Exhibit 10.8

 

THIRD AMENDMENT TO
SEPARATION BENEFITS PLAN AND EMPLOYMENT AGREEMENT

 

This Third Amendment to Separation Benefits Plan and Employment Agreement (and
Summary Plan Description) (this “Amendment”) is dated October 17, 2018, and is
by and between Waste Connections US, Inc., a Delaware corporation (the
“Company”), which is a wholly owned subsidiary of Waste Connections, Inc., a
corporation organized under the laws of Ontario, Canada (“Parent”), and Ronald
J. Mittelstaedt (“Executive”). The Company and Executive are referred to
together herein as the “Parties.” All capitalized terms not otherwise defined in
this Amendment shall have the meaning set forth in the Plan (as hereinafter
defined).

 

RECITALS

 

WHEREAS, the Company and Executive previously entered into that certain
Separation Benefits Plan and Employment Agreement (and Summary Plan
Description), effective as of February 13, 2012, which was amended December 17,
2015 and February 13, 2018 (as amended, the “Plan”); and

 

WHEREAS, the Company recently amended that certain Separation Benefits Plan (and
Summary Plan Description), effective July 24, 2018, under which certain other
executives of the Company may become participants (the “Separation Plan”); and

 

WHEREAS, the Company and the Executive have determined that it is prudent to
amend the Plan to make corresponding changes to the Plan’s terms and conditions
by executing this Amendment.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Parties hereby agree as follows:

 

1.       Retention Award. The first sentence of Section 4(g) of the Plan is
hereby amended by deleting the phrase “In consideration of the Executive’s
entering into this Amendment” and replacing it with the phrase “In consideration
of the Executive’s entering into the Second Amendment to this Plan, dated
February 13, 2018,”.

 

2.       Termination for Cause. Section 7(a) of the Plan is hereby amended by
revising the definition of “Cause,” to be and to read as follows:

 

“For purposes of this Plan, “Cause” shall mean:

 

1.       gross negligence or willful misconduct of a material nature in
connection with the performance of the Executive’s duties;

 

2.       the Executive’s conviction of (or pleading guilty or pleading no
contest or nolo contendere to) a felony;

 

3.       a non-de minimis intentional act of dishonesty or misappropriation (or
attempted misappropriation) of property belonging to the Company and/or any
member of the WCI Group (other than a good faith expense account dispute related
to a business expense);

 

   

 

 

4.       a material breach by the Executive of any of the obligations under this
Plan or any other agreement with the Company or any member of the WCI Group or
any policy of the WCI Group that is not immediately corrected following written
notice of default specifying such breach; or

 

5.       a breach (material or otherwise) of any of the provisions of Sections
5, 6 or 12 of this Plan.

 

“WCI Group” means, for purposes of this Plan, the Parent, the Company and each
of their subsidiaries and affiliates.”

 

3.       Termination without Cause. Section 7(b) of the Plan is hereby deleted
and replaced in its entirety with the following:

 

