Document:

exv4w1

Exhibit 4.1

AMENDMENT NO. 4 TO RIGHTS AGREEMENT

     THIS AMENDMENT NO. 4 (the “Amendment”), dated as of September 27, 2009, to the Rights
Agreement, dated November 29, 2004, by and between ASPECT MEDICAL SYSTEMS, INC., a Delaware
corporation (the “Company”), and COMPUTERSHARE TRUST COMPANY, N.A. (formerly EquiServe
Trust Company, N.A.), a national banking association, as Rights Agent (the “Rights Agent”),
as amended on May 23, 2005, November 1, 2007 and June 2, 2008 (the “Rights Agreement”) is
being executed at the direction of the Company. Capitalized terms used in this Amendment and not
otherwise defined herein shall have the meanings given them in the Rights Agreement.

     WHEREAS, Section 27 of the Rights Agreement provides that, except as specifically set forth
therein, the Company may, in its sole and absolute discretion, and the Rights Agent shall, if the
Company so directs, supplement or amend any provision of the Rights Agreement in any respect
without the approval of any holders of Rights, by action of its Board of Directors;

     WHEREAS, pursuant to Section 27 of the Rights Agreement, the Company has delivered to the
Rights Agent a certificate signed by an appropriate officer of the Company which states that the
proposed amendment of the Rights Agreement is in compliance with the terms of Section 27 of the
Rights Agreement;

     WHEREAS, United States Surgical Corporation (“Parent”), Transformer Delaware Corp.
(“Purchaser”) and the Company contemplate entering into an Agreement and Plan of Merger
(the “Merger Agreement”) providing for, among other things, the (i) a cash tender offer
(the “Offer”) by Purchaser to purchase all of the issued and outstanding shares of the
Company’s common stock, par value $0.01 per share the (the “Company Common Stock”), (ii)
the grant by the Company to Purchaser of the Top-Up Option (as defined in the Merger Agreement) and
(iii) following the consummation of the Offer, the merger of Purchaser with and into the Company
(the “Merger”), in each case, on the terms and subject to the conditions set forth in the
Merger Agreement; and

     WHEREAS, the Company desires to amend the Rights Agreement, as set forth herein, to facilitate
the transactions contemplated by the Merger Agreement.

     NOW, THEREFORE, in accordance with the procedures for amendment of the Rights Agreement set
forth in Section 27 thereof, and in consideration of the foregoing and the mutual agreements herein
set forth, the parties hereto, intending to be legally bound, hereby agree as follows:

     1. AMENDMENT TO SECTION 1.

          (a) The definition of “Acquiring Person” in Section 1(a) of the Rights Agreement is hereby
amended by adding the following sentence to the end of said Section 1(a):

“Notwithstanding anything in this Agreement to the contrary, none of Parent, Purchaser or
any of their respective Affiliates or Associates shall be or become an Acquiring Person
solely by reason of, and the term “Acquiring Person” shall not include any of Parent,
Purchaser or any of their respective Affiliates or Associates, solely by reason of, (i) the

 

 

approval, execution, delivery, performance or public announcement of the Merger Agreement
(including any amendments thereto), (ii) the public announcement of the Offer, (iii) the
commencement of the Offer or the purchase of Common Stock pursuant to the Offer, (iv) the
consummation or public announcement of the Merger and other transactions contemplated by the
Merger Agreement, (v) the Top Up Option, or (vi) the approval, execution, delivery,
performance or public announcement of the Tender and Voting Agreements.”

          (b) The definition of “Beneficial Owner” in Section 1(e) of the Rights Agreement is hereby
amended to add the following sentence at the end thereof:

     “Notwithstanding anything in Section 1(e) to the contrary, none of Parent, Purchaser,
or any of their Affiliates or Associates, individually or collectively, shall be deemed the
“Beneficial Owner” or shall be deemed to “beneficially own” any shares of Common Stock
solely by reason of (i) the approval, execution, delivery, performance or public
announcement of the Merger Agreement (including any amendments thereto), (ii) the public
announcement of the Offer, (iii) the commencement of the Offer or the purchase of Common
Stock pursuant to the Offer, (iv) the consummation or public announcement of the Merger and
other transactions contemplated by the Merger Agreement, (v) the Top Up Option, or (vi) the
approval, execution, delivery, performance or public announcement of the Tender and Voting
Agreements.”

          (c) The definition of “Distribution Date” in Section 1(n) of the Rights Agreement is hereby
amended to add the following at the end thereof immediately prior to the period:

     “; PROVIDED, HOWEVER, that, notwithstanding anything in this Agreement to the contrary,
a Distribution Date shall be deemed not to have occurred solely as a result of (i) the
approval, execution, delivery, performance or public announcement of the Merger Agreement
(including any amendments thereto), (ii) the public announcement of the Offer, (iii) the
commencement of the Offer or the purchase of Common Stock pursuant to the Offer, (iv) the
consummation or public announcement of the Merger and other transactions contemplated by the
Merger Agreement, (v) the Top Up Option, or (vi) the approval, execution, delivery,
performance or public announcement of the Tender and Voting Agreements”

          (d) The definition of “Permitted Offer” in Section 1(u) of the Rights Agreement is hereby
amended by adding the following sentence to the end of said Section 1(u):

     “For the avoidance of doubt, the Offer and the other transactions contemplated by the Merger
Agreement shall constitute a “Permitted Offer” hereunder.”

