Exhibit 99.1
CHANGE IN CONTROL AGREEMENT
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This Agreement is effective as of the date it is signed by both Novelis
Inc., a Canadian corporation (the "Company"), and __________________________
("Executive").
WHEREAS, the Company's Board of Directors has determined that it is in
the best interest of the Company's shareholders to reinforce and encourage the
continued attention and dedication of members of the Company's management,
including Executive, to their assigned duties without distraction in potentially
disturbing circumstances arising from the possibility of a Change in Control;
and
WHEREAS, this Agreement sets forth the payments and other benefits to
which Executive will be entitled upon certain conditions if Executive's
employment with the Company terminates.
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements set forth below, it is hereby agreed as follows:
1. Term. This Agreement shall terminate, except to the extent that
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any obligation of the Company hereunder remains unpaid as of such time, upon the
earlier of:
(i) December 31, 2008, unless a Change in Control occurs on
or before such date; or
(ii) Twenty-four (24) months following the date of a Change
in Control.
2. Severance upon Termination of Employment.
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(a) Events Giving Rise to Benefits. Executive shall be
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entitled to payments and other benefits as set forth in Sections 2(b)
and 2(c) if the Company shall terminate Executive's employment other
than for Cause, or Executive shall terminate his or her employment for
Good Reason, within six (6) months before or twenty-four (24) months
after a Change in Control. Executive's right to receive compensation and
benefits under this Agreement shall be subject to the terms and
conditions of the Company's release and waiver of claims and non-compete
agreement for executive employees. No payments or benefits shall be paid
pursuant to this Agreement unless Executive executes such release and
waiver of claims and non-compete agreement. Termination of employment
due to death, Disability or Retirement at any time shall not give rise
to any rights to compensation or benefits under this Agreement.
(b) Severance Pay. In accordance with Section 2(a) above,
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the Company shall pay a lump sum cash amount equal to:
[A x (B + C)] - D, where
"A" equals a multiplier of [one] OR [two];
"B" equals Executive's annual base salary (including all
amounts of such base salary that are voluntarily deferred under
any qualified and non-qualified plans of the Company) determined
at the rate in effect as of the date of such termination of
employment;
"C" equals Executive's target short term incentive
opportunity for the calendar year in which such Change in
Control occurs; and
"D" equals the amount of retention and severance
payments, if any, paid or payable to Executive by the Company
other than pursuant to this Agreement; it being expressly
understood that the purpose of this deduction is to avoid any
duplication of payments to Executive.
Except to the extent payment is required to be delayed pursuant to
Section 2(d) below, payment shall be made on the following dates (or as
soon as administratively practicable thereafter): (x) on the thirtieth
(30th) day following the effective date of Executive's termination of
employment if such termination occurs after a Change in Control, or (y)
on the 210th day following the effective date of Executive's termination
of employment if such termination occurs before a Change in Control.
(c) Other Benefits. In accordance with Section 2(a) above
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and in addition to the compensation set forth in Section 2(b) hereof,
Executive shall be entitled to the following benefits:
(i) Executive shall be entitled to receive the
benefit of all short term and long term incentive awards
pursuant to the terms of the incentive plan with respect to
which such awards were issued.
(ii) If Executive is not eligible for retiree medical
benefits and is covered under the Company's group health plan at
the time of his termination of employment, the Company shall pay
an additional lump sum cash amount for the purpose of assisting
Executive with the cost of post-employment medical continuation
coverage equal to: (C x M) / (1 - T), where
"C" equals the full monthly COBRA premium
charged for coverage under the Company's group medical
plan at Executive's then current level of coverage;
"M" equals [twelve (12)] OR [twenty-four (24)]
months; and
"T" equals an assumed tax rate of 40%
Except to the extent payment is required to be delayed pursuant
to Section 2(d) below, payment shall be made on the following
dates (or as soon as administratively practicable thereafter):
(x) on the thirtieth (30th) day following the effective date of
Executive's termination of employment if such termination occurs
after a Change in Control, or (y) on the 210th day following the
effective date of Executive's termination of employment if such
termination occurs before a Change in Control.