“The employment of the Executive may be terminated without Cause at any time by
the vote of a majority of the Board on delivery to the Executive of a written
Notice of Termination (as defined in Section 9(a)). On a termination of
Executive’s employment without Cause, the Company shall pay to the Executive in
lieu of payments under Sections 4(a), 4(b) and 4(d) for the remainder of the
Term, Seven Million Five Hundred Thousand Dollars ($7,500,000) in a lump sum
payment on or within 60 days following the Date of Termination; provided,
however, that if the 60-day period begins in one calendar year and ends in the
subsequent calendar year, such payment shall be made in the latter calendar
year. Notwithstanding anything in this Plan or this Section to the contrary, all
actions under this Plan shall be completed in a manner that complies with or is
exempt from Section 409A of the Internal Revenue Code of 1986, as amended (the
“Code”). In addition, for three years following the Executive’s termination of
employment, the Company shall make available to the Executive and the
Executive’s eligible dependents coverage under the Company’s group medical
insurance (including group health, dental, and visions benefits) (which shall be
concurrent with any health care continuation benefits to which the Executive or
his eligible dependents are entitled under Consolidated Omnibus Budget
Reconciliation Act (“COBRA”); provided, however, that the Executive shall be
obligated to pay the Company for the portion of the premiums for such coverage
on an after-tax basis equal to the amount paid by active employees for such
coverage (the “Health Insurance Benefit”). Notwithstanding the previous
sentence, with regard to such continuation coverage, if the Company determines
in its sole discretion that it cannot provide the foregoing benefit without
potentially violating applicable law or potentially incurring penalties, excise
taxes and fees pursuant to the Internal Revenue Code and the Department of
Treasury regulations promulgated thereunder (including, without limitation,
Section 2716 of the Public Health Service Act), the Health Insurance Benefit
shall terminate and the Executive shall not be eligible to receive any further
benefits related to the Health Insurance Benefit other than as otherwise
required by applicable law. In addition, on termination of the Executive under
this Section 7(b), all of the Executive’s outstanding but unvested time-based
equity awards shall immediately vest and become exercisable and all restrictions
thereon shall lapse, as applicable. With respect to the Executive’s outstanding
but unvested equity awards that vest or become earned based on the achievement
of pre-established performance goals or criteria over a specified time period,
the designated performance goals for such awards shall be deemed to have been
satisfied (and, for any award with different levels of potential payment, such
performance shall be deemed to be at the target level) and any remaining vesting
conditions shall be deemed to be satisfied on the Executive’s Date of
Termination and such equity awards shall be settled as soon as administratively
practicable thereafter. The term of any stock options shall be extended to the
earlier of (i) the fifth anniversary of the Executive’s termination or (ii) the
expiration of the original term of such stock options. The Executive
acknowledges that extending the term of any incentive stock option pursuant to
this Section could cause such stock option to lose its tax-qualified status
under the Code, and agrees that the Company shall have no obligation to
compensate the Executive for any additional taxes he incurs as a result.

 

 2 

 

 

In the event that the Executive’s employment is terminated pursuant to this
Section 7(b), on or prior to the 90th day following the Date of Termination, the
Board shall elect whether to apply the Optional Restricted Period. If the Board
elects to apply the Optional Restricted Period, then in addition to the payments
and benefits described in the preceding paragraph of this Section 7(b), Company
shall pay to the Executive the amounts as set forth in the last paragraph of
Section 7(a) hereof relating to the election of the Optional Restricted Period
at the times and subject to the conditions set forth therein.”

 

4.       Termination on Disability. Section 7(c) of the Plan is hereby deleted
and replaced in its entirety with the following:

 

“If during the Term the Executive should fail to perform his duties hereunder on
account of physical or mental illness or other incapacity which the Board shall
in good faith determine renders the Executive incapable of performing his duties
hereunder, and such illness or other incapacity shall continue for a period of
more than six (6) consecutive months (“Disability”), the Company shall have the
right, on written Notice of Termination (as defined in Section 9(a)) delivered
to the Executive to terminate the Executive’s employment under this Plan. During
the period that the Executive shall have been incapacitated due to Disability,
the Executive shall continue to receive the full Base Salary provided for in
Section 4(a) hereof at the rate then in effect until the Date of Termination (as
defined in Section 9(b)) pursuant to this Section 7(c). If the Executive’s
employment is terminated due to Disability during the Term, the Executive shall
be entitled to receive, and the Company agrees to pay and deliver, the payments
and other benefits applicable to termination without Cause set forth in Section
7(b) hereof at the times and subject to the conditions set forth therein. In
addition, on termination of the Executive under this Section 7(c), all of the
Executive’s outstanding but unvested time-based equity awards shall immediately
vest and become exercisable and all restrictions thereon shall lapse, as
applicable. With respect to the Executive’s outstanding but unvested equity
awards that vest or become earned based on the achievement of pre-established
performance goals or criteria over a specified time period, the designated
performance goals for such awards shall be deemed to have been satisfied (and,
for any award with different levels of potential payment, such performance shall
be deemed to be at the target level) and any remaining vesting conditions shall
be deemed to be satisfied on the Executive’s Date of Termination and such equity
awards shall be settled as soon as administratively practicable thereafter. The
term of any stock options shall be extended to the earlier of (i) the fifth
anniversary of the Executive’s termination or (ii) the expiration of the
original term of such stock options. The Executive acknowledges that extending
the term of any incentive stock option pursuant to this Section could cause such
stock option to lose its tax-qualified status under the Code, and agrees that
the Company shall have no obligation to compensate the Executive for any
additional taxes he incurs as a result.

