EMPLOYMENT
AGREEMENT (this “Agreement”) dated as of
January 6, 2009, between FOSTER WHEELER NORTH AMERICA
CORP., a Delaware corporation (the “Company”), and
GARY T. NEDELKA (the “Executive”).
WHEREAS ,
the Executive is currently employed by the Company and, effective
January 1, 2009, has been promoted to Chief Executive Officer
of Parent’s (as defined below) Global Power Group,
and
WHEREAS ,
the Executive and the Company wish to continue their employment
relationship on the terms and conditions set forth in this
Agreement.
ACCORDINGLY , the Company and the Executive hereby agree as
follows:
1.
Employment, Duties and Acceptance.
1.1
Employment, Duties . The Company hereby agrees to
employ the Executive for the Term (as defined in Section 2.1),
to render exclusive and full-time services to the Company, in the
capacity of President and Chief Executive Officer of the Company
and Chief Executive Officer of Parent’s Global Power Group
and to perform such other duties consistent with such position
(including service as a director or officer of any affiliate of the
Company if elected) as may be assigned by the Chief Executive
Officer and/or Chief Operating Officer of Parent; provided,
however , that the Executive may participate in civic,
charitable, industry, and professional organizations to the extent
that such participation does not materially interfere with the
performance of Executive’s duties hereunder. The
Executive’s title shall be President and Chief Executive
Officer of the Company and Chief Executive Officer of
Parent’s Global Power Group, or such other titles of at least
equivalent level consistent with the Executive’s duties from
time to time as may be assigned to the Executive by the Company
consistent with such position, and the Executive shall have all
authorities as are customarily and ordinarily exercised by
executives in similar positions in similar businesses of similar
size in the United States.
1.2
Acceptance . The Executive hereby accepts such
employment and agrees to render the services described above.
During the Term, and consistent with the above, the Executive
agrees to serve the Company faithfully and to the best of the
Executive’s ability, to devote the Executive’s entire
business time, energy and skill to such employment, and to use the
Executive’s best efforts, skill and ability to promote the
Company’s interests.
1.3
Fiduciary Duties to the Company . Executive
acknowledges and agrees that Executive owes a fiduciary duty of
loyalty, fidelity and allegiance to act at all times in the best
interests of the Company and to do no act which would, directly or
indirectly, injure the Company’s business, interests, or
reputation. It is agreed that any direct or indirect interest in,
connection with, or benefit from any outside activities,
particularly commercial activities, which interest might in any way
adversely affect Company, involves a possible conflict of interest.
In keeping with Executive’s fiduciary duties to the Company,
Executive agrees that Executive shall not knowingly become involved
in a conflict of interest with the Company, or upon discovery
thereof, allow such a conflict to continue. Moreover, Executive
shall not engage in any activity which might involve a possible
conflict of interest without first obtaining approval in accordance
with the Company’s policies and procedures.
1.4
Location . The duties to be performed by the
Executive hereunder shall be performed primarily at the
Company’s offices in Clinton, New Jersey, subject to
reasonable travel requirements consistent with the nature of the
Executive’s duties from time to time on behalf of the
Company. The Executive shall keep a residence within reasonable
daily commute of the Clinton, New Jersey area throughout the
Term.
1.5 Transfer
of Employment Within the Affiliated Group . Nothing
contained herein shall be construed to preclude the transfer of
Executive’s employment to another affiliated entity of the
Company (“Subsequent Employer”) at any time during the
Term and no such transfer shall be deemed to be a termination of
employment for purposes of Section 4 hereof; provided,
however , that, effective with such transfer, all of the
Company’s obligations hereunder shall be assumed by and be
binding upon, and all of the Company’s rights hereunder shall
be assigned to, such Subsequent Employer and the defined term
“Company” as used herein shall thereafter be deemed
amended to mean such Subsequent Employer. Notwithstanding the
foregoing, the Company shall remain guarantor (and be jointly
liable) on all financial obligations under this Agreement following
such transfer or transfers. Except as otherwise provided above, all
of the terms and conditions of this Agreement, including without
limitation, Executive’s rights and obligations, shall remain
in full force and effect following such transfer of employment. For
the avoidance of doubt, if any of the events set forth in
Section 4.1.2 of this Agreement occur in connection with a
transfer to an affiliated entity, such occurrence can give rise to
a resignation for Good Reason if the conditions of Section 4.1.2
are met.
2.1 Term
. The term of the Executive’s employment under this
Agreement (the “Term”) commenced on January 1,
2009 (the “Effective Date”), and shall end on the date
on which the Term is terminated pursuant to
Section 4.
