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EMPLOYMENT AGREEMENT

Executive Employment Agreement

EMPLOYMENT AGREEMENT | Document Parties: WILLBROS GROUP INC | Willbros USA, Inc., | Robert R. Harl You are currently viewing:
This Executive Employment Agreement involves

WILLBROS GROUP INC | Willbros USA, Inc., | Robert R. Harl

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Title: EMPLOYMENT AGREEMENT
Governing Law: Texas     Date: 6/16/2006
Industry: Oil Well Services and Equipment    

EMPLOYMENT AGREEMENT, Parties: willbros group inc , willbros usa  inc.  , robert r. harl
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Exhibit 10.26

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “Agreement”) is made and entered into as of the 20th day of January, 2006, between Willbros USA, Inc., a Delaware corporation (the “Corporation”), and Robert R. Harl (the “Executive”).

RECITALS

WHEREAS, the Executive has substantial industry experience and has obtained a knowledge of the business and affairs of the Corporation and Willbros Group, Inc., a Republic of Panama corporation (“WGI”), through his service as a consultant to the Corporation since August 1, 2005; and

WHEREAS, the Executive has agreed to forego other business opportunities, to accept permanent and full-time employment with the Corporation and WGI as President and Chief Operating Officer of both the Corporation and WGI, and to accept his election on January 20, 2006, to a position as a director and member of the Board of Directors of WGI (the “Board”); and

WHEREAS, it is anticipated that the Executive will be elected to the positions of Chief Executive Officer of the Corporation and WGI commencing January 1, 2007;

NOW THEREFORE, in consideration of the mutual covenants and representations contained herein, and the mutual benefits derived herefrom, the parties agree as follows:

ARTICLE I

FULL-TIME EMPLOYMENT OF EXECUTIVE

1.1 DUTIES AND STATUS.

(a) The Corporation hereby engages the Executive as a full-time executive employee for the period specified in Section 4.1 below (the “Employment Period”), and the Executive accepts such employment, on the terms and conditions set forth in this Agreement.

(b) The Executive shall serve as the President and Chief Operating Officer of the Corporation and WGI. He shall report to the Board and to the Chief Executive Officer of the Corporation and WGI, but to no other person or body. In the event the Executive is elected to the positions as Chief Executive Officer of the Corporation and WGI, he shall report only to the Board and to no other person.

(c) In addition to the Executive’s performance of his day to day executive and operating responsibilities referred to in Section 1.1(b) above, the Executive shall work diligently and closely with the Chief Executive Officer and the Board during the Employment Period to further develop, refine, and implement WGI’s strategic plan consistent with the annual budget(s) and other objectives approved by the Board.


(d) Throughout the Employment Period, the Executive shall devote substantially all his full time and efforts to the business of the Corporation and WGI and will not engage in consulting work or any trade or business for his own account or for or on behalf of any other person, firm or corporation which competes, conflicts or interferes with the performance of his duties under this Agreement in any way.

(e) Except for reasonable business travel, the Executive shall be required to perform the services and duties provided for in this Section 1.1 only at the principal offices of the Corporation in the Houston, Texas, metropolitan area. Throughout the Employment Period, the Executive shall be entitled to vacation and leave for illness or temporary disability in accordance with the Corporation’s policies for its senior executive officers.

1.2 COMPENSATION AND GENERAL BENEFITS. In consideration of the Executive foregoing other business opportunities and agreeing to stay on with the Corporation and WGI to perform the services described in this Agreement, the Executive shall be compensated as follows:

(a) Beginning January 20, 2006 through December 31, 2006, the Corporation shall pay the Executive a base salary of five hundred thousand dollars ($500,000) per year. Such base salary shall increase to $600,000 for the period January 1, 2007 through December 31, 2007, and to $700,000 for each calendar year beginning after December 31, 2007 through the end of the Employment Period. Such salary shall be payable in periodic equal installments pursuant to the Corporation’s executive payroll system.

