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FORM OF AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE AGREEMENT

Change of Control Agreement

FORM OF
AMENDED AND RESTATED
CHANGE IN CONTROL SEVERANCE AGREEMENT | Document Parties: ALLEGHENY TECHNOLOGIES INC You are currently viewing:
This Change of Control Agreement involves

ALLEGHENY TECHNOLOGIES INC

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Title: FORM OF AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE AGREEMENT
Governing Law: Pennsylvania     Date: 3/1/2006
Industry: Iron and Steel    

FORM OF
AMENDED AND RESTATED
CHANGE IN CONTROL SEVERANCE AGREEMENT, Parties: allegheny technologies inc
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Exhibit 10.26

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, March 12, 2003 and February 24, 2005 is further amended and restated as of February 22, 2006, 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”).

W I T N E S S E T H:

          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) 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

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Board or any class of the Board shall be made by any person other than the 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

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by a vote of at least two-thirds of the directors then still in office who were 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 “Outstanding” level of Total Shareholder Return (as defined in the TSRP

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and set forth in 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


 
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