Document:

exv10w3

 

EXHIBIT 10.3

 

 

Sterling Chemicals, Inc. 

Amended And Restated

Salaried Employees’ Pension Plan

 

Effective as of January 1, 2006

 

 

 

Amended And Restated

Salaried Employees’ Pension Plan

Table of Contents

	 	 	 	 	 	 	 	 	 
	Preamble	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	Article I — Definitions	 	 	1	 
	 
	 	 	 	 	 	 	 	 
	 
	 	1.1	 	Plan Definitions	 	 	1	 
	 
	 	1.2	 	Construction	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	Article II - Hours of Service	 	 	12	 
	 
	 	 	 	 	 	 	 	 
	 
	 	2.1	 	Crediting of Hours of Service	 	 	12	 
	 
	 	2.2	 	Hours of Service Equivalencies	 	 	12	 
	 
	 	2.3	 	Determination of Non-Duty Hours of Service	 	 	16	 
	 
	 	2.4	 	Allocation of Hours of Service to Service Computation Periods	 	 	15	 
	 
	 	2.5	 	Department of Labor Rules	 	 	15	 
	 
	 	 	 	 	 	 	 	 
	Article III — Service & Credited Service	 	 	16	 
	 
	 	 	 	 	 	 	 	 
	 
	 	3.1	 	Service and Credited Service	 	 	16	 
	 
	 	3.2	 	Transfers	 	 	18	 
	 
	 	3.3	 	Retirement or Termination and Reemployment	 	 	18	 
	 
	 	3.4	 	Finality of Determinations	 	 	19	 
	 
	 	 	 	 	 	 	 	 
	Article IV — Eligibility For Participation	 	 	23	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.1	 	Participation	 	 	20	 
	 
	 	4.2	 	Termination of Participation	 	 	20	 
	 
	 	4.3	 	Finality of Determinations	 	 	20	 
	 
	 	 	 	 	 	 	 	 
	Article V — Normal Retirement	 	 	21	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.1	 	Eligibility	 	 	20	 
	 
	 	5.2	 	Amount	 	 	21	 
	 
	 	5.3	 	401(a)(17) Fresh Start Adjustments	 	 	22	 
	 
	 	5.4	 	Special Calculation For Participants Who Transferred From The Hourly Plan	 	 	25	 
	 
	 	5.5	 	Special Calculation For Participants Who Transferred From A Canadian Affiliate	 	 	26	 
	 
	 	5.6	 	Adjustment to Normal Retirement Benefit for Employment After Normal  Retirement Date	 	 	26	 
	 
	 	5.7	 	Payment	 	 	24	 

-i-

 

	 	 	 	 	 	 	 	 	 
	Article VI — Early Retirement	 	 	24	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.1	 	Eligibility	 	 	24	 
	 
	 	6.2	 	Amount	 	 	24	 
	 
	 	6.3	 	Payment	 	 	25	 
	 
	 	 	 	 	 	 	 	 
	Article VII — Vested Rights	 	 	26	 
	 
	 	 	 	 	 	 	 	 
	 
	 	7.1	 	Vesting	 	 	25	 
	 
	 	7.2	 	Eligibility for Deferred Vested Retirement Benefit	 	 	26	 
	 
	 	7.3	 	Amount of Deferred Vested Retirement Benefit	 	 	26	 
	 
	 	7.4	 	Payment	 	 	26	 
	 
	 	7.5	 	Election of Former Vesting Schedule	 	 	26	 
	 
	 	 	 	 	 	 	 	 
	Article VIII — Disability	 	 	27	 
	 
	 	 	 	 	 	 	 	 
	 
	 	8.1	 	Eligibility for Disability Benefit	 	 	27	 
	 
	 	8.2	 	Disability Retirement	 	 	27	 
	 
	 	8.3	 	Disability Accrual	 	 	28	 
	 
	 	 	 	 	 	 	 	 
	Article IX — Forms of Payment	 	 	29	 
	 
	 	 	 	 	 	 	 	 
	 
	 	9.1	 	Normal Form of Payment	 	 	28	 
	 
	 	9.2	 	Optional Forms of Payment	 	 	29	 
	 
	 	9.3	 	Designation of Beneficiary and Beneficiary in Absence of Designated Beneficiary	 	 	38	 
	 
	 	9.4	 	Notice Regarding Forms of Payment	 	 	33	 
	 
	 	9.5	 	Election Period	 	 	34	 
	 
	 	9.6	 	Spousal Consent Requirements	 	 	34	 
	 
	 	9.7	 	Death Prior to Annuity Starting Date	 	 	35	 
	 
	 	9.8	 	Effect of Reemployment on Form of Payment	 	 	35	 
	 
	 	 	 	 	 	 	 	 
	Article X — Survivor Benefits	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	 
	 	10.1	 	Eligibility for Qualified Preretirement Survivor Annuity	 	 	35	 
	 
	 	10.2	 	Amount of Qualified Preretirement Survivor Annuity	 	 	35	 
	 
	 	10.3	 	Payment of Qualified Preretirement Survivor Annuity	 	 	36	 
	 
	 	 	 	 	 	 	 	 
	Article XI — General Provisions & Limitations	 	 	38	 
	 
	 	 	 	 	 	 	 	 
	 
	 	11.1	 	Suspension of Benefits	 	 	37	 
	 
	 	11.2	 	Exception to Suspension of Benefits Rule	 	 	37	 
	 
	 	11.3	 	Non-Alienation of Retirement Rights or Benefits	 	 	37	 
	 
	 	11.4	 	Payment of Benefits to Others	 	 	38	 
	 
	 	11.5	 	Payment of Small Benefits; Deemed Cashout	 	 	38	 
	 
	 	11.6	 	Direct Rollovers	 	 	39	 

-ii-

 

	 	 	 	 	 	 	 	 	 
	 
	 	11.7	 	Limitations on Commencement	 	 	39	 
	 
	 	11.8	 	Post Age 70 1/2 Payments	 	 	40	 
	 
	 	11.9	 	Offset to Accrual After Normal Retirement Date	 	 	41	 
	 
	 	 	 	 	 	 	 	 
	Article XII — Maximum Retirement Benefits	 	 	42	 
	 
	 	 	 	 	 	 	 	 
	 
	 	12.1	 	Definitions	 	 	41	 
	 
	 	12.2	 	Maximum Limitation on Annual Benefits	 	 	45	 
	 
	 	12.3	 	Manner of Reduction	 	 	45	 
	 
	 	 	 	 	 	 	 	 
	Article XIII — Pension Fund	 	 	46	 
	 
	 	 	 	 	 	 	 	 
	 
	 	13.1	 	Pension Fund	 	 	45	 
	 
	 	13.2	 	Contributions by the Employers	 	 	45	 
	 
	 	13.3	 	Expenses of the Plan	 	 	46	 
	 
	 	13.4	 	No Reversion	 	 	46	 
	 
	 	13.5	 	Forfeitures Not to Increase Benefits	 	 	47	 
	 
	 	13.6	 	Change of Funding Medium	 	 	47	 
	 
	 	 	 	 	 	 	 	 
	Article XIV — Administration	 	 	48	 
	 
	 	 	 	 	 	 	 	 
	 
	 	14.1	 	Authority of the Sponsor	 	 	47	 
	 
	 	14.2	 	Action of the Sponsor	 	 	48	 
	 
	 	14.3	 	Claims Review Procedure	 	 	48	 
	 
	 	14.4	 	Qualified Domestic Relations Orders	 	 	49	 
	 
	 	14.5	 	Indemnification	 	 	49	 
	 
	 	14.6	 	Actions Binding	 	 	49	 
	 
	 	 	 	 	 	 	 	 
	Article XV — Adoption By Other Entities	 	 	51	 
	 
	 	 	 	 	 	 	 	 
	 
	 	15.1	 	Adoption by Affiliated Companies	 	 	50	 
	 
	 	15.2	 	Effective Plan Provisions	 	 	50	 
	 
	 	 	 	 	 	 	 	 
	Article XVI — Amendment & Termination of Plan	 	 	51	 
	 
	 	 	 	 	 	 	 	 
	 
	 	16.1	 	Sponsor’s Right of Amendment	 	 	50	 
	 
	 	16.2	 	Termination of the Plan	 	 	51	 
	 
	 	16.3	 	Adjustment of Allocation	 	 	52	 
	 
	 	16.4	 	Assets Insufficient for Allocation	 	 	52	 
	 
	 	16.5	 	Assets Insufficient for Allocation Under Paragraph (c) of Section 16.2	 	 	52	 
	 
	 	16.6	 	Allocations Resulting in Discrimination	 	 	53	 
	 
	 	16.7	 	Residual Assets	 	 	53	 
	 
	 	16.8	 	Meanings of Terms	 	 	53	 
	 
	 	16.9	 	Payments by the Funding Agent	 	 	53	 
	 
	 	16.10	 	Residual Assets Distributable to the Employers	 	 	53	 
	 
	 	16.11	 	Withdrawal of an Employer	 	 	54	 

-iii-

 

	 	 	 	 	 	 	 	 	 
	Article XVII — Miscellaneous	 	 	55	 
	 
	 	 	 	 	 	 	 	 
	 
	 	17.1	 	No Commitment as to Employment	 	 	54	 
	 
	 	17.2	 	Claims of Other Persons	 	 	54	 
	 
	 	17.3	 	Governing Law	 	 	54	 
	 
	 	17.4	 	Nonforfeitability of Benefits Upon Termination or Partial Termination	 	 	55	 
	 
	 	17.5	 	Merger, Consolidation, or Transfer of Plan Assets	 	 	55	 
	 
	 	17.6	 	Funding Agreement	 	 	55	 
	 
	 	17.7	 	Benefit Offsets for Overpayments	 	 	55	 
	 
	 	17.8	 	Internal Revenue Requirements	 	 	55	 
	 
	 	17.9	 	Overall Permitted Disparity Limits	 	 	56	 
	 
	 	17.10	 	Veterans Reemployment Rights	 	 	57	 
	 
	 	 	 	 	 	 	 	 
	Article XVIII — Top-Heavy Provisions	 	 	58	 
	 
	 	 	 	 	 	 	 	 
	 
	 	18.1	 	Top-Heavy Plan Definitions	 	 	57	 
	 
	 	18.2	 	Applicability of Top-Heavy Plan Provisions	 	 	59	 
	 
	 	18.3	 	Top-Heavy Vesting	 	 	59	 
	 
	 	18.4	 	Minimum Top-Heavy Benefit	 	 	60	 
	 
	 	 	 	 	 	 	 	 
	Addendum A	 	 	62	 
	 
	 	 	 	 	 	 	 	 
	Section I — Definitions	 	 	62	 
	 
	 	 	 	 	 	 	 	 
	 
	 	1.1	 	Definitions	 	 	62	 
	 
	Section II — General Rules	 	 	63	 
	 
	 	 	 	 	 	 	 	 
	 
	 	2.1	 	Effective Date	 	 	62	 
	 
	 	2.2	 	Precedence	 	 	63	 
	 
	 	2.3	 	Requirements of Treasury Regulations Incorporated	 	 	63	 
	 
	 	2.4	 	TEFRA Section 242(b)(2) Elections	 	 	63	 
	 
	 	 	 	 	 	 	 	 
	Section III — Time and Manner of Distribution	 	 	64	 
	 
	 	 	 	 	 	 	 	 
	 
	 	3.1	 	Required Beginning Date	 	 	63	 
	 
	 	3.2	 	Death of Participant Before Distributions Begin	 	 	63	 
	 
	 	3.3	 	Form of Distribution	 	 	64	 
	 
	 	 	 	 	 	 	 	 
	Section IV — Determination of Amount To Be Distributed Each Year	 	 	65	 
	 
	 	 	 	 	 	 	 	 
	 
	 	4.1	 	General Annuity Requirements	 	 	64	 
	 
	 	4.2	 	Amount Required to be Distributed by Required Beginning Date	 	 	65	 
	 
	 	4.3	 	Additional Accruals After First Distribution Calendar Year	 	 	65	 

-iv-

 

	 	 	 	 	 	 	 	 	 
	Section V — Requirements For Annuity Distributions That Commence During Participant’s Lifetime	 	 	67	 
	 
	 	 	 	 	 	 	 	 
	 
	 	5.1	 	Joint Life Annuities Where the Beneficiary Is Not the Participant’s Spouse	 	 	66	 
	 
	 	5.2	 	Period Certain Annuities	 	 	66	 
	 
	 	 	 	 	 	 	 	 
	Section VI — Requirements For Minimum Distribiutions Where Participant Dies Before Date Distributions Begin	 	 	68	 
	 
	 	 	 	 	 	 	 	 
	 
	 	6.1	 	Participant Survived by Designated Beneficiary	 	 	67	 
	 
	 	6.2	 	No Designated Beneficiary	 	 	67	 
	 
	 	6.3	 	Death of Surviving Spouse Before Distributions to Surviving Spouse Begin	 	 	67	 

-v-

 

Preamble

The Sterling Chemicals, Inc. Amended and Restated Salaried Employees’ Pension Plan was
originally established effective August 1, 1986. The Plan was amended effective June 1, 2004, to
close participation in the Plan, and was amended effective December 31, 2004, to freeze further
accruals under the Plan. The frozen Plan is hereby amended and restated in its entirety. The
Plan, as amended and restated hereby, is intended to qualify as a defined benefit pension plan
under Code Section 401(a). The Plan is maintained for the exclusive benefit of eligible employees
and their beneficiaries.

Except as otherwise specifically provided in the Plan, this amended and restated Plan shall be
effective as of January 1, 2006, and the rights of any person who did not have an Hour of Service
under the Plan on or after January 1, 2006, shall generally be determined in accordance with the
terms of the Plan as in effect on the date for which he was last credited with an Hour of Service.

Notwithstanding any other provision of the Plan to the contrary, a Participant’s vested interest in
his Accrued Benefit under the Plan on and after the effective date of this amendment and
restatement shall be not less than his vested interest in his Accrued Benefit on the day
immediately preceding the effective date.

Article I

Definitions

1.1 Plan Definitions

As used herein, the following words and phrases, when they appear with initial letters capitalized
as indicated below, have the meanings hereinafter set forth:

A Participant’s “Accrued Benefit” as of any date means his benefit accrued as of December
31, 2004, determined under the terms of the Plan in effect on that date.

The “Actuarial Equivalent” of a value means the actuarial equivalent determined using the
1971 Towers, Perrin, Forster & Crosby Forecast Mortality Table with ages set back one year
for Participants and ages set back five years for Beneficiaries and an interest rate of
seven percent, except that in determining present value for purposes of a single sum
payment, the following factors shall be used: (i) the table prescribed by the Secretary of
the Treasury, which shall be based on the prevailing commissioners’ standard table,
described in Code Section 807(d)(5)(A), used to determine reserves for group annuity
contracts issued on the date as of which present value is being determined (without regard
to any other subparagraph of Code Section 807(d)(5)) and (ii) the annual rate of interest on
30-year Treasury securities for the second calendar month preceding the Plan Year in which
the distribution is made. For any
single sum payment with an

 

 

Annuity Starting Date on or after December 31, 2002, the
applicable mortality table is the table specified in Revenue Ruling 2001-62.

Notwithstanding the foregoing, for distributions made prior to October 1, 2000, for purposes
of determining present value, the following factors were applicable: (i) the mortality
rates used Pension Benefit Guaranty Mortality for terminating single-employer plans and (ii)
the “PBGC interest rate”. For any distribution made on or after October 1, 2000, but before
December 27, 2002, present value shall be determined using the factors in this paragraph or
the immediately preceding paragraph, whichever provides a greater benefit.

For purposes of this section, the “PBGC interest rate” means the immediate and deferred
rates, as applicable, utilized by the Pension Benefit Guaranty Corporation for purposes of
determining the present value of a lump sum distribution on plan termination as in effect at
the beginning of the Plan Year in which present value is being determined.

For a Participant who has reached Normal Retirement Date at the time present value is being
determined, the present value of his Accrued Benefit shall be calculated based on the
immediate annuity payable to the Participant as of his Annuity Starting Date. For a
Participant who has not yet reached Normal Retirement Date at the time present value is
being determined, the present value of his Accrued Benefit shall be calculated based on a
deferred annuity payable commencing at Normal Retirement Date. For purposes of this
paragraph, immediate and deferred annuities will be in the normal form applicable to
unmarried Participants under Section 9.1 of the Plan.

The “Actuary” means an independent actuary selected by the Sponsor, who is an enrolled
actuary as defined in Code Section 7701(a)(35), or a firm or corporation of actuaries having
such a person on its staff, which person, firm, or corporation is to serve as the actuarial
consultant for the Plan.

The “Administrator” means the Sponsor unless the Sponsor designates another person or
persons to act as such.

An “Affiliated Company” means any corporation or business, other than an Employer, which
would be aggregated with an Employer for a relevant purpose under Code Section 414.

A Participant’s, or Beneficiary’s, if the Participant has died, “Annuity Starting Date”
means the first day of the first period for which an amount is paid as an annuity or, in the
case of a single sum payment, the first day on which all events have occurred which entitle
the Participant, or his Beneficiary, if applicable, to such benefit.

If a Participant whose Annuity Starting Date has occurred is reemployed by an Employer or an
Affiliated Company resulting in a suspension of benefits in accordance with the provisions
of Section 11.1, for purposes of determining the form of payment of such Participant’s
benefit
upon his subsequent retirement, such prior Annuity Starting Date

-2-

 

shall apply to benefits
accrued prior to the Participant’s reemployment. Such prior Annuity Starting Date shall
also apply to benefits accrued following the Participant’s reemployment if such prior
Annuity Starting Date occurred on or after the Participant’s Normal Retirement Date. Such
prior Annuity Starting Date shall not apply to benefits accrued following the
Participant’s reemployment if such prior Annuity Starting Date occurred prior to the
Participant’s Normal Retirement Date.

A Participant’s “Average Monthly Earnings” means the greater of the average of:

	 	(1)	 	his monthly Earnings during the 36 months immediately preceding the earlier of:

	 	(a)	 	the date the Participant’s employment terminates (or the
Participant’s period of employment, if shorter); or
	 
	 	(b)	 	January 1, 2005; or

	 	(2)	 	his highest average Earnings received for any three consecutive calendar years
during the five consecutive calendar years immediately preceding the earlier of:

	 	(a)	 	the calendar year during which the Participant’s employment
terminates, or;
	 
	 	(b)	 	January 1, 2005.

If a Participant has no Earnings during one or more of the 36 months described above, the
average shall be determined based on the last 36 months during which he has Earnings.

Average Monthly Earnings shall be determined assuming that Earnings for any month during
which a Participant receives disability income from any Employer- sponsored welfare plan
shall equal the Participant’s base salary for the calendar month immediately preceding the
calendar month in which his disability commenced.

If a Participant’s base salary has been reduced because of a decline in his physical or
mental capacity to continue his former assignment, or because he was transferred to a
position of reduced responsibilities or his assignment was abolished or its responsibilities
curtailed, the Participant’s base salary will be used, as if it had not been reduced.

Notwithstanding any other provision of the Plan to the contrary, Earnings for employment
after January 1, 2005 shall not be included in determining a Participant’s Average Monthly
Earnings.

A Participant’s “Beneficiary” means any beneficiary who is entitled to receive a benefit
under the Plan upon the death of the Participant.

A “Break in Service” with respect to any Employee means any Service Computation Period
during which he completes fewer than 501 Hours of Service, except that no

-3-

 

Employee shall
incur a Break in Service solely by reason of temporary absence from work not exceeding 12
months resulting from illness, layoff, or other cause if authorized in advance by an
Employer pursuant to its uniform leave policy, if his employment is not otherwise terminated
during the period of such absence.

The “Code” means the Internal Revenue Code of 1986, as amended from time to time. Reference
to a Code section shall include (i) such section and any comparable section or sections of
any future legislation that amends, supplements, or supersedes such section and (ii) all
rulings, regulations, notices, announcements, and other pronouncements issued by the U.S.
Treasury Department, the Internal Revenue Service, and any court of competent jurisdiction
that relate to such section.

A Participant’s “Covered Compensation” means the average, without indexing, of the taxable
wage bases under Section 230 of the Social Security Act in effect for each calendar year
during the 35-year period ending on the last day of the calendar year in which the employee
attains (or will attain) Social Security retirement age, as determined under Code Section
415(b)(8). In determining a Participant’s Covered Compensation, the following shall apply:

	 	(1)	 	For calendar years within the 35-year period, the taxable wage base in effect
for future calendar years shall be assumed to be the same as the taxable wage base in
effect as of the beginning of the Plan Year in which the determination is being made.
	 
	 	(2)	 	For calendar years after the 35-year period ends, a Participant’s Covered
Compensation means his Covered Compensation for the Plan Year in which the 35-year
period ends.
	 
	 	(3)	 	For calendar years before the 35-year period begins, a Participant’s Covered
Compensation means the taxable wage base in effect as of the beginning of the Plan Year
in which the determination is being made.

A Participant’s Covered Compensation shall be adjusted each Plan Year.

A Participant’s Covered Compensation for purposes of calculating his retirement benefit
under the Plan shall be his Covered Compensation determined as of the date his retirement
benefit is being calculated or, if earlier, as of the date the Participant ceased to accrue
benefits under the Plan.

A Participant’s “Credited Service” means his period of service for purposes of determining
the amount of any benefit for which he is eligible under the Plan, as computed in accordance
with the provisions of Article III.

“Designated Non-U.S. Citizen Foreign Service Employee” means a person employed by a
Subsidiary who satisfies all of the following requirements:

-4-

 

	 	(1)	 	He is not a Citizen or Resident (as defined in Code Section 7701(b)) of the
United States of America; and
	 
	 	(2)	 	He is not covered by or participating in any funded plan of deferred
compensation maintained or otherwise provided by any party other than the Employer and
its subsidiaries with respect to the remuneration paid to him by such Foreign
Subsidiary or Foreign Operating Subsidiary; and
	 
	 	(3)	 	He is on international assignment from the Employer and is employed at a
location outside the United States; and
	 
	 	(4)	 	He has been designated by the Employer or its delegate as a Designated Non-U.S.
Citizen Foreign Service Employee.

Notwithstanding the foregoing, the Employer or its delegate may preclude participation or
impose such terms, conditions and restrictions on the participation of a Designated Non-U.S.
Citizen Foreign Service Employee as the Employer or its delegate, in the exercise of its
sole discretion, deems necessary or desirable in order to comply with U.S. or foreign law
(including, but not limited to, tax reporting and withholding, securities registration or
currency law requirements imposed by law or treaty) as it affects the Designated Non-U.S.
Citizen Foreign Service Employee, the Employer, the Sponsor, the trustee or any agent of the
foregoing.

A Participant is “Disabled” if the Participant meets the eligibility requirements in Section
8.1.

“Disability Accrual” means the benefit described in Section 8.3 that applies to a
Participant who is Disabled and is receiving payments from the LTD Plan.

“Disability Retirement Benefit” means the benefit described in Section 8.2 that applies to a
Participant who is Disabled and is not receiving payments from the LTD Plan.

“Early Retirement Date” means the first day of the month following the later of the month in
which a Participant retires after meeting the eligibility requirements in Section 6.1 or the
month in which he makes written application for an Early Retirement benefit, but not later
than his Normal Retirement Date.

The “Earnings” of a Participant for any Earnings Computation Period means all compensation
from the Employer including shift differential pay, overtime pay, holiday pay, sick leave
pay, fire brigade pay, military summer encampment pay, and incentive pay. Incentive pay for
this purpose shall mean additional compensation, which may be paid on an annual or more
frequent basis, and which is computed under a formula directly reflecting the performance of
a Participant or group of Participants, but shall not include any award made under the
Employer’s incentive plan nor any distributions made from the incentive plan or profit
sharing plan. Notwithstanding the foregoing, Earnings include any amount that would have
been included in the foregoing description, but for

-5-

 

the Participant’s election to defer
payment of such amount under Code Section 124, 402(e)(3), 401(h)(1)(B), 403(b) or 457(b)
and, effective for Plan Years beginning on and after January 1, 2001, Earnings shall also
include any amount that is not included in the Participant’s taxable gross income pursuant
to Code Section 132(f).

Earnings shall exclude bonuses, commissions, amounts paid under any incentive plans in the
future, amounts paid by the Employer for insurance or other welfare plans or benefits, pay
in lieu of vacations, strike pay received prior to May 2, 2004, and additional earnings or
other forms of compensation in excess of a Participant’s normal salary that is received by a
Participant on or after May 2, 2004 for services provided during a strike or lockout.

In no event, however, shall the Earnings of a Participant taken into account under the Plan
for any 12 consecutive Earnings Computation Periods (the “limitation period”) exceed (1)
$200,000 for limitation periods beginning before January 1, 1994, or (2) $150,000 for
limitation periods beginning on or after January 1, 1994. Notwithstanding the foregoing,
for any Participant who is credited with at least one Hour of Service on or after January 1,
2002, the annual Earnings of such Participant taken into account in determining benefit
accruals for any Plan Year beginning after December 31, 2001 shall not exceed $200,000. For
purposes of determining benefit accruals in a Plan Year beginning after December 31, 2001,
Earnings for any prior determination period shall be limited to $200,000.

The limitations set forth in the preceding paragraph shall be subject to adjustment annually
as provided in Code Section 401(a)(17)(B) and Code Section 415(d); provided, however, that
the dollar increase in effect on January 1 of any calendar year, if any, is effective for
limitation periods beginning in such calendar year.

An “Earnings Computation Period” means each calendar month.

An “Employee” means (i) any employee on the payroll of an Employer who is characterized or
treated by the Employer as a common law employee; or (ii) any person who is designated by
the Employer as a “U.S. Foreign Service Employee” or a “Designated Non-U.S. Citizen Foreign
Service Employee”. Any employee who becomes an Employee as a result of reclassification by
the Employer as a common law employee shall become an Employee effective as of the date of
such reclassification.

