entitled to vote on the election of directors, but only at an annual
meeting of shareholders, or (b) by the affirmative vote of a majority of the
remaining directors though less than a quorum of the Board at any regular or
special meeting thereof. Each director so elected by the Board shall hold
office until the next annual election of directors, and each director so elected
by the shareholders shall hold office for a term expiring at the annual meeting
of shareholders at which the term of the class to which he has been elected
expires, and, in each case, until his successor shall be elected, or until his
death, or until he shall resign, or until he shall have been removed in the
manner hereinabove provided. Any vacancy in the office of any officer or
assistant officer caused by death, resignation, removal or any other cause, may
be filled by the Board for the unexpired portion of the term.
-12-
<PAGE>
ARTICLE VII.
CONTRACTS, LOANS, CHECKS, DRAFTS, DEPOSITS, ETC.
SECTION 1. Execution of Contracts. Except as otherwise provided by law or
-----------------------
by these By-laws, the Board (i) may authorize any officer, employee or agent of
the Corporation to execute and deliver any contract, agreement or other
instrument in writing in the name and on behalf of the Corporation, and (ii) may
authorize any officer, employee or agent of the Corporation so authorized by the
Board to delegate such authority by written instrument to other officers,
employees or agents of the Corporation. Any such authorization by the Board may
be general or specific and shall be subject to such limitations and restrictions
as may be imposed by the Board. Any such delegation of authority by an officer,
employee or agent may be general or specific, may authorize re-delegation, and
shall be subject to such limitations and restrictions as may be imposed in the
written instrument of delegation by the person making such delegation.
SECTION 2. Loans. No loans shall be contracted on behalf of the
------
Corporation and no negotiable paper shall be issued in its name unless
authorized by the Board. When authorized by the Board, any officer, employee or
agent of the Corporation may effect loans and advances at any time for the
Corporation from any bank, trust company or other institution, or from any firm,
corporation or individual, and for such loans and advances may make, execute and
deliver promissory notes, bonds or other certificates or evidences of
indebtedness of the Corporation and when so authorized may pledge, hypothecate
or transfer any securities or other property of the Corporation as security for
any such loans or advances. Such authority may be general or confined to
specific instances.
SECTION 3. Checks, Drafts, etc. All checks, drafts and other orders for
--------------------
the payment of money out of the funds of the Corporation and all notes or other
evidences of indebtedness of the Corporation shall be signed on behalf of the
Corporation in such manner as shall from time to time be determined by the
Board.
SECTION 4. Deposits. All funds of the Corporation not otherwise employed
---------
shall be deposited from time to time to the credit of the Corporation in such
banks, trust companies or other depositories as the Board may select or as may
be selected by the Treasurer or any other officer, employee or agent of the
Corporation to whom such power may from time to time be delegated by the Board.
SECTION 5. Voting of Securities. Unless otherwise provided by the Board,
---------------------
the Chief Executive Officer may from time to time appoint an attorney or
attorneys, or agent or agents of the Corporation, in the name and on behalf of
the Corporation, to cast the votes which the Corporation may be entitled to cast
as the holder of stock or other securities in any other corporation, any of
whose stock or other securities may be held by the Corporation, at meetings of
the holders of the stock or other securities of such other corporation, or to
consent in writing, in the name of the Corporation as such holder, to any action
by such other corporation, and may instruct the person or persons so appointed
as
-13-
<PAGE>
to the manner of casting such votes or giving such consent, and may execute or
cause to be executed in the name and on behalf of the Corporation and under its
corporate seal, or otherwise, all such written proxies or other instruments as
such officer may deem necessary or proper in the premises.
ARTICLE VIII.
CAPITAL STOCK.
SECTION 1. Certificates. Every shareholder shall be entitled to a
-------------
certificate, or certificates, in such form as shall be approved by the Board,
signed by the Chairman of the Board, the President or a Vice President and the
Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer
or any other officer authorized by these By-laws or a resolution of the Board,
certifying the number of shares owned by him in the Corporation. Any such
certificate may, but need not, bear the seal of the Corporation or a facsimile
thereof. If any such certificate is countersigned by a transfer agent or
registered by a registrar other than the Corporation or an employee of the
Corporation, the signatures of any of the officers above specified upon such
certificate may be facsimiles. In case any such officer who shall have signed
or whose facsimile signature shall have been placed upon such certificate shall
have ceased to be such before such certificate is issued, it may be issued by
the Corporation with the same effect as if such officer had not ceased to be
such at the date of its issue.
SECTION 2. Transfers. Shares of stock of the Corporation shall be
----------
transferable on the stock books of the Corporation by the holder in person or by
his attorney thereunto authorized by power of attorney duly executed and filed
with the Secretary or the transfer agent, but, except as hereinafter provided in
the case of loss, destruction or mutilation of certificates, no transfer of
stock shall be entered until the previous certificate, if any, given for the
same shall have been surrendered and canceled. Except as otherwise provided by
law, no transfer of shares shall be valid as against the Corporation, its
shareholders or creditors, for any purpose, until it shall have been entered in
the stock records of the Corporation by an entry showing from and to whom
transferred. The Board may also make such additional rules and regulations as
it may deem expedient concerning the issue and transfer of certificates
representing shares of the capital stock of the Corporation.
SECTION 3. Record Date. For the purpose of determining shareholders
------------
entitled to notice of or to vote at any meeting of shareholders or any
adjournment thereof, or entitled to receive payment of any dividend, or in order
to make a determination of shareholders for any other proper purpose, the Board
may fix in advance a date as the record date for any such determination of
shareholders, such date in any case to be not more than seventy days prior to
the date on which the particular action, requiring such determination of
shareholders, is to be taken. When a determination of shareholders entitled to
vote at any meeting of shareholders has been made as provided in this section,
such determination shall apply to any adjournment thereof unless the Board fixes
a new record
-14-
<PAGE>
date, which it shall do if the meeting is adjourned to a date more than 120 days
after the date fixed for the original meeting.
SECTION 4. Lost, Destroyed or Mutilated Certificates. In case of loss,
------------------------------------------
destruction or mutilation of any certificate of stock, another may be issued in
its place upon proof of such loss, destruction or mutilation and upon the giving
of a bond of indemnity to the Corporation in such form and in such sum as the
Board may direct; provided that a new certificate may be issued without
requiring any bond when, in the judgment of the Board, it is proper so to do.
SECTION 5. Control Share Acquisitions. Article 14.1 of Chapter 9 of Title
---------------------------
13.1 of the Code of Virginia shall not apply to acquisitions of shares of the
Corporation.
ARTICLE IX.
INSPECTION OF RECORDS.
The Board from time to time shall determine whether, to what extent, at what
times and places, and under what conditions and regulations the accounts and
books and papers of the Corporation, or any of them, shall be open for the
inspection of the shareholders, and no shareholder shall have any right to
inspect any account or book or paper of the Corporation except as expressly
conferred by statute or by these By-laws or authorized by the Board.
ARTICLE X.
AUDITOR.
The Board shall annually appoint an independent accountant who shall
carefully examine the books of the Corporation. One such examination shall be
made immediately after the close of the fiscal year and be ready for
presentation at the annual meeting of shareholders of the Corporation, and such
other examinations shall be made as the Board may direct.
ARTICLE XI.
SEAL.
The seal of the Corporation shall be circular in form and shall bear the name
of the Corporation and the year "1892."
-15-
<PAGE>
ARTICLE XII.
FISCAL YEAR.
The fiscal year of the Corporation shall end on the 31st day of December in
each year.
ARTICLE XIII.
AMENDMENTS.
The By-laws of the Corporation may be altered, amended or repealed and new
By-laws may be adopted by the Board (except as Section 1 of Article II may
otherwise require), or by the holders of the outstanding shares of the
Corporation entitled to vote generally at any annual or special meeting of the
shareholders when notice thereof shall have been given in the notice of the
meeting of shareholders.
EMERGENCY BY-LAWS.
SECTION 1. Definitions. As used in these Emergency By-laws,
------------
(a) the term "period of emergency" shall mean any period during which a
quorum of the Board cannot readily be assembled because of some catastrophic
event.
(b) the term "incapacitated" shall mean that the individual to whom such term
is applied shall not have been determined to be dead but shall be missing or
unable to discharge the responsibilities of his office; and
(c) the term "senior officer" shall mean the Chairman of the Board, the
President, any corporate Vice President, the Treasurer, the Controller and the
Secretary, and any other person who may have been so designated by the Board
before the emergency.
SECTION 2. Applicability. These Emergency By-laws, as from time to time
--------------
amended, shall be operative only during any period of emergency. To the extent
not inconsistent with these Emergency By-laws, all provisions of the regular By-
laws of the Corporation shall remain in effect during any period of emergency.
No officer, director or employee shall be liable for actions taken in good
faith in accordance with these Emergency By-laws.
SECTION 3. Board of Directors. (a) A meeting of the Board may be called by
-------------------
any director or senior officer of the Corporation. Notice of any meeting of the
Board need be given only to such of the directors as it may be feasible to reach
at the time and by such
-16-
<PAGE>
means as may be feasible at the time, including publication or radio, and at a
time less than twenty-four hours before the meeting if deemed necessary by the
person giving notice.
(b) At any meeting of the Board, three directors in attendance shall
constitute a quorum. Any act of a majority of the directors present at a
meeting at which a quorum shall be present shall be the act of the Board. If
less than three directors should be present at a meeting of the Board, any
senior officer of the Corporation in attendance at such meeting shall serve as a
director for such meeting, selected in order of rank and within the same rank in
order of seniority.
(c) In addition to the Board's powers under the regular By-laws of the
Corporation to fill vacancies on the Board, the Board may elect any individual
as a director to replace any director who may be incapacitated and to serve
until the latter ceases to be incapacitated or until the termination of the
period of emergency, whichever first occurs. In considering officers of the
Corporation for election to the Board, the rank and seniority of individual
officers shall not be pertinent.
(d) The Board, during as well as before any such emergency, may change the
principal office or designate several alternative offices or authorize the
officers to do so.
SECTION 4. Appointment of Officers. In addition to the Board's powers under
------------------------
the regular By-laws of the Corporation with respect to the election of officers,
the Board may elect any individual as an officer to replace any officer who may
be incapacitated and to serve until the latter ceases to be incapacitated.
SECTION 5. Amendments. These Emergency By-laws shall be subject to repeal
-----------
or change by further action of the Board of Directors or by action of the
shareholders, except that no such repeal or change shall modify the provisions
of the second paragraph of Section 2 with regard to action or inaction prior to
the time of such repeal or change. Any such amendment of these Emergency By-
laws may make any further or different provision that may be practical and
necessary for the circumstances of the emergency.
-17-
<PAGE>
EXHIBIT 4(e)
CONFORMED COPY
U.S. $165,000,000
AMENDED AND RESTATED CREDIT AGREEMENT
Dated as of September 30, 1993
Amended and Restated as of February 22, 1999
Among
OLIN CORPORATION
as Borrower
-- --------
and
THE BANKS NAMED HEREIN
as Banks
-- -----
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms............................. 1
SECTION 1.02. Computation of Time Periods....................... 21
SECTION 1.03. Accounting Terms.................................. 21
ARTICLE II AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The A Advances.................................... 22
SECTION 2.02. Making the Advances............................... 22
SECTION 2.03. Facility Fee...................................... 30
SECTION 2.04. Reduction and Extension of the
Commitments/Substitution of
Banks........................................... 30
SECTION 2.05. Repayment......................................... 32
SECTION 2.06. Interest.......................................... 32
SECTION 2.07. Additional Interest on Eurodollar
Rate Advances................................... 33
SECTION 2.08. Interest Rate Determination....................... 34
SECTION 2.09. Prepayments....................................... 34
SECTION 2.10. Increased Costs................................... 35
SECTION 2.11. Payments and Computations......................... 37
SECTION 2.12. A Notes........................................... 38
SECTION 2.13. Sharing of Payments, Etc.......................... 38
SECTION 2.14. Taxes............................................. 39
SECTION 2.15. Interest Elections................................ 41
ARTICLE III CONDITIONS OF LENDING
SECTION 3.01. Condition Precedent to'
Restatement.......................................42
SECTION 3.02. [Intentionally left blank]..........................43
SECTION 3.03. Conditions Precedent to Each
Borrowing Increasing the Aggregate
Amount of Advances.............................. 43
SECTION 3.04. Conditions Precedent to Each B
Borrowing.........................................44
<PAGE>
ARTICLE IV REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties
of the Borrower................................. 45
ARTICLE V COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants............................. 48
SECTION 5.02. Negative Covenants................................ 50
ARTICLE VI EVENTS OF DEFAULT
SECTION 6.01. Events of Default................................. 55
ARTICLE VII ASSIGNMENTS AND PARTICIPATIONS
SECTION 7.01. Binding Effect.................................... 58
SECTION 7.02. Assignments....................................... 58
SECTION 7.03. Participations.................................... 60
SECTION 7.04. Information....................................... 61
ARTICLE VIII MISCELLANEOUS
SECTION 8.01. Amendments, Etc................................... 61
SECTION 8.02. Notices, Etc...................................... 62
SECTION 8.03. No Waiver; Remedies............................... 62
SECTION 8.04. Costs, Expenses and Taxes......................... 62
SECTION 8.05. [Intentionally left blank.]....................... 63
SECTION 8.06. Lender's Credit Decision.......................... 63
SECTION 8.07. Lender and Affiliates............................. 63
SECTION 8.08. Indemnification by Borrower....................... 63
SECTION 8.09. Governing Law..................................... 64
SECTION 8.10. Execution in Counterparts......................... 64
SECTION 8.11. Special Prepayment Right.......................... 64
Schedule I - List of Applicable Lending Offices
Exhibit A-1 - A Promissory Note
Exhibit A-2 - Form of B Note
Exhibit B-1 - Notice of A Borrowing
Exhibit B-2 - Notice of B Borrowing
Exhibit C - Assignment and Acceptance
Exhibit D - Opinion of Counsel to the Borrower
Exhibit E - Assumption Agreement
<PAGE>
AMENDED AND RESTATED CREDIT AGREEMENT
dated as of September 30, 1993, as amended and restated as of
February 22, 1999, among OLIN CORPORATION, a Virginia corporation
(the "Borrower"), and the banks (the "Banks") listed on the
signature pages hereof.
The Borrower and the Banks are parties to the Credit Agreement dated
as of September 30, 1993 as amended from time to time prior to the date hereof
(the "Existing Credit Agreement"). The Borrower has requested that the Existing
Credit Agreement be amended to effect certain changes thereto. The undersigned
Banks are willing to amend the Existing Credit Agreement and to restate the
Existing Credit Agreement as so amended in the form hereof, subject to the terms
and conditions hereinafter set forth.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, 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):
"A Advance" means an advance (other than a B Advance) by a Lender to
---------
the Borrower pursuant to Section 2.02(a), and refers to an Adjusted CD Rate
Advance, a Base Rate Advance or a Eurodollar Rate Advance (each of which
shall be a "Type" of A Advance).
"A Borrowing" means a borrowing consisting of A Advances of the same
-----------
Type made on the same day by the Lenders.
"Acquisition" means any acquisition by the Borrower or any of its
-----------
Subsidiaries of all or substantially all of the capital stock of, or all or
a substantial part of the assets of, or of a business unit or division of,
any Person.
"A Note" means a promissory note of the Borrower payable to the order
------
of any Lender, in substantially the form of Exhibit A-1 hereto, evidencing
the
<PAGE>
2
aggregate Indebtedness of the Borrower to such Lender resulting from the A
Advances made by such Lender.
"Adjusted CD Rate" means, for the Interest Period for each Adjusted CD
----------------
Rate Advance comprising part of the same Borrowing, an interest rate per
annum equal to the sum of:
(a) the rate per annum obtained by dividing (i) the rate of
interest determined by the Majority Lenders to be the average (rounded
upward to the nearest whole multiple of 1/100 of 1% per annum, if such
average is not such a multiple) of the consensus bid rate determined
by each of the Reference Banks for the bid rates per annum, at 9:00
A.M. (New York City time) (or as soon thereafter as practicable) on
the first day of such Interest Period, of New York certificate of
deposit dealers of recognized standing selected by each Reference Bank
for the purchase at face value of certificates of deposit of such
Reference Bank in an amount substantially equal to such Reference
Bank's Adjusted CD Rate Advance comprising part of such Borrowing and
with a maturity equal to such Interest Period (provided that if such
quotations from such dealers are not available to any Reference Bank,
such Reference Bank shall determine a reasonably equivalent rate on
the basis of another customary source or sources selected by it), by
(ii) a percentage equal to 100% minus the Adjusted CD Rate Reserve
Percentage (as defined below) for such Interest Period, plus
(b) the Assessment Rate (as defined below) for such Interest
Period.
The "Adjusted CD Rate Reserve Percentage" for the Interest Period for each
-----------------------------------
Adjusted CD Rate Advance comprising part of the same A Borrowing means the
reserve percentage applicable on the first day of such Interest Period
under regulations issued from time to time by the Board of Governors of the
Federal Reserve System (or any successor) for determining the maximum
reserve requirement (including, but not limited to, any emergency,
supplemental or other marginal reserve requirement) for a member bank of
the Federal Reserve System in New York City with deposits exceeding one
billion dollars with respect to liabilities consisting of or including
(among other liabilities) U.S. dollar nonpersonal time deposits in the
United States with a maturity equal to such Interest Period. The
<PAGE>
3
"Assessment Rate" for the Interest Period for each Adjusted CD Rate Advance
comprising part of the same A Borrowing means the annual assessment rate
estimated (in good faith) by the Majority Lenders on the first day of such
Interest Period for determining the then current annual assessment payable
by Citibank, N.A. to the Federal Deposit Insurance Corporation (or any
successor) for insuring U.S. dollar deposits of Citibank, N.A. in the
United States. The Adjusted CD Rate for the Interest Period for each
Adjusted CD Rate Advance comprising part of the same A Borrowing shall be
determined by the Majority Lenders on the basis of applicable rates
furnished to and received by the Majority Banks from the Reference Banks on
the first day of such Interest Period, subject, however, to the provisions
of Section 2.08.
"Adjusted CD Rate Advance" means an A Advance which bears interest as
------------------------
provided in Section 2.06(b).
"Advance" means an A Advance or a B Advance.
-------
"Affiliate" means, when used with respect to a Lender, any Person
---------
directly or indirectly controlling, controlled by or under common control
with such Lender. The term "control (including the terms "controlled by"
or "under common control with") means the possession directly or indirectly
of the power, whether or not exercised, to direct or cause the direction of
the management and policies of any Person, whether through ownership of
voting securities or by contract or otherwise.
"Applicable Lending Office" means, with respect to each Lender, such
-------------------------
Lender's Domestic Lending Office in the case of a Base Rate Advance, such
Lender's CD Lending Office in the case of an Adjusted CD Rate Advance, and
such Lender's Eurodollar Lending Office in the case of a Eurodollar Rate
Advance.
"Applicable Margin" means, as determined on the date the Adjusted CD
-----------------
Rate or Eurodollar Rate, as the case may be, is determined, when the
Ratings are as set forth below, the rate per annum set forth below opposite
such Ratings:
Applicable Applicable
Ratings Eurodollar C/D Rate
Moody's S&P Margin Margin
----------- ----- ----------- ---------
If the Borrower has
a Moody's or S&P
rating which is
greater than or
<PAGE>
4
equal to any one of:
Category 1 A3 or A- .12% .245%
- ----------
If the Borrower has
a Moody's or S&P
rating which is
equal to any
one of:
Category 2 Baal or BBB+ .16% .285%
- ----------
Category 3 Baa2 or BBB .20% .325%
- ----------
Category 4 Baa3 or BBB- .25% .375%
- ----------
Any other Rating
lower than those
set forth above:
Category 5 .32% .445%
- ----------
For purposes of the foregoing, if the Ratings established or deemed to have
been established by Moody's and S&P shall fall within different categories,
the Applicable Margin shall be based on (A) if the Ratings are in adjacent
categories, the higher of the two Ratings and (B) if the Ratings are in
non-adjacent categories, the Rating immediately below the higher of the two
Ratings. If the rating system of Moody's or S&P shall change, or if any
such rating agency shall cease to be in the business of rating corporate
debt obligations, the Borrower and the Lenders shall negotiate in good
faith to amend this definition to reflect such changed rating system or the
non-availability of ratings from such rating agency and, pending the
effectiveness of any such amendment, the Applicable Margin shall be
determined using the rating of such rating agency most recently in effect
prior to such change or cessation.
"Assignment and Acceptance" means an assignment and acceptance entered
-------------------------
into by a Lender and an assignee in substantially the form of Exhibit C
hereto and otherwise in accordance with Article VII.
"B Advance" means an advance by a Lender to the Borrower pursuant to
---------
the auction bidding procedure described in Section 2.02(b).
"B Borrowing" means a borrowing consisting of simultaneous B Advances
-----------
from each of the Lenders whose offer to make such B Advances has been
accepted under
<PAGE>
5
the auction bidding procedure described in Section 2.02(b).
"B Note" means a promissory note of the Borrower payable to the order
------
of any Lender, in substantially the form of Exhibit A-2 hereto, evidencing
the Indebtedness of the Borrower to such Lender resulting from a B Advance
made by such Lender.
"B Reduction" means, for each Lender at any time, such Lender's
-----------
ratable portion (determined according to such Lender's respective
Commitments) of the aggregate principal amount of all B Advances then
outstanding.
"Base Rate" means, for any Interest Period or any other period, a
---------
fluctuating interest rate per annum as shall be in effect from time to time
which rate per annum shall at all times be equal to the higher of:
(a) The rate of interest announced publicly by Citibank, N.A. in
New York, New York, from time to time, as Citibank, N.A.'s base rate,
or
(b) The sum (adjusted to the nearest 1/100 of one percent or, if
there is no nearest 1/100 of one percent, to the next higher 1/100 of
one percent) of (i) 1/2 of one percent per annum, plus (ii) the rate
per annum obtained by dividing (A) the Federal Funds Rate by (B) a
percentage equal to 100% minus the average of the daily percentages
specified during such period by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, but not limited to, any emergency,
supplemental or other marginal reserve requirement) for Citibank, N.A.
in respect of liabilities consisting of or including (among other
liabilities) three-month U.S. dollar nonpersonal time deposits in the
United States, plus (iii) the average during such period of the annual
assessment rates estimated by Citibank, N.A. for determining the then
current annual assessment payable by Citibank, N.A. to the Federal
Deposit Insurance Corporation (or any successor) for insuring U.S.
dollar deposits of Citibank, N.A. in the United States.
"Base Rate Advance" means an A Advance which bears interest as
-----------------
provided in Section 2.06(a).
"Business Day" means a day of the year on which banks are not required
------------
or authorized to close in New
<PAGE>
6
York City and, if the applicable Business Day relates to any Eurodollar
Rate Advances, on which dealings are carried on in the London interbank
market.
"Capital Lease Obligations" of any Person means the obligations of
-------------------------
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under
GAAP, and the amount of such obligations shall be the capitalized amount
thereof determined in accordance with GAAP.
"CD Lending Office" means, with respect to any Lender, the office of
-----------------
such Lender specified as its "CD Lending Office" opposite its name on
Schedule I hereto or in the Assignment and Acceptance pursuant to which it
became a Lender (or, if no such office is specified, its Domestic Lending
Office), or such other office of such Lender as such Lender may from time
to time specify to the Borrower.
"Commitment" has the meaning specified in Section 2.01.
----------
"Consolidated EBITDA" means, for any period, Consolidated Net Income
-------------------
for such period (adjusted to exclude all extraordinary or unusual items and
any gains or losses on sales of assets outside the ordinary course of
business) plus, without duplication and to the extent deducted in
----
calculating such Consolidated Net Income for such period, the sum of (a)
income tax expense, (b) interest expense, amortization or writeoff of debt
discount with respect to Indebtedness (including the Advances), (c)
depreciation and amortization expense, (d) amortization of intangibles
(including, but not limited to, goodwill) and organization costs, and (e)
any other non-cash charges. For the purposes of calculating Consolidated
EBITDA for any Reference Period pursuant to any determination of the
Consolidated Leverage Ratio or Consolidated Interest Coverage Ratio, if
during such Reference Period the Borrower or any Subsidiary shall have made
an Acquisition, Consolidated EBITDA for such Reference Period shall be
calculated after giving pro forma effect thereto and any Indebtedness
--- -----
incurred or assumed in connection therewith as if such Acquisition occurred
and such Indebtedness had been incurred or assumed on the first day of such
Reference Period.
<PAGE>
7
"Consolidated Interest Coverage Ratio" means, for any Reference
------------------------------------
Period, the ratio of (a) Consolidated EBITDA for such Reference Period to
(b) Consolidated Interest Expense for such Reference Period.
"Consolidated Interest Expense" means, for any period, total cash
-----------------------------
interest expense (including that attributable to capitalized lease
obligations) of the Borrower and its Subsidiaries for such period with
respect to all outstanding Indebtedness of the Borrower and its
Subsidiaries (including all commission, discounts and other fees and
charges accrued with respect to letters of credit and bankers' acceptance
financing allocable to such period in accordance with GAAP), minus (in the
case of net benefits) or plus (in the case of net costs) the net benefits
or net costs under all Hedging Agreements in respect of Indebtedness of the
Borrower and its Subsidiaries to the extent such net benefits or net costs
are allocable to such period in accordance with GAAP. For the purposes of
calculating Consolidated Interest Expense for any Reference Period pursuant
to any determination of the Consolidated Interest Coverage Ratio, if during
such Reference Period the Borrower or any Subsidiary shall have made an
Acquisition, Consolidated Interest Expense for such Reference Period shall
be calculated after giving pro forma effect thereto and any Indebtedness
--- -----
incurred or assumed in connection therewith as if such Acquisition occurred
and such Indebtedness had been incurred or assumed on the first day of such
Reference Period.
"Consolidated Leverage Ratio" means, as at the last day of any
---------------------------
Reference Period, the ratio of (a) Consolidated Total Debt on such date to
(b) Consolidated EBITDA for such Reference Period.
"Consolidated Net Income" means, for any period, the consolidated net
-----------------------
income (or loss) of the Borrower and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; provided that there shall be
--------
excluded (a) the income (or deficit) of any Person accrued prior to the
date it becomes a Subsidiary of the Borrower or is merged into or
consolidated with the Borrower or any of its Subsidiaries, (b) the income
(or deficit) of any Person (other than a Subsidiary of the Borrower) in
which the Borrower or any of its Subsidiaries has an ownership interest,
except to the extent that any such income is actually received by the
Borrower or such Subsidiary in the form of dividends or similar
distributions and (c) the undistributed earnings of any Subsidiary of the
<PAGE>
8
Borrower to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by
the terms of any Contractual Obligation (other than under any Loan
Document) or any law applicable to such Subsidiary.
"Consolidated Net Tangible Assets" means, at any date, the total
--------------------------------
assets of the Borrower and its Subsidiaries at such date, determined on a
consolidated basis, minus (a) the consolidated current liabilities of the
Borrower and its Subsidiaries as of such date, (b) unamortized debt
discount and expense, goodwill, trademarks, brand names, patents and other
intangible assets, and (c) any write-up of the value of any assets (other
than an allocation of purchase price in an acquisition) after December 31,
1997; all as determined in accordance with GAAP.
"Consolidated Total Debt" means, at any date, the aggregate principal
-----------------------
amount of all Indebtedness of the Borrower and its Subsidiaries at such
date other than Excluded Sunbelt Debt, determined on a consolidated basis
in accordance with GAAP.
"Contractual Obligation" means, as to any
----------------------
Person, any provision of any security issued by such Person or of any
agreement, instrument or other undertaking to which such Person is a party
or by which it or any of its property is bound.
"Domestic Lending Office" means, with respect to any Lender, the
-----------------------
office of such Lender specified as its "Domestic Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant
to which it became a Lender, or such other office of such Lender as such
Lender may from time to time specify to the Borrower.
"Domestic Subsidiary" shall mean any Subsidiary organized under the
-------------------
laws of any State of the United States of America, substantially all of the
assets of which are located, and substantially all of the business of which
is conducted, in the United States of America.
"Environmental Laws" means any and all federal, state, local and
------------------
foreign statutes, laws, judicial decisions, regulations, ordinances, rules,
judgments, orders, decrees, injunctions, permits, concessions, grants,
franchises, licenses or governmental restrictions relating to the effect of
the environment on human health, the environment or to emissions,
<PAGE>
9
discharges or releases of pollutants, contaminants, Hazardous Substances or
wastes into the environment including, without limitation, ambient air,
surface water, ground water, or land, or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of pollutants, contaminants, Hazardous Substances or
wastes or the clean-up or other remediation thereof.
"Eligible Assignee" means (i) a commercial bank organized under the
-----------------
laws of the United States, or any State thereof, and having total assets in
excess of $1,000,000,000 and a combined capital and surplus of at least
$500,000,000; (ii) a savings and loan association or savings bank organized
under the laws of the United States, or any State thereof, having total
assets in excess of $500,000,000, and having shareholders equity in excess
of $100,000,000; (iii) a commercial bank organized under the laws of any
other country which is a member of the OECD, or a political subdivision of
any such country, and having total assets in excess of $1,000,000,000,
provided that such bank is acting through a branch or agency located in the
United States; and (iv) the central bank of any country which is a member
of the OECD.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time, and the regulations promulgated and rulings
issued thereunder.
"ERISA Affiliate" means any Person who for purposes of Title IV of
---------------
ERISA is a member of the Borrower's controlled group, or under common
control with the Borrower, within the meaning of Section 414 of the
Internal Revenue Code of 1986, as amended from time to time, and the
regulations promulgated and rulings issued thereunder.
"ERISA Event" means (i) the occurrence of a reportable event, within
-----------
the meaning of Section 4043 of ERISA, unless the 30-day notice requirement
with respect thereto has been waived by the PBGC; (ii) the provision by the
administrator of any Plan of a notice of intent to terminate such Plan,
pursuant to Section 4041(a) (2) of ERISA (including any such notice with
respect to a plan amendment referred to in Section 4041(e) of ERISA); (iii)
the cessation of operations at a facility in the circumstances described in
Section 4068(f) of ERISA; (iv) the withdrawal by the Borrower or an ERISA
Affiliate from a Multiple Employer Plan during a plan year for which it was
a substantial
<PAGE>
10
employer, as defined in Section 4001(a)(2) of ERISA; (v) the failure by the
Borrower or any ERISA Affiliate to make a payment to a Plan required under
Section 302(f)(1) of ERISA, which Section imposes a lien for failure to
make required payments; (vi) the adoption of an amendment to a Plan
requiring the provision of security to such Plan, pursuant to Section 307
of ERISA; or (vii) the institution by the PBGC of proceedings to terminate
a Plan, pursuant to Section 4042 of ERISA, or the occurrence of any event
or condition which would constitute grounds under Section 4042 of ERISA for
the termination of, or the appointment of a trustee to administer, a Plan.
"Eurocurrency Liabilities" has the meaning assigned to that term in
------------------------
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.
"Eurodollar Lending Office" means, with respect to any Lender, the
-------------------------
office of such Lender specified as its "Eurodollar Lending Office" opposite
its name on Schedule I hereto or in the Assignment and Acceptance pursuant
to which it became a Lender (or, if no such office is specified, its
Domestic Lending Office), or such other office of such Lender as such
Lender may from time to time specify to the Borrower.
"Eurodollar Rate" means, for the Interest Period for each Eurodollar
---------------
Rate Advance comprising part of the same A Borrowing and each B Advance
comprising part of the same B Borrowing, an interest rate per annum equal
to the average (rounded upward to the nearest whole multiple of 1/16 of 1%
per annum, if such average is not such a multiple) of the rate per annum at
which deposits in U.S. dollars are offered by the principal office of each
of the Reference Banks in London, England to prime banks in the London
interbank market at 10:00 A.M. (New York time) two Business Days before the
first day of such Interest Period or, in the case of a B Advance, two
Business Days before the date of such B Borrowing in an amount
substantially equal to such Reference Bank's Eurodollar Rate Advance
comprising part of such A Borrowing or, in the case of a B Borrowing, in an
amount substantially equal to one quarter of the aggregate amount of such B
Borrowing and for a period equal to such Interest Period or, in the case of
a B Advance, equal to the period from the date of such B Advance to its
maturity date as specified in the applicable Notice of B Borrowing. The
Eurodollar Rate for such period for each such Advance comprising part of
the same A Borrowing or B Borrowing (as
<PAGE>
11
applicable) shall be such average as determined by the Majority Lenders on
the basis of applicable rates furnished to and received by the Majority
Lenders from the Reference Banks two Business Days before the first day of
such Interest Period or, in the case of a B Advance, two Business Days
before the date of such B Borrowing, subject, however, to the provisions of
Section 2.08.
"Eurodollar Rate Advance" means an A Advance which bears interest as
-----------------------
provided in Section 2.06(c).
"Eurodollar Rate Reserve Percentage" of any Lender for the Interest
----------------------------------
Period for any Eurodollar Rate Advance means the reserve percentage
applicable during such Interest Period (or if more than one such percentage
shall be so applicable, the daily average of such percentages for those
days in such Interest Period during which any such percentage shall be so
applicable) under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) for determining
the maximum reserve requirement (including, without limitation, any
emergency, supplemental or other marginal reserve requirement) for such
Lender with respect to liabilities or assets consisting of or including
Eurocurrency Liabilities having a term equal to such Interest Period.
"Events of Default" has the meaning specified in Section 6.01.
-----------------
"Excluded Sunbelt Debt" means 66__% of the
---------------------
Borrower's Indebtedness in respect of its Guarantee of the Guaranteed
Secured Senior Notes due 2017, Series O, of Sunbelt Chlor Alkali
Partnership.
"Existing Credit Agreement" is defined in the
-------------------------
preamble of this Agreement.
"Facility Fee Rate" means with respect to each day when the Ratings
-----------------
are as set forth below, the rate per annum set forth below opposite such
Ratings:
Ratings
Moody's S&P Facility Fee Rate
------- --- -----------------
If the Borrower has a
Moody's or
<PAGE>
12
Ratings
Moody's S&P Facility Fee Rate
------- --- -----------------
S&P rating
which is greater than or
equal to any one of:
Category 1
- ---------- A3 or A- .08%
If the Borrower has a
Moody's or S&P rating
which is equal to any one
of:
Category 2 Baa1 BBB+ .09%
- ----------
Category 3 Baa2 BBB .10%
- ----------
Category 4 Baa3 BBB- .12%
- ----------
Any other Rating
lower than those
set forth above:
Category 5 .18%
- ----------
For purposes of the foregoing, if the Ratings established or deemed to have
been established by Moody's and S&P shall fall within different categories,
the Facility Fee Rate shall be based on (A) if the Ratings are in adjacent
categories, the higher of the two Ratings and (B) if the Ratings are in
non-adjacent categories, the Rating immediately below the higher of the two
Ratings. If the rating system of Moody's or S&P shall change, or if any
such rating agency shall cease to be in the business of rating corporate
debt obligations, the Borrower and the Lenders shall negotiate in good
faith to amend this definition to reflect such changed rating system or the
non-availability of ratings from such rating agency and, pending the
effectiveness of any such amendment, the Facility Fee Rate shall be
determined using the rating of such rating agency most recently in effect
prior to such change or cessation.
<PAGE>
13
"Federal Funds Rate" means, for any period, a fluctuating interest
------------------
rate per annum equal for each day during such period to the weighted
average of the rates on overnight Federal funds transactions with members
of the Federal Reserve System arranged by Federal funds brokers, as
published in Federal Reserve Statistical Release H.15(519), for such day
(or, if such day is not a Business Day, for the next preceding Business
Day) by the Federal Reserve Bank of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by the Majority Banks
from three Federal funds brokers of recognized standing selected by them.
"Foreign Subsidiary" shall mean any Subsidiary other than a Domestic
------------------
Subsidiary.
"GAAP" is defined in Section 1.03.
----
"Guarantee" of or by any Person (the "guarantor") means any
--------- ---------
obligation, contingent or otherwise, of the guarantor guaranteeing or
having the economic effect of guaranteeing any Indebtedness or other
obligation of any other Person (the "primary obligor"") in any manner,
---------------
whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Indebtedness or other obligation
or to purchase (or to advance or supply funds for the purchase of) any
security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such
Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition
or liquidity of the primary obligor so as to enable the primary obligor to
pay such Indebtedness or other obligation or (d) as an account party in
respect of any letter of credit or letter of guaranty issued to support
such Indebtedness or obligation; provided, that the term Guarantee shall
--------
not include endorsements for collection or deposit in the ordinary course
of business.
"Hazardous Substances" means any toxic, radioactive, caustic or
--------------------
otherwise hazardous substance, including petroleum, its derivatives, by-
products and other hydrocarbons, or any substance having any constituent
elements displaying any of the foregoing
<PAGE>
14
characteristics, in each case regulated by an Environmental Law.
"Hedging Agreement" means any interest rate protection agreement,
-----------------
foreign currency exchange agreement, commodity price protection agreement
or other interest or currency exchange rate or commodity price hedging
arrangement.
"Indebtedness" of any Person means, without duplication, (a) all
------------
obligations of such Person for borrowed money or with respect to deposits
or advances of any kind, (b) all obligations of such Person evidenced by
bonds, debentures, notes or similar instruments, (c) all obligations of
such Person upon which interest charges are customarily paid, (d) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (e) all
obligations of such Person in respect of the deferred purchase price of
property or services (excluding current accounts payable incurred in the
ordinary course of business), (f) all Indebtedness of others secured by (or
for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien on property owned or acquired by
such Person, whether or not the Indebtedness secured thereby has been
assumed, (g) all Guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations,
contingent or otherwise, of such Person as an account party in respect of
letters of credit and letters of guaranty, other than letters of credit and
letters of guaranty issued to support obligations (other than Indebtedness)
incurred in the ordinary course of business, and (j) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances.
The Indebtedness of any Person shall include the Indebtedness of any other
entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefore as a result of such
Person's ownership interest in or other relationship with such entity,
except to the extent the terms of such Indebtedness provide that such
Person is not liable therefor.
"Insufficiency" means, with respect to any Plan, the amount, if any,
-------------
of its unfunded benefit liabilities, as defined in Section 4001(a)(18) of
ERISA.
<PAGE>
15
"Interest Election Request" means a request by the Borrower to
-------------------------
convert or continue an A Borrowing in accordance with Section 2.15.
