EXHIBIT 10.2.11 WCI Steel, Inc.
0000 Xxxx Xxxxxx, XX
Xxxxxx, XX 00000-0000
As of March 10, 1997
Xx. Xxxxxxx X. Xxxxxx
0000 Xxx Xxxxx Xxx
Xxxxxx, XX 00000
Re: Net Worth Appreciation Participation Agreement
Dear Xx. Xxxxxx:
In connection with your employment by WCI Steel, Inc.
("Company"), you have received a Net Worth Appreciation
Participation Agreement ("Agreement"). In connection with the
Company's going private and refinancing transaction
("Transaction"), you have received a certain payment under your
Agreement. In connection with the Transaction, you and the
Company have agreed to amend and restate the Agreement as
follows:
1) At the effective date of this Agreement, you have received
a credit of one and one quarter percent (1 1/4%). On October 31,
1997 provided that you continue to be continuously employed by
the Company from the date hereof through that date, you shall
receive an additional credit of forty five one hundredths of one
percent (.45%), and on each of October 31, 1998 and October 31,
1999, you shall receive an additional credit of fifteen one
hundredths of one percent (.15%), provided that you are
continuously employed by the Company to such date, for a maximum
credit, if you remain employed by the Company continuously
through October 31, 1999 of two percent (2%) ("Maximum Credit").
You shall not receive credit for any partial year of employment,
unless your employment terminates due to death or total
disability, in which case you shall be deemed to be vested in
that percentage earned through the next succeeding October 31st.
(up to said Maximum Credit of two percent).
2) Cumulative Net Income Participation Benefit - There is
hereby established for your benefit an unfunded, unsecured,
deferred compensation account (the"Account") to which there shall
be credited an amount equal to $765,678 (representing deferred
compensation earned as of November 30, 1996 under previously
existing agreements) plus the product of a) the total percentage
credited to you under paragraph 1 (a maximum of two percent)
multiplied by (b) the Cumulative Net Income (as defined). The
Cumulative Net Income is the amount, if any, of the cumulative
consolidated net income of the Company available to its Common
Stock, from December 1, 1996 through the Measurement Date (as
defined). In connection with this Agreement, you agree to
provide 30 days prior written notice of your intention to
voluntarily terminate your employment or retire. In the event
you voluntarily leave the Company's employ, the Measurement Date
for purposes of measuring compensation under this Agreement shall
be the end of the Company's fiscal quarter in which the 30-day
notice period ends. In the event your employment is terminated
involuntarily by the Company, the Measurement Date of the
termination of your employment shall be the end of the fiscal
quarter immediately preceding the termination of your employment.
In computing Cumulative Net Income, no deduction, net of tax
benefit, shall be taken for benefits payable under this Agreement
or similar Net Worth Appreciation Participation Agreements.
There shall be deducted from Cumulative Net Income for each
period any amount paid as dividends on the Common Stock of the
Company during such period. If the amount earned as computed in
this paragraph is not greater than zero, then no deferred
compensation shall be due you under this Agreement. The
determination of the independent public accountants for the
Company as to the Cumulative Net Income, made in accordance with
generally accepted accounting principles, consistently applied,
shall be conclusive. If your employment shall be terminated for
Cause (as defined) at any time, you shall not receive any future
payments under this Agreement. For purposes of this provision,
termination shall be deemed to be for "Cause" only if the grounds
therefor are one or more of the following: (a) material conduct
contrary to the best interests of WCI, (b) continuing refusal or
inability to perform the duties of your position (other than for
reasons of disability), or (c) illegal conduct having a material
impact on WCI.
3) Dividend Participation - If while you are employed by the
Company, the Company shall pay any cash dividend on its Common
Stock, or pay management fees to The Renco Group, Inc. ("Renco"),
or other affiliates of Renco in excess of one million, two
hundred thousand dollars per year, then the Company shall make a
cash payment to you equal to the total amount of the cash
dividend and excess management fees multiplied by your Maximum
Credit.
