Exhibit 10(a)
CABOT CORPORATION
SENIOR MANAGEMENT SEVERANCE PROTECTION PLAN
WHEREAS, the Board of Directors (the "Board") of Cabot Corporation, a
Delaware corporation (the "Company"), recognizes that the threat of an
unsolicited takeover or other change in control of the Company may occur which
can result in significant distractions of its key personnel because of the
uncertainties inherent in such a situation; and
WHEREAS, the Board has determined that it is essential and in the best
interest of the Company and its stockholders to be able to retain the services
of its key personnel in the event of a threat of a change in control of the
Company, and following any change in control, to ensure their continued
dedication and efforts in any such event without undue concern for their
personal financial and employment security.
NOW, THEREFORE, in order to fulfill the above purposes, the following
plan has been developed and is hereby adopted.
ARTICLE I
ESTABLISHMENT OF PLAN
As of the Effective Date, the Company hereby establishes the Cabot
Corporation Senior Management Severance Protection Plan (the "Plan") as set
forth in this document.
ARTICLE II
DEFINITIONS
As used herein, the following words and phrases shall have the
following respective meanings unless the context clearly indicates otherwise.
2.1 "Accrued Compensation" means an amount which shall include all
amounts earned, accrued or otherwise payable to a Participant as of the
Participant's Termination Date but not paid as of such Termination Date
including (i) base salary, (ii) reimbursement for reasonable and necessary
expenses incurred by the Participant on behalf of the Company during the
period ending on the Termination Date, (iii) vacation pay, and (iv) bonuses
and incentive compensation.
2.2 "Affiliate" means with respect to any person or entity, any
entity, directly or indirectly, controlled by, controlling or under common
control with such person or entity.
2.3 "Base Salary" means a Participant's annualized base salary
(including any portion that the Participant may have elected to defer),
calculated at the greater of the rate in effect (i) immediately prior to a
Change in Control or (ii) as of the Participant's Termination Date.
2.4 "Board" means the Board of Directors of Cabot Corporation.
2.5 "Bonus Amount" means an amount equal to the greater of (A)
Participant's target bonus amount (including any portion that the Participant
may have elected to defer), if any, under all Short-Term Incentive Plans for the
fiscal year in which the Change in Control occurs or the fiscal year in which
the Participant's Termination Date occurs, whichever is greater or (B) the
highest bonus amount paid or payable to the Participant (including any portion
that the Participant may have elected to defer) under all Short-Term Incentive
Plans in respect of any of the three fiscal years preceding the fiscal year in
which the Change in Control occurs.
2.6 "Cause" means (a) the willful and continued refusal by the
Participant to perform substantially his or her reasonably assigned duties with
the Company (other than any such failure resulting from his or her physical or
mental incapacity or any such actual or anticipated failure after the issuance
of a Notice of Termination by the Participant for Good Reason) after a written
demand for substantial performance is delivered to the Participant by the Board,
which demand specifically identifies the manner in which the Board believes that
the Participant has not substantially performed his or her duties, or (b) the
willful engaging by the Participant in conduct which is demonstrably and
materially injurious to the Company, monetarily or otherwise. For purposes of
this definition (i) no act, or failure to act, on the Participant's part shall
be deemed "willful" unless done, or omitted to be done, by the Participant not
in good faith and without reasonable belief that his or her action or omission
was in the best interest of the Company and (ii) good faith errors in judgment
by the Participant shall not constitute Cause or be considered in any
determination of whether Cause exists.
