Exhibit 10.6
Purpose
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
| • | terminates employment voluntarily (other than for Good Reason in connection with a Change in Control as contemplated by Section 7.5); or |
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Restriction
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. |
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. |
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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: |
| (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. |
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Other Benefits
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
11.2 | 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”):
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Additional Administrative Matters
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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.
| (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. |
| (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. |
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The written notice of a denial of a claim will set forth, in a manner calculated to be understood by the claimant:
| • | 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 |
| • | 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 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 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 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.
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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
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