Letter Agreement

Executive Severance agreement

CIC Severance Plan

Amendment to CIC Severance Plan 12/16/2009

 

 

 

 

EX-10.(B) 2 dex10b.htm LETTER AGREEMENT

Exhibit 10(b)

EXECUTION COPY

August 14, 2007

Mr. Klaus Kleinfeld

Dear Klaus:

Based on our meetings, as well as your meetings with other members of the Board of Directors (the “Board”) of Alcoa, Inc. (together with any successor thereto) (the “Company”), it is my pleasure to extend an offer of employment with the Company pursuant to this letter agreement (“Agreement”), commencing on October 1, 2007 (the “Effective Date”), as its President and Chief Operating Officer, reporting to the Chief Executive Officer. You will have all of the duties, responsibilities and authority commensurate with such position. From and after the Effective Date, you will continue to serve as a member of the Board. The Company acknowledges and agrees that you may continue to serve as a member of the board of directors of two non-competitive corporate board of directors and may serve on charitable boards, in each case with the consent of the Board (which consent shall not be unreasonably withheld), provided that such additional corporate and charitable board service does not interfere in any material way with your duties to the Company. Upon the retirement of the current Chief Executive Officer, you will be offered the position of Chief Executive Officer and Chairman of the Board, reporting to the Board, with such employment continuing on the terms and conditions of this Agreement. The specifics of this employment offer are set forth below:

 

1.      Base Salary

  

Effective the Effective Date, your annual base salary will be $1,400,000, subject to increase (but not decrease) from time to time in the discretion of the Compensation and Benefits Committee (“Committee”) of the Board of Directors (as may be increased, the “Base Salary”), payable in accordance with the Company’s customary payroll practices. Your Base Salary will be increased appropriately at such time as you assume the position of Chief Executive Officer and Chairman of the Board.

2.      Annual Bonus

  

Effective the Effective Date, your annual target bonus opportunity under the Company’s Incentive Compensation Plan will be equal to at least 120% of your then-current Base Salary, and you can earn up to a maximum bonus equal to 240% of your then-current Base Salary. Your 2007 bonus will be based on the same performance objectives as the Company’s current Chief Executive Officer’s 2007 bonus, but will be prorated based on the fraction the numerator of which is the number of days you are employed by the Company during 2007 and the denominator of which is 365; provided, such bonus will not be prorated to the extent that you demonstrate to the reasonable satisfaction of the Committee that you have forfeited your entitlement to a 2007 annual bonus payment from Siemens AG.


Mr. Klaus Kleinfeld

August 14, 2007

Page 2

 

3.      Initial Equity Awards

  

On the Effective Date, the Company will grant you the following time-vested and performance-based awards under Sections 3(a) and 3(b) and, if you so elect in the alternative, Section 3(c) hereof pursuant to the Company’s Equity Choice Program under the 2004 Alcoa Stock Incentive Plan (“Plan”) and will grant you the following stock award under Section 3(d) hereof pursuant to the Plan:

  

(a)    A time-vested award (“Time-Vested Award”) having a grant-date value of $675,000; provided, if the Effective Date is postponed to a date after October 1, 2007, as provided below, the value of such award shall be equal to the product of $675,000 multiplied by the fraction the numerator of which is the number of days from the Effective Date through December 31, 2007 and the denominator of which is 92 (“Award Proration”). Unless you elect otherwise, as provided below, the Time-Vested Award will be granted to you in the form of time-vested stock options. The number of stock options awarded will be determined based on the method and assumptions applied by the Company for the accounting of expense for stock option awards under FAS 123R in effect on the Effective Date (presently, the lattice method). Each time-vested stock option will have an exercise price equal to the Fair Market Value (as defined under the Plan) of a share of common stock of the Company on the grant date, a six-year term, and will vest and become exercisable in three equal installments on each of the first three anniversaries of the grant date, provided that you are continuously employed by the Company through such anniversary date for such installment to so vest. The standard terms and conditions for the Company’s stock option awards shall otherwise apply (except that, during any period of time in which you are the Chief Executive Officer of the Company, any determination by the Chief Executive Officer authorized thereunder shall be made by the Committee).

  

(b)    A performance-based award (“Performance-Based Award”) having a grant-date value of $675,000; provided, such value shall be subject to Award Proration. Unless you elect otherwise, as provided below, the Performance-Based Award will be granted to you in the form of performance shares. The number of performance shares awarded will be equal to the quotient of (i) $675,000 (or the value after any Award Proration) divided by (ii) the Fair Market Value of one share of Company common stock on the grant date. Performance shares will be earned and payable in accordance with the Company’s standard terms and conditions applicable to its performance share awards granted in 2007. The number of performance shares so earned will fully vest and become unrestricted on the third anniversary of the grant date, provided that you are continuously employed by the Company through such date.


Mr. Klaus Kleinfeld

August 14, 2007

Page 3

 

  

The standard terms and conditions for the Company’s performance share awards shall otherwise apply (except that, during any period of time in which you are the Chief Executive Officer of the Company, any determination by the Chief Executive Officer authorized thereunder shall be made by the Committee).

  

(c)    On or prior to the Effective Date, you may elect to receive an award of time-vested restricted stock in lieu of time-vested stock options under your Time-Vested Award, and you may elect to receive an award of performance stock options in lieu of performance shares under your Performance-Based Award, in accordance with the terms and procedures under the Equity Choice Program in effect on the Effective Date. To the extent that you elect to receive restricted stock or performance stock options (or both), the Company’s standard terms and conditions applicable to such awards will govern (except that, during any period of time in which you are the Chief Executive Officer of the Company, any determination by the Chief Executive Officer authorized thereunder shall be made by the Committee), including, without limitation:

  

(i)     any award of time-vested restricted stock will fully vest and become unrestricted on the third anniversary of the grant date, provided that you are continuously employed by the Company through such date; and

  

(ii)    any award of performance stock options will be earned and payable in accordance with the Company’s standard terms and conditions applicable to its performance stock option awards granted in 2007. Each earned performance stock option will have an exercise price equal to the Fair Market Value of a share of common stock of the Company on the grant date, a six-year term, and will vest and become exercisable in three equal installments on each of the first three anniversaries of the grant date, provided that you are continuously employed by the Company through such anniversary date for such installment to so vest.

  

(d)    On the Effective Date, the Company will grant you a fully vested award of Company common stock pursuant to the Plan having a grant-date value of $1,000,000, or a monetary equivalent thereof, prior to any applicable tax withholding. The number of any such shares awarded, prior to any applicable tax withholding, will be equal to the quotient of (i) $1,000,000 divided by (ii) the Fair Market Value of one share of Company common stock on the grant date. The foregoing to the contrary notwithstanding, upon any voluntary termination (other than a Qualifying Termination, defined below) occurring prior to the third anniversary of the Effective Date, you will repay such portion of this


Mr. Klaus Kleinfeld

August 14, 2007

Page 4

 

  

grant as equals the product of (A) the after-tax amount (determined after application of all refunds and credits to which you are entitled as a result of such repayment) of the product of (x) the number of shares of common stock (or any such monetary equivalent) granted to you pursuant to this Section 3(d) multiplied by (y) the Fair Market Value of one share of Company common stock on the date of such termination, multiplied by (B) the fraction the numerator of which is the number of whole months from the date of termination until such third anniversary and the denominator of which is 36. Any tax withholding applicable to such stock award described in this Section 3(d) may, at your election, be satisfied by withholding from such award a number of shares with an aggregate Fair Market Value equal to the amount of tax required to be withheld by the Company in connection with such award).

4.      Annual Equity Awards

  

Commencing with annual long-term incentive awards granted to senior executives during fiscal 2008, you will be eligible for further equity grants and other long-term incentive awards, and with vesting and other terms and conditions, consistent with awards to other senior officers of the Company.

5.      Sign-On Bonus

  

On the Effective Date, you will receive a cash payment in the amount of $6,500,000 (subject to applicable tax and other required withholdings) as an inducement to enter into this Agreement; provided, upon any voluntary termination (other than a Qualifying Termination, defined below) occurring prior to the third anniversary of the Effective Date, you will repay such portion of the cash payment as equals the net after-tax amount of the cash payment (after application of all refunds and credits to which you are entitled as a result of such repayment) multiplied by the fraction the numerator of which is the number of whole months from the date of termination until such third anniversary and the denominator of which is 36. The cash payment to you will not constitute compensation for purposes of determining the amount of benefits you may be entitled to receive under any of the Company’s qualified and nonqualified retirement plans, qualified savings plan and nonqualified deferred compensation plans (including the SERP Benefit, below).

6.      Supplemental Pensions

  

Effective the Effective Date:

  

(a)    You will be eligible to participate in the Company’s tax-qualified defined contribution retirement plan and the Company’s tax-qualified and nonqualified savings and deferred compensation plans, applicable to senior executives hired on or after the date you and the Company enter into this Agreement, in accordance with their terms in effect from time to time, except as provided in Attachment A to this Agreement.


Mr. Klaus Kleinfeld

August 14, 2007

Page 5

 

  

(b)    You also will be eligible for a supplemental retirement benefit (“SERP Benefit”), as set forth on Attachment A to this Agreement.

7.      Relocation

  

As of the Effective Date, you will be entitled to full relocation benefits in accordance with the Company’s policy governing relocation of its senior executives. Additionally, you will receive a non-accountable cash payment in the amount of $1,200,000 (subject to applicable tax and other required withholdings) to assist you in the relocation of your family and you from your current residence to a residence in the vicinity of the Company’s headquarters in New York City, New York. This amount will be fully taxable to you and will not be grossed-up for taxes. The cash payment to you will not constitute compensation for purposes of determining the amount of benefits you may be entitled to receive under any of the Company’s qualified and nonqualified retirement plans, qualified savings plan and nonqualified deferred compensation plans (including the SERP Benefit, below).

8.      Benefits, Perquisites

  

Effective the Effective Date, you will be eligible to participate in all employee benefit plans, be entitled to such vacation benefits (but not less than four (4) weeks per year, credited in accordance with applicable Company policy) and to receive all perquisites which the Company provides to its senior executives, in accordance with the most favorable terms thereof. For purposes of eligibility under any Company retiree life insurance plan as may be in effect from time to time, you shall be deemed to have attained any minimum service requirement (and shall remain subject to attaining any required minimum age and continued employment and other terms and conditions of eligibility) thereunder. As a member of the Executive Council, you will be subject to the Company’s Corporate Aircraft Policy, as in effect from time to time (and for which purpose the Company’s air transport security policy shall be amended to cover you in the same manner as the Chief Executive Officer while you are serving as the Company’s President and Chief Operating Officer). The Company will provide you with an automobile and driver while in the United States and abroad for your use for business and personal purposes, including commuting, subject to applicable tax reporting and withholding. The Company will provide you with an appropriate level of assistance consistent with existing Company polices regarding your and your family’s visa, immigration and naturalization status in the United States. If due to circumstances beyond the Company’s and your control, you are unable to obtain all necessary visas and United States immigration status required to commence your duties hereunder on a full-time basis in the United States by October 1, 2007 (“Residence Status”), the Effective Date will be postponed until the date you obtain Residence Status (and for all purposes hereunder, the


Mr. Klaus Kleinfeld

August 14, 2007

Page 6

 

  

“Effective Date” will be such postponed date); provided, if you are unable to obtain Residence Status by January 1, 2008, your employment will not commence (i.e., there will not be an Effective Date) and this Agreement will thereupon terminate without any further liability of the Company to you. The Company will pay your reasonable professional fees incurred to negotiate and prepare this Agreement in an amount not to exceed $50,000. Effective the Effective Date, upon a termination of your employment for any reason other than for Cause (as defined below), and continuing until you attain age 65 (and for coverage for your spouse, until she attains age 65), you and your spouse will be entitled to continued participation in the Company’s health plan (or plans), in which you were participating immediately prior to termination, at the same premium cost to you as the amount from time to time charged for COBRA benefits to former employees of the Company.