3.
Compensation; Benefits.
3.1
Salary . As compensation for all services to be
rendered pursuant to this Agreement, the Company agrees to pay to
the Executive during the Term a base salary, payable in arrears, at
the initial annual rate of Four Hundred Forty Thousand Dollars
($440,000) (the “Base Salary”). On each anniversary of
the Effective Date or such other appropriate date during each year
of the Term when the salaries of executives at the
Executive’s level are normally reviewed, the Company shall
review the Base Salary and determine if, and by how much, the Base
Salary should be increased; provided, however, the Base
Salary under this Agreement, including as subsequently adjusted
upwards, may not be decreased thereafter without the written
consent of Executive, except for across-the-board changes for
executives at the Executive’s level. All payments of Base
Salary or other compensation hereunder shall be less such
deductions or withholdings as are required by applicable law and
regulations.
3.2
Bonus . Executive shall be eligible to participate,
as determined by the Company and/or the Compensation Committee of
the Board of Directors of the Parent (the “Committee”),
in the Company’s annual cash incentive bonus program as in
effect from time to time for executives at the Executive’s
level (the “Bonus Program”). The Executive shall be
eligible for an annual cash incentive bonus at a target opportunity
of seventy percent (70%) of Base Salary (up to a maximum
opportunity of one hundred forty percent (140%) of Base Salary)
based upon the achievement of certain business unit objectives
established in advance by the Company and/or the Committee (the
“Annual Bonus”). The actual amount of any Annual Bonus
shall be determined by and in accordance with the terms of the
Company’s then-current Bonus Program and the Executive shall
have no absolute right to an Annual Bonus in any year.
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3.2.1
Long-Term Incentive . Executive shall be eligible for
annual equity awards at a level that is competitive with market
practices for Executive’s position, as reasonably determined
by the Committee, under the Company’s equity award plan
covering executives at the Executive’s level, as in effect
from time to time.
3.3 Business
Expenses . The Company shall pay or reimburse the Executive
for all reasonable expenses actually incurred or paid by the
Executive during the Term in the performance of the
Executive’s services under this Agreement, subject to and in
accordance with applicable expense reimbursement and related
policies and procedures as in effect from time to time.
3.4
Vacation . During the Term, the Executive shall be
entitled to an annual paid vacation or paid time off
(“PTO”) period or periods in accordance with the
applicable vacation or PTO policy as in effect from time to
time.
3.5 Employee
Pension and Health and Welfare Plans . During the Term, the
Executive shall be entitled to participate in those defined
benefit, defined contribution, group insurance, medical, dental,
disability and other benefit plans of the Company as from time to
time in effect and on a basis no less favorable than any other
executive at the Executive’s level.
3.6
Perquisites . During the Term, the Executive shall be
provided by the Company with the following perquisites:
3.6.1
an annual physical examination;
3.6.2
an annual automobile allowance based upon the current Company
policy; and
3.6.3
home office equipment and associated services for business use in
Executive’s homes not to exceed $5,000 per year (which amount
includes any applicable gross-up for any taxes due for such
payment).
4.1.1
In addition to terminating or expiring pursuant to Section 2.1
hereof, Executive’s employment and the Term shall terminate
immediately upon the occurrence of any of the following:
(i)
Death : the death of the Executive;
(ii)
Disability : the physical or mental disability of the
Executive, whether totally or partially, such that with or without
reasonable accommodation the Executive is unable to perform the
Executive’s material duties, for a period of not less than
one hundred and eighty (180) consecutive days; or
(iii)
For Cause By the Company : notice of termination for
“Cause”. As used herein, “Cause”
means:
(A) conviction
of a felony;
(B) actual
or attempted theft or embezzlement of Company assets;
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(C) use
of illegal drugs;
(D) material
breach of the Agreement that the Executive has not cured within
thirty (30) days after the Company has provided the Executive
notice of the material breach which shall be given within sixty
(60) days of the Company’s knowledge of the occurrence
of the material breach;
(E) commission
of an act of moral turpitude that in the judgment of the Board can
reasonably be expected to have an adverse effect on the business,
reputation or financial situation of the Company and/or the ability
of the Executive to perform the Executive’s
duties;
(F) gross
negligence or willful misconduct in performance of the
Executive’s duties;
(G) breach
of fiduciary duty to the Company;
(H) willful
refusal to perform the duties of Executive’s titled position;
or
(I) a
material violation of the Foster Wheeler Code of Business Conduct
and Ethics.