"Interest Period" means, for each A Advance comprising part of the
---------------
same A Borrowing, the period commencing on the date of such A Advance (or
on the effective date of any election applicable to such A Borrowing
pursuant to Section 2.15) and ending the last day of the period selected by
the Borrower pursuant to the provisions below. The duration of each such
Interest Period shall be (a) in the case of a Base Rate Advance, up to 180
days, (b) in the case of an Adjusted CD Rate Advance, 30, 60, 90 or 180
days and (c) in the case of a Eurodollar Rate Advance, 1, 2, 3 or 6 months,
in each case as the Borrower may select, upon notice received by the
Lenders not later than 11:00 A.M. (New York City time) on (i) the third
Business Day prior to the first day of such Interest Period in the case of
Eurodollar Rate Advances, (ii) the Business Day prior to the first day of
such Interest Period in the case of Adjusted CD Rate Advances and (iii) the
first day of such Interest Period in the case of Base Rate Advances;
provided, however, that:
(A) the Borrower may not select any Interest Period which ends
after the Termination Date;
(B) Interest Periods commencing on the same date for A Advances
comprising part of the same Borrowing shall be of the same duration;
and
(C) whenever the last day of any Interest Period would otherwise
occur on a day other than a Business Day, the last day on such
Interest Period shall be extended to occur on the next succeeding
Business Day, provided, in the case of any Interest Period for a
Eurodollar Rate Advance, that if such extension would cause the last
day of such Interest Period to occur in the next following calendar
month, the last day of such Interest Period shall occur on the next
preceding Business Day.
"Lenders" means the Banks listed on the signature pages hereof (until
-------
such Bank shall have assigned or had assumed all interests hereunder as
provided in Sections 7.02(a) or 2.04(c)) and each assignee or Assuming Bank
that shall become a party hereto pursuant to Sections 7.02(a) or 2.04(c).
<PAGE>
16
"Lien" means any mortgage, pledge, security interest, encumbrance,
----
lien or charge of any kind (including any conditional sale or other title
retention agreement, and the filing of any financing statement under the
Uniform Commercial Code of any jurisdiction).
"Margin Stock" shall have the meaning given such term under Regulation
------------
U issued by the Board of Governors of the Federal Reserve System.
"Majority Lenders" means at any time Lenders owed at least 51% of the
----------------
then aggregate unpaid principal amount of the A Advances owing to Lenders,
or, if no such principal amount is then outstanding, Lenders having at
least 51% of the Commitments.
"Multiemployer Plan" means a multiemployer plan, as defined in Section
------------------
4001(a)(3) of ERISA, to which the Borrower or any ERISA Affiliate is making
or accruing an obligation to make contributions, or has within any of the
preceding five plan years made or accrued an obligation to make
contributions, such plan being maintained pursuant to one or more
collective bargaining agreements.
"Multiple Employer Plan" means a single employer plan, as defined in
----------------------
Section 4001(a)(15) of ERISA, which (i) is maintained for employees of the
Borrower or an ERISA Affiliate and at least one Person other than the
Borrower and its ERISA Affiliates or (ii) was so maintained and in respect
of which the Borrower or an ERISA Affiliate could have liability under
Section 4064 or 4069 of ERISA in the event such plan has been or were to be
terminated.
"Note" means an A Note or a B Note.
----
"Notice of A Borrowing" has the meaning specified in Section 2.02.
---------------------
"Notice of B Borrowing" has the meaning specified in Section
---------------------
2.02(b)(i).
"OECD" means the Organization for Economic Cooperation and
----
Development.
"Officer's Certificate" means a certificate signed in the name of the
---------------------
Borrower by its President, one of its Vice Presidents, its Treasurer or its
Controller.
<PAGE>
17
"PBGC" means the Pension Benefit Guaranty Corporation.
----
"Permitted Encumbrances" means:
----------------------
(a) Liens imposed by law for taxes that are not yet due or are
being contested in good faith by appropriate proceedings;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the
ordinary course of business and securing obligations that are not
overdue by more than 30 days or are being contested in good faith by
appropriate proceedings;
(c) pledges and deposits made in the ordinary course of business
in compliance with workers' compensation, unemployment insurance and
other social security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the
ordinary course of business;
(e) judgment liens in respect of judgments that do not constitute
an Event of Default under Section 6.01(f); and
(f) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary
obligations and do not materially detract from the value of the
affected property or interfere with the ordinary conduct of business
of the Borrower or any Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
--------
securing Indebtedness.
"Person" means an individual, partnership, corporation (including a
------
business trust), joint stock company, trust, unincorporated association,
joint venture or other entity, or a government or any political subdivision
or agency thereof.
"Plan" means a Single Employer Plan or a Multiple Employer Plan.
----
<PAGE>
18
"Rating" means the senior unsecured debt rating of the Borrower (or
------
its status as unrated) from time to time in effect from Standard and Poors
Corporation ("S&P") or Moody's Investors Service, Inc. ("Moody's"), as the
case may be.
"Reference Banks" means The Chase Manhattan Bank and Citibank, N.A.
---------------
"Reference Period" means any period of four consecutive fiscal
----------------
quarters of the Borrower.
"Significant Subsidiary" means each Subsidiary, but excludes any
----------------------
Foreign Subsidiary the United States dollar value (or equivalent thereof)
of whose assets is less than 5% of the total assets of the Borrower and the
Subsidiaries, on a consolidated basis.
"Single-Employer Plan" means a single employer plan, as defined in
--------------------
Section 4001(a)(15) of ERISA, which (i) is maintained for employees of the
Borrower or an ERISA Affiliate and no Person other than the Borrower and
its ERISA Affiliates or (ii) was so maintained and in respect of which the
Borrower or an ERISA Affiliate could have liability under Section 4069 of
ERISA in the event such plan has been or were to be terminated.
"Subsidiary" means, as at any particular time, any corporation
----------
included as a consolidated subsidiary of the Borrower in the financial
statements contained in the most recent report filed by the Borrower with
the Securities and Exchange Commission on Form 10-K pursuant to the
Securities Exchange Act of 1934, provided that, under then current
regulations of the Securities and Exchange Commission, such corporation may
continue to be so included as a consolidated subsidiary of the Borrower in
any such annual report thereafter filed by the Borrower with the Securities
and Exchange Commission.
"Tax-Exempt Financing" means a transaction with a governmental unit or
--------------------
instrumentality which involves (i) the issuance by such governmental unit
or instrumentality to Persons other than the Borrower or a Subsidiary of
bonds or other obligations on which the interest is exempt from Federal
income taxes under Section 103 of the Internal Revenue Code and the
proceeds of which are applied to finance or refinance the cost of
acquisition of equipment or facilities of the Borrower or any of its
subsidiaries, and (ii)
<PAGE>
19
participation in the transaction by the Borrower or a Subsidiary in any
manner permitted by this Agreement.
"Termination Date" means (i) October 15, 2002 or (ii) any date to
----------------
which the Termination Date shall have been extended pursuant to Section
2.04(b); provided in each case of (i) and (ii), the earlier date on which
the termination in whole of the Commitments occurs pursuant to Section
2.04(a) or 6.01.
"Type" shall have the meaning given such term in the definition of A
----
Advance.
"Voting Rights" means, as to any corporation, ordinary voting power
-------------
(whether associated with outstanding common stock or outstanding preferred
stock, or both) to elect members of the Board of Directors of such
corporation (irrespective of whether or not at the time capital stock of
any class or classes of such corporation shall or might have voting power
or additional voting power upon the occurrence of any contingency).
"Wholly Owned" means, with respect to any corporation, a corporation
------------
of which 100% of the Voting Rights are at the time directly or indirectly
owned by the Borrower, by the Borrower and one or more other Wholly Owned
Subsidiaries, or by one or more other Wholly Owned Subsidiaries.
"Withdrawal Liability" shall have the meaning given such term under
--------------------
Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. (a) In this Agreement and
---------------------------
the Notes in the computation of periods of time from a specified date to a later
specified date, the word "from" means "from and including" and the words "to"
and "until" each means "to but excluding".
(b) In this Agreement and the Notes each reference to a year shall be
a reference to the twelve consecutive months beginning January 1 in such year
and ending December 31 in such year and each reference to a quarter shall be a
reference to one of the three consecutive month periods beginning January 1,
April 1, July 1 or October 1, in each year.
SECTION 1.03. Accounting Terms. All accounting terms not
----------------
specifically defined herein shall be construed in accordance
<PAGE>
20
with GAAP. GAAP shall mean generally accepted accounting principles as in effect
from time to time, applied on a basis consistent with the most recent certified
consolidated financial statements of the Borrower and the Subsidiaries delivered
to the Lenders, except that in the event that an accounting standard adopted by
the Financial Accounting Standards Board requires recognition of a liability
with respect to post retirement benefits other than pensions, the accruals which
would otherwise be called for under such accounting standard shall be excluded
in the calculations to be made under this Agreement. Disbursements with respect
to post retirement benefits other than pensions shall be reflected in the
calculations to be made under this Agreement.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The A Advances. Each Lender severally agrees, on the
--------------
terms and conditions hereinafter set forth, to make A Advances to the Borrower
from time to time on any Business Day during the period from the date hereof
until the Termination Date in an aggregate amount not to exceed at any time
outstanding the amount set forth opposite such Lender's name on the signature
pages hereof or on the Assumption Agreement or, if such Lender has entered into
one or more Assignments and Acceptances, set forth in such Assignments and
Acceptances, as such amount may be reduced pursuant to Section 2.04 (such
Lender's "Commitment"); provided that the Commitment of each Lender shall be
deemed used from time to time by the amount of such Lender's B Reduction. Each
A Borrowing shall be in an aggregate amount not less than $10,000,000 or an
integral multiple of $1,000,000 in excess thereof and shall consist of A
Advances of the same Type made on the same day by the Lenders ratably according
to their respective Commitments. Within the limits of each Lender's Commitment,
the Borrower may borrow, repay pursuant to Section 2.05 or prepay pursuant to
Section 2.09(b), and reborrow, prior to the Termination Date, under this Section
2.01.
SECTION 2.02. Making the A Advances. (i) Each A Borrowing shall be
---------------------
made on notice, given not later than 11:00 A.M. (New York City time) by the
Borrower to the Lenders, (A) in the case of Adjusted CD Rate Advances, on the
Business Day prior to the date of the proposed A Borrowing and (B) in the case
of Eurodollar Rate Advances, on the third Business Day prior to the date of the
proposed A Borrowing and (C) in the case of Base Rate Advances, on
<PAGE>
21
the day of the proposed A Borrowing. Each such notice of an A Borrowing (a
"Notice of A Borrowing") shall be by telephone, confirmed immediately in
writing, in substantially the form of Exhibit B-1 hereto, specifying therein the
requested (I) date of such A Borrowing, (II) Type of A Advances comprising such
A Borrowing, (III) aggregate amount of such A Borrowing, and (IV) Interest
Period for each such A Advance. In the case of a proposed A Borrowing comprised
of Base Rate Advances, Adjusted CD Rate Advances or Eurodollar Rate Advances,
the Borrower shall, as soon as possible, notify each Lender of the applicable
interest rate under Section 2.06(a), (b) or (c) and, if the Majority Lenders
disagree with the calculation of the interest rate so notified by the Borrower,
the Majority Lenders shall promptly notify each other Lender and the Borrower of
such applicable interest rate. Upon the fulfillment of the applicable conditions
set forth in Article III, each Lender shall, before 2:00 P.M. (New York City
time) on the date of such A Borrowing, make available to the Borrower such
Lender's ratable portion of such A Borrowing, at the account of the Borrower
with such Lender in New York, New York or, if no such account exists, by wire
transfer to such account as shall be specified by the Borrower by notice to such
Lender, in same day funds.
The failure of any Lender to make the A Advance to be made by it as
part of any A Borrowing shall not relieve any other Lender of its obligation, if
any, hereunder to make its A Advance on the date of such A Borrowing, but no
Lender shall be responsible for the failure of any other Lender to make the A
Advance to be made by such other Lender on the date of any A Borrowing.
(ii) Anything in subsection (i) above to the contrary
notwithstanding,
(A) if any Lender shall, at least one Business Day before the date of
any requested A Borrowing, notify the Borrower that the introduction of or
any change in or in the interpretation of any law or regulation by any
court, authority or agency, or any other governmental, judicial or
regulatory body, makes it unlawful, or that any central bank or other
governmental authority asserts that it is unlawful, for such Lender or its
Eurodollar Lending Office to perform its obligations hereunder to make
Eurodollar Rate Advances or to fund or maintain Eurodollar Rate Advances
hereunder, the right of the Borrower to select Eurodollar Rate Advances for
such A Borrowing or any subsequent A Borrowing, with respect to such Lender
(only), shall be suspended until such Lender shall notify the Borrower that
the circumstances causing such
<PAGE>
22
suspension no longer exist or such Lender shall cease to be a party hereto,
and each A Advance comprising such A Borrowing shall, with respect to such
Lender (only), be an Adjusted CD Rate Advance (or, if the Borrower so
notifies such Lender within two hours of such Lender so notifying the
Borrower, a Base Rate Advance) of an equivalent amount and for an
approximately equivalent term, provided that if all the Lenders so notify
--------
the Borrower, the Notice of A Borrowing in respect of such requested A
Borrowing shall be automatically revoked. Each Lender giving a notice under
this subclause (A) shall, promptly after giving such notice, provide the
Borrower with an explanation, in reasonable detail, as to the circumstances
causing such suspension;
(B) if none of the Reference Banks furnish timely information to the
Lenders for determining the Adjusted CD Rate for Adjusted CD Rate Advances,
or the Eurodollar Rate for Eurodollar Rate Advances, comprising any
requested A Borrowing, the right of the Borrower to select Adjusted CD Rate
Advances or Eurodollar Rate Advances, as the case may be, for such A
Borrowing or any subsequent A Borrowing shall be suspended until the
Majority Lenders shall notify the Borrower and the other Lenders that the
circumstances causing such suspension no longer exist, and each A Advance
comprising such A Borrowing shall be an Adjusted CD Rate Advance or a
Eurodollar Rate Advance, whichever is available (or, if neither is
available or the Borrower so notifies the Lenders, a Base Rate Advance);
and
(C) if the Majority Lenders shall, at least one Business Day before
the date of any requested A Borrowing, notify the Borrower that the
Eurodollar Rate for Eurodollar Rate Advances comprising such A Borrowing
will not adequately reflect the cost to the Lenders of making or funding
their respective Eurodollar Rate Advances for such A Borrowing, the Notice
of A Borrowing given in respect of such requested A Borrowing shall be
automatically revoked and the right of the Borrower to select Eurodollar
Rate Advances for such A Borrowing or any subsequent A Borrowing shall be
suspended until the Majority Lenders shall notify the Borrower and the
other Lenders that the circumstances causing such suspension no longer
exist. The Majority Lenders giving a notice under this subclause (C)
shall, promptly after giving such notice, provide the Borrower with an
explanation, in reasonable detail, as to the circumstances causing such
suspension.
<PAGE>
23
(iii) Each Notice of A Borrowing (subject to (A) and (C) above) shall
be irrevocable and binding on the Borrower. In the case of any A Borrowing
which the related Notice of A Borrowing specifies is to be comprised of Adjusted
CD Rate Advances or Eurodollar Rate Advances, the Borrower shall indemnify each
Lender against any loss, cost or expense incurred by such Lender as a result of
any failure to fulfill on or before the date specified in such Notice of A
Borrowing for such A Borrowing the applicable conditions set forth in Article
III, including, without limitation, any loss (excluding loss of anticipated
profits), cost or expense incurred by reason of the liquidation or reemployment
of deposits or other funds acquired by such Lender to fund the A Advance to be
made by such Lender as part of such A Borrowing when such A Advance, as a result
of such failure, is not made on such date. Each Lender claiming indemnity for
any such loss, cost or expense under this clause (iii) shall provide, at the
time of making such claim, the Borrower with reasonable details, including the
basis for the calculation thereof, of such loss, cost or expense, provided that,
--------
in the absence of manifest error, the amount of such claims so notified shall be
conclusive and binding upon the Borrower.
(b) Making the B Advances. (i) Each Lender severally agrees that
---------------------
the Borrower may make B Borrowings under this Section 2.02(b) from time to time
on any Business Day during the period from the date hereof until the date
occurring one day prior to the Termination Date in the manner set forth below;
provided that, following the making of each B Borrowing, the aggregate amount of
- --------
all Advances then outstanding shall not exceed the aggregate amount of the
Commitments of the Lenders (after giving effect to each B Reduction).
(A) The Borrower may request a B Borrowing under this Section 2.02(b)
by delivering to the Lenders, by telephone, confirmed immediately in
writing, a notice of a B Borrowing (a "Notice of B Borrowing"), in
---------------------
substantially the form of Exhibit B-2 hereto, specifying (I) the date and
aggregate amount of the proposed B Borrowing, (II) the type of interest
rate applicable to such B Borrowing (which shall be a margin above or below
the Eurodollar Rate or a fixed rate), (III) the interest period or periods
applicable to such B Borrowing (which shall be up to 6 months in the case
of Eurodollar Rate related B Borrowings and up to 180 days in the case of
fixed rate B Borrowings), (IV) the maturity date for repayment of each B
Advance to be made as part of such B Borrowing (which maturity date may not
be later than the Termination Date), (V) the
<PAGE>
24
interest payment date or dates relating thereto, (VI) the time after which
the offer of any Lender bidding for such B Borrowing cannot be accepted by
the Borrower (which shall not be later than 10:30 A.M., New York City time,
on the date of the proposed B Borrowing in the case of a fixed rate B
Borrowing and on the third Business Day prior to the date of the proposed B
Borrowing in the case of a Eurodollar Rate B Borrowing), and (VII) any
other terms to be applicable to such B Borrowing, not later than 9:00 A.M.
(New York City time) (x) on or before the date of the proposed B Borrowing
if the Borrower shall specify in the Notice of B Borrowing that the rates
of interest to be offered by Lenders shall be fixed rates and (y) at least
four Business Days prior to the proposed B Borrowing, if the Borrower shall
instead specify in the Notice of B Borrowing that the rates to be offered
by the Lenders shall be a margin above or below the Eurodollar Rate.
(B) Each Lender shall, if, in its sole discretion, it elects to do
so, irrevocably offer to make one or more B Advances to the Borrower as
part of such proposed B Borrowing at a rate or rates of interest, with
maturity date or dates, and with a maximum principal amount that may be
accepted by the Borrower, each as specified by such Lender in its sole
discretion, by notifying the Borrower by telephone before 9:30 A.M. (New
York City time), confirmed in writing before 10:30 A.M. (New York City
time), (I) on the date of such proposed B Borrowing, if the Borrower shall
have specified in the Notice of B Borrowing that the rates of interest to
be offered by the Lenders were to be fixed rates per annum and (II) on the
third Business Day prior to the proposed B Borrowing, if the Borrower shall
have instead specified in the Notice of B Borrowing that the rates of
interest to be offered by the Lenders were to be Eurodollar Rates, of the
maximum amount of each B Advance which such Lender would be willing to make
as part of such proposed B Borrowing (which amounts may, subject to the
proviso to the first sentence of this Section 2.02(b)(i), exceed such
Lender's Commitment), the rate or rates of interest and maturity date or
dates therefor and such Lender's Applicable Lending Office with respect to
such B Advance. If any Lender shall elect not to make such an offer, such
Lender shall so notify the Borrower by telephone, confirmed immediately in
writing, before 9:30 A.M. (New York City time) on the date it would have
been obliged to notify the Borrower of its offer, had it elected to make
such offer and such Lender shall not be obligated to, and shall not, make
any B Advance as part of such B Borrowing; provided that the failure
--------
<PAGE>
25
by any Lender to give such notice shall not cause such Lender to be
obligated to make any B Advance as part of such proposed B Borrowing.
(C) The Borrower shall, in turn, not later than the time after which
the Borrower cannot accept the bid of any Lender, as specified by the
Borrower in the Notice of B Borrowing delivered by it in respect of such
proposed B Borrowing, (I) on the date of such proposed B Borrowing, if the
Borrower shall have specified in the Notice of B Borrowing that the rates
of interest to be offered by the Lenders were to be fixed rates per annum
and (II) on the third Business Day prior to the proposed B Borrowing, if
the Borrower shall have instead specified in the Notice of B Borrowing that
the rates of interest to be offered by the Lenders were to be Eurodollar
Rates, either,
(x) cancel such B Borrowing by giving the Lenders notice by
telephone, confirmed immediately in writing, to that effect, or
(y) accept one or more of the offers made by any Lender or
Lenders pursuant to paragraph (B) above, in ascending order of the
effective cost to the Borrower (and if two or more of such offers have
an equal effective cost to the Borrower, the Borrower shall accept
each such equal offer in the proportion that the amount of each such
equal offer bears to the aggregate amount of all offers at such equal
effective cost made by the Lenders making such equal offers), provided
if the order referred to above would result in the acceptance of an
offer by any Lender in an aggregate amount of less than $5,000,000,
the Borrower shall accept such amounts as, in its discretion, it
chooses to ensure that no offer of a Lender is accepted for an
aggregate amount of less than $5,000,000; such acceptance shall be
made by the Borrower giving notice by telephone, confirmed immediately
in writing, to each Lender of the amount of each B Advance (which
amount shall be equal to or less than the maximum amount notified to
the Borrower by such Lender for such B Advance pursuant to paragraph
(B) above) to be made by such Lender as part of such B Borrowing, and
reject any remaining offers made by Lenders pursuant to paragraph (B)
above by giving such Lenders notice to that effect.
<PAGE>
26
(D) If the Borrower notifies the Lenders that such B Borrowing is
cancelled pursuant to paragraph (C)(x) above, such B Borrowing shall not be
made.
(E) If the Borrower accepts one or more of the offers made by any
Lender or Lenders pursuant to paragraph (C)(y) above, the Borrower shall in
turn promptly notify by telephone, confirmed immediately in writing, (I)
each Lender that has made an offer as described in paragraph (B) above, of
the date and aggregate amount of such B Borrowing and whether or not any
offer or offers made by such Lender pursuant to paragraph (B) above have
been accepted by the Borrower, (II) each Lender that is to make a B Advance
as part of such B Borrowing, of the amount of each B Advance to be made by
such Lender as part of such B Borrowing, and (III) each Lender of the
aggregate amount of the B Borrowing, the aggregate amount of the consequent
B Reductions, the dates upon which such B Reductions commenced and will
terminate, the lowest rate or margin (as applicable) bid and the rate or
margin (as applicable) above which bids were not accepted by the Borrower
in connection with such B Borrowing. Upon the fulfillment of the
applicable conditions set forth in Article III, each Lender that is to make
a B Advance as part of such B Borrowing shall, before 2:00 P.M. (New York
City time) on the date of such B Borrowing make available to the Borrower,
at the account of such Borrower with such Lender in New York, New York or,
if no account exists, by wire transfer to such account as shall be
specified by the Borrower by notice to such Lender, in same day funds.
(F) The Borrower shall indemnify each Lender against any loss, cost,
or expense incurred by such Lender as a result of any failure to fulfill on
or before the date specified for such B Borrowing the applicable conditions
set forth in Article III, including, without limitation, any loss
(excluding loss of anticipated profits), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired or
maintained by such Lender to fund the B Advance to be made by such Lender
as part of such B Borrowing when such B Advance, as a result of such
failure, is not made on such date. Each Lender claiming indemnity for such
loss, cost or expense under this subclause (F) shall provide, at the time
of making such claim, the Borrower with reasonable details, including the
basis for the calculation thereof, of such loss, cost or expense, provided
that, in the absence of manifest error, the amount of such claim so
<PAGE>
27
notified shall be conclusive and binding upon the Borrower.
(G) In the case of a proposed B Borrowing comprised of Eurodollar
Rate related B Advances, the Borrower shall, as soon as possible, notify
each Lender of the applicable Eurodollar Rate and, if the Majority Lenders
disagree with the calculation of the Eurodollar Rate so notified by the
Borrower, the Majority Lenders shall promptly notify each other Lender and
the Borrower of such applicable Eurodollar Rate.
(ii) Each B Borrowing shall be in an aggregate amount not less than
$5,000,000 or an integral multiple of $1,000,000 in excess thereof and,
following the making of such B Borrowing, shall not result in the limitations
set forth in the proviso to the first sentence of subsection (i) above being
exceeded.
(iii) Within the limits and on the conditions set forth in this
Section 2.02(b), the Borrower may from time to time borrow under this Section
2.02(b), repay or prepay pursuant to subsection (iv) below, and reborrow prior
to the Termination Date under this Section 2.02(b).
(iv) The Borrower shall repay each Lender which has made a B Advance
on the maturity date of each B Advance (such maturity date being that specified
by the Borrower for repayment of such B Advance in the related Notice of B
Borrowing delivered pursuant to subsection (i)(A) above and provided in the B
Note evidencing such B Advance), the then unpaid principal amount of such B
Advance. The Borrower shall have no right to prepay any principal amount of any
B Advance unless, and then only on the terms, specified by the Borrower for such
B Advance in the related Notice of B Borrowing delivered pursuant to subsection
(i)(A) above and provided in the B Note evidencing such B Advance.
(v) The Borrower shall pay interest on the unpaid principal amount of
each B Advance from the date of such B Advance to the date the principal amount
of such B Advance is repaid in full, at the rate of interest for such B Advance
specified by the Lender making such B Advance in its notice with respect thereto
delivered pursuant to subsection (i)(B) above, payable on the interest payment
date or dates specified by the Borrower for such B Advance in the related Notice
of B Borrowing delivered pursuant to subsection (i)(A) above, as provided in the
B Note evidencing such B Advance.
(vi) The Indebtedness of the Borrower resulting from each B Advance
made to the Borrower as part of a B
<PAGE>
28
Borrowing shall be evidenced by a separate B Note of the Borrower payable to the
order of the Lender making such B Advance.
SECTION 2.03. Facility Fee. The Borrower agrees to pay a facility
------------
fee on the average daily aggregate amount of the Lenders' Commitments from the
date hereof in the case of each Bank and from the effective date specified in
the Assignment and Acceptance or Assumption Agreement pursuant to which it
became a Lender in the case of each other Lender until the Termination Date at
the Facility Fee Rate, payable quarterly in arrears and on the Termination Date.
SECTION 2.04. Reduction and Extension of the Commitments/Substitution
-------------------------------------------------------
of Banks. (a) The Borrower shall have the right, upon at least two Business
- --------
Days' notice to the Lenders, to terminate in whole or reduce ratably in part the
unused portions of the respective Commitments of the Lenders, provided that each
partial reduction shall be in the aggregate amount of $15,000,000 or an integral
multiple of $1,000,000 in excess thereof.
(b) Not later than the date 45 days prior to the Termination Date then
in effect, the Borrower may deliver to the Lenders a notice requesting that the
Commitments be extended to the fourth anniversary of such Termination Date.
Within 10 days after its receipt of any such notice, each Lender shall notify
the Borrower of its willingness or unwillingness so to extend its Commitment.
Any Lender which shall fail so to notify the Borrower within such period shall
be deemed to have declined to extend its Commitment. In the event each Lender
shall be willing to extend its Commitment, the Borrower shall so notify each
Lender and the Termination Date shall without further action be extended to the
fourth anniversary of the date which shall theretofore have been the Termination
Date. In the event that any Lender shall be unwilling to extend its Commitment,
the Commitments of the Lenders will not be extended and the Termination Date
shall remain unchanged.
(c) Optional Termination and Substitution of Banks. The Borrower may,
----------------------------------------------
upon not less than two Business Days prior notice to a Bank or Banks, terminate
in whole the Commitment of such Bank or Banks and arrange in respect of each
terminated Bank for one or more bank or banks ("Assuming Bank or Banks") other
than the Banks to assume a Commitment equal to or Commitments in aggregate
amount equal to the amount of the Commitment of the terminated Bank, provided
--------
that no such termination shall be made unless, at
<PAGE>
29
such time, no event has occurred and is continuing which constitutes an Event of
Default. Such termination shall be effective (x) with respect to each such
terminated Bank's unused Commitment, on the date set forth in such notice,
provided, however, that such date shall be no earlier than two Business Days
- -------- -------
after receipt of such notice or (y) in the event that an Advance is outstanding
from such terminated Bank which is to be paid in connection with such
termination, on the last day of the then current interest period relating to
such Advance. Such assumption shall be effective on the date specified in (x) or
(y) above, as the case may be, provided, however, that each Assuming Bank shall
-------- -------
have delivered to the other Banks, on or prior to such date, an Assumption
Agreement in substantially the form of Exhibit E hereto. (The term "Bank" as
used in this Agreement immediately following such assumption shall include an
Assuming Bank.) Notwithstanding the provisions of this Section 2.04(c),
termination or substitution shall not be effective unless the Assuming Bank
meets, at the time of substitution, the criteria set forth in this Agreement for
an "Eligible Assignee."
Upon the termination of a Bank's Commitment under this subsection
2.04(c), the Borrower will pay or cause to be paid all principal of, and
interest accrued to the date of such payment on, Advances owing to such Bank and
pay any fees payable to such Bank pursuant to the provisions of Section 2.03
with respect to the Commitment which is terminated, any amounts payable pursuant
to the provisions of Section 8.04 and any other amounts payable to such Bank
hereunder with respect to the Commitment which is terminated or Advances which
are paid; and upon such payments, the obligations of such Bank hereunder shall,
by the provisions hereof, be released and discharged, and it shall be deemed to
have relinquished its rights under this Agreement (other than any rights under
Section 8.08).
SECTION 2.05. Repayment. The Borrower shall repay the principal
---------
amount of each A Advance owing to each Lender on the Termination Date.
SECTION 2.06. Interest. The Borrower shall pay interest on the
--------
unpaid principal amount of each A Advance owing to each Lender from the date of
such A Advance until such principal amount shall be paid in full, at the
following rates per annum:
(a) Base Rate Advances. If such A Advance is a Base Rate Advance, a
------------------
rate per annum equal at all times to the Base Rate in effect from time to
time, payable in arrears on (i) the last day of each quarter, (ii)
<PAGE>
30
the last day of the Interest Period applicable to such Base Rate Advance,
and (iii) the date such Base Rate Advance shall be paid in full; provided
--------
that any amount of principal which is not paid when due (whether at stated
maturity, by acceleration or otherwise) shall bear interest, from the date
on which such amount is due until such amount is paid in full, payable on
demand, at a rate per annum equal at all times to 1-1/2% per annum above
the Base Rate.
(b) Adjusted CD Rate Advances. If such A Advance is an Adjusted CD
-------------------------
Rate Advance, a rate per annum at all times during the Interest Period for
such A Advance equal to the sum of the Adjusted CD Rate for such Interest
Period, plus the Applicable Margin, payable in arrears on (A) if the
Interest Period in respect of such Advance is less than or equal to 90
days, the last day of such Interest Period, or (B) if the Interest Period
in respect of such Advance is greater than 90 days, the last day of each
three-month period (beginning the first day of such Interest Period)
occurring during that Interest Period, and also on the last day of such
Interest Period; provided that any amount of principal which is not paid
--------
when due (whether at stated maturity, by acceleration or otherwise) shall
bear interest, from the date on which such amount is due until such amount
is paid in full, payable on demand, at a rate per annum equal at all times
to 1 and 1/2 of 1% per annum above the Base Rate in effect from time to
time.
(c) Eurodollar Rate Advances. If such A Advance is a Eurodollar Rate
------------------------
Advance, a rate per annum equal at all times during the Interest Period for
such A Advance to the sum of the Eurodollar Rate for such Interest Period,
plus the Applicable Margin, payable in arrears on (A) if the Interest
Period in respect of such Advance is less than or equal to three months,
the last day of such Interest Period, or (B) if the Interest Period in
respect of such Advance is greater than three months, the last day of each
three-month period (beginning the first day of such Interest Period)
occurring during that Interest Period, and also on the last day of such
Interest Period; provided that any amount of principal which is not paid
when due (whether at stated maturity, by acceleration or otherwise) shall
bear interest, from the date on which such amount is due until such amount
is paid in full, payable on demand, at a rate per annum equal at all times
to 1 and 1/2% per annum above the Base Rate in effect from time to time.
<PAGE>
31
SECTION 2.07. Additional Interest on Eurodollar Rate Advances. The
-----------------------------------------------
Borrower shall pay to each Lender additional interest on the unpaid principal
amount of each Eurodollar Rate Advance of such Lender, from the date of such A
Advance until such principal amount is paid in full, at an interest rate per
annum equal at all times to the remainder obtained by subtracting (i) the
Eurodollar Rate for the Interest Period for such A Advance from (ii) the rate
obtained by dividing such Eurodollar Rate by a percentage equal to 100% minus
the Eurodollar Rate Reserve Percentage of such Lender for such Interest Period,
payable on each date on which interest is payable on such A Advance. Such
additional interest shall be determined by such Lender and notified to the
Borrower. Each Lender notifying the Borrower of such additional interest shall
provide the Borrower, at the time of such notification, with reasonable details,
including the basis for the calculation thereof, of such additional interest,
provided that, in the absence of manifest error, the amount of such additional
- --------
interest so notified shall be conclusive and binding upon the Borrower.
SECTION 2.08. Interest Rate Determination. (a) Each Reference Bank
---------------------------
agrees to furnish to the Borrower and the Lenders timely information for the
purpose of determining each Adjusted CD Rate or Eurodollar Rate, as applicable.
Subject to Section 2.02(a)(ii)(B), if any of the Reference Banks shall not
furnish such timely information to the Lenders for the purpose of determining
any such interest rate, the Lenders shall determine such interest rate on the
basis of timely information furnished by the remaining Reference Bank.
(b) The Majority Lenders shall give prompt notice to the Borrower and
the other Lenders of the applicable interest rate determined by the Majority
Lenders for purposes of Section 2.06(a), (b) or (c), and the applicable rate, if
any, furnished by each Reference Bank for the purpose of determining the
applicable interest rate or, in the case of Section 2.02(b), applicable
Eurodollar Rate under Sections 2.02(b) or 2.06(b) or (c).
SECTION 2.09. Prepayments. (a) The Borrower shall have no right to
-----------
prepay any principal amount of any A Advances other than as provided in
subsection (b) below.
(b) The Borrower may, (i) upon at least one Business Day's notice in
the case of Base Rate Advances, (ii) one Business Day's notice in the case of
Adjusted CD
<PAGE>
32
Rate Advances or (iii) three Business Days' notice in the case of Eurodollar
Rate Advances, to the Lenders stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given the Borrower shall prepay
the outstanding principal amounts of the A Advances comprising part of the same
A Borrowing in whole or ratably in part, together with accrued interest to the
date of such prepayment on the principal amount prepaid; provided, however, that
-------- --------
(i) each partial prepayment shall be in an aggregate principal amount not less
than $10,000,000 or an integral multiple of $1,000,000 in excess thereof and
(ii) in the event of any such prepayment of an Adjusted CD Rate Advance or
Eurodollar Rate Advance, the Borrower shall be obligated to reimburse the Banks
in respect thereof pursuant to Section 8.04(b).
SECTION 2.10. Increased Costs. (a) If, due to either (i) the
---------------
introduction of or any change (other than any change by way of imposition or
increase of reserve requirements, in the case of Adjusted CD Rate Advances,
included in the Adjusted CD Rate Reserve Percentage or, in the case of
Eurodollar Rate Advances, included in the Eurodollar Rate Reserve Percentage) in
or in the interpretation of any law or regulation by any court, authority or
agency, or any other governmental, judicial or regulatory body, or (ii) the
compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any Lender of agreeing to make or making, funding or
maintaining Adjusted CD Rate Advances or Eurodollar Rate Advances, then the
Borrower shall from time to time, upon demand by such Lender, pay to such Lender
additional amounts sufficient to compensate such Lender for such increased cost.
Each Lender demanding payment of such amount shall provide, at the time of
making such demand, the Borrower with reasonable details, including the basis
for the calculation thereof, of such increase, provided that, in the absence of
--------
manifest error, the amount so notified shall be conclusive and binding upon the
Borrower.
(b) If any Lender determines (in good faith) that compliance with any
law or regulation or any guideline or request from any central bank or other
governmental authority (whether or not having the force of law) affects or would
affect the amount of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and that the amount of such
capital is increased by or based upon the existence of such Lender's commitment
to lend hereunder and other commitments of this type, then, upon demand by such
Lender, the Borrower shall immediately pay to such Lender, from time to time as
<PAGE>
33
specified by such Lender, additional amounts sufficient to compensate such
Lender in the light of such circumstances, to the extent that such Lender
reasonably determines such increase in capital to be allocable to the existence
of such Lender's commitment to lend hereunder. Each Lender demanding payment of
such amount shall provide, at the time of making such demand, the Borrower with
reasonable details, including the basis for the calculation thereof, of such
increase, provided that, in the absence of manifest error, the amount so
notified shall be conclusive and binding upon the Borrower.
(c) Failure or delay on the part of any Lender to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender's right to
demand such compensation; provided that the Borrower shall not be required to
--------
compensate a Lender pursuant to this Section for any increased costs incurred
more than 270 days prior to the date that such Lender notifies the Borrower of
any event described in paragraph (a) or (b) of this Section (a "Change in Law")
which gives rise to such increased costs and of such Lender's intention to claim
compensation therefor; provided further that, if the Change in Law giving rise
----------------
to such increased costs is retroactive, then the 270-day period referred to
above shall be extended to include the period of retroactive effect thereof.
(d) Notwithstanding the foregoing provisions of this Section, a
Lender shall not be entitled to compensation pursuant to this Section in respect
of any B Advances if the Change in Law which would otherwise entitle it to such
compensation shall have been publicly announced prior to submission of the
Notice of B Borrowing pursuant to which such Advance was made.
(e) If any Lender requests compensation under this Section, then such
Lender shall use reasonable efforts to designate a different lending office for
funding or booking its Advances hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in
the judgment of such Lender, such designation or assignment (i) would eliminate
or reduce amounts payable pursuant to this Section and (ii) would not subject
such Lender to any unreimbursed cost or expense and would not otherwise be
disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment.
(f) If any Lender requests compensation under this Section, then the
Borrower may, at its sole expense and effort, upon notice to such Lender require
such Lender to
<PAGE>
34
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 7.02), all its interests, rights and
obligations under this Agreement (other than any outstanding B Advances held by
it) to an assignee that shall assume such obligations (which assignee may be
another Lender, if a Lender accepts such assignment); provided that (i) at the
--------
time the Borrower requires such an assignment, no event has occurred and is
continuing which constitutes an Event of Default, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Advances
(other than B Advances), accrued interest thereon, accrued fees and all other
amounts payable to it hereunder, from the assignee (to the extent of such
outstanding principal and accrued interest and fees) or the Borrower (in the
case of all other amounts) and (iii) in the case of any such assignment
resulting from a claim for compensation under this Section, such assignment will
result in a reduction in such compensation or payments. A Lender shall not be
required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.
SECTION 2.11. Payments and Computations. (a) The Borrower shall
-------------------------
make each payment hereunder and under the Notes not later than 2:00 P.M. (New
York City time) (or 11:00 A.M. (New York City time) if the Borrower does not
maintain an account with such Lender) on the day when due in U.S. dollars to the
applicable Lender at its Applicable Lending Office in same day funds. From and
after the effective date specified in each Assignment and Acceptance, the
Borrower shall make all payments hereunder and under the Notes in respect of the
interest assigned thereby to the Lender assignee thereunder, and the parties to
such Assignment and Acceptance shall make all appropriate adjustments in such
payments for periods prior to such effective date directly between themselves.
(b) [Intentionally left blank.]
