Document:

exv10w2

 

EXHIBIT 10.2

NOBLE CORPORATION

SHORT TERM INCENTIVE PLAN

Revised: April 2006*

Section 1. Purpose

     The success of Noble Corporation (“Noble”) and its subsidiaries (collectively, unless the
context otherwise requires, the “Company”) is a result of the efforts of all key employees. In
order to focus each employee’s efforts on optimizing the Company’s overall results, operationally
and financially, the Company maintains this Short Term Incentive Plan (the “Plan”) to reward
employees for successful achievement of specific goals.

     An effective incentive plan should both align employee interests with those of shareholders
and motivate and influence employee behavior. Key positions within the Company have the ability to
make a positive contribution to key factors that increase shareholder value. These factors can be
quantified and measured through achievement of various financial and operational targets, such as
safety, earnings per share and return on capital employed. The objectives of using such targets in
the formulation of the specific Company goals are to link an employee’s annual incentive award more
closely to the creation of shareholder wealth and to promote a culture of high performance and an
environment of team work.

Section 2. Participation and Eligibility

     Full-time employees in salary classifications 18N and higher who have completed one year of
service at the close of the Plan year are eligible for consideration of a bonus under the Plan,
subject to the discretion of the Compensation Committee (the “Committee”) of the Board of Directors
(the “Board”) of Noble. Each such employee will be considered either a “corporate employee” or a
“division employee” for purposes of adjustment of such employee’s target bonus pursuant to Section
6. Full-time, non-exempt employees not in such salary classifications who have
completed one year of service at the close of the Plan year are also eligible for consideration of
a bonus under the Plan, subject to the discretion of the Committee. The Plan year shall be the
calendar year.

 

			
	*	 	Established in 1977

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     To be eligible to receive a bonus payment with respect to a Plan year, the person must be
actively employed on the last day of such Plan year and must continue to be employed through the
date on which bonus payments for such Plan year are made. The bonus for an employee with less than
two years of service as of the end of a Plan year will be prorated based upon the number of full
months employed, unless another manner of adjustment is determined by the Committee in its
discretion.

     In the event of death, disability or retirement, the employee or estate of the former employee
may receive a pro-rated payment from the Plan, at the discretion of the Committee and the CEO.
For purposes of the Plan, “disability” means any termination of employment with the Company or an
affiliate of the Company because of a long-term or total disability, as determined by the Committee
and CEO, and “retirement” means a termination of employment with the Company on a voluntary basis
by a person if, immediately prior to such termination of employment, the sum of the age and the
number years of continuous service of such person with the Company (or affiliate) is equal to or
greater than 60.

     In order to align the interests of the participants under the Plan with shareholders,
participants in pay grades 27 and higher (“Scheduled Participants”) will receive one-half of their
bonus amount in Noble Corporation ordinary shares (“Ordinary Shares”), until the ownership targets
set forth in Annex I are satisfied. Scheduled Participants may elect to receive up to 100 percent
of their bonus amount in Ordinary Shares. So long as a Scheduled Participant satisfies and
maintains the ownership target applicable to such Scheduled Participant under the Plan, such
Scheduled Participant may elect to receive up to 100 percent of his or her bonus amount in cash.

     The total bonus paid for a Plan year shall not be greater than the aggregate bonus accruals
for all participating offices and divisions for such Plan year. If the accrual amount for a
specific participating office or division for a Plan year is greater than the bonus amount under
the Plan for such office or division, the excess accrual balance will not be distributed. If the
accrual amount for a specific participating office or division for a Plan year is less than the
bonus amount under the Plan, only the accrual balance will be distributed.

     Should the Company not achieve positive net income for the year, no bonus will be paid
pursuant to the Plan.

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Section 3. Administrative Procedures 

     During the fourth quarter of each year, the Company will commence preparation of budgets and
forecasts for the succeeding Plan year. The Board will approve the budget for the Plan year not
later than March 31st of such Plan year.

     Goals for a Plan year for each of the categories in Section 5 will be approved by the
Committee not later than the second quarter meeting of the Board in such Plan year. The specific
goals established for the Plan year will be set forth in an Annex II to this Plan for such Plan
year, and the Annex II hereto for each Plan year shall be incorporated into and made a part of this
Plan for such Plan year.

     If, after the establishment of goals for a Plan year, the budget changes substantially due to
subsequent events, such as the acquisition or sale of assets, then the Chief Executive Officer of
Noble (the “CEO”) shall, at his discretion, recommend to the Committee the adjustment of the
respective goals in order that they may not be adversely impacted by such an event. Any such
revised goals shall be applicable to the Plan year from and after the time of their approval.

Section 4. Target Bonus

     A target bonus is determinable for each full-time employee in salary classification 18N or
higher who has completed one year of service at the close of a Plan year. The target bonus for an
employee is an amount equal to the employee’s salary at the end of the Plan year multiplied times
the target bonus percentage assigned to such employee’s salary classification. 50 percent of this
amount will be paid based on the achievement of the stated goals under the Plan, as set forth on
page 4, and 50 percent will be available at the discretion of the Compensation Committee based on
merit, individual and team performance and additional selected criteria. Target bonus percentages
range from 10 percent to 100 percent based on salary classification, as follows:

	 	 	 
	Salary Classification	 	Target Bonus Percentage
	18N
	 	10%
	19N
	 	15%
	20N through 22N
	 	20%
	23N through 24N
	 	25%
	25N
	 	30%
	26C through 28C
	 	40%
	29C through 30C
	 	45%
	31C through 32C
	 	50%
	33C
	 	55%
	34C through 36C
	 	75%
	37C
	 	100%

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Section 5. Goal Categories and Weightings 

     Goals for the following categories will be approved by the Committee for each Plan year. Such
goals will then be set forth in the Annex II to this Plan for such Plan year. The relative
weighting assigned to each goal will be as set forth below subject to annual review by the
Committee.

