Document:

BEE-2015.3.31-EX10.2

STRATEGIC HOTELS & RESORTS, INC. 
SECOND AMENDED AND RESTATED 2004 INCENTIVE PLAN 
PERFORMANCE SHARE AWARD AGREEMENT
We are pleased to inform you that you have been awarded by Strategic Hotels & Resorts, Inc. (the “Company”) the opportunity to earn a performance share award (the “Performance Share Award”) subject to your waiver of a provision in your Executive Agreement as set forth in Section 15 below.
The terms of the Performance Share Award are as set forth in this Performance Share Award Agreement (“Agreement”).  This Agreement is granted under the Strategic Hotels & Resorts Second Amended and Restated 2004 Incentive Plan (“Plan”) and, except as expressly provided otherwise herein, is limited by and subject to the express terms and conditions of the Plan, a copy of which has been made available to you.  Certain capitalized terms are defined in the Appendix to this Agreement.  Capitalized terms that are not defined in this Agreement (including the Appendix) have the meanings given to them in the Plan.  The basic terms of the Performance Share Award are summarized as follows:
	
		
	Employee Name:
	 

	Target Number of Shares Subject 
to the Award (“Target Shares”): 

	 

	Performance Period:
	January 2, 2015 (“Start Date”) through December 29, 2017 (“End Date”)

1.Earning Performance Shares Award
Subject to the conditions and limitations set forth herein, the Company will determine and distribute shares of Common Stock to the extent earned as set forth below on a date (“Distribution Date”) in the first calendar quarter of 2018 (no later than March 15, 2018) in which the Committee determines and certifies the Relative SNL Lodging Index TSR Performance Percentage achieved, as described in Section 2 hereof.  The Committee will in good faith make such determination and certification and except as set forth in Sections 3, 4 and 6, distribute such shares of Common Stock within the time period set forth in the preceding sentence.

(a)    Base Performance Shares
Shares of Common Stock are earned under this Performance Share Award based on the following performance metric (the “Performance Metric”): the Relative SNL Lodging Index TSR Performance. 
Shares of Common Stock are earned according to Relative SNL Lodging Index TSR Performance as set forth below:

	
		
	Percentile Rank
	Multiple of Target Shares Earned

	85% or Higher
	2.0

	50%
	1.00

	25%
	0.25

	Below 25%
	0

The number of Shares that are earned with respect to the Performance Metric shall be interpolated on a straight line basis between the Multiple of Target Shares Earned levels set forth in the schedule above.
(b)    Dividend Equivalents:
Except as otherwise provided by a deferral election pursuant to Section 7 of this Agreement, the aggregate dividends that would have been paid with respect to an ex date occurring from the Start Date through the date of distribution of shares of Common Stock or cash under this Performance Share Award Agreement on the aggregate of the shares of Common Stock earned (including, without limitation, those shares of Common Stock deemed earned but paid in cash in a Go Private Transaction (as defined hereafter)) under this Agreement without regard to this Section 1(c) shall be paid to you in cash at approximately the same time as the distribution of shares of Common Stock or in a Go Private Transaction, cash under this Performance Share Award.
(c)    Limitation on Shares of Common Stock To Be Earned:
Notwithstanding anything to the contrary herein:
(1)    No more than the Target Shares will be earned under this Performance Share Award if the Company TSR is less than or equal to 100%.

(2)    No shares of Common Stock will be earned under this Performance Share Award if the Performance Date Average Price is less than or equal to $6.34 (50% of the Start Date Average Price), with such dollar amount subject to adjustment consistent with Section 14.1 of the Plan.

(d)    Example:
An example of a calculation of the earning of a Performance Share Award is set forth in Exhibit A.

