Document:

ufs-ex105_93.htm

Exhibit 10.5

PERFORMANCE SHARE UNIT AGREEMENT 

FOR AWARDS GRANTED IN 2019

PERFORMANCE SHARE UNIT AGREEMENT (the “Agreement”) dated as of the Grant Date set forth in the Notice of Grant (as defined below), by and between Domtar Corporation, a Delaware corporation (the “Company”), and the participant whose name appears in the Notice of Grant (the “Participant”).

1.  Grant of Performance Share Units.  The Company hereby evidences and confirms its grant to the Participant, effective as of the Grant Date, of the number of performance-based restricted stock units (the “Performance Share Units”) specified in the Domtar Corporation 2007 Omnibus Incentive Plan Performance Share Unit Grant Notice delivered by the Company to the Participant (the “Notice of Grant”).  This Agreement is subordinate to, and the terms and conditions of the Performance Share Units granted hereunder are subject to, the terms and conditions of the Amended and Restated Domtar Corporation 2007 Omnibus Incentive Plan (the “Plan”), which are incorporated by reference herein.  If there is any inconsistency between the terms hereof and the terms of the Plan, the terms of the Plan shall govern.  Any capitalized terms used herein without definition shall have the meanings set forth in the Plan.  The Performance Share Units shall be considered Performance Awards under the Plan.

2.  Vesting of Performance Share Units.  

(a)  Vesting.  Except as otherwise provided in this Section 2, the Performance Share Units shall become vested, if at all, on the vesting date(s) set forth in the Notice of Grant (each, a “Vesting Date”), subject to the continued employment of the Participant by the Company or any Subsidiary thereof through such date, and to the achievement of the Performance Goals (the “Goals”) established by the Committee pursuant to the Plan for the Performance Share Units for the performance period(s) (each a “Performance Period”) set forth in the Notice of Grant.  As soon as feasible after the end of each Performance Period, the Committee will determine whether the Goals have been satisfied, in whole or in part.  Based upon the foregoing determination, the number of Performance Share Units will vest on the Vesting Date on a percentage basis, as set forth in the Notice of Grant.  Performance Share Units that have not vested by the Vesting Date in accordance with this Section 2 shall be forfeited.  

(b)  Termination of Employment.  

(i)  Death.  If the Participant’s employment is terminated due to death prior to the end of a Performance Period, 100% of the Performance Share Units relating to such Performance Period, multiplied by a fraction, the numerator of which is the number of days elapsed from the commencement of the Performance Period through the date of the Participant’s death and the denominator of which is the number of days in the Performance Period, shall become fully vested and nonforfeitable and shall be paid as provided in Section 3.  If the Participant’s 

1

 

 

employment is terminated due to death after the end of any Performance Period but prior to the settlement date, the Participant shall be entitled to receive, and such Performance Share Units shall be deemed vested to the extent of, the number of shares of Stock that would have been payable with respect to the Performance Share Units relating to such Performance Period had the Participant’s Service continued until the settlement date, subject to achievement of the Goals, and the remainder of such Performance Share Units shall be forfeited and canceled as of the date of termination.

(ii)  Disability or Retirement.  If the Participant’s employment is terminated due to Disability or Retirement prior to the Vesting Date, then, on the Vesting Date the Participant shall be deemed vested to the extent of the number of Performance Share Units that would have vested had the Participant’s Service continued until the Vesting Date, subject to achievement of the Goals, multiplied by a fraction, the numerator of which is the number of days elapsed from the commencement of the Performance Period through the date of the Participant’s termination due to Disability or Retirement, as applicable, and the denominator of which is the number of days in the Performance Period, and the remainder of the Performance Share Units shall be forfeited and canceled as of the date of such termination due to Disability or Retirement, as applicable.  Vested Performance Share Units shall be settled as set forth in Section 3.

(iii)  Any Other Reason.  If the Participant’s employment is terminated prior to the Vesting Date for any reason other than death, Disability or Retirement, all Performance Share Units shall immediately be forfeited and canceled effective as of the date of the Participant’s termination.

(c)  Change in Control.  In the event of a Change in Control, then the Performance Share Units shall vest or continue as set forth in the Plan.

(d)  Committee Discretion.  Notwithstanding anything contained in this Agreement to the contrary, the Committee, in its sole discretion, may accelerate the vesting with respect to any Performance Share Units under this Agreement, at such times and upon such terms and conditions as the Committee shall determine.

