exv10w3



 





Exhibit 10.3 


Sterling Chemicals, Inc.




Seventh Amended and Restated




Savings and Investment Plan




Dated as of July 17, 2006





 









 








Sterling Chemicals, Inc.




Seventh Amended and Restated

Savings and Investment Plan




Table of Contents




	 	 	 
	 	 	Page
	Article I — Purpose and Effect of Plan; Definitions and Interpretation 
	 	1
	 
	 	 
	Section 1.01 Purpose 
	 	1
	Section 1.02 Effect of Amendment and Restatement 
	 	1
	Section 1.03 Certain Defined Terms 
	 	2
	Section 1.04 Interpretation 
	 	10
	 
	 	 
	Article II — Participation 
	 	11
	 
	 	 
	Section 2.01 Eligibility 
	 	11
	Section 2.02 Service 
	 	11
	Section 2.03 Notice of Eligibility; Election of Participation 
	 	15
	 
	 	 
	Article III — Period of Participation 
	 	16
	 
	 	 
	Section 3.01 Change in Participant’s Status 
	 	16
	Section 3.02 Restricted Participation 
	 	16
	 
	 	 
	Article IV — Form of Participation 
	 	16
	 
	 	 
	Section 4.01 Participant Contribution Options 
	 	16
	Section 4.02 Employer Matching Contributions 
	 	16
	Section 4.03 Actual Contribution Percentage Tests 
	 	17
	Section 4.04 Adjustment to Actual Contribution Percentage Tests 
	 	20
	Section 4.05 Discontinuance and Resumption of Contributions 
	 	21
	 
	 	 
	Article V — Pre-Tax Contributions 
	 	21
	 
	 	 
	Section 5.01 Eligibility 
	 	21
	Section 5.02 Pre-Tax Contributions 
	 	21
	Section 5.03 Limitation on Pre-Tax Contributions 
	 	22
	Section 5.04 Deduction of Pre-Tax Contributions 
	 	23
	Section 5.05 Cessation of Pre-Tax Contributions 
	 	23
	Section 5.06 Distribution of Pre-Tax Contributions 
	 	23
	Section 5.07 Actual Deferral Percentage Tests 
	 	23
	Section 5.08 Adjustment to Actual Deferral Percentage Tests 
	 	25
	Section 5.09 Modification of Pre-Tax Contribution Percentage 
	 	26
	 
	 	 
	-i-







 









 






	 	 	 
	 	 	Page
	Article VI — After-Tax Contributions 
	 	26
	 
	 	 
	Section 6.01 Eligibility 
	 	26
	Section 6.02 After-Tax Contributions 
	 	27
	Section 6.02 Limitation on After-Tax Contributions 
	 	27
	Section 6.03 Deduction of After-Tax Contributions 
	 	27
	Section 6.04 Cessation of After-Tax Contributions 
	 	27
	Section 6.05 Modification of After-Tax Contribution Percentage 
	 	28
	 
	 	 
	Article VII — Limitations on Contributions 
	 	28
	 
	 	 
	Section 7.01 Maximum Annual Additions 
	 	28
	Section 7.02 Adjustment for Excessive Annual Additions 
	 	30
	 
	 	 
	Article VIII — Accounting 
	 	31
	 
	 	 
	Section 8.01 Participant Accounts 
	 	31
	Section 8.02 Rollovers From Qualified Plans 
	 	32
	Section 8.03 Adjustment of Accounts 
	 	32
	Section 8.04 Charging Payments and Distributions 
	 	32
	Section 8.05 Crediting After-Tax Contributions 
	 	32
	Section 8.06 Crediting Pre-Tax Contributions 
	 	33
	Section 8.07 Employer Matching Contributions Account 
	 	33
	Section 8.08 Cytec Accounts and Historical Employer Matching
Contributions Accounts 
	 	33
	Section 8.09 Allocation of Employer Matching Contributions and Forfeitures 
	 	33
	 
	 	 
	Article IX — The Funds 
	 	33
	 
	 	 
	Section 9.01 The Investment Funds 
	 	33
	Section 9.02 Investment Elections 
	 	34
	Section 9.03 Transfers Between Investment Funds 
	 	34
	Section 9.04 Company Stock Fund 
	 	34
	 
	 	 
	Article X — Payment of Account Balances 
	 	35
	 
	 	 
	Section 10.01 Retirement, Disability or Death 
	 	35
	Section 10.02 Resignation or Dismissal 
	 	35
	Section 10.03 Distribution Options 
	 	36
	Section 10.04 Limitations on Distributions 
	 	39
	Section 10.05 Designation of Beneficiaries 
	 	43
	Section 10.06 Forfeitures 
	 	44
	Section 10.07 Payment of Distribution Directly to Eligible Retirement Plan 
	 	46
	Section 10.08 Qualified Domestic Relations Order Distribution 
	 	47
	 
	 	 
	-ii-







 









 






	 	 	 
	 	 	Page
	Article XI — In-Service Withdrawals 
	 	47
	 
	 	 
	Section 11.01 General Withdrawals by Participants 
	 	47
	Section 11.02 Periodic Distributions 
	 	47
	Section 11.03 Form of Withdrawals 
	 	47
	Section 11.04 Charging and Allocations of Withdrawals and Periodic Distributions 
	 	48
	 
	 	 
	Article XII — Loans
	 	48
	 
	 	 
	Section 12.01 Loans 
	 	48
	Section 12.02 Loan Administration 
	 	48
	Section 12.03 Loan Eligibility 
	 	49
	Section 12.04 Loan Application 
	 	49
	Section 12.05 Terms and Conditions of Loans 
	 	49
	Section 12.06 Maximum Loan 
	 	49
	Section 12.07 Interest 
	 	49
	Section 12.08 Terms of Loan and Repayment 
	 	50
	Section 12.09 Risk of Loss 
	 	50
	Section 12.10 Source of Loan Funds 
	 	50
	Section 12.11 Debiting of Accounts 
	 	50
	Section 12.12 Accounting for Loans 
	 	51
	Section 12.13 Distributions While Loan Balance is Outstanding 
	 	51
	Section 12.14 Unpaid Balances at End of Sixty-Month Period 
	 	51
	Section 12.15 Hardship Withdrawal in Bankruptcy 
	 	52
	Section 12.16 Default 
	 	52
	Section 12.17 Reductions in Force 
	 	52
	Section 12.18 Loan Expenses 
	 	53
	Section 12.19 Performing Service in the Uniformed Services 
	 	53
	 
	 	 
	Article XIII — The Committee 
	 	54
	 
	 	 
	Section 13.01 Membership 
	 	54
	Section 13.02 Committee’s General Powers, Rights and Duties 
	 	54
	Section 13.03 Manner of Action 
	 	54
	Section 13.04 Information Required by Committee 
	 	55
	Section 13.05 Committee Decision Final 
	 	56
	Section 13.06 Review of Benefit Determinations 
	 	56
	Section 13.07 Uniform Rules 
	 	56
	 
	 	 
	Article XIV — Relating to the Employers 
	 	56
	 
	 	 
	Section 14.01 Action by Employers 
	 	56
	Section 14.02 Additional Employers 
	 	56
	Section 14.03 Restrictions as to Reversion of Trust Assets to Employers 
	 	56
	 
	 	 
	-iii-







 









 






	 	 	 
	 	 	Page
	Article XV — General Provisions 
	 	57
	 
	 	 
	Section 15.01 Notices 
	 	57
	Section 15.02 Waivers 
	 	57
	Section 15.03 Absence of Guaranty 
	 	57
	Section 15.04 No Employment Rights 
	 	57
	Section 15.05 Interests Not Transferable 
	 	57
	Section 15.06 Facility of Payment 
	 	57
	Section 15.07 Distribution of Payment 
	 	58
	Section 15.08 Evidence 
	 	58
	Section 15.09 Indemnity 
	 	58
	Section 15.10 Controlling State Law 
	 	59
	Section 15.11 Severability 
	 	59
	Section 15.12 Successors 
	 	59
	 
	 	 
	Article XVI — Amendment, Termination or Plan Merger 
	 	59
	 
	 	 
	Section 16.01 Amendment 
	 	59
	Section 16.02 Termination 
	 	59
	Section 16.03 Plan Merger or Consolidation 
	 	60
	Section 16.04 Notice of Amendment, Termination or Plan Merger 
	 	60
	Section 16.05 Distribution on Termination 
	 	60
	 
	 	 
	Article XVII — Top-Heavy Provisions 
	 	60
	 
	 	 
	Section 17.01 Determination of Top-Heavy 
	 	60
	Section 17.02 Minimum Allocations 
	 	61
	Section 17.03 Compensation Limitation 
	 	61
	Section 17.04 Repeal, Modification or Postponement of Top-Heavy Provisions 
	 	62
	Section 17.05 Minimum Vesting 
	 	62
	Section 17.06 Key Employee 
	 	62
	Section 17.07 Compensation 
	 	62
	 
	 	 
	Article XVIII — EGTRRA Provisions 
	 	63
	 
	 	 
	Section 18.01. Increase in Eligible Earnings Limit 
	 	63
	Section 18.02. Limitations On Contributions 
	 	63
	Section 18.03. Modification Of Top-Heavy Rules 
	 	64
	Section 18.04. Direct Rollovers of Plan Distributions 
	 	65
	Section 18.05. Rollovers From Other Plans 
	 	66
	Section 18.06. Repeal of Multiple Use Test 
	 	66
	Section 18.07. Elective Deferrals — Contribution Limitation 
	 	66
	Section 18.08. Catch-Up Contributions 
	 	67
	Section 18.09. Distribution Upon Severance From Employment 
	 	67
	 
	 	 
	-iv-







 









 





	 
	Exhibits








	 	 	Exhibit A — Investment Funds





					
	 	 	 	 	 
	 
	 	-v-
	 	 







 









 








Sterling Chemicals, Inc.




Seventh Amended and Restated

Savings and Investment Plan




Preliminary Statements





	 	A.	 	Sterling Chemicals, Inc. (the “Corporation”) established the Sterling
Chemicals, Inc. Savings and Investment Plan (the “Original Plan”) effective as of
August 1, 1986, in recognition of the contributions of its employees to the operation of
the Corporation.
	 
	 	B.	 	The Corporation has heretofore amended, and amended and restated, the Original Plan
from time to time (as amended immediately prior to the date hereof, the “Existing
Plan”).
	 
	 	C.	 	In connection with the acquisition of certain assets from Cytec Industries Inc. and
certain of its affiliates (collectively, “Cytec”) on January 31, 1997, the
Corporation assumed the sponsorship of a plan created by the spin-off of the accounts of
those participants under the Cytec Employees Savings and Profit Sharing Plan (the
“Cytec Plan”) who became employees of Sterling Fibers, Inc., a Delaware
corporation and a wholly-owned subsidiary of the Corporation, and such plan was merged
into the Existing Plan, as constituted on January 31, 1997.
	 
	 	D.	 	The Corporation desires to amend the Existing Plan in certain respects and restate
the Existing Plan as so amended in its entirety.





          Now, Therefore, the Corporation hereby amends and restates the Existing Plan,
effective as of July 17, 2006, to read in its entirety as follows:




Article I




Purpose and Effect of Plan; Definitions and Interpretation




          Section 1.01. Purpose. This Plan is maintained by the Corporation and certain of its
Affiliates to provide benefits for Eligible Employees and shall be administered for the exclusive
benefit of the Participants and their Beneficiaries.




          Section 1.02. Effect of Amendment and Restatement. The Existing Plan is hereby
amended and completely restated as set forth herein and all rights and benefits under this Plan
shall hereafter be determined under the terms and provisions hereof; provided, however, that the
amendment and restatement of the Existing Plan effected hereby shall not operate or be construed to
deprive any Participant of any “protected benefit” (within the meaning of Section 411(d)(6) of the
Code and the Regulations thereunder) that he or she may have had under the Existing Plan as in
effect immediately prior to this amendment and restatement. Further, this amendment and
restatement shall not operate or be construed to confer on or provide for any




 









 




Participant whose employment terminated for any reason prior to the Effective Date any additional
or different rights or benefits than those to which he or she may have been entitled under the
Existing Plan as in effect at the time his or her employment terminated, except as otherwise
specifically provided herein or required by Law.




          Section 1.03. Certain Defined Terms. Capitalized terms used in this Plan shall have
the following respective meanings, except as otherwise provided herein or as the context shall
otherwise require:





    “60% Test” has the meaning specified in Section 17.01(a)(i).




    “414(s) Compensation” means, with respect to any Participant for any Plan Year,
such Participant’s “compensation” (within the meaning of Section 414(s) of the Code and the
Regulations), as limited by Section 401(a)(17) of the Code and any other applicable limits.




    “415 Compensation” means, with respect to any Participant for any Limitation
Year, the “total compensation” (as defined in Section 415(c)(3) of the Code) actually paid to
such Participant by the Employers during such Limitation Year plus any amounts that the
Employers contributed on behalf of such Participant during such Limitation Year under any
salary reduction arrangement which are excludable from gross income under Sections 402(e)(3),
402(h)(1)(B), 403(b) or 125 of the Code and, effective January 1, 2001, amounts which are not
includable in the gross income of the employee by reason of Section 1232(f)(4) of the Code;
provided, however, that 415 Compensation in excess of the greater of $150,000 and the amount
specified by the Secretary of the Treasury in accordance with Section 401(a)(17) of the Code
(prorated for any Plan Year of less than 12 months) shall be disregarded.




    “Accounts” means, with respect to any Participant, such Participant’s After-Tax
Matched Contributions Account, After-Tax Supplemental Contributions Account, Cytec Accounts,
Employer Matching Contributions Account, Historical Employer Matching Contributions Account,
Pre-Tax Matched Contributions Account, Pre-Tax Supplemental Contributions Account or Rollover
Account.




    “Accounting Dates” means each day that the New York Stock Exchange is open for
trading.




    “Actual Contribution Percentage” means, with respect to any person or group as of
any date of determination, the Actual Contribution Percentage for the relevant person or group
at such time, as determined in accordance with Sections 4.03 and 4.04.




    “Actual Contribution Ratio” means, with respect to any Highly Compensated
Participant for any Plan Year, the ratio of (i) such Highly Compensated Participant’s Actual
Contribution Percentage to (ii) the greater of:



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	 	(A)	 	1.25 times the Actual Contribution Percentage for the Non-Highly
Compensated Participant group for the immediately preceding Plan Year; and
	 
	 	(B)	 	the lesser of (x) 2.0 times the Actual Contribution Percentage for the
Non-Highly Compensated Participant group for the immediately preceding Plan Year
and (y) the Actual Contribution Percentage for the Non-Highly Compensated
Participant group for the immediately preceding Plan Year plus two percentage
points.






     “Actual Deferral Percentage” means, with respect to the Highly Compensated
Participant group and the Non-Highly Compensated Participant group for any Plan Year, the
Actual Deferral Percentage for such group for such Plan Year, as determined in accordance with
Sections 5.07 and 5.08.




     “Actual Deferral Ratio” means, with respect to any Employee for any Plan Year,
the ratio of (i) the amount of Pre-Tax Contributions allocated to such Employee’s Pre-Tax
Contributions Accounts (unreduced by distributions made pursuant to Section 5.03) for such
Plan Year to (ii) such Employee’s 414(s) Compensation for such Plan Year.




     “Adjudication of Bankruptcy” has the meaning specified in Section 12.15.




     “Affiliate” means (i) any corporation that is a member of a “controlled group of
corporations” (as defined in Section 414(b) of the Code) that include the Corporation, (ii)
any trade or business (whether or not incorporated) that is under “common control” (as defined
in Section 414(c) of the Code) with the Corporation, (iii) any organization (whether or not
incorporated) that is a member of an “affiliated service group” (as defined in Section 414(m)
of the Code) that includes the Corporation and (iv) any other entity required to be aggregated
with the Corporation pursuant to the Regulations under Section 414(o) of the Code.




     “After-Tax Contributions” means After-Tax Matched Contributions and After-Tax
Supplemental Contributions.




     “After-Tax Contributions Accounts” means, with respect to any Participant, such
Participant’s After-Tax Matched Contributions Account and After-Tax Supplemental Contributions
Account.




     “After-Tax Matched Contributions” has the meaning specified in Section 6.02.




     “After-Tax Matched Contributions Account” has the meaning specified in Section
8.01(c).




     “After-Tax Supplemental Contributions” has the meaning specified in Section 6.02.




     “After-Tax Supplemental Contributions Account” has the meaning specified in
Section 8.01(d).



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     “Aggregate Excess Contributions” means, for any Plan Year:




	 	(i)	 	with respect to any Highly Compensated Participant, the amount of
Aggregate Excess Contributions for such Highly Compensated Participant for such
Plan Year, as determined pursuant to Section 4.03(d); and
	 
	 	(ii)	 	with respect to the Highly Compensated Participant group, the amount by
which (A) the aggregate amount of Employer contributions, After-Tax Contributions,
Excess Contributions recharacterized as After-Tax Contributions and any Qualified
Non-Elective Contributions or Elective Deferrals taken into account on behalf of
all Highly Compensated Participants for such Plan Year exceeds (B) the maximum
amount of such contributions permitted under the limitations of Section 4.03(a).






     “Annual Additions” means, with respect to any Participant for any Limitation
Year, the amount of Annual Additions for such Participant for such Limitation Year, as
determined in accordance with Article VII.




     “Beneficiaries” means the persons, trusts, estates or other entities to whom a
deceased Participant’s benefits under this Plan are payable.




     “Code” means the Internal Revenue Code of 1986, as amended from time to time.




     “Committee” means the committee established under Article XIII of this Plan.




     “Company Stock” means the common stock, par value $0.01 per share, of Sterling
Chemicals Holdings, Inc. (or its successor).




     “Company Stock Fund” has the meaning specified in Section 9.04.




     “Corporation” has the meaning specified in the Preliminary Statements hereof.




     “Correcting Contribution” has the meaning specified in Section 4.02(c).




     “Cytec” has the meaning specified in the Preliminary Statements hereof.




     “Cytec Accounts” has the meaning specified in Section 8.08.




     “Cytec Employees” has the meaning specified in Section 2.02(j).




     “Cytec Plan” has the meaning specified in the Preliminary Statements hereof.




     “Deferred Compensation” means, with respect to any Participant, the amount of
such Participant’s total Eligible Earnings which has been contributed to this Plan in
accordance with such Participant’s deferral election.



-4-









 






     “Direct Rollover” has the meaning specified in Section 10.07(d).




     “Distributee” has the meaning specified in Section 10.07(c).




     “Effective Date” means July 17, 2006.




     “Elective Deferral” has the meaning specified in Regulation 1.402(g)-I(b).




     “Eligible Earnings” means, with respect to any Participant for any applicable
period, such Participant’s cash compensation paid for services rendered to the Employers,
including any elective salary reduction pursuant to Sections 401(k) and 129 of the Code, but
only to the extent that such cash compensation does not exceed straight time pay plus overtime
plus shift differential, exclusive of all other forms of premium pay; provided, however, that
notwithstanding any other provision of this Plan to the contrary, (i) for Plan Years beginning
on or after January 1, 1997, the annual Eligible Earnings of each Participant taken into
account under this Plan shall not exceed $160,000, as adjusted for increases in the cost of
living in accordance with Section 401(a)(17) of the Code, (ii) the cost of living adjustment
in effect for a calendar year applies to any period, not exceeding 12 months, over which
Eligible Earnings is determined beginning in such calendar year and (iii) if a determination
period consists of fewer than 12 months, the annual compensation limit will be multiplied by a
fraction, the numerator of which is the number of months in the determination period, and the
denominator of which is 12.




     “Eligible Matched Earnings” means, with respect to any Participant for any
applicable period, such Participant’s cash compensation paid for services rendered to the
Employers, including any elective salary reduction pursuant to Sections 401(k) and 129 of the
Code, but only to the extent that such cash compensation does not exceed straight time pay,
exclusive of all other forms of premium pay.




     “Eligible Employee” means an Employee who is not (i) a member of a collective
bargaining unit, unless the bargaining agreement with the relevant Employer provides for his
coverage, (ii) regularly scheduled to work outside the United States or (iii) a leased
employee. A “leased employee” is any person (other than an employee of the recipient) who
pursuant to an agreement between the recipient and any other person (a “leasing organization”)
has performed services for the recipient (or for the recipient and related persons determined
in accordance with Section 414(n)(6) of the Code) on a substantially full time basis for a
period of at least one year, and such services are performed under primary direction or
control by the recipient.




     “Eligible Rollover Distribution” has the meaning specified in Section 10.07(a).




     “Eligible Retirement Plan” has the meaning specified in Section 10.07(b).




     “Employee” means a person who is a common law employee of the Corporation or any
Affiliate.



-5-









 






     “Employer Matching Contributions” means any contributions made by any Employer to
an Employer Matching Contributions Account pursuant to Section 4.02.




     “Employer Matching Contributions Account” has the meaning specified in Section
8.07.




     “Employers” means the Corporation, Sterling Pulp Chemicals, Inc., Sterling Pulp
Chemicals US, Inc., Sterling Fibers, Inc. and any other Affiliate which adopts this Plan.




     “ERISA” means Public Law 93-406, the Employee Retirement Income Security Act of
1974, as amended from time to time, or any comparable section or sections of future
legislation that amends, supplements or supersedes any applicable provisions of ERISA or any
other applicable regulations or court decisions thereunder.




     “Excess Contributions” means, with respect to any Highly Compensated Participant
for any Plan Year, the amount of Excess Contributions for such Highly Compensated Participant
for such Plan Year, as determined pursuant to Section 5.08(a).




     “Existing Plan” has the meaning specified in the Preliminary Statements hereof.




     “Extended Group” means all Affiliates and any other company, trade or business
which would be included in the definition of Affiliate pursuant to Section 415(h) of the Code.




     “Five Percent Owner” means any person who owns (or is considered as owning within
the meaning of Section 318 of the Code) more than 5% of the outstanding stock of an employer
or stock possessing more than 5% of the total combined voting power of all stock of an
employer or, in the case of an unincorporated business, any person who owns more than 1% of
the capital or profits interest in an employer; provided, however, that in determining
percentage ownership hereunder, employers that would otherwise be aggregated under Sections
414(b), (c), (m) and (o) of the Code shall be treated as separate employers.




     “Five Year Break in Service” means five or more consecutive One Year Breaks in
Service.




     “Forfeiture” has the meaning specified in Section 10.06(a).