2.    Determining Performance Metric
As set forth above, the earning of shares of Common Stock under this Performance Share Award depends upon one Performance Metric: the Relative SNL Lodging Index TSR.  Shares of Common Stock are earned solely under that relative TSR measure.  Relative TSR will be based on the Company’s TSR performance relative to the equally-weighted TSRs of the common stock of each Index Company included in the SNL Lodging Index (the “Index”) as applicable as of the Performance Date, excluding the Company if it is part of the Index.  TSR is calculated as share price appreciation plus the reinvestment of dividends during the applicable period.
To determine relative performance, the baseline metrics are the 60-trading day average closing price of a share of Common Stock of the Company and of a share of common stock of each Index Company, with the last of the 60-trading days falling on December 31, 2014.  This 60-trading day average establishes both the Company’s Start Date Average Price and the Index Company Baseline Stock Price against which future Company stock performance and the stock performance of Index Companies within the applicable Index will be compared.  If a company was added to the applicable Index after the Start Date, such company’s average closing stock price for the 60-trading days prior to joining the Index will be used for purposes of determining the Index Company Baseline Stock Price.  In the event such Index Company does not have a trading history prior to joining the Index, the average closing stock price for the 60-trading days starting on the day the Index Company joined the Index will be used for purposes of determining the Index Company Baseline Stock Price.  Any companies included in the applicable Index as of the Start Date but which are no longer included in the applicable Index as of the Performance Date will not be included in the TSR analysis with respect to such Index. 
The 60-trading day average closing price of a share of Common Stock and of a share of each Index Company with the last trading day of such 60-trading day period ending on the Performance Date (establishing both the “Performance Date Average Price” and the “Index Company Performance Date Average Price”, respectively) is separately determined.  (The Performance Date Average Price and the Index Company Performance Date Average Prices shall be automatically adjusted to account for any stock split or similar change in capitalization in a manner as set forth in Section 14.1 of the Plan.) 
Company performance will be measured by dividing the Performance Date Average Price plus Company dividends reinvested as of each dividend ex-date between Start Date and the Performance Date by the Start Date Average Price, with the quotient expressed as a percentage of the Start Date Average Price (the “Company TSR”).  The performance for each Index Company will be measured separately by dividing the Index Company Performance Date Average Price plus Index Company dividends reinvested as of each dividend ex-date between Start Date and the Performance Date by the Index Company Baseline Stock Price, with the quotient expressed as a percentage of the Index Company Baseline Stock Price (the “Index Company TSR”).  

Therefore, the TSR for the Company and each Index Company equals the change in value between Start Date Average Price and the Performance Date Average Price, plus dividends reinvested as of each dividend ex-date between Start Date and Performance Date, as a percentage of the Start Date Stock Price.
The Company’s TSR will be ranked against the Index Company TSRs of the Index Companies within the SNL Lodging Index to determine the Company’s Percentile Rank for purposes of Relative SNL Lodging Index TSR Performance Metric.
An example including the calculation of Start Date Average Price and a calculation of Company TSR for a prior three year period is set forth in Exhibit B.
3.    Change of Control
Notwithstanding any other provision of this Agreement,if a Change of Control occurs prior to December 29, 2017 the end date for the Performance Period shall be treated as the date immediately prior to the Change of Control rather than December 29, 2017 and the relative TSR ranking for the Performance Metrics will be determined based on a shortened Performance Period (“Change of Control Performance Period”) and TSRs for Index Companies that shall be determined based on the 60-trading day average closing price of each Index Company’s common stock with the last trading day of such 60-trading day period ending immediately prior to the date of public announcement of the Change of Control.  For purposes of the calculation of the Company’s TSR for the Change of Control Performance Period, the Company’s Performance Date Average Price shall be the fair market value of a share of Common Stock in the Change of Control.  The Company’s TSR for the Change of Control Performance Period shall equal the Performance Date Average Price as determined pursuant to the preceding sentence plus dividends reinvested as of each dividend ex-date between the Start Date and the Performance Date, as a percentage of the Start Date Stock Price.
Although the date of public announcement of the Change of Control determines the end date of the 60-trading day period for determining the TSRs for Index Companies, payments under this Section 3 shall not be made unless the Change of Control closes.  In the absence of such a closing, this Section 3 shall be ineffective and inapplicable to determinations applicable to this Performance Share Award.
All payments under this Performance Share Award with respect to a Change of Control constituting a Go Private Change of Control Transaction shall be paid in cash.  For purposes of this Performance Share Award, a “Go Private Change of Control Transaction” shall be deemed to have occurred if on or immediately following the Change of Control no shares of Common Stock or other common stock of the Company (or any successor) are traded on a national securities exchange.
4.    Termination of Employment or Services
If you terminate your employment or service relationship with the Employer voluntarily (not including (i) a Constructive Termination in 2017 or in anticipation of (and a Change of 

