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EXHIBIT 10.2.14
WCI STEEL, INC.
0000 XXXX XXXXXX XX
XXXXXX, XX 00000-0000
As of June 1, 1999
Xx. Xxxxx X. Xxxxxx
000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
RE: AMENDED AND RESTATED 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 your appointment as Vice President-Commercial
and Renco's election for the Company to be treated as a qualified subchapter S
subsidiary for tax purposes you and the Company have agreed to amend and restate
the agreement as follows:
1) On each of August 1, 2001 and June 1, 2002 provided that you
continue to be continuously employed by the Company from the date hereof to such
date, you shall receive a credit of three fifths of one percent (3/5%), and on
each of August 1, 2002, June 1, 2003, August 1, 2003 and June 1, 2004, 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 June 1, 2004 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 vesting date. (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
($27,966) (representing the deficit in your account at
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May 31, 1999 under the previously existing agreement dated August 1, 1998) plus
(1) 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)
less (2) the cumulative amount of payments made to you under paragraph 3. The
Cumulative Net Income is the amount, if any, of 62% of the total of (a) the
cumulative consolidated net income of the Company available to its Common Stock
plus adjustments recorded of $278,880 to reflect the subchapter S election plus
(b) benefits expensed under this Agreement or similar Net Worth Appreciation
Participation Agreements which reduce the cumulative consolidated net income in
item (a); both from June 1, 1999 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
shall be the end of the fiscal quarter immediately preceding the termination of
your employment. 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 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.
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3) DIVIDEND PARTICIPATION - If while you are employed by the
Company, the Company shall pay any cash dividend on its Common Stock from
Accumulated Earnings (as defined), or pay management fees to The Renco Group,
Inc., ("Renco"), or other affiliates of Renco other than subsidiaries of the
Company, in excess of one million, two hundred thousand dollars per year, then
the Company shall make a cash payment to you equal to (a) 62% of the total
amount of the cash dividends being paid and excess management fees multiplied by
(b) your Maximum Credit. Accumulated Earnings is the amount of cumulative
consolidated net income, less dividends paid from Accumulated Earnings, both
from November 1, 1998 to the date of the cash dividend payment. If while you are
employed by the Company, the Company shall pay any cash dividend on its Common
Stock in excess of Accumulated Earnings, then the Company shall make a cash
payment to you equal to the total amount of the dividend in excess of
Accumulated Earnings 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
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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: (1) all expenses of the sale; (2) all applicable taxes owed by the
Company; (3) 38% of all income recorded by the Company on a sale of assets which
is not subject to corporate level tax; (4) all liabilities retained by the
seller; and (5) 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,
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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.
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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
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Xxx Xxxx Xxxxxxx
Chairman of the Board
Confirmed and Agreed to:
/S/ XXXXX X. XXXXXX
_____________________
Xxxxx X. Xxxxxx
000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
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