EXHIBIT 10.2

 

                    , 2004

 

(Addressee)

 

Re:     Executive Officer Severance Agreement

 

Dear (Addressee):

 

[This paragraph is used when there was a prior Severance Agreement.] Reference
is made to the agreement between us, dated                     ,          (the
“Prior Agreement”), setting forth the extent to which benefits will be provided
to you in the event of termination, under certain circumstances, of your
employment with AK Steel Corporation (the “Company”), AK Steel Holding
Corporation (“Holding”) or any of their respective subsidiaries, affiliates, or
successors (hereinafter collectively referred to as “AKS”). Upon your execution
of this letter agreement (the “Agreement”), the Prior Agreement shall be deemed
superseded in its entirety and no longer in effect. This Agreement sets forth
your obligations and commitments in exchange for continued employment with AKS,
the compensation and benefits you receive during such employment, and the
promise and/or receipt of severance benefits if your employment terminates under
certain circumstances. It establishes time limits for asserting certain claims
under this Agreement or arising out of your employment relationship with AKS. It
also requires that certain claims be resolved through arbitration rather than
through litigation. This Agreement is not, however, an employment agreement and
nothing in this Agreement shall be construed as a contract or promise of
continued employment with AKS. As an “at-will” employee, your employment may be
terminated by you or AKS at any time.

 

[This paragraph is used when there was no prior Severance Agreement.] This
letter agreement (the “Agreement”) sets forth the extent to which benefits will
be provided to you in the event of termination, under certain circumstances, of
your employment with AK Steel Corporation (the “Company”), AK Steel Holding
Corporation or any of their respective subsidiaries, affiliates, or successors
(hereinafter collectively referred to as “AKS”). It further sets forth your
obligations and commitments in exchange for continued employment with AKS, the
compensation and benefits you receive during such employment, and the promise
and/or receipt of severance benefits if your employment terminates under certain
circumstances. It establishes time limits for asserting certain claims under
this Agreement or arising out of your employment relationship with AKS. It also
requires that certain claims be resolved through arbitration rather than through
litigation. This Agreement is not, however, an employment agreement and nothing
in this Agreement shall be construed as a contract or promise of continued
employment with AKS. As an “at-will” employee, your employment may be terminated
by you or AKS at any time.

 

A. Effective Date; Term; Renewal. This Agreement is effective as of
                    , 2004 (the “Effective Date”). Except for the Change of
Control Agreement between you and AKS dated                     , 2004 (“Change
of Control Agreement”), this Agreement supercedes any other severance agreement
between you and AKS, and any severance plan, arrangement, policy or practice of
AKS. The term of this Agreement shall be the five-year

--------------------------------------------------------------------------------

period beginning on the Effective Date and ending on the fifth anniversary of
the Effective Date. This Agreement shall be automatically renewed annually
thereafter for a renewal period of one year, unless written notice of
non-renewal is given by you or by AKS at least ninety days prior to the
expiration of the term, including any renewal periods. Notwithstanding the
expiration of this Agreement, the terms of Sections F, G and H (including
Exhibit A) shall continue to be effective to the extent and as stated therein.

 

B. Date of Termination; Notice Period; Severance Pay Period. The date upon which
the termination of your employment becomes effective is referred to in this
Agreement as your “Date of Termination.” The period between the date a party
provides notice of termination under this Agreement and the Date of Termination
is referred to as the “Notice Period.” AKS may relieve you of your employment
duties at any time during a Notice Period; provided however, during any Notice
Period, you shall continue to receive your full salary and Employment Benefits
(as defined in Section E(2)(c) below). The period of time after your Date of
Termination equal to the number of months of base salary paid to you under this
Agreement as severance benefits is referred to as the “Severance Pay Period.”

 

C. Circumstances of Termination Covered by this Agreement. While the Change of
Control Agreement applies to the termination of your employment with AKS under
certain circumstances involving a Change of Control (as defined in such
agreement), this Agreement applies to the termination of your employment with
AKS under the following circumstances not involving a Change of Control:

 

1. Involuntary Termination without Cause. AKS may terminate your employment
without Cause at any time upon written notice given to you by AKS not less than
thirty days prior to the Date of Termination.

 

2. 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. The following circumstances shall constitute “Cause”
for purposes of this Agreement: (a) you are convicted of, or enter a plea of
guilty or nolo contendere, to a misdemeanor involving moral turpitude or to a
felony, (b) you engage in fraud, misappropriation or embezzlement with respect
to AKS, (c) your willful failure, gross negligence or gross misconduct in the
performance of your assigned duties for AKS, and (d) your breach of a fiduciary
duty to AKS.

 

3. Voluntary Termination. You may voluntarily terminate your employment upon
written notice given to AKS by you not less than thirty days prior to the Date
of Termination.

