Document:

EXHIBIT 10.2

OREGON STEEL MILLS, INC.
 EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of May 1, 2006, by and between OREGON STEEL MILLS, INC., a Delaware corporation (“OSM”) and JAMES E. DECLUSIN (the “Executive”). 

RECITALS

	
  
A.
  	
  
OSM desires to employ   Executive as President and Chief Executive Officer and Executive desires to   be so employed; and
  
	
  
 
  	
  
 
  
	
  
B.
  	
  
OSM and Executive desire   to set forth in writing the terms of their agreement with respect to   Executive’s employment;
  

NOW THEREFORE, in consideration of the premises and the mutual agreements contained in this Agreement, the parties agree as follows: 

1.          Term of Employment. 

                    (a)     OSM employs Executive, and Executive accepts employment with OSM, in the positions and with the duties and responsibilities as set forth in Section 2 below for the Term of Employment, subject to the terms and conditions of this Agreement. 

                    (b)     The Term of Employment under this Agreement will include the Initial Term and each Renewal Term.  The Initial Term will commence as of May 1, 2006 and will continue until April 30, 2010.  The Term of Employment will automatically renew for a one-year period (each such renewal, a “Renewal Term”) at the end of the Initial Term and each Renewal Term, unless either party gives notice to the other not less than six months prior to the end of the Initial Term or any Renewal Term, as the case may be, of his or its intent not to renew such Initial Term or Renewal Term, as the case may be. 

2.          Position; Duties and Responsibilities.  During the Term of Employment: 

                    (a)     Executive will be employed as President and Chief Executive Officer of OSM, reporting directly to the Board of Directors of OSM (the “Board of Directors”), with such duties and day-to-day management responsibilities as are customarily performed by persons holding such offices at similarly situated steel companies and such other duties as may be mutually agreed upon between Executive and the Board of Directors. 

                    (b)     Executive will, without additional compensation, also (i) serve on the Board of Directors of OSM; and (ii) serve on the board of directors or management committees of, serve as an officer of, and/or perform such executive and consulting services for, or on behalf of, such subsidiaries or affiliates of OSM as the Board of Directors may, from time to time, request.  OSM and such subsidiaries and affiliates are referred to, collectively, as the “Company.”

                    (c)     Executive will serve OSM faithfully, diligently and to the best of his ability and will devote substantially all of his time and efforts to his employment and the performance of his duties under this Agreement.  Nothing in this Agreement will preclude Executive from engaging in charitable and community affairs and managing his personal financial and legal affairs, so long as such activities do not materially interfere with his carrying out his duties and responsibilities under this Agreement.  

                    (d)     The employment relationship of Executive will also be governed by the general employment policies and practices of the Company reasonably adopted from time to time, except to the extent inconsistent and in conflict with the terms of this Agreement.  Executive agrees to execute and comply with the Company’s standard form of Confidentiality Agreement.

3.          Compensation.  During the Term of Employment:

                    (a)     Base Salary. OSM will pay Executive an annual base salary (the “Base Salary”) equal to $620,000, payable to Executive in semi-monthly equal payments on regular OSM paydays.   All payments and benefits payable under this Agreement will be paid subject to all required tax withholdings.

                    (b)     Annual Incentive Plan.  Executive will be eligible to participate in the existing annual incentive plan (“AIP”) with a target bonus initially set at 85%, subject to further review and modification by the Compensation Committee.  The AIP and its goals may be modified and established by the Compensation Committee from time to time.  If OSM adopts new annual incentive bonus plans or programs or new equity-based incentive compensation plans or programs, Executive will be eligible to participate in such plans or programs.

                    (c)     Long-Term Incentive Plan.  Executive will be eligible to participate in the Program for Executive Officers and Key Employees under the 2005 Long-Term Incentive Plan with a Target Performance Share Award determined by the Compensation Committee and the Board of Directors for each Performance Period. 

                    (d)     Other Incentive Programs.  Executive will be eligible to receive such stock options, restricted stock, other grants or bonuses as the Compensation Committee of the Board of Directors or the Board of Directors, as the case may be, will deem appropriate. 