4) Payment of Deferred Compensation Balances - Payment to you
of deferred compensation balances earned under this Agreement
shall be made in forty (40) equal quarterly installments, without
interest, commencing three (3) months after the Trigger Date (as
defined) and at three (3) month intervals thereafter. The
Trigger Date shall be the earlier of your sixty second birthday,
or the completion of twenty continuous years of employment with
the Company. If you remain employed by the Company after the
commencement of payments under the Agreement, and continue to
have earnings or losses under the Agreement, the amount of the
quarterly payment due you shall be recomputed on an annual basis
in the first fiscal quarter of each fiscal year to reflect the
balance of your Account at the end of the previous fiscal year
divided by 40 (i.e., a rolling ten year payment schedule). In
the event of your permanent disability, rendering you unable to
engage in your customary employment, payments measured and paid
as described above, if it has not already commenced, will
commence. The period during which the payments will be made is
herein called the "Payment Period". In the event of your death,
your estate or beneficiaries shall receive a payment, within 90
days of your death, equal to the present value of the balance of
your Account as determined under Section 2 above computed using
a) 40 equal quarterly installments if payments to you have not
begun or the remaining Payment Period if payments have previously
started and b) the discount rate used for computing the present
value of annuitized benefits under the provision of the Internal
Revenue Code of 1986 and the regulation thereunder as the same
may be amended from time to time.
5) Sale of Company's Stock or Assets - If, while you shall be
employed by the Company, Renco sells an interest in the Company
or if the Company sells substantially all of its assets, to a
person who is not an affiliate of Xxx Xxxx Xxxxxxx, then, upon
the closing of such sale, your Maximum Credit shall be deemed to
be vested, and you shall be entitled to receive a payment equal
to your Maximum Credit (2%) of the Net Proceeds (as defined) of
the sale available for the Company's Common Stock, in kind, on
the same terms and conditions as the Company or its shareholders
is being paid. Net Proceeds, for purposes hereof, shall mean the
amount of the proceeds of the sale after deducting all expenses
of the sale, all applicable taxes owed by the Company, all
liabilities retained by the seller and all amounts to which
holders of preferred stock are entitled. Upon the sale of all or
substantially all of the Company's Assets or Common Stock, and
except for such payment, neither you nor this Company shall have
any further rights or liabilities hereunder.
6) Condition Precedent - During the Payment Period, you shall
comply with the following provisions as a condition precedent to
your right to receive payments:
(a) For the purposes hereof, all confidential information
about the business and affairs of the Company (including, without
limitation, business plans, product design and specifications,
financial, engineering, and marketing information and information
about costs, manufacturing methods, names of suppliers and
customers) constitute "Company Confidential Information". You
further acknowledge that for some period, you have been a senior
officer or manager of the Company. You further acknowledge that
you have in the past had, and will continue to have, access to
and knowledge of Company Confidential Information, and that
improper use or revelation of same by you during or after the
termination of your employment by the Company could cause serious
injury to the business of the Company. Accordingly, you agree
that you will forever keep secret and inviolate all Company
Confidential Information which shall have come or shall hereafter
come into your possession, and that you will not use the same for
your own private benefit, or directly or indirectly for the
benefit of others, and that you will not disclose such Company
Confidential Information to any other person.
(b) You agree that, as long as you are entitled to any
part of the payment, you will not, directly or indirectly,
whether as employee, consultant, proprietor, partner, controlling
shareholder or other capacity engage in the production,
marketing, sale or financing activities of any entity involved in
the production or sale of flat rolled steel products that
competes with the Company. Should you engage in any activity
proscribed by the preceding sentence then the Company's
obligation to you to make the payment (or any unpaid part
thereof) shall automatically and permanently cease, and you shall
be deemed to have irrevocably released your right to same.
7) Notice - Any notices to be sent pursuant hereto shall be
sent by hand, certified or registered mail or overnight service
to you, at the address indicated below and to the Company, The
Renco Group, Inc., 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, to the attention of Xxx Xxxx Xxxxxxx, or to any other
address which any of us may designate by notice in writing.
8) General - Your rights under this Agreement may not be
assigned, transferred, pledged or hypothecated without the prior
approval of the Company, except that, upon your death, your
interest in the Account will vest in your estate or heirs and
that during your lifetime, you may assign your interest to a
revocable or irrevocable trust for the primary benefit of your
spouse or any lineal descendant of your or your spouse's
grandparents. This Amendment sets forth the entire understanding
of you and the Company concerning this subject matter, supersedes
all other terms contained in the Agreement, which other terms are
hereby agreed to be void and of no effect. Any further
additions, deletions or modifications of the Agreement shall only
be made in writing signed by you and the Company.
Please confirm that the foregoing correctly sets forth our full
agreement with respect to your Net Worth Appreciation
Participation Agreement by signing and returning the enclosed
copy of this letter.
Very truly yours,
/S/ XXX XXXX XXXXXXX
Xxx Xxxx Xxxxxxx
Chairman of the Board
Confirmed and Agreed to:
/S/ XXXXXXX X. XXXXXX
Xxxxxxx X. Xxxxxx
0000 Xxx Xxxxx Xxx
Xxxxxx, XX 00000
