Exhibit 10.1
June 19, 2002
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Dear Dick:
Reference is made to the agreement between us, dated March 1, 2000 ("Prior
Agreement"), setting forth the benefits to be provided to you in the event of
the termination of your employment upon the circumstances therein specified.
Upon your execution of a counterpart of this letter, the Prior Agreement shall
be deemed amended and, as so amended, is restated in its entirety to read as
hereinafter set forth.
AK Steel Corporation ("AKS" or "Company"), since its formation, has established
itself as a strong competitor in the steel industry. Continuity of the
management of AKS is a critical factor to the continued growth and success of
AKS. As an executive officer of AKS, you will have the opportunity as outlined
in Section A ("Severance Section") of this Executive Officer Severance Agreement
("Agreement") to receive severance benefits if your employment with the Company
ends under certain circumstances. AKS provides this severance benefits
opportunity because the Board of Directors ("Board") of AK Steel Holding
Corporation ("Holding"), of which AKS is a wholly-owned subsidiary, believes it
is in the best interest of Holding and AKS to reinforce and encourage the
continued attention and dedication of executive officers to their assigned
duties.
As an executive officer of AKS, you will be involved in decision-making
processes in your area of responsibility which involve AKS' proprietary and
confidential information. You will also have access and exposure to other
confidential competitive AKS information. Therefore, because of your involvement
with and access to proprietary and confidential information and in exchange for
AKS' agreement to provide you with the severance benefits opportunities set out
in this Agreement, you agree to be bound by the executive responsibilities set
forth in Section B of this Agreement ("Executive Responsibilities Section").
This Agreement establishes time limits for bringing claims for severance
benefits under this Agreement ("Severance Claims") and any claims or
controversies arising out of or relating to your employment relationship with
AKS or the termination of that relationship ("Employment Claims"), excluding
claims for workers' compensation and unemployment
compensation benefits and excluding the Company's right to seek injunctive or
other equitable relief to enforce the terms of the Executive Responsibilities
Section. The Agreement also provides that Severance Claims and Employment Claims
must be resolved through the arbitration process set forth in this Agreement.
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1. Providing of Severance Benefits
Holding shall cause AKS to provide and AKS shall provide to you the
benefits set forth in the Severance Section if your employment with
AKS (including for the purposes hereof, its subsidiaries and
Affiliates, as hereinafter defined) is terminated during the term of
the Severance Section as provided herein.
2. Purpose
The Severance Section establishes severance benefits opportunities
relating to the termination of your employment with AKS for reasons
other than: (i) your retirement; (ii) your becoming totally and
permanently disabled under the AKS long-term disability plan or
policy; or (iii) your death. The Severance Section supersedes any and
all prior severance agreements or severance provisions within
agreements with AKS or any predecessor business, as well as all other
AKS severance plans, policies and practices, except to the extent
incorporated or restated herein. Subject to the foregoing, neither the
termination of your employment nor anything contained in the Severance
Section shall have any affect upon your rights under (i) any
tax-qualified "pension benefit plan", as such term is defined in the
Employee Retirement Income Security Act of 1974, as amended ("ERISA");
(ii) any "welfare benefit plan" as defined in ERISA, including by way
of illustration and not limitation, any medical, surgical or
hospitalization benefit coverage or long-term disability benefit
coverage; or (iii) any non-qualified deferred compensation
arrangement, including by way of illustration and not limitation, any
non-qualified pension plan or deferred compensation plan.
3. Termination of Employment
The date upon which the termination of your employment becomes
effective is hereinafter referred to as the "Date of Termination." The
period between the date of notice of termination and the Date of
Termination is referred to as the "Notice Period." AKS may relieve you
of your employment duties upon the giving of any notice of termination
or at any time during any Notice Period; provided however, during such
Notice Period or the balance thereof, you shall continue to receive
your full salary
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and Employment Benefits (as defined in Section A(6)(b) below). This
Severance Section provides you with benefits in the event of the
termination of your employment during the term of the Severance
Section in accordance with the following paragraphs.
(a) Involuntary Termination Without Cause
AKS may terminate your employment without Cause (as defined in
Section A(3)(b) below), but only upon written notice given to you
by AKS not less than thirty (30) days prior to the Date of
Termination. From and after the Date of Termination, pursuant to
this Section A(3)(a), you shall be entitled to those benefits
provided under Sections A(4) and A(8) as applicable.
(b) Involuntary Termination For Cause
AKS may terminate your employment for Cause, but only upon
written notice, specifying the facts or circumstances
constituting such Cause, which notice may be given on or at any
time prior to the Date of Termination. For the purposes of this
Section A(3)(b), "Cause" means a willful engaging in gross
misconduct materially and demonstrably injurious to AKS.
"Willful" means an act or omission in bad faith and without
reasonable belief that such act or omission was in or not opposed
to the best interests of AKS. From and after your Date of
Termination, pursuant to this Section A(3)(b), you shall only be
entitled to those benefits provided under Section A(7).
(c) Voluntary Termination Without Good Reason
You may voluntarily terminate your employment without Good Reason
(as defined in Section A(3)(d) below), but only upon written
notice given to AKS by you not less than thirty (30) days prior
to the Date of Termination. From and after the Date of
Termination, pursuant to this Section A(3)(c), you shall be
entitled to those benefits provided under Sections A(7) and A(8)
as applicable.
