EXHIBIT 10(d)(ii)
CABOT CORPORATION
SUPPLEMENTAL CASH BALANCE PLAN
PREAMBLE
A supplemental pension program was authorized by a vote of the Board of
Directors of Cabot Corporation (the "Corporation") on September 10, 1976.
Pursuant to that vote, letter agreements were entered into between the
Corporation and certain of the Corporation's executive officers.
The Supplemental Cash Balance Plan (as herein amended and restated, and
as the same may hereafter be amended, the "Supplemental CBP") was originally
adopted pursuant to a vote of the Board of Directors of the Corporation on
February 10, 1984, its purpose being to provide benefits to a designated group
of managers who are highly compensated employees of the Corporation or its
subsidiaries, supplemental to the benefits provided under the Corporation's
tax-qualified pension program. The Corporation currently provides tax-qualified
pension benefits through its Cash Balance Plan (together with predecessor
programs, the "Cash Balance Plan"). The terms of the Supplemental CBP as amended
and restated and set forth herein are effective as of January 1, 2002. Except as
otherwise explicitly provided herein, the rights to benefits of persons (and
their beneficiaries) who were participants in the Plan before January 1, 2002,
and who are not employed by the Corporation or its subsidiaries on or after that
date, will be determined in accordance with the provisions of the Plan as in
effect from time to time prior to January 1, 2002.
SECTION 1
Definitions
When used herein, the words and phrases defined shall have the
following meanings unless a different meaning is clearly required by the
context. Terms used herein which are defined in Article 1 of the Cash Balance
Plan shall have the meanings assigned to them in the Cash Balance Plan unless a
different meaning is set forth below.
1.1. "Beneficiary" means the individual(s) or entity(ies) entitled
under Section 3.7 below to receive any benefits hereunder upon the death of a
Supplemental CBP Participant.
1.2. "Change in Control" has the same meaning as in the Cabot Cash
Balance Plan.
1.3. "Committee" means the Benefits Committee as defined in the Cash
Balance Plan.
1.4. "Retirement" means termination of employment with the Group
following attainment of (i) age fifty-five (55) with at least ten years of
Service, or (ii) age 65. An individual whose employment has terminated by reason
of Retirement shall be treated as having "Retired."
1.5. "Supplemental CBP Participant" has the meaning provided in Section
2 below.
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SECTION 2
Participation
2.1. Participation. Any person who was a participant in the Cabot
Corporation Supplemental CBP on January 1, 2002, will continue to participate in
this Plan in accordance with its terms after such date. Each other individual
who is a Participant in the Cash Balance Plan shall be eligible to participate
in and accrue benefits under this plan for any calendar year if such individual
satisfies either (a) or (b) below for such year:
(a) This Section 2.1(a) is satisfied if such individual's base salary
for any such year (as determined by the Committee), before reduction for
deferrals, if any, under the Cabot Retirement Incentive Savings Plan, the
Corporation's nonqualified Deferred Compensation Plan, or any salary deferral
under Sections 125 and 132 of the Code, equals or exceeds the dollar limitation
applicable to such year under Section 401(a) (17) of the Code.
(b) This Section 2.1(b) is satisfied if such individual's Compensation
for such year, reduced by deferrals, if any, under the Corporation's
nonqualified Deferred Compensation Plan equals or exceeds the dollar limitation
applicable to such year under Section 401(a)(17) of the Code.
For purposes of Section 3(36) of ERISA, the Supplemental CBP shall be
treated as two separate plans, one of which will be deemed to provide only
benefits (if any) in excess of the limitations of Section 415 of the Code.