 

 3 

 

 

In the event that the Executive’s employment is terminated pursuant to this
Section 7(c), on or prior to the 90th day following the Date of Termination, the
Board shall elect whether to apply the Optional Restricted Period. If the Board
elects to apply the Optional Restricted Period, then in addition to the payments
and benefits described in the preceding paragraph of this Section 7(c), the
Company shall pay to the Executive the amounts as set forth in the last
paragraph of Section 7(a) hereof relating to the election of the Optional
Restricted Period at the times and subject to the conditions set forth therein.”

 

5.       Death. Section 7(d) of the Plan is hereby deleted and replaced in its
entirety with the following:

 

“If the Executive dies during the Term the Company shall pay to the Executive’s
estate the payments and other benefits applicable to termination without Cause
set forth in Section 7(b) hereof. Any cash payments shall be paid in a lump sum
on or within 60 days following the date of death; provided, however, that if the
60-day period begins in one calendar year and ends in the subsequent calendar
year, such payment shall be made in the latter calendar year. In addition, on
termination of the Executive under this Section 7(d), all of the Executive’s
outstanding but unvested time-based equity awards shall immediately vest and
become exercisable and all restrictions thereon shall lapse, as applicable. With
respect to the Executive’s outstanding but unvested equity awards that vest or
become earned based on the achievement of pre-established performance goals or
criteria over a specified time period, the designated performance goals for such
awards shall be deemed to have been satisfied (and, for any award with different
levels of potential payment, such performance shall be deemed to be at the
target level) and any remaining vesting conditions shall be deemed to be
satisfied on the Executive’s Date of Termination and such equity awards shall be
settled as soon as administratively practicable thereafter. The term of any
stock options shall be extended to the earlier of (i) the fifth anniversary of
the Executive’s termination or (ii) the expiration of the original term of such
stock options. The Executive acknowledges that extending the term of any
incentive stock option pursuant to this Section could cause such stock option to
lose its tax-qualified status under the Code, and agrees that the Company shall
have no obligation to compensate the Executive for any additional taxes he
incurs as a result. The provisions of this Section 7(d) shall not affect the
entitlements of the Executive’s heirs, executors, administrators, legatees,
beneficiaries or assigns under any employee benefit plan, fund or program of the
Company.”

 

 4 

 

 

6.       Termination for Good Reason. The first paragraph of Section 8(a) of the
Plan is hereby deleted and replaced in its entirety with the following:

 

“In the event the Executive terminates his employment with the Company for Good
Reason (as defined below), the Executive shall be entitled to receive, and the
Company agrees to pay and deliver, the payments and other benefits applicable to
termination without Cause set forth in Section 7(b) hereof at the times and
subject to the conditions set forth therein. In addition, on termination of the
Executive under this Section 8(a), all of the Executive’s outstanding but
unvested time-based equity awards shall immediately vest and become exercisable
and all restrictions thereon shall lapse, as applicable. With respect to the
Executive’s outstanding but unvested equity awards that vest or become earned
based on the achievement of pre-established performance goals or criteria over a
specified time period, the designated performance goals for such awards shall be
deemed to have been satisfied (and, for any award with different levels of
potential payment, such performance shall be deemed to be at the target level)
and any remaining vesting conditions shall be deemed to be satisfied on the
Executive’s Date of Termination and such equity awards shall be settled as soon
as administratively practicable thereafter. The term of any stock options shall
be extended to the earlier of (i) the fifth anniversary of the Executive’s
termination or (ii) the expiration of the original term of such stock options.
The Executive acknowledges that extending the term of any incentive stock option
pursuant to this Section could cause such stock option to lose its tax-qualified
status under the Code, and agrees that the Company shall have no obligation to
compensate the Executive for any additional taxes he incurs as a result.”