(d) Voluntary Termination For Good Reason
You may voluntarily terminate your employment for Good Reason (as
herein defined), but only upon written notice, specifying the
facts or circumstances constituting such Good Reason, given to
AKS by you at least thirty (30) days prior to the Date of
Termination and not more than sixty (60) days following the
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occurrence of the circumstances constituting such Good Reason.
For the purposes of this Section A(4)(d), "Good Reason" shall
mean the occurrence, without your express written consent, of any
of the following circumstances (unless, in the case of clauses
(i), (v), (vi), (vii) or (viii) below, such circumstances are
fully corrected prior to the Date of Termination specified in the
notice of termination):
(i) the assignment to you of any duties inconsistent with your
position within AKS or a significant adverse alteration in
the nature or status of the responsibilities of your
employment;
(ii) a reduction by AKS in your annual base salary, but no such
reduction shall be effective with respect to your benefits
under Section A(4) if you have given timely notice pursuant
to this Section A(3)(d);
(iii) a requirement by AKS that you be based anywhere other than
the principal executive offices of AKS except for required
travel on AKS business to an extent substantially consistent
with customary business travel obligations;
(iv) the failure of AKS to pay to you any portion of your
compensation within seven (7) days of the date such
compensation is due;
(v) the failure of AKS, at any time within 24 months following
the occurrence of a Change In Control (as defined in Section
A(6)(c) hereof), to continue in effect any compensation plan
in which you participated immediately prior to such Change
In Control, which plan is material to your total
compensation, unless an equitable arrangement (embodied in
an ongoing substitute or alternative plan) has been made
with respect to such plan, or the failure of AKS to continue
your participation in such compensation plan (or in such
substitute or alternative plan) on a basis not materially
less favorable to you, both in terms of the amount of
benefits provided and the level of your participation
relative to other participants, than that existing
immediately prior to such Change In Control;
(vi) any material reduction, except to the extent permitted by
Section A(6)(b) hereof, in your Employment Benefits;
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(vii) the failure of AKS to obtain a satisfactory agreement from
any successor corporation to assume and agree to perform
this Agreement, as contemplated in Section D(5) hereof; or
(viii) any purported termination of your employment by AKS that
is not effected in compliance with the provisions of
Sections A(3)(a) or A(3)(b) hereof, as the case may be.
If you give notice of termination for Good Reason, then, during
the Notice Period (which shall not exceed 60 days), your full
base salary and Employment Benefits shall be the same as in
effect prior to the occurrence of the circumstances constituting
such Good Reason, subject to the right of AKS to make changes to
your Employment Benefits to the extent permitted by Section
A(6)(b). From and after the Date of Termination, pursuant to this
Section A(3)(d), you shall be entitled to those benefits provided
under Sections A(4) and A(8) as applicable.
(e) Voluntary Termination After Change In Control
You may voluntarily terminate your employment, with or without
Good Reason, during the thirty (30)-day period immediately
following the date on which a Change In Control occurs, but only
upon written notice given to AKS by you during such thirty
(30)-day period specifying the Date of Termination which, unless
otherwise agreed by you and AKS, shall not be less than thirty
(30) days nor more than sixty (60) days following such Change In
Control. From and after the Date of Termination, pursuant to this
Section A(3)(e), you shall be entitled to those benefits provided
under Sections A(4) and A(8) as applicable.
4. Special Severance Benefits
(a) If your employment with AKS is involuntarily terminated by AKS
without Cause in accordance with Section A(3)(a), you voluntarily
terminate your employment for Good Reason in accordance with
Section A(3)(d), or you voluntarily terminate your employment
after a Change In Control in accordance with Section A(3)(e),
then the Company will pay you, regardless of whether or not you
execute a release of claims, severance pay equal to your base
salary, less applicable tax withholdings and deductions, for a
period of six (6) months from your Date of Termination. The
aggregate base salary payable in accordance with this Section
A(4)(a) shall be paid to you in a single, undiscounted, lump sum
payment within ten (10) days following the Date of Termination
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unless you have requested, in writing, at any time prior to your
Date of Termination to receive such payments of your base salary
in regular monthly payments.
(b) If your employment with AKS is involuntarily terminated by AKS
without Cause in accordance with Section A(3)(a), you voluntarily
terminate your employment for Good Reason in accordance with
Section A(3)(d), or you voluntarily terminate your employment
after a Change In Control in accordance with Section A(3)(e), and
you sign a release of all claims against Holding, AKS, and AKS'
subsidiaries and Affiliates which is acceptable to AKS ("Release
of Claims"), then you shall be entitled, in addition to those
benefits provided for at Section A(4)(a), to the following
benefits, less applicable tax withholdings and deductions:
(i) Severance pay equal to your base salary shall be paid for an
additional period beyond the six (6) month period paid
pursuant to Section A(4)(a) of (1) thirty (30) months, if
the notice of your termination is given within 24 months
after the occurrence of a Change In Control or (2) eighteen
(18) months, if the notice of your termination is given at
any time other than within 24 months after the occurrence of
a Change In Control (hereafter, the total thirty-six (36)
month period or twenty-four (24) month period, as
applicable, under Sections A(4)(a) and A(4)(b)(i) will be
referred to as "Severance Pay Period"). The aggregate thirty
(30) months or eighteen (18) months of additional base
salary payable in accordance with this Section A(4)(b)(i)
shall be paid to you in a single, undiscounted, lump sum
payment within ten (10) days following the effective date of
the Release of Claims unless you have requested, in writing,
at any time prior to the effective date of the Release of
Claims to receive payments of your base salary in regular
monthly payments.
