Document:

EX-10.2

 

Exhibit 10.2

Allegheny Technologies Incorporated

Key Executive Performance Plan

Effective as of January 1, 2004

And as amended February 24, 2005

and as further amended on February 22, 2006

and as further amended on February 21, 2007

Article I. Adoption and Purpose of the Key Executive Performance Plan

     1.01 Adoption. This Key Executive Performance Plan is adopted by the Personnel and
Compensation Committee of the Board of Directors as a part of the Allegheny Technologies
Incorporated executive compensation program effective January 1, 2004. The KEPP Payments,
if any, earned under this Plan are intended as performance based compensation within the
meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended, as incentive
compensation determined solely with reference to attainment in predetermined levels of
Earnings and Operational Goals within the relevant Performance Period.

     1.02 Purpose. The purposes of the KEPP are (i) to direct the focus of key management
employees to the achievement of goals deemed necessary for the success of the Corporation,
(ii) to assist the Corporation in retaining and motivating selected key management employees
of the Corporation and its subsidiaries who will contribute to the success of the
Corporation and (iii) to reward key management employees for the overall success of the
Corporation as determined with reference to predetermined levels of Earnings of the
Corporation and attainment of Operational Goals. The KEPP is intended to act as an
incentive to participating key management employees to achieve long-term objectives that
will inure to the benefit of all stockholders of the Corporation measured in terms of
achievement of predetermined levels of Earnings of the Corporation and attainment of
Operational Goals.

     1.03 Plan Document. This KEPP plan document is intended as the plan document as
adopted by the Committee, which will govern all Performance Periods of the KEPP beginning in
or after 2004.

Article II. Definitions

     For purposes of this Plan, the capitalized terms set forth below shall have the following
meanings:

     2.01 Award means an opportunity to earn a KEPP Payment in a particular Performance
Period. Each Award shall be denominated in dollars that can be earned upon
attainment of predetermined Earnings thresholds (Level 1) and the maximum amount that may be
paid with respect to Operational Goals before the application of Negative Discretion (Level
2).

 

 

     2.02 Award Agreement means a written agreement between the Corporation and a Participant or
a written acknowledgment from the Corporation specifically setting forth the terms and
conditions of a KEPP Award granted to a Participant pursuant to Article VI of this Plan.

     2.03 Board means the Board of Directors of the Corporation.

     2.04 Cause means a determination by the Committee that a Participant has engaged in
conduct that is dishonest or illegal, involves moral turpitude or jeopardizes the
Corporation’s right to operate its business in the manner in which it is now operated.

     2.05 Change in Control means any of the events set forth below:

          (a) The acquisition in one or more transactions, other than from the Corporation, by
any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of a number of Corporation Voting Securities in excess of 25% of the
Corporation Voting Securities unless such acquisition has been approved by the Board; or

          (b) Any election has occurred of persons to the Board that causes two-thirds of the
Board to consist of persons other than (i) persons who were members of the Board on January
1, 2001 and (ii) persons who were nominated for election as members of the Board at a time
when two-thirds of the Board consisted of persons who were members of the Board on January
1, 2001; provided, however, that any person nominated for election by the Board at a time
when at least two-thirds of the members of the Board were persons described in clauses (i)
and/or (ii) or by persons who were themselves nominated by such Board shall, for this
purpose, be deemed to have been nominated by a Board composed of persons described in clause
(i); or

          (c) Approval by the stockholders of the Corporation of a reorganization, merger or
consolidation, unless, following such reorganization, merger or consolidation, all or
substantially all of the individuals and entities who were the respective beneficial owners
of the Outstanding Stock and Corporation Voting Securities immediately prior to such
reorganization, merger or consolidation, following such reorganization, merger or
consolidation beneficially own, directly or indirectly, more than 60% of, respectively, the
then outstanding shares of common stock and the combined voting power of the then
outstanding voting securities entitled to vote generally in the election of directors or
trustees, as the case may be, of the entity resulting from such reorganization, merger or
consolidation in substantially the same proportion as their ownership of the Outstanding
Stock and Corporation Voting Securities immediately prior to such reorganization, merger or
consolidation, as the case may be; or

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          (d) Approval by the stockholders of the Corporation of (i) a complete liquidation or
dissolution of the Corporation or (ii) a sale or other disposition of all or substantially
all the assets of the Corporation.