          (e) The definition of “Section 11(a)(ii) Event” in Section 1(ff) of the Rights Agreement is
hereby amended to add the following at the end thereof immediately prior to the period:

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     “; PROVIDED, HOWEVER, that, notwithstanding anything in this Agreement to the contrary,
a Section 11(a)(ii) Event shall be deemed not to have occurred, and the provisions of such
section shall not be made or given effect, solely as a result of (i) the approval,
execution, delivery, performance or public announcement of the Merger Agreement (including
any amendments thereto), (ii) the public announcement of the Offer, (iii) the commencement
of the Offer or the purchase of Common Stock pursuant to the Offer, (iv) the consummation or
public announcement of the Merger and other transactions contemplated by the Merger
Agreement, (v) the Top Up Option, or (vi) the approval, execution, delivery, performance or
public announcement of the Tender and Voting Agreements”

          (f) The definition of “Section 11(a)(ii) Trigger Date” in Section 1(gg) of the Rights
Agreement is hereby amended to add the following at the end thereof immediately prior to the
period:

     “; PROVIDED, HOWEVER, that, notwithstanding anything in this Agreement to the contrary,
a Section 11(a)(ii) Trigger Date shall be deemed not to have occurred solely as a result of
(i) the approval, execution, delivery, performance or public announcement of the Merger
Agreement (including any amendments thereto), (ii) the public announcement of the Offer,
(iii) the commencement of the Offer or the purchase of Common Stock pursuant to the Offer,
(iv) the consummation or public announcement of the Merger and other transactions
contemplated by the Merger Agreement, (v) the Top Up Option, or (vi) the approval,
execution, delivery, performance or public announcement of the Tender and Voting Agreements”

          (g) The definition of “Section 13 Event” in Section 1(hh) of the Rights Agreement is hereby
amended to add the following at the end thereof immediately prior to the period:

     “; PROVIDED, HOWEVER, that, notwithstanding anything in this Agreement to the contrary,
a Section 13 Event shall be deemed not to have occurred, and the provisions of such section
shall not be made or given effect, solely as a result of (i) the approval, execution,
delivery, performance or public announcement of the Merger Agreement (including any
amendments thereto), (ii) the public announcement of the Offer, (iii) the commencement of
the Offer or the purchase of Common Stock pursuant to the Offer, (iv) the consummation or
public announcement of the Merger and other transactions contemplated by the Merger
Agreement, (v) the Top Up Option, or (vi) the approval, execution, delivery, performance or
public announcement of the Tender and Voting Agreements”

          (h) The definition of “Stock Acquisition Date” in Section 1(jj) of the Rights Agreement is
hereby amended to add the following sentence at the end thereof:

     “Notwithstanding anything in this Agreement to the contrary, no Stock Acquisition Date
shall be deemed to have occurred solely as a result of (i) the approval, execution,
delivery, performance or public announcement of the Merger Agreement

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(including any amendments thereto), (ii) the public announcement of the Offer, (iii)
the commencement of the Offer or the purchase of Common Stock pursuant to the Offer, (iv)
the consummation or public announcement of the Merger and other transactions contemplated by
the Merger Agreement, (v) the Top Up Option, or (vi) the approval, execution, delivery,
performance or public announcement of the Tender and Voting Agreements.”

          (i) The definition of “Triggering Event” in Section 1(oo) of the Rights Agreement is hereby
amended to add the following at the end thereof immediately prior to the period:

“; PROVIDED, HOWEVER, that, notwithstanding anything in this Agreement to the contrary, a
Triggering Event shall not be deemed to have occurred, solely as a result of (i) the
approval, execution, delivery, performance or public announcement of the Merger Agreement
(including any amendments thereto), (ii) the public announcement of the Offer, (iii) the
commencement of the Offer or the purchase of Common Stock pursuant to the Offer, (iv) the
consummation or public announcement of the Merger and other transactions contemplated by the
Merger Agreement, (v) the Top Up Option, or (vi) the approval, execution, delivery,
performance or public announcement of the Tender and Voting Agreements”

          (j) Section 1 of the Rights Agreement is hereby amended by adding the following definitions to
the end of Section 1 as new paragraphs (pp), (qq), (rr), (ss), (tt), (uu) and (vv):

(pp) “Merger” shall have the meaning ascribed to such term in the Merger Agreement.

(qq) “Merger Agreement” shall mean that certain Agreement and Plan of Merger by and among
Parent, Purchaser and the Company, dated as of September 27, 2009 (as such agreement may be
amended from time to time).

(rr) “Offer” shall have the meaning ascribed to such term in the Merger Agreement.

(ss) “Parent” means United States Surgical Corporation, a company formed under the laws of
Delaware.

(tt) “Purchaser” shall mean Transformer Delaware Corp., a Delaware corporation.

(uu) “Tender and Voting Agreements” shall have the meaning ascribed to such term in the
Merger Agreement.

(vv) “Top-Up Option” shall have the meaning ascribed to such term in the Merger Agreement.

     2. AMENDMENT TO SECTION 2. Section 2 of the Rights Agreement is hereby amended to delete the
following language from the first sentence thereof: “and the holders of the

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Rights (who, in accordance with Section 3 hereof, shall prior to the Distribution Date also be
the holders of the Common Stock)”.

     3. AMENDMENT TO SECTION 5. Section 5(a) of the Rights Agreement is hereby amended to delete
the term “manually” from the second sentence thereof.

