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8-K - FORM 8-K - GILEAD SCIENCES INCd159419d8k.htm

Exhibit 10.1

GILEAD SCIENCES, INC.

SEVERANCE PLAN

AND

SUMMARY PLAN DESCRIPTION

(As Amended and Restated Effective March 8, 2016)


TABLE OF CONTENTS

 

         Page  
I.  

INTRODUCTION

     1   
II.  

COMMENCEMENT OF PARTICIPATION

     2   
III.  

TERMINATION OF PARTICIPATION

     2   
IV.  

SEVERANCE PAY BENEFIT

     3   
V.  

TIME AND FORM OF SEVERANCE PAY BENEFIT

     6   
VI.  

DEATH OF A PARTICIPANT

     8   
VII.  

AMENDMENT AND TERMINATION

     8   
VIII.  

NON-ALIENATION OF BENEFITS

     10   
IX.  

SUCCESSORS AND ASSIGNS

     10   
X.  

LEGAL CONSTRUCTION

     10   
XI.  

ADMINISTRATION AND OPERATION OF THE PLAN

     10   
XII.  

CLAIMS, INQUIRIES AND APPEALS

     11   
XIII.  

BASIS OF PAYMENTS TO AND FROM PLAN

     13   
XIV.  

OTHER PLAN INFORMATION

     13   
XV.  

STATEMENT OF ERISA RIGHTS

     13   
XVI.  

AVAILABILITY OF PLAN DOCUMENTS FOR EXAMINATION

     14   
XVII.  

DEFINITIONS

     14   
XVIII.  

EXECUTION

     19   
APPENDIX A Executive Chairman and Chief Executive Officer Severance Benefits      20   

APPENDIX B Executive Vice President, Senior Vice President and other Executive Officers (not covered by Appendix A) Severance Benefits

     25   
APPENDIX C Vice President and Senior Advisor Severance Benefits      30   

APPENDIX D Severance Benefits for Eligible Employees other than Chief Executive Officer, Executive Vice President, Senior Vice President, Vice President and Senior Advisor

     35   

 

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I. INTRODUCTION

The Gilead Sciences, Inc. Severance Plan (the “Plan”) was originally adopted by the Company effective January 29, 2003, and was subsequently amended and restated effective January 1, 2005, on May 9, 2006. The Plan was further amended and restated on May 8, 2007 and subsequently amended in February and May 2008 in order to effect the following: (i) bring the Plan into documentary compliance with Section 409A of the Code and the final Treasury Regulations thereunder and (ii) incorporate certain transitional relief in accordance with (A) Treasury Notice 2005-1, Q&A-19, as modified by the preamble to the proposed and the final regulations pursuant to Section 409A of the Code, published in the Federal Register on October 4, 2005 and April 17, 2007, respectively, and (B) Treasury Notice 2007-86. This Plan and Summary Plan Description as so amended and restated effects such full documentary compliance under Section 409A of the Code and the applicable Treasury Regulations, effective January 1, 2009, and replaces all severance or similar plans or programs of the Company previously in effect. The Company has no severance or similar plan or program other than this Plan.1

The May 7, 2008 restatement of the Plan also revised the bonus component of the Severance Pay Benefit formulas in Appendix A, Appendix B and Appendix C to comply with Revenue Ruling 2008-13. Such amendment was effective as of May 7, 2008.

The Plan was further amended on December 15, 2008 to provide, effective as of January 1, 2009, that (i) the cash severance benefits to which individuals covered by Appendix D may become entitled under the Plan shall be paid in a lump sum and (ii) the COBRA coverage costs that Participants may incur for the applicable period specified in Appendix A, B, C or D following their termination of employment shall be paid in the form of a lump sum prepayment, subject to the Company’s collection of the applicable withholding taxes.

The Plan was amended on December 14, 2009 to provide, effective as of January 1, 2010, that the bonus component of the severance benefit formula in effect under Appendix A and Appendix B of the Plan for the covered Participants thereunder whose qualifying termination occurs in a non-change in control situation will no longer calculated by applying the specified multiple in such situation to a pro-rated portion of their average actual bonus for the three-year or shorter period preceding the fiscal year of their termination but will instead be calculated by applying that multiple to one hundred percent of such average actual annual bonus.

  

 

1  The Triangle Pharmaceuticals, Inc. Severance Plan remained in effect until January 23, 2004 and provided benefits to employees of Triangle who were involuntarily terminated.