     2.06 Committee means the Personnel and Compensation Committee of the Board.

     2.07 Corporation means Allegheny Technologies Incorporated, a Delaware corporation, and
its successors.

     2.08 Corporation Voting Securities means the combined voting power of all outstanding
voting securities of the Corporation entitled to vote generally in the election of the
Board.

     2.09 Date of Award means the date as of which an Award is granted in accordance with
Article VI of this Plan.

     2.10 Disability means any physical or mental injury or disease of a permanent nature
which renders a Participant incapable of meeting the requirements of the employment
performed by such Participant immediately prior to the commencement of such disability. The
determination of whether a Participant is disabled shall be made by the Committee in its
sole and absolute discretion. Notwithstanding the foregoing, if a Participant’s employment
by the Corporation or an applicable subsidiary terminates by reason of a disability, as
defined in an Employment Agreement between such Participant and the Corporation or an
applicable subsidiary, such Participant shall be deemed to be disabled for purposes of the
KEPP.

     2.11 Earnings means the earnings of the Corporation determined in accordance with
generally accepted accounting principles, provided, however, for the 2005 through 2007, the
2006 through 2008, and the 2007 through 2009 Performance Periods, Earnings shall be
expressed in terms of income before taxes.

     2.12 Effective Date means January 1, 2004.

     2.13 Exchange Act means the Securities Exchange Act of 1934, as amended.

     2.14 KEPP Payment means the amount actually earned by a Participant in a particular
Performance Period. Each KEPP Payment shall be the sum of the amounts earned by a
Participant during a Performance Period as Level I and Level 2 achievement or, for the
2006-2008 and 2007-2009 Performance Periods, the amount under the Participant Retention
Achievement Bank under Section 8.04.

     2.15 Level 1 means that portion of an Award that may be earned based on attainment of
Earnings.

     2.16 Level 2 means that portion of an Award that may be earned, after application of
Negative Discretion by the Committee, based on attainment of Operational Goals. The

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Level 2 portion of any Award shall be denominated in the maximum amount that may be earned
with respect to Operational Goals prior to the application of Negative Discretion.

     2.17 Negative Discretion means the power of the Committee to be exercised solely in the
Committee’s discretion to reduce the Level 2 portion of any Award. It is anticipated that
the Committee will review with the Chief Executive Officer of the Corporation the
relative attainment of Operational Goals during a particular Performance Period before the
Committee exercises its Negative Discretion.

     2.18 Operational Goals means the goals set by the Committee at the commencement of a
Performance Period to be attained by the Participants during the course of a particular
Performance Period. Operational Goals will be set forth in terms of operating objectives
and/or criteria, which may or may not be earnings measures that, in the judgment of the
Committee after consultation with the Chief Executive Officer of the Corporation, will
enhance the success of the Corporation during and beyond a particular Performance Period.

..

     2.19 Participant means any key management employee selected by the Committee, pursuant
to Section 5.01 of this Plan, as eligible to participate under the KEPP for any one or more
Performance Period.

     2.20 Performance Period means a period of more than one fiscal year of the Corporation
over which the attainment of Earnings and Operational Goals shall be measured.

     2.21 Plan or KEPP means the Key Executive Performance Plan as set forth in this plan
document or as the same may be amended from time to time.

     2.22 Retirement means, a termination of employment with the Corporation and each
subsidiary of the Corporation at or after (i) attaining age 55 and (ii) completing five
years of employment with the Corporation and/or any subsidiary of the Corporation.

     2.23 Withholding Obligations means the amount of federal, state and local income and
payroll taxes the Corporation determines in good faith must be withheld with respect to a
KEPP Payment. Withholding Obligations may be settled by the Participant, as permitted by
the Committee in its discretion, in cash, previously owned shares of common stock of the
Corporation or any combination of the foregoing.

Article III. Administration

     In addition to any power reserved to the Committee under the governing documents of the
Corporation, the KEPP shall be administered by the Committee, which shall have exclusive and
final authority and discretion in each determination, interpretation or other action
affecting the KEPP and its Participants. The Committee shall have the sole and absolute
authority and discretion to interpret the KEPP, to amend or modify this Plan for the KEPP,
to select, in accordance with Section 5.01 of this Plan, the persons who will be
Participants hereunder, to set all Earnings thresholds and Operational Goals, to determine
all performance criteria, levels of Awards and KEPP Payments payable, to determine, after

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review of the Corporation’s financial reports, the degree to which any threshold of Earnings
has been achieved for a Performance Period with respect to the Level 1 portion of any Award,
to review the attainment of Operational Goals and exercise Negative Discretion with respect
to the Level 2 portion of any Award, to impose such conditions and restrictions as it
determines appropriate and to take such other actions and make such other determinations in
connection with the KEPP as it may deem necessary or advisable.