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4.          Benefits.  During the Term of Employment: 

                    (a)     Vacation and Other Paid Time Off.  Executive will be entitled to 5 weeks vacation annually and paid time off in accordance with OSM’s policies.

                    (b)     Benefit Plans.  Executive will be entitled to participate in OSM’s benefit plans for executives, including without limitation, OSM’s retirement and supplemental retirement plans, health and welfare (medical, dental, life and disability insurance) insurance programs, 401(k) plan and other qualified retirement plans and matching contributions with respect to such plans, in accordance with their terms (including eligibility, payroll deductions of any applicable employee cost sharing, and other requirements), each of which may be amended from time to time, and any other benefit plans now or hereafter available to OSM’s executive officers, in its sole discretion.  OSM may prospectively amend, eliminate or add to these insurance and benefit programs at any time, in its sole
discretion.  

                    (c)     Expenses.  OSM will reimburse Executive for any and all necessary, customary and usual business expenses, properly receipted in accordance with OSM policies, incurred by Executive in connection with his employment under this Agreement.  

                    (d)     Other Fringe Benefits.  OSM will provide Executive an automobile allowance in the amount of $2,000 per month.  OSM will reimburse Executive, or pay directly, for dues, assessments and other expenses related to his membership in Waverly Country Club and Thunderbird Country Club.  At the Executive’s option, OSM will also provide Executive with other perquisites customarily provided to a President and Chief Executive Officer.   

                    (e)     Change in Control and Indemnification Agreements.  OSM and Executive will enter into OSM’s standard forms of change in control letter for executives and Indemnification Agreement for executives, each modified as necessary to be consistent with or to accommodate this Agreement. 

5.          Termination of Employment. 

                    (a)     Termination Due to Death or Disability.  If Executive’s employment is terminated during the Term of Employment by reason of Executive’s death or Disability, Executive’s Term of Employment will terminate automatically without further obligations to Executive, his legal representative or his estate, as the case may be, under this Agreement except for (i) any compensation earned but not yet paid, including and without limitation, any amount of Base Salary accrued 

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or earned but unpaid and any other payments payable to Executive pursuant to Section 5(e) below, which amounts will be promptly paid in a lump sum to Executive, his legal representative or his estate, as the case may be, (ii) continued payment on a monthly basis of Executive’s then current Base Salary, as calculated pursuant to Section 3(a) above, for the remainder of the Term of Employment, which will be paid to Executive, his legal representative or his estate, as the case may be; and (iii) any benefits provided for in the event of death or Disability under OSM’s disability insurance plans, life insurance and other benefit plans for executives. 

                    (b)     Termination Without Cause or for Good Reason.  In the event Executive’s employment is terminated by OSM without Cause (including OSM’s giving notice of its determination not to renew the Initial Term or any Renewal Term pursuant to Section 1(b)) or by Executive for Good Reason, unless any such termination is preceded by Executive’s giving notice of his determination not to renew the Initial Term or any Renewal Term pursuant to Section 1(b), Executive will be entitled to the same payments and benefits provided for in Sections 4 and 5 of this Agreement until the expiration of the Term of Employment. 

                    (c)     Termination by OSM for Cause or Voluntary Termination by Executive.  In the event Executive’s employment is terminated by OSM for Cause, or is terminated by Executive on his own initiative for other than a Good Reason (including pursuant to Section 1(b)), Executive will be entitled to any compensation earned but not yet paid, including and without limitation, any amount of Base Salary accrued or earned but unpaid and any other payments payable to Executive pursuant to Section 5(e) below, as of the date of termination. 

                    (d)     Termination Related to Change in Control.  Termination related to Change in Control will be governed by the Change in Control Agreement entered into in accordance with Section 4(e). 

                    (e)     Other Payments.  Upon the termination of Executive’s employment, in addition to the amounts payable under any Section above, Executive will be entitled to receive the following: (i) any annual bonus earned during one or more preceding years but not paid; (ii) reimbursement for reasonable business expenses incurred but not yet reimbursed by OSM; and (iii) any other vested benefits to which Executive or his legal representative may be entitled under applicable plans and programs of OSM. 