(b) Throughout the Employment Period, the Executive shall be entitled to participate in such retirement, bonus, disability, life, sickness, accident, dental, medical and health benefits and other employee benefit programs, plans and arrangements of the Corporation which are in effect immediately prior to the date of this Agreement, and in any successor or additional employee benefit programs, plans or arrangements which may be established by the Corporation, as and to the extent any such employee benefit programs, plans and arrangements are or may from time to time be in effect.

1.3 BONUS . The Executive shall always remain eligible for bonus consideration annually at the sole discretion of the Board. Also, in consideration of the Executive foregoing other business opportunities and agreeing to accept employment with the Corporation and WGI and to perform the services described in this Agreement, and subject to Section 4.3 below, the Executive shall be entitled to a cash bonus for each year during the Employment Period if the “Net Income Target Performance Objectives” are achieved. For the purpose of this Agreement, “Net Income Target Performance Objective” shall be defined as the “line item” designated as such in the Annual WGI Budget for the year 2006, 2007, 2008, 2009, and 2010, respectively, as approved by the Board of Directors for the relevant year (with such modifications to such line item as the Board may determine appropriate, prospectively or retroactively, to permit for events or occurrences the Board believes should be considered) before deducting any net income performance bonuses payable to the Executive and/or

 

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otherwise to employees (the “NITPO”). The maximum cash bonus the Executive shall be entitled to receive for meeting the NITPO each year during the Employment Period shall be:

 

 

 

 

 

Year

  

Maximum

Cash Bonus

2006

  

$

500,000

2007

  

$

750,000

2008

  

$

1,050,000

2009

  

$

1,050,000

2010

  

$

1,050,000

Except to the extent provided in the next sentence, any cash bonus earned by the Executive for any year shall be payable within thirty days following the day the Audit Committee of the Board of Directors certifies to the Board its acceptance of the financial statements of WGI for such year as prepared by the independent public accountants for WGI.

1.4 RESTRICTED STOCK AWARD . In consideration of the Executive foregoing other business opportunities and agreeing to accept employment with the Corporation and WGI and to perform the services described in this Agreement, the Executive is hereby awarded and will be awarded the number of shares of common stock, par value $.05 per share (“common stock”), of WGI (“restricted stock shares”) on the dates indicated below, subject to (i) all of the terms and provisions of the WGI 1996 Stock Plan, (ii) the Executive’s execution and delivery of Restricted Stock Award Agreements substantially in the form of Exhibit A attached hereto, and (iii) Section 4.3 below:

 

 

 

 

Date of Award

  

Number of

Restricted

Stock Shares

January 20, 2006

  

100,000

January 1, 2007

  

50,000

January 1, 2008

  

50,000

January 1, 2009

  

50,000

January 1, 2010

  

50,000

The Executive’s rights in (i) the January 20, 2006 restricted stock shares shall vest with respect to 20,000 shares on each of December 31, 2006, December 31, 2007, December 31, 2008, December 31, 2009, and December 31, 2010, (ii) the January 1, 2007 restricted stock shares shall vest with respect to 12,500 shares on each of December 31, 2007, December 31, 2008, December 31, 2009, and December 31, 2010, (iii) the January 1, 2008 restricted stock shares shall vest with respect to 16,667 shares on each of December 31, 2008 and December 31, 2009, and with respect to 16,666 shares on December 31, 2010, (iv) the January 1, 2009 restricted stock shares shall vest with respect to 25,000 shares on each of December 31, 2009, and December 31, 2010, and (v) the January 1, 2010 restricted stock shares shall vest with respect to 50,000 shares on December 31, 2010.

