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EXHIBIT 10.5
FORM OF
AMENDED AND RESTATED
CHANGE IN CONTROL SEVERANCE AGREEMENT
THIS
AMENDED AND RESTATED AGREEMENT ("Agreement"), initially
effective as of the 10th day of February,
2000 (the "Effective Date"), and
amended and restated in its entirety
effective as of July 13, 2000 is further
amended and restated as of February 24,
2005, by and between Allegheny
Technologies Incorporated, a Delaware
corporation (hereinafter referred to as
the "Company"), and the individual
identified on the signature page of this
Agreement (the "Executive").
WITNESSETH:
WHEREAS, the Board of Directors of the Company (the "Board")
has
approved the Company's entering into this
agreement providing for certain
severance protection for the Executive
following a Change in Control (as
hereinafter defined);
WHEREAS, the Board of the Company believes that, should the
possibility of a Change in Control arise,
it is imperative that the Company be
able to receive and rely upon the
Executive's advice, if requested, as to the
best interests of the Company and its
stockholders without concern that the
Executive might be distracted by the
personal uncertainties and risks created by
the possibility of a Change in Control;
and
WHEREAS, in addition to the Executive's regular duties, the
Executive may be called upon to assist in
the assessment of a possible Change in
Control, advise management and the Board of
the Company as to whether such
Change in Control would be in the best
interests of the Company and its
stockholders, and to take such other
actions as the Board determines to be
appropriate.
NOW, THEREFORE, to assure the Company that it will have the
continued dedication of the Executive and
the availability of Executive's advice
and counsel notwithstanding the
possibility, threat, or occurrence of a Change
in Control, and to induce the Executive to
remain in the employ of the Company,
and for good and valuable consideration and
the mutual covenants set forth
herein, the Company and the Executive,
intending to be legally bound, agree as
follows:
Article I. Definitions
1.1
Definitions. Whenever used in this Agreement, the following
terms
shall have the meanings set forth below
when the initial letter of the word or
abbreviation is capitalized:
(a) "Accrued Obligations" means, as of the
Effective Date of Termination, the
sum of (i) the Executive's Base
Compensation through and including the Effective
Date of Termination, (ii) the amount of any
bonus, incentive compensation,
deferred compensation and other cash
compensation accrued by the Executive as of
the Effective Date of Termination under the
terms of any such arrangement and
not then paid, including, but not limited
to, AIP accrued but not paid for a
year ending prior to the year in which
occur, the Effective Date of Termination,
(iii)
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unused vacation time monetized at the then
rate of Base Compensation, (iv)
expense reimbursements or other cash
entitlements, (v) amounts accrued,
including but not limited to amounts
accrued as a result of the application of
Section 2.2(g), under any qualified,
non-qualified or supplemental employee
benefit plan, payroll practice, policy or
perquisite.
(b) "AIP" means the Company's Annual
Incentive Plan as it exists on the date
hereof and as it may be amended,
supplemented or modified from time to time or
any successor plan.
(c) "Base Compensation" shall mean (1) the
highest annual rate of base salary of
the Executive within the time period
consisting of two years prior to the date
of a Change in Control and the Effective
Date of Termination and (2) the AIP
bonus target for performance in the
calendar year that a Change in Control
occurs or the actual AIP payment for the
year immediately preceding the Change
in Control, whichever is higher.
(d) "Beneficiary" shall mean the persons or
entities designated or deemed
designated by the Executive pursuant to
Section 7.2 herein.
(e) "Board" shall mean the Board of
Directors of the Company.
(f) For purposes hereof, the term "Cause"
shall mean the Executive's conviction
of a felony, breach of a fiduciary duty
involving personal profit to the
Executive or intentional failure to perform
stated duties reasonably associated
with the Executive's position; provided,
however, an intentional failure to
perform stated duties shall not constitute
Cause unless and until the Board
provides the Executive with written notice
setting forth the specific duties
that, in the Board's view, the Executive
has failed to perform and the Executive
is provided a period of thirty (30) days to
cure such specific failure(s) to the
reasonable satisfaction of the Board.
