Exhibit 10.1
RCN CORPORATION
AMENDED AND RESTATED CHANGE OF CONTROL SEVERANCE PLAN
1. Term of Plan; General. This Plan shall become effective on the Effective
Date. For the sake of clarity, no benefits shall be provided hereunder in
respect of a Participant’s termination of employment for any reason prior to the
Effective Date. Capitalized terms not otherwise defined shall have the meanings
set forth on Exhibit A hereto.
2. Participants Covered. This Plan shall apply to Participants who are employed
by RCN immediately prior to a Change of Control.
3. Selection of Participants. The Compensation Committee of the Board (the
“Committee”) shall designate those employees of the Employer who shall be
considered to be Participants hereunder through a formal designation letter (the
“Designation Letter”) specifying the terms and conditions of the employee’s
participation. An employee who has not received a Designation Letter from the
Committee shall not be a Participant hereunder. Except as set forth in the
Designation Letter, the Committee may revoke an employee’s designation as a
Participant at any time, provided, however, that the Committee may not revoke an
employee’s designation as a Participant (i) at the request of a third party in
contemplation of a Change of Control, or otherwise in connection with or in
anticipation of a specifically-contemplated Change of Control, and in either
case, such Change of Control occurs within one year after such revocation, or
(ii) if any severance obligations owed to such Participant remain outstanding
and unpaid at the time of revocation.
4. Compensation Upon Termination. The Participant shall be entitled to the
severance benefits provided in this Section 4 hereof in the event that a Change
of Control occurs during the Protection Period, and the Participant’s employment
with all Employers is subsequently terminated during the Protection Period by an
Employer without Cause or by the Participant for Good Reason (a “Qualifying
Termination”). Notwithstanding the foregoing, the Participant shall not be
entitled to severance benefits in the event of a termination of employment due
to the Participant’s voluntary termination without Good Reason, an Employer’s
termination of the Participant for Cause or on account of death or Disability.
Upon termination of the Participant’s employment as provided above, each
Participant shall be entitled to the following benefits:
a. Severance. In the event of a Qualifying Termination during the Protection
Period, a Participant shall be entitled to a lump sum payment equal to (i) his
or her then-Base Salary for a twelve (12) month period, (ii) an amount equal to
such Participant’s target bonus, and (iii) a prorated portion of the
Participant’s target bonus (based upon the portion of the year of termination
elapsed prior to the Participant’s Qualifying Termination, calculated as if the
Company had achieved 100% of any bonus targets for the year of termination);
provided that to receive any such payments, the Participant shall be required to
execute and not revoke a customary form of separation and release agreement (the
“Release”).
b. Additional Payments. In addition to the severance payment in (a), above, the
Participants shall receive the following additional payments, payable in a lump
sum promptly after the Participant’s Termination Date: (i) any accrued but
unpaid Base Salary through the Termination Date, (ii) any accrued but unpaid
bonus payments attributable to periods prior to the year of termination, and
(iii) an amount, if any, equal to any accrued vacation in full satisfaction of
the Participant’s rights thereto.
c. Equity Acceleration. Upon a Qualifying Termination, all options, restricted
stock awards, restricted stock units or other similar awards then held by the
Participant shall become vested and, as applicable, exercisable.

 

 