9.      Severance

  

  

(a)    On the Effective Date, the Company and you will enter into the Company’s standard Executive Severance Agreement in the form recently provided to you; provided, such agreement shall terminate upon the date that you are appointed as the Chief Executive Officer of the Company.

  

(b)    For the purposes of your Executive Severance Agreement, “Cause” shall have the following meaning, and not the meaning in the standard form of Executive Severance Agreement: (i) any refusal by you to follow the lawful directives of the Board, or while you are Chief Operating Officer the lawful directives of the Chief Executive Officer, which are consistent with the scope and nature of your duties and responsibilities; (ii) your conviction of, or plea of guilty or nolo contendere to, a felony or of any crime involving moral turpitude, fraud or embezzlement; (iii) any gross negligence or willful misconduct in the conduct of your duties; (iv) any material breach of any one or more of the restrictive covenants provided at Section 12 hereof; or (v) any violation of any statutory or common law duty of loyalty to the Company or any of its subsidiaries; provided, no act or omission shall be “willful” if conducted in good faith and with a reasonable belief that such conduct was in the best interests of the Company.

  

(c)    Further, any voluntary termination of your employment will be deemed an involuntary termination of your employment “without Cause” under your Executive Severance Agreement (a “Qualifying Termination”) if such resignation occurs during the thirty (30) day period following the earliest to occur of (i) the date on which the current Chief Executive Officer and Chairman retires and you are not immediately thereafter


Mr. Klaus Kleinfeld

August 14, 2007

Page 7

 

  

appointed to succeed him as Chief Executive Officer and Chairman of the Board or (ii) the date at any time, after you had begun to serve in such positions, in which you are involuntarily terminated from either such position; provided, the appointment of a non-executive Chairman of the Board at any time will not constitute a basis for a Qualifying Termination provided that you, at such time as you then are or thereafter become the Chief Executive Officer, report directly to the Board.

  

(d)     If you are entitled to receive severance benefits under the Executive Severance Agreement, you will not be required to mitigate the amount of any payment provided for in the Executive Severance Agreement by seeking other employment or otherwise, and any amount received from subsequent employment will not offset your Salary Continuation payments (as defined under the Executive Severance Plan).

10.    Change in Control

  

On the date that the Company and you enter into this Agreement, you will become a participant under the Company’s Change in Control Severance Plan applicable to Tier II senior executives, or applicable to Tier I senior executives at such time as you become Chief Executive Officer, as in effect from time to time, subject to your commencement of employment on the Effective Date.

11.    Indemnification

  

The Company will indemnify you for your acts and omissions while serving as President and Chief Operating Officer, and thereafter if you are serving as Chief Executive Officer, to the same extent as provided to senior officers under the Company’s charter, by-laws and applicable law. During your employment and service as a member of the Board, and thereafter for such period as you may be subject to liability for any claims brought in connection with such employment or service under applicable statutes of limitations, laches and any other statutory, common law or equitable period during which a claim may be brought against you, the Company will insure you under any policy of directors and officers liability insurance in effect from time to time to the same extent as the Company insures thereunder members of the Board and its senior officers.

12.    Restrictive Covenants

  

You will be subject to such restrictive covenants as are applicable to senior executives of the Company as of the Effective Date (including, without limitation, as are provided under the Executive Severance Agreement provided under Section 9, above) and will enter into such other standard agreements as are required of other senior executives in accordance therewith.


Mr. Klaus Kleinfeld

August 14, 2007

Page 8

 

13.    Stock Ownership

  

You will be subject to the Company’s policy governing the accumulation and ownership of Company Shares, applicable at a level for your title and office from time to time, during the period of your employment.

14.    Arbitration

  

Any controversy or claim arising out of or relating to this letter or the breach of this letter, or any agreement identified hereunder, that cannot be resolved by you and the Company will be submitted to arbitration in metropolitan New York City, New York in accordance with the commercial dispute rules and procedures of the American Arbitration Association, which arbitration will be a binding and conclusive settlement of any such claims or disputes; provided that the Company will be entitled to seek a temporary injunction in any court of competent jurisdiction for any breach by you in accordance with the terms of the restrictive covenants applicable to you, which is the subject of an arbitration, for the duration of any arbitration proceeding. The Company will pay for the costs of arbitration. Each party will be responsible for his or its own attorneys fees and other litigation costs incurred in connection with the arbitration.

15.    Miscellaneous

  

This Agreement and any dispute hereunder will be construed, interpreted and governed in accordance with the laws of the State of new York without reference to rules relating to conflicts of law. Your employment with the Company will at all times be at-will. Subject to your rights to certain payments and benefits upon certain terminations of employment hereunder, nothing herein will confer upon you any right to continue in the employment of the Company for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company or you to terminate your employment at any time and for any reason, with or without Cause. Upon your termination of employment for any reason and as a condition to any payments and benefits to which you may become entitled under Section 9 (Severance) or 10 (Change in Control) hereunder, at the request of the Board you will immediately resign from the Board, your position as an officer of the Company and all offices and directorships of all subsidiaries and affiliates of the Company. Any waiver of any breach of this Agreement shall not be construed to be a continuing waiver or consent to any subsequent breach on the part of either you or the Company.

16.    Section 409A Compliance

  

  

(a)     Notwithstanding any provision to the contrary in this Agreement, if on the date of termination of your employment you are a “specified employee” under Section 409A(a)(2)(B) of the Internal Revenue Code of 1986, as amended (“Code”), then with regard to any payment or the provision of any benefit that is required to be delayed in compliance with


Mr. Klaus Kleinfeld

August 14, 2007

Page 9

 

  

Section 409A(a)(2)(B) of the Code such payment or benefit shall not be made or provided (subject to the last sentence hereof) prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of your “separation from service” (within the meaning of Section 409A(a)(2)(B) of the Code) or (ii) the date of your death (the “Delay Period”). Upon the expiration of the Delay Period, all payments and benefits delayed pursuant to this subparagraph (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to you in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein. Notwithstanding the foregoing, to the extent that the foregoing applies to the provision of any ongoing welfare benefits to you that would not be required to be delayed if the premiums therefor were paid by you, you shall pay the full cost of premiums for such welfare benefits during the Delay Period and the Company shall pay you an amount equal to the amount of such premiums paid by you during the Delay Period promptly after its conclusion. To the extent that your Executive Severance Agreement under Section 9, above, reflects the provisions of the final regulations issued under Section 409A, the terms of that Executive Severance Agreement shall control over the terms of this Section 16(a).

  

(b)     To the extent applicable, it is intended that this Agreement comply with the provisions of Section 409A of the Code, and this Agreement shall be construed and applied in a manner consistent with this intent. In the event that any payment or benefit under this Agreement is determined by the Company to be in the nature of deferred compensation, you and the Company hereby agree to take such actions as may be mutually agreed between the parties to ensure that such payments comply with the applicable provisions of Section 409A of the Code and the Treasury regulations and other official guidance promulgated thereunder. To the extent that any payment or benefit under this Agreement is modified by reason of this subsection (b), it shall be modified in a manner that preserves the economic costs and/or value thereof to the respective parties (determined on a pre-tax basis and without interest for the time value of any delayed payment).

17.    Successors

  

Neither party hereto may assign any rights or delegate any duties under this Agreement without the prior written consent of the other party; provided, however, that (a) this Agreement shall inure to the benefit of and be binding upon the successors and assigns of the Company upon any sale of all or substantially all of the Company’s assets, or upon any merger, consolidation or reorganization of the Company with or into any


Mr. Klaus Kleinfeld

August 14, 2007

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other corporation, all as though such successors and assigns of the Company and their respective successors and assigns were the Company; and (b) this Agreement shall inure to the benefit of and be binding upon your heirs, assigns or designees to the extent of any payments due to them hereunder.

18.    Entire Agreement

  

Except as otherwise contemplated herein, this Agreement contains the entire agreement between you and the Company with respect to the subject matter hereof. No modification or termination of this Agreement may be made orally, but must be made in writing and signed by you and the Company.

This offer of employment may be executed in counterparts, each of which will be deemed an original, but all of which will constitute one and the same instrument.

If the foregoing terms and conditions are acceptable and agreed to by you, please sign this Agreement where indicated below and return one executed copy to me.

 

Alcoa, Inc.

By:

 

/s/ Alain J. P. Belda

Name:

 

Alain J. P. Belda

Title:

 

Chairman & CEO

 

Accepted and Agreed:

/s/ Klaus Kleinfeld

Klaus Kleinfeld


ATTACHMENT A

SERP Benefit

A-1. The amount of your SERP Benefit will be equal to the excess, if any, of (a) your SERP Benefit Amount over (b) the amount of your Adjusted Siemens AG Pension Benefit (such benefit expressed as a single life annuity benefit payable annually that is the actuarial equivalent of the normal form of benefit provided under such pension plan). For all purposes hereunder, actuarial equivalence shall be determined in accordance with the terms and assumptions provided under the Company’s defined benefit tax-qualified Retirement Plan (or if the Retirement Plan shall be terminated, as set forth therein immediately prior to such termination).

A-2. For the purposes of this Agreement, your “SERP Benefit Amount” will be a fully vested annual benefit payable as a single life annuity payable annually in an amount equal to the product of (a) 4.35%, multiplied by (b) the number of whole and fractional years of pension service as an employee of the Company from and after the Effective Date, multiplied by (c) your average final compensation. “Pension service” and “average final compensation” shall have the meanings set forth in the Company’s Supplemental Pension Plan for Senior Executives (“Supplemental Pension”) as in effect on the date of termination of your employment (or, if the Supplemental Pension shall be terminated by the Company, as set forth therein immediately prior to such termination); provided, such terms shall have the meaning, respectively, set forth in the Supplemental Pension as in effect on the Effective Date if such meaning is more favorable to you at such time than on the date of termination of your employment (or immediately prior to termination of the Supplemental Pension, as the case may be); provided further, in all events, your “average final compensation” shall be deemed to be not less than the sum of your Base Salary in effect on the Effective Date plus a target-level annual bonus determined based on such initial Base Salary amount. For the avoidance of doubt, on the date hereof the Supplemental Pension provides that your “annual compensation” (which forms the basis for your “average final compensation”) is based on your Base Salary and annual bonus amount and on no other component of compensation. While your Executive Severance Agreement is in effect (under Section 9 hereof) and while you are a participant in the Company’s Change in Control Severance Plan (pursuant to Section 10 hereof), any additional service credit for pension accrual purposes to which you may become entitled under such Executive Severance Agreement or such Change in Control Severance Plan (to the extent provided for therein as of the date of termination of your employment thereunder), as the case may be, shall apply to the determination of your SERP Benefit.

A-3. The “Adjusted Siemens AG Pension Benefit” will be equal to the product of (a) 8.7%, multiplied by (b) the number of whole and fractional years of your pension service as an employee of the Company from and after the Effective Date, multiplied by (c) your accrued age 60 pension benefit due you under your Siemens AG’s qualified and nonqualified pension plans, expressed as a single life annuity benefit payable annually that is the actuarial equivalent of the normal form of benefit provided under each such plan; provided that, the product of (a) multiplied by (b) shall not exceed 100%. The United States dollar-equivalent of your Adjusted Siemens AG Pension Benefit will be determined based on the currency exchange rate for the Euro into United States dollars based on the 30 trading day average ending at the close of currency trading in New York City, NY on the business day preceding the day that you commence your SERP Benefit, as reported in The Wall Street Journal (electronic edition).