Corporate Goals

	 	 	 	 	 	 	 
	 	 	 	 	Assigned Weight
	1.

	 	Safety Results
	 	 	40	%
	2.

	 	Earnings per Share
	 	 	30	%
	3.

	 	Return on Capital Employed
	 	 	30	%

Operating Division Goals

Gulf Coast Marine, Mexico, Middle East (including the Adriatic Sea and India), West Africa,
North Sea, Brazil and Hibernia:

	 	 	 	 	 	 	 
	1.

	 	Safety Results
	 	 	40	%
	2.

	 	Earnings per Share
	 	 	30	%
	3.

	 	Return on Capital Employed
	 	 	30	%

Technology Goals

	 	 	 	 	 	 	 
	A.

	 	Noble Technology Services Division
	 	 	 	 
	 

	 	(Noble Downhole Technology and Maurer Technology)	 	 	 	 
	 
	 	 	 	 	 	 
	1.

	 	Rationalization of Projects
	 	 	50	%
	2.

	 	EBITDA
	 	 	50	%
	 
	 	 	 	 	 	 
	B.

	 	Triton Engineering Services Company*	 	 	 	 
	 
	 	 	 	 	 	 
	1.

	 	Net Income	 	 	100	%

 

			
	*	 	At the discretion of the Compensation Committee, a maximum amount of 20-50% of Triton’s
EBITDA will be paid out in STIP awards.

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Section 6. Adjustment of Target Bonus

     The respective employee target bonuses determined pursuant to Section 4 for a Plan year are
subject to adjustment as set forth in this Section to reflect the levels of achievement of the
specific, predetermined goals for such Plan year. Any bonus multiplier achieved will be applied to
the stated corporate and division goals, pursuant to the terms of the Plan, and a maximum bonus
multiplier of 2.0 may be applied to the discretionary portion of the STIP award, subject to the
approval of the Committee and CEO, as stated in Section 7 of this document.

Corporate Employees. In order to promote cooperation between the corporate office and the
divisions, the target bonus for a corporate employee will be weighted 25 percent for
achievement of the corporate goals, 25 percent for the cumulative average achievement of the
division goals and 50 percent will be based on merit, individual and team performance and
additional selected criteria, as determined by the Compensation Committee.

Operating and Technology Division Employees. In order to promote cooperation among the
operating and technology divisions and recognition by each division of its contribution to
the Company’s overall performance, the target bonus for a division employee will be weighted
25 percent for achievement of the applicable division goals, 25 percent for achievement of
the corporate goals and 50 percent will be based on merit, individual and team performance
and additional selected criteria, as determined by the Compensation Committee.

     Subject to the determination by the Board of a sufficient bonus pool for a Plan year pursuant
to Section 7, the bonus payable to an eligible employee in salary classification 18N or higher will
be an amount equal to such employee’s target bonus amount multiplied times the applicable
multiplier determined under the following schedule:

	 	 	 	 	 	 
	Combined Weighted	 	Applicable Multiplier
	Percentage of Goal Achievement	 	to Calculate Bonus Payable
	Greater than 160%

	 	 	 	2.00	 
	141 – 160%

	 	 	 	1.75	 
	131 – 140%

	 	 	 	1.50	 
	121 – 130%

	 	 	 	1.40	 
	106 – 120%

	 	 	 	1.20	 
	96 – 105%

	 	 	 	1.00	 
	76 – 95%

	 	 	 	.75	 
	65 – 75%

	 	 	 	.50	 
	Below 65%

	 	 	 	.00	 

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Section 7. Allocation of Bonus Payable 

     After the end of each Plan year, the Board, in its best business judgment, will determine the
total bonus pool for such Plan year, giving due consideration to the aggregate target bonus
amounts, overall Company performance, and levels of attainment of the specific, predetermined
corporate or division goals for such Plan year. In determining overall Company performance, the
Board will consider the Company’s performance in relation to both the predetermined corporate and
division goals and the prevailing market conditions in the industry during the Plan year.

     The total bonus pool authorized by the Board for a Plan year may be an amount equal to, less
than, or greater than the aggregate amount of the bonuses payable to all eligible employees in
salary classifications 18N through 37C (the “Aggregate Calculated Pool”).

     All eligible employees in salary classifications 18N through 37C will receive a bonus as
calculated in accordance with Section 6, provided the Board has determined and authorized a total
bonus pool in an amount equal to or greater than the Aggregate Calculated Pool. If the Board
authorizes a total bonus pool in an amount less than the Aggregate Calculated Pool, then the Board
shall also determine the percentage of such bonus pool (which may be any percentage up to 100
percent) that shall be allocated to the eligible employees in salary classifications 18N through
37C, and the bonuses otherwise payable to such employees, subject to the last sentence of the next
succeeding paragraph, will be prorated accordingly based on the amount so allocated. In such
event, the percentage of the total bonus pool not so allocated, if any, shall be available for
payment to the eligible full-time, non-exempt employees not in salary classifications 18N through
37C based upon merit. If the Board authorizes a total bonus pool in an amount greater than the
Aggregate Calculated Pool, then the excess amount will be allocated to eligible full-time,
non-exempt employees not in salary classifications 18N through 37C, subject to the discretion of
the Committee. Managers having responsibility for recommending the allocation of bonuses to
eligible full-time, non-exempt employees not in salary classifications 18N through 37C shall submit
their recommended bonus based on their performance and contributions to the Senior Vice President
of Administration and the CEO for review and approval.

