{"id":40732,"date":"2015-09-17T11:25:58","date_gmt":"2015-09-17T16:25:58","guid":{"rendered":"https:\/\/content.findlaw-admin.com\/ability-legal\/contracts\/uncategorized\/terms-and-conditions-for-stock-option-awards-alcoa.html"},"modified":"2015-09-17T11:25:58","modified_gmt":"2015-09-17T16:25:58","slug":"terms-and-conditions-for-stock-option-awards-alcoa","status":"publish","type":"corporate_contracts","link":"https:\/\/corporate.findlaw.com\/contracts\/compensation\/terms-and-conditions-for-stock-option-awards-alcoa.html","title":{"rendered":"Terms and Conditions for Stock Option Awards – Alcoa"},"content":{"rendered":"

ALCOA INC. <\/strong><\/p>\n

TERMS AND CONDITIONS FOR STOCK OPTION AWARDS <\/strong>\n<\/p>\n

Effective January 1, 2011 <\/strong><\/p>\n

These terms and conditions are authorized by the Compensation and Benefits
\nCommittee of the Board of Directors. They are deemed to be incorporated into and
\nform a part of every Stock Option award issued on or after January 1, 2011 under
\nthe 2009 Alcoa Stock Incentive Plan, as last amended prior to the grant (the
\n“Plan”).<\/p>\n

Terms that are defined in the Plan have the same meanings in these terms and
\nconditions, except that Alcoa or Company means Alcoa Inc. or any of its
\ncontrolled subsidiaries or affiliates.<\/p>\n

General Terms and Conditions <\/em><\/strong><\/p>\n

1. Stock Option awards are subject to the terms and conditions set forth in
\nthe Participant’s account at Merrill Lynch’s OnLine \u00ae<\/sup> website
\nwww.benefits.ml.com<\/u><\/em>, the provisions of the Plan and the
\nprovisions of these terms and conditions.<\/p>\n

2. The grant price of a stock option is 100% of the Fair Market Value per
\nShare on the date of grant, unless the Participant’s account at Merrill Lynch’s
\nOnLine \u00ae<\/sup> website www.benefits.ml.com<\/u>, specifies a higher grant
\nprice.<\/p>\n

3. “Fair Market Value” per Share on any given date is the closing price per
\nShare on that date as reported on the New York Stock Exchange or other stock
\nexchange on which the Shares principally trade. If the New York Stock Exchange
\nor such other exchange is not open for business on the date Fair Market Value is
\nbeing determined, the closing price as reported for the next business day on
\nwhich that exchange is open for business will be used.<\/p>\n

4. The expiration date of a Stock Option is ten years after the date of
\ngrant.<\/p>\n

Vesting and Exercisability <\/em><\/strong><\/p>\n

5. Stock Options vest as to one-third of the Award on the first anniversary
\nof the grant date, as to one-third of the Award on the second anniversary of the
\ngrant date and as to one-third of the Award on the third anniversary of the
\ngrant date.<\/p>\n

6. Except as provided in paragraph 8, once vested, a Stock Option may be
\nexercised until its expiration date, as long as the Participant remains an
\nactive employee of the Company.<\/p>\n<\/p>\n

2011 Stock Option Terms and Conditions (January 2011)<\/p>\n

1<\/p>\n

\n

7. Except as provided in paragraph 8:<\/p>\n\n\n\n
<\/td>\n\n<\/td>\n<\/td>\n\n

as a condition to exercise of a Stock Option, a Participant must
\nremain an Alcoa employee actively at work until the date the option vests, and
\nif a Stock Option vests as to some but not all Shares covered by the Award, the
\nParticipant must be an active employee on the date the relevant portion of the
\nAward vests; and<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
<\/td>\n\n<\/td>\n<\/td>\n\n

if the Participant’s employment with Alcoa terminates prior to
\nthe vesting date of the Stock Option (or relevant option portion), the Stock
\nOption (or relevant option portion) is forfeited and is automatically canceled.\n<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