                    (f)     No Mitigation; No Offset.  In the event of any termination of Executive’s employment under this Agreement, he will be under no obligation to seek other employment or otherwise in any way to mitigate the amount of any payment provided for in this Section 5, and there will be no offset against amounts due him under this Agreement on account of any remuneration attributable to any subsequent employment that he may obtain. 

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6.          Definitions.  For purposes of this Agreement, the following terms will be defined as set forth below: 

                    (a)     Cause.  “Cause” means any act or omission that is: a breach of Executive’s obligations to the Company, including but not limited to substantial absence without cause, serious breach of confidence, criminal offenses committed at the place of work or outside of it, personal dishonesty, incompetence, willful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, willful violation of any law, rule, or regulation (other than traffic violations or similar offenses).  OSM may terminate this Agreement effective as of the date a written Notice of Termination is given specifying the cause.

                    (b)     Disability.  “Disability” means a physical or mental condition which renders Executive unable or incompetent to carry out the essential functions of the job which Executive was assigned at the time the disability was incurred, which has lasted for at least 120 consecutive days, and which in the opinion of a physician mutually agreed upon by the Company and Executive (provided that neither party will unreasonably withhold agreement) is expected to last for an indefinite duration or a duration in excess of six months. 

                    (c)     Good Reason.  “Good Reason” means: (i) material diminution in Executive’s title, duties or responsibilities; (ii) relocation of Executive’s place of employment without his consent to an area other than a 50 mile radius from Portland, Oregon; or (iii) the failure by OSM to comply with the provisions of this Agreement, other than an isolated, insubstantial and inadvertent failure not taken in bad faith and which is remedied by the Company promptly after receipt of notice given by Executive. 

7.          Noncompetition.  During the Term of Employment and for a period of one year following any voluntary termination by Executive without Good Reason, Executive will not, without the prior written consent of OSM which will not be unreasonably withheld, perform services for any person or entity engaged in the business of manufacturing, selling or distributing steel products in the United States or Canada in competition with the Company.  Executive agrees that damages for breach of the covenants contained in this Section would be difficult to determine and therefore agrees that these provisions may be enforced by temporary or permanent injunction. The right to such injunctive relief will be in addition to and not in place of any other remedies to which the Company may be entitled. Executive agrees that the provisions of this Section are reasonable.  However, if any court of competent
jurisdiction determines that any provision within this Section is unreasonable in any respect, the parties intend that this Section should be enforced to the fullest extent allowed by such court.

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8.          Arbitration.  Any dispute between the parties with respect to any of the matters set forth in this Agreement will be submitted to binding arbitration in Portland, Oregon.  Either party may commence the arbitration by delivery of a written notice to the other, describing the issue in dispute and its position with regard to the issue.  If the parties are unable to agree on an arbitrator within 30 days following delivery of such notice, the arbitrator will be selected by a Judge of the Circuit Court of the State of Oregon for Multnomah County upon three days’ notice.  Discovery will be allowed in connection with any such arbitration to the same extent permitted by the Oregon Rules of Civil Procedure but either party may petition the arbitrator to limit the scope of such discovery, in which event the arbitrator will determine the extent of discovery allowable in connection
with the dispute in question.  Except as otherwise provided in this Agreement, the arbitration will be conducted in accordance with the rules of the Arbitration Services of Portland, Inc. then in effect for expedited proceedings.  The award of the arbitrator will be final and binding, and judgment upon an award may be entered in any court of competent jurisdiction. The arbitrator will hold a hearing, at which the parties may present evidence and argument, within 30 days of his or her appointment, and will issue an award within 15 days of the close of the hearing.  The arbitrator will have authority to award any remedy that a court in the State of Oregon could order or grant, including but not limited to injunctive relief and other equitable relief and the imposition of sanctions for abuse or frustration of the arbitration process, except that the arbitrator will not have authority to award punitive damages or any other amount for the purpose of imposing a penalty.   The
parties will keep all information relating to the arbitration and the disposition of each claim confidential to the fullest extent permitted by applicable law. Unless the arbitrator assesses reasonable attorneys’ fees and the cost of the arbitrator to one or both parties, each party will pay its own attorneys’ fees and share the cost of the arbitrator.