Control occurs), on or following a Change of Control or (ii) death or Disability at any time) or if the Company terminates your employment or service relationship (not including a termination of employment or service relationship without Cause in 2017 or in anticipation of (and a Change of Control occurs), on or following a Change of Control), you shall have no right to any shares of Common Stock under this Performance Share Award and this Performance Share Award will immediately terminate without the payment of any further consideration to you. 
If during 2017, other than in anticipation of (and a Change of Control occurs), on or following a Change of Control, either the Employer terminates your employment or service relationship without Cause or you terminate your employment or service relationship with the Employer as a result of a Constructive Termination, you will become fully vested in a pro-rata portion of the shares of Common Stock that you would have earned under this Performance Share Award if you had remained employed through December 29, 2017 determined by multiplying the number of shares of Common Stock that you would have earned under this Performance Share Award if you had remained employed through December 29, 2017 by a fraction with the numerator equal to the number of full calendar months from the January 1, 2015 until your termination of employment or services and the denominator equal to 36 (the number of full calendar months from January 1, 2015 until December 29, 2017).  Such pro rata portion of the Performance Share Award shall be paid in accordance with the Plan.
If, other than on or following a Change of Control, your employment or service relationship with the Employer terminates because of death, Disability or Retirement, you will become fully vested in a pro-rata portion of the shares of Common Stock that you would have earned under this Performance Share Award if you had remained employed through December 29, 2017 determined by multiplying the number of shares of Common Stock that you would have earned under this Performance Share Award by a fraction with the numerator equal to the number of full calendar months from the January 1, 2015 until your termination of employment or services and the denominator equal to 36 (the number of full calendar months from the January 1, 2015 until December 29, 2017).  Such pro rata portion of the Performance Share Award shall be paid in accordance with the Plan. 
If your employment or service relationship with the Employer terminates because of death, Disability or Retirement on or after a Change of Control or by the Employer without Cause in anticipation of (and a Change of Control occurs), on or after a Change of Control of the Company or in a Constructive Termination in anticipation of (and a Change of Control occurs), on or after a Change of Control, you are fully vested in the shares of Common Stock earned under this Performance Share Award and such Performance Share Award shall be paid as soon as practicable following the earlier of your termination of employment or service relationship or the Distribution Date in accordance with the Plan.
5.    Acknowledgement of No Single-Trigger Change of Control Vesting
By signing this Performance Share Award, you hereby acknowledge that you have no right to accelerated vesting of the Performance Share Award upon a Change of Control, except on or after a Change of Control with respect to a termination of your employment or service relationship by the Employer because of death, Disability  or Retirement or in anticipation of 

(and a Change of Control occurs), on or after a Change of Control with respect to a termination of your employment or service relationship by the Employer without Cause or in a Constructive Termination as set forth in Section 4.
6.    Distributions of Shares of Common Stock
Except as otherwise provided by a deferral election pursuant to Section 7 of this Agreement or by virtue of a Change of Control as described in Section 3 and 4, shares of Common Stock earned pursuant to Sections 1, 2, 3 or 4 shall be distributed in the first calendar quarter of 2018 (no later than March 15, 2018).
If, however, you elect to defer payment of the shares of Common Stock as provided in Section 7 of this Agreement, the shares of Common Stock shall be issued as set forth in the Deferral Election Agreement entered into between you and the Committee.
7.    Deferral Election
Subject to Section 14, you may elect to defer delivery of the shares of Common Stock that would otherwise be due by virtue of the satisfaction of the requirements for distribution of shares of Common Stock under this Performance Share Award Agreement.  The Committee shall, in its sole discretion, establish the rules and procedures for such deferral elections and payment deferrals.
8.    No Rights as Shareholder
You shall not have voting or any other rights as a shareholder of the shares of Common Stock with respect to the Performance Share Award until shares of Common Stock are actually delivered to you pursuant to Section 4 or 6.  Upon delivery of shares of Common Stock pursuant to this Performance Share Award, you will obtain full voting and other rights as a shareholder of the Company.
9.    Securities Law Compliance
Notwithstanding any other provision of this Agreement, you may not sell the shares of Common Stock acquired pursuant to this Performance Share Award unless such shares of Common Stock are registered under the Securities Act or, if such shares of Common Stock are not then so registered, the Company has determined that such sale would be exempt from the registration requirements of the Securities Act.  The sale of such shares of Common Stock must also comply with other applicable laws and regulations governing the shares of Common Stock, and you may not sell the shares of Common Stock if the Company determines that such sale would not be in material compliance with such laws and regulations.
10.    Transfer Restrictions
Any sale, transfer, assignment, encumbrance, pledge, hypothecation, conveyance in trust, gift, transfer by bequest, or other transfer or disposition of any kind, whether voluntarily or by operation of law, directly or indirectly, of this Performance Share Award shall be strictly 

