1
EXHIBIT 10(e)(ii)
CABOT CORPORATION
SUPPLEMENTAL EMPLOYEE STOCK OWNERSHIP PLAN
PREAMBLE
--------
A supplemental employee stock ownership program was
authorized by a vote of the Board of Directors of Cabot
Corporation (the "Corporation") effective as of September 9, 1988
(as from time to time thereafter amended and in effect, the
"Supplemental ESOP").
The purpose of this Supplemental ESOP is to provide benefits to a
designated group of managers who are highly compensated employees of the
Corporation or its subsidiaries, supplemental to benefits provided under the
Cabot Corporation Employee Stock Ownership Plan (the "ESOP"). The terms of the
Supplemental ESOP as amended and restated and set forth herein are effective as
of September 9, 1988; provided, that nothing herein shall be
deemed to affect the payment or computation of benefits in pay status on (or
distributed in full prior to) the date of this restatement.
2
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
Section 1 of the ESOP shall have the meanings assigned to them in
the ESOP unless a different meaning is set forth below.
1.1. "Beneficiary" means the individual(s) or entity(ies)
entitled under Section 3.6 below to receive any benefits
hereunder upon the death of a Supplemental ESOP Participant.
1.2. "Change in Control" has the same meaning as in the
Cabot Retirement Incentive Savings Plan.
1.3. "Committee" means the Compensation Committee of the
Board of Directors, or its delegates.
1.5. "Retirement" means termination of employment with the
Affiliated Employers following attainment by the Supplemental
ESOP Participant of his or her Early Retirement Date or Normal
Retirement Date. An individual whose employment has terminated
by reason of Retirement shall be treated as having "Retired".
1.6. "Supplemental ESOP Participant" has the meaning
provided in Section 2 below.
-2-
3
SECTION 2
2.1. PARTICIPATION. Those Participants in the ESOP whose
base salary for any year (as determined by the Committee), before
reduction for deferrals (if any) under the Cabot Retirement
Incentive Savings Plan, nonqualified Deferred Compensation Plan,
or any salary reduction under Section 125 of the Code, equals or
exceeds the dollar limitation applicable to such year under
Section 401(a)(17) of the Code, shall be eligible to participate
in and accrue benefits under this Supplemental ESOP. For
purposes of Section 3(36) of the ERISA, the Supplemental ESOP
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.
-3-
4
SECTION 3
Benefits
--------
3.1. CREDITS TO MEMORANDUM ACCOUNTS.
(a) As soon as practicable after the last business day
of each Plan Quarter, the Committee shall accrue to a
memorandum account maintained by the Corporation, for each
Supplemental ESOP Participant, an amount equal to the amount
that would have been allocated to the Supplemental ESOP
Participant's account under Section 7.5 of the ESOP had the
limitations of Sections 401(a)(17) and 415 of the Code and
the corresponding limitations under the ESOP not applied,
and had allocations been based on Compensation increased by
deferrals (if any) under the Corporation's nonqualified
Deferred Compensation Plan, such amount to be reduced by the
amount which is actually allocated to the Supplemental ESOP
Participant's account in the ESOP with respect to such Plan
Quarter. Amounts accrued under each memorandum account
shall be converted to units and treated as if invested in
shares of common stock of the Corporation, except as
provided in Sections 3.1(b) and 3.1(c) hereof.
(b) From and after the date of a Change in Control,
each memorandum account shall be treated as if invested in a
fixed-income vehicle earning interest at the rate earned by
the most currently issued 10-year U.S. Treasury Notes;
provided, that this paragraph shall operate to change the
basis for measuring investment return on memorandum accounts
-4-
5
upon a Change in Control only if such change would then be
consistent with continued exemption of interests hereunder
from the definition of "derivative securities" under Rule
16a-1(c) promulgated under the Securities Exchange Act of
1934, as amended (or any successor Rule).