9.          Assignability; Binding Nature.  This Agreement will inure to the benefit of the Company and Executive and their respective successors, heirs (in the case of Executive) and assigns.  The Company may not assigned or transfer its rights and obligations under this Agreement without the prior written consent of Executive except to a successor of the Company’s business which expressly assumes the liabilities, obligations and duties of OSM, as contained in this Agreement, either contractually or as a matter of law.  This Agreement will not be assignable by Executive. 

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10.         Representation.  OSM represents and warrants that it is fully authorized and empowered to enter into this Agreement. 

11.         Entire Agreement. This Agreement, and the documents referenced in this Agreement contain the entire agreement between OSM and Executive concerning the subject matter and supersedes all prior agreements, understandings, discussions, negotiations and undertakings, whether written or oral, between them with respect thereto. 

12.         Amendment; Waiver.  This Agreement cannot be changed, modified or amended without the consent in writing of both Executive and OSM.  No waiver by either OSM or Executive at any time of any breach by the other party of any condition or provision of this Agreement will be deemed a waiver of a similar or dissimilar condition or provision at the same or at any prior or subsequent time.  Any waiver must be in writing and signed by Executive or an authorized officer of OSM, as the case may be.

13.         Severability.  In the event that any provision or portion of this Agreement will be determined to be invalid or unenforceable for any reason, in whole or in part, the remaining provisions of this Agreement will be unaffected thereby and will remain in full force and effect to the fullest extent permitted by law. 

14.         Governing Law. This Agreement and all rights thereunder, and any controversies or disputes arising with respect thereto, will be governed by and construed and interpreted in accordance with the laws of Oregon, applicable to agreements made and to be performed entirely within such State, without regard to conflict of laws provisions thereof that would apply the law of any other jurisdiction. 

15.         Survival of Executive’s Rights and Obligations.  All of Executive’s rights under this Agreement, including his rights to compensation and benefits, and his noncompetition obligations under Section 7 and under the Confidentiality Agreement, will survive the expiration of the Term of Employment, any termination of Executive’s employment and the termination of this Agreement.

16.         Notices.  Any notice given to either party will be in writing and will be deemed to have been given when delivered personally or sent by certified or registered mail, postage prepaid, return receipt requested, duly addressed to the party concerned, if to OSM, at its principal office, and if to Executive, at the address of Executive shown on OSM’s records or at such other address as such party may give notice of. 

17.         Headings.  The headings of the sections contained in this Agreement are for convenience only and will not be deemed to control or affect the meaning or construction of any provision of this Agreement. 

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18.         Counterparts. This Agreement may be executed in two or more counterparts. 

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

	
  OREGON STEEL MILLS, INC.
  	
   
  	
  Executive:
  
	
   
  	
   
  	
   
  
	
  /s/ Carl W. Neun
  	
   
  	
  /s/  James E. Declusin
  
	
  

  	
   
  	
  

  
	
  Carl W. Neun, Chairman
  	
   
  	
  James E. Declusin
  

8Exhibit 10.3

OREGON STEEL MILLS, INC.
 PROGRAM FOR EXECUTIVE OFFICERS AND KEY EMPLOYEES
 UNDER THE 2005 LONG-TERM INCENTIVE PLAN

	
  
1.
  	
  
PURPOSE
  
	
  
 
  	
  
 
  
	
  
The purpose   of the 2005 Long-Term Incentive Plan (“LTIP”, or “the Plan”) is to increase   senior management’s focus on the Company’s long-term performance, to   encourage retention of executives and key employees, and to provide   executives and key employees with a motivating incentive opportunity.  This Program for Executive Officers and   Key Employees (“Program”) was approved by the Board on April 28, 2005 to   grant Performance Awards under the Plan.    Capitalized terms not defined in this document will have the meanings   given in the Plan.
  
	
  
 
  
	
  
2.
  	
  
PROGRAM ADMINISTRATION
  
	
   
  	
  
 
  
	
  
The Board of   Directors (“Board”) has primary responsibility for interpretation and   administration of the terms and provisions of the Plan and the Program.  The Board may act through its Compensation   Committee (“Committee”).  Such   responsibility includes, but is not limited to, selecting plan participants,   setting performance targets, conducting consultations with officers and other   executives of the Company as needed to perform the Board’s duties,   promulgating necessary rules, guidelines, and procedures for Plan and Program   administration, and engaging or employing counsel, advisors, or consultants,   and any other persons as it may deem necessary or expedient for the   performance of its responsibilities under the Plan and the Program.
  
