Exhibit 5
ALUMAX INC.
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SEPARATION POLICY FOR CORPORATE EMPLOYEES
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03/05/98
ALUMAX INC.
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SEPARATION POLICY FOR CORPORATE EMPLOYEES
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Page
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1. Purpose...................................................................1
2. Definitions...............................................................1
3. Eligibility...............................................................4
4. Severance Payments and Benefits...........................................4
5. Withholding...............................................................7
6. No Right to Employment....................................................7
7. Legal Fees................................................................7
8. Amendment and Termination.................................................7
9. Governing Law; Arbitration................................................7
10. Nonassignability..........................................................8
11. Administration and Claims.................................................8
12. No Duty to Mitigate.......................................................8
13. Duplicate Payments or Benefits............................................8
14. Effective Date............................................................9
ALUMAX INC.
SEPARATION POLICY FOR CORPORATE EMPLOYEES
1. Purpose. The purpose of the Alumax Inc. Separation Policy for
Corporate Employees (the "Policy") is to provide certain severance payments and
benefits to designated Corporate Employees (each, an "Employee") in the event of
termination of employment (other than by reason of retirement, death or
disability of the Employee) (i) within two years after a Change in Control (as
hereinafter defined) if the termination is by the Company other than for Cause
(as hereinafter defined) or by the Employee for Good Reason (as hereinafter
defined) or (ii) by the Company other than for Cause (as hereinafter defined).
This Policy shall not affect the right of the Company to terminate an Employee's
employment with or without Cause.
2. Definitions. The following definitions are applicable for purposes
of this Policy:
(a) "Annual Compensation" means the sum of (i) the Employee's annual
salary with the Company (before reduction pursuant to any deferred
compensation plan or agreement with the Company) immediately prior to
the date of termination of employment or, if greater, immediately prior
to the date of the Change in Control and (ii) the Employee's total
annual incentive award for the year of termination, assuming employment
for the full calendar year and that all applicable targets have been
met, under the Alumax Inc. 1993 Annual Incentive Plan, as the same may
be modified, replaced or added to by the Company from time to time.
(b) "Beneficial Owner" is defined in Section 8 of the Company's 1993
Long Term Incentive Plan.
(c) "Beneficiary" is defined in Section 2 of the Company's 1993 Long
Term Incentive Plan.
(d) "Cause" means (i) the willful and continued failure by the
Employee to perform substantially his duties with the Company (other
than any such failure resulting from the Employee's incapacity due to
physical or mental illness) after a written demand for substantial
performance is delivered to the Employee by the Chairman and Chief
Executive Officer or the President of the Company which specifically
identifies the manner in which the Employee has not substantially
performed his duties, (ii) the willful engagement by the Employee in
conduct which is not authorized by the Board of Directors of the
Company or within the normal course of the Employee's business
decisions and is known by
the Employee to be materially detrimental to the best interests of the
Company or any of its subsidiaries, or (iii) the willful engagement by
the Employee in illegal conduct or any act of serious dishonesty which
adversely affects, or, in the reasonable estimation of the Chairman and
Chief Executive Officer or the President of the Company, could in the
future adversely affect, the value, reliability or performance of the
Employee to the Company in a material manner. Any act, or failure to
act, based upon authority given pursuant to a resolution duly adopted
by the Board of Directors of the Company or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or
omitted to be done, by the Employee in good faith and in the best
interests of the Company.
(e) "Change in Control" means as defined in Section 8 of the
Company's 1993 Long Term Incentive Plan.
(f) "Company" means Alumax Inc., a Delaware corporation, or any
successor corporation.
(g) "Compensation Rate" means the result obtained by dividing the
Employee's Annual Compensation by 52.
(h) "Corporate Employee" means all regular, salaried exempt and non-
exempt personnel (i) of the Company at the Company's headquarters,
other than Corporate Officers; (ii) of Alumax Technical Services Inc.
at Golden, Colorado; (iii) of Alumax International, Inc. at Golden,
Colorado; (iv) of Alumax Asia Pacific Pty Limited in Sydney, Australia;
(v) of Alumax de Mexico S.A. de C.V. in Col. Napoles, Mexico; (vi) of
Alumax International Co. in Beijing, China and (vii) of Alumax
Materials Management, Inc. at Norcross, Georgia; Cressona, and
Lancaster, Pennsylvania; Goose Creek, South Carolina, Texarkana, Texas
and West Chicago, Illinois.