Article IV. Overview of KEPP

     4.01 Cash Bonus Plan. KEPP is designed to pay cash bonuses to participating key
executives after the end of a Performance Period based on the level (i) of achievement of
predetermined Earnings thresholds and (ii) attainment of Operational Goals (to which the
Committee may exercise Negative Discretion).

     4.02 Levels of Awards. KEPP Awards are granted with two levels. The first level,
Level 1, is a cash bonus payment based on achievement of Earnings that the Committee has no
discretion to reduce. KEPP Payments earned under Level 1 will be earned solely with
reference to Earnings attained during the Performance Period. The second level, Level 2 is
a cash bonus payment based on level of attainment of Operational Goals that the Committee
has the Negative Discretion to reduce. The Committee’s judgment in exercising its Negative
Discretion to arrive at a KEPP Payment under Level 2 is expected to be guided by the degree
to which the Corporation generally or the participating key executives in particular have
attained predetermined Operational Goals. The Committee is expected to review the level of
attainment of Operational Goals with the Chief Executive Officer of the Corporation before
exercising any Negative Discretion. For the 2006-2008 and the 2007- 2009 Performance
Periods, the Committee has established the Participant Retention Achievement Bank under
Section 8.04.

     4.03 Participating Key Executives. It is intended that the number of participating key
executives shall be limited to those key executives with the most direct influence on the
attainment of Earnings and operational goals.

Article V. Participation

     5.01 Designation of Participants. Participants in the KEPP shall be such key
management employees of the Corporation or of its subsidiaries as the Committee, in its sole
discretion, may designate as eligible to participate in the KEPP for any one or more
Performance Periods. No later than 90 days after the commencement of each Performance
Period during the term of the KEPP, the Committee shall designate the Participants who are
eligible to participate in the KEPP during such Performance Period. The Committee’s
designation of a Participant with respect to any Performance Period shall not require the
Committee to designate such person as a Participant with respect to any other Performance
Period. The Committee shall consider such factors as it deems pertinent in selecting
Participants. The Committee shall promptly provide to each person selected as a Participant
written notice of such selection.

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Article VI. Grants under the KEPP

     6.01 Annual Determination Regarding Performance Period. No later than the
60th day of each calendar year, the Committee shall determine whether to
establish a Performance Period, provided, however, for a Performance Period established in
calendar year 2004, the Committee may make a determination under this Section 6.01
at any time prior to the 90th day of calendar year 2004.

     6.02 Determination of Grants, Awards (both Level 1 and Level 2) and Performance
Criteria. For each Performance Period, the Committee shall take the following actions no
later than the 90th day of the first calendar year of that Performance Period:

     (a) Identify Participants for that Performance Period.

     (b) Establish the level of Level 1 and Level 2 opportunities for each
Participant.

     (c) Set the Earnings target(s).

     (d) Set the Operational Goals and relative weightings after discussing such
goals and weighting with the Chief Executive Officer in order to bring the
Operational Goals as closely as possible in line with the Corporation’s business
plans.

     6.03 Termination of Employment. If a Participant terminates employment with the
Corporation and each subsidiary of the Corporation during a then uncompleted Performance
Period for reasons other than death, Disability or Retirement, any KEPP Award for any then
uncompleted Performance Period shall be forfeited automatically. If a Participant
terminates employment with the Corporation and each subsidiary of the Corporation for
reasons of death, Disability or Retirement during a then uncompleted Performance Period, the
Participant shall be entitled to receive a pro rata KEPP Payment for each then uncompleted
Performance Period determined:

     (a) when the KEPP Payments for all other Participants in such Performance
Period(s) are determined; and

     (b) based on the actual level of achievement of Earnings for that Performance
Period and the attainment of Operational Goals, after the application of Negative
Discretion.

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Article VII. Determination of Achievement of Earnings and Operational Goals

     7.01 Determination of Earnings and Operational Goals. As promptly as administratively
feasible but in no event later than the March 1st of the calendar year following last
calendar year of each Performance Period, the Committee shall determine Earnings of the
Corporation and the attainment of Operational Goals and the degree, if any, to which the
Committee will exercise Negative Discretion.

