EXHIBIT
10.11
KENTUCKY ELECTRIC STEEL, INC.
SALARY CONTINUATION AGREEMENT
This Agreement is entered into between Kentucky Electric
Steel, Inc., a corporation having its principal office in Ashland,
Kentucky, (herein called the "Company") and _________________ (herein
called the "Executive").
WITNESSETH:
WHEREAS, the Executive is employed by the Company in the
capacity of _____________________________________ and by reason
thereof has acquired experience and knowledge of considerable value to
the Company; and
WHEREAS, the Company wishes to offer an inducement to the
Executive to remain employed by compensating him beyond his regular
salary for service which he has rendered or will hereafter render; and
WHEREAS, the Company and the Executive entered into a
Salary Continuation Agreement effective September 22, 1994 (the
"Agreement") which was amended and restated in its entirety on
September 1, 1998; and
WHEREAS, the parties desire to further amend and restate
the Agreement to modify certain terms and conditions:
NOW, THEREFORE, the Agreement is amended and restated in
its entirety to read as follows:
1. If the Executive remains in the continuous employ of
the Company he shall retire from active employment with the Company on
his sixty-second (62nd) birthday, unless by action of the Board of
Directors of the Company his period of active employment shall be
shortened, or, with his consent, extended.
2. Upon said retirement, the Company shall pay the
Executive __________ per month to age eight-five (85) and ____________
per month thereafter for life commencing with the first day of the
month following the date of said retirement. Notwithstanding the
foregoing, the amount of monthly payments provided under this Section
2, shall be reduced (but not below zero) by the Monthly Amount (as
hereinafter defined). The "Monthly Amount" is the monthly benefit
which the cash surrender value of the life insurance policies issued
by Pacific Life, Policy Number _________ Minnesota Life, Policy Number
___________ on the life of the Executive ("Policies") would provide
over the period of time until Executive reaches age 85 as of the time
of the Executive's termination of employment as determined by a life
insurance agent satisfactory to both the Company and the Executive,
adjusted upward to the amount which said monthly benefit would equal
if it were fully taxable to the Executive and results in said monthly
benefit after payment of taxes. The insurance agent will calculate
the Monthly Amount by assuming that (a) the Policies have remained in
effect until the date of the calculation, (b) the cash surrender value
of the Policies is first withdrawn in an amount equal to the
Executive's tax basis in the Policies, and (c) loans are then taken
out on the Policies but not in excess of the amount which would reduce
the remaining cash surrender value in the Policies below the amount
necessary to keep the Policies in effect until age 100 based upon the
insurance carrier's current crediting rates, expenses, and mortality
assumptions in effect on the date of calculation. If less than one
hundred twenty (120) such monthly payments shall be made prior to the
death of the Executive, such monthly payments shall continue to
whomever the Executive shall have designated, on the most recent
Salary Continuation Agreement Designation of Beneficiary form filed
with the Company (the "Beneficiary"), until the full number of one
hundred twenty (120) monthly payments have been made; provided, that
the amount of such monthly payments to the Beneficiary shall be
reduced (but not below zero) by the monthly benefit the death benefit
paid under the Policies would have provided over such remaining number
of months as determined by a life insurance agent satisfactory to both
the Company and the Beneficiary, said monthly benefit to be adjusted
upward in the same manner as provided above to determine the Monthly
Amount.
3. In the event the Executive terminates employment on
account of permanent and total disability (as determined by the Board
of Directors of the Company), he shall receive one hundred percent
(100%) of the benefit described in Section 2 commencing at age sixty-
two (62). In the event the Executive terminates employment for any
reason other than permanent and total disability (as determined by the
Board of Directors of the Company) or death, he shall receive such
percentage of the benefit described in Section 2 commencing at age
sixty-two (62) which the Compensation Committee of the Company's Board
of Directors shall from time to time determine. Provided, that in no
event shall such percentage be reduced below a percentage previously
set by such Committee. Provided, further, that upon a change of
control (as hereinafter defined) of the Company the Executive shall be
entitled to receive one hundred percent (100%) of the benefit
described in Section 2 commencing at age sixty-two (62) so long as he
continues to comply with the provisions of Section 4 of this
Agreement. For purposes of this Agreement, the term "change of
control" shall mean (i) the consummation of (A) any consolidation or
merger of the Company in which the Company is not the continuing or
surviving corporation or pursuant to which shares of the Company's
Common Stock would be converted into cash, securities or other
property, other than a merger of the Company in which the holders of
the Company's Common Stock immediately prior to the merger have
substantially the same proportionate ownership of common stock of the
surviving corporation immediately after the merger, or (B) any sale,
lease, exchange or transfer (in one transaction or a series of related
transactions) of all or substantially all the assets of the Company,
or (ii) the approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company, other than
in connection with a bankruptcy or reorganization proceeding of the
Company under applicable federal or state bankruptcy laws, or
(iii) any "person" (as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), other than the Company or a subsidiary thereof or any
employee benefit plan sponsored by the Company or a subsidiary
thereof, becoming the beneficial owner (within the meaning of Rule
13d-3 under the Exchange Act) of securities of the Company
representing twenty-five percent (25%) or more of the combined voting
power of the Company's then outstanding securities ordinarily (and
apart from rights accruing in special circumstances) having the right
to vote in the election of directors, as a result of a tender or
exchange offer, open market purchases, privately-negotiated purchases
or otherwise, or (iv) at any time during a period of two (2)
consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of the Company ceasing for any
reason to constitute at least a majority thereof, unless the election
or the nomination for election by the Company's shareholders of each
new director during such two-year period was approved by a vote of at
least two-thirds of the directors then still in office who were
directors at the beginning of such two-year period.