     All bonus calculations, allocations and recommendations are subject to review and approval by
the Committee. Notwithstanding anything otherwise contained in this Plan, the Committee and
the CEO (and any delegated designee of the CEO) shall have the authority to adjust individual bonus
amounts as deemed to be appropriate for any reason, including, but not limited to, company or
division performance, individual employee performance, employee conduct, etc.

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Exhibit 10.1

EMPLOYMENT AGREEMENT

     EMPLOYMENT AGREEMENT (this “Agreement”) dated as of May 8, 2006, between KAISER ALUMINUM &
CHEMICAL CORPORATION, a Delaware corporation (the “Company”), and Joseph P. Bellino (the
“Executive”).

     The Company wishes to employ the Executive, and the Executive wishes to become an employee of
the Company, on the terms and conditions set forth in this Agreement.

     Accordingly, the Company and the Executive hereby agree as follows:

1. Employment; Duties and Acceptance.

     1.1. Employment Duties. The Company hereby employs the Executive for the Term (as
defined in Section 2.1), to render exclusive and full-time services to the Company and its and
affiliates, in the capacity of executive vice president and chief financial officer of the Company
and its parent corporation, Kaiser Aluminum Corporation, a Delaware corporation (“KAC”) and to
perform such other duties consistent with such position (including service as a director or officer
of any affiliate of the Company if elected) as may be assigned by the chief executive officer of
the Company or the Board of Directors of Company or its affiliates (each a “Board”); provided,
however, that the Executive may serve on the Board of Directors of one other business at any time
during the Term that does not compete with the Company or any of its affiliates and may participate
in civic, charitable and industry organizations to the extent that such participation does not
materially interfere with the performance of his duties hereunder. The Executive’s title shall be
Executive Vice President and Chief Financial Officer, or such other titles of at least equivalent
level consistent with the Executive’s duties from time to time as may be assigned to the Executive
by the Boards, and the Executive shall have all authorities as are customarily and ordinarily
exercised by executives in similar positions in similar businesses in the United States. The
Executive shall report to the chief executive officer of the Company.

     1.2. Acceptance. The Executive hereby accepts such employment and agrees to render
the services described above. During the Term, and consistent with the above, the Executive agrees
to serve the Company faithfully and to the best of the Executive’s ability, to devote the
Executive’s entire business time, energy and skill to such employment, and to use the Executive’s
best efforts, skill and ability to promote the Company’s interests.

     1.3. Location. The duties to be performed by the Executive hereunder shall be
performed primarily at the Company’s offices in Foothill Ranch, California or such other location
as mutually agreed by the parties, subject to reasonable travel requirements consistent with the
nature of the Executive’s duties from time to time on behalf of the Company.

2. Term of Employment.

     2.1. Term. The term of the Executive’s employment under this Agreement (the “Term”)
shall commence on the date hereof (the “Effective Date”), and shall continue until the earlier of
(i) the third anniversary of the Effective Date and (ii) such earlier date on which the Term is
terminated pursuant to Section 4. The Term shall automatically be renewed and extended for
successive periods of one (1) year unless either party hereto shall have notified the

 

 

other party hereto in writing that such extension shall not take effect at least one (1) year
prior to the end of the initial Term or of any extension.

3. Compensation; Benefits.

     3.1. Salary. As compensation for the services to be rendered pursuant to this
Agreement, the Company agrees to pay to the Executive during the Term a base salary, payable
monthly in arrears, at the initial annual rate of $350,000 (the “Base Salary”). On each
anniversary of the Effective Date or such other appropriate date as may be agreed by the parties
during the Term, the Company shall review the Base Salary and determine if, and by how much, the
Base Salary should be increased. Once the Base Salary has been increased hereunder, it shall not
be decreased without the Executive’s consent. All payments of Base Salary or other compensation
hereunder shall be less such deductions or withholdings as are required by applicable law and
regulations.

     3.2. Bonus. In addition to the amounts to be paid to the Executive pursuant to
Section 3.1, if the Company achieves 100% or more of the Company’s target objectives for a fiscal
year of the Company, such target objectives which are recommended by the Executive and approved by
the Compensation Committee of the Board (the “Compensation Committee”) not later than March 31 of
such year, the Executive shall receive an annual bonus (an “Annual Bonus”) equal to the product of
(i) the Executive’s Base Salary at the rate in effect at the end of such fiscal year and (ii) 50%.
Should the Company achieve such target objectives in a fiscal year which are significantly beyond
expectations for the Company’s performance for such year, the 50% multiplier set forth in clause
(ii) of the preceding sentence shall be increased up to a maximum of 300% of the target bonus
opportunity (or 150% of Base Salary). A formula will be established to provide for recognition of
threshold objectives below such target objectives and for pro rata awards between the threshold
award opportunity and the maximum award opportunity. Any Annual Bonus earned hereunder shall be
payable not later than the 15th day of the third month following the end of the fiscal
year to which it relates. The Annual Bonus for 2006 shall not be prorated for the portion of the
year Executive is actually employed by the Company.

     In the event that the Executive’s employment shall terminate other than on a date which is the
last day of a fiscal year of the Company, the Executive’s target Annual Bonus with respect to the
fiscal year in which employment terminates shall be prorated for the actual number of days of the
Executive’s employment by the Company during the fiscal year in which occurs the Executive’s
termination of employment, and such Annual Bonus shall be payable to the Executive within ten (10)
business days following such termination of employment. Notwithstanding the foregoing, the
Executive shall be entitled to no Annual Bonus in respect of or the fiscal year of the Company in
which his Employment terminates if such termination is pursuant to Section 4.4.