2.7 "Change in Control" means:
(a) An acquisition of any voting securities of the Company (the
"Voting Securities") by any "Person" as the term person is used for purposes of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), immediately after which such Person has "Beneficial Ownership"
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) together
with all affiliates and associates (as such terms are used in Rule 12b-2 of the
General Rules and Regulations under the Exchange Act) of such person, directly
or indirectly, of securities of the
2
Company representing thirty-five percent (35%) or more of the combined voting
power of the Company's then outstanding Voting Securities; provided, however, in
determining whether a Change in Control has occurred, Voting Securities which
are acquired in a "Non-Control Acquisition" (as hereinafter defined) shall not
constitute an acquisition which would cause a Change in Control. A "Non-Control
Acquisition" shall mean an acquisition (i) by an employee benefit plan (or a
trust forming a part thereof) maintained (A) by the Company or (B) by any
corporation or other Person of which a majority of its voting power or its
voting equity securities or equity interest is owned, directly or indirectly, by
the Company (for purposes of this definition, a "Subsidiary"), (ii) by the
Company or its Subsidiaries or (iii) directly from the Company (A) by an
underwriter in connection with an underwritten public offering or private
placement, (B) of non-voting convertible debt or non-voting convertible
preferred stock, in either case, until converted into Voting Securities or (C)
by a Person who, in connection with such acquisition, enters into a standstill
agreement with Company with a duration of at least two years and pursuant to
which such Person agrees to vote the acquired securities on any matter either at
the direction of the Board or in the same proportion as the Company's other
stockholders vote on the matter; provided, however, that the expiration of the
standstill agreement shall constitute an acquisition of the Voting Securities
then Beneficially Owned by such Person.
(b) During any period of two years or less beginning on or after
January 1, 1998, individuals who at the beginning of such period are members of
the Board (the "Incumbent Board"), cease for any reason to constitute a majority
of the members of the Board; provided, however, that if the election, or
nomination for election by the Company's common stockholders, of any new
director (other than a director designated by a person who has entered into an
agreement with the Company to effect a transaction described in clause (d) of
this definition) was approved by a vote of at least two-thirds of the Incumbent
Board, such new director shall, for purposes of this Plan, be considered as a
member of the Incumbent Board; provided further, however, that no individual
shall be considered a member of the Incumbent Board if such individual initially
assumed office through either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board (a "Proxy Contest") including by reason of any agreement intended
to avoid or settle any Election Contest or Proxy Contest; or
(c) At any duly conducted election of directors at a special or
annual meeting of stockholders of the Company, (a) two (2) or more nominees who
are both: (i) nominees of, and endorsed by, the Company and (ii) not employees
of the Company or any Affiliate of the Company at the time of such election are
not elected to serve as directors, and (b) any person not a nominee of, and
endorsed by, the Company is so elected to serve as a director of the Company.
3
(d) Approval by stockholders of the Company of:
(i) A merger, consolidation or reorganization involving the
Company, unless such merger, consolidation or reorganization is a
"Non-Control Transaction." A "Non-Control Transaction" shall mean a
merger, consolidation or reorganization of the Company where:
(A) the stockholders of the Company, immediately
before such merger, consolidation or reorganization, own directly
or indirectly immediately following such merger, consolidation
or reorganization, at least sixty-five percent (65%) of the
combined voting power of the outstanding voting securities of
the corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially
the same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization,
(B) the individuals who were members of the Incumbent
Board immediately prior to the execution of the agreement
providing for such merger, consolidation or reorganization
constitute at least two-thirds of the members of the board of
directors of the Surviving Corporation, or a corporation
beneficially directly or indirectly owning a majority of the
Voting Securities of the Surviving Corporation, and
(C) no Person other than (i) the Company, (ii) any
Subsidiary, or (iii) any employee benefit plan (or any trust
forming a part thereof) maintained by the Company, the Surviving
Corporation, or any Subsidiary, acquires Beneficial Ownership of
thirty-five percent (35%) or more of the combined voting power
of the Surviving Corporation's then outstanding voting
securities.
