Exhibit 10(b)
CABOT CORPORATION
KEY EMPLOYEE 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 Key Employee 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 Company, which demand specifically identifies the manner
in which the Company 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
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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 elected to serve as a director of
the Company.
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(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
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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 "EIP" means the Cabot Corporation 1996 Equity Incentive Plan
and any subsequently adopted plan which has been approved by the stockholders
of the Company and which provides equity-based incentives to key employees of
the Company; provided, however, that no subsequently adopted plan which is
qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended, shall be included in this definition.
2.13 "Eligible Employee" means, as of any date, each employee of
the Company or any Affiliate (i) who has been granted, within one year prior
to such date, an award under an EIP; (ii) who, at the time such employee was
offered employment with the Company or Affiliate, was provided written notice
from the Company to the effect he or she will be considered for participation
in an EIP, provided that the duration of such eligibility under this clause
(ii) shall be only from the employee's date of hire or notice (whichever
occurs later) until the next annual grant of awards under an EIP; or (iii)
who has been designated as an Eligible Employee by the Compensation Committee.
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2.14 "Excluded Termination" has the meaning ascribed to it in
Section 4.1(b).
2.15 "Good Reason" means the occurrence after a Change in Control
of any of the following events or conditions:
(a) the assignment to the Participant of any duties
inconsistent with the position with the Company that the Participant held
immediately prior to the Change in Control, or a substantial adverse
alteration in the nature or status of the Participant's responsibilities from
those in effect immediately prior to the Change in Control;
(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;
(f) the failure by the Company to continue to provide the
Participant with benefits substantially similar to those enjoyed by the
Participant under
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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.
2.16 "Operating Unit" means any subsidiary, division, or other
business unit of the Company or any Affiliate.
2.17 "Participant" means an Eligible Employee who meets the
eligibility requirements of Article III.
2.18 "Plan" means the Cabot Corporation Key Employee Severance
Protection Plan.
2.19 "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.
2.20 "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.
2.21 "Severance Benefit" means the benefit payable in accordance
with Article IV of the Plan.
2.22 "Termination Date" means the date of termination of a
Participant's employment as set forth in Article V.
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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 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 result of such
termination of employment, provided that (i) the Participant is offered
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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 2.15 (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 one (1) times the sum of (A) the Participant's Base Salary and (B)
the Participant's Bonus Amount;
(d) for the one (1) 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 provided the Participant and his or
her dependents during the 90-day period immediately
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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 Senior Management 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
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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 of
Control, any purported termination by the Company of a Participant's
employment for Cause shall be communicated by written notice of termination
to the Participant. Written notice of termination to the Participant shall
include (i) the specific facts and circumstances which the Company asserts
constitute Cause, (ii) the Participant's termination date, which date shall
be not less than five (5) business days from the date the written notice of
termination is given to the Participant, and (iii) a specific reference to
Section 2.6 and to this Section of the Plan. A copy of this Plan shall be
delivered to the Participant with such notice of termination. No facts or
circumstances other than those set forth in the written notice of termination
given to the Participant by the Company as the facts and circumstances
constituting Cause 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 a written notice of termination as
required by 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 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
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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 2.15, 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 (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
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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.
(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.
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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.
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
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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.
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