A-4. For purposes hereof, if you retire and commence benefits hereunder on or after attaining age 55 and prior to age attaining age 62, your SERP Benefit will be payable in a reduced amount, determined as follows: (i) determine your SERP Benefit Amount under Section A-1(a), above, as a single life annuity amount that would be payable commencing at your age 62, (ii) determine your Adjusted Siemens AG Pension Benefit under Section A-1(b), above, as a single life annuity that would be payable at your age 60 and increased to the actuarial equivalent of such amount that would be payable as a single life annuity at your age 62, and (iii) the difference of the amount determined under clause (i) of this Section A-5 minus the amount determined under clause (ii) of this Section A-5 will be reduced by such fractional amount as applies under the Supplemental Pension for participants (who have fewer than 30 years of service) commencing benefits prior to age 62 (on the date hereof, the reduction method set forth in Section 1.1(M)(2)(B) and Section 1.1(M)(3) of the Supplemental Pension).

A-5. Your SERP Benefit shall be payable commencing on the later of the date on which you reach age 60 and your separation from service with the Company, or such later date as you elect in accordance with Section 409A of the Code and otherwise consistent with the Supplemental Pension, subject to the last two sentences of this paragraph A-5. Your SERP Benefit shall be paid in monthly installments as a joint and 50% surviving spouse annuity that is the actuarial equivalent of a single life annuity as determined above, subject to your election in accordance with Section 409A to receive your SERP Benefit in such different form as is permitted to participants under the Supplemental Pension, in accordance with the procedure for electing such benefit under the Supplemental Pension as in effect from time to time (or, if the Supplemental Pension shall be terminated by the Company, such procedure as in effect immediately prior to such termination), Notwithstanding anything to the contrary in the foregoing, if on the date of termination of your employment you are a “specified employee” under Section 409A(a)(2)(B) of the Code, then with regard to any payment or the provision of any benefit that is required to be delayed in compliance with Section 409A(a)(2)(B) of the Code your SERP Benefit shall not be provided prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of your “separation from service” (within the meaning of Section 409A(a)(2)(B) of the Code) or (ii) the date of your death (the “Delay Period”). Any installments of your SERP Benefit that are delayed pursuant to the previous sentence shall be paid or reimbursed to you in a lump sum upon the expiration of the Delay Period, and any remaining installments of your SERP shall be paid or provided in accordance with the normal payment dates provided for herein.

A-6. For purposes hereof, if you die before commencing benefits hereunder, your then surviving spouse will be entitled to a preretirement survivor benefit equal to the excess, if any, of (i) the preretirement survivor benefit that is provided under the Supplemental Pension (on the date hereof, as set forth in Section 1.1(M)(4) thereof) based on your SERP Benefit accrued through the date of your death and determined without regard for any eligibility or vesting requirement set forth under the Company’s tax-qualified Retirement Plan over (ii) the amount of your Adjusted Siemens AG Pension Benefit (determined by substituting for such benefit the amount of such benefit then payable to your surviving spouse or other beneficiary(s)).

A-7. For the avoidance of doubt, it is the intention of the Company and you that you will not be entitled to any tax-qualified or nonqualified defined benefit retirement benefit from the Company, other than the SERP Benefit, that you hereby waive any such Company defined benefit retirement benefit to which you are or become entitled, that any such Company defined


benefit retirement benefit that cannot be waived will offset, on a dollar-for-dollar actuarially equivalent basis, the amount of your SERP Benefit, and that all references herein to the Supplemental Pension are for purposes only of incorporating by reference herein certain defined terms and other provisions and procedures to determine the amount and terms of payment of your SERP Benefit.

A-8. Anything herein to the contrary notwithstanding, by entering into this Agreement, you hereby waive all entitlement to benefits under the Alcoa Deferred Compensation Plan (and any successor to such plan) (“Deferred Compensation Plan”) other than (x) Participant Deferrals as presently described at Article III (“Participant Deferrals”) and (y) Matching Company Credits under Article IV (“Matching Credits”) of the Deferred Compensation Plan; provided, if by the terms of the Deferred Compensation Plan or applicable law such waiver is determined not to be valid and enforceable, the Company and yon acknowledge and agree that the actuarial equivalent amount of your entire benefit under the Deferred Compensation Plan, other than your Participant Deferrals and Matching Credits, will offset your SERP Benefit on a dollar-for-dollar basis so as not to duplicate employer-provided benefits under your SERP Benefit and the Deferred Compensation Plan (and such actuarial equivalence shall be determined in accordance with the last sentence of Section A-1, above).

 

 

 

 

 

 

 

 

Exhibit 10(x)

 

 

 

EX-10.(GG) 12 dex10gg.htm AMENDED AND RESTATED EXECUTIVE SEVERANCE AGREEMENT - KLAUS KLEINFELD

Exhibit 10(gg)

 

 

 

  

    Alcoa

 

390 Park Avenue

 

New York, New York 10022 USA

 

 

 

Alain J.P. Belda

 

Chairman of the Board

 

 

Mr. Klaus Kleinfeld

 

President and Chief Executive Officer

 

Alcoa Inc.

 

390 Park Avenue

 

New York, New York 10022 USA

 

Dear Klaus,

 

As President and Chief Executive Officer, you are a key part of the senior executive management team of Alcoa Inc. (the “Company”). The business relationships you have developed both inside and outside of the Company, your knowledge of the Company’s business affairs and your management experience are all of great importance to the Company, and I value your continuing contributions. As I am sure you can also appreciate, it is important to the Company’s future success that you, me and the other members of the senior executive leadership team are able to enhance our ability to increase shareholder value, and if necessary, to ease transitions when it is in the best interest of the Company to do so. Accordingly, it is my pleasure to be able to provide you with this letter agreement (the “Agreement”) which sets forth the terms of an arrangement between you and the Company concerning your continuing and post-employment obligations. This letter agreement supersedes and replaces in its entirety the letter agreement dated February 15, 2008 between you and the Company. For avoidance of doubt, this letter agreement does not replace or supersede the offer letter between you and the Company dated August 14, 2007 (the “offer letter”). It is acknowledged that Section 9(a) of the offer letter which provides that the executive severance agreement would terminate upon your appointment as Chief Executive Officer was waived by the Compensation and Benefits Committee of the Board of Directors.

 

 

 

I. You voluntarily resign or retire. 

 

You may terminate your employment with the Company by voluntarily resigning or by retiring. If you wish to resign or retire, you will provide the Company with at least three months’ advance written notice (the “Notice,” which shall contain your selected date of termination, which must be at least three months after the date the Notice is received by the Company (such date of receipt, the “Notice Date”)), after which the following conditions shall apply:

 

Your active service with the Company will be terminated on the date specified in the Notice (or such later date as you and the Company mutually agree), or such earlier date as the Company may determine in its sole discretion (the “Voluntary Termination Date”). During the period from the Notice Date through the Voluntary Termination Date, (i) the Company may, in its sole discretion, assign you such duties as it sees fit (but commensurate with your position) and (ii) you agree to continue to provide at least 20% of the average level of services you provided to the Company during the preceding 36-month period, such that your “separation from service” for purposes of Section 409A of the Internal Revenue Code of 1986, as amended (“409A”), occurs on the Voluntary Termination Date.

 

 

 

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If your employment with the Company terminates pursuant to this Section I, you will be paid the following amounts (which you acknowledge would not be due you in the absence of this Agreement) on the first business day which is at least six months after the Voluntary Termination Date, provided that on or after the Voluntary Termination Date, and at least 10 days prior to the payment date, you execute and return to the Company the release agreement attached as Exhibit A (the “Release Agreement”) and (ii) any period within which you may revoke the Release Agreement pursuant to the terms thereof has expired without you having revoked the Release Agreement:

 

(i) $50,000 in consideration of execution and delivery of the Release Agreement as provided above; and

 

(ii) If the Voluntary Termination Date occurs before the date specified in your Notice and less than three months following the Notice Date (e.g., if the Company elects a Voluntary Termination Date earlier than the date specified in the Notice), a lump sum amount equal to your monthly base salary as of the Voluntary Termination Date for the time between the Voluntary Termination Date and three months following the Notice Date; or

 

(iii) If you and the Company mutually agree to extend your service to a later date than the date stated in your Notice, upon your Voluntary Termination Date, you will receive: a lump sum amount equal to your monthly base salary for each month you provided service beyond the date stated in your Notice or for such period of time as you and the Company may mutually agree, not to exceed 24 months (referred to as the “additional period of time”) ; a lump sum amount as provided under Section II B (iii) and (iv) below except that the amount will be calculated for the “additional period of time”; and continued active medical benefits for the “additional period of time” as described in Section II B below.

 

If your employment with the Company terminates pursuant to this Section I, upon and following the Voluntary Termination Date, your other compensation and benefits continue to be governed by the terms of the plans in which you participate; provided however, that payments and benefits under this Section I are in lieu of any other involuntary separation benefits or severance payments which you may be eligible to receive from the Company; and if you receive severance pay and benefits under the Company’s Change in Control Severance Plan, no payments will be made, or benefits provided, under this Agreement.

 

 

 

II. Company terminates your employment. 

 

The Company may terminate your employment at any time, with or without Cause, with the results described below. In such case, the Company shall determine the effective date of your termination (the “Involuntary Termination Date”).

 

A. Involuntary Termination With Cause. If the Company terminates your employment due to Cause, you will receive no severance payment under this Agreement or any other severance plan, policy or arrangement of the Company or any of its affiliates. For purposes of this Agreement, “Cause” means: (i) any refusal by you to follow the lawful directives of the Board of Directors, which are consistent with the scope and nature of your duties and responsibilities; (ii) your conviction of, or plea of guilty or nolo contendere to, a felony or of any crime involving moral turpitude, fraud or embezzlement; (iii) any gross negligence or willful

 

 

 

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misconduct in the conduct of your duties; (iv) any material breach of any one or more of the restrictive covenants provided in this Agreement; or (v) any violation of any statutory or common law duty of loyalty to the Company or any of its subsidiaries; provided no act or omission shall be “willful” if conducted in good faith and with a reasonable belief that such conduct was in the best interests of the Company.

 

B. Involuntary Termination Without Cause. If the Company terminates your employment for reasons other than Cause, and you fulfill your obligations as set forth in this Agreement, you shall be paid the following amounts (which you acknowledge would not be due you in the absence of this Agreement) on the first business day which is at least six months after the Involuntary Termination Date, provided that, on or after the Involuntary Termination Date, and at least 10 days prior to the payment date, (i) you execute and return to the Company the Release Agreement and (ii) any period within which you may revoke the Release Agreement pursuant to the terms thereof has expired without you having revoked the Release Agreement:

 

(i) a lump sum amount equivalent to two times your annual base salary and annual target bonus as of the Involuntary Termination Date;

 

(ii) $50,000 in consideration of execution and delivery of the Release Agreement as provided above;

 

(iii) a lump sum amount, in cash, equal to two times the Employer Retirement Income Contributions under the Alcoa Savings Plan contribution percent in effect on the Involuntary Termination Date multiplied by the portion of your annual base salary as of your Involuntary Termination Date which is eligible for contribution to the Alcoa Savings Plan; and

 

(iv) a lump sum amount, in cash, equal to the excess of (I) the actuarial equivalent of the aggregate retirement pension under the SERP Benefit provided in your offer letter as if you had been credited with an additional 24 months of service following the Involuntary Termination Date; over (II) the actuarial equivalent of the aggregate retirement pension which you had accrued under the provisions of the SERP Benefit provided in your offer letter as of the Involuntary Termination Date.