     “Highly Compensated Employee” means, as of the date of determination, any
Employee or former Employee who is a “highly compensated employee” (as defined in Section
414(q) of the Code and the Regulations thereunder), including any Employee or former Employee
that:




	 	(i)	 	was at any time during the year of determination or the preceding year
a Five Percent Owner of the Employer; or




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	 	(ii)	 	for the preceding year:






	 	(A)	 	received 415 Compensation (as adjusted) from the Employer
in excess of $80,000; and
	 
	 	(B)	 	was in the group consisting of the top 20% of Employees
when ranked on the basis of 415 Compensation during such year.






     “Highly Compensated Participant” means any Highly Compensated Employee who is
eligible to participate in this Plan.




     “Historical Employer Matching Contributions Account” means, with respect to any
Participant, such Participant’s Employer Matching Contributions Account in effect immediately
prior to the amendment and restatement of the Existing Plan effected by this Plan.




     “Investment Funds” has the meaning specified in Section 9.01(a).




     “Hour of Service” has the meaning specified in Section 2.02(b).




     “Key Employee” has the meaning specified in Section 17.06.




     “Laws” means all laws, statutes, rules, regulations, ordinances, orders, writs,
injunctions or decrees and other pronouncements having the effect of law of any governmental
authority.




     “Layoff” means, with respect to any Participant, a layoff of such Participant
from employment with an Employer or Affiliate.




     “Limitation Year” means the “limitation year” for purposes of Section 415 of the
Code, which shall be a calendar year; provided, however, that for periods prior to January 1,
1996, the Limitation Year was a period of 12 months ending each September 30, with the period
commencing October 1, 1995 and ending December 31, 1995 being a short Limitation Year.




     “Loan Account” has the meaning specified in Section 12.12.




     “Loan Fund” has the meaning specified in Section 9.01(b).




     “Long Term Disability” means, with respect to any Participant, that such
Participant qualifies for long term disability benefits under a long term disability income
plan of an Employer or an Affiliate or if the Committee determines that such Participant is
unable to engage in any occupation or employment for remuneration or profit by reason of a
bodily injury or disease which has existed for six continuous months and which disability the
Committee presumes in its judgment will be permanent during the remainder of such



-7-









 







Participant’s life, exclusive of any disability resulting from service in the armed forces of
any country, resulting from warfare or acts of the public enemy, intentional self-inflicted
injury, willful misconduct or participation in any criminal or unlawful act. The Committee
shall have the responsibility for determining whether a Participant has become disabled and
may require medical proof of such disability, including requiring that the Participant submit
to medical examination no more frequently than semi-annually.




     “Lump Sum Distribution” has the meaning specified in Section 10.03(a).




     “Lump Sum Deferral Option” has the meaning specified in Section 10.03(b)(ii).




     “Non-Highly Compensated Participant” means any Participant who is not a Highly
Compensated Participant.




     “Normal Retirement Age” means, with respect to any Participant, the later of such
Participant’s 65th birthday or the fifth anniversary of the date such Participant’s
participation in this Plan commenced.




     “One Percent Owner” means any person who owns (or is considered as owning within
the meaning of Section 318 of the Code) more than one percent of the outstanding stock of an
employer or stock possessing more than one percent of the total combined voting power of all
stock of an employer or, in the case of an unincorporated business, any person who owns more
than one percent of the capital or profits interest in an employer; provided, however, that
(i) in determining percentage ownership hereunder, employers that would otherwise be
aggregated under Sections 414(b), (c), (m) and (o) of the Code shall be treated as separate
employers.




     “One Year Break in Service” has the meaning specified in Section 2.02(d).




     “Original Plan” has the meaning specified in the Preliminary Statements hereof.




     “Participant” means any person who has an Account balance under this Plan.




     “Plan” means this Seventh Amended and Restated Savings and Investment Plan, as
amended, supplemented or modified from time to time in accordance with its terms.




     “Plan Year” means a calendar year; provided, however, that for periods prior to
January 1, 1996, the Plan Year was a period of 12 months ending each September 30, with the
period commencing October 1, 1995 and ending December 31, 1995 being a short Plan Year.




     “Pre-Tax Contributions” means, with respect to any Participant, such
Participant’s Pre-Tax Matched Contributions and Pre-Tax Supplemental Contributions.



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     “Pre-Tax Contributions Accounts” means, with respect to any Participant, such
Participant’s Pre-Tax Matched Contributions Account and Pre-Tax Supplemental Contributions
Account.




     “Pre-Tax Matched Contributions” has the meaning specified in Section 5.02.




     “Pre-Tax Matched Contributions Account” has the meaning specified in Section
8.01(a).




     “Pre-Tax Supplemental Contributions” has the meaning specified in Section 5.02.




     “Pre-Tax Supplemental Contributions Account” has the meaning specified in Section
8.01(b).




     “Prior Employer” means The Monsanto Company.




     “Prior Plan” means the Monsanto Savings and Investment Plan.




     “Qualified Election” has the meaning specified in Section 10.05(c).




     “Qualified Non-Elective Contributions” has the meaning specified in Section
401(m)(4)(C) of the Code.




     “Regulations” means the Income Tax Regulations, as promulgated by the Secretary
of the Treasury or his or her delegate, and as amended from time to time.




     “Related Defined Contribution Plans” has the meaning specified in Section 7.02.




     “Retirement” means, with respect any Participant, such Participant’s ceasing to
be an Employee (i) on or after reaching his or her Normal Retirement Age or (ii) in connection
with his or her retirement under a defined benefit plan of Employer that is qualified under
Section 401(a) of the Code.




     “Rollover Account” has the meaning specified in Section 8.01(e).




     “Settlement Dates” means, with respect to any Participant, the Accounting Date
following the date on which such Participant’s employment with all Employers and Affiliates is
terminated for any reason, including retirement, disability, death, resignation or dismissal.




     “Standard Work Week” means (i) with respect to any regular, full-time Employee,
40 Hours of Service, and (ii) with respect to any Employee who is not a regular, full-time
Employee, the average number of hours which are regularly scheduled to be worked each week by
such Employee.




     “Top Heavy Plan” has the meaning specified in Section 17.01(a).



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     “Total and Permanent Disability” means, as determined by the Committee, a
Participant’s complete inability to substantially perform each of the material duties of any
gainful occupation for which the Participant is reasonably qualified by reason of his
education, training or experience, which condition is reasonably expected to continue for an
extended period of time.




     “Trust” means the trust established under the Trust Agreement.




     “Trust Agreement” means one or more trust agreements pursuant to which the
Trustee shall hold and invest the funds accumulated under this Plan and that implement and
form a part of this Plan.




     “Trust Fund” means any and all assets of this Plan which are held by the Trustee
in accordance with this Plan and the Trust Agreement.




     “Trustee” means one or more corporate trustees appointed by the Committee or
another Trustee who shall hold and invest the funds accumulated under this Plan and who shall
act in accordance with the Trust Agreement.




     “Vesting Computation Period” means each calendar year.




     “Vesting Percentage” means, with respect to any Participant, the percentage set
forth in the following table opposite the number of such Participant’s Years of Service with
the Employers and Affiliates:



	 	 	 	 	 
	Years of Service	 	Vesting Percentage
	Less than 1 year
	 	 	0	%
	1 year but less than 2 years
	 	 	20	%
	2 years but less than 3 years
	 	 	40	%
	3 years but less than 4 years
	 	 	60	%
	4 years but less than 5 years
	 	 	80	%
	5 years or more
	 	 	100	%





Notwithstanding the vesting schedule described above, each Eligible Employee who is active on
the payroll of Sterling Fibers, Inc., Sterling Pulp Chemicals US, Inc. or Sterling Pulp
Chemicals, Inc. (collectively, the “Subsidiaries”) on the date in December 2002 that
the Subsidiaries are sold to an unrelated third party shall be fully vested as of the sale
date.





     “Year of Service” has the meaning specified in Section 2.02(a).




     Section 1.04. Interpretation. In this Plan, unless a clear contrary intention
appears:




     (a) the words “hereof,” “herein” and “hereunder” and words of similar import refer to
this Plan as a whole and not to any particular provision of this Plan;



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     (b) reference to any gender includes each other gender and the neuter;




     (c) all terms defined in the singular shall have the same meanings in the plural and vice
versa;




     (d) all references to Articles and Sections shall be deemed to be references to the
Articles and Sections of this Plan;




     (e) the word “including” (and with correlative meaning “include”) means including,
without limiting the generality of any description preceding such term;




     (f) with respect to the determination of any period of time, the word “from” means “from
and including” and the words “to” and “until” each means “to but excluding”;




     (g) the captions and headings contained in this Plan shall not be considered or given any
effect in construing the provisions hereof if any question of intent should arise; and




     (h) reference to any Law means such Law as amended, modified, codified, reenacted,
supplemented or superseded in whole or in part, and in effect from time to time.



Article II




Participation




          Section 2.01. Eligibility. Each Employee who was eligible to participate in the
Existing Plan on the date immediately prior to the Effective Date shall continue to be eligible to
participate in this Plan. Thereafter, each Employee will be eligible to become a Participant (in
the manner described in Section 2.03) on any Accounting Date on which he or she is an Eligible
Employee. If an Eligible Employee does not elect to become a Participant as of the first
Accounting Date on which he or she is eligible to do so, such Eligible Employee may join this Plan
on any subsequent Accounting Date; provided, however, that he or she is then an Eligible Employee.




          Section 2.02. Service. In determining Years of Service, the following rules shall
apply:





       (a) A “Year of Service” means a period of twelve consecutive months during which
an Employee has completed at least 1,000 Hours of Service and, if an Employee was employed by
an Employer on August 1, 1986, Years of Service shall include Years of Service as determined
under the Prior Plan as of that date. A Participant who completes at least 1,000 Hours of
Service in both (i) the period beginning October 1, 1995 and ending September 30, 1996 and
(ii) the calendar year beginning January 1, 1996, shall be credited with two Years of Service
for purposes of vesting under this Plan.



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       (b) An “Hour of Service” means an hour for which an Employee is directly or
indirectly compensated by any Employer or Affiliate for the performance of duties for an
Employer or an Affiliate (including hours for which an Employee has been awarded back pay by
any Employer or Affiliate or by any governmental agency or judicial body to the extent such
hours are not otherwise treated as Hours of Service). Notwithstanding the preceding sentence,
the following special rules shall apply:




	 	(i)	 	To the extent not otherwise treated as Hours of Service, the following
shall constitute Hours of Service:






	 	(A)	 	overtime clock hours;
	 
	 	(B)	 	Hours of Service required to be taken into account to
satisfy federal military service Laws or to satisfy any other federal Laws;
	 
	 	(C)	 	hours of absence from active work because of regular paid
vacations or holidays;
	 
	 	(D)	 	hours of absence from active work because of occupational
illness or disability not yet determined to constitute Long Term Disability;
	 
	 	(E)	 	hours of absence from active work during the first 12
months of an absence due to non-occupational illness or disability not yet
determined to constitute Long Term Disability or due to a Layoff; provided,
however, that the Participant returns to work with an Employer or an
Affiliate at the expiration of such absence or Layoff;
	 
	 	(F)	 	hours during an approved leave of absence or such shorter
period during such leave of absence as may be specified by an Employer; and
	 
	 	(G)	 	for any Employee who immediately prior to August 1, 1986
was employed by the Prior Employer, Hours of Service shall include those
hours which were recognized and counted under the Prior Plan, as adopted and
in effect on July 31, 1986.






	 	(ii)	 	During the absences from employment during which no duties are
performed for any Employer or Affiliate as specified above, an Employee will be
credited with the number of Hours of Service such Employee would have worked for an
Employer or Affiliate during a Standard Work Week if such Employee had reported for
work during each week of absence, subject, however, to Section 2.02(b)(iii). No
more than eight Hours of Service shall be credited for any day of absence and no
more than 1,000 Hours of Service shall be awarded under this Section in any one
Vesting Computation Period.
	 
	 	(iii)	 	No Hours of Service shall be credited to an Employee:










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	 	(A)	 	during any period of Layoff in excess of 12 months;
	 
	 	(B)	 	during any absence for which the Employee performs no
duties and is solely compensated under, or by a plan established pursuant to,
applicable workers’ compensation laws, unemployment compensation or
disability income Laws of any state;
	 
	 	(C)	 	during any period during which an Employee or former
Employee is in receipt of retirement benefits under any plan established by
any Employer or Affiliate (or to which any such entity contributes) unless or
until such Employee or former Employee ceases drawing such benefits and
performs services for any Employer or Affiliate;
	 
	 	(D)	 	for any payment made solely to reimburse an Employee for
medical or medically related benefits;
	 
	 	(E)	 	for any payment made on account of pay in lieu of vacation;
	 
	 	(F)	 	for any Hours of Service in excess of the Standard Work
Week (pro-rated) on account of payments made as back-pay awards or agreement
in amounts in excess of the standard rate of compensation which would have
been made if the Employee had actually worked during the period at issue; or
	 
	 	(G)	 	for any Hours of Service in excess of the Standard Work
Week (pro-rated) on account of any other payment made during an absence set
forth in this Section.






	 	(iv)	 	Effective May 1, 1996, in determining the Hours of Service of any
Employee, such Employee will be credited with 95 Hours of Service for each
semi-monthly payroll period in which such Employee is directly or indirectly
compensated by any Employer or Affiliate for the performance of duties for any
Employer or Affiliate.
	 
	 	(v)	 	Once it is determined that an Employee should be credited with an Hour
of Service, such Hour of Service shall be credited to the computation period or
periods in which the duties are performed or are deemed to have been performed or
to which the payment pertains; provided, however, that, except as may be otherwise
provided in this Section 2.02 for certain specified types of absences, no more than
501 Hours of Service shall be credited during any absence from employment during
which no services are rendered, notwithstanding the fact that the Employee may have
been deemed to have performed services or for which payments are due.






     (c) If an Employee’s employment with all of the Employers and Affiliates terminates and
such Employee is later re-employed without incurring a One Year Break in



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Service, such Employee’s Years of Service both before employment termination and after
reemployment shall be aggregated for purposes of this Plan.




     (d) For purposes of this Plan, a “One Year Break in Service” means a Vesting
Computation Period in which an Employee completes not more than 500 Hours of Service, except
where such Vesting Computation Period is the year in which the Employee either:




	 	(i)	 	first commenced employment with any Employer or Affiliate and
continuously accrued Hours of Service from the date of hire to the end of such
Vesting Computation Period; or
	 
	 	(ii)	 	terminated all further employment with the Employers and Affiliates
following an unbroken, continuous accrual of Hours of Service from the first day of
such Vesting Computation Period to the date of such termination.






In determining whether a One Year Break in Service has occurred, Hours of Service will be
credited pursuant to the normal method of crediting Hours of Service under this Plan, not to
exceed 501 Hours of Service due to any period of absence from employment due to:




	 	(A)	 	the pregnancy of the Participant;
	 
	 	(B)	 	the birth of a child of the Participant;
	 
	 	(C)	 	the placement of a child with the Participant in connection with the
adoption of such child by such Participant; or
	 
	 	(D)	 	the care of such child by the Participant immediately following such
birth or placement.






The Hours of Service to be credited under this paragraph (d) shall only be credited in the
Vesting Computation Period in which the absence from work begins, if a Participant would be
prevented from incurring a One Year Break in Service solely because the period of absence is
treated as Hours of Service or, in any other case, in the immediately following Vesting
Computation Period. No credit for such enumerated absences shall be given pursuant to this
paragraph (d) unless the Participant furnishes the Committee with such timely information as
the Committee may reasonably require to establish that the absence and the length of the
absence was due to an enumerated reason.




       (e) The termination of an Employee’s employment with one Employer or Affiliate will not
interrupt the continuity of such Employee’s employment if, concurrently with or immediately
after such termination, such Employee is employed by one or more other Employers or
Affiliates.




       (f) If and to the extent the Committee so provides, the last continuous period of an
Employee’s service with any corporation or other entity, the stock, assets or business of
which is acquired by an Employer (whether by merger, consolidation, purchase of assets or



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otherwise), and any predecessor thereto designated by the Corporation, will be considered as
service with the Employers if such Employee becomes employed by one or more of the Employers.




       (g) For purposes of this Section 2.02, if an Employee had a prior period or periods of
service with an Affiliate that has not adopted this Plan, such period or periods of service
with the Affiliate will be considered as service with an Employer.




       (h) A period of concurrent service with two or more Employers under this Plan or
Affiliates that have not adopted this Plan will be considered as employment with only one of
them during that period.




       (i) If an Employee incurs a Five Year Break in Service and is subsequently re-employed by
any Employer or Affiliate, such Employee’s Years of Service after such Five Year Break in
Service shall not be taken into account when determining his or her Vesting Percentage
applicable to the portion of his or her Employer Matching Contributions Account balance which
is attributable to his or her employment prior to such Five Year Break in Service. However,
such an Employee’s Years of Service before and after his Five Year Break in Service shall be
aggregated for purposes of determining his or her Vesting Percentage applicable to the portion
of his or her Employer Matching Contributions Account balance which is attributable to
employment subsequent to such Five Year Break in Service.




       (j) Employees of Cytec who became Employees on February 1, 1997 (“Cytec
Employees”) shall receive credit for all purposes under this Plan for all service that was
credited under the Cytec Plan as of January 31, 1997.




       (k) Notwithstanding any provision of this Plan to the contrary, contributions, benefits
and service credit with respect to qualified military service will be provided in accordance
with Section 414(u) of the Code.



          Section 2.03. Notice of Eligibility; Election of Participation. The Committee will
notify an Employee of the circumstances under which such Employee will be eligible to participate
in this Plan and the steps required for participation. The Committee will also notify each person
that first becomes an Eligible Employee on or after October 2, 2000 that, unless and until the
earlier of (a) such Employee making an election to participate in this Plan at a specified rate or
to not participate in this Plan and (b) such Employee ceasing to be an Eligible Employee, the
Corporation will deduct 3% of such Employee’s Eligible Compensation from each of such Employee’s
paychecks, and contribute such amounts to this Plan on behalf of such Employee as Pre-Tax
Contributions (with such amounts being invested in the Guaranteed Income Fund until redirected into
another Investment Fund by the relevant Participant).




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Article III




Period of Participation




          Section 3.01. Change in Participant’s Status. If a Participant ceases to be an
Eligible Employee, such Participant shall not be entitled to make any additional contributions to
this Plan unless such Participant again becomes an Eligible Employee.




          Section 3.02. Restricted Participation. When payment of all of a Participant’s
benefits is not made at his or her Settlement Date, such Participant or, in the event of his or her
death, such Participant’s Beneficiary will be considered as a Participant for all purposes of this
Plan, except that:





       (a) a Beneficiary of a deceased Participant cannot designate a beneficiary under Section
10.05;




       (b) a Beneficiary of a deceased Participant shall not be entitled to retain Accounts in
this Plan except to the extent permitted by Section 10.04(c);




       (c) such persons cannot make contributions to this Plan; and




       (d) such persons cannot take out loans or make in-service withdrawals that are available
only to Participants who are Employees.



Article IV




Form of Participation




          Section 4.01. Participant Contribution Options. Each Participant who is an Eligible
Employee shall have the right to make Pre-Tax Contributions pursuant to Article V, After-Tax
Contributions pursuant to Article VI or both.




          Section 4.02. Employer Matching Contributions. (a) Each Employer shall make Employer
Matching Contributions to this Plan, determined by the Pre-Tax Contributions made by such Employer
on behalf of the Participants to the Pre-Tax Contributions Accounts or the After-Tax Contributions
made by such Employer on behalf of the Participants to the After-Tax Contributions Accounts as
specified herein. Employer Matching Contributions with respect to any Participant shall first be
used to match such Participant’s Pre-Tax Contributions. All Employer Matching Contributions made
to this Plan shall be allocated to such Participant’s Employer Matching Contributions Account.




          (b) Except as otherwise provided in Article V or Article VI, for each pay period, the
Employers will make Employer Matching Contributions under this Plan in an amount equal to:





       (i) for Participants who (A) are part of a collective bargaining unit and who were hired
prior to June 1, 2004 or (B) are rehired by an Employer on or after June 1, 2004 and



-16-









 







who must participate or accrue a benefit in the Sterling Chemicals, Inc. Amended and Restated
Hourly Paid Employees’ Pension Plan or the Sterling Chemicals, Inc. Amended and Restated
Salaried Employees’ Pension Plan after they are rehired on or after June 1, 2004 due to the
requirements of the break-in-service rules under Section 410(a)(5) of the Code or Section
202(b) of ERISA with respect to service performed on or after June 1, 2004, 50% of the Pre-Tax
Matched Contributions and After-Tax Matched Contributions made for such pay period minus the
aggregate amounts of any outstanding Forfeitures; and




       (ii) for all other Participants, 100% of the Pre-Tax Matched Contributions and After-Tax
Matched Contributions made for such pay period minus the aggregate amounts of any outstanding
Forfeitures.


Employer Matching Contributions for any pay period shall be paid to the Trustee at the same time
and in the same manner as Pre-Tax Matched Contributions and After-Tax Matched Contributions are
paid to the Trustee.




          (c) In addition to the Employer Matching Contributions described in paragraph (b) above, the
Employers may make such additional contributions to this Plan as may be necessary to correct any
error which occurs in the administration of this Plan (a “Correcting Contribution”). Any
Correcting Contribution which relates to correction of an investment loss occasioned by the
administration of the Accounts under the Plan shall not constitute an Annual Addition to this Plan
under Article VII and shall not be deemed Employer Matching Contributions for purposes of this
Section or Sections 8.07, 8.09 and 9.02 hereof. A Correcting Contribution which relates to errors
made by the Corporation in crediting the proper amount of Employer Matching Contributions to a
Participant’s account for any Plan Year under this Section or Sections 8.07, 8.09 or 9.02 shall be
attributable to the Annual Addition for the Plan Year to which such Correcting Contribution relates
and which may not be the Plan Year in which such Correcting Contribution is made.




          (d) Notwithstanding anything in Article V, VII or VII to the contrary, the Employers shall not
make Employer Matching Contributions in an amount in excess of the amount which will be deductible
by the Employers under Section 404 of the Code for the taxable year with respect to which such
contributions are made.