(iii) To the extent applicable, Executive shall be
entitled to continue coverage under the Company's group life
plan for a period of [twelve (12) months] OR [twenty-four (24)
months] at Executive's pre-termination level of coverage.
(iv) Executive shall be entitled to [twelve (12)
months] OR [twenty-four (24 months)] of additional credit for
benefit accrual and contribution allocation purposes (including
credit for age, service and earnings pro rated over [twelve
(12)] OR [twenty-four (24)] months) under the Company's
tax-qualified and non-qualified pension, savings or other
retirement plans; provided that if applicable provisions of the
Code prevent payment in respect of such credit under the
Company's tax-qualified plans, such payments shall be made under
the Company's non-qualified plans.
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(v) To the extent Executive is not already fully
vested under the Company's tax-qualified and non-qualified
retirement pension, savings and other retirement plans,
Executive shall become 100% vested under such plans; provided
that if applicable provisions of the Code prevent accelerated
vesting under the Company's tax-qualified plans, an equivalent
benefit shall be payable under the Company's non-qualified
plans.
(d) Notwithstanding the foregoing provisions of this Section
2 or any other provision in this Agreement to the contrary, if Executive
is a "specified employee" within the meaning of Code Section 409A, then
all payments under this Agreement shall be delayed for a period of six
(6) months to the extent required by Section 409A.
3. Tax Reimbursement.
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(a) Gross-Up Payment. Notwithstanding anything in this
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Agreement to the contrary, in the event it shall be determined that any
payment or distribution to or for the benefit of Executive whether paid
or payable or distributed or distributable pursuant to the terms of this
Agreement (other than any payment under this Section 3) or otherwise
would be subject to the excise tax imposed by Section 4999 of the Code
or a similar section (such payment, a "Change in Control Payment" and
such excise tax on all such Change in Control Payments, together with
any interest and penalties thereon, collectively the "Excise Tax"), then
Executive shall be entitled to receive an additional payment (a
"Gross-Up Payment") in an amount determined by the Accounting Firm such
that after payment by Executive of any tax thereon, Executive retains an
amount of the Gross-Up Payment equal to the amount of the Excise Tax;
provided, however, that if the aggregate value (as determined under
Section 280G of the Code) of such Change in Control Payments is less
than 110% of the product of "3 times" the Executive's "base amount" (as
defined in Section 280G(b)(3) of the Code) (such product, the "Golden
Parachute Threshold"), then Executive shall not be entitled to any
Gross-Up Payment and, instead, the Change in Control Payments shall be
reduced so that their aggregate value (as so determined) is equal to
$1.00 less than the Golden Parachute Threshold.
For purposes of this Section 3, Executive's applicable Federal,
state and local taxes shall be computed at the maximum marginal rates,
taking into account the effect of any loss of personal exemptions
resulting from receipt of the Gross-Up Payment.
(b) Determinations. All determinations required to be made
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under this Section 3, including whether a Gross-Up Payment is required
under Section 3(a), and the assumptions to be used in determining the
Gross-Up Payment, shall be made by such nationally recognized accounting
firm as the Company may designate in writing prior to a Change in
Control (the "Accounting Firm"), which shall provide detailed supporting
calculations both to the Company and Executive within thirty (30)
business days of the receipt of notice from Executive that there has
been a Change in Control, 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 Person effecting the Change in Control or is
otherwise unavailable, Executive 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.