 

In addition, for a period of two years after the Involuntary Termination Date the Company shall arrange to provide you, and anyone entitled to claim through you, health (including medical, behavioral, prescription drug, dental and vision) benefits substantially similar to those provided to active employees, at no greater after tax cost to you than the after tax cost to you immediately prior to the Involuntary Termination Date. If the company contribution to these benefits becomes taxable to you, you will be grossed up on these contributions (with any gross up paid to you promptly but in no event later than the end of your taxable year following the taxable year in which you or the Company remits the related taxes). In order to comply with 409A, the following shall apply to the health care benefits provided pursuant to this paragraph, the costs of which are not fully paid by you (the “Health Benefits”). Any and all reimbursements of eligible expenses made pursuant to the Health Benefits shall be made no later than the end of the calendar year next following the calendar year in which the expenses were incurred. The amount of expenses that are eligible for reimbursement or of in-kind benefits that are provided pursuant to the Health Benefits in any given calendar year shall not affect the expenses that are eligible for reimbursement or benefits to be provided pursuant to the Health Benefits in any other calendar year, except as specifically permitted by Treasury Regulation Section 1.409A-3(i)(iv)(B). Your right to the Health Benefits may not be liquidated or exchanged for any other benefit.

 

 

 

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If your employment with the Company terminates pursuant to this Section II, upon and following the Involuntary Termination Date, your other compensation and benefits continue to be governed by the terms of the plans in which you participate; provided however, that payments and benefits under this Section II are in lieu of any other involuntary separation benefits or severance payments which you may be eligible to receive from the Company; and if you receive severance pay and benefits under the Company’s Change in Control Severance Plan, no payments will be made, or benefits provided, under this Agreement.

 

Any voluntary termination of your employment will be deemed an involuntary termination of your employment “without Cause” under this Agreement (a “Qualifying Termination”) if such resignation occurs during the thirty day period following the date on which the Chairman of the Board retires and you are not immediately thereafter appointed to succeed him as Chief Executive Officer and Chairman of the Board; provided, the appointment of a non-executive Chairman of the Board at any time will not constitute a basis for a Qualifying Termination if you continue to be the Chief Executive Officer reporting directly to the Board of Directors.

 

Restrictive Covenants

 

In light of the unique character of your position with the Company, the business relationships you have developed and will continue to develop while employed by the Company, and your knowledge of the Company’s business affairs including the Confidential Information (as defined below), and with the acknowledgment of the continuing consideration which you will receive from the Company as a member of its senior executive management team, and the personal financial security which is provided under this Agreement, or in the event of a change in control as defined in the Company’s Change in Control Severance Plan, you agree to the following Restrictive Covenants:

 

Noncompetition: During your employment and for a period of two (2) years thereafter (regardless of whether the termination of your employment is voluntary or involuntary), you will not directly or indirectly provide services, whether as a director, officer, partner, owner, employee, inventor, consultant, advisor, agent, or otherwise, to any domestic or international business or firm that is engaged or has plans to become engaged in the manufacturing, fabricating, distributing or selling of aluminum and/or aluminum related products for the aerospace, automotive, packaging, or other aluminum fabricated product markets, the mining of bauxite, conversion and refining of bauxite into alumina and/or the sale or distribution of alumina or alumina related chemical products or any other line of business in which the Company is involved or becomes involved during your employment with the Company (collectively, the “Aluminum Business”). However, you may own up to five percent (5%) of the outstanding securities of any publicly traded company.

 

It is not the Company’s intention to restrict or limit your activities, unless it is believed that there is a substantial possibility that your future employment, or activities in any of the lines of business in which the Company is engaged may be detrimental to the Company. So as to not unduly restrict your future employment, if you desire to enter into any employment arrangement or relationship with any entity in the above identified markets within the two year period, please consult with me to discuss your intended relationship with the competitive entity. You and the Company recognize that due to the many different businesses which presently compete, or which in the future may compete with the Company in the Aluminum Business, the Company will discuss your desire to enter into a business or professional relationship with any manufacturer or firm which may be perceived as a competitor.

 

 

 

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Non-solicitation: During your employment and for a period of two (2) years thereafter (regardless of whether the termination of your employment was voluntary or involuntary), you will not directly or indirectly (i) solicit, induce or attempt to solicit or induce any current or future employee of the Company to leave the Company for any reason, or (ii) solicit business from, or engage in business with, any current or future customer or supplier of the Company which you met and dealt with during your employment with the Company for any purpose. In the event that you become aware that any present or future employee of the Company has been hired by any business or firm with which you are then affiliated, you will immediately notify the Company’s chief legal officer to confirm your non-solicitation of said employee.

 

Confidentiality: During your employment with the Company and at all times thereafter, you will maintain the confidentiality of any and all information about the Company which is not generally known or available outside the Company, including without limitation, strategic plans, technical and operating know-how, business strategy, trade secrets, customer information, business operations and other proprietary information (“Confidential Information”), and you will not, directly or indirectly, disclose any Confidential Information to any person or entity, or use any Confidential Information, whether for your benefit or the benefit of any new employer or any other person or entity, or in any other manner that is detrimental to or inconsistent with any interest of the Company. If you receive notice that you may be required to disclose any Confidential Information pursuant to a subpoena or other lawful process, you must notify the Company’s chief legal officer immediately.

 

You acknowledge and agree that given the nature of the Company’s business, which is conducted throughout the world, and your position of confidence and trust with the Company, the scope and duration of these Restrictive Covenants are reasonable and necessary to protect the legitimate business interests of the Company. You further acknowledge that you have received substantial compensation from the Company and that your general skills and abilities are such that you can be gainfully employed in noncompetitive employment, and that this Agreement will in no way prevent you from earning a living following your employment with the Company.

 

You also recognize and agree that any breach or threatened or anticipated breach of any part of these Restrictive Covenants will result in irreparable harm to the Company, and that the remedy at law for any such breach or threatened breach will be inadequate. Accordingly, in addition to any other legal or equitable remedies that may be available to the Company, you agree that the Company shall be entitled to obtain an injunction, without posting a bond, to prevent any breach or threatened breach of any part of these Restrictive Covenants. You agree to reimburse the Company for all costs and expenses, including reasonable attorney’s fees and costs, incurred by the Company in connection with the enforcement of its rights under this Agreement.

 

In the event that any court of competent jurisdiction finds that the limitations set forth in these Restrictive Covenants are overly broad with respect to duration, geographic scope or scope of prohibited activities, such court shall have the authority to reduce the duration, area or activities of such provisions so as to be enforceable to the maximum extent compatible with applicable law, and such provisions shall then be enforced as modified. In the event that a court reduces the duration of the restriction, any unpaid amounts, as set forth above, shall be reduced on a pro rata basis.

 

 

 

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Tax Withholding

 

All amounts payable pursuant to this Agreement shall be subject to withholding for taxes as legally required, and for other amounts authorized by you.

 

Application of 409A Provisions

 

If you provide a written, unqualified opinion from your tax advisor to the Company stating that you are a non-resident alien not subject to 409A at the time of your termination of employment, or that 409A otherwise does not apply to you at that time, unless the Company has reason to believe that such opinion is more likely than not incorrect the Company shall cooperate with you to amend this Agreement in a mutually satisfactory manner to cause any severance payments payable hereunder to be paid as soon as practicable following your termination of employment, and to otherwise remove references to Section 409A from this Agreement; provided that in no event shall such payments be made unless and until you have returned an executed Release Agreement (signed by you on or following your termination date) and any period within which you may revoke the Release Agreement pursuant to the terms thereof has expired without you having revoked the Release Agreement. The Company shall have no responsibility for any taxes or penalties you may incur on account of any such amendments, whether pursuant to 409A or otherwise.

 

Governing Law; Jurisdiction

 

This Agreement shall be governed and interpreted in accordance with the laws of the State of New York without reference to its choice of law principles. Any action arising out of or related to this Agreement shall be brought in the state or Federal courts located in New York City, and you and the Company consent to the jurisdiction and venue of such courts.

 

Amendment; Waiver

 

No provision of this Agreement may be modified, waived, or discharged unless such waiver, modification or discharge is in writing and signed by the Chief Executive Officer of the Company. Any failure by you or the Company to enforce any of the provisions of this Agreement shall not be construed to be a waiver of such provisions or any right to enforce each and every provision in the future. A waiver of any breach of this Agreement shall not be construed as a waiver of any other or subsequent breach.

 

Successors; Binding Agreement

 

The Company shall have the right to assign its rights and obligations under this Agreement to any entity that acquires all or substantially all of the assets of the Company and continues the Company’s business. The rights and obligations of the Company under this Agreement shall inure to the benefit and shall be binding upon the successors and assigns of the Company.

 

Severability

 

In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of this Agreement shall not in way be affected or impaired thereby.

 

 

 

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No Mitigation

 

If you are entitled to receive severance benefits under this Agreement, you will not be required to mitigate the amount of any payment provided for in this Agreement by seeking other employment or otherwise, and any amount received from subsequent employment will not offset your severance payments under this Agreement.

 

Entire Agreement

 

You acknowledge that you have not relied upon any representations (whether oral or written) from the Company, other than as set forth in this Agreement. This Agreement and the offer letter set forth the entire agreement and understanding between you and the Company and merge and supersede any and all prior discussions, agreements, arrangements and understandings with regard to the subject matter hereof, and may not be modified, amended, discharged or supplemented in any respect, except by a subsequent writing signed by you and the Company. In the event that any payments under this agreement in the aggregate are more than 2.99 times of your base salary and bonus, the payments which you will be eligible to receive under this Agreement will be reduced accordingly. Except for involuntary separation benefits or other similar severance payments, this Agreement does not supersede the terms of any other compensation plans, stock option programs, welfare benefit plans, or other such plans or programs in which you are eligible to participate, or may become eligible to participate.

 

If you agree to the terms of this Agreement, please sign on the line provided on the next page and return two signed copies to the Corporate Secretary. A fully executed copy will be returned to you for your files after it is signed by the Company.

 

 

 

  

Sincerely,

ALCOA INC.

 

/s/ Alain J.P. Belda

By:   Alain J.P. Belda

Title:   Chairman of the Board

Dated:   December 8, 2008

 

Agreed to and accepted:

 

/s/ Klaus Kleinfeld

 

Klaus Kleinfeld

President and Chief Executive Officer

 

 

 

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Exhibit A

 

RELEASE AGREEMENT

 

RELEASE AGREEMENT (this “Release Agreement”), dated as of                                 , between Alcoa Inc. (the “Company”), and [Name] (“Releasor”).                                                                                       [DATE]

 

WHEREAS, Releasor was employed by the Company as                                 

 

                                                                                                      [TITLE]

 

WHEREAS, Releasor and the Company are parties to a letter agreement dated [date] (the “Letter Agreement”).

 

WHEREAS, Releasor’s employment with the Company terminated as of                                 

 

                                                                                                                                   [DATE]

 

NOW, THEREFORE, in consideration of the promises and of the releases, representations, covenants and obligations contained herein, the parties hereto agree as follows:

 

1. Severance Benefits. Subject to Releasor’s execution and non-revocation of this Release Agreement within the time periods described in this Release Agreement and the Letter Agreement, and compliance with the other terms of the Letter Agreement, the Company shall pay Releasor the amounts, and provide Releasor the benefits, described in the Letter Agreement.