(c) All computations of interest with respect to the A Advances based
on the Base Rate and of fees shall be made by the Majority Lenders on the basis
of a year of 365 or 366 days, as the case may be, and all computations of
interest (i) with respect to the B Advances, (ii) with respect to the A Advances
based on the Adjusted CD Rate, the Eurodollar Rate or the Federal Funds Rate and
(iii) pursuant to Section 2.07 shall be made by the Majority Lenders on the
basis of a year of 360 days, in each case for the actual number of days
(including the first day but excluding the
<PAGE>
35
last day) occurring in the period for which such interest is payable. Each
determination by the Majority Lenders (or, in the case of Section 2.07, by a
Lender) of an interest rate hereunder shall be conclusive and binding for all
purposes, absent manifest error.
(d) Whenever any payment hereunder or under the Notes shall be stated
to be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest and fees, as the case may be;
provided, however, if such extension would cause payment of interest on or
- -------- -------
principal of Eurodollar Rate Advances to be made in the next following calendar
month, such payment, shall be made on the next preceding Business Day.
SECTION 2.12. A Notes. The Indebtedness of the Borrower resulting
-------
from each A Advance made to the Borrower as part of an A Borrowing shall be
evidenced by an A Note of the Borrower payable to the order of the Lender making
such A Advance.
SECTION 2.13. Sharing of Payments, Etc. If any Lender shall obtain
------------------------
any payment (whether voluntary, involuntary, through the exercise of any right
of set-off, or otherwise) on account of the A Advances owing to it (other than
pursuant to Section 2.04(c), 2.07, 2.10 or 2.14) in excess of its ratable share
of payments on account of the A Advances obtained by all the Lenders, such
Lender shall forthwith purchase from the other Lenders such participations in
the A Advances owing to them as shall be necessary to cause such purchasing
Lender to share the excess payment ratably with each of them, provided, however,
-------- -------
that if all or any portion of such excess payment is thereafter recovered from
such purchasing Lender, such purchase from each Lender shall be rescinded and
such Lender shall repay to the purchasing Lender the purchase price to the
extent of such recovery together with an amount equal to such Lender's ratable
share (according to the proportion of (i) the amount of such Lender's required
repayment to (ii) the total amount so recovered from the purchasing Lender) of
any interest or other amount paid or payable by the purchasing Lender in respect
of the total amount so recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section 2.13
may, to the fullest extent permitted by law, exercise all its rights of payment
with respect to such participation as fully as if such Lender were the direct
creditor of the Borrower in the amount of such participation.
<PAGE>
36
SECTION 2.14. Taxes. (a) Any and all payments by the Borrower
-----
hereunder or under the Notes shall be made, in accordance with Section 2.11,
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of each Lender, taxes imposed on its
---------
income, and franchise taxes imposed on it, and any liability arising therefrom
or with respect thereto, by the United States or any State or other political
subdivision thereof or by the jurisdiction under the laws of which such Lender
is organized or any political subdivision thereof and, in the case of each
Lender, taxes imposed on its income, and franchise taxes imposed on it, by the
jurisdiction of such Lender's Applicable Lending Office or any political
subdivision thereof (all such non-excluded taxes, levies, imposts, deductions,
charges, withholdings and liabilities being hereinafter referred to as "Taxes").
If the Borrower shall be required by law to deduct any Taxes from or in respect
of any sum payable hereunder or under any Note to any Lender, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 2.14) such Lender receives an amount equal to the sum it would have
received had no such deductions been made, (ii) the Borrower shall make such
deductions and (iii) the Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or under the Notes or
from the execution, delivery or registration of, or otherwise with respect to,
this Agreement or the Notes (hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender for the full amount of
Taxes or Other Taxes (including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.14) paid by
such Lender and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes or Other
Taxes were correctly or legally asserted. This indemnification shall be made
within 30 days from the date such Lender makes written demand therefor. If a
Lender receives an indemnification payment from the Borrower in accordance with
this subsection (c) and such Lender subsequently receives from the applicable
jurisdiction a payment of all or a
<PAGE>
37
portion of the amount of Taxes or Other Taxes or liability with respect to which
such indemnity payment was made, such Lender shall promptly turn over (without
interest) to the Borrower the amount of such repayment.
(d) Within 30 days after the date of any payment of Taxes, the
Borrower will furnish to the applicable Lender, at its Domestic Lending Office,
the original or a certified copy of a receipt evidencing payment thereof. If no
Taxes are payable in respect of any payment hereunder or under the Notes, the
Borrower will, if reasonably requested by a Lender furnish to such Lender, at
such address, a certificate from each appropriate taxing authority, or an
opinion of counsel acceptable to the Majority Banks, in either case stating that
such payment is exempt from or not subject to Taxes.
(e) Any Lender claiming any additional amounts payable pursuant to
this Section 2.14 shall use its best efforts (consistent with its internal
policy and legal and regulatory restrictions) to change the jurisdiction of its
Applicable Lending Office if the making of such a change would avoid the need
for, or reduce the amount of, any such additional amounts which may thereafter
accrue and would not, in the reasonable judgment of such Lender, be otherwise
disadvantageous to such Lender.
(f) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 2.14 shall survive the payment in full of principal and interest
hereunder and under the Notes.
SECTION 2.15. Interest Elections. (a) Each A Borrowing initially
-------------------
shall be of the Type specified in the applicable Notice of A Borrowing and, in
the case of a Eurodollar Rate A Borrowing or Adjusted CD Rate A Borrowing, shall
have an initial Interest Period as specified in such Notice of A Borrowing.
Thereafter, the Borrower may elect to convert such A Borrowing to a different
Type or to continue such A Borrowing and, in the case of a Eurodollar Rate A
Borrowing or Adjusted CD Rate A Borrowing, may elect Interest Periods therefor,
all as provided in this Section. The Borrower may elect different options with
respect to different portions of the affected A Borrowing, in which case each
such A Borrowing shall be allocated ratably among the Lenders having made the A
Advances comprising such A Borrowing, and the A Advances comprising each such
portion shall be considered a separate A Borrowing. This Section shall not
apply to B Borrowings, which may not be converted or continued.
<PAGE>
38
(b) To make an election pursuant to this Section, the Borrower shall
notify each Lender of such election by telephone by the time that a Notice of A
Borrowing would be required under Section 2.02 if the Borrower were requesting
an A Borrowing of the Type resulting from such election to be made on the
effective date of such election. Each such telephonic Interest Election Request
shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to each Lender of a written Interest Election Request signed by the
Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02:
(i) the A Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different portions
thereof, the portions thereof to be allocated to each resulting A Borrowing (in
which case the information to be specified pursuant to clauses (iii) and (iv)
below shall be specified for each resulting A Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
(iii) the Type of A Advances comprising such A Borrowing; and
(iv) the Interest Period for each such A Advance.
If any such Interest Election Request requests a Eurodollar Rate A Borrowing but
does not specify an Interest Period, the Borrower shall be deemed to have
selected an Interest Period of one month's duration. If any such Interest
Election Request requests an Adjusted CD Rate A Borrowing but does not specify
an Interest Period, the Borrower shall be deemed to have selected an Interest
Period of 30 days duration.
(d) If the Borrower fails to deliver a timely Interest Election
Request with respect to an A Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such A Borrowing is repaid as provided herein,
at the end of such Interest Period such A Borrowing shall be continued as or
converted to a Base Rate A Borrowing with an Interest Period ending on the next
day that is the last day of a quarter.
<PAGE>
39
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Condition Precedent to Restatement. The effectiveness
----------------------------------
of the amendment and restatement of the Existing Credit Agreement in the form of
this Agreement is subject to the execution and delivery of counterparts of this
Agreement by the Borrower and the Lenders and the satisfaction of the following
additional conditions precedent:
(i) The Lenders shall have received the following, each dated the date
hereof, in form and substance satisfactory to them:
(a) An A Note to the order of any Lender requesting such note
to replace the A Note issued to such Lender under the Existing
Credit Agreement.
(b) An Officer's Certificate attaching copies of the resolutions
of the Board of Directors of the Borrower (or an authorized committee
thereof) approving this Agreement and the Notes, and of all documents
evidencing other necessary corporate action and governmental
approvals, if any, with respect to this Agreement and the Notes.
(c) An Officer's Certificate certifying the names and true
signatures of the officers of the Borrower authorized to sign this
Agreement and the Notes and the other documents to be delivered
hereunder.
(d) A favorable opinion of a Senior Counsel of the Borrower,
substantially in the form of Exhibit D hereto and as to such other
matters as any Lender may reasonably request.
(ii) The Borrower shall have paid to the Lenders the amendment fee
separately agreed upon.
Upon satisfaction of the foregoing conditions the Existing Credit Agreement
shall be deemed amended and restated in the form of this Agreement, and the
commitments under the Existing Credit Agreement shall be deemed terminated to
the extent inconsistent with the Commitments set forth herein, and the Borrower
shall pay any accrued fees and other
<PAGE>
40
amounts owing to any Bank party to the Existing Credit Agreement but not this
Agreement.
SECTION 3.02. [Intentionally left blank]
SECTION 3.03. Conditions Precedent to Each Borrowing Increasing the
-----------------------------------------------------
Aggregate Amount of Advances. The obligation of each Lender to make an A
- ----------------------------
Advance on the occasion of each A Borrowing (including the initial A Borrowing)
which would increase the aggregate outstanding amount of A Advances owing to
such Lender over the aggregate outstanding amount of A Advances owing to such
Lender immediately prior to the making of such A Advance, shall be subject to
the further conditions precedent that on the date of such A Borrowing the
following statements shall be true (and each of the giving of the applicable
Notice of A Borrowing and the acceptance by the Borrower of the proceeds of such
A Borrowing shall constitute a representation and warranty by the Borrower that
on the date of such A Borrowing such statements are true):
(i) The representations and warranties contained in Section 4.01 are
correct on and as of the date of such A Borrowing, before and after giving
effect to such Borrowing and to the application of the proceeds therefrom,
as though made on and as of such date, and
(ii) No event has occurred and is continuing, or would result from
such A Borrowing or from the application of the proceeds therefrom, which
constitutes an Event of Default or which would constitute an Event of
Default but for the requirement that notice be given or time elapse or
both.
SECTION 3.04. Conditions Precedent to Each B Borrowing. The
----------------------------------------
obligation of each Lender which is to make a B Advance on the occasion of a B
Borrowing (including the initial B Borrowing) to make such B Advance as part of
such B Borrowing is subject to the conditions precedent that (a) such Lender
shall have received the written confirmatory Notice of B Borrowing with respect
thereto and (b) on the date of such B Borrowing the following statements shall
be true (and each of the giving of the applicable Notice of B Borrowing and the
acceptance by the Borrower of the proceeds of such B Borrowing shall constitute
a representation and warranty by the Borrower that on the date of such B
Borrowing such statements are true):
<PAGE>
41
(a) The representations and warranties contained in Section 4.01 are
correct on and as of the date of such B Borrowing, before and after giving
effect to such B Borrowing and to the application of the proceeds
therefrom, as though made on and as of such date.
(b) No event has occurred and is continuing, or would result from such
B Borrowing or from the application of the proceeds therefrom, which
constitutes an Event of Default or which would constitute an Event of
Default but for the requirement that notice be given or time elapse or
both.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of the Borrower. The
----------------------------------------------
Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction indicated at the
beginning of this Agreement, has all requisite corporate power and
authority to conduct its business, to own its properties and assets as it
is now conducted and as proposed to be conducted and is qualified or
licensed to do business as a foreign corporation in good standing in all
jurisdictions in which the conduct of its business requires it to so
qualify or be licensed except where the failure to do so, individually or
in the aggregate, could not reasonably be expected to materially and
adversely affect the ability of the Borrower to perform its obligations
under this Agreement or any Note.
(b) The execution, delivery and performance by the Borrower of this
Agreement and the Notes, including the Borrower's use of the proceeds
thereof, are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action, and do not contravene (i) the
Borrower's charter or by-laws or (ii) law (including, without limitation,
Regulations T, U and X issued by the Board of Governors of the Federal
Reserve Board) or any contractual restriction binding on or affecting the
Borrower.
<PAGE>
42
(c) No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required
for the due execution, delivery and performance by the Borrower of this
Agreement or the Notes.
(d) This Agreement is, and each of the Notes when delivered hereunder
will be, the legal, valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with their respective terms.
(e) [Intentionally Left Blank.]
(f) There are no actions, suits or proceedings pending or, to the
knowledge of the Borrower, threatened, against the Borrower or any
Subsidiary the reasonably anticipated outcome of which would materially and
adversely affect the ability of the Borrower to perform its obligations
under this Agreement or any Note or which purports to affect the legality,
validity or enforceability of this Agreement or any Note.
(g) [Intentionally left blank]
(h) The Borrower is not engaged in the business of extending credit
for the purpose of purchasing or carrying Margin Stock, and no proceeds of
any Advance will be used to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any Margin
Stock, except in compliance with Regulations T, U and X issued by the Board
of Governors of the Federal Reserve Board.
(i) Neither the Borrower nor any Subsidiary is an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940.
(j) The Borrower and each Subsidiary have filed all tax returns
(Federal, state and local) required to be filed and paid all taxes shown
thereon to be due, including interest and penalties, or provided adequate
reserves for payment thereof.
(k) In the ordinary course of its business, the Borrower conducts an
ongoing review of the effect of Environmental Laws on the operations and
properties of the Borrower, in the course of which it identifies and
evaluates associated liabilities and costs (including, without limitation,
any capital or operating expenditures required for clean-up or closure of
<PAGE>
43
properties presently or previously owned, any liabilities in connection
with off-site deposit of Hazardous Substances or wastes, any capital or
operating expenditures required to achieve or maintain compliance with
environmental protection standards imposed by law or as a condition of any
license, permit or contract, any related constraints on operating
activities, including any periodic or permanent shutdown of any facility or
reduction in the level of or change in the nature of operations conducted
thereat and any actual or potential liabilities to third parties, including
employees, and any related costs and expenses). On the basis of this
review, the Borrower has reasonably concluded that, except with respect to
any matter disclosed in Items 1 or 3 in the Borrower's 1997 Form 10-K or in
the Commitments and Contingencies Note to the consolidated financial
statements incorporated therein, such associated liabilities and costs,
including the costs of compliance with Environmental Laws, are unlikely to
cause a material adverse change in the financial condition or results of
operations of the Borrower from that shown on the consolidated financial
statements as at, and for the nine-month period ended September 30, 1998,
provided that the inclusion of such exception does not indicate that any
--------
such matter will cause such a material adverse change.
(l) Except as otherwise disclosed in the Annual Report of the Borrower
on Form 10-K for the fiscal year ended December 31, 1998 (the "Borrower's
10K"), as supplemented (but only if each such supplement is delivered to
the Lenders) on or before the date the amendment and restatement of the
Existing Credit Agreement becomes effective pursuant to Section 3.01, to
the best of the Borrower's knowledge, the disclosures relating to Year 2000
materials contained in the Borrower's 10K referred to above in this clause
(1) materially accurately reflect as of the date such statements are
purported to be made, the Borrower's efforts to address issues associated
with the Year 2000.
<PAGE>
44
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as any Advance shall
---------------------
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will, unless the Majority Lenders shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause each Subsidiary to
--------------------------
comply, with all applicable laws, rules, regulations and orders (such
compliance to include, without limitation, paying before the same become
delinquent all taxes, assessments and governmental charges imposed upon it
or upon its property except to the extent contested in good faith) the
failure to comply with which would have a material adverse effect on the
property, condition or operations (financial or otherwise) of the Borrower
or the Borrower and the Subsidiaries taken as a whole.
(b) Consolidated Leverage Ratio. Maintain a Consolidated Leverage
---------------------------
Ratio as of the last day of any Reference Period of not more than 3.5 to
1.0.
(c) Consolidated Interest Coverage Ratio. Maintain a Consolidated
------------------------------------
Interest Coverage Ratio for any Reference Period of not less than 3.0 to
1.0.
(d) [Intentionally Left Blank.]
(e) Insurance. Maintain, and cause each Subsidiary to maintain,
---------
insurance with reputable insurance companies or associations in such amount
and covering such risks as the Borrower, in its good faith business
judgment, believes necessary.
(f) ERISA. And will ensure that each ERISA Affiliate will meet its
-----
minimum funding requirements and all of its other obligations under ERISA
with respect to all of its Plans and satisfy all of its obligations to
Multiemployer Plans, including any Withdrawal Liability, if the failure to
do so would have a material adverse effect on the property, condition or
operations of the Borrower or the Borrower and the Subsidiaries taken as a
whole.
<PAGE>
45
(g) Reporting Requirements. Furnish to the Lenders:
----------------------
(i) as soon as available and in any event within 60 days after
the end of each of the first three quarters of each year, balance
sheets of the Borrower and the Subsidiaries, on a consolidated basis,
as of the end of such quarter and statements of income and retained
earnings and cash flow of the Borrower and the Subsidiaries, on a
consolidated basis, for the period commencing at the end of the
previous year and ending with the end of such quarter, certified by
the chief financial officer of the Borrower, subject to audit and year
end adjustments;
(ii) as soon as available and in any event within 120 days after
the end of each year, a copy of the balance sheets of the Borrower and
the Subsidiaries, on a consolidated basis, as of the end of such year
and the statements of income and retained earnings and cash flow of
the Borrower and the Subsidiaries, on a consolidated basis, for such
year, certified by KPMG Peat Marwick or another independent nationally
recognized firm of public accountants;
(iii) as soon as possible and in any event within ten days after
an officer of the Borrower becomes aware of the occurrence of each
Event of Default (and each event which, with the giving of notice or
lapse of time, or both, would constitute an Event of Default), an
Officer's Certificate setting forth details of such Event of Default
or event and the action which the Borrower has taken and proposes to
take with respect thereto;
(iv) contemporaneously with each delivery of the statements
referred to in clauses (i) and (ii) above, (A) either an Officer's
Certificate stating that no Event of Default (other than by reason of
non-compliance with the covenants referred to in Sections 5.01(b), (c)
and (d)) and no event which, with the giving of notice or lapse of
time, or both, would constitute an Event of Default (other than by
reason of non-compliance with the covenants referred to in Sections
5.01(b), (c) and (d)) occurred during such quarter or, if applicable,
an Officer's Certificate pursuant to clause (iii) above, (B) an
Officer's Certificate stating that, as of the last day of the
preceding quarter, and to the best of his or her knowledge,
<PAGE>
46
at all times during the preceding quarter, the Borrower was in
compliance with the covenants referred to in Sections 5.01(b), (c) and
(d) and providing reasonable details of the calculations evidencing
the Borrower's compliance with such covenants and (C) reasonable
details of each material change in GAAP from those applied in
preparing the statements referred to in Section 4.01(e) insofar as
such changes are applicable to the statements referred to in clauses
(i) and (ii) above;
(v) promptly after the sending or filing thereof, copies of all
reports which the Borrower sends to any of its shareholders, and
copies of all reports and registration statements which the Borrower
or any Subsidiary files with the Securities and Exchange Commission or
any national securities exchange (other than those pertaining to
employee benefit plans); and
(vi) such other information respecting the condition or
operations, financial or otherwise, of the Borrower or any Subsidiary
as any Lender may from time to time reasonably request.
SECTION 5.02. Negative Covenants. So long as any Advance shall
------------------
remain unpaid or any Lender shall have any Commitment hereunder, the Borrower
will not, without the written consent of the Majority Lenders:
(a) Liens. Create, assume or suffer to exist or permit any Subsidiary
-----
of the Borrower to create, assume or suffer to exist any Lien upon any of
its property or assets, whether now owned or hereafter acquired, except
(i) Permitted Encumbrances,
(ii) other Liens incidental to the conduct of its business or the
ownership of its property and assets which were not incurred to secure
Indebtedness, and which do not in the aggregate materially detract
from the value of its property or assets or materially impair the use
thereof in the operation of its business,
(iii) Liens on property or assets of a Domestic Subsidiary to
secure obligations of such Subsidiary to the Borrower or another
Domestic Subsidiary,
<PAGE>
47
(iv) any Lien on property of any Foreign Subsidiary to secure
Indebtedness of such Subsidiary, provided that, immediately after
giving effect thereto and to the concurrent repayment of any other
Indebtedness, the aggregate principal amount of outstanding
Indebtedness secured by Liens permitted by this clause (iv) or by
clause (vi), (vii), (viii) or (ix) of this Section does not exceed 10%
of Consolidated Net Tangible Assets,
(v) Liens incurred in connection with any Tax-Exempt Financing
which do not in the aggregate materially detract from the value of the
property or assets affected thereby or materially impair the use of
such property or assets in the operation of its business,
(vi) Liens on property or assets granted in connection with
applications for or reimbursement obligations with respect to letters
of credit issued at the request of the Borrower or a Subsidiary by a
banking institution to secure the performance of obligations of the
Borrower or a Subsidiary relating to such letters of credit, to the
extent such banking institution requested the granting to it of such
Lien as a condition for its issuance of the letter of credit; provided
that, immediately after giving effect thereto and to the concurrent
repayment of any other Indebtedness, the aggregate principal amount of
outstanding Indebtedness secured by Liens permitted by this clause
(vi) or by clause (iv), (vii), (viii) or (ix) of this Section does not
exceed 10% of Consolidated Net Tangible Assets,
(vii) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Subsidiary or existing on
any property or asset of any Person that becomes a Subsidiary after
the date hereof prior to the time such Person becomes a Subsidiary;
provided that (A) such Lien is not created in contemplation of or in
--------
connection with such acquisition or such Person becoming a Subsidiary,
as the case may be, (B) such Lien shall not apply to any other
property or assets of the Borrower or any Subsidiary, (C) such Lien
shall secure only those obligations which it secures on the date of
such acquisition or the date such Person becomes a Subsidiary, as the
case maybe, and extensions,
<PAGE>
48
renewals and replacements thereof that do not increase the outstanding
principal amount thereof and (D) immediately after giving effect
thereto and to the concurrent repayment of any other Indebtedness, the
aggregate principal amount of outstanding Indebtedness secured by
Liens permitted by this clause (vii) or by clause (iv), (vi), (viii)
or (ix) of this Section does not exceed 10% of Consolidated Net
Tangible Assets,
(viii) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary; provided that (A) with
--------
respect to Liens securing Indebtedness of any Domestic Subsidiary,
such Liens secure Indebtedness permitted by clause (ii) of Section
5.02(b), (B) such Liens and the Indebtedness secured thereby are
incurred prior to or within 90 days after acquisition or the
completion of such construction or improvement, (C) the Indebtedness
secured thereby does not exceed 100% of the cost of acquiring,
constructing or improving such fixed or capital assets, (D) such Liens
shall not apply to any other property or assets of the Borrower or any
Subsidiary and (E) immediately after giving effect thereto and to the
concurrent repayment of any other Indebtedness, the aggregate
principal amount of outstanding Indebtedness secured by Liens
permitted by this clause (viii) or by clause (iv), (vi), (vii) or (ix)
of this Section does not exceed 10% of Consolidated Net Tangible
Assets,
(ix) Liens securing other obligations of the Borrower and its
Subsidiaries not expressly permitted by clauses (i) through (viii)
above; provided that, immediately after giving effect thereto and to
the concurrent repayment of any other secured obligations, the
aggregate principal amount of outstanding obligations secured by Liens
permitted by this clause (ix) or by clause (iv), (vi), (vii) or (viii)
of this Section does not exceed 10% of Consolidated Net Tangible
Assets, and
(x) Liens on Margin Stock, if and to the extent the value of all
Margin Stock of the Borrower and its Subsidiaries exceeds 25% of the
value of the total assets subject to this Section 5.02(a) (it being
understood that Margin Stock not in excess of 25% of the value of such
assets will be subject to the restrictions of this Section 5.02(a)).
<PAGE>
49
(b) Domestic Subsidiary Indebtedness. Permit any Domestic Subsidiary
--------------------------------
to create, incur, assume or permit to exist any Indebtedness, except:
(i) Indebtedness of any Domestic Subsidiary to the Borrower or
any other Domestic Subsidiary;
(ii) Indebtedness incurred to finance the acquisition,
construction or improvement of any fixed or capital assets, including
Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any
such assets prior to the acquisition thereof, and extensions, renewals
and replacements of any such Indebtedness that do not increase the
outstanding principal amount thereof; provided that (A) such
--------
Indebtedness is incurred prior to or within 90 days after such
acquisition or the completion of such construction or improvement and
(B) the aggregate principal amount of outstanding Indebtedness
permitted by this clause (ii) and clause (iii) below shall not, at the
time that any such Indebtedness is incurred (and after giving effect
to any concurrent repayment of Indebtedness), exceed 10% of
Consolidated Net Tangible Assets;
(iii) Indebtedness of any Person that becomes a Domestic
Subsidiary after the date hereof; provided that (A) such Indebtedness
--------
exists at the time such Person becomes a Domestic Subsidiary and is
not created in contemplation of or in connection with such Person
becoming a Domestic Subsidiary and (B) the aggregate principal amount
of outstanding Indebtedness permitted by this clause (iii) and clause
(ii) above shall not, at the time that any such Indebtedness is
incurred (and after giving effect to any concurrent repayment of
Indebtedness), exceed 10% of Consolidated Net Tangible Assets; and
(iv) other Indebtedness in an aggregate principal amount not
exceeding $10,000,000 at any time outstanding.
(c) Mergers, Etc. (i) Merge or consolidate with or into any other
-------------
Person (other than a Subsidiary) or (ii) convey, transfer, lease or
otherwise dispose of, or permit a Subsidiary to convey, transfer, lease, or
otherwise dispose of, (whether in one transaction or in
<PAGE>
50
a series of related transactions) all or substantially all of the property
or assets of the Borrower and its Subsidiaries taken as a whole (whether
now owned or hereafter acquired), directly or indirectly, to any Person,
including through a merger or consolidation of a Subsidiary with an
unaffiliated party, unless, in each case of (i) or (ii), (A) after giving
effect to such proposed transaction, no Event of Default or event which
with the giving of notice or lapse of time, or both, would constitute an
Event of Default would exist, (B) the surviving or acquiring entity is a
corporation organized under the laws of one of the United States and (C)
the surviving or acquiring corporation if other than the Borrower,
expressly assumes the performance of all the obligations of the Borrower
under this Agreement and the Notes provided that to the extent that the
--------
value of all Margin Stock owned by the Borrower and its Subsidiaries taken
as a whole exceeds 25% of the value of the total assets of the Borrower and
its Subsidiaries subject to this Section 5.02(c), nothing in this Section
5.02(c) shall prohibit the sale of such Margin Stock (it being understood
that Margin Stock not in excess of 25% of the value of such assets will be
subject to the restrictions of this Section 5.02(c)).
(d) [Intentionally Left Blank.]
(e) ERISA. Create, assume or suffer to exist or permit any ERISA
-----
Affiliate to create, assume or suffer to exist (i) any Insufficiency of any
Plan (or, in the case of a Plan with respect to which an ERISA Event
described in clauses (iii) through (vi) of the definition of ERISA Event
shall have occurred and then exist, the liability related thereto), in
respect of which Plan an ERISA Event has occurred, or (ii) any Withdrawal
Liability under any Multiemployer Plan, if the sum of (A) any such
Insufficiency or Withdrawal Liability, as applicable, (B) the Insufficiency
of any and all other Plans with respect to which an ERISA Event shall have
occurred and then exist (or, in the case of a Plan with respect to which an
ERISA Event described in clauses (iii) through (vi) of the definition of
ERISA Event shall have occurred and then exist, the liability related
thereto), (C) amounts then required to be paid to any and all other
Multiemployer Plans by the Borrower or its ERISA Affiliates as Withdrawal
Liability and (D) the aggregate principal amount of all Indebtedness of the
Borrower and all the Subsidiaries secured by Liens permitted by clauses
(iv), (vi), (vii), (viii) and (ix) of Section 5.02(a), shall exceed 10% of
Consolidated Net Tangible Assets.
<PAGE>
51
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of the following events
-----------------
("Events of Default") shall occur and be continuing:
(a) The Borrower shall fail to pay (i) any principal of any Advance
when the same becomes due and payable or (ii) any interest on any Advance
or any fees or other amounts payable under this Agreement within five days
of the same becoming due and payable; or
(b) Any representation or warranty made by the Borrower herein or by
the Borrower (or any of its officers) in connection with this Agreement
shall prove to have been incorrect in any material respect when made; or
(c) The Borrower shall fail to perform or observe (i) any term,
covenant or agreement contained in Section 5.01 (b) or (c) or Section 5.02,
or (ii) any term, covenant or agreement contained in this Agreement or any
Note (other than as referred to in subsection (a) or clause (i) above) on
its part to be performed or observed if, in the case of this clause (ii),
such failure shall remain unremedied for 30 days after written notice
thereof shall have been given to the Borrower by any Lender; or
(d) The Borrower or any Subsidiary shall fail to pay any installment
of principal of or any premium or interest on any Indebtedness, which is
outstanding in a principal amount of at least $25,000,000 in the aggregate
(but excluding Indebtedness outstanding hereunder) of the Borrower or such
Subsidiary (as the case may be), when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration, demand
or otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument relating to such
Indebtedness, or any other event shall occur or condition shall exist under
any agreement or instrument relating to any such Indebtedness and shall
continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or to permit the acceleration of, the maturity of such
Indebtedness, or any Indebtedness of the Borrower or any Subsidiary which
is outstanding in an aggregate principal amount
<PAGE>
52
of at least $10,000,000 shall, for any reason, be accelerated; or
(e) Either the Borrower or any Significant Subsidiary or any two or
more Subsidiaries which (when taken together) would have aggregate total
assets constituting those of a Significant Subsidiary shall generally not
pay its debts as such debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a general assignment
for the benefit of creditors; or any proceeding shall be instituted by or
against the Borrower or any such Subsidiary seeking to adjudicate it a
bankrupt or insolvent, or seeking liquidation, winding up, reorganization,
arrangement, adjustment, protection, relief, or composition of it or its
debts under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or the
appointment of a receiver, trustee, or other similar official for it or for
any substantial part of its property, and, in the case of any such
proceeding instituted against the Borrower or such Subsidiary (but not
instituted by it), either such proceeding shall not be dismissed or stayed
for 60 days or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against it or the
appointment of a trustee, custodian or other similar official for it or any
substantial part of its property) shall occur; or the Borrower or any such
Subsidiary shall take any corporate action to authorize any of the actions
set forth above in this subsection (e); or
(f) Any judgment or order for the payment of money in excess of
$5,000,000 shall be rendered against the Borrower or any Subsidiary and
either (i) enforcement proceedings shall have been commenced by any
creditor upon such judgment or order and, within 60 days of the
commencement of such proceedings, such judgment shall not have been
satisfied or (subject to clause (ii) below) shall have been stayed or (ii)
there shall be any period of 60 consecutive days during which a stay of
enforcement of such judgment or order, by reason of a pending appeal or
otherwise, shall not be in effect;
then, and in any such event, the Majority Lenders may (i) declare the obligation
of each Lender to make Advances to be terminated, whereupon the same shall
forthwith terminate, and (ii) by notice to the Borrower, declare the Notes, all
interest thereon and all other amounts payable under this Agreement to be
forthwith due and payable, whereupon the
<PAGE>
53
Notes, all such interest and all such amounts shall become and be forthwith due
and payable, without presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower; provided, however,
that in the event of an Event of Default resulting from the actual or deemed
entry of an order for relief with respect to the Borrower or any Subsidiary
under the Federal Bankruptcy Code, (A) the obligation of each Lender to make
Advances shall automatically be terminated and (B) the Notes, all such interest
and all such amounts shall automatically become and be due and payable, without
presentment, demand, protest or any notice of any kind, all of which are hereby
expressly waived by the Borrower.
ARTICLE VII
ASSIGNMENTS AND PARTICIPATIONS
SECTION 7.01. Binding Effect. This Agreement shall become effective
--------------
when it shall have been executed by the Borrower and by each Bank and thereafter
shall be binding upon and inure to the benefit of the Borrower and each Lender
and their respective successors and assigns, except that the Borrower shall not
have the right to assign its rights hereunder or any interest herein without the
prior written consent of the Lenders.
SECTION 7.02. Assignments. (a) Each Lender may, upon at least 10
-----------
Business Days' notice to the Borrower, assign to one or more banks or other
entities (other than an assignment which would result in increased costs to the
Borrower pursuant to Sections 2.07, 2.10 or 2.14 hereof or under the definitions
of "Adjusted CD Rate" or "Base Rate") all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment, the Advances owing to it and the Note or Notes held
by it); provided, however, that (i) if such bank or other entity is not already
--------
a Lender or an Affiliate of a Lender and prior to the expiring of the 10
Business Days' notice referred to above, the Borrower notifies the assignor
Lender that such assignee is, in its sole discretion, not acceptable to it, such
assignor Lender shall not make such assignment, (ii) the parties to each such
assignment shall execute and deliver to the Borrower an Assignment and
Acceptance, together with any Note or Notes subject to such assignment, (iii)
each such assignment shall be only to an Eligible Assignee, (iv) each such
assignment shall be of a constant, and not a varying, percentage of all of the
assigning
<PAGE>
54
Lender's rights and obligations under this Agreement and (v) the amount of the
Commitment of the assigning Lender being assigned pursuant to each such
assignment (determined as of the date of the Assignment and Acceptance with
respect to such assignment) shall in no event be less than $5,000,000, in the
case of an assignment to a Lender and $10,000,000, in the case of an Assignment
to an Eligible Assignee not already a Lender and, in each case, shall be an
integral multiple of $5,000,000. Upon such execution and delivery, from and
after the effective date specified in each Assignment and Acceptance, (A) the
assignee thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such Assignment and
Acceptance, have the rights and obligations of a Lender hereunder and (B) the
Lender assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all or the remaining
portion of an assigning Lender's rights and obligations under this Agreement,
such Lender shall cease to be a party hereto).
(b) By executing and delivering an Assignment and Acceptance, the
Lender assignor thereunder and the assignee thereunder confirm to and agree with
each other and the other parties hereto as follows: (i) other than as provided
in such Assignment and Acceptance, such assigning Lender makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; (ii) such assigning Lender makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrower or the performance or observance by the Borrower of any of its
obligations under this Agreement or any other instrument or document furnished
pursuant hereto; (iii) such assignee confirms that it has received a copy of
this Agreement, together with copies of the financial statements referred to in
Section 4.01(e) and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into such
Assignment and Acceptance; (iv) such assignee will, independently and without
reliance upon such assigning Lender or any other Lender and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under this
Agreement; (v) such assignee agrees that it will perform in accordance with
<PAGE>
55
their terms all of the obligations which by the terms of this Agreement are
required to be performed by it as a Lender; and (vi) such assignee confirms that
it is an Eligible Assignee.
(c) Subject to its rights to notify the Assignor of the
unacceptability of an assignee under and in accordance with Section 7.02(a),
upon its receipt of an Assignment and Acceptance executed by an assigning Lender
and an Eligible Assignee, the Borrower, at its own expense shall execute and
deliver to the assignee Lender in exchange for the surrendered A Note or A Notes
a new A Note to the order of such assignee Lender in an amount equal to the
Commitment assumed by it pursuant to such Assignment and Acceptance and, if the
assigning Lender has retained a Commitment hereunder, a new A Note to the order
of the assigning Lender in an amount equal to the Commitment retained by it
hereunder. Such new A Note or A Notes shall be in an aggregate principal amount
equal to the aggregate principal amount of such surrendered A Note or A Notes,
shall be dated the effective date of such Assignment and Acceptance and shall
otherwise be in substantially the form of Exhibit A-1 hereto.
(d) Each Lender may assign to one or more banks or other entities any
B Note or B Notes held by it.
(e) Any Lender may pledge all or a portion of its Advances to any
Federal Reserve Bank as collateral security pursuant to Regulation A of the
Board of Governors of the Federal Reserve System and any Operating Circular
issued by such Federal Revenue Bank. No such assignment shall release the
assigning Lender from its obligations under the Agreement.
SECTION 7.03. Participations. Each Lender may sell participations to
--------------
one or more banks or other entities in or to all or a portion of its rights and
obligations under this Agreement (including, without limitation, all or a
portion of its Commitment, and the Advances owing to it and the Note or Notes
held by it); provided, however, that (a) such Lender's obligations under this
--------
Agreement (including, without limitation, its Commitment to the Borrower
hereunder) shall remain unchanged, (b) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(c) such Lender shall remain the holder of any such Note for all purposes of
this Agreement, (d) the Borrower and the other Lenders shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and (e) such participation is not prohibited
<PAGE>
56
by applicable law. Any agreement or instrument pursuant to which a Lender sells
such a participation shall provide that such Lender shall retain the sole right
to enforce this Agreement and to approve any amendment, modification or waiver
of any provision of this Agreement; provided that such agreement or instrument
--------
may provide that such Lender will not, without the consent of the Person
acquiring such participation, agree to any amendment, modification or waiver
described in the proviso to Section 8.01 that affects such Person.
SECTION 7.04. Information. Any Lender may, in connection with any
-----------
assignment or participation or proposed assignment or participation pursuant to
this Article VII, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Borrower furnished to such
Lender by or on behalf of the Borrower.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or waiver of any
----------------
provision of this Agreement or the Notes, nor consent to any departure by the
Borrower therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Majority Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
-------- -------
unless in writing and signed by all the Lenders, do any of the following: (a)
increase the Commitments of the Lenders or subject the Lenders to any additional
obligations, (b) reduce the principal of, or interest on, the A Notes, A
Advances, or any fees or other amounts payable hereunder, (c) postpone any date
fixed for any payment of principal of, or interest on, the A Notes, A Advances,
or any fees or other amounts payable hereunder, (d) change the percentage of the
Commitments or of the aggregate unpaid principal amount of the A Notes, A
Advances, or the number of Lenders, which shall be required for the Lenders or
any of them to take any action hereunder or (e) amend this Section 8.01.
SECTION 8.02. Notices, Etc. All notices and other communications
------------
provided for hereunder shall be in writing (including, telegraphic, telex,
telecopy or cable communication) and mailed, telegraphed, telexed, telecopied,
cabled or delivered, if to the Borrower, at its address at 501 Merritt
<PAGE>
57
7, P.O. Box 4500, Norwalk, Connecticut, 06851-4500, telecopy no. (203) 750-3292,
Attention: Treasury Department; if to any Bank, at its Domestic Lending Office
specified opposite its name on Schedule I hereto; if to any other Lender, at its
Domestic Lending Office specified in the Assignment and Acceptance pursuant to
which it became a Lender; or, as to each party, at such other address as shall
be designated by such party in a written notice to the other parties. All such
notices and communications shall, when mailed, telegraphed, telexed, telecopied
or cabled, be effective only when received by the relevant party (which in the
case of telex shall be when receipt is confirmed by the appropriate telex answer
back).