1.5 GRANT OF STOCK OPTIONS . In consideration of the Executive foregoing other business opportunities and agreeing to accept employment with the Corporation and

 

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WGI and to perform the services described in this Agreement, contemporaneously with the execution and delivery of this Agreement the Executive will be granted an option to purchase up to 100,000 shares of common stock subject to (i) all of the terms and provisions of the WGI 1996 Stock Plan, (ii) the Executive’s execution and delivery of a Stock Option Agreement substantially in the form of Exhibit B attached hereto, and (iii) Section 4.3 below. The Executive’s right to exercise such stock option and purchase the shares of common stock shall vest in five equal installments of 20,000 shares each on each of December 31, 2006, December 31, 2007, December 31, 2008, December 31, 2009, and December 31, 2010.

1.6 GROSS-UP PAYMENT . Notwithstanding anything to the contrary in this Agreement, if any of the payments or benefits which the Executive has the right to receive from the Corporation (the “Payments”) are later determined to be subject to the tax imposed by Section 409A of the Code, or any interest or penalties with respect to such tax (such tax, together with any such interest or penalties, are hereinafter collectively referred to as the “409A Tax”), the Corporation shall pay to the Executive an additional payment (a “Gross-up Payment”) in an amount such that after payment by the Executive of all taxes (including any interest or penalties imposed with respect to such taxes), including any income tax imposed on any Gross-up Payment, the Executive retains an amount of the Gross-up Payment equal to the 409A Tax imposed upon the Payments. The Compensation Committee shall make an initial determination as to whether a Gross-up Payment is required and the amount of any such Gross-up Payment. The Executive shall notify the Corporation immediately in writing of any claim by the Internal Revenue Service which, if successful, would require the Corporation to make a Gross-up Payment (or a Gross-up Payment in excess of that, if any, initially determined by the Compensation Committee) within five days of the receipt of such claim. The Corporation shall notify the Executive in writing at least five days prior to the due date of any response required with respect to such claim if it plans to contest the claim. If the Corporation decides to contest such claim, then the Executive shall cooperate fully with the Corporation in such action; provided, however, the Corporation shall bear and pay all costs and expenses (including additional interest and penalties) incurred in connection with such action and shall indemnify and hold the Executive harmless, on an after-tax basis, for any 409A Tax or income tax, including interest and penalties with respect thereto, imposed as a result of the Corporation’s action. If, as a result of the Corporation’s action with respect to a claim, the Executive receives a refund of any amount paid by the Corporation with respect to such claim, then the Executive shall promptly pay such refund to the Corporation. If the Corporation fails to timely notify the Executive whether it will contest such claim or the Corporation determines not to contest such claim, then the Corporation shall immediately pay to the Executive the portion of such claim, if any, which it has not previously paid to the Executive.

1.7 POST TERMINATION MEDICAL COVERAGE. If the Executive’s employment with the Corporation and its affiliates is terminated at the end of the Employment Period and not by reason of an early termination event described in Section 4.2 below, then upon termination of Executive’s employment with the Corporation and its affiliates the Corporation shall permit the Executive and his eligible dependents the opportunity to elect, at the Executive’s expense, to continue coverage under the Corporation’s group medical and dental benefits plans as in effect at such time (the “Medical Plan”). Such election shall be made within thirty (30) days of the termination of the Executive’s employment with the

 

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Corporation and its affiliates and, if it is not made within such period, such election right shall be forever forfeited. The cost of such post-employment coverage under the Medical Plan to be charged to the Executive shall be the cost charged to participants in the Medical Plan who have elected COBRA Continuation Coverage under such plan. If the Executive and/or his dependents elect to participate in the Medical Plan following the termination of his employment, they shall be required to waive their rights to obtain COBRA Continuation Coverage under the Medical Plan. Notwithstanding the foregoing, when the Executive subsequently becomes eligible to receive (a) medical benefits under another employer’s benefit plans or (b) benefits through Medicare, the Corporation’s obligations under this Section 1.7 shall terminate as of the end of the month in which such subsequent coverage first becomes available to the Executive and the Executive shall promptly report such benefit eligibility to the Corporation. Any dependent coverage provided to the Executive’s dependents under the Medical Plan as of such subsequent coverage eligibility shall also terminate at the same time and any covered dependents shall be eligible to elect COBRA Continuation Coverage under the Medical Plan at such time. As used in this Section 1.7, “COBRA Continuation Coverage” shall mean coverage under the Corporation’s Group Medical Plan pursuant to Part 6 of Title I of the Employee Retirement Income Security Act of 1974, as amended.