Notwithstanding the foregoing, the term “Employee” shall not include the following:

	 	(1)	 	any nonresident alien who does not receive United States source income;
	 
	 	(2)	 	any person covered by a collective bargaining agreement between employee
representatives and the Employer, unless the collective bargaining agreement
specifically provides for participation in the Plan;
	 
	 	(3)	 	any temporary worker who is engaged through or employed by a temporary or
leasing agency; or

-6-

 

	 	(4)	 	any leased employee or any person who is an independent contractor or who is
employed by another company while providing services to the Employer.

For purposes of the Plan with respect to the provisions of Code Sections 401(a)(3), (4), (7)
and (16), and 408(k), 410, 411, 415 and 416, any “leased employee,” other than an excludable
leased employee, shall be treated as an employee of an Employer or any other Affiliated
Company; provided, however, that no “leased employee” shall become an Employee or shall
accrue a benefit hereunder based on service as a “leased employee”.

A “leased employee” means any person who performs services for an Employer or an Affiliated
Company (the “recipient”) (other than an employee of the recipient) pursuant to an agreement
between the recipient and any other person (the “leasing organization”) on a substantially
full-time basis for a period of at least one year, provided that such services are performed
under the primary direction or control of the recipient. An “excludable leased employee”
means any leased employee of the recipient who is covered by a money purchase pension plan
maintained by the leasing organization which provides for (i) a nonintegrated employer
contribution on behalf of each participant in the plan equal to at least ten percent of
compensation, (ii) full and immediate vesting, and (iii) immediate participation by
employees of the leasing organization (other than employees who perform substantially all of
their services for the leasing organization or whose compensation from the leasing
organization in each plan year during the four-year period ending with the plan year is less
than $1,000); provided, however, that leased employees do not constitute more than 20
percent of the recipient’s nonhighly compensated work force. For purposes of this Section,
contributions or benefits provided to a leased employee by the leasing organization that are
attributable to services performed for the recipient shall be treated as provided by the
recipient.

An “Employer” means the Sponsor and any entity which has adopted the Plan as may be provided
under Article XV.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to
time. Reference to a section of ERISA shall include such section and any comparable section
or sections of any future legislation that amends, supplements, or supersedes such section.

“Foreign Operating Subsidiary” means a domestic corporation which is a Subsidiary and which
satisfies the following requirements:

(1) 80 percent or more of its outstanding voting stock is owned by an Employer; and

(2) Except as provided below, as of the close of its taxable year which ends on or before
the close of the most recent fiscal year of the Employer described in item (1) above, 95
percent or more of its gross income for the immediately preceding three year period (or for
the entire immediately preceding period of its existence if it had not been in existence for
three years as of such date) was derived from sources without the United

-7-

 

States of America
(determined by the Employer in a manner consistent with Code Sections 861 through 864); and

(3) Except as provided below, 90 percent or more of its gross income for the period
described in item (2) above was derived from the active conduct of a trade or business; and

(4) If for the period described in item (2) above such Subsidiary had no gross income, the
provisions of items (2) and (3) above shall be considered to be satisfied if the Employer
determined that it is reasonable to anticipate that such provisions will be satisfied with
respect to the period ending on the close of the first taxable year of such Subsidiary
ending after the last day of the period described in item (2) above.

“Foreign Subsidiary” means a foreign corporation or entity in which the Employer owns
(directly or through one or more entities) not less than 10 percent of the voting stock, in
the case of a corporation, or not less than 10 percent of the profits, in the case of any
other entity.

The “Funding Agent” means the person or persons which at the time shall be designated,
qualified, and acting under the Funding Agreement and shall include (i) any trustee for a
trust established pursuant to the Funding Agreement, (ii) any insurance company that issues
an annuity or insurance contract pursuant to the Funding Agreement, or (iii) any person
holding assets in a custodial account pursuant to the Funding Agreement. The Sponsor may
designate a person or persons other than the Funding Agent to perform any responsibilities
of the Funding Agent under the Plan, other than trustee responsibilities as defined in ERISA
Section 405(c)(3), and the Funding Agent shall not be liable for the performance of such
person in carrying out such responsibilities except as otherwise provided by ERISA. The
term Funding Agent shall include any delegate of the Funding Agent as may be provided in the
Funding Agreement.

The “Funding Agreement” means the agreement entered into between the Sponsor and the Funding
Agent relating to the holding, investment, and reinvestment of the assets of the Plan,
together with all amendments thereto, and shall include any agreement establishing a trust,
a custodial account, an annuity contract, or an insurance contract (other than a life,
health or accident, property, casualty, or liability insurance contract) for the investment
of assets; provided, however, that any custodial account or contract established hereunder
meets the requirements of Code Section 401(f).

A “Highly Compensated Employee” means any Employee or former Employee who is a highly
compensated active employee or a highly compensated former employee as defined hereunder.

A “highly compensated active employee” includes any Employee who performs services for an
Employer or any Affiliated Company during the Plan Year and who (i) was a five percent owner
at any time during the Plan Year or the look back year or (ii) received compensation from
the Employers and Affiliated Companies during the look back year in

-8-

 

excess of $80,000
(subject to adjustment annually at the same time and in the same manner as under Code
Section 415(d)). The dollar amount in (ii) shall be pro-rated for any Plan Year of fewer
than 12 months.

A “highly compensated former employee” includes any Employee who (i) separated from service
from an Employer and all Affiliated Companies (or is deemed to have separated from service
from an Employer and all Affiliated Companies) prior to the Plan Year, (ii) performed no
services for an Employer or any Affiliated Company during the Plan Year, and (iii) for
either the separation year or any Plan Year ending on or after the date the Employee attains
age 55, was a highly compensated active employee, as determined under the rules in effect
under Code Section 414(q) for such year.

The determination of who is a Highly Compensated Employee hereunder shall be made in
accordance with the provisions of Code Section 414(q) and regulations issued thereunder.

For purposes of this definition, the following terms have the following meanings:

	 	(1)	 	An employee’s “compensation” means compensation as defined in Code Section
415(c)(3) and regulations issued thereunder.
	 
	 	(2)	 	The “look back year” means the 12-month period immediately preceding the Plan
Year.

An “Hour of Service” with respect to any Employee means an hour which is determined and
credited as such in accordance with the provisions of Article II.

“LTD Plan” means the Employer’s long-term disability plan.

A Participant’s “Normal Retirement Date” means, for purposes of benefit eligibility, the
later of (i) the date on which he attains age 65 or (ii) the fifth anniversary of the date
he commenced participation in the Plan and, for all other purposes, the first day of the
month immediately following such date.

A “Participant” means any person who becomes eligible to participate in the Plan in
accordance with the provisions of Article IV and who retains an Accrued Benefit under the
Plan.

The “Pension Fund” means the fund or funds maintained under the Funding Agreement for
purposes of accumulating contributions made by the Employers and paying benefits under the
Plan.

The “Plan” means this Sterling Chemicals, Inc. Amended and Restated Salaried Employees’
Pension Plan, established effective August 1, 1986, as amended and restated by this
instrument, with all amendments, modifications, and supplements hereafter made.

-9-

 

A “Plan Year” on and after January 1, 2004 means the 12-consecutive-month period ending each
December 31. The Plan Year that began on October 1, 2003 ended on December 31, 2003. Prior
to October 1, 2003, the Plan Year meant the 12-consecutive-month period ending each
September 30. The first Plan Year began on August 1, 1986 and ended on September 30, 1986.

“Prior Albright & Wilson Participant” means each employee of an Employer as of August 21,
1992 who was previously an employee of Albright & Wilson based in the United States and was
a participant in the Tenneco, Inc. Retirement Plan during such employment with Albright &
Wilson.

“Prior Monsanto Participant” means each employee of an Employer as of September 30, 1986 who
was previously an employee of the Monsanto Company (whether or not just prior to formation
of the Employer) and was a participant in the Monsanto Company Salaried Employees’ Pension
Plan or the Monsanto Company Hourly Paid Employees’ Pension Plan during such employment with
the Monsanto Company.

A “Qualified Joint and Survivor Annuity” is an immediate annuity payable to the Participant
for his life with a survivor benefit payable upon the death of the Participant to the
Participant’s Spouse (determined as of his Annuity Starting Date) for the remainder of such
Spouse’s lifetime. The amount of the survivor benefit payable under a Qualified Joint and
Survivor Annuity shall be equal to at least 50 percent of the amount the Participant was
receiving on his date of death.

A “Qualified Preretirement Survivor Annuity” is an annuity payable to the surviving Spouse
of a Participant for such Spouse’s life as provided in Article X.

A Participant’s “Required Beginning Date” on and after December 31, 1998 means the April 1
following the calendar year in which occurs the later of (i) the Participant’s attainment of
age 70 1/2 or (ii) the date the Participant retires; provided, however, that clause (ii)
shall not apply to a Participant who is a five percent owner, as defined in Code Section
416(i), with respect to the Plan Year ending with or within the calendar year in which the
Participant attains age 70 1/2. The Required Beginning Date of a Participant who is a five
percent owner hereunder shall not be redetermined if the Participant ceases to be a five
percent owner with respect to any subsequent Plan Year.

A Participant’s “Service” means his period of service for purposes of determining his
eligibility for a benefit under the Plan, as computed in accordance with the provisions of
Article III.

A “Service Computation Period” means the 12-month period used for determining an Employee’s
years of Service and years of Credited Service.

The Service Computation Period for determining an Employee’s years of Service is the Plan
Year.

-10-

 

The Service Computation Period for determining an Employee’s years of Credited Service is
the Plan Year.

The “Sponsor” means Sterling Chemicals, Inc., and any successor thereto.

A Participant’s “Spouse” means the person who is the Participant’s lawful spouse.

“Standard Work Week” means 40 hours per week.

“Standard Work Year” means 2080 hours per calendar year.

“Subsidiary” means any subsidiary, as defined below, or affiliate of the Employer, 80
percent of the stock of which is controlled by the Employer by application of Code Sections
414(b) and 1563(a).

For purposes of the preceding paragraph, a “subsidiary” means any subsidiary or affiliate of
the Employer not described in the paragraph above which would be so described if the figure
“51” were replaced for the figure “80” in the preceding paragraph; provided, however, that
only for purposes of exclusion of persons on international assignment from foreign
operations of a domestic subsidiary, “20” shall be substituted for “51” in this paragraph.

“U.S. Citizen Foreign Service Employee” means a person employed by a Foreign Subsidiary or a
Foreign Operating Subsidiary who satisfies all of the following requirements:

	 	(1)	 	He is a Citizen or Resident (as defined in Code Section 7701(b)) of the United
States of America; and
	 
	 	(2)	 	He is not covered by or participating in any funded plan of deferred
compensation maintained or otherwise provided by any party other than the Employer (or
where the requisite stock ownership of a Foreign Subsidiary or a Foreign Operating
Subsidiary is owned by another Employer, such other Employer) with respect to the
remuneration paid to him by such Foreign Subsidiary or Foreign Operating Subsidiary;
and
	 
	 	(3)	 	If he is an employee of a Foreign Subsidiary, the Employer (or where the
requisite stock ownership of a Foreign Subsidiary or a Foreign Operating Subsidiary is
owned by another Employer, such other Employer) has entered into an agreement with the
Secretary of the Treasury or his delegate under Code Section 3121(l) which applies to
the Foreign Subsidiary of which he is an employee; and
	 
	 	(4)	 	He is on international assignment from the Employer (or where the requisite
stock ownership of a Foreign Subsidiary or a Foreign Operating Subsidiary is owned by
another Employer, such other Employer).

-11-

 

Notwithstanding the foregoing, the Employer or its delegate may preclude participation or
impose such terms, conditions and restrictions on the participation of a U.S. Citizen
Foreign Service Employee as the Employer or its delegate, in the exercise of its sole
discretion, deems necessary or desirable in order to comply with U.S. or foreign law
(including, but not limited to, tax reporting and withholding, securities registration or
currency law requirements imposed by law or treaty) as it affects the U.S. Citizen Foreign
Service Employee, the Employer, any Foreign Subsidiary, any Foreign Operating Subsidiary,
the Sponsor, the trustee or any agent of the foregoing.

1.2 Construction

Where required by the context, the noun, verb, adjective, and adverb forms of each defined term
shall include any of its other forms. Wherever used herein, the masculine pronoun shall include
the feminine, the singular shall include the plural, and the plural shall include the singular.

Article II

Hours of Service

2.1 Crediting of Hours of Service

An Employee shall be credited with an Hour of Service under the Plan for:

	(a)	 	Each hour for which he is paid, or entitled to payment, for the performance of duties for an
Employer as an Employee; provided, however, that hours paid for at a premium rate shall be
treated as straight-time hours.
	 
	(b)	 	Each hour for which he is paid, or entitled to payment, by an Employer on account of a period
of time during which no duties as an Employee are performed (irrespective of whether he
remains an Employee) due to vacation, holiday, illness, incapacity (including disability),
layoff, jury duty, military duty, or leave of absence, up to a maximum of eight hours per day
and 40
hours per week; provided, however, that no more than 501 Hours of Service shall be credited
to an Employee on account of any single continuous period during which he performs no duties
(whether or not such period occurs in a single Service Computation Period); provided,
further, that no Hours of Service shall be credited for payment which is made or due under a
program maintained solely for the purpose of complying with applicable Workers’
Compensation, unemployment compensation, or disability insurance laws; and provided,
further, that no Hours of Service shall be credited to an Employee for payment which is made
or due solely as reimbursement for medical or medically related expenses incurred by him.
	 
	(c)	 	Each hour for which back pay, irrespective of mitigation of damages, is either awarded or
agreed to by an Employer; provided, however, that the crediting of Hours of Service for back
pay awarded or agreed to with respect to periods of employment or absence from

-12-

 

	 	 	employment
described in any other paragraph of this Section shall be subject to the limitations set forth
therein and, if applicable, in Section 2.3 and Section 2.4.
	 
	(d)	 	Each hour for which he would have been scheduled to work for an Employer during the period of
time that he is absent from work because of service with the armed forces of the United
States, up to a maximum of eight hours per day and 40 hours per week, but only if he is
eligible for reemployment rights under the Uniformed Services Employment and Reemployment
Rights Act of 1994 and he returns to work with an Employer within the period during which he
retains such reemployment rights.
	 
	(e)	 	Each hour for which he would have been scheduled to work for an Employer during the period of
time that he is absent from work because of disability for which he is eligible for or
receiving disability benefits under his Employer’s long term disability plan. For purposes of
this paragraph, an eligible Participant shall be credited with 95 Hours of Service for each
half month, or 190 Hours of Service for each full month, during which he is eligible for or
receives such long term disability benefits.
	 
	(f)	 	Solely for purposes of determining his Service under the Plan, each hour for which he would
have been scheduled to work for an Employer during the period of time that he is absent from
work because of an approved leave of absence of no more than two years, provided that he
returns to work at the end of such leave.
	 
	(g)	 	Solely for purposes of determining his Service under the Plan, each hour for which he would
have been scheduled to work for an Employer during the period of time that he is absent from
work because of temporary layoff, provided that he returns to active employment when recalled.
	 
	(h)	 	Solely for purposes of determining whether he has incurred a Break in Service, each hour for
which he would have been scheduled to work for an Employer during the period of time that he
is absent from work because of the birth of a child, pregnancy, the adoption of a child, or
the caring for a child for the period beginning following the birth or adoption of such child,
up to a maximum of eight hours per day and 40 hours per week so that, when added to Hours of Service
credited under any other paragraph of this Section, he shall be credited with not fewer than
501 total Hours of Service under the Plan for the Service Computation Period in which his
absence commenced or the immediately following Service Computation Period; provided,
however, that he shall be credited with Hours of Service under this paragraph for the
Service Computation Period in which his absence from employment commenced only if necessary
to prevent a Break in Service; and provided, further, that he shall be credited with Hours
of Service under this paragraph for the Service Computation Period immediately following the
Service Computation Period in which his absence from employment commenced only if he is not
credited with Hours of Service under this paragraph for the Service Computation Period in
which his absence from employment commenced.
	 
	(i)	 	Solely for purposes of determining whether he has incurred a Break in Service, each hour for
which he would be scheduled to work for an Employer during the period of time that 

-13-

 

	 	 	he is
absent from work on an approved leave of absence pursuant to the Family and Medical Leave Act
of 1993; provided, however, that Hours of Service shall not be credited to an Employee under
this paragraph if the Employee fails to return to employment with an Employer following such
leave.

Notwithstanding anything to the contrary contained in this Section, no more than one Hour of
Service shall be credited to an Employee for any one hour of his employment or absence from
employment.

2.2 Hours of Service Equivalencies

Notwithstanding any other provision of the Plan to the contrary, if an Employer does not maintain
records that accurately reflect actual hours of service with respect to an Employee, such Employee
shall be credited with 95 Hours of Service for each semi-monthly payroll period, which results in a
credit of 190 Hours of Service for each month in which he performs an Hour of Service.

2.3 Determination of Non-Duty Hours of Service

In the case of a payment which is made or due from an Employer on account of a period during which
an Employee performs no duties, and which results in the crediting of Hours of Service, or in the
case of an award or agreement for back pay, to the extent that such award or agreement is made with
respect to a period during which an Employee performs no duties, the number of Hours of Service to
be credited shall be determined as follows:

	(a)	 	In the case of a payment made or due which is calculated on the basis of units of time, such
as hours, days, weeks, or months, the number of Hours of Service to be credited shall be the
number of regularly scheduled working hours included in the units of time on the basis of
which the payment is calculated.
	 
	(b)	 	In the case of a payment made or due which is not calculated on the basis of units of time,
the number of Hours of Service to be credited shall be equal to the amount of the payment
divided by the Employee’s most recent hourly rate of compensation immediately prior to the
period to which the payment relates.
	 
	(c)	 	Notwithstanding the provisions of paragraphs (a) and (b), no Employee shall be credited on
account of a period during which no duties are performed with a number of Hours of Service
that is greater than the number of regularly scheduled working hours during such period.
	 
	(d)	 	If an Employee is without a regular work schedule, the number of “regularly scheduled working
hours” shall mean the average number of hours worked by Employees in the same job
classification during the period to which the payment relates, or if there are no other
Employees in the same job classification, the average number of hours worked by the Employee
during an equivalent, representative period.

-14-

 

For the purpose of crediting Hours of Service for a period during which an Employee performs no
duties, a payment shall be deemed to be made by or due from an Employer (i) regardless of whether
such payment is made by or due from an Employer directly, or indirectly through (among others) a
trust fund or insurer to which the Employer contributes or pays premiums, and (ii) regardless of
whether contributions made or due to such trust fund, insurer, or other entity are for the benefit
of particular persons or are on behalf of a group of persons in the aggregate.

2.4 Allocation of Hours of Service to Service Computation Periods

Hours of Service credited under Section 2.1 shall be allocated to the appropriate Service
Computation Period as follows:

	(a)	 	Hours of Service described in paragraph (a) of Section 2.1 shall be allocated to the Service
Computation Period in which the duties are performed.
	 
	(b)	 	Hours of Service credited to an Employee for a period during which an Employee performs no
duties shall be allocated as follows:

	 	(1)	 	Hours of Service credited to an Employee on account of a payment which is
calculated on the basis of units of time, such as hours, days, weeks, or months, shall
be allocated to the Service Computation Period or Periods in which the period during
which no duties are performed occurs, beginning with the first unit of time to which
the payment relates.
	 
	 	(2)	 	Hours of Service credited to an Employee on account of a payment which is not
calculated on the basis of units of time shall be allocated to the Service Computation
Period or Periods in which the period during which no duties are
performed occurs, or, if such period extends beyond one Service Computation Period, such Hours of Service
shall be allocated equally between the first two such Service Computation Periods.
	 
	 	(3)	 	Hours of Service credited to an Employee for a period of absence during which
the Employee performs no duties and for which no payment is due from his Employer shall
be allocated to the Service Computation Period or Periods during which such absence
occurred.
	 
	 	(4)	 	Hours of Service credited to an Employee because of an award or agreement for
back pay shall be allocated to the Service Computation Period or Periods to which the
award or agreement for back pay pertains, rather than to the Service Computation Period
in which the award, agreement, or payment is made.

2.5 Department of Labor Rules

The rules set forth in paragraphs (b) and (c) of Department of Labor Regulation Section
2530.200b-2, which relate to determining Hours of Service attributable to reasons other than the

-15-

 

performance of duties and crediting Hours of Service to Service Computation Periods, are hereby
incorporated into the Plan by reference.

Article III

Service & Credited Service

3.1 Service

Each person who is an employee of the Employer shall be credited with Service for determining his
vested interest in his Accrued Benefit as follows:

	(a)	 	For periods on and after October 1, 1993, with the exception of the period described in item
(b) below, he shall be credited with a year of Service for each Service Computation Period for
which he is credited with at least 1,000 Hours of Service; provided, however, that if he is
credited with fewer than 1,000 Hours of Service for a Service Computation Period, he shall be
credited with a partial year of Service in the ratio that his Hours of Service for the Service
Computation Period bears to the greater of:

	 	(1)	 	1,000 Hours of Service; or
	 
	 	(2)	 	the Hours of Service in the Participant’s Standard Work Year.

	(b)	 	A Participant who has at least 1 Hour of Service in the Service Computation Period that began
on October 1, 1995 and ended on December 31, 1996 shall be credited with a year of Service for
such Service Computation Period.
	 
	(c)	 	A Participant who meets the requirements of Section 8.1, entitled “Eligibility for Disability
Benefits” who has not elected Disability Retirement in accordance with Section 8.2 will
continue to accrue Service while eligible for benefits under the Employer’s LTD Plan, in
accordance with Section 8.3.
	 
	(d)	 	For periods prior to October 1, 1993, Service was credited in accordance with the provisions
of the Plan as constituted prior to such date.
	 
	(e)	 	For Prior Monsanto Participants, Service is credited on August 1, 1986 in an amount that is
not less than the Service credited to the Participant under the Monsanto Company Salaried
Employees’ Pension Plan and/or the Monsanto Company Hourly Paid Employees’ Pension Plan as of
August 1, 1986.
	 
	(f)	 	For Prior Albright & Wilson Participants, Service is credited on August 1, 1992 in an amount
that is not less than the Service credited to the Participant under the Tenneco, Inc.
Retirement Plan as of August 1, 1992.

-16-

 

	(g)	 	For Participants who were employees of Cytec Industries, Inc., who became employees of
Sterling Fibers, Inc. on January 31, 1997, Service is credited on January 31, 1997 in an
amount that is not less than the Service credited to the Participant under the Cytec Salaried
and Nonbargaining Employees’ Retirement Plan as of January 31, 1997.

3.2 Credited Service

There shall be no Credited Service credited under the Plan after January 1, 2005, except for
purposes of determining a Participant’s eligibility for Disability Retirement in accordance with
the provisions of Section 8.1.

Each person who was an Employee on or prior to January 1, 2005 shall be credited with Credited
Service for determining the amount of his Accrued Benefit as follows:

	(a)	 	For periods on and after October 1, 1993, subject to any limitations set forth in Article V,
with the exception of the period described in item (b) below, he shall be credited with a year
of Credited Service for each Service Computation Period for which he is credited with at least
the number of Hours of Service in the Participant’s Standard Work Year (not less than 1,000
Hours of Service).
	 
	 	 	If the Participant is credited with fewer than the number of Hours of Service in the
Participant’s Standard Work Year for a Service Computation Period, he shall be credited with
a partial year
of Credited Service in the ratio that his Hours of Service for the Service Computation
Period bears to the number of Hours of Service in the Participant’s Standard Work Year.
	 
	(b)	 	For the Service Computation Period that began on October 1, 1995 and ended on December 31,
1996, a Participant shall be credited with a fractional year of Credited Service for such
Service Computation Period in the ratio that his Hours of Service for the Service Computation
Period bears to the number of Hours of Service in the Participant’s Standard Work Year.
	 
	(c)	 	A Participant who meets the requirements of Section 8.1, entitled “Eligibility for Disability
Benefits” who has not elected Disability Retirement in accordance with Section 8.2 will
continue to accrue Credited Service while eligible for benefits under the Employer’s LTD Plan,
in accordance with Section 8.3, at the rate of 190 Hours of Service per month.
	 
	(d)	 	Effective on and after November 1, 1998, a Participant who is involuntarily terminated (other
than for cause) as part of a formal reduction in force or layoff program, who is between the
ages of 54 and 55 at the time of such involuntary termination will continue to accrue Credited
Service until he reaches age 55, at the rate of 190 Hours of Service per month; provided no
duplication of benefits exist due to any other credit given for such period.

-17-

 

	(e)	 	For periods prior to October 1, 1993, Service was credited in accordance with the provisions
of the Plan as constituted prior to such date.
	 
	(f)	 	For Prior Monsanto Participants, Credited Service is credited on August 1, 1986 in an amount
that is not less than the Credited Service credited to the Participant under the Monsanto
Company Salaried Employees’ Pension Plan and/or the Monsanto Company Hourly Paid Employees’
Pension Plan as of August 1, 1986.
	 
	(g)	 	For Prior Albright & Wilson Participants, Credited Service is credited on August 1, 1992 in
an amount that is not less than the Credited Service credited to the Participant under the
Tenneco, Inc. Retirement Plan as of August 1, 1992.
	 
	(h)	 	For Participants who were employees of Cytec Industries, Inc., who became employees of
Sterling Fibers, Inc. on January 31, 1997, no Credited Service is granted prior to January 31,
1997.

3.3 Transfers

There shall be no Credited Service credited under the Plan after January 1, 2005.

Notwithstanding the foregoing, Service credited to a person shall be subject to the following:

	(a)	 	Any person who transfers or retransfers to employment with an Employer as an Employee
directly from other employment (i) with an Employer in a capacity other than as an Employee or
(ii) with any other Affiliated Company, shall be credited with Service for such other
employment as if such other employment were employment with an Employer as an Employee.
	 