prohibited and void except a transfer after death by will or by the applicable laws of descent and distribution.
11.    Independent Tax Advice
You acknowledge that determining the actual tax consequences to you of receiving this Performance Share Award or shares of Common Stock or cash thereunder or deferring or disposing of shares of Common Stock or cash may be complicated.  These tax consequences will depend, in part, on your specific situation and may also depend on the resolution of currently uncertain tax law and other variables not within the control of the Company.  You are aware that you should consult a competent and independent tax advisor for a full understanding of the specific tax consequences to you of receiving, deferring or disposing of the Performance Share Award or shares of Common Stock or cash hereunder.  Prior to executing this Agreement, you either have consulted with a competent tax advisor independent of the Company to obtain tax advice concerning the Performance Share Award with respect to your specific situation or have had the opportunity to consult with such a tax advisor but chose not to do so.
12.    Withholding and Disposition of Shares of Common Stock 
You agree to make arrangements satisfactory to the Employer for the payment of any federal, state, local or foreign withholding tax obligations that arise with respect to this Performance Share Award, including, without limitation, the receipt of shares of Common Stock or cash.  Notwithstanding the previous sentence, you acknowledge and agree that the Employer has the right to deduct from payments of any kind otherwise due to you any federal, state or local taxes of any kind required by law to be withheld with respect this Performance Share Award, including, without limitation, the receipt of shares of Common Stock or cash.
13.    General Provisions
13.1    No Waiver.  No waiver of any provision of this Agreement will be valid unless in writing and signed by the person against whom such waiver is sought to be enforced, nor will failure to enforce any right hereunder constitute a continuing waiver of the same or a waiver of any other right hereunder.
13.2    Undertaking.  You hereby agree to take whatever additional action and execute whatever additional documents the Committee may deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on either you, the Performance Share Award or the shares of Common Stock or cash acquired pursuant to the express provisions of this Agreement.
13.3    Agreement Is Entire Contract.  This Agreement constitutes the entire contract between the parties hereto with regard to the subject matter hereof.  
13.4    Successors and Assigns.  The provisions of this Agreement will inure to the benefit of, and be binding on, the Company and its successors and assigns and you and your legal representatives, heirs, legatees, distributees, assigns and transferees by operation of law, 

whether or not any such person will have become a party to this Agreement and agreed in writing to join herein and be bound by the terms and conditions hereof.
13.5    No Employment or Service Contract.  This Agreement does not confer upon you any right with respect to continuance of employment by the Employer, nor does it interfere in any way with the right of your employer to terminate your employment or services at any time.
13.6    Counterparts.  This Agreement may be executed in two or more counterparts, each of which will be deemed an original, but which, upon execution, will constitute one and the same instrument.
13.7    Governing Law.  This Agreement will be construed and administered in accordance with and governed by the laws of the State of Illinois.
14.    Section 409A Compliance
The Company intends that any distribution of shares of Common Stock or cash, deferral and other provisions applicable to your Performance Share Award fully comply with the payout and other limitations and restrictions imposed under Section 409A of the Internal Revenue Code of 1986, as amended (“Code”), as clarified or modified by IRS guidance, including without limitation, treating the date you have a separation from service under Code Section 409A as the date you terminate employment or your service relationship for purposes of this Agreement – in each case if and to the extent such Code Section 409A is otherwise applicable to your Performance Share Award and such compliance is necessary to avoid the penalties otherwise imposed under Code Section 409A.  In this connection, the Company and you agree that the payout timing provisions applicable to the Performance Share Award, and the terms of any deferral and other rights regarding such Performance Share Award, shall be deemed modified, if and to the extent necessary to comply with the payout and other limitations and restrictions imposed under Code Section 409A, as clarified or modified by IRS guidance – in each case if and to the extent such Code Section 409A is otherwise applicable to your Performance Share Award and such compliance is necessary to avoid the penalties otherwise imposed under Section 409A.  This Performance Share Award is subject to Section 17.5 of the Plan.
15.    Waiver of Accelerated Vesting in Executive Agreement
The grant of this Performance Share Award and the ability to earn any shares of Common Stock or cash hereunder is contingent upon your waiver of the accelerated vesting provisions of Section 3(c) of your Executive Agreement with respect to this Performance Share Award.  The accelerated vesting provisions of Section 3(c) of your Executive Agreement do not apply to this Performance Share Award.