     3.3. Emergence Grant. On the effective date of the Company’s Plan of Reorganization
pending in the bankruptcy cases (the “Emergence Date”), the Executive will be awarded a one-time
grant of 15,000 shares of restricted stock of KAC, subject to a three-year cliff vesting schedule
and other customary restrictions that shall lapse on the third anniversary of the date of such
award or earlier upon a Change of Control or the Executive’s retirement, death, Disability,
termination of employment by the Company other than for Cause or termination by

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the Executive for Good Reason. For purposes of this Section 3.3, the term “retirement” means
the Executive’s termination of employment for any reason at or after the earlier of age 65.

     3.4. Incentive Compensation. For fiscal year 2007 and each fiscal year thereafter,
the Executive will be eligible to receive grants of long-term incentive compensation, including,
but not limited to equity awards (such as restricted stock, stock options and performance shares)
having a target economic value of $450,000 for the fiscal year, on similar terms as grants made to
senior executives.

     3.5. Business Expenses. The Company shall pay or reimburse the Executive for all
reasonable expenses actually incurred or paid by the Executive during the Term in the performance
of Executive’s services under this Agreement, subject to and in accordance with applicable expense
reimbursement and related policies and procedures as in effect from time to time.

     3.6. Vacation. During each year of the Term, the Executive shall be entitled to a
paid vacation period or periods of four (4) weeks taken in accordance with applicable vacation
policy as in effect from time to time.

     3.7. Benefits; Perquisites. During the Term, the Executive shall be entitled to
participate in those retirement plans, deferred compensation plans, group insurance, life, medical,
dental, disability and other benefit plans of the Company at the same level as those benefits are
provided by the Company from time to time to senior executives of the Company generally. Also,
during the Term, the Executive shall be entitled to fringe benefits and perquisites at the same
level as those benefits are provided by the Company from time to time to senior executives of the
Company generally. However, nothing herein shall require the Company to establish and/or maintain
any such plans. Upon the Effective Date, Executive shall be entitled to a car allowance under the
Runzheimer Car Allowance Program and a membership at the Country Club at Coto.

4. Termination.

     4.1. General. Following any termination of the Executive’s employment, the Company
shall pay or provide to the Executive, or his estate or beneficiary, as the case may be, (i) Base
Salary earned through the date of such termination; (ii) except in the case of a termination
described in Section 4.4, any earned, but unpaid, annual cash incentive or other incentive awards,
including the Executive’s Annual Bonus earned pursuant to Section 3.2; (iii) a payment representing
the Executive’s accrued but unpaid vacation; (iv) any vested, but not forfeited benefits on the
date of such termination under the Company’s employee benefit plans, as determined in accordance
with the terms of such plans but subject to the provisions of Section 3.3 and 3.4; and (v) benefit
continuation and conversion rights to which the Executive is entitled under the Company’s employee
benefit plans.

     4.2. Death. If the Executive shall die during the Term, the Term shall immediately
terminate and the Executive shall be entitled to no further payments or benefits hereunder, except
for those payments and benefits described in Section 4.1. All outstanding equity grants shall vest
in the manner provided in the applicable award (subject to the provisions of Section 3.3 and 3.4),

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and any vested but unexercised grants shall become exercisable and shall remain so for the
period commencing on the date of such termination through the second anniversary of such
termination.

     4.3. Disability. If during the Term the Executive shall become physically or mentally
disabled (a “Disability”), whether totally or partially, such that the Executive is unable to
perform the Executive’s principal services hereunder for a period of not less than ninety (90)
consecutive days, the Company may at any time after the last day of such period (provided that such
disability is continuing), by written notice to the Executive, terminate the Term. Upon
termination under this Section 4.3, all outstanding equity grants shall vest in the manner provided
in the applicable award (subject to the provisions of Section 3.3 and 3.4), and any vested but
unexercised grants shall become exercisable and shall remain so for the period commencing on the
date of such termination through the second anniversary of such termination. In addition to those
payments and benefits described in Section 4.1, the Executive shall be entitled to payments made to
the Executive pursuant to a Company insurance plan.

     4.4. For Cause; Without Good Reason. If the Company terminates the Executive’s
employment for Cause or the Executive terminates his employment other than for Good Reason, the
Term shall terminate immediately and (i) the Executive shall be entitled to receive no further
amounts or benefits hereunder, except those payments and benefits described in Section 4.1 or as
required by law, (ii) all unvested equity grants pursuant to Section 3.3 and 3.4 shall be
immediately forfeited, and (iii) all vested but unexercised equity grants shall be forfeited on the
date which is ninety (90) days following such termination. For purposes of this Agreement, “Cause”
shall mean the Executive (A) being convicted of, or pleading guilty or no contest to, a felony
(except for motor vehicle violations); (B) engaging in conduct that constitutes gross misconduct or
fraud in connection with the performance of his duties to the Company, or (C) materially breaching
this Agreement which the Executive does not cure within thirty (30) days after the Company provides
written notice of such breach to the Executive. The Executive shall not terminate his employment
without Good Reason prior to the date which is thirty (30) days following the date on which the
Executive provides written notice of such termination to the Company; provided, however, that the
Company may waive such notice period in writing.