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SECTION 3
Benefits
3.1. Amount of Benefits. The amount of the benefit payable by the Corporation
under this Supplemental CBP with respect to a Supplemental CBP Participant shall
be: (i) the Accrued Benefit, if any, which would be payable with respect to such
individual under the Cash Balance Plan (determined after applying the vesting
schedule under the Cash Balance Plan and any special vesting applicable upon a
Change in Control) if such Accrued Benefit were determined without regard to the
limitations of Sections 401(a) (17) and 415 of the Code (and the corresponding
limitations under the Cash Balance Plan) and based on Compensation unreduced
(but only if Section 2.1(a) is satisfied) for any deferrals under the
Corporation's nonqualified Deferred Compensation Plan reduced by (ii) the
portion of the Accrued Benefit described in clause (i) above which is
actuarially equivalent to any special additions credited to such individual's
Cash Balance Plan Account (and interest credits on such special additions) in
accordance with the provisions of Appendix H, Appendix I, and similar Appendices
of the Cash Balance Plan, and further reduced by (iii) the benefit actually
payable with respect to the Supplemental CBP Participant under the Cash Balance
Plan.
3.2. Form of Benefit Payments. The benefit payable to a Supplemental
CBP Participant as determined under Section 3.1 hereunder shall be paid in the
same form and commencing at the same time as the Supplemental CBP Participant's
benefit under the Cash Balance Plan; provided, however, that in the discretion
of the Committee the actuarial equivalent of the benefit hereunder, determined
on the basis of actuarial assumptions chosen in accordance with Section 3.4
hereof, shall instead be paid in an immediate lump sum or on such other
accelerated basis as the Committee may determine. The proviso in the preceding
sentence shall apply, in the case of a Supplemental CBP Participant who Retires,
dies, or becomes a Disabled Participant, only if the present value of the amount
payable under Section 3.1 (determined on the basis of such actuarial
assumptions) is less than $50,000. Notwithstanding the foregoing provisions of
this Section, if the employment of a Supplemental CBP Participant shall be
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terminated without cause (as determined under Section 4.1 hereof) within the
three-year period immediately following a Change in Control, payment of such
Supplemental CBP Participant's benefit hereunder shall be made in a lump sum
payment.
3.3. Death Benefits. If a Supplemental CBP participant dies before his
or her Benefit Commencement Date, the Corporation shall pay to the decedent's
Beneficiary a benefit equal to (i) the actuarial equivalent (determined on the
basis of actuarial assumptions chosen in accordance with Section 3.4 hereof) of
the death benefit that would be payable under the Cash Balance Plan if such
benefit were determined without regard to the limitations of Sections 401(a)
(17) and 415 of the Code (and the corresponding limitations under the Cash
Balance Plan) and based on Compensation unreduced (but only if Section 2.1(a) is
satisfied) for any deferrals under the Corporation's nonqualified Deferred
Compensation Plan reduced by (ii) the portion of the death benefit described in
clause (i) above which is actuarially equivalent to any special additions
credited to such decedent's Cash Balance Plan Account (and interest credits on
such special additions) in accordance with the provisions of Appendix H,
Appendix I, and similar Appendices of the Cash Balance Plan, and further reduced
by (iii) the death benefit actually payable under the Cash Balance Plan. No
death benefit shall be payable if the Supplemental CBP participant dies after
his or her Benefit Commencement Date, except to the extent the form of payment
applicable with respect to the Supplemental CBP participant under Section 3.2
provided for payments to a survivor.
3.4. Actuarial Equivalency, Etc.. Benefits payable hereunder shall be
actuarially adjusted to carry out the purposes of this Supplemental CBP, which
is intended (i) to offset reductions in the value of benefits under the Cash
Balance Plan attributable to (A) the limitations of Sections 401(a) (17) and 415
of the Code and (B) reductions in Compensation caused by deferrals under the
Corporation's nonqualified Deferred Compensation Plan, and (ii) to ensure that
the different ways in which the aggregate benefit hereunder and under the Cash
Balance Plan may be paid are of substantially equivalent value. The actuarial
assumptions used in determining actuarial equivalency hereunder shall be
determined from time to time by the Committee and may, but need not, be the same
as those used to determine actuarial equivalency
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under the Cash Balance Plan; provided, that upon and following a Change in
Control, the actuarial assumptions used for purposes of this Supplemental CBP
shall not be less favorable to Supplemental CBP Participants or their
Beneficiaries than those last specified by the Committee prior to the Change in
Control, or to the extent none was so specified, than those applicable under the
Cash Balance Plan.