 

2. Release. Releasor knowingly and voluntarily releases and forever discharges the Company, its parents, and each of their respective subsidiaries and affiliates, together with their respective present and former directors, managers, officers, shareholders, employees, agents, and each of their respective predecessors, heirs, executors, administrators, successors and assigns (collectively, the “Releasees”) from any and all debts, obligations, demands, actions, causes of action, accounts, covenants, contracts, agreements, damages, omissions, promises, and any and all claims and liabilities whatsoever, of every name and nature, known or unknown, suspected or unsuspected, both in law and equity (“Claims”), which Releasor ever had, now has, or may hereafter claim to have by reason of any matter, cause or thing whatsoever arising out of or relating to: (a) any events, occurrences or omissions from the beginning of time to the time Releasor signs this Release Agreement, or (b) Releasor’s employment with the Company or termination thereof (the “Release”). The Release shall apply to any Claim of any type, including, without limitation, any and all Claims of any type that Releasor may have arising under the common law, the Age Discrimination in Employment Act of 1967, the Older Workers Benefit Protection Act, Title VII of the Civil Rights Act of 1964, the Civil Rights Act of 1991, the Americans With Disabilities Act of 1990, the Family and Medical Leave Act of 1993, the Employee Retirement Income Security Act of 1974, or the New York State and City Human Rights Laws, each as amended, and any other federal, state or local statutes, regulations, ordinances or common law creating employment-related causes of action, or under any policy, agreement, understanding or promise, written or oral, formal or informal, between Releasor and any of the Releasees, and all Claims for alleged tortious, defamatory or fraudulent conduct; provided, however, that nothing in the Release shall: (i) affect any vested employee benefits

 

 

 

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(including equity awards) to which Releasor may be entitled under any existing employee benefit plans of the Company, or (ii) prohibit Releasor from enforcing this Release Agreement or the Letter Agreement. By signing this Release Agreement, Releasor represents that he or she shall not be entitled to any personal recovery in any action or proceeding that may be commenced on his or her behalf in any way arising out or relating to any of the matters that are the subject of the Release.

 

3. Releasor represents that he or she has not commenced or joined in any claim, charge or action against any of the Releasees, arising out of or relating in any way to Releasor’s relationship with the Company, or the termination thereof.

 

4. Releasor represents and agrees that the obligations and representations set forth in the Restrictive Covenants in the Letter Agreement, on their stated terms, regarding noncompetition, nonsolicitation and confidentiality, shall remain in full force and effect.

 

5. Consultation With Attorney; Voluntary Agreement. Releasor represents that the Company has advised Releasor to consult with an attorney of Releasor’s choosing prior to signing this Release Agreement. Releasor further represents that he or she understands and agrees that he or she has the right and has been given the opportunity to review this Release Agreement, with an attorney of Releasor’s choice. Releasor further represents that he or she understands and agrees that the Company is under no obligation to offer the payments and benefits set forth in paragraph 1 above, and that Releasor is under no obligation to consent to this Release Agreement, and that Releasor has entered into this Release Agreement freely and voluntarily. Releasor shall have twenty-one (21) days to consider this Release Agreement, unless Releasor is terminated in connection with a an exit incentive or other group termination program, in which case Releasor shall have forty-five (45) days to consider this Release Agreement. In either case, once Releasor has signed this Release Agreement, Releasor shall have seven (7) additional days from the date of execution to revoke his or her consent. Any such revocation shall be made in writing to Attn: Corporate Secretary, Alcoa Inc., 390 Park Avenue, New York, New York 10022, and shall be deemed to have been duly given when hand delivered or when mailed by United States certified mail, return receipt requested. If no such revocation occurs, this Release Agreement shall become effective on the eighth (8th) day after Releasor shall have executed and returned it to the Company (the “Effective Date”). In the event that Releasor revokes his or her consent to this Release Agreement prior to the Effective Date, this Release Agreement shall be null and void and no payments or benefits shall be due hereunder or under the Letter Agreement.

 

6. Entire Agreement. Releasor acknowledges that he or she has not relied upon any representations (whether oral or written) from the Company, other than as set forth in this Release Agreement. This Release Agreement sets forth the entire agreement and understanding between Releasor and the Company and merges and supersedes any and all prior discussions, agreements, arrangements and understandings with regard to the subject matter hereof, except for the Letter Agreement, and may not be modified, amended, discharged or supplemented in any respect, except by a subsequent writing signed by Releasor and the Company.

 

7. Successors; Binding Agreement. The Company shall have the right to assign its rights and obligations under this Release Agreement to any entity that acquires all or substantially all of the assets of the Company and continues the Company’s business. The rights and obligations of the Company under this Release Agreement shall inure to the benefit and shall be binding upon the successors and assigns of the Company.

 

 

 

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8. Severability. In the event that any one or more of the provisions of this Release Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of this Release Agreement shall not in way be affected or impaired thereby.

 

9. Governing Law; Jurisdiction. Without reference to any principles concerning choice of law, this Release Agreement shall be governed and interpreted in accordance with the laws of the State of New York. Any action arising out of or related to this Release Agreement shall be brought in the state or Federal courts located in New York City, and Releasor and the Company consent to the jurisdiction and venue of such courts.

 

10. Counterparts. This Release Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the Company and Releasor have executed this Release Agreement, on the date and year set forth below.

 

 

 

  

   ALCOA INC.

 

By:     

   [NAME]

   [TITLE]

 

 

[NAME]

Dated:                                                 

 

 

 

 

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ALCOA INC.

CHANGE IN CONTROL

SEVERANCE PLAN

The Company hereby adopts, as of January 11, 2002, the Alcoa Inc. Change in Control Severance Plan for the benefit of certain employees of the Company and its subsidiaries, on the terms and conditions hereinafter stated. All capitalized terms used herein are defined in Section 1 hereof.

Section 1. DEFINITIONS. As hereinafter used:

1.1 “Affiliate” shall have the meaning set forth in Rule 12b-2 under Section 12 of the Exchange Act.

1.2 “Applicable Multiplier” shall mean three (3); provided, however, that, with respect to an Eligible Employee who incurs a Severance during the three year period immediately preceding such individual’s Mandatory Retirement Age, such multiplier shall be equal to (x) the number of full and partial months remaining until such Eligible Employee attains Mandatory Retirement Age, (y) divided by twelve.

1.3 “Applicable Period” shall mean the thirty-six (36) month period immediately following an Eligible Employee’s Severance Date; provided, however, that, with respect to an Eligible Employee who incurs a Severance during the three year period immediately preceding such individual’s Mandatory Retirement Age, the Applicable Period shall mean the period remaining until such Eligible Employee attains Mandatory Retirement Age.

1.4 “Beneficial Owner” shall have the meaning set forth in Rule 13d-3 under the Exchange Act.

1.5 “Board” means the Board of Directors of the Company.

1.6 “Cause” means: (i) the willful and continued failure by the Eligible Employee to substantially perform the Eligible Employee’s duties with the Employer that has not been cured within thirty (30) days after a written demand for substantial performance is delivered to the Eligible Employee by the Board, which demand specifically identifies the manner in which the Board believes that the Eligible Employee has not substantially performed the Eligible Employee’s duties, or (ii) the willful engaging by the Eligible Employee in conduct which is demonstrably and materially injurious to the Company, monetarily or otherwise. For purposes of clauses (i) and (ii) of this definition, (x) no act, or failure to act, on the Eligible


Employee’s part shall be deemed “willful” unless done, or omitted to be done, by the Eligible Employee not in good faith and without reasonable belief that the Eligible Employee’s act, or failure to act, was in the best interest of the Company and (y) in the event of a dispute concerning the application of this provision, no claim by the Company that Cause exists shall be given effect unless the Company establishes to the Board by clear and convincing evidence that Cause exists and the Board finding to that effect is adopted by the affirmative vote of not less than three quarters (3/4) of the entire membership of the Board (after reasonable notice to the Eligible Employee and an opportunity for the Eligible Employee, together with the Eligible Employee’s counsel, to be heard by the Board).

1.7 “Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(a) any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) (a “Person”) becomes the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the then-outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of the then-outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that, for purposes of this Section 1.7, the following acquisitions shall not constitute a Change of Control: (i) any acquisition directly from the Company, (ii) any acquisition by the Company, (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Affiliated Company or (iv) any acquisition pursuant to a transaction that complies with Sections 1.7 (c)(A), 1.7(c)(B) and 1.7(c)(C);

(b) individuals who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds ( 2/3) of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board;

 

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(c) consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Company or any of its subsidiaries, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of another entity by the Company or any of its subsidiaries (each, a “Business Combination”), in each case unless, following such Business Combination, (A) all or substantially all of the individuals and entities that were the beneficial owners of the Outstanding Company Common Stock and the Outstanding Company Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, 55% or more of the then-outstanding shares of common stock (or, for a non-corporate entity, equivalent securities) and the combined voting power of the then-outstanding voting securities entitled to vote generally in the election of directors (or, for a non-corporate entity, equivalent governing body), as the case may be, of the entity resulting from such Business Combination (including, without limitation, an entity that, as a result of such transaction, owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership immediately prior to such Business Combination of the Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case may be, (B) no Person (excluding any corporation resulting from such Business Combination or any employee benefit plan (or related trust) of the Company or such corporation resulting from such Business Combination) beneficially owns, directly or indirectly, 20% or more of, respectively, the then-outstanding shares of common stock of the corporation resulting from such Business Combination or the combined voting power of the then-outstanding voting securities of such corporation, except to the extent that such ownership existed prior to the Business Combination, and (C) at least a majority of the members of the board of directors (or, for a non-corporate entity, equivalent governing body) of the entity resulting from such Business Combination were members of the Incumbent Board at the time of the execution of the initial agreement or of the action of the Board providing for such Business Combination; or

(d) the shareholders of the Company approve a plan of complete liquidation or dissolution of the Company.

1.8 “Code” means the Internal Revenue Code of 1986, as it may be amended from time to time.

1.9 “Committee” means the Compensation Committee of the Board.

1.10 “Company” means Alcoa Inc., or any successors thereto.

 

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1.11 “DB Pension Plan” means any tax-qualified, supplemental or excess defined benefit pension plan maintained by the Company or any of its Affiliates and any other defined benefit plan or agreement entered into between the Eligible Employee and the Company or any of its Affiliates which is designed to provide the Eligible Employee with supplemental defined benefit retirement benefits.

1.12 “DC Pension Plan” means any tax-qualified, supplemental or excess defined contribution plan maintained by the Company or any of its Affiliates and any other defined contribution plan or agreement entered into between the Eligible Employee and the Company or any of its Affiliates which is designed to provide the Eligible Employee with supplemental defined contribution retirement benefits.

1.13 “Eligible Employee” means any Tier I, Tier II or Tier III Employee. An Eligible Employee becomes a “Severed Employee” once he or she incurs a Severance.

1.14 “Employer” means the Company or any of its subsidiaries which is an employer of the Eligible Employee.

1.15 “Entity” means any individual, entity, person (within the meaning of Section 3(a)(9) of the Exchange Act or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act), other than (i) an employee plan of the Company or any of its Affiliates, (ii) any Affiliate of the Company, (iii) an underwriter temporarily holding securities pursuant to an offering of such securities, or (iv) a corporation owned, directly or indirectly, by shareholders of the Company in substantially the same proportions as their ownership of the Company.

1.16 “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended from time to time.

1.17 “Excise Tax” shall mean any excise tax imposed under section 4999 of the Code.

1.18 “Good Reason” in respect of an Eligible Employee means the occurrence, after a Change in Control (or prior to a Change in Control, under the circumstances described in the second sentence of Section 1.26 hereof, treating all references below to a “Change in Control” as references to a “Potential Change in Control”), of:

(i) the assignment to the Eligible Employee of any duties inconsistent with the Eligible Employee’s employment status with the Employer

 

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immediately prior to the Change in Control or a substantial adverse alteration in the nature or status of the Eligible Employee’s responsibilities from those in effect immediately prior to the Change in Control, including, but not limited to, (x) with respect to a Tier I Employee, the Eligible Employee’s ceasing to hold the office as the sole chief executive officer of the Company (or its parent or successor) and to function in that capacity, reporting directly to the board of directors of a public company, and (y) with respect to a Tier II Employee, the Eligible Employee’s ceasing to report directly to the chief executive officer of a public company;

(ii) a reduction by the Company in the Eligible Employee’s total compensation and benefits in the aggregate from that in effect immediately prior to the Change in Control. Total compensation and benefits includes, but is not limited to (1) annual base salary, annual variable compensation opportunity (taking into account applicable performance criteria and the target bonus amount of annual variable compensation); (2) long term stock-based and cash incentive opportunity (taking into account applicable performance criteria and the target stock option amount); and (3) benefits and perquisites under pension, savings, life insurance, medical, health, disability, accident and material fringe benefit plans of the Company or its subsidiaries or Affiliates in which the Eligible Employee was participating immediately before the Change in Control;

(iii) the relocation of the Eligible Employee’s principal place of employment to a location more than fifty (50) miles from the Eligible Employee’s principal place of employment immediately prior to the Change in Control; or

(iv) the failure by the Employer to pay to the Eligible Employee any portion of the Eligible Employee’s compensation, within fourteen (14) days of the date such compensation is due.

