FORM OF AMENDED AND RESTATED CHANGE IN CONTROL SEVERANCE AGREEMENT
Exhibit 10.10
FORM OF
AMENDED AND RESTATED
THIS AMENDED AND RESTATED AGREEMENT (“Agreement”), is made and entered as of the 31st day of
December, 2008 (the “Execution Date”) by and between Allegheny Technologies Incorporated, a
Delaware corporation (hereinafter referred to as the “Company”), and (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;
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; and
WHEREAS, the purpose of this Amended and Restated Change in Control Agreement is to amend and
restate the Change in Control Agreement in its entirety to cause the Agreement to comply with
Section 409A of the Code.
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
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 occurs 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 annual bonus plan.
(c) “Base Compensation” shall mean the sum of (1) the highest annual rate of base salary of
the Executive as in effect within two years prior to (A) the Effective Date of the Termination or
(B) the date of the Change in Control and (2) the greater of (A) the amount that would be paid
under the AIP for target performance in the calendar year that a Change in Control occurs or (B)
the actual AIP payment for the year immediately preceding the Change in Control.
(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
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(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 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 Execution Date hereof.
(ii) “Beneficial Ownership” shall be determined as provided in Rule
13d-3 under the 1934 Act as in effect on the Execution 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).
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(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 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) “Disability” means (A) the Executive is unable to engage in any substantial gainful
activity by reason of any medically determinable physical or mental impairment that can be expected
to result in death or can be expected to last for a continuous period of not less than 12 months;
or (B) the Executive is, by reason of any medically determinable physical or mental impairment that
can be expected to result in death or can be expected to last for a continuous period of not less
than 12 months, receiving income replacement benefits for a period of not less than 3 months under
an accident and health plan covering employees of the Company.
(j) “409A Payment Date” shall mean, if the Executive is a Specified Employee on the Effective
Date of Termination, the date which is six months and one day after the Effective Date of
Termination and, if the Executive is not a Specified Employee on the Effective Date of Termination,
the date which is 30 days after the Effective Date of Termination. For a Specified Employee, in no
event shall such payment be made after the later of (i) the last day of the calendar year in which
such six-month dates occurs or (ii) 2 1/2 months after the occurrence of the six-month date and the
initial payment shall be equal to six times the monthly amount otherwise due and the next and each
subsequent monthly payment shall be equal to one times the monthly amount otherwise due. Payments
made pursuant to this Agreement resulting from Separation From Service due to Disability shall
commence as soon as administratively feasible following such Separation From Service, but in no
event shall distribution be made, or commence to be made, after the later of (i) the next following
December 31 or (ii) 2 1/2 months after the date of such Separation From Service due to Disability.
(k) “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).
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(l) “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 unqualified agreement 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.
(m) “XXXX” 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.
(n) “Performance/Restricted Stock Program” or “PRSP” means the Company’s
Performance/Restricted Stock Program 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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(o) “Separation from Service” means the cessation of Employment of the Executive or the
cessation of an independent contractor relationship between the Company and the Executive (in each
case at the level of interaction then permitted under regulations issued pursuant to Section 409A
of the Code) or the Executive’s death, or Disability.
(p) “Severance Compensation” means three [two, in the case of Group Presidents] times Base
Compensation (as defined in Section 1.1(c) above).
(q) “Specified Employee” means a key employee as defined in Section 416 of the Code (without
regard to paragraph (5) thereof) if the Company has publicly traded securities.
(r) “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
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 Separation from Service of the Executive’s employment with the Company by
action taken by the Company without Cause; or
(b) a voluntary Separation from Service of the Executive’s employment with the Company by an
action taken by the Executive for Good Reason. For purposes of this Subsection 2.1(b), the
voluntary Separation from Service by the Executive for Good Reason is intended to be treated as
described in Treas. Reg. 1.409A-1(n)(2).
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 single lump sum cash Severance Compensation payment on the
409A Payment Date.