3.5. Time of Benefit Payments. Benefits due under Section 3.1 above
shall be paid commencing as soon as practicable after the Supplemental CBP
Participant's Benefit Commencement Date. Survivor benefits due under Section 3.2
above shall be paid commencing as soon as practicable following the receipt by
the Employer of notice of the Supplemental CBP Participant's death.
3.6. Benefits Unfunded. This Supplemental CBP shall not be construed to
create a trust of any kind or a fiduciary relationship between any Employer and
a Supplemental CBP Participant. Neither Supplemental CBP Participants nor their
Beneficiaries, nor any other person, shall have any rights against any Employer
or its assets in respect of any benefits hereunder, other than rights as general
creditors. Nothing in this Section 3.6, however, shall preclude an Employer from
establishing and funding a trust for the purpose of paying benefits hereunder,
if such trust's assets are subject to the claims of the Employer's general
creditors in the event of the Employer's bankruptcy or insolvency.
3.7. Designation of Beneficiary. A Supplemental CBP Participant may
designate, in writing, one or more Beneficiaries under this Supplemental CBP who
may be the same as or different from those named in the Cash Balance Plan to
receive benefits, if any, payable upon the Supplemental CBP Participant's death;
provided, that in the case of a Supplemental CBP Participant who is married at
the time of death, the Supplemental CBP Participant's surviving spouse shall be
treated as the sole Beneficiary unless he or she has consented (in accordance
with procedures similar to those in the Cash Balance Plan relating to spousal
consent) to the designation of one or more other Beneficiaries. In the absence
of any Beneficiary so designated, benefits payable following death shall be paid
to the Supplemental CBP participant's surviving spouse, if any; if none (and if
a death benefit is nevertheless payable under Section 3.3 above), to
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such. person or persons (including the decedent's estate) as are designated to
receive any benefits remaining to be paid under the Cash Balance Plan; or if
none of the foregoing, to such person or persons as shall be designated by the
Committee.
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SECTION 4
Certain Forfeitures
4.1. Forfeiture of Supplemental Benefits. Notwithstanding anything to
the contrary in this Supplemental CBP, benefits payable hereunder shall be
forfeited by the Supplemental CBP Participant if the Supplemental CBP
Participant's termination of employment was requested by an Employer and the
termination was determined by the Committee to be for "cause." For purposes of
this Supplemental CBP, "cause" shall mean any action or failure to act by the
Supplemental CBP Participant which the Committee in its sole discretion
determines to have constituted negligence or misconduct in the performance of
the Supplemental CBP Participant's duty to his or her Employer. Notwithstanding
the foregoing provisions of this Section 4.1, in respect of any termination of a
Supplemental CBP Participant's employment requested by such Employer within the
three-year period immediately following a Change in Control, "cause" shall mean
only (i) the willful and continued failure by the Supplemental CBP Participant
to perform substantially his or her duties with the Employer, after a written
demand for substantial performance is delivered to the Supplemental CBP
Participant by the Employer which demand specifies the manner in which the
Employer believes that the Supplemental CBP Participant has not substantially
performed the Supplemental CBP Participant's duties, or (ii) the willful
engaging by the Supplemental CBP Participant in conduct which is demonstrably
and materially injurious to the Employer, monetarily or otherwise. For purposes
of clauses (i) and (ii) of the preceding sentence, no act, or failure to act, on
the Supplemental CBP Participant's part shall be deemed "willful" unless done,
or omitted to be done, by the Supplemental CBP Participant not in good faith and
without reasonable belief that the Supplemental CBP Participant's act or failure
to act was in the best interest of the Employer.
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SECTION 5
Administration
5.1. Duties of Committee. This Supplemental CBP shall be administered
by the Committee in accordance with its terms and purposes. The Committee shall
determine, in accordance with Section 3 hereunder, the amount and manner of
payment of the benefits due to or on behalf of each Supplemental CBP Participant
from this Supplemental CBP and shall cause them to be paid by the Corporation
accordingly. The Committee may delegate its powers, duties and responsibilities
to one or more individuals (including in the discretion of the Committee
employees of one or more Employers) or one or more committees of such
individuals.