          Section 4.03. Actual Contribution Percentage Tests. (a) The Actual Contribution
Percentage for the Highly Compensated Participant group for any Plan Year shall not exceed the
greater of:





       (i) 1.25 times the Actual Contribution Percentage for the Non-Highly Compensated
Participant group for the immediately preceding Plan Year; and




       (ii) the lesser of (A) 2.0 times the Actual Contribution Percentage for the Non-Highly
Compensated Participant group for the immediately preceding Plan Year and (B) the Actual
Contribution Percentage for the Non-Highly Compensated Participant group for the immediately
preceding Plan Year plus two percentage points;



-17-









 




provided, however, that in order to prevent the multiple use of the alternative method described in
clause (ii) above and Section 401(m)(9)(A) of the Code, any Highly Compensated Participant eligible
to make Elective Deferrals pursuant to any cash or deferred arrangement maintained by any Employer
and to make Employee contributions or to receive matching contributions under this Plan or any
other plan maintained by any Employer shall have his or her Actual Contribution Ratio reduced
pursuant to Regulation 1.401(m)-2. The provisions of Section 401(m) of the Code and Regulations
1.401(m)-1(b) and 1.401(m)-2 are incorporated herein by reference.




          (b) For purposes of this Section 4.03 and Section 4.04, the Actual Contribution Percentage for
a Plan Year with respect to the Highly Compensated Participant group and the Non-Highly Compensated
Participant group is the average of the ratios (calculated separately for each Participant in each
group) of:





       (i) the sum of (A) all Employer Matching Contributions made pursuant to Section 4.02 plus
(B) all After-Tax Contributions made pursuant to Section 6.02 plus (C) all Excess
Contributions characterized as After-Tax Contributions pursuant to Section 5.08(a) on behalf
of such Participant (determined with respect to the current Plan Year for a Highly Compensated
Participant and with respect to the immediately preceding Plan Year for a Non-Highly
Compensated Participant); to




       (ii) such Participant’s 414(s) Compensation for such Plan Year.



          (c) In the event that the Actual Contribution Percentage test under Section 4.03(a) for any
Plan Year is not satisfied, the Actual Contribution Ratio of the Highly Compensated Participant
with the highest Actual Contribution Ratio will be reduced (or if two or more Highly Compensated
Participants have the highest Actual Contribution Ratio, the Actual Contribution Ratios of all of
such Highly Compensated Participants will be reduced pro rata) by reducing the amount of After-Tax
Contributions and Employer Matching Contributions made by or on behalf such Highly Compensated
Participant in the order specified in Section 4.04(a) until either the Actual Contribution
Percentage test is satisfied or such Highly Compensated Participant’s Actual Contribution Ratio is
equal the Actual Contribution Ratio of the Highly Compensated Participant(s) with the next highest
Actual Contribution Ratio. This process shall be repeated until the Actual Contribution Percentage
test under Section 4.03(a) is satisfied for such Plan Year. The amount of “Aggregate Excess
Contributions” for any Highly Compensated Participant is equal to the sum of these hypothetical
reductions multiplied, in each case, by such Highly Compensated Participant’s compensation.




          (d) The distribution (or Forfeiture, if applicable) of Aggregate Excess Contributions shall be
made on the basis of the respective amounts attributable to each Highly Compensated Participant.
The Highly Compensated Participants subject to actual distribution or Forfeiture in any Plan Year
shall be determined using the “dollar leveling method” starting with the Highly Compensated
Participant with the greatest dollar amount of employee contributions for such Plan Year and
continuing until the amount of the Aggregate Excess Contributions has been accounted for.




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          (e) For purposes of determining Actual Contribution Percentage and the amount of Aggregate
Excess Contributions pursuant to Section 4.03(d), only Employer Matching Contributions (excluding
those Forfeited pursuant to Section 4.04(a)) contributed to this Plan prior to the end of the
succeeding Plan Year shall be considered. In addition, the Committee may elect to take into
account, with respect to Employees eligible to have Employer Matching Contributions or After-Tax
Contributions allocated to their accounts, Elective Deferrals and Qualified Non-Elective
Contributions contributed to any plan maintained by any Employer. Such Elective Deferrals and
Qualified Non-Elective Contributions shall be treated as Employer Matching Contributions subject to
Regulation 1.401(m)- I (b)(5), which is incorporated herein by reference. However, the Plan Year
must be the same as the plan year of the plan to which such Elective Deferrals and Qualified
Non-Elective Contributions are made. Qualified Non-Elective Contributions shall be non-forfeitable
when made and subject to the provisions of Section 5.06.




          (f) For purposes of this Section 4.03 and Sections 401(a)(4), 410(b) and 401(m) of the Code,
if two or more plans of the Employers to which matching contributions, Employee contributions or
both are made are treated as one plan for purposes of Sections 401(a)(4) or 410(b) of the Code
(other than the average benefits test under Section 410(b)(2)(A)(ii) of the Code), such plans shall
be treated as one plan. In addition, two or more plans of the Employers to which matching
contributions, Employee contributions or both are made may be considered as a single plan for
purposes of determining whether or not such plans satisfy Sections 401(a)(4), 410(b) and 401(m) of
the Code. In such a case, the aggregated plans must satisfy this Section and Sections 401(a)(4),
410(b) and 401(m) of the Code as though such aggregated plans were a single plan. Plans may be
aggregated under this paragraph (f) only if they have the same plan year.




          (g) If a Highly Compensated Participant is a participant under two or more plans which are
maintained by the Employers to which matching contributions, Employee contributions or both are
made, all such contributions on behalf of such Highly Compensated Participant shall be aggregated
for purposes of determining such Highly Compensated Participant’s Actual Contribution Ratio.
However, if the plans have different plan years, this paragraph (g) shall be applied by treating
plans ending with or within the same calendar year as a single plan. For purposes of this
paragraph (g), contributions under a plan that is an employee stock ownership plan described in
Section 4975(e)(7) or 409 of the Code may not be aggregated with contributions under a plan that is
not an employee stock ownership plan.




          (h) For purposes of this Section 4.03 and Section 4.04, the Highly Compensated Participants
and the Non-Highly Compensated Participants for any Plan Year shall include any Employee eligible
to have Employer Matching Contributions or After-Tax Contributions allocated to his or her account
for such Plan Year. For purposes of this Section 4.03, an Employee who is eligible to have
Employer Matching Contributions allocated to his or her account includes (i) any Employee who would
be a Participant but for the failure to make required contributions, (ii) any Employee whose
eligibility to receive Employer Matching Contributions has been suspended because of an election
(other than certain one-time elections) not to participate, a distribution or a loan, (iii) any
Employee who cannot receive Employer Matching Contributions because of the limits under Section 415
of the Code and (iv) any Employee who, although otherwise eligible, does not elect to participate
in this Plan.




-19-









 





          Section 4.04. Adjustment to Actual Contribution Percentage Tests. (a) In the event
that the Actual Contribution Percentage for the Highly Compensated Participant group exceeds the
Actual Contribution Percentage for the Non-Highly Compensated Participant group pursuant to Section
4.03(a), the Committee (on or before the 15th day of the third month following the end of the Plan
Year, but in no event later than the close of the following Plan Year) shall direct the Trustee to
distribute to each Highly Compensated Participant whose Actual Contribution Ratio was
hypothetically reduced pursuant to Section 4.03(c), the vested portion of such Highly Compensated
Participant’s Aggregate Excess Contributions (and income allocable to such contributions) and, if
forfeitable, forfeit any non-vested Aggregate Excess Contributions of such Highly Compensated
Participant attributable to Employer Matching Contributions (and income allocable to such
Forfeitures). The distribution and/or Forfeiture of Aggregate Excess Contributions shall be made
in the following order:





       (i) first, After-Tax Contributions including Excess Contributions recharacterized as
After-Tax Contributions pursuant to Section 5.08(a); and




       (ii) second, Employer Matching Contributions.


With respect to the distribution of After-Tax Contributions pursuant to clause (i) above, such
distribution shall be made first from unmatched After-Tax Contributions and, thereafter, from
After-Tax Contributions which are matched. Employer Matching Contributions which relate to such
After-Tax Contributions shall be forfeited.




          (b) Any distribution and/or Forfeiture of less than the entire amount of Aggregate Excess
Contributions (and income) shall be treated as a pro rata distribution and/or Forfeiture of
Aggregate Excess Contributions and income thereon. Distribution of Aggregate Excess Contributions
shall be designated by the Employer as a distribution of Aggregate Excess Contributions (and
income). Forfeitures of Aggregate Excess Contributions shall be treated in accordance with Section
8.09.




          (c) Aggregate Excess Contributions attributable to amounts other than After-Tax Contributions,
including forfeited matching contributions, shall be treated as Employer contributions for purposes
of Sections 404 and 415 of the Code, even if distributed from this Plan. Forfeited matching
contributions that are reallocated to Participants’ Accounts for the Plan Year in which the
Forfeiture occurs shall be treated as an Annual Addition for the Participants to whose Accounts
they are reallocated and for the Participants from whose Accounts they are forfeited.




          (d) The determination of the amount of Aggregate Excess Contributions with respect to any Plan
Year shall be made after first determining the Excess Contributions, if any, to be treated as
After-Tax Contributions due to recharacterization for the Plan Year of any other “qualified cash or
deferred arrangement” (as defined in Section 401(k) of the Code) maintained by the Employer that
ends with or within the Plan Year or which are treated as After-Tax Contributions due to
recharacterization pursuant to Section 5.08(a).




-20-









 





          (e) If, during a Plan Year, the projected aggregate amount of Employer Matching Contributions,
After-Tax Contributions and Excess Contributions to be recharacterized as After-Tax Contributions
to be allocated to all Highly Compensated Participants under this Plan would, by virtue of the
tests set forth in Section 4.03(a), cause this Plan to fail such tests, then the Committee may
automatically reduce, in the order provided in Section 4.03(d), each affected Highly Compensated
Participant’s projected share of such contributions by an amount necessary to satisfy one of the
tests set forth in Section 4.03(a).




          Section 4.05. Discontinuance and Resumption of Contributions. Effective the first day
of the next available payroll period, a Participant may:





       (a) elect to discontinue making After-Tax Contributions in accordance with Section 6.02
and have his or her Employer discontinue making Pre-Tax Contributions on his or her behalf in
accordance with Section 5.02; or




       (b) elect to resume making After-Tax Contributions and have his or her Employer resume
making Pre-Tax Contributions on his or her behalf.


A resumption of contributions may only be made if the Participant then meets the eligibility
requirements of Article II. The Participant’s specified Investment Funds (both After-Tax
Contributions and Pre-Tax Contributions) and the percentage thereof, and his or her Beneficiary
designation in effect at the time of discontinuance, shall remain the same unless the Participant
has elected to make such changes as provided in this Plan.




Article V




Pre-Tax Contributions




          Section 5.01. Eligibility. Each Participant who is an Eligible Employee shall have
the right to make Pre-Tax Contributions to this Plan.




          Section 5.02. Pre-Tax Contributions. Each Participant shall specify the amount by
which his or her Eligible Earnings shall be reduced by his or her Employer and contributed to this
Plan on his or her behalf; provided, however, that such Participant may not direct that more than
20% of his or her Eligible Earnings be contributed to this Plan as Pre-Tax Contributions or
After-Tax Contributions, on a combined basis. For purposes of this Plan, the term “Pre-Tax
Matched Contributions” means:





       (i) for Participants who (A) are part of a collective bargaining unit and who were hired
prior to June 1, 2004 or (B) are rehired by an Employer on or after June 1, 2004 and who must
participate or accrue a benefit in the Sterling Chemicals, Inc. Amended and Restated Hourly
Paid Employees’ Pension Plan or the Sterling Chemicals, Inc. Amended and Restated Salaried
Employees’ Pension Plan after they are rehired on or after June 1, 2004 due to the
requirements of the break-in-service rules under Section 410(a)(5) of the Code or Section
202(b) of ERISA with respect to service performed on or after June 1,



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       2004, 7% of the Participant’s contributions based upon his or her Eligible Matched Earnings;
and




       (ii) for all other Participants, 6% of the Participant’s contributions based upon his or
her Eligible Matched Earnings.


Pre-Tax Matched Contributions shall be contributed by the Employer on behalf of a Participant to
such Participant’s Pre-Tax Matched Contributions Account. All remaining Pre-Tax Contributions made
by the Employer on behalf of such Participant shall be considered “Pre-Tax Supplemental
Contributions” and shall be contributed by the Employer on behalf of such Participant to such
Participant’s Pre-Tax Supplemental Contributions Account.




          Section 5.03. Limitation on Pre-Tax Contributions. (a) Notwithstanding anything to
the contrary contained in Sections 5.01 or 5.02, no Employer may make any Pre-Tax Contributions on
behalf of any Participant for any pay period which will cause the limitations of either Section
5.07 or 7.01 to be exceeded. A Participant’s Deferred Compensation made pursuant to this Plan and
all other plans, contracts or arrangements of the Employers and Affiliates shall not exceed, during
any taxable year of the Participant, the limitation imposed by Section 402(g) of the Code, as in
effect at the beginning of such taxable year. The dollar limitation shall be adjusted annually
pursuant to the method provided in Section 415(d) of the Code in accordance with the Regulations.




          (b) If a Participant’s Deferred Compensation under this Plan, together with any Elective
Deferrals under another “qualified cash or deferred arrangement” (as defined in Section 401(k) of
the Code), a “simplified employee pension” (as defined in Section 408(k) of the Code), a “salary
reduction arrangement” (within the meaning of Section 3121(a)(5)(D) of the Code), a “deferred
compensation plan” under Section 457 of the Code or a trust described in Section 501(c)(18) of the
Code, cumulatively exceed the limitation imposed by Section 402(g) of the Code (as adjusted
annually in accordance with the method provided in Section 415(d) of the Code pursuant to the
Regulations) for such Participant’s taxable year, such Participant may, not later than March 1
following the close of such taxable year, notify the Committee in writing of such excess and
request that his or her Deferred Compensation under this Plan be reduced by an amount specified by
such Participant. In such event, the Committee may direct the Trustee to distribute such excess
amount, and any income allocable to such amount, to such Participant not later than the first April
15th following the close of such Participant’s taxable year. Any distribution of less than the
entire amount of excess Deferred Compensation and income shall be treated as a pro rata
distribution of excess Deferred Compensation and income. The amount distributed shall not exceed
such Participant’s Deferred Compensation under this Plan for such taxable year. Any distribution
on or before the last day of such Participant’s taxable year must satisfy each of the following
conditions:





       (i) the distribution must be made after the date on which this Plan received the excess
Deferred Compensation;




       (ii) such Participant shall designate the distribution as excess Deferred Compensation;
and



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       (iii) this Plan must designate the distribution as a distribution of excess Deferred
Compensation.


Any distribution made pursuant to this Section 5.03 shall be made first from unmatched Deferred
Compensation and, thereafter, simultaneously from Deferred Compensation which is matched and
matching contributions which relate to such Deferred Compensation; provided, however, that any such
matching contributions which are not vested shall be forfeited in lieu of being distributed.




          Section 5.04. Deduction of Pre-Tax Contributions. The contributions made by an
Employer on behalf of a Participant in accordance with Section 5.02 shall be made at regular
payroll intervals and shall be paid to the Trustee as soon as practicable after the end of the
payroll period for which such contributions were made. The Employer shall collect and withhold any
Social Security, federal or state unemployment taxes, other payroll taxes and any state or local
income or earnings taxes which are imposed on Pre-Tax Contributions and shall pay such amounts to
the applicable government authorities in a timely manner.




          Section 5.05. Cessation of Pre-Tax Contributions. Except as otherwise provided
herein, no contributions shall be made for any pay period which begins after a Participant ceases
to be an Eligible Employee.




          Section 5.06. Distribution of Pre-Tax Contributions. Amounts held in a Participant’s
Pre-Tax Contributions Accounts may not be distributable prior to the earlier of:





       (a) such Participant’s retirement, disability, death or separation from service;




       (b) such Participant’s attainment of age 591/2;




       (c) termination of this Plan without establishment of a “successor plan” (as described in
Regulation 1.401(k)-1(d)(3)) by any Employer or Affiliate;




       (d) the date of the sale by an Employer to an entity that is not an Affiliate of
substantially all of the assets of an Employer’s trade or business (within the meaning of
Section 409(d)(2) of the Code) with respect to a Participant who continues employment with the
entity acquiring such assets; or




       (e) the date of the sale by an Employer or Affiliate of its interest in a subsidiary
(within the meaning of Section 409(d)(3) of the Code) to an entity which is not an Affiliate
with respect to a Participant who continues employment with such subsidiary.



          Section 5.07. Actual Deferral Percentage Tests. (a) For each Plan Year, the annual
allocation derived from Pre-Tax Contributions to a Participant’s Pre-Tax Contributions Accounts
shall satisfy one of the following tests:




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       (i) the Actual Deferral Percentage for the Highly Compensated Participant group for such
Plan Year shall not be more than the Actual Deferral Percentage of the Non-Highly Compensated
Participant group for the immediately preceding Plan Year multiplied by 1.25, or




       (ii) the excess of the Actual Deferral Percentage for the Highly Compensated Participant
group for such Plan Year over the Actual Deferral Percentage for the Non-Highly Compensated
Participant group for the immediately preceding Plan Year shall not be more than two
percentage points. Additionally, the Actual Deferral Percentage for the Highly Compensated
Participant group for such Plan Year shall not exceed the Actual Deferral Percentage for the
Non-Highly Compensated Participant group for the immediately preceding Plan Year multiplied by
two. The provisions of Section 401(k)(3) of the Code and Regulation 1.401(k)-I (b) are
incorporated herein by reference.


To prevent the multiple use of the alternate method described in clause (ii) above and in Section
401(m)(9)(A) of the Code, any Highly Compensated Participant eligible to make Pre-Tax Contributions
pursuant to Section 5.02 of this Plan or under any other plan maintained by any Employer or
Affiliate shall have his or her Actual Contribution Ratio reduced pursuant to Regulation
1.401(m)-2, the provisions of which are incorporated herein by reference.




          A Pre-Tax Contribution shall be taken into account for purposes of the Actual Deferral
Percentage test for a Plan Year only if it relates to compensation that either would have been
received by an Employee in such Plan Year (but for the deferral election) or is attributable to
services performed by the Employee in the Plan Year and would have been received by the Employee
within 21/2 months after the close of the Plan Year (but for the deferral election). In addition, a
Pre-Tax Contribution shall be taken into account for purposes of the Actual Deferral Percentage
test for a Plan Year only if it is allocated to the Employee as of a date within such Plan Year.
For this purpose, a Pre-Tax Contribution is considered allocated as of a date within a Plan Year if
the allocation is not contingent on participation or performance of services after such date and
the Pre-Tax Contribution is actually paid to the Trust no later than 12 months after the Plan Year
to which the contribution relates.




          (b) For purposes of this Plan, the Actual Deferral Percentage of the Highly Compensated
Participant group and the Non-Highly Compensated Participant group for a Plan Year is the average
of the Actual Deferral Ratios of all Employees in the relevant group. The Actual Deferral Ratio
for each Employee and the Actual Deferral Percentage for each group shall be calculated to the
nearest 1/100th of 1%.




          (c) For purposes of this Section 5.07, if two or more plans (other than an employee stock
ownership plan as defined in Section 4975(e)(7) of the Code) that include cash or deferred
arrangements are considered one plan for the purposes of Section 401(a)(4) or 410(b) of the Code
(other than Section 410(b)(2)(A)(ii) of the Code), the cash or deferred arrangements included in
such plans shall be treated as one arrangement.




          (d) For purposes of this Section 5.07, if a Highly Compensated Participant is a participant
under two or more cash or deferred arrangements of the Employers or Affiliates




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(other than a cash or deferred arrangement that is part of an employee stock ownership plan as
defined in Section 4975(e)(7) of the Code), all such cash or deferred arrangements shall be treated
as one cash or deferred arrangement for the purpose of determining the Actual Deferral Percentage
of such Highly Compensated Participant; provided, however, that if the cash or deferred
arrangements have different plan years, this paragraph (d) shall be applied by treating all cash or
deferred arrangements ending with or within the same calendar year as a single arrangement.




          (e) Notwithstanding anything to the contrary contained in this Section 5.07, the determination
and treatment of Pre-Tax Contributions and the Actual Deferral Percentage of any Participant shall
satisfy such other requirements as may be prescribed by the Secretary of the Treasury.




          (f) For purposes of this Section 5.07, (i) the Highly Compensated Participant group and the
Non-Highly Compensated Participant group for any Plan Year shall include each Employee who is
directly or indirectly eligible to make a Pre-Tax Contribution, whether or not such Pre-Tax
Contribution was made, and (ii) Employees who are eligible to make a Pre-Tax Contribution include
(A) any Employee who would be a Participant but for the failure to make required contributions, (B)
any Employee whose eligibility to make Pre-Tax Contributions has been suspended because of an
election (other than certain one-time elections) not to participate, a distribution or a loan, (C)
any Employee who cannot make Pre-Tax Contributions because of the limits under Section 415 of the
Code and (D) any Employee who, although otherwise eligible, does not elect to participate in this
Plan.




          Section 5.08. Adjustment to Actual Deferral Percentage Tests. In the event that the
initial allocations of the Pre-Tax Contributions made pursuant to Section 5.02 do not satisfy one
of the tests set forth in Section 5.07(a), the Committee shall adjust the Pre-Tax Contributions
pursuant to the options set forth below:





       (a) On or before the 15th day of the third month following the end of each Plan Year, the
Excess Contributions for the Highly Compensated Participant group shall be determined by (i)
reducing the Actual Deferral Ratio of the Highly Compensated Participant having the highest
Actual Deferral Ratio until either the Actual Deferral Percentage test set forth in Section
5.07(a) is satisfied or such Highly Compensated Participant’s Actual Deferral Ratio is equal
the Actual Deferral Ratio of the Highly Compensated Participant with the next highest Actual
Deferral Ratio. This process shall be repeated until the Actual Deferral Percentage test
under Section 5.07(a) is satisfied for such Plan Year. The amount of “Excess
Contributions” for any Highly Compensated Participant is equal to the sum of these
hypothetical reductions multiplied, in each case, by such Highly Compensated Participant’s
compensation. The Highly Compensated Participants subject to distribution (or
recharacterization) of Excess Contributions in any Plan Year shall be determined using the
“dollar leveling method” starting with the Highly Compensated Participant with the greatest
dollar amount of elective and other contributions treated as elective contributions for such
Plan Year and continuing until the amount of the Excess Contributions has been accounted for.
Such Excess Contribution amounts (and any earnings allocable thereto) shall be distributed
and/or recharacterized as After-Tax



-25-









 







Contributions pursuant to Article VI until one of the tests set forth in Section 5.07(a) is
satisfied. In determining the amount of Excess Contributions (and any earnings allocable
thereto) to be distributed and/or recharacterized with respect to any affected Highly
Compensated Participant, such Excess Contribution amount shall be reduced by any excess
Deferred Compensation previously distributed to such affected Highly Compensated Participant
for his or her taxable year ending with or within such Plan Year. If there is a loss
allocable to such excess amount, the distribution shall in no event be less than the lesser of
such Participant’s Pre-Tax Contributions and such Participant’s Deferred Compensation for the
Plan Year.