ARTICLE II

COMPETITION AND CONFIDENTIAL INFORMATION

2.1 COMPETITION AND CONFIDENTIAL INFORMATION. The Executive and the Corporation recognize that, due to the nature of his prior association with the Corporation and WGI and of his engagements hereunder, and the relationship of the Executive to the Corporation and WGI, both in the past as an executive and in the future hereunder, the Executive has had access to and has acquired, will have access to and will acquire, and has assisted in and may assist in developing, confidential and proprietary information relating to the business and operations of the Corporation, WGI, and their affiliates, including but not limited to, information with respect to present and prospective business plans, financing arrangements, marketing projections, customer lists, contracts and proposals.

The Executive acknowledges that such information has been and will continue to be of central importance to the business of the Corporation, WGI, and their affiliates and that disclosure or use by others could cause substantial loss to the Corporation, WGI, and their affiliates. The Executive and the Corporation also recognize that an important part of the Executive’s duties will be to develop goodwill for the Corporation, WGI, and their affiliates through his personal contact with vendors, customers, subcontractors, and others sharing business relationships with the Corporation, WGI, and their affiliates, and that there is a danger that this goodwill, a proprietary asset of the Corporation, WGI and their affiliates, may follow the Executive if and when his employment relationship with the Corporation is terminated.

The Executive accordingly agrees that, during the Employment Period and for a period of one year thereafter, the Executive will not either individually or as owner, partner, agent,

 

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employee, or consultant engage in any activity competitive with the onshore and offshore pipeline, engineering and construction businesses of the Corporation, WGI, or any of their affiliates or with any other lines of material business activity of the Corporation, WGI, or any of their affiliates that commence during the Employment Period, and will not directly or indirectly solicit any employee to leave the employment of the Corporation, WGI, or any of their affiliates.

Nothing in this Article II shall be construed to prevent the Executive from owning, as an investment, not more than one percent (1%) of a class of equity securities issued by any issuer and publicly traded and registered under Section 12 of the Securities Exchange Act of 1934.

This Section 2.1 shall survive the termination of this Agreement for whatever reason.

2.2 NON-DISCLOSURE. At all times after the date of this Agreement, the Executive will keep confidential any confidential or proprietary information of the Corporation, WGI, and their affiliates which is now known to him or which hereafter may become known to him as a result of his employment or association with the Corporation, WGI, and their affiliates and shall not at any time directly or indirectly disclose any such information to any person, firm or corporation, or use the same in any way other than in connection with the business of the Corporation, WGI, and their affiliates. For purposes of this Agreement, “confidential or proprietary information” means information unique to the Corporation, WGI, and their affiliates which has a significant business purpose and is not known or generally available from sources outside the Corporation, WGI and their affiliates or typical of industry practice. This Section 2.2 shall survive the termination of this Agreement.

ARTICLE III

CORPORATION’S REMEDIES FOR BREACH OF ARTICLE II

3.1 CORPORATION’S REMEDIES FOR BREACH. It is recognized that damages in the event of a breach of Article II above by the Executive would be difficult, if not impossible, to ascertain, and it is therefore agreed that, if such a breach occurs, the Corporation, in addition to and without limiting any other remedy or right it may have, shall have the right to an injunction or other equitable relief, in any court of competent jurisdiction, enjoining any such breach, and the Executive hereby waives any and all defenses he may have on the ground of lack of jurisdiction or competence of the court to grant such an injunction or other equitable relief. The existence of this right shall not preclude any other rights and remedies at law or in equity which the Corporation may have.