 

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The Plan was further amended on January 28, 2010 to limit the class of participants eligible to qualify for the potential tax gross-up payment under Appendices A through C to the Plan that is designed to cover any excise tax liability they might incur under Section 4999 of the Code in connection with the severance benefits provided to them under the Plan and to implement a greatest after-tax benefit limitation for participants whose benefits under the Plan may constitute parachute payments under Section 280G of the Code but who are not otherwise eligible for any tax gross-up payment under the Plan that would cover any resulting tax liability to which they might otherwise become subject under Section 4999 of the Code.

The Plan was further amended on January 26, 2012 to (i) revise the Continuous Service definition with respect to any participant who is reemployed by the Company following an earlier termination of employment with the Company that resulted in his or her receipt of a severance pay benefit under the Plan so that such individual will not be entitled to any continuous service credit for his or her prior period of employment or service with the Company or for any bridge period between the period of such prior service and the date of his or her re-employment and (ii) effect certain other clarifying changes to facilitate the administration of the Plan and assure that the Plan continues to comply with applicable laws and regulations.

The Plan was further amended on March 8, 2016 to provide that the Severance Pay Benefit payable to the executive chair shall be as set forth in Appendix A and that Appendix B covers any executive officer not otherwise covered by Appendix A. In addition, the March 8, 2016 amendment eliminated the potential tax gross-up payment provided to participants who as of January 28, 2010 were employed in a position with the Company covered under Appendices A through C to the Plan, which gross-up provision was designed to cover any excise tax liability that might be incurred under Section 4999 of the Code in connection with the severance benefits provided under the Plan, with such amendment being effective on March 8, 2016 except as provided (unless otherwise waived by a participant) in Section VII(b) of the Severance Plan in the event that during the six months after March 8, 2016 there occurs the public announcement of an event or proposed transaction which would constitute a Change in Control (as such term is defined in the Severance Plan). Upon the effectiveness of the amendment, a participant in the Severance Plan employed in a position that is covered under Appendices A through C shall be provided the greatest after-tax benefit as provided for under such Appendix.

The purpose of the Plan is to provide a Severance Pay Benefit to certain Eligible Employees whose employment with the Company terminates under certain prescribed circumstances. The Company is the Plan Administrator for purposes of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Plan is intended to comply with the requirements of Section 409A of the Code.

Capitalized terms used in this Plan shall have the meaning set forth in Section XVII.

II. COMMENCEMENT OF PARTICIPATION

An Eligible Employee shall commence participation in the Plan upon the later of (i) January 29, 2003 or (ii) his or her date of hire.

III. TERMINATION OF PARTICIPATION

A Participant’s participation in the Plan shall terminate upon the occurrence of the earliest of the following:

 

(a) The Participant’s employment terminates without meeting the requirements of Section IV(a)(i)(1).

 

(b) The Participant’s employment terminates with a provision of Section IV(a)(ii) being applicable.

 

(c) The Participant fails to meet the requirements of Section IV(a)(i)(2).

 

(d) The Participant has received a complete distribution of his or her Severance Pay Benefit.

 

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(e) The Participant ceases to be an Eligible Employee (other than by reason of termination of his or her employment with the Company).

 

(f) The Plan terminates.

IV. SEVERANCE PAY BENEFIT

 

(a) Eligibility for Severance Pay Benefit.

 

  (i) Subject to Section IV(a)(ii), a Participant shall be eligible for a Severance Pay Benefit only if the Participant meets the requirements of Section IV(a)(i)(1) and Section IV(a)(i)(2).

 

  (1) The Participant incurs a Separation from Service as a result of an involuntary termination of his or her Employee status by the Company because of a Company-wide or departmental reorganization or a significant restructuring of the Participant’s job duties; provided, however, that a Participant’s Employee status shall also be deemed to have been involuntarily terminated by the Company if he or she resigns because of (A) a transfer to a new work location that is more than 50 miles from his or her previous work location, and (B) in the case of a Participant whose Severance Pay Benefit is determined with reference to Appendix A, B or C, a Constructive Termination (as defined in Section 11(d) of the 2004 Equity Incentive Plan) in conjunction with a Change in Control and within the time specified in Appendix A, B or C, as applicable.

 

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  (2) The Participant executes and delivers to the Company the Release within the time frame prescribed by the Company therein, but in no event later than the forty-fifth (45th) day following his or her Separation from Service, and the period (if any such period is prescribed by the Company in the Release) for revoking the execution of the Release under the Older Workers’ Benefit Protection Act, 29 U.S.C. § 626(f), expires without the Participant’s revocation of such Release. A Participant’s failure to comply on a timely basis with such Release requirement shall render such individual ineligible to receive any Separation Pay Benefit under the Plan.