       (b) Within 12 months after the end of the Plan Year, if necessary, the Employer may make
a special Qualified Non-Elective Contribution on behalf of Non-Highly Compensated Participants
in an amount sufficient to satisfy one of the tests set forth in Section 5.07(a). Such
contribution shall be allocated to the Pre-Tax Contributions Accounts of each Non-Highly
Compensated Participant in the same proportion that each Non-Highly Compensated Participant’s
compensation for the year bears to the total compensation of all Non-Highly Compensated
Participants. Qualified Non-Elective Contributions shall be non-forfeitable when made and
subject to the provisions of Section 5.07. Qualified Non-Elective Contributions used to
satisfy the tests set forth in Section 5.07(a) shall be required to satisfy the discrimination
requirements of Regulation 1.401(k)- 1(b)(5), the provisions of which are specifically
incorporated herein by reference.




       (c) If during a Plan Year the projected aggregate amount of Pre-Tax Contributions to be
allocated to all Highly Compensated Participants under this Plan would, by virtue of the tests
set forth in Section 5.07(a), cause this Plan to fail such tests, then the Committee may
automatically reduce proportionately, or in the order provided in Section 5.08(a), each
affected Highly Compensated Participant’s Pre-Tax Contributions, as specified by such Highly
Compensated Participant pursuant to Section 5.02, by an amount necessary to satisfy one of the
tests set forth in Section 5.07(a), as determined by the Committee, in its sole discretion.
Unless an affected Highly Compensated Participant elects otherwise, any Pre-Tax Contributions
reduced pursuant to this paragraph (c) shall be treated as After-Tax Contributions.



          Section 5.09. Modification of Pre-Tax Contribution Percentage. A Participant may
change the percentage of his or her Eligible Earnings that is contributed as Pre-Tax Contributions
at any time in 1/2% increments. Any such change shall be effective the first day of the next
available payroll period.




Article VI




After-Tax Contributions




          Section 6.01. Eligibility. Each Participant who is an Eligible Employee may make
After-Tax Contributions to this Plan.




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          Section 6.02. After Tax Contributions. Each Participant shall specify the percentage
of his or her Eligible Earnings to be contributed to this Plan; provided, however, that such
Participant may not direct that more than 20% of his or her Eligible Earnings be contributed as
After-Tax Contributions or Pre-Tax Contributions, on a combined basis. For purposes of this Plan,
the term “After-Tax Matched Contributions” means:





       (i) for Participants who (A) are part of a collective bargaining unit and who were hired
prior to June 1, 2004 or (B) are rehired by an Employer on or after June 1, 2004 and who must
participate or accrue a benefit in the Sterling Chemicals, Inc. Amended and Restated Hourly
Paid Employees’ Pension Plan or the Sterling Chemicals, Inc. Amended and Restated Salaried
Employees’ Pension Plan after they are rehired on or after June 1, 2004 due to the
requirements of the break-in-service rules under Section 410(a)(5) of the Code or Section
202(b) of ERISA with respect to service performed on or after June 1, 2004, 7% of the
Participant’s After-Tax Contributions based upon his or her Eligible Matched Earnings;
provided, however, that if the sum of a Participant’s After-Tax Matched Contributions plus
such Participant’s Pre-Tax Matched Contributions exceeds 7% of such Participant’s Eligible
Matched Earnings, such Participant’s After-Tax Matched Contributions shall be reduced until
such sum equals 7% of such Participant’s Eligible Matched Earnings; and




       (ii) for all other Participants, 6% of the Participant’s contributions based upon his or her
Eligible Matched Earnings; provided, however, that if the sum of a Participant’s After-Tax Matched
Contributions plus such Participant’s Pre-Tax Matched Contributions exceeds 6% of such
Participant’s Eligible Matched Earnings, such Participant’s After-Tax Matched Contributions shall
be reduced until such sum equals 6% of such Participant’s Eligible Matched Earnings.


After-Tax Matched Contributions shall be contributed by the Employer on behalf of a Participant to
such Participant’s After-Tax Matched Contributions Account. All remaining After-Tax Contributions
made by the Employer on behalf of such Participant shall be considered “After-Tax Supplemental
Contributions” and shall be contributed by the Employer on behalf of such Participant to such
Participant’s After-Tax Supplemental Contributions Account.




          Section 6.03. Limitation on After-Tax Contributions. Notwithstanding anything to the
contrary contained in Sections 6.01 or 6.02, no Participant may make After-Tax Contributions for
any pay period which will cause the limitations of Section 4.03 or Section 7.01 to be exceeded.




          Section 6.04. Deduction of After-Tax Contributions. A Participant’s After-Tax
Contributions shall be made by regular payroll deductions. After-Tax Contributions deducted by an
Employer will be paid to the Trustee as soon as practicable after the end of the payroll period for
which such contributions were made.




          Section 6.05. Cessation of After-Tax Deductions. Except as otherwise provided in this
Plan, no After-Tax Contributions will be accepted on behalf of any Participant for any pay period
which begins after such Participant ceases to be an Eligible Employee.





-27-









 







          Section 6.06. Modification of After-Tax Contribution Percentage. A Participant
may change the percentage of his or her Eligible Earnings that is contributed as After-Tax
Contributions at any time in 1/2% increments. Any such change shall be effective the first day of
the next available payroll period.




Article VII




Limitations on Contributions




          Section 7.01. Maximum Annual Additions. (a) Notwithstanding anything contained in
this Plan to the contrary, the maximum Annual Additions credited to any Participant’s account for
any Limitation Year shall equal the lesser of (i) $30,000 (as adjusted for cost of living increases
pursuant to Sections 415(c)(1), 415(d)(1), 415(d)(3) or 415(d)(4) under Section 415(b)(1)(A) of the
Code) and (ii) 25% of such Participant’s 415 Compensation for such Limitation Year. For any short
Limitation Year, the dollar limitation in clause (i) above shall be reduced by a fraction, the
numerator of which is the number of full months in the short Limitation Year and the denominator of
which is 12.




          (b) For purposes of applying the limitations of Section 415 of the Code, the Annual Additions
for a Participant is the sum credited to such Participant’s accounts for any Limitation Year of:





     (i) such Participant’s Pre-Tax Contributions and Employer Matching Contributions for such
Limitation Year; plus




     (ii) such Participant’s After-Tax Contributions for such Limitation Year; plus




     (iii) such Participant’s Forfeitures for such Limitation Year; plus




     (iv) amounts allocated to an “individual medical account” (as defined in Section
415(l)(2) of the Code) on behalf of such Participant which is part of a pension or annuity
plan maintained by the Employer for such Limitation Year; plus




     (v) amounts derived from contributions paid or accrued which are attributable to
post-retirement medical benefits allocated to the separate account of such Participant if he
or she is a “key employee” (as defined in Section 419A(d)(3) of the Code) under a “welfare
benefit plan” (as defined in Section 419(e) of the Code) maintained by the Employer for such
Limitation Year;


provided, however, that the 415 Compensation percentage limitation referred to in paragraph (a)
above shall not apply to (A) any contribution for “medical benefits” (within the meaning of Section
419(A)(f)(2) of the Code) after separation from service which is otherwise treated as an Annual
Addition or (B) any amount otherwise treated as an Annual Addition under Section 415(l)(1) of the
Code.




-28-









 





          (c) For purposes of applying the limitations of Section 415 of the Code, the transfer of funds
from one qualified plan to another is not an Annual Addition. In addition, the following are not
Employee contributions for the purposes of Section 7.01(b):





     (i) “rollover contributions” (as defined in Sections 402(a)(5), 403(a)(4), 403(b)(8) and
408(d)(3) of the Code);




     (ii) repayments of loans made to a Participant from this Plan;




     (iii) repayments of distributions received by an Employee pursuant to Section
411(a)(7)(B) of the Code (cash-outs);




     (iv) repayments of distributions received by an Employee pursuant to Section 411(a)(3)(D)
of the Code (mandatory contributions); and




     (v) Employee contributions to a simplified employee pension excludable from gross income
under Section 408(k)(6) of the Code.



          (d) The dollar limitation under Section 415(b)(1)(A) of the Code referred to in paragraph (a)
above shall be adjusted annually as provided in Section 415(d) of the Code pursuant to the
Regulations. The adjusted limitation is effective as of January 1st of each calendar year and is
applicable to Limitation Years ending with or within that calendar year.




          (e) For purposes of this Section, all qualified defined benefit plans (whether terminated or
not) ever maintained by the Employer shall be treated as one defined benefit plan, and all
qualified defined contribution plans (whether terminated or not) ever maintained by the Employer
shall be treated as one defined contribution plan.




          (f) For purposes of this Section, if the Employer is a member of a controlled group of
corporations, trades or businesses “under common control” (as defined by Section 1563(a) or Section
414(b) and (c) of the Code, as modified by Section 415(h) of the Code), is a member of an
“affiliated service group” (as defined by Section 414(m) of the Code) or is a member of a group of
entities required to be aggregated pursuant to the Regulations under Section 414(o) of the Code,
all Employees of such Employers shall be considered to be employed by a single Employer.




          (g) For purpose of this Section 7.01, if this Plan is a Section 413(c) of the Code plan, all
Employers of a Participant who maintain this Plan will be considered to be a single Employer.





     (h)(i) If a Participant participates in more than one defined contribution plan
maintained by the Employers which have different anniversary dates, the maximum Annual
Additions under this Plan for any Limitation Year shall equal the maximum Annual Additions for
such Limitation Year minus any Annual Additions previously credited to such Participant’s
accounts during such Limitation Year.



-29-









 






     (ii) If a Participant participates in both a defined contribution plan subject to Section
412 of the Code and a defined contribution plan not subject to Section 412 of the Code
maintained by the Employers which have the same anniversary date, Annual Additions will be
credited to such Participant’s accounts under the defined contribution plan subject to Section
412 of the Code prior to crediting Annual Additions to such Participant’s accounts under the
defined contribution plan not subject to Section 412 of the Code.




     (iii) If a Participant participates in more than one defined contribution plan not
subject to Section 412 of the Code maintained by the Employers which have the same anniversary
date, the maximum Annual Additions under this Plan for any Limitation Year shall equal the
product of (A) the maximum Annual Additions for such Limitation Year minus any Annual
Additions previously credited under clauses (i) or (ii) above, multiplied by (B) a fraction,
the numerator of which is the Annual Additions which would be credited to such Participant’s
accounts under this Plan without regard to the limitations of Section 415 of the Code and the
denominator of which is such Annual Additions for all plans described in this clause.



          Section 7.02. Adjustment for Excessive Annual Additions. It is intended that in
applying Section 7.01, the Annual Additions to a Participant’s Accounts under this Plan will be
limited before the Annual Additions to such Participant’s accounts under any other defined
contribution plan maintained by the Extended Group (“Related Defined Contribution Plans”),
if any, are limited. This Section 7.02 shall be applied as follows:





     (a) first, such Participant’s After-Tax Supplemental Contributions in such year shall be
reduced until such Participant’s Annual Additions are within the limits specified above;




     (b) second, if, after applying clause (a) above, such Participant’s Annual Additions are
still in excess of the limits specified above, then such Participant’s Pre-Tax Supplemental
Contributions shall be reduced until such Participant’s Annual Additions are within the limits
specified above;




     (c) third, if, after applying clauses (a) and (b) above, such Participant’s Annual
Additions are still in excess of the limits specified above, then Employer Matching
Contributions hereunder shall be reduced by applying any amount which cannot be credited to
such Participant’s Employer Matching Contributions Account because of the foregoing
limitations in accordance with Section 4.02 to reduce the share of Employer Matching
Contributions due this Plan by such Participant’s Employer for such year;




     (d) fourth, if, after applying clauses (a), (b) and (c) above, such Participant’s Annual
Additions are still in excess of the limits specified above, then such Participant’s After-Tax
Matched Contributions shall be reduced until such Participant’s Annual Additions are within
the limits specified above; and




     (e) fifth, if, after applying clauses (a), (b), (c) and (d) above, such Participant’s
Annual Additions are still in excess of the limits specified above, then such Participant’s



-30-









 







Pre-Tax Matched Contributions shall be reduced until such Participant’s Annual Additions are
within the limits specified above.


If, in any Plan Year, as the result of a reasonable error in estimating a Participant’s
compensation or in determining the amount of such Participant’s Pre-Tax Contributions, such
Participant’s Annual Additions exceed the maximum amount that may be allocated to such Participant,
the excess amount attributable, first, to such Participant’s After-Tax Supplemental Contributions
(and allocable earnings), second, to such Participant’s Pre-Tax Supplemental Contributions (and
allocable earnings), third, to such Participant’s After-Tax Matched Contributions (and allocable
earnings) and, fourth, to such Participant’s Pre-Tax Matched Contributions (and allocable
earnings), shall be returned to such Participant to the extent necessary to cure such excess.




Article VIII




Accounting




          Section 8.01. Participant Accounts. The Committee shall maintain the Accounts set
forth below in the name of each Participant to reflect such Participant’s After-Tax Contributions,
Pre-Tax Contributions and rollover contributions:





     (a) a “Pre-Tax Matched Contributions Account” to reflect the Pre-Tax Matched
Contributions made by an Employer on behalf of such Participant in accordance with Section
5.02, as well as the income, losses, appreciation and depreciation attributable to such
contributions;




     (b) a “Pre-Tax Supplemental Contributions Account” to reflect the Pre-Tax
Supplemental Contributions made by an Employer on behalf of such Participant in accordance
with Section 5.02, as well as the income, losses, appreciation and depreciation attributable
to such contributions;




     (c) an “After-Tax Matched Contributions Account” to reflect the After-Tax Matched
Contributions made by an Employer on behalf of such Participant in accordance with Section
6.02, as well as the income, losses, appreciation and depreciation attributable to such
contributions;




     (d) an “After-Tax Supplemental Contributions Account” to reflect the After-Tax
Supplemental Contributions made by an Employer on behalf of such Participant in accordance
with Section 6.02, as well as the income, losses, appreciation and depreciation attributable
to such contributions; and




     (e) a “Rollover Account” to reflect the rollover contributions made by such
Participant, as well as the income, losses, appreciation and depreciation attributable to such
contributions.


Each Participant shall have a full 100% vested interest in such Participant’s Pre-Tax Contributions
Accounts, After-Tax Contributions Accounts and Rollover Account.




-31-









 








          Section 8.02. Rollovers From Qualified Plans. Any Participant may transfer an
eligible rollover distribution from a qualified retirement plan under Section 401(a) of the Code to
this Plan subject to the rules set forth in the Regulations; provided, however, that effective on
and after September 1, 1997, no rollovers from the Terminated ESOP (including indirectly through a
conduit IRA) shall be permitted.




          Section 8.03. Adjustment of Accounts. As of each Accounting Date, the Committee
shall:





     (a) first, charge to the proper Accounts all payments, distributions or loans made since
the last preceding Accounting Date that have not been charged previously as provided in
Section 8.04;




     (b) second, credit each Participant’s Accounts with such Participant’s pro rata share of
any increase, or charge such Accounts with such Participant’s pro rata share of any decrease,
in the value of the adjusted net worth of each Investment Fund in which such Accounts have an
interest as of that date;




     (c) third, credit all After-Tax Contributions made by Participants that are to be
credited as of that date to the appropriate After-Tax Contributions Accounts in accordance
with Section 8.05;




     (d) fourth, credit all Pre-Tax Contributions made on behalf of Participants that are to
be credited as of that date to the appropriate Pre-Tax Contributions Accounts in accordance
with Section 8.06; and




     (e) fifth, allocate and credit any Employer Matching Contributions (including any
Forfeitures applied to reduce those contributions) as of that date in accordance with Section
8.09.


For purposes of this Plan, the “adjusted net worth” of an Investment Fund as of any Accounting Date
means the then net worth of that Investment Fund as determined by the Trustee less an amount equal
to any Employer Matching Contributions and any Participants’ After-Tax Contributions and Pre-Tax
Contributions that have not previously been credited to Participants’ Accounts in accordance with
paragraphs (c), (d) and (e) above. The adjustment of Participants’ Accounts provided for in this
Section shall be made on the basis of an Accounting Date valuation of Investment Funds as
determined by the Trustee on a fair market value basis.




          Section 8.04. Charging Payments and Distributions. As of each Accounting Date, all
payments or distributions made under this Plan since the last preceding Accounting Date to or for
the benefit of a Participant or any Beneficiary will be charged to the proper Account of such
Participant unless previously charged.




          Section 8.05. Crediting After-Tax Contributions. After-Tax Contributions made by an
Employer on behalf of a Participant shall be credited to such Participant’s applicable After-




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Tax Contributions Accounts as of the Accounting Date on which the Trustee received the
contributions from the Employer.




          Section 8.06. Crediting Pre-Tax Contributions. Pre-Tax Contributions made by an
Employer on behalf of a Participant shall be credited to such Participant’s applicable Pre-Tax
Contributions Accounts as of the Accounting Date on which the Trustee received the contributions
from the Employer.




          Section 8.07. Employer Matching Contributions Account. The Committee shall maintain
an “Employers Matching Contributions Account” in the name of each Participant to reflect
such Participant’s share of the Employer Matching Contributions and the Forfeitures arising under
the Plan which are credited to such Employer Matching Contributions Account as a part of the
Employer Matching Contributions in accordance with Section 10.06, as well as the income, losses,
appreciation and depreciation attributable to both such items.




          Section 8.08. Cytec Accounts and Historical Employer Matching Contributions Accounts.
The accounts of the Cytec Employees that were spun off to this Plan from the Cytec Plan (the
“Cytec Accounts”) and each Participant’s Historical Employer Matching Contributions Account
(if any) shall be separately accounted for under this Plan.




          Section 8.09. Allocation of Employer Matching Contributions and Forfeitures. Employer
Matching Contributions made by an Employer on behalf of a Participant (after giving effect to any
Forfeitures applied to reduce that Employer’s Employer Matching Contributions in accordance with
Section 7.01(b) and Section 10.06) shall be credited to such Participant’s Employer Matching
Contributions Account as of the Accounting Date on which the Trustee received such Employer
Matching Contributions from the Employer. For purposes of this Section 8.09, the portion of any
Forfeiture arising under this Plan during any period which is attributable to the prior
contributions by any Employer shall be that proportion of such Forfeiture which the contributions
made by that Employer and credited to the Employer Matching Contributions Accounts of the
Participant with respect to whom the Forfeiture arose bears to the total contributions of all
Employers which are credited to such Employer Matching Contributions Accounts. Until credited in
accordance with this Section 8.09, all Forfeiture accounts will be treated the same as
Participants’ Accounts and will be adjusted in accordance with Section 8.03.




Article IX




The Funds




          Section 9.01. The Investment Funds. (a) The Trust Fund shall consist of the
Investment Funds set forth in Exhibit A as it may be amended from time to time (the “Investment
Funds”). The Trustee, pursuant to any discretion given it by the Trust Agreement, may retain
all or any portion of any of the Investment Funds and, on a temporary or interim basis, may invest
any of the Investment Funds in property other than that specified as the primary type of investment
for such Investment Funds. Any Investment Fund, at the discretion of the Trustee, may be partially
or entirely invested in any commingled or mutual fund which is invested in property of the type
specified for that Investment Fund. Except as provided in Section 9.04, no




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stocks or obligations issued by the Corporation or its Affiliates shall be included in any of the
Investment Funds; provided, however, that any investment of any such Investment Fund through the
medium of commingled funds shall not constitute an investment in the stocks or obligations of the
Employers or the Affiliates, even though the commingled funds may contain such stocks or
obligations.




          (b) As part of the Trust Fund, a “Loan Fund” shall be maintained which shall include
promissory notes executed by each Participant for whom a loan has been made, which shall be
reflected in the Loan Account of such Participant. As of the time a loan is made, the borrowing
Participant’s other Accounts shall be debited to reflect the amount of the loan to such Participant
in the manner specified in Section 12.11 and the amount of such loan shall be credited to such
Participant’s Loan Account. As payments of principal and interest are made on the loan, the Loan
Account shall be debited as specified in Section 12.12 hereof.




          Section 9.02. Investment Elections. Each Participant may elect to have his or her
Accounts invested in any or all of the Investment Funds in 1% increments. An investment election
must be made in the time and manner prescribed by the Committee. A Participant’s After-Tax
Contributions, Pre-Tax Contributions, rollover contributions and Employer Matching Contributions
shall be invested, as soon as practicable after the Accounting Date for which the contributions
were made, in the Investment Funds in accordance with such Participant’s investment election then
in effect; provided, however, that a Participant’s Employer Matching Contributions shall be
invested in accordance with such Participant’s investment elections for his or her Pre-Tax
Contributions or, in the absence of any such investment election, in the Guaranteed Income Fund.
After making an investment election, a Participant may change his or her investment election at any
time, effective the first day of the next available payroll period.




          Section 9.03. Transfers Between Investment Funds. A Participant may elect as of any
business day on which the national stock exchanges are open to transfer all or a portion of his or
her After-Tax Contributions Accounts and, separately, all or a portion of his or her Pre-Tax
Contributions Accounts, Employer Matching Contributions Account and Rollover Account between the
Investment Funds. Such Participant shall make such election in the time and manner prescribed by
the Committee, which shall specify how the contributions and earnings are to be allocated between
the Investment Funds after the transfer.




          Section 9.04. Company Stock Fund. The “Company Stock Fund” shall consist
solely of those shares of Company Stock rolled over to this Plan upon the liquidation of the
Terminated ESOP’s trust, including any “default” rollovers with respect to those participants in
the Terminated ESOP who did not consent to a distribution upon such liquidation. Shares of Company
Stock so rolled over from the Terminated ESOP may not be directed to be sold and reinvested in any
other Investment Fund. Any withdrawal or distribution from the Company Stock Fund shall be made
solely in shares of Company Stock. Notwithstanding anything in this Plan to the contrary, any
distribution received by the Trustee with respect to Company Stock, except for a stock dividend in
shares of Company Stock, shall be automatically reinvested in the Guaranteed Income Fund, until
redirected into another Investment Fund by the relevant Participant. No amounts may be contributed
to, redirected into or otherwise added to the Company Stock Fund. The shares of Company Stock held
in the Company Stock Fund shall be




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transferred to the Sterling Chemicals ESOP in a trust-to-trust transfer pursuant to Section 16.03,
as soon as administratively feasible after the trustee of the Sterling Chemicals ESOP communicates
to the Trustee of this Plan that it is ready to accept the transfer. After the shares are
transferred to the ESOP, the Company Stock Fund shall cease to be an Investment Fund under this
Plan.




