Preview of our top selling CEO Severance Agreement
AK Steel Holding - Executive Officer (other Than Ceo) Severance Agrmt
Exhibit 10.1
EXECUTIVE OFFICER (OTHER THAN CEO) SEVERANCE AGREEMENT
(as amended and restated to reflect certain March, 2000 language changes)
__________________, 2000
(Addressee)
Dear (Addressee):
Reference is made to the agreement between us, dated _____________, 19___ (the "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 Agreement shall be deemed amended and, as so amended, is restated in its entirety to read as hereinafter set forth.
AK Steel Corporation ("AKS"), 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. 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 key members of management to their assigned duties.
In consideration of the mutual promises contained herein, it is hereby agreed that Holding shall cause AKS to provide and AKS shall provide to you, and you shall receive from AKS, the benefits set forth in this Agreement if your employment by AKS (including, for the purposes hereof, its subsidiaries and Affiliates, as hereinafter defined) is terminated during the term of this Agreement as provided herein.
1. Purpose
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This Agreement establishes certain basic terms and conditions relating to
your employment with AKS, and special arrangements relating to the
termination of your employment with AKS for any reason other than: (i) your
voluntary retirement; (ii) your becoming totally and permanently disabled
under the AKS long-term disability plan or policy; or (iii) your death.
This Agreement supersedes all prior agreements with AKS or any predecessor
business, as well as all other AKS severance 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 this
Agreement 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.
2. Employment
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During the term of this Agreement:
(a) you will be employed by AKS (including for this purpose any direct
or indirect subsidiary or Affiliate of AKS to which you may be
transferred) in your present position or in a position that is at
least comparable to your present position in compensation,
responsibility and stature and for which you are suited by education
and background; and
(b) you will be eligible to participate in any employee benefit plan of
AKS (excluding any severance policies and practices other than this
Agreement) in accordance with the terms of said plans as they may be
amended from time to time.
Plans, policies and practices that generally apply to other members of
management of AKS will be referred to in this Agreement as your "Employment
Benefits." 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.
3. Term of Agreement
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This Agreement shall be deemed effective as of ________________________,
200__ (the "Effective Date") and shall continue in effect through the later
of: (i) the fifth anniversary of the Effective Date or (ii) the completion
of full payment of all benefits promised hereunder except for the benefits
payable pursuant to the pension benefit plans referenced in Section 1
above. This Agreement shall be automatically renewed annually from and
after the fifth anniversary of 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.
4. Termination of Employment
-------------------------
Your employment may be terminated during the term of this Agreement in
accordance with any of the following paragraphs. 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
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Period or the balance thereof, you shall continue to receive your full
salary and Employment Benefits.
(a) Involuntary Termination Without Cause
-------------------------------------
AKS may terminate your employment without Cause (as defined in
Section 4(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
4(a), you shall be entitled to those benefits provided under Section
5.
(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 4(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 4 (b), you shall only be
entitled to those benefits provided under Section 8.
(c) Voluntary Termination Without Good Reason
-----------------------------------------
You may voluntarily terminate your employment without Good Reason
(as defined in Section 4 (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 4 (c), you shall only be entitled to those benefits
provided under Section 8.
(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 occurrence of the
circumstances constituting such Good Reason. For the purposes of
this Section 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):
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(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 5 if you have given timely notice pursuant to
this Section 4(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
7(b) 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 2 hereof, in your Employment Benefits;
(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 15 hereof;
(viii) any purported termination of your employment by AKS that is
not effected in compliance with the provisions of Section
4(a) or 4(b) hereof, as the case may be;
(ix) notice of non-renewal is given by AKS pursuant to Section 3
of this Agreement.
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
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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 2. From and after the Date of Termination,
pursuant to this Section 4 (d), you shall be entitled to those
benefits provided under Section 5.
(e) Voluntary Termination After A Change In Control
-----------------------------------------------
You may voluntarily terminate your employment, with or without Good
Reason, during the thirty (30)-day period immediately following the
six (6)-month anniversary of a Change In Control, 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 the end of such thirty (30)-day
period. From and after the Date of Termination, pursuant to this
Section 4(e), you shall be entitled to those benefits provided under
Section 5.
5. Special Severance Benefits
--------------------------
(a) If your employment with AKS is involuntarily terminated by AKS
without Cause in accordance with Section 4(a), you voluntarily
terminate your employment for Good Reason in accordance with Section
4(d), or you voluntarily terminate your employment after a Change In
Control in accordance with Section 4(e), then you shall receive the
following benefits:
(i) Severance pay equal to your base salary shall be paid for a
period (hereafter, the "Severance Pay Period") of (1) 36
months from the Date of Termination, if the notice of your
termination is given within 24 months after the occurrence of
a Change In Control or (2) 24 months from your Date of
Termination, if the notice of your termination is given at
any time other than within 24 months after the occurrence of
a Change In Control. The aggregate base salary payable in
accordance with this Section 5(a)(i) shall be paid to you in
a single, undiscounted, lump sum payment within ten (10) days
following the Date of Termination unless you have requested,
in writing, at any time prior to your Date of Termination to
receive payments of your base salary in regular monthly
payments throughout the Severance Pay Period.
(ii) (1) Within ten (10) days following the Date of Termination,
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;
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(x) = twelve times your monthly base salary;
(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 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 4(d) or after a Change In Control under Section
4(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 performance under the
plan at the same time as all other participants receive
such payments, and (B) an additional amount equal to
the amount in (A) within sixty (60) days of your Date
of Termination. If the amount in (A) has not yet been
paid at 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 4(d) or after a Change In
Control under Section 4(e) shall not be considered a
voluntary termination under the long-term incentive
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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 first day of your
Notice Period until the first to occur of the third
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
within the Notice Period 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 Date of Termination, 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
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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...
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