Document:

EX-10.38

 Exhibit 10.38 
 ALLISON TRANSMISSION HOLDINGS, INC. 
 Amended and Restated Non-Employee
Director Deferred Compensation Plan 
 1. General. The Amended and Restated Non-Employee Director Deferred
Compensation Plan (the “Plan”), as set forth herein, has been adopted by the Board of Directors (the “Board”) of Allison Transmission Holdings, Inc. (the “Company”) effective as of the date the
Allison Transmission Holdings, Inc. 2015 Equity Incentive Award Plan (the “Equity Plan”) is approved by the stockholders of the Company in 2015. The purpose of the Plan is to promote the success and enhance the value of the Company
by linking the personal interests of the members of the Board to those of Company stockholders and by providing such members with an incentive for outstanding performance to generate superior returns to Company stockholders. Capitalized but
undefined terms used herein shall have the meanings provided for in the Equity Plan. 
 2. Administration. The Plan will
be administered by the Administrator subject to the provisions of the Equity Plan and the Company’s Non-Employee Director Compensation Policy as in effect from time to time (the “Director Compensation Policy”) and subject to
applicable law. The Administrator will have full power and authority to supervise the administration and interpret the provisions of the Plan and to authorize and supervise any crediting of Deferred Stock or issuance or payment of Common Stock
hereunder. Any determination or action of the Administrator in connection with the interpretation or administration of the Plan will be final, conclusive and binding on all parties. The Administrator (and each member thereof) will not be liable for
any determination made, or any decision or action taken, with respect to the Plan. 
 3. Eligibility. Each member of the
Board who is eligible to receive compensation under the Director Compensation Policy (each a “Non-Employee Director”) shall be eligible to receive Deferred Stock in accordance with the Plan. Each such eligible Non-Employee Director
who elects to participate in the Plan will be referred to herein as a “Participant.” 
 4. Non-Employee
Director Compensation Generally. The amount and kind of compensation paid to each Participant for services as a Non-Employee Director (the “Director Compensation”) and the amount and kind of compensation eligible for a deferral
election will be determined from time to time in accordance with the Director Compensation Policy, as such policy may be amended by the Board from time to time. In the event of any conflict between the terms of this Plan and the Director
Compensation Policy, the terms of the Director Compensation Policy shall control except to the extent otherwise required to comply with Section 409A of the Code. Notwithstanding any provision of the Plan to the contrary, a Non-Employee Director
shall be permitted to make a Deferral Election with respect to Director Compensation only to the extent permitted by the Director Compensation Policy. 
 5. Deferral Elections. 
 (a) To the extent permitted by the Director
Compensation Policy or as otherwise permitted by the Board, a Non-Employee Director may make an irrevocable deferral election (a “Deferral Election”) to defer payment of all or a portion of his or her Director Compensation in
accordance with the terms of the Plan. Deferral Elections made by a member of the Board with respect to Director Compensation earned on or following the date of the Company’s 2015 annual meeting shall be deferred pursuant to this Plan, as
amended and restated. 

  
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 (b) In order to make a Deferral Election pursuant to Section 5(a) of the Plan, a
Non-Employee Director must deliver to the Company a written notice in a form prescribed by the Company (the “Deferral Election Form”) setting forth and clearly identifying the Director Compensation subject to the Deferral Election
and the percentage of such Director Compensation that the Non-Employee Director elects to be deferred and paid in Deferred Stock in accordance with the Plan. 
 (c) The Deferral Election Form must be delivered no later than (and shall be irrevocable as of) the last business day of the calendar year prior to the year for which such Director Compensation is to be
paid (the “Service Year”) and will be effective with respect to Director Compensation earned for such Service Year, provided that an eligible Director who is initially elected to the Board may deliver the Deferral Election Form
within 30 days of the date on which such Director becomes a Director, and such Deferral Election Form will be irrevocable as of the close of business on the date it is delivered and will be effective with respect to Director Compensation earned
after the date it is delivered for the remainder of the Service Year in which such Director becomes a Director. 
 (d) For
purposes of the Plan, the “Deferred Payment Date” means the earlier of (i) the Participant’s Separation from Service on the Board within the meaning of Treasury Regulation Section 1.409A-1(h) (a “Separation
from Service”) or (ii) a Change in Control. For the avoidance of doubt, an event or transaction shall only constitute a Change in Control for purposes of this Plan if the event or transaction also constitutes a “change in control
event,” as defined in Treasury Regulation §1.409A-3(i)(5). 
 (e) Notwithstanding the foregoing, a Participant may
revoke or modify a Deferral Election, subject to proof of an “unforeseeable emergency” (within the meaning of Treasury Regulation 1.409A-3(i)(3)), as determined by the Administrator, and any other limitations and restrictions as the
Administrator may prescribe in its sole discretion, by delivering a revised Deferral Election Form, which must be approved by the Administrator. If a Participant is allowed to discontinue a deferral election during a calendar year, he or she will
not be permitted to elect a new deferral until the next calendar year. 
 6. Deferred Stock Accounts. 