     7.02 Determination of KEPP Payments. KEPP Payments for a particular Performance Period
for a particular Participant shall be the result of adding (i) the amount earned by a
particular Participant under Level 1 based on the Corporation’s actual Earnings during the
Performance Period and (ii) the amount earned by a particular Participant under Level 2
based on attainment of Operational Goals and after the application, if any, by the Committee
of Negative Discretion or, for the 2006-2008 Performance Period, the Participant Retention
Achievement Bank amount determined under Section 8.04.

Article VIII. Miscellaneous

     8.01 Change in Control. In the event of a Change in Control, KEPP Payments shall be
determined for all then uncompleted Performance Periods as of the date of the Change in
Control at the highest level Earnings for each such uncompleted Performance Period and KEPP
Payments shall be delivered to the Participant as soon after the Change in Control as is
administratively feasible.

     8.02 Non-Uniform Determinations. The actions and determinations of the Committee need
not be uniform and may be taken or made by the Committee selectively among employees or
Participants, whether or not similarly situated.

     8.03 Amendment and Termination of the Plan. The Committee shall have complete power
and authority to amend or terminate this Plan at any time it is deemed necessary or
appropriate. No termination or amendment of the Plan may, without the consent of the
Participant to whom any award shall theretofore have been granted under the KEPP, adversely
affect the right of such individual under such award; provided, however, that the Committee
may, in its sole discretion, make such provision in the Award Agreement for amendments
which, in its sole discretion, it deems appropriate.

     8.04 Participant Retention Achievement Bank. In order to retain participants
designated as eligible to participate in KEPP for the 2006-2008 and the 2007-2009
Performance Period (“Banking Performance Period(s)”), for those Performance Periods, KEPP
Payments will be made under this Participant Retention Achievement Bank provision if greater
than the KEPP Payment otherwise due under the KEPP for the relevant Banking Performance
Periods. The aggregate amount in the Participant Retention Achievement Bank shall be equal
to the sum of the three amounts (none less than 0) determined as of the close of each year
in the relevant Banking Performance Period by taking the amount of Earnings for that year
multiplied by three and determining the Level 1 amount due for that level of achievement for
the entire three year, relevant Banking

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Performance Period(s) and then dividing the KEPP Payment due under the foregoing clause by
three. The resulting amount will be one of the three amounts added together (one for each
year in the relevant Banking Performance Period) to comprise the aggregate Participant
Retention Achievement Bank. The amount of the KEPP Payment due to any individual
Participant for the relevant Banking Performance Period will be equal to the amount
determined by multiplying the Participant Retention Achievement Bank by a fraction, the
numerator of which is the Level 1 KEPP Payment due to that Participant if actual performance
for the relevant Banking Performance Period was at the 1X Threshold Reference and the
denominator of which is the sum of all payments due at Level 1 for 1X achievement for all
Participants for the relevant Banking Performance Period.

8EX-10.3

 

Exhibit 10.3

TOTAL SHAREHOLDER RETURN INCENTIVE COMPENSATION PROGRAM AWARD AGREEMENT

Allegheny Technologies Incorporated (the “Company”) and the award recipient named below
(“Participant”) enter into this Total Shareholder Return Incentive Compensation Program Agreement
effective as of January 1, 2007.

	 	 	 
	Participant:

	 	«Name»
	 

	 	PARTICIPANT TO COMPLETE THE FOLLOWING CHART
	 

	 	(Please print)
	 
	 	 
	Street Address
	 	 
	 
	 	 
	City/State/Zip Code
	 	 
	 
	 	 
	Social Security Number
	 	 

WHEREAS, the Company has adopted the Allegheny Technologies Incorporated 2000 Incentive Plan (the
“Plan”) and, in accordance with the Plan, has adopted Administrative Rules for the Total
Shareholder Return Incentive Compensation Program, as amended (the “TSRP”) as a portion of the Plan
to (i) assist the Company retain and motivate key management employees; (ii) reward key management
employees for the overall success of the Company; and (iii) provide a means of encouraging key
management employees to acquire and hold shares of Company Common Stock.

WHEREAS, the TSRP provides that each TSR Target Award made under the TSRP shall be evidenced by an
Award Agreement between the Company and the key management employee who receives a TSR Target Award
under the TSRP setting forth the terms and conditions of such TSR Target Award;

WHEREAS, the Company desires to make a TSR Target Award to the Participant and evidence such TSR
Target Award by this Award Agreement and the Participant, having read and understood the Plan and
the TSRP, is willing to enter into this Award Agreement on the terms and conditions set forth
herein.

