SECOND AMENDMENT TO THE EMPLOYMENT AGREEMENT BETWEEN FOSTER WHEELER INC. AND BETH B. SEXTON
Exhibit 10.3
This SECOND AMENDMENT (this “Amendment”) to the Employment Agreement between XXXXXX XXXXXXX
INC., a Delaware corporation (the “Company”), and XXXX X. XXXXXX (the “Executive”), dated as of
April 7, 2008 (the “Agreement”), is made and entered into as of May 4, 2010 (the “Effective Date”).
WHEREAS, Xxxxxx Xxxxxxx Ltd. entered into the Agreement with the Executive; and
WHEREAS, the Company thereafter assumed the Agreement from Xxxxxx Xxxxxxx Ltd. on or about
February 9, 2009, and the Company and the Executive entered into a First Amendment to the
Agreement, effective January 18, 2010 (“First Amendment”); and
WHEREAS, the Company and the Executive have agreed to further amend the Agreement as set forth
herein; and
WHEREAS, pursuant to the Agreement, an amendment to the Agreement may be made pursuant to the
written consent of the Company and the Executive.
NOW THEREFORE, for good and valuable consideration the receipt and sufficiency of which are
hereby acknowledged, and in further consideration of the following mutual promises, covenants and
undertakings, the parties agree by executing this Amendment to amend the Agreement, including its
First Amendment, as follows:
| 1. | The Agreement is amended by replacing the Addendum set forth in the First Amendment with the following addendum inserted at the end of the Agreement: |
ADDENDUM
This Addendum sets forth the terms and conditions applicable during the Executive’s
performance of duties (as described in Agreement Section 1.1) for the period beginning as of the
Effective Date and ending on the date the Agreement is terminated pursuant to Agreement Section 4
(the “Term”). Unless otherwise provided in this Addendum, all Agreement terms (including the
Executive’s entitlement to the compensation and benefits described in Agreement Section 3, as
adjusted for merit increases since the date of the Agreement) shall remain in full force and effect
during the Term.
A-1. Location.
During the Term, the Executive shall perform her duties (as described in Agreement Section 1)
primarily at the Company’s offices in Geneva, Switzerland, subject to reasonable travel
requirements consistent with the nature of the Executive’s duties from time to time on behalf of
the Company.
A-2. Long-Term Incentive Awards.
Upon the Executive’s termination of employment (other than for Cause), all stock options
outstanding as of the Executive’s Termination Date shall remain exercisable for the shorter of one
(1) year following the Executive’s termination of employment or the remainder of the term of the
stock option(s).
A-3. Stay Bonus Award.
The Company shall pay the Executive a cash stay bonus under the following terms:
(a) Full Stay Period. The Executive shall receive a cash bonus equal to
175% of the Executive’s Base Salary then in effect, provided the Executive remains in active
employment until June 30, 2011. Payment of such bonus shall be made in a single lump sum in July
2011.
(b) Minimum Stay; Minimum Notice. The Executive shall receive a cash bonus
equal to 125% of the Executive’s Base Salary then in effect upon the termination of the Executive’s
employment if the Executive remains an active employee of the Company through December 31, 2010,
and provides the Company with at least four (4) months advance written notice of her termination of
employment. Payment of such bonus shall be made in a single lump sum within thirty (30) days of
the date of termination of employment. This 125% stay bonus shall be increased if the Executive
provides the requisite notice and works beyond December 31, 2010. In such case, the amount of the
stay bonus shall be increased on a pro-rata basis based on the number of full months worked between
December 31, 2010 and June 30, 2011. For example, if the Executive works one (1) full month beyond
December 31, 2010, the Executive shall receive another one-sixth (1/6th) of the amount
of the differential between 125% and 175%. Payment of such bonus shall be made in a single lump
sum within thirty (30) days of the Executive’s termination of employment.
(c) Termination Without Cause; For Good Reason; Death; Disability. The stay
bonus described in paragraph (a) shall be payable in full and irrespective of when the Executive’s
employment terminates if the Executive’s employment is terminated by the Company without Cause, by
the Executive for Good Reason (not including the event of the assignment to Switzerland), or due to
the Executive’s death or Disability. In such case, and if the stay bonus has not already been
paid, the stay bonus shall be paid in a lump sum within thirty (30) days of termination of
employment.
(d) Termination Relating to Catastrophic Personal Event. The stay bonus
described in paragraph (a) shall be payable in full if the Executive remains an active employee
through December 31, 2010 and terminates employment prior to June 30, 2011 due to an unforeseen
personal and catastrophic event affecting the Executive or a family member, which event requires
the Executive to relocate to the U.S., and the Executive provides the Company with thirty (30) days
advance written notice.