(b) The Executive shall receive the Accrued Obligations in a lump sum cash payment within
thirty (30) days of the Effective Date of Termination.
(c) On the 409A Payment Date, the Executive shall receive as AIP for the year in which the
termination occurs a lump sum cash payment, the greater of (i) target AIP for that annual period or
(ii) the amount that would have been earned for the annual period if actual performance for the
calendar year up to and including the date of the Change in Control were annualized and measured
against the applicable Executive’s AIP goals for the calendar year, 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) On the 409A Payment Date, the Executive shall receive a lump sum payment (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), the value for each then uncompleted
TSRP Performance Period equal to the greater of (A) the aggregate value of the TRSP Awards that
would have been earned if the rate of dividends paid for the calendar year immediately prior to the
Change in Control continued for the remainder of each then uncompleted TSRP Performance Period and
the rank of the Company stock among the peer group as achieved as of the date of the Change in
Control was the rank of the Company stock as at the end of the TSRP Performance Period and (B) the
aggregate value of the TSRP Awards at Target for each then uncompleted TSRP Performance Period;
provided that portion of any TSRP Award that would be paid in stock under the terms of the TSRP
shall be paid in cash using the highest value of Company Stock during the period of time between
the Change in Control and the Executive’s termination of employment.
(e) On the 409A Payment Date, the Executive shall receive a lump sum payment in cash based on
the then current market value of the stock paid within thirty (30) days of the Effective Date of
Termination of any awards for then uncompleted measurement periods under the Performance/Restricted
Stock Program as if all then applicable performance and service restrictions had been satisfied.
(f) On the 409A Payment Date, the Executive shall receive a lump sum cash payment equal to the
sum of (i) any earned but unpaid XXXX amounts and (ii) with respect to any XXXX opportunities for
any then uncompleted XXXX Performance Periods an amount determined as the greater of (A) 1X
Performance or (B) the level of performance that would have been achieved if the rate of the
Company’s financial performance for the then completed period had continued for the remainder of
the Performance Period.
(g) 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 commencing on the 409A Payment Date
for a period of thirty-six (36) months after the 409A Payment Date. 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(g) 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.
(h) On or after the 409A Payment Date, the Executive shall be entitled to reimbursement for
actual payments made for professional outplacement services or job search not to exceed $25,000
[$15,000 in the case of Group Presidents] in the aggregate.
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(i) In determining the Executive’s pension benefit following entitlement to a Severance
Benefit, (i) the Executive shall be deemed to have satisfied the age and service requirements for
full vesting under the Company’s qualified (within applicable legal parameters), non-qualified and
supplemental pension plans as of the Effective Date of Termination in which the Executive then
participates such that the Executive shall be entitled to receive the full accrued benefit (based
on actual service rendered through the Effective Date of Termination plus the service under this
Section 2.2(i)) under all such plans in effect as of the date of the Change in Control, without any
actuarial reduction for early payment and (ii) the Executive shall be credited with years of
service for all purposes under each such plan equal to the number used to multiply Base
Compensation in Section 1.1(l) (not to exceed a maximum total of ten credited years of service
under the Company’s Supplemental Pension Plan, if applicable). To the extent the amounts
determined after giving effect to this Section 2.2(i) cannot be paid from or under a qualified
plan, as determined by the administrator of the qualified plan(s), such amounts shall be paid in a
single cash payment on the 409A Payment Date, it being understood that the Executive will receive
all amounts that can be paid from or under a qualified plan from such plan when such amounts
otherwise become due.
(j) If the Company is providing the Executive with the use of an automobile on the date of the
Change in Control, on the 409A Payment Date, the Company shall acquire title to such automobile if
it does not then have title, satisfy any lease obligation, lien or encumbrance related to such
automobile and transfer to the Executive, free and clear of all encumbrances, title to the
automobile.