The Eligible Employee’s right to terminate the Eligible Employee’s employment for Good Reason shall not be affected by the Eligible Employee’s incapacity due to physical or mental illness. The Eligible Employee’s continued employment shall not constitute consent to, or a waiver of rights with respect to, any act or failure to act constituting Good Reason hereunder. For purposes of any determination regarding the existence of Good Reason, any good faith determination by the Eligible Employee that Good Reason exists shall be conclusive. Notwithstanding anything in this Section 1.18 to the contrary, any termination of employment by a Tier I Employee or a Tier II Employee, whether voluntary or involuntary, for any reason or no reason, within a thirty (30) day period commencing on a date six months immediately following a Change in Control shall be deemed to constitute a termination for Good Reason hereunder.

 

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1.19 “Gross-Up Payment” shall have the meaning set forth in Section 2.2 hereof.

1.20 “Incumbent Board” shall mean individuals who, as of the date hereof, constitute the Board cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the date hereof whose election, or nomination for election by the Company’s shareholders was approved by a vote of at least a majority of the directors then comprising the Incumbent Board shall be considered as though such individual was a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended, other than the Board.

1.21 “Mandatory Retirement Age” means, solely for purposes of this Plan, age 75.

1.22 “Notice of Termination” shall have the meaning set forth in Section 3.6.

1.23 “Plan” means the Alcoa Inc. Change in Control Severance Plan, as set forth herein, as it may be amended from time to time.

1.24 A “Potential Change in Control” shall be deemed to have occurred if the event set forth in any one of the following paragraphs shall have occurred:

(a) the Company is negotiating an agreement, the consummation of which may result in the occurrence of a Change in Control;

(b) the Company or any Entity states an intention to take or to consider taking actions which, if consummated, would constitute a Change in Control;

(c) any Entity becomes the Beneficial Owner, directly or indirectly, of securities of the Company representing 5% or more of either the then outstanding shares of common stock of the Company or the combined voting power of the Company’s then outstanding securities with the purpose or with the effect of changing or influencing the control of the Company.

 

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A Potential Change in Control shall be considered to be pending during the period beginning on the date when it occurs and ending on the occurrence of a subsequent Change in Control; provided, a Potential Change in Control shall be considered to cease to be pending on the first anniversary of such date unless either (i) a Change in Control has previously occurred or (ii) the Incumbent Board determines that the Potential Change in Control is still pending; and if the Incumbent Board does so determine, then the Potential Change in Control shall continue to be considered pending until the occurrence of a Change in Control or a determination by the Incumbent Board that the Potential Change in Control is no longer pending.

1.25 A “Separation from Service” means (i) an Eligible Employee ceases to provide any services to the Company in any capacity (whether as an employee or an independent contractor), other than bona fide services at a level that does not exceed more than fifty (50) percent of the average level of bona fide services (whether as an employee or an independent contractor) performed by the Eligible Employee over the preceding thirty-six (36) month period (or the full period of services to the Company if the Eligible Employee has been providing services to the Company for less than thirty-six (36) months), and (ii) the Company and the Eligible Employee reasonably anticipate that such cessation will be permanent.

1.26 “Severance” means an Eligible Employee’s Separation from Service on or within three years immediately following the date of the Change in Control, (x) by the Employer other than for Cause, or (y) by the Eligible Employee for Good Reason. In addition, for purposes of this Plan, the Eligible Employee shall be deemed to have incurred a Severance, if (i) the Eligible Employee’s Separation from Service occurs because his employment is terminated by the Employer without Cause prior to a Change in Control (whether or not a Change in Control ever occurs) and such termination was at the request or direction of an Entity who has entered into an agreement with the Company the consummation of which would constitute a Change in Control or (ii) the Eligible Employee’s Separation from Service occurs because he terminates his employment for Good Reason prior to a Change in Control (whether or not a Change in Control ever occurs) and the circumstance or event which constitutes Good Reason occurs at the request or direction of such Entity. For purposes of any determination regarding the applicability of the immediately preceding sentence, any position taken by the Eligible Employee shall be presumed to be correct unless the Company establishes to the Board by clear and convincing evidence that such position is not correct. An Eligible Employee will not be

 

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considered to have incurred a Severance if his or her employment is discontinued by reason of the Eligible Employee’s death or a physical or mental condition causing such Eligible Employee’s inability to substantially perform his or her duties with the Company, including, without limitation, such condition entitling him or her to benefits under any sick pay or disability income policy or program of the Company.

1.27 “Severance Date” means the date on which an Eligible Employee’s Severance takes place.

1.28 “Severance Pay” means the payment determined pursuant to Section 2.1(a) hereof.

1.29 “Tier I Employee” means the Chief Executive Officer of the Company.

1.30 “Tier II Employee” means (i) the Chief Financial Officer, the President and Chief Operating Officer, the General Counsel and the head of Corporate Development for the Company, and (ii) any such other officer (other than an assistant officer) of the Company as the Committee determines.

1.31 “Tier III Employee” means (i) any officer (other than an assistant officer) of the Company and (ii) any such other key executive of the Company or any of its subsidiaries or Affiliates as the Committee determines, which employee, in each case, is not a Tier I Employee or Tier II Employee.

Section 2. BENEFITS.

2.1 Severance Payments and Benefits. Each Eligible Employee who incurs a Severance shall be entitled, subject to Section 2.4, to receive the following payments and benefits from the Company.

(a) Severance Pay equal to the product of (i) the sum of (x) the Severed Employee’s annual base salary, and (y) his or her target annual variable compensation with respect to the year in which the Change in Control occurs, and (ii) the Applicable Multiplier. For purposes of this Section 2.1(a), annual base salary shall be the higher of (i) base monthly salary in the calendar month immediately preceding a Change in Control or (ii) base monthly salary in the calendar month immediately preceding the Severed Employee’s Severance Date (in either case without regard to any reductions therein which constitute Good Reason) multiplied by twelve.

 

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(b) During the Applicable Period, the Company shall arrange to provide the Severed Employee and anyone entitled to claim through the Severed Employee life, accident and health (including medical, behavioral, prescription drug, dental and vision) benefits substantially similar to those provided to the Severed Employee and anyone entitled to claim through the Severed Employee immediately prior to Employee’s Severance Date or, if more favorable to the Severed Employee, those provided to the Severed Employee and those entitled to claim through the Severed Employee immediately prior to the first occurrence of an event or circumstance constituting Good Reason, at no greater after tax cost to the Severed Employee than the after tax cost to the Severed Employee immediately prior to such Severance Date or occurrence.

(c) In addition to the retirement benefits to which the Severed Employee is entitled under each DC Pension Plan or any successor plan thereto, the Company shall pay the Severed Employee a lump sum amount, in cash, equal to the product of (i) the value of contributions or allocations actually made by the Company to all DC Pension Plans, on behalf of the employee, with respect to the calendar year immediately preceding the year in which the Change in Control occurs (but assuming such contributions and allocations had been based on the annualized base salary plus target annual variable compensation as determined in Section 2.1(a)) and (ii) the Applicable Multiplier. Such contributions or allocations shall specifically not include any employee deferrals or contributions, or any earnings.

(d) In addition to the retirement benefits to which the Severed Employee is entitled under each DB Pension Plan or any successor plan thereto, the Company shall pay the Severed Employee a lump sum amount, in cash, equal to the excess of the actuarial equivalent of the aggregate retirement pension (taking into account any early retirement subsidies associated therewith and determined in accordance with each of the DB Pension Plan’s normal form of payment, commencing at the date (but in no event earlier than the end of the Applicable Period) as of which the actuarial equivalent of such form of payment is greatest) which the Severed Employee would have accrued and vested in under the terms of all DB Pension Plans determined:

(i) without regard to any amendment to any DB Pension Plan made subsequent to a Change in Control and on or prior to the date of the Severed Employee’s Severance Date, which amendment adversely affects in any manner the computation of retirement benefits thereunder, and

(ii) as if the Severed Employee had accumulated (after the Severed Employee’s Severance Date) a number of additional months of age

 

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and service credit thereunder as if the Severed Employee had remained employed by the Company during the Applicable Period (for all such purposes of determining pension benefits and eligibility for such benefits including all applicable retirement subsidies), and

(iii) as if the Severed Employee had been credited under each DB Pension Plan compensation for each full calendar month during the Applicable Period following the calendar month of the Severed Employee’s Severance Date equal to the Severed Employee’s annualized base salary plus target annual variable compensation as determined in Section 2.1(a) divided by twelve over the actuarial equivalent of the aggregate retirement pension (taking into account any early retirement subsidies associated therewith and determined in accordance with each of the DB Pension Plan’s normal form of payment commencing at the date (but in no event earlier than the Severed Employee’s Severance Date) as of which the actuarial equivalent of such form of payment is greatest) which the Severed Employee had accrued and vested in pursuant to the provisions of the DB Pension Plans as of the Severed Employee’s Severance Date.

For purposes of this Section 2.1(d), “actuarial equivalent” shall be determined based upon the Severed Employee’s age as of the Severed Employee’s Severance Date using the same assumptions utilized under the Alcoa Retirement Plan I, Section 8.3(d)(ii) or the successor to such provision (without regard to applicable dollar limitations ($5,000 as of January 1, 2002)) immediately prior to the Severed Employee’s Severance Date or, if more favorable to the Severed Employee, immediately prior to the first occurrence of an event or circumstance constituting Good Reason.

(e) If the Severed Employee would have become entitled to benefits under the Company’s post-retirement health care or life insurance plans, as in effect immediately prior to the Severed Employee’s Severance Date or, if more favorable to the Severed Employee, as in effect immediately prior to the first occurrence of an event or circumstance constituting Good Reason, had the Severed Employee’s employment terminated at any time during the Applicable Period, the Company shall provide such post-retirement health care or life insurance benefits to the Severed Employee and the Severed Employee’s dependents commencing on the later of (i) the date on which such coverage would have first become available and (ii) the date on which benefits described in 2.1(b) terminate and ending upon the death of the Eligible Employee. Any such benefit, which is dependent on service or compensation shall be determined as if the Severed Employee had accumulated (after the Severed Employee’s Severance Date) a number of additional months of

 

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age and service credit thereunder as if the Severed Employee had remained employed by the Company up to the foregoing commencement date, and as if the Severed Employee had been credited with compensation for each full calendar month following the calendar month of the Severed Employee’s Severance Date up to the foregoing commencement date equal to the Severed Employee’s annualized based salary as determined in Section 2.1(a) divided by twelve plus the Severed Employee’s target annual variable compensation as determined in Section 2.1(a) divided by twelve. Except for the additional service and compensation during the Applicable Period, nothing herein is intended to provide the Severed Employee with benefits, which exceed the benefits provided to other participants in said post-retirement health care or life insurance plans, as in effect from time to time.

(f) The Company shall provide the Severed Employee with reasonable outplacement services suitable to the Severed Employee’s position for a period of six (6) months or, if earlier, until the first acceptance by the Severed Employee of an offer of employment.

The amounts described in Sections 2.1(a), (c) and (d) shall be paid to the Eligible Employee in a cash lump sum as soon as practicable after the Severance Date but in no event later than 30 days after the Severance Date; provided, that if the Severed Employee is, as of the Severance Date, a “specified employee” within the meaning of Section 409A of the Code as determined in accordance with the methodology duly adopted by the Company as in effect on the Severance Date, then such amounts shall instead be paid on the first business day that is at least six months after the Severance Date (or if sooner, upon the death of the Severed Employee), with interest at the applicable federal rate provided for in Section 7872(f)(2)(A) of the Code, from the first business day after the Severance Date through the date of payment.