(e) Forfeiture of Stay Bonus. The Executive shall forfeit the stay bonus
(and must repay the stay bonus if the stay bonus has been paid) if (i) the Executive does not
remain in active employment through December 31, 2010, (ii) the Executive (A) prior to June 30,
2011, provides the Company with less than four (4) months advance written notice of her termination
of employment (less than thirty (30) days notice for termination due to a catastrophic event
described in A-4(d)), or (B) on or after June 30, 2011 and prior to June 30, 2012,
provides the Company with an advance written notice of termination of employment such that the
resulting termination date is prior to June 30, 2012, is less than thirty (30) days after the
notice for termination due to a catastrophic event described in paragraph (d), or is less than
ninety (90) days after the notice for termination that is not due to a catastrophic event described
in paragraph (d), or (iii) prior to June 30, 2011, the Executive’s employment is terminated for
Cause. Upon
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any such forfeiture, the Executive must repay any paid stay bonus in full within
thirty (30) days of termination of employment.
A-4. Miscelleneous Terms
(a) Agreement Terms. Unless otherwise provided in this Addendum, all Agreement terms
(including the Executive’s entitlement to the compensation and benefits described in Agreement
Section 3, as adjusted for merit increases since the date of the Agreement) shall remain in full
force and effect during the Term.
(b) Supplemental Long-Term Incentive Award. The Executive shall receive an
award of restricted stock units on a date designated by the Xxxxxx Xxxxxxx AG Board of Directors or
its Compensation Committee (“Compensation Committee”) during the first open trading window for
Section 16 officers subsequent to the Effective Date (known as the “Grant Date”) with an economic
value as of the Grant Date equal to USD 1,250,000. Such award shall vest ratably on the
first, second, and third anniversaries of the Grant Date. Restricted stock units that vest shall
be settled by issuance of shares as provided in the grant agreements described above, but in no
event later than March 15 of the year following the year in which the restricted stock units vest.
For purposes of this Section, the number of restricted stock units to be granted to the Executive
shall be consistent with the methodology used for valuing restricted stock unit awards granted to
employees which has been approved and adopted by the Compensation Committee. Such award will be
granted under the Company’s Omnibus Incentive Plan and governed by separate agreements entered into
between the Executive and the Company or one of its affiliates, and in the event of any
inconsistency between such separate agreements and the terms of the Agreement (including, but not
limited to its Section 4 and this Amendment), the Agreement shall govern and control. For
avoidance of doubt, nothing in the preceding sentence shall be construed to limit the application
of any provision of such separate agreements that expressly refers to and incorporates a provision
of this Agreement.
(c) Assignment Benefits. During the Term and so long as assigned to
Switzerland, the Executive shall be entitled to the following benefits (“Assignment Benefits”); all
the benefits provided for in this Addendum are inclusive of a Representative Allowance of CHF
100,000 and are in addition to the perquisities and other benefits provided for in the Agreement:
(i) Relocation Assistance: The following relocation assistance shall be
provided:
(1) The Company will assist in obtaining the proper work permits
and/or visas necessary for the provision of services in Switzerland and reimburse
the Executive for any work permit/visa, passport and immigration expenses, including
expenses for dependents of the Executive relocating or intending to relocate to
Switzerland;
(2) Home sale assistance, including the Company’s payment of
realtor’s fees, closing costs and any loss on the sale of the Executive’s
condominium in the Perryville area (basis for home includes major home
improvements);
(3) Reimbursement for two (2) house hunting trips of up to six (6)
days each, to include reasonable lodging, transportation and meals;
(4) The cost of the shipment of household goods;
(5) The cost of pet relocation, including transportation and kennel
fees related to the move; and
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(6) The loss on sale of automobiles or lease termination, including
any losses based on blue book/fair market value, costs, and penalties.
(ii) Settling-in Allowance: A settling-in allowance of CHF 30,000 shall be
paid within thirty (30) days of the date the Effective Date.