	(b)	 	Any person who transfers from employment with an Employer as an Employee directly to other
employment (i) with an Employer in a capacity other than as an Employee or (ii) with any other
Affiliated Company, shall be deemed by such transfer not to lose his Service or Credited
Service, and shall be deemed not to retire or otherwise terminate his employment as an
Employee until such time as he is no longer in the employment of an Employer or any other
Affiliated Company, at which time he shall become entitled to benefits if he is otherwise
eligible therefore under the provisions of the Plan and shall receive credit for Service for
such other employment as if such other employment were employment with an Employer as an
Employee.

3.4 Retirement or Termination and Reemployment

If an Employee retires or otherwise terminates employment with the Employers and all Affiliated
Companies, his eligibility for and the amount of any benefit to which he may be entitled under the
Plan shall be determined based upon the Service and Credited Service with which he is credited at
the time of such retirement or other termination of employment. If such retired or former Employee
is reemployed by an Employer or any Affiliated Company, following the completion of a year of
Service, the Service and Credited Service with which he was credited at

-18-

 

the time of such prior
retirement or other termination of employment shall be aggregated with the Service and Credited
Service with which he is credited following his reemployment for purposes of determining his
eligibility for and the amount of any benefit to which he may be entitled under the Plan upon his
subsequent retirement or other termination of employment if:

	(a)	 	he was eligible for any retirement benefit at the time of his previous retirement or other
termination of employment; or
	 
	(b)	 	he terminated his employment before satisfying the conditions of eligibility for any
retirement benefit under the Plan and either (i) the aggregate number of his years of Service
(not including any years of Service not required to be aggregated because of previous Breaks
in Service) is greater than the number of his consecutive one-year Breaks in Service or (ii)
the number of his consecutive one-year Breaks in Service is less than five; or
	 
	(c)	 	his Break in Service was the result of a layoff; or
	 
	(d)	 	his Break in Service was a result of a disability and the Participant was eligible for
benefits under the Employer’s LTD Plan, as described in Section 8.1, and upon cessation of the
LTD Plan benefits, the Participant returns to active employment with the Employer as an
Employee.

Notwithstanding the foregoing, if the Participant received a single sum payment of the present
value of his vested Accrued Benefit as provided in Section 11.5, other than a deemed distribution,
because of his prior retirement or termination of employment, his Service and Credited Service
credited at the time
of such prior retirement or termination of employment shall be lost and shall not be aggregated
with the Service and Credited Service credited to the Participant following his reemployment.
Payment of the present value of a Participant’s vested Accrued Benefit is deemed to be made because
of his prior retirement or termination of employment if it is made before the end of the second
Plan Year following the Plan Year in which such retirement or termination occurred.

Notwithstanding any other provision of this Section, if a retired or former Employee returns to
employment in a capacity other than as an Employee, his period of employment shall be treated for
the purposes of the Plan solely in accordance with the transfer provisions of this Article III.

3.5 Finality of Determinations

All determinations with respect to the crediting of Service and Credited Service under the Plan
shall be made on the basis of the records of the Employers, and all determinations so made shall be
final and conclusive upon Employees, former Employees, and all other persons claiming a benefit
interest under the Plan. Notwithstanding anything to the contrary contained in this Article, there
shall be no duplication of Service and Credited Service.

-19-

 

Article IV

Eligibility For Participation

4.1 Participation

Participation in the Plan was frozen effective June 1, 2004. Any Employee who was a Participant on
that date shall continue as a Participant hereunder. No other Employee shall become a Participant
hereunder after that date.

Prior to June 1, 2004, an employee became a Participant on the day the employee became an Employee;
provided no employee became a Participant any earlier than the date their Employer adopted the
Plan.

Prior Albright & Wilson Participants became Participants in the Plan on August 21, 1992.

Prior Monsanto Participants became Participants in the Plan on the date they became an Employee,
provided such date is no earlier than August 1, 1986 and no later than September 30, 1986.

4.2 Termination of Participation

A person shall remain a Participant as long as he retains an Accrued Benefit under the Plan.

4.3 Finality of Determinations

All determinations with respect to the eligibility of an Employee to become a Participant under the Plan shall be made on the basis of the records of the Employers, and all determinations so made shall be final and conclusive for all Plan purposes. Each Employee who becomes a Participant shall be entitled to the benefits, and be bound by all the terms, provisions, and conditions of the Plan and the Funding Agreement.

Article V

Normal Retirement

5.1 Eligibility

Each Participant who retires from employment with his Employer and all Affiliated Companies on or after his Normal Retirement Date shall be eligible for a normal retirement benefit.

-20-

 

5.2 Amount

Notwithstanding any other provision of the Plan, benefits under the Plan are frozen effective
January 1, 2005. No further benefits shall accrue after that date.

An eligible Participant’s monthly normal retirement benefit shall be equal to (a) or (b), whichever
is applicable; provided, however, that if (c) applies to such Participant and such Participant’s
monthly normal retirement benefit would be higher under (c), then such Participant’s monthly normal
retirement benefit shall be equal to (c):

	(a)	 	For any Participant who is a Prior Monsanto Participant, employed by Monsanto prior to April
1, 1986:
	 
	 	 	1.4 percent of the Participant’s Average Monthly Earnings multiplied by his number of years
and partial years of Credited Service at retirement.
	 
	(b)	 	For all other Participants, the sum of (1) and (2):

	 	(1)	 	1.2 percent of the Participant’s Average Monthly Earnings multiplied by his
number of years and partial years of Credited Service at retirement plus
	 
	 	(2)	 	If the Participant retires or otherwise terminates employment on or after April
1, 1999, 0.45 percent of the Participant’s Average Monthly Earnings in excess of
Covered Compensation multiplied by his number of years and partial years of Credited
Service at retirement not in excess of 35 years.

	(c)	 	For any Participant hired prior to June 1, 1996, a minimum benefit equal to the following:

	 	(1)	 	If the Participant retires or otherwise terminates employment prior to January
1, 1991, $30 multiplied by his years and partial years of Credited Service.
	 
	 	(2)	 	If the Participant retires or otherwise terminates employment on or after
January 1, 1991, $35 multiplied by his years and partial years of Credited Service.

Notwithstanding anything to the contrary contained above, a Participant’s monthly normal retirement
benefit determined above will be offset by such Participant’s vested Accrued Benefit payable under
the Monsanto Company Salaried Employees’ Pension Plan, the Monsanto Company Hourly Paid Employees’
Pension Plan or the Tenneco, Inc. Retirement Plan, if any.

In no event will a reduction in a Participant’s Average Monthly Earnings reduce the normal
retirement benefit payable to him below the amount that would have been payable to him under the
same form of payment had he retired prior to his Normal Retirement Date when eligible for an early
retirement benefit.

-21-

 

5.3 401(a)(17) Fresh Start Adjustments

The monthly normal retirement benefit of a Participant whose Earnings exceeded the $200,000 and
$150,000 Earnings limitations described in the definition of Earnings for limitation periods ending
before the limitation periods in which the limitations were effective shall be the greatest of: (i)
the Participant’s Accrued Benefit determined as of the end of the 1988 limitation period, using the
Plan formula in effect on that date (without regard to any amendments made after that date), as if
the Participant terminated employment on that date; (ii) the Participant’s Accrued Benefit
determined as of the end of the 1993 limitation period, using the Plan formula in effect on that
date (without regard to any amendments made after that date), as if the Participant terminated
employment on that date, but applying the $200,000 Earnings limitation; or (iii) the Participant’s
Accrued Benefit determined under the Plan formula in effect thereafter, but applying the $150,000
Earnings limitation.

5.4 Special Calculation For Participants Who Transferred From The Hourly Plan

The total Accrued Benefit (due to participation in both plans) of a Participant who transferred to
employment covered under the Plan from employment covered under the Sterling Chemicals, Inc.
Amended and Restated Hourly Paid Employees’ Pension Plan (the “Hourly Plan’) will be the greater of
(a) or (b):

	(a)	 	the Accrued Benefit under the Plan, calculated using the total years and partial years of
Credited Service under both plans; or
	 
	(b)	 	The sum of (1) and (2):

	 	(1)	 	The Accrued Benefit under the Plan, calculated using only the Benefit Service
earned under the Plan, plus
	 
	 	(2)	 	The Accrued Benefit payable to him from the Hourly Plan, calculated using only
the Credited Service earned under the Hourly Plan, and the formula in effect in the
Hourly Plan at the time he ceased to be a participant in the Hourly Plan.

5.5 Special Calculation For Participants Who Transferred From A Canadian Affiliate

This provision applies to employees of a Canadian affiliate company who transfer to employment
covered under the Plan on and after January 1, 1997, after becoming eligible for a benefit under a
defined benefit plan adopted by the Canadian affiliate company. The total Accrued Benefit (due to
participation in both plans) of a Participant who transferred to employment covered under the Plan
from employment with a Canadian affiliate will be the greater of (a) or (b):

	(a)	 	the Accrued Benefit under the Plan, calculated using the total years and partial years of
Credited Service under both plans; or
	 
	(b)	 	The sum of (1) and (2):

-22-

 

	 	(1)	 	The Accrued Benefit under the Plan, calculated using only the Benefit Service
earned under the Plan, plus
	 
	 	(2)	 	The Accrued Benefit payable to him from the Canadian plan, calculated using
only the Credited Service earned under the Canadian plan, and the formula in effect in
the Canadian plan at the time he ceased to be a participant in the Canadian plan.

5.6 Adjustment to Normal Retirement Benefit for Employment After Normal Retirement Date

The monthly normal retirement benefit payable with respect to each Participant who continues in
employment with his Employer or an Affiliated Company after his Normal Retirement Date shall be
determined as provided in paragraph (a), and, if applicable, (b).

	(a)	 	For the period beginning on the Participant’s Normal Retirement Date and ending on the April
1 of the calendar year following the calendar year in which he reaches age 70 1/2, his benefit
shall be the greater of (1) or (2):

	 	(1)	 	the Participant’s Accrued Benefit as of the date such benefit is being
determined (taking into account that benefits under the Plan are frozen effective
January 1, 2005); or
	 
	 	(2)	 	the Participant’s Accrued Benefit as of his Normal Retirement Date (taking into
account that benefits under the Plan are frozen effective January 1, 2005), increased,
using the Actuarial Equivalent as of his Annuity Starting Date (but no later than the
April 1 following the calendar year in which the Participant attains age 70 1/2).

	(b)	 	For the period beginning on the April 1 of the calendar year following the calendar year in
which he reaches age 70 1/2, the Participant’s monthly retirement benefit shall be adjusted as
of each “determination date” (as defined in this Section). His benefit shall be the greater
of (1) or (2):

	 	(1)	 	the Participant’s Accrued Benefit as of the “determination date”; or
	 
	 	(2)	 	the Actuarial Equivalent on the “determination date” of the Participant’s
“adjusted normal retirement benefit” determined under this Section for the prior
“determination date” (as defined in this Section).

For purposes of this Section, a “determination date” means the last day of each calendar
year during the period beginning with the calendar year following the calendar year in which
the Participant attains age 70 1/2 and ending on the earlier of (i) the date the Participant
retires from employment with his Employer and all Affiliated Companies, or

-23-

 

(ii) his Annuity
Starting Date, except that the first “determination date” is the April 1 following the
calendar year in which the Participant attains age 70 1/2.

No further adjustments shall be made to a Participant’s monthly normal retirement benefit as
provided in paragraphs (a)(2) and (b)(2) after the earlier of (i) the date the Participant retires
from employment with his Employer and all Affiliated Companies, or (ii) his Annuity Starting Date,
and, if he continues to accrue benefits under the Plan, such continued accruals shall be reduced as
provided in Section 11.9.

5.7 Payment

A monthly normal retirement benefit shall be paid to an eligible Participant commencing as of the
first day of the month following the month in which he retires, but not later than the date
specified in Section 11.7.

Article VI

Early Retirement

6.1 Eligibility

Each Participant who retires from employment with his Employer and all Affiliated Companies at or
after age 55, but prior to his Normal Retirement Date and who has at least five years of Service
and who is not eligible for or does not elect to receive long term disability plan (“LTD”) benefits
in accordance with the provisions of Article VIII shall be eligible for an early retirement
benefit.

Notwithstanding the above, a Participant, the sum of whose age plus years of Service equals at
least 70 on his last day of employment prior to the reduction in force announced by means of an
official letter in September, 2005 from the Employer to the Participants affected by such reduction
in force, is entitled at any time after attaining age 55, to commence payment of his benefit on an
Early Retirement Date, without application of the early retirement reduction described in the
following Section.

A Participant (i) who is at least 50 years of age as of November 9, 2004, (ii) who is involuntarily
terminated other than for cause during the period beginning on November 9, 2004 and ending on
December 31, 2004, and (iii) who executes a release of claims in connection with his or her pension
benefit under the Plan, may, at any time after attaining 55 years of age, commence payment of his
benefit on an Early Retirement Date, without application of the early retirement reduction
described in the following Section.

6.2 Amount

An eligible Participant’s monthly early retirement benefit shall be equal to his vested Accrued
Benefit on his Early Retirement Date; provided, however, that the amount of such benefit shall

-24-

 

be
reduced by 1/4 of one percent for each full calendar month by which his Annuity Starting Date
precedes his Normal Retirement Date, subject to the exceptions in the preceding Section and the
following paragraph.

If the sum of a Participant’s age and years of Service equals or exceeds 80 on his Early Retirement
Date and his Early Retirement Date is on or after April 1, 1999, the reduction in the preceding
paragraph will not be applied to Section 5.2(a) and item (1) of Section 5.2(b); provided the
Participant meets one of the following requirements:

	(a)	 	the Participant is retiring directly from active employment and the sum of a Participant’s
age and years of Service equals or exceeds 80 prior to his retirement; or
	 
	(b)	 	the Participant earned Credited Service after he became a Participant in the Plan and his
termination of employment is a result of a reduction in workforce and, after his involuntary
termination, the sum of his age and years of Service reaches or exceeds 80.

A Participant’s vested interest in his Accrued Benefit shall be determined in accordance with the
schedule provided in Section 7.1.

6.3 Early Retirement Supplement

A Participant who retires directly from active employment and has an Annuity Starting Date between
the ages of 55 and 62, shall receive an Early Retirement Supplement, payable until the earlier of
the first of the month after he reaches age 62 or the first of the month in which his death occurs.
The monthly amount of the early Retirement Supplement is equal to $4 times his years and partial
years of Credited Service.

6.4 Payment

A monthly early retirement benefit shall be paid to an eligible Participant commencing as of his
Early Retirement Date.

ArticleVII

Vested Rights

7.1 Vesting

A Participant’s vested interest in his Accrued Benefit shall be determined in accordance with the
following schedule, based upon the number of full years of Service credited to him; provided,
however, that a Participant’s vested interest in his Accrued Benefit shall be 100 percent if he is:

	(a)	 	employed by an Employer or an Affiliated Company on his Normal Retirement Date, regardless of
whether he has completed the number of years of Service required under the schedule for 100
percent vesting; or

-25-

 

	(b)	 	a Participant who terminated employment with Sterling Fibers, Inc. between September 18, 2000
and May 20, 2001; or
	 
	(c)	 	a Participant on the active payroll of Sterling Fibers, Inc., Sterling Pulp Chemicals US,
Inc. or Sterling Pulp Chemicals Inc. on the date such Subsidiaries on December 19, 2002 and
ceased to be Subsidiaries of the Employer.

	 	 	 
	Years of Service	 	Vested Interest
	 	 	 
	less than five
	 	0%
	 	 	 
	five or more
	 	100%

7.2 Eligibility for Deferred Vested Retirement Benefit

Each Participant who terminates employment with his Employer and all Affiliated Companies, who has
a vested interest in his Accrued Benefit, and who is not eligible for a normal, early, or
disability retirement benefit under the Plan shall be eligible for a deferred vested retirement
benefit.

7.3 Amount of Deferred Vested Retirement Benefit

An eligible Participant’s monthly deferred vested retirement benefit shall be equal to his vested
Accrued Benefit on the date of his termination of employment; provided, however, that if the
Participant is eligible to elect to begin benefit payments before his Normal Retirement Date as
provided in Section 7.4, the amount of such benefit shall be reduced for early commencement in the
same way as provided in Section 6.2 with respect to an early retirement benefit.

7.4 Payment

A monthly deferred vested retirement benefit shall be paid to an eligible Participant commencing as
of his Normal Retirement Date; provided, however, that a Participant who has five years of Service
may elect to begin benefit payments as of the first day of any month following the month in which
he attains age 55.

7.5 Election of Former Vesting Schedule

In the event the Sponsor adopts an amendment to the Plan that changes the vesting schedule under
the Plan, including any amendment which directly or indirectly affects the computation of the
nonforfeitable interest of Participants’ rights to Accrued Benefits, any Participant with three or
more years of Service shall have a right to have his nonforfeitable interest in his Accrued Benefit
continue to be determined under the vesting schedule in effect prior to such amendment rather than
under the new vesting schedule, unless the nonforfeitable interest of such Participant in his
Accrued Benefit under the Plan, as amended, at any time is not less than such interest

-26-

 

determined
without regard to such amendment. Such Participant shall exercise such right by giving written
notice of his exercise thereof to the Administrator within 60 days after the latest of (i) the date
he receives notice of such amendment from the Administrator, (ii) the effective date of the
amendment, or (iii) the date the amendment is adopted. Notwithstanding the foregoing provisions of
this Section, the vested interest of each Participant on the effective date of such amendment shall
not be less than his vested interest under the Plan as in effect immediately prior to the effective
date thereof.

Article VIII

Disability

8.1 Eligibility for Disability Benefit

Each Participant who ceases active employment with his Employer and all Affiliated Companies prior
to his Normal Retirement Date due to an illness or disability after meeting the requirements for
long-term disability payments under the provisions of the LTD Plan is considered to be Disabled and
is eligible for one of the disability benefits described below; provided the Participant has been
credited with at least two and one-half years of Credited Service.

8.2 Disability Retirement

	(a)	 	Disability Retirement Eligibility
	 
	 	 	Each Participant who meets the requirements of Section 8.1 and who has met one of the
following requirements is eligible to elect payment of a Disability Retirement Benefit:

	 	(1)	 	the Participant has elected in writing, in accordance with procedures
established under the LTD Plan, not to receive any payments from the LTD Plan; or
	 
	 	(2)	 	the Participant has elected to stop payments he is receiving from the LTD Plan,
in order to receive Disability Retirement Benefit, instead.

	(b)	 	Disability Retirement Amount

	 	(1)	 	An eligible Participant’s monthly Disability Retirement Benefit shall be equal
to his Accrued Benefit on the date his Disability Retirement Benefit commences, taking
into account any Credited Service credited to the Participant for any period prior to
his Normal Retirement Date during which he is receiving benefits under the LTD Plan
prior to the cessation of LTD payments, adjusted actuarially for early retirement and,
if applicable, form of payment.
	 
	 	(2)	 	In addition to the amount payable under item (1), a supplement will be paid to
the Participant starting on the Annuity Starting Date of his disability retirement and
ending on the first day of the month following the earliest of the date he ceases to

-27-

 

	 	 	 	be
Disabled, his Normal Retirement Date or his date of death. The amount of the
supplement will be the amount his Accrued Benefit was reduced due to actuarial
adjustment for early retirement and, if applicable, form of payment.

	(c)	 	Disability Retirement Payment
	 
	 	 	A monthly Disability Retirement Benefit shall be paid to an eligible Participant commencing
as of the first day of the month following the later of:

	 	(1)	 	the month in which he terminates employment; or
	 
	 	(2)	 	the last calendar month in which benefits under the LTD Plan are payable.

8.3 Disability Accrual

A Participant who meets the requirements of Section 8.1 will accrue Service and Credited
Service during the period he is eligible for benefits under the LTD Plan; provided, such
Disability Accrual ceases on the earliest of:

	 	(1)	 	the first day of the month after he ceases to meet the requirements of Section
8.1; or
	 
	 	(2)	 	the first day of the month after he elects, in writing to cease his LTD Plan
payments in order to elect Disability Retirement benefits; or
	 
	 	(3)	 	the date of his death; or
	 
	 	(4)	 	his Normal Retirement Date.

Article IX

Forms of Payment

9.1 Normal Form of Payment

A Participant who is eligible to receive any retirement benefit under Section 5.1, 6.1, 7.2, or 8.1
of the Plan shall receive payment of such benefit in accordance with one of the following normal
forms of payment:

	(a)	 	A Participant who is not married on his Annuity Starting Date shall receive such benefit in
the form of a single life annuity. Such Participant shall receive a monthly retirement
benefit payable for his lifetime, the last monthly payment being for the month in which his
death occurs.

-28-

 

	(b)	 	A Participant who is married on his Annuity Starting Date shall receive such benefit in the
form of a 50 percent Qualified Joint and Survivor Annuity. Such Participant shall receive a
reduced monthly retirement benefit payable for his lifetime, the last monthly payment being
for the month in which his death occurs. If the Participant’s Spouse survives him, then
commencing with the month following the month in which the Participant’s death occurs, his
Spouse shall receive a monthly benefit for his or her remaining lifetime equal to one-half of
the reduced amount payable during the Participant’s lifetime, the last payment being for the
month in which the Spouse’s death occurs. A married Participant may elect to increase the
survivor benefit payable to his Spouse under the Qualified Joint and Survivor Annuity to 100
percent or 75 percent of the reduced amount payable during the Participant’s lifetime. Any
such election must be made during the election period described in Section 9.5.
	 
	 	 	The reduced monthly payments to be made to the Participant under this paragraph shall be in
an amount which, on the date of commencement thereof, is the Actuarial Equivalent of the
monthly benefit otherwise payable to the Participant under the form of payment described in
paragraph (a).

To receive a benefit under the Qualified Joint and Survivor Annuity form of payment described in
paragraph (b) above, a Participant’s Spouse must be the same Spouse to whom the Participant was
married on his Annuity Starting Date. Once a Participant’s Annuity Starting Date occurs and
retirement benefit payments commence under one of the normal forms of payment, the form of payment
will not change even if the Participant’s marital status changes; provided, however, that if the
Participant is reemployed by an Employer or an Affiliated Company, any benefits he accrues under
the Plan following such reemployment with respect to which a separate Annuity Starting Date occurs
shall be payable in the form elected by the Participant as of such separate Annuity Starting Date.

Subject to the requirements of Section 9.6, a Participant may waive the normal form of payment
applicable to him and elect to receive payment of his benefit in one of the optional forms of
payment provided in Section 9.2.

9.2 Optional Forms of Payment

Within the election period described in Section 9.5, a Participant who is eligible to receive a
normal, early, deferred vested, or disability retirement benefit may elect to receive payment of
such benefit in accordance with any one of the following options. If the Participant is married on
his Annuity Starting Date, any such election must satisfy the requirements of Section 9.6.

If the Participant’s Beneficiary under an optional form of payment dies prior to the Participant’s
Annuity Starting Date, the election shall become inoperative and ineffective, and benefit payments,
if any, shall be made under the normal form of payment provided in Section 9.1, unless the
Participant elects another optional form of payment provided under the Plan prior to his Annuity
Starting Date. Once a Participant’s Annuity Starting Date occurs, however, the optional form of
payment elected by the Participant will not change even if the Participant’s marital status changes
or his Beneficiary predeceases him; provided, however, that if the

-29-

 

Participant is reemployed by an
Employer or an Affiliated Company, any benefits he accrues under the Plan following his
reemployment with respect to which a separate Annuity Starting Date occurs shall be payable in the
form elected by the Participant as of such separate Annuity Starting Date.

The monthly payments made under any optional form of payment hereunder shall be the Actuarial
Equivalent of the monthly benefit otherwise payable to the Participant in the single life annuity
form described in paragraph (a) of Section 9.1.

	(a)	 	Single Life Annuity. The Participant shall receive a monthly retirement benefit payable for
his lifetime, the last monthly payment being for the month in which his death occurs.
	 
	(b)	 	100% Joint and Survivor Annuity. The Participant shall receive a reduced monthly retirement
benefit payable for his lifetime, the last monthly payment being for the month in which his
death occurs. If the Participant’s Beneficiary survives him, then commencing with the month
following the month in which the Participant’s death occurs, his Beneficiary shall receive a
monthly benefit for his or her remaining lifetime equal to the reduced amount payable during
the Participant’s lifetime, the last monthly payment being for the month in which the
Beneficiary’s death occurs.
	 
	(c)	 	75% Joint and Survivor Annuity. The Participant shall receive a reduced monthly retirement
benefit payable for his lifetime, the last monthly payment being for the month in which his
death occurs. If the Participant’s Beneficiary survives him, then commencing with the month
following the month in which the Participant’s death occurs, his Beneficiary shall receive a
monthly benefit for his or her remaining lifetime equal to three-quarters of the reduced
amount payable during the Participant’s lifetime, the last monthly payment being for the month
in which the Beneficiary’s death occurs.
	 
	(d)	 	50% Joint and Survivor Annuity. The Participant shall receive a reduced monthly retirement
benefit payable for his lifetime, the last monthly payment being for the month in which his
death occurs. If the Participant’s Beneficiary survives him, then commencing with the month
following the month in which the Participant’s death occurs, his Beneficiary shall receive a
monthly benefit for his or her remaining lifetime equal to one-half of the reduced amount
payable during the Participant’s lifetime, the last monthly payment being for the month in
which the Beneficiary’s death occurs.
	 
	(e)	 	25% Joint and Survivor Annuity. The Participant shall receive a reduced monthly retirement
benefit payable for his lifetime, the last monthly payment being for the month in which his
death occurs. If the Participant’s Beneficiary survives him, then commencing with the month
following the month in which the Participant’s death occurs, his Beneficiary shall receive a
monthly benefit for his or her remaining lifetime equal to one-quarter of the reduced amount
payable during the Participant’s lifetime, the last monthly payment being for the month in
which the Beneficiary’s death occurs.
	 