4.1.2
For Good Reason By the Executive : The Executive may
immediately resign the Executive’s position for Good Reason
and, in such event, the Term shall terminate. As used herein,
“Good Reason” means, a material negative change in the
employment relationship without the Executive’s consent, as
evidenced by the occurrence of any of the following:
(i) material
diminution in title, duties, responsibilities or
authority;
(ii) reduction
of Base Salary and benefits except for across-the-board changes for
executives at the Executive’s level;
(iii) exclusion
from executive benefit/compensation plans;
(iv) relocation
of the Executive’s principal business location by the Company
of greater than fifty (50) miles;
(v) material
breach of the Agreement by the Company; or
(vi) resignation
in compliance with securities/corporate governance applicable law
(such as the US Sarbanes-Oxley Act) or rules of professional
conduct specifically applicable to such Executive.
For each event
described above in this Section 4.1.2, the Executive must
notify the Company within ninety (90) days of the occurrence
of the event and the Company shall have thirty (30) days after
receiving such notice in which to cure.
4.1.3
Without Cause By the Company : The Company may
terminate the Executive’s employment thirty (30) days
following notice of termination without Cause given by the Company
and, in such event, the Term shall terminate. During such thirty
(30) day notice period, the
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Company may
require that the Executive cease performing some or all of the
Executive’s duties and/or not be present at the
Company’s offices and/or other facilities.
4.1.4
Without Good Reason By the Executive : The Executive
may voluntarily resign the Executive’s position effective
thirty (30) days following notice to the Company of the
Executive’s intent to voluntarily resign without Good Reason
and, in such event, the Term shall terminate. During such thirty
(30) day notice period, the Company may require that the
Executive cease performing some or all of the Executive’s
duties and/or not be present at the Company’s offices and/or
other facilities.
4.1.5
Definition of Termination Date . The date upon which
Executive’s employment and the Term terminate pursuant to
this Section 4.1 shall be the Executive’s
“Termination Date” for all purposes of this
Agreement.
4.2 Payments
Upon a Termination Event .
4.2.1
Entitlements Upon Termination For Any Reason .
Following any termination of the Executive’s employment, the
Company shall pay or provide to the Executive, or the
Executive’s estate or beneficiary, as the case may
be:
(i) Base
Salary earned through the Termination Date;
(ii) the
balance of any awarded ( i.e. , the amount and payment of
the specific award has been fully approved, including, where
applicable, by the Committee) but as yet unpaid, Annual Bonus or
other incentive awards for any calendar year prior to the calendar
year during which the Executive’s Termination Date occurs;
provided, however, if the Executive’s employment is
terminated by the Company for Cause, such Annual Bonus or incentive
award, even if awarded, shall be immediately forfeited if permitted
under the law of the State in which the Executive
resides;
(iii) a
payment representing the Executive’s accrued but unused
vacation;
(iv) any
vested, but not forfeited benefits on the Termination Date under
the Company’s employee benefit plans in accordance with the
terms of such plans; and
(v) any
benefit continuation and conversion rights to which the Executive
is entitled under the Company’s employee benefit
plans.
4.2.2
Payments Upon Involuntary Termination by the Company Without
Cause or Voluntary Termination of the Executive with Good
Reason . Following a termination by the Company without
Cause or by the Executive for Good Reason, the Company shall pay or
provide to the Executive in addition to the payments in
Section 4.2.1 above:
(i) Base
Salary at the rate in effect on the Termination Date and continuing
for eighteen (18) months thereafter, payable at the same intervals
at which active employees at the Executive’s level are
paid;;
(ii)
Two (2) payments, the first in an amount equal to one hundred
percent (100%) of the Executive’s annual cash incentive bonus
payment at target, and the second in an amount equal to fifty
percent (50%) of the Executive’s annual cash incentive bonus
payment at target, the first of such payments being payable in the
first year following the Termination Date at the same time that
the
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Company pays
annual cash incentive bonuses to its active employees pursuant to
its then current Bonus Program (or, if no payment to its active
employees is made in the relevant year, at the time that such
bonuses normally would be scheduled to be paid) and the second
being payable at the same time in the second year following the
Termination Date;
(iii) eighteen
(18) months of continued health and welfare benefit plan
coverage following the Termination Date (excluding any additional
vacation accrual or sick leave) at active employee levels, if and
to the extent the Executive was participating in any such plans on
the Termination Date, provided that the Executive remits monthly
premiums for the full cost of any health benefits;
(iv) a
cash payment each month during the eighteen-month period following
the Termination Date equal to the full monthly premium for the
medical and health benefits described in clause (iii) above minus
the active employee cost of such coverage, such full monthly
premium to be grossed-up by the Company for any applicable income
taxes;
(v) except
as prohibited by law, immediate removal of transfer and other
restrictions from all shares of capital stock of the Company
registered in the Executive’s name;
(vi) full
and immediate vesting of all stock options to purchase shares of
capital stock of the Company, restricted stock and restricted stock
units; and
(vii) executive
level career transition assistance services by a firm selected by
the Executive and approved by the Company in an amount not to
exceed $8,000 in the aggregate (which amount includes any
applicable gross-up for any taxes due for such payment).