(g) For the purposes of this Agreement,
"Change in Control" shall mean, and
shall be deemed to have occurred upon the
occurrence of, any of the following
events:
(1) The Company
acquires actual knowledge that (x) any Person, other
than the Company, a subsidiary, any employee benefit plan(s)
sponsored by the Company or a subsidiary, has acquired the
Beneficial Ownership, directly or indirectly, of securities of
the
Company entitling such Person to 20% or more of the Voting Power
of
the Company, or (y) any Person or Persons agree to act together
for
the purpose of acquiring, holding, voting or disposing of
securities
of the Company or to act in concert or otherwise with the purpose
or
effect of changing or influencing control of the Company, or in
connection with or as Beneficial Ownership, directly or
indirectly,
of securities of the Company entitling such Person(s) to 20% or
more
of the Voting Power of the Company; or
(2) The completion of a Tender Offer is made to acquire
securities
of the Company entitling the holders thereof to 20% or more of
the
Voting Power of the Company; or
(3) The occurrence of a successful solicitation subject to Rule
14a-11 under the Securities Exchange Act of 1934 as amended (or
any
successor Rule) (the "1934 Act") relating to the election or
removal
of 50% or more of the members of the Board or any class of the
Board
shall be made by any person other than the
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Company or less than 51% of the members of the Board (excluding
vacant seats) shall be Continuing Directors; or
(4) The occurrence of a merger, consolidation, share exchange,
division or sale or other disposition of assets of the Company as
a
result of which the stockholders of the Company immediately prior
to
such transaction shall not hold, directly or indirectly,
immediately
following such transaction a majority of the Voting Power of (i)
in
the case of a merger or consolidation, the surviving or
resulting
corporation, (ii) in the case of a share exchange, the
acquiring
corporation or (iii) in the case of a division or a sale or
other
disposition of assets, each surviving, resulting or acquiring
corporation which, immediately following the transaction, holds
more
than 20% of the consolidated assets of the Company immediately
prior
to the transaction;
provided, however that (A) if securities
beneficially owned by Executive are
included in determining the Beneficial
Ownership of a Person referred to in
Section (i), (B) if Executive is named
pursuant to Item 2 of the Schedule 14D-1
(or any similar successor filing
requirement) required to be filed by the bidder
making a Tender Offer referred to in
Section (ii) or (C) if Executive is a
"participant" as defined in Instruction 3
to Item 4 of Schedule 14A under the
1934 Act in a solicitation referred to in
Section (iii) then no Change of
Control with respect to Executive shall be
deemed to have occurred by reason of
any such event.
For the purposes of Section 1(g), the following terms shall have
the
following meanings:
(i) The term "Person" shall be used as that term is used in
Section
13(d) and 14(d) of the 1934 Act as in effect on the Effective
Date
hereof.
(ii) "Beneficial Ownership" shall be determined as provided in
Rule
13d-3 under the 1934 Act as in effect on the Effective Date
hereof.
(iii) A specified percentage of "Voting Power" of a company
shall
mean such number of the Voting Shares as shall enable the
holders
thereof to cast such percentage of all the votes which could be
cast
in an annual election of directors (without consideration of
the
rights of any class of stock, other than the common stock of
the
company, to elect directors by a separate class vote); and
"Voting
Shares" shall mean all securities of a company entitling the
holders
thereof to vote in an annual election of directors (without
consideration of the rights of any class of stock, other than
the
common stock of the company, to elect directors by a separate
class
vote).
(iv) "Tender Offer" shall mean a tender offer or exchange offer
to
acquire securities of the Company (other than such an offer made
by
the Company or any subsidiary), whether or not such offer is
approved or opposed by the Board.
(v) "Continuing Directors" shall mean a director of the Company
who
either (x) was a director of the Company on the date hereof or
(y)
is an individual whose election, or nomination for election, as
a
director of the Company was approved by a vote of at least
two-thirds of the directors then still in office who were
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Continuing Directors (other than an individual whose initial
assumption of office is in connection with an actual or
threatened
election contest relating to the election of directors of the
Company which would be subject to Rule 14a-11 under the 1934 Act,
or
any successor Rule).
(h) "Code" shall mean the Internal Revenue
Code of 1986, as amended.
(i) "Effective Date of Termination" shall
mean the date on which the Executive's
employment terminates in a circumstance in
which Section 2.1 provides for
Severance Benefits (as defined in Section
2.1).
(j) "Good Reason" shall mean, without the
Executive's express written consent,
the occurrence of any one or more of the
following:
(1) A
material diminution of the Executive's authorities, duties,
responsibilities, or status (including
offices, titles, or reporting
relationships) as an employee of the
Company from those in effect as of one
hundred eighty (180) days prior to the
Change in Control or as of the date of
execution of this Agreement if a Change in
Control occurs within one hundred
eighty (180) days of the execution of this
Agreement (the "Reference Date") or
the assignment to the Executive of duties
or responsibilities inconsistent with
his position as of the Reference Date,
other than an insubstantial and
inadvertent act that is remedied by the
Company promptly after receipt of notice
thereof given by the Executive, and other
than any such alteration which is
consented to by the Executive in
writing;
(2) The
Company's requiring the Executive to be based at a location in
excess of thirty-five (35) miles from the
location of the Executive's principal
job location or office immediately prior to
the Change in Control, except for
required travel on the Company's business
to an extent substantially consistent
with the Executive's present business
obligations;
(3) A
reduction in the Executive's annual salary or any material
reduction
by the Company of the Executive's other
compensation or benefits from that in
effect on the Reference Date or on the date
of the Change in Control, whichever
is greater;
(4) The
failure of the Company to obtain an agreement satisfactory to
the
Executive from any successor to the Company
to assume and agree to perform the
Company's obligations under this Agreement,
as contemplated in Article 5 herein;
and
(5) Any
purported termination by the Company of the Executive's
employment
that is not effected pursuant to a Notice
of Termination satisfying the
requirements of Section 2.6 below, and for
purposes of this Agreement, no such
purported termination shall be
effective.