NOW THEREFORE, in consideration of the covenants and agreements herein contained and intending to
be legally bound, the parties hereto agree with each other as follows:

Subject to the attainment of the Performance Levels described below and to the terms and conditions
of the Plan, the TSRP and the Terms and Conditions of Award attached hereto and incorporated herein
by reference, by which Participant agrees to be bound, the Company awards to Participant the Award
described below, with respect to the Performance Period described below:

 

 

PERFORMANCE PERIOD: January 1, 2007 through December 31, 2009

TSR TARGET AWARD: «TSRP target shares» Shares of Company Common Stock
[equals applicable base salary times «TSRP award percent» (which is the Participant’s target award
opportunity as a percent of salary) divided by $88.338 (which is the average Closing Price for the
30 trading days prior to January 1, 2007)]

PERFORMANCE LEVELS: The following table shows the performance award relationship under the TSRP
for the 2007 – 2009 performance period:

	 	 	 	 	 	 	 
	 	 	Outcome Relative to Peer Group TSR
	 	 	Three-Year Percentile	 	Percent of Target
	Level of Performance	 	Ranking in TSR	 	Award Earned
	Below Threshold
	 	Below 25th percentile	 	 	0	%
	Threshold
	 	25th percentile	 	 	50	%
	Target
	 	50th percentile	 	 	100	%
	Excellent
	 	75th percentile	 	 	200	%
	Outstanding
	 	90th percentile	 	 	300	%

Note: Extrapolation between points will be made on a straight line
basis on each scale. Below the 25th percentile and above the
90th percentile, there will be no extrapolation.

THE ACTUAL AWARD UNDER THE TSRP WILL EQUAL THE TSR TARGET AWARD TIMES THE APPLICABLE PERCENT OF
TARGET AWARD EARNED.

IN WITNESS WHEREOF, the parties hereto have executed this Total Shareholder Return Incentive
Compensation Program Award Agreement effective the day and year first above written.

ALLEGHENY TECHNOLOGIES INCORPORATED

	 	 	 	 	 	 	 
	By:	 	 	 	 
	 	 	 	 	 
	 

	 	Title:
	 	Executive Vice President, Human Resources,	 	 
	 

	 	 	 	Chief Legal & Compliance Officer	 	 

	 	 	 	 	 
	PARTICIPANT:

	 	WITNESS:	 	 
	 
	 	 	 	 
	 

	 	 

	 	 

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TERMS AND CONDITIONS OF TSRP AWARD

Section 1: Definitions

Capitalized words used but not defined below or elsewhere in these Terms and Conditions shall have
the meanings ascribed to them in the Plan.

“Administrative Rules” or “TSRP” shall mean the Administrative Rules for the TSRP adopted by the
Committee effective January 1, 2001, as amended effective
February 24, 2005, as the same may be amended from time to time.

“Award” shall mean the grant of a TSR Target Award evidenced by this Award Agreement.

“Committee” means the Personnel and Compensation Committee of the Board of Directors.

“Common Stock” shall mean the common stock, $0.10 par value per share, of Allegheny Technologies
Incorporated.

“Company” shall mean Allegheny Technologies Incorporated and its subsidiaries, unless the context
requires otherwise.

“Disability” shall mean the total and permanent disability of Participant as determined by the
Committee in its sole discretion.

“Excellent” shall mean a relative standing of the Company’s TSR as against the TSR for the Peer
Group, in each case for the TSR Performance Period, equal to or greater than 75% but less than 90%.

“Outstanding” shall mean a relative standing of the Company’s TSR as against the TSR for the Peer
Group, in each case for the TSR Performance Period, equal to or greater than 90%.

“Peer Group” shall mean the corporations listed on Exhibit 1 to this Award Agreement, subject to
the adjustments to such group as permitted under the Administrative Rules.

“Retirement” means a termination of employment with the Company and each of its subsidiaries, with
the consent of the Company, at or after (i) attaining age 55 and (ii) completing five years of
employment with the Company and/or any subsidiary of the Company.

“Target” shall mean a relative standing of the Company’s TSR as against the TSR of the Peer Group,
in each case for the TSR Performance Period, of equal to or greater than 50% but less than 75%.