	
  
 
  
	
  
The Vice   President Administration will serve the Committee as the chief personnel   resource for matters relating to the Plan and Program.  While the Committee is free to delegate   any duties and responsibilities it deems appropriate, all decisions regarding   selection for participation, performance and payments under the Plan and   Program will be made solely by the Committee and to the extent required, by   the Board.  All decisions,   determinations and interpretations of the Committee with respect to the Plan   and Program will be binding upon all persons.
  
	
  
 
  
	
  
3.
  	
  
PROGRAM PARTICIPATION
  
	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
3.1.
  	
  
Eligibility
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
Participation   in the Program is limited to executive officers, senior management and   certain key employees who can have a major impact on the long-term success of   the Company.  The CEO will recommend   Participants subject to Committee approval.
  

	
  4.
  	
  
PERFORMANCE AWARDS
  
	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
4.1.
  	
  
Performance Periods
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  

Each Performance Period shall consist of a period of three consecutive Company
fiscal years, with the first Performance Period for the Program commencing on
January 1, 2005 and ending on December 31, 2007.
 
	
  
 
  
	
  

Performance Periods of future Performance Awards will overlap and provide a
payout opportunity annually beginning in Q1 2008.
 

Illustration of Overlapping 3-Year Performance Cycles

	
  
 
  	
  
 
  	
  
4.2.
  	
  
Target Performance Award
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
The Target Performance Award Value (“Target Value”) is set by the   Committee for each Participant at the beginning of each Performance   Period.  The Target Value is expressed   in US dollars and is based on an assessment of external market data as well   as the Participant’s level of responsibility within the Company.
  
	
  
 
  
	
  
The Target Performance Share Grant (“Target Grant”) is determined by   dividing the Target Value by the “Share Price” (defined as the prior twenty-trading-day   average closing price) as of the first day of the Performance Period.  The Target Grant will be rounded to the   nearest whole number of Performance Shares.
  
	
   
  
	
  
 
  	
  
 
  	
  
Example Calculation of Target Grant at Target Value:
  
	
  
 
  	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
Target Value: $100,000
  
	
  
 
  	
  
 
  	
  
Average OSM Share Price: $20.00
  
	
  
 
  	
  
 
  	
  
Target Grant:  $100,000 /   $20.00 = 5,000 Performance Shares
  

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Once the Target Grant is set for a three-year Performance Period it   will not be changed unless otherwise provided in the Program or the Plan.
  
	
  
 
  
	
  
 
  	
  
 
  	
  
4.3.
  	
  
Performance Award Determination
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
Performance Shares are earned at the end of the three-year   Performance Period subject to the following performance measures as approved   by the Committee.
  
	
  
 
  
	
  
 
  	
  
 
  	
  
4.3.1.
  	
  
Total Shareholder Return Relative to   Industry Peer Group.
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
Fifty percent (50%) of the Target Grant for a Performance Period is   earned based on Total Shareholder Return (“TSR”) relative to a select steel   industry peer group (“Peer Group” defined in Section 4.3.2)  TSR is defined as the stock price   appreciation including reinvestment of dividends during the Performance   Period.
  
	
  
 
  
	
  
 
  	
  
 
  	
  
The Relative Total Shareholder Return   (“rTSR”) performance will be calibrated as follows:
  

	
  
Superior
  	
  
  >  
	
  
75th Percentile Performance
  
	
  
 
  	
  
 
  	
  
 
  
	
  Target
  	
  
=
  	
  
50th Percentile Performance
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Threshold
  	
  
=
  	
  
25th Percentile Performance
  

	
  
The percentile rank of the Company will be determined through a rank   ordering of the Peer Group and the Company.    The top ranked company will be the 100th percentile and the   bottom ranked company will be the 0th percentile.  The “PERCENTRANK” function of Microsoft   Excel will indicate the Company’s relative rank.  The Performance Award determination for this measure will be   calculated as outlined in Sections 5.1 and 5.2.
  