In order to comply with Section 409A of the Code, the following shall apply to health care benefits provided pursuant to Sections 2.1(b) and (e), the costs of which are not fully paid by the Severed Employee (the “Health Benefits”). Any and all reimbursements of eligible expenses made pursuant to the Health Benefits shall be made no later than the end of the calendar year next following the calendar year in which the expenses were incurred. The amount of expenses that are eligible for reimbursement or of in-kind benefits that are provided pursuant to the Health Benefits in any given calendar year shall not affect the expenses that are eligible for reimbursement or benefits to be provided pursuant to the Health Benefits in any other calendar year, except as specifically permitted by Treasury Regulation Section 1.409A-3(i)(iv)(B). The Severed Employee’s right to the Health Benefits may not be liquidated or exchanged for any other benefit.

 

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2.2 Gross-Up Payment.

(a) Whether or not an Eligible Employee incurs a Severance, if any of the payments or benefits received or to be received by the Eligible Employee in connection with a Change in Control or the Eligible Employee’s termination of employment (whether pursuant to the terms of this Plan or any other plan, arrangement or agreement) (all such payments and benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “Total Payments”) will be subject to the Excise Tax, the Company shall pay to the Eligible Employee an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Eligible Employee, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, and after taking into account the phase out of itemized deductions and personal exemptions attributable to the Gross-Up Payment, shall be equal to the Total Payments.

(b) Subject to the provisions of Section 2.2(c), all determinations required to be made under this Section 2.2, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by PricewaterhouseCoopers (the “Accounting Firm”). The Accounting Firm shall provide detailed supporting calculations both to the Company and the Eligible Employee within 15 business days of the receipt of notice from the Eligible Employee that there has been any payment 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 Employee, whether paid or payable pursuant to this Agreement or otherwise, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Eligible Employee may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and the Eligible Employee.

(c) In the event that the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, the Eligible Employee shall repay to the Company, within five (5) business days following the time that the amount of such reduction in the Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state

 

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and local income and employment taxes imposed on the Gross-Up Payment being repaid by the Eligible Employee), to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Eligible Employee’s taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or additions payable by the Eligible Employee with respect to such excess) within five (5) business days following the time that the amount of such excess is finally determined. The Eligible Employee and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments.

(d) The Gross-Up Payment shall be paid on the thirtieth (30) day (or such earlier date as the Excise Tax becomes due and payable to the taxing authorities) after it has been determined that the Total Payments are subject to the Excise Tax; provided however, that if the amount of the Gross-Up Payment or any portion thereof cannot be finally determined on or before that day, the Company shall pay to the Eligible Employee on such date an estimate as determined by the Auditor until such point in time that the final determination of the Gross-up Payment can occur.

(e) The Eligible Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of any additional Gross-Up Payment pursuant to Section 2.2(c). Such notification shall be given as soon as practicable but no later than ten (10) business days after the Eligible Employee is informed in writing of such claim and shall apprise the Company of the nature of such claim and date on which the Company must respond to contest the claim. If the Company provides timely notice to the Eligible Employee in writing that it desires to contest such claim, the Eligible Employee shall (i) give the Company any information reasonably requested by the Company relating to such claim; (ii) take such action in connection with contesting such claim, as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company; (iii) cooperate with the Company in good faith in order effectively to contest such claim; and (iv) permit the Company to participate in any proceeding relating to such

 

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claim. The Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Eligible Employee harmless on an after-tax basis, for any Excise tax or income tax including interest and penalties with respect hereto) imposed as a result of such representation and payment of cost and expenses. Without limiting the foregoing, the Company shall control all proceedings taken in connection with such contest and at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may at its sole option either direct the Eligible Employee to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Eligible Employee agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts as the Company shall determine. Provided however if the Company directs the Eligible Employee to pay such claim and sue for a refund, the Company shall make such payment on behalf of the Eligible Employee and shall indemnify and hold the Eligible Employee harmless on an after-tax basis from any Excise Tax or income tax imposed with respect to such payment or with respect to such imputed income with respect to such payment and further provided that any extension of the statute of limitation relating to such payment of taxes for the taxable year of the Eligible Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest and reimbursement for the expenses shall be limited to issues with respect to which an additional Gross-Up Payment would be payable hereunder and the Eligible Employee shall be entitled to settle or contest as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. If after the Company has made any such payment on behalf of the Eligible Employee, the Eligible Employee becomes entitled to receive any refund with respect to such claims, the Eligible Employee shall promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the Company has made any such payment of behalf of the Eligible Employee pursuant to the above section, a determination is made that the Eligible Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Eligible Employee in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such determination, then such payment shall not be required to be repaid and the amount of such payment shall off-set to the extent thereof the amount of Gross-Up Payment required to be paid.

(f) In order to comply with Section 409A of the Code, any Gross-Up Payment, as determined pursuant to this Section 2.2, shall in all events be paid by the Company no later than the end of the Eligible Employee’s taxable year next

 

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following the Eligible Employee’s taxable year in which the Excise Tax (and any income or other related taxes or interest or penalties thereon) on a Payment are remitted to the Internal Revenue Service or any other applicable taxing authority or, in the case of amounts relating to a claim described in Section 2.2(e) that does not result in the remittance of any federal, state, local and foreign income, excise, social security and other taxes, the calendar year in which the claim is finally settled or otherwise resolved. Notwithstanding any other provision of this Section 2.2, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Eligible Employee, all or any portion of any Gross-Up Payment, and the Eligible Employee hereby consents to such withholding.

2.3 Legal Fees. The Company shall pay to the Eligible Employee all legal fees and expenses incurred by the Eligible Employee in disputing in good faith any issue hereunder or in seeking in good faith to obtain or enforce any benefit or right provided by this Plan; provided, that the payment of legal fees hereunder by the Company shall not be required if the Eligible Employee pursues such dispute in a manner inconsistent with the provisions of Sections 3.4 and 3.5 hereof; and provided further, that, the Eligible Employee shall be required to repay any such amounts to the Company to the extent that an arbitrator issues a final, unappealable order setting forth a determination that the position taken by the Eligible Employee was frivolous or advanced in bad faith. Subject to Section 2.2(e) hereof, the Company shall pay to the Eligible Employee all legal fees and expenses incurred in connection with any tax audit or proceeding to the extent attributable to the application of section 4999 of the Code to any payment or benefit provided hereunder. Such payments shall be made within fourteen (14) business days after delivery of the Eligible Employee’s written requests for payment accompanied with such evidence of fees and expenses incurred as the Company reasonably may require. In order to comply with Section 409A of the Code, in no event shall the payments by the Company under this Section 2.3 be made later than the end of the calendar year next following the calendar year in which such fees and expenses were incurred, provided, that the Eligible Employee shall have submitted an invoice for such fees and expenses at least fourteen (14) business days before the end of the calendar year next following the calendar year in which such fees and expenses were incurred. The amount of such legal fees and expenses that the Company is obligated to pay in any given calendar year shall not affect the legal fees and expenses that the Company is obligated to pay in any other calendar year, and the Eligible Employee’s right to have the Company pay such legal fees and expenses may not be liquidated or exchanged for any other benefit.

2.4 Withholding. The Company shall be entitled to withhold from amounts to be paid to the Severed Employee hereunder any federal, state or local withholding or other taxes or charges (or foreign equivalents of such taxes or charges) which it is from time to time required to withhold.

 

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2.5 Status of Plan Payments. Neither Severance Pay nor any payment made pursuant to Section 2.1(c) or (d) hereof shall constitute “compensation” (or similar term) under the Company’s and its Affiliates’ employee benefit plans, including any DB Pension Plan or DC Pension Plan.

2.6 Mitigation; Setoff. The Severed Employee is not required to seek other employment or attempt in any way to reduce any amounts payable to him or her under the Plan. Further, except as specifically provided in Section 2.1(b), no payment or benefit provided for in this Plan shall be reduced by any compensation earned by the Severed Employee as a result of employment by another employer, by retirement benefits, by offset against any amount claimed to be owed by the Severed Employee to the Company or its Affiliates, or otherwise.

Section 3. PLAN ADMINISTRATION; CLAIMS PROCEDURES.

3.1 The Committee shall administer the Plan and may interpret and construe the terms of the Plan, prescribe, amend and rescind rules and regulations under the Plan and make all other determinations necessary or advisable for the administration of the Plan, subject to all of the provisions of the Plan, including, without limitation, Section 3.4. Any determination by the Committee shall be final and binding with respect to the subject matter thereof on all Eligible Employees.

3.2 The Committee may delegate any of its duties hereunder to such person or persons from time to time as it may designate.

3.3 The Committee is empowered, on behalf of the Plan, to engage accountants, legal counsel and such other personnel as it deems necessary or advisable to assist it in the performance of its duties under the Plan. The functions of any such persons engaged by the Committee shall be limited to the specified services and duties for which they are engaged, and such persons shall have no other duties, obligations or responsibilities under the Plan. Such persons shall exercise no discretionary authority or discretionary control respecting the management of the Plan. All reasonable expenses thereof shall be borne by the Company.

3.4 In the event of a claim by a Severed Employee, such Severed Employee shall present the reason for his or her claim, dispute or controversy in writing to the Committee. The Committee shall, within sixty (60) days after receipt of such written claim, dispute or controversy, send a written notification to the

 

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Severed Employee as to its disposition. In the event the claim, dispute or controversy is wholly or partially denied, such written notification shall (i) state the specific reason or reasons for the denial, (ii) make specific reference to pertinent Plan provisions on which the denial is based, (iii) provide a description of any additional material or information necessary for the Severed Employee to perfect the claim, dispute or controversy and an explanation of why such material or information is necessary, and (iv) set forth the procedure by which the Severed Employee may appeal the denial of his or her claim, dispute or controversy. In the event a Severed Employee wishes to appeal the denial of his or her claim, dispute or controversy he or she may request a review of such denial by making application in writing to the Committee within sixty (60) days after receipt of such denial. Such Severed Employee (or his or her duly authorized legal representative) may, upon written request to the Committee, review any documents pertinent to his or her claim, dispute or controversy and submit in writing, issues and comments in support of his or her position. Within sixty (60) days after receipt of a written appeal (unless special circumstances require an extension of time, but in no event more than one hundred twenty (120) days after such receipt), the Committee shall notify the Severed Employee of the final decision. The final decision shall be in writing and shall include specific reasons for the decision, written in a manner calculated to be understood by the claimant, and specific references to the pertinent Plan provisions on which the decision is based. Notwithstanding the foregoing, any claim, dispute or controversy regarding whether an Eligible Employee was terminated for Cause shall be submitted to the Board in accordance with Section 1.6, and upon the mutual agreement of the Severed Employee and the Committee, any claim, dispute or controversy that has been submitted by the Severed Employee in writing to the Committee may be submitted directly to arbitration in accordance with Section 3.5.

3.5 Any unresolved claim, dispute or controversy arising under or in connection with the Plan, and which is not resolved in accordance with Section 3.4, shall be settled exclusively by arbitration in New York City or at any other mutually agreed upon location. All claims, disputes and controversies shall be submitted to the CPR Institute for Dispute Resolution (“CPR”) in accordance with the CPR’s rules then in effect; provided, however, that the evidentiary standards set forth in this Agreement shall apply. The claim, dispute or controversy shall be heard and decided by three arbitrators selected from CPR’s employment panel. The arbitrator’s decision shall be final and binding on all parties. Judgment may be entered on the arbitrator’s award in any court having jurisdiction.