Article X




Payment of Account Balances




          Section 10.01. Retirement, Disability or Death. If a Participant terminates
employment due to Retirement or a Total and Permanent Disability, or dies while an Employee, the
entire balances of such Participant’s Accounts as of such Participant’s Settlement Date (after any
adjustments then required under this Plan) shall be vested and become distributable to such
Participant or his or her Beneficiary, as the case may be, in accordance with Section 10.03.




          Section 10.02. Resignation or Dismissal. (a) If a Participant resigns, is dismissed
from the employ of the Employers and the Affiliates before his or her Normal Retirement Age or
otherwise incurs a separation from service, the vested balance of such Participant’s Accounts as of
such Participant’s Settlement Date (after any adjustments then required under this Plan) shall
become distributable to such Participant in accordance with Section 10.03. The vested balance in
such Participant’s Employer Matching Contributions Account shall be determined by multiplying such
balance by such Participant’s Vesting Percentage and the product thereof shall become distributable
to such Participant in accordance with Section 10.03.




          (b) The computation of a Participant’s non-forfeitable percentage interest in his or her
Accounts shall not be reduced as the result of any direct or indirect amendment to this Section.
In the event that this Plan is amended to change or modify any vesting schedule, a Participant with
a least three Years of Service as of the expiration date of the election period may elect to have
his or her non-forfeitable percentage computed under this Plan without regard to such amendment.
If a Participant fails to make such election, then such Participant shall be subject to the new
vesting schedule. The Participant’s election period shall commence on the adoption date of the
amendment and shall end 60 days after the latest of:





     (i) the adoption date of the amendment;




     (ii) the effective date of the amendment; or




     (iii) the date such Participant receives written notice of the amendment from the
Employer or Committee.


Notwithstanding anything herein to the contrary, a Participant shall have a non-forfeitable
interest in such Participant’s Account balances on the attainment of his or her Normal Retirement
Age, Total and Permanent Disability or death, while an Employee.




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          Section 10.03. Distribution Options. (a) Lump Sum Distribution. Subject to the
conditions and limitations set forth in this paragraph (a) and Sections 10.04 and 10.05, the vested
balances in a Participant’s Accounts will be distributed to such Participant or, in the case of
such Participant’s death, to his or her Beneficiaries by payment in a lump sum (a “Lump Sum
Distribution”). If the vested value of such Participant’s Account balances as of such
Participant’s Settlement Date (or as of the date of any prior withdrawal) does not exceed $1,000,
the balances in such Participant’s Accounts will be paid in a Lump Sum Distribution as soon as
practicable after such Participant’s Settlement Date (after all adjustments, if any, then required
under this Plan have been made).




          Participants who are terminated under a formal reduction in workforce or layoff program are
allowed to continue to make loan repayments and are not subject to the involuntary cash out
described in the paragraph above in this Section 10.03(a). However, once a Participant who is
terminated under a formal reduction in workforce or layoff program defaults on a plan loan (as
determined under Section 12.16 of this Plan) or fully repays all plan loans, and such Participant’s
Account balance is $1,000 or less at that time, then this Plan shall distribute the Participant’s
entire vested Account balance (in accordance with Section 12.13) as soon as practicable after such
Participant’s Settlement Date (after all adjustments, if any, then required under this Plan have
been made).




          Notwithstanding anything in this Section 10.03 of this Plan to the contrary, the value of a
Participant’s vested Account balances shall be determined by including that portion of the Account
balance that is attributable to rollover contributions (and earnings allocable thereto) within the
meaning of Sections 402(c), 403(a)(4), 403(b)(8), 408(d)(3)(A)(ii), and 457(e)(16) of the Code.




          (b) Lump Sum Deferral Option. If the vested value of a Participant’s Account balances as of
such Participant’s Settlement Date (or as of the date of any prior withdrawal) exceeds $1,000, such
Participant may elect to receive payment of the balances in his or her Accounts as follows:





     (i) in a Lump Sum Distribution as set forth in paragraph (a) above as soon as practicable
after such Participant’s Settlement Date; or




     (ii) in a lump sum at any time after his or her termination, provided any distribution
must satisfy Section 10.04(b) (a “Lump Sum Deferral Option”).


If such Participant fails to make an election under clauses (i) or (ii) above, such Participant
shall be deemed to have elected a Lump Sum Deferral Option under clause (ii). There shall be no
immediate distribution of a Participant’s Account balances when his or her vested Account balances
exceed $1,000 in the aggregate. A Participant’s Account balances are immediately distributable if
any part of the Account balances may be distributed to such Participant before the later of Normal
Retirement Age or age 62. However, this paragraph (b) shall not be applicable after the death of a
Participant.




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          If a Participant elects to retain the balances in his or her Accounts in this Plan under a
Lump Sum Deferral Option, such Participant shall be entitled to make transfers between Investment
Funds but shall not be entitled to make After-Tax Contributions, to have Pre-Tax Contributions made
on his or her behalf, to receive withdrawals or periodic distributions as provided in Article XI or
to obtain a loan under Article XII. If such Participant elects a Lump Sum Deferral Option and dies
prior to receipt of the balances in his or her Accounts, the Accounts of such Participant shall be
distributed in a single lump sum to his or her Beneficiary as soon as practicable after the death
of such Participant. Upon termination of a Lump Sum Deferral Option, in lieu of payment in a lump
sum and subject to the provisions of paragraph (c) below, the Participant may elect the Installment
Payout Option.




          (c) Installment Payout Option. Subject to the conditions and limitations set forth in this
paragraph (c) and in Sections 10.04 and 10.05, if (i) a Participant retires while an Employee with
an entitlement to receive an Employer or an Affiliate pension benefit (as determined under the
terms of the pension plan in which such Participant participates) and (ii) the lump sum value of
the Participant’s Account balances as of such Participant’s Settlement Date exceeds $1,000, such
Participant may direct that the value of the balances in his or her Accounts be distributed in
monthly, quarterly or annual installments from this Plan over a number of years up to the lesser of
20 years (30 years with respect to a Cytec Account) or the life expectancy of such Participant on
the date the installments commence; provided, however, that in no event shall installment payments
under this paragraph (c) begin after such Participant’s attainment of age 65 or, if later, his or
her retirement date, even if such Participant had previously elected a Lump Sum Deferral Option.
The amount of the payments for the first calendar year in which such installment payments shall
commence shall be determined by dividing the value of such Participant’s Accounts, determined as of
such Participant’s Settlement Date, by the number of remaining calendar years. For each subsequent
calendar year, the amount of the payments shall be determined at the beginning of each calendar
year by dividing the value of the balances of such Participant’s Accounts, determined as of the
last day of the previous calendar year, by the number of remaining calendar years. If a
Participant dies prior to the receipt of the entire balance of his or her Accounts under this Plan
pursuant to this paragraph (c), the remaining account balances shall be payable in a single lump
sum to his or her Beneficiary as soon as practicable after the death of such Participant.




          If a Participant elects the Installment Payout Option, such Participant shall be entitled to
make transfers between Investment Funds but shall not be entitled to make After-Tax Contributions
or to have Pre-Tax Contributions made on his or her behalf, to receive withdrawals or periodic
distributions as provided in Article XI or to obtain a loan under Article XII. Once each Plan
Year, a Participant who is receiving payments under the Installment Payout Option may elect to
withdraw all or any portion of his or her Account balances under this Plan; provided, however, that
if the remaining Account balances immediately after such withdrawal do not equal or exceed $1,000,
the remaining Account balances shall be distributed to the Participant in a lump sum.




          Effective January 1, 2003, Participants may no longer elect to receive an Installment Payout
Option under this Section. However, payments will continue to be paid pursuant to an Installment
Payout Option filed with the Committee prior to January 1, 2003.




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          (d) Life Expectancy Payout Option. Subject to the conditions and limitations set forth below
and in Sections 10.04 and 10.05, if (i) a Participant retires while an Employee on or after a date
determined by the Committee with an entitlement to receive an Employer or an Affiliate pension
benefit (as determined under the terms of the pension plan in which such Participant participates),
and (ii) the vested value of such Participant’s Account balances exceeds $1,000 as of such
Participant’s Settlement Date, such Participant may elect to receive payment of his or her Account
balances in the form of a Life Expectancy Payout Option, even if such Participant had previously
elected a Lump Sum Deferral Option. Under the Life Expectancy Payout Option, the Account balances
of such Participant will be distributed to such Participant over a period equal to the life
expectancy of such Participant in monthly, quarterly or annual installments; provided, however,
that in no event shall installment payments under this paragraph (d) begin after such Participant’s
attainment of age 65 or, if later, his or her retirement date, even if such Participant had
previously elected a Lump Sum Deferral Option.




          The amount of the payment for each Plan Year shall be determined at the beginning of each Plan
Year by dividing the vested value of the balances of the relevant Participant’s Accounts determined
as of the last day of the previous Plan Year by the life expectancy of such Participant, which
shall be recalculated annually as of the last day of each Plan Year. If such Participant
predeceases his or her designated Beneficiary, the remaining Account balances shall be payable to
the designated Beneficiary in a single lump sum as soon as practicable after the death of such
Participant. The life expectancy of such Participant shall be determined by the qualified actuary
for the Corporation’s qualified pension plan, and the qualified actuary’s determination shall be
final and binding on all parties.




          If a Participant elects the Life Expectancy Payout Option, such Participant shall be entitled
to make transfers between Investment Funds but shall not be entitled to make After-Tax
Contributions or to have Pre-Tax Contributions made on his or her behalf, to receive withdrawals or
periodic distributions as provided in Article XI or to obtain a loan under Article XII. Once each
Plan Year, a Participant who is receiving payments under the Life Expectancy Payout Option may
elect to withdraw all or any portion of his or her Account balances under this Plan; provided,
however, that if the remaining Account balances immediately after such withdrawal do not equal or
exceed $1,000, the remaining Account balances shall be distributed to such Participant in a lump
sum. In addition, a Cytec Employee may elect, with respect to his or her Cytec Account, to have
such Account used to purchase a non-transferable single life annuity contract or a 50% joint and
survivor annuity contract from an insurance company selected by the Committee.




          Effective January 1, 2003, Participants may no longer elect to receive a Life Expectancy
Payout Option under this Section. However, payments will continue to be paid pursuant to a Life
Expectancy Payout Option filed with the Committee prior to January 1, 2003.




          (e) Cytec Account Annuities. Each Cytec Employee may elect, with respect to his or her Cytec
Accounts, to use the balance of such Cytec Accounts to purchase a non-transferable single life
annuity contract or a 50% joint and survivor annuity contract from an insurance company selected by
the Committee.




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          Effective January 1, 2003, Cytec Employees may no longer elect to receive an annuity under
this Section. However, annuity payments will continue to be paid pursuant to an annuity election
filed by a Cytec Employee with the Committee prior to January 1, 2003.




          (f) Any distribution to a Participant who has a vested benefit which exceeds, or has ever
exceeded, $1,000 at the time of any prior distribution shall require such Participant’s consent if
such distribution commences prior to the time benefits must commence to be paid pursuant to Section
10.04(b). With regard to this required consent:





     (i) notice of the rights specified under this paragraph (e) shall be provided no less
than 30 days and no more than 90 days before the first day on which all events have occurred
which entitle such Participant to such benefit; and




     (ii) written consent of such Participant to the distribution may not be made before such
Participant receives the notice and may not be made more than 90 days before the first day on
which all events have occurred which entitle such Participant to such benefit;


provided, however, that notwithstanding the foregoing, if a distribution is one to which Sections
401(a)(11) and 417 of the Code do not apply, such distribution may commence less than 30 days after
the required notice is given if, but only if, (A) the Committee clearly informs such Participant
that such Participant has a right to a period of at least 30 days after receiving the notice to
consider the decision of whether or not to elect a distribution (and, if applicable, a particular
distribution option), and (B) such Participant, after receiving the notice, affirmatively elects a
distribution.




          (g) Partial Distribution. Three times each calendar year, a terminated Participant may elect
to withdraw up to the vested balance of any of his or her Accounts. The minimum withdrawal shall
be the lesser of $500 and the entire vested balance of the relevant Account. Withdrawals from the
Accounts shall be made in the accordance with Plan administrative procedures.




          Section 10.04. Limitations on Distributions. (a) Unless a Participant elects
otherwise, or if deemed to have elected otherwise pursuant to Section 10.03(b), payment of benefits
under this Plan to a Participant shall not commence later than the 60th day after the latest of the
end of the Plan Year during which:





     (i) such Participant attains age 65 years;




     (ii) the tenth anniversary of the date on which such Participant’s participation in this
Plan occurs; or




     (iii) such Participant’s employment with the Employers and Affiliates terminates.



          (b) Notwithstanding any provision in this Plan to the contrary, the distribution of a
Participant’s benefits shall be made in accordance with the following requirements and shall

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otherwise comply with Section 401(a)(9) of the Code and the Regulations thereunder (including
Regulation Section 1.401(a)(9)-2):





     (i) a Participant’s benefits shall be distributed to him or her not later than April 1 of
the calendar year following the calendar year in which such Participant attains age 701/2 or,
alternatively, distributions to a Participant must begin no later than the April 1st as
determined under the preceding sentence and must be made over the life expectancy of such
Participant (or the life expectancies of such Participant and his or her designated
Beneficiaries) in accordance with the Regulations; and




     (ii) distributions to such Participant and his or her Beneficiaries shall only be made in
accordance with the incidental death benefit requirements of Section 401(a)(9)(G) of the Code
and the Regulations thereunder;


provided, however, that with respect to any Participant who attains age 701/2 after 1998 (other than
an “owner” within the meaning of Section 318 of the Code), benefits shall not be paid or begin
prior to such Participant’s termination of employment with all Employers and Affiliates but, except
to the extent otherwise required by Section 401(a)(9) of the Code, this Plan shall not preclude
such Participant from receiving benefits in any of the same optional forms (except for the
difference in the timing of the commencement of payments) that would have been available to such
Participant hereunder if such Participant retired in the calendar year in which he or she attained
the age 701/2.




          (c) Minimum Required Distributions under Section 401(a)(9) of the Code.





	 	(i)	 	General Rules.






	 	(1)	 	Effective Date. This Section will apply for
purposes of determining required minimum distributions for calendar years
beginning with the 2003 calendar year.
	 
	 	(2)	 	Precedence. The requirements of this Section will
take precedence over any inconsistent provisions of this Plan.
	 
	 	(3)	 	Requirements of Regulations Incorporated. All
distributions required under this Section will be determined and made in
accordance with the Regulations under Section 401(a)(9) of the Code.
	 
	 	(4)	 	TEFRA Section 242(b)(2) Elections. Notwithstanding
the other provisions of this Section, distributions may be made under a
designation made before January 1, 1984, in accordance with Section 242(b)(2)
of the Tax Equity and Fiscal Responsibility Act (“TEFRA”) and the
provisions of this Plan that relate to Section 242(b)(2) of TEFRA.





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	 	(ii)	 	Time and Manner of Distribution.






	 	(1)	 	Required Beginning Date. The Participant’s entire
interest will be distributed, or begin to be distributed, to the Participant
no later than the Participant’s required beginning date.






	 	(2)	 	Death of Participant Before Distributions Begin.
If the Participant dies before distributions begin, the Participant’s entire
interest will be distributed as a lump sum as soon as practicable after the
Participant’s death.






	 	(iii)	 	Required Minimum Distributions During Participant’s Lifetime.






	 	(1)	 	Amount of Required Minimum Distribution For Each
Distribution Calendar Year. During the Participant’s lifetime, the
minimum amount that will be distributed for each distribution calendar year
is the lesser of:






	 	(A)	 	the quotient obtained by dividing the
Participant’s account balance by the distribution period in the Uniform
Lifetime Table set forth in Section 1.401(a)(9)-9 of the Regulations,
using the Participant’s age as of the Participant’s birthday in the
distribution calendar year; or
	 
	 	(B)	 	if the Participant’s sole designated
beneficiary for the distribution calendar year is the Participant’s
spouse, the quotient obtained by dividing the Participant’s account
balance by the number in the Joint and Last Survivor Table set forth in
Section 1.401(a)(9)-9 of the Regulations, using the Participant’s and
spouse’s attained ages as of the Participant’s and spouse’s birthdays
in the distribution calendar year.






	 	(2)	 	Lifetime Required Minimum Distributions Continue
Through Year of Participant’s Death. Required minimum distributions will
be determined under this section (iii) beginning with the first distribution
calendar year and up to and including the distribution calendar year that
includes the Participant’s date of death.






	 	(iv)	 	Required Minimum Distributions After Participant’s Death.






	 	(1)	 	Death On or After Date Distributions Begin. If the
Participant dies on or after the date distributions have begun to be paid,
the remaining Account balances shall be distributed to the Participant’s
beneficiary as soon as practicable after the Participant’s death in a lump
sum.






	 	(2)	 	Death Before Date Distributions Begin. If the
Participant dies before the date distributions have begun to be paid, the
remaining Account balances




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	 	 	 	shall be distributed to the Participant’s beneficiary as soon as practicable
after the Participant’s death in a lump sum.
	 
	 	(3)	 	Death of Surviving Spouse Before Distributions to
Surviving Spouse Are Required to Begin. If the Participant dies before
the date distributions begin, the Participant’s surviving spouse is the
Participant’s sole designated beneficiary, and the surviving spouse dies
before distributions are required to begin to the surviving spouse under this
Section, this section (iv) will apply as if the surviving spouse were the
Participant.






	 	(v)	 	Definitions.






	 	(1)	 	Designated Beneficiary. The individual who is
designated as the beneficiary under Section 10.05 of this Plan and is the
designated beneficiary under Section 401(a)(9) of the Code and Section
1.401(a)(9)-1, Q&A-4, of the Regulations.
	 
	 	(2)	 	Distribution Calendar Year. A calendar year for
which a minimum distribution is required. For distributions beginning before
the Participant’s death, the first distribution calendar year is the calendar
year immediately preceding the calendar year which contains the Participant’s
required beginning date. The required minimum distribution for the
Participant’s first distribution calendar year will be made on or before the
Participant’s required beginning date. The required minimum distribution for
other distribution calendar years, including the required minimum
distribution for the distribution calendar year in which the Participant’s
required beginning date occurs, will be made on or before December 31 of that
distribution calendar year.
	 
	 	(3)	 	Life Expectancy. Life expectancy as computed by
use of the Single Life Table in Section 1.401(a)(9)-9 of the Regulations.
	 
	 	(4)	 	Participant’s Account Balances. The Account
balances as of the last valuation date in the calendar year immediately
preceding the distribution calendar year (valuation calendar year) increased
by the amount of any contributions made and allocated or forfeitures
allocated to the Account balances as of dates in the valuation calendar year
after the valuation date and decreased by distributions made in the valuation
calendar year after the valuation date. The Account balances for the
valuation calendar year includes any amounts rolled over or transferred to
this Plan either in the valuation calendar year or in the distribution
calendar year if distributed or transferred in the valuation calendar year.
	 
	 	(5)	 	Required Beginning Date. The required beginning
date is April 1 of the calendar year following the later of (i) the calendar
year in which the Participant attains age 701/2 or (ii) the calendar year in
which the




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	 	 	 	Participant retires, except that clause (ii) shall not apply to a Five
Percent Owner.





          (d) For purposes of this Section 10.04, the life expectancy of a Participant and a
Participant’s spouse may, at the election of such Participant or such Participant’s spouse,
respectively, be redetermined in accordance with the Regulations; provided, however, that any such
election, once made, shall be irrevocable. If no election is made by the time distributions must
commence, then the life expectancy of such Participant and such Participant’s spouse shall not be
subject to recalculation.




          (e) If a distribution is made at a time when a Participant is not fully vested in any of his
or her Accounts and such Participant may increase the vested percentage in such Account:





     (i) a separate account shall be established for such Participant’s interest in this Plan
as of the time of the distribution; and




     (ii) at any relevant time, such Participant’s vested portion of the separate account
shall equal:



	 	 	 	 	 	 	 	 	 
	 	 	P(AB + (R x D))
– (R x D), where
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	P
	 	=
	 	the vested percentage at the relevant time,
	 

	 	 	 	AB
	 	=
	 	the account balance at the relevant time,
	 

	 	 	 	D
	 	=
	 	the amount of distribution and
	 

	 	 	 	R


	 	=

	 	the ratio of the account balance at
the relevant time to the account balance after distribution.






          Section 10.05. Designation of Beneficiaries. (a) Each Participant may, from time to
time, designate any person or persons (who may be designated concurrently, contingently or
successively) to whom any benefits payable on behalf of such Participant are to be distributed if
such Participant dies before he or she receives all of his or her benefits. Such Beneficiary
designation shall also be effective if a Participant dies after such Participant’s Settlement Date
but prior to distribution of all of the balances of his or her Accounts. A Beneficiary designation
shall be effective only when it is signed, dated and filed with the Committee while the Participant
is alive and will cancel all beneficiary forms previously signed and filed by such Participant.




          (b) In the event of the death of a Participant prior to distribution of the balances of such
Participant’s Accounts pursuant to Section 10.03, if such Participant was married on the date of
his or her death, the balances in such Participant’s Accounts will be distributed by payment in a
lump sum to the surviving spouse unless such Participant had made a Qualified Election prior to his
or her death, in which event payment shall be made in a lump sum to or for the benefit of such
Participant’s Beneficiaries.




          (c) For purposes of this Plan, a “Qualified Election” means, with respect to any
Participant, an election made by such Participant (on forms provided by and filed with the

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Committee) providing that the balances of such Participant’s Accounts will not be distributed in
full to the surviving spouse, and:





     (i) the spouse of such Participant consents in writing to such Qualified Election
(witnessed by a Plan representative or a notary public) and the designation of the applicable
Beneficiary (which may not be changed without spousal consent) and acknowledges the effect of
such election on forms provided by and filed with the Committee and; or




     (ii) it is established that there is no spouse, the spouse cannot be located or there
exists such other circumstances as may be provided by the Regulations prescribed by the Code.