(ii) (1) Within ten (10) days following the effective date of the
Release of Claims, you will receive a lump-sum payment equal
in amount to the result obtained by application of the
following formula: P = (x) times (y) times (z), where:
P = the lump-sum payment;
(x) = twelve times your monthly base salary;
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(y) = the fraction obtained by dividing your
annual incentive compensation which
was paid or is payable to you for
the immediately preceding calendar
year by your actual base salary
for such year; and
(z) = 3.0 (if the notice of your termination is
given within 24 months after the
occurrence of a Change In Control,
or 2.0 (if the notice of your
termination is given at any time
other than within 24 months after
the occurrence of a Change in Control).
(2) Within ten (10) days following the later of the
effective date of the Release of Claims or the date
that payment is made to active employees of AKS, you
shall receive a pro-rata payment of the annual
incentive payment you would have received for the year
in which your Date of Termination occurs. Such payment
shall be: (A) pro-rated based upon your Date of
Termination and (B) determined without giving effect to
any contrary provision of the applicable incentive
plan, and without giving effect to any reduction in
such annual incentive payment that could result from
any amendment to or termination of such annual
incentive plan or a reduction in your level of
participation in connection with a Change In Control.
For purposes of this calculation, a termination for
Good Reason under Section A(3)(d) or after a Change In
Control under Section A(3)(e) shall not be considered a
voluntary termination under the annual incentive plan.
If the plan is amended or terminated subsequent to a
Change In Control such that a pro-rated payment cannot
be calculated, then you shall receive the maximum
payment, at your level of participation prior to the
Change In Control, pro-rated based upon your Date of
Termination.
(3) Without giving effect to any contrary provision of the
applicable long-term incentive plan, you shall receive:
(A) payment for the prior year's
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performance under the plan at the same time as all
other participants receive such payments, but no
earlier than the effective date of the Release of
Claims, and (B) an additional amount equal to the
amount in (A) within sixty (60) days following the
later of the effective date of the Release of Claims
or your Date of Termination. If the amount in (A)
has not yet been paid as of the later of the
effective date of the Release of Claims or your Date
of Termination, you shall receive an amount equal to
two times the amount in (A) at the next long-term
incentive payment date or within sixty (60) days of
your Date of Termination, whichever is earlier. For
purposes of this calculation, a termination for Good
Reason under Section A(3)(d) or after a Change In
Control under Section A(3)(e) shall not be
considered a voluntary termination under the
long-term incentive plan. Such payment shall be
determined without giving effect to any reduction in
such long-term incentive payment that could result
from any amendment to or termination of such plan or
a reduction in your level of participation in
connection with a Change In Control. If the plan is
amended or terminated such that no calculation of
the payment in (A) above for the prior year's
performance can be made, then you shall receive
twice the maximum payment in cash, at your level of
participation prior to the Change In Control, in
full payment of the amounts in (A) and (B) above.
(iii) Notwithstanding any provision to the contrary in the AK
Steel Holding Corporation Stock Incentive Plan as amended or
any other similar plan of AKS or Holding (each, a "Plan"),
or under the terms of any grant, award agreement or form for
exercising any right under the Plan, you shall have the
right:
(1) to exercise any stock option awarded to you under the
Plan without regard to any waiting period required by
the Plan or award agreement (but subject to a minimum
six month holding period from the date of award and any
restrictions imposed by law) from the effective date of
the Release of Claims until the first to occur of the
third
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anniversary of your Date of Termination or the date the
award expires by its terms, and
(2) to the absolute ownership of any shares of stock
granted to you under the Plan, free of any restriction
on your right to transfer or otherwise dispose of the
shares (but subject to a minimum six month holding
period from the date of grant and any restrictions
imposed by law), regardless of whether entitlement to
the shares is contingent or absolute by the terms of
the grant; and Holding and AKS shall take such action
as soon as practicable after the effective date of the
Release of Claims as is necessary or appropriate to
eliminate any restriction on your ownership of, or your
right to sell or assign, any such shares; or AKS shall
pay you, in exchange for such shares, no later than ten
(10) days after the effective date of the Release of
Claims, an amount in cash equal to the greatest
aggregate market value of the shares during the Notice
Period.
You agree, for a period of six (6) months after your
Termination Date, to continue to comply with all AKS and
Holding policies and directives related to trading in
Holding stock which were in effect prior to your notice of
termination. If your compliance with such policies and
directives precludes you from exercising any stock options
or selling any shares of stock described in paragraphs (1)
and (2) above for a period of more than sixty (60) days from
the first day of your Notice Period, then AKS will pay you
in cash the difference between the average share price
during the Notice Period and, if less, the actual share
price received by you at the time of sale provided you have
completed such sale within sixty (60) days from your first
opportunity to do so. The average sale price during the
Notice Period will be determined by averaging the highest
share price and the lowest share price during the Notice
Period. Any such differential payment will be paid to you
within thirty (30) days after you provide written notice to
AKS requesting such payment, but no earlier than the
effective date of the Release of Claims. Such notice is to
be directed to the attention of the Secretary of AKS and
contain the relevant stock transaction dates and actual
share price information.