REMAINDER OF PAGE INTENTIONALLY BLANK. 
SIGNATURE PAGE FOLLOWS.

IN WITNESS WHEREOF, the parties have executed this Agreement on this 23rd day of February 2015 and specifically agree that the accelerated vesting provisions of Section 3(c) of the Executive Agreement do not apply to this Performance Share Award and this Performance Share Award shall serve as an amendment to the Executive Agreement solely with respect to vesting under this Performance Share Award.
STRATEGIC HOTELS & RESORTS, INC.
	
	
	 

By:    Paula C. Maggio
		
	Its: 
	Executive Vice President, General Counsel & Secretary

	
	
	 

(Employee Name)
	
	
	 

(Employee Signature)

EXHIBIT A
EXAMPLE OF PERFORMANCE SHARE AWARD CALCULATION

	
									
	 
	Company % TSR Rank
	Multiple
	 
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 
	 

	SNL Lodging Index
	72
	1.61
	 
	 
	 
	 
	 

	 
	 
	 
	 
	 
	 
	 
	 

	
						
	 
	Multiple
	 
	Target Grant
	 
	 

	 
	 
	 
	 
	 
	 

	 
	1.61
	X
	10,000
	=
	Base Grant   16,100

The example above does not include dividend equivalents payable in cash.

A-1

EXHIBIT B
EXAMPLE OF PRICE CALCULATION
Start Date Average Price was calculated as set forth below: 
	
							
	Date
	 
	Close
	 
	Date
	 
	Close

	31-Dec-14
	 
	13.23
	 
	17-Nov-14
	 
	12.85

	30-Dec-14
	 
	13.48
	 
	14-Nov-14
	 
	12.85

	29-Dec-14
	 
	13.58
	 
	13-Nov-14
	 
	12.92

	26-Dec-14
	 
	13.57
	 
	12-Nov-14
	 
	12.75

	24-Dec-14
	 
	13.55
	 
	11-Nov-14
	 
	12.74

	23-Dec-14
	 
	13.56
	 
	10-Nov-14
	 
	12.67

	22-Dec-14
	 
	13.50
	 
	7-Nov-14
	 
	12.52

	19-Dec-14
	 
	13.31
	 
	6-Nov-14
	 
	12.69

	18-Dec-14
	 
	13.34
	 
	5-Nov-14
	 
	12.69

	17-Dec-14
	 
	13.25
	 
	4-Nov-14
	 
	12.77

	16-Dec-14
	 
	12.87
	 
	3-Nov-14
	 
	12.95

	15-Dec-14
	 
	12.87
	 
	31-Oct-14
	 
	12.85

	12-Dec-14
	 
	13.12
	 
	30-Oct-14
	 
	12.67

	11-Dec-14
	 
	13.09
	 
	29-Oct-14
	 
	12.67

	10-Dec-14
	 
	13.06
	 
	28-Oct-14
	 
	12.69

	9-Dec-14
	 
	13.06
	 
	27-Oct-14
	 
	12.48

	8-Dec-14
	 
	12.81
	 
	24-Oct-14
	 
	12.36

	5-Dec-14
	 
	12.83
	 
	23-Oct-14
	 
	12.31

	4-Dec-14
	 
	12.76
	 
	22-Oct-14
	 
	12.03

	3-Dec-14
	 
	12.81
	 
	21-Oct-14
	 
	11.94

	2-Dec-14
	 
	12.83
	 
	20-Oct-14
	 
	11.74

	1-Dec-14
	 
	13.03
	 
	17-Oct-14
	 
	11.60

	28-Nov-14
	 
	13.28
	 
	16-Oct-14
	 
	11.58

	26-Nov-14
	 
	13.09
	 
	15-Oct-14
	 
	11.24

	25-Nov-14
	 
	13.02
	 
	14-Oct-14
	 
	11.35

	24-Nov-14
	 
	13.01
	 
	13-Oct-14
	 
	11.23

	21-Nov-14
	 
	12.91
	 
	10-Oct-14
	 
	11.30

	20-Nov-14
	 
	13.02
	 
	9-Oct-14
	 
	11.55

	19-Nov-14
	 
	12.94
	 
	8-Oct-14
	 
	11.69

	18-Nov-14
	 
	13.03
	 
	7-Oct-14
	 
	11.25

	
			
	Average
	 
	$12.68

Performance Date Average Price, Index Company Baseline Stock Price and Index Company Performance Date Average Price shall be calculated in the same manner as the Start Date Average Price was calculated.