(iii) Assignment Allowance: Prior to the earlier of the date upon which the
Executive’s immediate family relocates to Switzerland or June 30, 2011 (“First Period”), the
Company shall pay the Executive a monthly allowance, and after such date (“Second Period”),
the Company shall pay to the Executive a different monthly allowance, consisting of the
following amounts for each period:
| Allowance | First Period | Second Period | ||
(1) Cost-of-living
allowance: |
CHF 6,327 | CHF 2,940 (*) | ||
(2) Housing: |
CHF 13,800 | CHF 13,800 | ||
(3) Transportation: |
CHF 3,042 | CHF 2,208 | ||
(4) Utilities: |
CHF 400 | CHF 400 | ||
TOTAL |
CHF 23,569 | CHF 19,348 |
| (*) | This amount (CHF 2,940) assumes the Executive’s immediately family has not relocated to Switzerland. The amount of the Executive’s Second Period Cost-of-living allowance shall be CHF 5,341 if and when her immediate family relocates to Switzerland, which increased allowance would increase her Second Period total allowance to CHF 21,749 |
Such allowances shall be payable in advance in Swiss Francs according to the Company’s
payroll practices. The Company shall also provide for reasonable advances to the Executive
for the purpose of obtaining housing and satisfying other relocation expenses.
(iv) Personal Air Travel and Home Leave: Until the earlier of the date upon
which the Executive’s immediate family relocates to Switzerland or June 30, 2011, (A) the
Company shall provide reimbursement of one (1) business-class round-trip ticket per month for
personal travel between Switzerland and the U.S, (B) each month, the Executive may use the
business-class round trip ticket to instead fly one (1) family member from the U.S. to
Switzerland, and (C) once per quarter, in lieu of the Executive’s trip to the U.S., the
Company shall reimburse the cost of business-class round-trip tickets for the Executive’s
family to travel from the U.S. to Switzerland. After the earlier of the dates set forth
above, (X) the Company shall reimburse the Executive for one (1) trip per twelve (12) months
per authorized dependent and for the Executive, (Y) expenses eligible for reimbursement
include a business class airline ticket and local ground expenses to the original point of
origin, and (Z) one (1) day of travel shall be permitted each way as additional vacation.
(v) Vacation and Holidays: The Executive’s paid time off shall be consistent
with that currently provided. Swiss holidays shall be established by the Company.
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(vi) Continued Medical Coverage. To the extent U.S. medical coverage is not
available in Switzerland, the Company shall pay for the cost of securing substantially
similar coverage in Switzerland for the Executive and the Executive’s family. Eligible
dependents of the Executive shall continue to maintain medical coverage irrespective of their
relocation to Switzerland.
(vii) Tax Equalization. Under tax equalization, the Executive’s obligation
for income taxes shall not exceed the amount of income tax calculated each year on Base
Salary, short-term annual pay and long-term incentive pay applying the U.S. tax rules without
taking into consideration any foreign tax credit. Such amount will be deducted from the
Executive’s paycheck. Should additional income taxes arise in the U.S. or Switzerland as a
result of the assignment, the Company shall pay the additional tax. The Executive may
choose, as an alternative to the U.S. tax equalization program, to be personally responsible
for the Swiss income tax on the Executive’s Base Salary, short-term incentive pay and
long-term incentive pay. In addition to the tax equalization on the compensation above, the
Executive will be reimbursed for any wealth tax due in Switzerland as a result of the
assignment.
(viii) Tax Preparation Services: The Company shall retain the services of a
tax consultant to prepare the Executive’s U.S. and Switzerland tax returns, as required,
while the Executive is on assignment to Switzerland.
(ix) Tax Gross-Up. To the extent that the provision of Assignment Benefits
results in taxable income to the Executive, the Company shall pay the Executive an amount to
satisfy the Executive’s Swiss and U.S. income tax obligation. Such payment shall be
grossed-up for taxes and made as soon as practicable after the tax liability arises but in no
event later than the end of the year following the year in which the tax is due.
(x) Seconded Arrangement: The Executive shall be seconded to Xxxxxx Xxxxxxx
Management AG in Switzerland and shall continue to remain an employee of the Company. The
Executive remain eligible to participate in the Company’s employee benefit plans as set forth
in Section 3 of the Agreement and to receive U.S. social security benefits.
(xi) Legal Services. The Company shall reimburse the Executive for legal fees
incurred in relation to an attorney’s review of this Amendment, up to a maximum of USD 5,000.
(xii) Financial/Estate Planning. The Company shall reimburse the Executive
for one-time costs relating to the Executive’s financial and estate planning.
(xiii) Compassionate Leave: The Executive shall be provided with up to
five (5) day’s paid compassionate leave in relation to the death of an immediate family
member. The Company shall reimburse the Executive and her dependents for the cost of
round-trip business airline tickets to attend funeral services.
(xiv) U.S. Vehicle Allowance. Any vehicle allowance provided under Company
policy for vehicles based in the U.S. shall cease upon the earlier of (A) the date upon which
the Executive’s immediate family relocates to Switzerland or (B) June 30, 2011.