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(iv) During the Severance Pay Period, your Employment Benefits
shall be continued, subject to the right of AKS to make any
changes to your Employment Benefits permitted in accordance
with Section A(6)(b); provided, however, that you shall not:
(1) accumulate vacation pay for periods after the Date of
Termination;
(2) qualify during the Severance Pay Period for sickness
and accident, salary continuation, and long-term
disability plan benefits if you were not eligible for
these benefits on the Date of Termination;
(3) be eligible to continue to make contributions to any
Internal Revenue Code ss. 401(k) plan maintained by AKS
or qualify for a share of any employer contribution
made to any tax-qualified defined contribution plan; or
(4) be eligible to accumulate service for pension plan
purposes; and
provided, further, that if, during the Severance Pay Period,
you are eligible to receive life insurance, medical,
hospital and other health insurance benefits ("Life and
Health Insurance") either based upon employment with another
employer or based upon benefits available to you as a
retiree of another employer, the obligations of AKS to
continue to provide you with Life and Health Insurance shall
be limited solely to those benefits necessary to assure
that, together with the corresponding benefits provided to
you under any other plans, you receive total benefits
comparable to those to which you were entitled at the Date
of Termination. You must report to the Vice President, Human
Resources of AKS your eligibility for another employer's
active or retiree Life and Health Insurance within ten (10)
days after becoming eligible.
(v) You shall qualify for full COBRA health benefit continuation
coverage upon the expiration of the Severance Pay Period.
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(vi) You shall be entitled, at no cost to you, to up to twelve
(12) months of full executive outplacement assistance with
an agency selected by AKS.
(c) You shall receive payment of your benefit under the AK Steel
Corporation Executive Minimum and Supplemental Retirement Plan
(the "SERP") in accordance with the provisions of the SERP.
Notwithstanding the foregoing, if your employment with AKS is
involuntarily terminated by AKS without Cause in accordance with
Section A(3)(a), or if at any time after a Change In Control you
voluntarily terminate your employment with AKS (or any Affiliate,
any successor of AKS, or any entity which as a result of the
completion of the transactions causing a Change In Control
becomes affiliated with AKS) for Good Reason in accordance with
Section A(3)(d), or after a Change In Control in accordance with
Section A(3)(e), within ten (10) days following the later of the
effective date of the Release of Claims or your Date of
Termination you will receive, in addition to any benefits you may
be entitled to under Sections A(4)(a) and A(4)(b) above, a lump
sum payment in an amount equal to the benefit you would be
entitled to under the SERP determined as if (i) your Vesting Date
(as defined under the SERP) had occurred prior to the Date of
Termination (if it has not already occurred as of the Date of
Termination) and (ii) you had attained age 60 prior to the Date
of Termination (if you have not already attained age 60 as of the
Date of Termination). The amount of any such additional benefit
shall be calculated as of the Date of Termination in accordance
with the benefit formula under the SERP (as if you had attained
age 60, or your actual age if greater), and the payment of such
benefit shall be in lieu of any payment under the SERP.
(d) You shall not be required to mitigate the amount of any payment
provided for in this Section A(4) by seeking other employment or
otherwise, nor shall the amount of any payment or benefits
provided for in this Section A(4) be reduced by any compensation
or benefits earned by you as the result of employment by another
employer (except as expressly provided in Section A(4)(b)(iv)
above) or by retirement benefits, or be offset against any amount
claimed to be owed by you to AKS or any of its Affiliates or
successors.
(e) For purposes of calculating any amount due under this Agreement,
the effect of any deferral of income shall be disregarded and all
sums due shall be calculated as if no such deferral had been
made.
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5. Certain Tax Matters
(a) If any of the payments provided to you pursuant to Section A(4)
hereof (the "Contract Payments") or any other portion of the
Total Payments(as defined below) becomes subject at any time to
the tax (the "Excise Tax") imposed by section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), AKS shall
pay to you at the time specified in Section A(5)(b) below, an
additional amount (the "Gross-Up Payment") such that the net
amount retained by you, after deduction of the Excise Tax on any
Contract Payments and/or other Total Payments, any federal and
state and local income tax and Excise Tax upon the payment(s)
provided for by this paragraph, and any interest, penalties or
additions to tax payable by you with respect thereto, shall be
equal to the present value of the Contract Payments and such
other Total Payments. For purposes of determining whether any of
the foregoing payments will be subject to the Excise Tax and the
amount of such Excise Tax, (i) any other payments or benefits
received or to be received by you in connection with a Change In
Control or the termination of your employment (whether such
payments are Contract Payments or are payable pursuant to the
terms of any other plan, arrangement or agreement with AKS,
Holding or any of their respective Affiliates or successors, any
person whose actions result in a Change In Control or any
corporation which, as a result of the completion of the
transactions causing a Change In Control, will become affiliated
with AKS or Holding within the meaning of section 1504 of the
Code (such other payments, together with the Contract Payments,
the "Total Payments")) shall be treated as "parachute payments"
within the meaning of section 28OG(b)(2) of the Code, and all
"excess parachute payments" within the meaning of section
28OG(b)(1) shall be treated as subject to the Excise Tax, except
to the extent that, in the opinion of tax counsel selected by
AKS' independent auditors and acceptable to you ("Tax Counsel"),
the Total Payments (in whole or in part) do not constitute
parachute payments, or such excess parachute payments are
otherwise not subject to the Excise Tax, (ii) the amount of the
Total Payments that shall be treated as subject to the Excise Tax
shall be equal to the lesser of (1) the total amount of the Total
Payments or (2) the amount of excess parachute payments within