 

7.       Definitions. Section 10(b) of the Plan is hereby deleted and replaced
in its entirety with the following:

 

“For the purposes of this Plan, a Change in Control shall be deemed to have
occurred if:

 

1.there shall be consummated (i) any reorganization, liquidation or
consolidation of Parent, or any merger or other business combination of Parent
with any other corporation, other than any such merger or other combination that
would result in the voting securities of Parent outstanding immediately prior
thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity) at least fifty percent
(50%) of the total voting power represented by the voting securities of Parent
or such surviving entity outstanding immediately after such transaction, or (ii)
any sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all, or substantially all, of the assets of Parent; or

 

 5 

 

 

2.any “person” (as defined in Section 13(d) and 14(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”)), shall become the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of fifty percent (50%) or more of the Parent’s outstanding voting
securities; or

 

3.during any period of two consecutive years, individuals who at the beginning
of such period constituted the entire Board shall cease for any reason to
constitute at least one-half of the membership thereof unless the election, or
the nomination for election by Parent’s shareholders, of each new director was
approved by a vote of at least one-half of the directors then still in office
who were directors at the beginning of the period.

 

No benefits deemed non-qualified deferred compensation subject to Section 409A
shall be payable upon a Change in Control pursuant to this Plan unless such
Change in Control constitutes a “change in control event” with respect to the
Parent within the meaning of Section 409A.”

 

8.       Indemnification. Section 13 of the Plan is hereby deleted and replaced
in its entirety with the following:

 

“As an officer, employee and/or agent of the WCI Group, the Executive shall be
indemnified by the Parent and/or the Company to the fullest extent permitted by
applicable law in connection with his employment hereunder, unless the Executive
is asserting claims against the WCI Group (as defined in Section 7(a)) or any
member entity thereof. The indemnification provided under this Section 13 shall
be in addition to, and shall not limit in any manner, any indemnification
available to the Executive from the WCI Group under any other agreement, program
or provision.”

 

9.       Governing Law and Jurisdictional Agreement. Section 22 of the Plan is
hereby amended by (i) revising the phrase “The Plan and this Amendment are
together intended” to read “This Plan is intended”, and (ii) revising the
subsequent references to “the Plan and this Amendment” to read “this Plan”.

 

10.       Arbitration. Appendix A of the Plan is hereby deleted and replaced in
its entirety with the Appendix A attached to this Amendment.

 

 6 

 

 

11.       Additional Information Rights Under ERISA. Appendix B of the Plan is
hereby amended to change the addresses referenced under the Administrative
Information section to the Company’s new address. All references to “10001
Woodloch Forest Drive, Suite 400” shall be replaced with “3 Waterway Square
Place, Suite 110.” All other provisions of the addresses listed and Appendix B
remain the same.

 

12.       No Other Changes. Except as provided in this Amendment, the Plan shall
remain in full force and effect and remain unchanged.

 

13.       Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument. A facsimile, telecopy or other reproduction of this Amendment may be
executed by one or more parties and delivered by such party by facsimile or any
similar electronic transmission device pursuant to which the signature of or on
behalf of each such party can be seen. Such execution and delivery shall be
considered valid, binding and effective for all purposes.

 

14.       Governing Law. The Plan and this Amendment are together intended to be
a Top Hat Plan and shall be interpreted, administered and enforced in accordance
with ERISA. It is expressly intended that ERISA preempt the application of state
laws to the Plan and this Amendment to the maximum extent permitted by Section
514 of ERISA. To the extent that state law is applicable, the statutes and
common law of the State of Texas shall apply, excluding any that mandate the use
of another jurisdiction’s laws. The parties irrevocably and unconditionally
submit to the jurisdiction and venue of any court, federal or state, situated
within Harris County, Texas, for the purpose of any suit, action or other
proceeding arising out of, or relating to or in connection with, the Plan and
this Amendment.