SECTION 8.03. No Waiver; Remedies. No failure on the part of any
-------------------
Lender to exercise, and no delay in exercising, any right hereunder or under any
Note shall operate as a waiver thereof; nor shall any single or partial exercise
of any such right preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 8.04. Costs, Expenses and Taxes. (a) The Borrower agrees to
-------------------------
pay on demand all costs and expenses in connection with the preparation,
execution, delivery, administration, modification and amendment of this
Agreement, the Notes and the other documents to be delivered hereunder,
including, without limitation, the reasonable fees and out-of-pocket expenses of
counsel for the Lenders with respect thereto and with respect to advising the
Lenders as to their rights and responsibilities under this Agreement, and all
costs and expenses, if any (including, without limitation, reasonable fees and
expenses of counsel for each Lender), in connection with the enforcement
(whether through negotiations, legal proceedings or otherwise) of this
Agreement, the Notes and the other documents to be delivered hereunder.
(b) If any payment of principal of any Adjusted CD Rate Advance or
Eurodollar Rate Advance is made by the Borrower to or for the account of a
Lender other than on the last day of the Interest Period for such Advance, as a
result of a payment pursuant to Section 2.09(b), acceleration of the maturity of
the Notes pursuant to Section 6.01 or for any other reason, the Borrower shall,
upon demand by such Lender, pay to such Lender any amounts required to
compensate such Lender for any additional losses, costs or expenses which it may
reasonably incur as a result of such payment, including, without limitation, any
<PAGE>
58
loss (excluding loss of anticipated profits), cost or expense incurred by reason
of the liquidation or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Advance.
SECTION 8.05. [Intentionally left blank.]
SECTION 8.06. Lender's Credit Decision. Each Lender acknowledges
------------------------
that it has, independently and without reliance upon any other Lender and based
on such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement.
SECTION 8.07. Lender and Affiliates. Each Lender and its affiliates
---------------------
may accept deposits from, lend money to, act as trustee under indentures of, and
generally engage in any kind of business with the Borrower, any Subsidiary and
any person or entity who may do business with or own securities of the Borrower
or any Subsidiary, all as it if were not a Lender and without any duty to
account therefor to any other Lender.
SECTION 8.08. Indemnification by Borrower. The Borrower agrees to
---------------------------
indemnify and hold harmless each Lender (and each of their respective officers,
agents, employees and directors) from and against any and all claims, damages,
liabilities, obligations, losses, penalties, actions, judgments, suits, costs,
expenses and disbursements (including, without limitation, reasonable fees and
disbursements of counsel) of any kind or nature whatsoever ("Claims") which may
be imposed on, incurred by or asserted against such Lender or any of its
officers, agents, employees or directors (but excluding Claims of any Person
resulting from such Person's gross negligence or willful misconduct) in
connection with or arising out of any investigation, litigation or proceeding
(including, without limitation, any threatened investigation, litigation or
proceeding) related to any acquisition or proposed acquisition by the Borrower,
or by any Subsidiary of the Borrower, of all or any portion of the stock or
substantially all the assets of any Person whether or not the Person to be
indemnified hereunder is a party thereto, provided that this indemnity shall not
--------
cover (i) any Claims for actions unrelated to this Agreement taken by a Lender
prior to the date of this Agreement except to the extent such Claims relate to
any commitment letter or summary of terms prepared in connection with this
Agreement or (ii) any
<PAGE>
59
Claims that do not arise out of or by reason of (whether directly or indirectly)
this Agreement or any transactions contemplated by this Agreement or the
Borrower's use of the proceeds of the Advances.
SECTION 8.09. Governing Law. This Agreement and the Notes shall be
-------------
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 8.10. Execution in Counterparts. This Agreement may be
-------------------------
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 8.11. Special Prepayment Right. (a) In the event that a
------------------------
Change of Control Date shall occur, the Borrower will, within 10 days after such
Change of Control Date, give each Lender written notice thereof and describe in
reasonable detail the facts and circumstances giving rise thereto, and the
Borrower will prepay, if any such Lender shall so request, all of the Advances
from such Lender plus interest accrued to the date of prepayment and any other
fees and amounts as may then be payable by Borrower under this Agreement. Said
request (the "Prepayment Notice") shall be made by a Lender in writing not later
than 45 days after the Change of Control Date and shall specify (i) the date
(the "Special Prepayment Date") upon which the Borrower shall prepay the
Advances, which date shall be not less than 15 days nor more than 45 days from
the date of the Prepayment Notice and (ii) the amount of the Advances to be
prepaid. In the event of such request, the Commitment of such Lender to make
Advances shall forthwith terminate.
(b) On the Special Prepayment Date, the Borrower shall prepay all of
the Advances of such Lender plus interest accrued thereon to the Special
Prepayment Date and such other fees and amounts as may then be payable by
Borrower under this Agreement. Payment shall be made as provided in this
Agreement.
(c) For the purposes of this Section 8.11:
(i) the term "Change of Control Date" shall mean (A) the first
day on which any person, or group of related persons, has beneficial
ownership of more than 50% of the outstanding voting stock of the
Borrower or (B) the date immediately
<PAGE>
60
following the first date on which the members of the Board of
Directors of the Borrower (the "Board") at the commencement of any
period of 730 consecutive days (together with any other Directors
whose appointment or election by the Board or whose nomination for
election by the stockholders of the Borrower was approved by a vote of
at least a majority of the Directors then in office who either were
Directors at the beginning of such period or whose appointment or
election or nomination for election was previously so approved) shall
cease to constitute a majority of the Board at the end of such period;
provided, however, that a Change of Control Date shall not be deemed
to have occurred under clause (A) hereof if (x) the Borrower shall
have merged or disposed of a portion of its assets in compliance with
the requirements of subsection 5.02(c) hereof within 10 days after the
acquisition of such beneficial ownership shall have occurred and (y)
no person or group of related persons shall have beneficial ownership
of more than 50% of the outstanding voting stock of the Borrower after
such merger or disposition.
(ii) the term "voting stock" shall mean stock of any class or
classes (however designated) having ordinary voting power for the
election of a majority of the directors of the Borrower other than
stock having such power only by reason of a contingency.
<PAGE>
61
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
Borrower
--------
OLIN CORPORATION
By: /s/ Janet Pierpont
--------------------
Name: Janet Peirpont
Title: Vice President
and Treasurer
Commitment Banks
- ---------- -----
$40,000,000 WACHOVIA BANK, N.A.
By: /s/ John C. Coffin
------------------
Name: John C. Coffin
Title: Senior Vice President
$35,000,000 THE CHASE MANHATTAN BANK
By: /s/ Robert T. Sacks
---------------------
Name: Robert T. Sacks
Title: Managing Director
$35,000,000 CITIBANK, N.A.
By: /s/ Frank Gerbasi
-----------------
Name: Frank Gerbasi
Title: Vice President
$30,000,000 BANK OF AMERICA
By: /s/ Eileen Higgins
------------------
Name: Eileen Higgins
Title: Vice President
<PAGE>
62
$25,000,000 BANKERS TRUST COMPANY
By: /s/ Robert R. Telesca
----------------------
Name: Robert R. Telesca
Title: Authorized Signatory
<PAGE>
SCHEDULE I
OLIN CORPORATION
CREDIT AGREEMENT DATED AS OF SEPTEMBER 30, 1993
All Notices and A/B Advance Payments
------------------------------------
<TABLE>
<CAPTION>
Name of Bank Domestic Lending Office CD Lending Office Eurodollar Lending Office
- ------------ ----------------------- ----------------- -------------------------
<S> <C> <C> <C>
Wachovia Bank For Operation Notices: Same as Domestic Same as Domestic
---------------------
Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, GA 30303
Attn: Peaches Brown
Tel. No.: 404-332-6688
Fax: 404-332-4320
For Credit Matters:
------------------
John Coffin, SVP
Wachovia Bank, N.A.
191 Peachtree Street, N.E.
Atlanta, GA 30303
Tel: No.: 404-332-4056
Fax: 404-332-6898
For Payments:
------------
Wachovia Bank
ABA: #061000010
Account 18171498
Attn: Complex Speciality Unit
The Chase Manhattan Bank For Operation Notices: Same as Domestic Same as Domestic
---------------------
1 Chase Manhattan Plaza
8th Floor
New York, NY 10081
Attn: Tonya Mitchell
Tel No:. 212-552-7206
Fax: 212-552-5777
</TABLE>
<PAGE>
2
All Notices and A/B Advance Payments
------------------------------------
<TABLE>
<CAPTION>
Name of Bank Domestic Lending Office CD Lending Office Eurodollar Lending Office
- ------------ ----------------------- ----------------- -------------------------
<S> <C> <C> <C>
For Credit Matters:
------------------
Robert Sacks
Managing Director
270 Park Avenue
38th Floor
New York, NY 10017
Tel No.: 212-270-6000
Fax: 212-270-1355
For Payment:
-----------
The Chase Manhattan Bank
ABA: #021000021
New York, New York
For Credit to CMLN9420
Commercial Loan Operations
Re: Olin Corporation
Attn: John Knapp
Citibank, N.A. For Operations Notices: Same as Domestic Same as Domestic
----------------------
Citibank, N.A.
2 Penns Way, Suite 200
New Castle, DE 19720
Attn: Mark Waldron
Tel. No.: 302-894-6084
Fax: 302-894-6120
For Credit Matters:
------------------
Mellissa May
CitiBank, N.A.
399 Park Avenue
New York, NY 10043
Tel. No.: 212-559-7259
Fax: 212-826-2371
</TABLE>
<PAGE>
3
All Notices and A/B Advance Payments
------------------------------------
<TABLE>
<CAPTION>
Name of Bank Domestic Lending Office CD Lending Office Eurodollar Lending Office
- ------------ ----------------------- ----------------- -------------------------
<S> <C> <C> <C>
For Payments:
------------
Citibank, N.A.
ABA: #021000089
A/C: #4054-8046
Ref: Olin Corporation
Attn: Mark Waldron
Bank of America For Operation Notices: Same as Domestic Same as Domestic
---------------------
Bank of America
1850 Gateway Blvd.
Concord, CA 94520
Attn: J. Miller
Tel. No.: 925-675-7209
Fax: 925-675-7531
For Credit Matters:
------------------
Eileen Higgins
Vice President
335 Madison Avenue
5th Floor
New York, NY 10017
Tel. No.: 212-503-7260
Fax: 212-503-7878
For Payments:
------------
Bank of America
ABA #1210-0035-8
Acct. No.: 1233183980
Attn: J. Miller
Favor of Olin Corporation
</TABLE>
<PAGE>
4
All Notices and A/B Advance Payments
------------------------------------
<TABLE>
<CAPTION>
Name of Bank Domestic Lending Office CD Lending Office Eurodollar Lending Office
- ------------ ----------------------- ----------------- -------------------------
<S> <C> <C> <C>
Bankers Trust For Operation Notices: Same as Domestic Same as Domestic
---------------------
130 Liberty Street
14th Floor
New York, NY 10006
Attn: Joe Regan
Tel. No.: 212-250-4169
Fax: 212-250-2340
For Credit Matters:
------------------
Tom Cole
Managing Director
233 S Wacker Drive
Suite 8400
Chicago, IL 60606
Tel. No.: 312-993-8051
Fax: 312-993-8162
For Payments:
------------
Bankers Trust Company
New York, New York
ABA #021-001-033
Commercial Loan Division
Acct. No.: 99-401-268
Attn: Joe Regan
Ref: Olin Corp.
</TABLE>
<PAGE>
EXHIBIT A-1
A PROMISSORY NOTE
*
U.S. $___________ Date: _________, ____
FOR VALUE RECEIVED, the undersigned, OLIN CORPORATION, a Virginia
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of ___________
________________________________________________________________________________
(the "Lender") for the account of its Applicable Lending Office (as defined in
the Credit Agreement referred to below) the principal amount of each A Advance
(as defined in the Credit Agreement) owing to the Lender by the Borrower
pursuant to the Credit Agreement (as defined below) on the last day of the
Interest Period (as defined in the Credit Agreement) for such A Advance.
The Borrower promises to pay interest on the unpaid principal amount
of each A Advance from the date of such A Advance until such principal amount is
paid in full, at such interest rates, and payable at such times, as are
specified in the Credit Agreement.
Both principal and interest are payable in lawful money of the United
States of America to the Lender, at its Applicable Lending Office (as defined in
the Credit Agreement, referred to below), in same day funds. Each A Advance
owing to the Lender by the Borrower and the maturity thereof, and all payments
made on account of principal thereof, shall be recorded by the Lender and, prior
to any transfer hereof, endorsed on the grid attached hereto which is part of
this Promissory Note; provided that any failure to make such a recording or any
error in such recording shall not in any manner affect the obligation of the
Borrower to make payment of principal and interest in accordance with this
Promissory Note and the Credit Agreement.
This Promissory Note is one of the A Notes referred to in, and is
entitled to the benefits of, the Credit Agreement dated as of September 30, 1993
as amended
___________________
* Insert the dollar amount of the Bank's Commitment.
<PAGE>
2
and restated as of February 22, 1999 (as otherwise amended and in effect from
time to time, the "Credit Agreement") among the Borrower and certain other
lenders parties thereto. The Credit Agreement, among other things, (i) provides
for the making of the A Advances by the Lender to the Borrower from time to time
in an aggregate amount not to exceed at any time outstanding the U.S. dollar
amount first above mentioned, the indebtedness of the Borrower resulting from
each such A Advance being evidenced by this Promissory Note, and (ii) contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events and also for prepayments on account of principal hereof prior to
the maturity hereof upon the terms and conditions therein specified.
This Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of New York, United States of America.
OLIN CORPORATION
By: _______________________
Title:
<PAGE>
ADVANCES, MATURITIES AND PAYMENTS OF PRINCIPAL
<TABLE>
<S> <C> <C> <C> <C> <C>
Date of Amount of
Amount of Maturity Principal Paid Unpaid Principal Notation
Date Advance of Advance or Prepaid Balance Made by
____ _______ __________ ______________ ________________ _______
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
_____________________________________________________________________________________________
</TABLE>
<PAGE>
EXHIBIT A-2
FORM OF B NOTE
*
U.S. $__________________ Dated:____________, ____
FOR VALUE RECEIVED, the undersigned, OLIN CORPORATION, a Virginia
corporation (the "Borrower"), HEREBY PROMISES TO PAY to the order of
___________________________________________________________________(the
"Lender") for the account of its Applicable Lending office (as defined in the
Credit Agreement referred to below),on _______________, ____, principal amount
of ___________ Dollars ($__________________).
The Borrower promises to pay interest on the unpaid principal amount
hereof from the date hereof until such principal amount is paid in full, at the
interest rate and payable on the interest payment date or dates provided below:
Interest Rate: ________% per annum (calculated on
the basis of a year of 360 days for the actual
number of days elapsed)
Interest Payment Date or Dates:
Both principal and interest are payable in lawful money of the United
States of America to the Lender at its Applicable Lending Office (as defined in
the Credit Agreement referred to below) in same day funds.
This Promissory Note is one of the B Notes referred to in, and is
entitled to the benefits of, the Credit Agreement dated as of September 30, 1993
as amended and restated as of February 22, 1999 (as otherwise amended and in
effect from time to time, the "Credit Agreement") among the Borrower and certain
other banks parties thereto. The Credit Agreement, among other things, contains
provisions for acceleration of the maturity hereof upon the happening of certain
stated events.
__________________
* Insert the dollar amount of the Lender's B Advance.
<PAGE>
2
The Borrower hereby waives presentment, demand, protest and notice of
any kind. No failure to exercise, and delay in exercising, any rights hereunder
on the part of the holder hereof shall operate as a waiver of such rights.
This Promissory Note shall be governed by, and construed in accordance
with, the laws of the State of New York, United Sates.
OLIN CORPORATION
By _________________________
Title
<PAGE>
EXHIBIT B-1
NOTICE OF A BORROWING
The Lenders parties
to the Credit Agreement
referred to below
_______________________
_______________________ [Date]
Attention:___________________________
Gentlemen:
The undersigned, Olin Corporation, refers to the Credit Agreement,
dated as of September 30, 1993 as amended and restated as of February 22, 1999
(as otherwise amended and in effect from time to time, the "Credit Agreement",
the terms defined therein being used herein as therein defined), among the
undersigned and certain Banks parties thereto, and hereby gives you notice,
irrevocably, pursuant to Section 2.02(a) of the Credit Agreement that the
undersigned hereby requests a A Borrowing under the Credit Agreement, and in
that connection sets forth below the information relating to such A Borrowing
(the "Proposed A Borrowing") as required by Section 2.02(a) of the Credit
Agreement:
(i) The Business Day of the Proposed A Borrowing
is ______________, ____.
(ii) The Type of A Advances comprising the Proposed A Borrowing [is]
[are] [Adjusted CD Rate Advances] [Base Rate Advances] [and] [Eurodollar Rate
Advances], as set out below.
(iii) The aggregate amount of the Proposed A
Borrowing is $______________.
<PAGE>
2
(iv) The Interest Period and principal amount for each A Advance made
as part of the Proposed A Borrowing is as set out below:
Type of A Advance Interest Period Principal
----------------- --------------- ---------
* Amount
------
The undersigned hereby certifies that on the date hereof, and on the date
of the Proposed A Borrowing, the sum of (a) the aggregate amount of the Proposed
A Borrowing and all other A Borrowings to be made on the date of the Proposed A
Borrowing, (b) the aggregate amount of all other outstanding A Borrowings, (c)
the aggregate amount of all B Borrowings outstanding and (d) the aggregate
amount of all B Borrowings to be made on the date of the Proposed A Borrowing,
is less than or equal to the aggregate Commitments of the Lenders.
Very truly yours,
OLIN CORPORATION
By______________________
Title
_____________________
* More than one A Advance of the same Type may be requested.
<PAGE>
EXHIBIT B-2
NOTICE OF B BORROWING
The Lenders parties
to the Credit Agreement
referred to below
_______________________
_______________________ [Date]
Attention:________________
Gentlemen:
The undersigned, Olin Corporation, refers to the Credit Agreement, dated as
of September 30, 1993 as amended and restated as of February 22, 1999 (as
otherwise amended and in effect from time to time, the "Credit Agreement", the
terms defined therein being used herein as therein defined), among the
undersigned and Banks parties thereto, and hereby gives you notice pursuant to
Section 2.02 (b) of the Credit Agreement that the undersigned hereby requests a
B Borrowing under the Credit Agreement, and in that connection sets forth in
Schedules A and B below the terms on which such B Borrowing (the "Proposed B
Borrowing") is requested to be made:
SCHEDULE A
----------
(A) Date of B Borrowing
(B) Aggregate Amount of
B Borrowing
(C) Interest Rate Basis
(D) Time after which bids by any Lender
cannot be accepted by the Borrower*
(E)_____________________
__________________
* Time shall not be later than 10:30AM (New York City time).
<PAGE>
2
SCHEDULE B
----------
Amount of Interest Maturity
B Advance Payment Date(s) Dates
--------------- --------
The undersigned hereby certifies that on the date hereof, and on the
date of the Proposed B Borrowing the sum of (a) the aggregate amount of the
Proposed B Borrowing and all other B Borrowings to be made on date of the
Proposed B Borrowing, (b) the aggregate amount of all other outstanding B
Borrowings, (c) the aggregate amount of all A Borrowings outstanding and (d) the
aggregate amount of all A Borrowings to be made on the date of the Proposed B
Borrowing, is less than or equal to the aggregate Commitments of the Lenders.
The undersigned hereby confirms that the Proposed B Borrowings is,
subject to the above, to be made available to it in accordance with Section
2.02(b) of the Credit Agreement.
Very truly yours,
OLIN CORPORATION
By__________________
Title:
<PAGE>
EXHIBIT C
---------
ASSIGNMENT AND ACCEPTANCE
Dated ____________, ____
Reference is made to the Credit Agreement dated as of September 30,
1993 as amended and restated as of February 22, 1999 (as otherwise amended and
in effect from time to time, the "Credit Agreement") among Olin Corporation, a
Virginia corporation (the "Borrower"), and the Lenders (as defined in the Credit
Agreement). Terms defined in the Credit Agreement are used herein with the same
meaning.
_______________________(the "Assignor") and ____________ (the
"Assignee") agree as follows:
1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, the percentage interest
specified on Schedule 1, hereto in and to all of the Assignor's rights and
obligations under the Credit Agreement as of the date hereof (after giving
effect to any other assignments thereof made prior to the date hereof, whether
or not such assignments have become effective, but without giving effect to any
other assignments thereof also made on the date hereof), including, without
limitation, such percentage interest in the Assignor's Commitment [,] [and] the
A Advances owing to the Assignor [, and the A Note[s] held by the Assignor] but
excluding any amount payable to the Assignor pursuant to Section 8.04 of the
Credit Agreement.
2. The Assignor (i) represents and warrants that as of the date
hereof its Commitment (after giving effect to any other assignments thereof made
prior to the date hereof, whether or not such assignments have become effective,
but without giving effect to any other assignments thereof also made on the date
hereof) is in the dollar amount specified as the Assignor's Commitment on
Schedule 1, hereto and the aggregate outstanding principal amount of A Advances
owing to it (after giving effect to any other assignments thereof made prior to
the date hereof, whether or not such assignments have become effective, but
without giving effect to any other assignments thereof also made on the date
hereof) is in the dollar amount specified as the aggregate outstanding principal
amount of A Advances owing to the Assignor on Schedule 1 hereto; (ii) represents
and warrants that it is the legal and beneficial owner of the interest being
-----
assigned by it hereunder and that such interest is free and clear of any adverse
claim; (iii) makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or
<PAGE>
2
representations made in or in connection with the Credit Agreement or the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement or any other instrument or document furnished pursuant
thereto; (iv) confirms that it has not received a notice from the Borrower
pursuant to Section 7.02(a) of the Credit Agreement that the assignee is not
acceptable; [and] (v) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Credit Agreement or any other instrument or document furnished pursuant thereto
[; and (vi) attaches the A Note[s] referred to in paragraph 1 above and requests
that the Borrower exchange such A Note[s] for a new A Note payable to the order
of the Assignee in an amount equal to the Commitment assumed by the Assignee
pursuant hereto or new A Notes payable to the order of the Assignee in an amount
equal to the Commitment assumed by the Assignee pursuant hereto and the Assignor
in an amount equal to the Commitment retained by the Assignor under the Credit
Agreement, respectively, as specified on Schedule 1 hereto].
3. The Assignee (i) confirms that it is an Eligible Assignee or that
it was a Lender prior to the effective date hereof; (ii) confirms that it has
received a copy of the Credit Agreement and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into this Assignment and Acceptance; (iii) agrees that it will,
independently and without reliance upon the Assignor or any other Lender and
based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Credit Agreement; (iv) agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Credit Agreement
are required to be performed by it as a Lender; [and] (v) specifies as its CD
Lending Office, Domestic Lending Office (and address for notices) and Eurodollar
Lending office the offices set forth beneath its name on the signature pages
hereof [and; (vi) attaches the forms prescribed by the Internal Revenue Service
of the United States certifying as to the Assignee's status for purposes of
determining exemption from United States withholding taxes with respect to all
payments to be made to the Assignee under the Credit Agreement [and the A Notes]
or such other documents as are necessary to indicate that all such payments are
subject to such rates at a rate reduced by an applicable tax treaty].*
__________________
* If the Assignee is organized under the laws of a jurisdiction outside the
United States.
<PAGE>
3
4. Following the execution of this Assignment and Acceptance by the
Assignor and the Assignee, it will be delivered to the Borrower by the Assignee.
The effective date of this Assignment and Acceptance shall be the date specified
on Schedule 1 hereto (the "Effective Date").
5. Upon such delivery to the Borrower, as of the Effective Date, (i)
the Assignee shall be a party to the Credit Agreement and, to the extent
provided in this Assignment and Acceptance, have the rights and obligations of a
Lender thereunder and (ii) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
6. Upon such delivery to the Borrower, from and after the Effective
Date, the Borrower shall make all payments under the Credit Agreement [and the A
Notes] in respect of the interest assigned hereby (including, without
limitation, all payments of principal, interest and commitment fees with respect
thereto) to the Assignee. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Credit Agreement [and the A Notes] for periods
prior to the Effective Date directly between themselves.
7. This Assignment and Acceptance shall be governed by, and construed
in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the Parties hereto have caused this Assignment and
Acceptance to be executed by their respective officers thereunto duly
authorized, as of the date first above written, such execution being made on
Schedule 1 hereto.
[NAME OF ASSIGNOR]
By_____________________
Title:
[NAME OF ASSIGNEE]
By___________________
Title:
CD Lending Office:
[Address]
<PAGE>
4
Domestic Lending Office (and
address for notices):
[Address]
Eurodollar Lending Office:
[Address]
Received this _____ day
of _______________, ____ by
OLIN CORPORATION
By_______________________
Title:
<PAGE>
Schedule 1
to
Assignment and Acceptance
Dated _____________, ____
Section 1.
- ---------
Percentage Interest*:
_______%
Section 2.
- ---------
Assignor's Commitment:
$_______
Aggregate Outstanding Principal
Amount of A Advances owing to the Assignor:
$_______
An A Note payable to the order of the Assignee
Dated: ____________, ____
Principal amount: ____________
An A Note payable to the order of the Assignor
Dated: ___________, ____
Principal amount: ____________
Section 3.
- ---------
Effective Date**: ___________, ____
__________________
* This percentage must comply with the limitation in Section 7.02(a)(v).
** This date should be no earlier than the date of delivery of this Assignment
and Acceptance to the Borrower by the Assignee.
<PAGE>
EXHIBIT D
OPINION OF COUNSEL TO THE BORROWER
February 22, 1999
To each of the Banks parties
to the Credit Agreement dated
as of September 30, 1993 as
amended and restated as of
February 22, 1999 among Olin
Corporation and said Banks
Olin Corporation
----------------
Ladies and Gentlemen:
This opinion is furnished to you pursuant to Section 3.01(d) of the
Credit Agreement, dated as of September 30, 1993 as amended and restated as of
February 22, 1999 (as otherwise amended and in effect from time to time, the
"Credit Agreement"), among Olin Corporation (the "Borrower") and the Banks
parties thereto. Terms defined in the Credit Agreement are used herein as
therein defined.
I have acted as counsel for the Borrower in connection with the
preparation, execution and delivery of, and the initial Borrowing made under,
the Credit Agreement.
In that connection, I have examined:
(1) The Credit Agreement.
(2) The documents furnished by the Borrower pursuant to Article III of the
Credit Agreement.
(3) The restated articles of incorporation of the Borrower and all
amendments hereto (the "Charter").
(4) The by-laws of the Borrower and all amendments thereto (the "By-laws").
<PAGE>
2
(5) A certificate of the Virginia State Corporation Commission, dated February
18, 1999, attesting to the continued corporate existence and good standing of
the Borrower in that State.
In addition, I have examined the originals, or copies certified to my
satisfaction, of such other corporate records of the Borrower, certificates of
public officials and of officers of the Borrower, and agreements, instruments
and other documents, as I have deemed necessary as a basis for the opinions
expressed below. As to questions of fact material to such opinions, I have,
when relevant facts were not independently established by me, relied upon
certificates of the Borrower or its officers or of public officials. I have
assumed the due execution and delivery, pursuant to due authorization, of the
Credit Agreement by the Banks.
Based upon the foregoing and upon such investigation as we have deemed
necessary, I am of the following opinion:
1. The Borrower is a corporation duly organized, validly existing and
in good standing under the laws of the Commonwealth of Virginia.
2. The execution, delivery and performance by the Borrower of the
Credit Agreement and the Notes are within the Borrower's corporate powers,
have been duly authorized by all necessary corporate action, and do not
contravene (i) the Charter or the By-laws (ii) any law (including, without
limitation, Regulations T, U and X of the Board of Governors of the Federal
Reserve System) or (iii) the provisions of any material agreement of the
Borrower listed as an exhibit to the most recent annual report of the
Borrower on Form 10-K or subsequent SEC filings of the Borrower. The
Credit Agreement and the A Notes have, and the B Notes, when executed and
delivered by the Chairman of the Board and President, any Vice President
and Treasurer or any Assistant Treasurer of the Borrower, will have been
duly executed and delivered on behalf of the Borrower.
3. No authorization, approval or other action by, and no notice to or
filing with, any governmental authority or regulatory body is required for
the due
<PAGE>
3
execution, delivery and performance by the Borrower of the Credit Agreement
and the notes.
4. The Credit Agreement and the A Notes are, and the B Notes when
executed and delivered as described in Paragraph 2 above, will be, the
legal, valid and binding obligations of the Borrower enforceable against
the Borrower in accordance with their respective terms.
5. There are no actions, suits or proceedings pending or, to the best
of my knowledge, threatened against the Borrower or any Subsidiary the
reasonably anticipated outcome of which would materially and adversely
affect the ability of the Borrower to perform its obligations under the
Credit Agreement or any Note or which purports to affect the legality,
validity or enforceability of the Credit Agreement or any Note.
6. Neither the Borrower nor any Subsidiary is an "investment company"
or a company "controlled" by an "investment company" within the meaning of
the Investment Company Act of 1940.
The opinions set forth above are subject to the following qualifications:
(a) My opinion in paragraph 4 above is subject to the effect of any
applicable bankruptcy, insolvency, reorganization, moratorium or similar
law affecting creditor's rights generally.
(b) My opinion in paragraph 4 above is subject to the effect of
general principles of equity, including (without limitation) concepts of
materiality, reasonableness, good faith and fair dealing (regardless of
whether considered in a proceeding in equity or at law).
I am a member of the bar of the State of Connecticut. The law covered
by this opinion is limited to the laws of the State of Connecticut, the Virginia
Stock Corporation Act of the Commonwealth of Virginia and the laws of the United
States of America. I have assumed for the
<PAGE>
4
purpose of this opinion that the substantive law of the State of New York is
identical in all material respects to the substantive law of the State of
Connecticut.
Very truly yours,
Johnnie M. Jackson, Jr.
<PAGE>
EXHIBIT E
ASSUMPTION AGREEMENT
Dated _______________, ____
Reference is made to the Credit Agreement dated as of September 30,
1993 as amended and restated as of February 22, 1999 (as otherwise amended and
in effect from time to time, the "Credit Agreement"), among Olin Corporation, a
Virginia corporation (the "Borrower"), and the Lenders (as defined in the Credit
Agreement). Terms defined in the Credit Agreement are used herein with the same
meaning.
1. ____________________ (the "Assuming Bank") hereby assumes, as of
the Effective Date hereinafter referred to, the Commitment under the Credit
Agreement set forth opposite its name on the signature page hereof.
2. The Assuming Bank (i) confirms that it meets the criteria for an
Eligible Assignee; (ii) confirms that it has received a copy of the Credit
Agreement, together with copies of the most recently delivered financial
statements referred to in Section 5.01(g) thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into this Assumption Agreement; (iii) agrees that it will,
independently and without reliance upon any other Lender and based on, such
documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Credit
Agreement; (iv) agrees that it will perform in accordance with their terms all
of the obligations which by the terms of the Credit Agreement are required to be
performed by it as a Lender; [and] (v) specifies as its CD Lending Office,
Domestic Lending Office (and address for notices) and Eurodollar Lending Office
the offices set forth beneath its name on the signature pages hereof [and; (vi)
attaches the forms prescribed by the Internal Revenue Service of the United
States certifying as to the Assuming Bank's status for purposes of determining
exemption from United States withholding taxes with respect to all payments to
be made to the Assuming Bank under the Credit Agreement [and the A Notes] or
such other documents as are necessary to indicate that all such payments are
subject to such rates at a rate reduced by an applicable tax treaty).*
__________________
* If the Assuming Bank is organized under the laws of a jurisdiction outside the
United States.
<PAGE>
2
3. The effective date of this Assumption Agreement shall be the date
specified below (the "Effective Date").
4. As of the Effective Date, the Assuming Bank shall be a party to
the Credit Agreement and have the rights and obligations of a Lender thereunder.
5. From and after the Effective Date, the Borrower shall make to the
Assuming Bank all payments due the Assuming Bank as a Lender under the Credit
Agreement [and the A Notes held by the Assuming Bank] (including, without
limitation, all payments of principal, interest and commitment fees with respect
thereto).
6. This Assumption Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the Assuming Bank has caused this Assumption
Agreement to be executed by its officer thereunto duly authorized, as of the
date first above written.
[NAME OF ASSUMING BANK]
Effective Date:_____________
$ By_____________________
Title
CD Lending Office;
[Address]
Domestic Lending Office
(and address for notices):
[Address)
Eurodollar Lending Office:
[Address)
<PAGE>
3
Received this ______________________ day
of __________________, ____ by
OLIN CORPORATION
By_______________________
Title:
<PAGE>
EXHIBIT 10(c)
OLIN CORPORATION
EMPLOYEE DEFERRAL PLAN
As Amended and Restated Effective February 8, 1999
1. PURPOSE
-------
The purpose of this Olin Corporation Employee Deferral Plan (the "Plan") is
to provide eligible employees of Olin Corporation and its subsidiaries and
affiliates with an opportunity to defer compensation earned or to be earned by
them as a means of saving for retirement or other future purposes. The Plan is
amended and restated to reflect the distribution to Olin's shareholders of all
of the outstanding shares of common stock of Arch Chemicals, Inc., effective as
of the date of such distribution.
2. DEFINITIONS
-----------
The following definitions shall be applicable throughout the Plan:
(a) "Accounting Date" means each December 31, March 31, June 30 and
September 30.
(b) "Administrator" means the Senior Vice President, Corporate Affairs or
his delegate.
(c) "Arch" means Arch Chemicals, Inc., a Virginia corporation and any
successor thereto.
(d) "Arch Common Stock" means shares of common stock of Arch, par value
$1.00 per share.
(e) "Arch Employee" means an employee of Arch.
(f) "Arch Employee Deferral Plan" means the Arch Chemicals, Inc. Employee
Deferral Plan.
(g) "Arch Stock Account" means the Stock Account to which Arch Stock Units
are credited.
(h) "Arch Stock Unit(s)" means the share equivalents credited to the Arch
Stock Account of a Participant's Compensation Account pursuant to Section 6,
with one Arch Stock Unit equal to one share of Arch Common Stock.
(i) "Beneficiary" means the person(s) designated by the Participant in
accordance with Section 10.
<PAGE>
2
(j) "Board" means the Board of Directors of the Company.
(k) "Cash Account" means an account established under the Plan for a
Participant to which compensation has been or is to be credited in the form of
cash and which is to earn interest at the Rate of Interest as provided herein.
(l) "Change in Control" means that any of the following events shall have
occurred:
(i) the Company ceases to be, directly or indirectly, owned by at
least 1,000 shareholders;
(ii) a person, partnership, joint venture, corporation or other
entity, or two or more of any of the foregoing acting as a group (or a "person"
within the meaning of Section 13(d)(3) of the Exchange 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 13(d)(3) under the Exchange 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 (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 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) the Company's Board of Directors determines that a tender offer
for the Company's shares indicates a serious intention by the offeror to acquire
control of the Company.
(m) "Committee" means the Compensation Committee (or its successor) of the
Board.
(n) "Common Stock" means the Company's common stock, $1.00 par value per
share.
(o) "Company" means Olin Corporation, a Virginia corporation, its divisions
and subsidiaries.
<PAGE>
3
(p) "Compensation" means any employee compensation which represents salary,
severance pay, bonus, or any other incentive plan payout, in the form of cash or
stock, including but not limited to payouts or payment distributions from the
EVA Incentive Plan, Performance Unit Plan and 1991 Olin Long Term Incentive Plan
but excluding stock resulting from employee stock option exercises and excluding
other incentive payouts which the Administrator determines prospectively not
eligible to be deferred under this Plan.
(q) "Compensation Account" means the account established under the Plan to
which the Participant's Deferred Compensation is credited, including the Cash
Account, Stock Account, and such other investment accounts as the Committee may
establish from time to time.
(r) "Corporate Human Resources" means the Corporate Human Resources
Department of the Company.
(s) "Credit Date" means with respect to Deferred Compensation, such date as
designated by Corporate Human Resources that Deferred Compensation shall be
credited to the Compensation Account.
(t) "Deferred Compensation" means the Compensation elected by the
Participant to be deferred pursuant to the Plan.
(u) "Distribution" means the distribution of all outstanding shares of Arch
Common Stock to the shareholders of the Company.
(v) "Distribution Date" means the dividend payment date fixed by the Board
for the Distribution.
(w) "Election" means a Participant's delivery of a written notice of
election to Corporate Human Resources electing to defer payment of all or a
portion of his or her Compensation.
(x) "Employee" means a full-time, active salaried employee (which term
shall be deemed to include officers) of the Company and its affiliates who has
at least 1182 Hay Points and who has been selected by the Administrator, and if
required, approved by the Committee, to participate in this Plan.
(y) "Exchange Act" means the Securities Exchange Act of 1934, as amended.
(z) "Fair Market Value" means, with respect to a date, on a per share
basis, the average of the high and the low price of a share of Common Stock or
Arch 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.
<PAGE>
4
(aa) "Fiscal Year" means that annual period commencing January 1 and ending
the following December 31.
(bb) "Olin Stock Account" means the Stock Account to which Olin Stock Units
are credited from time to time.
(cc) "Olin Stock Unit(s)" means the share equivalents credited to the Olin
Stock Account of a Participant's Compensation Account pursuant to Section 6,
with one Olin Stock Unit equal to one share of Common Stock.
(dd) "Participant" means an Employee selected by the Administrator and if
required, approved by the Committee, to participate in the Plan and who has
elected to defer payment of all or a portion of his or her Compensation under
the Plan. "Participant" shall also include any person who had an account under
the Prior Plans which has been transferred to this Plan.
(ee) "Plan" means this Olin Corporation Employee Deferral Plan.
(ff) "Prior Plans" mean the deferral plans and arrangements utilized by
present and past employees or consultants for the deferral of payouts or
distributions of salary, bonuses (other than Bonus bank amounts under the EVA
Incentive Plan), performance shares, performance units and retention units, all
which were replaced by this Plan as of the effective date of this Plan
identified in Section 17.
(gg) "Rate of Interest" means the rate of interest for the quarterly period
ending with the Accounting Date 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 the
Committee may select prospectively from time to time.
(hh) "Section 16(b) Employee" means an Employee or former Employee who is
subject to Section 16(b) of the Exchange Act.
(ii) "Stock Account" means an account established under the Plan to which
shares of Common Stock and Arch Common Stock have been or are to be credited in
the form of Olin Stock Units and Arch Stock Units, which shall include the Olin
Stock Account and the Arch Stock Account.
(jj) "Stock-based Compensation" means Compensation that is being paid out
in the form of shares of Common Stock (excluding stock options), such as
retention stock units, performance shares and restricted stock units.
<PAGE>
5
(kk) "Termination" means retirement from the Company or termination of
services as an Employee for any other reason; provided, however, that an
-------- -------
Employee will not be considered to have incurred a Termination if he or she
ceases to provide services to the Company as a result of becoming an Arch
Employee.
3. SHARES; ADJUSTMENTS IN EVENT OF CHANGES IN CAPITALIZATION
---------------------------------------------------------
(a) Shares Authorized for Issuance. There shall be reserved for issuance
under the Plan 100,000 shares of Common Stock, subject to adjustment pursuant to
subsection (b) below.