5.2. Finality of Decision. The decisions made, and the actions taken,
by the Committee in the administration of this Supplemental CBP shall be final
and conclusive with respect to all persons, and neither the Committee nor
individual members thereof, nor its or their delegates hereunder, shall be
subject to individual liability with respect to this Supplemental CBP.
5.3. Benefit Claims; Appeal and Review.
(a) If any person believes that he or she is being denied any rights or
benefits under this Supplemental CBP, such person may file a claim in writing
with the Committee or its designee. If any such claim is denied, the Committee
or its designee will notify such person of its decision in writing. Such
notification shall be written in a manner calculated to be understood by such
person and will contain (i) specific reasons for denial, (ii) specific reference
to pertinent plan provisions, (iii) a description of any additional material or
information necessary for such person to perfect such claim and an explanation
of why such material or information is necessary, and (iv) information as to the
steps to be taken if the person wishes to submit a request for review. Such
notification will be given within 90 days after the claim is received by the
Committee or its designee (or within 180 days, if special circumstances require
an extension of time for processing the claim, and if written notice of such
extension and circumstances is given to such person within the initial 90-day
period). If such notification is not given within
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such period, the claim will be considered denied as of the last day of such
period and such person may request a review of his or her claim by the
Committee.
(b) Within 60 days after the date on which a person receives a written
notice of a denied claim (or, if applicable, within 60 days after the date on
which such denial is considered to have occurred) such person (or his or her
duly authorized representative) may (i) file a written request with the
Committee for a review of his or her denied claim and of pertinent documents and
(ii) submit written issues and comments to the Committee. The Committee will
notify such person of its decision in writing. Such notification will be written
in a manner calculated to be understood by such person and will contain specific
reasons for the decision as well as specific references to pertinent plan
provisions. The decision on review will be made within 60 days after the request
for review is received by the Committee (or within 120 days, if special
circumstances require an extension of time for processing the request, such as
an election by the Committee to hold a hearing, and if written notice of such
extension and circumstances is given to. such person within the initial 60-day
period). If the decision on review is not made within such period, the claim
will be considered denied.
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SECTION 6
Amendment and Termination
6.1. Amendment and Termination. While the Corporation intends to
maintain this Supplemental CBP in conjunction with the Cash Balance Plan for as
long as it deems necessary, the Board of Directors reserves the right to amend
and/or terminate it at any time for whatever reasons it may deem appropriate;
provided, that no such amendment shall reduce the benefit amount that a
Supplemental CBP Participant would be entitled to receive hereunder if he or she
were deemed to have terminated employment (other than by reason of death)
immediately prior to the date of such amendment, unless the Supplemental CBP
Participant consents to such reduction. For clarification, a Supplemental CBP
Participant's benefit under this Plan may fluctuate, up and down, due to
increases and decreases in the Participant's Accrued Benefit under the Cash
Balance Plan as a result of increases or decreases to the limits under Sections
401(a)(17) and 415 of the Code. Such fluctuations are not "amendments" for
purposes of the immediately preceding sentence.
Notwithstanding any other provision hereunder, during the three-year
period immediately following a Change in Control, this Supplemental CBP may not
be terminated, altered or amended in a way that would decrease future accrual
of, eligibility for, or entitlement to, a benefit hereunder. This Section 6.1
may not be altered or amended during that same three year period in any way
except with the prior written consent of all of the then Supplemental CBP
Participants.
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SECTION 7
Miscellaneous
7.1. No Employment Rights. Nothing contained in this Supplemental CBP
shall be construed as a contract of employment between any Employer and a
Supplemental CBP Participant, or as giving any Supplemental CBP Participant the
right to be continued in the employment of an Employer, or as a limitation of
the right of an Employer to discharge any Supplemental CBP Participant, with or
without cause.
7.2. Assignment. Subject to the provisions of this Supplemental CBP
relating to payment of benefits upon the death of a Supplemental CBP
Participant, the benefits payable under this Supplemental CBP may not be
assigned, alienated, transferred, pledged, or encumbered.