the meaning of sections 28OG(b)(1) (after applying clause (i)
hereof), and (iii) the value of any noncash benefits or any
deferred payment or benefit shall be determined by AKS'
independent auditors in accordance with the principles of
sections 28OG(d)(3) and (4) of the Code. For purposes of
determining the amount of the Gross-Up Payment(s), you shall be
deemed to pay federal
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income taxes at the highest marginal rate of federal income
taxation applicable to individuals in the calendar year in which
the Gross-Up Payment(s) is (are) to be made and state and local
income taxes at the highest marginal rates of taxation applicable
to individuals as are in effect in the state and locality of your
residence in the calendar year in which the Gross-Up Payment(s)
is (are) to be made, net of the maximum reduction in federal
income taxes that could be obtained from deduction of such state
and local taxes. In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account
hereunder, you shall repay to AKS at the time that the amount of
such reduction in Excise Tax is finally determined the portion of
the Gross-Up Payment attributable to such reduction (plus the
portion of the Gross-Up Payment attributable to the Excise Tax
and federal and state and local income tax imposed on the
Gross-Up Payment being repaid by you if such repayment results in
a federal and state and local income tax deduction), plus
interest on the amount of such repayment at the applicable
federal rate (as defined in section 1274(d) of the Code). In the
event that the Excise Tax is determined to exceed the amount
taken into account hereunder (including by reason of any payment
the existence or amount of which cannot be determined at the time
of the Gross-up Payment), AKS shall make an additional gross-up
payment in respect of such excess (plus any interest payable with
respect to such excess) at the time that the amount of such
excess is finally determined.
(b) The Gross-up Payment(s) provided for in Section A(5)(a) above
shall be made within ten (10) days following the later of the
effective date of the Release of Claims or the Date of
Termination or, with respect to any portion of the Excise Tax not
determined on or before the later of such dates to be due, upon
the imposition of such portion of the Excise Tax; provided,
however, that if the amounts of such payments cannot be finally
determined on or before the later of such dates, AKS shall pay to
you within ten (10) days of the later of such dates an estimate,
as determined in good faith by AKS, of the minimum amount of such
payments and shall pay the remainder of such payments (together
with interest at the rate provided in section 1274(b)(2)(B) of
the Code) as soon as the amount thereof can be determined but in
no event later than the thirtieth day after the later of such
dates. In the event that the amount of the estimated payments
exceeds the amount subsequently finally determined to have been
due, such excess shall constitute a loan by the Corporation to
you, payable on the tenth day after demand by the Corporation
(together with interest at the rate provided in section
1274(b)(2)(B) of the Code).
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(c) In the event of any change in, or further interpretation of,
sections 28OG or 4999 of the Code and the regulations promulgated
thereunder, you shall be entitled, by written notice to AKS, to
request an opinion of Tax Counsel regarding the application of
such change to any of the foregoing, and AKS shall use its best
efforts to cause such opinion to be rendered as promptly as
practicable. All fees and expenses of Tax Counsel incurred in
connection with this Agreement shall be borne by AKS
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6. Definitions
For purposes of this Agreement the following terms shall have the
following meanings:
(a) "Affiliate" of any specified person means (i) any other person
which, directly or indirectly, is in control of, is controlled by
or is under common control with such specified person or (ii) any
other person who is a director or officer (1) of such specified
person, (2) of any subsidiary of such specified person or (3) of
any person described in clause (i) above. For purposes of this
definition, control of a person means the power, direct or
indirect, to direct or cause the direction of the management and
policies of such person whether by contract or otherwise and the
terms "controlling" and "controlled" have meanings correlative to
the foregoing.
(b) "Employment Benefits" means the employee benefit plans, policies,
and practices of AKS (excluding any severance policies and
practices other than this Agreement) that generally apply to
other salaried employees or managers in accordance with the terms
thereof as they may be amended from time to time. Your Employment
Benefits may be modified from time to time after the date hereof
without violation of this Agreement if the changes apply
generally to other members of management of AKS.
(c) "Change In Control" means the occurrence of any of the following
events:
(i) any "Person" (as such term is used in Sections 13(d) and
14(d) of Securities Exchange Act of 1934, as amended (the
"Exchange Act"), is or becomes the beneficial owner (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have "beneficial
ownership" of all shares that any such Person has the right
to acquire, whether such right is exercisable immediately or
only after the passage of time), directly or indirectly, of
more than 40% of the total voting power of the Voting Equity
Interests of Holding; provided, however, that a Person shall
not be deemed the "beneficial owner" of shares tendered
pursuant to a tender or exchange offer made by that Person
or any Affiliate of that Person until the tendered shares
are accepted for purchase or exchange;
(ii) during any period of two consecutive years, individuals who
at the beginning of such period constituted the Board
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(together with any new directors whose election by such
Board, or whose nomination for election by the shareholders
of Holding, as the case may be, was approved by a vote of
66-2/3% of the directors then still in office who were
either directors at the beginning of such period or whose
election or nomination for election was previously so
approved) cease for any reason to constitute a majority of
the Board then in office; or
(iii) Holding fails to own 100% of the outstanding stock of AKS;
provided, however, that it shall not be deemed a Change in
Control if Holding merges into AKS except that, in such
case, AKS shall be substituted for Holding for purposes of
this definition of "Change in Control" and this clause (iii)
shall not longer be applicable.