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d. Welfare Benefits. RCN and the Participant shall continue to make such
contributions as were required to be paid by RCN and the Participant immediately
prior to the Termination Date for, and the Participant shall continue to
receive, medical, dental, and vision benefits for the Participant and the
Participant’s eligible dependents on the same basis as in effect prior to the
Change of Control or the Participant’s Termination Date, whichever is deemed to
provide for more substantial benefits, for the one-year period following the
Participant’s date of termination (the “Severance Period”); thereafter, the
Participant may continue to be covered under the plans of the Employer providing
such benefits at the Participant’s expense at the applicable COBRA rate for the
duration of the Consolidated Omnibus Reconciliation Act of 1985, as amended
(“COBRA”) period which begins to run as of the Termination Date of the
Participant; provided, however, in the event that the Participant commences
comparable benefit coverage with a subsequent employer during the Severance
Period, such Employer benefit coverage shall cease. RCN shall be entitled to
reduce the amount of the payment to be made under Section 5(a) in the amount of
the sum of the contributions required to be made by Participant during the
Severance Period in respect of the benefits to be provided to Participants under
this Section 5(c) (the “Participant Contributions”); provided that, in the event
Participant commences comparable benefit coverage with an alternative provider
prior to the end of the Severance Period, RCN shall pay unused portion of the
Participant Contributions to Participant promptly.
e. Section 409A. Any payments required to be made hereunder during the six month
period following a Participant’s Qualifying Termination shall be deferred and
paid at the expiration of such period.
f. Withholding. Payments and benefits provided pursuant to this Section 5 shall
be subject only to any applicable payroll and other taxes required to be
withheld.
g. No Mitigation. The Participant shall not be required to mitigate the amount
of any payment provided for in this Plan by seeking other employment or
otherwise and no such payment shall be offset or reduced by the amount of any
compensation or benefits provided to the Participant in any subsequent
employment, other than is set forth in Section 5(c).
h. Offset for Other Severance. In the event that the Participant is eligible for
severance under any other plan or agreement of RCN or any Employer, then any
cash severance amounts payable pursuant to this Plan shall be reduced by the
amount of any cash severance payments payable under such other plan or
agreement.
5. Gross-Up. Except as otherwise provided in a Participant’s Designation Letter
(which letter may not eliminate the requirement that any payments to Participant
exceed the Safe Harbor Limit by greater than 10% before such Participant would
be entitled to a Gross-Up Payment), each Participant shall additionally be
entitled to the benefits specified in Exhibit B attached hereto.
6. Notices. Termination of the Participant by an Employer for any reason shall
be made by delivery to the Participant a written notice specifying the basis for
such termination (“Notice of Termination”). For the purposes of this Plan,
notices and all other communications provided for in the Plan shall be in
writing and shall be deemed to have been duly given when personally delivered,
delivered by a nationally recognized overnight delivery service, or sent by
certified mail, return receipt requested, postage prepaid, addressed to the
respective addresses last given by each party to the other, provided that all
notices to RCN shall be directed to the attention of the General Counsel with a
copy to the Secretary of RCN. All notices and communications shall be deemed to
have been received on the date of delivery thereof or on the third business day
after the mailing thereof, except that notice of change of address shall be
effective only upon receipt.

 

 

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7. Amendment and Termination. This Plan may not be amended or terminated during
the Protection Period. The Board may amend, modify or terminate the Plan prior
to the Effective Date; provided, however, that the Board may not amend, modify,
or terminate the Plan (i) at the request of a third party in contemplation of a
Change of Control, or otherwise arose in connection with or anticipation of a
specifically-contemplated Change of Control, and such Change of Control occurs
within one year after such amendment or termination or (ii) until all severance
obligations under the Plan have been performed, if any such amendment or
modification is adverse to any Participant.
8. 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 RCN or any of its subsidiaries
and for which the Participant may qualify, nor shall anything herein limit or
reduce such rights as the Participant may have under any agreements with RCN or
any of its subsidiaries (although any such severance benefits reduce the
severance payable under this Plan). Amounts which are vested benefits or which
the Participant is otherwise entitled to receive under any plan or program of
RCN or any of its subsidiaries shall be payable in accordance with such plan or
program, except as explicitly modified by this Plan.
9. Joint and Several Liability. Each entity included in the definition of
“Employer” and any successors or assigns shall be jointly and severally liable
with RCN under this Plan.
10. Governing Law; Disputes. This Plan shall be governed by and construed and
enforced in accordance with the laws of the State of New York without giving
effect to the conflict of law principles thereof. For purposes of jurisdiction
and venue, RCN and each Employer hereby consents to jurisdiction and venue in
any action, suit or proceeding in any court of competent jurisdiction in any
state in which the Participant resides at the commencement of such action, suit
of proceeding and waives any objection, challenge or dispute as to such
jurisdiction or venue being proper. In the event that Participant is required to
take legal action to enforce Participant’s rights hereunder, the Company shall
reimburse Participant for all reasonable legal fees and expenses of such legal
action, provided that Participant prevails in such legal action with respect to
at least one material issue.
11. Successors and Assigns. This Plan shall be binding upon and shall inure to
the benefit of RCN, its successors and assigns, and RCN shall require any
successor or assign to expressly assume and agree to maintain this Plan and to
perform under this Plan to the same extent that RCN would be required to perform
under the Plan if no such succession or assignment had taken place. The term
“Company” as used herein shall include such successors and assigns.
12. Severability. The provisions of this Plan shall be deemed severable, and the
invalidity or unenforceability of any provision hereof shall not affect the
validity or enforceability of the other provisions hereof.
IN WITNESS WHEREOF, this instrument has been executed on this 3rd day of July,
2008.

