WCI Steel, Inc.
0000 Xxxx Xxxxxx XX
Xxxxxx, XX 00000-0000
As of August 1, 1998
Xx. Xxxxx X. Xxxxxx
000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
Re: Net Worth Appreciation Participation Agreement
Dear Xx. Xxxxxx:
In connection with your employment by WCI Steel, Inc. ("Company"), you are
hereby granted a Net Worth Appreciation Participation Agreement
("Agreement"), under which you and the Company agree as follows:
1) On August 1, 2001 provided that you continue to be continuously employed
by the Company from the date hereof through that date, you shall receive a
credit of three fifths of one percent (3/5%), and on each of August 1, 2002
and August 1, 2003, you shall receive an additional credit of one fifth of
one percent (1/5%), 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 August 1, 2003 of one percent (1%) ("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 August 1st. (up to said Maximum Credit of one 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 the product of
a) the total percentage credited to you under paragraph 1 (a maximum of one
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 August 1, 1998
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 there is no positive
Cumulative Net Income, 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 payment 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 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 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 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 (1%) 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 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 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, c/o 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
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/ Xxxxx X. Xxxxxx
-------------------
Xxxxx X. Xxxxxx
000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
