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EXHIBIT 10.2.10
WCI STEEL, INC.
0000 XXXX XXXXXX XX
XXXXXX, XX 00000-0000
As of January 15, 1999
Xx. Xxxxxx X. Xxxxx
000 Xxxx Xxxxx
Xxxxxx, XX 00000
RE: AMENDED AND RESTATED NET WORTH APPRECIATION PARTICIPATION AGREEMENT
Dear Xx. Xxxxx:
In connection with your employment by WCI Steel, Inc. ("Company"),
you have received a Net Worth Appreciation Participation Agreement
("Agreement"). In connection with 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 April 1, 1999 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 percent (3%), and on each of April 1, 2000 and April
1, 2001, you shall receive an additional credit of one percent (1%), 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 April 1, 2001
of five percent (5%) ("Maximum Credit"). You shall not receive credit for any
partial year of employment, unless your employment terminates due to death or
total disability. If your death or disability occurs before April 1, 1999, you
shall be vested in a credit of three percent (3%) and if your death or
disability occurs on or after April 1, 1999, you shall be deemed to be vested in
that percentage earned through the next succeeding April 1st. (up to said
Maximum Credit of five percent).
2) CUMULATIVE NET INCOME PARTICIPATION BENEFIT - There has been
established for your benefit an unfunded, unsecured, deferred compensation
account (the"Account") to which there shall be credited an amount equal to
$1,274,956 (representing deferred compensation
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earned as of October 31, 1998 under the previously existing agreement dated
March 10, 1997 plus (1) the product of a) the total percentage credited to you
under paragraph 1 (a maximum of five 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, less adjustments recorded of $4,278,768 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 November 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 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 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.
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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 dividend 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 (5%) 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 taxes; (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.
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
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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/ XXXXXX X. XXXXX
__________________________
Xxxxxx X. Xxxxx
000 Xxxx Xxxxx
Xxxxxx, XX 00000
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