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(c) Subsequent Redeterminations. Unless requested otherwise
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by the Company, Executive agrees to use reasonable efforts to contest in
good faith any subsequent determination by the Internal Revenue Service
that Executive owes an amount of Excise Tax greater than the amount
determined pursuant to Section 3(b), provided that Executive shall be
entitled to reimbursement by the Company of all fees and expenses
reasonably incurred by Executive in contesting such determination. In
the event the Internal Revenue Service or any court of competent
jurisdiction determines that Executive owes an amount of Excise Tax that
is either greater or less than the amount previously taken into account
and paid under this Section 3, the Company shall promptly reimburse
Executive, or Executive shall promptly reimburse the Company, as the
case may be, the amount of such excess or shortfall. In the case of any
payment that the Company is required to make to Executive pursuant to
the preceding sentence (a "Later Payment"), the Company shall also
reimburse Executive an additional amount such that after payment by
Executive of all of Executive's applicable Federal, state and local
taxes, including any interest and penalties assessed by any taxing
authority, on such additional amount, Executive will retain an amount
equal to the total of Executive's applicable Federal, state and local
taxes, including any interest and penalties assessed by any taxing
authority, arising due to the Later Payment. In the case of any
reimbursement of Excise Tax that Executive is required to make to the
Company pursuant to the second sentence of this Section 3(c), Executive
shall also reimburse the Company at the amount of any additional payment
received by Executive from the Company in respect of applicable Federal,
state and local taxes on such repaid Excise Tax, to the extent Executive
is entitled to a refund of (or has not yet paid) such Federal, state or
local taxes.
4. Definitions. Except as otherwise provided under this Agreement,
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the following capitalized terms used within this Agreement shall have the
meaning set forth below:
(a) "Cause" means:
(i) The willful and continued failure by Executive
to substantially perform his or her usual and customary duties
of employment with Company other than any such failure resulting
from Executive's incapacity due to physical or mental illness,
unless Executive uses reasonable efforts to correct such failure
within a reasonable time after demand for substantial
performance is delivered by the Company that specifically
identifies the manner in which the Company believes Executive
has not substantially performed his or her duties;
(ii) The willful misconduct by Executive which
materially injures the Company monetarily or otherwise; or
(iii) Conviction of, or entry of a plea of nolo
contendere with regard to, any felony or any crime involving
moral turpitude or dishonesty of or by Executive.
No act, or failure to act, on Executive's part shall be
considered "willful" unless done, or omitted to be done, by him or her
not in good faith and without reasonable belief that his or her action
or omission was in, or not opposed to, the best interests of the
Company.
(b) "Change in Control" means the first to occur of any of
the following events:
(i) any person is or becomes the beneficial owner,
directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such person
any securities acquired directly from the Company or its
affiliates, other than in connection with the acquisition by the
Company or its affiliates of a business) representing 35% 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; or
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(ii) the majority of the members of the Board is
replaced during any 12-month period by directors whose
appointment or election is not endorsed by a majority of the
members of the Board prior to the date of the appointment or
election; or
(iii) the consummation of a merger or consolidation of
the Company with any other entity, other than (a) a merger or
consolidation which would result in the voting securities of the
Company outstanding immediately prior to such merger or
consolidation continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity or any parent thereof), in combination with the
ownership of any trustee or other fiduciary holding securities
under an employee benefit plan of the Company, 50% or more of
the combined voting power of the voting securities of the
Company or such surviving entity or any parent thereof
outstanding immediately after such merger or consolidation, or
(b) a merger or consolidation effected to implement a
recapitalization of the Company (or similar transaction) in
which no person is or becomes the beneficial owner, directly or
indirectly, of securities of the Company (not including in the
securities beneficially owned by such person any securities
acquired directly from the Company or its affiliates, other than
in connection with the acquisition by the Company or its
affiliates of a business) representing 50% 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; or
(iv) the stockholders of the Company approve a plan
of complete liquidation or dissolution of the Company or there
is a consummation of an agreement for the sale or disposition by
the Company of all or substantially all of the Company's assets,
other than a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, 50% or
more of the combined voting power of the voting securities of
which is owned by persons in substantially the same proportions
as their ownership of the Company immediately prior to such
sale.
Notwithstanding the foregoing, no "Change in Control" shall be
deemed to have occurred if there is consummated any transaction or
series of integrated transactions immediately following which the record
holders of the common stock of the Company immediately prior to such
transaction or series of transactions continue to have substantially the
same proportionate ownership in an entity which owns all or
substantially all of the assets of the Company immediately following
such transaction or series of transactions.
For purposes of this definition, "beneficial ownership" shall be
determined in accordance with Rule 13d-3 under the Securities Exchange
Act of 1934, as amended.
(c) "Code" means the Internal Revenue Code of 1986, as
amended. Any reference to a section of the Code shall include such
section and any comparable section or sections of any future legislation
that amends, supplements or supersedes such section.