The Executive's right to terminate
employment for Good Reason shall not be
affected by the Executive's (A) incapacity
due to physical or mental illness or
(B) continued employment following the
occurrence of any event constituting Good
Reason herein.
(k) "KEPP" means the Company's Key
Executive Performance Plan as it exists on
the date hereof and as it may be amended,
supplemented or modified from time to
time or any successor plan.
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(l) "Severance Compensation" means three
times Base Compensation.
(m) "TSRP" means the Total Shareholder
Return Program as it exists on the date
of the amendment and restatement of this
Agreement and as it may be amended,
supplemented or modified from time to time
or a successor plan.
Article II. Severance Benefits
2.1 Right
to Severance Benefits. The Executive shall be entitled to
receive from the Company severance benefits
described in Section 2.2 below
(collectively, the "Severance Benefits") if
a Change in Control shall occur and
within twenty-four (24) months after the
Change in Control either of the
following shall occur:
(a) an
involuntary termination of the Executive's employment with
the Company without Cause; or
(b) a voluntary
termination of the Executive's employment with the
Company for Good Reason.
2.2
Severance Benefits. In the event that the Executive becomes
entitled
to receive Severance Benefits, as provided
in Section 2.1, the Company shall
provide the Executive with total Severance
Benefits as follows (but subject to
Sections 2.5 and 2.6):
(a) The
Executive shall receive a single lump sum cash Severance
Compensation payment within thirty (30) days of the Effective
Date of Termination.
(b) The Executive shall receive
the Accrued Obligations.
(c) The
Executive shall receive as AIP for the year in which the
termination occurs a lump sum cash payment paid within thirty
(30) days of the Effective Date of Termination equal to that
which would have been paid if corporate and personal
performance had achieved 120% of target objectives established
for the annual period in which the Change in Control occurred,
multiplied by a fraction, the numerator of which is the number
of days elapsed in the current fiscal period to the Effective
Date of Termination, and the denominator of which is 365.
(d) The
Executive shall receive a lump sum payment paid within
thirty (30) days of the Effective Date of Termination (i) of
any earned but unpaid TSRP Awards (as defined in the TSRP) and
(ii) with respect to
any TSRP Awards for then uncompleted TSRP
Performance Periods (as defined in the TSRP); provided that
portion of the TSRP award that would be paid in stock under
the TSRP is to be paid in cash based on the then current
market value of the stock and the payment for then uncompleted
TSRP Performance Periods will be determined based upon a
deemed "Excellent" level of Total Shareholder Return (as
defined in the TSRP and set forth in
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the applicable TSRP agreement) for each uncompleted TSRP
Performance Period.
(e) All
perquisites and welfare benefits, including medical,
dental, vision, life and disability benefits pursuant to plans
under which the Executive and/or the Executive's family is
eligible to receive benefits and/or coverage shall be
continued for a period of thirty-six (36) months after the
Effective Date of Termination. Such benefits shall be provided
to the Executive at no less than the same coverage level as in
effect as of the date of the Change in Control. The Company
shall pay the full cost of such continued benefits, except
that the Executive shall bear any portion of such cost as was
required to be borne by key executives of the Company
generally at the date of the Change in Control.
Notwithstanding the foregoing, the benefits described in this
Section 2.2(e) may be discontinued prior to the end of the
periods provided in this Section to the extent, but only to
the extent, that the Executive receives substantially similar
benefits from a subsequent employer. In the event any
insurance carrier shall refuse to provide coverage to a former
employee, the Company shall secure comparable coverage or may
self-insure the benefits if it pays such benefits together
with a payment
to the Executive equal to the federal income
tax consequences of payments to a former highly compensated
employee from a discriminatory self-insured plan.
(f) The
Executive shall be entitled to reimbursement for actual
payments made for professional outplacement services or job
search not to exceed $25,000 in the aggregate.
(g) In
determining the Executive's pension benefit following
entitlement to a Severance Bene