(d) "Voting Equity Interests" of a corporation means all classes of
stock then outstanding and normally entitled to vote in the
election of directors or other governing body of such
corporation.
7. Benefits Upon Voluntary Termination or Termination for Cause
Upon your Date of Termination for Cause in accordance with Section
A(3)(b) or your Date of Termination without Good Reason in accordance
with Section A(3)(c), you will not be entitled to benefits under
Section A(4) of this Agreement, but you nevertheless shall be eligible
for any benefits provided in accordance with the plans and practices
of AKS which are applicable to employees generally.
8. Benefits Based on Age and Service
Notwithstanding any provision in this Agreement to the contrary, if
your employment with AKS terminates for any reason under Section A(3)
other than involuntary termination for Cause under Section A(3)(b);
and if on your Date of Termination (i) you have attained at least age
50, (ii) you are a participant in the AK Steel Corporation Executive
Minimum and Supplemental Retirement Plan ("SERP") and you are vested
in your SERP benefit, (iii) the sum of your age and your years of
service with AKS equals or exceeds 65, and (iv) you execute a Release
of Claims (as defined in Section A(4)(b)); then the following
provisions shall be applicable, effective as of the effective date of
the Release of Claims:
(a) If you are not otherwise eligible for retiree medical insurance
coverage from AKS, AKS shall make available to you retiree
medical insurance coverage, the benefits and duration of which
16
shall at least be comparable to the benefits and duration of the
retiree medical insurance coverage generally available to retired
salaried employees of AKS; provided however, if at any time on or
after your Date of Termination you are eligible to receive
retiree medical insurance coverage based upon benefits available
to you as a retiree of another employer, the obligations of AKS
to continue to provide you with retiree medical insurance
coverage under this Section A(8) shall be limited solely to those
benefits necessary to assure that, together with the
corresponding benefits provided to you under any other plan, you
receive total benefits comparable to those to which you were
entitled on the effective date of the Release of Claims. You must
report to the Vice President, Human Resources of AKS your
eligibility for another employer's retiree medical insurance
coverage. Benefits provided under this Section A(8) may be
modified from time to time after the date hereof without
violation of this Agreement if the changes are consistent with
changes that generally apply to the retiree medical coverage
available to other salaried employees of AKS.
(b) Notwithstanding any provisions to the contrary in the AK Steel
Holding Corporation Stock Incentive Plan, the AK Steel
Corporation Annual Management Incentive Plan, the AK Steel
Corporation Long-Term Performance Plan, the AK Steel Corporation
Executive Deferred Compensation Plan, and the AK Steel
Corporation Supplemental Thrift Plan (collectively, the "Plans"),
your termination of employment hereunder shall be considered your
"retirement" solely for purposes of determining the amount of any
benefits, and the method of payment of any benefits, under the
Plans.
B. Executive Responsibilities
1. Confidentiality
(a) During your employment with AKS and subsequent to the termination
of that employment for any reason, you will not disclose to any
person or use for the benefit of yourself or any other person or
entity any confidential or proprietary information of AKS without
the prior written consent of the Vice President, Human Resources
of AKS. Upon your termination of employment with the Company for
any reason, you will immediately deliver to AKS any and all AKS
information which you have in your possession or control,
including but not limited to, information about AKS' practices,
procedures, operations, trade secrets, customer lists, financial
matters, or product marketing. You will deliver this
17
information to AKS in whatever format in which you have it,
including but not limited to paper, disk, hard drive, tape,
electronic storage, Palm Pilot or other PDA, or CD-ROM. You will
also deliver to AKS any and all AKS property, including but not
limited to, company credit cards, property access keys and cards,
planners, day books, customer lists, laboratory notebooks,
cellular/digital phones, computers, software, and Palm Pilots (or
other PDA).
(b) You also agree that you remain bound by the Employee Invention
and Confidential Information Agreement which you executed.
2. Covenant Not to Compete
In exchange for AKS' agreement to provide you with the severance
benefits opportunities set out in this Agreement (including the
opportunity to receive six months of severance pay set out at
Section A(4)(a) of the Agreement) and the compensation provided
to you as an executive officer, you agree that, during your
employment at AKS and for a period of one year following the
termination of your employment with AKS for any reason, you agree
not to be employed by, or serve as a director of or consultant or
advisor to, any business engaged directly or indirectly in the
melting, hot rolling, cold rolling, or coating of carbon,
electrical or stainless steel, or in the manufacturing of steel
pipe and tubing products, or that is reasonably likely to engage
in such business during the one-year period following the date
when your employment with AKS terminates; provided, however, if a
Change In Control occurs, the foregoing restriction applicable to
the one year period following your Date of Termination shall
lapse and be null and void.
3. Non-Solicitation and Non-Disparagement
(a) During your employment at AKS and for a period of five years
following the termination of your employment with AKS for any
reason, you agree that you will not solicit directly or cause or
encourage another person or entity to solicit any employee of the
Company or its subsidiaries or Affiliates for employment by any
entity which is engaged directly or indirectly in the melting,
hot rolling, cold rolling, or coating of carbon, electrical or
stainless steel, or in the manufacturing of steel pipe and tubing
products or that is reasonably likely to engage in such business
during the one year period following your termination of
employment.