“Threshold” shall mean a relative standing of the Company’s TSR as against the TSR of the Peer
Group, in each case for the TSR Performance Period, of equal to or greater than 25% but less than
50%.

“TSR Performance Level” means the measure of Company TSR performance relative to the Peer Group, as
set forth on page 2 of this Award Agreement. In determining the final Performance Level, the
Committee shall use straight-line extrapolation between Threshold and Target, between Target and
Excellent, and between Excellent and Outstanding. No TSR Reward will be earned for a Performance
Level less than Threshold. No additional TSR Reward above Outstanding will be earned for a
Performance Level greater than Outstanding.

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Section 2: TSRP Award

2.1 Subject to the attainment of the TSR Performance Levels and to the terms and conditions
otherwise set forth in the Plan, the TSRP and this Award Agreement, the Company awards to
Participant the TSRP Award described in the first two pages of this Award Agreement with respect to
the Performance Period described therein.

Section 3: Payment

3.1 Subject to the withholding obligations and any requirements of Section 4 then applicable, the
Company shall deliver to the Participant certificates representing the TSR Rewards, if any, for the
TSR Performance Period within 75 days after the end of the TSR Performance Period.

3.2 If the Participant terminates employment with the Company and each subsidiary of the Company
during a then uncompleted TSR Performance Period for reasons other than death, Disability or
Retirement, any TSR Target Award for any then uncompleted TSR Performance Period shall be forfeited
automatically and the shares represented by such TSR Target Awards shall again be eligible for
awards under the Rules.

3.3 If the Participant terminates employment with the Company and each Subsidiary of the Company
during a then uncompleted TSR Performance Period due to the Participant’s death, Disability, or
Retirement, a pro rata award based on the number of full months worked by the Participant during
that Performance Period will be calculated, based on goal achievement over the entire performance
period. Any award determined to be payable shall be paid after the end of the applicable
Performance Period.

Section 4: Miscellaneous

4.1 General Restriction. To the extent any TSR Target Award is denominated in Common Stock
under this Award Agreement, it shall be subject to the requirement that if at any time the
Committee shall determine that any listing or registration of the shares of Common Stock or any
consent or approval of any governmental body or any other agreement or consent is necessary or
desirable as a condition of the issuance of shares of Common Stock or cash in satisfaction thereof,
such issuance of shares of Common Stock may not be consummated unless such requirement is satisfied
in a manner acceptable to the Committee. The Company shall in no event be obligated to register
any securities pursuant to the Securities Act of 1933 (as the same shall be in effect from time to
time) or to take any other affirmative action to cause the issuance of shares pursuant to the
distribution of TSR Rewards to comply with any law or regulation of any governmental authority.

4.2 Non-Assignability. No TSR Target Award granted under this Award Agreement shall be
assignable or transferable by the Participant, except by will or by the laws of descent and
distribution. During the life of the Participant, any TSR Rewards shall be payable only to the
Participant. No assignment or transfer of a TSR Target Award or of the rights represented thereby,
whether voluntary or involuntary, by operation of law or otherwise (except by will or the laws of
descent and distribution), shall vest in the assignee or transferee any interest or right herein
whatsoever, and immediately upon

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such purported assignment or transfer, the TSR Target Awards shall terminate and become of no further effect.

4.3 Withholding Obligations. Whenever the Company makes delivery under the Plan, in whole
or in part, the Company shall notify the Participant of the amount of withholding for tax, if any,
which must be paid under federal and, where applicable, state and local law. The Company shall, in
the discretion of the Company, but with the consent of the Committee, arrange for payment for such
withholding for taxes in any one or combination of the following ways: (i) acceptance of an amount
in cash paid by the Participant; or (ii) reduction in the number of shares to be issued by that
number of shares which, in aggregate, have a value equal to such withholding amount. If the full
amount of the required withholding is not recovered in the above manner, the Participant shall,
forthwith upon receipt of notice, remit the deficiency to the Company. No shares of Common Stock
shall be issued or delivered to the Participant (and/or the Participant’s designee) until all
applicable withholding obligations shall have been satisfied in full.

4.4 Delivery of Certificates. As soon as practicable after compliance by the Participant
with all applicable conditions including, but not limited to, the satisfaction of the Withholding
Obligations described in Section 4.3 hereof, the Company will issue and deliver by mail, or cause
delivery by mail, to the Participant at the address specified by the Participant in writing,
certificates registered in the name of the Participant (and/or the Participant’s designee) for the
number of shares of Common Stock which the Participant is entitled to receive (subject to reduction
for withholding as provided in Section 4.3 hereof) under the provisions of this Award Agreement.