7.3. Withholding, Etc. Benefits payable under this Supplemental CBP
shall be subject to all applicable federal, state or other tax withholding
requirements. To the extent any amount credited or accrued hereunder for the
benefit of a Supplemental CBP Participant's benefit is treated as "wages" for
FICA/Medicare or FUTA tax purposes on a current basis (or when vested) rather
than when distributed, all as determined by the Committee, then the Committee
shall require that the Supplemental CBP Participant either (i) timely pay such
taxes in cash by separate check to his or her Employer, or (ii) make other
arrangements satisfactory to such Employer (e.g., additional withholding from
other wage payments) for the payment of such taxes. To the extent a Supplemental
CBP Participant fails to pay or provide for such taxes as required, the
Committee may suspend the Supplemental CBP Participant's participation in the
Supplemental CBP or reduce benefits accrued hereunder.
7.4. Distribution of Taxable Amounts. Anything in the Plan to the
contrary notwithstanding, in the event any Supplemental CBP Participant or
Beneficiary is determined to be subject to federal income tax on any benefit
accrued under the Plan prior to the time payment is otherwise due hereunder, the
portion of the accrued benefit determined to be so taxable shall be paid to such
Participant or Beneficiary as soon as practicable following such determination.
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The Committee's determination of the amount to be distributed shall be binding
and conclusive. Such accrued benefit shall be determined to be subject to
federal income tax upon the earlier of:
(a) determination by the Internal Revenue Service addressed to the
Supplemental CBP Participant or Beneficiary which is not appealed; or
(b) a final determination by the United States Tax Court or any other
Federal Court affirming any such determination by the Internal Revenue Service
that amounts credited to a Supplemental CBP Participant's Account are subject to
federal income tax.
7.5. No Guarantee of Benefits. Nothing contained in the Plan shall
constitute a guarantee by the Corporation, Affiliated Employer, the Committee,
or any other person or entity that the assets of the Corporation of Affiliated
Employers will be sufficient to pay any benefits hereunder. No Supplemental CBP
Participant shall have any right to receive a benefit payment under the Plan
except in accordance with the terms of the Plan.
In no event shall the employees, officers, directors, or stockholders
of the Corporation of Affiliated Employers be liable to any individual or entity
on account of any claim arising by reason of the Plan provisions or any
instrument or instruments implementing its provisions, or for the failure of any
Participant, Beneficiary or other individual or entity to be entitled to any
particular tax consequences with respect to the Plan or any credit or payment
hereunder.
7.6. Incapacity of Recipient. If any person entitled to a benefit
payment under the Plan is deemed by the Administrator to be incapable of
personally receiving and giving a valid receipt for such payment, then, unless
and until claim therefor shall have been made by a duly appointed guardian or
other legal representative of such person, the Committee may provide for such
payment or any part thereof to be made to any other person or institution then
contributing toward or providing for the care and maintenance of such person.
Any such payment shall be a payment for the account of such person and a
complete discharge of any liability of the Corporation and Affiliated Employers
and the Plan therefor.
7.7. Limitations on Liability. Notwithstanding any of the preceding
provisions of the Plan, neither the Corporation nor Affiliated Employers, nor
any individual acting as employee or agent of the foregoing, nor the Committee
shall be liable to any Supplemental CBP
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Participant or other person for any claim, loss, liability or expense incurred
in connection with the Plan.
7.8. Provisions to Facilitate Plan Operations. If it is impossible or
difficult to ascertain the person to receive any benefit under the Plan, the
Committee may, in its discretion and subject to applicable law, direct payment
to the person it deems appropriate consistent with the Plan's purposes; or
retain such amounts in the Plan for payment to a court pending judicial
determination of the rights thereto. Any payment under this Section 7.8 shall be
a complete discharge of any liability for the making of such payment under the
provisions of the Plan.