3.  Settlement of Performance Share Units.  Subject to Section 7(d), the Company shall deliver to the Participant the value of one share of Stock in settlement of each outstanding Performance Share Unit that has vested as provided in Section 2 on the first to occur of (i) as soon as practicable after the date (the “Committee Determination Date”) that the Committee determines that the Goals for the last Performance Period(s) have been satisfied, but in no event later than 21⁄2 months after the end of the Performance Period; (ii) in the event of a Termination of Service due to death, January 31 of the year following the Participant’s Termination of Service, (iii) with respect to Performance Share Units that are not a Specified Award, a Change in Control in which the Performance Share Units do not continue, and (iv) with respect to Performance Share 

2

 

 

Units that are a Specified Award, a Specified Change in Control, in each case (A) by a cash payment equal to the Fair Market Value of the Stock on the Committee Determination Date or (B) if the Participant is a member of the Management Committee, at the Company’s sole discretion, in Stock, by either (1) issuing one or more certificates evidencing the Stock to the Participant or (2) registering the issuance of the Stock in the name of the Participant through a book entry credit in the records of the Company’s transfer agent or (C) in the event of settlement upon a Change in Control or a Specified Change in Control, as applicable, a cash payment equal to the Change in Control Price, in each case, multiplied by the number of vested Performance Share Units.  With respect to Specified Awards, in the event of a Change in Control that is not a Specified Change in Control, if no Alternative Awards are available, or Alternative Awards may not be issued in a manner that complies with Section 409A of the Code or without the imposition of any additional taxes or interest under Section 409A of the Code, the Committee, as constituted immediately prior to the Change in Control, may determine that Specified Awards shall be settled through a cash payment equal to the Change in Control Price multiplied by the number of vested Specified Awards plus interest from the later of the Vesting Date and the Change in Control through the date of payment at a rate determined by the Committee as constituted immediately prior to the Change in Control to the extent that such settlement shall not subject the Participant to any additional taxes or interest under Section 409A of the Code or in such other manner that shall comply with Section 409A of the Code.  No fractional shares of Stock shall be issued in settlement of Performance Share Units.  Fractional Performance Share Units shall be settled through a cash payment equal to the Fair Market Value of the Stock on the  Committee Determination Date.

4.  Securities Law Compliance.  Notwithstanding any other provision of this Agreement, the Participant may not sell the shares of Stock acquired upon vesting of the Performance Share Units unless such shares are registered under the Securities Act of 1933, as amended (the “Securities Act”), or, if such shares are not then so registered, such sale would be exempt from the registration requirements of the Securities Act.  The sale of such shares must also comply with other applicable laws and regulations governing the shares and Participant may not sell the shares of Stock if the Company determines that such sale would not be in material compliance with such laws and regulations.

5.  Participant’s Rights with Respect to the Performance Share Units.

(a)  Restrictions on Transferability.  The Performance Share Units granted hereby are not assignable or transferable, in whole or in part, and may not, directly or indirectly, be offered, transferred, sold, pledged, assigned, alienated, hypothecated or otherwise disposed of or encumbered (including without limitation by gift, operation of law or otherwise) other than by will or by the laws of descent and distribution to the estate of the Participant upon the Participant’s death; provided that the deceased Participant’s beneficiary or representative of the Participant’s estate shall acknowledge and agree in 

3

 

 

writing, in a form reasonably acceptable to the Company, to be bound by the provisions of this Agreement and the Plan as if such beneficiary or the estate were the Participant.

(b)  No Rights as Stockholder.  The Participant shall not have any rights as a stockholder including any voting, dividend or other rights or privileges as a stockholder of the Company with respect to any Stock corresponding to the Performance Share Units granted hereby unless and until shares of Stock are issued to the Participant in respect thereof.  

6.  Adjustment in Capitalization.  The number, class, Performance Goals or other terms of any outstanding Performance Share Units shall be adjusted by the Board to reflect any extraordinary dividend, stock dividend, stock split or share combination or any recapitalization, business combination, merger, consolidation, spin-off, exchange of shares, liquidation or dissolution of the Company or other similar transaction affecting the Stock in such manner as it determines in its sole discretion.

7.  Miscellaneous.

(a)  Binding Effect; Benefits.  This Agreement shall be binding upon and inure to the benefit of the parties to this Agreement and their respective successors and assigns.  Nothing in this Agreement, express or implied, is intended or shall be construed to give any person other than the parties to this Agreement or their respective successors or assigns any legal or equitable right, remedy or claim under or in respect of any agreement or any provision contained herein.

(b)  No Right to Continued Employment.  Nothing in the Plan or this Agreement shall interfere with or limit in any way the right of the Company or any of its Subsidiaries to terminate the Participant’s employment at any time, or confer upon the Participant any right to continue in the employ of the Company or any of its Subsidiaries.

(c)  Interpretation.  The Committee shall have full power and discretion to construe and interpret the Plan (and any rules and regulations issued thereunder) and this Award.  Any determination or interpretation by the Committee under or pursuant to the Plan or this Award shall be final and binding and conclusive on all persons affected hereby.

(d)  Tax Withholding.  The Company and its Subsidiaries shall have the right to deduct from all amounts paid to the Participant in cash (whether under the Plan or otherwise) any amount of taxes required by law to be withheld in respect of settlement of the Performance Share Units under the Plan as may be necessary in the opinion of the Employer to satisfy tax withholding required under the laws of any country, state, province, city or other jurisdiction, including but not limited to income taxes, capital gains taxes, transfer taxes, and social security contributions that are required by law to be withheld.  The Company may require the recipient of the cash or shares of Stock, as applicable, to remit to the Company an amount in cash sufficient to satisfy the amount of 

4

 

 

taxes required to be withheld as a condition to the payment of cash or issuance of shares in settlement of the Performance Share Units.  The Committee may, in its discretion, require the Participant, or permit the Participant to elect, subject to such conditions as the Committee shall impose, to meet such obligations by having the Company withhold from the cash payment in settlement of the Performance Share Units or withhold or sell the least number of whole shares of Stock having a Fair Market Value sufficient to satisfy all or part of the amount required to be withheld.  The Company may defer settlement until such requirements are satisfied.