2.3 Stock Options. All Company stock options previously granted to the Executive
shall be fully vested and exercisable immediately upon a Change in Control, provided, however for
purposes of this Section 2.3, the thresholds for measuring a Change in Control under the
regulations published under Section 409A shall be substituted for the thresholds under Section
1.1(g). Such options shall be exercisable for the remainder of the term established by the
Company’s stock option plan as if the options had vested in accordance with the normal vesting
schedule and the Executive had remained an employee of the Company. Company stock acquired
pursuant to any such exercise may be sold by the Executive free of any Company restrictions,
whatsoever (other than those imposed by federal and state securities laws).
2.4 Termination for any Other Reason. If the Executive’s employment with the Company
is terminated under any circumstances other than those set forth in Section 2.1, including without
limitation by reason of retirement, death, disability, discharge for Cause or resignation without
Good Reason, or any termination, for any reason, that occurs prior to a Change in Control (other
than as provided below) or after twenty-four (24) months following a Change in Control, the
Executive shall have no right to receive the Severance Benefits under this Agreement or to receive
any payments in respect of this Agreement. In such event Executive’s benefits, if any, in respect
of such termination shall be determined in accordance with the Company’s retirement, survivor’s
benefits, insurance, and other applicable plans, programs, policies and practices then in effect.
Notwithstanding anything in this Agreement to the contrary, if the Executive’s employment with the
Company is terminated at any time from three (3) to eight (8) months prior to the date on which a
Change in Control occurs either (i) by the Company other than for Cause or (ii) by the Executive
for Good Reason, and it is reasonably demonstrated that termination of employment (a) was at the
request of an unrelated third party
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who has taken steps reasonably calculated to effect a Change in Control, or (b) otherwise
arose in connection with or in anticipation of the Change in Control, then for all purposes of this
Agreement the termination shall be deemed to have occurred as if immediately following a Change in
Control for Good Reason and the Executive shall be entitled to Severance Benefits as provided in
Section 2.2 hereof. Notwithstanding anything in this Agreement to the contrary, if the Executive’s
employment with the Company is terminated at any time within three (3) months prior to the date on
which a Change in Control occurs either (i) by the Company other than for Cause or (ii) by the
Executive for Good Reason, such termination shall conclusively be deemed to have occurred as if
immediately following a Change in Control for Good Reason and the Executive shall be entitled to
Severance Benefits as provided in Section 2.2. hereof.
2.5 Notice of Termination. Any termination by the Company for Cause or by the
Executive for Good Reason shall be communicated by Notice of Termination to the other party. For
purposes of this Agreement, a “Notice of Termination” shall mean a written notice which shall
indicate the specific termination provision in this Agreement relied upon, and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for termination of the
Executive’s employment under the provision so indicated.
2.6 Withholding of Taxes. The Company shall withhold from any amounts payable under
this Agreement all Federal, state, local, or other taxes that are legally required to be withheld.
2.7 Certain Additional Payments by the Company.
(a) Notwithstanding anything in this Agreement to the contrary, in the event it shall be
determined that any economic benefit or payment or distribution by the Company to or for the
benefit of the Executive, whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise (a “Payment”), would be subject to the excise tax imposed by
Section 4999 of the Code or any interest or penalties with respect to such excise tax (such excise
tax, together with any such interest and penalties, are hereinafter 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), including any Excise Tax imposed
upon the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment equal to the
Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 2.7(c), all determinations required to be made under
this Section 2.7 including whether a Gross-Up Payment is required and the amount of such Gross-Up
Payment, shall be made by the Company’s regular outside independent public accounting firm (the
“Accounting Firm”) which shall provide detailed supporting calculations both to the Company and the
Executive within fifteen (15) business days of the Effective Date of Termination, if applicable, or
such earlier time as is requested by the Company. The initial Gross-Up Payment, if any, as
determined pursuant to this Section 2.7(b), shall be paid to the Executive within five (5) days of
the receipt of the Accounting Firm’s determination. If the Accounting Firm determines that no
Excise Tax is payable by the Executive, it shall furnish the Executive with an opinion that the
Executive has substantial authority not to report any Excise Tax or excess parachute payments on
Executive’s federal income tax return. Any
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determination by the Accounting Firm shall be binding upon the Company and the Executive. As
a result of the 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 which
will not have been made by the Company should have been made (“Underpayment”), consistent with the
calculations required to be made hereunder. In the event that the Company exhausts its remedies
pursuant to Section 2.7(c) and the Executive thereafter is required to make a payment of any Excise
Tax, the Accounting Firm shall determine the amount of the Underpayment that has occurred and any
such Underpayment shall be promptly paid by the Company to or for the benefit of the Executive.