Under no circumstances shall a Participant be eligible for a Severance Pay Benefit under the Plan if he or she terminates Employee status for the purpose of accepting employment with the entity that effectuates a Change in Control, its subsidiaries or affiliates.

 

  (ii) Notwithstanding Section IV(a)(i), a Participant shall be disqualified from receiving a Severance Pay Benefit upon the occurrence of any of the following:

 

  (1) The Participant voluntarily terminates Employee status for any reason prior to the termination date set by the Company;

 

  (2) The Participant’s Employee status is terminated by death or for cause (including, without limitation, gross misconduct or dereliction of duty) or for failure to meet performance goals or objectives as determined by the Company;

 

  (3) If the Participant is receiving short-term sick leave benefits on the date his or her Employee status terminates, the Participant fails to execute and deliver to the Company, within thirty (30) days after his or her Separation from Service, a written waiver of any short-term sick leave benefits that might otherwise be payable after such termination of Employee status;

 

  (4) The Participant terminates Employee status in order to accept employment with an organization that is wholly or partly owned (directly or indirectly) by the Company or an Affiliate;

 

  (5) The Participant accepts any job with a Buyer or Outsourcing Supplier;

 

  (6) The Participant is offered full-time employment with a Buyer or Outsourcing Supplier at a new work location 50 miles or less from his or her previous work location with the Company and taking such position would not result in a reduction in his or her Regular Earnings;

 

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  (7) Except in the case of a Severance Pay Benefit payable on account of a Change in Control of the Company, the Participant received a severance benefit in connection with an acquisition effected by the Company within 24 months prior to his or her Separation from Service; or

 

  (8) Except for a Severance Pay Benefit payable on account of a Change in Control of the Company, the Participant has not completed six months of Continuous Service as of the date of his or her termination of Employee status; provided, however, that, effective May 8, 2007, such service requirement shall not be applicable to Employees who are Vice Presidents or in Grades 21 through 34.

The business decisions that may result in a Participant qualifying for a Severance Pay Benefit are decisions to be made by the Company in its sole discretion. In making these decisions, similarly situated organizations, locations, functions, classifications, and/or Participants need not be treated in the same manner. Each Participant remains an employee at will, and the date selected by the Company to terminate the Participant’s Employee status is within its sole discretion.

 

(b) Amount of Severance Pay Benefit.

 

  (i) Subject to Section IV(b)(ii), the Severance Pay Benefit payable to a Participant shall be as set forth in the applicable Appendix:

 

       Appendix A—The Executive Chairman and the Chief Executive Officer.

 

       Appendix B—Executive Vice Presidents, Senior Vice Presidents and any other executive officers not covered by Appendix A.

 

       Appendix C—Vice Presidents and Senior Advisors.

 

       Appendix D—All Eligible Employees not covered by Appendix A, B, or C.

 

       Senior Advisors covered under Appendix C shall only be eligible for a Severance Pay Benefit in connection with a Change in Control.

 

  (ii) Notwithstanding Section IV(b)(i), the total Severance Pay Benefit otherwise payable to a Participant under the Plan shall be subject to reduction (but not below zero) as follows:

 

  (1) If a Participant is reemployed by the Company or an Affiliate within the number of weeks after his or her Separation from Service that is equal to the number of weeks taken into consideration in calculating the Regular Earnings component of his or her Severance Pay Benefit, the total Severance Pay Benefit payable to such Participant shall be reduced to the dollar amount that the Participant’s Regular Earnings would have been for the period from the date of termination to the date of reemployment. In all cases, the reduced benefit will be based on the Participant’s Regular Earnings used to calculate such Participant’s Severance Pay Benefit under the Plan. A Participant will be considered “reemployed” under the Plan for purposes of the foregoing repayment provision if he or she is rehired as an Employee or if he or she is retained at a Company facility as or through a contractor for more than a full-time equivalent of more than 45 work days.

 

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  (2) If a Participant is employed by a Buyer or Outsourcing Vendor within the number of weeks after his or her Separation from Service that is equal to the number of weeks taken into consideration in calculating the Regular Earnings component of his or her Severance Pay Benefit, the total Severance Pay Benefit payable to such Participant shall be reduced to the dollar amount that the Participant’s Regular Earnings would have been for the period from the date of termination to the date of employment with the Buyer or Outsourcing Vendor.

 

       Section IV(b)(ii)(2) may be waived in writing by the Company in its sole discretion.