 

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ARTICLE IV

EMPLOYMENT PERIOD

4.1 DURATION. The Employment Period shall commence on January 20, 2006 and shall terminate on December 31, 2010.

4.2 EARLY TERMINATION. This Agreement shall be terminated prior to the end of the Employment Period for the following reasons or upon the occurrence of the following events:

(a) Termination of this Agreement by the Corporation without cause or through constructive discharge, as described in Section 4.4(a) below;

(b) Discharge of the Executive for cause, as described in Section 4.4(b) below;

(c) Death of the Executive;

(d) Total disability of the Executive, as described in Section 4.4(c) below;

(e) Voluntary resignation of the Executive; or

(f) “Change in Control” as that term is defined in the Willbros Group, Inc. Severance Plan as Amended and Restated Effective September 25, 2003, or as it may be amended hereafter (the “Severance Plan”); provided, however, that any event, transaction, or series of events or transactions that would constitute a Change in Control under such definition and which relates to, results from or constitutes a part of the insolvency of, or a bankruptcy, bankruptcy reorganization, or receivership of the Corporation or WGI shall not constitute a Change in Control or otherwise operate to trigger the obligation to pay amounts otherwise payable upon the early termination of this Agreement.

4.3 COMPENSATION AND/OR BENEFITS FOLLOWING EARLY TERMINATION.

(a) In the event of an early termination of this Agreement during the calendar year 2006 due to a Change in Control, the Corporation shall pay to the Executive and provide him with the following:

(i) For the remainder of calendar year 2006, the Corporation shall continue to pay the Executive his base salary at the rate specified in Section 1.2(a) above,

(ii) During the remainder of calendar year 2006, the Executive shall, to the extent legally permissible, continue to be entitled to all benefits and benefit payment options under all of the employee benefit programs, plans or arrangements of the Corporation described in Section 1.2(b) above as if he were still employed until December 31, 2006, under this Agreement,

 

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(iii) The vesting of all stock options granted and restricted stock shares awarded to the Executive on January 20, 2006, shall be accelerated to the date of the termination of this Agreement, and

(iv) A cash bonus in an amount determined as if the Corporation had exceeded the performance goals set forth at Section 1.3 above necessary for the Executive to receive the maximum cash bonus for the 2006 calendar year which cash bonus shall be payable at the time(s) provided in Section 1.3 above.

(b) In the event of an early termination of this Agreement after December 31, 2006, due to the Corporation’s involuntary termination of the Executive’s employment without cause, or due to a constructive discharge of the Executive, or due to a Change in Control, the Corporation shall pay to the Executive and provide him with the following:

(i) During the remainder of the Employment Period, the Corporation shall continue to pay the Executive his base salary at the rate specified in Section 1.2(a) above,

(ii) During the remainder of the Employment Period, the Executive shall, to the extent legally permissible, continue to be entitled to all benefits and benefit payment options under all of the employee benefit programs, plans or arrangements of the Corporation described in Section 1.2(b) above as if he were still employed during such period under this Agreement, and which have accrued as of the time of the termination of this Agreement under the WGI 1996 Stock Plan, and

(iii) A cash bonus in an amount determined as if the Corporation had exceeded the performance goals set forth at Section 1.3 above necessary for the Executive to receive the maximum cash bonus for each of the uncompleted years remaining in the Employment Period at the time of the termination of this Agreement which cash bonus shall be payable at the time(s) provided in Section 1.3 above.

(c) In the event of an early termination of this Agreement because of the voluntary resignation of the Executive or termination of the Executive’s employment for cause, the Executive will receive his base salary through the date of such voluntary resignation or termination of the Executive’s employment for cause, the Executive shall receive no cash bonuses under Section 1.3 above for any years remaining in the Employment Period which have not ended as of the date of such voluntary resignation or termination of the Executive’s employment for cause even if the performance goals set forth in Section 1.3 above for such years are met or exceeded, and the Executive and his dependents and beneficiaries will receive such benefits as they may be entitled under the terms of the WGI 1996 Stock Plan and the employee benefit programs, plans and arrangements of the Corporation descr


 
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