(c) Beginning as of the Valuation Date next following
the Supplemental ESOP Participant's termination of
employment, the Supplemental ESOP Participant's memorandum
account shall be treated as if invested (i) in a fixed-
income vehicle earning interest at the rate earned by the
most currently issued 10-year U.S. Treasury Notes on the
date of reference, or (ii) on such other reasonable basis
(other than one related to or derived from the common stock
of the Corporation) as the Committee shall determine from
time to time. The interest rate shall be determined and
interest accrued as of each Valuation Date until all amounts
have been paid to or on behalf of the Supplemental ESOP
Participant.
3.2. AMOUNT, FORM AND TIMING OF BENEFIT PAYMENTS.
(a) In the event of a Supplemental ESOP Participant's
termination of employment with the Affiliated Employers
(other than by reason of death or becoming a Disabled
Participant, or Retirement), his or her vested balance under
the Supplemental ESOP shall commence to be paid as soon as
practicable on or after his or her benefit commencement date
under the ESOP in the form of 40 quarterly installments,
-5-
6
each installment calculated by dividing the unpaid vested
balance, valued as of the preceding Valuation Date, by the
number of installments remaining to be paid; provided,
however, that the Committee in its discretion may accelerate
payment of all or any portion of the account if it
determines such acceleration to be in the interests of the
Corporation. For purposes of this paragraph, the vested
balance of any Supplemental ESOP Participant shall be the
product of (i) the balance of his or her memorandum account
determined under Section 3.1, times (ii) his or her
applicable vesting percentage as determined under Section
8.5 of the ESOP.
(b) In the event a Supplemental ESOP Participant becomes a Disabled
Participant or Retires, the balance of his or her memorandum account
determined under Section 3.1 shall be distributed at the same time and
in the same manner (i.e., in a lump sum or in installments) as the
Supplemental ESOP Participant's ESOP account; provided, that (i) if the
Supplemental ESOP Participant elects a lump sum payment form under the
ESOP, such election shall be effective for purposes of this Supplemental
ESOP only with the consent of the Committee (and absent such consent the
Supplemental ESOP Participant's memorandum account hereunder shall be
paid in 40 quarterly installments as described in paragraph (a)); and
(ii) if the Supplemental ESOP Participant elects an installment
distribution under the ESOP and if the balance
-6-
7
of his or her memorandum account hereunder at Retirement (or
at the time he or she becomes a Disabled Participant) is
less than $50,000, the Committee may distribute the account
in a lump sum (or on some other accelerated basis)
notwithstanding the Supplemental ESOP Participant's election
under the ESOP.
(c) In the event the employment of a Supplemental ESOP
Participant terminates by reason of death, the balance of
his or her memorandum account determined under Section 3.1
shall be paid in a single sum to the Supplemental ESOP
Participant's Beneficiary as soon as practicable after
receipt by the Supplemental ESOP Participant's Affiliated
Employer of notice of the Supplemental ESOP Participant's
death.
(d) If a Supplemental ESOP Participant described in
paragraph (a) or (b) dies prior to the complete distribution
of his or her vested benefit, the remaining installments
shall be paid to his or her Beneficiary; PROVIDED, that upon
application by such Beneficiary showing financial hardship
or other adequate cause as determined by the Committee in
its sole discretion, the Committee may cause the remaining
balance in the decedent's memorandum account to be paid in a
lump sum to the Beneficiary in complete satisfaction of any
remaining benefit obligation to such Beneficiary hereunder.
(e) If the Supplemental ESOP Participant elects to
roll over his or her vested ESOP benefit to the
-7-
8
Corporation's Cash Balance Plan, the vested balance of his
or her memorandum account hereunder shall be treated as
having been transferred to the Corporation's nonqualified
plan maintained as a supplement to the Corporation's Cash
Balance Plan, and paid in accordance with the terms of that
supplemental plan.
(f) All amounts payable hereunder shall be paid in
cash only.
3.3. NATURE OF ACCOUNT. The memorandum account
maintained by the Corporation for a Supplemental ESOP Participant
shall be a book-entry account only, shall hold no actual shares
of Stock and shall represent no interest in or ownership of any
Stock. Supplemental ESOP Participants shall have no voting
rights or any other shareholder rights by reason of participation
in this Supplemental ESOP.