8. The following are exceptions to the vesting and exercisability rules:<\/p>\n\n\n\n
<\/td>\n\n<\/td>\n<\/td>\n\n

Death<\/u>: a Stock Option held by a Participant who dies
\nwhile an employee vests in accordance with the original vesting date and must be
\nexercised by a legal representative or beneficiary on the earlier of five years
\nfrom the date of death or the original expiration date of the Stock Option.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
<\/td>\n\n<\/td>\n<\/td>\n\n

Change in Control<\/u>: a Stock Option vests if a Replacement
\nAward is not provided following certain Change in Control events, as described
\nin the Plan.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
<\/td>\n\n<\/td>\n<\/td>\n\n

Retirement<\/u>: a Stock Option is not forfeited if it is held
\nby a Participant who retires at least 6 months after the grant date under a
\nCompany plan (or if there is no Company plan, a government retirement plan) in
\nwhich the Participant is eligible for an immediate payment of a retirement
\nbenefit. In that event, any unvested portion of the Stock Option vests in
\naccordance with the original vesting schedule of the grant, and any Stock Option
\nthat is vested will remain exercisable until the earlier of five years from the
\ndate of retirement or the original expiration date of the Stock Option.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
<\/td>\n\n<\/td>\n<\/td>\n\n

Divestiture<\/u>: if a Stock Option is held by a Participant
\nidentified by the Company to be terminated from employment with the Company as a
\nresult of a divestiture of a business or a portion of a business of the Company
\nand the Participant either becomes an employee of (or is leased or seconded to)
\nthe entity acquiring the business on the date of the closing, or the Participant
\nis not offered employment with the entity acquiring the business and is
\nterminated by the Company within 90 days of the closing of the sale, then, at
\nthe discretion of the Chief Executive Officer of Alcoa Inc.:<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
<\/td>\n\n<\/td>\n<\/td>\n\n

Any unvested portion of the Stock Option will continue to vest
\nunder the original vesting schedule and once vested, will be exercisable on the
\nearlier of the original expiration date of the Stock Option or three years from
\nthe date the Participant’s employment with the Company has been terminated; and\n<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

2011 Stock Option Terms and Conditions (January 2011)<\/p>\n

2<\/p>\n

\n\n\n\n
<\/td>\n\n<\/td>\n<\/td>\n\n

Any vested portion of the Stock Option will remain exercisable
\non the earlier of the original expiration date of the Stock Option or two years
\nfrom the date the Participant’s employment with the Company has been terminated.\n<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

For purposes of this paragraph, employment by “the entity acquiring the
\nbusiness” includes employment by a subsidiary or affiliate of the entity
\nacquiring the business; and “divestiture of a business” means the sale of assets
\nor stock resulting in the sale of a going concern. “Divestiture of a business”
\ndoes not include a plant shut down or other termination of a business.<\/p>\n\n\n\n
<\/td>\n\n<\/td>\n<\/td>\n\n

Termination of Employment<\/u>: if a Stock Option is held by a
\nParticipant whose employment with the Company is terminated for any reason other
\nthan those described above in this paragraph 8, any unvested Stock Options will
\nbe forfeited on the date of termination of employment and any vested Stock
\nOptions will remain exercisable for 90 days after the date employment is
\nterminated.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

Option Exercise and Payment of Exercise Price
\n<\/em><\/strong><\/p>\n

9. A vested, exercisable option is exercised when a signed notification of
\nexercise is received by Merrill Lynch’s OnLine \u00ae<\/sup> website
\nwww.benefits.ml.com<\/u>.<\/p>\n

10. Payment in full of the purchase price of a Stock Option is due on the
\nexercise date. Payment of the option purchase price may be made:<\/p>\n\n\n\n
<\/td>\n\n<\/td>\n<\/td>\n\n

in cash (including a “broker-assisted cashless exercise”
\ndescribed in the next paragraph); or<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n\n\n\n
<\/td>\n\n<\/td>\n<\/td>\n\n

by the delivery or presentation of Shares that have been owned
\nby the Participant for the Minimum Holding Period (as defined below) and that
\nhave an aggregate Fair Market Value on the date of exercise, which, together
\nwith any cash payment, equals or exceeds the Stock Option purchase price.<\/p>\n<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