(i) "Corporate Officers" means any officers or designated key
executives of the Company who upon termination will otherwise receive
severance payments and benefits under an effective employment agreement
with the Company or under the Alumax Inc. Executive Separation Policy.
(j) "Designated Participant" means any Corporate Employee.
(k) "Good Reason" means:
(i) a reduction by the Company in the Employee's base salary as
in effect immediately prior to the Change in Control;
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(ii) the failure by the Company to continue in effect any Plan
(as hereinafter defined) in which the Employee was participating at the
time of the Change in Control, unless such Plan (x) is replaced by a
successor Plan providing to Employee substantially similar compensation
and benefits (which replacement Plan shall continue to be subject to
this provision) or (y) terminates as a result of the normal expiration
of such Plan in accordance with its terms, as in effect immediately
prior to the Change in Control; or by the taking of any other action,
or the failure to act, by the Company which would materially adversely
affect the Employee's continued participation in any of such Plans as
compared to the terms of such participation on the date of the Change
in Control, including by materially reducing the Employee's benefits in
the future under any such Plans; or
(iii) the failure by the Company to provide and credit the
Employee with the number of paid vacation days to which he or she is
entitled in accordance with the Company's normal vacation policy as
such policy was in effect immediately prior to the Change in Control;
(iv) effecting a change in the position of the Employee which
does not represent a position commensurate in level, authority and
responsibilities with or a promotion from Employee's position with the
Company or any of its subsidiaries immediately prior to the date of the
Change in Control, or assigning the Employee responsibilities which are
materially inconsistent with such prior position; or
(v) the Company's requiring the Employee to be based anywhere
more than 45 miles from the location of Employee's office or the
location of the Company's executive offices immediately prior to the
Change in Control, except that the Company may require Employee to be
based more than 45 miles from such location if the relocation is to a
principal executive office of the Company or principal office of a
major division or subsidiary of the Company, provided that the Employee
is reimbursed, on an after-tax basis, for all reasonable expenses
incurred and losses experienced in respect of such relocation in
accordance with Company's relocation policy prior to the date of the
Change in Control, and except for required travel on the Company's
business to an extent substantially consistent with the business travel
obligations which the Employee undertook on behalf of the Company prior
to the Change in Control;
in each case after notice in writing from the Employee to the Company
and a period of 30 days after such notice during which the Company
fails to correct such conduct.
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(l) "Named Subsidiary" means Alumax Technical Services, Inc.; Alumax
International, Inc.; Alumax Asia Pacific Pty Limited; Alumax de Mexico
S.A. de C.V.; Alumax International Co. and Alumax Materials Management,
Inc.
(m) "Plan" means any compensation plan of the Company such as an
incentive, stock option or restricted stock plan or any employee
benefit plan of the Company such as a pension, profit sharing, medical,
dental or life insurance plan.
(n) "Salary" means the Employee's base annual salary with the
Company or a Named Subsidiary (before reduction pursuant to any
deferred compensation plan or agreement with the Company or a Named
Subsidiary) as in effect immediately prior to the date of termination
of employment or, if greater, immediately prior to the date of the
Change in Control.
(o) "Salary Rate" means the result obtained by dividing the
Employee's salary by 52.
(p) "Years of Service" means the number of years (including partial
credit for partial years) that the Employee has been employed by the
Company and any of its subsidiaries and predecessors including AMAX
Inc.
3. Eligibility. Each Corporate Employee who was employed by the Company
or a Named Subsidiary immediately prior to termination shall be
eligible for the severance payments and benefits provided by Section 4
hereof.