(b) Adjustments in Certain Events. In the event of any change in the
outstanding Common Stock of the Company or Arch Common Stock by reason of any
stock split, share dividend, recapitalization, merger, consolidation,
reorganization, combination, or exchange or reclassification of shares, split-
up, split-off, spin-off, liquidation or other similar change in capitalization,
or any distribution to common shareholders other than cash dividends, the number
or kind of shares or Olin Stock Units or Arch Stock Units, as the case may be
that may be issued or credited under the Plan may be adjusted by the Committee
so that the proportionate interest of the Participants shall be maintained as
before the occurrence of such event. Such adjustment shall be conclusive and
binding for all purposes of the Plan.
4. ELIGIBILITY
-----------
The Administrator shall have the authority to select among any Employees
those Employees who shall be eligible to participate in the Plan. Deferrals to
a Stock Account by Section 16(b) Employees must be approved by the Committee.
<PAGE>
6
5. ADMINISTRATION
--------------
Full power and authority to construe, interpret and administer the Plan
shall be vested in the Committee. This power and authority includes, but is not
limited to, selecting compensation eligible for deferral, establishing deferral
terms and conditions and adopting modifications, amendments and procedures as
may be deemed necessary, appropriate or convenient by the Committee. Decisions
of the Committee shall be final, conclusive and binding upon all parties. Day-
to-day administration of the Plan shall be the responsibility of Corporate Human
Resources.
6. PARTICIPANT ACCOUNTS
--------------------
(a) Compensation Accounts. Upon election to participate in the Plan, there
shall be established a Compensation Account for the Participant to which there
shall be credited any Deferred Compensation as of the Credit Date for such
deferral. For each type of Compensation to be deferred, the Plan shall provide
for a Cash Account and an Olin Stock Account. Stock-based Compensation may only
be deferred to an Olin Stock Account. The Committee may establish from time to
time other types of Compensation Accounts reflecting different investment
options. Each Participant's Compensation Account shall be credited (or debited)
on each Accounting Date with income (or loss) based on a hypothetical investment
in any one or more of the investment options available under the Plan, as
prescribed by the Plan or the Committee. Gains, losses and other elements of
determining value shall be determined substantially on the basis of a
hypothetical investment in the various investment options, as determined and
applied in the manner deemed appropriate by the Committee.
(b) Olin Stock Account. If a Participant elects to invest all or any
portion of his or her Deferred Compensation in the Olin Stock Account, that
portion of the Participant's Compensation Account shall be credited on the
Credit Date with Olin Stock Units equal to the number of shares of Common Stock
(including fractions of a share determined to three decimal places) that could
have been purchased with the amount of such Deferred Compensation at the Fair
Market Value on the Credit Date; provided that in the case of Stock-based
Compensation, the Olin Stock Account shall be credited with the number of Olin
Stock Units equal to the number of shares being paid out as the Stock-based
Compensation.
(c) Dividends and Interest. Each time a cash dividend is paid on Common
Stock or Arch Common Stock, a Participant who has shares of such stock credited
to his or her Stock Account shall receive a credit in applicable Stock Units for
such dividends on the dividend payment date to his or her applicable Stock
Account. The number of additional Olin Stock Units or Arch Stock Units (rounded
to the nearest one-thousandth of a share) credited to the applicable Stock
Account will be determined by dividing (i) the product of (a) the dollar value
of the cash dividend declared in respect of a share of Common Stock or Arch
Common Stock, as applicable, multiplied by (b) the number of Stock Units
credited to the Participant's applicable Stock Account as of the dividend
<PAGE>
7
record date by (ii) the Fair Market Value of a share of Common Stock or Arch
Common Stock, as applicable, on the dividend payment date.
The Cash Account of a Participant shall be credited on each Accounting Date
with interest for the quarter ending on such date, payable at the Rate of
Interest on such date.
(d) Prior Plans. A Participant who had an existing deferred account under
the Prior Plans shall automatically have such account transferred to a
Compensation Account under this Plan to be maintained and administered pursuant
to the terms and conditions of this Plan. A cash account of a Prior Plan shall
be transferred to the Cash Account maintained under the Plan for such Prior Plan
and a stock account for a Prior Plan shall be transferred to the Olin Stock
Account maintained under this Plan for such Prior Plan.
(e) Adjustment for Distribution. Immediately prior to the Distribution,
the terms of the Olin Stock Units held in the Olin Stock Accounts of each
Participant who will become an Arch Employee shall be amended to provide that
such shares shall be paid out in cash based on the Fair Market Value of Olin
Stock Units at the time of distribution to the Arch Employees. As of the
Distribution Date, the Arch Stock Account of each Participant on such date shall
be credited with the number of Arch Stock Units that the Participant would have
received in the Distribution Date had the Participant owned directly the number
of shares of Common Stock represented by the Olin Stock Units held in his or her
Olin Stock Account. As of the Distribution Date, the Cash Account and Stock
Account of each Arch Employee (after giving effect to the adjustment described
in this Section 6(e)) shall be transferred to the Arch Employees Deferral Plan
provided that the Arch Employee provides the Company with a release, acceptable
to the Committee, waiving all rights to benefits under this Plan.
Except as provided in Section 6(c) with respect to dividends or in Section
3, no additional contributions or additions may be made to a Participant's Arch
Stock Account after the Distribution Date.
(f) Plan Remains Unfunded. Amounts credited to a Compensation Account
shall remain a part of the general funds of the Company and nothing contained in
this Plan shall be deemed to create a trust or fund of any kind or create any
fiduciary relationship. Nothing contained herein shall be deemed to give any
Participant any ownership or other proprietary, security or other rights in any
funds, stock or assets owned or possessed by the Company, whether or not
earmarked for the Company's own purposes as a reserve or fund to be utilized by
the Company for the discharge of its obligations hereunder. To the extent that
any person acquires a right to receive payments or distributions from the
Company under this Plan, such right shall be no greater than the right of any
unsecured creditor of the Company.
7. MANNER OF ELECTION
------------------
<PAGE>
8
(a) General. Any Employee selected by the Administrator to participate in
the Plan may elect to do so in any Fiscal Year by delivering to Corporate Human
Resources a written notice on a form prescribed by Corporate Human Resources
electing to defer payment of all or a portion (in 25% increments or other
increments so prescribed by the Committee) of his or her Compensation (an
"Election"), provided Section 16(b) Employees who elect to defer to an Olin
Stock Account must have the prior approval of the Committee. Such Election
shall specify whether the payout for the Compensation Account shall be in a lump
sum or in annual installments (not to exceed 20). Separate elections may be
made with respect to each type of Deferred Compensation; however, Compensation
Accounts for the same type of Deferred Compensation shall be paid out in
accordance with the same payout schedule. The Election must be filed on or
before December 31 in order to be effective for amounts earned in the
immediately succeeding Fiscal Year. An effective Election may not be revoked or
modified (except as otherwise stated herein) with respect to a Fiscal Year for
which such Election is effective.
(b) Changes in Election. A Participant will be allowed to change the
Election as provided herein. Any change with respect to the terms of a
Participant's Election for (i) amount or form of any future deferral hereunder
may be made at any time prior to such Compensation being earned and (ii) the
timing (which change may not accelerate a distribution date) or amount of
payments from any Compensation Account shall only be effective if made at least
six months prior to the payout and in the calendar year prior to the calendar
year payout is to occur.
8. MANNER OF PAYMENT
-----------------
(a) Form of Payment. In accordance with the Participant's Election,
amounts credited to a Participant's Compensation Account will be paid in a lump
sum or in the form of annual installments. Except as provided in Section 11, in
the case of distributions from the Olin Stock Account (unless the Administrator,
or in the case of a Section 16(b) Employee, the Committee, decides it shall be
in the form of cash), distributions shall be in shares of Common Stock and in
case of distributions from any other Compensation Account (including the Arch
Stock Account), distributions shall be in the form of cash (unless the Committee
decides it shall be in the form of shares of Common Stock), in each case to the
Participant or, in the event of his or her death, to the Beneficiary. If a
Participant elects to receive payment in installments, the payment period shall
not exceed 20 years. Payment dates shall be January 1 or July 1 pursuant to
Participant's Election.
(b) Calculation for Payments in Cash. The amount of any cash distribution
to be made in installments with respect to a Compensation Account (other than
the Olin Stock Account) will be determined by multiplying (i) the balance in
such Compensation Account on the payment date by (ii) a fraction, the numerator
of which is one and the denominator of which is the number of installments in
which distributions remain to be made (including the current distribution). If a
Stock Account is to be paid out in cash, the amount of any cash distribution to
be made in installments with respect to Stock Units will be determined by (i)
multiplying the number of Olin Stock Units or Arch Stock Units
<PAGE>
9
attributable to such installment (determined as hereinafter provided) by (ii)
the Fair Market Value of a share of Common Stock or Arch Common Stock, as
applicable, on the fifth business day immediately prior to the date on which
such installment is to be paid. The number of Olin Stock Units or Arch Stock
Units, as applicable, attributable to an installment shall be determined by
multiplying (i) the current number of Olin Stock Units or Arch Stock Units in
the applicable Stock Account by (ii) a fraction, the numerator of which is one
and the denominator of which is the number of installments in which
distributions remain to be made (including the current distribution).
(c) Calculation for Payments in Stock. The amount of any stock
distribution to be made in installments with respect to the amount of a
Compensation Account invested in the Olin Stock Account shall be determined by
multiplying (i) the current number of Olin Stock Units by (ii) a fraction, the
numerator of which is one and the denominator of which is the number of
installments in which distributions remain to be made (including the current
distribution). If a Compensation Account (other than the Olin Stock Account) is
to be paid out in shares of Common Stock, the amount of any stock distribution
to be made in installments with respect to such Compensation Account shall be
determined by dividing the amount of cash attributable to such installment
(determined as provided above) by the Fair Market Value of the Common Stock on
the fifth business day immediately prior to the date on which such installment
is to be paid.
(d) Fractional Shares; Required Withholding. Only whole numbers of shares
of Common Stock will be issued, with any fractional shares to be paid in cash.
To the extent required by law, taxes shall be withheld from payouts of the
Compensation Account, provided that if a fractional share results after
withholding, such fractional share shall be withheld as additional tax.
9. COMMENCEMENT OF PAYMENTS
------------------------
Payments of amounts deferred pursuant to a valid Election shall commence
(i) with respect to a lump sum, on January 1 or July 1 as indicated in a
Participant's Election and (ii) with respect to annual installments, on January
1 or July 1 of the first calendar year of deferred payment as selected by a
Participant in his or her Election. If a Participant dies prior to the first
deferred payment specified in an Election or prior to completion of all
installments, payments shall commence to the Participant's Beneficiary on the
first or next payment date so specified, unless the Administrator elects
otherwise to provide for a lump-sum distribution of the deceased Participant's
Compensation Accounts.
10. BENEFICIARY DESIGNATION
-----------------------
A Participant may designate one or more persons to whom payments are to be
made if the Participant dies before receiving payment of any or all amounts due
hereunder. A designation of Beneficiary will be effective only after the signed
Election is filed with Corporate Human Resources while the Participant is alive
and will cancel
<PAGE>
10
all designations of Beneficiary signed and filed earlier. If Corporate Human
Resources so permits, Beneficiaries may be designated for each type of
Compensation that is deferred. If the Participant fails to designate a
Beneficiary as provided above, the remaining unpaid amounts shall be paid in one
lump sum to the estate of such Participant. If all Beneficiaries of the
Participant die before the Participant or before complete payment of all amounts
due hereunder, the remaining unpaid amounts shall be paid in one lump sum to the
estate of the last to die of such Beneficiaries. A Participant may, at any time
prior to death, elect to change the designation of a Beneficiary.
11. CHANGE IN CONTROL
-----------------
Notwithstanding any provision of this Plan to the contrary, in the event of
a Change in Control, each Participant in the Plan shall receive an automatic
lump-sum cash distribution of all amounts accrued in the Participant's
Compensation Account (including interest at the Rate of Interest from the date
of the Change in Control through the business day immediately preceding the date
of distribution) not later than 15 days after the date of the Change in Control.
For this purpose, the balance in the portion of a Participant's Compensation
Account invested in the Olin Stock Account or Arch Stock Account shall be
determined by multiplying the number of applicable Stock Units by the higher of
(a) the highest Fair Market Value of Common Stock or Arch Common Stock, as
applicable, on any date within the period commencing 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 of the Company 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 Arch Common Stock, as applicable, pursuant thereto.
Any consideration other than cash forming a part or all of the consideration for
Common Stock to be paid pursuant to the applicable transaction shall be valued
at the valuation price thereon determined by the Board.
In addition, the Company shall reimburse a Participant for the legal fees
and expenses incurred if the Participant is required to seek to obtain or
enforce any right to distribution. In the event that it is determined that such
Participant is properly entitled to a cash distribution hereunder, such
Participant shall also be entitled to interest thereon payable in an amount
equivalent to the prime rate of interest as announced from time to time by
Citibank, N.A. from the date such distribution should have been made to and
including the date it is made.
Notwithstanding any provision of this Plan to the contrary, this Section 11
as applied to any Participant may not be amended or modified to the detriment of
a Participant after a Change in Control occurs without the written consent of
such Participant.
12. LOANS
-----
<PAGE>
11
The Administrator may, upon rules and procedures established by it, permit
Participants to borrow from their Compensation Accounts up to 50% of the value
of the Participant's Stock Account and up to 100% of the Participant's other
Compensation Accounts with such accounts constituting security for repayment of
such borrowings and with such borrowings bearing interest at market rates as
determined by the Administrator. In addition to terms established by the
Administrator, borrowings shall be subject to the following terms and
conditions: (1) a borrowing may not exceed in principal amount outstanding at
any one time $50,000 and the minimum borrowed amount shall be $1,000, (2) a
Participant may not have more than one borrowing outstanding hereunder at any
one time, (3) a borrowing shall mature in not more than five years, (4) the
annual interest rate on the borrowing, which shall be fixed during its term
(except it may increase in the case of default), shall be 25 basis points over
the minimum rate required by the Internal Revenue Service to avoid imputation of
income and (5) principal and interest payments will amortize over the life of
the borrowing except Participants with borrowings maturing over two years or
more may instead elect to make annual principal installment payments of five
percent and pay the balance of principal at maturity. Notwithstanding any later
maturity date, all such borrowings by Participant become due and payable when
the Participant's employment with the Company and any affiliate terminates.
13. INALIENABILITY OF BENEFITS
--------------------------
The interests of the Participants and their Beneficiaries under the Plan
may not in any way be voluntarily or involuntarily transferred, alienated or
assigned, nor subject to attachment, execution, garnishment or other such
equitable or legal process. A Participant or Beneficiary cannot waive the
provisions of this Section 13.
<PAGE>
12
14. GOVERNING LAW
-------------
The provisions of this plan shall be interpreted and construed in
accordance with the laws of the Commonwealth of Virginia, except to the extent
preempted by Federal law.
15. AMENDMENTS
----------
The Committee may amend, alter or terminate this Plan at any time without
the prior approval of the Board; provided, however, that the Committee may not,
without approval by the Board increase the number of securities that may be
issued under the Plan (except as provided in Section 3(b)). No amendment or
modification may impair the rights of a Participant to receive amounts accrued
in the Participant's Compensation Account at the time of the effectiveness of
the amendment or modification.
16. 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.
17. EFFECTIVE DATE
--------------
The Plan became effective as of November 1, 1997, and is amended and
restated in this document effective as of the Distribution Date.
<PAGE>
EXHIBIT 10(d)
OLIN SENIOR EXECUTIVE PENSION PLAN
(Restated as of September 1, 1995)
Article I. The Plan
--------------------
1.1 Establishment of Plan. Olin Corporation (the "Company") hereby
----------------------
restates its Olin Senior Executive Pension Plan, originally adopted by the
Board of Directors on September 27, 1984. The Effective Date of this
restatement is September 1, 1995.
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
select management employees.
Article II. Eligibility
------------------------
2.1 Participation. Any employee of the Company or its subsidiaries
--------------
(collectively referred to as "Employing Companies") whose job is rated at
2,000 Hay Points (or the equivalent) or more, and who is selected by the
Compensation Committee (prior to April 24, 1997, the Compensation and
Nominating Committee), (referred to in this Plan as the "Selection
Committee"), shall participate in the Plan. 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
herefrom.
Article III. Benefits
---------------------
3.1 Benefit Formula.
---------------
Upon retirement, as hereinafter provided, a Participant shall be
entitled to receive an annual "Retirement Allowance" 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 (1/2%) 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;
-1-
<PAGE>
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, and the Certain
Defense Operations for Non-Bargaining Units 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 or an Employing 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 (as previously defined) 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", "Retirement Allowance" 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 Unit
Plan, the EVA Bonus Bank and other long-term incentive and long-term bonus
plans); (ii) Average Compensation of Participants whose employment is being
transferred directly to Primex Technologies, Inc. or its affiliates
("Primex") (or who transfer directly within five (5) years following the
spin-off of Primex) shall be determined taking into account reasonable
compensation paid by Primex (as determined by the Plan Administrator of
this Plan); (iii) 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 of salary used to calculate
the amount of such severance, even if such severance is received in a lump
sum; (iv) Average Compensation shall be calculated without regard to the
dollar limitations imposed by Section 401(a)(17) of the Internal Revenue
Code; and (v) "Years of Benefit Service" shall include service imputed as a
result of treating executive
-2-
<PAGE>
severance as having been received over the number of months of salary used
to calculate such severance.
(d) The annual retirement allowances payable under the Olin Employees
Pension Plan, Other Olin Plans and from pension plans of the Participant's
previous 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 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 factors as may, from time to time, be elected by the Plan
Administrator.
3.2 Early Retirement.
----------------
(a) Except as otherwise provided in Section 4.2(a), a Participant may
retire from active service with all Employing Companies and commence
benefits under this Plan at any time after reaching his fifty-fifth (55th)
birthday, provided, however, that Accelerated Benefits may not commence
until at least twelve (12) full months following the Participant's actual
retirement. In the case of Participants who transfer directly to Primex or
Arco Chemical Company ("Arco") (or who, in the case of Primex only,
transfer directly to Primex within five (5) years of the spin-off of
Primex), (i) "actual retirement" shall be construed to mean retirement or
termination of service from Primex or Arco and their affiliates, as the
case may be, and (ii) service with Primex or Arco (and their affiliates)
shall be credited in enabling the Participant to attain his early
retirement age (but not in determining Years of Benefit Service) under this
Plan.
(b) For purposes of (i) determining whether a Participant has reached his
fifty-fifth (55th) birthday and, thus, is eligible to commence benefits
under this Section 3.2 instead of on a deferred vested basis, and (ii)
calculating the annual retirement allowance from the Olin Employees Pension
Plan which is to be used as an offset, any 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 (without
taking into account any severance period) other than (i) for cause or (ii)
as a result of a voluntary termination, shall be treated as continuing as
an active Employee until age fifty-five (55). No Benefit Service shall be
credited under this Section 3.2(b) and a Participant may not commence
benefits hereunder until he actually reaches age fifty-five (55).
3.3 Deferred Vested Employees. Any Participant who terminates active
-------------------------
service with all Employing Companies prior to having reached age fifty-five
(55) may commence benefits under this Plan only after having reached age
sixty-five (65); provided however that, in the case of Participants who
transfer directly to Primex or
-3-
<PAGE>
Arco, service with those respective companies and their affiliates shall be
counted in enabling such Participants to retire on or after attaining age
fifty-five (55) and actually retiring from Primex or Arco, as the case may
be, in accordance with Section 3.2 above. In the case of a deferred vested
Participant, benefits paid from this Plan will assume that the Participant
did not commence benefits under the Olin Employees Pension Plan until he or
she reached age sixty-five (65), even though the Participant may actually
commence benefits under the Olin Employees Pension Plan prior to that date.
3.4 Calculation of Benefit if Participant is Disabled. In the event that
-------------------------------------------------
a Participant becomes Totally Disabled as that term is defined in the Olin
Employees Pension Plan, the Participant shall continue to receive the same
service credit under this Plan as would be applicable to Totally Disabled
nonbargaining employees covered by the Olin Employees Pension Plan. The
disabled Participant's benefit under this Plan shall be calculated in
accordance with 3.1(a) and (b), and shall be payable as of the date that
the Participant is no longer Totally Disabled (if such date occurs after
age fifty-five (55)) or at age sixty-five (65), if the Employee is still
then Disabled. If a Participant is no longer Disabled prior to reaching age
fifty-five (55), then his entitlement to benefits shall be determined under
Section 3.3, if he terminates service prior to reaching age 55, or under
the other applicable provisions of this Plan, if he returns to active
service. No Participant shall qualify for Disability Benefits hereunder
once he or she is no longer actively employed by Olin Corporation or its
affiliates.
Article IV. Payment of Benefits
--------------------------------
4.1 Payment Provisions for Current and Future Retirees.
---------------------------------------------------
(a) Subject to the Minimum Benefit Accumulation threshold requirement of
Section 4.4, the actuarial present value of the Retirement Allowance of
Participants who are already retired as of September 1, 1995, determined in
accordance with the actuarial assumptions hereinafter provided, shall be
paid, at the election of the Chairman of the Board of Directors of the
Company, and in the case of the Chairman, the Selection Committee, either
in a single sum, in up to three (3) annual installments, or in a
combination of an annuity and either a single lump sum or installments
(such single sum or annual installments being referred to in this Plan as
"Accelerated Benefits"). Such Accelerated Benefits shall commence as of
(a) October 31, 1996, in the case of Participants who are retired as of
September 1, 1995, and (b) at least twelve months following the
Participant's actual retirement, in the case of future retirees (such dates
being referred to as the Participant's "Accelerated Benefit Commencement
Date"). If a Participant's benefits under this Plan are already in pay
status in accordance with the terms of Section 4.3 of the Plan, such
benefits will remain in pay status until the Participant's Accelerated
Benefit Commencement Date.
-4-
<PAGE>
(b) Alternatively, the retired Participant may elect, at least one full
year prior to such Accelerated Benefit Commencement Date, to receive his
entire benefit in the form of an annuity in accordance with Section 4.3 of
this Plan.
4.2 Payment Provisions for Active Employees.
----------------------------------------
(a) As of October 31 of the calendar year following the year in which an
actively employed Participant meets the Minimum Benefit Accumulation
threshold provided for in Section 4.4, the Actuarial Present Value
(determined as hereinafter provided) of the after-tax amount of an actively
employed Participant's Retirement Allowance shall be deposited in an
employee-grantor trust established by the Participant unless, at least one
full year prior to the funding of such employee-grantor trust, the
Participant shall instead have elected to receive Accelerated Benefits
commencing on his Accelerated Benefit Commencement Date. In the case of an
actively employed Participant, the "Accelerated Benefit Commencement Date"
shall be twelve full months following his actual retirement date at age
fifty-five (55) or later. In the case of Participants who transfer
directly to Primex or Arco (or who, in the case of Primex only, transfer
directly to Primex within five (5) years of the spin-off of Primex),
"actual retirement" shall be construed to mean retirement or termination of
service from Primex or Arco and their affiliates, as the case may be.
(b) In the event that an actively employed Participant elects not to
establish an employee-grantor trust, but instead to receive Accelerated
Benefits, regular monthly benefits shall commence to be paid upon such
Participant's actual retirement in accordance with Section 4.3 until such
Participant reaches his Accelerated Benefit Commencement Date, at which
time Accelerated Benefits shall be paid in the form and manner determined
by the Chairman of the Board of Directors of the Company, and in the case
of the Chairman, the Selection Committee, either in a single sum, in up to
three (3) annual installments, or in a combination of annuity payments and
either a single sum or annual installments, provided, however, that no
monthly benefits shall be paid to Participants who transfer to Primex or
Arco until they separate from service with Primex or Arco, respectively.
(c) Alternatively, the actively employed Participant may elect, at least
one full year prior to such Accelerated Benefit Commencement Date, to
receive his entire benefit in the form of an annuity in accordance with
Section 4.3 of this Plan.
4.3 Payment of Regular Monthly Benefits.
------------------------------------
(a) Participants retiring from active service from all Employing Companies
may elect to receive regular monthly benefits in lieu of receiving
Accelerated Benefits or
-5-
<PAGE>
establishing an employee-grantor trust. Such monthly benefits shall be
calculated and payable (without reduction for the death benefit protection)
in the form of a joint and 50% survivor annuity with the Participant's
Spouse as the joint annuitant.
(b) Any Participant who terminates service with all Employing Companies
before reaching age 55 may not commence benefits under this Plan prior to
reaching age 65 unless (i) he is eligible for "lay-off credit" pursuant to
Section 3.2(b) and, thus, is deemed to qualify for early retirement
benefits or (ii) he receives service credit for purposes of enabling him to
retire on or after age 55 as provided in the next sentence. In the case of
Participants who transfer directly to Primex or Arco, service with those
respective companies and their affiliates shall be counted in enabling such
Participants to retire on or after attaining age fifty-five (55). Any
benefits payable under this Plan with respect to a Participant who
terminates service prior to reaching age 55, and who is not eligible for
any imputed service under the foregoing provisions of Section 4.3(b), will
be calculated assuming that the 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.
4.4 Assumptions used for Determining Amount to be contributed to Employee-
---------------------------------------------------------------------
grantor Trust; Threshold for Accelerated Benefits.
--------------------------------------------------
(a) Actuarial Assumptions for Employee-Grantor Trust. In determining the
------------------------------------------------
Actuarial Present Value of the Participant's Plan benefit to be used for
purposes funding an employee-grantor trust, the benefit shall be
determined:
(i) as of the close of the Plan Year (i.e., December 31) prior to the
year in which the employee grantor trust is being funded;
(ii) 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 of the deposit to the employee-grantor trust) with a
maturity that approximates the Participant's life expectancy
determined as of the date the payment to the trust is scheduled to be
made; and
(iii) assuming that the benefit commences under this Plan
(a) on the Participant's 65th birthday, if the Participant
terminates service (or is treated as terminating service)
prior to age 55;
(b) on the Participant's 62nd birthday, if the Participant
terminates service on or after reaching age 55 and before
reaching age 62; and
-6-
<PAGE>
(c) on the Participant's 65th birthday, if the Participant
terminates service on or after reaching age 62.
(b) Actuarial Assumptions for Determining Accelerated Benefits. In
----------------------------------------------------------
determining the Actuarial Present Value of the Participant's Accelerated
Benefit, the benefit shall be determined:
(i) as of the close of the Participant's retirement or termination of
service;
(ii) 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 the Accelerated Benefit is scheduled to commence) with a
maturity that approximates the Participant's life expectancy
determined as of the date the payment is scheduled to be made; and
(iii) assuming that the benefit commences under this Plan
(a) on the Participant's 65th birthday, if the Participant
terminates service (or is treated as terminating service)
prior to age 55;
(b) on the Participant's 62nd birthday, if the Participant
terminates service on or after reaching age 55 and before
reaching age 62; and
(c) on the Participant's 65th birthday, if the Participant
terminates service on or after reaching age 62.
(c) Minimum Benefit Accumulation Threshold. No Accelerated Benefits shall
---------------------------------------
commence to be paid, and no Participant shall be given the opportunity to
fund an employee-grantor trust, until the Participant has accumulated
benefits under this Plan, the Olin Supplementary Pension Plan and the Olin
Deferral Benefit Pension Plan which, in the aggregate, have an actuarial
present value of at least One Hundred Thousand Dollars ($100,000.00).
4.5 Surviving Spouse Benefit.
-------------------------
(a) The Surviving Spouse of a Participant who dies after commencing regular
-----
monthly benefits shall receive a survivor benefit for his or her lifetime
equal to 50% of the monthly payments that were being paid to the
Participant under the Plan as of his death. The Surviving Spouse of a
Participant who dies after having elected to receive Accelerated Benefits,
but who as of the date of his death has not received the entire value of
his Accelerated Benefits, shall receive the remainder of any Accelerated
Benefits not yet paid in the form in effect with respect to the
Participant.
-7-
<PAGE>
(b) The Surviving Spouse of any Participant who dies prior to benefit
-----
commencement 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, retired
and commenced monthly regular benefits under the Plan, and then died the
next day.
(c) Notwithstanding (a) or (b) above, if the Surviving Spouse is more than
four years younger than the Participant, the Surviving Spouse's benefit
under this Plan shall be reduced so that the present value of the spouse's
lifetime benefit, as determined by the Company, is the same as it would
have been if he or she were only four years younger than the Participant.
(d) For purposes of this Plan, the term "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, no Surviving Spouse's retirement allowance shall be
paid, and (ii) common law marriages shall not be recognized hereunder.
4.6 Benefit Upon a Change of Control.
--------------------------------
(a) Lump Sum Payment Upon a Change of Control.
-----------------------------------------
Notwithstanding any other provision of the Plan, upon a Change in Control,
each Participant covered by the Plan shall automatically be paid a lump sum
amount in cash by the Company sufficient to purchase an annuity which,
together with the monthly payment, if any, under a Rabbi or other trust
arrangement established by the Company to make payments hereunder in the
event of a Change in Control and/or pursuant to any other annuity purchased
by the Company for the Participant to make payments hereunder, shall
provide the Participant with the same monthly after-tax benefit as he would
have received under the Plan based on the benefits accrued to the
Participant hereunder as of the date of the Change in Control. Payment
under this Section shall not in and of itself terminate the Plan, but such
payment shall be taken into account in calculating benefits under the Plan
which may otherwise become due the Participant thereafter.
(b) No Divestment Upon a Change of Control. If a Participant is removed
--------------------------------------
from participation in the Plan after a Change of Control has occurred, in
no event shall his years of Benefit Service accrued prior to such removal,
and the benefit accrued prior thereto, be adversely affected.
(c) Change of Control Defined.
-------------------------
For purposes of the Plan, a "Change in Control" shall be deemed to have
occurred if
-8-
<PAGE>
(i) Olin ceases to be a publicly owned corporation with at least 1000
stockholders; or
(ii) a person, partnership, joint venture, corporation or other
entity, or two or more of any of the foregoing acting as a group ( or
a 'person' within the meaning of Sections 13(d)(3) and 14(d)(2) 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 Olin, becomes 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 Board of Directors of the
Company (together with any new Director whose election by the 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) the Company's Board of Directors determines that a tender offer
for the Company's shares indicates a serious intention by the offeror
to acquire control of the Company.
(d) Arbitration. Any dispute or controversy arising under or in
-----------
connection with the Plan subsequent to a Change in Control shall be settled
exclusively by arbitration in Connecticut, 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.
4.7 Removal from the Plan; Non-Payment of Benefits.
-----------------------------------------------
(a) Any Participant may be removed from the Plan by the Selection
Committee at any time "for cause", as determined by the Selection 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 or Employing
Company without the consent of the Selection Committee. Neither the
Participant nor his or her 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
Spouse shall not be required to return any payments made prior to removal
of the Participant from the Plan.
-9-
<PAGE>
(b) The Selection Committee may notify a Participant that he or she is
being suspended from the Plan as a result of job performance which the
Selection Committee in its sole discretion deems unsatisfactory. From and
after the date of such notification and notwithstanding the Participant's
actual Hay Points, he or she will not be deemed to have 2,000 or more Hay
Points for purposes of calculating the Participant's Retirement Allowance.
Any prior Years of Benefit Service shall not be affected by such
suspension.
ARTICLE V. Funding
5.1 Unfunded Plan. This Plan shall be unfunded. All payments under
-------------
this Plan shall be made from the general assets of the Employing Company of
the Participant.
5.2 Liability for Payment. Each Employing 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. In the case of a Participant who was employed by more than one
Employing Company, the Committee shall allocate the cost of such benefits
among such Employing Companies in such manner as it deems equitable. The
obligations of the Employing Company 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 creditor of the Employing Company liable for payment
hereunder.
5.3 Anti-alienation. No Participant or beneficiary shall have the
---------------
right to assign, transfer, encumber or otherwise subject to any lien any
payment or any other interest under this Plan, nor shall such payment or
interest be subject to attachment, execution or levy of any kind.
Article VI. Plan Administration
-------------------------------
6.1 Plan Administrator. The Company hereby appoints the Benefit Plan
-------------------
Review Committee as the Plan Administrator (the "Plan Administrator" or
"Committee"). Any person, including, but not limited to, the directors,
shareholders, officers and employees of the Company, shall be eligible to
serve on the Committee. Any person so appointed shall signify his
acceptance by undertaking the duties assigned. Any member of the Committee
may resign by delivering written resignation to the Company. The Company
may also remove any member of the Committee by delivery of a written notice
of removal, which shall take effect upon delivery or on a date specified.
Upon resignation or removal of a Committee member, the Company shall
promptly designate in writing such other person or persons as a successor.
-10-
<PAGE>
6.2 Allocation and Delegation. The Committee members may allocate
-------------------------
the responsibilities among themselves, and shall notify the Company in
writing of such action and the responsibilities allocated to each member.
6.3 Powers, Duties and Responsibilities. Except for those powers
-----------------------------------
expressly reserved to the Selection Committee, the Plan Administrator shall
have all power to administer the Plan for the exclusive benefit of the
Participants and their 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,
interpretation and application of the Plan. Any such determination 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 done in a non-discriminatory manner
and shall be consistent with the intent of the Plan.
The Plan Administrator shall:
(a) compute the amount and kind of benefits to which any Participant
shall be entitled hereunder;
(b) maintain all necessary records for the administration of the Plan;
(c) interpret the provisions of the Plan and make and publish such
rules for regulation of the Plan as are consistent with the terms hereof;
(d) assist any Participant regarding his rights, benefits or elections
available under the Plan; and
(e) communicate to Participants and their Beneficiaries concerning the
provisions of the Plan.
6.4 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 may be necessary for proper administration of
the Plan. The Plan Administrator shall file and distribute all reports
that may be required by the Internal Revenue Service, Department of Labor
or others, as required by law.
6.5 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.
-11-
<PAGE>
6.6 Majority Actions. The Committee shall act by a majority of their
----------------
numbers, but may authorize one or more of them to sign all papers on their
behalf.
6.7 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.
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. Any Employing Company may
withdraw from participation in the Plan at any time. No amendment or
termination of the Plan or withdrawal therefrom by an Employing Company
shall adversely affect the vested benefits payable hereunder to any
Participant for service rendered prior to the effective date of such
amendment, termination or withdrawal.
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 Uniformity and Non Discrimination. All provisions of this Plan
----------------------------------
shall be interpreted and applied in a uniform nondiscriminatory manner.
8.5 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 under the
laws of the State of Connecticut.
-12-
<PAGE>
8.6 Employment Rights. Nothing in this Plan shall confer any right
------------------
upon any Employee to be retained in the service of the Company or any of
its affiliates.
8.7 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.
OLIN CORPORATION
By: __________________________
Its
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<PAGE>
EXHIBIT 10(e)
OLIN SUPPLEMENTAL CONTRIBUTING EMPLOYEE OWNERSHIP PLAN
EFFECTIVE JANUARY 1, 1990, AS AMENDED MAY 6, 1994 AND JANUARY 30, 1998
AND RESTATED AS OF SEPTEMBER 24, 1998
Olin Corporation ("Olin") hereby restates the Olin Supplemental
Contributing Employee Ownership Plan (the "Plan" or "SCEOP"), effective
September 24, 1998. The Plan was originally effective as of January 1, 1990 and
was amended as of May 6, 1994 and January 30, 1998. The Plan is intended to be
an unfunded, nonqualified deferred compensation plan for certain management and
highly compensated employees, as described in Section 201(2) and 301(a)(3) of
the Employee Retirement Income Security Act ("ERISA").
The purpose of this Plan is to provide certain eligible executive
employees, whose contributions to the Olin Corporation Contributing Employee
Ownership Plan (as from time to time amended, the "CEOP") are limited under
Sections 401(a)(17) of the Internal Revenue Code of 1986 and the regulations
promulgated thereunder (the "Code"), with certain supplemental benefits to make
up for such Code-imposed limitations.
ARTICLE I
DEFINITIONS AND GENERAL PROVISIONS
1.1 Except as otherwise provided herein, the terms defined in the CEOP are
used herein with the meanings ascribed to them in the CEOP. In addition, when
used herein, the following definitions shall apply:
(a) "CEOP Percentage" means with respect to a SCEOP Participant the
annual percentage by which such Participant reduces his Maximum Eligible
Compensation on either a before-tax or after-tax basis in calculating
Contributions made to the CEOP; provided, however, that, if a Participant's
CEOP percentage exceeds six percent (6%), the Participant may elect, for
purposes of this Plan, to limit the CEOP percentage used under this Plan to
six percent (6%).
(b) "Company" means Olin Corporation.
(c) "Compensation" shall have the same meaning as under the CEOP,
except that it shall not be subject to the maximum dollar limitation on
compensation taken into account for purposes of the CEOP under Section
401(a)(17) of the Code.
(d) "Dividend Equivalents" means (i) with respect to Olin Phantom
Units held in a SCEOP Account, 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; and (ii)
effective as of December 31, 1996, with respect to Primex Phantom Units
held in a SCEOP Account, the dollar amount of regular or special dividends
actually paid in cash from time to time on the actual number of shares of
Primex Technologies, Inc. common stock ("Primex Stock") reflected in such
Primex
<PAGE>
Phantom Units. Any Dividend Equivalents issued with respect to Primex
Phantom Units shall be deemed reinvested in Olin Phantom Units and not
Primex Phantom Units.
(e) "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 (in
excess of $25 per month) (as of the date hereof, 50%) under the CEOP, as
such percentage changes from time to time, by (ii) the annual Supplemental
Plan Contribution for that Participant; provided that, if the participant's
CEOP Percentage exceeds six percent (6%), the Supplemental Plan
Contribution will be calculated using six percent (6%) for the CEOP
Percentage when calculating the Excess Company Matching Contribution.
(f) "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 CEOP for that year, if any, by (ii) the Supplemental Plan Contribution
of that Participant for such year; provided that if such Participant's CEOP
Percentage exceeds six percent (6%), the Supplemental Plan Contribution
will be calculated using six percent (6%) for the CEOP Percentage when
calculating the Excess Performance Contribution.
(g) "Maximum Eligible Compensation" means the maximum amount of
Compensation under Section 401(a)(17) of the Code from which a Participant
is permitted to make Contributions to the CEOP, as such maximum amount is
adjusted from time to time under the Code.
(h) "Olin Phantom Units" means phantom units of the CEOP's Olin Common
Stock Fund held in the SCEOP, such units consisting of both Olin Stock and
cash.
(i) "Plan Year" shall mean a twelve-month period ending on December
31.
(j) "Primex Phantom Units" means, effective on and after December 31,
1996, phantom units of the CEOP's Primex Stock Fund held in the SCEOP, such
units consisting of both Primex Stock and cash.
(k) "SCEOP Participant" with respect to a month in a Plan Year shall
mean a Participant whose contributions to the CEOP are limited as a result
of the imposition of the limitations set forth in the Sections 401(a)(17)
of the Code and who has filed an election to participate in the SCEOP with
the Committee.
