Fifth Amendment to Sterling Chemicals, Inc. Amended and Restated Hourly-Paid Employees' Pension Plan

Summary

This amendment updates the Sterling Chemicals, Inc. Hourly-Paid Employees' Pension Plan to comply with the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and related IRS guidance. It revises how lump sum distributions are calculated, adjusts compensation and benefit limits, and adds new provisions to ensure the plan remains in line with federal law. The changes affect how benefits are determined and distributed for hourly-paid employees, with most provisions effective for plan years beginning after December 31, 2001.

EX-10.5 13 h02973exv10w5.txt 5TH AMEND.TO AMENDED HOURLY PAID EMPLOYEES' PLAN EXHIBIT 10.5 FIFTH AMENDMENT TO THE STERLING CHEMICALS, INC. AMENDED AND RESTATED HOURLY-PAID EMPLOYEES' PENSION PLAN WHEREAS, Sterling Chemicals, Inc. (the "Corporation") currently maintains its Hourly-Paid Employees' Pension Plan (the "Existing Plan"); WHEREAS, Section 15.1 of the Existing Plan reserves the Corporation's right to amend the Existing Plan; WHEREAS, the Corporation desires to amend the Existing Plan to reflect the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA") and other IRS guidance; NOW, THEREFORE, the Existing Plan is amended as follows: 1. Amendment to Section 17.12(b) of the Existing Plan. Effective as of the Execution Date, Section 17.12(b) is amended to read as follows: "In the case of lump sum determinations, the following actuarial assumptions shall be used to determine actuarial equivalence: Mortality Table: Actuarial equivalence shall be based on the mortality table prescribed by the Secretary of the Treasury in Rev. Rul. 95-6, except that for distributions with annuity starting dates on or after December 31, 2002, actuarial equivalence shall be based on the mortality table prescribed in Rev. Rul. 2001-62 or any subsequent revisions to this table published and required by the Internal Revenue Service (the "applicable mortality table"); Interest Rate: The annual interest rate for distributions during a Plan Year shall be the rate on 30-year Treasury securities in effect for the second month preceding the first day of the Plan Year (i.e., August)(the "applicable interest rate"). For distributions with annuity starting dates on or after March 1, 2002, the interest rate on `30-year Treasury securities' in the preceding sentence shall be construed to mean the interest rate under section 417(e)(3) of the Code as determined in accordance with published guidance from the Internal Revenue Service. "However, for distributions made after October 1, 2000, and before the date that is one year after the adoption date of this amendment, the interest rate that would be used by the PBGC at the beginning of the Plan Year for determining lump sum distributions on plan termination shall be used if it results in a larger distribution." 2. Addition of new Article XVIII to the Existing Plan. Effective as of the Execution Date, a new Article XVIII is added to read as follows: ARTICLE XVIII - EGTRRA PROVISIONS PREAMBLE A. ADOPTION AND EFFECTIVE DATE OF ARTICLE XVIII. This Article XVIII of the Plan is adopted to reflect certain provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001 ("EGTRRA"). This Article is intended as good faith compliance with the requirements of EGTRRA and is to be construed in accordance with EGTRRA and guidance issued thereunder. Except as otherwise provided, this Article shall be effective as of the first day of the first Plan Year beginning after December 31, 2001, and shall end December 31, 2010, unless extended by law or otherwise. B. SUPERSESSION OF INCONSISTENT PROVISIONS. This Article XVIII shall supersede the provisions of the Plan to the extent those provisions are inconsistent with the provisions of this Article. 18.1 INCREASE IN COMPENSATION LIMIT (a) INCREASE IN LIMIT. Notwithstanding Section 17.14 and any other provision of the Plan, the annual compensation of each Participant taken into account in determining benefit accruals in any Plan Year beginning after December 31, 2001, shall not exceed $200,000. Annual compensation means compensation during the Plan Year (which is the Plan's "determination period"). For purposes of determining benefit accruals in a Plan Year beginning after December 31, 2001, the annual compensation limit for any determination period prior to January 1, 2002, shall be $200,000. (b) Cost-of-Living Adjustment. The $200,000 limit on annual compensation in paragraph (a) shall be adjusted for cost-of-living increases in accordance with Code Section 401(a)(17)(B). The cost-of-living adjustment in effect for a calendar year applies to annual compensation for the determination period that begins with or within such calendar year. 18.2 LIMITATIONS ON CONTRIBUTIONS (a) Effective Date. This Section shall be effective for limitation years ending after December 31, 2001. (a) Effect on Participants. Benefit increases resulting from the increase in the limitations of Code Section 415(b) will be provided to all Participants (with benefits limited by Code Section 415(b)) credited with one Hour of Service on or after the first day of the first limitation year ending after December 31, 2001. (b) Definitions 2 (i) Defined Benefit Dollar Limitation. The "defined benefit dollar limitation" is $160,000, as