 

15.       Miscellaneous. This Amendment and the Plan set forth the entire
agreement between the Company and the Executive concerning the subject matter
herein, and fully supersedes any and all prior oral or written agreements,
promises or understandings between the Company and the Executive concerning the
subject matter herein including, without limitation, any acceleration provisions
set forth in any agreement evidencing an equity award held by the Executive.
Further, the Executive represents and acknowledges that in executing this
Amendment, the Executive does not rely, and has not relied, on any prior oral or
written communications by the Company, and the Executive expressly disclaims any
reliance on any prior oral or written communications, agreements, promises,
inducements, understandings, statements or representations in entering into this
Amendment. Therefore, the Executive understands that he is precluded from
bringing any fraud or fraudulent inducement claim against the Company associated
with any such communications, agreements, promises, inducements, understandings,
statements or representations. The Company and the Executive are entering into
this Amendment based on their own judgment.

 

[Signature Page Follows]

 7 

 

 

IN WITNESS WHEREOF, the Company has caused this Amendment to be executed by its
duly authorized officer and the Executive has executed this Amendment as of
October 17, 2018.

 

 

 

WASTE CONNECTIONS US, INC.

 

By: /s/ Worthing F. Jackman

 

Its: President

 

Date: October 17, 2018

EXECUTIVE

 

/s/ Ronald J. Mittelstaedt

Ronald J. Mittelstaedt

 

 

Date: October 17, 2018

   

 

 

 

 

 

Signature Page

 

 

 

APPENDIX A

 

Detailed Claims And Arbitration Procedures

 

1.       Claims Procedure

 

Initial Claims

 

All claims shall be presented to the Plan Administrator in writing. Within
ninety (90) days after receiving a claim, a claims official appointed by the
Plan Administrator shall consider the claim and issue his or her determination
thereon in writing. If the Plan Administrator or claims official determines that
an extension of time is necessary, the claims official may extend the
determination period for up to an additional ninety (90) days by giving the
Executive written notice indicating the special circumstances requiring the
extension of time prior to the termination of the initial ninety (90) day
period. Any claims that the Executive does not pursue in good faith through the
initial claims stage shall be treated as having been irrevocably waived.

 

Claims Decisions

 

If the claim is granted, the benefits or relief the Executive seeks shall be
provided. If the claim is wholly or partially denied, the claims official shall,
within ninety (90) days (or a longer period, as described above), provide the
Executive with written notice of the denial, setting forth, in a manner
calculated to be understood by the Executive: (1) the specific reason or reasons
for the denial; (2) specific references to the provisions on which the denial is
based; (3) a description of any additional material or information necessary for
the Executive to perfect the claim, together with an explanation of why the
material or information is necessary; and (4) an explanation of the procedures
for appealing denied claims. If the Executive can establish that the claims
official has failed to respond to the claim in a timely manner, the Executive
may treat the claim as having been denied by the claims official.

 

Appeals of Denied Claims

 

The Executive shall have the opportunity to appeal the claims official’s denial
of a claim in writing to an appeals official appointed by the Plan Administrator
(which may be a person, committee, or other entity). The Executive must appeal a
denied claim within sixty (60) days after receipt of written notice of denial of
the claim, or within sixty (60) days after it was due if the Executive did not
receive it by its due date. The Executive shall have the opportunity to submit
written comments, documents, records and other information relating to the
Executive’s claim. The Executive (or the Executive’s duly authorized
representative) shall be provided upon request and free of charge, reasonable
access to, and copies of, all documents, records and other information relevant
to the Executive’s claim. The appeals official shall take into account during
its review all comments, documents, records and other information submitted by
the Executive relating to the claim, without regard to whether such information
was submitted or considered in the initial benefits review. Any claims that the
Executive does not pursue in good faith through the appeals stage, such as by
failing to file a timely appeal request, shall be treated as having been
irrevocably waived.

 

 

Appendix A-1 

 

 

Appeals Decisions

 

The decision by the appeals official shall be made not later than sixty (60)
days after the written appeal is received by the Plan Administrator, however, if
the appeals official determines that an extension of time is necessary, the
appeals official may extend the determination period for up to an additional
sixty (60) days by giving the Executive written notice indicating the special
circumstances requiring the extension of time prior to the termination of the
initial sixty (60) day period. The appeal decision shall be in writing, shall be
set forth in a manner calculated to be understood by the Executive and shall
include the following: (1) the specific reason or reasons for the denial; (2)
specific references to the provisions on which the denial is based; (3) a
statement that the Executive is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant to the Executive’s claim. If the Executive does not receive
the appeal decision by the date it is due, the Executive may deem the appeal to
have been denied.

