TERMINATION OF YOUR EMPLOYMENT
BY THE COMPANY, OTHER THAN FOR CAUSE, YOU SHALL BE ENTITLED TO A NET WORTH
APPRECIATION PAYMENT ("PAYMENT") EQUAL TO (A) THE PRODUCT OF THE VESTED CREDITS
AND THE NET WORTH INCREMENT, AS DEFINED BELOW, LESS (B) THE PRODUCT OF THE
VESTED CREDITS AND THE CUMULATIVE INCOME STATEMENT TAX DIFFERENCE (THE
CALCULATION PERIOD SHALL END AT THE END OF THE COMPANY'S FISCAL QUARTER
IMMEDIATELY PRECEDING YOUR DATE OF TERMINATION) AND EXCLUDING SUCH CUMULATIVE
INCOME STATEMENT TAX DIFFERENCE TO THE EXTENT EQUAL TO CUMULATIVE CASH FLOW TAX
DIFFERENCE UTILIZED IN CALCULATING AMOUNTS PAYABLE UNDER PARAGRAPH 5(A).
THE
"NET WORTH INCREMENT" IS THE AMOUNT, IF ANY, BY WHICH THE CONSOLIDATED NET WORTH
OF THE COMPANY AND ITS SUBSIDIARIES, AS AT THE END OF ITS FISCAL QUARTER
IMMEDIATELY PRECEDING THE DATE OF YOUR TERMINATION, EXCEEDS ITS CONSOLIDATED NET
WORTH AS OF THE BASE DATE IN THE BASE YEAR, PROVIDED, HOWEVER, THAT ANY INCREASE
IN CONSOLIDATED NET WORTH RESULTING FROM A CAPITAL CONTRIBUTION TO THE COMPANY
OR THE SALE OF STOCK OF THE
2
COMPANY SHALL BE DISREGARDED IN CALCULATING NET WORTH INCREMENT, AND FURTHER
PROVIDED THAT PREFERRED STOCK OF THE COMPANY AND CASH PAYMENTS OF DIVIDENDS AND
PAYMENTS IN KIND THEREON SHALL BE TREATED AS DEBT OF THE COMPANY FOR PURPOSES OF
CALCULATING CONSOLIDATED NET WORTH.
FOR CLARITY, IT IS UNDERSTOOD THAT THE NET
WORTH INCREMENT WILL NOT INCLUDE CHARGES OR BENEFITS FOR INTEREST ON THE
RESTRUCTURED DEBT OF THE COMPANY TO THE EXTENT NOT INCLUDED AS INTEREST EXPENSE
OR INCOME UNDER GAAP AS ACCOUNTED FOR UNDER FAS 15, NOR WILL THE TAX DIFFERENCES
INCLUDE ANY BENEFIT OR CHARGE FOR SUCH INTEREST ON SUCH RESTRUCTURED DEBT.
THE
DETERMINATION OF THE INDEPENDENT PUBLIC ACCOUNTANTS FOR THE COMPANY AS TO THE
NET WORTH INCREMENT, MADE IN ACCORDANCE WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLES, CONSISTENTLY APPLIED, SHALL BE CONCLUSIVE ON EACH OF US.
IF THERE
IS NO NET WORTH INCREMENT, NO AMOUNT SHALL BE PAYABLE.
IF YOUR EMPLOYMENT IS
TERMINATED FOR CAUSE, YOU SHALL NOT BE ENTITLED TO RECEIVE ANY PAYMENT.
ANY
TERMINATION REFERRED TO IN THIS AGREEMENT SHALL MEAN SEPARATION FROM SERVICE
FROM ALL MEMBERS OF THE RENCO GROUP, INC. CORPORATE CONTROLLED GROUP (WITHIN THE
MEANING OF INTERNAL REVENUE CODE SECTIONS 414(B), (C), (M), AND (O)).
4.
PAYMENT.
THE PAYMENT SHALL BE PAYABLE TO YOU (OR YOUR DESIGNEE OR
ESTATE) IN 40 EQUAL QUARTERLY INSTALLMENTS, WITHOUT INTEREST, COMMENCING THREE
MONTHS AFTER THE TERMINATION OF YOUR EMPLOYMENT, AND AT 3 MONTH INTERVALS
THEREAFTER.
NOTWITHSTANDING ANY PROVISION IN THIS AGREEMENT, THE COMPANY SHALL
NOT BE REQUIRED TO PAY YOU (I) ANY PAYMENT, WHERE THE MAKING OF SUCH PAYMENT
WOULD VIOLATE ANY AGREEMENT BETWEEN THE COMPANY AND ANY LENDER OF THE COMPANY,
OR (II) IN THE EVENT THAT ANY AGREEMENT BETWEEN THE COMPANY AND ANY LENDER OF
THE COMPANY LIMITS THE AGGREGATE AMOUNT THAT THE COMPANY MAY PAY AS BONUSES, NET
WORTH APPRECIATION PAYMENTS, PROFIT SHARING PAYMENTS OR OTHER PAYMENTS OF
SIMILAR NATURE ("RESTRICTED PAYMENTS") DURING ANY PERIOD, ANY PAYMENT IN EXCESS
OF YOUR