(ii) A complete liquidation or dissolution of the Company;
or
(iii) An agreement for the sale or other disposition of all
or substantially all of the assets of the Company to any Person
(other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired Beneficial
Ownership of more than the permitted amount of the then outstanding Voting
Securities as a result of the acquisition of Voting Securities by the Company
which, by reducing the number of Voting Securities then outstanding, increases
the percentage of shares
4
Beneficially Owned by the Subject Person, provided that if a Change in Control
would occur (but for the operation of this sentence) as a result of the
acquisition of Voting Securities by the Company, and after such share
acquisition by the Company, the Subject Person becomes the Beneficial Owner of
any additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person, then a
Change in Control shall occur.
Notwithstanding anything to the contrary contained herein, if the
employment of a Participant is terminated (i) at the request of a third party
who has indicated an intention or taken steps reasonably calculated to effect a
Change in Control and who effectuates a Change in Control or (ii) otherwise in
connection with, or in anticipation of, a Change in Control which actually
occurs, then for purposes of this Plan the date of a Change in Control with
respect to that Participant shall be deemed to be the date immediately prior to
the Participant's Termination Date.
2.8 "Company" means Cabot Corporation, a Delaware corporation.
2.9 "Compensation Committee" means the Compensation Committee of the
Board as such committee may be constituted from time to time.
2.10 "Disability" shall occur if, as a result of a Participant's
physical or mental incapacity due to illness, accident or otherwise, a
Participant shall be unable to perform his or her duties with the Company.
2.11 "Effective Date" means the date the Plan is approved by the Board
or such other date as the Board shall designate in its resolution approving the
Plan.
2.12 "Eligible Employee" means each employee of the Company (i) who is
elected by the Board to the position, and is serving in the position, of
Chairman, Vice Chairman, President or Vice President (including Senior Vice
President or Executive Vice President) or (ii) who is designated as an Eligible
Employee by the Compensation Committee.
2.13 "Excluded Termination" has the meaning ascribed to it in
Section 4.1(b).
2.14 "Good Reason" means the occurrence after a Change in Control of
any of the following events or conditions:
(a) a change in the Participant's status, title, position or
responsibilities (including reporting responsibilities) which, in the
Participant's reasonable judgment, represents an adverse change from his status,
title, position or responsibilities as in effect immediately prior thereto (it
being understood that such an adverse change will be deemed to have occurred for
any officer of the Company
5
designated by the Board as an "executive officer" for purposes of Section 16 of
the Securities Exchange Act of 1934, as amended, if, as a consequence of the
Change in Control, (i) the Company becomes a subsidiary of another corporation
and the Participant is not employed by the ultimate parent corporation or
(ii) the Participant is employed by an entity the equity interests in which are
not publicly traded); the assignment to the Participant of any duties or
responsibilities which, in the Participant's reasonable judgment, are
inconsistent with his status, title, position or responsibilities; or any
removal of the Participant from or failure to reappoint or reelect him to any of
such offices or positions, except in connection with the termination of his
employment for Disability, Cause, as a result of his death or by the Participant
other than for Good Reason;
(b) a reduction in the Participant's annual base salary below
the greater of the rate in effect (i) as of the date of the Change in Control or
(ii) on any date following the Change in Control;
(c) the relocation of the offices of the Company or Operating
Unit at which the Participant is principally employed to a location more than
twenty-five (25) miles from the location of such offices immediately prior to
the Change in Control, or the Company's requiring the Participant to be based
anywhere other than such offices, except to the extent the Participant was not
previously assigned to a principal location and except for required travel on
the Company's business to an extent substantially consistent with the
Participant's business travel obligations at the time of the Change in Control;
(d) the failure by the Company to pay to the Participant any
portion of the Participant's current compensation or to pay to the Participant
any portion of an installment of deferred compensation under any deferred
compensation program of the Company in which the Participant participated,
within seven (7) days of the date such compensation is due;
(e) the failure by the Company to continue in effect any
material compensation or benefit plan in which the Participant participated
immediately prior to the Change in Control, unless an equitable arrangement
(embodied in an ongoing substitute or alternative plan providing compensation
and benefits not materially less favorable than those provided to the
Participant immediately prior to the Change in Control) has been made with
respect to such plan, or the failure by the Company to continue the
Participant's participation therein (or in such substitute or alternative plan)
on a basis not materially less favorable, both in terms of the amount of
benefits provided and the level of the Participant's participation relative to
other Participants, as existed immediately prior to the Change in Control;
6
(f) the failure by the Company to continue to provide the
Participant with benefits substantially similar to those enjoyed by the
Participant under any pension, life insurance or death benefit, medical, health
and accident, or disability plan in which the Participant participated
immediately prior to the Change in Control, the taking of any action by the
Company which would directly or indirectly materially reduce any of such
benefits, or the failure by the Company to provide the Participant with the
number of paid vacation days to which the Participant is entitled by reason of
agreement or understanding with the Company or on the basis of years of service
with the Company in accordance with the normal vacation policy of the Company in
effect immediately prior to the Change in Control;
(g) the failure of the Company to obtain a satisfactory
agreement from any successor, enforceable by the Participant, to assume and
agree to honor and perform the Company's obligations under this Plan; or
(h) any purported termination of the Participant's employment by
the Company which is not effected pursuant to the requirements of Article V.