(e)  Forfeiture for Financial Reporting Misconduct.  If the Company is required to prepare an accounting restatement due to material noncompliance by the Company with any financial reporting requirement under the securities laws, and if the Participant knowingly or grossly negligently engaged in the misconduct or knowingly or grossly negligently failed to prevent the misconduct as determined by the Committee, or if the Participant is one of the individuals subject to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, then the Participant shall forfeit and disgorge to the Company (i) any Stock and cash received in respect of Performance Share Units granted or vested and all gains earned or accrued due to the sale of any Stock received in settlement of the Performance Share Units during the 12-month period following the filing of the financial document embodying such financial reporting requirement and (ii) any Stock and cash received in respect of Performance Share Units that vested based on the materially non- complying financial reporting.  The Company may also cancel or reduce, or require a Participant to forfeit and disgorge to the Company or reimburse the Company for, any Performance Share Units granted or vested and any gains earned or accrued, due to the vesting or settlement of Performance Share Units or sale of any Stock acquired in settlement of a Performance Share Unit, to the extent permitted or required by, or pursuant to any Company policy implemented as required by, applicable law, regulation or stock exchange rule as from time to time may be in effect (including but not limited to The Dodd–Frank Wall Street Reform and Consumer Protection Act and regulations and stock exchange rules promulgated pursuant to or as a result of such Act).

(f)  Applicable Law.  This Agreement shall be governed by and construed in accordance with the law of the State of Delaware regardless of the application of rules of conflict of law that would apply the laws of any other jurisdiction.

(g)  Limitation on Rights; No Right to Future Grants; Extraordinary Item of Compensation.  By entering into this Agreement and accepting the Performance Share Units evidenced hereby, the Participant acknowledges: (a) that the Plan is discretionary in nature and may be suspended or terminated by the Company at any time; (b) that the Award does not create any contractual or other right to receive future grants of Awards; (c) that participation in the Plan is voluntary; (d) that the value of the Performance Share Units is not part of normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service 

5

 

 

awards, pension or retirement benefits or similar payments; and (e) that the future value of the Stock is unknown and cannot be predicted with certainty. 

(h)  Employee Data Privacy.  By entering into this Agreement and accepting the Performance Share Units evidenced hereby, the Participant: (a) authorizes the Company and the Participant’s employer, if different, any agent of the Company administering the Plan or providing Plan recordkeeping services, to disclose to the Company or any of its affiliates any information and data the Company requests in order to facilitate the grant of the Award and the administration of the Plan; (b) waives any data privacy rights the Participant may have with respect to such information; and (c) authorizes the Company and its agents to store and transmit such information in electronic form.

(i)  Consent to Electronic Delivery.  By entering into this Agreement and accepting the Performance Share Units evidenced hereby, Participant hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Participant pursuant to applicable securities laws) regarding the Company and the Subsidiaries, the Plan, this Agreement and the Performance Share Units via Company web site or other electronic delivery.

(j)  Specified Employee Delay.  Notwithstanding anything to the contrary in this Agreement, if settlement is to occur upon a Termination of Service other than due to death or Disability and the Participant is a Specified Employee and the Performance Share Units are a Specified Award, to the extent necessary to comply with, and avoid imposition on the Participant of any additional tax or interest imposed under, Section 409A of the Code, settlement shall instead occur on the first business day following the six-month anniversary of the Participant’s Termination of Service (or, if earlier, upon the Participant’s death), or as soon thereafter as practicable (but no later than 90 days thereafter). 

(k)  Headings and Captions.  The section and other headings contained in this Agreement are for reference purposes only and shall not affect the meaning or interpretation of this Agreement.

(l)  Counterparts.  This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same instrument.

 

 

 

6ufs-ex106_132.htm

 

Exhibit 10.6

 

		
	

	
AMENDED AND RESTATED SEVERANCE PROGRAM FOR MANAGEMENT COMMITTEE MEMBERS 

 

Purpose

	

	

	
1.1
	
This severance program is designed to provide Eligible Executives (as defined below) with guidelines relative to the benefits they would receive upon an involuntary termination of employment for business reasons whether or not in connection with the occurrence of a Change in Control in order to allow for equitable, objective and uniform treatment of similar situations.

Key Elements

	

	

	
2.1
	
This severance program is composed of the following key elements which will be offered in whole or in part by Domtar Corporation or its subsidiaries (the “Corporation”), depending on each situation:

	
 
	
•
	
Severance allowance;

	
 
	
•
	
Maintenance of medical and dental benefits;

	
 
	
•
	
Outplacement services.

Any entitlement to payments or benefits other than those specifically addressed in this severance program shall be determined in accordance with the applicable plan or policy.  