(l) "SCEOP Account" for a SCEOP Participant shall mean the Account
established under the SCEOP for such Participant holding Olin Phantom Units
and/or Primex Phantom Units, and/or any other phantom securities or units
created herein.
(m) "Supplemental Plan Contribution" with respect to a SCEOP
Participant shall mean the annual amount by which the SCEOP Participant has
elected to reduce his
<PAGE>
Compensation under this Plan, such amount being equal to the CEOP
Percentage multiplied by the difference between (i) such Participant's
Compensation and (ii) his Maximum Eligible Compensation.
ARTICLE II
ELIGIBILITY AND PARTICIPATION
2.1 Any Employee of the Company 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 or rate of pay is in excess of the limitation
contained in Section 401(a)(17) of the Code
shall be eligible to participate in this Plan.
2.2 Each Eligible Employee wishing to participate in this Plan must
execute and file a salary reduction agreement in a form acceptable to the Plan
Administrator. Such agreement to reduce Compensation shall be made by December
1 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, and shall remain in effect for subsequent Plan Years unless
revoked by the Participant in writing in a form acceptable to the Plan
Administrator. Notwithstanding the foregoing, for the Plan Year in which a
Participant first becomes eligible to participate in the Plan, a Participant may
make such election within 30 days after he becomes eligible.
2.3 Any election to reduce salary shall be irrevocable for the Plan Year
to which it relates, provided, however, that during a Plan Year a Participant
may elect to cease all salary reductions for the remainder of the Plan Year, in
which case, no subsequent election shall be effective until the beginning of the
next Plan Year.
2.4 No salary reduction election shall be given effect under this Plan
until the Participant has contributed to the CEOP the maximum amount permitted
by the CEOP and by applicable law for the Plan Year to which such salary
reduction election relates.
ARTICLE III
CONTRIBUTIONS AND ACCOUNTS
<PAGE>
3.1 Each SCEOP Participant who so elects for a Plan Year shall defer the
Supplemental Plan Contribution on a pre-tax basis. For each SCEOP Participant,
a SCEOP Account will be established. The Account will contain sub-accounts for
each type of contribution credited to the SCEOP Account. For each Plan Year
during which a person is a SCEOP Participant and making deferrals, the
Participating Employer will credit to the SCEOP Account of each SCEOP
Participant the number of Olin Phantom Units equal in value to the sum of (1)
the Supplemental Plan Contribution, plus (2) the Excess Company Matching
Contribution, plus (3) the Excess Performance Contribution, if any. Such
crediting shall occur periodically in accordance with the timing of
contributions to the CEOP, in the case of the Supplemental Plan Contributions
and Excess Company Matching Contributions, and as soon as administratively
feasible following the making of a Performance Matching Contribution under the
CEOP, in the case of an Excess Performance Contribution. The SCEOP Account will
also be credited with Dividend Equivalents from time to time, in the form of
additional Olin Phantom Units when dividends are paid (i) on the actual number
of shares of Olin Common Stock reflected in the Olin Phantom Units held in such
Account and (ii) on the actual number of shares of Primex Stock reflected in
Primex Phantom Units held in such Account.
3.2 For purposes of calculating the number of Olin Phantom Units to be
credited to a Participant's SCEOP Account, the SCEOP shall use the Current
Market Value for valuing units in the Olin Common Stock Fund as defined under
the CEOP. Olin and Primex Phantom Units will be credited in fractional amounts
up to three decimal places.
3.3 As a result of the spin-off of Primex, Participants' SCEOP Account
Balances deemed invested in Olin Phantom Units shall be credited with a dividend
deemed invested in Primex Phantom Units. For each Olin Phantom Unit credited to
a Participant's SCEOP Account as of December 31, 1996, he shall be credited with
a dividend equal to the then current value of the Olin Common Stock Fund,
multiplied by a fraction, the numerator of which is equal to one-tenth of the
closing price of Primex Common Stock on the NASDAQ on December 31, 1996, and the
denominator of which is equal to the closing price of Olin Common Stock on the
New York Stock Exchange on December 31, 1996. The number of Primex Phantom
Units deemed credited to a SCEOP Participant's Account as a result of the
crediting of the dividend described above shall be determined by dividing the
amount of such dividend by the Current Market Value of a unit in the Primex
Common Stock Fund under the CEOP on December 31, 1996. No new investment shall
be permitted in Primex Phantom Units.
3.4 SCEOP Participants may either retain their Primex Phantom Units or may
have their entire Primex Phantom Unit Account Balance deemed transferred at the
then Current Market Value and reinvested in Olin Phantom Units at the then
Current Market Value. Once Primex Phantom Units are deemed transferred and
reinvested, a Participant may not re-direct investment back into Primex Phantom
Units. No new investment, whether in the form of Company or Participant
contributions or Dividend Equivalents, shall be permitted in Primex Phantom
Units.
<PAGE>
3.5 A Participant shall be fully vested in his Supplemental Plan
Contribution Account Balance, and shall vest in his Excess Company Matching and
Excess Performance Contribution Account Balances in accordance with the vesting
schedule contained in the CEOP. Nevertheless, each Participant shall be deemed
vested in his SCEOP Account Balance to the same extent that he is actually
vested in his CEOP Account Balance. A 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 Permanent Disability as defined in
the CEOP.
3.6 In the event that the Compensation Committee of the Board ("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, Primex Stock, or any other securities of Olin or Primex, issuance
of warrants or other rights to purchase Olin Common Stock or other securities or
Olin or Primex, or other similar corporate transaction or event affects Olin
Common Stock such that the Committee determines an adjustment in 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 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, reinvestment of such phantom shares in Olin Phantom Units, and the like.
Notwithstanding the foregoing, a 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.
ARTICLE IV
DISTRIBUTIONS
4.1 No amounts credited to a Participant's SCEOP Account under this Plan
may be withdrawn or distributed prior to the Participant's termination of
employment with the Company and all affiliates thereof, including, but not
limited to, Olin Corporation and any other corporation in the same controlled
group with Olin Corporation (within the meaning of Section 414(b), (c) and (m)
of the Code). Amounts credited to a Participant's Account under this Plan may
not be loaned to such Participant. Subject to the provisions of Section 4.2, a
Participant's SCEOP Account will be distributed in the form elected under
Section 4.3 upon the earliest to occur of the Participant's death, termination
of service due to Permanent Disability, retirement or termination of active
service from the Company and all affiliates.
4.2 Each Participant whose employment is transferred from the Company to
Primex, in connection with the spin-off of Primex, shall be fully vested in his
or her SCEOP Account Balance. Such Balance shall continue to be credited with
Dividend Equivalents until it is distributed; however, no such Balance may be
distributed until such Participant terminates active service with Primex and its
subsidiaries.
<PAGE>
4.3 Upon becoming a SCEOP Participant, such SCEOP Participant shall elect
to receive the value of his SCEOP Account Balance either (i) in a lump sum, or
(ii) in annual installments for a period not to exceed fifteen (15) years,
commencing on the earliest to occur of the Participant's death, retirement,
termination of service due to Permanent Disability or termination of active
employment. A SCEOP Participant may change such election upon written notice to
the Plan Administrator, provided no such change shall be given effect if the
SCEOP Participant becomes eligible for a distribution from this Plan within
twelve (12) months of such change.
4.4 Installment payments shall commence to be paid as soon as
administratively feasible and generally effective as of the first day of the
month following a Participant's termination of active service. The Company may
delay the payment of any benefit owed hereunder in order to complete the orderly
processing of such benefit.
4.5 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, the
value of the amount of any distribution shall be based on the Current Market
Value of units in the Olin Common Stock Fund and, if applicable, Primex Common
Stock Fund, as calculated in accordance with the CEOP at the close of business
on the last business day immediately preceding the date on which the
distribution is to be effective.
4.6 Any benefit payable under this Plan on account of the death of a
Participant shall be paid to the Participant's beneficiary as designated or
determined under the terms of the CEOP.
ARTICLE V
LIABILITY FOR PAYMENT
5.1 Each 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 Committee shall
allocate the cost of such benefits among such Participating Employers in such
manner as it deems equitable. The obligations of the 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 creditor of
the Participating Employer liable for such benefits hereunder.
ARTICLE VI
ADMINISTRATION OF THE PLAN
6.1 The Benefit Plan Review Committee shall be the named Plan
Administrator of this Plan. The Plan Administrator shall administer the Plan
for the exclusive benefit of the Participants (and their Beneficiaries), in
accordance with the terms of the Plan. The Plan
<PAGE>
Administrator shall have the absolute discretion and power to determine all
questions arising in connection with the administration, interpretation and
application of the Plan. Any such determination 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 done in a
non-discriminatory manner and shall be consistent with the intent of the Plan,
the Code and ERISA.
The Plan Administrator shall:
(a) determine all questions relating to eligibility of Employees to
participate or continue participation in the Plan;
(b) maintain all necessary records for the administration of the
Plan;
(c) interpret the provisions of the Plan and make and publish such
rules for regulation of the Plan as are consistent with the terms hereof;
(d) assist any Participant regarding his rights, benefits or
elections available under the Plan; and
(e) communicate to Employees, Participants and their Beneficiaries
concerning the provisions 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 may be
necessary for proper administration of the Plan. The Plan Administrator shall
file and distribute all reports that may be required by the Internal Revenue
Service, Department of Labor or others, as required by law. 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.
6.2 Except as otherwise provided herein, all provisions set forth in the
CEOP with respect to the administration of the Plan shall also be applicable
with respect to this Plan. For purposes of this Plan, the Company 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 or by Olin Corporation with
respect to the CEOP.
<PAGE>
ARTICLE VII
AMENDMENT, TERMINATION AND CHANGE OF CONTROL
7.1 The Company reserves the right to amend or terminate this Plan at any
time, by action of the Company's Board of Directors, the Compensation Committee
of the Board, or such other committee from time to time designated by the Board,
and without the consent of any employee or other person.
7.2 Notwithstanding Section 7.1 above, no amendment or termination of the
Plan shall directly or indirectly reduce the balance to the credit of any
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 Participants except as provided
in Article IV, above.
7.3 Upon a Change of Control (as defined below), the Plan shall terminate
and the Account Balance of a SCEOP Participant shall be paid in cash to such
Participant as promptly as practicable, but in no event later than 30 days
following the Change in Control. For purposes of this paragraph, "Change in
Control" shall mean that any of the following events shall have occurred:
(i) Olin ceases to be a publicly owned corporation with 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 a group ( or
a 'person' within the meaning of Sections 13(d)(3) and 14(d)(2) 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 Olin, becomes 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 Board of Directors of the
Company (together with any new Director whose election by the 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) the Company's Board of Directors determines that a tender offer
for the Company's shares indicates a serious intention by the offeror
to acquire control of the Company.
<PAGE>
For purposes of computing the payout under this Section 7.3, the cash value of
the SCEOP Account of a Participant shall be determined by:
(i) multiplying the actual number of shares of Olin Common Stock reflected
in a 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 Participant's Olin Phantom
Units held in his SCEOP Account; then
(iii) adding the then Current Market Value of that portion of a
Participant's SCEOP Account which is deemed invested in Primex Units (and
any other phantom units or stock fund established in the SCEOP).
ARTICLE VIII
GENERAL PROVISIONS
8.1 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 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 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 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 Nothing contained in the Plan 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 Participant 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 Participant
the right to be retained in the service of the Company.
8.4 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.
<PAGE>
8.5 The Plan shall be construed and administered under the laws of the
State of Connecticut, to the extent not preempted by federal law.
8.6 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 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 Each 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 Participant is not made known to the Company within three (3)
years after the date on which payment of any or all of the Participant's
Accounts may first be made, 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 designated
Beneficiary of the Participant, then the Company shall have no further
obligation to pay any benefit hereunder to such Participant or designated
Beneficiary and such benefit shall be irrevocably forfeited.
8.9 This Plan shall constitute the entire agreement between the Company
and its executives concerning the provision of supplemental CEOP benefits.
8.10 Notwithstanding any of the preceding provisions of the Plan, neither
the Company nor any individual acting as employee or agent of the Company shall
be liable to any Participant, former Participant or other person for any claim,
loss, liability or expense incurred in connection with the Plan.
<PAGE>
IN WITNESS WHEREOF, Olin Corporation has caused this Plan to be executed by
its duly authorized officer as of September 24, 1998.
OLIN CORPORATION
By:_____________________________
Its
<PAGE>
Exhibit 10(h)
EXECUTIVE AGREEMENT
-------------------
Agreement between Olin Corporation, a Virginia corporation ("Olin"), and
_________________ (the "Executive"), dated as of December 10, 1998.
Olin and the Executive agree as follows:
1. Definitions
As used in this Agreement:
(a) "Cause" means the willful and continued failure of the Executive to
substantially perform his duties; the willful engaging by the Executive in gross
misconduct significantly and demonstrably financially injurious to Olin; or
willful misconduct by the Executive in the course of his employment which is a
felony or fraud. No act or failure to act on the part of the Executive will be
considered "willful" unless done or omitted not in good faith and without
reasonable belief that the action or omission was in the interests of Olin or
not opposed to the interests of Olin.
(b) "Change in Control" means:
(i) Olin ceases to be, directly or indirectly, owned 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 a "person" within the
meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended
(the "Act"), other than Olin, a majority-owned subsidiary of Olin or an employee
benefit plan (or the plan's related trust) of Olin or such subsidiary, become(s)
the "beneficial owner" (as defined in Rule 13d-3 under such Act) of 20% or more
of the then outstanding voting stock of Olin;
(iii) During any period of two consecutive years, individuals
who at the beginning of such period constitute Olin's Board of Directors
(together with any new Director whose election by Olin's Board of Directors or
whose nomination for election by Olin's stockholders was approved by a vote of
at least two-thirds of the Directors 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;
(iv) All or substantially all of the business of Olin is
disposed of pursuant to a merger, consolidation or other transaction in which
Olin is not the surviving corporation or Olin combines with another company and
is the surviving corporation (unless the shareholders of Olin immediately
following such merger, consolidation, combination, or other transaction
beneficially own, directly or indirectly, more than 50%
1
<PAGE>
of the aggregate voting stock or other ownership interests of (x) the entity or
entities, if any, that succeed to the business of Olin or (y) the combined
company) or
(v) Approval by Olin's shareholders of (i) a sale of all or
substantially all the assets of Olin or (ii) a liquidation or dissolution of
Olin.
(c) "Disability" means that the Executive has suffered an incapacity
due to physical or mental illness which meets the criteria for disability
established at the time under Olin's short term disability plan.
(d) "Executive Severance" means:
(i) twelve months of the Executive's then current monthly salary
(without taking into account any reductions which may have occurred at or after
the date of a Change in Control); plus
(ii) an amount equal to the greater of (A) the Executive's
average annual award actually paid under Olin's short-term annual incentive
compensation plans or programs ("ICP") (including zero if nothing was paid or
deferred but including any portion thereof the Executive has elected to defer)
for the three years immediately preceding the date of Termination (or if the
Executive has not participated in ICP for such three completed fiscal years, the
average of any such awards for the shorter period of years in which the
Executive was a participant) and (B) the Executive's then current ICP standard
annual award.
(e) "Potential Change in Control" means:
(i) Olin has entered into an agreement the consummation of which
would result in a Change in Control;
(ii) any person (including Olin) publicly announces an intention
to take or to consider taking actions which if consummated would constitute a
Change in Control;
(iii) Olin learns that any person (other than an employee
benefit plan of Olin or a subsidiary of Olin (or the plan's related trust)) has
become the beneficial owner directly or indirectly of securities of Olin
representing 9.5% or more of the combined voting power of Olin's then
outstanding securities ordinarily entitled to vote in elections of directors; or
(iv) the Board of Directors of Olin adopts a resolution to the
effect that, for purposes of this Agreement, a Potential Change in Control of
Olin has occurred;
provided, if an event specified in clause (iii) above has occurred by or on the
date hereof, such event shall not be deemed a Potential Change in Control unless
such person acquires
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another 1% of such securities subsequent to the date hereof.
(f) "Termination" means:
(i) The Executive is discharged by Olin other than for Cause;
(ii) The Executive terminates his or her employment in the event
that:
(1) Olin requires the Executive to relocate the
Executive's then office to an area which is not within reasonable commuting
distance, on a daily basis, from the Executive's then residence, except that
prior to a Change in Control a requirement to relocate the Executive's office to
Olin's corporate headquarters is not a basis for Termination;
(2) Olin reduces the Executive's base salary or fails to
increase the Executive's base salary on a basis consistent (as to frequency and
amount) with Olin's exempt salary system as then in effect or, in the event of a
Change in Control, as in effect immediately prior to the Change in Control;
(3) Olin fails to continue the Executive's participation
in its benefit plans (including incentive compensation and stock options) on
substantially the same basis, both in terms of the amount of the benefits
provided (other than due to Olin's or a relevant operation's financial or stock
price performance provided such performance is a relevant criterion under such
plan) and the level of the Executive's participation relative to other
participants as exists on the date hereof; provided that, with respect to annual
and long term incentive compensation plans, the basis with which the amount of
benefits and level of participation of the Executive shall be compared shall be
the average benefit awarded to the Executive under the relevant plan during the
three completed fiscal years immediately preceding the date of Termination;
(4) The Executive suffers a Disability which prevents
the Executive from performing the Executive's duties with Olin for a period of
at least 180 consecutive days;
(5) Following a Change in Control, Olin fails to
substantially maintain its benefit plans as in effect at the time of the Change
in Control, unless reasonably equivalent arrangements (embodied in an on-going
substitute or alternative plan) have been made with respect to such plans; or
(6) The Executive's duties, position or reporting
responsibilities are diminished.
For purposes solely of clarification, it is understood that (i) if, in
connection with the spinoff of an Olin business or Olin's assets as a separate
public company to Olin's shareholders, the Executive accepts employment with,
and becomes employed at, the
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<PAGE>
spunoff company or its affiliate, the termination of the Executive's employment
with Olin shall not be considered a "Termination" for purposes of this Agreement
provided a Change in Control shall not have occurred prior to the termination of
the Executive's employment with Olin and (ii) except as provided in paragraph
5(f), in connection with the sale of an Olin business to a third party or the
transfer or sale of an Olin business or Olin's assets to a joint venture to be
owned directly or indirectly by Olin with one or more third parties, if the
Executive accepts employment with, and becomes employed by, such buyer or its
affiliate or such joint venture or its affiliate in connection with such
transaction, such cessation of employment with Olin shall not be considered a
"Termination" for purposes of this Agreement.
2. Previous Change in Control Agreement. This Agreement supersedes and
replaces the Executive Agreement dated as of October 3, 1997 between Olin and
the Executive.
3. Term/Executive's Duties.
(a) This Agreement expires at the close of business on September 30,
2002, unless prior to that date there is a Change in Control, in which case this
Agreement will expire on the later of (i) the close of business on September 30,
2002, (ii) or three years following the date of the Potential Change in Control
or (iii) three years following the date of the Change in Control; provided that
the expiration of this Agreement will not affect any of the Executive's rights
resulting from a Termination prior to such expiration. In the event of the
Executive's death while employed by Olin, this Agreement shall terminate and be
of no further force or effect on the date of his or her death; provided that the
Executive's death will not affect any of the Executive's rights resulting from a
Termination prior to death.
(b) During the period of the Executive's employment by Olin, the
Executive shall devote his or her full time efforts during normal business hours
to Olin's business and affairs, except during reasonable vacation periods and
periods of illness or incapacity. Nothing in this Agreement will preclude the
Executive from devoting reasonable periods required for service as a director or
a member of any organization involving no conflict of interest with Olin's
interest, provided that no additional position as director or member shall be
accepted by the Executive during the period of his employment with Olin without
its prior consent.
(c) The Executive agrees that in the event of any Potential Change in
Control of Olin occurring from time to time after the date hereof, the Executive
will remain in the employ of Olin until the earlier of (i) the end of the six
month period following the occurrence of such Potential Change in Control and
(ii) a Change in Control during which time the Executive will have an office,
title, duties and responsibilities substantially consistent with those
applicable immediately prior to such Potential Change in Control.
4. Executive Severance Payment
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(a) In the event of a Termination occurring before the expiration of
this Agreement, Olin will pay the Executive a lump sum in an amount equal to the
Executive Severance. The payment will be made within 10 days of the Termination.
(b) In the event of a Termination after a Change in Control has
occurred, in addition to the Executive Severance paid under paragraph 4(a)
above, Olin will pay a Change in Control severance premium to the Executive in
an amount equal to two times the Executive Severance. The Change in Control
severance premium, if it becomes due, will be made within 10 days of the
Termination.
(c) The amount due under paragraph 4(a) and 4(b), if any, will be
reduced to the extent that, if such amount in the aggregate were paid in equal
monthly installments over a 12-month period (or in the event both paragraph 4(a)
and 4(b) are applicable, a 36-month period), no installment would be paid after
the Executive's sixty-fifth birthday.
(d) The Executive will not be required to mitigate the amount of any
payment provided for in paragraph 4(a) or 4(b) by seeking other employment or
otherwise, nor shall any compensation received by the Executive from a third
party reduce such payment except as explicitly provided in this Agreement.
Except as may otherwise be expressly provided herein, nothing in this Agreement
will be deemed to reduce or limit the rights which the Executive may have under
any employee benefit plan, policy or arrangement of Olin. Except as expressly
provided in this Agreement, payments made under paragraphs 4 or 5(e) shall not
be affected by any set-off, counterclaim, recoupment, defense or other claim
which Olin may have against the Executive.
(e) If the Executive receives the Executive Severance, the Executive
will not be entitled to receive any other severance otherwise payable to the
Executive under any other severance plan of Olin. If on the Termination date the
Executive is eligible and is receiving payments under any then existing Olin
disability plan, then the Executive agrees that all such payments may, and will
be, suspended and offset for 12 months (or in the event paragraph 4(b) is also
applicable, 36 months) (subject to applicable law) following the Termination
date. If after such period the Executive remains eligible to receive disability
payments, then such payments shall resume in the amounts and in accordance with
the provisions of the applicable Olin disability plan.
(f) In the event the Executive, in connection with the sale of an Olin
business to a third party or the transfer of an Olin business or Olin assets to
a joint venture which would be owned directly or indirectly by Olin with one or
more third parties, ceases to be employed by Olin and with Olin's consent
becomes employed by the buyer or its affiliate or the joint venture or its
affiliate, the Executive shall be entitled to the benefits provided under
paragraph 4(a) (using Olin figures at the time of new employment) (subject to
paragraphs 4(c), 4(d) and 4(e)) and the first sentence of paragraph 5(a)
(subject to paragraph 5(c)), and paragraph 5(d), if the Executive has a
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Termination as defined in paragraph 1(f) with his new employer (with the new
employer being substituted for Olin in such paragraph 1(f) and without giving
any effect to the Change in Control references contained therein following such
new employment) within 12 months of becoming employed by such new employer.
Any cash compensation amounts paid under this paragraph 4(f) shall be reduced by
any severance, job transition or employment termination payments such Executive
receives in cash from his or her new employer in connection with the
Termination. In connection with this paragraph 5(f), in no event shall the
Change in Control provisions of this Agreement be applicable once the Executive
ceases to be employed by Olin.
5. Other Benefits
(a) If the Executive becomes entitled to payment under paragraph 4(a),
the Executive will receive 12 months service credit under all Olin Pension Plans
for which the Executive was eligible at the time of the Termination (i.e., under
Olin's qualified Pension Plans to the extent permitted under then applicable
law, otherwise such credit will be reflected in a supplementary pension payment
from Olin to be due at the times and in the manner payments are due the
Executive under such qualified pension plans), and for 12 months from the date
of the Termination the Executive (including covered dependents) will continue to
enjoy coverage on the same basis as a similarly situated active employee under
all Olin medical, dental, and life insurance plans to the extent the Executive
was enjoying such coverage immediately prior to the Termination. The Executive's
entitlement to insurance coverage under the Consolidated Omnibus Budget
Reconciliation Act would commence at the end of the period during which
insurance coverage is provided under this Agreement without offset for coverage
provided hereunder. The Executive shall accrue no vacation during the 12 months
following the date of Termination but shall be entitled to payment for accrued
and unused vacation for the calendar year in which the Termination occurs. If
the Executive receives the Executive Severance (including the amount referred to
in paragraph 1(d)(ii)), the Executive shall not be entitled to an ICP award for
the calendar year of Termination if Termination occurs during the first calendar
quarter. Even if the Executive receives the Executive Severance (including the
amount referred to in paragraph 1(d)(ii)) and if Termination occurs during or
after the second calendar quarter, the Executive shall be entitled to a prorated
ICP award for the calendar year of Termination which shall be determined by
multiplying his or her then current ICP standard by a fraction the numerator of
which is the number of weeks in the calendar year prior to the Termination and
the denominator of which is 52. The Executive shall accrue no ICP award
following the date of Termination. The accrued vacation pay and ICP award, if
any, shall be paid in a lump sum when the Executive Severance is paid.
(b) If the Executive becomes entitled to payment under paragraph 4(b),
the pension credit and insurance coverage provided for in paragraph 5(a) will be
for an additional 24-month period beyond the period provided in paragraph 5(a).
(c) Notwithstanding the foregoing paragraphs 5(a) and 5(b), no such
service credit or insurance coverage will be afforded by this Agreement with
respect to
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any period after the Executive's sixty-fifth birthday.
(d) In the event of a Termination, the Executive will be entitled at
Olin's expense to outplacement counseling and associated services in accordance
with Olin's customary practice at the time (or, if a Change in Control shall
have occurred, in accordance with such practice immediately prior thereto) with
respect to its senior executives who have been terminated other than for Cause.
It is understood that the counseling and services contemplated by this paragraph
5(d) are intended to facilitate the obtaining by the Executive of other
employment following a Termination, and payments or benefits by Olin in lieu
thereof will not be available to the Executive.
(e) Notwithstanding the provisions of Section 10 of the Olin Senior
Executive Pension Plan (the "Senior Plan"), if the Executive is in active
employment with Olin at the date of a Change in Control but has not attained age
55 at such date, the Executive shall (if then a Participant in the Senior Plan)
nevertheless automatically be paid the lump-sum amount called for by such
Section 10, except that such lump-sum amount will be calculated first, by
calculating the sum equal to the annual benefit which would otherwise be payable
to the Executive at age 65 under all Olin pension plans assuming the Executive
had terminated his or her employment with Olin on the date of the Change in
Control, second, by multiplying such sum by 72%, which is the current percentage
applicable in the calculation of benefits paid to employees retiring from active
service with Olin at age 55 under the early retirement provisions of the Olin
Employees Pension Plan, third, by determining the then lump-sum actuarial value
of the product resulting from the second step, and fourth, by deducting from
such lump-sum actuarial value the then lump-sum actuarial value of the
Executive's accrued annual benefits under all other Olin pension plans. The
actuarial value shall be determined as the amount needed to purchase a fixed
annuity through Metropolitan Life Insurance Company ("Metropolitan") or its
successor immediately prior to the Change in Control. In the event such annuity
is not available through Metropolitan, then Prudential Insurance Company or an
insurance company with comparable rating by A.M. Best & Company shall be
substituted for Metropolitan. A lump-sum payment under this paragraph 5(e) will
be used to reduce any payments under the Senior Plan which may become due to the
Executive thereafter. The purpose of this paragraph 5(e) is to ensure that an
Executive who is less than age 55 at the time of the Change in Control receives
a lump-sum payment which when combined with the value of the Executive's pension
benefits from all other Olin pension plans preserves the 72% age 55, subsidized
early retirement factor, rather than the actuarial reduction. Such lump-sum
payment shall be discounted by the same interest rate used by the insurance
company to determine the actuarial value to provide for the deferral of the
benefit until the Executive reaches age 55.
(f) If the Executive becomes entitled to the payment under paragraph
4(b), at the end of the period for insurance coverage provided in accordance
with paragraph 5(b), the Executive shall be entitled to continue in Olin's
medical and dental coverage (including dependent coverage) on terms and
conditions no less favorable to the Executive as in effect prior to the Change
in Control for the Executive until the Executive
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<PAGE>
reaches age 65; provided that if the Executive obtains other employment which
offers medical or dental coverage to the Executive and his or her dependents,
the Executive shall enroll in such medical or dental coverage, as the case may
be, and the corresponding coverage provided to the Executive hereunder shall be
secondary coverage to the coverage provided by the Executive's new employer so
long as such employer provides the Executive with such coverage.
(g) If there is a Change in Control, Olin shall not reduce or diminish
the insurance coverage or benefits which are provided to the Executive under
paragraph 5(a), 5(b) or 5(f) during the period the Executive is entitled to such
coverage; provided the Executive makes the premium payments required by active
employees generally for such coverage, if any, under the terms and conditions of
coverage applicable to the Executive. Following a Change in Control, incentive
compensation plans in which the Executive participates shall contain reasonable
financial performance measures and shall be consistent with practice prior to
the Change in Control.
6. Participation in Change in Control/Section 4999 of Internal Revenue
Code
(a) In the event that the Executive 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 paragraph 1(b)(i) or
(ii), the Executive must promptly disclose such participation or agreement to
Olin. If the Executive so participates or agrees to participate, no payments due
under this Agreement or by virtue of any Change in Control provisions contained
in any compensation or benefit plan of Olin will be paid to the Executive until
the acquiring group in which the Executive participates or agrees to participate
has completed the acquisition. In the event the Executive so participates or
agrees to participate and fails to disclose his participation or agreement, the
Executive will not be entitled to any payments under this Agreement or by virtue
of Change in Control provisions in any Olin compensation or benefit plan,
notwithstanding any of the terms hereof or thereof.
(b) Anything in this Agreement to the contrary notwithstanding, in the
event that it shall be determined that any payment or distribution by Olin to or
for the benefit of the Executive (whether paid or payable or distributed or
distributable) pursuant to the terms of this Agreement or otherwise
(collectively, the "Payments") but determined without regard to any additional
payments required under this paragraph 6(b), would be subject to the excise tax
imposed by Section 4999 of the Internal Revenue Code of 1986, as amended, the
Executive 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
Executive in respect of the Payments (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 Executive 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
Executive retains a portion of the Gross-Up Payment equal to the Excise Tax.
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7. Successors; Binding Agreement
(a) Olin will require any successor (whether direct or indirect, by
purchase, merger, consolidation or otherwise) to all or substantially all of the
business or assets of Olin, by agreement, in form and substance satisfactory to
the Executive, expressly to assume and agree to perform this Agreement in the
same manner and to the same extent that Olin would be required to perform if no
such succession had taken place. Failure of Olin to obtain such assumption and
agreement prior to the effectiveness of any such succession will be a breach of
this Agreement and entitle the Executive to compensation from Olin in the same
amount and on the same terms as the Executive would be entitled to hereunder had
a Termination occurred on the succession date. As used in this Agreement, "Olin"
means Olin as defined in the preamble to this Agreement and any successor to its
business or assets which executes and delivers the agreement provided for in
this paragraph 7 or which otherwise becomes bound by all the terms and
provisions of this Agreement by operation of law or otherwise.
(b) This Agreement shall be enforceable by the Executive's personal or
legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
8. Notices. For the purpose of this Agreement, notices and all other
communications provided for herein shall be in writing and shall be deemed to
have been duly given when delivered or mailed by United States registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:
If to the Executive:
If to the Company: Olin Corporation
501 Merritt 7
P.O. Box 4500
Norwalk, CT 06856-4500
Attention: Corporate Secretary
or to such other address as either party may have furnished to the other in
writing in accordance herewith, except that notices of change of address shall
be effective only upon receipt.
9. Governing Law. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of the Commonwealth
of Virginia (without giving effect to its conflicts of law).
10. Miscellaneous. No provisions of this Agreement may be modified,
waived or discharged unless such modification, waiver or discharge is agreed to
in
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writing signed by the Executive and Olin. No waiver by either party hereto at
any time of any breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provisions or conditions at
the same or at any prior or subsequent time. No agreements or representations,
oral or otherwise, express or implied, with respect to the subject matter hereof
have been made by either party which are not set forth expressly in this
Agreement.
11. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all of which
together will constitute one and the same Agreement.
12. Withholding of Taxes. Olin may withhold from any benefits
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.
13. Non-assignability. This Agreement is personal in nature and
neither of the parties hereto shall, without the consent of the other, assign or
transfer this Agreement or any rights or obligations hereunder, except as
provided in paragraph 7 above. Without limiting the foregoing, the Executive's
right to receive payments hereunder shall not be assignable or transferable,
whether by pledge, creation of a security interest or otherwise, other than a
transfer by his will or by the laws of descent or distribution, and, in the
event of any attempted assignment or transfer by the Executive contrary to this
paragraph, Olin shall have no liability to pay any amount so attempted to be
assigned or transferred.
14. No Employment Right. This Agreement shall not be deemed to
confer on the Executive a right to continued employment with Olin.
15. Disputes/Arbitration.
(a) Any dispute or controversy arising under or in connection with
this Agreement shall be settled exclusively by arbitration at Olin's corporate
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; provided, however, that the Executive shall be
entitled to seek specific performance of the Executive's right to be paid during
the pendency of any dispute or controversy arising under or in connection with
this Agreement.
(b) Olin shall pay all reasonable legal fees and expenses, as they
become due, which the Executive may incur to enforce this Agreement through
arbitration or otherwise unless the arbitrator determines that Executive had no
reasonable basis for his claim. Should Olin dispute the entitlement of the
Executive to such fees and expenses, the burden of proof shall be on Olin to
establish that the Executive had no reasonable basis for his claim.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed
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and delivered as of the day and year first above set forth.
OLIN CORPORATION
By: ______________________________
Donald W. Griffin
Chairman of the Board, President
and Chief Executive Officer
_________________________
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EXHIHIT 10(n)
OLIN CORPORATION
1997 STOCK PLAN FOR NON-EMPLOYEE DIRECTORS
As Amended and Restated Effective February 8, 1999
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. The Plan is amended and
restated to reflect the distribution to Olin's shareholders of all of the
outstanding shares of common stock of Arch Chemicals, Inc., effective as of the
date of such distribution.
2. Definitions. The following capitalized terms utilized herein have the
following meanings:
"Annual Grant Participant" means a Non-employee Director who is not
eligible for any other pension benefits from the Company, including, but
not limited to, benefits from the Olin Employees Pension Plan, the Olin
Senior Executive Pension Plan or another pension plan of the Company.
"Arch" means Arch Chemicals, Inc., a Virginia corporation and any
successor.
"Arch Common Stock" means shares of common stock of Arch, par value
$1.00 per share.
"Arch Director" means a non-employee director of the board of
directors of Arch.
"Arch Stock Account" means the Stock Account to which phantom shares
of Arch Common Stock are credited.
"Arch Directors' Plan" means the Arch Chemicals, Inc. 1999 Stock Plan
for Non-employee Directors.
"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 and retainers have been or are
to be credited in the form of cash.
"Change in Control" means any of the following: (i) the Company
ceases to be, directly or indirectly, owned by at least 1,000 shareholders;
(ii) a person, partnership, joint venture, corporation or other entity, or
two or more of any of the
<PAGE>
2
foregoing acting as a "person" within the meaning of Section 13(d)(3) of
the 1934 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 under the 1934 Act) of 20% or more of the then outstanding
voting stock of the Company; and (iii) during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board
(together with any new director whose election by the Board or whose
nomination for election by the Company's shareholders was approved by a
vote of at least two-thirds of the directors 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.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time.
"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 first day of each calendar quarter, beginning
with January 1, 1998.
"Distribution" means the distribution of all outstanding shares of
Arch Common Stock to the shareholders of the Company.
"Distribution Date" means the dividend payment date fixed by the Board
for the Distribution.
"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 Arch Common Stock,
the average of the high and the low price of a share of Common Stock or
Arch Common Stock, as the case may be, as reported on the consolidated tape
of the
<PAGE>
3
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.
"Interest Rate" means the rate of interest equal to the Company's
before-tax cost of borrowing as determined from time to time by the Chief
Financial Officer, the Treasurer or the Controller of the Company (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 any
such officer) or such other rate as determined from time to time by the
Board or the Committee.
"l934 Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"1994 Plan" means the 1994 Stock Plan for Non-employee Directors as in
effect on October 1, 1997.
"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.
"One-time Grant Participant" means a Director with an accrued benefit
under the Retirement Plan, as shown on Exhibit 1 hereto; provided such
Director waives his or her rights with respect to the Retirement Plan.
(See Exhibit 1 for the present value of each such Director's accrued
benefit as of December 31, 1996.)
"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 ceases to
be a member of the Board for any reason; provided that a Non-employee
Director will not be considered to have incurred a Retirement Date if he
ceases to be a Non-employee Director to become an Arch Director.
"Retirement Plan" means the Retirement Plan for Non-employee Directors
of Olin Corporation as in effect on December 31, 1996.
"Stock Account" means an account established under the Plan for a Non-
employee Director to which shares of Common Stock and Arch Common Stock
have been or are to be credited in the form of phantom stock, which shall
include the Olin Stock Account and the Arch Stock Account.
<PAGE>
4
3. Term. The Plan became effective January 1, 1997. Once effective, the
Plan shall operate and shall remain in effect until terminated by action of the
Board as provided in Section 9 hereof. The Plan was amended and restated
effective October 2, 1997, and again effective as of the Distribution Date.
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, each Non-employee Director shall be credited with 204 shares of Common
Stock on January 1 of each calendar year beginning in 1998 and each Annual
Grant Participant shall be credited with 500 shares of Common Stock on January 1
of each calendar year beginning in 1997. To be entitled to such credit in any
calendar year, a Non-employee Director or an Annual Grant Participant, as the
case may be, must be serving as such on January 1 of such year; provided,
however, that in the event a person becomes an Annual Grant Participant
subsequent to January 1 of a calendar year, such Annual Grant Participant, on
the first day of the calendar month following his or her becoming such, shall be
credited with that number of shares (rounded up to the next whole share in the
event of a fractional share) of Common Stock equal to one-twelfth of 500 times
the number of whole calendar months remaining in such calendar year following
the date he or she becomes an Annual Grant Participant. Actual receipt of
shares shall be deferred and each eligible Non-employee Director or Annual Grant
Participant, as the case may be, shall receive a credit to his or her Olin Stock
Account in the amount of such shares and 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 to a date or
dates on or following such Non-employee Director's or Annual Grant Participant'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)) as soon as practicable following his or her
Retirement Date.
(b) Annual Retainer Stock Grant. Subject to the terms and conditions
---------------------------
of the Plan, on each January 1 of each year beginning with 1998, each Non-
employee Director who is such on such date shall receive that number of shares
(rounded up to the next whole share) of Common Stock having an aggregate Fair
Market Value on such date of $25,000. 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
first day of the calendar month following his or her becoming such, shall
receive that number of shares (rounded up to the next whole share in the event
<PAGE>
5
of a fractional share) of Common Stock having an aggregate Fair Market Value on
such first day of an amount equal to $2,084 times the number of whole calendar
months remaining in such calendar year following the date he or she becomes a
Non-employee Director. The annual cash retainer payable to the Non-employee
Director 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 the Non-employee
Director becomes entitled to receive shares under this Section 6(b) for such
calendar year. 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 as soon as practicable
following the date as of which the shares are awarded.