2.15 "Operating Unit" means any subsidiary, division, or other
business unit of the Company or any Affiliate.
2.16 "Participant" means an Eligible Employee who meets the
eligibility requirements of Article III.
2.17 "Plan" means the Cabot Corporation Senior Management Severance
Protection Plan.
2.18 "Pro-Rata Bonus" means, with respect to the fiscal year in which
a Participant's Termination Date occurs, an amount equal to the Bonus Amount
multiplied by a fraction the numerator of which is the number of days that have
elapsed in such fiscal year through the Termination Date and the denominator of
which is 365.
2.19 "Short-Term Incentive Plan" means any bonus or incentive
compensation plan, policy, program or other arrangement pursuant to which awards
payable in cash are made to a Participant in respect of an award period of one
year or less.
2.20 "Severance Benefit" means the benefit payable in accordance with
Article IV of the Plan.
2.21 "Termination Date" means the date of termination of a
Participant's employment as set forth in Article V.
7
ARTICLE III
ELIGIBILITY
3.1 Participation. For purposes of this Plan (i) each individual who
is an Eligible Employee as of the Effective Date shall automatically be a
Participant under this Plan as of the Effective Date, without further action and
(ii) each individual who becomes an Eligible Employee after the Effective Date
shall simultaneously become a Participant under this Plan as of the date he or
she becomes an Eligible Employee, without further action.
3.2 Duration of Participation. Any individual who is a Participant
as of the occurrence of a Change in Control shall continue as a Participant
until the date on which the Participant has received the entire amount of the
Severance Benefit, if any, payable to such Participant under the Plan. Any
individual who, after becoming a Participant but before the occurrence of a
Change in Control, (i) ceases to be an Eligible Employee (including ceasing to
be an Eligible Employee by reason of an Excluded Termination), or (ii) is an
Eligible Employee described in Section 2.12(ii) and not then also described in
Section 2.12(i) and is removed from participation in the Plan by action of the
Compensation Committee, shall cease to be a Participant under the Plan one year
from the date such individual ceases to be an Eligible Employee in accordance
with clause (i) of this sentence, or is removed from participation in the Plan
in accordance with clause (ii) of this sentence, as the case may be.
ARTICLE IV
SEVERANCE BENEFITS
4.1 Right to Severance Benefit.
(a) A Participant shall be entitled to receive from the Company
a Severance Benefit in the amount provided in Section 4.2 if (i) a Change in
Control has occurred and (ii) within the three (3) year period commencing on the
date of the Change in Control, the Participant's employment with the Company and
its Affiliates terminates for any reason other than (A) Cause, (B) Disability,
(C) the Participant's death, (D) a termination initiated by the Participant
without Good Reason or (E) an Excluded Termination.