Notwithstanding
any other provision of this Agreement, as consideration for the pay
and benefits that the Company shall provide the Executive pursuant
to this Section 4.2.2, the Executive shall provide the Company
an enforceable waiver and release agreement in a form that the
Company normally requires.
(i)
Affiliated Company . For purposes of this Agreement,
“Affiliated Company” means any company, directly or
indirectly, controlled by, controlling or under common control with
the Parent.
(ii)
Change of Control . For the purpose of this
Agreement, a “Change of Control” shall mean:
(A)
The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”))
(a “Person”) of beneficial ownership (within the
meaning of Rule 13d-3 promulgated under the Exchange Act) of
voting securities of the Parent where such acquisition causes such
Person to own 20% or more of the combined voting power of the then
outstanding voting securities of the Parent entitled to vote
generally in the election of directors (the “Outstanding
Parent Voting Securities”), provided, however , that
for purposes of this subparagraph (A), the following acquisitions
shall not be deemed to result in a Change of Control: (I) any
acquisition directly from the Parent or any corporation or other
legal entity controlled, directly or indirectly, by the Parent,
(II) any acquisition by the Parent or
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any corporation
or other legal entity controlled, directly or indirectly, by the
Parent, (III) any acquisition by any employee benefit plan (or
related trust) sponsored or maintained by the Parent or any
corporation or other legal entity controlled, directly or
indirectly, by the Parent or (IV) any acquisition by any
corporation pursuant to a transaction that complies with clauses
(I), (II) and (III) of subparagraph (C) below; and
provided, further, that if any Person’s beneficial
ownership of the Outstanding Parent Voting Securities reaches or
exceeds 20% as a result of a transaction described in clauses
(I) or (II) above, and such Person subsequently acquires
beneficial ownership of additional voting securities of the Parent,
such subsequent acquisition shall be treated as an acquisition that
causes such Person to own 20% or more of the Outstanding Parent
Voting Securities; or
(B) Individuals
who, as of the date hereof, constitute the Parent’s Board of
Directors (such Board of Directors, the “Board”; such
individuals, the “Incumbent Board”) cease for any
reason to constitute at least a majority of the Board; provided,
however , that any individual becoming a director subsequent to
the date hereof whose election, or nomination for election by the
Parent’s shareholders, was approved by a vote of at least a
majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the
Incumbent Board, but excluding, for this purpose, any such
individual whose initial assumption of office occurs as a result of
an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a Person
other than the Board; or
(C) The
approval by the shareholders of the Parent of a reorganization,
merger or consolidation or sale or other disposition of all or
substantially all of the assets of the Parent (“Business
Combination”) or, if consummation of such Business
Combination is subject, at the time of such approval by
shareholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or
implicitly by consummation); excluding, however, such a Business
Combination pursuant to which (I) all or substantially all of
the individuals and entities who were the beneficial owners of the
Outstanding Parent Voting Securities immediately prior to such
Business Combination beneficially own, directly or indirectly, more
than 60% of, respectively, the then outstanding shares of common
stock and the combined voting power of the then outstanding voting
securities entitled to vote generally in the election of directors,
as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation that as a
result of such transaction owns the Parent or all or substantially
all of the Parent’s assets either directly or through one or
more subsidiaries) in substantially the same proportions as their
ownership, immediately prior to such Business Combination of the
Outstanding Parent Voting Securities, (II) no Person
(excluding any (1) corporation owned, directly or indirectly,
by the beneficial owners of the Outstanding Parent Voting
Securities as described in subclause (I) immediately
preceding, or (2) employee benefit plan (or related trust) of
the Parent or such corporation resulting from such Business
Combination, or any of their respective subsidiaries) beneficially
owns, directly or indirectly, 20% or more of, respectively, the
then outstanding shares of common stock of the corporation
resulting from such Business Combination or the combined voting
power of the then outstanding voting securities of such corporation
except to the extent that such ownership existed prior to the
Business Combination and (III) at least a majority of the
members of the board of directors of the corporation resulting from
such Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination;
or
(D) approval
by the shareholders of the Parent of a complete liquidation or
dissolution of the Parent.