 

D. Circumstances of Termination Not Covered by this Agreement. This Agreement
does not provide severance benefits for, nor, as the case may be, affect the
benefits you otherwise may receive outside of this Agreement in connection with
the termination of your employment with AKS for reasons relating to: (1) your
early or normal retirement from AKS under the terms of any tax-qualified
“pension benefit plan” as defined in the Employee Retirement Income Security Act
of 1974, as amended (“ERISA”); (2) total and permanent

 

2

--------------------------------------------------------------------------------

disability under the AKS long-term disability plan or policy; or (3) your death.
Nothing in this Agreement shall affect your rights under any such “pension
benefit plan”; any “welfare benefit plan” as defined in ERISA, including but not
limited to any medical, surgical, hospitalization, or long-term disability
benefits; or any non-qualified pension or deferred compensation plan or
arrangement.

 

E. Severance Benefits.

 

1. Basic Severance Benefits. If your employment with AKS is involuntarily
terminated without Cause pursuant to Section C(1), AKS will pay you, regardless
of whether or not you execute a Release of Claims (as defined in Section E(2)
below), severance pay equal to your base salary for a period of six months from
your Date of Termination. The aggregate of such severance pay shall be paid to
you in a single, undiscounted, lump sum payment within ten days following the
Date of Termination unless you previously have requested in writing to receive
such amount in regular monthly payments during the Severance Pay Period.

 

2. Supplemental Severance Benefits. If your employment with AKS is involuntarily
terminated without Cause pursuant to Section C(1), and you execute and provide
to AKS a complete and full release of all claims against AKS that is in a form
reasonable and customary (“Release of Claims”), then you shall be entitled, in
addition to the severance pay provided under Section E(1), to the following
supplemental benefits:

 

a. Additional Base Salary. Severance pay based upon your base salary shall be
paid for an additional twelve months beyond the period paid pursuant to Section
E(1). Such additional base salary payable as severance shall be paid to you in a
single, undiscounted, lump sum payment within ten days following the Date of
Termination unless you previously have requested in writing to receive such
amount in regular monthly payments during the Severance Pay Period.

 

b. MIP Payment. You will receive a lump-sum payment equal to one and one-half
times your assigned target amount under the AK Steel Corporation Annual
Management Incentive Plan (“MIP”) for the calendar year during which your Date
of Termination occurs, less any amount otherwise paid (or payable) to you under
the MIP with respect to such calendar year. Payment of this lump sum amount will
be made within ten days after the effective date of your Release of Claims.

 

c. Employment Benefits. During the Severance Pay Period, your Employment
Benefits (as defined below) shall continue; provided, however, that you shall
not:

 

i. accumulate vacation pay for periods after the Date of Termination;

 

3

--------------------------------------------------------------------------------

ii. 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;

 

iii. be eligible to continue to make contributions to any Internal Revenue Code
§ 401(k) plan maintained by AKS or qualify for a share of any employer
contribution made to any tax-qualified defined contribution plan; or

 

iv. 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
the Company your eligibility for another employer’s active or retiree Life and
Health Insurance within ten days after becoming eligible.

 

“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 executive officers of AKS in accordance with
the terms thereof as they may be amended from time to time. It is expressly
understood and agreed that the AK Steel Corporation Executive Minimum and
Supplemental Retirement Plan is not an Employment Benefit as defined in this
section. 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.

 

d. COBRA. You shall qualify for full COBRA health benefit continuation coverage
upon the expiration of the Severance Pay Period.

 

3. Mitigation. You shall not be required to mitigate the amount of any payment
provided for in this Section E by seeking other employment or otherwise, nor
shall the amount of any such payment or benefits be reduced by any compensation
or benefits earned by you as the result of employment by another employer
(except as expressly provided in Section E(2)(c)) or by retirement benefits, or
be offset against any amount claimed to be owed by you to AKS.

 

4. Deferrals. 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.

 

4

--------------------------------------------------------------------------------

5. No Duplication of Benefits. You shall not be entitled to severance benefits
both under this Agreement and under the Change of Control Agreement in
connection with the termination of your employment with AKS.

 

6. Involuntary Termination for Cause; Voluntary Termination. In the event your
employment with AKS ends as a result of involuntary termination for Cause
pursuant to Section C(2) or voluntary termination pursuant to Section C(3), you
shall not be entitled to any benefits under this Agreement, but you nevertheless
shall be eligible for any benefits provided in accordance with the plans and
practices which apply to employees generally.

 

F. Executive Responsibilities.

 

1. Confidentiality. 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
trade secret, proprietary or other confidential information of AKS (hereinafter
referred to as “AKS Confidential Information”) without the prior written consent
of the Vice President, Human Resources of the Company. Upon your termination of
employment with the Company for any reason, you will immediately deliver to AKS
any and all AKS Confidential Information which you have in your possession or
control in tangible form. For purposes of this Section F, it is expressly
understood and agreed that the term AKS Confidential Information shall include,
but not be limited to, all information not already in the public domain relating
to AKS operating practices and procedures, customer lists, product marketing,
sales, sales prices, costs, margins, discounts, rebates, profits, shipments,
product mix, research, technical support, business plans and operating results.
You will deliver this AKS Confidential 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). You 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’s agreement to provide you with
the severance benefits opportunities set out in this Agreement (including, in
particular, the opportunity to receive the severance pay set out at Section E(1)
of this 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 has an intent or plan
to engage in such business during the one-year period following the date when
your employment with AKS terminates.