Eligible Executives

	

	

	
3.1
	
An executive is eligible for this severance program if he or she is a member of the Management Committee of the Corporation (as duly appointed by the Board of Directors of the Corporation (the “Board”) upon recommendation of the Corporation’s Chief Executive Officer, each an “Eligible Executive”), if the Eligible Executive’s employment (a) is involuntarily terminated for business reasons by the Corporation or (b) in connection with a Change in Control is involuntarily terminated by the Corporation without Cause or is terminated by the Eligible Executive due to Good Reason, and in all cases the Eligible Executive executes, delivers and does not revoke within the applicable statutory time period, a written release (a “Release”) in a form satisfactory to the Administrator; provided that, except as provided in Section 6.3 below, this severance program does not apply to those Eligible Executives for whom another program, agreement or arrangement is applicable.  Except as provided otherwise in Section 3.2 below, an Eligible Executive will no longer be eligible for this severance program upon cessation of his or her service as a member of the Management Committee for reasons other than those listed in this paragraph.

	
3.2
	
Any individual who is an Eligible Executive at the commencement of the Protection Period or becomes an Eligible Executive during the Protection Period and prior to the Change in Control will continue to be an Eligible Executive for the duration of the Protection Period.  

	
3.3
	
This severance program will not be offered if the Eligible Executive:

	
 
	
•
	
is dismissed for Cause;

	
 
	
•
	
terminates employment voluntarily (other than for Good Reason in connection with a Change in Control as contemplated by Section 7.5); or

	
 
	
•
	
is offered continuous employment in a comparable position with comparable terms and conditions of employment by a purchaser of a business from the Corporation (and provided that the Eligible Executive does not have Good Reason as a result).  

1

 

 

Effective Date of Program

	

	

	
4.1
	
This amended and restated severance program will take effect [Date].

Restriction

	

	

	
5.1
	
If on the date an Eligible Executive’s employment is terminated the Eligible Executive is receiving benefits under the Corporation’s Short-Term or Long-Term Disability Plans, the Eligible Executive will not be entitled to a severance allowance under this severance program.  However, if the Eligible Executive ceases to be eligible for those benefits for reasons other than retirement, the Eligible Executive will be entitled to the severance program if he or she regains the ability to carry out his or her duties prior to the effective date of his or her termination of employment.

Administration

	

	

	
6.1
	
This severance program will be administered by the Administrator, whose actions and decisions will be conclusive and binding on the Eligible Executive and on the Corporation.

	
6.2
	
Subject to Section 6.3, the Corporation reserves the right to terminate, delete, amend or add to this severance program or any of its provisions at any time and from time to time.

	
6.3
	
Notwithstanding anything in this severance program to the contrary, during the Protection Period, the Corporation may not amend, modify, suspend or terminate this severance program, in whole or in part, in a manner that is materially adverse to any Eligible Executive (including but not limited to the removal of an individual as an Eligible Executive or any reduction in the applicable severance allowance) without the written consent of such Eligible Executive or, prior to the consummation of  a Change in Control, the Administrator. With respect to any program, agreement, or arrangement adopted, established, or entered into during the Protection Period, no such program, agreement, or arrangement shall replace this severance program and the severance program shall continue to apply to each Eligible Executive, except to the extent such Eligible Executive expressly agrees in writing that this severance program does not apply to such Eligible Executive or as expressly approved by the Administrator prior to the consummation of a Change in Control.

Severance Allowance

	

	

	
7.1
	
An Eligible Executive shall be entitled to a severance allowance of 12 months of base salary, plus an additional 3 months of base salary for each full year of continuous service as a member of the Management Committee, up to a maximum of 24 months of base salary (the “Severance Period”), unless otherwise determined by the Administrator, upon recommendation of the Corporation’s Chief Executive Officer.

	
7.2
	
The base salary used to calculate an Eligible Executive’s severance allowance will be the Eligible Executive’s base salary on the date his or her employment is terminated.  The minimum payments as outlined by the different provincial legislations will be paid within the time limit prescribed by the applicable legislation.  The remaining balance will be paid in a lump sum, except if the Eligible Executive’s severance allowance is subject to taxation in the United States, the severance allowance shall be paid as described below under the heading “Provisions Applicable to U.S. Taxpayers.”

	
7.3
	
The severance allowance pursuant to this severance program shall not be less than that required by the applicable legislation.  However, this severance program shall not be interpreted or applied as a minimum severance allowance.

	
7.4
	
The severance allowance pursuant to this severance program includes any pay in lieu of notice and severance pay required by law.  

	
7.5
	
Notwithstanding the allowance amounts described above, if[, within 3 months prior to or] 24 months following the occurrence of a Change in Control, an Eligible Executive’s employment is involuntarily terminated without Cause or the Eligible Executive voluntarily terminates his or her employment for Good Reason, such termination shall be deemed to be in connection with a Change in Control, and the severance allowance will be equal to the sum of (A) 24 months of base salary and (B) two (2) times the Eligible Executive’s target bonus award under the Domtar Corporation Annual Incentive Plan (such plan and any successor or additional annual incentive plan, “AIP”), regardless of the employee’s actual continuous service as a member of the Management Committee.  For this purpose, the Severance Period will be equal to 24 months, and base salary and target bonus award shall be as of 

2

 

 

		
the date of termination or the occurrence of the Change in Control, whichever is greater, and, subject to Section 7.2, shall be paid within sixty (60), but in no event later than March 15 of the year after, after the termination date.