 

  (3) The Severance Pay Benefit shall be reduced by severance pay or other similar benefits payable under any other plan or policy of the Company or an Affiliate or government required payment (other than unemployment compensation under United States law), including, but not limited to, any benefit enhancement program adopted as part of a pension plan, but only to the extent the time and form of such alternative payments do not otherwise result in an impermissible acceleration or deferral under Code Section 409A of the Severance Pay Benefit payable under this Plan.

 

  (4) The Severance Pay Benefit shall be reduced by any amounts payable pursuant to the Worker Adjustment and Retraining Notification Act (“WARN”) or any other similar federal, state or local statute, but such reduction shall be effected in a manner that does not otherwise result in an impermissible acceleration or deferral under Code Section 409A of the Severance Pay Benefit payable under this Plan.

 

  (5) The Severance Pay Benefit shall be reduced by the amount of any indebtedness owed to the Company, but only to the extent such offset would not otherwise contravene any applicable limitations of Code Section 409A.

 

(c) Repayment of the Severance Pay Benefit.

If the Participant has received payment under the Plan in excess of the Severance Pay Benefit, as reduced in accordance with Section IV(b)(ii), the Participant must agree as a condition of reemployment that such excess will be repaid to the Company within sixty (60) days after the date his or her reemployment commences.

V. TIME AND FORM OF SEVERANCE PAY BENEFIT

 

(a)

The Severance Pay Benefit (other than the Lump Sum Health Care Payment) for each Participant, other than a Participant whose Severance Pay Benefit is determined pursuant to Appendix D, shall be paid in equal periodic installments over the total number of weeks taken into account in calculating the Regular Earnings component of the Severance Pay Benefit to which such Participant is entitled. Except as set forth below, such installments shall be payable over the applicable period on the regularly scheduled pay dates in effect for the Company’s salaried employees, beginning with the first such pay date within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(ander Code Section 280G payable to the Participant shall be limited to the greater of (x) the Safe Harbor Amount or (y) the amount that yields the Participant the greatest after-tax aggregate amount of such Severance Pay Benefit and other payments due the Participant after taking into account any excise tax imposed on those amounts under Code Section 4999.

 

  c. All calculations required under this section A.5 shall be made by an independent registered public accounting firm (the “Auditor”) selected by the Company, and the fees of such Auditor shall be paid by the Company. Unless the Participant agrees otherwise in writing, the Auditor selected by the Company shall be a nationally recognized United States registered public accounting firm that has not during the two years preceding the date of its selection, acted in any way on behalf of the Company. The required calculations shall be provided to the Participant and the Company within ten (10) business days following the Participant’s Separation from Service during the Change in Control Period under circumstances entitling the Participant to a Severance Pay Benefit under the Plan and within ten (10) days following the occurrence of any other event triggering a parachute payment for the Participant.

 

  d.

If a reduction in the payments or benefits constituting a parachute payment under Code Section 280G is required pursuant to the Benefit Limitation imposed under this section A.5, then such reduction shall be effected in the following order: first, the Participant’s salary and bonus continuation payments under section A.1 of this Appendix C to the Plan shall be reduced (with such reduction to be applied pro-rata to each such payment and without any change to the payment dates), then the amount of the Participant’s Lump Sum Health

 

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  Care Payment shall be reduced, and finally any accelerated vesting of the Participant’s equity awards under one or more of the Company’s stock compensation plans, including (without limitation) the 2004 Equity Incentive Plan and any predecessor plans, shall be reduced (based on the amount of the parachute payment calculated for each such award in accordance with the Treasury Regulations under Code Section 280G), with such reduction to occur in the same chronological order in which those awards were made.

 

B. Severance Pay Benefit for Vice Presidents with at least Six Months of Continuous Service.

For Vice Presidents who have completed six or more months of Continuous Service at the time they become eligible for a severance benefit under Section IV (a)(i), if the Severance Pay Benefit becomes payable in connection with a Separation from Service occurring at any time other than the Change in Control Period as defined in paragraph A of this Appendix C, then the Severance Pay Benefit shall be:

 

  1. 1.0 times annual Regular Earnings.

 

  2. A lump sum cash payment (the “Lump Sum Health Care Payment”) in an amount equal to twelve (12) times the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company’s employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of such termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant’s former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant’s Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant’s Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant’s Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company’s collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company’s group health care plan.

 

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  3. Outplacement services for 6 months following the date of Separation from Service.