 

Procedures

 

The Plan Administrator shall adopt procedures by which initial claims shall be
considered and appeals shall be resolved; different procedures may be
established for different claims. All procedures shall be designed to afford the
Executive full and fair consideration of his or her claim.

 

Additional Disability Claims Procedures

 

Notwithstanding anything to the contrary above, disability claims and appeals
under this Plan shall comply with the following requirements (in addition to any
requirements above):

 

Initial Claims

 

Within forty-five (45) days after receiving a claim, a claims official appointed
by the Plan Administrator shall consider the claim and issue his or her
determination thereon in writing. If the Plan Administrator or claims official
determines that an extension of time is necessary, the claims official may
extend the determination period twice by thirty (30) days by giving the
Executive prior written notice indicating the special circumstances requiring
the extension of time and the date by which we expect to render a decision. If
such an extension is necessary due to the Executive’s failure to submit the
information necessary to decide the claim, the notice of extension will
specifically describe the required information, and the Executive will be
afforded at least forty-five (45) days within which to provide the specified
information. If the Executive delivers the requested information within the time
specified, any thirty (30)-day extension period will begin after the Executive
has provided that information.

 

Appeals

 

The Executive must appeal a denied claim within one hundred eighty (180) days
after receipt of written notice of denial of the claim. The decision by the
appeals official shall be made not later than forty-five (45) days after the
written appeal is received by the Plan Administrator, however, if the appeals
official determines that an extension of time is necessary, the appeals official
may extend the determination period for up to an additional forty-five (45) days
by giving the Executive written notice indicating the special circumstances
requiring the extension of time prior to the termination of the initial
forty-five (45) day period. If an extension is necessary due to the Executive’s
failure to submit the information necessary to decide the appeal, the notice of
extension will specifically describe the required information, and the Executive
will be afforded at least forty-five (45) days to provide the specified
information. If the Executive delivers the requested information within the time
specified, the forty-five (45) day extension of the appeal period will begin
after the Executive has provided that information.

 

 

Appendix A-2 

 

 

Effective as of April 1, 2018, the following provisions apply with respect to a
claim for disability benefits under this Plan. The claims requirements above
shall apply as the internal claims process except as provided under DOL Reg.
2650.503-1 and any superseding guidance.

 

(1)       Independent and Impartial Review. The Plan must meet the conflict of
interest requirements under DOL Reg. 2560.503-1(b)(7). All claims and appeals
for disability benefits must be adjudicated in a manner designed to ensure the
independence and impartiality of the persons involved in making the decision.
Accordingly, decisions regarding hiring, compensation, termination, promotion,
or other similar matters with respect to any individual (such as a claims
adjudicator or medical or vocational expert) must not be made based upon the
likelihood that the individual will support the denial of benefits.

 

(2)       Adverse Benefit Determination. An adverse benefit determination also
includes any rescission of coverage as described in DOL Reg.
2560.503-1(m)(4)(ii).

 

(3)       Full and Fair Review. The Executive must be allowed to review the file
and present evidence and testimony as part of the appeals process. Executives
must be provided, free of charge, with any new or additional evidence
considered, relied upon or generated by the Plan in connection with the claim
sufficiently in advance of the final adverse benefit determination to give the
Executive a reasonable opportunity to respond prior to that date in accordance
with DOL Reg. 2560.503-1(h)(4).

 

(4)       Deemed Exhaustion of Claims Process. If the Plan fails to adhere to
the requirements of DOL Reg. 2560.503-1, except as provided under DOL Reg.
2560.503-1(l)(2)(ii), the Executive may bring an action under section 502(a) of
ERISA as provided in DOL Reg. 2560.503-1(l)(2)(i) and any superseding guidance.