(d) "Disability" means Executive is permanently and totally
disabled and unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which
can be expected to result in death or which has lasted or can be
expected to last for a continuous period of twelve months.
(e) "Good Reason" means any of the following if the same
shall occur, without Executive's express written consent:
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(i) a material reduction in Executive's position,
duties, responsibilities and status with the Company (without
sole regard to any change in title or the Company's status as a
public or private entity);
(ii) a reduction in Executive's base salary and short
term and long term incentive opportunity in effect on the date
hereof or as the same may be increased from time to time during
the term of this Agreement; or
(iii) any requirement that Executive relocate more
than 50 miles from the area in which Executive regularly
performs his or her duties for the Company, except for required
travel by Executive on the Company's business to an extent
substantially consistent with Executive's normal business travel
obligations.
(f) "Retirement" means Executive's voluntary retirement on
or after qualifying for early or normal retirement under the applicable
Company pension plan in which such Executive participates.
5. Notice of Termination. Any termination of Executive's employment
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for any reason shall take effect pursuant to a written notice of termination to
the other party. Such notice must set forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of Executive's
employment pursuant to this Agreement. No such purported termination of
employment shall be effective without such written notice of termination
conforming to the requirements of this Section.
6. No Obligation to Mitigate Damages; No Effect on Other
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Contractual Rights.
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(a) Executive shall not be required to mitigate damages or
the amount of any payment provided for under this Agreement by seeking
other employment or otherwise, nor shall the amount of any payment
provided for under this Agreement be reduced by any compensation earned
by Executive as the result of employment by another employer after
Executive's termination of employment, or otherwise.
(b) The provisions of this Agreement, and any payment
provided for hereunder, shall not reduce any amounts otherwise payable,
or in any way diminish Executive's existing rights, or rights which
would accrue solely as a result of the passage of time, under any
employee benefit plan or arrangement providing retirement benefits or
health, life, disability or similar welfare benefits.
7. Successor to the Company.
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(a) The Company will require any successor or assign
(whether direct or indirect, by purchase, merger, consolidation or
otherwise) to all or substantially all of the business and/or assets of
the Company, by agreement in form and substance reasonably satisfactory
to Executive, expressly, absolutely and unconditionally to assume and
agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such
succession or assignment had taken place. Any failure of the Company to
obtain such agreement prior to the effectiveness of any such succession
or assignment shall be a material breach of this Agreement and shall
entitle Executive to terminate Executive's employment for Good Reason.
(b) This Agreement shall inure to the benefit of and be
enforceable by Executive's personal and legal representatives,
executors, administrators, successors, heirs, distributees, devisees and
legatees. If Executive should die while any amounts are still payable to
him or her hereunder, all such amounts, unless otherwise provided
herein, shall be paid in accordance with the terms of this Agreement to
Executive's devisee, legatee, or other designee, or if there be no such
designee, to Executive's estate. The services to be provided by
Executive to the Company under this Agreement are personal and are not
delegable or assignable.
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8. Notice. Notices and all other communications provided for in the
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Agreement shall be in writing and shall be deemed to have been duly given when
delivered or mailed by certified or registered mail, return receipt requested,
postage prepaid, as follows:
If to the Company:
Novelis Inc.
Attn: Vice President, Human Resources
Lenox Building
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
If to Executive to the address of
Executive on the books of the Company.
Another address may be used if a party has furnished a different address
to the other party in writing in accordance herewith, except that notices of
change of address shall be effective only upon receipt.
9. Sole Agreement. This Agreement represents the entire agreement
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between the parties with respect to the matters contemplated herein. Any earlier
agreement between the parties or between Executive and any affiliate of the
Company is hereby terminated and superseded, and all obligations by either party
thereunder shall cease immediately preceding the commencement of the term of
this Agreement and are hereby agreed to be satisfied in full. No agreements or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not set forth
expressly in this Agreement.
10. Validity. The invalidity or unenforceability of any provisions
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of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.