The following definitions apply:

	
 
	
(1)
	
“Administrator” means the Human Resources Committee of the Board (the “HR Committee”), or such other committee as shall be designated by the Board to administer this severance program.

	
 
	
(2)
	
“Cause” will have the same definition as in the Domtar Corporation 2007 Omnibus Incentive Plan (“Omnibus Plan”), disregarding any amendments to such plan effected during the Protection Period.

	
 
	
(3)
	
“Change in Control” will have the same definition as in the Omnibus Plan, disregarding any amendments to such plan effected during the Protection Period.

	
 
	
(4)
	
“Good Reason” means the occurrence of any of the following after a Change in Control:

	
 
	
(a)
	
a material reduction by the Corporation in the Eligible Executive’s base salary or target annual bonus, as in effect immediately prior to the Change in Control or as increased from time to time.  Eligible Executive shall not have a basis to resign for Good Reason if (i) such reduction is part of an across-the-board reduction in base salary rate or target annual incentive opportunity similarly affecting other Management Committee members or (ii) no bonus is paid, or the amount of the bonus is reduced as a result of the failure of the Eligible Executive or the Corporation to achieve the applicable performance goals;

	
 
	
(b)
	
a material diminution in the Eligible Executive’s position, duties or responsibilities (including due to the assignment to the Eligible Executive of duties materially inconsistent with his or her position, duties or responsibilities as in effect immediately prior to Change in Control), excluding for this purpose (i) a change in title or reporting relationship alone, and (ii) an isolated, insubstantial and inadvertent action not taken in bad faith and which is remedied by the Corporation promptly after receipt of notice thereof given by the Eligible Executive;

	
 
	
(c)
	
a requirement that the Eligible Executive move his or her principal place of business to a location that is (i) more than 50 miles from the location at which the Eligible Executive was stationed immediately prior to a Change in Control, and (ii) farther from the Eligible Executive’s primary residence than was the location at which the Eligible Executive was stationed immediately prior to the Change in Control; and

	
 
	
(d)
	
a material breach by the Corporation of any agreement under which the Eligible Executive provides services in each case, provided that the Eligible Executive provides written notice to the Corporation of the condition giving rise to Good Reason within 90 days of the initial existence of the condition, such condition is not remedied within 30 days of receipt of such notice, and the Eligible Executive terminates employment within two years of the occurrence of the Change in Control.

	
 
	
(5)
	
The term “Corporation” as used in this severance program shall mean the Corporation as hereinbefore defined and any successor or assignee to the business or assets which by reason hereof becomes bound by this severance program.

	
 
	
(6)
	
The term “Protection Period” means period that begins on the earlier of the date the Corporation enters into a definitive written agreement pursuant to which it will effect a transaction that will result in a Change in Control or the date of a Change in Control through the second anniversary of the consummation of the Change in Control (as extended as provided below, the “Protection Period”), provided that, with respect to any Eligible Executive whose employment is terminated in a manner described in Section 3.1 during such Protection Period, the Protection Period with respect to such Eligible Executive shall extend until the date all benefits under this severance program have been paid or provided to such Eligible Executive.

 Annual Incentive Plan

	

	

	
8.1
	
An Eligible Executive who has been involuntarily terminated by the Corporation for business reasons, whether or not in connection with a Change in Control, or who in the three months prior to or 24 months following a Change in Control has terminated his or her employment for Good Reason or has been terminated by the Corporation without Cause will be eligible for a prorated bonus under the AIP for the year in which the termination of employment 

3

 

 

		
occurred.  Payment will be based on the pre-established goals under the AIP for the applicable plan year accrued on the books and records of the Company as at the end of the fiscal quarter ended immediately prior to such termination (or such greater amount as is payable under the AIP) and the Eligible Executive’s performance.  It will be calculated prorated on base salary earned during the year of termination.  Payment will be made at the same time as the severance allowance is payable and in any event no later than March 15 of the calendar year following the year of termination.  In situations where an Eligible Executive is terminated prior to the payment of the previous year’s AIP, he or she will also be eligible for payment of the previous year’s AIP, which will also be paid at the same time payment is made to all other employees under the AIP and in any event no later than March 15 of the year following the year in which the related services were performed.  

Other Benefits

	

	

	
9.1
	
A terminated Eligible Executive’s coverage under the Corporation’s medical and dental insurance policies will remain in effect until the last day of the Severance Period, except if the Eligible Executive’s benefits are subject to taxation in the United States, as described below under the heading “Provisions Applicable to U.S. Taxpayers.” In the event that the Eligible Executive obtains equivalent or better coverage elsewhere, this coverage will terminate.

	
9.2
	
Notwithstanding Section 9.1 above, the group insurance coverage to which the Eligible Executive was subject immediately prior to his or her termination will be maintained, to the extent provided by applicable law.

	
9.3
	
A terminated Eligible Executive will be entitled to reasonable outplacement services.  This benefit will terminate in the event the Eligible Executive obtains new employment.  In no event will this benefit continue beyond December 31 of the second year beginning after the date of termination.