(c) One-time Stock Grant. Subject to the terms and conditions of the
--------------------
Plan, each One-time Grant Participant shall be credited as of January 15, 1997,
with that number of shares (rounded up to the next whole share in the event of a
fractional share) of Common Stock equal to the present value of his or her
accrued benefit under the Retirement Plan, divided by the Fair Market Value per
share on January 15, 1997. Actual receipt of all shares credited under this
Section 6(c) shall be deferred and each One-time Grant Participant shall receive
a credit to his or her Olin Stock Account in the amount of such credit on
January 15, 1997. A One-time Grant Participant 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 One-time Grant Participant's Retirement Date. Except with
respect to any shares so deferred, certificates representing such shares shall
be delivered to the One-time Grant Participant (or in the event of death, to his
or her beneficiary designated pursuant to Section 6(i)) as soon as practicable
following his or her Retirement Date.
(d) Election to Receive Meeting Fees and Excess Retainer in Stock in
----------------------------------------------------------------
Lieu of Cash. 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 and
all or a portion of 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). The
number of shares (rounded up to the next whole share in the event of a
fractional share) for a calendar year payable to a Non-employee Director who so
elects to receive all or a portion of the Excess Retainer in the form of shares
for such year shall be paid on January 1 (or in the case of proration, when the
annual stock retainer is to be paid or credited) equal to the amount of Excess
Retainer which has been elected to be paid in shares divided by the Fair Market
Value per share on January 1 of such calendar year (or in the case of a Non-
employee Director who becomes such after January 1, on the first day of the
calendar month following the day such new Non-employee Director became such).
The number of shares (rounded up to the next whole share in the event of a
fractional share) for a calendar quarter payable to a Non-employee Director who
so elects to receive meeting fees in the form of shares shall be equal to the
aggregate Fair Market Value on the Credit Date following such quarter of the
director meeting fees which have been earned in such quarter and which are
elected to be paid
<PAGE>
6
in shares. Except with respect to any shares the director has elected to defer,
certificates representing such shares shall be delivered to the Non-employee
Director as soon as practicable following the date as of which the Excess
Retainer and/or meeting fees would have been paid in cash absent an election
hereunder.
(e) Deferral of Meeting 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 and Excess Retainer payable in cash by the Company for
his or her service as a director for the calendar year. The amount of the
Excess Retainer deferred in cash shall be credited on January 1 (or in the case
of proration, on the first day of the next calendar month following the day such
new Non-employee Director becomes such). 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. All elections under Sections 6(a), 6(b), 6(c), 6(d),
6(e), 6(f)(2) and 6(f)(3) shall (A) be made in writing and delivered to the
Secretary of the Company and (B) be irrevocable. All Non-employee Director
elections for payments in cash or stock or for deferrals shall 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,
prior to the date of his or her election as a director). All One-time
Grant Participant elections shall be made before December 31 of the year
prior to the year in which the shares of Common Stock are to be granted
(or, in the case of an individual who becomes an Annual Grant Participant
during a calendar year, before the last day of the calendar month of his or
her becoming such). Deferral elections shall also (A) specify the portions
(in 25% increments) to be deferred and (B) specify the future date or dates
on which deferred amounts are to be paid, or the future event or events
upon the occurrence of which the deferred amounts are to be paid, and the
method of payment (lump sum or annual installments (up to 10)). However,
Non-employee Directors may elect to defer all of his or her cash dividends
on the Stock Account in whole and not in part and all of his or her
interest on the Cash Account in whole but not in part. 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 or Excess Retainer to be paid
in shares of Common Stock, the election shall specify the portion (in 25%
increments) to be so paid. Any change with respect to the terms of a Non-
employee Director's election for (A) amount or form of any
<PAGE>
7
future deferral or the form of payment of any director compensation
hereunder may be made at any time prior to such compensation being earned
(and in the case of quarterly fees, prior to the start of the quarter in
which the fees are to be earned) and (B) the timing (which timing may not
accelerate a distribution date) or amount of payments from any Account
shall only be effective if made at least six months prior to the payout and
in the calendar year prior to the calendar year payout is to occur.
(2) 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)(4).
(3) 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
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)(4).
(4) Dividends and Interest. Each time a cash dividend is paid
on Common Stock or Arch 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 Arch 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 Arch 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 Arch Common Stock, as the case may be,
on the dividend payment date. A Non-employee Director who has a Cash
Account shall be paid directly on each Credit Date interest on such
account's balance at the end
<PAGE>
8
of the preceding quarter, payable at a rate equal to the Interest Rate in
effect for such preceding 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 on the Credit Date.
(5) Payouts. Cash Accounts and the Arch 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. Cash amounts and
certificates representing shares credited to the Olin Stock Account shall
be delivered to the Non-employee Director as soon as practicable following
the termination of the deferral and consistent therewith.
(g) No Stock Rights. Except as expressly provided herein, the
---------------
deferral of shares of Common Stock or Arch Common Stock into a Stock Account
shall confer no rights upon such Non-employee Director, as a shareholder of the
Company or of Arch 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 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 Arch Stock Account by the higher of (i) the
highest Fair Market Value of Common Stock or Arch Common Stock, as appropriate,
on any date within the period commencing 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
Arch 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. As of October 2, 1997, a Participant or any
-------------------
former Non-employee Director who had an existing account under any Prior Plan
shall automatically have such account transferred, in the case of an account
denominated in cash, to the Cash Account, and in the case of an account
denominated in Olin Common Stock, to the Olin Stock Account, to be maintained
and administered pursuant to the terms and conditions of this Plan; provided
that prior annual 100- or 204-share grant
<PAGE>
9
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) Adjustment for Distribution. Immediately prior to the
---------------------------
Distribution, the terms of the phantom shares of Common Stock held in the Olin
Stock Account of each Non-Employee Director who will become an Arch Director
shall be amended to provide that such shares shall be paid out in cash based on
the Fair Market Value of such shares at the time of distribution to the Arch
Director. As of the Distribution Date, the Arch Stock Account of each Non-
Employee Director on such date shall be credited with the number of shares of
Arch Common Stock that the Non-Employee Director would have received in the
Distribution Date had the Non-Employee Director owned directly the number of
shares of Common Stock held in his or her Olin Stock Account. As of the
Distribution Date, the Cash Account and Stock Account of each Arch Director
(after giving effect to the adjustment described in this Section 6(k)) shall be
transferred to the Arch Directors' Plan provided that the Arch Director provides
the Company with a release, acceptable to the Committee, waiving all rights to
benefits under this Plan.
With respect to a Non-Employee Director who does not become an Arch
Director, shares credited to his or her Arch Stock Account shall be treated as
follows: (i) to the extent such shares represent a dividend on shares of Common
Stock credited pursuant to paragraph 6(a) of the Plan (or shares arising from
dividend equivalents thereon), such shares shall be deemed credited pursuant to
paragraph 6(a) of the Plan, (ii) to the extent such shares represent a dividend
on shares of Common Sock credited pursuant to paragraph 6(b) of the Plan (or
shares arising from dividend equivalents thereon), such shares shall be deemed
credited pursuant to paragraph 6(b) of the Plan, and (iii) to the extent such
shares represent a dividend on shares of Common Stock credited under paragraph
6(c) of the Plan (or shares arising from dividend equivalents thereon), such
shares shall be deemed credited pursuant to paragraph 6(c) of the Plan.
(l) 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 Arch
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 Arch Common Stock in his or her Arch 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)(4)
with respect to dividends or in Section 8, no additional contributions or
additions may be made to a Non-Employee Director's Arch Stock Account after the
Distribution Date.
<PAGE>
10
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 150,000.
Such total number of shares may consist, in whole or in part, of authorized but
unissued shares. The foregoing number may be increased or decreased by the
events set forth in Section 8 below. 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 Arch
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 Arch 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. 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.
<PAGE>
11
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 1934 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.
<PAGE>
12
Exhibit 1
Accrued Benefits Under the Retirement Plan
------------------------------------------
for Non-Employee Directors of Olin Corporation
----------------------------------------------
<TABLE>
<CAPTION>
===========================================================================================
Present Value of Accrued Benefit as of
Non-employee Director December 31, 1996
-------------------------------------------------------------------------------------------
<S> <C>
Richard E. Cavanagh $74,000
-------------------------------------------------------------------------------------------
William W. Higgins $144,000
-------------------------------------------------------------------------------------------
Suzanne Denbo Jaffe $90,000
-------------------------------------------------------------------------------------------
Jack D. Kuehler $181,000
-------------------------------------------------------------------------------------------
H. William Lichtenberger $144,000
-------------------------------------------------------------------------------------------
G. Jackson Ratcliffe $138,000
-------------------------------------------------------------------------------------------
William L. Read $253,000
-------------------------------------------------------------------------------------------
John P. Schaefer $155,000
===========================================================================================
</TABLE>
<PAGE>
EXHIBIT 10(s)
OLIN SUPPLEMENTARY AND DEFERRAL BENEFIT PENSION PLAN
(Restated as of September 1, 1995)
Article I. The Plan
--------------------
1.1 Establishment of Plan. Olin Corporation (the "Company") hereby
----------------------
restates into a single document its Supplementary Pension Plan and Deferral
Benefit Pension Plan for the benefit of salaried employees of Olin Corporation
and other Employing Companies who may be eligible to participate in the Plan.
The restated Plan is effective as of September 1, 1995 and is known as the "Olin
Supplementary and Deferral Benefit Pension Plan." For purposes of this Plan, an
"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
qualified defined benefit plans maintained by the Company or other Employing
Companies (the "Qualified Plans").
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 under the Qualified Plans ("Qualified Plan Benefits")
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 (i) 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 Eligible Employees into non-qualified plans or
arrangements. These limitations are collectively referred to herein as "Benefit
Limitations". This Plan is intended to provide such employees 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 exemption from the Employee
Retirement Income Security Act ("ERISA") as an "excess benefit plan", and that
portion which provides for benefits in excess of applicable compensation limits,
and is intended to be a supplemental executive retirement plan for management
and highly compensated employees.
Article II. Eligibility.
-------------------------
2.1 Any Employee who is eligible to receive a Qualified Plan Benefit from
the Company or an Employing Company, the amount of which is reduced by reason of
the application of a Benefit Limitation (as previously defined) shall be
eligible to receive a Supplemental Pension Benefit as provided in this Plan.
<PAGE>
Article III. Calculation of Benefits.
-------------------------------------
3.1 Amount of Benefit. The Supplemental Pension Benefit payable to a
------------------
Participant retiring on or after his Normal Retirement Date shall be calculated
in the form of a single life annuity, commencing at the Participant's Normal
Retirement Date (or, if later, his actual retirement date) and 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)
including non-qualified deferred payments of regular salary and deferred
awards under the management incentive plan, 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 Retirement 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, 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).
Article IV. Payment of Benefits.
---------------------------------
4.1. Benefits commencing on or after Reaching Early Retirement Date.
---------------------------------------------------------------
(a) A Participant may retire from active service with all Employing
Companies and commence benefits under this Plan at any time after reaching his
fifty-fifth (55th) birthday (his "Early Retirement Date"), provided, however,
that no election as to the commencement date of benefits under this Plan,
including any election under Section 4.4, shall be given effect if not made at
least twelve (12) full months prior to the Participant's actual retirement. A
Participant may commence benefits under this Plan regardless of the date on
which he actually commences benefits under the Olin Corporation Employees'
Pension Plan. In the case of Participants who transfer directly to Primex or
Arco Chemical Company ("Arco") (or who, in the case of Primex only, transfer
directly to Primex within five (5) years of the spin-off of Primex), (i) "actual
retirement" shall be construed to mean retirement or termination of service from
Primex or Arco and their affiliates, as the case may be, and (ii) service with
Primex or Arco (and their affiliates) shall be credited in enabling the
Participant to attain his early retirement age under this Plan.
(b) For purposes of determining whether a Participant has reached his
fifty-fifth (55th) birthday and, thus, is eligible to commence benefits under
this Section 4.1(a) instead of on a deferred vested basis, any Participant who
has completed at least seven (7) Years of Creditable
<PAGE>
Service (as defined in the Olin Corporation 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 (without taking into account any severance period) other
than (i) for cause or (ii) as a result of a voluntary termination, shall be
treated as continuing as an active Employee until age fifty-five (55). A
Participant may not commence benefits hereunder until he actually reaches age
fifty-five (55).
(c) With respect to a Participant retiring from active service on or after
reaching his Early Retirement Date, the Plan Administrator will calculate the
Participant's retirement benefit then payable from all Olin non-qualified and
qualified pension plans using, in the case of the qualified pension plan
benefit, the Benefit Limitations then in effect and based upon the benefit
commencement date elected by the Participant for commencement of his qualified
and non-qualified plan benefits. In the case of a Participant who elects to
defer commencement of his qualified plan benefits, the Olin Non-qualified
pension plans, including this Plan, shall provide for the payment of the
Participant's estimated qualified plan benefit until such time as the
Participant actually commences his qualified plan benefit, at which time the
amount of the Participant's non-qualified plan benefit, including the benefits
payable from this Plan, shall be reduced dollar for dollar, but not below $0, by
the amount of the qualified pension plan benefit ultimately payable to the
Participant, based upon the Benefit Limitations in effect when the Participant
actually commences receipt of such qualified plan benefit.
4.2 Deferred Vested Employees. Any Participant who terminates active
-------------------------
service with all Employing Companies prior to having reached age fifty-five
(55), may commence benefits under this Plan at any time after having reached age
fifty-five (55); provided, however, that his benefit hereunder shall subject to
the actuarial reductions that would be applicable under the Olin Qualified Plan,
and further provided that, in the case of Participants who transfer directly to
Primex or Arco, service with those respective companies and their affiliates
shall be counted in enabling such Participants to retire on or after attaining
age fifty-five (55) and actually retiring from Primex or Arco, as the case may
be, in accordance with Section 4.1 above.
4.3 Payment of Regular Monthly Benefits along with Qualified Plan Benefits.
----------------------------------------------------------------------
(a) In the event that the Participant (i) does not elect to establish an
employee-grantor trust in accordance with Section 4.4(a), (ii) does not elect to
receive Accelerated Benefits in accordance with Section 4.4(a), and (iii) elects
to commence his benefits under this Plan at the same time that he commences his
Qualified Plan Benefit, then the Supplemental Pension Benefit payable hereunder
shall be paid commencing at the same time and in the same form as that in which
the Qualified Plan Benefit is payable to the Participant. If the Participant
elects an actuarially equivalent form of benefit payment with respect to his
Qualified Plan Benefits (with, if applicable, the consent of his surviving
Spouse), that same form of payment shall apply to payment of his Supplementary
Pension Benefit. Any election to receive regular monthly benefits under this
Section 4.3 must be made at least one full year prior to the Participant's
Accelerated Benefit Commencement Date.
<PAGE>
(b) An election by the Participant with respect to the timing and form of
this Supplemental Pension Benefit shall be effective only if consented to by the
Plan Administrator. If not so approved, then the timing and form of the
Supplementary Pension Benefit shall be selected by the Plan Administrator in its
sole discretion.
(c) A Supplemental Pension Benefit that is payable in any form other than
a single life annuity, or which commences at any time prior to the Participant's
Normal Retirement Date shall be calculated using the same conversion factors and
actuarial adjustments as those specified in the Qualified Plan as of the date
that such benefit is being determined.
4.4 Choice of Employee-grantor Trust or Payment of Accelerated Benefits.
--------------------------------------------------------------------
(a) As of October 31 of the calendar year following the year in which a
Participant meets the Minimum Benefit Accumulation threshold provided for in
Section 4.5, the Actuarial Present Value (determined as hereinafter provided)
of the after-tax amount of a Participant's Supplemental Pension Benefit shall be
deposited in an employee-grantor trust established by the Participant unless, at
least one full year prior to the funding of such employee-grantor trust, the
Participant shall instead have elected to receive "Accelerated Benefits" as
hereinafter provided. If a Participant elects to receive Accelerated Benefits,
then the Actuarial Present Value of such Benefits shall be paid, at the election
of the Chairman of the Board of Directors of the Company, either in a single sum
or in up to three (3) annual installments (such single sum or annual
installments being referred to in this Plan as "Accelerated Benefits"). The
Participant's Accelerated Benefits shall commence on his Accelerated Benefit
Commencement Date, which shall be twelve full months following a Participant's
actual retirement date at age fifty-five (55) or later (the "participant's
"Accelerated Benefit Commencement Date"). For purposes of determining whether a
Participant has reached his fifty-fifth (55th) birthday and, thus, is eligible
to commence benefits under Section 4.1(a) instead of on a deferred vested basis
under Section 4.2, Section 4.1(b) shall apply. In the case of Participants who
transfer directly to Primex or Arco (or who, in the case of Primex only,
transfer directly to Primex within five (5) years of the spin-off of Primex),
actual retirement shall be construed to mean retirement or termination of
service from Primex or Arco and their affiliates, as the case may be.
(b) In the event that an actively employed Participant elects not to
establish an employee-grantor trust, but instead to receive Accelerated
Benefits, regular monthly benefits shall commence to be paid upon such
Participant's actual retirement in accordance with Section 4.1 until such
Participant reaches his Accelerated Benefit Commencement Date, at which time
Accelerated Benefits shall be paid in the form and manner determined by the
Chairman of the Board of Directors of the Company, and in the case of the
Chairman, the Selection Committee, either in a single sum, in up to three (3)
annual installments, or in a combination of annuity payments and either a single
sum or annual installments, provided, however, that no monthly benefits shall be
paid to Participants who transfer to Primex or Arco until they separate from
Primex or Arco, respectively.
<PAGE>
(c) In lieu of funding an employee-grantor trust or receiving Accelerated
Benefits, the Participant may elect, at least one full year prior to such
Accelerated Benefit Commencement Date, to receive benefit payments in an annuity
for life in accordance with Section 4.1 of this Plan.
4.5 Assumptions used for Determining Amount to be contributed to Employee-
---------------------------------------------------------------------
grantor Trust; Threshold for Accelerated Benefits.
--------------------------------------------------
(a) Actuarial Assumptions for Employee-Grantor Trust. In determining the
------------------------------------------------
Actuarial Present Value of the Participant's Plan benefit to be used for
purposes of funding an employee-grantor trust, the benefit shall be determined
(i) as of the close of the Plan Year (i.e., December 31) prior to the
year in which the employee grantor trust is being funded;
(ii) using the Code Section 415 limits and 401(a)(17) limits then
currently in effect as of the date on which the actuarial present
value is being determined or may, in the discretion of the Plan
Administrator, be projected, using reasonable assumptions concerning
cost-of-living indices;
(iii) 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 of the deposit to the employee-grantor trust) with a
maturity that approximates the Participant's life expectancy
determined as of the date the payment to the trust is scheduled to be
made; and
(iv) assuming that the benefit commences under this Plan
(a) on the Participant's 65th birthday, if the Participant
terminates service (or is treated as terminating service)
prior to age 55;
(b) on the Participant's 62nd birthday, if the Participant
terminates service on or after reaching age 55 and before
reaching age 62; and
(c) on the Participant's 65th birthday, if the Participant
terminates service on or after reaching age 62.
(b) Actuarial Assumptions for Determining Accelerated Benefits. In
----------------------------------------------------------
determining the Actuarial Present Value of the Participant's Accelerated
Benefit, the benefit shall be determined
(i) as of the close of the Participant's retirement or termination of
service; and
<PAGE>
(ii) 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 Accelerated Benefits are scheduled to commence) with
a maturity that approximates the Participant's life expectancy
determined as of the date the payment is scheduled to be made.
(c) Minimum Benefit Accumulation Threshold. No Accelerated Benefits
---------------------------------------
shall commence to be paid, and no Participant shall be given the
opportunity to fund an employee-grantor trust, until the Participant has
accumulated benefits under this Plan, and the Olin Senior Executive Pension
Plan which, in the aggregate, have an actuarial present value of at least
One Hundred Thousand Dollars ($100,000.00).
4.6 Death Benefits.
---------------
(a) The Beneficiary of a Participant who dies after commencing regular
-----
monthly benefits under Section 4.1 of this Plan shall receive a death benefit
under this Plan only if the form selected by, or in force with respect to, the
Participant under the Qualified Plan provides for a death benefit. For purposes
of this Plan, a Participant's Beneficiary shall be the Beneficiary designated to
receive death benefits under the Qualified Plan.
(b) The Beneficiary of a Participant who dies after having elected to
receive Accelerated Benefits, but who as of the date of his death has not
received the entire value of his Accelerated Benefits, shall receive the
remainder of any Accelerated Benefits not yet paid in the form in effect with
respect to the Participant.
(c) If a Participant dies prior to commencement of his Qualified Plan
Benefits under circumstances in which a pre-retirement survivor annuity is
payable under the Qualified Plan, then a supplemental surviving Spouse benefit
shall be payable under this Plan in a monthly amount that shall be equal to the
difference between
(i) the monthly amount of the Qualified pre-retirement survivor
benefit to which the surviving Spouse would have been entitled under
the Qualified Plan had such benefit been calculated (i) including non-
qualified deferred payments of regular salary and deferred awards
under the management incentive plan, 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 pre-retirement survivor
benefit that is actually payable to the surviving Spouse.
(d) For purposes of this Plan, the term "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, no
<PAGE>
Surviving Spouse's retirement allowance shall be paid, and (ii) common law
marriages shall not be recognized hereunder.
4.7 Benefit Upon a Change of Control.
--------------------------------
(a) Lump Sum Payment Upon a Change of Control.
-----------------------------------------
Notwithstanding any other provision of the Plan, upon a Change in Control,
each Participant covered by the Plan shall automatically be paid a lump sum
amount in cash by the Company sufficient to purchase an annuity which, together
with the monthly payment, if any, under a Rabbi or other trust arrangement
established by the Company to make payments hereunder in the event of a Change
in Control and/or pursuant to any other annuity purchased by the Company for the
Participant to make payments hereunder, shall provide the Participant with the
same monthly after-tax benefit as he would have received under the Plan based on
the benefits accrued to the Participant hereunder as of the date of the Change
in Control. Payment under this Section shall not in and of itself terminate the
Plan, but such payment shall be taken into account in calculating benefits under
the Plan which may otherwise become due the Participant thereafter.
(b) No Divestment Upon a Change of Control. If a Participant is removed
--------------------------------------
from participation in the Plan after a Change of Control has occurred, in no
event shall his years of Benefit Service accrued prior to such removal, and the
benefit accrued prior thereto, be adversely affected.
(c) Change of Control Defined.
-------------------------
For purposes of the Plan, a "Change in Control" shall be deemed to have
occurred if
(i) Olin ceases to be a publicly owned corporation with at least 1000
stockholders; or
(ii) a person, partnership, joint venture, corporation or other
entity, or two or more of any of the foregoing acting as a group ( or
a 'person' within the meaning of Sections 13(d)(3) and 14(d)(2) 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 Olin, becomes 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 Board of Directors of the
Company (together with any new Director whose election by the 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
<PAGE>
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) the Company's Board of Directors determines that a tender offer
for the Company's shares indicates a serious intention by the offeror
to acquire control of the Company.
(d) Arbitration. Any dispute or controversy arising under or in
-----------
connection with the Plan subsequent to a Change in Control shall be settled
exclusively by arbitration in Connecticut, 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. All payments under this
-------------
Plan shall be made from the general assets of the Employing Company of the
Participant. No provision shall at any time be made with respect to segregating
any assets of an Employing Company for payment of benefits hereunder. No
Participant, surviving Spouse or any other Beneficiary shall have any interest
in any particular assets of an Employing 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 Employing Company with respect to any rights under the
Plan.
5.2 Liability for Payment. Each Employing 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. In the case of
a Participant who was employed by more than one Employing Company, the Committee
shall allocate the cost of such benefits among such Employing Companies in such
manner as it deems equitable. The obligations of the Employing Company shall
not be funded in any manner.
5.3 Anti-alienation. No Participant or Beneficiary shall have the right
---------------
to assign, transfer, encumber or otherwise subject to any lien any payment or
any other interest under this Plan, nor shall such payment or interest be
subject to attachment, execution or levy of any kind.
Article VI. Plan Administration
-------------------------------
6.1 Plan Administrator. The Company hereby appoints the Benefit Plan
-------------------
Review Committee as the Plan Administrator (the "Plan Administrator" or
"Committee"). Any person, including, but not limited to, the directors,
shareholders, officers and employees of the Company, shall be eligible to serve
on the Committee. Any person so appointed shall signify his acceptance by
undertaking the duties assigned. Any member of the Committee may resign by
delivering written resignation to the Company. The Company may also remove any
member of the Committee by delivery of a written notice of removal, which shall
take effect upon delivery
<PAGE>
or on a date specified. Upon resignation or removal of a Committee member, the
Company shall promptly designate in writing such other person or persons as a
successor.
6.2 Allocation and Delegation. The Committee members may allocate the
-------------------------
responsibilities among themselves, and shall notify the Company in writing of
such action and the responsibilities allocated to each member.
6.3 Powers, Duties and Responsibilities. Except for those powers
-----------------------------------
expressly reserved to the Selection Committee, the Plan Administrator shall have
all power to administer the Plan for the exclusive benefit of the Participants
and their 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, interpretation and
application of the Plan. Any such determination 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 done in a
non-discriminatory manner and shall be consistent with the intent of the Plan.
The Plan Administrator shall:
(a) compute the amount and kind of benefits to which any Participant
shall be entitled hereunder;
(b) maintain all necessary records for the administration of the Plan;
(c) interpret the provisions of the Plan and make and publish such
rules for regulation of the Plan as are consistent with the terms hereof;
(d) assist any Participant regarding his rights, benefits or elections
available under the Plan; and
(e) communicate to Participants and their Beneficiaries concerning the
provisions of the Plan.
6.4 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 may be necessary for proper administration of the Plan. The
Plan Administrator shall file and distribute all reports that may be required by
the Internal Revenue Service, Department of Labor or others, as required by law.
6.5 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.
<PAGE>
6.6 Majority Actions. The Committee shall act by a majority of their
----------------
numbers, but may authorize one or more of them to sign all papers on their
behalf.
6.7 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.
6.8 Construction of Plan Terms. Except as otherwise expressly provided in
---------------------------
this Plan, all terms and conditions of the Qualified Plan shall be applicable to
a Supplemental and Deferral Pension Benefit payable hereunder.
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. Any Employing Company may withdraw from
participation in the Plan at any time. No amendment or termination of the Plan
or withdrawal therefrom by an Employing Company shall adversely affect the
vested benefits payable hereunder to any Participant for service rendered prior
to the effective date of such amendment, termination or withdrawal.
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 Uniformity and Non Discrimination. All provisions of this Plan shall
----------------------------------
be interpreted and applied in a uniform nondiscriminatory manner.
8.5 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 under the laws of the State of
Connecticut.
<PAGE>
8.6 Employment Rights. Nothing in this Plan shall confer any right upon
------------------
any Employee to be retained in the service of the Company or any of its
affiliates.
8.7 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.
Dated: OLIN CORPORATION
By ____________________________
Its
<PAGE>
EXHIBIT 10(v)
================================================================================
FORM OF
EMPLOYEE
BENEFITS
ALLOCATION AGREEMENT
BETWEEN
OLIN CORPORATION
AND
ARCH CHEMICALS, INC.
================================================================================
<PAGE>
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.................. 12
Section 2.4. Welfare Plans........................................ 13
Section 2.5. Options.............................................. 16
Section 2.6. Executive and Director Compensation
Plans.............................................. 18
ARTICLE III
Foreign Plans
-------------
Section 3.1. General Principles................................... 20
Section 3.2. Exceptions to General Principles..................... 21
ARTICLE IV
General Provisions
------------------
Section 4.1. Employment Transfers; Severance Pay.................. 21
Section 4.2. Recognition of Olin Employment
Service, Etc......................................... 21
Section 4.3. Workers' Compensation................................ 22
ARTICLE V
<PAGE>
Miscellaneous
-------------
Section 5.1. Guarantee of Subsidiaries'
Obligations.......................................... 22
Section 5.2. Disputes............................................. 22
Section 5.3. Sharing of Information............................... 23
Section 5.4. Termination.......................................... 23
Section 5.5. Rights to Amend or Terminate Plans;
No Third Party Beneficiaries......................... 23
Section 5.6. Complete Agreement................................... 24
Section 5.7. Governing Law........................................ 24
Section 5.8. Notices.............................................. 24
Section 5.9. Amendment and Modification........................... 24
Section 5.10. Successors and Assigns............................... 24
Section 5.11. Consent to Jurisdiction.............................. 24
Section 5.12. Counterparts......................................... 25
Section 5.13. Interpretation....................................... 25
Section 5.14. Legal Enforceability................................. 25
Section 5.15. References, Construction............................. 25
<PAGE>
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.
<PAGE>
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.
<PAGE>
3
"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.
<PAGE>
4
"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
<PAGE>
5
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
<PAGE>
6
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
<PAGE>
7
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.
<PAGE>
8
"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
<PAGE>
9
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
<PAGE>
10
of the Distribution Date of all participants in the Olin Pension Plan (including
Arch Former Employees and Olin Former Employees). Projected benefit obligations
will be determined based on the assumptions used for purposes of Financial
Accounting Standards No. 87 in the disclosure footnote in Olin's 1998 Annual
Report to Shareholders (the "FAS 87 Assumptions"). If necessary, the amount
determined to be transferred will be adjusted to comply with Code Section 414(l)
as a result of the transfer to and assumption of Liabilities by the Successor
Plan, as reasonably and equitably determined by the Enrolled Actuary using the
asset allocation methodology set forth in Section 4044 of ERISA, the PBGC safe
harbor assumptions referred to in Treasury Regulation Section 1.414(l)-
1(b)(5)(ii) and the pre-retirement withdrawal assumption used by Olin in the
above-referenced FAS-87 disclosure. As soon as practicable after the
Distribution Date and after receipt of the opinion of counsel described in
Section 2.1(d) hereof, Olin shall cause 85% of the amount determined above
(increased by interest at the settlement rate included in the FAS-87 Assumptions
from the Distribution Date to the date of such transfer) to be transferred from
the trust under the Olin Pension Plan to the trust established under the
Successor Plan (the "Initial Transfer"). On or about August 31, 1999, Olin will
cause an additional amount to be transferred to the trust established under the
Successor Plan (the "Subsequent Transfer") equal to the excess of (i) the actual
amount to be transferred as determined by the Enrolled Actuary using the
methodology described above, over (ii) the amount previously transferred
provided that such amount will be credited with interest at the settlement rate
included in the FAS-87 Assumptions from the date of the Initial Transfer to the
date of the Subsequent Transfer and shall be reduced by all benefit payments
paid from the Olin Pension Plan to Arch Employees who retire or otherwise
terminate employment on or after the Distribution Date but prior to the date of
actual transfer.
On or about February 1, 2000, the Enrolled Actuary will determine a
net amount ("Net Amount") equal to the greater of the (i) the excess of (A) the
additional assets and related Liabilities that are required to be transferred to
the trust established under the Successor Plan from the trust established under
the Olin Pension Plan as a result of Olin Employees who become Subsequent Arch
Employees over (B) the additional assets and related Liabilities that should be
transferred from the trust established under the Successor Plan to the trust
established under the Olin Plan as a result of Arch Employees who become
Subsequent Olin
<PAGE>
11
Employees or (ii) the excess of (B) above over (A). Such Liabilities will be
based on the individual's accrued benefit under the applicable plan as of the
date of transfer of such individual. The assets representing the Net Amount to
be transferred from the appropriate trust shall be based on the same
proportionate percentage as applied in the preceding paragraph; provided,
---------
however, that if necessary, the amount to be transferred will be adjusted to
- --------
comply with Code Section 414(l). Interest (at the same rate as was used for the
initial transfer) shall be credited on the Net Amount and transferred along with
the Net Amount to the trust that will be receiving the transfer, which Net
Amount will be transferred to the appropriate trust as soon as practicable.
(c) Union Contracts. Arch shall honor and assume all rights and
----------------
obligations of Olin, and shall become the successor employer under union
contracts covering Arch Employees and such employees will be eligible to
participate in the Successor Plan subject to the provisions of any union consent
required to implement paragraph (a) of this Section 2.1.
(d) Implementation. Arch and Olin shall, in connection with the
---------------
actions taken pursuant to this Section 2.1, cooperate in making any and all
appropriate filings required under the Code or ERISA, and the regulations
thereunder and any applicable securities laws, implementing all appropriate
communications with participants, transferring appropriate records, and taking
all such other actions as may be necessary and appropriate to implement the
provisions of this Section 2.1 in a timely manner and to cause the transfer of
assets pursuant to Section 2.1(b) to take place as soon as practicable after the
Distribution Date (or in the case of a Subsequent Arch Employee, as soon as
practicable following January 31, 2000); provided, however, that such transfer
-------- -------
shall not take place until Olin receives an opinion of counsel satisfactory to
Olin (or a copy of a favorable determination letter from the Internal Revenue
Service) to the effect that the Successor Plan is in form qualified under
Section 401(a) of the Code, and the related trust is in form exempt under
Section 501(a) of the Code.
Section 2.2. Supplemental Retirement Plans and Employment Agreements.
--------------------------------------------------------
(a) Establishment of Successor Supplemental Retirement Plans. On or prior to
---------------------------------------------------------
the Distribution Date, Arch shall establish nonqualified
<PAGE>
12
Supplemental Retirement Plans for the benefit of Arch Employees and Subsequent
Arch Employees that will contain terms that are substantially similar to those
contained in the Olin Supplemental Plans. Arch agrees that each Arch Employee
and Subsequent Arch Employee shall, for all purposes under the Supplemental
Retirement Plans, be entitled to service, compensation and the accrued benefit
(or account balance, as the case may be) credited to such Arch Employee as of
the Distribution Date (or in the case of a Subsequent Arch Employee, the date of
transfer) under the terms of the Olin Supplemental Plans as if such service had
been rendered to Arch, as if such compensation had been paid by Arch and as if
such accrued benefit (or account balance) had originally been credited to such
Arch Employee under the Supplemental Retirement Plans of Arch provided that in
the case of a Subsequent Arch Employee who is participating in an Arch
Supplemental Retirement Plan that is a defined benefit plan, his or her benefit
from such plan shall be offset by the benefit payable (regardless of whether or
not actually paid) under the comparable Olin Supplemental Plan (assuming the
terms of which do not change after the Distribution Date). All reserves and
liabilities held under the Olin Supplemental Plans with respect to Arch
Employees (who are determined to be Arch Employees on the Distribution Date)
shall be transferred to Arch. Arch shall be responsible for all claims arising
under the Supplemental Retirement Plans with respect to Arch Employees whether
incurred before, on or after the Distribution Date and the Olin Group shall have
no responsibility for such claims. All reserves and Liabilities determined
through the date of transfer held under the Olin Supplemental Plans with respect
to Subsequent Arch Employees shall remain with Olin. To the extent an Arch
Employee becomes a Subsequent Olin Employee, any reserves and Liability for such
Arch Employee under such Arch Supplemental Retirement Plan through the date of
transfer shall be retained by Arch and if such individual is participating in an
Olin Supplemental Plan that is a defined benefit plan, his or her benefit from
such plan shall be offset by the benefit payable (regardless of whether or not
actually paid) under the comparable Arch Supplemental Retirement Plan (assuming
the terms which do not change after the Distribution Date). Olin shall include
similar provisions in the Olin Supplemental Plans for Subsequent Olin Employees
as the Arch Supplemental Retirement Plans include for Subsequent Arch Employees.
(b) Olin's Supplemental Plans. Effective as of the Distribution
--------------------------
Date, Olin shall continue to sponsor the
<PAGE>
13
Olin Supplemental Plans, subject to the terms thereof. Olin hereby retains all
liability for benefits (whether funded or unfunded) that have accrued prior to
the Distribution Date under the Olin Supplemental Plans with respect to Arch
Former Employees.
(c) Supplemental Employment Agreements. Effective as of the
-----------------------------------
Distribution Date, Arch shall assume and be solely responsible for all
Liabilities of the Pre-Distribution Group relating to Supplemental Employment
Agreements with Arch Employees. Arch and Olin shall cooperate in taking all
actions necessary or appropriate to implement the foregoing, including amending
any Supplemental Employment Agreement and obtaining any necessary consents of
affected individuals.
Section 2.3. Qualified Defined Contribution Plan. (a) Olin CEOP.
------------------------------------ ----------
As of the Distribution Date, Olin and Arch will take such steps as are necessary
or desirable to convert the Olin CEOP into a multiple employer plan in which
both Olin and Arch shall be participating employers. On and after the
Distribution Date, employer contributions made on behalf of Arch Employees will
be made solely by Arch. As of a date to be determined by Arch which may not be
more than two years after the Distribution Date, Arch shall establish an Arch
SIP and shall no longer participate in the Olin CEOP. Under the multiple
employer plan, Arch Employees will become 100% vested in matching contributions
following completion of five years of service (including prior service with
Olin). Arch Common Stock received by Olin Employees in the Olin CEOP as a
result of the Distribution that is attributable to (i) Olin contributions made
before the Distribution may be retained in Arch Common Stock or reinvested in
Olin Common Stock at the participant's election at any time and (ii) employee
contributions may be retained in Arch Common Stock or reinvested in any other
available option under the Olin CEOP at the participant's election at any time.
Except as provided in the preceding sentence, contributions made to or held
under the Olin CEOP on behalf of Olin Employees may not be invested in Arch
Common Stock. Dividends on Arch Common Stock in accounts of Olin Employees will
be reinvested in Olin Common Stock. Olin Common Stock held in the accounts of
Arch Employees that is attributable to (i) Olin contributions made before the
Distribution may be retained in Olin Common Stock or reinvested only in Arch
Common Stock at the participant's election and (ii) employee contributions may
be retained in Olin Common Stock or reinvested in any other available
<PAGE>
14
option under the Olin CEOP at the participant's election. Except as provided in
the preceding sentence, contributions after the Distribution Date made to or
held under the Olin CEOP on behalf of Arch Employees may not be invested in Olin
Common Stock. Dividends on Olin Common Stock in accounts of Arch Employees will
be reinvested in Arch Common Stock.
(b) Implementation. Olin and Arch shall cooperate in making all
---------------
appropriate filings required under the Code or ERISA, and the regulations
thereunder and any applicable securities laws, implementing all appropriate
communications with participants, maintaining, and transferring appropriate
records, and taking all such other actions as may be necessary and appropriate
to implement the provisions of this Section 2.3.