(b) Sale of Business or Assets. If, following a Change in
Control, a Participant's employment with the Company and its Affiliates is
terminated in connection with the sale, divestiture or other disposition of any
Operating Unit (or part thereof), such termination shall not be a termination of
employment of the Participant for purposes of the Plan and the Participant shall
not be entitled to a Severance Benefit as a
8
result of such termination of employment, provided that (i) the Participant is
offered employment by the Operating Unit or the acquiror of such Operating Unit
(or part thereof), as appropriate, on terms and conditions that would not
constitute "Good Reason" as defined in Section 2.14 (substituting the Operating
Unit or acquiror for the Company, as appropriate) and (ii) the Company obtains
an agreement from such acquiror or the Operating Unit, as appropriate,
enforceable by the Participant, to provide severance pay and benefits (A) at
least equal to the Severance Benefit and (B) payable upon a termination of the
Participant's employment with the acquiror or the Operating Unit, as
appropriate, and its Affiliates under the same circumstances as they would have
been payable under this Plan substituting the acquiror or the Operating Unit, as
appropriate, and its Affiliates for the Company and its Affiliates (such a
termination of employment is herein referred to as an "Excluded Termination").
In such circumstances, the Participant shall not be entitled to receive any
Severance Benefit under this Plan whether or not the Participant becomes so
employed. This provision shall not be construed or interpreted so as to give
any Participant an entitlement to any Severance Benefit under any circumstances
prior to a Change in Control or in connection with any termination of employment
prior to a Change in Control.
4.2 Amount of Severance Benefit. If a Participant's employment is
terminated in circumstances entitling him or her to a Severance Benefit as
provided in Section 4.1, such Participant shall be entitled to the following:
(a) the Company shall pay to the Participant all Accrued
Compensation within ten (10) days after the Participant's Termination Date;
(b) the Company shall pay to the Participant a Pro-Rata Bonus
within thirty (30) days after the Participant's Termination Date;
(c) the Company shall pay to the Participant, as severance pay
and in lieu of any further salary for periods subsequent to the Participant's
Termination Date, in a single payment (without any discount for accelerated
payment, but subject to applicable withholding taxes) within thirty (30) days
after the Participant's Termination Date, an amount in cash equal to two
(2) times the sum of (A) the Participant's Base Salary and (B) the Participant's
Bonus Amount;
(d) for the two (2) year period commencing on the Participant's
Termination Date (the "Continuation Period"), the Company shall at its expense
(and without contribution by the Participant) continue on behalf of the
Participant and his or her dependents and beneficiaries (i) medical, health,
dental and prescription drug benefits, (ii) long-term disability coverage and
(iii) life insurance and other death benefits coverage. The coverages and
benefits (including deductibles, if any) provided under this Section 4.2(d)
during the Continuation Period shall be no less favorable to the Participant and
his or her beneficiaries than the most favorable of such coverages and benefits
9
provided the Participant and his or her dependents during the 90-day period
immediately preceding the Change in Control or as of any date following the
Change in Control but preceding the Participant's Termination Date. The
obligation under this Section 4.2(d) with respect to the foregoing benefits
shall be limited if the Participant obtains any such benefits pursuant to a
subsequent employer's benefit plans, in which case the Company may reduce or
eliminate the coverage and benefits it is required to provide the Participant
hereunder as long as the aggregate coverages and benefits of the combined
benefit plans is no less favorable to the Participant than the coverages and
benefits required to be provided hereunder. Any period during which benefits
are continued pursuant to this Section 4.2(d) shall be considered to be in
satisfaction of the Company's obligation to provide "continuation coverage"
pursuant to Section 4980B of the Internal Revenue Code of 1986, as amended, and
the period of coverage required under said Section 4980B shall be reduced by the
period during which benefits were provided pursuant to this Section 4.2(d); and
(e) the Company shall pay or reimburse the Participant for the
costs, fees and expenses of outplacement assistance services (not to exceed
fifteen percent (15%) of the Participant's Base Salary) provided by an
outplacement agency selected by the Participant.