(c) The Executive shall notify the Company in writing of any claim by the Internal Revenue
Service that, if successful, would require the payment by the Company of the Gross-Up Payment.
Such notification shall be given as soon as practicable but no later than ten (10) business days
after the later of either (i) the date the Executive has actual knowledge of such claim, or (ii)
ten (10) days after the Internal Revenue Service issues to the Executive either a written report
proposing imposition of the Excise Tax or a statutory notice of deficiency with respect thereto,
and shall apprise the Company of the nature of such claim and the date on which such claim is
requested to be paid. The Executive shall not pay such claim prior to the expiration of the
thirty-day period following the date on which he gives such notice to the Company (or such shorter
period ending on the date that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such period that the Company
desires to contest such claim, the Executive shall: (i) give the Company any information
reasonably requested by the Company relating to such claim, (ii) take such action in connection
with contesting such claim as the Company shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with respect to such claim by an
attorney reasonably selected by the Company, (iii) cooperate with the Company in good faith in
order effectively to contest such claim, (iv) permit the Company to participate in any proceedings
relating to such claim; provided, however, that the Company shall bear and pay directly all costs
and expenses (including additional interest and penalties) incurred in connection with such contest
and shall indemnify and hold the Executive harmless, on an after-tax basis, for any Excise Tax or
income tax, including interest and penalties with respect thereto, imposed as a result of such
representation and payment of costs and expenses. Without limitation of the foregoing provisions
of this Section 2.7(c), the Company shall control all proceedings taken in connection with such
contest and, at its sole option, may pursue or forego any and all administrative appeals,
proceedings, hearings and conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct the Executive to request or accede to a request for an extension
of the statute of limitations with respect only to the tax claimed, or pay the tax claimed and xxx
for a refund or contest the claim in any permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company shall determine; provided,
however, that if the Company directs the Executive to pay such claim and xxx for a refund, the
Company shall advance the amount of such payment to the Executive, on an interest-free basis and
shall indemnify and hold the Executive harmless, on an after-tax basis, from any Excise Tax or
income tax, including interest or penalties with respect thereto, imposed with respect to such
advance or with respect to any imputed income with respect to such advance; and provided further
that any extension of the statute of limitations requested or acceded to by the Executive at the
Company’s request and relating to payment of taxes for the
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taxable year of the Executive with respect to which such contested amount is claimed to be due
is limited solely to such contested amount. Furthermore, the Company’s control of the contest
shall be limited to issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any other issue raised by
the Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Executive of an amount advanced by the Company pursuant to
Section 2.7(c), the Executive becomes entitled to receive any refund with respect to such claim,
the Executive shall (subject to the Company’s complying with the requirements of Section 2.7(c))
promptly pay to the Company the amount of such refund (together with any interest paid or credited
thereon after taxes applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 2.7(c), a determination is made that the Executive
shall not be entitled to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the expiration of
thirty (30) days after such determination, then such advance shall be forgiven and shall not be
required to be repaid and the amount of such advance shall offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid.
(e) In the event that any state or municipality or subdivision thereof shall subject any
Payment to any special tax which shall be in addition to the generally applicable income tax
imposed by such state, municipality, or subdivision with respect to receipt of such Payment, the
foregoing provisions of this Section 2.7 shall apply, mutatis mutandis, with respect to such
special tax.