Section 2.4. Welfare Plans. (a) Pre-Retirement Welfare Plans. Arch
-------------- -----------------------------
shall take, and shall cause the other members of the Arch Group to take, all
actions necessary or appropriate to establish, on or before the Distribution
Date, Arch U.S. Welfare Plans to provide each Arch Employee and Subsequent Arch
Employee in the United States with benefits substantially similar to the
benefits provided to him or her under the Olin U.S. Welfare Plans. The Arch
Group shall assume, and shall be solely responsible for, all Liabilities in
connection with unpaid health care and short-term and long-term disability
claims by or in respect of Arch Employees in the United States for benefits
under the Olin Welfare Plans whether incurred before, on or after the
Distribution Date and the Olin Group shall have no responsibility for such
claims. With respect to Subsequent Arch Employees, the Olin Group shall assume,
and shall be solely responsible for all Liabilities in connection with unpaid
health care and short-time and long-term disability incurred claims by or in
respect of such individuals prior to their transfer to any member of the Arch
Group and Arch shall be responsible for such claims incurred by or in respect of
such individuals on or subsequent to such transfer. With respect to other
benefits provided under Olin Welfare Plans (including job transition benefits,
accidental death benefits, group-term life insurance and tuition aid): (i) the
Arch Group shall assume, and shall be solely responsible for, all Liabilities
for such claims payable to Arch Employees and/or Subsequent Arch Employees where
the event giving rise to the claim occurs on or after the Distribution Date (or
on or after the date of transfer for Subsequent Arch Employees) and the Olin
Group shall have no responsibility for such claims and (ii) the Olin Group
<PAGE>
15
shall assume, and be responsible for such claims payable to (A) Arch
Participants and Subsequent Arch Employees where the event giving rise to the
claim occurs prior to the Distribution Date (or in the case of a Subsequent Arch
Employee, prior to the date of transfer) and (B) Olin Participants whether the
claim incurred before, on or after the Distribution Date; and the Arch Group
shall have no responsibility for such claims. Claims for tuition aid benefits
shall be considered incurred when the semester or course is successfully
completed.
Olin shall take all actions necessary or appropriate to transfer a proportionate
share of the assets held under the voluntary employee benefit association trust
("VEBA") maintained by Olin and attributable to long-term disability benefits to
a VEBA established by Arch. Such proportionate share shall be equal to the
product of (i) the fair market value of the assets in the VEBA as of the
Distribution Date earmarked for long-term disability benefits and (ii) the ratio
of the Liabilities for long-term disability benefits attributable to Arch
Employees to the Liabilities for long-term disability benefits for Olin
Employees, Olin Former Employees, Arch Employees and Arch Former Employees. In
determining such Liabilities, a 7-1/2% interest assumption shall be used. Olin
shall transfer the same proportionate share of reserves on its books to Arch for
such long-term disability benefits. Olin shall retain responsibility for
continuation health coverage benefits under the Olin Welfare Plans for Arch
Former Employees providing health benefits under ERISA section 601(a) whether
the claims are incurred before, on or after the Distribution Date.
(b) Flexible Spending Account Plan. Prior to the Distribution Date,
-------------------------------
Arch shall establish a flexible spending account plan (which shall provide
benefits substantially similar to the Flexible Spending Account Plan of Olin
Corporation) to assume Liabilities of Arch Employees and Subsequent Arch
Employees in the Flexible Spending Account Plan of Olin Corporation. As soon as
practicable after the Distribution Date (or in the case of a Subsequent Arch
Employee, the date of transfer), Olin shall transfer to Arch an amount equal to
the monies deducted from the compensation of such individuals during the
calendar year in which the Distribution Date occurs reduced by the amount of
benefits paid under such plan during such year. Olin and Arch shall take all
other action necessary or appropriate so that, effective as of the Distribution
Date, Arch shall assume and be solely responsible for all flexible spending
account
<PAGE>
16
Liabilities of such individual under its flexible spending account plan. Olin
shall retain liability for Arch Former Employees and for any claims incurred in
the calendar year preceding the year of the Distribution under the Flexible
Spending Account Plan of Olin Corporation.
(c) Assigned Split Dollar and Corporate-Owned Life Insurance
--------------------------------------------------------
Policies. Olin and Arch shall take all actions necessary or appropriate to
- ---------
assign to Arch, effective as of the Distribution Date, all of the rights and
interests of the Pre-Distribution Group in the split dollar life insurance
policies insuring the lives of Arch Participants pursuant to the Split Dollar
Life Insurance Program (such policies, the "Assigned Split Dollar Policies").
Such actions shall include Arch's acceptance of any collateral assignments,
policy endorsements or such other documentation executed by or on behalf of such
Arch Participants or any trustee of any trust to which any Arch Participant's
policy rights or incidents of ownership under the Assigned Split Dollar Policies
have been assigned, and Arch's entering into such agreements as may be necessary
to fulfill any obligations of Olin to any insurance company or insurance agent
or broker under Assigned Split Dollar Policies. From and after the date of the
assignment of any Assigned Split Dollar Policy to Arch, Arch shall assume and be
solely responsible for all Liabilities, and shall be entitled to all benefits,
of the Pre-Distribution Group to the applicable Arch Participant under his or
her Split Dollar Policy, including under any related agreements entered into by
such Arch Participant or any such trustee.
Olin shall retain and pay any premiums or take any action required to keep any
corporate-owned life insurance ("COLI") insuring the lives of Arch Participants
in force. Olin shall be entitled to the life insurance proceeds when payable
and Olin shall pay the related $5,000 to the Arch Participant's Beneficiary when
payable in accordance with COLI plan provisions. For purposes of COLI, the Arch
Participant will be deemed to be an Olin Employee.
(d) Post-Retirement Medical and Life Insurance Benefits. Effective
----------------------------------------------------
as of the Distribution Date, Olin shall continue to sponsor the retiree medical
benefit and life insurance plans of Olin. Olin agrees that it will retain all
liability with respect to medical and life insurance benefits provided to Arch
Former Employees who retired or otherwise terminated prior to the Distribution
Date. Effective as of the Distribution Date, Arch shall adopt a
<PAGE>
17
medical benefit plan substantially similar to Olin's retiree benefits plan
program. Such plan shall provide credit to Arch Employees and Subsequent Arch
Employees for service with Olin on the same basis as credit for such service was
provided under Olin's plan. Other than possible increases in employee
contributions, Arch agrees that the benefits provided under its retiree medical
benefits program shall not be reduced or terminated prior to the fifth
anniversary of the Distribution Date. Arch hereby agrees to assume, and shall
indemnify and hold Olin harmless from and against, all claims brought against
any member of the Olin Group under Olin's retiree medical benefit plans by any
Arch Employee or Subsequent Arch Employee who retires after the Distribution
Date. If an Arch Employee is transferred to Olin or any of its Affiliates by the
Arch Group on or prior to January 31, 2000, Olin shall be responsible for such
individual's retiree medical benefits.
(e) Implementation. Olin agrees to provide Arch or its designated
---------------
representative with such information (in the possession of a member of the Olin
Group and not already in the possession of a member of the Arch Group) as may be
reasonably requested by Arch in order to carry out the requirements of this
Section 2.4.
Section 2.5. Options. (a) Arch Long Term Incentive Plan. Arch
-------- ------------------------------
shall take all actions necessary or appropriate to establish on or before the
Distribution Date the Arch Chemicals, Inc. 1999 Long Term Incentive Plan which
shall contain terms that are substantially similar to the terms provided under
the Olin 1991 Long Term Incentive Plan.
(b) Olin Options. Olin and Arch shall take all actions necessary or
-------------
appropriate so that each Olin Option is adjusted and/or replaced as set forth
below.
(1) Certain Employees and Former Employees of the Olin Group. This
---------------------------------------------------------
Section 2.5(b)(1) sets forth the treatment in the Distribution of each Olin
Option that is, as of the Distribution Date, outstanding and held by an Olin
Employee employed by (or Olin Former Employee formerly employed by) a member of
the Olin Group other than Olin, or a Beneficiary of any such Employee. Each
such Olin Option ("Pre-Adjustment Option") shall be adjusted to constitute an
Olin option (a "New Olin Option") and an Arch SAR. With respect to each New
Olin Option (i) the number of shares of Olin Common Stock subject to such New
Olin Option shall equal the number of shares of Olin Common Stock subject to
<PAGE>
18
the Pre-Adjustment Option, and (ii) the per-share exercise price of such New
Olin Option shall equal the per-share exercise price of such Pre-Adjustment
Option, as applicable, multiplied by the Olin Ratio (rounded down to the nearest
whole cent). With respect to each such Arch SAR (i) the number of shares of Arch
Common Stock subject to such Arch SAR shall equal the number of shares of Olin
Common Stock subject to the Pre-Adjustment Option multiplied by the Distribution
Ratio (rounded up to the nearest whole share), and (ii) the per-share base
amount of such Arch SAR shall equal the per-share exercise price of such Pre-
Adjustment Option multiplied by the Arch Ratio (and then rounded down to the
nearest whole cent).
(2) Other Olin Participants and Arch Participants. This Section
----------------------------------------------
2.5(b)(2) sets forth the treatment in the Distribution of each Olin Option that
is, as of the Distribution Date, outstanding and held by an Olin Participant
(other than one described in Section 2.5(b)(1)), or by an Arch Participant. As
of the Distribution Date, each such outstanding Olin Option shall be adjusted to
constitute two options (one a "New Olin Option" and the other an "Arch Option")
as provided in this Section 2.5(b)(2). With respect to each such New Olin
Option, (i) the number of shares of Olin Common Stock subject to such New Olin
Option, shall equal the number of shares of Olin Common Stock subject to the
Pre-Adjustment Option, and (ii) the per-share exercise price of such New Olin
Option shall equal the per-share exercise price of such Pre-Adjustment Option,
as applicable, multiplied by the Olin Ratio (rounded down to the nearest whole
cent). With respect to each such Arch Option (i) the number of shares of Arch
Common Stock subject to such Arch Option shall equal the number of shares of
Olin Common Stock subject to the Pre-Adjustment Option multiplied by the
Distribution Ratio (rounded up to the nearest whole share), and (ii) the per-
share exercise price of such Arch Option shall equal the per-share exercise
price of such Pre-Adjustment Option multiplied by the Arch Ratio (rounded down
to the nearest whole cent).
(c) Terms of Options and Arch SARs. The terms and conditions of each
-------------------------------
New Olin Option, Arch Option and/or Arch SAR adjusted pursuant to this Section
2.5 shall be the same as those of the Olin Option it replaces, except as
otherwise specifically provided in this Section 2.5 and except that (1) in the
case of such options issued under the Olin 1980 Stock Option Plan to individuals
who become Arch
<PAGE>
19
Employees, such options shall expire no later than on the earlier of (i) the end
of their original term or (ii) the second anniversary of the Distribution Date,
or (2) in the case of such options issued under the Olin 1988 Stock Option Plan
or the Olin 1996 Stock Option Plan to individuals who become Arch Employees,
such options shall expire no later than at the end of their original term. With
respect to individuals who become Arch Employees, references to employment with
or termination of employment with the Olin Group shall be changed to references
to employment with or termination of employment with the Arch Group, and (ii)
other references to the Olin Group shall be changed to references to the Arch
Group as appropriate.
(d) Delivery of Shares and Cash. Effective as of the Distribution
----------------------------
Date, New Olin Options and Arch Options held by Arch Employees shall be
transferred to the Arch Chemicals, Inc. 1999 Long Term Incentive Plan. New Olin
Options, Arch Options and Arch SARs held by Olin Employees, Olin Former
Employees, Subsequent Arch Employees and Arch Former Employees shall be retained
by the Olin Incentive Plans. Olin shall be solely responsible for the delivery
of Olin Common Stock upon exercise of New Olin Options in exchange for payment
of the exercise price and Arch shall be solely responsible for the delivery of
Arch Common Stock upon exercise of Arch Options, in each case in exchange for
payment of the applicable exercise price. Olin shall assume and be solely
responsible for all Liabilities with respect to Arch SARs which shall be issued
under the Olin Incentive Plans. Any adjustment to or cash-out of New Olin
Options made by Olin in accordance with the Olin Incentive Plans shall apply to
all outstanding New Olin Options including those transferred to an Arch Plan and
Olin shall be liable for such adjustment or cash-out. Similarly, any adjustment
to or cash-out of Arch Options made by Arch in accordance with the Arch
Chemicals, Inc. 1999 Long Term Incentive Plan shall apply to all outstanding
Arch Options resulting from the Distribution, including those held under
Incentive Plans, and Arch shall be liable for such adjustment or cash-out.
(e) Implementation. Olin and Arch shall each maintain a registration
---------------
statement on Form S-8 to cover all of their respective outstanding options,
regardless of who holds such options. Notwithstanding the foregoing provisions
of this Section 2.5, if either Olin or Arch determines that because of legal,
accounting, tax, and/or regulatory rules or requirements applicable to options,
or
<PAGE>
20
restricted stock in any jurisdiction outside the United States, compliance with
any of its obligations under this Section 2.5 with respect to options, or
restricted stock held by or to be issued to any individual employed outside the
United States would be impossible, illegal, impracticable or unreasonably
expensive, it shall so notify the other party, and Arch and Olin shall use their
best efforts to agree to appropriate alternative arrangements.
Section 2.6. Executive and Director Compensation Plans. (a) 1998
----------------------------------------- ----
Incentive Awards. Arch Employees and Former Arch Employees who were
- -----------------
participating in the EVA Management Incentive Compensation Plan will be entitled
to receive an annual incentive bonus award with respect to 1998 performance
assuming plan provisions are satisfied.
(b) Other Equity Awards. Olin shall continue to sponsor the Olin
--------------------
1991 Long-Term Incentive Plan for the benefit of Olin Participants and Former
Arch Employees. Immediately prior to the Distribution Date, holders of Olin
Restricted Stock Units (whether an Olin Participant or an Arch Participant)
shall be credited with one Arch Restricted Stock Unit for every two Olin
Restricted Stock Units credited to them under an Olin Plan. Such Arch
Restricted Stock Units shall be subject to substantially the same restrictions
as the Olin Restricted Stock Units except that with respect to Arch Employees,
any requirement for continued employment with the Olin Group shall be deemed to
refer to continued employment with the Arch Group. All liability for Olin
Restricted Stock Units and Arch Restricted Stock Units held by Arch Employees
shall be transferred to the Arch Chemicals, Inc. 1999 Long Term Incentive Plan
immediately prior to the Distribution Date and all reserves related to such
units attributable to Arch Employees who are determined to be Arch Employees on
the Distribution Date shall be transferred to Arch. Olin shall take all actions
necessary or appropriate to provide that each individual who is expected to
become an Arch Employee who has "Olin Performance Unit Plan" retention units
shall have the payment of such units accelerated and paid out prior to the
Distribution Date in Olin Common Stock.
(c) Deferred Compensation Plan. Olin will continue to sponsor the
---------------------------
Olin Corporation Employee Deferral Plan ("Olin Deferral Plan") for the benefit
of Olin Participants and Arch Former Employees. Arch shall take all actions
necessary or appropriate to establish before the Distribution Date, a Deferred
Compensation Plan which shall
<PAGE>
21
contain terms that are substantially similar to the terms contained in the Olin
Deferral Plan. Immediately prior to the Distribution Date, participants in the
Olin Deferral Plan (whether Olin Participants or Arch Participants) who have an
account invested in phantom shares of Olin Common Stock shall be credited with
one phantom share of Arch Common Stock for every two phantom shares of Olin
Common Stock credited to their accounts. All liability for phantom shares of
Arch Common Stock and Olin Common Stock credited to Arch Employees and related
cash accounts for such employees and all related reserves attributable to Arch
Employees who are determined to be Arch Employees on the Distribution Date shall
be transferred to Arch immediately prior to the Distribution Date.
(d) Benefits for Non-Employee Directors. Arch shall take all actions
------------------------------------
necessary or appropriate to establish on or before the Distribution Date, a
stock plan for non-employee directors which shall contain terms that are similar
to the terms contained in the Olin Corporation 1997 Stock Plan for Non-Employee
Directors; provided, however, that in lieu of or in addition to the annual
-------- -------
grants of shares of Arch Common Stock to non-employee directors, the board of
directors of Arch may elect to grant options to purchase shares of Arch Common
Stock and/or performance shares. Phantom shares of Olin Common Stock and Arch
Common Stock (after an adjustment which is similar to the Distribution) credited
to Arch directors will be transferred to the Arch stock Plan for non-employee
directors.
(e) Dividend Equivalents. Dividend equivalent units on Olin
---------------------
Restricted Stock Units and phantom shares of Olin Common Stock will be
reinvested in Olin Restricted Stock Units and phantom shares of Olin Common
Stock, respectively. Similarly, dividend equivalent units on Arch Restricted
Stock Units and phantom shares of Common Stock will be reinvested in Arch
Restricted Stock Units and phantom shares of Arch Common Stock, respectively.
Effective as of the Distribution Date, (i) Arch shall assume and be solely
responsible for all Liabilities (whether accrued, contingent or otherwise) with
respect to dividend equivalent units on awards held by Arch Employees, and (ii)
Olin shall assume or retain, as applicable, and be solely responsible for all
Liabilities (whether accrued, contingent or otherwise) with respect to dividend
equivalent units on awards held by Olin Participants or Former Arch Employees.
<PAGE>
22
ARTICLE III
Foreign Plans
-------------
Section 3.1. General Principles. This Section 3.1 sets forth certain
-------------------
general principles relating to Foreign Plans; however, exceptions may be made to
those general principles as set forth in Section 3.2. Olin and Arch shall take
all actions necessary or appropriate so that, effective no later than the
Distribution Date, all Foreign Plans have been divided and/or new Foreign Plans
established (to the extent necessary) so that all benefits of Olin Participants
under Foreign Plans (whether accrued or payable before, on or after the
Distribution Date) are provided by Olin Foreign Plans, and all benefits of Arch
Participants under Foreign Plans (whether accrued or payable before, on or after
the Distribution Date) are provided by Arch Foreign Plans. If any Foreign Plan
that is separated into an Olin Foreign Plan and an Arch Foreign Plan in
connection with or in anticipation of the Distribution is funded through a
trust, insurance contract or other funding vehicle, then such funding vehicle
shall be divided between such Olin Foreign Plan and Arch Foreign Plan on an
equitable basis. From and after the Distribution Date: (i) the members of the
Olin Group and the Olin Foreign Plans shall assume or retain, as applicable, and
shall be solely responsible for, all Liabilities of the Pre-Distribution Group
arising out of or relating to the Olin Foreign Plans; and (ii) the members of
the Arch Group and the Arch Foreign Plans shall assume or retain, as applicable,
and shall be solely responsible for, all Liabilities arising out of or relating
to the Arch Foreign Plans.
Section 3.2. Exceptions to General Principles. Olin and Arch
---------------------------------
recognize that it is possible that, in certain cases, applicable law may
prohibit the implementation of the general principles set forth in Section 3.1,
or that there may be special circumstances making such implementation
inadvisable or impractical. In all such cases, such general principles shall
not be implemented and Olin and Arch shall use best efforts to develop and
implement an alternative approach, and shall enter into such additional
agreements as may be necessary or appropriate in connection therewith.
<PAGE>
23
ARTICLE IV
General Provisions
------------------
Section 4.1. Employment Transfers; Severance Pay. (a) Arch and Olin
------------------------------------
shall take all steps necessary and appropriate so that, on or immediately after
the Distribution Date, all individuals who have been designated to be Arch
Employees are employed by a member of the Arch Group, and all individuals who
have been designated to be Olin Employees are employed by a member of the Olin
Group.
(b) Arch and Olin agree that, except as specifically provided by law
or otherwise in this Agreement, individuals who, in connection with the
Distribution, cease to be Olin Employees and become Arch Employees shall not be
deemed to have experienced a termination or severance of employment from Olin
and its subsidiaries for purposes of any Olin Plan that provides for the payment
of severance, redundancy, salary continuation or similar benefits.
Section 4.2. Recognition of Olin Employment Service, Etc. The Arch
--------------------------------------------
Plans shall, to the extent permitted by applicable law, recognize service before
the Distribution with the Pre-Distribution Group as service with the Arch Group.
Each Arch Welfare Plan shall, to the extent permitted by applicable law, provide
benefits to Arch Employees without interruption or change solely as a result of
the transition from the corresponding Olin Welfare Plans, and, without limiting
the generality of the foregoing: (a) shall, to the extent applicable, recognize
all amounts applied to deductibles, out-of-pocket maximums and lifetime maximum
benefits with respect to Arch Employees under the corresponding Olin Welfare
Plan for the plan year that includes the Distribution Date and for prior periods
(if applicable); (b) shall, to the extent applicable, not impose any limitations
on coverage of preexisting conditions of Arch Employees except to the extent
such limitations applied to such Arch Employees under the corresponding Olin
Welfare Plan immediately before such Arch Welfare Plan became effective; and (c)
shall not impose any other conditions (such as proof of good health, evidence of
insurability or a requirement of a physical examination) upon the participation
by Arch Employees who were participating in the corresponding Olin Welfare Plan
immediately before such Arch Welfare Plan became effective.
<PAGE>
24
Section 4.3. Workers' Compensation. Arch shall be responsible for
----------------------
all workers' compensation claims payable to or on behalf of Arch Participants
and Subsequent Arch Employees whether arising before, on or after the
Distribution Date; provided, however, that with respect to such individuals
-------- -------
receiving or entitled to receive workers' compensation benefits on the
Distribution Date, Olin shall pay or cause to be paid such benefits on and after
the Distribution Date and shall be reimbursed for such payments by Arch to the
extent not covered by Olin's insurance. Accruals for such Liabilities shall be
transferred to Arch.
ARTICLE V
Miscellaneous
-------------
Section 5.1. Guarantee of Subsidiaries' Obligations. Each of the
---------------------------------------
parties hereto shall cause to be performed, and hereby guarantees the
performance and payment of, all actions, agreements, obligations and Liabilities
set forth herein to be performed or paid by any Subsidiary of such party which
is contemplated by the Distribution Agreement to be a Subsidiary of such party
on or after the Distribution Date.
Section 5.2. Disputes. (a) In any case in which Arch or Olin shall
---------
disagree with the determination of an amount which this Agreement requires to be
made by the Enrolled Actuary, each such disagreeing party shall have the right,
within 30 days after receipt of notice of such determination, to engage, at its
own expense, an independent expert to make the determination of such amount. If
the amount determined by such independent experts should differ, such amount
shall be reasonably and equitably determined by another independent expert
selected by agreement between or among the Enrolled Actuary and such independent
experts.
(b) Any other dispute, controversy or claim arising out of or relating
to this Agreement shall be governed by Article V of the Distribution Agreement.
Section 5.3. Sharing of Information. Each of Olin and Arch shall,
-----------------------
and shall cause each of the other members of their respective Groups to, provide
to the other all such information in its possession as the other may reasonably
request to enable it to administer its employee benefit plans and programs, and
to determine the scope of,
<PAGE>
25
and fulfill, its obligations under this Agreement. Such information shall, to
the extent reasonably practicable, be provided in the format and at the times
and places requested, but in no event shall the party providing such information
be obligated to incur any direct expense not reimbursed by the party making such
request, nor to make such information available outside its normal business
hours and premises except as the parties otherwise specifically agree. The right
of the parties to receive information hereunder shall, without limiting the
generality of the foregoing, extend to any and all reports, and the data
underlying such reports, prepared by the Enrolled Actuary in making any
determination under this Agreement or by any third party engaged pursuant to
Section 5.2.
Section 5.4. Termination. This Agreement shall be terminated in the
------------
event that the Distribution Agreement is terminated and the Distribution
abandoned prior to the Distribution Date. In the event of such termination,
neither party shall have any liability of any kind to the other party.
Section 5.5. Rights To Amend or Terminate Plans; No Third Party
--------------------------------------------------
Beneficiaries. Except as provided in Section 2.4(d), no provision of this
- --------------
Agreement shall be construed (a) to limit the right of Olin, any other member of
the Olin Group, Arch or any other member of the Arch Group to amend any Plan or
terminate any Plan, or (b) to create any right or entitlement whatsoever in any
Employee, former Employee or Beneficiary, including a right to continued
employment or to any benefit under a Plan or any other compensation. This
Agreement is solely for the benefit of the parties hereto and their respective
subsidiaries and should not be deemed to confer upon third parties any remedy,
claim, liability, reimbursement, claim of action or other right in excess of
those existing without reference to this Agreement.
Section 5.6. Complete Agreement. This Agreement and the agreements
-------------------
and other documents referred to herein shall constitute the entire agreement
between the parties hereto with respect to the subject matter hereof and shall
supersede all previous negotiations, commitments and writings with respect to
such subject matter.
Section 5.7. Governing Law. Subject to applicable U.S. federal law,
--------------
this Agreement shall be governed by and construed in accordance with the laws of
the
<PAGE>
26
Commonwealth of Virginia applicable to contracts executed therein and to be
performed therein as to all matters, including matters of validity,
construction, effect, performance and remedies.
Section 5.8. Notices. All notices, requests, claims, demands and
--------
other communications hereunder shall be given in accordance with the provisions
of Section 8.08 of the Distribution Agreement.
Section 5.9. Amendment and Modification. This Agreement may be
---------------------------
amended, modified or supplemented only by a written agreement signed by both of
the parties hereto.
Section 5.10. Successors and Assigns. This Agreement and all of the
-----------------------
provisions hereof shall be binding upon and inure to the benefit of the parties
hereto and their successors and permitted assigns, but neither this Agreement
nor any of the rights, interests and obligations hereunder shall be assigned by
any party hereto without the prior written consent of the other party (which
consent shall not be unreasonably withheld or delayed).
<PAGE>
27
SECTION 5.11. Consent to Jurisdiction. Without limiting the
------------------------
provisions of Article V of the Distribution Agreement, each of the parties
irrevocably submits to the exclusive personal jurisdiction and venue of (a) the
Circuit Court of Henrico County, Commonwealth of Virginia, and (b) the United
States District Court for the Eastern District of Virginia (Richmond Division),
for the purposes of any suit, action or other proceeding arising out of this
Agreement or any transaction contemplated hereby. Each of the parties agrees to
commence any action, suit or proceeding relating hereto either in the United
States District Court for the Eastern District of Virginia (Richmond Division)
or if such suit, action or other proceeding may not be brought in such court for
juris dictional reasons, in the Circuit Court of the Henrico County,
Commonwealth of Virginia. Each of the parties further agrees that service of
any process, summons, notice or document by U.S. registered mail to such party's
respective address set forth in the Distribution Agreement shall be effective
service of process for any action, suit or proceeding in Virginia with respect
to any matters to which it has submitted to jurisdiction in this Section 5.11.
Each of the parties irrevocably and unconditionally waives any objection to the
laying of venue of any action, suit or proceeding arising out of this Agreement
or the transactions contemplated hereby in (i) the Circuit Court of Henrico
County, Commonwealth of Virginia, or (ii) the United States District Court for
the Eastern District of Virginia (Richmond Division), and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in any
such court that any such action, suit or proceeding brought in any such court
has been brought in an inconvenient forum, and the right to object, with respect
to such action, suit or proceeding, that such court does not have jurisdiction
over such Party.
Section 5.12. Counterparts. This Agreement may be executed in two or
-------------
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 5.13. Interpretation. The Article and Section headings
---------------
contained in this Agreement are solely for the purpose of reference, are not
part of the agreement of the parties hereto and shall not in any way affect the
meaning or interpretation of this Agreement.
<PAGE>
28
Section 5.14. Legal Enforceability. Any provision of this Agreement
---------------------
which is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Each party
acknowledges that money damages would be an inadequate remedy for any breach of
the provisions of this Agreement and agrees that the obligations of the parties
hereunder shall be specifically enforceable.
Section 5.15. References; Construction. References to any "Article"
-------------------------
or "Section" without more, are to Articles or Sections to or of this Agreement.
Unless otherwise expressly stated, "including", "includes" or "include" shall be
deemed followed by the words "without limitation".
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
OLIN CORPORATION,
by
-----------------------------------
Name: Johnnie M. Jackson, Jr.
Title: Vice President,
General Counsel and
Secretary
ARCH CHEMICALS, INC.,
by
-----------------------------------
Name: Sarah A. O'Connor
Title: Vice President
<PAGE>
EXHIBIT 12
OLIN CORPORATION AND CONSOLIDATED SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
(UNAUDITED)
<TABLE>
<CAPTION>
(IN MILLIONS)
YEARS ENDED DECEMBER 31,
-------------------------------------------------
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
Earnings:
Income from continuing operations before taxes $ 59 $ 147 $ 352 $ 137 $ 77
Add (deduct):
Equity in (income)loss of non-consolidated
affiliates - (1) (2) (2) 1
Dividends received from non-consolidated
affiliates - 1 1 1 1
Interest capitalized, net of amortization (1) - (2) - -
Fixed charges as described below 31 36 42 55 47
------ ------ ------ ------ ------
Total $ 89 $ 183 $ 391 $ 191 $ 126
====== ====== ====== ====== ======
Fixed charges:
Interest expense $ 18 $ 25 $ 30 $ 44 $ 37
Estimated interest factor in rent expense 13 11 12 11 10
------ ------ ------ ------ ------
Total $ 31 $ 36 $ 42 $ 55 $ 47
====== ====== ====== ====== ======
Ratio of earnings to fixed charges(a) 2.9 5.1 9.3 3.5 2.7
====== ====== ====== ====== ======
</TABLE>
(a) Computation of ratio of earnings to fixed charges has been restated to
reflect the spin-off of Arch Chemicals, Inc.
<PAGE>
EXHIBIT 21
SUBSIDIARIES OF OLIN CORPORATION/1/
(as of February 8, 1999)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------
Company Domestic % Ownership Jurisdiction
- ------------------------ ----------------- ------------
(Direct/Indirect)
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
A.J. Oster Caribe, Inc. 100 DE
- ------------------------------------------------------------------------------------------------------------
A.J. Oster Foils, Inc. 100 DE
- ------------------------------------------------------------------------------------------------------------
A.J. Oster West, Inc. 100 RI
- ------------------------------------------------------------------------------------------------------------
A O Holdings, Inc. 100 DE
- ------------------------------------------------------------------------------------------------------------
Aegis, Inc. 100 MA
- ------------------------------------------------------------------------------------------------------------
Bridgeport Brass Corporation/2/ 100 IN
- ------------------------------------------------------------------------------------------------------------
Bryan Metals, Inc./3/ 100 OH
- ------------------------------------------------------------------------------------------------------------
Hunt Trading Co. 100 MO
- ------------------------------------------------------------------------------------------------------------
Lectranator Corporation 100 OH
- ------------------------------------------------------------------------------------------------------------
Olin Asahi Interconnect Technologies 100 DE
- ------------------------------------------------------------------------------------------------------------
Olin Benefits Management, Inc./4/ 90 CA
- ------------------------------------------------------------------------------------------------------------
Olin Engineered Systems, Inc. 100 DE
- ------------------------------------------------------------------------------------------------------------
Olin Environmental Management, Inc./4/ 90 DE
- ------------------------------------------------------------------------------------------------------------
Olin Far East, Limited 100 DE
- ------------------------------------------------------------------------------------------------------------
Olin Financial Services Inc. 100 DE
- ------------------------------------------------------------------------------------------------------------
Olin Sunbelt, Inc. 100 DE
- ------------------------------------------------------------------------------------------------------------
Sunbelt Chlor Alkali Partnership 50 DE
- ------------------------------------------------------------------------------------------------------------
Nutmeg Insurance Limited 100 Bermuda
- ------------------------------------------------------------------------------------------------------------
Olin Asia Pacific Pte. Ltd. 100 Singapore
- ------------------------------------------------------------------------------------------------------------
Olin Australia Limited 100 Australia
- ------------------------------------------------------------------------------------------------------------
Olin Brass Japan, Inc. 100 Japan
- ------------------------------------------------------------------------------------------------------------
Olin Canada Inc. 100 Canada
- ------------------------------------------------------------------------------------------------------------
Olin Corporation N.Z. Limited 100 New Zealand
- ------------------------------------------------------------------------------------------------------------
Olin Export Trading Corporation 100 U.S. Virgin Islands
- ------------------------------------------------------------------------------------------------------------
Olin Hunt Specialty Products S.r.l. 100 Italy
- ------------------------------------------------------------------------------------------------------------
Olin Mexico S.A. de C.V. 100 Mexico
- ------------------------------------------------------------------------------------------------------------
Reductone Brasil Ltda. 100 Brazil
- ------------------------------------------------------------------------------------------------------------
Yamaha-Olin Metal Corporation 50 Japan
- ------------------------------------------------------------------------------------------------------------
</TABLE>
1 There are omitted from the following list the names of certain subsidiaries
which, if considered in the aggregate as a single subsidiary, would not
constitute a significant subsidiary.
2 d/b/a "Olin Brass, Indianapolis" and "Olin Brass, Indianapolis Facility" in
CA, IL, IN, NJ, NC, OH, PA, RI and TX.
3 d/b/a "Bryan Metals of Ohio" in NJ.
4 Class A shares, all of which are held directly and indirectly by Olin
Corporation, have the right to elect 4 directors. Class B shares, none of which
are held directly or indirectly by Olin Corporation, have the right to elect 1
director.
<PAGE>
EXHIBIT 23
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Olin Corporation:
We consent to the incorporation by reference in Registration Statements No.
33-4479 and No. 33-52771 on Form S-3 and Nos. 33-28593, 33-00159, 33-40346,
33-41202, 333-05097, 333-17629, 333-18619, 333-39305, 333-39303 and 333-71693
on Form S-8 of Olin Corporation of our report dated January 26, 1999, relating
to the consolidated balance sheets of Olin Corporation and subsidiaries as of
December 31, 1998 and 1997, and the related consolidated statements of income,
shareholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1998, which report is included in the December 31,
1998 annual report on Form 10-K of Olin Corporation.
KPMG LLP
Stamford, Connecticut
March 16, 1999
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Financial Statements contained in Item 8 of Form 10-K for the period ended
December 31, 1998 and is qualified in its entirety by reference to such
financial statements. Figures are rounded to the nearest 1,000,000 (except
EPS).
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 50
<SECURITIES> 25
<RECEIVABLES> 162
<ALLOWANCES> (6)
<INVENTORY> 199
<CURRENT-ASSETS> 517
<PP&E> 1,550
<DEPRECIATION> (1,075)
<TOTAL-ASSETS> 1,577
<CURRENT-LIABILITIES> 292
<BONDS> 230
0
0
<COMMON> 46
<OTHER-SE> 744
<TOTAL-LIABILITY-AND-EQUITY> 1,577
<SALES> 1,426
<TOTAL-REVENUES> 1,426
<CGS> 1,161
<TOTAL-COSTS> 1,161
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1
<INTEREST-EXPENSE> 17
<INCOME-PRETAX> 59
<INCOME-TAX> 21
<INCOME-CONTINUING> 38
<DISCONTINUED> 40
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 78
<EPS-PRIMARY> 1.64
<EPS-DILUTED> 1.63
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule has been restated as required by Item 601(c)(2)(iii) of
Regulation S-K to reflect the spin-off of Arch, Inc, effective February 8,
1999. Figures are rounded to the nearest 1,000,000 (except EPS).
</LEGEND>
<MULTIPLIER> 1000
<S> <C> <C> <C>
<PERIOD-TYPE> 9-MOS 6-MOS 3-MOS
<FISCAL-YEAR-END> DEC-31-1998 DEC-31-1998 DEC-31-1998
<PERIOD-START> JAN-01-1998 JAN-01-1998 JAN-01-1998
<PERIOD-END> SEP-30-1998 JUN-30-1998 MAR-31-1998
<CASH> 109 23 71
<SECURITIES> 0 0 0
<RECEIVABLES> 209 174 177
<ALLOWANCES> 0 0 0
<INVENTORY> 208 229 219
<CURRENT-ASSETS> 566 463 501
<PP&E> 1,587 1567 1,552
<DEPRECIATION> (1,086) (1,067) (1,045)
<TOTAL-ASSETS> 1,599 1,609 1,673
<CURRENT-LIABILITIES> 301 282 309
<BONDS> 230 231 262
0 0 0
0 0 0
<COMMON> 47 48 48
<OTHER-SE> 785 820 817
<TOTAL-LIABILITY-AND-EQUITY> 1,599 1,609 1,673
<SALES> 1,090 707 359
<TOTAL-REVENUES> 1,090 707 359
<CGS> 892 572 287
<TOTAL-COSTS> 892 572 287
<OTHER-EXPENSES> 0 0 0
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 14 9 5
<INCOME-PRETAX> 43 62 35
<INCOME-TAX> 14 22 12
<INCOME-CONTINUING> 29 40 23
<DISCONTINUED> 41 38 16
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> 70 78 39
<EPS-PRIMARY> 1.47 1.61 0.81
<EPS-DILUTED> 1.45 1.60 0.80
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
This schedule has been restated as required by Item 601 (c)(2)(iii) of
Regulation S-K to reflect the spin-off of Arch Chemicals, Inc., effective
February 8, 1999. Such Item does not require balance sheet information for the
fiscal year 1996 to be included and zero's have been inserted in lieu of such
information for such year. Figures are rounded to the neares 1,000,000 (except
EPS).
</LEGEND>
<RESTATED>
<S> <C> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR 9-MOS 6-MOS 3-MOS YEAR
<FISCAL-YEAR-END> DEC-31-1997 DEC-31-1997 DEC-31-1997 DEC-31-1997 DEC-31-1996
<PERIOD-START> JAN-01-1997 JAN-01-1997 JAN-01-1997 JAN-01-1997 JAN-01-1996
<PERIOD-END> DEC-31-1997 SEP-30-1997 JUN-30-1997 MAR-31-1997 DEC-31-1996
<CASH> 157 34 77 334 0
<SECURITIES> 28 0 0 0 0
<RECEIVABLES> 166 198 170 176 0
<ALLOWANCES> (6) 0 0 0 0
<INVENTORY> 208 212 217 207 0
<CURRENT-ASSETS> 602 547 551 820 0
<PP&E> 1,546 1,479 1,472 1,461 0
<DEPRECIATION> (1,029) (995) (976) (962) 0
<TOTAL-ASSETS> 1,707 1,704 1,725 1,968 0
<CURRENT-LIABILITIES> 329 317 302 510 0
<BONDS> 262 262 263 271 0
0 0 0 0 0
0 0 0 0 0
<COMMON> 49 49 50 51 0
<OTHER-SE> 830 848 865 882 0
<TOTAL-LIABILITY-AND-EQUITY> 1,707 1,704 1,725 1,968 0
<SALES> 1,499 1,118 733 366 1,758
<TOTAL-REVENUES> 1,499 1,118 733 366 1,758
<CGS> 1,203 896 595 294 1,396
<TOTAL-COSTS> 1,203 896 595 294 1,396
<OTHER-EXPENSES> 0 0 0 0 0
<LOSS-PROVISION> 1 0 0 0 1
<INTEREST-EXPENSE> 24 20 15 7 27
<INCOME-PRETAX> 147 107 65 37 352
<INCOME-TAX> 50 37 22 13 125
<INCOME-CONTINUING> 97 70 43 24 227
<DISCONTINUED> 56 48 37 18 53
<EXTRAORDINARY> 0 0 0 0 0
<CHANGES> 0 0 0 0 0
<NET-INCOME> 153 118 80 42 280
<EPS-PRIMARY> 3.02 2.32 1.56 0.81 5.34
<EPS-DILUTED> 3.00 2.30 1.55 0.80 5.27
</TABLE>