	(f)	 	Pop-Up 100% Joint and Survivor Annuity. The Participant shall receive a reduced monthly
retirement benefit payable for his lifetime, the last monthly payment being for

-30-

 

	 	 	the month in
which his death occurs. If the Participant’s Beneficiary survives him, then commencing with
the month following the month in which the Participant’s death occurs, his Beneficiary shall
receive a monthly benefit for his or her remaining lifetime equal to the reduced amount
payable during the Participant’s lifetime, the last monthly payment being for the month in
which the Beneficiary’s death occurs.
	 
	 	 	If the Beneficiary’s death occurs prior to the death of the Participant, then commencing
with the month following the month in which the Beneficiary’s death occurs, the Participant
shall receive an increase in the amount of his monthly benefit for the remainder of his or
her remaining lifetime equal to the amount that would be payable under a Single Life
Annuity, the last monthly payment being for the month in which the Participant’s death
occurs.
	 
	(c)	 	Pop-Up 75% Joint and Survivor Annuity. The Participant shall receive a reduced monthly
retirement benefit payable for his lifetime, the last monthly payment being for the month in
which his death occurs. If the Participant’s Beneficiary survives him, then commencing with
the month following the month in which the Participant’s death occurs, his Beneficiary shall
receive a monthly benefit for his or her remaining lifetime equal to three-quarters of the
reduced amount payable during the Participant’s lifetime, the last monthly payment being for
the month in which the Beneficiary’s death occurs.
	 
	 	 	If the Beneficiary’s death occurs prior to the death of the Participant, then commencing
with the month following the month in which the Beneficiary’s death occurs, the Participant
shall receive an increase in the amount of his monthly benefit for the remainder of his or
her remaining lifetime equal to the amount that would be payable under a Single Life
Annuity, the last monthly payment being for the month in which the Participant’s death
occurs.
	 
	(d)	 	Pop-Up 50% Joint and Survivor Annuity. The Participant shall receive a reduced monthly
retirement benefit payable for his lifetime, the last monthly payment being for the month in
which his death occurs. If the Participant’s Beneficiary survives him, then commencing with
the month following the month in which the Participant’s death occurs, his Beneficiary shall
receive a monthly benefit for his or her remaining lifetime equal to one-half of the reduced
amount payable during the Participant’s lifetime, the last monthly payment being for the month
in which the Beneficiary’s death occurs.
	 
	 	 	If the Beneficiary’s death occurs prior to the death of the Participant, then commencing
with the month following the month in which the Beneficiary’s death occurs, the Participant
shall receive an increase in the amount of his monthly benefit for the remainder of his or
her remaining lifetime equal to the amount that would be payable under a Single Life
Annuity, the last monthly payment being for the month in which the Participant’s death
occurs.
	 
	(e)	 	Pop-Up 25% Joint and Survivor Annuity. The Participant shall receive a reduced monthly
retirement benefit payable for his lifetime, the last monthly payment being for the month in
which his death occurs. If the Participant’s Beneficiary survives him, then

-31-

 

	 	 	commencing with
the month following the month in which the Participant’s death occurs, his Beneficiary shall
receive a monthly benefit for his or her remaining lifetime equal to one-quarter of the
reduced amount payable during the Participant’s lifetime, the last monthly payment being for
the month in which the Beneficiary’s death occurs.
	 
	 	 	If the Beneficiary’s death occurs prior to the death of the Participant, then commencing
with the month following the month in which the Beneficiary’s death occurs, the Participant
shall receive an increase in the amount of his monthly benefit for the remainder of his or
her remaining lifetime equal to the amount that would be payable under a Single Life
Annuity, the last monthly payment being for the month in which the Participant’s death
occurs.
	 
	(g)	 	Ten-Year Certain and Life Annuity. The Participant shall receive a reduced monthly
retirement benefit payable for his lifetime, the last monthly payment being for the month in
which his death occurs. If the Participant’s death occurs prior to the end of the ten-year
period commencing with his Annuity Starting Date, his Beneficiary shall receive a continued
monthly benefit equal to such reduced amount for the remainder of such ten-year period. If
the Participant’s Beneficiary dies after becoming eligible to receive a benefit hereunder, but
prior to the end of the ten-year period, the unpaid monthly benefit shall be paid to the
Beneficiary designated by the Participant to receive payment in such event or, if none, in
accordance with the provisions of Section 9.3. If the Participant’s Beneficiary dies while
the Participant is living and before 120 payments have been made, the Participant may name
another Beneficiary.
	 
	(h)	 	Social Security Adjustment Annuity. The Participant shall receive an increased monthly
retirement benefit prior to a specified date, which shall be the first day of the month
following the date the Participant reaches age 62 or age 65, as elected by the Participant,
and a reduced monthly retirement benefit thereafter, so that the adjusted benefit, when
combined with the Primary Insurance Benefits under the Federal Social Security Act expected to
become payable as of such specified date, will produce, as nearly as practicable, a level
monthly income, the last monthly payment being for the month in which the Participant’s death
occurs.
	 
	 	 	The Participant may elect the Social Security Adjustment Annuity in conjunction with the
Single Life Annuity optional form of payment, one of the Joint and Survivor Annuity optional
forms of payment or in conjunction with Ten-Year Certain and Life Annuity optional form of
payment. The Participant’s shall receive a reduced monthly retirement benefit in accordance
with the Joint and Survivor or Certain and Life Annuity option, in addition to the
adjustment for Social Security described in the previous paragraph.
	 
	 	 	The Social Security Adjustment Annuity is not available in conjunction with any of the
Pop-Up Joint and Survivor optional forms of payment.

Notwithstanding any other provision of the Plan to the contrary, distribution under an optional
form of payment shall be made in accordance with Code Section 401(a)(9) and regulations issued
thereunder, including the minimum distribution incidental benefit requirement. If a

-32-

 

Participant
designates a person other than his Spouse as his Beneficiary under an optional form of payment, and
if payments under the optional form elected would not meet the minimum distribution incidental
benefit requirement, the election shall be ineffective and benefit payments, if any, shall be made
under the normal form of payment provided in Section 9.1, unless the Participant elects another
optional form of payment provided under the Plan prior to his Annuity Starting Date.

9.3 Designation of Beneficiary and Beneficiary in Absence of Designated Beneficiary

A Participant’s Beneficiary may be any individual or, in the case of a Beneficiary to receive
payments for the remainder of a period-certain under the form of payment elected by the
Participant, any individuals, trust, or estate selected by the Participant. A Participant’s
designation of a Beneficiary is subject to the spousal consent requirements of Section 9.6.

If payment is to be made to a Participant’s surviving Beneficiary for the remainder of a
period-certain under the form of payment elected by the Participant and no Beneficiary survives or
the Participant has not designated a Beneficiary, the Participant’s Beneficiary shall be the
Participant’s surviving Spouse or, if none, the Participant’s surviving children in equal shares
or, if none, the Participant’s estate.

9.4 Notice Regarding Forms of Payment

The Administrator shall provide a Participant with a written description of (i) the terms and
conditions of the normal forms of payment provided in Section 9.1, (ii) the optional forms of
payment provided in Section 9.2, (iii) the Participant’s right to waive the normal form of payment
provided in Section 9.1 and to elect an optional form of payment and the effect thereof, (iv) the
rights of the Participant’s Spouse with respect to the Qualified Joint and Survivor Annuity form of
payment, and (v) the Participant’s right to revoke a waiver of the normal form of payment or to
change his election of an option and the effect thereof. The explanation shall notify the
Participant of his right to defer payment of his retirement benefit under the Plan until his Normal
Retirement Date, or such later date as may be provided under the Plan. The Administrator shall
provide such explanation no fewer than 30 days and no more than 90 days before a Participant’s
Annuity Starting Date.

Notwithstanding the foregoing, a Participant’s Annuity Starting Date may occur fewer than 30 days
after receipt of such explanation if the Administrator clearly informs the Participant:

	(a)	 	of his right to consider his form of payment election for a period of at least 30 days
following his receipt of the explanation;
	 
	(b)	 	the Participant, after receiving the explanation, affirmatively elects an early Annuity
Starting Date, with his Spouse’s written consent, if necessary;
	 
	(c)	 	the Participant’s Annuity Starting Date occurs after the date the explanation is provided to
him;

-33-

 

	(d)	 	the election period described in Section 9.5 does not end until the later of his Annuity
Starting Date or the expiration of the seven-day period beginning the day after the date the
explanation is provided to him; and
	 
	(e)	 	actual payment of the Participant’s retirement benefit does not begin to the Participant
before such revocation period ends.

9.5 Election Period

A Participant may waive or revoke a waiver of the normal form of payment provided in Section 9.1
and elect, modify, or change an election of an optional form of payment provided in Section 9.2 by
written notice delivered to the Administrator at any time during the election period; provided,
however, that no waiver of the normal form of payment and election of an optional form of payment
shall be valid unless the Participant has received the written explanation described in Section
9.4. Subject to the provisions of Section 9.4 extending a Participant’s election period under
certain circumstances, a Participant’s “election period” means the 90-day period ending on his
Annuity Starting Date.

The form in which a Participant shall receive payment of his retirement benefit shall be determined
upon the later of his Annuity Starting Date or the date his election period ends, based upon any
waiver and election in effect on such date. Except as otherwise specifically provided in the Plan,
in no event shall the form in which a Participant’s retirement benefit is paid be changed on or
after such date.

9.6 Spousal Consent Requirements

A married Participant’s waiver of the normal Qualified Joint and Survivor Annuity form of payment
and his election, modification, or change of an election of an optional form of payment must
include the written consent of the Participant’s Spouse. A Participant’s Spouse shall be deemed to
have given written consent to the Participant’s waiver and election if the Participant establishes
to the satisfaction of a Plan representative that such consent cannot be obtained because of any of
the following circumstances:

	(a)	 	the Spouse cannot be located,
	 
	(b)	 	the Participant is legally separated or has been abandoned within the meaning of local law,
and the Participant has a court order to that effect, or
	 
	(c)	 	other circumstances set forth in Code Section 401(a)(11) and regulations issued thereunder.

Notwithstanding the foregoing, written spousal consent shall not be required if the Participant
elects an optional form of payment that is a Qualified Joint and Survivor Annuity.

-34-

 

Any written spousal consent given pursuant to this Section shall acknowledge the effect of the
waiver of the Qualified Joint and Survivor Annuity form of payment and of the election of an
optional form of payment, shall specify the optional form of payment selected by the Participant
and that such form may not be changed (except to a Qualified Joint and Survivor Annuity) without
written spousal consent, shall specify any Beneficiary designated by the Participant and that such
Beneficiary may not be changed without written spousal consent, and shall be witnessed by a Plan
representative or a notary public. Any written consent given or deemed to be given by a
Participant’s Spouse shall be irrevocable and shall be effective only with respect to such Spouse
and not with respect to any subsequent Spouse.

9.7 Death Prior to Annuity Starting Date

Notwithstanding any other provision of the Plan to the contrary, should a Participant die prior to
his Annuity Starting Date neither he nor any person claiming under or through him shall be entitled
to any retirement benefit under the Plan; and no benefit shall be paid under the Plan with respect
to such Participant (except any survivor benefit payable under the provisions of Article X).

9.8 Effect of Reemployment on Form of Payment

Notwithstanding any other provision of the Plan, if a former Employee is reemployed, his prior
election of a form of payment hereunder shall become ineffective, except to the extent that the
Participant’s Annuity Starting Date occurred prior to such reemployment and such prior Annuity
Starting Date is preserved with respect to a portion or all of the Participant’s retirement
benefit.

Article X

Survivor Benefits

10.1 Eligibility for Qualified Preretirement Survivor Annuity

If a Participant dies before his Annuity Starting Date, his surviving Spouse shall be eligible for
a Qualified Preretirement Survivor Annuity if all of the following requirements are met on the
Participant’s date of death:

	(a)	 	the Participant has a Spouse; and
	 
	(b)	 	the Participant has a vested Accrued Benefit.

10.2 Amount of Qualified Preretirement Survivor Annuity

The monthly amount of the Qualified Preretirement Survivor Annuity payable to a surviving Spouse
shall be equal to the survivor benefit that would have been payable to the Spouse if the
Participant had:

-35-

 

	(a)	 	separated from service on the earlier of his actual separation from service date or his date
of death; and
	 
	(b)	 	survived to the date as of which payment of the Qualified Preretirement Survivor Annuity to
his surviving Spouse commences; and
	 
	(c)	 	elected to commence retirement benefits as of the date described in paragraph (b) above in
the form of a 50 percent Qualified Joint and Survivor Annuity; and
	 
	(d)	 	died on his Annuity Starting Date.

Notwithstanding the foregoing, if immediately prior to a Participant’s death the Participant met
the requirements for Disability Accrual under Section 8.3, had at least 10 years of Service and
dies prior to age 55, the amount of the Qualified Joint and Survivor Annuity will not be reduced
for commencement of payments prior to Normal Retirement Date.

10.3 Payment of Qualified Preretirement Survivor Annuity

Payment of a Qualified Preretirement Survivor Annuity to a Participant’s surviving Spouse shall
commence as of the first day of the month following the later of (a) or (b):

	(a)	 	the month in which the Participant dies; or
	 
	(b)	 	the earliest of (1), (2), (3) or (4):

	 	(1)	 	the month in which the Participant would have attained earliest retirement age
(as defined herein) under the Plan; or
	 
	 	(2)	 	the month the Participant completed 20 years of Service while employed; or
	 
	 	(3)	 	the month the Participant completes 5 years of Service while employed after
reaching age 50; or
	 
	 	(4)	 	if the Participant meets the requirements for Disability Accrual under Section
8.3, the month after reaching age 55.

Notwithstanding the foregoing, a Participant’s surviving Spouse may elect to defer commencement of
payment of the Qualified Preretirement Survivor Annuity to a date no later than the Participant’s
Normal Retirement Date. If a Participant’s surviving Spouse dies before the date as of which
payment of the Qualified Preretirement Survivor Annuity is to commence to such Spouse, no Qualified
Preretirement Survivor Annuity shall be payable hereunder.

Payment of a Qualified Preretirement Survivor Annuity shall continue to a Participant’s surviving
Spouse for such Spouse’s lifetime, the last monthly payment being for the month in which the
Spouse’s death occurs.

-36-

 

For purposes of this Article, a Participant’s “earliest retirement age” means the earliest age at
which the Participant could have elected to commence retirement benefits under the Plan if he had
survived, but based on his years of Service on his date of death.

Article XI

General Provisions & Limitations Regarding Benefits

11.1 Suspension of Benefits for Rehired Retired Participants

Except as otherwise provided in Sections 11.2, 11.7, and 11.8, if a retired former Employee is
reemployed by an Employer or an Affiliated Company, any benefits payable to such Participant under
the Plan shall be suspended during the period of such reemployment, provided that the notice
requirements of Department of Labor Regulations Section 2530.203-3(b)(4) are met, if
applicable. If a retired former Employee whose Annuity Starting Date occurred prior to
reemployment again becomes eligible to receive benefits under the Plan, the amount of benefit
payable to the Participant shall be reduced to its Actuarial Equivalent to reflect the value of any
benefit payments made to the Participant prior to his reemployment.

11.2 Exception to Suspension of Benefits Rule

Notwithstanding any other provision of the Plan to the contrary, a retired former Employee who is
reemployed by an Employer or an Affiliated Company after his Annuity Starting Date shall be
eligible for a retirement benefit for any month in which he is employed for fewer than 40 hours or
such other amount of time that does not constitute ERISA Section 203(a)(3)(B) service. The Plan
may provide an Actuarial Equivalent increase to the benefit for any such month in lieu of stopping
and starting payments to the Participant on a month-by-month basis.

11.3 Non-Alienation of Retirement Rights or Benefits

Except as provided in Code Section 401(a)(13)(B) (relating to qualified domestic relations orders),
Code Sections 401(a)(13)(C) and (D) (relating to offsets ordered or required under a criminal
conviction involving the Plan, a civil judgment in connection with a violation or alleged violation
of fiduciary responsibilities under ERISA, or a settlement agreement between the Participant and
the Department of Labor in connection with a violation or alleged violation of fiduciary
responsibilities under ERISA), Section 1.401(a)-13(b)(2) of the Treasury Regulations (relating to
Federal tax levies), or as otherwise required by law, no benefit under the Plan at any time shall
be subject in any manner to anticipation, alienation, assignment (either at law or in equity),
encumbrance, garnishment, levy, execution, or other legal or equitable process; and no person shall
have the power in any manner to anticipate, transfer, assign (either at law or in equity), alienate
or subject to attachment, garnishment, levy, execution, or other legal or equitable process, or in
any way encumber his benefits under the Plan, or any part thereof, and any attempt to do so shall
be void.

-37-

 

11.4 Payment of Benefits to Others

If any person to whom a retirement benefit is payable is unable to care for his affairs because of
illness or accident, any payment due (unless prior claim therefore shall have been made by a duly
qualified guardian or other legal representative) may be paid to the spouse, parent, brother or
sister of such person, or any other individual deemed by the Administrator to be maintaining or
responsible for the maintenance of such person. The monthly payment of a retirement benefit to a
person for the month in which he dies shall, if not paid to such person prior to his death, be paid
to his spouse, parent, brother, sister, or estate as the Administrator shall determine. Any
payment made in accordance with the provisions of this Section shall be a complete discharge of any
liability of the Plan with respect to the benefit so paid.

11.5 Payment of Small Benefits; Deemed Cashout

If the Actuarially Equivalent present value of any retirement benefit payable under Section 5.1,
6.1, 7.2, or 8.1 or any survivor benefit is $5,000 or less, such Actuarially Equivalent present
value shall be paid to the Participant, or his Beneficiary, if applicable, in a single sum payment,
in lieu of all other benefits under the Plan, as soon as practicable following the date of the
Participant’s retirement, death, or other termination of employment and he shall cease to be a
Participant under the Plan as of the date of such payment. For distributions made prior to October
17, 2000, the Actuarially Equivalent present value of a benefit shall be deemed to exceed $5,000 if
the Actuarially Equivalent present value of the benefit exceeded such amount at the time of any
prior distribution.

Notwithstanding any other provision of this Section, if the Actuarially Equivalent present value of
any retirement benefit payable under the Plan to a Participant is greater than $1,000, such
Actuarially Equivalent present value shall not be paid to the Participant in a single sum payment
prior to the later of (i) the date the Participant attains age 62 or (ii) the Participant’s Normal
Retirement Date, unless the Participant consents in writing to such distribution. The provisions of
this paragraph shall not apply to a distribution to a Participant’s surviving Spouse or an
alternate payee under a qualified domestic relations order.

If the nonforfeitable Accrued Benefit of a Participant is zero, such Participant shall be deemed to
have received distribution of his entire vested Accrued Benefit under the Plan, in lieu of all
other benefits under the Plan, as of the date of his termination of employment with his Employer
and all Affiliated Companies and he shall cease to be a Participant under the Plan as of such date.

A former Participant who received a distribution hereunder, other than a deemed distribution,
because of his retirement or other termination of employment shall lose the Service and Credited
Service with which he was credited at the time of his prior termination of employment or
retirement. If such former Participant is reemployed, such prior Service and Credited Service
shall not be reinstated.

-38-

 

11.6 Direct Rollovers

Notwithstanding any other provision of the Plan to the contrary, in lieu of receiving a single sum
payment as provided in Section 11.5, a “qualified distributee” may elect in writing, in accordance
with rules prescribed by the Sponsor, to have any portion or all of such payment that is an
“eligible rollover distribution” paid directly by the Plan to the “eligible retirement plan”
designated by the “qualified distributee”; provided, however, that this provision shall not apply
if the total distribution is less than $200 and that a “qualified distributee” may not elect this
provision with respect to any partial distribution that is less than $500. Any such payment by the
Plan to another “eligible retirement plan” shall be a direct rollover. For purposes of this
Section, the following terms have the following meanings:

	(a)	 	An “eligible retirement plan” means an individual retirement account described in Code
Section 408(a), an individual retirement annuity described in Code Section 408(b), an
annuity plan described in Code Section 403(a), or a qualified trust described in Code
Section 401(a) that accepts rollovers; provided, however, that, in the case of a direct
rollover by a surviving Spouse, an eligible retirement plan does not include a qualified
trust described in Code Section 401(a). An “eligible retirement plan” shall also mean an
annuity contract described in Code Section 403(b) and an eligible plan under Code Section
457(b) 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 the 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 relation order, as defined in Code Section 414(p).

	(b)	 	An “eligible rollover distribution” means any distribution of all or any portion of a
Participant’s Accrued Benefit or a distribution of all or any portion of a survivor benefit
under Article X; provided, however, that an eligible rollover distribution does not include:
any distribution that is one of a series of substantially equal periodic payments made not
less frequently than annually for the life or life expectancy of the qualified distributee or
the joint lives or joint life expectancies of the qualified distributee and the qualified
distributee’s designated beneficiary, or for a specified period of ten years or more; and any
distribution to the extent such distribution is required under Code Section 401(a)(9).
	 
	(c)	 	A “qualified distributee” means a Participant, his surviving Spouse, or his Spouse or former
Spouse who is an alternate payee under a qualified domestic relations order, as defined in
Code Section 414(p).

11.7 Limitations on Commencement

Notwithstanding any other provision of the Plan to the contrary, payment of a Participant’s
retirement benefit shall commence not later than the earlier of:

-39-

 

	(a)	 	the 60th day after the end of the Plan Year in which occurs the Participant’s Normal
Retirement Date, the tenth anniversary of the date on which he first became a Participant, or
the Participant’s retirement or other termination of employment, whichever is latest; or
	 
	(b)	 	his Required Beginning Date.

Distributions required to commence under this Section shall be made in accordance with Code Section
401(a)(9) and regulations issued thereunder. If payment of a Participant’s retirement benefit does
not commence until his Required Beginning Date, his Required Beginning Date shall be considered his
Annuity Starting Date for all purposes of the Plan.

If the Participant dies after his Annuity Starting Date, but prior to distribution of his entire
interest, the remaining portion of such interest shall be distributed to his Beneficiary in a
method which is at least as rapid as the method being used at the date of the Participant’s death.
If the Participant dies prior to his Annuity Starting Date, the entire interest attributable to the
Participant shall be distributed within five years after the date of his death, unless such
interest is payable to a designated beneficiary (as defined in Code Section 401(a)(9)) for a period
which does not exceed the life or life expectancy of such designated beneficiary, in which event
distribution of such interest shall commence no later than the date the Participant would have
attained age 70 1/2 if the designated beneficiary is the surviving Spouse of such Participant, or
the date which is one year after the date of such Participant’s death if the designated beneficiary
is not the surviving Spouse of such Participant.

Subject to the requirements of Code Sections 401(a)(9) and 411(d)(6), no benefit payments shall
commence under the Plan until the Participant, or his surviving Spouse, if applicable, makes
written application therefore on a form satisfactory to the Administrator. If the amount of a
monthly retirement benefit payable to a Participant cannot be determined for any reason (including
lack of information as to whether the Participant is still living or his marital status) on the
date payment of such benefit is to commence under this Section, payment shall be made retroactively
to such date no later than 60 days after the date on which the amount of such monthly retirement
benefit can be determined.

11.8 Post Age 70 1/2 Payments

Notwithstanding any other provision of the Plan to the contrary, a Participant who attains age 70
1/2 on or after December 31, 1998, will receive distribution of his retirement benefit beginning as
of his Required Beginning Date.

A Participant who is receiving retirement benefits under the Plan while employed by an Employer or
an Affiliated Company because his required beginning date occurred under the provisions of the Plan
as in effect prior to January 1, 1998, shall continue to receive retirement benefits hereunder.

A Participant who is a five percent owner (as defined in Code Section 416(i)) with respect to the
Plan Year ending with or within the calendar year in which he attains age 70 1/2 and who continues
employment with an Employer or any Affiliated Company shall receive distribution of

-40-

 

his retirement
benefit beginning as of the April 1 of the calendar year following the calendar year in which he
attains age 70 1/2.

11.9 Offset to Accrual After Normal Retirement Date

The amount of benefit accrued by an Employee for each year of Credited Service that he completes
after the date retirement income becomes payable to him by reasons other than his retirement or
termination of employment shall be reduced (but not below zero) by the Actuarial Equivalent of the
retirement benefits paid to the Employee for the period for which he accrues such year of Credited
Service.

Article XII

Maximum Retirement Benefits

12.1 Definitions

For purposes of this Article, the following terms have the following meanings.

An “Affiliated Employer” means any corporation or business, other than an Employer, which
would be aggregated with an Employer for a relevant purpose under Code Section 414 as
modified by Code Section 415(h).

A Participant’s “Aggregate Annual Retirement Benefit” includes his Annual Retirement Benefit
and his annual retirement benefit, if any, under any and all other defined benefit plans
(whether or not terminated) maintained by an Employer or any Affiliated Employer. Effective
for Limitation Years beginning after December 31, 2001, for purposes of applying the
compensation limit in Code Section 415(b)(1)(B), a Participant’s Aggregate Annual Retirement
Benefit shall not include the Participant’s accrued benefit under a multiemployer plan, if
any.

A Participant’s “Annual Retirement Benefit” means the amount of retirement benefit
attributable to Employer contributions which is payable to him annually under the Plan
multiplied by the factors prescribed in the following paragraph if such benefit is to be
paid (i) in a manner other than to the Participant for his life only or as a qualified joint
and survivor annuity as defined in Code Section 417, (ii) prior to the Participant attaining
age 62, or (iii) after the Participant attains age 65. If a Participant’s retirement
benefit under the Plan includes contributions made by the Participant or rollover
contributions (as defined in Code Section 402(c), 403(a)(4), 403(b)(8), 408(d)(3), or
457(e)(16)), it shall be adjusted to the actuarial equivalent of the retirement benefit
attributable to the Employer’s contributions using the factors prescribed in the following
paragraph. A Participant’s Aggregate Annual Retirement Benefit includes his Annual
Retirement Benefit and his Annual Retirement Benefit, if any, under any and all other
defined benefit plans (whether or not terminated) maintained by an Employer or any
Affiliated Employer.