     4. AMENDMENT TO SECTION 7. Section 7(a) of the Rights Agreement is hereby amended and restated
in its entirety to read as follows:

“(a) Subject to Section 7(e) hereof, the registered holder of any Rights Certificate may
exercise the Rights evidenced thereby (except as otherwise provided herein including,
without limitation, the restrictions on exercisability set forth in Section 9(c), Section
11(a)(iii) and Section 23 hereof) in whole or in part at any time after the Distribution
Date upon surrender of the Rights Certificate, with the form of election to purchase and the
certificate on the reverse side thereof duly executed, to the Rights Agent at the office of
the Rights Agent designated for such purpose, together with payment of the aggregate
Purchase Price with respect to the total number of one one-thousandths of a share of
Preferred Stock (or other shares, securities, cash or other assets, as the case may be) as
to which such surrendered Rights are then exercisable, at or prior to the earliest of (i)
the Final Expiration Date, (ii) the time at which the Rights expire as provided in Section
13(d) hereof, (iii) the time at which the Rights are redeemed as provided in Section 23
hereof (the “Redemption Date”), (iv) the time at which such Rights are exchanged as provided
in Section 24 hereof and (v) the time immediately prior to the Effective Time (as defined in
the Merger Agreement), but only if the Effective Time shall occur (the earliest of (i),
(ii), (iii), (iv) and (v) being herein referred to as the “Expiration Date”). The Company
shall notify the Rights Agent promptly after the occurrence of the Expiration Date.”

     5. AMENDMENT TO SECTION 21. The first sentence of Section 21 of the Rights Agreement is
hereby amended and restated in its entirety to read as follows:

“The Rights Agent or any successor Rights Agent may resign and be discharged from its duties
under this Agreement upon thirty (30) days’ notice in writing mailed to the Company, and, in
the event that the Rights Agent or one of the Rights Agent’s Affiliates is not also the
transfer agent for the Company, to each transfer agent of the Common Stock and Preferred
Stock, by registered or certified mail.”

     6. AMENDMENT OF SECTION 26. Section 26 of the Rights Agreement is hereby amended to delete
the Rights Agent notice address in its entirety and replace it with the following:

“Computershare Trust Company, N.A.

250 Royall Street

Canton, MA 02021

Attention: Client Services”

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     7. AMENDMENTS TO SUMMARY OF RIGHTS. Exhibit C (“Summary of Right to Purchase Preferred
Stock”) of the Rights Agreement shall be deemed amended in a manner consistent with this Amendment.

     8. BENEFITS OF THIS AGREEMENT. All the covenants and provisions of this Amendment by or for
the benefit of the Company or the Rights Agent shall bind and inure to the benefit of their
respective successors and assigns hereunder.

     9. SEVERABILITY. If any term, provision, covenant or restriction of this Amendment is held by
a court of competent jurisdiction or other authority to be invalid, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions of this Amendment shall remain in
full force and effect and shall in no way be affected, impaired or invalidated; provided,
however, that notwithstanding anything in this Amendment to the contrary, if any such term,
provision, covenant or restriction is held by such court or authority to be invalid, void or
unenforceable and the Board determines in its good faith judgment that severing the invalid
language from this Amendment would adversely affect the purpose or effect of this Amendment and the
right of redemption set forth in Section 23 of the Rights Agreement shall have expired, such right
shall be reinstated and shall not expire until the tenth Business Day following the date of such
determination by the Board.

     10. GOVERNING LAW. This Amendment shall be deemed to be a contract made under the laws of the
State of Delaware and for all purposes shall be governed by and construed in accordance with the
laws of the State of Delaware applicable to contracts made and to be performed entirely within
Delaware.

     11. EFFECTIVENESS AND EFFECT OF AMENDMENT.

          (a) Notwithstanding anything to the contrary set forth in Section 27, this Amendment shall
become effective as of the date first written above, but such effectiveness is contingent upon the
execution and delivery of the Merger Agreement by the parties thereto. The Company shall notify
the Rights Agent via electronic mail of such execution and delivery of the Merger Agreement
promptly thereafter.

          (b) Except as specifically modified herein, the Rights Agreement shall not otherwise be
supplemented or amended by virtue of this Amendment, but shall remain in full force and effect.
The execution, delivery and effectiveness of this Amendment 4 shall not, except as expressly
provided herein, constitute a waiver or amendment of any provision of the Rights Agreement. Upon
and after the effectiveness of this Amendment, each reference in the Rights Agreement to “this
Agreement”, “hereunder”, “hereof” or words of like import referring to the Rights Agreement, and
each reference in any other document to “the Rights Agreement”, “thereunder”, “thereof” or words of
like import referring to the Rights Agreement, shall mean and be a reference to the Rights
Agreement as modified hereby.

     12. DESCRIPTIVE HEADINGS. Descriptive headings of the several sections of this Amendment are
inserted for convenience only and shall not control or affect the meaning or construction of any of
the provisions hereof.

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     13. COUNTERPARTS. This Amendment may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all such counterparts
shall together constitute but one and the same instrument. A signature to this Agreement
transmitted electronically shall have the same authority, effect, and enforceability as an original
signature.