Article III
The Company’s Payment Obligation
The Company’s Payment Obligation
3.1 Payment Obligations Absolute. Except as otherwise provided in the last sentence
of Section 2.2(g), the Company’s obligation to make the payments and the arrangements provided for
in this Agreement shall be absolute and unconditional, and shall not be affected by any
circumstances, including, without limitation, any offset, counterclaim, recoupment, defense, or
other right that the Company may have against the Executive or any other party. All amounts
payable by the Company under this Agreement shall be paid without notice or demand. Each and every
payment made hereunder by the Company shall be final, and the Company shall not seek to recover all
or any part of such payment from the Executive or from whomsoever may be entitled thereto, for any
reasons whatsoever. Notwithstanding any other provisions of this Agreement to the contrary, the
Company shall have no obligation to make any payment to the Executive hereunder to the extent, but
only to the extent, that such payment is prohibited by the terms of any final order of a Federal or
state court or regulatory agency of competent jurisdiction; provided, however, that such an order
shall not affect, impair, or invalidate any provision of this Agreement not expressly subject to
such order.
3.2 Contractual Rights to Payments and Benefits. This Agreement establishes and vests
in the Executive a contractual right to the payments and benefits to which the Executive is
entitled hereunder. Nothing herein contained shall require or be deemed to require, or prohibit or
be deemed to prohibit, the Company to segregate, earmark, or otherwise set aside any funds or other
assets, in trust or otherwise, to provide for any payments to be made or required hereunder.
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The Executive shall not be obligated to seek other employment in mitigation of the amounts
payable or arrangements made under any provision of this Agreement, and the obtaining of any such
other employment shall in no event effect any reduction of the Company’s obligations to make the
payments and arrangements required to be made under this Agreement, except to the extent provided
in the last sentence of Section 2.2(g).
Article IV
Enforcement and Legal Remedies
Enforcement and Legal Remedies
4.1 Consent to Jurisdiction. Each of the parties hereto irrevocably consents to
personal jurisdiction in any action brought in connection with this Agreement in the United States
District Court for the Western District of Pennsylvania or any Pennsylvania state court of
competent jurisdiction. The parties also consent to venue in the above forums and to the
convenience of the above forums. Any suit brought to enforce the provisions of this Agreement must
be brought in the aforementioned forums.
4.2 Cost of Enforcement. In the event that it shall be necessary or desirable for the
Executive to retain legal counsel in connection with the enforcement of any or all of Executive’s
rights to Severance Benefits under Section 2.2 of this Agreement, and provided that the Executive
substantially prevails in the enforcement of such rights, the Company, as applicable, shall pay (or
the Executive shall be entitled to recover from the Company, as the case may be) the Executive’s
reasonable attorneys’ fees, costs and expenses in connection with the enforcement of Executive’s
rights.
Article V
Binding Effect; Successors
Binding Effect; Successors
The rights of the parties hereunder shall inure to the benefit of their respective successors,
assigns, nominees, or other legal representatives. The Company shall require any successor
(whether direct or indirect, by purchase, merger, reorganization, consolidation, acquisition of
property or stock, liquidation, or otherwise) to all or a significant portion of the assets of the
Company, as the case may be, by agreement in form and substance reasonably satisfactory to the
Executive, expressly to assume and agree to perform this Agreement in the same manner and to the
same extent that the Company, as the case may be, would be required to perform if no such
succession had taken place. Regardless of whether such agreement is executed, this Agreement shall
be binding upon any successor in accordance with the operation of law and such successor shall be
deemed the “Company”, as the case may be, for purposes of this Agreement.