Successors

	

	

	
10.1
	
Any successor of or to the Corporation, its assets or its businesses (whether direct or indirect, by purchase, merger, consolidation or otherwise), shall assume the obligations under this severance program in the same manner and to the same extent that the Corporation would be obligated under this severance program if no succession had taken place.  In the case of any transaction in which a successor would not by the foregoing provision or by operation of law be bound by this severance program, the Corporation shall require such successor expressly and unconditionally to assume and agree to perform the Corporation’s obligations under this severance program, in the same manner and to the same extent that the Corporation would be required to perform if no such succession had taken place.

Provisions Applicable to U.S. Taxpayers

	

	

	
11.1
	
Any payment or benefit provided under this severance program that is subject to U.S. taxation and section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”) and the applicable rules, regulations and guidance promulgated thereunder (“Section 409A”), will only be paid or provided if the termination of an Eligible Executive’s employment for business reasons by the Corporation or other termination entitling the Eligible Executive to benefits under this severance program constitutes a “Separation from Service” within the meaning of Section 409A.  

	
11.2
	
Payments or benefits subject to U.S. taxation shall be administered and paid as follows:

Subject to the execution and delivery by the Eligible Executive of a Release within 45 days of the date of his or her Separation from Service and such Release becoming irrevocable (such execution and revocation period, the “Release Period”):

	
 
	
•
	
The Eligible Executive’s severance allowance will be paid in a lump sum within 90 days of the date of the Eligible Executive’s Separation from Service, but in no event later than March 15 of the calendar year following the calendar year in which the Eligible Executive’s Separation from Service takes place provided that, if such 90-day period spans more than one calendar year, the payment shall be made in the second calendar year.

	
 
	
•
	
If the Eligible Executive would otherwise be eligible to elect continued health coverage under Section 4980B of the Code (“COBRA”) (i) if permitted by the applicable plan and applicable law, the Eligible Executive’s coverage under the applicable health insurance policies maintained by the Corporation will remain in effect or (ii) if not so permitted, the Corporation shall pay or reimburse the Eligible Executive for the excess of the cost of COBRA coverage over what would have been the Eligible Executive’s cost for continued coverage under the applicable health insurance policies had he or she been permitted to continue coverage, in each case until 

4

 

 

	
 
		
the earlier to occur of the last day of the Severance Period and the last day on which the Eligible Executive would otherwise be eligible for COBRA coverage if he or she had elected such coverage and paid the applicable premiums.  In the event that the Eligible Executive obtains equivalent or better coverage elsewhere, this coverage will terminate.

	
 
	
•
	
If the Eligible Executive would not otherwise be eligible to elect COBRA coverage, the Eligible Executive’s coverage under the applicable health insurance policies maintained by the Corporation will remain in effect until the earlier to occur of the last day of the Severance Period and the 18-month anniversary of the date of the Eligible Executive’s Separation from Service.  In the event that the Eligible Executive obtains equivalent or better coverage elsewhere, this coverage will terminate.

	
11.3
	
The amount of any reimbursement or in-kind benefit provided under this severance program in one taxable year shall not affect the amount of any reimbursement or in-kind benefit provided in any other taxable year (except that a plan providing medical or health benefits may impose a generally applicable limit on the amount that may be reimbursed or paid).  Any reimbursement shall be paid to the Eligible Executive on or before the last day of the taxable year following the taxable year in which the expense was incurred.  No entitlement to any reimbursement or in-kind benefit provided under this severance program shall be subject to liquidation or exchange for any other benefit.  

	
11.4
	
Notwithstanding anything to the contrary contained herein, if an Eligible Executive is a “specified employee” within the meaning of any specified employee policy of the Corporation or, if no such policy is in effect at the time of termination, Section 409A, (i) any portion of an Eligible Executive’s severance allowance under this severance program that is subject to Section 409A (after taking into account all exclusions applicable to the Eligible Executive’s severance allowance under Section 409A) and that would otherwise be payable or provided within six months following the date of the Eligible Executive’s Separation from Service will be accumulated and paid on the first payroll date following the six-month anniversary of the date of the Eligible Executive’s Separation from Service and (ii) the Eligible Executive will pay the full cost of any non-COBRA health care benefits provided to him or her under Section 9.1 that are subject to Section 409A for the six-month period following the date of his or her Separation from Service, with the full amount of such costs to be reimbursed to the Eligible Executive on the first payroll date following the six-month anniversary of the date of his or her Separation from Service, in each case to the extent necessary to comply with Section 409A.

	
11.5
	
Neither the Corporation nor any of its directors, officers or employees shall have any liability to an Eligible Executive in the event Section 409A applies to any benefit provided pursuant to this severance program in a manner that results in adverse tax consequences for such Eligible Executive or any of his or her beneficiaries or transferees.  The Administrator may unilaterally amend, modify or terminate any benefit provided under this severance program if it determines, in its sole discretion, that such amendment, modification or termination is necessary or advisable to comply with applicable U.S. law as a result of changes in law or regulation or to avoid the imposition of an additional tax, interest or penalty under Section 409A.