Any Qualified Election consented to by a spouse pursuant to this paragraph (c) shall be irrevocable
and shall be effective only with respect to such spouse. A Qualified Election may be revoked but
not changed by such Participant without consent of such Participant’s spouse in accordance with
this paragraph (c).




          (d) If a Participant fails to designate a Beneficiary or if the designated Beneficiary
predeceases such Participant, for purposes of this Plan it shall be conclusively presumed that such
Participant intended to and did designate as the Beneficiary (i) his or her surviving spouse or
(ii) in the event that such Participant has no surviving spouse, his or her estate.




          Section 10.06. Forfeitures. (a) For purposes of this Plan, “Forfeiture” shall
mean that portion of a Participant’s Employer Matching Contributions Account, if any, that is not
vested, and occurs on the earlier of the last day of the Plan Year in which such Participant incurs
five consecutive One Year Breaks in Service or receives the distribution of the entire vested
balances of his or her Accounts.




          (b) As of each Accounting Date, any amounts which became Forfeitures since the last Accounting
Date shall first be made available to reinstate previously forfeited account balances of former
Participants, if any, in accordance with paragraph (c) below. The remaining Forfeitures, if any,
shall be applied to reduce the Employer Matching Contributions in accordance with Section 4.02 for
the Plan Year in which such Forfeiture occurs.





     (c)(i) If any former Participant shall be reemployed by an Employer or an Affiliate
before a One Year Break in Service occurs, such Participant shall continue to participate in
this Plan in the same manner as if such termination had not occurred and any Forfeitures shall
be reinstated pursuant to clause (ii) below.




     (ii) If any former Participant shall be reemployed by an Employer or an Affiliate before
five consecutive One Year Breaks in Service, and such former Participant received a
distribution of the vested balances of his or her Accounts prior to reemployment, any amounts
which became Forfeitures shall be reinstated if, but only if, such Participant repays the full
amount distributed to him or her before the earlier of five years after the first date on
which such Participant is subsequently reemployed by an Employer or an Affiliate or the close
of the first period of five consecutive One Year Breaks in Service commencing



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after the distribution. In the event that such former Participant does repay the full amount
distributed to him or her, the undistributed portion of such Participant’s Employer Matching
Contributions Account shall be restored in full, unadjusted by any gains or losses occurring
subsequent to the Accounting Date coinciding with or preceding such Participant’s termination.
The source for such reinstatement shall first be any Forfeitures of other Participants
occurring during the year in which such Participant’s Employer Matching Contributions Account
is reinstated. If such source is insufficient, then such Participant’s Employer shall
contribute an amount which is sufficient to restore any such forfeited Employer Matching
Contributions Accounts.




     (iii) If any former Participant is reemployed after a One Year Break in Service has
occurred, Years of Service shall include Years of Service prior to his One Year Break in
Service, subject to the following rules:




	 	(A)	 	if a former Participant has a One Year Break in Service, such
Participant’s pre-break and post-break service shall be used for computing Years of
Service for eligibility and for vesting purposes only after such Participant has
been employed for one Year of Service following the date of his or her reemployment
with an Employer;
	 
	 	(B)	 	any former Participant who under this Plan does not have a
non-forfeitable right to any interest in this Plan resulting from Employer
contributions shall lose credits otherwise allowable under clause (A) above if such
Participant’s consecutive One Year Breaks in Service equal or exceed the greater of
(x) five and (y) the aggregate number of such Participant’s pre-break Years of
Service;
	 
	 	(C)	 	after five consecutive One Year Breaks in Service, a former
Participant’s vested Employer Matching Contributions Account balance attributable
to pre-break service shall not be increased as a result of post-break service;
	 
	 	(D)	 	if a former Participant who has not had his or her Years of Service
before a One Year Break in Service disregarded pursuant to clause (B) above
completes one Year of Service for eligibility purposes following his or her
reemployment with an Employer, such Participant shall participate in this Plan
retroactively from the date of reemployment; and
	 
	 	(E)	 	if a former Participant who has not had his or her Years of Service
before a One Year Break in Service disregarded pursuant to clause (B) above
completes a Year of Service (a One Year Break in Service previously occurred, but
employment had not terminated), such Participant shall participate in this Plan
retroactively from the first day of the Plan Year during which such Participant
completes one Year of Service.





          (d) Subject to the foregoing provisions of this Section 10.06, if (i) a Participant elects the
Lump Sum Deferral Option pursuant to Section 10.03(b), (ii) such Participant (or his or her
Beneficiary) has not requested distribution of the balances of such Participant’s Accounts

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on or before the date such Participant would have attained age 65 and (iii) such Participant cannot
be located by the Corporation, then the balances in such Participant’s Accounts may be forfeited at
the end of a Plan Year and shall be applied to reduce the Employer Matching Contributions in
accordance with Section 4.02 at the Accounting Date which occurs at the end of such Plan Year. Any
such Participant (or his or her Beneficiary) who subsequently requests a distribution of the
balances of such Participant’s Accounts shall have his or her Accounts restored by the Corporation
based upon the balances in such Accounts on the Accounting Date on which such Forfeiture occurred,
unadjusted by any subsequent gains or losses.




          Section 10.07. Payment of Distribution Directly to Eligible Retirement Plan.
Notwithstanding any provision of this Plan to the contrary that would otherwise limit a
Distributee’s election under this Section 10.07, a Distributee may elect, at the time and in the
manner prescribed by the Committee, to have any portion of an Eligible Rollover Distribution paid
directly to an Eligible Retirement Plan specified by the Distributee in a Direct Rollover. For
purposes of this Section:





     (a) “Eligible Rollover Distribution” means, with respect to any Distributee, any
distribution of all or any portion of the balance of an Account to the credit of such
Distributee; provided, however, that an “Eligible Rollover Distribution” does not
include (i) any distribution that is one of a series of substantially equal periodic payments
(not less frequently than annually) made for the life (or life expectancy) of such Distributee
or the joint lives (or joint life expectancies) of such Distributee and such Distributee’s
designated beneficiary, or for a specified period of ten years or more, (ii) any distribution
to the extent such distribution is required under Section 401(a)(9) of the Code, (iii) the
portion of any distribution that is not includable in gross income (determined without regard
to the exclusion for net unrealized appreciation with respect to Employer securities) or (iv)
a hardship distribution described in Section 401(k)(2)(B)(i)(IV) of the Code;




     (b) “Eligible Retirement Plan” means, with respect to any Distributee, an
individual retirement account described in Section 408(a) of the Code, an individual
retirement annuity described in Section 408(b) of the Code, an annuity plan described in
Section 403(a) of the Code or a qualified trust described in Section 401(a) of the Code, in
each case, that accepts such Distributee’s Eligible Rollover Distribution; provided, however,
that in the case of an Eligible Rollover Distribution to a surviving spouse, “Eligible
Retirement Plan” means an individual retirement account or individual retirement annuity;




     (c) “Distributee” means (i) a Participant or former Participant, (ii) the
surviving spouse of a Participant or former Participant and (iii) with respect to the interest
of a spouse or former spouse of a Participant or former Participant who is the alternate payee
under a “qualified domestic relations order” (as defined in Section 414(p) of the Code), such
spouse or former spouse; and




     (d) “Direct Rollover” means a payment by this Plan to the Eligible Retirement
Plan specified by a Distributee.



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          Section 10.08. Qualified Domestic Relations Order Distribution. All rights and
benefits, including elections, provided to a Participant in this Plan shall be subject to the
rights afforded to any alternate payee under a “qualified domestic relations order.” Furthermore,
a distribution to an alternate payee shall be permitted if such distribution is authorized by a
qualified domestic relations order, even if the affected Participant has not separated from service
and has not reached the “earliest retirement age” under this Plan. For purposes of this Section
10.08, “alternate payee,” “qualified domestic relations order” and “earliest retirement age” shall
have the meaning set forth under Section 414(p) of the Code.




Article XI




In-Service Withdrawals




          Section 11.01. General Withdrawals by Participants. Three times each calendar year, a
Participant who is an Employee may elect to withdraw up to (a) the balance of his or her Rollover
Account and all earnings credited to such Rollover Account and (b) the vested balance of his or her
After-Tax Supplemental Contributions Account, Historical Employer Matching Contributions Account,
Cytec Accounts (excluding any Cytec Account designated as a “Pre-Tax Account”) and After-Tax
Matched Contributions Account; provided, however, that, with respect to such Participant’s
After-Tax Matched Contributions Account, such amounts have been in this Plan for at least two
years. The minimum withdrawal shall be the lesser of $500 and the entire vested balance of the
relevant Account. Withdrawals from the Accounts of a Participant specified in clause (b) above
shall be made in the order established by Plan administrative procedures. Notwithstanding anything
contained in this Section 11.01 to the contrary, any withdrawals during a calendar year pursuant to
Section 11.02 shall be considered to be withdrawals under this Section 11.01 for purposes of the
requirement that withdrawals be made no more than three times each calendar year.




          Section 11.02. Periodic Distributions. Three times each calendar year, a Participant
who is an Employee and age 591/2 or older may elect to withdraw up to the vested balance of any of
his or her Accounts other than his or her Employer Matching Contributions Account; provided,
however, that, with respect to such Participant’s After-Tax Matched Contributions Account, such
amounts have been in this Plan for at least two years. The minimum withdrawal shall be the lesser
of $500 and the entire balance of the relevant Account. Notwithstanding anything contained in this
Section 11.02 to the contrary, any withdrawals during a calendar year pursuant to Section 11.01
shall be considered to be withdrawals under this Section 11.02 for purposes of the requirement that
withdrawals be made no more than three times each calendar year. Except as provided above,
withdrawals and distributions from a Participant’s Pre-Tax Contributions Accounts, Rollover Account
and Employer Matching Contributions Account shall be prohibited until the earlier of such
Participant’s retirement, death, disability or separation from service.




          Section 11.03. Form of Withdrawals. Withdrawals shall be in the form of a lump sum,
except to the extent a Participant elects to receive Installment Payments pursuant to Section
10.03.




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          Section 11.04 Charging and Allocations of Withdrawals and Periodic Distributions. All
withdrawals under Sections 11.01 and 11.02 shall be charged to the proper Accounts of the
Participant and taken from his or her interests in the Investment Funds as directed by such
Participant.




Article XII




Loans




          Section 12.01. Loans. The Committee, or its delegate, may, in its sole discretion,
direct the Trustee to loan a Participant who is an Employee amounts from any of such Participant’s
Accounts (to the extent vested); provided, however, that all loans (including the amount thereof)
shall be subject to all of the terms, conditions, requirements and limitations specified in this
Article XII. It is intended that all loans made to participants under this Article XII shall meet
the requirements of Section 72(p) of the Code and Department of Labor Regulation 2550.408b.




          Section 12.02. Loan Administration. The loan provisions of this Plan shall be
administered by the Committee, which shall establish the terms and conditions generally applicable
to loans made under this Plan. The Committee is authorized to delegate to a committee or Employees
the authority to review loan applications, execute loan agreements and collect loan payments. The
Committee is also authorized to:





     (a) adopt such rules and regulations as it deems necessary for the proper and efficient
administration of loans under this Plan, including such adjustments to the accounting
provisions of this Plan as it deems necessary and advisable to facilitate accounting for loans
under this Plan;




     (b) establish standards which shall be used to determine if a loan application should be
approved;




     (c) prescribe the forms to be used in administering the loan provisions of this Plan;




     (d) determine how the interest rate to be charged on outstanding loans is to be
calculated and when the rate to be charged for new loans is to be changed;




     (e) determine, from time to time, the minimum loan amount (which shall not be less than
$1,000);




     (f) employ agents, attorneys, accountants and other persons to properly and efficiently
administer the loan provisions of this Plan and to collect outstanding loans; and




     (g) take all other actions necessary or advisable to carry out the provisions of this
Article XII.



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          Section 12.03. Loan Eligibility. Only those Participants who are Employees shall be
eligible to submit loan applications or to obtain a loan. Additionally, Participants who are on a
paid leave of absence from the Employer are eligible to submit loan applications to obtain a loan.
Notwithstanding anything in this Article XII to the contrary, Participants who are on unpaid leave
of absence or military leave of absence are not eligible to submit loan applications to obtain a
new loan.




          Section 12.04. Loan Application. The Committee shall set procedures by which
Participants may apply for a loan and by which loans shall be approved. Only three loans per
Participant may be outstanding at any time. All loan applications are to be considered on a
reasonably equivalent basis, and in making such loans the Committee should consider only those
factors which would be considered in a normal commercial setting by a person in the business of
making similar types of loans.




          Section 12.05. Terms and Conditions of Loans. From time to time the Committee shall
establish rules governing the making of loans, including the minimum amount for which a loan shall
be made (which shall not be less than $1,000) and the terms and conditions of repayment of
principal and interest. Such rules shall be uniformly applied to all similarly situated
Participants. Each loan shall be evidenced by a promissory note in a form approved by the
Committee, shall provide for a reasonable annual rate of interest and shall be adequately secured.




          Section 12.06. Maximum Loan. The maximum aggregate amount for which loans may be made
to any Participant shall be the lesser of the following amounts:





     (a) 50% of the vested balances in such Participant’s Accounts; or




     (b) $50,000, reduced by the amount (if any) by which (i) the highest outstanding balance
of such Participant’s loans from this Plan (and all other plans of the Employers and
Affiliates) during the one year period ending on the day before the date on which such loan is
to be made exceeds (ii) the outstanding balance of such Participant’s loans from this Plan on
the date the loan is made.


The foregoing loan limit shall apply only at the time the loan is made. The Committee shall also
establish guidelines relating to the ability of Participants to repay loans, which shall determine
the maximum amount of any loan which can be made to any Participant.




          Section 12.07. Interest. Each loan shall bear interest at a reasonable rate to be
fixed by the Committee. In determining the interest rate, the Committee shall provide this Plan
with a return commensurate with the interest rates charged by persons in the business of lending
money for loans which would be made under similar circumstances. Interest rates shall be fixed for
the term of the loan at the time the loan is made, and the Committee shall determine periodically,
but not less often than annually, the interest rate to be charged on new loans. Notwithstanding
anything in this Section 12.07 to the contrary, consistent with the requirements under the
Servicemembers Civil Relief Act, any loan outstanding at the time a Participant enters military
service (as defined under the Servicemembers Civil Relief Act) shall be charged a rate of interest

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of no more than 6% compounded annually during such period of military service, which shall end on
the date on which the Participant is released from military service or dies while in military
service. To obtain this 6% rate, the Participant must provide this Plan with written notice and a
copy of the military orders calling the Participant to military service. Upon receipt of written
notice and a copy of orders calling a Participant to military service, this Plan shall reduce the
rate of interest on the Participant’s loan(s) to 6% effective as of the date on which the
Participant is called to military service.




          Section 12.08. Terms of Loan and Repayment. (a) The Committee, or its delegate, shall
review each loan application in accordance with the provisions of this Plan and decide whether or
not the relevant loan shall be approved. The decision of the Committee, or its delegate, regarding
the approval or rejection of a loan application shall be final and binding on all parties. The
period of repayment for any loan shall be determined by mutual agreement between the Committee, or
its delegate, and the Participant, but such period shall in no event exceed 60 months (plus the
period that such Participant was on a leave of absence due to performing service in the uniformed
services as provided for under Section 12.19).




          (b) Each loan to a Participant must be adequately secured. A Participant’s vested balance in
this Plan is the only collateral which may be used as security for a loan.




          (c) Loan payments shall be required to be made through payroll deductions and each Participant
shall be required to execute irrevocable authorization forms authorizing the Employers to deduct
the loan payments from such Participant’s wages or salary, which amounts shall be transmitted to
the Trustee and applied against the outstanding loan balance. A Participant may prepay the entire
outstanding unpaid principal balance on any loan (and all remaining interest due thereon) other
than by payroll deduction at any time without penalty. If a Participant is not receiving wages or
a salary from the Employer, repayment of any loan to such Participant shall be made in accordance
with the terms and procedures established by the Committee.




          (d) Loan repayments will be suspended under this Plan as permitted by Section 414(u)(4) of the
Code.




          Section 12.09. Risk of Loss. To insure the loan program does not place other
Participants at risk with respect to their interest in this Plan, the Committee may administer any
Participant’s loan as a Participant directed investment of that portion of the vested balances of
such Participant’s Accounts and, as such, may charge any expenses related to issuing, maintaining
or collecting such loan to such Participant’s Accounts.




          Section 12.10. Source of Loan Funds. Loans to a Participant may be made from any of
such Participant’s Accounts (to the extent vested); provided, however, that notwithstanding
anything contained in this Plan to the contrary, Company Stock held in a Participant’s Account may
not under any circumstances be sold to fund a loan.




          Section 12.11. Debiting of Accounts. Accounts of a Participant shall be debited to
satisfy a loan request in the order established by Plan administrative procedures. If a
Participant

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has Account balances in more than one of the Investment Funds, such Investment Funds shall be
reduced in the manner established by Plan administrative procedures, except that balances invested
in Company Stock will not be sold to fund a loan or distributed as a loan. Company Stock may,
however, be used as security for a loan.




          Section 12.12. Accounting for Loans. Any loan made to a Participant from any of such
Participant’s Accounts specified in Section 12.11 shall be made by liquidating and converting to
cash the appropriate Accounts and Investment Funds (other than Company Stock). A “Loan
Account” shall then be established for such Participant, which shall reflect the outstanding
unpaid balance of the loan from time to time. Repayments towards such loan shall be separated into
principal and interest payments. Principal and interest payments shall be debited against such
Participant’s Loan Account and credited to such Participant’s Accounts in the order established by
Plan administrative procedures. Principal and interest payments credited to such Participant’s
Accounts shall be invested in Investment Funds in accordance with such Participant’s current
investment election with respect to new deposits or, if such Participant does not have a current
investment election, in the Guaranteed Income Fund.




          Section 12.13. Distributions While Loan Balance is Outstanding. (a) When a final
distribution is made with respect to a Participant who has an outstanding loan balance, such
Participant (or his or her Beneficiaries) shall receive a distribution equal to (i) the vested
balances in such Participant’s Accounts minus (ii) any balance in such Participant’s Loan Account
plus accrued and unpaid interest through the date of distribution. In addition, such Participant’s
promissory note shall be delivered to such Participant (or his or her Beneficiaries) and the
balance in such Participant’s Loan Account shall be reduced to zero.




          (b) If a Participant who has an outstanding loan balance elects a Lump Sum Distribution, a
Lump Sum Deferral Option, an Installment Payout Option or a Life Expectancy Payout Option, the
entire outstanding unpaid principal amount of all loans plus accrued and unpaid interest must be
extinguished prior to such Participant’s Settlement Date. If such Participant does not pay the
entire outstanding unpaid principal amount of all loans plus accrued and unpaid interest in cash
prior to his or her Settlement Date, such Participant’s promissory note shall be delivered to him
or her (or his or her Beneficiaries) and the balance in such Participant’s Loan Account shall be
reduced to zero; provided, however, that none of such Participant’s Accounts shall be credited in
connection with such reduction in the balance of such Participant’s Loan Account.




          (c) In no event shall any Participant, Beneficiary or any other person be paid in cash or
property (other than the promissory note of the relevant Participant) an amount attributable to a
balance in such Participant’s Loan Account.




          Section 12.14. Unpaid Balances at End of Sixty-Month Period. Except as provided under
Section 12.19, in the event that any principal or interest on any loan remains outstanding at the
end of 60 months, the Committee or its delegate shall declare the remaining unpaid loan balance to
be a taxable distribution from this Plan for purposes of Section 72(p) of the Code. If the
outstanding loan balance is subsequently repaid, the principal payments shall be credited as
provided in Section 12.12. For all other purposes, the remaining unpaid loan balance shall

-51-









 








remain a legal obligation of the Participant, and the Trustee and the Committee shall take all
necessary action to ensure its collection.




          Section 12.15. Hardship Withdrawal in Bankruptcy. Upon an Adjudication of Bankruptcy
with respect to any Participant that has an outstanding loan, the Committee, or its delegate, shall
determine if such Adjudication of Bankruptcy has caused such Participant to incur a hardship. If
the Committee or its delegate, in its sole discretion, determines that a hardship (within the
meaning of Section 401(k)(2)(B) of the Code) exists for such Participant, the Committee or its
delegate shall declare a hardship distribution, such Participant’s promissory note shall be
delivered to him or her (or his or her Beneficiaries) and the balance in such Participant’s Loan
Account shall be reduced to zero; provided, however, that none of such Participant’s Accounts shall
be credited in connection with such reduction in the balance of such Participant’s Loan Account.
For purposes of this Plan, an “Adjudication of Bankruptcy” means, with respect to any
Participant, the earliest of the following to occur:





     (a) an entry of an order for relief with respect to such Participant under the United
States Bankruptcy Code, as amended; or




     (b) the filing of a petition against such Participant in an involuntary case under the
United States Bankruptcy Code, as amended.



          Section 12.16. Default. The Committee will treat a loan to any Participant as in
default if any scheduled payment remains unpaid more than 90 days. If a loan is required to be
treated as in default hereunder, the entire outstanding principal amount of such loan and accrued
and unpaid interest thereon shall automatically become immediately due and payable on demand. To
the extent a distribution to a Participant whose loan is required to be treated as in default
hereunder is permissible under this Plan, the Committee will, as soon as practicable after such
loan is required to be treated as in default hereunder, reduce the vested balances in such
Participant’s Accounts by the lesser of (a) the outstanding principal amount of such loan plus
accrued and unpaid interest thereon and (b) the aggregate vested balances in such Participant’s
Accounts. To the extent a distribution to a Participant whose loan is required to be treated as in
default hereunder is not permissible under this Plan, such Participant may be treated as having a
deemed taxable distribution in an amount equal to the outstanding principal amount of such loan
plus accrued and unpaid interest thereon and the Committee will treat the promissory note as repaid
to the extent of, and after making, any permissible offset or deemed distribution.




          Section 12.17. Reductions in Force. Notwithstanding anything to the contrary
contained in this Article XII, in the event that a Participant’s employment is involuntarily
terminated on or after November 16, 1998 by an Employer (other than for cause) as part of a formal
reduction in force or a layoff program, the term of such Participant’s loan shall not be
accelerated by reason of such termination of employment and, thereafter, each monthly installment
payment shall be due at the end of each month remaining in such term. This provision shall
constitute a part of the terms and provisions of each loan; provided, however, that to the extent
that this Section 12.17 constitutes a modification to an outstanding loan, it shall be effective
with respect to such loan only if the requirements of Section 2550.408b-1 of the

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regulations of the Department of Labor are determined to have been complied with at the time of
such modification.