     14. CERTIFICATION. The officer of the Company executing this Amendment, being an
appropriate officer of the Company and authorized to do so by resolution of the Board of Directors
of the Company duly adopted and approved at a meeting held on September 27, 2009, hereby certifies
to the Rights Agent that the supplements and amendments to the Rights Agreement set forth in this
Amendment are in compliance with the terms of Section 27 of the Rights Agreement.

[Remainder of Page Intentionally Left Blank]

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     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and
attested, all as of the day and year first above written.

	 	 	 	 	 	 	 	 	 
	ASPECT MEDICAL SYSTEMS, INC.	 	 	 	COMPUTERSHARE TRUST COMPANY,
	 	 	 	 	 	 	N.A., as Rights Agent
	 
	 	 	 	 	 	 	 	 
	By:

	 	/s/ Nassib G. Chamoun
	 	 	 	By:
	 	/s/ Dennis V. Moccia
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	Nassib G. Chamoun
	 	 	 	Name:
	 	Dennis V. Moccia
	Title:

	 	President and Chief
Executive Officer
	 	 	 	Title:
	 	Manager, Contract Administration

SIGNATURE PAGE TO AMENDMENT TO RIGHTS AGREEMENT

8exv10w1

Exhibit 10.1

ASPECT MEDICAL SYSTEMS, INC.

RESTATED KEY EMPLOYEE CHANGE IN CONTROL SEVERANCE BENEFITS PLAN

SECTION 1. INTRODUCTION

     This Restated Key Employee Change in Control Severance Benefits Plan (the “Severance Benefits
Plan”) sets forth the terms and conditions for the provision of severance pay and certain other
benefits to Eligible Employees (as defined below) of Aspect Medical Systems, Inc. or any successor
entity or assignee (“the “Company”) whose employment is involuntarily terminated without Cause or
voluntarily terminated for Good Reason in connection with a Change in Control Event (as such terms
are defined below) as set forth in this Severance Benefits Plan.

SECTION 2. DEFINITIONS

     For purposes of this Severance Benefits Plan, the following terms shall have the meanings set
forth below:

     (a) “BASE SALARY” means the annual base salary for an Eligible Employee (as defined in this
Section 2(f)) as in effect on the Change in Control Date.

     (b) “BOARD” means the Board of Directors of the Company.

     (c) “CAUSE” shall have such meaning provided for in the Company’s 2001 Stock Incentive Plan,
as amended, and as may be further amended from time to time (the “Plan”).

     (d) “CHANGE IN CONTROL EVENT” shall have such meaning provided for in the Plan.

     (e) “CHANGE IN CONTROL DATE” means the first date on which a Change of Control Event occurs.

     (f) “ELIGIBLE EMPLOYEE” shall mean those employees of the Company holding any of the positions
listed in Exhibit A to this Severance Benefits Plan as of the Change of Control Event.

     (g) “GOOD REASON” shall mean the occurrence, without the Eligible Employee’s written consent,
of (i) a reduction in the Eligible Employee’s annual base salary as in effect on the Change in
Control Date or as the same was or may be increased thereafter from time to time, (ii) a change by
the Company in the location at which the Eligible Employee performs his or her principal duties for
the Company to a new location that is both (i) outside a radius of 50 miles from the Eligible
Employee’s principal residence immediately prior to the Change in Control Date and (ii) more than
20 miles from the location at which the Eligible Employee performed his or her principal duties for
the Company immediately prior to the Change in Control Date; or a requirement by the Company that
the Eligible Employee travel on Company business to a substantially greater extent than required
immediately prior to the Change in Control Date; or (iii) a material diminution in the Eligible
Employee’s authority or responsibilities in effect immediately prior to the earliest to occur of
(a) the Change in Control Date, (b) the date of the execution by the Company of the initial written
agreement or instrument providing for the Change in Control Event or (c) the date of the adoption
by the Board of Directors of a resolution providing for the Change in Control Event; provided that,
for the sake of clarity, a change in such Eligible Employee’s title, office or status following a
Change in Control Event shall not constitute Good Reason unless such change, in light of all
relevant facts and circumstances, shall in fact result in a material diminution in authority or
responsibilities.

 

 

     (h) “INVOLUNTARY TERMINATION WITHOUT CAUSE” means an Eligible Employee’s dismissal from or
discharge by the Company for a reason other than Cause. The termination of an Eligible Employee’s
employment will not be deemed to be an “Involuntary Termination Without Cause” if such termination
occurs as a result of the Eligible Employee’s voluntary resignation without Good Reason or by
reason of the Eligible Employee’s death or disability.

     (i) “QUALIFYING TERMINATION” means that an Eligible Employee’s employment with the Company is
terminated by the Eligible Employee for Good Reason or is terminated by the Company without Cause,
as applicable, in either case within one (1) month before or twelve (12) months following the
Change in Control Date; provided that, with respect to any termination in the month prior to the
Change in Control Date, (a) the Change in Control Event occurs and (b) the Eligible Employee
reasonably demonstrates that such termination (i) was at the request of a third party who has taken
steps reasonably calculated to effect a Change in Control Event or (ii) otherwise arose in
connection with or in anticipation of a Change in Control Event.