 

3. Non-Solicitation. 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

 

5

--------------------------------------------------------------------------------

you will not solicit directly or cause or encourage another person or entity to
solicit any employee of AKS 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.

 

4. Non-Disparagement. You agree that, during your employment with AKS and
subsequent to the termination of that employment for any reason, you will not
disparage AKS, its operations, products, employees, officers, or directors.

 

5. 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 all AKS policies regarding
conflicts of interest. You further agree to immediately report to the Vice
President, Human Resources of the Company, any conflict or potential conflict of
interest with AKS.

 

6. Co-operation. For a period of one year following your Date of Termination,
you agree to co-operate in good faith with AKS with respect to pending or
potential claims or litigation involving AKS as to which you have personal
knowledge. Such co-operation shall include meeting with AKS and its
representatives, upon reasonable request, for purposes of (a) providing
information based upon your personal knowledge in connection with any
investigation by AKS, and (b) preparing for and providing deposition and/or
trial testimony.

 

7. Injunctive Relief. You recognize and acknowledge that your involvement in
decision making processes which involve AKS’s 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 F(1)) or Covenant
Not to Compete (Section F(2)) provisions of this Agreement (hereinafter referred
to collectively as the “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.

 

G. Time Limits for Bringing Claims; Arbitration of Claims. This section
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 right of AKS to seek
injunctive or other equitable relief to enforce the terms of Section F. The
Agreement also provides that Severance Claims and Employment Claims must be
resolved through the arbitration process set forth in this Agreement.

 

1. Time Limit for Severance Claims and Employment Claims. Severance Claims must
be filed within one year from the Date of Termination. Employment Claims must be
filed within one 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.

 

6

--------------------------------------------------------------------------------

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 otherwise have to have Severance
and Employment Claims decided by a judge or jury.

 

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. § 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 Butler County, Ohio
or in the United States District Court for the Southern District of Ohio.

 

H. Miscellaneous.

 

1. Notices. 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, his or her last known
address. Notices to AKS shall be marked for the attention of the Vice President,
Human Resources of the Company.

 

2. Modification; Waiver. No provision of this Agreement may be waived, modified
or discharged except pursuant to a written instrument signed by you and the
Chairman of the Board or the Chief Executive Officer of AKS. You and AKS do not
waive, nor shall this Agreement be construed to waive, any right which is not
subject to waiver as a matter of law.

 

3. Successors. AKS 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.

 

4. Inurement. 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.

 

7

--------------------------------------------------------------------------------

5. 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.

 

6. 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 the provisions of Section G (2) 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 G (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.

 

7. 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 Butler 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.

 

8. Withholding and Deductions. It is understood and agreed that the payment of
severance benefits under this Agreement will be subject to withholding for taxes
and other deductions. It further is understood and agreed that, to the extent
that this Agreement provides for payment of specified amounts of severance
benefits, such amounts are before such tax withholdings and deductions.

 

   

Sincerely,

Accepted and agreed to this          day             , 200    .

 

AK STEEL HOLDING CORPORATION

   

By:

 

 

--------------------------------------------------------------------------------

       

Chief Executive Officer

--------------------------------------------------------------------------------

(Name of Executive)

           

AK STEEL CORPORATION

   

By:

 

 

--------------------------------------------------------------------------------

       

Chief Executive Officer

 

8

--------------------------------------------------------------------------------

OFFICER SEVERANCE AGREEMENT

Exhibit A

Rules for Arbitration

 

(1) Location. The arbitration hearing (“Hearing”) will take place in Middletown,
Ohio, unless the parties mutually agree to another location.

 

(2) Governing Rules. 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 Agreement and this Exhibit A to the Agreement. You have the opportunity
to review these rules at any time.

 

(3) Notice. 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 G(1) of the Agreement. The date the Notice is
considered “filed” for purposes of Section G(1) of the Agreement and this rule
is the date the Notice is received in a AAA regional office.

 

(4) Fees; Expenses. 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) Arbitrators. 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: (a) membership on the AAA’s National Employment Dispute roster;
(b) membership on AAA’s labor-management roster; and (c) 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 persons chosen from the panel. You and AKS will have ten 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) Pre-Hearing Matters. Any pre-hearing disputes will be presented to the
arbitrator for expeditious, final and binding resolution.

 

(7) Remedies; Relief. 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

--------------------------------------------------------------------------------

(8) 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 fifty miles from the hearing site,
conflicting travel plans or other comparable reason.

 

(9) Post-Hearing Briefs. You and AKS will have the opportunity to submit to the
arbitrator a post-hearing brief in support of your respective positions.

 

(10) Confidentiality. 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, (c) either party may disclose the
decision of the arbitrator to his or its attorneys, accountants, other
professional advisors, and/or spouse as long as they agree to keep it
confidential; or (d) as may otherwise be appropriate in response to a
governmental agency or legal process, or to comply with applicable legal,
accounting, financial or insurance rules, regulations or requirements.

 

10