4.3 Mitigation. The Participant shall not be required to mitigate
the amount of any payment or benefit provided for in this Plan by seeking other
employment or otherwise and no such payment or benefit shall be offset or
reduced by the amount of any compensation or benefits provided to the
Participant in any subsequent employment, except to the extent provided in
Section 4.2(d).
4.4 Other Benefits; Non-Exclusivity of Rights. Nothing in this Plan
shall prevent or limit the Participant's continuing or future participation in
any benefit, bonus, incentive or other plan or program provided by the Company
or any of its Affiliates and for which the Participant may qualify, nor shall
anything herein limit or reduce such rights as any Participant may have under
any other agreements with the Company or any of its Affiliates; provided,
however, that to the extent the Participant may be entitled under any such other
plan, program or agreement or pursuant to any applicable law or regulation to
benefits of the types enumerated in Section 4.2, the provision of such benefits
pursuant to such other plan, program or agreement or in satisfaction of such
legal requirement shall count toward the Company's obligation to provide the
enumerated benefits pursuant to this Plan, it being the intention of this Plan
to provide the enumerated benefits at least at the level specified herein, but
not to provide such benefits on a duplicative basis. Without limiting the
generality of the foregoing, any benefits provided by the Company to a
Participant pursuant to the Company's Key Employee Severance Protection Plan
shall count toward the Company's obligations to provide similar benefits to such
Participant pursuant to this Plan. Nothing herein shall be deemed to limit,
supersede or restrict any rights that any Participant may have to
10
accelerated vesting of any right or benefit under change in control provisions
of any plan, program, agreement or otherwise.
ARTICLE V
TERMINATION OF EMPLOYMENT
5.1 Termination by Company for Cause. Following a Change in Control,
any termination by the Company of a Participant's employment for Cause shall be
in accordance with the following procedure. First, a meeting of the Board of
Directors of the Participant's employer shall be called and held for the purpose
of determining whether there exists Cause for termination. The Participant
shall be given reasonable notice in writing of such meeting and of any facts and
circumstances to be presented to such Board of Directors as constituting Cause,
and shall have an opportunity, together with his or her counsel, to be heard
before such Board of Directors. If such Board of Directors, by resolution duly
adopted by the affirmative vote of not less than three-quarters of the entire
membership of such Board of Directors, shall find in good faith that Cause
exists and that the Participant should be terminated for Cause, then such
findings including the specific facts and circumstances found to constitute
Cause (which shall not include any facts or circumstances not included in the
written notice to the Participant of the meeting) shall be set forth in such
resolution and a copy thereof furnished to the Participant, together with a
written notice from the Company stating that the Participant is being terminated
for Cause. Such notice shall specify the effective date of such termination,
which shall not be less than five (5) business days after the delivery to the
Participant of such resolution and notice. The findings of the Board of
Directors of the Participant's employer shall have no presumptive weight in any
action to contest the existence of Cause; and no facts or circumstances other
than those set forth in the notice to the Participant of such Board of Directors
meeting that were found by such Board of Directors to constitute Cause as
provided herein may be relied upon by the Company thereafter as Cause for such
termination. Any termination of a Participant's employment by the Company other
than in accordance with this Section 5.1 shall not be a termination for Cause.