     4.5. Without Cause; For Good Reason. If during the Term the Company terminates the
Executive’s employment without Cause or if the Executive terminates his employment with Good
Reason, the Term shall immediately terminate and the Executive shall be entitled to no further
payments or benefits hereunder other than his Accrued Benefits, except: (i) the Company shall make
a lump sum payment to the Executive within ten (10 ) business days of such termination in an amount
equal to two hundred percent (200%) of the sum of the Base Salary for the fiscal year in which
occurs the Executive’s termination of employment; (ii) continuing receipt of group insurance, life,
medical, dental, disability and other similar benefits described in Section 3.7 (to the extent to
which such are in place from time to time, but excluding perquisites) during the twenty-four month
period commencing on the date of such termination; and (iii) all outstanding equity grants shall
vest in the manner provided in the applicable award (subject to the provisions of Section 3.3 and
3.4), and any vested but unexercised grants shall become exercisable and shall remain so for the
period commencing on the date of such termination through the second anniversary of such
termination.

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     For purposes of this Agreement, “Good Reason” shall mean, without the Executive’s consent, the
occurrence of any of the following during the Term: (A) any reduction in the Executive’s Base
Salary, target bonus opportunity or benefits pursuant to Section 3 of this Agreement without the
Executive’s prior consent; (B) a material change in the Executive’s position causing it to be of
materially less stature or responsibility, or a change in the Executive’s duties, authorities,
responsibilities or reporting relationship, but in each case only if the Company does not cure such
change within thirty (30) days after the Executive provides written notice of such change to the
Company; or (C) the Company materially breaches this Agreement and does not cure such breach within
thirty (30) days after the Executive provides written notice of such breach to the Company. The
Company shall not terminate the Executive’s employment without Cause prior to the date which is
thirty (30) days following the date on which the Company provides written notice of such
termination to the Executive; provided, however, that the Executive may waive such notice period in
writing.

     Notwithstanding anything to the contrary in clause (i) immediately above, if the Executive
constitutes a “key employee” as defined in Section 416(i) of the Internal Revenue Code and as
applied under Section 409A of the Internal Revenue Code at such termination, the payment under
clause (i) immediately above shall be paid on the first business day following the sixth month
anniversary of the Executive’s termination of employment if necessary to comply with Section 409A
of the Internal Revenue Code and regulations issued thereunder.

     4.6. Change of Control.

          4.6.1 In the event of a Change of Control, the Executive shall become fully vested in all
outstanding equity grants as of the date of the Change of Control. In addition to those payments
and benefits described in Section 4.1, if during the Term the Company terminates the Executive’s
employment without Cause or the Executive terminates his employment with Good Reason, in each case
within two (2) years following a Change of Control or the Emergence Date, whichever is later, the
Term shall immediately terminate and the Executive shall be entitled to no further payments or
benefits hereunder other than his Accrued Benefits, except: (i) the Company shall make a lump sum
payment to the Executive within ten (10 ) business days of such termination in an amount equal to
three hundred percent (300%) of the sum of the Base Salary plus target Annual Bonus opportunity for
the fiscal year in which occurs the Executive’s termination of employment; (ii) continuing receipt
of group insurance, life, medical, dental, disability and other similar benefits described in
Section 3.7 (to the extent to which such are in place from time to time, but excluding perquisites)
during the thirty-six month period commencing on the date of each termination; (iii) any previously
unvested grants shall become exercisable and all outstanding grants shall remain exercisable for
the period commencing on the date of such termination through the earlier the second anniversary of
such termination; and (iv) the payment required, if any, pursuant to Section 4.6.3. If the
Executive constitutes a “key employee” as defined in Section 416(i) of the Internal Revenue Code
and as applied under Section 409A of the Internal Revenue Code at such termination of employment,
the payment due under clause (i) immediately above shall be paid on the first business day
following the sixth month anniversary of Executive’s termination of employment if necessary to
comply with Section 409A of the Internal Revenue Code and regulations issued thereunder.

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          4.6.2 For purposes of this Agreement, a “Change of Control” shall be deemed to occur upon: (i)
the sale, lease, conveyance or other disposition of all or substantially all of KAC’s assets as an
entirety or substantially as an entirety to any person, entity or group of persons acting in
concert other than in the ordinary course of business; (ii) any transaction or series of related
transactions (as a result of a tender offer, merger, consolidation, issuance of securities pursuant
to the Plan of Reorganization, purchase or otherwise) that results in any Person (as defined in
Section 13(h)(8)(E) under the Securities Exchange Act of 1934) other than the Union VEBA Trust
becoming the beneficial owner (as defined in Rule 13d-3 under the Securities Exchange Act of 1934),
directly or indirectly, of 20% or more of the aggregate voting power of all classes of common
equity of KAC, except if such Person is (w) a subsidiary of KAC, (x) an employee benefit plan for
employees of the Company or (y) a company formed to hold KAC’s common equity securities and whose
shareholders constituted, at the time such company became such holding company, substantially all
the shareholders of KAC; or (iii) a change in the composition of the Board of KAC over a period of
twenty-four (24) consecutive months or less such that a majority of the then current Board members
ceases to be comprised of individuals who either (a) have been Board members continuously since the
beginning of such period, or (b) have been elected or nominated for election as Board members
during such period by at least a majority of the Board members described in clause (a) who were
still in office at the time such election or nomination was approved by the Board. The parties
recognize that a Change of Control may occur contemporaneous with or prior to KAC’s emergence from
bankruptcy or the Emergence Date.

          4.6.3. If it shall be determined that any payment or distribution of any type to or in respect
of the Executive made directly or indirectly by the Company, whether paid or payable or distributed
or distributable pursuant to the terms of this Agreement or otherwise (the “Total Payments”), is or
will be subject to the excise tax imposed by Section 4999 of the Internal Code of 1986, as amended
(the “Code”), or any interest or penalties with respect to such excise tax (such excise tax,
together with any such interest and penalties, are collectively referred to as the “Excise Tax”),
then the Executive shall be entitled to receive an additional payment (a “Gross-Up Payment”) in an
amount such that after payment by the Executive of all taxes (including any interest or penalties
imposed with respect to such taxes) imposed upon the Gross-Up Payment, the Executive retains an
amount of the Gross-Up Payment equal to the Excise Tax imposed upon the Total Payments.