SECTION 3. ELIGIBILITY AND PARTICIPATION

     Individuals shall be deemed “Eligible Employees” to participate in the Severance Benefits Plan
if they have previously been duly appointed to at least one of the offices of the Company listed in
the attached Exhibit A and have held such office(s) for a period of at least one (1) month
prior to the Change in Control Date. For the avoidance of any doubt, should any Eligible Employee
hold more than one office with the Company that would entitle the Eligible Employee to benefits
pursuant to this Severance Benefits Plan, such Eligible Employee shall not be entitled to multiple
severance benefits pursuant to Section 4 below but shall only receive benefits in accordance with
such of the Eligible Employee’s office as would entitle the employee to the greatest benefits
hereunder.

SECTION 4. SEVERANCE BENEFITS AND OTHER PAYMENTS

     Eligible Employees are eligible to receive the following benefits on the following conditions:

     (a) SEVERANCE PAYMENTS. If an Eligible Employee is subject to a Qualifying Termination, the
Eligible Employee will be entitled to a lump sum payment from the Company in an amount equal to the
product of (i) the “Severance Multiple” (as defined below), multiplied by (ii) the sum of (A) the
Eligible Employee’s Base Salary at the time of the termination of the Eligible Employee’s
employment, plus (B) the average of the Eligible Employee’s last three annual bonuses paid
(annualized for partial years) by the Company; provided that with respect to the Chief Financial
Officer (the “CFO”), the amount in (B) shall take into account the annual bonuses paid to the
individual who was serving as the CFO at the time the last three annual bonuses were paid. Such
lump sum payment will be payable in accordance with the terms set forth in the Eligible Employee’s
severance agreement to be executed in connection with the employee’s termination, but in no event
later than two and one-half months following the end of the fiscal year in which the Eligible
Employee’s Qualifying Termination occurs (the “Short-Term Deferral Period”).

     For purposes of this Section 4(a), “Severance Multiple” shall mean the following:

	 	 	 	 	 	 	 
	 

	 	Chief Executive Officer
	 	—
	 	2.00 
	 
	 	 	 	 	 	 
	 

	 	Founder Chairman
	 	—
	 	2.00 
	 
	 	 	 	 	 	 
	 

	 	All Other Eligible Employees
	 	—
	 	1.25 

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     In addition, the Eligible Employee will be paid a one lump sum cash payment representing the
Eligible Employee’s target bonus for the year in which the Qualifying Termination occurs on the
date of termination, multiplied by a fraction, the numerator of which shall equal the number of
days the Eligible Employee was employed by the Company during the fiscal year in which the
Qualifying Termination occurs and the denominator of which shall be 365. Such cash payment shall be
made to the Eligible Employee no later than by the expiration of the Short-Term Deferral Period.
Notwithstanding anything in this Severance Benefits Plan to the contrary, in no event will any
payments be made pursuant to this Section 4(a) or any other provision of this Severance Benefits
Plan unless and until a release of claims is executed in accordance with Section 4(f) below and
such release becomes enforceable.

     (b) HEALTH BENEFITS. If the Eligible Employee timely elects continued health insurance
coverage under the federal “COBRA” law, 29 U.S.C. § 1161 et seq., following a
Qualifying Termination, the Company shall continue to pay that portion of the premium costs for the
type of group health insurance coverage, including coverage for his or her eligible dependents,
that the Company paid on behalf of the Eligible Employee immediately prior to the Eligible
Employee’s termination of employment, for a period starting on the Qualifying Termination date and
continuing for the following applicable periods:

	 	 	 	 	 
	 

	 	 
	 	 
	Chief Executive Officer

	 	—
	 	As long as the Chief Executive
Officer remains eligible for
continuation coverage pursuant
to COBRA, but for no more than
24 Months following the
Qualifying Termination date
	 
	 	 	 	 
	 
	 	 	 	 
	Founder Chairman

	 	—
	 	As long as the Founder Chairman
remains eligible for
continuation coverage pursuant
to COBRA, but for no more than
24 Months following the
Qualifying Termination date
	 
 
	 	 	 	 
	All other Eligible Employees

	 	—
	 	As long as these other Eligible
Employees remain eligible for
continuation coverage pursuant
to COBRA, but for no more than
15 Months following the
Qualifying Termination date

provided, however, that the Company will pay such premiums for the Eligible Employee and
his/her eligible dependents (if applicable) only for coverage for which such individual and
dependents (if applicable) were enrolled as of the date of the Qualifying Termination. The Eligible
Employee shall continue to pay any remaining premium costs for such continuation coverage
(including coverage for his/her eligible dependents) that he/she had been required to pay as an
active employee immediately prior to the Qualifying Termination during the period set forth above,
and shall pay all premium costs thereafter for as long as, and to the extent that, the Eligible
Employee remains eligible for COBRA continuation.

     (c) EQUITY ACCELERATION. Nothing in this Severance Benefits Plan shall be deemed to modify or
alter, in any manner, any outstanding equity awards issued to an Eligible Employee pursuant to any
stock-based plan operated by the Company.