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(iii)
Change of Control Period . For purposes of this
Agreement, the “Change of Control Period” shall mean
the period commencing on the date of a Change of Control and ending
on the twenty-fourth (24 th )
month anniversary of such date.
(iv)
Parent . For purposes of this Agreement,
“Parent” shall mean Foster Wheeler Ltd., a Bermuda
company, as of the Effective Date, but shall mean Foster Wheeler
AG, a Swiss corporation, upon the completion of the Scheme of
Arrangement described in Foster Wheeler Ltd.’s Proxy
Statement for the Court-Ordered Meeting of Common Shareholders to
be held on January 27, 2009.
(v)
Recent Annual Bonus . For purposes of this Agreement,
a “Recent Annual Bonus” shall mean a prior year’s
Annual Bonus in cash equal to at least the highest “annual
short-term incentive award” (as such terminology is defined
in the Foster Wheeler Annual Executive Short-Term Incentive Plan)
received by the Executive under the Foster Wheeler Annual Executive
Short-Term Incentive Plan, or any comparable bonus under any
predecessor or successor plan, including any bonus or portion
thereof that has been awarded but deferred, for the last three full
fiscal years prior to the Start Date. Notwithstanding anything to
the contrary, in the event that during any three year look-back
period above, any annual bonus paid and received by Executive under
the Foster Wheeler Annual Executive Short-Term Incentive Plan (or
any respective predecessor annual incentive plan) was paid by a
Foster Wheeler affiliate other than the Company, then any such
annual bonus paid by either the Company or any other Foster Wheeler
affiliate during the three-year look-back period shall be deemed to
be paid by the Company for purposes of this computation.
(vi)
Start Date . For purposes of this Agreement,
“Start Date” shall mean the first date of the Change of
Control Period. Anything in this Agreement to the contrary
notwithstanding, if a Change of Control occurs and if the
Executive’s employment with the Company is terminated prior
to the date on which the Change of Control occurs, and if it is
reasonably demonstrated by the Executive that such termination of
employment (A) was at the request of a third party who has
taken steps reasonably calculated to effect a Change of Control or
(B) otherwise arose in connection with or anticipation of a
Change of Control, then for all purposes of this Agreement the
“Start Date” shall mean the date immediately prior to
the Termination Date.
4.3.2
Obligations of the Company upon Executive’s Voluntary
Termination with Good Reason or the Company’s Involuntary
Termination of Executive Without Cause (Other Than for Death or
Disability) During Change of Control Period . If, during
the Change of Control Period, the Company terminates the
Executive’s employment without Cause (other than for death or
Disability) or the Executive terminates the Executive’s
employment for Good Reason, the Company shall pay or provide to the
Executive the following:
(i)
Accrued Obligations . the sum of (I) the
Executive’s Annual Base Salary through the Termination Date
to the extent not theretofore paid, (II) the product of (1)
the higher of: (a) any Recent Annual Bonus, and
(b) the Annual Bonus paid or payable, including any bonus or
portion thereof which has been earned but deferred (and annualized
for any fiscal year consisting of less than twelve full months or
during which the Executive was employed for less than twelve full
months), for the most recently completed fiscal year during the
Change of Control Period, if any (such higher amount being referred
to as the “Highest Annual Bonus”) and (2) a
fraction, the numerator of which is the number of days in the
current fiscal year through the Termination Date, and the
denominator of which is 365, and (III) any compensation
previously deferred by the Executive (together with any accrued
interest or earnings thereon) and any accrued vacation pay, in each
case described in this Section 4.3.2(i) to the
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extent not
theretofore paid (the sum of the amounts described in subclauses
(I), (II) and (III), (the “Accrued Obligations”),
all in a lump sum in cash within 30 days following the
Termination Date;
(ii)
Base Salary . Base Salary at the rate in effect on
the Termination Date and continuing for thirty (30) months
thereafter, payable at the same intervals at which active employees
at the Executive’s level are paid;
(iii)
Bonus . three (3) payments, the first two each
in an amount equal to one hundred percent (100%) of the
Executive’s annual cash incentive bonus payment at target,
and the third in an amount equal to fifty percent (50%) of the
Executive’s annual cash incentive bonus payment at target,
the first and second of such payments being payable in each of the
first and second years following the Termination Date at the same
time that the Company pays annual cash incentive bonuses to its
active employees pursuant to its then current Bonus Program (or, if
no payment to its active employees is made in the relevant year, at
the time tha
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