Additional Administrative Matters

	

	

	
12.1
	
The Administrator shall have complete discretion to interpret where necessary all provisions of the severance program (including, without limitation, by supplying omissions from, correcting deficiencies in, or resolving inconsistencies or ambiguities in, the language of the severance program), to make factual findings with respect to any issue arising under the severance program, to determine the rights and status under the severance program of Eligible Executive or other persons, to resolve questions (including factual questions) or disputes arising under the severance program and to make any determinations with respect to the benefits payable under the severance program and the persons entitled thereto as may be necessary for the purposes of the severance program.  Without limiting the generality of the foregoing, the Administrator is hereby granted the authority (i) to determine whether a particular employee is an Eligible Executive, and (ii) to determine if a person is entitled to benefits hereunder and, if so, the amount and duration of such benefits.  The Administrator may delegate, subject to such terms as the Administrator shall determine, any of its authority hereunder to such person or persons from time to time as it may designate.  In the event of such delegation, all references to the Administrator in the severance program shall be deemed references to such delegates as it relates to those aspects of the severance program that have been delegated.  The Administrator’s determination of the rights of any person hereunder shall be final and binding on all persons.

	
12.2
	
All benefits payable hereunder that are subject to U.S. taxation and Section 409A of the Code shall be unfunded for purposes of section 83 of the Code and Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).  The severance program constitutes a mere promise by the Corporation to make such benefit payments in the future.

5

 

 

	
12.3
	
Notwithstanding any provision of the severance program to the contrary, in the event that it shall be determined by the Accounting Firm that any Payment to an Eligible Executive would be subject to the Excise Tax, the Accounting Firm shall determine whether to reduce the aggregate amount of the Payments payable to such Eligible Executive under this severance program (the “Severance Payments”) to the Reduced Amount.  The Severance Payments shall be reduced to the Reduced Amount only if the Accounting Firm determines that the Eligible Executive would have a greater Net After-Tax Benefit if the Eligible Executive’s Severance Payments were reduced to the Reduced Amount.  If instead the Accounting Firm determines that the Eligible Executive would have a greater Net After-Tax Benefit if the Eligible Executive’s Severance Payments were not reduced to the Reduced Amount, the Eligible Executive shall receive all Severance Payments to which the Eligible Executive is entitled under this severance program.  For the avoidance of doubt, nothing in this severance program obligates the Corporation to pay, and the Corporation shall not pay, any Excise Tax imposed on any Eligible Executive.  

If the Accounting Firm determines that the aggregate Severance Payments otherwise payable to an Eligible Executive should be reduced to the Reduced Amount pursuant to this Section 12.3, the Corporation shall promptly give the Eligible Executive notice to that effect and a copy of the detailed calculation thereof.  All determinations made by the Accounting Firm under this Section 12.3 shall be binding upon the Corporation and the Eligible Executive and shall be made within fifteen (15) days after the Eligible Executive’s termination date.  The reduction of the Severance Payments to the Reduced Amount, if applicable, shall be made by first reducing, on a pro-rata basis, the cash payments under Section 8.1 and Section 7.5, then reducing the cash payments and benefits under Section 9.1, and then reducing, on a pro-rata basis, any benefits under Sections 9.2 and 9.3.  All fees and expenses of the Accounting Firm shall be borne solely by the Corporation.

The following definitions apply for purposes of this Section 12.3.

	
 
	
(1)
	
“Accounting Firm” shall mean the Corporation’s then current independent outside auditors, or such other nationally recognized certified public accounting firm as may be designated by the Administrator.

	
 
	
(2)
	
“Excise Tax” shall mean the excise tax imposed by Section 4999 of the Code, together with any interest or penalties imposed with respect to such excise tax.

	
 
	
(3)
	
“Net After-Tax Benefit” shall mean the aggregate Value of all Payments to an Eligible Executive, net of all taxes imposed on the Eligible Executive with respect thereto under Sections 1 and 4999 of the Code and under applicable state and local laws, as determined by the Accounting Firm.

	
 
	
(4)
	
“Payment” shall mean any payment, benefit or distribution in the nature of compensation (within the meaning of Section 280G(b)(2) of the Code) to or for the benefit of the Eligible Executive, whether paid or payable pursuant to the severance program or otherwise.

	
 
	
(5)
	
“Reduced Amount” shall mean the greatest amount of Severance Payments that can be paid that would not result in the imposition of the Excise Tax upon an Eligible Executive if the Accounting Firm determines to reduce Severance Payments pursuant to this Section 12.3.

	
 
	
(6)
	
“Value” of a Payment shall mean the economic present value of a Payment, as determined by the Accounting Firm for purposes of Section 280G of the Code.

	
12.4
	
Each person who is or shall have been a member of the HR Committee or other Administrator and each delegate of such Committee or Administrator shall be indemnified and held harmless by the Corporation against and from any loss, cost, liability, or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit, or proceeding to which he or she may be made a party or in which he or she may be involved in by reason of any action taken or failure to act under this severance program and against and from any and all amounts paid by him or her in settlement thereof, or paid by him or her in satisfaction of any judgment in any such action, suit, or proceeding against him or her, provided that the Corporation is given an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it personally.  The foregoing right of indemnification shall not be exclusive and shall be independent of any other rights of indemnification to which such persons may be entitled under the Corporation’s articles of incorporation or by-laws, by contract, as a matter of law, or otherwise. 