     (d) PARACHUTE PAYMENTS. Notwithstanding any other provision of this Severance Benefits Plan,
in the event that an Eligible Employee becomes entitled to payments and/or benefits or any other
amounts in the “nature of compensation” as a result of a Change in Control Event or Qualifying
Termination, (all such payments and benefits, including the payments and benefits provided under
this Severance Benefits Plan, being hereinafter called “Total Payments”) that would be subject (in
whole or part) to the excise tax (the “Excise Tax”) imposed under section 4999 of the Internal
Revenue Code of

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1986, as amended, and the regulations promulgated thereunder (the “Code”), the Total Award shall be
reduced, to the extent necessary so that no portion of the Total Payments is subject to the Excise
Tax. In the event that the Total Award is reduced in accordance with the preceding sentence, such
reduction shall be applied in the following order: (i) any cash payments , (ii) any taxable
benefits that are not related to the vesting of equity awards, (iii) any nontaxable benefits, and
(iv) any vesting of equity awards in each case in reverse order beginning with payments or benefits
that are to be paid the farthest in time from the date that triggers the applicability of the
Excise Tax. This reduction shall only occur if (i) the net present value of such Total Payments, as
so reduced (and after subtracting the net amount of federal, state and local income taxes on such
reduced Total Payments) is greater than or equal to (ii) the net present value of such Total
Payments without such reduction (but after subtracting the net amount of federal, state and local
income taxes on such Total Payments and the amount of Excise Tax to which an Eligible Employee
would be subject in respect of such unreduced Total Payments). All determinations required to be
made under this section shall be made by the Compensation Committee of the Board after consultation
with any advisors it shall deem appropriate. All fees and expenses of such calculations shall be
borne solely by the Company. If any portion of the Total Payments becomes subject to the Excise
Tax, the Eligible Employee acknowledges and agrees that the payment of such tax, together with any
interest and penalties, shall be the Eligible Employee’s sole responsibility.

     (e) EARNED BUT UNPAID BENEFITS. An Eligible Employee will also be entitled to receive any
earned but unpaid benefits as of the Qualifying Termination date, including salary earned but
unpaid, the Eligible Employee’s annual bonus for the most recently completed financial year, if
any, and any unused accrued vacation time.

     (f) RELEASE. The receipt of any severance benefits under this Severance Benefits Plan is
expressly conditioned upon any Eligible Employee executing a release of claims in favor of the
Company, substantially in the form attached to this Severance Benefits Plan as Exhibit B,
and such release of claims must be executed and become effective in accordance with its terms and
within the applicable time period provided therein (the “Applicable Release Period”);
provided, however, that in any case where the first and last days of the Applicable Release
Period are in two separate taxable years, any payments required to be made to Eligible Employee
that are treated as deferred compensation for purposes of Section 409A of the Code shall be made in
the later taxable year, promptly following the conclusion of the Applicable Release Period.

     (g) TERMINATION OF BENEFITS. Benefits under this Severance Benefits Plan shall terminate
immediately if an Eligible Employee, at any time, violates any proprietary information,
confidentiality, non-competition or non-solicitation obligation to the Company, or any other
continuing obligation to the Company as may be set forth in any agreement between the Company and
the Eligible Employee.

     (h) NON-DUPLICATION OF BENEFITS. Eligible Employees are not eligible to receive benefits under
this Severance Benefits Plan more than one time and are not eligible to receive benefits under any
other Company change-of-control severance plan, arrangement or agreement, provided that, for the
purpose of clarification, the foregoing shall not apply to any outstanding equity awards issued to
an Eligible Employee pursuant to any stock-based plan operated by the Company or any successor
entity plan or pursuant to any stock-based plan operated by the Company or any successor entity
plan.

     (i) TAX WITHHOLDING. Any payments that an Eligible Employee receives under this Severance
Benefits Plan shall be subject to all required tax withholding.

     SECTION 5. CODE SECTION 409A.

4

 

     (a) Subject to this Section 5, payments or benefits under this Severance Benefits Plan shall
begin only upon the date of a “separation from service” of the Eligible Employee (determined as set
forth below) which occurs on or after the termination of the Eligible Employee’s employment. The
following rules shall apply with respect to distribution of the payments and benefits, if any, to
be provided to the Eligible Employee under this Severance Benefits Plan, as applicable:  

(i) It is intended that each of the payments and benefits provided under this
Severance Benefits Plan shall be treated as a separate “payment” for purposes of
Section 409A of the Code and the guidance issued thereunder (“Section 409A”). Neither
the Company nor the Eligible Employee shall have the right to accelerate or defer the
delivery of any such payments or benefits except to the extent specifically permitted
or required by Section 409A.

(ii) If, as of the date of the “separation from service” of the Eligible Employee from
the Company, the Eligible Employee is not a “specified employee” (within the meaning
of Section 409A), then each of the payments and benefits shall be made on the dates
and terms set forth in Section 4.

(iii) If, as of the date of the “separation from service” of the Eligible Employee
from the Company, the Eligible Employee is a “specified employee” (within the meaning
of Section 409A), then:

(A) Each installment of the payments and benefits due under this Severance
Benefits Plan that, in accordance with the dates and terms set forth herein,
will in all circumstances, regardless of when the separation from service
occurs, be paid within the Short-Term Deferral Period shall be treated as a
short-term deferral within the meaning of Treasury Regulation Section
1.409A-1(b)(4) to the maximum extent permissible under Section 409A; and

(B) Each of the payments and benefits due under Severance Benefits Plan that
is not described in Section 5(a)(iii)(A) and that would, absent this
subsection, be paid within the six-month period following the “separation from
service” of the Eligible Employee from the Company shall not be paid until the
date that is six months and one day after such separation from service (or, if
earlier, the Eligible Employee’s death), with any such installments that are
required to be delayed being accumulated during the six-month period and paid
in a lump sum on the date that is six months and one day following the
Eligible Employee’s separation from service and any subsequent installments,
if any, being paid in accordance with the dates and terms set forth herein;
provided, however, that the preceding provisions of this sentence shall not
apply to any installment of payments and benefits if and to the maximum extent
that that such installment is deemed to be paid under a separation pay plan
that does not provide for a deferral of compensation by reason of the
application of Treasury Regulation 1.409A-1(b)(9)(iii) (relating to separation
pay upon an involuntary separation from service). Any installments that
qualify for the exception under Treasury
Regulation Section 1.409A-1(b)(9)(iii) must be paid no later than the last day
of the Eligible Employee’s second taxable year following his taxable year in
which the separation from service occurs.