3.4. NO PAYMENT WHILE EMPLOYED. No amounts accrued
hereunder on behalf of a Supplemental ESOP Participant may be
distributed prior to his or her benefit commencement date under
the ESOP, or death, as the case may be. If a Supplemental ESOP
Participant whose employment has terminated returns to the employ
of the Affiliated Employers, any benefits remaining to be paid to
such Supplemental ESOP Participant shall be suspended during the
period of reemployment. Upon his or her subsequent termination
of employment, the Supplemental ESOP Participant's memorandum
account shall be payable in accordance with the rules set forth
in Section 3.2 above.
-8-
9
3.5. BENEFITS UNFUNDED. This Supplemental ESOP
shall not be construed to create a trust of any kind or a
fiduciary relationship between any Affiliated Employer and a
Supplemental ESOP Participant. Neither Supplemental ESOP
Participants nor their Beneficiaries, nor any other person, shall
have any rights against any Affiliated Employer or its assets in
respect of any benefits hereunder, other than rights as general
creditors. Nothing in this Section 3.5, however, shall preclude
the Corporation or any Affiliated 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
Corporation's or Affiliated Employer's general creditors in the
event of the Affiliated Employer's bankruptcy or insolvency.
3.6. DESIGNATION OF BENEFICIARY. A Supplemental ESOP Participant may
designate, in writing, one or more Beneficiaries under this Supplemental ESOP,
who may be the same as or different than those named under the ESOP to receive
benefits, if any, payable upon the Supplemental ESOP Participant's death;
provided, that in the case of a Supplemental ESOP Participant who is
married at time of death, the Supplemental ESOP 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 ESOP 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 ESOP Participant's surviving spouse,
-9-
10
if any; if none, to such person or persons (including the
decedent's estate) as are designated to receive any benefits
remaining to be paid under the ESOP; or if none of the foregoing,
to such person or persons as shall be designated by the
Committee.
-10-
11
SECTION 4
Certain Forfeitures
-------------------
4.1. TERMINATION FOR CAUSE. Notwithstanding anything to
the contrary in this Supplemental ESOP, benefits payable
hereunder shall be forfeited by the Supplemental ESOP Participant
if the Supplemental ESOP Participant's termination of employment
was requested by an Affiliated Employer and the termination was
determined by the Committee to be for "cause." For purposes of
this Supplemental ESOP, "cause" shall mean any action or failure
to act by the Supplemental ESOP Participant which the Committee
in its sole discretion determines to have constituted negligence
or misconduct in the performance of the Supplemental ESOP
Participant's duty to the Affiliated Employer. Notwithstanding
the foregoing provisions of this Section 4.1, in respect of any
termination of a Supplemental ESOP Participant's employment
requested by his or her Affiliated 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 ESOP Participant to substantially perform his or her
duties with the Affiliated Employer, after a written demand for
substantial performance is delivered to the Supplemental ESOP
Participant by the Affiliated Employer which demand specifies the
manner in which the Affiliated Employer believes that the
Supplemental ESOP Participant has not substantially performed the
Supplemental ESOP Participant's duties, or (ii) the willful
engaging by the Supplemental ESOP Participant in conduct which is
-11-
12
demonstrably and materially injurious to the Affiliated Employer,
monetarily or otherwise. For purposes of clauses (i) and (ii) of
the preceding sentence, no act, or failure to act, on the
Supplemental ESOP Participant's part shall be deemed "willful"
unless done, or omitted to be done, by the Supplemental ESOP
Participant not in good faith and without reasonable belief that
the Supplemental ESOP Participant's act or failure to act was in
the best interest of the Participating Employer.