4. The Executive agrees that he will not, during or after
his employment under this Agreement, engage in "Competitive
Activity," as it is defined in Section V of the Executive's Employment
Agreement with the Company, as amended, directly or indirectly, or,
without the specific authority of the Board of Directors of the
Company, serve as a director or employee of any corporation or
business entity so engaged. The Executive further agrees that he will
not, either during or after his employment under this Agreement,
disclose to anyone not legally entitled thereto any "Confidential
Information" as defined in Section VI of such Employment Agreement.
The Executive also agrees to make himself available for such
consulting services as the Company may reasonably request during the
period in which payments are being made to the Executive under this
Agreement, but in no event shall the Executive be required to devote
more than ten (10) hours per month for such consulting services. The
Company agrees to pay the Executive's reasonable fees and expenses in
respect of the consulting services the Executive in fact renders.
5. The Executive agrees that if he shall breach any
covenant of Section 4 of this Agreement, and shall continue to breach
such covenant for a period of thirty (30) days after the Company shall
have requested him to desist from such breach, then, any provisions
hereof to the contrary notwithstanding, no further payments shall be
due or payable by the Company hereunder either to the Executive or to
his wife or other designee, and the Company shall have no further
liability hereunder.
6. The Company shall pay all administrative expenses of
the Trust Agreement entered into as of 10/6/99 between the Executive
and Fifth Third Bank, Ohio Valley, as Trustee (the "Trustee")
including, but not limited to, fees for legal services rendered to the
Trustee, any taxes levied or assessed under existing or future laws
upon or against the Trustee, actuarial fees, accounting fees, and to
pay compensation to the Trustee or other persons. If the Company pays
any premium on the Policies, the Executive shall incur income on such
payment for tax purposes ("Premium Payment Income"). As Executive
incurs Premium Payment Income, the Company shall pay to Executive a
payment (a "Gross-Up Payment") in an amount sufficient to enable
Executive to pay all income and employment taxes (including any interest
or penalties imposed with respect to such income and employment taxes)
on the Premium Payment Income as well as all such income and employment
taxes imposed upon the Gross-Up Payment.
7. It is agreed that neither the Executive, nor his wife,
nor any other designee, shall have any right to sell, assign, transfer
or otherwise convey the right to receive any payments hereunder which
payments and the right thereto are expressly declared to be non-
assignable. Any attempted sale, assignment, transfer or conveyance
shall be null and void and the Company shall have no further liability
hereunder after any such attempt.
8. The Company agrees that it will not merge or
consolidate with any other company or organization, or permit its
business activities to be taken over by any other organization unless
and until the succeeding or continuing company or other organization
shall expressly assume all obligations and liabilities herein set
forth.
9. This Agreement may be revoked or amended in whole or in
part only by mutual consent of the parties hereto. This Agreement
shall be construed and administered in accordance with the laws of the
Commonwealth of Kentucky without regard to the principles of conflicts
of law which might otherwise apply.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed this 6th day of October, 1999.
ATTEST: KENTUCKY ELECTRIC STEEL, INC.
_______________________________ By: ________________________________
Secretary
_______________________________ By: ________________________________
Witness
Kentucky Electric Steel, Inc.
Supplemental Schedule for Exhibit 10.11
Salary Continuation Agreement
Monthly
Monthly Retirement
Retirement Benefit Benefit
(Ten Year Certain) After Age 85
Name Title Age 62 to Age 85 for Life
Xxxxxxx X. Xxxxxxxx President & Chief Executive Officer $13,518.00 $6,200.00
Xxxxxxx X. Xxxxxx V. P. and Chief Financial Officer $ 6,636.00 $ 0.00
Xxxxxx X. Xxxxxxxx Vice President, Sales & Marketing $ 6,320.00 $ 0.00
Xxxxxxx X. Xxxxx Vice President, Administration $ 5,495.00 $ 0.00