-41-

 

For purposes of determining a Participant’s Annual Retirement Benefit, the following special
rules shall apply:

	 	(a)	 	If (i) the Participant’s retirement benefit includes contributions made by the
Participant or rollover contributions (as described above) or (ii) payment is to be
made in a form other than to the Participant for his life only or as a qualified joint
and survivor annuity, and such form is not subject to the requirements of Code Section
417(e)(3), the following factors shall be used: (A) the Applicable Mortality Table and
(B) an interest rate equal to the greater of five percent or the interest rate
otherwise used under the Plan for purposes of determining whether optional
forms are an Actuarial Equivalent not subject to the requirements of Code Section
417(e)(3).

	 	(b)	 	If payment is to be made to the Participant in a form that is subject to the
requirements of Code Section 417(e)(3), the following factors shall be used: (i) the
Applicable Mortality Table and (ii) an interest rate equal to the greater of the
Applicable Interest Rate or the interest rate otherwise used under the Plan for
purposes of determining whether such optional form is an Actuarial Equivalent.
Notwithstanding the foregoing, for Plan Years beginning in 2004 and 2005, 5.5 percent
shall be substituted for the Applicable Interest Rate in (ii) above; provided, however,
that for a Participant receiving a distribution after December 31, 2003 and before
January 1, 2005, such substitution shall not reduce the benefit payable to the
Participant below the amount determined using the Applicable Interest Rate in effect as
of the last day of the last Plan Year beginning before January 1, 2004.
	 
	 	(c)	 	If payment is to be made to the Participant beginning before the Participant
attains age 62, the following factors shall be used: (i) the Applicable Mortality
Table and (ii) an interest rate equal to the greater of five percent or the interest
rate otherwise used under the Plan for purposes of determining whether optional forms
are an Actuarial Equivalent not subject to the requirements of Code Section 417(e)(3).
	 
	 	(d)	 	If payment is to be made to the Participant beginning after the Participant
attains age 65, the following factors shall be used: (i) the Applicable Mortality
Table and (ii) an interest rate equal to the lesser of five percent or the interest
rate otherwise used under the Plan for purposes of determining whether optional forms
are an Actuarial Equivalent not subject to the requirements of Code Section 417(e)(3).

The “Applicable Interest Rate” means the annual rate of interest on 30-year Treasury
securities for the second calendar month preceding the Plan Year in which the distribution
is made.

-42-

 

The “Applicable Mortality Table” means the table prescribed by the Secretary of the
Treasury, which shall be based on the prevailing commissioners’ standard table, described in
Code Section 807(d)(5)(A), used to determine reserves for group annuity contracts issued on
the date as of which present value is being determined (without regard to any other
subparagraph of Code Section 807(d)(5)). For any distribution with an Annuity Starting Date
prior to December 31, 2002, the Applicable Mortality Table is the table specified in Revenue
Ruling 95-6. For any distribution with an Annuity Starting Date on or after December 31,
2002, the Applicable Mortality Table is the table specified in Revenue Ruling 2001-62.

A Participant’s “Compensation” means his compensation as defined in IRS Regulations Section
1.415-2(d)(10); provided, however, that for Plan Years beginning on and after January 1,
1998, Compensation includes any elective deferral, as defined in Code Section 402(g)(3), and
any amount contributed or deferred by the Employer at the Employee’s
election that is not includable in the Employee’s gross income by reason of Code Section 125
or 457; and provided, further, that for Plan Years beginning on and after January 1, 2001,
Compensation includes any amount contributed or deferred by the Employer at the Employee’s
election that is not includable in the Employee’s gross income by reason of Code Section
132(f)(4).

“Defined Benefit Plan” has the meaning given such term in Code Section 415(k).

The “Defined Benefit Compensation Limitation” for Limitation Years ending after December 31,
2001 means 100 percent of a Participant’s average Compensation for his highest three years.

The “Defined Benefit Dollar Limitation” for Limitation Years ending after December 31, 2001
means $160,000, as adjusted, effective January 1 of each year, under Code Section 415(d) in
such manner as the Secretary of Treasury shall prescribe, and payable in the form of a
straight life annuity. A limitation as adjusted under Code Section 415(d) will apply to
Limitation Years ending with or within the calendar year for which the adjustment applies.

The “Limitation Year” means the calendar year.

The “Maximum Permissible Benefit” is the lesser of the Defined Benefit Dollar Limitation or
the Defined Benefit Compensation Limitation (both adjusted where required, as provided in
(a) and, if applicable, in (b) or (c) or (d) below).

	 	(a)	 	If the Participant has fewer than 10 years of participation in the Plan, the
Defined Benefit Dollar Limitation shall be multiplied by a fraction, (i) the numerator
of which is the number of years (or part thereof) of participation in the Plan and (ii)
the denominator of which is 10. In the case of a Participant who has fewer than 10
years of service with the employer, the Defined Benefit Compensation Limitation shall
be multiplied by a fraction, (A) the numerator of which is the number of

-43-

 

	 	 	 	years (or part
thereof) of service with the employer and (B) the denominator of which is 10.
	 
	 	(b)	 	If the benefit of a Participant begins prior to age 62, the Defined Benefit
Dollar Limitation applicable to the Participant at such earlier age is an annual
benefit payable in the form of a straight life annuity beginning at the earlier age
that is the actuarial equivalent of the Defined Benefit Dollar Limitation applicable to
the Participant at age 62 (adjusted under (a) above, if required). The Defined Benefit
Dollar Limitation applicable at an age prior to age 62 is determined as the lesser of
(i) the actuarial equivalent (at such age) of the Defined Benefit Dollar Limitation
computed using the interest rate and mortality table (or other tabular factor)
specified in the definition of Actuarial Equivalent and (ii) the actuarial equivalent
(at such age) of the Defined Benefit Dollar Limitation computed using a five percent
interest rate and the Applicable Mortality Table. Any decrease in the
Defined Benefit Dollar Limitation determined in accordance with this paragraph (b)
shall not reflect a mortality decrement if benefits are not forfeited upon the death
of the Participant. If any benefits are forfeited upon death, the full mortality
decrement is taken into account.
	 
	 	(c)	 	If the benefit of a Participant begins after the Participant attains age 65,
the Defined Benefit Dollar Limitation applicable to the Participant at the later age is
the annual benefit payable in the form of a straight life annuity beginning at the
later age that is actuarially equivalent to the Defined Benefit Dollar Limitation
applicable to the Participant at age 65 (adjusted under (a) above, if required). The
actuarial equivalent of the Defined Benefit Dollar Limitation applicable at an age
after age 65 is determined as (i) the lesser of the actuarial equivalent (at such age)
of the Defined Benefit Dollar Limitation computed using the interest rate and mortality
table (or other tabular factor) specified in the definition of Actuarial Equivalent and
(ii) the actuarial equivalent (at such age) of the Defined Benefit Dollar Limitation
computed using a five percent interest rate assumption and the Applicable Mortality
Table. For these purposes, mortality between age 65 and the age at which benefits
commence shall be ignored.
	 
	 	(d)	 	If payment is to be made in a form other than to the Participant for his life
only or as a qualified joint and survivor annuity, the Maximum Permissible Benefit
shall be adjusted to an actuarially equivalent amount determined using the following
factors:

	 	(1)	 	If such form is not subject to the requirements of Code Section
417(e)(3), the following factors shall be used: (i) the Applicable Mortality
Table and (ii) an interest rate equal to the greater of five percent or the
rate specified in the definition of Actuarial Equivalent for purposes other
than calculating the value of a single sum payment.
	 
	 	(2)	 	If payment is to be made to the Participant in a form that is
subject to the requirements of Code Section 417(e)(3), the following factors
shall be

-44-

 

	 	 	 	used: (i) the Applicable Mortality Table and (ii) an interest rate
equal to the greater of the Applicable Interest Rate or the rate specified in
the definition of Actuarial Equivalent for purposes other than calculating the
value of a single sum payment. Notwithstanding the foregoing, for Limitation
Years beginning in 2004 or 2005, 5.5% shall be substituted for the Applicable
Interest Rate in the preceding sentence.

12.2 Maximum Limitation on Annual Benefits

The Aggregate Annual Retirement Benefit accrued or payable to a Participant may not at any time
within any Limitation Year exceed the limitations contained in Code Section 415(b). The maximum
limitations will be determined in accordance with Code Section 415 and the regulations thereunder.
For purposes of applying the limitations contained in this Section, benefit increases
resulting from the increase in the limitations under Code Section 415(b) effective for Limitation
Years beginning after December 31, 2001 shall be provided only to those Employees participating in
the Plan who have one Hour of Service on or after the first day of the first Limitation Year ending
after December 31, 2001.

12.3 Manner of Reduction

If the Participant’s Aggregate Annual Retirement Benefit exceeds the limitations specified in this
Article, the reduction in the amount of his Annual Retirement Benefit shall be equal to the amount
by which his Aggregate Annual Retirement Benefit exceeds the limitations of this Article multiplied
by a fraction, the numerator of which is his Annual Retirement Benefit (determined without regard
to this Article) and the denominator of which is his Aggregate Annual Retirement Benefit
(determined without regard to the limitations of this Article or any corresponding limitation in
any other defined benefit plan maintained by an Employer or any Affiliated Employer in which he
participates).

Article XIII

Pension Fund

13.1 Pension Fund

The Pension Fund is maintained by the Funding Agent for the Plan under a Funding Agreement with the
Sponsor. Subject to the provisions of Title IV of ERISA, benefits under the Plan shall be only
such as can be provided by the assets of the Pension Fund, and no liability for payment of benefits
shall be imposed upon the Employers or any Affiliated Company, or any of their officers, employees,
directors, or stockholders.

13.2 Contributions by the Employers

So long as the Plan continues, contributions will be made by the Employers at such times and in
such amounts as the Sponsor in its sole discretion shall from time to time determine, based on

-45-

 

the
advice of the Actuary and consistent with the funding policy for the Plan. Subject to the
provisions of Section 13.5, all such contributions shall be delivered to the Funding Agent for
deposit in the Pension Fund. Participants shall make no contributions under the Plan.

13.3 Expenses of the Plan

The expenses of administration of the Plan, including the expenses of the Administrator and fees of
the Funding Agent and any investment advisor, shall be paid from the Pension Fund, unless the
Sponsor or an Employer elects to make payment.

13.4 No Reversion

The Pension Fund shall be for the exclusive benefit of Participants and persons claiming under or
through them. All contributions pursuant to Section 13.2 hereof shall be based on the facts then
understood by the Sponsor, shall be conditioned upon the initial qualification of the Funding
Agreement and Plan under Code Sections 401 and 501(a), and, unless otherwise specified by the
Sponsor, shall be conditioned upon deductibility of the contributions under Code Section 404 in the
year for which such contributions were made. All such contributions shall be irrevocable and such
contributions as well as the Pension Fund, or any portion of the principal or income thereof, shall
never revert to or inure to the benefit of the Employers or any Affiliated Company except that:

	(a)	 	the residual amounts specified in Article XVI may be returned to the Employers;
	 
	(b)	 	any contributions which are made under a mistake of fact may be returned to the Employers
within one year after the contributions were made;
	 
	(c)	 	any contributions made for years during which the Funding Agreement and Plan were not
initially qualified under Code Sections 401 and 501(a) may be returned to the Employers within
one year after the date of denial of initial qualification, but only if an application for
determination was filed within the period of time prescribed under ERISA Section 403(c)(2)(B);
and
	 
	(d)	 	any contributions, which are not, in whole or in part, deductible under Code Section 404 for
the year for which they were made, may to the extent such contributions were not so
deductible, be returned to the Employers within one year after the disallowance of the
deduction.

The Sponsor shall determine, in its sole discretion, whether the contributions described above,
other than the residual amounts described in paragraph (a), shall be returned to an Employer. If
any such contributions are to be returned, the Sponsor shall so direct the Funding Agent, in
writing, no later than ten days prior to the last day upon which they may be returned.

-46-

 

13.5 Forfeitures Not to Increase Benefits

Any forfeitures arising from the termination of employment or death of an Employee, or for any
other reason, shall be used to reduce Employer contributions to the Pension Fund, and shall not be
applied to increase the benefits any Participant otherwise would receive under the Plan at any time
prior to the termination of the Plan.

13.6 Change of Funding Medium

The Sponsor shall have the right to change at any time the means through which benefits under the
Plan shall be provided. No such change shall constitute a termination of the Plan or result in the
diversion to the Employers of any funds previously contributed in accordance with the Plan.

Article XIV

Administration

14.1 Authority of the Sponsor

The Sponsor, which shall be the administrator for purposes of ERISA and the plan administrator for
purposes of the Code, shall have all the powers and authority expressly conferred upon it herein
and further shall have the sole discretionary right, authority, and power to interpret and construe
the Plan, and to determine any disputes arising thereunder, subject to the provisions of Section
14.3. In exercising such powers and authority, the Sponsor at all times shall exercise good faith,
apply standards of uniform application, and refrain from arbitrary action. The Sponsor may employ
such attorneys, agents, and accountants as it may deem necessary or advisable to assist it in
carrying out its duties hereunder. The Sponsor shall be a “named fiduciary” as that term is
defined in ERISA Section 402(a)(2). The Sponsor may:

	(a)	 	allocate any of the powers, authority, or responsibilities for the operation and
administration of the Plan (other than trustee responsibilities as defined in ERISA Section
405(c)(3)) among named fiduciaries; and
	 
	(b)	 	designate a person or persons other than a named fiduciary to carry out any of such powers,
authority, or responsibilities;

except that no allocation by the Sponsor of, or designation by the Sponsor with respect to, any of
such powers, authority, or responsibilities to another named fiduciary or a person other than a
named fiduciary shall become effective unless such allocation or designation shall first be
accepted by such named fiduciary or other person in a writing signed by it and delivered to the
Sponsor.

-47-

 

14.2 Action of the Sponsor

Any act authorized, permitted, or required to be taken by the Sponsor under the Plan, which has not
been delegated in accordance with Section 14.1, may be taken by a majority of the members of the
board of directors of the Sponsor, either by vote at a meeting, or in writing without a meeting or
by the employee or employees of the Sponsor designated by the board of directors to carry out such
acts on behalf of the Sponsor. All notices, advice, directions, certifications, approvals, and
instructions required or authorized to be given by the Sponsor under the Plan shall be in writing
and signed by either (i) a majority of the members of the board of directors of the Sponsor, or by
such member or members as may be designated by an instrument in writing, signed by all the members
thereof, as having authority to execute such documents on its behalf, or (ii) the employee or
employees of the Sponsor who have the authority to act on behalf of the Sponsor.

14.3 Claims Review Procedure

Whenever the Administrator decides for whatever reason to deny, whether in whole or in part, a
claim for benefits filed by any person (hereinafter referred to as the “claimant”), the
Administrator shall transmit to the claimant a written notice of its decision, which notice shall
be written in a manner calculated to be understood by the claimant and shall contain a statement of
(i) the specific reasons for the denial of the claim, (ii) specific reference to pertinent Plan
provisions on which the denial is based, and (iii) a description of any additional material or
information necessary for the claimant to perfect the claim and an explanation of why such
information is necessary. The notice shall also include a statement advising the claimant that,
within 60 days of the date on which he receives such notice, he may obtain review of the decision
of the Administrator in accordance with the procedures hereinafter set forth.

Within the 60-day period beginning on the date the claimant receives notice regarding disposition
of his claim, the claimant or his authorized representative may request that the claim denial be
reviewed by filing with the Administrator a written request therefore, which request shall contain
the following information:

	(a)	 	the date on which the claimant’s request was filed with the Administrator; provided that the
date on which the claimant’s request for review was in fact filed with the Administrator shall
control in the event that the date of the actual filing is later than the date stated by the
claimant pursuant to this paragraph; and
	 
	(b)	 	the specific portions of the denial of his claim which the claimant requests the
Administrator to review; and
	 
	(c)	 	a statement by the claimant setting forth the basis upon which he believes the Administrator
should reverse its previous denial of his claim for benefits and accept his claim as made; and

-48-

 

	(d)	 	any written material (offered as exhibits) which the claimant desires the Administrator to
examine in its consideration of his position as stated pursuant to paragraph (c) of this
Section.

Within 60 days of the date determined pursuant to paragraph (a) of this Section (or, if special
circumstances require an extension, within 120 days of that date; provided that the delay and the
reasons for the delay are communicated to the claimant within the initial 60-day period), the
Administrator shall conduct a full and fair review of its decision denying the claimant’s claim for
benefits and shall render its written decision on review to the claimant. The Administrator’s
decision on review shall be written in a manner calculated to be understood by the claimant and
shall specify the reasons and Plan provisions upon which the Administrator’s decision was based.

14.4 Qualified Domestic Relations Orders

The Administrator shall establish reasonable procedures to determine the status of domestic
relations orders and to administer distributions under domestic relations orders which are deemed
to be qualified orders. Such procedures shall be in writing and shall comply with the provisions
of Code Section 414(p) and regulations issued thereunder.

14.5 Indemnification

In addition to whatever rights of indemnification the members of the board of directors of the
Sponsor or any employee or employees to whom any power, authority, or responsibility is delegated
pursuant to Section 14.2, may be entitled under the articles of incorporation, regulations, or
bylaws of the Sponsor, under any provision of law, or under any other agreement, the Sponsor shall
satisfy any liability actually and reasonably incurred by any such person or persons, including
expenses, attorneys’ fees, judgments, fines, and amounts paid in settlement (other than amounts
paid in settlement not approved by the Sponsor), in connection with any threatened, pending, or
completed action, suit, or proceeding which is related to the exercise or failure to exercise by
such person or persons of any of the powers, authority, responsibilities, or discretion as provided
under the Plan and the Funding Agreement, or reasonably believed by such person or persons to be
provided thereunder, and any action taken by such person or persons in connection therewith, unless
the same is judicially determined to be the result of such person’s or persons’ gross negligence or
willful misconduct.

14.6 Actions Binding

Subject to the provisions of Section 14.3, any action taken by the Sponsor which is authorized,
permitted, or required under the Plan shall be final and binding upon the Employers, the Funding
Agent, all persons who have or who claim an interest under the Plan, and all third parties dealing
with the Employers or the Funding Agent.

-49-

 

Article XV

Adoption By Other Entities

15.1 Adoption by Affiliated Companies

An Affiliated Company that is not an Employer may, with the consent of the Sponsor, adopt the Plan
and become an Employer hereunder by causing an appropriate written instrument evidencing such
adoption to be executed in accordance with the requirements of its organizational authority. Any
such instrument shall specify the effective date of the adoption. Unless otherwise specified in
the adoption instrument, for purposes of computing the Service and Average Monthly Earnings of an
Employee who is in the employ of the Employer on the effective date of the adoption, employment
with and compensation from the Employer before the effective date of the adoption shall be treated
as employment with and Earnings from an Employer. Unless otherwise
specifically provided in the adoption instrument, for purposes of computing the Credited Service of
an Employee, only employment with the Employer for periods on or after the effective date of the
adoption shall be treated as employment with an Employer. Any Employer shall undertake to
contribute its appropriate share, as determined by the Sponsor, of any contributions made to the
Funding Agent hereunder. Notwithstanding the foregoing, however, any adoption of the Plan by an
Employer shall be subject to the receipt of a determination from the Internal Revenue Service to
the effect that with respect to such Employer the Plan meets the requirements for qualification
under Code Section 401(a), and, should an adverse determination be issued by the Internal Revenue
Service, the adoption of the Plan by said Employer shall be null and void and of no effect
whatsoever.

15.2 Effective Plan Provisions

An Employer who adopts the Plan shall be bound by the provisions of the Plan in effect at the time
of the adoption and as subsequently in effect because of any amendment to the Plan.

Article XVI

Amendment & Termination of Plan

16.1 Sponsor’s Right of Amendment

The Sponsor reserves the right at any time and from time to time, by means of a written instrument
executed in the name of the Sponsor by its duly authorized representatives, to amend or modify the
Plan and, to the extent provided therein, to amend or modify the Funding Agreement. No pension or
other benefit granted prior to the time of any amendment or modification of the Plan shall be
reduced, suspended, or discontinued as a result thereof, except to the extent necessary to enable
the Plan to meet the requirements for qualification under the Code or the requirements of any
governmental authority. Moreover, no such action shall operate

-50-

 

to recapture for the Employers any
contributions made to the Pension Fund, except as provided in Section 13.4 or Section 16.7.

16.2 Termination of the Plan

The Sponsor reserves the right, by means of a written instrument executed in the name of the
Sponsor by its duly authorized representatives, at any time to terminate the Plan. In the event of
termination, no further benefits shall accrue, no further contributions shall be made, except as
may be required under Title IV of ERISA or Code Section 412, and all assets remaining in the
Pension Fund, after provision has been made for payment of the expenses of administration and
liquidation in connection with the termination, shall be allocated by the Funding Agent upon the
advice of the Actuary, among the Participants and Beneficiaries of the Plan, in the following
manner and order of precedence:

	(a)	 	In the case of benefits payable as an annuity,

	 	(1)	 	in the case of the benefit of a Participant or Beneficiary which was in pay
status as of the beginning of the three-year period ending on the termination date of
the Plan, to each such benefit, based on the provisions of the Plan (as in effect
during the five-year period ending on such date) under which such benefit would be the
least; and
	 
	 	(2)	 	in the case of a Participant’s or Beneficiary’s benefit (other than a benefit
described in subparagraph (1) of this paragraph) which would have been in pay status as
of the beginning of such three-year period if the Participant had retired prior to the
beginning of such three-year period and if his benefits had commenced (in the normal
form of annuity under the Plan) as of the beginning of such period, to each such
benefit based on the provisions of the Plan (as in effect during the five-year period
ending on such date) under which such benefit would be the least.

For purposes of subparagraph (1) of this paragraph, the lowest benefit in pay status during
a three-year period shall be considered the three-year benefit in pay status for such
period.

	(b)	 	Next,

	 	(1)	 	to all other benefits, if any, of individuals under the Plan guaranteed under
Title IV of ERISA (determined without regard to ERISA Section 4022B(a)); and
	 
	 	(2)	 	to the additional benefits, if any, which would be determined under
subparagraph (1) of this paragraph if ERISA Section 4022(b)(5) did not apply.

For purposes of this paragraph, ERISA Section 4021 shall be applied without regard to
subsection (c) thereof.

-51-

 

	(c)	 	Next, to all nonforfeitable benefits under the Plan.
	 
	(d)	 	Last, to all other benefits under the Plan.

Notwithstanding any other provision of the Plan to the contrary, other than Sections 16.3 through
16.8, the amount allocated to any Participant under this Section 16.2 shall be fully vested and
nonforfeitable. The Sponsor shall furnish all information reasonably required for the purposes of
making such allocations. The Funding Agent shall implement the allocations determined under this
Section among the persons for whose benefit such allocations are made through distribution of the
assets of the Pension Fund, through application of the amounts allocated to the purchase from an
insurance company of immediate or deferred annuities, or through creation of one or more new funds
for the purpose of distributing the assets of the Pension Fund (to the extent so allocated), or by
a combination of the foregoing.

16.3 Adjustment of Allocation

The amount allocated under any paragraph of Section 16.2 with respect to any benefit shall be
properly adjusted for any allocations of assets with respect to that benefit under a prior
paragraph of Section 16.2.

16.4 Assets Insufficient for Allocation

If the assets available for allocation under any paragraph of Section 16.2 (other than paragraphs
(c) and (d) are insufficient to satisfy in full the benefits of all individuals which are described
in that paragraph, the assets shall be allocated pro rata among such individuals on the basis of
the present value (as of the date of termination of the Plan) of their respective benefits
described in that paragraph.

16.5 Assets Insufficient for Allocation Under Paragraph (c) of Section 16.2

This Section applies if the assets available for allocation under paragraph (c) of Section 16.2 are
not sufficient to satisfy in full the benefits of individuals described in such paragraph.

	(a)	 	If this Section applies, except as provided in paragraph (b), the assets shall be allocated
to the benefits of individuals described in paragraph (c) of Section 16.2 on the basis of the
benefits of individuals which would have been described in such paragraph under the Plan as in
effect at the beginning of the five-year period ending on the date of termination of the Plan.
	 
	(b)	 	If the assets available for allocation under paragraph (a) of this Section are sufficient to
satisfy in full the benefits described in such paragraph (without regard to this paragraph
(b)), then for purposes of paragraph (a), benefits of individuals described in such paragraph
shall be determined on the basis of the Plan as amended by the most recent Plan amendment
effective during such five-year period under which the assets available for allocation are
sufficient to satisfy in full the benefits of individuals described in paragraph (a), and any
assets remaining to be allocated under such 

-52-

 

	 	 	paragraph (a) on the basis of the Plan as amended
by the next succeeding Plan amendment effective during such period.

16.6 Allocations Resulting in Discrimination

If the Secretary of the Treasury determines that the allocation made pursuant to this Article
(without regard to this Section) results in discrimination prohibited by Code Section 401(a)(4),
then the assets allocated under paragraphs (b)(2), (c), and (d) of Section 16.2 shall be
reallocated to the extent necessary to prevent the disqualification of the Plan (or any trust or
annuity contract under the Plan) under Code Section 401(a).

16.7 Residual Assets

Subject to the provisions of Section 16.10, any residual assets of the Plan shall be distributable
to the Employers if:

	(a)	 	all liabilities of the Plan to Participants and their beneficiaries have been satisfied; and
	 
	(b)	 	the distribution does not contravene any provision of law.

16.8 Meanings of Terms

The terms used in Sections 16.2 through 16.7 shall have, where required, the same meaning as the
same terms have as used in ERISA Section 4044; provided, however, that any term specifically
defined in the Plan shall retain its meaning as defined thereunder.