Claims for Benefits

	

	

	
13.1
	
Each terminated Eligible Executive or other person who has been determined to be eligible to receive benefits under this severance program may contest the administration of the benefits by completing and filing a written claim for reconsideration with the Administrator (“claimant”).  If the Administrator denies a claim in whole or in part, the Administrator will provide notice to the claimant, in writing, within 90 days after the claim is filed, unless the 

6

 

 

		
Administrator determines that an extension of time for processing is required.  In the event that the Administrator determines that such an extension is required, written notice of the extension will be furnished to the claimant prior to the termination of the initial 90-day period.  The extension will not exceed a period of 90 days from the end of the initial period of time and the extension notice will indicate the special circumstances requiring an extension of time and the date by which the Administrator expects to render the benefit decision.

The written notice of a denial of a claim will set forth, in a manner calculated to be understood by the claimant:

	
 
	
•
	
the specific reason or reasons for the denial;

	
 
	
•
	
reference to the specific severance program provisions on which the denial is based;

	
 
	
•
	
a description of any additional material or information necessary for the terminated claimant to perfect the claim and an explanation as to why such information is necessary; and

	
 
	
•
	
an explanation of the severance program’s claims procedure and the time limits applicable to such procedures, including a statement of the claimant’s right to bring a civil action under section 502(a) of ERISA following an adverse benefit determination on appeal.

	
13.2
	
The claimant or his or her duly authorized representative will have an opportunity to appeal a claim denial to the Administrator for a full and fair review.  The Eligible Executive or his or her duly authorized representative may:

	
 
	
•
	
request a review upon written notice to the Administrator within 60 days after receipt of a notice of the denial of a claim for benefits;

	
 
	
•
	
submit written comments, documents, records, and other information relating to the claim for benefits; and

	
 
	
•
	
examine the severance program and obtain, upon request and without charge, copies of all documents, records, and other information relevant to the claimant’s claim for benefits.

The Administrator’s review will take into account all comments, documents, records, and other information submitted by the claimant relating to the claim, without regard to whether such information was submitted or considered by the Administrator in the initial benefit determination.  A determination on the review by the Administrator will be made not later than 60 days after receipt of a request for review, unless the Administrator determines that an extension of time for processing is required.  In the event that the Administrator determines that such an extension is required, written notice of the extension will be furnished to the claimant prior to the termination of the initial 60-day period.  The extension will not exceed a period of 60 days from the end of the initial period and the extension notice will indicate the special circumstances requiring an extension of time and the date on which the Administrator expects to render the determination on review.

The written determination of the Administrator will set forth, in a manner calculated to be understood by the claimant:

	
 
	
•
	
the specific reason or reasons for the decision;

	
 
	
•
	
reference to the specific severance program provisions on which the decision is based;

	
 
	
•
	
the claimant’s right to receive, upon request and without charge, reasonable access to, and copies of, all documents, records, and other information relevant to the claim for benefits; and

	
 
	
•
	
a statement of the claimant’s right to bring a civil action under section 502(a) of ERISA.

A claim or action (i) to recover benefits allegedly due under the severance program or by reason of any law, (ii) to enforce rights under the severance program, (iii) to clarify rights to future benefits under the severance program, or (iv) that relates to the severance program and seeks a remedy, ruling or judgment of any kind against the severance program or a severance program fiduciary or party in interest (collectively, a “Judicial Claim”), may not be commenced in any court or forum until after the claimant has exhausted the severance program’s claims and appeals procedures set forth above (an “Administrative Claim”).  A claimant must raise every argument and/or produce all evidence the claimant believes supports the claim or action in the Administrative Claim and shall be 

7

 

 

deemed to have waived any argument and/or the right to produce any evidence not submitted to the Administrator as part of the Administrative Claim.

	
13.3
	
Any Judicial Claim must be commenced in the appropriate court or forum no later than 18 months from the earliest of (i) the date the first benefit payment was made or allegedly due; (ii) the date the Administrator first denied the claimant’s request or (iii) the first date the claimant knew or should have known the principal facts on which such claim or action is based; provided, however, that, if the claimant commences an Administrative Claim before the expiration of such 18 month period, the period for commencing a Judicial Claim shall expire on the later of the end of the 18 month period and the date that is three months after the claimant’s appeal of the initial denial of his or her Administrative Claim is finally denied, such that the claimant has exhausted the severance program’s claims and appeals procedures.  Any claim or action that is commenced, filed or raised, whether a Judicial Claim or an Administrative Claim, after expiration of such 18-month period (or, if applicable, expiration of the three-month period following exhaustion of the severance program’s claims and appeals procedures) shall be time-barred.  Filing or commencing a Judicial Claim before the claimant exhausts the Administrative Claim requirements shall not toll the 18-month limitations period (or, if applicable, the three month limitations period).

 

December 11, 2019

 

8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00305-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00305-of-00352.parquet"}]]