B-1

EXAMPLE OF TSR CALCULATION
 
Below is a calculation of TSR for the Company from 2005 to 2007: 
	
												
	Date
	Stock Price
	Dividends Per Share
	Value of $100 Initial Investment
	TSR

	 
	 
	 
	 
	 

	12/31/04 60 Day Avg.
	

	$14.82
	

	 
	

	$100.00
	

	 

	3/29/05 Dividend Ex-Date
	

	$14.30
	

	

	$0.22
	

	

	$97.98
	

	 

	6/28/05 Dividend Ex-Date
	

	$17.96
	

	

	$0.22
	

	

	$124.56
	

	 

	9/28/05 Dividend Ex-Date
	

	$17.70
	

	

	$0.22
	

	

	$124.28
	

	 

	12/16/05 Dividend Ex-Date
	

	$20.35
	

	

	$0.22
	

	

	$144.43
	

	 

	3/29/06 Dividend Ex-Date
	

	$22.90
	

	

	$0.23
	

	

	$164.16
	

	 

	6/28/06 Dividend Ex-Date
	

	$20.06
	

	

	$0.23
	

	

	$145.45
	

	 

	9/27/06 Dividend Ex-Date
	

	$20.04
	

	

	$0.23
	

	

	$146.98
	

	 

	12/22/06 Dividend Ex-Date
	

	$21.14
	

	

	$0.23
	

	

	$156.73
	

	 

	3/23/07 Dividend Ex-Date
	

	$23.54
	

	

	$0.24
	

	

	$176.30
	

	 

	6/22/07 Dividend Ex-Date
	

	$22.20
	

	

	$0.24
	

	

	$168.07
	

	 

	9/24/07 Dividend Ex-Date
	

	$20.95
	

	

	$0.24
	

	

	$160.42
	

	 

	12/24/07 Dividend Ex-Date
	

	$18.37
	

	

	$0.24
	

	

	$142.50
	

	 

	12/31/07 60 Day Avg.
	

	$21.61
	

	 
	

	$167.64
	

	167.64
	%

A comparable methodology for determining TSR for the Company and Index Companies during the Performance Period or Change of Control Performance Period shall be used.

B-2

APPENDIX

“Executive Agreement” means your Agreement with the Company dated ____________.

“Constructive Termination” has the meaning assigned to it in your Executive Agreement.

“Cause” has the meaning assigned to it in your Executive Agreement.

“Index Company” means each of the companies including in the SNL Lodging Index.

“Index Company Baseline Stock Price” means the baseline common stock price for each Index Company.

“Performance Date” means the earlier of the End Date or the date of a Change of Control.

“Performance Date Average Price” means the average closing price of a share of Common Stock during the 60-trading day period ending on the End Date if the Performance Date is the End Date or the fair market value of a share of Common Stock on the date of a Change of Control if the Performance Date is the date of a Change of Control.

“Retirement” means retirement on or after age 62 from the Employer.

“Start Date Average Price” means the average closing price of a Share during the 60-day trading period immediately prior to the Start Date.

“TSR” means the total shareholder return.

B-3FY 2015 Q1 Exhibit 10.1

Exhibit 10.1

FORM OF
OPERATIONAL GOALS
LONG-TERM SHAREHOLDER VALUE
AWARD AGREEMENT

This Long-Term Shareholder Value Award Agreement (the “Agreement”) is effective as of «Date» by and between ALLEGHENY TECHNOLOGIES INCORPORATED, a Delaware corporation (the “Company”) and «Name» (the “Participant”).

WHEREAS, the Company has adopted the Allegheny Technologies Incorporated «Year» Incentive Plan (the “Plan”) and, in accordance with the Plan, has adopted Administrative Rules for the Long-Term Performance Plan (“LTPP”);

WHEREAS, the Administrative Rules for the LTPP allow for the grant of opportunities to earn shares of Common Stock based on the degree of achievement of specific and objective Operational Goals (a “Long-Term Shareholder Value or LTSV Award”) to (i) assist the Company to 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 shares of Company Common Stock.

WHEREAS, the LTPP provides that each award made under the LTPP to be measured by relative LTSV (a “LTSV Target Award”) shall be evidenced by an Award Agreement (each a “LTSV Award Agreement”) between the Company and the key management employee who receives a LTSV Target Award under the LTPP setting forth the terms and conditions of such LTSV Target Award;

WHEREAS, in consideration of the Restrictive Covenants and other good and valuable consideration, the Company desires to make a LTSV Target Award to the Participant and evidence such LTSV Target Award by this LTSV Award Agreement and the Participant, having read and understood the Plan and the LTPP, is willing to enter into this LTSV 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 LTPP Administrative Rules 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 LTSV Award described below, with respect to the Performance Period described below:

PERFORMANCE PERIOD:  «Date» through «Date».