4.2. OTHER TERMINATIONS OF EMPLOYMENT. In the event of a
Supplemental ESOP Participant's termination of employment other
than by reason of death or Retirement or after becoming a
Disabled Participant, that portion of his or her memorandum
account balance, if any, that is not payable under Section 3.2
shall be promptly forfeited. If such Supplemental ESOP
Participant is later reemployed by the Affiliated Employers under
circumstances entitling him or her to a restoration of all or a
portion of his or her account balance under the ESOP, the
Committee shall make an appropriate corresponding restorative
adjustment to his or her memorandum account hereunder.
-12-
13
SECTION 5
Administration
--------------
5.1. DUTIES OF COMMITTEE. This Supplemental ESOP 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 ESOP
Participant from this Supplemental ESOP 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 Committee's discretion employees of
one or more Affiliated Employers) or one or more committees of
such individuals.
5.2. FINALITY OF DECISION. The decisions made by and the
actions taken by the Committee in the administration of this
Supplemental ESOP 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 ESOP.
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 ESOP,
such person may file a claim in writing with the Committee.
The Committee will notify such person of its decision with
respect to such claim in writing. If such claim is denied
by the Committee, such notification will be written in a
-13-
14
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. Notification of Committee decisions
with respect to claims will be given within 90 days after
the claim is received by the Committee (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 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.
(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
-14-
15
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
ESOP 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.
-15-
16
SECTION 6
Amendment and Termination
-------------------------
6.1. AMENDMENT AND TERMINATION. While the Corporation
intends to maintain this Supplemental ESOP in conjunction with
ESOP 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 balance of any Supplemental ESOP
Participant's memorandum account as of the Valuation Date next
preceding the date of such amendment. Amendments affecting the
accrual of benefits hereunder in respect of Supplemental ESOP
Participants who are subject to the short-swing profit provisions
of Section 16 of the Securities Exchange Act of 1934, as amended,
may be made no more frequently than once every six (6) months.
Notwithstanding any other provision hereunder, during the three-
year period immediately following a Change in Control, this
Supplemental ESOP may not be terminated, altered or amended in a
way that would decrease future accrual of, eligibility for, or
entitlement to, benefits 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 ESOP Participants.
-16-
17
SECTION 7
Miscellaneous
-------------
7.1. NO EMPLOYMENT RIGHTS. Nothing contained in this
Supplemental ESOP shall be construed as a contract of employment
between any Affiliated Employer and a Supplemental ESOP
Participant, or as giving any Supplemental ESOP Participant the
right to be continued in the employment of an Affiliated
Employer, or as a limitation of the right of an Affiliated
Employer to discharge any Supplemental ESOP Participants, with or
without cause.
7.2. ASSIGNMENT. Subject to the provisions of this
Supplemental ESOP relating to payment of benefits upon the death
of a Supplemental ESOP Participant, the benefits payable under
this Supplemental ESOP may not be assigned, alienated,
transferred, pledged, or encumbered.
7.3. WITHHOLDING, ETC. Benefits payable under this Supplemental ESOP
shall be subject to all applicable federal, state or other tax withholding
requirements. To the extent any amount credited hereunder to a Supplemental
ESOP Participant's account 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 ESOP Participant either (i) timely pay such taxes in cash by
separate check to his or her Affiliated Employer, or (ii) make other
arrangements satisfactory to such Affiliated Employer (e.g., additional
-17-
18
withholding from other wage payments) for the payment of such
taxes. To the extent a Supplemental ESOP Participant fails to
pay or provide for such taxes as required, the Committee may
suspend the Supplemental ESOP Participant's participation in the
Supplemental ESOP or reduce amounts credited or to be credited
hereunder.
7.4. 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 ESOP and shall be incorporated
herein.
7.5. LAW APPLICABLE. This Supplemental ESOP shall
be construed in accordance with the laws of the Commonwealth of
Massachusetts.
IN WITNESS WHEREOF, this instrument is executed this 20th
day of December, 1994.
CABOT CORPORATION
By /s/ Karen M. Morrissey
___________________________
Vice President
-18-
19
SCHEDULE A
TO
Supplemental Employee Stock Ownership Plan
Effective May 13, 1994, the Board of Directors deemed it
advisable to provide certain additional benefits to one or more
Supplemental ESOP Participants.