            RCN CORPORATION
      By:   Peter D. Aquino         Name:   Peter D. Aquino        Title:  
President & Chief Executive Officer   

 

 

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EXHIBIT A
DEFINITIONS
The following terms shall have the meanings set forth below for purposes of this
Plan:
a. “Base Salary” shall mean the greater of a Participant’s annual base salary on
the Effective Date or the Participant’s Termination Date following the Effective
Date.
b. “Just Cause” means a Participant’s repeated failure to perform the
Participant’s material duties as assigned, a Participant’s engagement in willful
or intentional materially injurious acts, continual or repeated absence (unless
due to illness or disability), a Participant’s use of illegal drugs or
impairment due to other substances, a Participant’s conviction of any felony, or
a plea of guilty or no contest with respect thereto, an act of gross misconduct,
fraud, embezzlement or theft or a Participant’s violation of a material policy
of an Employer that is demonstrably and materially injurious to RCN or a
subsidiary. In order to terminate a Participant for “Just Cause”, an Employer
shall first give a Participant written notice stating with specificity the
reason for termination (“breach”) and, if such breach is susceptible of cure or
remedy, the Participant shall be given a period of 10 days after the giving of
such notice to fully remedy or cure such breach. An Employer may terminate a
Participant for “just cause” at the end of such 10-day period if the breach is
not fully remedied at that time. Notwithstanding the foregoing, need not provide
a Participant with an opportunity to cure any acts of theft of cash or
significant property of an Employer, fraud or embezzlement.
c. “Change of Control” of RCN shall mean: (a) any “person” (as such term is used
in Sections 3(a)(9) and 13(d) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) or “group” (as such term is used in Section 14(d)(2) of
the Exchange Act) is or becomes a “beneficial owner” (as such term is used in
Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the Voting
Stock of RCN; (b) all or substantially all of the assets or business of RCN are
disposed of pursuant to a merger, consolidation or other transaction unless,
immediately after such transaction, the stockholders of RCN immediately prior to
the transaction own, directly or indirectly, in substantially the same
proportion as they owned the Voting Stock of RCN prior to such transaction more
than 50% of the Voting Stock of RCN surviving such transaction or succeeding to
all or substantially all of the assets or business of RCN or the ultimate parent
company of such surviving or successor company if such surviving or successor
company is a subsidiary of another entity (there being excluded from the number
of shares held by such stockholders, but not from the Voting Stock of the
combined company, any shares received by affiliates of such other company in
exchange for stock of such other company); (c) a majority of the Board consists
of individuals other than Incumbent Directors, which term means the members of
the Board on the effective date or, if any such individual is no longer a member
of the Board, any successor to any such individual (or to any successor to any
such individual) if the election or nomination for election of such individual
or successor was approved by a majority of the directors who then comprised the
Incumbent Directors; (d) the stockholders of RCN approve any plan of liquidation
providing for the distribution of all or substantially all of its assets if such
plan of liquidation will result in the winding-up of the business of RCN; or
(e) the consummation of any merger, consolidation or other similar corporate
transaction unless, immediately after such transaction, the stockholders of RCN
immediately prior to the transaction own, directly or indirectly, in
substantially the same proportion as they owned the Voting Stock of RCN prior to
such transaction more than 50% of the Voting Stock of RCN surviving such
transaction or its ultimate parent company if such surviving company is a
subsidiary of another entity (there being excluded from the number of shares
held by such stockholders, but not from the Voting Stock of the combined
company, any shares received by affiliates of such other company in exchange for
stock of such other company). For purposes of this definition, “RCN” shall
include any entity that succeeds to all or substantially all of the business of
RCN; “Voting Stock” shall mean securities of any class or classes having general
voting power under ordinary circumstances, in the absence of contingencies, to
elect the directors of a corporation; and references to ownership of “more than
50% of the Voting Stock” shall mean the ownership of shares of Voting Stock that
represent the right to exercise more than 50% of the votes entitled to be cast
in the election of directors of a corporation.

 

 

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d. "“Disability” means, as a result of a Participant’s incapacity due to
physical or mental illness as determined by a physician selected by the
Participant, and reasonably acceptable to RCN, a Participant has been
substantially unable to perform his or her duties hereunder for six consecutive
months, or for an aggregate of 180 days during any period of twelve consecutive
months..
e. “Effective Date” shall mean August 1, 2008.
f. “Employer” shall mean RCN or any subsidiary of RCN for which a Participant is
employed thereby.
g. “Good Reason” shall mean the occurrence after a Change of Control of any of
the following events or conditions: (a) an Employer’s material breach of an
employment agreement with the Participant (after failure to cure within thirty
(30) days of receipt of written notice from the Participant); (b) a reduction in
a Participant’s Base Salary or Target Bonus opportunity (that is not in either
case agreed to by the Participant); (c) a material diminution in a Participant’s
title or duties as in effect immediately prior to the Effective Date that is not
cured within thirty (30) days of receipt of written notice from the Participant;
or (d) relocation of a Participant’s principal place of work more than thirty
(30) miles without the Participant’s consent
h. “Protection Period” means the period commencing on the Effective Date and
ending on the second anniversary of a Change of Control.
i. “Termination Date” shall mean the Participant’s termination date specified in
any notice of termination.