4.5 No Right to Employment. Nothing in the Plan or in this Award Agreement shall confer
upon the Participant the right to continue in the employ of the Company or any subsidiary or affect
any right that the Company or a subsidiary may have to terminate the employment of the Participant.

4.6 Amendment or Termination of the Plan. The Plan, or any part thereof (including the
TSRP and/or Administrative Rules) may be terminated or may, from time to time, be amended, each in
accordance with the Plan, TSRP or Administrative Rules, as applicable, provided, however, the
termination or amendment of the Plan, the Administrative Rules or TSRP shall not, without the
consent of the Participant, affect Participant’s rights under this Award Agreement.

4.7 Investment Representation. Under the federal and/or state securities laws, the
Participant may be required to deliver, and, if so, shall deliver, to the Committee, upon demand by
the Committee, at the time of any payment of Common Stock, a written representation that the shares
to be acquired are to be acquired for investment and not for resale or with a view to the
distribution thereof. Upon such demand, delivery of such representation prior to delivery of any
shares shall be a condition precedent to the right of the Participant to receive any shares.

4.8 No Rights as Shareholder. The Participant shall have no rights as a stockholder of the
Company with respect to shares of Common Stock subject to the Award
evidenced by this Award Agreement
unless and until a certificate for shares of Common Stock is issued to the Participant.

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4.9 Adjustment of Award. In the event of any change or changes in the outstanding Common
Stock of the Company by reason of any stock dividend, recapitalization, reorganization, merger,
consolidation, split-up, combination or exchange of shares or any rights offering to purchase a
substantial amount of Common Stock at a price substantially below fair market value or of any
similar change affecting the Common Stock, any of which takes effect after the first grant of a TSR
Target Award under this Award Agreement, the Committee may, in its discretion, appropriately adjust
the number of shares of Common Stock which may be issued under this Award Agreement, the number of
shares of Common Stock subject to TSR Target Awards under this Award Agreement and any and all
other adjustments deemed appropriate by the Committee to prevent substantial dilution or
enlargement of the rights granted to the Participant in such manner as the Committee shall deem
appropriate. Any adjustment so made shall be final and binding upon the Participant.

4.10 Awards Not a Bar to Corporate Event. The existence of the TSR Target Awards granted
hereunder shall not affect in any way the right or the power of the Company or its stockholders to
make or authorize any or all adjustments, recapitalizations, reorganizations or other changes in
the Company’s capital structure or its business, or any merger or consolidation of the Company, or
any issue of bonds, debentures, preferred or prior preference stocks ahead of or affecting the
Common Stock or the rights thereof, or the dissolution or liquidation of the Company, or any sale
or transfer of all or any part of its assets or business, or any other corporate act or proceeding,
whether of a similar character or otherwise.

4.11 Not Income for Qualified Plans. No amounts of income received by a Participant
pursuant to this Award Agreement shall be considered compensation for purposes of any pension or
retirement plan, insurance plan or any other employee benefit plan of the Company or any of its
affiliates.

4.12 Meaning of Participant. Whenever the word “Participant” is used in any provision of
this Award Agreement under circumstances where the provision should logically be construed to apply
to the executors, the administrators, or the person or persons to whom the TSR Target Awards may be
transferred by will or by the laws of descent and distribution, the word “Participant” shall be
deemed to include such person or persons.

4.13 Determinations of Committee. The actions taken and determinations of the Committee
made pursuant to this Award Agreement and of the Committee pursuant to the Plan, the TSRP and the
Administrative Rules shall be final, conclusive and binding upon the Company and upon the
Participant. No member of the Committee shall be liable for any action taken or determination made
relating to this Award Agreement, the Plan, the TSRP, or the Administrative Rules if made in good
faith.

6

 

Exhibit 1: List of Peer Companies (2007 — 2009 Performance Period)

AK Steel Corporation

Alcan Holding Inc.

Alcoa Inc.

Carpenter Technology Corporation

IPSCO Steel Inc.

Kennametal Inc.

Nucor Corporation

Quanex Corporation

Reliance Steel & Aluminum Co.

RTI International Metals

Steel Dynamics, Inc.

Titanium Metals Corporation

United States Steel Corporation

7

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