 

C. Severance Pay Benefit for Vice Presidents with less than Six Months of Continuous Service.

For Vice Presidents who have not completed six or more months of Continuous Service but are otherwise eligible for a severance benefit under Section IV(a)(i), if the Severance Pay Benefit becomes payable in connection with a Separation from Service occurring at any time other than the Change in Control Period as defined in paragraph A of this Appendix C, then the Severance Pay Benefit shall be:

 

  1. 4 months of Regular Earnings.

 

  2. A lump sum cash payment (the “Lump Sum Health Care Payment”) in an amount equal to four (4) times the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company’s employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of such termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant’s former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant’s Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant’s Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant’s Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company’s collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company’s group health care plan.

 

  3. Outplacement services for 1 month following the date of Separation from Service.

Senior Advisors shall not be entitled to any benefits under Sections B and C of this Appendix C.

 

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APPENDIX D

Severance Benefits for Eligible Employees other than Chief Executive Officer, Executive Vice President, Senior Vice President, Vice President and Senior Advisor

This Appendix is effective for covered individuals who cease Employee status on or after May 8, 2007, unless they have a pre-existing contract providing a different level of severance pay.

 

A. Change in Control Severance Pay Benefit.

If a Severance Pay Benefit becomes payable under Section IV(a)(i) in connection with a Separation from Service occurring within the 12-month period following a Change in Control (the “Change in Control Period”), then regardless of the period of Continuous Service the Severance Pay Benefit shall be:

 

  1. Eligible Employees in Grades 31 through 34:

 

  a. Three weeks of Regular Earnings times Years of Continuous Service, with a maximum of 52 weeks of Regular Earnings and a minimum of 22 weeks of Regular Earnings.

 

  b.

A lump sum cash payment (the “Lump Sum Health Care Payment”) in the dollar amount determined by multiplying (A) the number of months (rounded up to the next whole month) in the applicable severance pay period determined for the Participant in accordance with Paragraph A.1.a above by (B) the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company’s employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of the Participant’s termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant’s former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant’s Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured

 

35


  from the date of the Participant’s Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant’s Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company’s collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company’s group health care plan.

 

  c. Outplacement services for 6 months following the date of Separation from Service.

 

  2. Eligible Employees in Grades 25 through 30:

 

  a. Three weeks of Regular Earnings times Years of Continuous Service, with a maximum of 39 weeks of Regular Earnings and a minimum of 13 weeks of Regular Earnings.

 

  b.

A lump sum cash payment (the “Lump Sum Health Care Payment”) in the dollar amount determined by multiplying (A) the number of months (rounded up to the next whole month) in the applicable severance pay period determined for the Participant in accordance with Paragraph A.2.a above by (B) the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company’s employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of the Participant’s termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant’s former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant’s Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant’s Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred

 

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  payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant’s Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company’s collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company’s group health care plan.

 

  c. Outplacement services for 3 months following the date of Separation from Service.

 

  3. Eligible Employees in Grades 21 through 24:

 

  a. Three weeks of Regular Earnings times Years of Continuous Service, with a maximum of 26 weeks of Regular Earnings and a minimum of 9 weeks of Regular Earnings.

 

  b.

A lump sum cash payment (the “Lump Sum Health Care Payment”) in the dollar amount determined by multiplying (A) the number of months (rounded up to the next whole month) in the applicable severance pay period determined for the Participant in accordance with Paragraph A.3.a above by (B) the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company’s employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of the Participant’s termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant’s former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant’s Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant’s Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant’s Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company’s

 

37


  collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company’s group health care plan.

 

  c. Outplacement services for 1week following the date of Separation from Service.

 

B. General Severance Pay Benefit.

If a Severance Pay Benefit becomes payable under Section IV(a)(i) after completion of six or more months of Continuous Service in connection with a subsequent Separation from Service occurring at any time other than within the Change in Control Period as defined in paragraph A of this Appendix D, then the Severance Pay Benefit shall be:

 

  1. Eligible Employees in Grades 31 through 34.

 

  a. Three weeks of Regular Earnings times Years of Continuous Service, with a maximum of 39 weeks of Regular Earnings and a minimum of 13 weeks of Regular Earnings.

 

  b.

A lump sum cash payment (the “Lump Sum Health Care Payment”) in the dollar amount determined by multiplying (A) the number of months (rounded up to the next whole month) in the applicable severance pay period determined for the Participant in accordance with Paragraph B.1.a above by (B) the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company’s employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of the Participant’s termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant’s former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant’s Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant’s Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds

 

38


  the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant’s Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company’s collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company’s group health care plan.