Article VI
Term of Agreement
Term of Agreement
The term of this Agreement shall commence on the Execution Date and shall continue in effect
for three (3) full years (the “Term”) unless further extended as provided in this Article. The
Term of this Agreement shall be automatically and without action by either party extended for one
additional calendar month on the last business day of each calendar month so that at any given time
there are no fewer than 35 nor more than 36 months remaining unless one party gives written notice
to the other that it no longer wishes to extend the Term of this Agreement, after
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which written notice, the Term shall not be further extended except as may be provided in the
following sentence. However, in the event a Change in Control occurs during the Term, this
Agreement will remain in effect for the longer of: (i) thirty-six (36) months beyond the month in
which such Change in Control occurred; or (ii) until all obligations of the Company hereunder have
been fulfilled and all benefits required hereunder have been paid to the Executive or other party
entitled thereto.
Article VII
Miscellaneous
Miscellaneous
7.1 Employment Status. Neither this Agreement nor any provision hereof shall be
deemed to create or confer upon the Executive any right to be retained in the employ of the Company
or any subsidiary or other affiliate thereof.
7.2 Beneficiaries. The Executive may designate one or more persons or entities as the
primary and/or contingent Beneficiaries of any Severance Benefits owing to the Executive under this
Agreement. Such designation must be in the form of a signed writing acceptable to the Board of
Directors of the Company. The Executive may make or change such designation at any time.
7.3 Entire Agreement. This Agreement contains the entire understanding of the Company
and the Executive with respect to the subject matter hereof. Any payments actually made under this
Agreement in the event of the Executive’s termination of employment shall be in lieu of any
severance benefits payable under any severance plan, program, or policy of the Company to which the
Executive might otherwise be entitled.
7.4 Gender and Number. Except where otherwise indicated by the context, any masculine
term used herein also shall include the feminine; the plural shall include the singular, and the
singular shall include the plural.
7.5 Notices. All notices, requests, demands, and other communications hereunder must
be in writing and shall be deemed to have been duly given if delivered by hand or mailed within the
continental United States by first-class certified mail, return receipt requested, postage prepaid,
to the other party, addressed as follows:
(a) If to the Company:
Allegheny Technologies Incorporated
0000 Xxx XXX Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attn: Chief Executive Officer
0000 Xxx XXX Xxxxx
Xxxxxxxxxx, XX 00000-0000
Attn: Chief Executive Officer
(b) If to Executive, to the Executive’s address set forth at the end of this Agreement.
Addresses may be changed by written notice sent to the other party at the last recorded address of
that party.
7.6 Execution in Counterparts. The parties hereto in counterparts may execute this
Agreement, each of which shall be deemed to be original, but all such counterparts shall
constitute one and the same instrument, and all signatures need not appear on any one
counterpart.
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7.7 Severability. In the event any provision of this Agreement shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the remaining parts of the
Agreement, and the Agreement shall be construed and enforced as if the illegal or invalid provision
had not been included. Further, the captions of this Agreement are for convenience of reference
and not part of the provisions hereof and shall have no force and effect.
7.8 Modification. No provision of this Agreement may be modified, waived, or
discharged unless such modification, waiver, or discharge is agreed to in writing and signed by the
Executive and on behalf of the Company.
7.9 Applicable Law. To the extent not preempted by the laws of the United States, the
laws of the Commonwealth of Pennsylvania, other than the conflict of law provisions thereof, shall
be the controlling laws in all matters relating to this Agreement.
7.10 Section 409A.
(a) CONSTRUCTION AND INTERPRETATION. This Agreement shall be construed and interpreted in a
manner so as not to trigger adverse tax consequences to the Executive under Section 409A of the
Code and the rulings and regulations issued thereunder. The Company may amend this Agreement in
any manner necessary to comply with Code Section 409A or any successor law, without the consent of
the Executive. Furthermore, to the extent necessary to comply with Section 409A of the Code, the
payment terms for any of the payments or benefits payable hereunder may be delayed without the
Executive’s consent to comply with Section 409A of the Code.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first
above written.
| ALLEGHENY TECHNOLOGIES INCORPORATED | ||||||
| By: | ||||||
| Title: | Executive Vice President, Human Resources, Chief Legal and Compliance Officer, General Counsel and Corporate Secretary | |||||
| EXECUTIVE: | ||||||
| Address: | ||||||
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