	
  
 
  
	
  
 
  	
  
 
  	
  
4.3.2.
  	
  
Peer Group
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
For the rTSR award determination, a performance peer group (“Peer   Group”) is required.  The Peer Group   for a Performance Period will be defined at the beginning of the Performance   Period, approved by the Committee and documented in a Confidential Addendum   to this Program.  The Peer Group may   be modified for future Performance Periods.    The Peer Group may be adjusted at the discretion of the Committee;   however, to the extent any modification of the Peer Group impacts the   Performance Award to be received by a Participant, such modification will be   made within the time period prescribed by Section 162(m) of the Code and   related regulations.
  

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  In general, if a Peer Group company is acquired or otherwise ceases   to have a publicly traded common stock during the Performance Period, it will   be dropped from the Peer Group.  If,   however, the company ceases to have a tradable common stock for reasons of   bankruptcy, liquidation or other indication of financial distress, the   company will remain in the Peer Group as the lowest performing company.  All decisions regarding the above will be   made by the Committee and are final.
  
	
  
 
  
	
  
 
  	
  
 
  	
  
4.3.3.
  	
  
Company Financial Measure.
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
Fifty percent (50%) of the Target Grant for a Performance Period is   earned based on the three-year average EBITDA per ton of steel shipped.  Target- and range-setting for the   Company’s EBITDA measure is based on OSM’s internal financial plan and   forecasts, as well as any other information that the Committee may choose to   use.  The EBITDA measure will be   expressed in terms of a minimum “Threshold Performance”, “Target Performance”   and “Superior Performance” for the three-year Performance Period.  The CEO will recommend, and the Committee   will approve, the Threshold, Target and Superior levels of performance for a   Performance Period and document the approved levels in a Confidential   Addendum to this Program.
  
	
   
  
	
  
The Performance Award determination for this measure will be   calculated as outlined in Sections 5.1 and 5.2.
  
	
  
 
  
	
  
Once targets and ranges are set for a three-year Performance Period,   they may not be changed.  New   performance assumptions may be incorporated in targets and ranges set for   future Performance Periods.
  
	
  
 
  
	
  
5.
  	
  
PAYMENT OF PERFORMANCE AWARD
  
	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
5.1.
  	
  
Calculation of Actual Performance Award
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
The actual Performance Award is expressed as a number of Performance   Shares and is determined by the Participant’s Target Grant (see Section 4.2)   and the actual performance level that the Company achieves over the   three-year Performance Period.  See   Exhibits for example award calculations under different scenarios.
  
	
   
  
	
  
 
  	
  
 
  	
  
The actual Performance Award will be   calibrated as follows:
  

	
  
Performance
   Level
  	
  
 
  	
  
Multiple Applied to # of 
   Performance Shares of Target 
   Grant
  
	
  

  	
  
 
  	
  

  
	
  
Superior
  	
  
 
  	
  
2.00 X
  
	
  
 
  	
  
 
  	
  
 
  
	
  Target
  	
  
 
  	
  
1.00 X
  
	
  
 
  	
  
 
  	
  
 
  
	
  
Threshold
  	
  
 
  	
  
0.25 X
  

  
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5.2.
  	
  
Interpolation of Performance Awards Between   Performance Levels
  
	
   
  	
  
 
  	
  
 
  	
  
 
  
	
  
Linear interpolation will be used to determine actual awards when   Company performance is between performance levels.  No awards will be earned if Company performance is not at or   above the threshold level for either the rTSR or Company financial measures.
  
	
  
 
  
	
  
If at least the threshold is achieved in a category, then Performance   Shares will be earned in an amount equal to the number of Target Grant   Performance Shares tied to that category, multiplied by a percentage   determined by a straight-line interpolation between the level of the   Company’s performance in that category and the above-stated payout   percentages.
  
	
  
 
  
	
  
 
  	
  
 
  	
  
5.3.
  	
  
Form and Manner of Payout
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
As indicated above and subject to Section 6 below, the actual   Performance Award will be paid out as follows:  Forty percent (40%) of the Performance Award will be paid out   in OSM Shares.  The remaining sixty   percent (60%) will be payable in cash in an amount determined by multiplying   the number of remaining Performance Shares by the prior twenty-trading-day   average closing price as of the last day of the Performance Period.
  