5.2 Termination by Company for Disability. Following a Change in
Control, any termination by the Company of a Participant's employment for
Disability shall be in accordance with the following procedure. If as a result
of Disability, a Participant shall have been absent from the performance of his
or her duties with the Company for six (6) consecutive months, and the
Participant is unable to return to his or her duties (on the same basis,
full-time or part-time, as the case may be, as the Participant was working
immediately prior to such absence) even with reasonable accommodations on the
part of the Company, the Company may give the Participant written notice of a
proposed termination of the Participant's employment for Disability. Such
notice shall
11
state that the Participant shall be terminated for Disability unless the
Participant returns to the performance of his or her duties by a date stated in
such notice, which shall be not less than thirty (30) days after the receipt of
such notice by the Participant. Such termination shall be effective as a
termination for Disability if, and only if, the Company has made all reasonable
accommodations required to permit the Participant to return to work and the
Participant has not returned to the performance of his or her duties (on the
same basis, full-time or part-time, as the case may be, as the Participant was
working immediately prior to such absence) prior to the date therefor stated in
such notice, in which case such date shall be the Termination Date.
5.3 Termination by Participant for Good Reason. Following a Change
in Control, a Participant having Good Reason shall have the right to terminate
his or her employment without prior notice to the Company, and shall not be
required to give any notice in order to perfect his or her rights under this
Plan upon a termination for Good Reason, except as provided in this Section 5.3.
Within thirty (30) days after receipt by the Participant of (a) a written
request by the Company for a statement of any facts and circumstances relied
upon by the Participant as constituting Good Reason for such termination, which
request shall specifically refer to this Section and to Section 2.14,
accompanied by (b) a copy of this Plan, the Participant shall (if the
Participant has not already done so) provide the Company with a written
statement setting forth in reasonable detail all facts and circumstances relied
upon by the Participant as constituting Good Reason for such termination. The
Participant shall have the right to amend and supplement such statement (or any
statement provided prior to such notice) until thirty (30) days after receipt of
such request from the Company; and no facts or circumstances not set forth in
such statement, as the same may be amended and supplemented as provided herein,
may be relied upon by the Participant thereafter as Good Reason for such
termination.
5.4 Other Terminations. Any termination, other than for Cause,
Disability or Good Reason, shall not require any particular procedures.
ARTICLE VI
LIMITATION ON SEVERANCE BENEFITS
6. Excise Tax Limitation.
(a) Notwithstanding anything contained in the Plan to the
contrary, to the extent that the Severance Benefit provided to a Participant
would be subject to the excise tax (the "Excise Tax") imposed under Section 4999
of the Internal Revenue Code of 1986, as amended (the "Code"), the Severance
Benefit shall be reduced (but not below zero) if and to the extent that a
reduction in the Severance Benefit would result in the Participant retaining a
larger amount, on an after-tax basis
12
(taking into account federal, state and local income taxes and the Excise Tax),
than if the Participant received the entire amount of such Severance Benefit.
Unless the Participant shall have given prior written notice specifying a
different order to the Company to effectuate the foregoing, the Company shall
reduce or eliminate the Severance Benefit, by first reducing or eliminating the
portion of the Severance Benefit which is not payable in cash and then by
reducing or eliminating cash payments, in each case in reverse order beginning
with payments or benefits which are to be paid the farthest in time from the
Determination (as hereinafter defined).
(b) The initial determination of whether the Severance
Benefit shall be reduced as provided in Section 6(a) and the amount of such
reduction shall be made at the Company's expense by an accounting firm selected
by the Company from among the six largest accounting firms in the United States
(the "Accounting Firm"). The Accounting Firm shall provide its determination
(the "Determination"), together with detailed supporting calculations and
documentation to the Company and the Participant within ten (10) days of the
Termination Date. If the Accounting Firm determines that no Excise Tax is
payable by the Participant with respect to a Severance Benefit, it shall furnish
the Participant with an opinion reasonably acceptable to the Participant that no
Excise Tax will be imposed with respect to any such Severance Benefit, and such
Determination shall be binding, final and conclusive upon the Company and the
Participant. If the Accounting Firm determines that an Excise Tax would be
payable, the Participant shall have the right to accept the Determination of the
Accounting Firm as to the extent of the reduction, if any, pursuant to
Section 6(a), or to have such Determination reviewed by an accounting firm
selected by the Participant, at the expense of the Company, in which case the
determination of such second accounting firm shall be binding, final and
conclusive upon the Company and Participant.