(a) If a Participant elects to receive Deferred Stock under Section 5 of the Plan, notional shares of Deferred Stock will be
credited to a bookkeeping account in the Participant’s name as of the day the Director Compensation to which the Deferred Stock relates would have been paid. The number of notional shares of Deferred Stock credited to a Participant’s
account will be as determined by the Director Compensation Policy and such notional shares of Deferred Stock may be subject to vesting and forfeiture as provided in the Director Compensation Policy. Each notional share in a Participant’s
bookkeeping account (“Deferred Stock”) shall represent the right to receive one share of Common Stock, or an equivalent amount of cash, at such time as is provided in Section 7 below. 

(b) Participants shall be entitled to Dividend Equivalents with respect to each notional share in the Participant’s Deferred Stock
account, such that a Participant’s account will be credited as of the last day of each calendar month with that number of additional notional 

  
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shares of Deferred Stock equal to the amount of cash dividends paid by the Company during that month on the number of shares of Common Stock equivalent to the number of shares of Deferred Stock
in the Participant’s account from time to time during such month divided by the Fair Market Value of one share of Common Stock on the last business day of such calendar month. Such Dividend Equivalents, which will likewise be credited with
Dividend Equivalents, will be deferred until the Deferred Payment Date and shall be subject to the same vesting and forfeiture conditions, if any, as applied to the Deferred Stock in respect of which such Dividend Equivalents were credited.

 (c) Subject to Section 7(c) of the Plan, Deferred Stock will be subject to a deferral period beginning on the date of
crediting to the Participant’s account and ending upon the Deferred Payment Date. Unless otherwise provided by the Administrator, during such deferral period the Participant will have no rights as a Company stockholder with respect to his or
her Deferred Stock. 
 7. Delivery of Shares or Payment. 

(a) Subject to Section 7(c) of the Plan, the number of vested shares in a Participant’s Deferred Stock account as of the
Deferred Payment Date will be delivered on or as soon as practicable, but in no event more than 60 days after, the Deferred Payment Date. The Company will make delivery of certificates representing the shares of Common Stock which a Participant is
entitled to receive in accordance with the terms of the Plan and the Director Compensation Policy. 
 (b) Notwithstanding
Section 7(a) above, at the Company’s option and discretion, in lieu of delivering Common Stock, the Company may pay the Participant an amount of cash (at the time set forth in Section 7(a)) equal to the Fair Market Value of one share
of Common Stock as of the day prior to the applicable date of payment, multiplied by the number of notional shares in the Participant’s Deferred Stock account, or a portion thereof, as determined by the Administrator. Any portion of a
Participant’s Deferred Stock account not settled in cash shall be settled as provided in Section 7(a). 
 (c)
Notwithstanding anything to the contrary in this Plan, if at the time of a Director’s Separation from Service, such Director is a “specified employee” as defined in Section 409A of the Internal Revenue Code of 1986, as amended
(the “Code”), as reasonably determined by the Company in accordance with Section 409A of the Code, and the deferral of the commencement of any distributions otherwise payable hereunder as a result of such Separation from
Service is necessary in order to prevent any accelerated or additional tax under Section 409A of the Code, then the Company will defer any such distributions hereunder (without any reduction in the amounts ultimately distributed or provided to
the Director) until the date that is at least six months following the Director’s Separation from Service with the Company (or the earliest date permitted under Section 409A of the Code), whereupon the Company will distribute to the
Director a lump-sum amount equal to the cumulative amounts that would have otherwise been previously distributed to the Director under this Plan during the period in which such distributions were deferred. 