 

  c. Outplacement services for 3 months following the date of Separation from Service.

 

  2. Eligible Employees in Grades 25 through 30:

 

  a. Three weeks of Regular Earnings times Years of Continuous Service, with a maximum of 39 weeks of Regular Earnings and a minimum of 13 weeks of Regular Earnings.

 

  b.

A lump sum cash payment (the “Lump Sum Health Care Payment”) in the dollar amount determined by multiplying (A) the number of months (rounded up to the next whole month) in the applicable severance pay period determined for the Participant in accordance with Paragraph B.2.a above by (B) the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company’s employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of the Participant’s termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant’s former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant’s Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant’s Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant’s Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company’s collection of all applicable withholding taxes, and the Participant shall receive only

 

39


  the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company’s group health care plan.

 

  c. Outplacement services for 3 months following the date of Separation from Service.

 

  3. Eligible Employees in Grades 21 through 24:

 

  a. Three weeks of Regular Earnings times Years of Continuous Service, with a maximum of 26 weeks of Regular Earnings and a minimum of 9 weeks of Regular Earnings.

 

  b. A lump sum cash payment (the “Lump Sum Health Care Payment”) in the dollar amount determined by multiplying (A) the number of months (rounded up to the next whole month) in the applicable severance pay period determined for the Participant in accordance with Paragraph B.3.a above by (B) the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company’s employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of the Participant’s termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant’s former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant’s Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant’s Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant’s Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company’s collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company’s group health care plan.

 

40


  c. Outplacement services for 1 week following the date of Separation from Service.

 

C. General Severance Pay Benefit Without Six Months of Continuous Service.

For Eligible Employees in Grades 21 through 34 who have not completed six or more months of Continuous Service but are eligible for a severance benefit under Section IV(a)(i), if the Severance Pay Benefit becomes payable in connection with a Separation from Service occurring at any time other than within the Change Control Period as defined in paragraph A of this Appendix D, then the Severance Pay Benefit shall be:

 

  1. 4 weeks of Regular Earnings.

 

  2. A lump sum cash payment (the “Lump Sum Health Care Payment”) in the amount equal to one (1) times the amount by which (i) the monthly cost that would be payable by the Participant, as measured as of the date of his or her termination of employment, to obtain continued medical care coverage for the Participant and his or her spouse and eligible dependents under the Company’s employee group health plan, pursuant to their COBRA rights, at the level in effect for each of them on the date of the Participant’s termination of employment exceeds (ii) the monthly amount payable at such time by a similarly-situated executive whose employment with the Company has not terminated to obtain group health care coverage at the same level. The Company shall pay the Lump Sum Health Care Payment to the Participant on the first regularly scheduled pay date for the Participant’s former job and location that occurs within the sixty (60)-day period measured from the date of his or her Separation from Service on which both (A) the Release delivered by the Participant in accordance with Section IV(a)(i)(2) of the Plan is effective following the expiration of the applicable maximum review and revocation periods and (B) any waiver required of the Participant pursuant to Section IV(a)(ii)(3) of the Plan has been delivered on a timely basis to the Company and in the case of such waiver the thirty (30)-day maximum delivery period has expired, or on such subsequent date thereafter as the Company may determine in its sole discretion, but in no event shall such payment be made later than the last day of such sixty (60)-day period, provided (i) such Release and waiver have each been delivered to the Company within the required time period following the Participant’s Separation from Service, as set forth in Section IV, (ii) such Release has not been revoked and (iii) should such sixty (60)-day period measured from the date of the Participant’s Separation from Service extend over two calendar years, then the Lump Sum Health Care Payment shall be made during the portion of that sixty (60)-day period that occurs in the second calendar year. Notwithstanding the foregoing, the Lump Sum Health Care Payment shall be subject to the deferred payment provisions of Section V(d) of the Plan, to the extent such payment exceeds the applicable dollar amount under section 402(g)(1) of the Code for the year in which the Participant’s Separation from Service occurs. The Lump Sum Health Care Payment shall constitute taxable income to the Participant and shall be subject to the Company’s collection of all applicable withholding taxes, and the Participant shall receive only the portion of the Lump Sum Health Care Payment remaining after such withholding taxes have been collected. It shall be the sole responsibility of the Participant and his or her spouse and eligible dependents to obtain actual COBRA coverage under the Company’s group health care plan.

 

  3. Outplacement services for 1 week following the date of Separation from Service.

 

41