11. A Participant may elect to pay the cash purchase price of the option
\nthrough a “broker-assisted cashless exercise,” using Merrill Lynch’s
\nOnLine \u00ae<\/sup> website www.benefits.ml.com<\/u>. On or prior to the
\nexercise date, the Participant must deliver the Participant’s instruction
\ndirecting and obligating the broker to (a) sell Shares (or a sufficient portion
\nof the Shares) acquired upon exercise of the option and (b) remit to the Company
\na sufficient portion of the sale proceeds to pay the entire purchase price and
\nany tax withholding resulting from the exercise. Such proceeds are due not later
\nthan the third trading day after the exercise date.<\/p>\n

12. Shares owned by a Participant include (a) those registered in the
\nParticipant’s name (or registered jointly with another person), (b) those held
\nin a brokerage account owned by the<\/p>\n<\/p>\n

2011 Stock Option Terms and Conditions (January 2011)<\/p>\n

3<\/p>\n

\n

Participant individually or jointly with another person, and (c) those held
\nin a trust, partnership, limited partnership or other entity for the benefit of
\nthe Participant individually (or for the benefit of the Participant jointly with
\nanother person). Notwithstanding the foregoing, Shares owned by a Participant do
\nnot include Shares held in any qualified plan, IRA or similar tax deferred
\narrangement or Shares that are otherwise subject to potential accounting
\nlimitations regarding their use in stock swap transactions. The Company may
\nrequire verification or proof of ownership or length of ownership of any shares
\ndelivered in payment of the purchase price of an option.<\/p>\n

13. The term “Minimum Holding Period” means 6 months or such other period, if
\nany, as qualifies as the measurement period for “mature shares” under applicable
\ngenerally accepted accounting principles. In calculating the number of shares
\navailable for delivery to pay the purchase price of an option, shares acquired
\nupon exercise of a stock option (including any shares delivered or exchanged to
\npay the purchase price thereof or withholding taxes thereon) shall be
\ndisregarded until expiration of the Minimum Holding Period after exercise.<\/p>\n

Taxes <\/strong><\/p>\n

14. All taxes required to be withheld under applicable tax laws in connection
\nwith a Participant’s receipt of Shares upon exercise of a Stock Option must be
\npaid over by the Participant, in cash, immediately upon advice, unless the
\nParticipant complies with the following paragraphs regarding payment using
\nShares.<\/p>\n

15. A Participant may satisfy his or her obligation to pay required
\nwithholding taxes due upon such exercise by having Alcoa withhold from the
\nShares to be issued upon the exercise that number of Shares with a Fair Market
\nValue on the exercise date equal to the withholding amount to be paid.
\nWithholding taxes in the United States include applicable income taxes, federal
\nand state unemployment compensation taxes and FICA\/FUTA taxes.<\/p>\n

16. The amount of taxes that may be paid by a Participant using Shares
\nretained from the Stock Option exercise will be determined by applying the
\nminimum rates required by applicable tax regulations.<\/p>\n

17. The election to use Shares to satisfy a Participant’s withholding
\nobligation must be made, in writing, not later than at the time of exercise of
\nthe stock option.<\/p>\n

Beneficiaries <\/em><\/strong><\/p>\n

18. Participants will be entitled to designate one or more beneficiaries to
\nreceive all Stock Options that are unexercised at the time of the Participant’s
\ndeath. All beneficiary designations will be on a beneficiary designation form
\napproved for the Plan. Copies of the form are available from the Communications
\nCenter on Merrill Lynch’s Benefits OnLine \u00ae<\/sup>
\nwww.benefits.ml.com<\/u>.<\/p>\n<\/p>\n