  
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 8. Amendment or Termination. 

(a) The Company may at any time amend the Plan, provided that to the extent necessary and desirable to comply with any applicable law,
regulation or stock exchange rule, the Company will obtain stockholder approval of any Plan amendment in such a manner and to such a degree as required. The Company may terminate the Plan at any time and, in connection with any such termination, may
deliver to each Participant the shares of Common Stock credited to his account (or cash), subject to and in accordance with the requirements of Treasury Regulation Section 1.409A-3(j)(4)(ix) (or any successor provision thereto). An amendment or
termination of the Plan will not adversely affect the right of a Participant to receive Common Stock issuable or cash payable at the effective date of the amendment or termination. 

(b) The Plan is intended to meet the requirements of Section 409A of the Code and will be interpreted and construed in accordance
with Section 409A of the Code and Department of Treasury Regulations and other interpretive guidance issued thereunder, including without limitation any such regulations or other guidance that may be issued after the effective date of this
Plan. Notwithstanding any provision of the Plan or the Director Compensation Policy to the contrary, in the event that following the effective date of this Plan the Administrator determines that any provision of the Plan could otherwise cause any
person to be subject to the penalty taxes imposed under Section 409A of the Code, the Administrator may adopt such amendments to the Plan or adopt other policies and procedures (including amendments, policies and procedures with retroactive
effect), or take any other actions, that the Administrator determines are necessary or appropriate to comply with the requirements of Section 409A of the Code and related Department of Treasury guidance and thereby avoid the application of any
penalty taxes under such Section. 
 9. Miscellaneous. 

(a) The rights, benefits or interests a Participant may have under this Plan are not assignable or transferable and will not be subject
in any manner to alienation, sale or any encumbrances, liens, levies, attachments, pledges or charges of the Participant or his or her creditors. 
 (b) To the extent that the application of any formula described in the Director Compensation Policy does not result in a whole number of shares of Common Stock, the result will be rounded down to the next
whole number. 
 (c) The Plan has been adopted under the Equity Plan and shall be subject to all of the terms and conditions of
the Equity Plan (and/or such successor plan, as determined by the Administrator). 
 (d) The adoption and maintenance of this
Plan will not be deemed to be a contract between the Company and a Participant to retain his or her position as a Director. 

*    *    *    *    * 

  
 4KRFT 10-Q Q1 2015 EX-10.1

EXHIBIT 10.1

PERSONAL AND CONFIDENTIAL

February 13, 2015

James Kehoe
400 Rue Sherbrooke West
Apartment PH-3
Montreal H3A 0A9, 
Quebec, Canada

Dear James,

It is my pleasure to confirm our offer for the position of Executive Vice President and Chief Financial Officer. Your position will report to John Cahill, Chairman and Chief Executive Officer.  We are confident that you will be an excellent addition to the Kraft team.  This letter sets forth all of the terms and conditions of the offer.  

At Kraft, you can expect to receive a total rewards package that is highly competitive and aligns strongly to pay for performance principles.  We believe that a Total Rewards approach means providing competitive pay and benefits, career growth opportunities, a challenging and rewarding work environment, and a culture with strong values that is committed to success.  Listed below are details of your compensation and benefits that will apply to this offer.

Annualized Compensation (Target Opportunity)
Your annual compensation will be comprised of three components: (i) annual base salary, (ii) annual incentive opportunity and (iii) long-term incentive opportunity. The value of your annual base salary and the target value of your annual and long-term incentive opportunity are described below. You may earn more or less than the target value depending upon business and your own individual performance. 

	
		
	Component of Compensation
	Annual Target

	Annual Base Salary
	$700,000

	Annual Incentive Target Opportunity (90%)
	$630,000

	Long-Term Incentive Target Opportunity
	$1,700,000

	Total Target Annual Compensation
	$3,030,000

Each component of your compensation is described in greater detail below.