16.9 Payments by the Funding Agent

The Funding Agent shall make the payments specified in a written direction of the Sponsor in
accordance with the provisions of Section 16.2 until the same shall be superseded by a further
written direction. The obligation of the Funding Agent to make any payment hereunder in all events
shall be limited to the amount of the Pension Fund at the time any such payment shall become due.

16.10 Residual Assets Distributable to the Employers

Upon written notice from the Sponsor that any residual assets of the Plan are distributable to the
Employers in accordance with the provisions of Section 16.7, then the Funding Agent shall pay over
such residual assets, or an amount equal to the fair market value of that portion of such residual
assets which are not so paid, to the Employers; provided, however, that, under no circumstances or
conditions other than as set forth in this Section 16.10 and in Section 13.4, shall any
contribution of the Employers, or any portion of the proceeds or avails thereof, ever revert, be
paid, or inure to the benefit, directly or indirectly, of the Employers or any Affiliated Company;
nor shall any portion of the principal or the income from the Pension Fund ever be used for or
diverted to any purpose other than for the exclusive benefit of Participants and persons claiming
under or through them pursuant to the Plan.

-53-

 

16.11 Withdrawal of an Employer

Each Employer shall have the right to withdraw from the Plan by action in accordance with its
organizational authority, and by filing with the Sponsor written notice thereof, in which event the
Employer shall cease to be an Employer for purposes of the Plan. An Employer shall be deemed
automatically to withdraw from the Plan in the event it completely discontinues contributions to
the Plan or it ceases to be an Affiliated Company.

If such withdrawal is for the purpose of establishing or merging with a separate plan which meets
the requirements for qualification under applicable provisions of the Code, the portion of the
assets of the Pension Fund which is applicable to the withdrawing Employer, as determined by the
Sponsor upon the advice of the Actuary, on a fair and equitable basis, taking into account the
contributions made by the Employer, benefit payments made with respect to its Employees and retired
and former Employees, and other relevant factors, shall be transferred to and become a part of the
trust fund or other financing medium maintained in connection with the separate plan, subject to
the limitations on merger, consolidation, or transfers of Plan assets set forth in Section 17.5.

Article XVII

Miscellaneous

17.1 No Commitment as to Employment

Nothing contained herein shall be construed as a commitment or agreement on the part of any person
to continue his employment with his Employer, or as a commitment on the part of his Employer to
continue the employment, compensation, or benefits of any person for any period, and all employees
of an Employer shall remain subject to discharge, layoff, or disciplinary action to the same extent
as if the Plan had never been put into effect.

17.2 Claims of Other Persons

Nothing in the Plan or Funding Agreement shall be construed as giving any Participant or any other
person, firm, or corporation, any legal or equitable right against the Employers or any Affiliated
Company, their officers, employees, or directors, or as against the Funding Agent, except such
rights as are specifically provided for in the Plan or the Funding Agreement or hereafter created
in accordance with the terms and provisions of the Plan.

17.3 Governing Law

Except as provided under Federal law, the provisions of the Plan shall be governed by and construed
in accordance with the laws of Texas.

-54-

 

17.4 Nonforfeitability of Benefits Upon Termination or Partial Termination

Notwithstanding any other provision of the Plan, in the event of the termination or a partial
termination of the Plan, including the complete discontinuation of contributions to the Plan, the
rights of all Employees who are affected by such termination to benefits accrued to the date of
such termination, to the extent funded as of such date, shall be nonforfeitable.

17.5 Merger, Consolidation, or Transfer of Plan Assets

The Plan shall not be merged or consolidated with any other plan, nor shall any of its assets or
liabilities be transferred to another plan, unless, immediately after such merger, consolidation,
or transfer of assets or liabilities, each Participant in the Plan would receive a benefit under
the Plan which is at least equal to the benefit he would have received immediately prior to such
merger, consolidation, or transfer of assets or liabilities (assuming in each instance that the
Plan had then terminated).

If another qualified plan merges or consolidates with the Plan, notwithstanding any other provision
of the Plan to the contrary, the forms of payment and other provisions that were available with
respect to benefits accrued immediately prior to the transfer or merger under such other qualified
plan and that may not be eliminated under Code Section 411(d)(6) shall continue to be available
under the Plan with respect to the benefit that the Participant would have received immediately
prior to such merger or consolidation.

17.6 Funding Agreement

The Funding Agreement and the Pension Fund maintained thereunder shall be deemed to be a part of
the Plan as if fully set forth herein and the provisions of the Funding Agreement are hereby
incorporated by reference into the Plan.

17.7 Benefit Offsets for Overpayments

If a Participant or Beneficiary receives benefits hereunder for any period in excess of the amount
of benefits to which he was entitled under the terms of the Plan as in effect for such period, such
overpayment shall be offset against current or future benefit payments, as applicable, until such
time as the overpayment is entirely recouped by the Plan.

17.8 Internal Revenue Requirements

Notwithstanding any other provision of the Plan to the contrary, to conform to the requirements of
U.S. Treasury Regulations, the benefit payable under the Plan shall be subject to the following
limitations:

	(a)	 	If the Plan is terminated, the benefit of any Highly Compensated Employee shall be limited to
a benefit that is nondiscriminatory under Code Section 401(a)(4).

-55-

 

	(b)	 	The annual payments in any one year to any of the 25 Highly Compensated Employees with the
greatest compensation (hereinafter referred to as a “restricted employee”) in the current or
any prior year shall not exceed an amount equal to the payments that would be made on behalf
of the restricted employee under (1) a straight life annuity that is the Actuarial Equivalent
of the restricted employee’s Accrued Benefit and other benefits to which the restricted
employee is entitled under the Plan (other than a Social Security supplement), and (2) the
amount of the payments the restricted employee is entitled to
	 
	 	 	receive under a Social Security supplement. For purposes of this paragraph, “benefit”
includes, among other benefits, loans in excess of the amounts set forth in Code Section
72(p)(2)(A), any periodic income, any withdrawal values payable to a living employee, and
any death benefits not provided for by insurance on the restricted employee’s life. The
foregoing provisions of this paragraph shall not apply, however, if:

	 	(1)	 	After payment to a restricted employee of all benefits payable to the
restricted employee under the Plan, the value of Plan assets equals or exceeds 110
percent of the value of “current liabilities” as defined in Code Section 412(l)(7)
(each value being determined as of the same date in accordance with applicable Treasury
Regulations);
	 
	 	(2)	 	The value of the benefits payable under the Plan to or for a restricted
employee is less than one percent of the value of current liabilities before
distribution; or
	 
	 	(3)	 	The value of benefits payable under the Plan to or for a restricted employee
does not exceed the amount described in Code Section 411(a)(11)(A).

17.9 Overall Permitted Disparity Limits

If an Employer or an Affiliated Company maintains another qualified plan, in no event shall the
“overall permitted disparity limits” of Internal Revenue Service regulations Section 1.401(l)-5 be
exceeded. The “annual” overall disparity limit of Section 1.401(l)-5(b) shall not be exceeded if
the “total annual disparity fraction” determined as of the end of the Plan Year for each
Participant who accrues a benefit under the Plan for the Plan Year does not exceed one. An
Employee’s “total annual disparity fraction” is the sum of the Employee’s annual disparity
fractions under all qualified plans maintained by an Employer or an Affiliated Company as
determined under Internal Revenue Service regulations Sections 1.401(l)-5(b)(3) through
1.401(l)-5(b)(8) for the plan year ending in the current Plan Year.

The “cumulative” permitted disparity limit of Internal Revenue Service regulations Section
1.401(l)-5(c) shall not be exceeded if a Participant’s “cumulative disparity fraction” does not
exceed 35. A Participant’s “cumulative disparity fraction” is the sum of the Participant’s “total
annual disparity fractions” attributable to the Participant’s total years of service under all
plans maintained by an Employer or an Affiliated Company.

-56-

 

17.10 Veterans Reemployment Rights

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

Article XVIII

Top-Heavy Provisions

18.1 Top-Heavy Plan Definitions

For purposes of this Article, the following terms have the following meanings.

	(a)	 	The “compensation” of an Employee means compensation as defined in Code Section 415 and
regulations issued thereunder. In no event, however, shall the compensation of a Participant
taken into account under the Plan for any Plan Year exceed (1) $200,000 for Plan Years
beginning prior to January 1, 1994, or (2) $150,000 for Plan Years beginning on or after
January 1, 1994. The limitations set forth in the preceding sentence shall be subject to
adjustment annually as provided in Code Section 401(a)(17)(B) and Code Section 415(d);
provided, however, that the dollar increase in effect on January 1 of any calendar year, if
any, is effective for Plan Years beginning in such calendar year.
	 
	(b)	 	The “determination date” with respect to any Plan Year means the last day of the immediately
preceding Plan Year.
	 
	(c)	 	A “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 an
Employer or an Affiliated Company having annual compensation greater than $130,000 (as
adjusted under Code Section 416(i)(1) for Plan Years beginning after December 31, 2002), a
five-percent owner of an Employer or an Affiliated Company, or a one-percent owner of an
Employer or an Affiliated Company having annual compensation of more than $150,000. For this
purpose, annual compensation means compensation within the meaning of Code Section 415(c)(3).
The determination of who is a “key employee” will be made in accordance with Code Section
416(i)(1) and the applicable regulations and other guidance of general applicability issued
thereunder.
	 
	(d)	 	A “non-key employee” means any Employee who is not a key employee.
	 
	(e)	 	A “permissive aggregation group” means those plans included in an Employer’s required
aggregation group together with any other plan or plans of the Employer or an Affiliated
Company so long as the entire group of plans would continue to meet the requirements of Code
Sections 401(a)(4) and 410.

-57-

 

	(f)	 	A “required aggregation group” means the group of tax-qualified plans maintained by an
Employer or an Affiliated Company consisting of each plan in which a key employee participates
and each other plan which enables a plan in which a key employee participates to meet the
requirements of Code Section 401(a)(4) or Code Section 410, including any plan that terminated
within the five-year period ending on the relevant determination date.
	 
	(g)	 	A “super top-heavy group” with respect to a particular Plan Year means a required or
permissive aggregation group that, as of the determination date, would qualify as a top-heavy
group under the definition in paragraph (j) of this Section with “90 percent” substituted for
“60 percent” each place where “60 percent” appears in the definition.
	 
	(h)	 	A “super top-heavy plan” with respect to a particular Plan Year means a plan that, as of the
determination date, would qualify as a top-heavy plan under the definition in paragraph (k) of
this Section with “90 percent” substituted for “60 percent” each place where “60 percent”
appears in such definition. A plan is also a super top-heavy plan if it is part of a super
top-heavy group.
	 
	(i)	 	The “testing period” means the period of consecutive years of service, not in excess of five,
during which an Employee has the greatest aggregate compensation from his Employer, excluding,
however, any year which ends in a Plan Year beginning prior to January 1, 1984, as well as any
Plan Year which begins after the close of the last Plan Year in which the Plan was a top-heavy
plan.
	 
	(j)	 	A “top-heavy group” with respect to a particular Plan Year means a required or permissive
aggregation group if the sum, as of the determination date, of the present value of the
cumulative accrued benefits for key employees under all defined benefit plans included in such
group and the aggregate of the account balances of key employees under all defined
contribution plans included in such group exceeds 60 percent of a similar sum determined for
all employees covered by the plans included in such group.
	 
	(k)	 	A “top-heavy plan” with respect to a particular Plan Year means (i) in the case of a defined
benefit plan, a plan for which, as of the determination date, the present value of the
cumulative accrued benefits under the plan (within the meaning of Code Section 416(g) and the
regulations and rulings thereunder) for key employees exceeds 60 percent of the present value
of the cumulative accrued benefits under the plan for all employees, with the present value of
the cumulative accrued benefits to be determined under the accrual method uniformly used under
all plans maintained by his Employer or, if no such method exists, under the slowest accrual
method permitted under the fractional accrual rate of Code Section 411(b)(1)(c), (ii) in the
case of a defined contribution plan, a plan for which, as of the determination date, the
aggregate of the accounts (within the meaning of Code Section 416(g) and the regulations and
rulings thereunder) of key employees exceeds 60 percent of the aggregate of the accounts of
all participants covered under the plan, with the accounts valued as of the most recent
valuation date coinciding with or preceding the determination date, and (iii) any plan
included in a required 

-58-

 

	 	 	aggregation group that is a top-heavy group. Notwithstanding the
foregoing, if a plan is included in a required or permissive aggregation group which is not a
top-heavy group, such plan shall not be a top-heavy plan. For purposes of this Article, the
present value of the cumulative accrued benefits under the Plan shall be determined as of the
date Plan costs for minimum funding purposes are computed, and shall be calculated using the
actuarial assumptions otherwise employed under the Plan for actuarial valuations, except that
the same actuarial assumptions shall be used for all plans within a required or
permissive aggregation group. 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 the Plan and any plan aggregated with
the Plan under Code Section 416(g)(2) during the one-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 the Plan
under Code Section 416(g)(2)(A)(i). In the case of a distribution made for a reason other
than separation from service, death, or disability, this provision shall be applied by
substituting “five-year period” for “one-year period”. The accrued benefits and accounts of
any individual who has not performed services for an Employer or an Affiliated Company
during the one-year period ending on the “determination date” shall not be taken into
account.

18.2 Applicability of Top-Heavy Plan Provisions

Notwithstanding any other provision of the Plan to the contrary, if the Plan is deemed to be a
top-heavy plan for any Plan Year, the provisions contained in this Article with respect to vesting
and benefit accrual shall be applicable with respect to such Plan Year. If the Plan is determined
to be a top-heavy plan and upon a subsequent determination date is determined no longer to be a
top-heavy plan, the benefit accrual provisions specified elsewhere in the Plan shall again become
applicable as of such subsequent determination date; provided, however, that the vesting provisions
contained in this Article shall continue to apply to the Plan for all Plan Years occurring after
the top-heavy Plan Year.

18.3 Top-Heavy Vesting

If the Plan is determined to be a top-heavy plan, an Employee’s nonforfeitable right to a
percentage of the accrued portion of his monthly normal retirement benefit shall be determined no
less rapidly than in accordance with the following vesting schedule.

	 	 	 
	Years of Service	 	Vested Interest
	less than 2
	 	0%
	2, but less than 3
	 	20%
	3, but less than 4
	 	40%
	4, but less than 5
	 	60%
	5, but less than 6
	 	80%
	6 or more
	 	100%

-59-

 

18.4 Minimum Top-Heavy Benefit

If the Plan is determined to be a top-heavy plan, the annual normal retirement benefit of an
Employee who is a non-key employee and who is eligible therefor, payable in the form of a single
life annuity beginning at his Normal Retirement Date, shall not be less than such Employee’s
average compensation for years in the testing period multiplied by the lesser of:

	(a)	 	Two percent multiplied by his years of Service; or
	 
	(b)	 	20 percent.

For purposes of this Section, “years of Service” shall only include years of Service completed
after December 31, 1983, but shall not include any such year of Service with an Employer if the
Plan was not a top-heavy plan with respect to the Plan Year ending within such year of Service.
Any minimum benefit required by this Section shall be made without regard to the number of Hours of
Service credited to an Employee for a Plan Year and without regard to any Social Security
contribution made by his Employer on behalf of the Employee and without regard to whether the
non-key employee was employed on a specific date. In the event the Plan is part of a required
aggregation group in which another top-heavy plan is included, non-key employees who are also
covered under such other top-heavy plan shall not receive minimum top-heavy benefits under both
top-heavy plans. Such non-key employees shall receive the minimum top-heavy benefit provided under
the Plan in lieu of the minimum top-heavy benefit or allocation provided under such other top-heavy
plan. For purposes of satisfying the minimum benefit requirements of Code Section 416(c)(1) and
the Plan, in determining years of Service with an Employer or an Affiliated Company, any Service
with the Employer or Affiliated Company shall be disregarded to the extent that such Service occurs
during a Plan Year when the Plan benefits (within the meaning of Code Section 410(b)) no key
employee or former key employee.

* * *

-60-

 

Executed At Houston, Texas, this 14th day of November, 2006.

	 	 	 	 	 
	 	Sterling Chemicals, Inc.

 	 
	 	By:  	 	 
	 	 	Richard K. Crump 	 
	 	 	President and Chief Executive Officer 	 
	 

Important Note

Prudential Financial, its contractors, and any employees of Prudential Financial or its
contractors cannot provide you with legal advice in connection with the execution of this document.
Prior to execution of this document, you should consult your attorney on whether this document is
appropriate for you.

-61-

 

Addendum A

This Addendum to the Plan is adopted to comply with final and temporary regulations issued
under Code Section 401(a)(9).

Section I

Definitions

1.1 Definitions

For purposes of this Addendum the following terms have the following meanings. Except as otherwise
specifically provided herein, any term defined in Section 1.1 of the Plan has the meaning given
such term in such Section.

A Participant’s “designated beneficiary” means the individual who is designated as the
Participant’s Beneficiary under the Plan and is the designated beneficiary under Code Section
401(a)(9) and Section 1.401(a)(9)-1, Q&A-4, of the Treasury Regulations.

A “distribution calendar year” means 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”. For distributions beginning after the Participant’s death, the first
“distribution calendar year” is the calendar year in which distributions are required to begin
under Section 3.2 of this Addendum.

A Participant’s or Beneficiary’s “life expectancy” means his life expectancy as computed by use of
the Single Life Table in Section 1.401(a)(9)-9 of the Treasury Regulations.

A Participant’s “required beginning date” means his Required Beginning Date as defined in Section
1.1 of the Plan.

Section  II

General Rules

2.1 Effective Date

The provisions of this Addendum will apply for purposes of determining required minimum
distributions for calendar years beginning with the 2003 calendar year.

-62-

 

2.2 Precedence

The requirements of this Addendum will take precedence over any inconsistent provisions of the
Plan.

2.3 Requirements of Treasury Regulations Incorporated

All distributions required under this Addendum will be determined and made in accordance with the
Treasury Regulations under Code Section 401(a)(9).

2.4 TEFRA Section 242(b)(2) Elections

Notwithstanding the other provisions of this Addendum, other than Section 2.3, 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 the Plan that relate to
Section 242(b)(2) of TEFRA.

Section III

Time and Manner of Distribution

3.1 Required Beginning Date

A Participant’s entire interest will be distributed, or begin to be distributed, to the Participant
no later than the Participant’s “required beginning date”.

3.2 Death of Participant Before Distributions Begin

If a Participant dies before distributions begin, the Participant’s entire interest will be
distributed, or begin to be distributed, no later than as follows:

	(a)	 	If the Participant’s surviving Spouse is the Participant’s sole “designated beneficiary”,
then distributions to the surviving Spouse will begin by December 31 of the calendar year
immediately following the calendar year in which the Participant died, or by December 31 of
the calendar year in which the Participant would have attained age 70 1/2, if later.
	 
	(b)	 	If the Participant’s surviving Spouse is not the Participant’s sole “designated beneficiary”,
then distributions to the “designated beneficiary” will begin by December 31 of the calendar
year immediately following the calendar year in which the Participant died.

-63-

 

	(c)	 	If there is no “designated beneficiary” as of September 30 of the year following the year of
the Participant’s death, the Participant’s entire interest will be distributed by December 31
of the calendar year containing the fifth anniversary of the Participant’s death.
	 
	(d)	 	If the Participant’s surviving Spouse is the Participant’s sole “designated beneficiary” and
the surviving Spouse dies after the Participant but before distributions to the surviving
Spouse begin, this Section 3.2, other than Section 3.2(a), will apply as if the surviving
Spouse were the Participant.

For purposes of this Section 3.2 and Section VI, distributions are considered to begin on the
Participant’s “required beginning date” (or, if Section 3.2(d) applies, the date distributions are
required to begin to the surviving Spouse under Section 3.2(a)). If annuity payments irrevocably
commence to a Participant before the Participant’s “required beginning date” (or to the
Participant’s surviving Spouse before the date distributions are required to begin to the surviving
Spouse under Section 3.2(a)), the date distributions are considered to begin is the date
distributions actually commence.

3.3 Form of Distribution

Unless a Participant’s interest is distributed in the form of an annuity purchased from an
insurance company or in a single sum on or before the “required beginning date”, as of the first
“distribution calendar year”, distributions will be made in accordance with Sections IV, V and VI
of this Addendum. If a Participant’s interest is distributed in the form of an annuity purchased
from an insurance company, distributions thereunder will be made in accordance with the
requirements of Code Section 401(a)(9) and the Treasury Regulations. Any part of a Participant’s
interest that is in the form of an individual account described in Code Section 414(k) will be
distributed in a manner satisfying the requirements of Code Section 401(a)(9) and the Treasury
Regulations that apply to individual accounts.

Section  IV

Determination of Amount To Be Distributed Each Year

4.1 General Annuity Requirements

If a Participant’s interest is paid in the form of annuity distributions under the Plan, payments
under the annuity will satisfy the following requirements:

	(a)	 	the annuity distributions will be paid in periodic payments made at intervals not longer than
one year;
	 
	(b)	 	the distribution period will be over a life (or lives) or over a period certain not longer
than the period described in Section V or VI;

-64-

 

	(c)	 	once payments have begun over a period certain, the period certain will not be changed even
if the period certain is shorter than the maximum permitted;
	 
	(d)	 	payments will either be nonincreasing or increase only as follows:

	 	(1)	 	by an annual percentage increase that does not exceed the annual percentage
increase in a cost-of-living index that is based on prices of all items and issued by
the Bureau of Labor Statistics;
	 
	 	(2)	 	to the extent of the reduction in the amount of the Participant’s payments to
provide for a survivor benefit upon death, but only if the Beneficiary whose life was
being used to determine the distribution period described in Section V dies or is no
longer the Participant’s Beneficiary pursuant to a qualified domestic relations order
within the meaning of Code Section 414(p);
	 
	 	(3)	 	to provide cash refunds of accumulated contributions upon the Participant’s
death; or
	 
	 	(4)	 	to pay increased benefits that result from a Plan amendment.

4.2 Amount Required to be Distributed by Required Beginning Date

The amount that must be distributed on or before a Participant’s “required beginning date” (or, if
the Participant dies before distributions begin, the date distributions are required to begin under
Section 3.2(a) or (b)) is the payment that is required for one payment interval. The second payment
need not be made until the end of the next payment interval even if that payment interval ends in
the next calendar year. Payment intervals are the periods for which payments are received, e.g.,
bi-monthly, monthly, semi-annually, or annually. All of the Participant’s benefit accruals as of
the last day of the first “distribution calendar year” will be included in the calculation of the
amount of the annuity payments for payment intervals ending on or after the Participant’s “required
beginning date”.

4.3 Additional Accruals After First Distribution Calendar Year

Any additional benefits accruing to a Participant in a calendar year after the first “distribution
calendar year” will be distributed beginning with the first payment interval ending in the calendar
year immediately following the calendar year in which such amount accrues.

-65-

 

Section V

Requirements For Annuity Distributions

That Commence During Participant’s Lifetime

5.1 Joint Life Annuities Where the Beneficiary Is Not the Participant’s Spouse

If a Participant’s interest is being distributed in the form of a joint and survivor annuity for
the joint lives of the Participant and a non-Spouse Beneficiary, annuity payments to be made on or
after the Participant’s “required beginning date” to the “designated beneficiary” after the
Participant’s death must not at any time exceed the applicable percentage of the annuity payment
for such period that would have been payable to the Participant using the table set forth in Q&A-2
of Section 1.401(a)(9)-6T of the Treasury Regulations. If the form of distribution combines a joint
and survivor annuity for the joint lives of the Participant and a non-Spouse Beneficiary and a
period certain annuity, the requirement in the preceding sentence will apply to annuity payments to
be made to the “designated beneficiary” after the expiration of the period certain.

5.2 Period Certain Annuities

Unless the Participant’s Spouse is the sole “designated beneficiary” and the form of distribution
is a period certain and no life annuity, the period certain for an annuity distribution commencing
during the Participant’s lifetime may not exceed the applicable distribution period for the
Participant under the Uniform Lifetime Table set forth in Section 1.401(a)(9)-9 of the Treasury
Regulations for the calendar year that contains the Annuity Starting Date. If the Annuity Starting
Date precedes the year in which the Participant reaches age 70, the applicable distribution period
for the Participant is the distribution period for age 70 under the Uniform Lifetime Table set
forth in Section 1.401(a)(9)-9 of the Treasury Regulations plus the excess of 70 over the age of
the Participant as of the Participant’s birthday in the year that contains the Annuity Starting
Date. If the Participant’s Spouse is the Participant’s sole “designated beneficiary” and the form
of distribution is a period certain and no life annuity, the period certain may not exceed the
longer of the Participant’s applicable distribution period, as determined under this Section 5.2,
or the joint life and last survivor expectancy of the Participant and the Participant’s Spouse as
determined under the Joint and Last Survivor Table set forth in Section 1.401(a)(9)-9 of the
Treasury Regulations, using the Participant’s and Spouse’s attained ages as of the Participant’s
and Spouse’s birthdays in the calendar year that contains the Annuity Starting Date.

-66-

 

Section  VI

Requirements For Minimum Distributions

Where Participant Dies Before Date Distributions Begin

6.1 Participant Survived by Designated Beneficiary

Except as elected by the Sponsor, if a Participant dies before the date distribution of his or her
interest begins and there is a “designated beneficiary”, the Participant’s entire interest will be
distributed, beginning no later than the time described in Section 3.2(a) or (b), over the life of
the “designated beneficiary” or over a period certain not exceeding:

	(a)	 	unless the Annuity Starting Date is before the first “distribution calendar year”, the “life
expectancy” of the “designated beneficiary” determined using the Beneficiary’s age as of the
Beneficiary’s birthday in the calendar year immediately following the calendar year of the
Participant’s death; or
	 
	(b)	 	if the Annuity Starting Date is before the first “distribution calendar year”, the “life
expectancy” of the “designated beneficiary” determined using the Beneficiary’s age as of the
Beneficiary’s birthday in the calendar year that contains the Annuity Starting Date.