	
   
  
	
  
The delivery of OSM Shares and payment of cash will be made as soon   as reasonably practicable following the Committee’s certification of   performance results.  In general,   payments will be made before the close of the first quarter of the fiscal   year following the end of the Performance Period (“Payment Date”).
  
	
  
 
  
	
  
 
  	
  
 
  	
  
5.4.
  	
  
Taxation
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
All Performance Awards are subject to any applicable taxes   immediately upon payout.  The Company   will withhold any sums that federal, state, local, or foreign tax law   requires to be withheld with respect to award payments.  All applicable taxes will be subtracted   from the cash amount payable to the Participant.
  
	
  
 
  
	
  
6.
  	
  
PROGRAM GUIDELINES
  
	
  
 
  	
  
 
  
	
   
  	
  
 
  	
  
6.1.
  	
  
Retirement
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
Upon retirement on or after age 55 with 15 years of pension eligible   Company service under the Company’s pension plan applicable to the   Participant, or on or after age 65 (“Retirement”), for all Performance   Periods commenced at the time of Retirement, a pro-rata Performance Award   will be calculated based on actual performance at the end of the Performance   Period and paid contingent upon receipt of any separation agreement requested   by the Company.  Unless otherwise   specified in the separation agreement, such payments will be made on the   applicable Payment Date for the Performance Award as prorated for service   during the period.
  

 
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6.2.
  	
  
Voluntary Termination and Involuntary   Termination for Cause
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
Upon voluntary termination other than Retirement or involuntary   termination for Cause, any Performance Awards not paid by the date of   termination are completely forfeited, including Performance Awards earned but   unpaid from completed Performance Periods and Performance Awards not yet   earned. Involuntary termination of your employment for “Cause” means any act   or omission that is: a breach of your obligations to the Company, including   but not limited to substantial absence without cause, serious breach of   confidence, criminal offenses committed at the place of work or outside of   it, personal dishonesty, incompetence, willful misconduct, breach of   fiduciary duty involving personal profit, intentional failure to perform   stated duties, willful violation of any law, rule, or regulation (other than   traffic violations or similar offenses).
  
	
  
 
  
	
   
  	
  
 
  	
  
6.3.
  	
  
Involuntary Termination without Cause
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
Upon involuntary termination without Cause (as defined in 6.2),   (i) if the date of termination is at least 24 months into the   Performance Period, a pro-rata Performance Award will be calculated based on   actual performance at the end of the Performance Period and paid contingent   upon any separation agreement requested by the Company; and (ii) all other   Performance Awards for all other Performance Periods will be completely   forfeited at the date of termination.    Any payments will be made on the applicable Payment Date for the   Performance Award as prorated for service during the period.
  
	
  
 
  
	
  
 
  	
  
 
  	
  
6.4.
  	
  
Death and Long-Term Disability
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  If termination of a Participant’s employment occurs during the   Performance Period for reason of death or Long-Term Disability as defined in   the Company’s Long-Term Disability Policy then in effect, a pro-rata   Performance Award will be calculated based on actual performance at the end   of the Performance Period.  Unless   otherwise specified in the separation agreement, such payments will be made   on the applicable Payment Date for the Performance Award as prorated for   service during the period.  In the   event of death, the payment will be made to the Employee’s estate.
  
	
  
 
  
	
  
 
  	
  
 
  	
  
6.5.
  	
  
Change of Control
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
In the event that a Change in Control (as defined in the Plan) is   deemed to have occurred at any time within a Performance Period, a pro-rata   Performance Award will be calculated based on actual performance as of the   date of the Change in Control  and paid   as soon as reasonably practical following the Change in Control.
  

  
6

	
  
 
  	
  
 
  	
  
6.6.
  	
  
New Hires and Promotions into Eligibility
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
Subject to approval by the Committee, any individual who is hired or   promoted into a position that is selected for participation in the Program   during the first twelve months of a Performance Period will be eligible to   participate in such Performance Period.    The Target Value and Target Grant granted will be prorated for the   portion of the Performance Period in which he or she is a Participant.
  