February 13, 2015
Page 2 of 5

Annual Incentive Opportunity
You will be eligible to participate in the Kraft Management Incentive Plan (MIP), which is the Company’s annual cash incentive program.  Your target annual incentive award opportunity under MIP will be equal to 90% of your base salary (and your maximum incentive award opportunity will be capped at 250% of target). The actual amount you will receive may be lower or higher than your target incentive award opportunity depending on your individual performance and the performance of the Company.  Your 2015 annual incentive award will be payable in March 2016.  Your MIP eligibility will begin on your date of employment.

Long-Term Incentive Opportunity
Typically, each year you will be eligible to receive a long-term incentive (LTI) grant. Generally, this mix can include performance shares, restricted stock units (RSUs) and stock options (Options). At the beginning of each year, the total target value of LTI awards for your level will be established by the Company. Your actual grant value can be planned by your leader between 0-150% of the target value based on sustained performance and potential. For 2015, long-term incentive awards and the relative value of these awards for your level are expected to be as follows:

	
		
	Vehicle and Mix
	Overview Information from 2014 Grant

	Performance Shares 
60% of total LTI value
	Target performance shares can vest from 0-200% based on business performance over a three-year period.  Dividend equivalents are accumulated over the three-year period and paid (in additional shares) based on actual shares that vest

	Stock Options  
20% of total LTI value
	Stock Options are granted at a 7:1 option to full value share ratio and vest pro-rata over a three-year vesting period

	Restricted Stock Units 
20% of total LTI value
	RSUs have a time based three-year cliff vest.  During the vesting period, dividend equivalents are paid through payroll consistent in amount and timing with that of common stock shareholders.

The Company reserves the right to change the mix, type and value of long-term incentive awards granted each year. 

On the date of our LTI 2015 grant to employees, we will make a $1,700,000 LTI 2015 grant with the mix described above.

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February 13, 2015
Page 3 of 5

Sign-On Incentives
As an incentive to join Kraft, you will receive the following one-time sign-on incentives in the form of stock on your hire date:
		
	Stock Sign-On Incentive:
	$3,000,000 (50% RSUs and 50% stock options)

		
	•
	RSUs will vest 50% after 3-years and 50% after 4-years

		
	•
	Options will vest one-third each year from your hire date

For the stock sign-on incentive, the actual number of RSUs/Options that you will receive will be determined based upon the closing price of Kraft Foods Group, Inc. common stock on the grant date.  You will be paid dividend equivalents on the RSUs during the vesting period consistent in amount and timing with that of common stock shareholders. Options will be granted using a 7:1 option to full value share ratio.  The complete terms and conditions of your LTI grant will be set forth in Kraft’s standard Stock Award Agreements.

If prior to full vesting of the sign-on RSU and stock options granted per this offer letter, your employment with the Company ends due to involuntary termination for reasons other than cause, the total number of unvested RSU and stock options shall vest on the scheduled vesting dates, provided you execute a release and waiver as well as a non-compete and non-solicitation at the time of termination. 

For purposes of this offer letter, “cause” means: 1) continued failure to substantially perform the job’s duties to the satisfaction of the Company (other than resulting from incapacity due to disability); 2) gross negligence, dishonesty, or violation of any reasonable policy, procedure, rule or regulation of the Company; or 3) engaging in conduct which materially adversely reflects on the Company.

Non-Competition and Non-Solicitation Obligations
In consideration for, and as a condition to, the position being offered to you, the salary and benefits you will receive, and the benefits and incentives described in this letter, each of which you agree is sufficient consideration for your assent to certain restrictive covenants, you are required to sign a non-competition and non-solicitation agreement, which includes, among other things, restrictions from working for a competitor and/or soliciting business or employees away from Kraft for 12 months following any termination from employment.  The agreement is attached to and incorporated in this Offer Letter as Exhibit A.

Financial Counseling Perquisite
You will be eligible for Kraft’s financial counseling perquisite.  Details of this program will be provided to you upon hire. 