6.2 No Designated Beneficiary

If a Participant dies before the date distributions begin and there is no “designated beneficiary”
as of September 30 of the year following the year of the Participant’s death, distribution of the
Participant’s entire interest will be completed by December 31 of the calendar year containing the
fifth anniversary of the Participant’s death.

6.3 Death of Surviving Spouse Before Distributions to Surviving Spouse Begin

If a Participant dies before the date distribution of his or her interest begins, the Participant’s
surviving Spouse is the Participant’s sole “designated beneficiary”, and the surviving Spouse dies
before distributions to the surviving Spouse begin, this Section will apply as if the surviving
Spouse were the Participant, except that the time by which distributions must begin will be
determined without regard to Section 3.2(a).

-67-exv4w1

 

 Exhibit 4.1

REGISTRATION RIGHTS AGREEMENT

     This REGISTRATION RIGHTS AGREEMENT, dated as of November 8, 2006 by and among Complete
Production Services, Inc. (the “Company”) and the stockholders set forth on Exhibit
A hereto (the “Stockholders”).

ARTICLE 1.

DEFINITIONS AND CONSTRUCTION

     1.1 Definitions. In addition to the terms defined elsewhere herein, when used herein
the following terms shall have the meanings indicated:

     “Affiliate” means, with respect to a particular Person, any Person Controlling,
Controlled by, or Under Common Control with such Person.

     “Agreement” means this Registration Rights Agreement, as amended and restated from
time to time.

     “Board” means the board of directors of the Company.

     “Business Day” means any day other than a Saturday, a Sunday, or a holiday on which
banks are authorized or required by Law to close in the city of Houston, Texas.

     “Common Stock” means the common stock, $0.01 par value, of the Company.

     “Common Stock Equivalents” means (without duplication with any other Common Stock or
Common Stock Equivalents) rights, warrants, options, convertible securities, or exchangeable
securities or indebtedness, or other rights, exercisable for or convertible or exchangeable into,
directly or indirectly, Common Stock or securities convertible or exchangeable into Common Stock,
whether at the time of issuance or upon the passage of time or the occurrence of some future event.

     “Company” means Complete Production Services, Inc., a Delaware corporation.

     “Control” (including the correlative terms “Controlling”, “Controlled by” and “Under
Common Control with”) means possession, directly or indirectly, of the power to direct or cause the
direction of management or policies (whether through ownership of securities or any partnership or
other ownership interest, by contract or otherwise) of a Person.

     “Demand Holder” means any SCF Demand Holder or Non-SCF Demand Holder.

     “Demand Registration” has the meaning set forth in Section 2.1(a)(i) below.

     “Demand Request” means any SCF Demand Request or Non-SCF Demand Request.

 

 

     “Disposing Holders” has the meaning set forth in Section 2.9.

     “Eligibility Date” means April 20, 2007.

     “Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated by the Securities and Exchange Commission thereunder.

     “Holder” means a Stockholder (as defined herein, but excluding any Person who executes
this Agreement or a separate agreement to be bound by the terms hereof solely in his or her
capacity as a spouse of a Stockholder) who holds Registrable Securities; provided,
however, that a Person shall cease to be a Holder if and when such Person owns Common Stock
and Common Stock Equivalents representing less than four percent of the outstanding Common Stock
and such Person may dispose of all Registrable Securities then owned by such Person pursuant to
Rule 144(k) (or any successor rule) under the Securities Act, and in such case the Registrable
Securities owned by such Person shall cease to be Registrable Securities; provided
further, however that a Person shall cease to be a Holder after the second
anniversary hereof if the Company requests in writing that such Person confirm in writing that such
Person remains a Holder and such Person fails to so confirm within 30 days of such notice.

     “Indemnified Party” has the meaning set forth in Section 2.6(c) below.

     “Indemnifying Party” has the meaning set forth in Section 2.6(c) below.

     “Inspectors” has the meaning set forth in Section 2.4(j) below.

     “Law” means any applicable constitutional provision, statute, act, code, law,
regulation, rule, ordinance, order, decree, ruling, proclamation, resolution, judgment, decision,
declaration, or interpretative or advisory opinion or letter of a governmental authority.

     “Material Adverse Effect” has the meaning set forth in Section 2.1(d) below.

     “Non-SCF Demand Holder” means each Non-SCF Holder and each transferee of Non-SCF
Registrable Securities directly or indirectly (in a chain of title) from such Non-SCF Holder if
such transferee to whom the right to request, or participate in the request of, a Demand
Registration under Section 2.1(a) has been expressly assigned in writing directly or indirectly (in
a chain of title) from such Non-SCF Holder as permitted by Section 2.8 hereof.

     “Non-SCF Demand Request” has the meaning set forth in Section 2.1(a)(ii) below.

     “Non-SCF Holder” means any Stockholder other than SCF or any of its Affiliates.

     “Non-SCF Registrable Securities” means the Common Stock issued to any Non-SCF Holder
pursuant to the Purchase Agreement and any other securities issued or issuable with respect to such
securities by way of a stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or reorganization; provided, that any Non-SCF
Registrable Security will cease to be a Non-SCF Registrable Security when (a) a registration
statement covering such Non-SCF Registrable Security has been declared effective by the SEC and it
has been disposed of pursuant to such effective registration statement, (b) it,

 

 

together with all other shares of Common Stock issued to such Non-SCF Holder pursuant to the
Purchase Agreement and any other securities issued or issuable with respect to such securities by
way of a stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or reorganization, may be sold under circumstances in which
all of the applicable conditions of Rule 144 (or any similar provisions then in force) under the
Securities Act are met, (c) (i) it has been otherwise transferred, (ii) the Company has delivered a
new certificate or other evidence of ownership for it not bearing any restrictive legend and (iii)
it may be resold without subsequent registration under the Securities Act, or (d) such Non-SCF
Holder has ceased to be a Holder in accordance with the provisos to the definition of Holder
provided for herein.

     “Other Piggyback Securities” has the meaning set forth in Section 2.2(b).

     “Person” means any natural person, limited liability company, corporation, limited
partnership, general partnership, joint stock company, joint venture, association, company, trust,
bank trust company, land trust, business trust, or other organization, whether or not a legal
entity, and any government or agency or political subdivision thereof.

     “Piggyback Registration” has the meaning set forth in Section 2.2(a).

     “Piggyback Securities” has the meaning set forth in Section 2.2(b).

     “Preferred Request” has the meaning set forth in Section 2.3(c).

     “Purchase Agreement” means the Stock Purchase Agreement, dated as of the date hereof,
among the Company, Integrated Production Services, LLC, a Delaware limited liability company,
Pumpco Services, Inc., a Delaware corporation, and the other signatories thereto, including the
Stockholders.

     “Records” has the meaning set forth in Section 2.4(j) below.

     “Registrable Securities” means the SCF Registrable Securities and the Non-SCF
Registrable Securities.

     “Registration Expenses” has the meaning set forth in Section 2.5 below.

     “Requesting Holders” means a Holder who makes a Demand Request pursuant to Section 2.1
below, except as provided in Section 2.1(e) below.

     “Required Filing Date” has the meaning set forth in Section 2.1(a)(ii).

     “SCF” means SCF-VI, L.P., a Delaware limited partnership.

     “SCF Demand Holder” means SCF and each transferee of SCF Registrable Securities
directly or indirectly (in a chain of title) from SCF if such transferee to whom the right to
request, or participate in the request of, a Demand Registration under Section 2.1(a) has been
expressly assigned in writing directly or indirectly (in a chain of title) from SCF as permitted by
Section 2.8 hereof.

 

 

     “SCF Demand Request” has the meaning set forth in Section 2.1(a)(i) below.

     “SCF Registrable Securities” means the Common Stock issued to SCF pursuant to the
Purchase Agreement and any other securities issued or issuable with respect to such securities by
way of a stock dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or reorganization; provided, that any SCF
Registrable Security will cease to be an SCF Registrable Security when (a) a registration statement
covering such SCF Registrable Security has been declared effective by the SEC and it has been
disposed of pursuant to such effective registration statement, (b) it, together with all other
shares of Common Stock issued to SCF pursuant to the Purchase Agreement and any other securities
issued or issuable with respect to such securities by way of a stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation or reorganization,
may be sold under circumstances in which all of the applicable conditions of Rule 144 (or any
similar provisions then in force) under the Securities Act are met, (c) (i) it has been otherwise
transferred, (ii) the Company has delivered a new certificate or other evidence of ownership for it
not bearing any restrictive legend and (iii) it may be resold without subsequent registration under
the Securities Act, or (d) SCF has ceased to be a Holder in accordance with the provisos to the
definition of Holder provided for herein.

     “SEC” means the Securities and Exchange Commission or any successor governmental
agency.

     “Securities Act” means the Securities Act of 1933, as amended from time to time.

     “Selling Holder” means a Holder who is selling Registrable Securities pursuant to a
registration statement under the Securities Act.

     “Spouse” has the meaning set forth in Section 3.7.

     “Stockholder” means each person listed as a “Stockholder” on Exhibit A hereto and any
Person to whom Registrable Securities and registration rights have been transferred pursuant to
Section 2.8 hereof.

     “Subsidiary” means (i) any corporation or other entity a majority of the capital stock
or other equity ownership interests of which having ordinary voting power to elect a majority of
the board of directors or other Persons performing similar functions is at the time owned, directly
or indirectly, with power to vote, by the Company or any direct or indirect Subsidiary of the
Company or (ii) a partnership in which the Company or any direct or indirect Subsidiary is a
general partner.

     “Transfer” (including the correlative terms “Transfers” or “Transferred”) means any
direct or indirect transfer, assignment, sale, gift, pledge, hypothecation or other encumbrance, or
any other disposition (whether voluntary or involuntary or by operation of Law), of shares of
Common Stock (or any interest (pecuniary or otherwise) therein or right thereto), including
derivative or similar transactions or arrangements whereby a portion or all of the economic
interest in, or risk of loss or opportunity for gain with respect to, Common Stock is transferred
or shifted to another Person; provided, however, that (i) an exchange, merger,
recapitalization, consolidation or reorganization involving the Company in which securities of the
Company or

 

 

any other Person and/or cash are issued in respect of all shares of Common Stock shall not be
deemed a Transfer if all shares of Common Stock are treated identically in any such transaction
(other than (A) differences resulting from the treatment of fractional shares that would otherwise
result from such transaction, (B) the cancellation for no consideration of shares of Common Stock
held by any Person that has consented to such cancellation and/or (C) differences resulting from
any election made by the Persons so long as all Persons have an equal opportunity to make such an
election) and (ii) the exercise of options in accordance with the terms of an Incentive Plan shall
not be deemed a Transfer.

     “Underwriter” means a securities dealer which purchases any Registrable Securities as
principal and not as part of such dealer’s market-making activities.

     1.2 Construction. All references in this Agreement to Exhibits, Articles, Sections,
subsections and other subdivisions refer to the corresponding Exhibits, Articles, Sections,
subsections and other subdivisions of or to this Agreement unless expressly provided otherwise.
Titles appearing at the beginning of any Articles, Sections, subsections or other subdivisions of
this Agreement are for convenience only, do not constitute any part of this Agreement, and shall be
disregarded in construing the language hereof. The words “this Agreement,” “herein,” “hereby,”
“hereunder” and “hereof” and words of similar import refer to this Agreement as a whole and not to
any particular subdivision unless expressly so limited. The words “this Article,” “this Section”
and “this subsection” and words of similar import refer only to the Article, Section or subsection
hereof in which such words occur. The word “or” is not exclusive, and the word “including” (in its
various forms) means including without limitation. Pronouns in masculine, feminine or neuter
genders shall be construed to state and include any other gender, and words, terms and titles
(including terms defined herein) in the singular form shall be construed to include the plural and
vice versa, unless the context otherwise requires.

ARTICLE 2.

REGISTRATION OF STOCK

     2.1 Demand Registration.

          (a) Request for Registration.

               (i) From and after the Eligibility Date, any SCF Demand Holder may make a written request of
the Company (an “SCF Demand Request”) to have the Company effect a registration under the
Securities Act (a “Demand Registration”) for the sale of all or part of their SCF
Registrable Securities. Following receipt of such Demand Request, the Company shall be required to
use commercially reasonable efforts to effect such Demand Registration subject to the terms hereof;
provided that the SCF Registrable Securities proposed to be offered by the Requesting
Holders in any such SCF Demand Request must have a reasonably anticipated aggregate offering price
of at least $20,000,000 net of underwriting discounts and commissions; and provided
further that subject to paragraph (b) below, the SCF Demand Holders shall be entitled to
make no more than one SCF Demand Request pursuant to the foregoing provisions. The SCF Demand
Request may be for a “shelf” registration pursuant to Rule 415 under the Securities Act.

 

 

               (ii) From and after the Eligibility Date, any Non-SCF Demand Holder may make a written request
of the Company (a “Non-SCF Demand Request”) to have the Company effect a Demand
Registration for the sale of all or part of their Non-SCF Registrable Securities. Following
receipt of such Non-SCF Demand Request, the Company shall be required to use commercially
reasonable efforts to effect such Demand Registration subject to the terms hereof; provided
that the Non-SCF Registrable Securities proposed to be offered by the Requesting Holders in any
such Demand Request must have a reasonably anticipated aggregate offering price of at least
$10,000,000 net of underwriting discounts and commissions; and provided further
that subject to paragraph (b) below, the Non-SCF Demand Holders (regardless of whether certain
Non-SCF Demand Holders do not participate in such Non-SCF Demand Request) shall be entitled to make
no more than one Non-SCF Demand Request pursuant to the foregoing provisions. The Non-SCF Demand
Request may be for a “shelf” registration pursuant to Rule 415 under the Securities Act.

               (iii) Each Demand Request shall specify the number of shares of Registrable Securities
proposed to be sold. Subject to Section 2.3(c), the Company shall use its best efforts to file
under the Securities Act a registration statement on an appropriate form to effect the Demand
Registration within 30 days if eligible to use Form S-3, otherwise within 60 days if not so
eligible, after receiving a Demand Request (the “Required Filing Date”) and shall use
commercially reasonable efforts to cause the same to be declared effective by the SEC as promptly
as practicable after such filing.

          (b) Effective Registration and Expenses. A registration will not count as a Demand
Registration until it has become effective (unless the Requesting Holders withdraw their Demand
Request, in which case such demand will count as a Demand Registration unless (i) the Requesting
Holders pay all Registration Expenses in connection with such withdrawn registration, (ii) during
the registration process material adverse information regarding the Company is disclosed that was
not known by such Requesting Holders at the time the request for such Demand Registration was made
or (iii) the Company has not complied in all material respects with its obligations hereunder
required to have been taken prior to such withdrawal); provided that if, after it has
become effective, an offering of Registrable Securities pursuant to a registration is interfered
with by any stop order, injunction or other order or requirement of the SEC or other governmental
agency or court, such registration will be deemed not to have been effected and will not count as a
Demand Registration. Furthermore, a registration will not count as a Demand Registration if the
conditions to closing specified in the purchase agreement or underwriting agreement entered into in
connection with such registration are not satisfied other than by reason of some act,
misrepresentation or omission by a Requesting Holder and are not waived by the purchasers or
underwriters.

          (c) Selection of Underwriters. If the Requesting Holder so indicates, the offering of
Registrable Securities pursuant to a Demand Registration shall be in the form of an underwritten
offering. In the case of an underwritten offering, the Requesting Holder shall select the
book-running managing Underwriter and such additional Underwriters to be used in connection with
the offering; provided that such selections shall be subject to the consent of the Company,
which consent shall not be unreasonably withheld.

 

 

          (d) Priority on Demand Registrations. In the case of an underwritten offering, no
securities to be sold for the account of any Person (including the Company) other than a Requesting
Holder shall be included in a Demand Registration if the managing Underwriter(s) shall advise the
Requesting Holders that the inclusion of such securities will materially and adversely affect the
price or success of the offering (a “Material Adverse Effect”); provided,
however, that for purposes of the foregoing, all of the Demand Holders who desire to
participate in such Demand Registration shall be deemed to be Requesting Holders. Furthermore, in
the event the managing Underwriter(s) shall advise the Requesting Holders that even after exclusion
of all securities of other Persons pursuant to the immediately preceding sentence, the amount of
Registrable Securities proposed to be included in such Demand Registration by Requesting Holders is
sufficiently large to cause a Material Adverse Effect, the Registrable Securities of Requesting
Holders to be included in such Demand Registration shall be allocated pro rata among the Requesting
Holders on the basis of the number of shares of Common Stock requested to be included in such
registration by each such Requesting Holder.

          (e) Multiple Demands. If the Company shall receive, within a period of 15 days, a
request to file a registration statement from more than one Person who has the contractual right
(whether exercisable alone or in conjunction with other rights) to require the Company to file a
registration statement (whether or not such Person is a Demand Holder), only the first such Person
requesting the Company to file a registration statement shall be considered a Requesting Holder for
the purposes of determining the number of Demand Requests that may be made by such Person pursuant
to this Section 2.1, and all other Persons making such requests shall be considered a Requesting
Holder for all purposes other than determining the number of Demand Requests made by such Person
and provided further that any Holder who exercises his rights under Section 2.2 hereof shall be
deemed a Requesting Holder for all purposes hereunder. In the event the Company shall receive a
request to file a Demand Registration Statement from any Person (including a Demand Holder) who has
the contractual right to cause the Company to do so, the Company shall promptly (and in any event
within five days after its receipt of such request) notify all Demand Holders (in each case who
then own Registrable Securities) thereof.

     2.2 Piggy-Back Registration.

          (a) Piggyback Registration Rights. If the Company proposes to file a registration
statement under the Securities Act with respect to an offering of any shares of Common Stock by the
Company for its own account or for the account of any holder of Common Stock (including any Holder)
(other than a registration statement on Form S-4 or S-8 or any substitute form that may be adopted
by the SEC or any registration statement filed in connection with an exchange offer or offering of
securities solely to the Company’s existing security holders or a registration of the resale of
debt securities), then the Company shall give written notice of such proposed filing to the Holders
of the Registrable Securities as soon as practicable (but, subject to the last sentence in Section
2.1(e), in no event less than 15 days before the anticipated initial filing date of such
registration statement), and such notice shall offer such Holders the opportunity to register such
number of Registrable Securities as each such Holder may request (a “Piggyback
Registration”). Subject to Section 2.2(b) hereof, the Company shall include in each such
Piggyback Registration all Registrable Securities requested to be included in the registration for
such offering by written notice to the Company within 15 days of receipt (in accordance with
Section 3.1) of the Company’s notice referred to above; provided,

 

 

however, that the Company may at any time withdraw or cease proceeding with any such
registration for its own account prior to effectiveness of such registration whether or not any
Holder of Registrable Securities has elected to include any Registrable Securities in such
registration. Each Holder of Registrable Securities shall be permitted to withdraw all or part of
such Holder’s Registrable Securities from a Piggyback Registration at any time prior to the
effective date thereof.

          (b) Priority on Piggyback Registration. The Company shall use commercially reasonable
efforts to cause the managing Underwriter(s) of a proposed underwritten offering to permit the
Registrable Securities requested to be included in the registration statement for such offering
under Section 2.2(a) (“Piggyback Securities”) to be included on the same terms and
conditions as any similar securities included therein. Notwithstanding the foregoing, the Company
shall not be required to include any Holder’s Piggyback Securities in such offering unless such
Holder accepts the terms of the underwriting agreement between the Company and the managing
Underwriter(s) and otherwise complies with the provisions of Section 2.7 below. If the managing
Underwriter(s) of a proposed underwritten offering advise(s) the Company that in their opinion the
total amount of securities, including Piggyback Securities, to be included in such offering is
sufficiently large to cause a Material Adverse Effect, then in such event the securities to be
included in such offering shall be allocated (i) first, to the Requesting Holders if such
registration statement is pursuant to a Demand Request or, if not, then to the Company, and (ii)
second, to the extent that any additional securities can, in the opinion of such managing
Underwriter(s), be sold without any such Material Adverse Effect, pro rata among the holders of
Piggyback Securities and holders of any shares of Common Stock having contractual, incidental or
“piggy back” registration rights pursuant to an agreement which is not this Agreement (“Other
Piggyback Securities”) on the basis of the number of Piggyback Securities and Other Piggyback
Securities then held by each such holder.

          (c) No registration of Registrable Securities effected under this Section 2.2 shall relieve
the Company of its obligation to effect any registration of Registrable Securities pursuant to
Section 2.1.

     2.3 Holdback Agreements.

          (a) Restrictions on Public Sale by Holder of Registrable Securities. Following any
underwritten public offering of equity securities by the Company or any Holder of Registrable
Securities effected pursuant to this Agreement, each Holder of Registrable Securities agrees not to
effect any public sale or distribution of equity securities of the Company similar to those being
registered or of any securities convertible into or exchangeable or exercisable for such securities
or hedging transactions relating to the Registrable Securities, including a sale pursuant to Rule
144 under the Securities Act, during the 14 days prior to the expected date of “pricing” of such
offering and during such period, not to exceed 90 days with respect to any such offering, beginning
on the date of such final prospectus (or prospectus supplement if applicable) as shall be
reasonably requested by the managing Underwriter(s) except as part of such registration, and, if
and to the extent requested by the managing Underwriter(s), each such Holder of Registrable
Securities agrees to execute an agreement to the foregoing effect with the Underwriter(s) for such
offering on such terms as the managing Underwriter(s) shall reasonably request.

 

 

          (b) Restrictions on Public Sale by the Company. Following any underwritten public
offering of equity securities by any Holder of Registrable Securities effected pursuant to this
Agreement, the Company agrees not to effect any public sale or distribution of any equity
securities of the Company similar to those being registered, or any securities convertible into or
exchangeable or exercisable for such securities, during the 14 days prior to the expected date of
“pricing” of such offering and during such period, not to exceed 90 days with respect to any such
offering, beginning on the date of such final prospectus (or prospectus supplement if applicable)
as shall be reasonably requested by the managing Underwriter(s) except as part of such registration
as permitted hereby.

          (c) Deferral of Filing. The Company may defer the filing (but not the preparation) of
a registration statement required by Section 2.1 if (i) at the time the Company receives the Demand
Request, the Company or any of its subsidiaries are engaged in confidential negotiations or other
confidential business activities, disclosure of which would be required in such registration
statement (but would not be required if such registration statement were not filed) and the Board
determines in good faith that such disclosure would be materially detrimental to the Company, until
a date not later than 60 days after the Required Filing Date or (ii) subject to Section 2.1(e), the
Company had received, prior to receiving such Demand Request, a Demand Request from a different
group of Requesting Holders (a “Preferred Request”) and is proceeding with reasonable
diligence to comply with the Preferred Request, until a date not later than the later of (A) six
months after the effective date of such Preferred Request or (B) the end of the holdback period
referred to in Section 2.3(a) above with respect to such Preferred Request or (iii) prior to
receiving such Demand Request, the Board had determined to effect a registered underwritten public
offering of the Company’s equity securities for the Company’s account and the Company had taken
substantial steps (including, but not limited to, selecting or entering into a letter of intent
with the managing Underwriter(s) for such offering) and is proceeding with reasonable diligence to
effect such offering, until a date not later than the end of the holdback period referred to in
Section 2.3(a) above with respect to such offering. A deferral of the filing of a registration
statement pursuant to this Section 2.3(c) shall be lifted, and the requested registration statement
shall be filed as soon as reasonably practicable, if, in the case of a deferral pursuant to clause
(i) of the preceding sentence, the negotiations or other activities are disclosed or terminated,
or, in the case of a deferral pursuant to clause (ii) of the preceding sentence, the Preferred
Request is withdrawn, or in the case of a deferral pursuant to clause (iii) of the preceding
sentence, the proposed registration for the Company’s account is abandoned. In order to defer the
filing of a registration statement pursuant to this Section 2.3(c), the Company shall promptly (but
in any event within 15 days), upon determining to seek such deferral, deliver to each Requesting
Holder a certificate signed by the Chief Executive Officer of the Company stating that the Company
is deferring such filing pursuant to this Section 2.3(c) and the basis therefor in reasonable
detail. Within 20 days after receiving such certificate, the Holders of a majority of the
Registrable Securities held by the Requesting Holders and for which registration was previously
requested may withdraw such request by giving notice to the Company. If withdrawn, the Demand
Request shall be deemed not to have been made for all purposes of this Agreement. The Company may
defer the filing of a Demand Registration pursuant to this Section 2.3(c) only one time during any
12 month period. Nothing in this paragraph shall affect the rights of the Holders under Section 2.2
to participate in any such Demand Registration at such time as the filing deferral is lifted in
accordance with this Section 2.3(c).

 

 

          (d) Use, and Suspension of Use, of Shelf Registration Statement. If the Company has
filed a “shelf” registration statement pursuant to a Demand Request under Section 2.1(a)(i) and has
included Registrable Securities therein, the Company shall be entitled to suspend (but not more
than an aggregate of 90 days in any 12-month period), for a reasonable period of time not in excess
of 90 days, the offer or sale of Registrable Securities pursuant to such registration statement by
any holder of Registrable Securities if (i) a “road show” is not then in progress with respect to a
proposed offering of Registrable Securities by such holder pursuant to such registration statement
and such holder has not executed an underwriting agreement with respect to a pending sale of
Registrable Securities pursuant to such registration statement and (ii) the Company or any of its
subsidiaries are engaged in confidential negotiations or other confidential business activities,
disclosure of which would be required if such registration statement were used (but would not be
required if such registration statement were not used) and the Board determines in good faith that
such disclosure would be materially detrimental to the Company. In order to suspend the use of the
registration statement pursuant to this Section 2.3(d), the Company shall promptly (but in any
event within 10 days), upon determining to seek such suspension, deliver to the holders of
Registrable Securities included in such registration statement, a certificate signed by the Chief
Executive Officer of the Company stating that the Company is suspending use of such registration
statement pursuant to this Section 2.3(d) and the basis therefor in reasonable detail. IN ADDITION,
A HOLDER OF REGISTRABLE SECURITIES MAY NOT UTILIZE A SHELF REGISTRATION STATEMENT TO EFFECT THE
SALE OF ANY SUCH SECURITIES UNLESS SUCH HOLDER HAS GIVEN THE COMPANY AT LEAST ONE BUSINESS DAY
ADVANCE WRITTEN NOTICE OF THE DATE OR DATES OF A PROPOSED SALE OF SUCH SECURITIES BY SUCH HOLDER
PURSUANT TO SUCH REGISTRATION STATEMENT (WHICH NOTICE MAY BE GIVEN AS OFTEN AS SUCH HOLDER
DESIRES).