(b) You also agree that, during your employment with AKS and
subsequent to the termination of that employment for any reason,
18
you will not disparage the Company or its subsidiaries or its
Affiliates, operations, products, employees, officers, or
directors.
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4. Conflicts of Interest
You agree for so long as you are employed by AKS to avoid dealings and
situations which would create a conflict of interest with AKS. In this
regard, you agree to comply with the AKS policy regarding conflicts of
interest. You further agree to immediately report to the Vice
President, Human Resources of AKS any conflict or potential conflict
of interest with AKS.
5. Injunctive Relief
You recognize and acknowledge that your involvement in decision making
processes which involve AKS' proprietary and confidential information
and your access to confidential competitive information will be such
that, in the event of a breach of the Confidentiality (Section B(1))
and Covenant Not to Compete (Section B(2)) provisions of this
Agreement (hereafter referred to together as "Confidentiality and CNC
Provisions"), monetary damages would be an insufficient remedy for
AKS, and that AKS would be entitled to injunctive relief in the
appropriate court to restrain the breach and otherwise enforce the
Confidentiality and CNC Provisions without proof of actual damages.
C. Time Limits for Bringing Claims; Arbitration of Claims
1. Time Within Which Severance Claims and Employment Claims Must Be
Brought
Severance Claims must be filed within one (1) year from the Date of
Termination. Employment Claims must be filed within one (1) year after
the occurrence of the action or actions upon which the claim is based.
You agree to waive any statute of limitations to the contrary.
2. Arbitration of Severance Claims and Employment Claims
Severance Claims and Employment Claims shall be submitted to final and
binding arbitration, subject to the Rules of Arbitration attached to
this Agreement as Exhibit A. Employment Claims subject to arbitration
include, but are not limited to, allegations of unlawful
discrimination based on race, sex, religion, age, national origin,
disability, and retaliation and any other claim of a violation of a
right created or protected by local, state, or federal law.
You and AKS agree that it is the intention of you and AKS to avoid
litigation in court of Severance Claims and Employment Claims and you
and AKS, therefore, specifically waive any right you or AKS would
20
otherwise have to have Severance and Employment Claims decided by a
judge or jury. You understand that this Agreement does not limit your
right to file a charge with or to assist any administrative agency,
including the Equal Employment Opportunity Commission and the National
Labor Relations Board. However, you further agree that, should any
person, organization, or other entity file, charge, claim, ▇▇▇, or
cause or permit to be filed any civil action, suit or legal proceeding
involving those matters which you have agreed to submit to final and
binding arbitration, you will not seek or accept any personal relief
in any such proceeding.
You and AKS agree that this agreement to arbitrate and the arbitration
award are enforceable under and subject to the Federal Arbitration
Act, 9 U.S.C. ss. 1 et. seq. You and AKS consent that judgment upon
the arbitration award may be entered in an appropriate court of
competent jurisdiction located in ▇▇▇▇▇▇ County, Ohio or in the United
States District Court for the Southern District of Ohio.
D. Miscellaneous
1. Term
The Agreement is effective as of June 19, 2002 ("the Effective Date").
The term of this Agreement is five (5) years, except that the term of
Sections B, C, D, and Exhibit A are indefinite. The Agreement shall be
automatically renewed annually from and after the Effective Date,
unless written notice of non-renewal is given by you or by AKS at
least ninety (90) days prior to the expiration of the term, including
any extension thereof.
2. Notice
Notices required or permitted under this Agreement shall be in writing
and shall be deemed to have been given when personally delivered or
mailed by United States certified mail, return receipt requested,
postage prepaid, addressed to the intended recipient at its or his or
her last known address. Notices to AKS shall be marked for the
attention of the Vice President, Human Resources of AKS.
3. No Contract of Employment
Nothing in this Agreement shall be construed as a contract or promise
of continued employment with AKS, AKS' subsidiaries or Affiliates. As
an "at-will" employee of AKS, your employment may be terminated by you
or AKS at any time.
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4. Modification; Waiver
No provision of this Agreement may be waived, modified or discharged
except pursuant to a written instrument signed by you and an
authorized officer of AKS.
5. Successors; Binding Agreement
(a) AKS and Holding will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all
or substantially all of the business and/or assets of AKS to
expressly assume and agree to perform this Agreement in the same
manner and to the same extent that AKS would be required to
perform it if no such succession had taken place.
(b) This Agreement shall inure to the benefit of and be enforceable
by you and your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and
legatees. If you should die while any amount would still be
payable to you hereunder had you continued to live, all such
amounts, unless otherwise provided herein, shall be paid in
accordance with the terms of this Agreement to your devisee,
legatee or other designee, or, if there is no such devisee,
legatee or designee, to your estate.
6. Counterparts
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.
7. Severability; Validity
The provisions of the Agreement (including Exhibit A) are severable
and the validity or unenforceability of any provision shall not effect
the validity or enforceability of any other provision, with the
following exception. If a court rules that Section C(2)'s provisions
regarding the agreement to waive the right to have Severance Claims or
Employment Claims decided by judge or jury are unenforceable, any and
all rights created by Section C(2) of the Agreement and Exhibit A to
the Agreement will be voided retroactively, and the proceeds of any
arbitration award must be returned to the party from which they
originated.