          4.6.4 All computations and determinations relevant to Section 4.6.3 and this 4.6.4 shall be
made by an independent accounting firm selected and reimbursed by the Company (The “Accounting
Firm”), subject to the Executive’s consent (not to be unreasonably withheld), which firm may be the
Company’s accountants. Such determination shall include whether any of the Total Payments are
“parachute payments” (within the meaning of Section 280G of the Code). In making the initial
determination hereunder as to whether a Gross-Up Payment is required, the Accounting Firm shall
determine that no Gross-Up Payment is required if the Accounting Firm is able to conclude that no
“Change of Control” has occurred (within the meaning of Section 280G of the Code). If the
Accounting Firm determines that a Gross-Up Payment is required, the Accounting Firm shall provide
its determination (the “Determination”), together with detailed supporting calculations regarding
the amount of any Gross-Up Payment and any other relevant matter both to the Company and the
Executive by no later than ten (10) days following its Determination, if applicable, or such
earlier time as is requested by the

6

 

Company or the Executive (if the Executive reasonably believes that any of the Total Payments
may be subject to the Excise Tax). If the Accounting Firm determines that no Excise Tax is payable
by the Executive, it shall furnish the Executive and the Company with a written statement that such
Accounting Firm has concluded that no Excise Tax is payable (including the reasons therefor) and
that the Executive has substantial authority not to report any Excise Tax on his federal income tax
return.

          4.6.5 If a Gross-Up Payment is determined to be payable, it shall be paid to the Executive
within twenty (20) days after the Determination (and all accompanying calculations and other
material supporting the Determination) is delivered to the Company by the Accounting Firm. Any
determination by the Accounting Firm shall be binding upon the Company and the Executive, absent
manifest error.

          4.6.6 As a result of uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that Gross-Up Payments
not made by the Company should have been made (“Underpayment”) or that Gross-Up Payments will have
been made by the Company which should not have been made (“Overpayments”). In either such event,
the Accounting Firm shall determine the amount of the Underpayment or Overpayment that has
occurred. In the case of an Underpayment, the amount of such Underpayment (together with any
interest and penalties payable by the Executive as a result of such Underpayment) shall be promptly
paid by the Company to or for the benefit of the Executive.

          4.6.7 In the case of an Overpayment, the Executive shall, at the direction and expense of the
Company, take such steps as are reasonably necessary (including the filing of returns and claims
for refund), follow reasonable instructions from, and procedures established by, the Company, and
otherwise reasonably cooperate with the Company to correct such Overpayment, provided, however,
that (i) the Executive shall not in any event be obligated to return to the Company an amount
greater than the net after-tax portion of the Overpayment that he has retained or has recovered as
a refund from the applicable taxing authorities and (ii) this provision shall be interpreted in a
manner consistent with the intent of this Section 4.6, which is to make the Executive whole, on an
after-tax basis, from the application of the Excise Taxes, it being acknowledged and understood
that the correction of an Overpayment may result in the Executive repaying to the Company an amount
which is less than the Overpayment.

          4.6.8 The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service relating to the possible application of the Excise Tax under Section 4999 of the Code to
any of the payments and amounts referred to herein and shall afford the Company, at its expense,
the opportunity to control the defense of such claim (for the sake of clarity, if the Internal
Revenue Service is successful in any such claim or the Executive reaches a final settlement with
the Internal Revenue Service with respect to such claim (after having afforded the Company, at its
expense, the opportunity to control the defense of such claim), the amount of the Excise Tax
resulting from such successful claim or settlement shall be determinative as to whether or not
there has been an Underpayment or an Overpayment for purposes of Section 4.6.6).

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          4.6.9 Without limiting the intent of this Section 4.6.9 to make the Executive whole, on an
after-tax basis, from the application of the Excise Taxes, all determinations by the Accounting
Firm shall be made with a view to minimizing the application of Sections 280G and 4999 of the Code
of any of the Total Payments, subject, however, to the following: the Accounting Firm shall make
its determination on the basis of substantial authority and shall provide opinions to that effect
to both the Company and the Executive upon the request of either of them.

     4.7. End of Term. If the Company notifies the Executive that the Term will not be
extended in accordance with the provisions of Section 2.1, the Executive shall be entitled to no
further payments or benefits, except for those payments and benefits described in Section 4.1. All
outstanding equity grants shall vest in the manner provided in the applicable award (subject to the
provisions of Section 3.3 and 3.4), and any vested but unexercised grants shall become exercisable
and shall remain so for the period commencing on the expiration of the Term and continuing through
the second anniversary of the end of the Term.

     4.8. No Mitigation. Upon termination of the Executive’s employment with the Company,
the Executive shall be under no obligation to seek other employment or otherwise to mitigate the
obligations of the Company under this Agreement.