4. Severance Payments and Benefits.
(a) A Corporate Employee who is eligible for termination payments
and benefits under this Policy pursuant to Section 3 shall be entitled
to the following upon termination of employment within two years
following a Change in Control (other than by reason of retirement,
death or disability entitling the Employee to long-term disability
benefits under the Company's long-term disability policy), if such
termination is by the Company other than for Cause or by the Employee
for Good Reason:
(i) such Employee's annual salary otherwise payable through the
date of termination of employment, together with salary, incentive
compensation and benefits which have been earned or become payable as
of the date of termination but which have not yet been paid to the
Employee;
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(ii) a prorated portion of the award to the Employee for the
year of termination, assuming all applicable targets had been met,
under the Alumax Inc. 1993 Annual Incentive Plan, as the same may be
modified, replaced or added to by the Company from time to time, with
such award prorated based on the number of days during the year of
termination which precede the Employee's termination;
(iii) a lump-sum severance payment equal to the sum of (A) four
times the Employee's Compensation Rate multiplied by the Employee's
Years of Service, plus (B) the Employee's Compensation Rate multiplied
by a fraction the numerator of which is Employee's Annual Compensation
and the denominator of which is 10,000; provided, however, that in no
event shall the amount payable to an Employee pursuant to this clause
(iii) be less than .5 times the Employee's Annual Compensation or
greater than 1.5 times the Employee's Annual Compensation; and
(iv) continued coverage, for a period of months equal to the
lump-sum determined under clause (iii) above divided by Employee's
Annual Compensation and multiplied by 12 from the date of termination
of employment, under the Company's medical, dental, disability and life
insurance plans in which such Employee participated immediately prior
to the date of termination of employment, on the same basis as in
effect immediately prior to the date of termination of employment
(including required employee contributions, if any). Such coverage may
be discontinued by the Company in the event that the Employee becomes
reemployed and the new employer of the Employee has a comparable
insurance program. The comparability of the new employer's program to
that of the Company is to be determined by the Company on a
category-by-category basis with respect to life, medical, dental and
disability coverage.
(b) An Employee who is eligible for severance payments and benefits
under this Policy pursuant to Section 3 shall be entitled to the
following upon termination of employment at any time prior to a Change
in Control, if such termination is by the Company or a Named Subsidiary
other than for Cause (but not if such termination is for any other
reason, including retirement, death or disability entitling the
Employee to long-term disability benefits under the Company's long-term
disability policy, or by the Employee for any reason or by the Company
for Cause):
(i) the amount determined in accordance with clause (i) of
paragraph (a) of Section 4;
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(ii) the amount determined in accordance with clause (ii) of
paragraph (a) of Section 4;
(iii) severance payments, at the dates annual salary payments
would otherwise have been made, equal to the sum of (A) two times the
Employee's Compensation Rate multiplied by the Employee's Years of
Service plus (B) the Employee's Salary Rate multiplied by a fraction,
the numerator of which is the Employee's Salary and the denominator of
which is $10,000; provided, however, that in no event shall the amount
payable to an Employee pursuant to this clause (iii) be less than 0.25
times the Employee's Annual Compensation or greater than 1.5 times the
Employee's Salary; and
(iv) continued benefit coverage for a period of six months
from the date of termination of employment, to the extent specified in
clause (iv) of paragraph (a) of Section 4.
(c) All payments required by clauses (i), (ii) and (iii) of
paragraph (a) of this Section 4 and by clauses (i) and (ii) of
paragraph (b) of this Section 4 shall be paid not later than the
fifteenth (15th) day following the date of termination of employment.
(d) In the event of the death of an Employee, all payments hereunder
due to such Employee shall be paid to his or her Beneficiary.
(e) Notwithstanding anything in this Policy to the contrary, an
Employee shall not be entitled to any payments or benefits under
Section 4(b) of this Policy, unless the Human Resources and
Compensation Committee of Board of Directors of the Company in its sole
discretion provides otherwise, in the event termination of employment
results from the sale or spin-off of a subsidiary, the sale of a
division, other business unit or facility in which the Employee was
employed immediately prior to such sale, and the Employee has been
offered employment with the purchaser of such subsidiary, division,
other business unit or facility on substantially the same terms and
conditions under which the Employee worked prior to the sale. Such
terms and conditions must include an agreement or plan binding on such
purchaser or spun-off entity or business, providing that upon any
termination of employment with the purchaser of the kinds described in
Section 4(b) hereof within two years following such sale, the purchaser
shall:
(i) pay to such Employee an amount equal to the severance
payments that such Employee would have received under Section 4(b)(iii)
hereof if termination of employment had resulted in amounts being owed
thereunder at the time of such sale; and
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(ii) pay or provide for the Employee and his or her dependents
the benefits described in Section 4(b)(iv) hereof for a period
beginning upon the Employee's termination of employment with the
purchaser or spun-off entity or business and terminating on the earlier
of (a) the expiration of a number of months and partial months
following the date of termination of employment with the purchaser
equal to the Employee's Years of Service to the date of such sale, but
in no event less than six or more than 18, and (b) the commencement of
equivalent benefits from a new employer following termination of
employment with the purchaser or spun-off entity or business.