NOW, THEREFORE, the Supplemental ESOP is hereby amended as
follows:
1. "Schedule A Participant" shall mean Samuel W. Bodman.
2. Amount of benefits. Effective January 1, 1987, for the Schedule A
Participant, his total benefit determined under Sections 3.1 and
3.3 of the Supplemental ESOP shall be equal to two times the
benefit which would otherwise be provided under those Sections.
IN WITNESS WHEREOF, this Schedule A is executed this
twentieth day of December, 1994.
CABOT CORPORATION
By /s/ Karen M. Morrissey
______________________
Vice President
20
SCHEDULE B
TO
Supplemental Employee Stock Ownership Plan
Effective May 13, 1994, the Board of Directors deemed it
advisable to provide certain additional benefits to one or more
Supplemental ESOP Participants.
NOW, THEREFORE, the Supplemental ESOP is hereby amended as
follows:
1. "Schedule B Participant" shall mean Kennett F. Burnes.
2. Amount of benefits. Effective November 12, 1987, for
the Schedule B Participant, his total benefit
determined under Sections 3.1 and 3.3 of the
Supplemental ESOP shall be equal to two times the
benefit which would otherwise be provided under those
Sections.
IN WITNESS WHEREOF, this Schedule B is executed this
twentieth day of December, 1994.
CABOT CORPORATION
By /s/ Karen M. Morrissey
______________________
Vice President
21
Schedule C
TO
Supplemental Employee Stock Ownership Plan
Effective May 13, 1994, the Board of Directors deemed it
advisable to provide certain additional benefits to one or more
Supplemental ESOP Participants.
NOW, THEREFORE, the Supplemental ESOP is hereby amended as
follows:
1. "Schedule C Participant" shall mean John D. Curtin, Jr.
2. Amount of benefits. Effective June 1, 1989, for the
Schedule C Participant, his total benefit determined
under Sections 3.1 and 3.3 of the Supplemental ESOP
shall be equal to two times the benefit which would
otherwise be provided under those Sections.
IN WITNESS WHEREOF, this Schedule C is executed this
twentieth day of December, 1994.
CABOT CORPORATION
By /s/ Karen M. Morrissey
______________________
Vice President
22
SCHEDULE D
TO
Supplemental Employee Stock Ownership Plan
Effective May 13, 1994, the Board of Directors deemed it
advisable to provide certain additional benefits to one or more
Supplemental ESOP Participants.
NOW, THEREFORE, the Supplemental ESOP is hereby amended as
follows:
1. "Schedule D Participant" shall mean Kenyon D. Gilson.
2. Amount of benefits. Effective August 1, 1989, for the
Schedule D Participant, his total benefit determined
under Sections 3.1 and 3.3 of the Supplemental ESOP
shall be equal to two times the benefit which would
otherwise be provided under those Sections.
IN WITNESS WHEREOF, this Schedule D is executed this
twentieth day of December, 1994.
CABOT CORPORATION
By /s/ Karen M. Morrissey
______________________
Vice President
23
SCHEDULE E
TO
Supplemental Employee Stock Ownership Plan
Effective May 13, 1994, the Board of Directors deemed it
advisable to provide certain additional benefits to one or more
Supplemental ESOP Participants.
NOW, THEREFORE, the Supplemental ESOP is hereby amended as
follows:
1. "Schedule E Participant" shall mean Robert Rothberg.
2. Amount of benefits. Effective October 18, 1993, after
completion of a three year Period of Service with Cabot
Corporation as determined under the Cabot Corporation
Employee Stock Ownership Plan, for the Schedule E
Participant, his total benefit determined under
Sections 3.1 and 3.3 of the Supplemental ESOP shall be
equal to two times the benefit which would otherwise be
provided under those Sections.
IN WITNESS WHEREOF, this Schedule E is executed this
twentieth day of December, 1994.
CABOT CORPORATION
By /s/ Karen M. Morrissey
______________________
Vice President