 

 

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EXHIBIT B

Certain Change of Control Benefits
1. In the event it shall be determined that any payment or distribution in the
nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to
or for a Participant’s benefit, whether paid or payable pursuant to the
agreement to which this Exhibit B is attached (including, without limitation,
the accelerated vesting of equity awards held by a Participant) (collectively,
the “Company Payments”), would be subject to the excise tax imposed by
Section 4999 of the Code (the “Excise Tax”), then the amount of such Company
Payments shall be automatically reduced to an amount one dollar less than the
amount that would subject a Participant to such Excise Tax (the “Safe Harbor
Limit”); provided that if the Company Payments exceed the Safe Harbor Limit by
more than 10% of the Safe Harbor Limit, then a Participant shall instead be
entitled to receive an additional payment (the “Gross-Up Payment”) in an amount
such that, after payment by a Participant of all taxes (and any interest or
penalties imposed with respect to such taxes), including, without limitation,
any income taxes (and any interest and penalties imposed with respect thereto)
and Excise Tax imposed upon the Gross-Up Payment, a Participant retain an amount
of the Gross-Up Payment equal to the Excise Tax imposed upon the payments.
3. All determinations required to be made under this Exhibit B, including
whether and when a Gross-Up Payment is required, the amount of such Gross-Up
Payment and the assumptions to be utilized in arriving at such determination,
shall be made by a nationally recognized accounting firm selected by the Company
(the “Accounting Firm”). The Accounting Firm shall provide detailed supporting
calculations both to the Company and the Participant within 15 business days of
the receipt of notice from a Participant that there has been a Payment or such
earlier time as is requested by the Company. All fees and expenses of the
Accounting Firm shall be borne solely by the Company. Any Gross-Up Payment, as
determined pursuant to this Exhibit B, shall be paid by the Company to a
Participant within 15 days of the receipt of the Accounting Firm’s
determination. Absent manifest error, any determination by the Accounting Firm
shall be binding upon the Company and a Participant.
4. A Participant shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by the
Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable, but no later than ten business days after a Participant is informed
in writing of such claim. The Participant shall apprise the Company of the
nature of such claim and the date on which such claim is requested to be paid.
The Participant shall not pay such claim prior to the expiration of the 30-day
period following the date on which a Participant gives such notice to the
Company (or such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies a Participant in
writing prior to the expiration of such period that the Company desires to
contest such claim, the Participant shall:
(i) give the Company any information reasonably requested by the Company
relating to such claim,
(ii) take such action in connection with contesting such claim as the Company
shall reasonably request in writing from time to time, including, without
limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company,
(iii) cooperate with the Company in good faith in order effectively to contest
such claim, and
(iv) permit the Company to participate in any proceedings relating to such
claim;

 

 

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provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest, and shall indemnify and hold a Participant harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties) imposed as a result of such representation and payment of costs and
expenses. Without limitation on the foregoing provisions of this Exhibit B, the
Company shall control all proceedings taken in connection with such contest,
and, at its sole discretion, may pursue or forego any and all administrative
appeals, proceedings, hearings and conferences with the applicable taxing
authority in respect of such claim and may, at its sole discretion, either pay
the tax claimed to the appropriate taxing authority on a Participant’s behalf
and direct the Participant to sue for a refund or contest the claim in any
permissible manner, and the Participant agrees to prosecute such contest to a
determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that, if the Company pays such claim and directs
the Participant to sue for a refund, the Company shall indemnify and hold the
Participant harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties) imposed with respect to such payment or with
respect to any imputed income in connection with such payment; and provided,
further, that any extension of the statute of limitations relating to payment of
taxes for a Participants taxable year with respect to which such contested
amount is claimed to be due is limited solely to such contested amount.
Furthermore, the Company’s control of the contest shall be limited to issues
with respect to which the Gross-Up Payment would be payable hereunder, and the
Participant shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.
5. If, after a Participant’s receipt of a Gross-Up Payment or payment by the
Company of an amount on a Participant’s behalf pursuant to this Exhibit B, a
Participant becomes entitled to receive any refund with respect to the Excise
Tax to which such Gross-Up Payment relates or with respect to such claim, the
Participant shall promptly pay to the Company the amount of such refund
(together with any interest paid or credited thereon after taxes applicable
thereto). If, after payment by the Company of an amount on a Participant’s
behalf pursuant to this Exhibit B, a determination is made that the Participant
shall not be entitled to any refund with respect to such claim and the Company
does not notify the Participant in writing of its intent to contest such denial
of refund prior to the expiration of 30 days after such determination, then the
amount of such payment shall offset, to the extent thereof, the amount of
Gross-Up Payment required to be paid.
6. Notwithstanding any other provision of this Exhibit B, the Company may, in
its sole discretion, withhold and pay over to the Internal Revenue Service or
any other applicable taxing authority, for a Participant’s benefit, all or any
portion of any Gross-Up Payment, and each Participant hereby consents to such
withholding and payment.