     (b) The determination of whether and when a separation from service of the Eligible Employee
from the Company has occurred shall be made and in a manner consistent with, and based on the

5

 

presumptions set forth in, Treasury Regulation Section 1.409A-1(h). Solely for purposes of this
Section 5(b), “Company” shall include all persons with whom the Company would be considered a
single employer under Treasury Regulation Section 1.409A-1(h)(3)..

     (c) All reimbursements and in-kind benefits provided under this Severance Benefits Plan shall
be made or provided in accordance with the requirements of Section 409A to the extent that such
reimbursements or in-kind benefits are subject to Section 409A.

     (d) Notwithstanding anything herein to the contrary, the Company shall have no liability to
the Eligible Employee or to any other person if the payments and benefits provided in this
Severance Benefits Plan that are intended to be exempt from or compliant with Section 409A are not
so exempt or compliant

SECTION 6. OTHER TERMINATIONS

     An otherwise Eligible Employee shall NOT be eligible to receive benefits under this Severance
Benefits Plan if (i) the Eligible Employee’s employment terminates due to death, disability or any
other reason other than a Qualifying Termination; or (ii) an Eligible Employee’s employment is
terminated within thirty (30) days of his or her refusal to accept an offer of comparable
employment by any successor to the Company, as determined in the successor entity’s discretion;
provided, however, that “comparable employment” shall not include situations which would
constitute “Good Reason” as defined in Section 2(g) above.

SECTION 7. CLAIMS PROCEDURE

     If an Eligible Employee believes that he or she is entitled to severance benefits under the
Severance Benefits Plan that are not being paid, the Eligible Employee may submit a written claim
for payment to the Chief Financial Officer of the Company. Any claim for benefits shall be in
writing, addressed to the Chief Financial Officer of the Company and must be sufficient to notify
the Company of the benefit claimed. If such claim is denied, the Company shall, within a reasonable
period of time, provide a written notice of denial. The notice will include the specific reasons
for denial, the provisions of the Severance Benefits Plan on which the denial is based, and the
procedure for a review of the denied claim. Where appropriate, it will also include a description
of any additional material or information necessary to complete or perfect the claim to any
benefits under the Severance Benefits Plan. Any Eligible Employee may request, in writing, a review
of a claim denied by the Company and may review pertinent documents and submit issues and comments
in writing to Chief Financial Officer of the Company. The Company shall provide a written decision
upon such request for review of a denied claim. The decision of the Chief Financial Officer upon
such review shall be final. To the extent that a claims procedure is being invoked hereunder by
the Chief Financial Officer, then for purposes of this paragraph, the Chief Executive Officer shall
receive and review such claim.

SECTION 8. MISCELLANEOUS

     No amounts under this Severance Benefits Plan shall be funded, set aside or otherwise
segregated prior to payment. The Company’s obligation to pay the amounts contemplated hereunder
shall at all times be an unfunded and unsecured obligation.

     The Company reserves the right to amend or terminate this Severance Benefits Plan and Exhibits
thereto at any time; provided, however, that this Severance Benefits Plan may not be
amended or terminated following the Change in Control Date without the prior written consent of
each Eligible Employee then subject to this Severance Benefits Plan. This Severance Benefits Plan
shall continue in full force and effect notwithstanding a Change in Control Event, and in the event
that the Change of Control

6

 

Event is the result of a sale or other disposition of all or substantially all of the assets of the
Company, this Severance Benefits Plan shall be assumed by the entity acquiring such assets. This
Severance Benefits Plan shall be binding upon any surviving entity resulting from a Change in
Control Event and upon any other person who is a successor by merger, acquisition, consolidation or
otherwise to the business formerly carried on by the Company without regard to whether or not such
person actively adopts or formally continues the Severance Benefits Plan. The Severance Benefits
Plan shall be interpreted in accordance with the laws of the Commonwealth of Massachusetts.

     This Severance Benefit Plan restates and supersedes in its entirety the Key Employee Change in
Control Severance Benefits Plan adopted by the Board on September 18, 2008.

7

 

EXHIBIT A

ELIGIBLE EMPLOYEES

President and CEO

Founder Chairman of the Board of Directors

Vice President of Human Resources

Vice President of Manufacturing Operations

Vice President of Engineering

Vice President of Emerging Technologies & General Manager of Neuroscience

Chief Financial Officer

Executive Vice President of Worldwide Sales and Marketing

Vice President of Medical Affairs

Vice President of Clinical, Regulatory and Quality Assurance

A-1

 

EXHIBIT B

FORM OF RELEASE OF CLAIMS

     Certain capitalized terms used in this Release are defined in the Key Employee Change in
Control Severance Benefits Plan (the “Severance Benefits Plan”) which I have reviewed.

     In order to receive the benefits as set forth in the Severance Benefits Plan, I acknowledge
that I must enter into this Release and have it become binding upon me.