 

(5)       Notices. A notice of adverse benefit determination must include the
information required under DOL Reg. 2560.503-1(g)(vii), (j)(4) and (j)(6), as
applicable. The notice of adverse benefit determination must include a
discussion of the decision, including an explanation of the basis for
disagreeing with or not following:

 

(A)    The views presented by the Executive to the Plan of health care
professionals treating the Executive and vocational professionals who evaluated
the Executive;

 

(B)    The views of medical or vocational experts whose advice was obtained on
behalf of the plan in connection with the Executive’s adverse benefit
determination, without regard to whether the advice was relied upon in making
the benefit determination; and

 

 

Appendix A-3 

 

 

(C)    A disability determination regarding the Executive presented by the
Executive to the Plan made by the Social Security Administration;

 

If the adverse benefit determination is based on a medical necessity or
experimental treatment or similar exclusion or limit, the notice should contain
an explanation of the scientific or clinical judgment for the determination,
applying the terms of the Plan to the Executive’s medical circumstances, or a
statement that such explanation will be provided free of change upon request. In
addition, if any specific internal rules, guidelines, protocols, standards or
other similar criteria of the plan were relied upon in making the adverse
determination, the notice should describe such criteria or, alternatively, a
statement that such rules, guidelines, protocols, standards or other similar
criteria of the plan do not exist.

 

The notice must be provided in a culturally and linguistically appropriate
manner as provided under DOL Reg. 2560.503-1(g)(viii), (j)(7), and (o). If the
Plan maintains a contractual deadline to file a civil action under section
502(a) of ERISA, the notice of adverse benefit determination shall disclose the
specific deadline, including the calendar date on which the Executive’s rights
expire, as required by DOL Reg. 2560.503-1(j)(4)(ii).

 

Arbitration of Rejected Appeals

 

If the Executive has pursued a claim through the appeal stage of these claims
procedures, the Executive may contest the actual or deemed denial of that claim
through arbitration, as described below. In no event shall any denied claim be
subject to resolution by any means (such as in a court of law) other than
arbitration in accordance with the following provisions.

 

2.       Arbitration Procedure

 

Request for Arbitration

 

The Executive must submit a request for arbitration to the Plan Administrator
within 60 days after receipt of the written denial of an appeal (or within sixty
(60) days after he or she should have received the determination). The Executive
or the Plan Administrator may bring an action in any court of appropriate
jurisdiction to compel arbitration in accordance with these procedures.

 

Applicable Arbitration Rules

 

If the Executive has entered into a separate and valid arbitration agreement
with the Company, the arbitration shall be conducted in accordance with that
agreement. If not, the rules set forth in the balance of this Appendix shall
apply: The arbitration shall be held under the auspices of the American
Arbitration Association (“AAA”). Except as provided below, the arbitration shall
be in accordance with AAA’s then-current employment dispute resolution rules.
The Arbitrator shall apply the Federal Rules of Evidence and shall have the
authority to entertain a motion to dismiss or a motion for summary judgment by
any party and shall apply the standards governing such motions under the Federal
Rules of Civil Procedure. The Federal Arbitration Act shall govern all
arbitrations that take place under these Detailed Claims and Arbitration
Procedures (or that are required to take place under them), and shall govern the
interpretation or enforcement of these Procedures or any arbitration award. To
the extent that the Federal Arbitration Act is inapplicable, Texas law
pertaining to arbitration agreements shall apply.

 

 

Appendix A-4 

 

 

Arbitrator

 

The arbitrator (the “Arbitrator”) shall be an attorney familiar with employee
benefit matters who is licensed to practice law in the state in which the
arbitration is convened. The Arbitrator shall be selected in the following
manner from a list of eleven arbitrators drawn by the sponsoring organization
under whose auspices the arbitration is being conducted and taken from its panel
of labor and employment arbitrators. Each party shall designate all arbitrators
on the list whom they find acceptable; the parties shall then alternately strike
arbitrators from the list of arbitrators acceptable to both parties, with the
party who did not initiate the arbitration striking first. If only one
arbitrator is acceptable to both parties, he or she will be the Arbitrator. If
none of the arbitrators is acceptable to both parties, a new panel of
arbitrators shall be obtained from the sponsoring organization and the selection
process shall be repeated.

 

Location

 

The arbitration will take place in or near the city in which the Executive is or
was last employed by the Company or in which the Plan is principally
administered, whichever is specified by the Plan Administrator, or in such other
location as may be acceptable to both the Executive and the Plan Administrator.