(f) Notwithstanding anything in this Policy to the contrary, a
transfer of employment from the Company to a subsidiary or vice versa
shall not be considered a termination of employment for purposes of
this Policy.
5. Withholding. The Company shall have the right to deduct from all
payments hereunder any taxes required by law to be withheld therefrom.
6. No Right to Employment. Nothing in this Policy shall be construed as
giving any person the right to be retained in the employment of the Company or
any subsidiary, nor shall it affect the right of the Company or any subsidiary
to dismiss an Employee without any liability except as provided in this Policy.
7. Legal Fees. The Company shall reimburse all legal fees and related
expenses incurred by an Employee in seeking to obtain or enforce any payment,
benefit or right provided by this Policy; provided, however, that the Employee
shall not be reimbursed for any such amounts to the extent that an arbitrator or
a court of competent jurisdiction issues a final, unappealable order setting
forth a determination that the position taken by the Employee was frivolous or
advanced in bad faith.
8. Amendment and Termination. The Board of Directors of the Company may
amend or terminate this Policy at any time prior to a Change in Control. This
Policy may not be amended or terminated at any time after a Change in Control in
any manner adverse to an Employee without the prior consent of such Employee.
9. Governing Law; Arbitration. The validity, construction, and effect
of this Policy and any rules and regulations relating to this Policy shall be
determined in accordance with Delaware General Corporation Law, to the extent
applicable, other laws (including those governing contracts) of the State of
Delaware, without giving effect to principles of conflicts of laws, and
applicable federal law. If any provision hereof shall be held by a court of
competent jurisdiction to be invalid and unenforceable, the remaining provisions
shall continue to be fully effective. Any dispute or controversy arising under
or in connection with this Policy shall be settled exclusively by arbitration in
Atlanta, Georgia by three arbitrators in accordance with the rules of the
American
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Arbitration Association in effect at the time of submission to arbitration.
Judgment may be entered on the arbitrators' award in any court having
jurisdiction. For purposes of settling any dispute or controversy arising
hereunder or for the purpose of entering any judgment upon an award rendered by
the arbitrators, the Company and the Employee hereby consent to the jurisdiction
of any or all of the following courts: (i) the United States District Court for
the Northern District of Georgia, (ii) any of the courts of the State of
Georgia, or (iii) any other court having jurisdiction. The Company and the
Employee hereby waive, to the fullest extent permitted by applicable law, any
objection which it may now or hereafter have to such jurisdiction and any
defense of inconvenient forum. The Company and the Employee hereby agree that a
judgment upon an award rendered by the arbitrators may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
10. Nonassignability. Compensation and benefits under the Policy may
not be assigned by the Employee. The terms and conditions of this Policy shall
be binding on the successors and assigns of the Company.
11. Administration and Claims. This Policy shall be administered by
Philip Gaetano. The administrator shall provide adequate written notice to any
employee whose claim for benefits hereunder has been denied, setting forth
specific reasons for such denial, written in a manner calculated to be
understood by such Employee, and afford such Employee a full and fair review of
the decision denying the claim, in accordance with the applicable requirements
(if any) of the Employee Retirement Income Security Act of 1974, as amended.
12. No Duty to Mitigate. No Employee shall be required to mitigate, by
seeking employment or otherwise, the amount of any payment that the Company
becomes obligated to make under this Policy, and, except as expressly provided
in this Policy, amounts or other benefits to be paid or provided to an Employee
pursuant to this Policy shall not be reduced by reason of the Employee's
obtaining other employment or receiving similar payments or benefits from
another employer.
13. Duplicate Payments or Benefits.
(a) Except to the extent that the terms of this Policy confer
compensation or benefits that are more favorable to Employee than are
available under any other employee (including executive) benefit or
compensation plan of the Company in which Employee is a participant
relating to severance, Employee's rights under any such employee
(including executive) benefit plan or compensation plan shall be
determined in accordance with the terms of such plan (as it may be
modified or added to by the Company from time to time).
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(b) This Policy constitutes the entire understanding between the
Company and Employee relating to employment of Employee by the Company
and its subsidiaries and supersedes and cancels all prior agreements
and understandings with respect to the subject matter of this Policy.
Employee shall not be entitled to any payment or benefit under this
Policy which duplicates a payment or benefit received or receivable by
Employee under such prior agreements and understandings or under any
employee (including executive) benefit plan or executive compensation
plan or policy of the Company.
14. Effective Date. This Policy is effective as of March 5, 1998.
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