          Section 12.18. Loan Expenses. Any expenses incurred or charged relating to
administering, issuing, maintaining or collecting a Participant’s loan shall be charged to such
Participant’s Accounts. The payment of such expenses by the Participant is a condition to the
receipt of benefits under this Plan.




          Section 12.19. Performing Service in the Uniformed Services. Notwithstanding anything
in this Section 12.19 to the contrary, this Article XII shall be applied in accordance with the
requirements under Section 414(u) of the Code. If this Plan suspends repayments for any part of a
period during which the Participant is performing service in the uniformed services (as defined in
Chapter 43 of Title 38 of the United States Code), whether or not qualified military service (as
defined under Section 414(u)(5) of the Code), the suspension will not cause the loan to be deemed
distributed under Section 72(p) of the Code. However, the loan will not satisfy the repayment term
requirement and level amortization requirement of Section 72(p)(2) of the Code unless the loan
repayments resume upon the completion of such period of performing service in the uniformed
services and the loan is repaid thereafter by amortization in substantially level installments over
a period that ends not later than the latest permissible term of the loan (which shall include the
original term of the loan plus the period that such Participant was on a leave of absence due to
performing service in the uniformed services).




          Upon resuming active employment after performing service in the uniformed services ends, the
Participant shall have the following option with respect to the repayment of his or her outstanding
loan balance (which shall include interest that accrued during such period of the military leave of
absence and shall resume upon the Participant’s completion of performing service in the uniformed
services):





     (a) continue the monthly installments with respect to the loan in the same amount as
required prior to the military leave of absence and pay the full balance remaining at the end
of the term of the loan; or




     (b) continue the monthly installments with respect to the loan in an increased amount to
include the interest that accrued during the period that the Participant was on a military
leave of absence, which shall be amortized in substantially level installments over the
remaining term of the loan.


If the Participant who was on a military leave of absence fails to elect either option (a) or (b)
above within 15 days after resuming active employment, then the Participant shall continue the
monthly installments for his or her loan under option (b) above.




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Article XIII




The Committee




          Section 13.01. Membership. The Committee shall consist of three or more members
appointed by the Corporation.




          Section 13.02. Committee’s General Powers, Rights and Duties. The Committee, which is
established by and derives its authority from the Corporation, is, as respects the rights and
obligations of all parties with an interest in this Plan, given the powers, rights and duties
specifically stated elsewhere in this Plan, the Trust Agreement or any other document, and in
addition is given the power, right and duty to:





     (a) determine all questions arising under this Plan, including the power to determine the
rights or eligibility of Employees or Participants and any other persons, and the amounts of
their benefits under this Plan, and to remedy ambiguities, inconsistencies or omissions;




     (b) adopt such rules of procedure and regulations as in its opinion may be necessary for
the proper and efficient administration of this Plan and as are consistent with this Plan and
the Trust Agreement;




     (c) enforce this Plan in accordance with the terms of this Plan and the Trust Agreement
and in accordance with any rules of procedure and regulations adopted by the Committee
pursuant to clause (b) above;




     (d) direct the Trustee in connection with payments, distributions or loans from the Trust
Fund in accordance with the provisions of this Plan;




     (e) furnish the Employers with such information as may be required by them for tax or
other purposes in connection with this Plan; and




     (f) employ agents, attorneys, accountants or other persons (who also may be employed by
any Employer or the Trustee), and allocate or delegate to them such powers, rights and duties
as the Committee may consider necessary or advisable to properly carry out the administration
of this Plan; provided, however, that such allocation or delegation and the acceptance thereof
by such agents, attorneys, accountants or other persons are in writing.



          Section 13.03. Manner of Action. During any period in which two or more Committee
members are acting, the following provisions apply where the context admits:





     (a) at all meetings of the Committee, a majority of the members of the Committee shall be
necessary and sufficient to constitute a quorum for the transaction of business;



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     (b) if a quorum shall not be present at any meeting of the Committee, the members of the
Committee present thereat may adjourn the meeting from time to time (without notice other than
announcement at the meeting) until a quorum shall be present;




     (c) a meeting of the Committee at which a quorum is initially present may continue to
transact business notwithstanding the withdrawal of members of the Committee; provided,
however, that no action of the remaining members of the Committee shall constitute the act of
the Committee;




     (d) an action or a decision of a majority of the members of the Committee shall be the
act of the Committee;




     (e) any action required or permitted to be taken at any meeting of the Committee may be
taken without a meeting if a majority of the members of the Committee consent thereto in
writing;




     (f) members of the Committee may participate in a meeting of the Committee by means of
conference telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other, and such participation in a meeting shall
constitute presence in person at such meeting;




     (g) any document to be signed by the Committee may be signed in any number of
counterparts, each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument;




     (h) a Committee member may delegate any or all of his or her rights, powers, duties and
discretion to any other Committee member, with the consent of the latter; provided, however,
that such delegation and the acceptance thereof by such other Committee member are in writing;




     (i) if, because of the number qualified to act, there is an even division of opinion
among the Committee members as to a matter, a disinterested party selected by the Committee
shall decide the matter and such party’s decision shall control;




     (j) except as otherwise provided by Law, no member of the Committee shall be liable or
responsible for an act or omission of the other Committee members in which the former has not
concurred; and




     (k) a certificate signed by the Secretary of the Committee or a majority of the members
of the Committee certifying that the Committee has taken or authorized any action shall be
conclusive in favor of any person relying on such certificate.



          Section 13.04. Information Required by Committee. The Employers shall furnish the
Committee with such data and information as the Committee may deem necessary or desirable in order
to administer this Plan. The records of the Employers as to an Employee’s or Participant’s period
of employment, termination of employment and the reason therefor, leave of

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absence, reemployment and earnings will be conclusive on all persons unless determined to the
Committee’s satisfaction to be incorrect. Participants and other persons entitled to benefits
under this Plan also shall furnish the Committee with such evidence, data or information as the
Committee considers necessary or desirable to administer this Plan.




          Section 13.05. Committee Decision Final. Subject to applicable Law and the provisions
of Section 13.06, any interpretation of the provisions of this Plan and any decision on any matter
within the discretion of the Committee made by the Committee in good faith shall be binding on all
persons. A misstatement or other mistake of fact shall be corrected when it becomes known and the
Committee shall make such adjustment on account thereof as it considers equitable and practicable.




          Section 13.06. Review of Benefit Determinations. The Committee will provide notice in
writing to any Participant, Beneficiary or other person whose claim for benefits under this Plan is
denied and the Committee shall afford such Participant, Beneficiary or other person a full and fair
review of its decision, if so requested.




          Section 13.07. Uniform Rules The Committee shall administer this Plan on a
reasonable and nondiscriminatory basis and shall apply uniform rules to all Participants similarly
situated.




Article XIV




Relating to the Employers




          Section 14.01. Action by Employers. Any action required or permitted of an Employer
under this Plan shall be by resolution of its Board of Directors, by a duly authorized committee of
its Board of Directors or by a person or persons authorized by resolution of its Board of Directors
or duly authorized committee.




          Section 14.02. Additional Employers. Any Affiliate that is not an Employer may adopt
this Plan and become an Employer under this Plan, with the consent of the Committee.




          Section 14.03. Restrictions as to Reversion of Trust Assets to Employers. An Employer
contribution made based on a good faith mistake of fact or good faith mistake in determining the
deductibility of the contribution or conditioned upon the initial qualification of this Plan shall
be returned to the Employer within one year of the mistaken payment or disallowance of the
deduction or denial of qualification, as the case may be. The amount returnable is the excess of
the amount contributed over the amount that would have been contributed had there not occurred such
mistaken payment or disallowance of the deduction or denial of qualification, as the case may be.
However, earnings on the excess amount may not be so returned and any losses attributable to such
amount shall reduce the amount returnable. Further, the amount returnable cannot cause the
individual account of any Participant to be reduced to less than it would have been had such amount
not been contributed.




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Article XV




General Provisions




          Section 15.01. Notices. Each person entitled to benefits under this Plan must file in
writing with the Committee such person’s post office address and each change of post office
address. Any communication, statement or notice addressed to any person at the last post office
address filed with the Committee will be binding upon such person for all purposes of this Plan,
and none of the Committee, the Employers or the Trustee shall be obligated to search for or
ascertain the whereabouts of any such person. Any notice or document required to be given to or
filed with the Committee shall be considered as given or filed if delivered or mailed by registered
mail, postage prepaid, to the Committee in care of the Corporation.




          Section 15.02. Waivers. No amendment, modification, restatement or supplement of this
Plan shall be valid unless the same is in writing and signed by the Corporation. No waiver of any
provision of this Plan shall be valid unless in writing and signed by the person or entity against
whom that waiver is sought to be enforced. No failure or delay on the part of any person or entity
in exercising any right, power or privilege hereunder shall operate as a waiver of any right, power
or privilege hereunder. No single or partial exercise of any right, power or privilege hereunder
shall preclude any other or further exercise thereof or the exercise of any other right, power or
privilege hereunder. No notice to or demand on any person or entity in any case shall entitle such
person or entity to any other or further notice or demand in similar or other circumstances or
constitute a waiver of the rights of any person or entity to any other or further action in any
circumstances without notice or demand.




          Section 15.03. Absence of Guaranty. None of the Committee, the Employers or the
Trustee in any way guarantees the Trust Fund from loss or depreciation, nor guarantees any payment
to any person. The liability of the Committee, the Employers and the Trustee to make any payment
under this Plan will be limited to the assets held by the Trustee as a part of the Trust Fund.




          Section 15.04. No Employment Rights. The Plan does not constitute a contract of
employment, and participation in this Plan will not give any Employee the right to be retained in
the employ of the Employers or Affiliates nor any right or claim to any benefit under this Plan,
(other than rights and claims that have specifically accrued under the terms of this Plan).




          Section 15.05. Interests Not Transferable. Except as may be required or permitted by
the Code, and except (to the extent permitted by applicable Law) as to any loan owing to the
Trustee under this Plan, the interests of Participants and Beneficiaries under this Plan are not
subject to the claims of their creditors and may not be voluntarily or involuntarily sold,
transferred, alienated, assigned or encumbered.




          Section 15.06. Facility of Payment. When a person entitled to benefits under this
Plan is under a legal disability or, in the Committee’s opinion, is in any way incapacitated so as
to be unable to manage his or her financial affairs, the Committee may direct that the benefits to
which such person otherwise would be entitled shall be made to such person’s legal

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representative, or to a relative or friend of such person for such person’s benefit, or the
Committee may direct the application of such benefits for the benefit of such person. If the
Committee receives proper authorization by a Participant or any other person entitled to benefits
under this Plan, and unless and until the Committee is notified or becomes aware that such
authorization no longer is in effect, the Committee will direct that periodic deposits of the
benefits which otherwise would be payable directly to such Participant shall be made into a savings
or checking account established in such Participant’s name at a bank or other financial
institution. Any payment made in accordance with the provisions of this Section 15.06 shall be a
full and complete discharge of any liability for such payment under this Plan.




          Section 15.07. Distribution of Payment. In the event that any distribution or payment
directed by the Committee shall be mailed by the Trustee to the person specified in such direction
at the latest address of such person filed with the Committee, and shall be returned to the Trustee
because such person cannot be located at such address, the Trustee shall promptly notify the
Committee of the return. Upon the expiration of 60 days after such notification, such direction
shall become void and unless and until a further direction by the Committee is received by the
Trustee with respect to such distribution or payment, the Trustee shall thereafter continue to
administer the Trust as if such direction had not been made by the Committee. The Trustee shall
not be obligated to search for or ascertain the whereabouts of any such person.




          Section 15.08. Evidence. Evidence required of anyone under this Plan may be by
certificate, affidavit, document or other information which the person acting on it considers
pertinent and reliable, and signed, made or presented by the proper party or parties.




          Section 15.09. Indemnity. Without in any way limiting the scope of any indemnity
agreement entered into in favor of or by and between parties referred to in this Section 15.09, the
Trustee, the Committee, the members of the Committee, the former members of the Committee and any
persons who are or were directors, officers or employees of the Employers, any Affiliates or any of
their respective subsidiaries, and each of them, shall be indemnified and saved harmless by the
Corporation from and against any and all loss, cost, liability or expense that may be imposed upon
or reasonably incurred by such indemnified person in connection with or resulting from any claim,
action, suit or proceeding to which such indemnified person may be a party or in which such
indemnified person may be involved by reason of any action taken or failure to act under this Plan
or the Trust, the administration thereof or the investment of the assets held in the Trust Fund,
and against and from any and all amounts paid by such indemnified person in settlement thereof,
with the Corporation’s approval, or paid by such indemnified person in satisfaction of any judgment
in any such action, suit or proceeding; provided, however, that such indemnified person shall give
the Corporation prompt written notice of any such action, suit or proceeding and an opportunity, at
its own expense, to handle, defend and settle the same before such indemnified person undertakes to
handle, defend or settle the same. The foregoing right of indemnification shall not be exclusive
of any other rights or indemnification to which any such indemnified person may be entitled under
the Corporation’s Certificate of Incorporation or Bylaws, as a matter of law or otherwise, or any
power that the Corporation may have to indemnify them or hold them harmless.




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          Section 15.10. Controlling State Law. To the extent not superseded by the Laws of the
United States, the Laws of the State of Texas shall be controlling in all matters relating to this
Plan.




          Section 15.11. Severability. Should any clause, sentence, paragraph, subsection,
Section or Article of this Plan be judicially declared to be invalid, unenforceable or void, such
decision will not have the effect of invalidating or voiding the remainder of this Plan, and the
part or parts of this Plan so held to be invalid, unenforceable or void will be deemed to have been
stricken herefrom as if such stricken part or parts had never been included herein.




          Section 15.12. Successors. The provisions of this Plan shall be binding upon the
Employers and their successors and assigns and upon the Participants and their Beneficiaries and
their respective heirs, executors, personal representatives, administrators, successors and
assigns.




Article XVI




Amendment, Termination or Plan Merger




          Section 16.01. Amendment. While the Corporation expects and intends to continue this
Plan, the Corporation, by action of its Board of Directors or the Committee, reserves the right to
amend, retroactively or prospectively, this Plan from time to time; provided, however, that:





     (a) the Committee may not make any amendment to this Plan that would materially increase
the Employers’ costs or obligations under this Plan;




     (b) except as may be required by the Internal Revenue Service for the purpose of meeting
the conditions for qualification or for tax deduction under Sections 401 through 415 and
Section 501 of the Code or as may be required by ERISA or any other state or federal Law, no
action of the Corporation hereunder shall alter the operation of this Plan as it applies to
employees with whom or with whose representatives there exists a written agreement pertaining
to retirement income benefits, during the term of any such agreement; and




     (c) except as provided in Section 14.03, under no condition shall any amendment result in
the return or repayment to any Employer of any part of the Trust Fund or the income therefrom,
or result in the distribution of the Trust Fund for the benefit of anyone other than
Participants and any other persons entitled to benefits under this Plan.



          Section 16.02. Termination. This Plan will terminate as to all Employers on any date
specified by the Corporation if 30 days’ advance written notice of such termination is given to the
Committee, the Trustee and the other Employers. This Plan will terminate as to an individual
Employer on the first to occur of the following:





     (a) the date it is terminated by the Board of Directors of the Corporation as to that
Employer; or



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     (b) the date that such Employer ceases to be an Affiliate of the Corporation, such
Employer dissolves, merges, consolidates or reorganizes or such Employer sells all or
substantially all of its assets, except that:




	 	(i)	 	in any such event, arrangements may be made with the consent of the
Corporation whereby this Plan may be continued by any successor to that Employer or
any purchaser of all or substantially all of its assets, in which case, the
successor or purchaser may be substituted for that Employer under this Plan and the
Trust Agreement; and
	 
	 	(ii)	 	if any Employer is merged, dissolved or in any way reorganized into, or
consolidated with, any other Employer, this Plan as applied to the former Employer
will automatically continue in effect without a termination thereof.




Notwithstanding anything to the contrary contained in this Plan, if this Plan is terminated or
partially terminated, or the Employers’ contributions under this Plan are completely discontinued,
each affected Participant shall thereupon be 100% vested in his or her Accounts as of the date of
such discontinuance or termination and in any amount thereafter credited or allocated to such
Accounts.




          Section 16.03. Plan Merger or Consolidation. The Corporation reserves the right at
any time and from time to time to merge or consolidate this Plan with another plan, to transfer
assets or liabilities of this Plan to another plan, or to accept a transfer of assets or
liabilities from another plan to this Plan. To the extent that Section 414(l) of the Code applies,
no merger, consolidation or transfer may be undertaken unless each Participant shall be entitled to
receive a benefit immediately after the merger, consolidation or transfer which is equal to or
greater than the benefit he or she would have been entitled to receive immediately prior to the
merger, consolidation or transfer if this Plan had been terminated at such time, or unless such
alternative requirements as may be imposed by regulations under Section 414(l) of the Code are
satisfied.




          Section 16.04. Notice of Amendment, Termination or Plan Merger. Affected Participants
will be notified of any termination, plan merger, consolidation or substantial amendment within a
reasonable time.




          Section 16.05. Distribution on Termination. On termination of this Plan,
distributions shall be paid as soon as practicable thereafter in a lump sum.




Article XVII




Top-Heavy Provisions




          Section 17.01. Determination of Top-Heavy. (a) Except as otherwise provided in this
Section 17.01, this Plan shall be considered a “Top-Heavy Plan” with respect to any Plan
Year if, as of the last day of the preceding Plan Year:




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     (i) the aggregate of the sum of the Accounts of Participants who are Key Employees
exceeds 60% of the aggregate of the sum of the Accounts of all Participants (the “60%
Test”); or




     (ii) this Plan is part of a “required aggregation group” (i.e., each qualified plan of
the Employers in which at least one Key Employee participates and any other qualified plan of
the Employers which enables any such plan to meet the requirements of Sections 401(a)(4) or
410 of the Code) and, as of the last day of the preceding Plan Year:




	 	(A)	 	the sum of (x) the present value of the Accrued Benefits for Key
Employees under all defined benefit plans included in such group plus (y) the
aggregate of the Accounts of Key Employees under all defined contribution plans
included in such group, exceeds
	 
	 	(B)	 	60% of the sum, as of the last day of the preceding Plan Year, of the
amounts specified in clause (A) above for all participants under the plans
described in clause (A);




provided, however, that if any Participant has not performed services for any Employer at any time
during the five-year period ending on the determination date, such Participant’s Account balances
shall not be taken into account for purposes of top heavy determination. For purposes of this
Section 17.01, the “determination date” means, for the first plan year of any plan, the last day of
such plan year and, for each subsequent plan year of such plan, the last day of the preceding plan
year).




          (b) Notwithstanding anything to the contrary contained in this Section 17.01, this Plan shall
not be considered a Top-Heavy Plan with respect to any Plan Year if this Plan is a part of a
“permissive aggregation group” (i.e., the required aggregation group of plans plus any other plan
or plans of the Employer which, when considered as a group with the required aggregation group,
would continue to satisfy the requirements of Sections 401(a)(4) and 410 of the Code) which does
not satisfy the requirements of Section 17.01(a)(ii).




          (c) Distributions made within the preceding Plan Year and within the four Plan Years
immediately preceding such Plan Year shall be added to the Account of any Participant in
determining whether this Plan shall be considered a Top-Heavy Plan; provided, however, that the
Accounts of any Participant who is not a Key Employee but who was a Key Employee in a prior Plan
Year or who has not received any compensation from any Employer maintaining this Plan at any time
during such five-year period will be disregarded.




          Section 17.02. Minimum Allocations. Notwithstanding anything contained in this Plan
to the contrary, for any Plan Year in which this Plan is deemed a Top-Heavy Plan, the minimum
Employer contributions for a Plan Year for each Participant who is not a Key Employee shall be
equal to 3% of such Participant’s compensation.




          Section 17.03. Compensation Limitation. The compensation limits of Section 401(a)(17)
of the Code shall apply.




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          Section 17.04. Repeal, Modification or Postponement of Top-Heavy Provisions. In the
event that all or any portion of Section 416 of the Code is modified, this Article XVII shall be
deemed to have been modified in a manner commensurate with such amendment to Section 416 of the
Code. In the event that all or any portion of Section 416 of the Code is repealed, this Article
XVII shall have no effect as of the effective date of such repeal. Furthermore, if the effective
date of Section 416 of the Code is delayed or postponed, this Article XVII shall have no effect
until the effective date of Section 416 of the Code.




          Section 17.05. Minimum Vesting. If a Participant resigns or is dismissed from the
employ of the Employers and the Affiliates before retirement, payment of Account balances shall be
governed by Section 10.02 of this Plan.




          Section 17.06. Key Employee. An Employee is considered a “Key Employee” with
respect to any Plan Year if such Employee, at any time during such Plan Year or any of the
preceding four Plan Years, has been included in one of the following categories:





     (a) an “officer” of the Employer (as defined in the Regulations under Section 416 of the
Code) having annual 415 Compensation greater than 50% of the amount in effect under Section
415(b)(1)(A) of the Code for any such Plan Year;




     (b) one of the ten Employees having annual 415 Compensation from the Employers for any
such Plan Year greater than the dollar limitation in effect under Section 415(c)(1)(A) of the
Code for the calendar year in which such Plan Year ends and owning (or considered as owning
within the meaning of Section 318 of the Code) both more than a 0.5% interest and the largest
interests in the Employer;




     (c) a Five Percent Owner of any Employer; or




     (d) a One Percent Owner of any Employer having annual 415 Compensation from such Employer
of more than $150,000; provided, however, that in determining whether an individual has 415
Compensation of more than $150,000, 415 Compensation from each Employer required to be
aggregated under Sections 414(b), (c), (m) and (o) of the Code shall be taken into account.


For purposes of this Section 17.06, the determination of 415 Compensation shall be based only on
415 Compensation which is actually paid, including amounts which are (i) contributed by the
Employers pursuant to a salary reduction agreement and which are not includable in the gross income
of the relevant Participant under Sections 125, 402(e)(3), 402(h), 403(b) or 457 of the Code and
(ii) contributions by such Participant that are described in Section 414(h)(2) of the Code and
treated as Employer contributions.