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8. Choice of Law; Forum Selection
This Agreement shall be governed by the laws of the United States and
the laws of the State of Ohio, both as to interpretation and
performance. Any action or other legal proceeding not subject to
arbitration under this Agreement or any action or legal proceeding
regarding the enforceability of this Agreement shall be brought
exclusively in an appropriate court of competent jurisdiction located
in ▇▇▇▇▇▇ County, Ohio (if the action is brought in state court) or in
the Southern District of Ohio (if such action is brought in federal
court). Any action brought within such courts shall not be transferred
or removed by you to any other state or federal court.
Sincerely,
AK STEEL HOLDING CORPORATION
Accepted and agreed to this _____ day
______________, 2002. By:___________________________
__________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. AK STEEL CORPORATION
By:___________________________
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Exhibit A
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Rules for Arbitration
---------------------
1. The arbitration hearing ("Hearing") will take place in Middletown, Ohio,
unless the parties mutually agree to another location.
2. The arbitration process will be governed by the National Rules for the
Resolution of Employment Disputes ("National Rules") of the American
Arbitration Association ("AAA") except to the extent they are modified by
the Executive Officer Severance Agreement ("Agreement") and this Exhibit A
to the Agreement.
3. Either you or AKS may initiate the arbitration process by filing a written
demand for monetary or non-monetary relief and notice of intent to
arbitrate ("Notice") with any regional office of the AAA and paying the
filing fee as set out in the National Rules. The Notice must be filed
within the time limits established in Section C(1) of the Agreement. The
date the Notice is considered "filed" for purposes of Section C(1) of the
Agreement and this rule is the date the Notice is received in a AAA
regional office.
4. You and AKS will share equally any AAA administrative fee other than the
filing fee. The Company will pay all of the arbitrator's fees. You and AKS
will bear your own litigation costs and expenses (including attorneys
fees), unless the arbitrator awards attorneys fees to a prevailing party in
accordance with the law applicable to the matter in dispute.
5. You and AKS will agree upon an arbitrator selected from a panel of
arbitrators chosen by and maintained at the headquarters office of the AAA
in New York. Arbitrators on this panel will have the following three
qualifications: (1) membership on the AAA's National Employment Dispute
roster; (2) membership on AAA's labor-management roster; and (3) at least
fifteen years experience as an arbitrator. After the filing of a written
notice of intent to arbitrate, the AAA will send simultaneously to you and
AKS an identical list of names of ten (10) persons chosen from the panel.
You and AKS will have ten (10) days from the transmittal date in which to
strike any names objected to, number the remaining names in order of
preference, and return the list to the AAA. If no arbitrator is acceptable
to both you and AKS or the person who has been approved on both lists and
selected by the AAA cannot serve promptly, another list or lists will be
sent out by the AAA in accordance with the above procedure until an
arbitrator is agreed upon by you and AKS.
6. Any pre-hearing disputes will be presented to the arbitrator for
expeditious, final and binding resolution.
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7. You have had an opportunity to review the National Rules and will be given
the opportunity to review these rules at any time.
8. The remedy and relief which may be granted by the arbitrator is that which
the arbitrator deems just and equitable considering what would have been
available to the parties had the matter been heard in court.
9. Discovery - Obtaining Information. You and AKS recognize that a primary
benefit each derives from entering into the Agreement is that we avoid the
delay and costs normally associated with litigation. Therefore, you and AKS
agree that neither party will be entitled to conduct any discovery prior to
the Hearing except that:
(a) AKS will furnish you with copies of all non-privileged documents in
your personnel file;
(b) if you are pursuing a claim against AKS for discharge, you will
furnish AKS with records of your earnings and benefits relating to
your subsequent employment and all documents relating to your efforts
to obtain subsequent employment;
(c) AKS and you will exchange no later than seven days prior to the
Hearing copies of all documents which either party intends to
introduce as evidence at the Hearing and a list of witnesses either
party intends to present at the Hearing;
(d) you will be allowed (at your expense) to take the deposition of your
immediate supervisor and the individual who made the decision which
resulted in your claim (if that individual is not your immediate
supervisor) for a period not to exceed two hours each, and AKS will be
allowed (at its expense) to depose you for a period not to exceed two
hours; and
(e) either you or AKS may ask the arbitrator to grant additional discovery
to the extent permitted by the National Rules if it is demonstrated
that such discovery is necessary for a fair arbitration and no less
expensive alternative for exchanging the information exists.
Nothing herein will prevent either you or AKS from taking the
deposition of any witness where: (a) the sole purpose for taking the
deposition is to use the deposition in lieu of the witness testifying
at the hearing; and (b) the witness is, in good faith, unavailable to
testify in person at the hearing due to poor health, residency and
employment more than 50 miles from the hearing site, conflicting
travel plans or other comparable reason.
10. You and AKS will have the opportunity to submit to the arbitrator a
post-hearing brief in support of your respective positions.
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11. All aspects of the procedure under the Agreement, including the hearing,
the record of the proceedings, and the arbitrator's decision are
confidential and will not be open to the public, except (a) to the extent
you and AKS agree otherwise in writing, (b) as may be appropriate in any
subsequent proceedings between you and AKS, or (c) as may otherwise be
appropriate in response to a governmental agency or legal process.
26