5. Protection of Confidential Information; Non-Competition.

     5.1. The Executive acknowledges that the Executive’s services will be unique, that they will
involve the development of Company-subsidized relationships with key customers, suppliers, and
service providers as well as with key Company employees and that the Executive’s work for the
Company will give the Executive access to highly confidential information not available to the
public or competitors, including trade secrets and confidential marketing, sales, product
development and other data and information which it would be impracticable for the Company to
effectively protect and preserve in the absence of this Section 5 and the disclosure or
misappropriation of which could materially adversely affect the Company. Accordingly, the
Executive agrees:

     5.1.1 Except in the course of performing the Executive’s duties provided for in Section 1.1,
not at any time, whether before, during or after the Executive’s employment with the Company, to
divulge to any other entity or person any confidential information acquired by the Executive
concerning the Company’s or its affiliates’ financial affairs or business processes or methods or
their research, development or marketing programs or plans, or any other of its or their trade
secrets. In the event that the Executive is requested or required to make disclosure of
information subject to this Section 5.1.1 under any court order, subpoena or other judicial
process, then, except as prohibited by law, the Executive will promptly notify the Company, take
all reasonable steps requested by the Company to defend against the compulsory disclosure and
permit the Company to control with counsel of its choice any proceeding relating to the compulsory
disclosure. The Executive acknowledges that all information, the disclosure of which is prohibited
by this section, is of a confidential and proprietary character and of great value to the Company.

8

 

          5.1.2 to deliver promptly to the Company on termination of the Executive’s employment with the
Company, or at any time that the Company may so request, all confidential memoranda, notes,
records, reports, manuals, drawings, blueprints and other documents (and all copies thereof)
relating to the Company’s business and all property associated therewith, which the Executive may
then possess or have under the Executive’s control.

     5.2. In consideration of the Company’s entering into this Agreement, the Executive agrees that
at all times during the Term and thereafter, until the first anniversary of the date of the
termination of the Term for any reason, the Executive shall not, directly or indirectly, for
himself or on behalf of or in conjunction with, any other person, company, partnership,
corporation, business, group, or other entity (each, a “Person”):

          5.2.1 provide services to a “Competitor” (as defined below), as an officer, director,
shareholder, owner, partner, joint venturer, or in any other capacity, whether as an executive,
independent contractor, consultant, advisor, or sales representative; or

          5.2.2 call upon any Person who is or that is, at such date of termination, engaged in activity
on behalf of the Company or any affiliate of the Company for the purpose or with the intent of
enticing such Person to cease such activity on behalf of the Company or such affiliate.

     For purposes of this Agreement, “Competitor” means, on any date, a person or entity that is
primarily engaged in a material line of business conducted by the Company or its affiliates.

     5.3. If the Executive commits a breach of any of the provisions of Section 5.1 or 5.2 hereof,
the Company shall have the right and remedy to have the provisions of this Agreement specifically
enforced by any court having equity jurisdiction, it being acknowledged and agreed that any such
breach will cause irreparable injury to the Company and that money damages will not provide an
adequate remedy to the Company, and, if the Executive attempts or threatens to commit a breach of
any of the provisions of Section 5.1 or 5.2, the right and remedy to be granted a preliminary and
permanent injunction in any court having equity jurisdiction against the Executive with respect to
the attempted or threatened breach, it being agreed that each of such rights and remedies shall be
independent of the others and shall be severally enforceable, and that all of such rights and
remedies shall be in addition to, and not in lieu of, any other rights and remedies available to
the Company under law or in equity.

     5.4. If any of the covenants contained in Section 5.1, 5.2 or 5.3, or any part thereof,
hereafter are construed to be invalid or unenforceable, the same shall not affect the remainder of
the covenant or covenants, which shall be given full effect, without regard to the invalid
portions.

     5.5. The period during which the prohibitions of Section 5.2 are in effect shall be extended
by any period or periods during which the Executive is in violation of Section 5.2.

     5.6. If any of the covenants contained in Section 5.1 or 5.2, or any part thereof are held to
be unenforceable because of the duration of such provision or the area covered thereby, the parties
agree that the court making such determination shall have the power to reduce the duration and/or
area of such provision so as to be enforceable to the maximum extent permitted by applicable law
and, in its reduced form, said provision shall then be enforceable.

9

 

     5.7. The parties hereto intend to and hereby confer jurisdiction to enforce the covenants
contained in Sections 5.1, 5.2 and 5.3 upon the courts of any state within the geographical scope
of such covenants. In the event that the courts of any one or more of such states shall hold such
covenants wholly unenforceable by reason of the breadth of such covenants or otherwise, it is the
intention of the parties hereto that such determination not bar or in any way affect the Company’s
right to the relief provided above in the courts of any other states within the geographical scope
of such covenants as to breaches of such covenants in such other respective jurisdictions, the
above covenants as they relate to each state being for this purpose severable into diverse and
independent covenants.

6. Inventions and Patents.

     The Executive agrees that all processes, technologies and inventions (collectively,
“Inventions”), including new contributions, improvements, ideas and discoveries, whether patentable
or not, conceived, developed, invented or made by him during the Term shall belong to the Company,
provided that such Inventions grew out of the Executive’s work with the Company or any of its
subsidiaries or affiliates, are related in any manner to the business (commercial or experimental)
of the Company or any of its subsidiaries or affiliates or are conceived or made on the Company’s
time or with the use of the Company’s facilities or materials. The Executive shall further (a)
promptly disclose such Inventions to the Company; (b) assign to the Company, without additional
compensation, all patent and other rights to such Inventions for the United States and foreign
countries; (c) sign all papers necessary to carry out the foregoing; and (d) give testimony in
support of the Executive’s inventorship.

7. Intellectual Property.

     Notwithstanding and without limiting the provisions of Section 6, the Company shall be the
sole owner of all the products and proceeds of the Executive’s services hereunder, including, but
not limited to, all materials, ideas, concepts, formats, suggestions, developments, arrangements,
packages, programs and other intellectual properties that the Executive may acquire, obtain,
develop or create in connection with or during the Term, free and clear of any claims by the
Executive (or anyone claiming under the Executive) of any kind or character whatsoever (other than
the Executive’s right to receive payments hereunder), the Executive shall, at the request of the
Company, execute such assignments, certificates or other instruments as the Company may from time
to time deem necessary or desirable to evidence, establish, maintain, perfect, protect, enforce or
defend its right, title or interest in or to any such properties.