     Except as otherwise set forth in this Release, I hereby release, acquit and forever discharge
the Company, its parents and subsidiaries, and their officers, directors, agents, servants,
employees, shareholders, predecessor, successors, assigns and affiliates as well as its and their
representatives, agents, insurers and reinsurers, and employee benefit programs (and the trustees,
administrators, fiduciaries and insurers of such programs), past, present and future (hereafter,
the “Released Parties”) from any and all claims, charges, complaints, demands, actions, causes of
action, suits, rights, debts, sums of money, costs, accounts, reckonings, covenants, contracts,
agreements, promises, doings, omissions, damages, executions, obligations, liabilities, and
expenses (including attorneys’ fees and costs), of every kind and nature which I ever had or now
have against the Released Parties, including, but not limited to, those claims arising out of my
employment with and/or separation from the Company, including, but not limited to, all claims under
Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., the Age Discrimination in
Employment Act, 29 U.S.C. § 621 et seq. (the “ADEA”), the Americans With
Disabilities Act of 1990, 42 U.S.C. § 12101 et seq., the Family and Medical Leave
Act, 29 U.S.C. § 2601 et seq., the Worker Adjustment and Retraining Notification
Act (“WARN”), 29 U.S.C. § 2101 et seq., Section 806 of the Corporate and Criminal
Fraud Accountability Act of 2002, 18 U.S.C. § 1514(A), the Rehabilitation Act of 1973, 29 U.S.C. §
701 et seq., Executive Order 11246, Executive Order 11141, the Fair Credit
Reporting Act, 15 U.S.C. § 1681 et seq., the Employee Retirement Income Security Act of 1974
(“ERISA”), 29 U.S.C. § 1001 et seq., the Massachusetts Fair Employment Practices Act., M.G.L. c.
151B, § 1 et seq., the Massachusetts Civil Rights Act, M.G.L. c. 12, §§ 11H and 11I, the
Massachusetts Equal Rights Act, M.G.L. c. 93, § 102 and M.G.L. c. 214, § 1C, the Massachusetts
Labor and Industries Act, M.G.L. c. 149, § 1 et seq., the Massachusetts Privacy Act, M.G.L. c. 214,
§ 1B, and the Massachusetts Maternity Leave Act, M.G.L. c. 149, § 105D, all as amended; all common
law claims including, but not limited to, actions in tort, defamation and breach of contract; all
claims to any non-vested ownership interest in the Company, contractual or otherwise, including,
but not limited to, claims to stock or stock options; and any claim or damage arising out of my
employment with or separation from the Company (including a claim for retaliation) under any common
law theory or any federal, state or local statute or ordinance not expressly referenced above;
provided, however, that nothing in this Agreement prevents me from filing, cooperating
with, or participating in any proceeding before the EEOC or a state Fair Employment Practices
Agency (except that I acknowledge that I may not be able to recover any monetary benefits in
connection with any such claim, charge or proceeding); and provided, further, that nothing
in this paragraph shall be construed in any way to release the Company from its obligation to
indemnify me from any third party action brought against me based on my employment with the
Company, pursuant to any applicable agreement or applicable law or to reduce or eliminate any
coverage I may have under the Company’s director and officer liability policy, if any, in effect as
of the date of the termination of my employment with the Company.

     I understand and agree that, as a condition for payment to me of the Severance Benefits Plan
benefits, I shall not make any false, disparaging or derogatory statements to any media outlet,
industry group, financial institution or current or former employee, consultant, client or customer
of the Company regarding the Company or any of its directors, officers, employees, agents or
representatives or about the

B-1

 

     Company’s business affairs and financial condition; provided, however, that nothing
herein shall prevent me from making truthful disclosures to any governmental entity or in any
litigation or arbitration.
 

     I acknowledge that I have returned to the Company all keys, files, records (and copies
thereof), equipment (including, but not limited to, computer hardware, software and printers,
wireless handheld devices, cellular phones, pagers, etc.), Company identification, Company vehicles
and any other Company-owned property in my possession or control and have left intact all
electronic Company documents, including but not limited to those which I developed or help develop
during my employment. I further confirm that I have cancelled all accounts for my benefit, if any,
in the Company’s name, including but not limited to, credit cards, telephone charge cards, cellular
phone and/or pager accounts and computer accounts.

     I further acknowledge that I am knowingly and voluntarily waiving and releasing any rights I
may have under the ADEA. I also acknowledge that the consideration given under the Severance
Benefits Plan for the waiver and release in the preceding paragraph hereof is in addition to
anything of value to which I was already entitled. I further acknowledge that I have been advised
by this writing, as required by the ADEA, that:

     (A) My waiver and release do not apply to any rights or claims that may arise after the date I
execute this Release;

     (B) I should consult with an attorney prior to executing this Release;

     (C) I have been given more than twenty-one (21) days advance written notice to consider this
Release (although I may voluntarily choose to execute this Release earlier);

     (D) I have seven (7) days following the execution of this Release by the parties to revoke my
acceptance by notifying the Company in writing (the “Applicable Release Period”); and

     (E) This Release shall not be effective until the date upon which the Applicable Release
Period has expired, which shall be the eighth day after this Release is executed by me provided I
have not timely revoked.

[NAME OF EMPLOYEE]

	 	 	 	 	 
	Signature:

	 	 	 	 
	 

	 	 	 	 
	 
	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 	 	 

B-2

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