adjusted, effective January 1 of each year, under Code Section 415(d) in such manner as the Secretary of the 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. (ii) Maximum Permissible Benefit. The "maximum amount of retirement income" is the lesser of the defined benefit dollar limitation or the defined benefit compensation limitation set forth in Code Section 415(b)(2) (both adjusted where required, as provided in (1) and, if applicable, in (2) or (3) below). (1) 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 Employers and Subsidiaries, the defined benefit compensation limitation shall be multiplied by a fraction, (I) the numerator of which is the number of years (or part thereof) of service with the Employers and Subsidiaries and (II) the denominator of which is 10. (2) 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 (1) 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) for adjusting benefits upon early commencement and (II) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using a 5 percent interest rate and the applicable mortality table specified in Section 17.12(b). Any decrease in the defined benefit dollar limitation determined in accordance with this paragraph (2) shall not reflect a mortality decrement if benefits are not forfeited upon the death of the participant. If any benefits 3 are forfeited upon death, the full mortality decrement is taken into account. (3) 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 (1) above, if required). The actuarial equivalent of the defined benefit dollar limitation applicable at an age after age 65 is determined as the lesser of (I) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using the Plan interest rate and mortality table (or other tabular factor) for adjusting benefits upon late commencement and (II) the actuarial equivalent (at such age) of the defined benefit dollar limitation computed using a 5 percent interest rate assumption and the applicable mortality table specified in Section 17.12(b). For these purposes, mortality between age 65 and the age at which benefits commence shall be ignored. 18.3 MODIFICATION OF TOP-HEAVY RULES (a) Effective Date. This Section shall apply for purposes of determining whether the Plan is a top-heavy plan under Code Section 416(g) for Plan Years beginning after December 31, 2001, and whether the Plan satisfies the minimum benefits requirements of Code Section 416(c) for such years. This Section amends Section 8.5 of the Plan. (b) Determination of Top-Heavy Status (i) Key Employee. 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 a Controlled Group Member having annual compensation greater than $130,000 (as adjusted under Code Section 416(i)(1) for Plan Years beginning after December 31, 2002), a 5-percent owner of the Employer, or a 1-percent owner of the Employer 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 Treasury regulations and other guidance of general applicability issued thereunder. 4 (ii) Determination of Present Values and Amounts. This paragraph (ii) shall apply for purposes of determining the present values of accrued benefits and the amounts of account balances of employees as of the determination date. (1) Distributions During Year Ending on the Determination Date. The present values of accrued benefits and the amounts of account balances of an employee as of the determination date shall be increased by the distributions made with respect to the employee under the Plan and any plan aggregated with the Plan under Code Section 416(g)(2) during the 1-year period ending on the determination date. The preceding sentence shall also apply to distributions under a terminated plan which, had it not been terminated, would have been aggregated with 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 "5-year period" for "1-year period". (2) Employees Not Performing Services During Year Ending on the Determination Date. The accrued benefits and accounts of any individual who has not performed services for the employer maintaining the plan during the 1-year period ending on the determination date shall not be taken into account. (c) Minimum Benefits. For purposes of satisfying the minimum benefit requirements of Code Section 416(c)(1) and the Plan, in determining years of service with the Employers and Subsidiaries, any service with the Employers and Subsidiaries 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. 18.4 DIRECT ROLLOVERS OF PLAN DISTRIBUTIONS (a) Effective Date. Notwithstanding Section 9.11, this Section shall apply to distributions made after December 31, 2001. (b) Modification of Definition of Eligible Retirement Plan. Notwithstanding Section 9.11(b), an eligible retirement plan shall also mean an annuity contract described in Section 403(b) of the Code and an eligible plan under Section 457(b) of the Code that 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 that agrees to separately account for amounts transferred into such plan from the Plan. The definition of 5 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. IN WITNESS WHEREOF, this Amendment has been adopted by the Chief Executive Officer and has been executed as of the date stated below. STERLING CHEMICALS, INC. _______________________________________ David G. Elkins, President and Co-Chief Executive Officer Dated: ________________________________ 6