ARTICLE VII
SUCCESSORS TO COMPANY
7.1 Successors.
(a) This Plan shall be binding upon the Company, its successors and
assigns and the Company shall require any successor or assign to expressly
assume and agree to perform this Plan in the same manner and to the same extent
that the Company would be required to perform it if no such succession or
assignment had taken place. The term "Company" as used herein shall include
such successors and assigns. The term "successors and assigns" as used herein
shall mean a corporation or other entity acquiring all or substantially all the
assets and business of the Company whether by operation of law or otherwise.
13
(b) Neither this Plan nor any right or interest hereunder shall be
assignable or transferable by a Participant or his or her beneficiaries or legal
representatives, except by will or by the laws of descent and distribution.
This Plan shall inure to the benefit of and be enforceable by a Participant's
legal personal representative.
ARTICLE VIII
DURATION, AMENDMENT AND PLAN TERMINATION
8.1 Duration. This Plan shall continue in effect until terminated in
accordance with Section 8.2.
8.2 Amendment and Termination. Prior to a Change in Control, the
Plan may be amended or modified in any respect, and may be terminated, by
resolution adopted by two-thirds of the Board; provided, however, that no such
amendment, modification or termination, which would adversely affect the
benefits or protections hereunder of any individual who is a Participant as of
the date such amendment, modification or termination is adopted shall be
effective as it relates to such individual unless no Change in Control occurs
within one year after such adoption, any such attempted amendment, modification
or termination adopted within one year prior to a Change in Control being null
and void ab initio as it relates to all individuals who were Participants prior
to such adoption; provided, further, however, that the Plan may not be amended,
modified or terminated, (i) at the request of a third party who has indicated an
intention or taken steps to effect a Change in Control and who effectuates a
Change in Control or (ii) otherwise in connection with, or in anticipation of, a
Change in Control which actually occurs, any such attempted amendment,
modification or termination being null and void ab initio. From and after the
occurrence of a Change in Control, the Plan (i) may not be amended or modified
in any manner that would in any way adversely affect the benefits or protections
provided to any individual hereunder and (ii) may not be terminated until the
later of (a) the third anniversary of the Change in Control or (b) the date that
all Participants who have become entitled to a Severance Benefit hereunder shall
have received such payments in full.
8.3 Form of Amendment. Any amendment or termination of the Plan
shall be effected by a written instrument signed by a duly authorized officer or
officers of the Company, certifying that the amendment or termination has been
approved by the Board.
14
ARTICLE IX
MISCELLANEOUS
9.1 Legal Fees and Expenses. The Company shall pay all legal fees and
related expenses (including the costs of experts, evidence and counsel)
reasonably incurred by a Participant as they become due as a result of (a) the
Participant's termination of employment (including all such fees and expenses,
if any, incurred in contesting or disputing in good faith any such termination
of employment) or (b) the Participant seeking to obtain or enforce any right or
benefit provided by this Plan or by any other plan or arrangement maintained by
the Company under which the Participant is or may be entitled to receive
benefits upon or following his or her termination of employment; provided,
however, that the circumstances set forth in clauses (a) and (b) occurred on or
after a Change in Control.
9.2 Employment Status. This Plan does not constitute a contract of
employment or impose on the Company any obligation to retain any Participant as
an employee or to change any employment policies of the Company.
9.3 Validity and Severability. The invalidity or unenforceability of
any provision of the Plan shall not affect the validity or enforceability of any
other provision of the Plan, which shall remain in full force and effect, and
any prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
9.4 Settlement of Claims. The Company's obligation to make the
payments provided for in this Plan and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, defense, recoupment, or other right which
the Company may have against a Participant or others.
9.5 Governing Law. The validity, interpretation, construction and
performance of the Plan shall in all respects be governed by the laws of the
Commonwealth of Massachusetts, without giving effect to the conflict of law
principles thereof.
15