          Section 17.07. Compensation. For purposes of this Article XVII, the “compensation” to
be used for any Employee is the compensation stated on such Employee’s Form W-2 for the calendar
year that ends within the relevant Plan Year. This definition of compensation shall be used for
determining a minimum benefit or a minimum contribution for

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any Employee and for all Top-Heavy Plan purposes, except that, for the purpose of determining
whether an Employee is a Key Employee with respect to any Plan Year beginning on or after January
1, 1989, the compensation to be used is “compensation” (as defined in Section 415(c)(3) of the
Code) but including Employer contributions made pursuant to any salary reduction arrangement and,
effective January 1, 2001, amounts not includable in gross income by reason of Code section
132(f)(4).




Article XVIII




EGTRRA Provisions




Preamble





	 	A.	 	Adoption and Effective Date of Article XVIII. This Article XVIII of this
Plan is adopted to reflect certain provisions of the Economic Growth and Tax Relief
Reconciliation Act of 2001 (“EGTRRA”). This Article is intended as good faith
compliance with the requirements of EGTRRA and is to be construed in accordance with
EGTRRA and guidance issued thereunder. Except as otherwise provided, this Article shall
be effective as of the first day of the first Plan Year beginning after December 31,
2001, and shall end December 31, 2010, unless extended by law or otherwise.
	 
	 	B.	 	Supersession of Inconsistent Provisions. This Article XVIII shall
supersede the provisions of this Plan to the extent those provisions are inconsistent
with the provisions of this Article.





          Section 18.01. Increase in Eligible Earnings Limit. Notwithstanding anything in the
definitions of Eligible Earnings and 414(s) Compensation in Article I or any other Plan provision
to the contrary, for Plan Years beginning on or after January 1, 2002, the annual compensation of
each Participant taken into account in determining allocations for any Plan Year shall not exceed
$200,000, as adjusted for increases in the cost-of-living in accordance with Section 401(a)(17)(B)
of the Code. Annual compensation means compensation during the Plan Year or such other consecutive
12-month period over which compensation is otherwise determined under this Plan (the determination
period). The cost-of-living adjustment in effect for a calendar year applies to annual
compensation for the determination period that begins with or within such calendar year.




          Section 18.02. Limitations on Contributions. (a) Effective Date. This
Section shall be effective for limitation years beginning after December 31, 2001.




          (b) Maximum Annual Addition. Notwithstanding Section 7.01, except to the extent
permitted under Section 414(v) of the Code, if applicable, the annual additions that may be
contributed or allocated to a Participant’s Account under this Plan for any limitation year shall
not exceed the lesser of:




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     (1) $40,000, as adjusted for increases in the cost-of-living under Section 415(d) of the
Code, or




     (2) 100% of the Participant’s 415 Compensation for the limitation year.


The compensation limit referred to in (2) shall not apply to any contribution for medical benefits
after separation from service (within the meaning of Section 401(h) or Section 419A(f)(2) of the
Code) which is otherwise treated as an annual addition.




          Section 18.03. Modification of Top-Heavy Rules. (a) Effective Date. This
Section shall apply for purposes of determining whether this Plan is a top-heavy plan under Section
416(g) of the Code for Plan Years beginning after December 31, 2001, and whether this Plan
satisfies the minimum benefits requirements of Section 416(c) of the Code for such years. This
subsection amends Article XVII of this Plan.




          (b) Determination of Top-Heavy Status. “Key Employee” means any Employee or former
Employee (including any deceased Employee) who at any time during the Plan Year that includes the
determination date was an officer of the Employer having annual compensation greater than $130,000
(as adjusted under Section 416(i)(1) of the Code for Plan Years beginning after December 31, 2002),
a 5-percent owner of his or her Employer, or a 1-percent owner of his or her Employer having annual
compensation of more than $150,000. For this purpose, “annual compensation” means
compensation within the meaning of section 415(c)(3) of the Code. The determination of who is a
Key Employee will be made in accordance with Section 416(i)(1) of the Code and the applicable
regulations and other guidance of general applicability issued thereunder.




          (c) Determination of Present Values and Amounts. This Section shall apply for
purposes of determining the present values of accrued benefits and the amounts of account balances
of Employees as of the determination date.





     (1) Distributions During Year Ending on the Determination Date. The present
values of accrued benefits and the amounts of account balances of an Employee as of the
determination date shall be increased by the distributions made with respect to the Employee
under this Plan and any plan aggregated with this Plan under Section 416(g)(2) of the Code
during the 1-year period ending on the determination date. The preceding sentence shall also
apply to distributions under a terminated plan which, had it not been terminated, would have
been aggregated with this Plan under Section 416(g)(2)(A)(i) of the Code. In the case of a
distribution made for a reason other than severance from employment, death, or disability,
this provision shall be applied by substituting 5-year period for 1-year period.




     (2) Employees Not Performing Services During Year Ending on the Determination
Date. The accrued benefits and accounts of any individual who has not performed services
for the Employers or an Affiliate during the 1-year period ending on the determination date
shall not be taken into account.



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          (d) Minimum Benefits. (1) Matching Contributions. Employer matching
contributions shall be taken into account for purposes of satisfying the minimum contribution
requirements of Section 416(c)(2) of the Code and this Plan. The preceding sentence shall apply
with respect to matching contributions under this Plan or, if this Plan provides that the minimum
contribution requirement should be met in another plan, such other plan. Employer matching
contributions that are used to satisfy the minimum contribution requirements shall be treated as
matching contributions for purposes of the actual contribution percentage test and other
requirements of Section 401(m) of the Code.




          (2) Contributions under Other Plans. This Plan shall satisfy the minimum benefit
requirement to the extent not met by any other plan qualified under Code Section 401(a) maintained
by the Employers.




          (e) Modification of Top-Heavy Rules. The top-heavy requirements of Section 416 of the
Code and Article XVII shall not apply in any year beginning after December 31, 2001, in which this
Plan consists solely of a cash or deferred arrangement which meets the requirements of Section
401(k)(12) of the Code and matching contributions with respect to which the requirements of Section
401(m)(11) of the Code are met.




          Section 18.04. Direct Rollovers of Plan Distributions. (a) Effective Date.
Notwithstanding Section 10.07, this Section shall apply to distributions made after December 31,
2001.




          (b) Modification of Definition of Eligible Retirement Plan. For purposes of
clarifying the direct rollover provisions in Section 10.07 of this Plan, an eligible retirement
plan shall include an annuity contract described in Section 403(b) of the Code and an eligible plan
under Section 457(b) of the Code which is maintained by a state, political subdivision of a state,
or any agency or instrumentality of a state or political subdivision of a state and which agrees to
separately account for amounts transferred into such plan from this Plan. The definition of
eligible retirement plan shall also apply in the case of a distribution to a surviving spouse, or
to a spouse or former spouse who is the alternate payee under a qualified domestic relations order,
as defined in Section 414(p) of the Code.




          (c) Modification of Definition of Eligible Rollover Distribution to Exclude Hardship
Distributions. For purposes of clarifying the direct rollover provisions in Section 10.07 of
this Plan, any amount that is distributed on account of hardship shall not be an eligible rollover
distribution and the distributee may not elect to have any portion of such a distribution paid
directly to an eligible retirement plan.




          (d) Modification of Definition of Eligible Rollover Distribution to Include After-tax
Employee Contributions. For purposes of clarifying the direct rollover provisions in Section
10.07 of this Plan, a portion of a distribution shall not fail to be an eligible rollover
distribution merely because the portion consists of after-tax employee contributions that are not
includible in gross income. However, such portion may be transferred only to an individual
retirement account or annuity described in Section 408(a) or (b) of the Code, or to a qualified
defined contribution plan described in Section 401(a) or 403(a) of the Code that agrees to
separately

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account for amounts so transferred, including separately accounting for the portion of such
distribution which is includible in gross income and the portion of such distribution which is not
so includible.




          Section 18.05. Rollovers From Other Plans. Notwithstanding Section 8.02 and the
definition of Rollover Contribution, effective January 1, 2002, this Plan will accept an Eligible
Employee’s rollover contribution and/or direct rollover of distributions made after December 31,
2001, from the following types of plans:





     (a) Direct Rollovers. This Plan will accept a direct rollover of an eligible
rollover distribution from:




	 	(1)	 	a qualified plan described in Section 401(a) or 403(a) of
the Code, including after-tax employee contributions;
	 
	 	(2)	 	an annuity contract described in Section 403(b) of the
Code, excluding after-tax employee contributions; and
	 
	 	(3)	 	an eligible plan under Section 457(b) of the Code which is
maintained by a state, political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state.






     (b) Employee Rollover Contributions from Other Plans. This Plan will accept an
Eligible Employee’s contribution of an eligible rollover distribution from:




	 	(1)	 	a qualified plan described in Section 401(a) or 403(a) of
the Code;
	 
	 	(2)	 	an annuity contract described in Section 403(b) of the
Code; and
	 
	 	(3)	 	an eligible plan under Section 457(b) of the Code which is
maintained by a state, political subdivision of a state, or any agency or
instrumentality of a state or political subdivision of a state.






     (c) Employee Rollover Contributions from IRAs. This Plan will accept an Eligible
Employee’s rollover contribution of the portion of a distribution from an individual
retirement account or annuity described in Section 408(a) or 408(b) of the Code (including
SEPs and SIMPLE IRAs after two years of participating in the SIMPLE IRA) that is eligible to
be rolled over and would otherwise be includible in gross income.



          Section 18.06. Repeal of Multiple Use Test. The multiple use test described in
Section 1.401(m)-2 of the Regulations and Section 4.03 of this Plan shall not apply for Plan Years
beginning after December 31, 2001.




          Section 18.07. Elective Deferrals – Contribution Limitation. Notwithstanding Section
5.03, no Participant shall be permitted to have elective deferrals made under this Plan or any
other qualified plan maintained by the Employer during any taxable year, in excess of the

-66-









 






dollar limitation contained in section 402(g) of the Code in effect for such taxable year, except
to the extent permitted under Section 18.08 below and Section 414(v) of the Code, if applicable.




          Section 18.08. Catch-Up Contributions. All Employees who are eligible to make Pre-Tax
Contributions under this Plan and who have attained age 50 before the close of a Plan Year shall be
eligible to make catch-up contributions for that Plan Year in accordance with, and subject to the
limitations of, Section 414(v) of the Code. Such catch-up contributions shall not be taken into
account for purposes of the provisions of this Plan implementing the required limitations of
Sections 402(g) and 415 of the Code. This Plan shall not be treated as failing to satisfy the
provisions of this Plan implementing the requirements of Sections 401(k)(3), 401(k)(11),
401(k)(12), 410(b), and 416 of the Code, as applicable, by reason of the making of such catch-up
contributions.




          This Section shall apply to contributions after January 1, 2002.




          Section 18.09. Distribution Upon Severance From Employment. Notwithstanding Section
5.06, a Participant’s elective deferrals, qualified nonelective contributions, qualified matching
contributions and earnings attributable to these contributions shall be distributed on account of
the Participant’s severance from employment. However, such a distribution shall be subject to the
other provisions of this Plan regarding distributions, other than provisions that require a
separation from service before such amounts may be distributed.




          This Section shall apply to distributions after January 1, 2002.




          In Witness Whereof, the Corporation has executed this Seventh Amended and Restated
Savings and Investment Plan effective as of July 17, 2006.




	 	 	 	 	 	 	 
	 	 	Sterling Chemicals, Inc.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Richard K. Crump 	 	 
	 

	 	 	 	 

Richard K. Crump
	 	 
	 

	 	 	 	   President and Chief Executive Officer	 	 






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Exhibit A




Investment Funds




	 	 	 
	Core Investment Options
	 	 
	 
	 	 
	Guaranteed Income Fund

	 	The Guaranteed Income Fund
is a general account managed by
The Prudential Insurance Company
of America and Prudential
Investment Management. The
Guaranteed Income Fund (the
“Fund”) is a stable value product
specifically designed for defined
contribution plans to provide
money market-like liquidity and
safety of principal with an
attractive rate of return. The
Fund offers: 1) Predictability of
returns; 2) Guaranteed protection
of principal and credited
interest from market volatility;
and 3) Improved earnings power
versus short-term or money market
investments
	 
	 	 
	Calvert Income Fund

	 	Ordinarily invests in bonds
and other income-producing
securities in order to meet the
Fund’s goal of maximizing
long-term income, consistent with
prudent investment management and
preservation of capital.
	 
	 	 
	Oakmark Equity & Income Fund

	 	The Oakmark Equity & Income
Fund is a separate account
offered by Prudential Retirement
Insurance and Annuity Company.
This Separate Account invests
wholly in Class I shares of The
Oakmark Equity & Income Fund (the
“Fund”), a mutual fund managed by
Harris Associates, L.P. Seeks
high current income, preservation
and growth of capital. The Fund
invests primarily in U.S. equity
and fixed-income securities.
There is no assurance the
objective of the Mutual Fund will
be met. The portfolio manager
considers overall and relative
economic conditions in the U.S.
and foreign markets, and seeks
broad portfolio diversification
in different companies to help
moderate the special risks of
foreign investing. The manager
tries to reduce risks by
carefully researching securities
before they are purchased. The
Fund attempts to reduce its
exposure to market risks by
diversifying its investments.
	 
	 	 
	Retirement Goal Funds

	 	The Retirement Goal Funds
are a family of six multi-asset
class, multi-manager investment
portfolios offering a range of
distinct risk/return
characteristics. This family is
based on the “life-cycle”
approach to investing – that
different bond/stock mixes are
appropriate for individuals at
different stages of their lives.
Five of the Funds are managed to
specific target dates – 2010,
2020, 2030, 2040, and 2050. The
Retirement Goal Income Fund is
designed for individuals in or
near retirement who seek high
current income. The Funds’ active
strategic asset allocation
strategy allows investors to
remain in a single Retirement
Goal Fund through every






A-i









 






	 	 	 
	 

	 	life
stage, using their own risk
tolerance to help select the
appropriate Retirement Goal Fund.
Each Retirement Goal Fund’s
investment objective is to
consistently outperform its
custom benchmark over full market
cycles. There is no assurance the
objective of the Fund will be
met. Using sophisticated asset
allocation techniques, each Fund
has been structured to optimize
return and minimize risk over a
specific period. Individuals are
able to select and stay in a
single investment option through
every phase of their retirement
planning process. With Retirement
Goal Funds, investors enjoy a
simplified investment process,
access to a professionally
allocated portfolio, broad
diversification and best-in-class
investment management. The Funds
also help individuals reduce the
time-consuming and detailed
decision-making associated with
implementing a sound investment
strategy.
	 
	 	 
	Dryden S&P 500 Index®
Fund

	 	The Dryden S&P 500® Index
Fund is a separate account
offered by Prudential Retirement
Insurance and Annuity Company.
This Separate Account (the
“Fund”) is managed by
Quantitative Management
Associates. The Fund is
constructed to reflect the
composition of the S&P 500®
Index. Seeks to provide
long-term growth of capital and
income. There is no assurance the
objective of the Fund will be
met. This Fund is structured to
match overall stock market
performance, as measured by the
S&P 500® Index, which is heavily
weighted toward the largest blue
chip companies. Unlike actively
managed stock accounts, it does
not attempt to outperform the
market, so there is little risk
that it will substantively
underperform the market. Such an
investment strategy can be an
effective complement to actively
managed portfolios.
	 
	 	 
	Large Cap Growth/ Waddell & Reed Fund

	 	The Large Cap Growth /Waddell
& Reed Fund is a separate
account offered by Prudential
Retirement Insurance and Annuity
Company. This Separate Account
(the “Fund”) is managed by
Waddell & Reed following its
Large Cap Growth Equity
investment strategy. The Fund
seeks to provide long-term growth
of capital and to outperform the
Russell 1000 Growth Index over
the long-term. There is no
assurance the objective of the
Fund will be met. The Large Cap
Growth Equity style is based on
the core beliefs that superior
growth companies create superior
wealth over time and that the
primary characteristic of
superior growth companies is
sustainable competitive
advantage.
	 
	 	 
	Large Cap Value/Barrow Hanley Fund

	 	The Large Cap Value / Barrow
Hanley Fund is a separate account
offered by Prudential Retirement
Insurance and Annuity Company.
This Separate Account is managed
by Barrow, Hanley, Mewhinney, and
Strauss, Inc. following their
Large Cap Value strategy. The
Fund seeks appreciation of
capital and to outperform the
Russell 1000® Value benchmark
over the rolling 3 and 5-year
periods, or a full market cycle,
whichever is longer. There is no
assurance the objective of the
Fund will be met. The manager’s






A-ii









 






	 	 	 
	 

	 	expertise in managing equity
portfolios through a
value-oriented,
research-intensive process of
individual stock selection
provides investors with an
opportunity to realize long-term
total return in excess of the
benchmark.
	 
	 	 
	Mid Cap Growth/ Artisan Partners Fund

	 	The Mid Cap Growth / Artisan
Partners Fund is a separate
account offered by Prudential
Retirement Insurance and Annuity
Company. This Separate Account
(the “Fund”), is managed by
Artisan Partners Limited
Partnership and invests primarily
in the common stocks of
medium-sized companies. Seeks to
achieve maximum long-term capital
growth in excess of the Russell
Midcap Growth and Russell Midcap
Indexes, while managing portfolio
risk. There is no assurance the
objective of the Fund will be
met. The Fund focuses on
medium-sized companies, which can
offer attractive investment
characteristics. Such companies
are typically small enough to
have higher growth potential than
the general U.S. economy, mature
enough to have seasoned
management and established,
multiple product lines, and large
enough to have liquid trading
markets.
	 
	 	 
	Mid Cap Value Fund (sub-

advised by Wellington Management)

	 	The Mid Cap Value Fund is a
separate account offered by
Prudential Retirement Insurance and
Annuity Company. This Separate
Account (the “Fund”) is managed by
Wellington Management Company, LLP,
following their Mid Cap Value style.
Seeks to provide long-term total
returns consistently above the
Russell 2500 Value Index over
complete market cycles. There is no
assurance the objective of the Fund
will be met. The Fund’s exposure to
securities that appear to be
misunderstood or undervalued in the
marketplace offers investors an
opportunity for portfolio
diversification and provides the
potential for greater risk-adjusted
total returns.
	 
	 	 
	Small Cap Growth/TimesSquare

Fund

	 	The Small Cap Growth /TimesSquare
Fund is a separate
account offered by Prudential
Retirement Insurance and Annuity
Company. This Separate Account (the
“Fund”) is managed by TimesSquare
Capital Management, LLC following
their Small Capitalization Growth
strategy. Seeks to achieve
long-term capital appreciation.
There is no assurance the objective
of the Fund will be met.
TimesSquare Capital Management’s
investment team consists of members
with extensive experience with small
capitalization equities. Through the
use of a consistent process, the
strategy has significantly
outperformed small cap benchmarks
over the past several years,
achieving superior performance with
lower-than-average volatility
compared to similar approaches.
	 
	 	 
	Small Cap Value/ Kennedy

Capital Fund

	 	The Small Cap Value / Kennedy
Capital Fund is a separate account
offered by Prudential Retirement
Insurance and Annuity Company. This
Separate Account (the “Fund”) is
managed by Kennedy Capital
Management, pursuant to their
extended small cap value investment
strategy, investing primarily in the
common stock of U.S. small
capitalization companies that have
been overlooked by






A-iii









 






	 	 	 
	 

	 	the market place.
The manager seeks to outperform the
Russell 2000® Value Index over a
typical market cycle by investing in
fundamentally strong,
small-capitalization companies that
have low institutional ownership and
analyst coverage. There is no
assurance the objective of the Fund
will be met. Kennedy Capital
applies a contrarian approach to
exploit the inefficiencies of small
cap stocks by seeking attractive
companies that have been missed by
other investors. By discovering
opportunities before other
investors, Kennedy can purchase
shares of the undervalued firms
before the market recognizes their
value and subsequently drives up the
share prices. With an allocation of
up to 35 percent in microcap stocks,
the Fund is able to pursue value
opportunities earlier than typical
small cap managers and enhance
returns.
	 
	 	 
	International Equity/ Julius

Baer Fund

	 	The International Equity /Julius
Baer Fund is a separate
account offered by Prudential
Retirement Insurance and Annuity
Company. This Separate Account (the
“Fund”) is managed by Julius Baer
Investment Management following
their International Equity strategy.
The Fund seeks long-term growth of
capital and to consistently
outperform the MSCI EAFE Index and a
universe of peers regardless of the
market cycle through superior stock
selection. There is no assurance the
objective of the Fund will be met.
The Manager builds a diversified
portfolio of international equity
securities by leveraging its senior
portfolio management team with a
global research center of over 50
economists and analysts. The team
focuses on consistency,
diversification and relative risk. A
proprietary real-time attribution
system focuses on risk management
and provides the management team a
competitive advantage in evaluating
active information.
	 
	 	 
	Jennison Health Sciences Fund

	 	Jennison Health Sciences Fund
seeks long-term capital
appreciation. The fund normally
invests at least 80% of assets in
equity securities of U.S. companies
within the health sciences sector.
It may invest more than 5% of assets
in any one issuer. The fund may
invest in ADRs and S&P Depositary
Receipts, REITs, warrants and
rights. It may participate in the
IPO market. The fund may also
invest in foreign securities,
including money market instruments
and other fixed-income securities
and may make short sales of a
security. It is nondiversified.
	 
	 	 
	Waddell & Reed Advisors Science
and Technology Fund

	 	The Waddell & Reed Advisors
Science and Technology Fund is a
separate account offered by
Prudential Retirement Insurance and
Annuity Company. This Separate
Account invests wholly in Class A
shares of the Waddell & Reed
Advisors Science and Technology Fund
(the “Fund”), a mutual fund managed
by Waddell & Reed Investment
Management Company. Seeks to
provide capital growth. There is no
assurance the objective of the
Mutual Fund will be met. Portfolio
management utilizes a bottom-up
stock selection process which seeks
to identify science and technology
companies






A-iv









 






	 	 	 
	 

	 	whose earnings are
expected to grow at a faster rate
than the overall economy.
	 
	 	 
	Others
	 	 
	 
	 	 
	Cytec Stock Fund

	 	The Cytec Accounts that were invested in Cytec
common stock under the Cytec Plan on January 31, 1997
continue to be in such stock and constitute a “frozen”
fund as of that date (i.e., no additional Cytec common
stock shall be acquired by this Fund, other than Cytec
stock dividends and any cash dividends or other
distributions received by such frozen fund which are
automatically reinvested in Cytec common stock).






A-v