LTSV TARGET AWARD: «LTSV_Shares_Awarded» shares of Company Common Stock, equals applicable base salary times «Company Performance Achievement % (AIP)» (which is the Participant’s target award opportunity as a percent of salary) divided by $«Price», which is the average of the high and low trading prices of Company Common Stock on the date of grant.

PERFORMANCE LEVELS:  The following sets forth the Operational Goals applicable to this LTSV Award for the «Range of Years» Performance Period:

«List of applicable operational goals and relative weighting percentages»

THE NUMBER OF SHARES DELIVERED UNDER THIS LTSV AWARD AGREEMENT WILL EQUAL THE LTSV TARGET AWARD TIMES THE APPLICABLE PERCENT OF ACTUAL ACHIEVEMENT OF THE OPERATIONAL GOALS.  THE COMMITTEE WILL DETERMINE THE DEGREE TO WHICH EACH OPERATIONAL GOAL HAS BEEN ACHIEVED AND SHALL ADD THE PERCENTAGES TOGETHER AND MULTIPLY THE SUM OF SUCH PERCENTAGES BY THE NUMBER OF LTSV SHARES SET FORTH AS THE LTSV TARGET AWARD.  NO AWARD SHALL BE DELIVERED UNLESS THE PARTICIPANT HAS FULLY COMPLIED WITH ALL CORPORATION POLICIES, INCLUDING, BUT NOT LIMITED TO, THE COMPANY’S CORPORATE GUIDELINES FOR BUSINESS CONDUCT AND ETHICS, THE RESTRICTIVE COVENANTS AND THE CLAWBACK POLICIES AND AGREEMENTS. 

IN WITNESS WHEREOF, the parties hereto have executed this LTSV Award Agreement effective the day and year first above written.

ALLEGHENY TECHNOLOGIES INCORPORATED

	
		
	By:
	 

	Name:
	 «Name»

	Title:
	«Title»

	
			
	PARTICIPANT
	 
	WITNESS

	 
	 
	 

	«Name»
	 
	 

2

TERMS AND CONDITIONS OF LTSV 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 “LTPP” shall mean the Administrative Rules for the LTPP adopted by the Committee effective «Date», as the same may be amended from time to time.

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

“Award Agreement” or “LTSV Award Agreement” shall mean this agreement evidencing this grant under the LTPP Administrative Rules and the Plan opportunities measured by LTSV.

“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.

“Operational Goals” shall mean the specific and objective operational goals set out above which shall include and shall have incorporated and included therein the longer form explanations of the elements of each such Operational Goal in the Company’s books and records as if such descriptions were set forth at length.  

“Performance Period” or “LTSV Performance Period” shall mean for this Award Agreement, the calendar years «Year», «Year» and «Year». 

“Performance Level” or “LTSV Performance Level” shall mean the sum of the percentages of actual achievement of the LTSV Operational Goals as determined by the Committee. 

“Proof of Ownership” shall mean a certificate or certificates, electronic or book entry evidencing shares awarded subject to achievement of the Operational Goals or delivered to the extent the Operational Goals have been achieved.

“Restrictive Covenants” shall mean those covenants not to compete, not to solicit business or employees of the Company and not to disparage the Company, its officers, directors or employees, in each case for a period of one (1) year after termination of employment for any reason, as such Restrictive Covenants are more fully set forth herein. 

“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 (5) years of employment with the Company and/or any subsidiary of the Company.

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“Target Award” or “LTSV Target Award” means this grant of an opportunity to earn the number of LTSV Shares set out in the LTSV Award Agreement if each Operational Goal is achieved in full.

Section 2:  LTSV Award

2.1    Subject to the attainment of the LTSV Performance Levels and to the terms and conditions otherwise set forth in the Plan, the LTPP Administrative Rules and this Award Agreement, the Company awards to Participant the LTSV 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 5 then applicable, the Company shall deliver to the Participant Proof of Ownership representing the LTSV Awards, if any, for the LTSV Performance Period within seventy-five (75) days after the end of the LTSV Performance Period.

