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”).
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:
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:
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(a)
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an
involuntary termination of the Executive’s employment with
the Company without Cause; or
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(b)
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a
voluntary termination of the Executive’s employment with the
Company for Good Reason.
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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):
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(a)
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The
Executive shall receive a single lump sum cash Severance
Compensation payment within thirty (30) days of the Effective
Date of Termination.
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(b)
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The
Executive shall receive the Accrued Obligations.
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(c)
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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.
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(d)
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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.
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(e)
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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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