Exhibit 10.2.1
Lodestar Energy, Inc.
000 Xxxx Xxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, XX 00000
May 14, 1998
Xx. Xxxx X. Xxxxxx
000 Xxxxxxx Xxxxx
Xxxxxxxxxxxxx, XX 00000
Re: Net Worth Appreciation Participation Agreement
Dear Xx. Xxxxxx:
This will confirm the understanding of Lodestar Energy, Inc., (the
"Company"), with you with respect to your Net Worth Appreciation
Participation, intended to constitute additional incentive compensation to
you. This letter is a restatement of, and replaces in its entirety, a
similar letter from Rencoal, Inc. to you dated March 14, 1997, and shall be
deemed to have effect from March 14, 1997.
1) Vesting - On April 30, 2000 provided that you continue to be
continuously employed by the Company from the date hereof through that date,
you shall receive a credit of one and one half percent (1 1/2%), and on each
of April 30, 2001, and April 30, 2002, you shall receive an additional credit
of one half of one percent (1/2%), provided that you are continuously
employed by the Company to the said date, for a maximum credit, if you remain
in the employ of the Company continuously through April 30, 2002 of two and
one half percent (2 1/2%) ("Maximum Credit"). You shall not receive credit
for any partial year, unless your employment terminates due to death or total
disability, in which case you shall receive a credit of one half of one
percent (1/2%) for the year in which such termination takes place, in
addition to any other credit previously vested (up to said Maximum Credit of
two and one half percent (2 1/2%).
2) Cumulative Net Income Participation Benefit - Upon the termination
of your employment by the Company (other than for cause), or your death or
total disability while in
our employment, you (or your designee or estate) shall be entitled to a
payment ("Payment") equal to the product of (a) the total percentage credited
to you under paragraph 1 (a maximum of two and one half percent (2 1/2%))
multiplied by (b) the "cumulative net income". The "cumulative net income"
is the amount, if any, of the cumulative consolidated net income of the
Company's parent, Lodestar Holdings, Inc., ("Holdings") available to its
Common Stock, from March 14, 1997 through the end of either (at the Company's
option) (x) its fiscal quarter immediately preceding the date of your
termination or (y) the fiscal quarter in which your date of termination
occurs. If there is no positive "cumulative net income" there shall be no
payment. The determination of the independent public accountants for the
Company as to the cumulative net income, made in accordance with generally
accepted accounting principals, consistently applied, shall be conclusive.
There shall be deducted from net income for each period any amount paid as
dividends on the Common Stock of Holdings during such period. If your
employment shall be terminated for cause at any time, you shall forfeit all
rights to receive any Payment.
3) Dividend Participation - If while you are employed by the Company,
Holdings shall pay any cash dividend on its Common Stock, or Holdings or the
Company pay management fees to The Renco Group, Inc. in excess of $1,200,000
per fiscal year, then the Company shall make a cash payment to you equal to
the total amount of the cash dividend and management fees in excess of
$1,200,000 per fiscal year multiplied by your Maximum Credit.
4) Payment - The Payment shall be payable to you (or your designee or
estate) in 40 equal quarterly installments, without interest, commencing
three (3) months after the later of (x) the termination of your employment or
(y) your attaining 62 years of age, and at 3-month intervals thereafter,
provided, however, that in the event of your death or permanent disability,
rendering you unable to engage in your customary employment, the Payment, if
it has not already commenced, will commence. The period during which the
payments will be made is herein called the "Payment Period". You have
advised us that your date of birth is 5/31/41.
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5) Payment Effect on Other Benefits - Any payments made to you
pursuant to this agreement, whether as a result of dividend participation or
otherwise, will not be counted as wages for the purpose of computing other
benefits.
6) Sale of Substantially All of Holdings Stock or Assets - If, while
you shall be employed by the Company all or substantially all the stock or
assets of Holdings shall be sold to a person who is not an affiliate of Xxx
Xxxx Xxxxxxx, or if The Renco Group, Inc. sells a controlling interest in
Holdings, then, upon the closing of such sale, the Maximum Credit shall be
deemed to be vested, and you shall be entitled to receive, as payment in full
of your participation, your pro rata share two and one half percent (2 1/2%)
of the "net proceeds" of the sale available for Holdings Common Stock, in
kind, on the same terms and conditions as Holdings or its shareholder is
being paid. "Net proceeds", for purposes hereof, shall mean the amount, if
any, by which the proceeds of the sale after deducting all expenses of the
sale, all applicable taxes, all liabilities retained by the seller and all
amounts to which holders of preferred stock are entitled exceeds the
consolidated net worth applicable to the Common Stock of Holdings on March
14, 1997. Except for such payment, neither you nor this Company shall have
any further rights or liabilities hereunder.
7) Condition Precedent - Non Compete and Confidentiality - You shall
comply with the following provisions as a condition precedent to your right
to receive Payments:
(a) You acknowledge that, by reason of your employment by the
Company, you will have continuing 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.
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(b) You agree that you will not (whether as an officer, director,
partner, proprietor, investor, associate, employee, consultant, adviser,
public relations or advertising representative or otherwise), directly or
indirectly, be engaged in the coal business, or in any other business in
which the Company is engaged, or proposed to engage, at the time of the
termination of your employment.
8) Notices - Any notice to be sent pursuant hereto shall be sent by
hand, certified or registered mail or overnight service to you, at the
address indicated above 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.
Please confirm that the foregoing correctly sets forth our full
agreement with respect to the subject matter contained herein by signing and
returning the enclosed copy of this letter.
Very truly yours,
LODESTAR ENERGY, INC.
By: /s/ Xxx Xxxx Xxxxxxx
---------------------------
Xxx Xxxx Xxxxxxx
Chairman of the Board
CONFIRMED AND AGREED TO:
/s/ Xxxx X. Xxxxxx
---------------------------
Xxxx X. Xxxxxx
000 Xxxxxxx Xxxxx
Xxxxxxxxxxxxx, XX 00000
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