8. Indemnification.

     In addition to any rights to indemnification to which the Executive is entitled under the
Company’s charter and by-laws, to the extent permitted by applicable law, the Company will
indemnify, from the assets of the Company supplemented by insurance in an amount customary for
corporations similar in size and value to the Company and engaged in business activities similar to
the business activities of the Company, the Executive at all times, during and after the Term, and,
to the maximum extent permitted by applicable law, shall pay the Executive’s expenses (including
reasonable attorneys’ fees and expenses, which shall be paid in advance by the Company as incurred,
subject to recoupment in accordance with applicable law) in

10

 

connection with any threatened or actual action, suit or proceeding to which the Executive may
be made a party, brought by any shareholder of the Company directly or derivatively or by any third
party by reason of any act or omission or alleged act or omission in relation to any affairs of the
Company or any subsidiary or affiliate of the Company of the Executive as an officer, director or
employee of the Company or of any subsidiary or affiliate of the Company. The Company shall
maintain during the Term and thereafter insurance coverage sufficient to satisfy any
indemnification obligation of the Company arising under this Section 8.

9. Notices.

     All notices, requests, consents and other communications required or permitted to be given
hereunder shall be in writing and shall be deemed to have been duly given if delivered personally,
one day after sent by overnight courier or three days after mailed first class, postage prepaid, by
registered or certified mail as follows (or to such other address as either party shall designate
by notice in writing to the other in accordance herewith):

     If to the Company, to:

Kaiser Aluminum & Chemical Corporation

27422 Portola Parkway, Suite 350

Foothill Ranch, California 92610

Attn: General Counsel

     If to the Executive, to the Executive’s principal residence as reflected in the records of the
Company.

10. General.

     10.1. This Agreement shall be governed by and construed and enforced in accordance with the
laws of the State of Delaware applicable to agreements made between residents thereof and to be
performed entirely in Delaware.

     10.2. The section headings contained herein are for reference purposes only and shall not in
any way affect the meaning or interpretation of this Agreement.

     10.3. This Agreement sets forth the entire agreement and understanding of the parties relating
to the subject matter hereof and supersedes all prior agreements, arrangements and understandings,
written or oral, relating to the subject matter hereof. No representation, promise or inducement
has been made by either party that is not embodied in this Agreement, and neither party shall be
bound by or liable for any alleged representation, promise or inducement not so set forth.

     10.4. This Agreement, and the Executive’s rights and obligations hereunder, may not be
assigned by the Executive, nor may the Executive pledge, encumber or anticipate any payments or
benefits due hereunder, by operation of law or otherwise. The Company may assign its rights,
together with its obligations, hereunder (i) to any affiliate or (ii) to a third party in
connection with any sale, transfer or other disposition of all or substantially all of any business
to which the Executive’s services are then principally devoted, provided that no assignment
pursuant to clause

11

 

     (ii) shall relieve the Company from its obligations hereunder to the extent the same are not
timely discharged by such assignee.

     10.5. The respective rights and obligations of the parties hereunder shall survive any
termination of this Agreement or the Term to the extent necessary to the intended preservation of
such rights and obligations.

     10.6. This Agreement may be amended, modified, superseded, canceled, renewed or extended and
the terms or covenants hereof may be waived, only by a written instrument executed by both of the
parties hereto, or in the case of a waiver, by the party waiving compliance. The failure of either
party at any time or times to require performance of any provision hereof shall in no manner affect
the right at a later time to enforce the same. No waiver by either party of the breach of any term
or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing waiver of any such
breath, or a waiver of the breach of any other term or covenant contained in this Agreement.

     10.7. This Agreement may be executed in two or more counterparts, each of which shall be
deemed to be an original but all of which together will constitute one and the same instrument.

11. Dispute Resolution.

     Subject to the rights of the Company pursuant to Section 5.3 above, any controversy, claim or
dispute arising out of or relating to this Agreement, the breach thereof, or the Executive’s
employment by the Company shall be settled by arbitration with one arbitrator. The arbitration
will be administered by the American Arbitration Association in accordance with its National Rules
for Resolution of Employment Disputes. The arbitration proceeding shall be confidential, and
judgment on the award rendered by the arbitrator may be entered in any court having jurisdiction.
Any such arbitration shall take place in the Orange County, California, or in any other mutually
agreeable location. In the event any judicial action is necessary to enforce the arbitration
provisions of this Agreement, sole jurisdiction shall be in the federal and state courts, as
applicable, located in California. Any request for interim injunctive relief or other provisional
remedies or opposition thereto shall not be deemed to be a waiver of the right or obligation to
arbitrate hereunder. The Company shall pay or promptly reimburse the Executive for all reasonable
costs, fees and expenses relating to such dispute, including reasonable legal fees.

12. Subsidiaries and Affiliates.

     As used herein, the term “subsidiary” shall mean any corporation or other business entity
controlled directly or indirectly by the corporation or other business entity in question, and the
term “affiliate” shall mean and include any corporation or other business entity directly or
indirectly controlling, controlled by or under common control with the corporation or other
business entity in question.

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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above
written.

	 	 	 	 	 
	 	 	KAISER ALUMINUM & CHEMICAL 
CORPORATION
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 

	 

	 	 	 	Name:
	 

	 	 	 	Title:
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	 

	 
	 	 	 	Joseph P. Bellino

13

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