     2.4 Registration Procedures. Whenever the Holders have requested that any Registrable
Securities be registered pursuant to Section 2.1 hereof, the Company will, at its expense, use
commercially reasonable efforts to effect the registration of such Registrable Securities under the
Securities Act prior to the Required Filing Date, and in connection with any such request, the
Company will as expeditiously as practicable:

          (a) prepare and file with the SEC a registration statement on any form for which the Company
then qualifies or which counsel for the Company shall deem appropriate and which form shall be
available for the sale of the Registrable Securities to be registered thereunder in accordance with
the intended method of distribution thereof, and use commercially reasonable efforts and proceed
diligently and in good faith to cause such filed registration statement to become effective under
the Securities Act; provided that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company will furnish to all Selling Holders and to one
counsel reasonably acceptable to the Company selected by the Selling Holders, copies of all such
documents proposed to be filed, which documents will be subject to the review of such counsel;
provided further that in connection with a Demand Registration, the Company shall not file
any registration statement or prospectus, or any amendments or supplements thereto, if the
Requesting Holders who hold a majority of the Registrable Securities covered by such registration
statement or their counsel shall reasonably object on a timely basis;

 

 

          (b) prepare and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection therewith as may be necessary to keep such
registration statement effective pursuant to Section 2.1 for a period (except as provided in the
last paragraph of this Section 2.4) of not less than 270 consecutive days (or four years, or such
shorter period as the Requesting Holders who hold a majority of the Registrable Securities covered
by such registration may elect, if a “shelf registration” is requested) or, if shorter, the period
terminating when all Registrable Securities covered by such registration statement have been sold
(but not before the expiration of the applicable period referred to in Section 4(3) of the
Securities Act and Rule 174 thereunder, if applicable) and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended method of disposition by the Selling
Holders thereof set forth in such registration statement; provided, however, that
any Selling Holder that has been included on a “shelf” registration statement may request that such
Selling Holder’s Common Stock be removed from such registration statement, in which event the
Company shall promptly either withdraw such registration statement or file a post-effective
amendment to such registration statement removing such Common Stock;

          (c) furnish, without charge, to each such Selling Holder such number of copies of such
registration statement, each amendment and supplement thereto (in each case including all exhibits
thereto), the prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as such Selling Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Selling Holder;

          (d) notify the Selling Holders promptly, and (if requested by any such Person) confirm such
notice in writing, (i) when a prospectus or any prospectus supplement or post-effective amendment
has been filed, and, with respect to a registration statement or any post-effective amendment, when
the same has become effective under the Securities Act and each applicable state Law, (ii) of any
request by the SEC or any other federal or state governmental authority for amendments or
supplements to a registration statement or related prospectus or for additional information, (iii)
of the issuance by the SEC of any stop order suspending the effectiveness of a registration
statement or the initiation of any proceedings for that purpose, (iv) if at any time the
representations or warranties of the Company or any Subsidiary contained in any agreement
(including any underwriting agreement) contemplated by Section 2.4(i) below cease to be true and
correct in any material respect, (v) of the receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such
purpose, (vi) of the happening of any event which makes any statement made in such registration
statement or related prospectus or any document incorporated or deemed to be incorporated therein
by reference untrue in any material respect or that requires the making of any changes in such
registration statement, prospectus or documents so that, in the case of the registration statement,
it will not contain any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein not misleading, and that
in the case of the prospectus, it will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which

 

 

they were made, not misleading, and (vii) of the Company’s reasonable determination that a
post-effective amendment to a registration statement would be appropriate;

          (e) use commercially reasonable efforts to obtain the withdrawal of any order suspending the
effectiveness of a registration statement, or the lifting of any suspension of the qualification
(or exemption from qualification) of any of the Registrable Securities for sale in any
jurisdiction, at the earliest practicable moment;

          (f) cooperate with the Selling Holders and the managing Underwriter(s) to facilitate the
timely preparation and delivery of certificates representing Registrable Securities to be sold,
which certificates shall not bear any restrictive legends and shall be in a form eligible for
deposit with The Depositary Trust Company;

          (g) use commercially reasonable efforts to register or qualify such Registrable Securities as
promptly as practicable under such other securities or blue sky laws of such jurisdictions as any
Selling Holder or managing Underwriter reasonably (in light of the intended plan of distribution)
requests and do any and all other acts and things which may be reasonably necessary or advisable to
enable such Selling Holder or managing Underwriter to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such Selling Holder; provided that the
Company will not be required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (g), (ii) subject itself to
taxation in any such jurisdiction or (iii) consent to general service of process in any such
jurisdiction;

          (h) use commercially reasonable efforts to cause such Registrable Securities to be registered
with or approved by such other governmental agencies or authorities, if any, as may be required of
the Company to enable the Selling Holder or Selling Holders thereof to consummate the disposition
of such Registrable Securities;

          (i) enter into customary agreements (including an underwriting agreement in customary form
with customary indemnification provisions) and take such other actions as are reasonably required
or advisable in order to expedite or facilitate the disposition of such Registrable Securities,
including providing reasonable availability of appropriate members of senior management of the
Company to provide customary due diligence assistance in connection with any offering and to
participate in customary “road show” presentations in connection with any underwritten offerings in
substantially the same manner as they would in an underwritten primary registered public offering
by the Company of its Common Stock, after taking into account the reasonable business requirements
of the Company in determining the scheduling and duration of any road show;

          (j) make available for inspection by any Selling Holder of such Registrable Securities, any
Underwriter participating in any disposition pursuant to such registration statement and any
attorney, accountant or other professional retained by any such Selling Holder or Underwriter
(collectively, the “Inspectors”), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the “Records”) as shall be
reasonably necessary to enable them to exercise their due diligence responsibility, and cause the
Company’s officers, directors and employees to supply all information reasonably requested by

 

 

any such Inspectors in connection with such registration statement. Each Selling Holder of
such Registrable Securities agrees that information obtained by it as a result of such inspections
shall be deemed confidential and shall not be used by it as the basis for any market transactions
in the securities of the Company or its Affiliates unless and until such is made generally
available to the public (other than by such Selling Holder). Each Selling Holder of such
Registrable Securities further agrees that it will, as soon as practicable upon learning that
disclosure of such Records is sought in a court of competent jurisdiction, give notice to the
Company and allow the Company at its expense to undertake appropriate action to prevent disclosure
of the Records deemed confidential;

          (k) use commercially reasonable efforts to obtain a comfort letter or comfort letters from the
Company’s independent public accountants in customary form and covering such matters of the type
customarily covered by comfort letters as the managing Underwriter(s) reasonably request(s);

          (l) otherwise use commercially reasonable efforts to comply with all applicable rules and
regulations of the SEC, and make available to its security holders, as soon as reasonably
practicable, an earnings statement covering a period of twelve months, beginning within three
months after the effective date of the registration statement, which earnings statement shall
satisfy the provisions of Section 11(a) of the Securities Act;

          (m) use commercially reasonable efforts to cause all such Registrable Securities to be listed
on each securities exchange on which similar securities issued by the Company are then listed or
quoted on any inter-dealer quotation system on which similar securities issued by the Company are
then quoted;

          (n) if any event contemplated by Section 2.4(d)(vi) above shall occur, as promptly as
practicable prepare a supplement or amendment or post-effective amendment to such registration
statement or the related prospectus or any document incorporated therein by reference or promptly
file any other required document so that, as thereafter delivered to the purchasers of the
Registrable Securities, the prospectus will not contain an untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not misleading; and

          (o) cooperate and assist in any filing required to be made with the National Association of
Securities Dealers, Inc. and in the performance of any due diligence investigation by any
Underwriter, including any “qualified independent underwriter,” or any Selling Holder.

Notwithstanding anything contained herein to the contrary, the Company hereby agrees that any
Demand Registration shall contain all language (including, without limitation, on the prospectus
cover sheet, the principal stockholders’ chart and the plan of distribution) as may be requested by
a holder of Registrable Securities. The Company may require each Selling Holder to promptly furnish
in writing to the Company such information regarding the distribution of the Registrable Securities
as it may from time to time reasonably request and such other information as may be legally
required in connection with such registration. Notwithstanding anything herein to the contrary, the
Company shall have the right to exclude from any offering the Registrable

 

 

Securities of any Selling Holder who does not comply with the provisions of the immediately
preceding sentence.

Each Selling Holder agrees that, upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 2.4(d)(vi) hereof, such Selling Holder will forthwith
discontinue disposition of Registrable Securities pursuant to the registration statement covering
such Registrable Securities until such Selling Holder’s receipt of the copies of the supplemented
or amended prospectus contemplated by Section 2.4(n) hereof, and, if so directed by the Company,
such Selling Holder will deliver to the Company all copies, other than permanent file copies, then
in such Selling Holder’s possession, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice. In the event the Company shall give such notice,
the Company shall extend the period during which such registration statement shall be maintained
effective (including the period referred to in Section 2.4(b) hereof) by the number of days during
the period from and including the date of the giving of notice pursuant to Section 2.4(d)(vi)
hereof to the date when the Company shall make available to the Selling Holders of Registrable
Securities covered by such registration statement a prospectus supplemented or amended to conform
with the requirements of Section 2.4(n) hereof.

     2.5 Registration Expenses. Subject to the provisions in Section 2.1(b) above with
respect to a withdrawn Demand Registration, in connection with any registration statement required
to be filed hereunder, the Company shall pay the following registration expenses (the
“Registration Expenses”):

          (a) all registration and filing fees (including, without limitation, with respect to filings
to be made with the National Association of Securities Dealers, Inc.);

          (b) fees and expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications of the Registrable
Securities);

          (c) printing expenses;

          (d) internal expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties);

          (e) the fees and expenses incurred in connection with the listing on an exchange of the
Registrable Securities if the Company shall choose, or be required pursuant to Section 2.4(m), to
list such Registrable Securities;

          (f) reasonable fees and disbursements of counsel for the Company and customary fees and
expenses for independent certified public accountants retained by the Company (including the
expenses of any comfort letters requested pursuant to Section 2.4(k) hereof);

          (g) the reasonable fees and expenses of any special experts retained by the Company in
connection with such registration;

 

 

          (h) reasonable fees and expenses of one counsel reasonably acceptable to the Company selected
by the Selling Holders incurred in connection with the registration of such Registrable Securities
hereunder; and

          (i) fees and expenses of any “qualified independent underwriter” or other independent
appraiser participating in any offering pursuant to Section 2.2 of Schedule E to the By-laws of the
National Association of Securities Dealers, Inc.

The Company shall not have any obligation to pay any underwriting fees, discounts, or commissions
attributable to the sale of Registrable Securities or, except as provided by clause (b), (h) or (i)
above, any out-of-pocket expenses of the Holders (or the agents who manage their accounts) or the
fees and disbursements of any Underwriter.

     2.6 Indemnification; Contribution.

          (a) Indemnification by the Company. The Company agrees to indemnify and hold harmless
each Selling Holder, each Person, if any, who controls such Selling Holder within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, and the officers, directors,
agents, general and limited partners, and employees of each Selling Holder and each such
controlling Person from and against any and all losses, claims, damages, liabilities (joint or
several), and expenses (including reasonable costs of investigation and attorneys’ fees) arising
out of or based upon any untrue statement or alleged untrue statement of a material fact contained
in any registration statement or prospectus relating to the Registrable Securities or in any
amendment or supplement thereto or in any preliminary prospectus, or arising out of or based upon
any omission or alleged omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or expenses arise out of, or are based upon and in conformity with, any such
untrue statement or omission or allegation thereof based upon information furnished in writing to
the Company by such Selling Holder or on such Selling Holder’s behalf expressly for use therein.
The Company also agrees to indemnify any Underwriter(s) of the Registrable Securities, their
officers and directors and each Person who controls such Underwriter(s) on substantially the same
basis as that of the indemnification of the Selling Holders provided in this Section 2.6(a).

          (b) Indemnification by Holder of Registrable Securities. Each Selling Holder agrees,
severally and not jointly, to indemnify and hold harmless each other Selling Holder, the Company,
and each Person, if any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act and the officers, directors, agents and employees
of each other Selling Holder, the Company and each such controlling Person to the same extent as
the foregoing indemnity from the Company to such Selling Holder, but only with respect to
information furnished in writing by such Selling Holder or on such Selling Holder’s behalf
expressly for use in any registration statement or prospectus relating to the Registrable
Securities. The liability of any Selling Holder under this Section 2.6(b) shall be limited to the
aggregate cash and property received by such Selling Holder pursuant to the sale of Registrable
Securities covered by such registration statement or prospectus.

 

 

          (c) Conduct of Indemnification Proceedings. If any action or proceeding (including
any governmental investigation) shall be brought or asserted against any Person entitled to
indemnification under Section 2.6(a) or 2.6(b) above (an “Indemnified Party”) in respect of
which indemnity may be sought from any Person who has agreed to provide such indemnification under
Section 2.6(a) or 2.6(b) above (an “Indemnifying Party”), the Indemnified Party shall give
prompt written notice to the Indemnifying Party and the Indemnifying Party shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to such Indemnified Party, and
shall assume the payment of all reasonable expenses of such defense. Such Indemnified Party shall
have the right to employ separate counsel in any such action or proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the expense of such
Indemnified Party unless (i) the Indemnifying Party has agreed to pay such fees and expenses or
(ii) the Indemnifying Party fails promptly to assume the defense of such action or proceeding or
fails to employ counsel reasonably satisfactory to such Indemnified Party or (iii) the named
parties to any such action or proceeding (including any impleaded parties) include both such
Indemnified Party and Indemnifying Party (or an Affiliate of the Indemnifying Party), and such
Indemnified Party shall have been advised by counsel that there may be one or more legal defenses
available to the Indemnified Party that are different from or additional to those available to the
Indemnifying Party, or there is a conflict of interest on the part of counsel employed by the
Indemnifying Party to represent such Indemnified Party (in which case, if such Indemnified Party
notifies the Indemnifying Party in writing that it elects to employ separate counsel at the expense
of the Indemnifying Party, the Indemnifying Party shall not have the right to assume the defense of
such action or proceeding on behalf of such Indemnified Party). Notwithstanding the foregoing, the
Indemnifying Party shall not, in connection with any one such action or proceeding or separate but
substantially similar related actions or proceedings in the same jurisdiction arising out of the
same general allegations or circumstances, be liable at any time for the fees and expenses of more
than one separate firm of attorneys (together in each case with appropriate local counsel). The
Indemnifying Party shall not be liable for any settlement of any such action or proceeding effected
without its written consent (which consent will not be unreasonably withheld), but if settled with
its written consent, or if there be a final judgment for the plaintiff in any such action or
proceeding, the Indemnifying Party shall indemnify and hold harmless such Indemnified Party from
and against any loss or liability (to the extent stated above) by reason of such settlement or
judgment. The Indemnifying Party shall not consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release, in form and substance reasonably satisfactory to
the Indemnified Party, from all liability in respect of such action or proceeding for which such
Indemnified Party would be entitled to indemnification hereunder.

          (d) Contribution. If the indemnification provided for in this Section 2.6 is
unavailable to the Indemnified Parties in respect of any losses, claims, damages, liabilities or
judgments referred to herein, then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Parties, shall contribute to the amount paid or payable by such Indemnified Parties as
a result of such losses, claims, damages, liabilities and judgments as between the Company on the
one hand and each Selling Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company and of each Selling Holder in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or judgments, as well as any
other relevant equitable considerations. The relative fault of the Company on the one hand and of

 

 

each Selling Holder on the other shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by such Person, and such Person’s
relative intent, knowledge, access to information and opportunity to correct or prevent such
statement or omission.

The Company and the Selling Holders agree that it would not be just and equitable if contribution
pursuant to this Section 2.6(d) were determined by any method of allocation which does not take
into account the equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the losses, claims, damages,
liabilities or judgments referred to in the immediately preceding paragraph shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses reasonably
incurred by such Indemnified Party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this Section 2.6(d), no Selling Holder shall be required
to contribute any amount in excess of the amount by which the total price at which the Registrable
Securities of such Selling Holder were offered to the public (less any underwriting discounts or
commissions) exceeds the amount of any damages which such Selling Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any Person who was not guilty of such
fraudulent misrepresentation.

     2.7 Participation in Underwritten Registrations. No Holder may participate in any
underwritten registration hereunder unless such Holder (a) agrees to sell such Holder’s Registrable
Securities on the basis provided in any underwriting arrangements approved by the Person entitled
hereunder to approve such arrangements and (b) completes and executes all questionnaires, powers of
attorney, custody agreements, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements and this Agreement.

     2.8 Transfers of Registration Rights. The provisions hereof will inure to the benefit
of and be binding upon the successors and assigns of each of the parties hereto, except as
otherwise provided herein; provided, however, that the registration rights granted
hereby may be transferred only (i) by operation of Law or (ii) to any Person to whom a Holder
transfers Registrable Securities, provided further that any such transferee shall
not be entitled to rights pursuant to Section 2.1, 2.2 or 2.3 hereof unless such transferee of
registration rights hereunder agrees to be bound by the terms and conditions hereof and executes
and delivers to the Company an acknowledgment and agreement to such effect.

     2.9 Information Rights in Private Sale. If any Demand Holders (such Demand Holders,
for purposes of this Section 2.9, being herein called the “Disposing Holders”) propose to
Transfer in a private transaction Registrable Securities having a fair market value in excess of
$20,000,000, as determined in good faith by such Disposing Holders, then held by such Disposing
Holders, then, the Company shall afford to such Disposing Holders, such prospective transferees and
their respective counsel, accountants, lenders and other representatives, full access during normal
business hours to the properties, books, contracts, records and management of the Company in order
that such parties may have full opportunity to make such investigations

 

 

as they shall desire to make of the Company and shall, upon request, promptly furnish to such
parties all other information concerning the Company as such parties may reasonably request in
connection with such prospective Transfer, in each case subject to such confidentiality
restrictions or obligations as the Company may reasonably require; provided,
however, that any such investigation shall be conducted in such a manner as not to
interfere unreasonably with the Company’s business and operations.

     2.11 Reservation of Rights. The Company will not (i) grant any registration rights to
third parties which conflict with or are inconsistent with the rights granted hereunder (provided
that the Company shall not be restricted from granting any registration rights equivalent to the
rights granted hereunder) or (ii) enter into any agreement, take any action, or permit any change
to occur, with respect to its securities that violates or subordinates the rights expressly granted
to the Holders in this Agreement; provided that this Section 2.11 shall not apply to any amendment
of the Amended and Restated Stockholders Agreement dated as of September 12, 2005, by and among the
Company and the other parties thereto.

ARTICLE 3.

MISCELLANEOUS

     3.1 Notices. Unless otherwise provided herein, any notice, request, consent,
instruction or other document to be given hereunder by any party hereto to another party hereto
shall be in writing and will be deemed given (a) when received if delivered personally or by
courier; or (b) on the date receipt is acknowledged if delivered by certified mail, postage
prepaid, return receipt requested; or (c) on the day of transmission if sent by facsimile
transmission and receipt thereof is confirmed, as follows:

	 	 	 
	If to the Company, addressed to:

	 	Complete Production Services, Inc.
	 

	 	11700 Old Katy Road, Suite 300
	 

	 	Houston, Texas 77079
	 

	 	Attention: Joseph C. Winkler
	 

	 	Facsimile: (281) 372-2301

If to a Stockholder, addressed to such Stockholder at the address for notice set forth opposite
such Stockholder’s name on Exhibit A hereto, or to such other place and with such other copies as
any party hereto may designate as to itself by written notice to the others in accordance with this
Section 3.1.

     3.2 Binding Effect. Subject to Section 2.8, this Agreement is binding on and inures
to the benefit of the Stockholders and their respective heirs, legal representatives, successors,
and assigns.

     3.3 Governing Law. This agreement is governed by and shall be construed in accordance
with the law of the State of Delaware without regard to the principles of conflicts of law thereof.

     3.4 Severability. If any provision of this Agreement or the application thereof to
any Person or circumstance is held invalid or unenforceable to any extent, the remainder of this

 

 

Agreement and the application of that provision to other Persons or circumstances is not
affected thereby and that provision shall be enforced to the greatest extent permitted by Law.

     3.5 Section Headings. Headings contained in this Agreement are inserted only as a
matter of convenience and in no way define, limit, or extend the scope or intent of this Agreement
or any provisions hereof.

     3.6 Assignment. Except as otherwise expressly provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the Stockholders and the Company. No such assignment shall relieve the
assignor from any liability hereunder. Any purported assignment made in violation of this Section
3.6 shall be void and of no force and effect.

     3.7 Spouses. Each reference herein to the shares owned by a Stockholder includes the
community property interest of such Stockholder’s spouse (if any) (each, a “Spouse”) in
such shares. Each Spouse is fully aware of, understands and fully consents and agrees to the
provisions of this Agreement and its binding effect upon any community property interest such
Spouse may now or hereafter own. Each Spouse agrees that the termination of his or her marital
relationship with a Stockholder for any reason shall not have the effect of removing any shares of
the Company otherwise subject to this Agreement from its coverage. Each Spouse’s awareness,
understanding, consent and agreement are evidenced by the execution of the Previous Agreement or an
adoption agreement by such Spouse. In addition, each Spouse hereby acknowledges that the Company
and the parties hereto may desire to amend this Agreement from time to time, and such Spouse hereby
appoints his or her spouse as his or her true and lawful proxy and attorney, with full power of
substitution to enter into any such amendment to this Agreement. Such proxy is irrevocable and will
survive the death, incompetency, and disability of such Spouse, provided that upon termination of
this Agreement, the above authorized proxy shall become null and void. Each such Spouse agrees, for
such Spouse and such Spouse’s heirs, executors, administrators, guardians and other personal
representatives, to offer for sale all shares now owned or hereafter acquired by such Spouse upon
the happening of the events and on the terms and conditions set forth in this Agreement.

     3.8 Entire Agreement. The provisions of the Agreement contain the entire
understanding of the parties hereto respecting the subject matter hereof and supersede all prior
agreements, discussions and understandings with respect thereto.

     3.9 Miscellaneous; Amendment; Termination. The provisions of this Agreement may only
be amended by the written consent of the Company and the SCF Demand Holders (if the SCF Demand
Holders then own Registrable Securities); provided, however, that any amendment that has an adverse
effect on the rights of, or imposes additional obligations on, the Non-SCF Holders shall require
the consent of the Non-SCF Holders that hold in the aggregate at least 50% of the Registrable
Securities then held by the Non-SCF Holders (if the Non-SCF Holders then own Registrable
Securities). The Holders acknowledge and agree that any Person that becomes a Stockholder shall
have the rights and obligations set forth in this Agreement and that such Person becoming a
Stockholder shall be deemed not to be an amendment to this Agreement. The provisions of this
Agreement shall terminate and be of no further force or effect as of and following (i) the tenth
anniversary of the date hereof, and (ii) as to each Stockholder, on a case

 

 

by case basis, on the date such Stockholder ceases to be a Holder; provided that the
provisions of Section 2.6 shall survive for any sales of Registrable Securities prior to such date.

[Signature Pages Follow]

 

 

In Witness Whereof, the parties hereto have caused this Registration Rights Agreement
to be duly executed by their respective authorized persons as of the date first indicated above.

	 	 	 	 	 
	THE COMPANY:	 	 
	 
	 	 	 	 
	COMPLETE PRODUCTION SERVICES, INC.	 	 
	 
	 	 	 	 
	By:
	 	/s/ Joseph C. Winkler	 	 
	Name:

	 	 

Joseph C. Winkler
	 	 
	Title:

	 	Chief Executive Officer	 	 

 

 

	 	 	 	 	 	 	 	 	 
	STOCKHOLDERS:	 	 
	 
	 	 	 	 	 	 	 	 
	SCF-VI, L.P.	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	By: SCF-VI, G.P., Limited Partnership,

its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	By: L.E. Simmons & Associates, Incorporated,

its general partner	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	By:	 	/s/ Anthony F. DeLuca	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	Name:
	 	Anthony F. DeLuca	 	 
	 

	 	 	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 	 	 
	RAY BALLANTYNE	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ RAY BALLANTYNE	 	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	DAVID CROMBIE	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ DAVID CROMBIE	 	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	RYAN LILES	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ RYAN LILES	 	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	CODY ORTOWSKI	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ CODY ORTOWSKI	 	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	COLE ORTOWSKI	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ COLE ORTOWSKI	 	 
	 	 	 

 

 

	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	RONNY ORTOWSKI	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ RONNY ORTOWSKI	 	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	JOHN SCHMITZ	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ JOHN SCHMITZ	 	 
	 	 	 
	 
	 	 	 	 	 	 	 	 
	ROBERT SNELL	 	 
	 
	 	 	 	 	 	 	 	 
	/s/ ROBERT SNELL	 	 
	 	 	 

 

 

EXHIBIT A

STOCKHOLDERS

	1.	 	Ballantyne,
Ray
	 
	2.	 	Crombie, David
	 
	3.	 	Liles, Ryan
	 
	4.	 	Ortowski, Cody
	 
	5.	 	Ortowski, Cole
	 
	6.	 	Ortowski,
Ronny
	 
	7.	 	SCF-VI, L.P.
	 
	8.	 	Schmitz, John
	 
	9.	 	Snell, Robert

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00113-of-00352.parquet"}]]