7.9. Correction of Payment Mistakes. Any mistake in the payment of a
Supplemental CBP Participant's benefits under the Plan may be corrected by the
Committee when the mistake is discovered. The mistake may be corrected in any
reasonable manner authorized by the Committee (e.g., adjustment in the amount of
future benefit payments, repayment to the Plan of an overpayment, or catch-up
payment to a Participant for an underpayment). In appropriate circumstances
(e.g., where a mistake is not timely discovered), the Committee may waive the
making of any correction. A Supplemental Plan Participant or Beneficiary
receiving an overpayment by mistake shall repay the overpayment if requested to
do so by the Committee.
7.10. Schedules. The Committee may by Schedule modify the benefits
available hereunder to one or more specified individuals. The provisions of each
such Schedule shall, with respect to the individual or individuals thereby
affected, be deemed a part of the Supplemental CBP and shall be incorporated
herein.
7.11. Law Applicable. This Supplemental CBP shall be construed in
accordance with the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, this instrument is executed this 11th day of
December, 2002.
CABOT CORPORATION
By: /s/ Robby D. Sisco
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SCHEDULE A
Effective May 13, 1994, the Board of Directors deemed it advisable to
provide certain additional benefits to one or more Supplemental CBP
Participants. Pursuant to such action of the Board, and in accordance with
Section 7.10 of the Plan, the foregoing terms of this Supplemental Cash Balance
Plan are modified as follows:
1. "Schedule A Participant" shall mean Kennett F. Burnes.
2. Amount of Benefit. The following shall be substituted for Sections
3.1 and 3.3 of the Plan for the Schedule A Participant:
"3.1. Amount of Benefits. The amount of the benefit payable by the
Corporation under this Supplemental CBP with respect to a Supplemental CBP
Participant shall be an amount calculated as follows:
(a) Determine the Accrued Benefit, if any, which would be payable with
respect to such individual under the Cash Balance Plan (determined
after applying the vesting schedule under the Cash Balance Plan and any
special vesting applicable upon a Change in Control) if such Accrued
Benefit were determined without regard to the limitations of Sections
401(a) (17) and 415 of the Code (and the corresponding limitations
under the Cash Balance Plan) and based on Compensation unreduced (but
only if Section 2.1(a) of the Plan is satisfied) for any deferrals
under the Corporation's nonqualified Deferred Compensation Plan.
(b) Multiple the result in subsection (a) by two (2).
(c) Reduce the result in subsection (b) above by the portion of the
Accrued Benefit described in subsection (a) above which is actuarially
equivalent to any special additions credited to such individual's Cash
Balance Plan Account (and interest credits on such special additions)
in accordance with the provisions of Appendix H, Appendix I, and
similar Appendices of the Cash Balance Plan,.
(d) Further reduce the result in subsection (b) above by the benefit
actually payable with respect to the Supplemental CBP Participant under
the Cash Balance Plan."
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...
"3.3. Death Benefits. If a Supplemental CBP participant dies before his
or her Benefit Commencement Date, the Corporation shall pay to the decedent's
Beneficiary a benefit calculated as follows:
(a) Determine the actuarial equivalent (determined on the basis of
actuarial assumptions chosen in accordance with Section 3.4 hereof) of the death
benefit that would be payable under the Cash Balance Plan if such benefit were
determined without regard to the limitations of Sections 401(a) (17) and 415 of
the Code (and the corresponding limitations under the Cash Balance Plan) and
based on Compensation unreduced (but only if Section 2.1(a) of the Plan is
satisfied) for any deferrals under the Corporation's nonqualified Deferred
Compensation Plan.
(b) Multiple the result in subsection (a) by two (2).
(c) Reduce the result in subsection (b) by the portion of the death
benefit described in subsection (a) above which is actuarially equivalent to any
special additions credited to such decedent's Cash Balance Plan Account (and
interest credits on such special additions) in accordance with the provisions of
Appendix H, Appendix I, and similar Appendices of the Cash Balance Plan.
(d) Further reduce the result in subsection (b) by the death benefit
actually payable under the Cash Balance Plan.
No death benefit shall be payable if the Supplemental CBP participant
dies after his or her Benefit Commencement Date, except to the extent the form
of payment applicable with respect to the Supplemental CBP participant under
Section 3.2 provided for payments to a survivor."
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