 

Authority of Arbitrator

 

The Arbitrator shall have the authority to resolve any factual or legal claim
relating to the Plan or relating to the interpretation, applicability, or
enforceability of these arbitration procedures, including, but not limited to,
any claim that these procedures are void or voidable. The Arbitrator may grant
the Executive’s claim only if the Arbitrator determines that it is justified
because: (1) the appeals official erred on an issue of law; or (2) the appeals
official’s findings of fact, if applicable, were not supported by substantial
evidence. The arbitration shall be final and binding on all parties.

 

Limitation on Scope of Arbitration

 

The Executive may not present any evidence, facts, arguments, or theories at the
arbitration that the Executive did not pursue in his or her appeal, except in
response to new evidence, facts, arguments, or theories presented on behalf of
the other parties to the arbitration. However, an arbitrator may permit the
Executive to present additional evidence or theories if the Arbitrator
determines that the Executive was precluded from presenting them during the
claim and appeal procedures due to procedural errors of the Plan Administrator
or its delegates.

 

Administrative Record

 

The Plan Administrator shall submit to the Arbitrator a certified copy of the
record on which the appeals official’s decision was made.

 

 

Appendix A-5 

 

 

Experts, Depositions, and Discovery

 

Except as otherwise permitted by the Arbitrator on a showing of substantial
need, either party may: (1) designate one expert witness; (2) take the
deposition of one individual and the other party’s expert witness; (3) propound
requests for production of documents; and (4) subpoena witnesses and documents
relating to the discovery permitted in this paragraph.

 

Pre-Hearing Procedures

 

At least thirty (30) days before the arbitration hearing, the parties must
exchange lists of witnesses, including any expert witnesses, and copies of all
exhibits intended to be used at the hearing. The Arbitrator shall have
jurisdiction to hear and rule on pre-hearing disputes and is authorized to hold
pre-hearing conferences by telephone or in person, as the Arbitrator deems
necessary.

 

Transcripts

 

Either party may arrange for a court reporter to provide a stenographic record
of the proceedings at the party’s own cost.

 

Post-Hearing Procedures

 

Either party, on request at the close of the hearing, may be given leave to file
a post-hearing brief within the time limits established by the Arbitrator.

 

Costs and Attorneys’ Fees

 

The prevailing party shall be entitled to reasonable attorneys’ fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled, except as required by applicable law.

 

Procedure for Collecting Costs From Executive

 

Before the arbitration commences, the Executive must deposit with the Plan
Administrator a payment equal to the amount of any fees that he or she would pay
to file a claim in court. The Company shall pay any portion of the anticipated
fees and costs of the Arbitrator in excess of that amount. In the event the
Company is the prevailing party in any arbitration, the Arbitrator shall be
permitted to reallocate the fees and costs associated with the arbitration from
the Company to the Participant and in such event the Participant shall be
obligated to reimburse the Company for such fees and costs within 10 days after
such determination is made.

 

Arbitration Award

 

The Arbitrator shall render an award and opinion in the form typically rendered
in labor arbitrations. Within twenty (20) days after issuance of the
Arbitrator’s award and opinion, either party may file with the Arbitrator a
motion to reconsider, which shall be accompanied by a supporting brief. If such
a motion is filed, the other party shall have twenty (20) days from the date of
the motion to respond, after which the Arbitrator shall reconsider the issues
raised by the motion and either promptly confirm or promptly change his or her
decision. The decision shall then be final and conclusive on the parties.
Arbitrator fees and other costs of a motion for reconsideration shall be borne
by the losing party, unless the Arbitrator orders otherwise. Either party may
bring an action in any court of appropriate jurisdiction to enforce an
arbitration award. A party opposing enforcement of an arbitration award may not
do so in an enforcement proceeding, but must bring a separate action in a court
of competent jurisdiction to set aside the award. In any such action, the
standard of review shall be the same as that applied by an appellate court
reviewing the decision of a trial court in a nonjury trial.

 

 

Appendix A-6 

 

 

Severability

 

The invalidity or unenforceability of any part of these arbitration procedures
shall not affect the validity of the rest of the procedures.

 

 

 

 

 

 

 

 

 

 

Appendix A-7