2011 Stock Option Terms and Conditions (January 2011)<\/p>\n

4<\/p>\n

\n

19. Beneficiary designations on an approved form will be effective at the
\ntime received by Merrill Lynch’s OnLine \u00ae<\/sup> website
\nwww.benefits.ml.com<\/u>. A Participant may revoke a beneficiary designation
\nat any time by written notice to Merrill Lynch’s OnLine \u00ae<\/sup> website
\nwww.benefits.ml.com<\/u> or by filing a new designation form. Any designation
\nform previously filed by a Participant will be automatically revoked and
\nsuperseded by a later-filed form.<\/p>\n

20. A Participant will be entitled to designate any number of beneficiaries
\non the form, and the beneficiaries may be natural or corporate persons.<\/p>\n

21. The failure of any Participant to obtain any recommended signature on the
\nform will not invalidate the beneficiary designation or prohibit Alcoa from
\ntreating such designation as valid and effective. No beneficiary will acquire
\nany beneficial or other interest in any Stock Option prior to the death of the
\nParticipant who designated such beneficiary.<\/p>\n

22. Unless the Participant indicates on the form that a named beneficiary is
\nto receive unexercised options only upon the prior death of another named
\nbeneficiary, all beneficiaries designated on the form will be entitled and
\nrequired to join in the exercise of the option. Unless otherwise indicated, all
\nsuch beneficiaries will have an equal, undivided interest in all such Stock
\nOptions.<\/p>\n

23. Should a beneficiary die after the Participant but before the option is
\nexercised, such beneficiary’s rights and interest in the option award will be
\ntransferable by last will and testament of the beneficiary or the laws of
\ndescent and distribution. A named beneficiary who predeceases the Participant
\nwill obtain no rights or interest in a stock option award, nor will any person
\nclaiming on behalf of such individual. Unless otherwise specifically indicated
\nby the Participant on the form, beneficiaries designated by class (such as
\n“children,” “grandchildren” etc.) will be deemed to refer to the members of the
\nclass living at the time of the Participant’s death, and all members of the
\nclass will be deemed to take “per<\/u> capita<\/u>.”<\/p>\n

Transferable Options <\/em><\/strong><\/p>\n

24. Vested Stock Options may be transferred to one or more immediate family
\nmembers, individually or jointly. A trust, each of whose beneficiaries is the
\nParticipant or an immediate family member, will be deemed to be a family member
\nfor purposes of these rules.<\/p>\n

25. A transfer shall be effective on the date written notice thereof, on a
\nform approved for this purpose. Copies of the form are available from the
\nCommunications Center on Merrill Lynch’s Benefits OnLine \u00ae<\/sup> website
\nwww.benefits.ml.com<\/u>. As a condition to transfer, the Participant shall
\nagree to remain responsible to pay in cash the applicable taxes due upon
\nexercise of the option by the transferee. The Participant or the Participant’s
\nestate will be required to provide sufficient evidence of ability to pay such
\ntaxes upon the Company’s request.<\/p>\n

26. A transfer shall be irrevocable; no subsequent transfer by the transferee
\nshall be effective. Notwithstanding the foregoing, a transferee shall be
\nentitled to designate a<\/p>\n<\/p>\n

2011 Stock Option Terms and Conditions (January 2011)<\/p>\n

5<\/p>\n

\n

beneficiary in accordance with the provisions of paragraphs 18 through 23
\nabove. Except where a beneficiary has been designated, in the event of death of
\nthe transferee prior to option exercise, the transferee’s option will be
\ntransferable by last will and testament of the beneficiary or the laws of
\ndescent and distribution.<\/p>\n

27. Except as modified by the provisions of paragraphs 24 through 26, all
\nterms applicable to option exercises by Participants are applicable to exercises
\nby transferees. The Plan administrator may make and publish additional rules
\napplicable to exercises by transferees not inconsistent with these provisions.\n<\/p>\n<\/p>\n

2011 Stock Option Terms and Conditions (January 2011)<\/p>\n

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