3.6 Any purported termination of an Eligible Employee’s employment shall be communicated by written Notice of Termination from one party hereto to the other party in accordance with Section 5.8. For purposes of this

 

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Agreement, a “Notice of Termination” shall mean a notice which shall indicate the specific termination provision in this Plan relied upon, shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Eligible Employee’s employment under the provision so indicated, and shall specify the Severance Date (which, in the case of a termination by the Company, shall not be less than thirty (30) days and, in the case of a termination by the Eligible Employee, shall not be less than fifteen (15) days nor more than sixty (60) days, respectively, from the date such Notice of Termination is given). The Company and the Eligible Employee shall take all steps necessary (including with regard to any post-termination services by the Eligible Employee) to ensure that any termination described in this Section 3.6 constitutes a Separation from Service occurring on the Severance Date.

Section 4. PLAN MODIFICATION OR TERMINATION.

The Plan may be amended or terminated by the Board at any time; provided, however, that the Committee may make amendments to the Plan (i) that are required by law, (ii) that will have minimal effect upon the Company’s cost of providing benefits, or (iii) that do not change or alter the character and intent of the Plan; and further provided that the Plan may not be terminated, or amended in any manner that adversely affects any Eligible Employee, (A) within three years immediately following a Change in Control, or (B) during the pendency of a Potential Change in Control.

Section 5. GENERAL PROVISIONS.

5.1 Except as otherwise provided herein or by law, no right or interest of any Eligible Employee under the Plan shall be assignable or transferable, in whole or in part, either directly or by operation of law or otherwise, including without limitation by execution, levy, garnishment, attachment, pledge or in any manner; no attempted assignment or transfer thereof shall be effective; and no right or interest of any Eligible Employee under the Plan shall be liable for, or subject to, any obligation or liability of such Eligible Employee. When a payment is due under this Plan to an Eligible Employee who is unable to care for his or her affairs, payment may be made directly to his or her legal guardian or personal representative.

Nothing herein is intended to affect an employee’s rights under any unemployment law or severance contract or plan.

 

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5.2 Neither the establishment of the Plan, nor any modification thereof, nor the creation of any fund, trust or account, nor the payment of any benefits shall be construed as giving any Eligible Employee, or any person whomsoever, the right to be retained in the service of the Company, and all Eligible Employees shall remain subject to discharge to the same extent as if the Plan had never been adopted.

5.3 If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provisions had not been included.

5.4 This Plan shall inure to the benefit of and be binding upon the heirs, executors, administrators, successors and assigns of the parties, including each Eligible Employee, present and future, and any successor to the Company. If an Eligible Employee shall die while any amount would still be payable to such Eligible Employee hereunder if the Eligible Employee had continued to live, all such amounts, unless otherwise provided herein, shall be paid in accordance with the terms of this Plan to the executor, personal representative or administrators of the Eligible Employee’s estate.

5.5 The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan.

5.6 The Plan shall not be funded. No Eligible Employee shall have any right to, or interest in, any assets of the Company which may be applied by the Company to the payment of benefits or other rights under this Plan.

5.7 Any notice or other communication required or permitted pursuant to the terms hereof shall have been duly given when delivered or mailed by United States Mail, first class, postage prepaid, addressed to the intended recipient at his, her or its last known address.

5.8 This Plan shall be construed and enforced according to the laws of the State of New York to the extent not preempted by federal law, which shall otherwise control.

 

 

 

 

EX-10.(BB)(1) 14 dex10bb1.htm AMENDMENT TO ALCOA INC. CHANGE IN CONTROL SEVERANCE PLAN

Exhibit 10.BB(1)

AMENDMENT TO

ALCOA INC.

CHANGE IN CONTROL SEVERANCE PLAN

The Alcoa Inc. Change in Control Severance Plan dated as of January 11, 2002 (the “Plan”) is hereby amended as follows:

1. The following provisions of the Plan shall not apply to any person who becomes an Eligible Employee under the Plan on or after January 1, 2010:

Section 1.18 (iv) Good Reason

“Notwithstanding anything in this Section 1.18 to the contrary, any termination of employment by a Tier I Employee or a Tier II Employee, whether or not voluntary or involuntary, for any reason or for no reason, within a thirty (30) day period commencing on a date six months immediately following a Change in Control shall be deemed to constitute a termination for Good Reason hereunder.”

Section 2.2 Gross-Up Payment

(a) “Whether or not an Eligible Employee incurs a Severance, if any of the payments or benefits received or to be received by the Eligible Employee in connection with a Change in Control or the Eligible Employee’s termination of employment (whether pursuant to the terms of this Plan or any other plan, arrangement or agreement) (all such payments and benefits, excluding the Gross-Up Payment, being hereinafter referred to as the “Total Payments”) will be subject to the Excise Tax, the Company shall pay to the Eligible Employee an additional amount (the “Gross-Up Payment”) such that the net amount retained by the Eligible Employee, after deduction of any Excise Tax on the Total Payments and any federal, state and local income and employment taxes and Excise Tax upon the Gross-Up Payment, and after taking into account the phase out of itemized deductions and personal exemptions attributable to the Gross-Up Payment, shall be equal to the Total Payments.

(b) Subject to the provisions of Section 2.2(c), all determinations required to be made under this Section 2.2, including whether and when a Gross-Up Payment is required, the amount of such Gross-Up Payment and the assumptions to be utilized in arriving at such determination, shall be made by PricewaterhouseCoopers (the “Accounting Firm”). The Accounting Firm shall provide detailed supporting calculations both to the Company and the Eligible Employee within 15 business days of the receipt of notice from the

 

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Eligible Employee that there has been any payment 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 Employee, whether paid or payable pursuant to this Agreement or otherwise, or such earlier time as is requested by the Company. In the event that the Accounting Firm is serving as accountant or auditor for the individual, entity or group effecting the Change in Control, the Eligible Employee may appoint another nationally recognized accounting firm to make the determinations required hereunder (which accounting firm shall then be referred to as the Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall be borne solely by the Company. Any determination by the Accounting Firm shall be binding upon the Company and the Eligible Employee.

(c) In the event that the Excise Tax is finally determined to be less than the amount taken into account hereunder in calculating the Gross-Up Payment, the Eligible Employee shall repay to the Company, within five (5) business days following the time that the amount of such reduction in the Excise Tax is finally determined, the portion of the Gross-Up Payment attributable to such reduction (plus that portion of the Gross-Up Payment attributable to the Excise Tax and federal, state and local income and employment taxes imposed on the Gross-Up Payment being repaid by the Eligible Employee), to the extent that such repayment results in a reduction in the Excise Tax and a dollar-for-dollar reduction in the Eligible Employee’s taxable income and wages for purposes of federal, state and local income and employment taxes, plus interest on the amount of such repayment at 120% of the rate provided in section 1274(b)(2)(B) of the Code. In the event that the Excise Tax is determined to exceed the amount taken into account hereunder in calculating the Gross-Up Payment (including by reason of any payment the existence or amount of which cannot be determined at the time of the Gross-Up Payment), the Company shall make an additional Gross-Up Payment in respect of such excess (plus any interest, penalties or additions payable by the Eligible Employee with respect to such excess) within five (5) business days following the time that the amount of such excess is finally determined. The Eligible Employee and the Company shall each reasonably cooperate with the other in connection with any administrative or judicial proceedings concerning the existence or amount of liability for Excise Tax with respect to the Total Payments.

(d) The Gross-Up Payment shall be paid on the thirtieth (30) day (or such earlier date as the Excise Tax becomes due and payable to the taxing authorities) after it has been determined that the Total Payments are subject to the Excise Tax; provided however, that if the amount of the Gross-Up Payment or any portion thereof cannot be finally determined on or before that day, the Company shall pay to the Eligible Employee on such date an estimate as determined by the

 

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Auditor until such point in time that the final determination of the Gross-up Payment can occur.

(e) The Eligible Employee shall notify the Company in writing of any claim by the Internal Revenue Service that, if successful, would require the payment by the Company of any additional Gross-Up Payment pursuant to Section 2.2(c). Such notification shall be given as soon as practicable but no later than ten (10) business days after the Eligible Employee is informed in writing of such claim and shall apprise the Company of the nature of such claim and date on which the Company must respond to contest the claim. If the Company provides timely notice to the Eligible Employee in writing that it desires to contest such claim, the Eligible Employee shall (i) give the Company any information reasonably requested by the Company relating to such claim; (ii) take such action in connection with contesting such claim, as the Company shall reasonably request in writing from time to time, including, without limitation, accepting legal representation with respect to such claim by an attorney reasonably selected by the Company; (iii) cooperate with the Company in good faith in order effectively to contest such claim; and (iv) permit the Company to participate in any proceeding relating to such claim. The Company shall bear and pay directly all costs and expenses (including additional interest and penalties) incurred in connection with such contest and shall indemnify and hold the Eligible Employee harmless on an after-tax basis, for any Excise tax or income tax including interest and penalties with respect hereto) imposed as a result of such representation and payment of cost and expenses. Without limiting the foregoing, the Company shall control all proceedings taken in connection with such contest and at its sole option, may pursue or forgo any and all administrative appeals, proceedings, hearings and conferences with the taxing authority in respect of such claim and may at its sole option either direct the Eligible Employee to pay the tax claimed and sue for a refund or contest the claim in any permissible manner, and the Eligible Employee agrees to prosecute such contest to a determination before any administrative tribunal, in a court of initial jurisdiction and in one or more appellate courts as the Company shall determine. Provided however if the Company directs the Eligible Employee to pay such claim and sue for a refund, the Company shall make such payment on behalf of the Eligible Employee and shall indemnify and hold the Eligible Employee harmless on an after-tax basis from any Excise Tax or income tax imposed with respect to such payment or with respect to such imputed income with respect to such payment and further provided that any extension of the statute of limitation relating to such payment of taxes for the taxable year of the Eligible Employee with respect to which such contested amount is claimed to be due is limited solely to such contested amount. Furthermore, the Company’s control of the contest and reimbursement for the expenses shall be limited to issues with respect

 

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to which an additional Gross-Up Payment would be payable hereunder and the Eligible Employee shall be entitled to settle or contest as the case may be, any other issue raised by the Internal Revenue Service or any other taxing authority. If after the Company has made any such payment on behalf of the Eligible Employee, the Eligible Employee becomes entitled to receive any refund with respect to such claims, the Eligible Employee shall promptly pay to the Company the amount of such refund (together with any interest paid or credited thereon after taxes applicable thereto). If, after the Company has made any such payment of behalf of the Eligible Employee pursuant to the above section, a determination is made that the Eligible Employee shall not be entitled to any refund with respect to such claim and the Company does not notify the Eligible Employee in writing of its intent to contest such denial of refund prior to the expiration of thirty (30) days after such determination, then such payment shall not be required to be repaid and the amount of such payment shall off-set to the extent thereof the amount of Gross-Up Payment required to be paid.

(f) In order to comply with Section 409A of the Code, any Gross-Up Payment, as determined pursuant to this Section 2.2, shall in all events be paid by the Company no later than the end of the Eligible Employee’s taxable year next following the Eligible Employee’s taxable year in which the Excise Tax (and any income or other related taxes or interest or penalties thereon) on a Payment are remitted to the Internal Revenue Service or any other applicable taxing authority or, in the case of amounts relating to a claim described in Section 2.2(e) that does not result in the remittance of any federal, state, local and foreign income, excise, social security and other taxes, the calendar year in which the claim is finally settled or otherwise resolved. Notwithstanding any other provision of this Section 2.2, the Company may, in its sole discretion, withhold and pay over to the Internal Revenue Service or any other applicable taxing authority, for the benefit of the Eligible Employee, all or any portion of any Gross-Up Payment, and the Eligible Employee hereby consents to such withholding.”

2. Capitalized terms in this amendment shall have the meaning ascribed to them in the Plan.

3. Except as amended herein, the Plan remains in full force and effect.

Dated: January 1, 2010

 

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