11. Counterparts. This Agreement may be executed in one or more
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counterparts , each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
12. Legal Fees and Expenses. The Company shall pay all legal fees
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and expenses which Executive reasonably may incur as a result of the Company's
contesting the validity, enforceability or Executive's interpretation of, or
determinations under, this Agreement except to the extent Executive's position
is frivolous or carried out in bad faith.
13. Confidential Information. Executive agrees not to disclose
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during the term hereof or thereafter any of the Company's confidential or trade
secret information, except as required by law. Executive recognizes that
Executive shall be employed in a sensitive position in which, as a result of a
relationship of trust and confidence, Executive will have access to trade
secrets and other highly confidential and sensitive information.
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Executive further recognizes that the knowledge and information acquired by
Executive concerning the Company's materials regarding employer/employee
contracts, customers, pricing schedules, advertising and interviewing
techniques, manuals, systems, procedures and forms represent the most vital part
of the Company's business and constitute by their very nature, trade secrets and
confidential knowledge and information. Executive hereby stipulates and agrees
that all such information and materials shall be considered trade secrets and
confidential information. If it is at any time determined that any of the
information or materials identified in this Section are, in whole or in part,
not entitled to protection as trade secrets, they shall nevertheless be
considered and treated as confidential information in the same manner as trade
secrets, to the maximum extent permitted by law. Executive further agrees that
all such trade secrets or other confidential information, and any copy, extract
or summary thereof, whether originated or prepared by or for Executive or
otherwise coming into Executive's knowledge, possession, custody, or control,
shall be and remain the exclusive property of the Company.
14. Withholding. The Company may withhold from any benefits payable
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under this Agreement all applicable taxes and other amounts as shall be required
pursuant to any law or governmental regulation or ruling.
15. Non-Binding Arbitration; Claim Venue. Any claim or controversy
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arising out of or relating to this Agreement or any breach thereof shall be
subject to non-binding arbitration before either party may seek any other legal
recourse. Any such arbitration shall take place in Atlanta, Georgia, in
accordance with the rules of the American Arbitration Association. Each party
further submits to the exclusive jurisdiction of the United States District
Court for the Middle District of Georgia (Atlanta, Georgia) and irrevocably
waives, to the fullest extent permitted by law, any objections that either party
may now or hereafter have to the aforesaid venue, including without limitation
any claim that any such proceeding brought in either such court has been brought
in an inconvenient forum, provided however, this provision shall not limit the
ability of either party to enforce the other provisions of this Section.
16. Code Section 409A. To the extent applicable, this Agreement
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shall be interpreted in accordance with Section 409A of the Code and the
applicable U.S. Treasury regulations and other interpretative guidance issued
thereunder, including without limitation any regulations or other guidance that
may be issued after the effective date of this Agreement. Notwithstanding any
provision of the Agreement to the contrary, the Company may adopt such
amendments to the Agreement or adopt other policies and procedures, or take any
other actions, that the Company determines is necessary or appropriate to exempt
the Agreement from Section 409A and/or preserve the intended tax treatment of
the benefits provided hereunder, or to comply with the requirements of Section
409A and related U.S. Treasury guidance.
17. Attachment. Except as required by law, the right to receive
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payments under this Agreement shall not be subject to anticipation, sale,
encumbrance, charge, levy, or similar process or assignment by operation of law.
18. Waivers. Any waiver by a party or any breach of this Agreement
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by another party shall not be construed as a continuing waiver or as a consent
to any subsequent breach by the other party. Except as otherwise expressly set
forth herein, no failure on the part of any party hereto to exercise and no
delay in exercising any right, power or remedy hereunder shall operate as a
waiver thereof, nor shall any single or partial exercise of any right, power or
remedy hereunder preclude any other or further exercise thereof or the exercise
of any other right, power or remedy.
19. Headings. The headings of the sections of this Agreement have
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been inserted for convenience of reference only and shall in no way restrict or
modify any of the terms or provisions hereof.
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20. Governing Law. This Agreement shall be governed and construed
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and the legal relationships of the parties determined in accordance with the
laws of the State of Georgia.
THIS CONTRACT CONTAINS AN ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE
PARTIES.
NOVELIS INC.
By:_____________________________________
Date:___________________________________
EXECUTIVE
By:_____________________________________
Date:___________________________________
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