3.2    If the Participant terminates employment with the Company and each subsidiary of the Company during a then uncompleted LTSV Performance Period for reasons other than death, Disability or Retirement, any LTSV Target Award for any then uncompleted LTSV Performance Period shall be forfeited automatically and the shares represented by such LTSV 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 LTSV Performance Period due to the Participant’s death, Disability, or Retirement, a pro rata award determined by multiplying the number of LTSV Shares set out in the Award Agreement by the Performance Level for the LTSV Performance Period and then multiplying that result by a fraction, the numerator of which is the number of months the Participant was employed by the Company during the LTSV Performance Period and the denominator is thirty-six (36).  Any award determined to be payable shall be paid after the end of the applicable LTSV Performance Period.

Section 4:  Restrictive Covenants

4.1    Non-Competition.  For a period of one (1) year after the Participant’s termination of employment with the Company (including for this Section 4 any of the Company’s subsidiaries and affiliates) for any reason, the Participant will not directly or indirectly (i) serve as an owner, principal, partner, employee, consultant, officer, director or agent of an entity, including a sole proprietorship, that engages or is planning to engage in any business in which the Company is engaged in any market in which the Company is engaged at the time of the Participant’s termination of employment, including the production and delivery of specialty materials and products for the aerospace and defense, oil and gas/chemical process industry, electrical energy, medical, automotive, food equipment and appliance, and construction and mining markets (each such entity in such market is referred to as a “Competing Business”).  Participant shall not be deemed to be in violation of this covenant if the Participant is the owner of not more than 2% of a corporation the stock of which is traded on a recognized securities exchange.

4.2    Non-Solicitation of Customers.  For a period of one (1) year after the Participant’s termination of employment with the Company for any reason, the Participant shall not, directly or indirectly, on behalf of a Competing Business solicit or attempt to divert the business or patronage of any business entity that has purchased specialty materials from the Company within two (2) years prior to the termination of the Participant’s employment and shall not assist any person or business entity in planning or making such a solicitation.  

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4.3    Non-Solicitation of Employees.  For a period of one (1) year after the Participant’s termination of employment with the Company for any reason, the Participant will not solicit or assist another person or entity to solicit any person who consults with the Company or is employed by the Company to cease consulting with the Company or to leave the employ of the Company or to accept a consulting or other business relationship or employment with another person or entity, whether or not a Competing Business.

4.4    Non-Disparagement.  For a period of one (1) year after the Participant’s termination of employment with the Company for any reason, the Participant shall not disparage the Company or its business, agents, servants, employees, officers or directors.

4.5    Confidentiality.  For a period of three (3) years after the Participant’s termination of employment with the Company for any reason, the Participant shall not disclose, divulge or use any material non-public information of the Company, including, but not limited to, manufacturing processes, customer lists, marketing plans or procedure proprietary information and trade secrets.

4.6    Consideration and Remedies.  The Participant recognizes and acknowledges that the opportunity to earn compensation or receive shares of Company stock under this Agreement is adequate consideration for the covenants set forth in this Section 4.  The Participant further acknowledges that the Company has no adequate remedy at law should the Participant violate or threaten to or attempt to violate any one or more of the covenants in this Section 4 and the Participant agrees that the Company is entitled to an injunction or other equitable relief restraining the Participant from violating or threatening to or attempting to violate any one or more of the covenants set forth in Section 4.  

Section 5:  Miscellaneous

5.1    General Restriction.  To the extent any LTSV 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 LTSV Awards to comply with any law or regulation of any governmental authority.

5.2    Non-Assignability.  No LTSV 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 LTSV Awards shall be payable only to the Participant.  No assignment or transfer of a LTSV 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 such purported assignment or transfer, the LTSV Target Awards shall terminate and become of no further effect.

5.3    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 

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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.

5.4    Delivery of Proof of Ownership.  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 5.3 hereof, the Company will issue and deliver by mail, or cause delivery by mail, to the Participant at the address of the Company’s records, Proof of Ownership 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 5.3 hereof) under the provisions of this Award Agreement.

5.5    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.

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

5.7    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.

5.8    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 this Award Agreement unless and until Proof of Ownership for shares of Common Stock is issued to the Participant.

5.9    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 LTSV 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 LTSV 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.

5.10     Awards Not a Bar to Corporate Event.  The existence of the LTSV 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 

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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.

5.11     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.

5.12    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 LTSV 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.

5.13    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 and the LTPP 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 or the LTPP Administrative Rules if made in good faith.

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