	
  
 
  
	
  
Individuals who are hired or promoted into a position that is   selected for participation in the Program after the first twelve months of a   Performance Period will not be eligible for that Performance Period but will   be eligible for subsequent Performance Periods to the extent approved by the   Committee.
  
	
   
  
	
  
 
  	
  
 
  	
  
6.7.
  	
  
Promotions within Program Eligible   Positions
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
For any current Participant who is promoted to another   Program-eligible position, no changes will be made to grant levels for all   Performance Periods commenced by the date of promotion.  Grant levels for such Participants may be   reviewed by the Committee for subsequent Performance Periods.
  
	
  
 
  
	
  
 
  	
  
 
  	
  
6.8.
  	
  
Removal from Program
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  A Participant may be removed from further participation in the   Program by the Committee and such removal shall be effective as of the date   determined by the Committee.  In such   a case, the Participant shall be eligible to receive a pro-rated Performance   Award, if any, based on his or her period of participation during the   Performance Period ending in the year in which the Participant’s removal   occurred.
  
	
  
 
  
	
  
7.
  	
  
MISCELLANEOUS PROVISIONS
  
	
  
 
  	
  
 
  
	
  
 
  	
  
 
  	
  
7.1.
  	
  
Assignment or Transfer
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
No Performance Awards or other interest or rights under the Program   or the Plan may be sold, assigned, transferred, pledged or otherwise   encumbered, except by will or by the laws of descent and distribution;   provided that, if so determined by the Committee, a Participant may, in the   manner established by the Committee, designate a beneficiary to exercise the   rights of the Participant with respect to any Performance Award upon the   death of the Participant.
  
	
   
  
	
  
 
  	
  
 
  	
  
7.2.
  	
  
Costs and Expenses
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
The costs and expenses of administering the Program and Plan shall be   borne by the Company and shall not be directly charged against any   Participant.
  

  
7

	
   
  	
  
 
  	
  
7.3.
  	
  
Effect on Employment
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
Nothing contained in the Plan, Program or any related agreement shall   affect, or be construed as affecting, the terms of employment of any   Participant except to the extent specifically provided.  Nothing contained in this Plan, the   Program or any related agreement shall impose, or be construed as imposing,   any obligation on (i) the Company to continue the employment of any   Participant; or (ii) any Participant to remain in the employ of the   Company.
  
	
  
 
  
	
  
 
  	
  
 
  	
  
7.4.
  	
  
Not Part of Other Benefits
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  The benefits provided in Program and the Plan shall not be deemed a   part of any other benefit provided by the Company to its employees.  The Company assumes and shall have no   obligation to Participants except as expressly provided in the Plan or the   Program.
  
	
  
 
  
	
  
 
  	
  
 
  	
  
7.5.
  	
  
Amendment or Termination of the Program
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
The Committee shall have the right to amend or terminate the Program   at any time in any way provided, that no such amendment or termination is   made without the consent of the affected Participant, if such action would   impair the right of such Participant under any outstanding Performance Award.
  
	
  
 
  
	
  
 
  	
  
 
  	
  
7.6.
  	
  
Plan Terms
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  The terms of the Plan are incorporated by reference into the   Program.  The Company and the   Committee retain all rights and authority under the Plan and Program with   respect to a Performance Award.  Any   conflict between the Plan and the Program will be resolved in favor of the   Plan.
  
	
  
 
  
	
  
 
  	
  
 
  	
  
7.7.
  	
  
No Rights of Stock Ownership
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  
Any Performance Award will not entitle a Participant to any interest   in or to any dividend, voting, or other rights normally attributable to common   stock ownership.
  
	
  
 
  
	
  
 
  	
  
 
  	
  
7.8.
  	
  
Dispute Resolution
  
	
  
 
  	
  
 
  	
  
 
  	
  
 
  
	
  Any dispute   or disagreement which arises under, or as a result of, or pursuant to, this   Program will be resolved by the Company’s Board or Committee in its absolute   discretion, and any such determination or any other determination by the   Board or Committee under or pursuant to this Program and any interpretation   by the Board or Committee of the terms of the Program will be final, binding   and conclusive on all persons affected.
  

  8

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