Management Stock Purchase Plan (MSPP)
Kraft also provides voluntary stock purchase opportunities.  You can elect to defer up to 50% of your annual MIP cash bonus award in the form of deferred stock units (DCUs), and the company will match 25% of this bonus deferral into the MSPP in the form of RSUs with a three-year vest.  Additional information for this program will be provided to you in Q2, prior to the next enrollment period.

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February 13, 2015
Page 4 of 5

Executive Deferred Compensation Program (EDCP)
You will be eligible to participate in the Executive Deferred Compensation Program.  This program allows you to voluntarily defer on a pre-tax basis up to 50% of your salary and up to 100% of your annual incentive to a future date.  Investment opportunities under this program are designed to mirror the Company’s 401(k) plan.  Additional information for this program will be provided to you upon hire.

Stock Ownership Guidelines
You will be required to attain and hold Company stock equal in value to four times your base salary.  You will have five years from your date of employment to achieve this level of ownership.  Stock held for ownership determination includes common stock held directly or indirectly, unvested RSUs, DCUs and share equivalents held in the Company’s 401(k) plan.  It does not include Options or unvested performance shares.  Additional information regarding these guidelines will be provided to you upon hire.

Relocation and Transition
To assist in your relocation from Montreal, Canada to Northfield, IL, we offer relocation assistance as outlined in Kraft’s Relocation Guide.  You will need to complete and submit a Notice of Transfer and Repayment Agreement to begin the process.

In addition to the relocation benefits outlined in our program and unanticipated expenses related to accepting this offer, we will reimburse you for additional relocation and transition expenses incurred up to $1 million.  We will only provide reimbursement of incurred expenses upon proof of payment, which must be submitted no later than March 1, 2016.  If you have not incurred all your relocation and transition expenses by March 1, 2016, you will provide a reasonable estimate of future relocation expenses which you anticipate you will incur and the basis for that estimate.  Assuming timely submission of (i) proof of payment and (ii) if applicable, a reasonable estimate of future relocation and transition expenses, reimbursement of incurred relocation and transition expenses and reasonably estimated future relocation and transition expenses will be made no later than March 15, 2016, subject to the $1 million limit described above. 

You will be required to sign an Employee Expense Repayment Agreement for relocation and transition benefits. If, prior to the end of the two-year repayment period, your employment with the Company ends due to involuntary termination for reasons other than cause, you will not be required to repay these benefits. 

Other Benefits
Your offer includes Kraft’s comprehensive benefits package available to full-time salaried employees.  This benefits package is described in the Kraft Benefits Summary brochure.  You will be eligible for 35 days of Paid Time-Off (PTO).

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February 13, 2015
Page 5 of 5

  
Other Matters
The benefits provided to you under this offer letter are subject to the specific terms of each plan as set forth in the governing plan documents. 

You will be a U.S. employee of the Company and your employment status will be governed by and shall be construed in accordance with the laws of the United States.  As such, your status will be that of an “at will” employee.  This means that either you or Kraft is free to terminate the employment relationship at any time, for any reason, with or without notice. 

Section 409A of the Internal Revenue Code of 1986, as amended (the “Code”)
The payments to you pursuant to this offer letter are intended to comply with or be exempt from the requirements of Section 409A of the Code, and shall be interpreted and construed consistently with such intent.  To the extent payments pursuant to this offer letter are designed to be exempt from Section 409A of the Code under either the separation pay exemption pursuant to Treasury regulation §1.409A-1(b)(9)(iii) or as short-term deferrals pursuant to Treasury regulation §1.409A-1(b)(4), each such payment to you under this letter shall be considered a separate payment.

*   *   *   *
This offer is contingent upon successful completion of our pre-employment checks, which may include a background screen, reference check, and post-offer drug test pursuant to testing procedures determined by Kraft Foods.

James, we are excited at the prospect of you joining our team and are confident you will make a significant impact at Kraft. Please acknowledge your acceptance of the above offer by signing below and returning this letter to me. If you have any questions, please call me at (847) 646-XXXX.

Sincerely,
 
/s/ Diane Johnson May

Diane Johnson May
Executive Vice President, Human Resources

I accept the offer as expressed above.

	
			
	/s/ James Kehoe
	 
	02/17/2015

	Signature
	 
	Date

                        

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