(d) Termination of Employment. If the Executive’s employment is terminated
for any reason, the terms of Agreement Section 4 shall control; provided, that the relocation to
Switzerland shall not constitute an event giving rise to a termination of employment for Good
Reason. If the termination is
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for any reason other than for Cause or a resignation by the
Executive without Good Reason, the Company shall pay the reasonable costs associated with the
repatriation to the U.S.
A-5. Maximum Length of Assignment
For the avoidance of doubt, the maximum period of time during which the Executive may be
considered to be “on assignment” and, therefore, eligible for assignment-related compensation and
Assignment Benefits is five (5) years from the start of the Executive’s assignment to Switzerland,
i.e., no later than January 17, 2015.
A-6. Application of Section 409A to Benefits-in-Kind, Expense Reimbursements and
Allowances
(a) Benefits-in-Kind; Expense Reimbursements. Benefits-in-kind and any
provision for reimbursement of expenses during the Executive’s assignment shall be subject to the
following rules, as required to comply with Code Section 409A:
(i) The amount of in-kind benefits provided or expenses eligible for
reimbursement in one calendar year may not affect in-kind benefits or reimbursements to be
provided in any other calendar year.
(ii) Expenses will be reimbursed as soon as administratively possible, but in
no event shall expenses be reimbursed later than December 31st of the year
following the year in which the expense was incurred.
(iii) The right to an in-kind benefit or reimbursement may not be subject to
liquidation or exchange for another benefit.
(b) Allowances. Allowances generally shall be paid monthly. In no event
shall the payment of any allowance be made later than March 15th of the year following
the year in which the Executive is entitled to payment.
* * *
| 2. | Agreement Sections 4.1.3 and 4.1.4 are hereby revised by replacing “thirty (30) days” each time it appears in those Sections with “ninety (90) days”. | |
| 3. | Agreement Section 4.1.5 is hereby revised by adding the following new sentence to the end of Section 4.1.5: |
In the event that the termination of the Executive’s employment does not
constitute a “separation from service” as defined in Section 409A of the
Internal Revenue Code of 1986, including all regulations and other guidance
issued pursuant thereto (the “Code”), the Executive’s rights to the payments
and benefits described in this Section 4 shall vest upon the Termination
Date, but no payment to the Executive that is subject to Section 409A shall
be paid until the Executive incurs a separation from service (or as set
forth at Section 13.1, until six months after such date if the Executive is
a specified employee), and any
amounts that would otherwise have been paid prior to such date shall be paid
instead as soon as practicable after such date.
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| 4. | The phrase “within 30 days” in Agreement Section 4.2.2(i) and (ii) and 4.3.2(i) is hereby revised to read “on the 30th day”. | |
| 5. | The last paragraph in Agreement Section 4.2.2 is hereby revised to read in its entirety as follows: |
Notwithstanding any other provision of this Agreement, in no event, shall
the Executive be entitled to receive the pay and benefits that the Company
shall provide the Executive pursuant to this Section 4.2.2 unless the
Executive provides the Company an enforceable waiver and release agreement
in a form that the Company normally requires. Such release shall be
furnished to the Executive for the Executive’s review not later than 7
business days following the Termination Date, and shall be executed and
returned to the Company within 21 days of receipt (or within 45 days of
receipt if the Executive’s separation is part of a group). Provided the
Executive does not timely revoke the waiver and release agreement, pay and
benefits pursuant to this Section 4.2.2 shall commence on the 60th day
following the Executive’s Termination Date. Any amounts that otherwise
would have been paid to the Executive pursuant to this Section 4.2.2 before
the 60th day shall be paid to the Executive, without interest, on the 60th
day.
| 6. | Agreement Section 4.3.2(i)(A) is hereby revised to read in its entirety as follows: |
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 accrued
vacation pay, in each case, to the extent not theretofore paid (the sum of
the amounts described in subclauses (I), (II), and (III), (the “Accrued
Obligations”);
| 7. | Agreement Section 13 is hereby revised by adding the following new Section 13.2: |
13.2 Interpretation and Administration of Agreement. To the maximum
extent permitted by law and consistent with the substantive terms of this
Agreement, this Agreement shall be interpreted and administered in such a
manner that the payments to the Executive are either exempt from, or comply
with all requirements of, Section 409A of the Code.
| 8. | Counterparts. This Amendment may be executed in two or more counterparts, each of which shall be deemed to be an original but all of which together will constitute one and the same instrument. |
[Signature Page Follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment to the Agreement as
of the date first written above.
XXXXXX XXXXXXX INC. |
||||
| By: | /s/ Xxxxxxx X. Xxxxxxxxxx | |||
| Name: | Xxxxxxx X. Xxxxxxxxxx | |||
| Title: | Chairman, President & Chief Executive Officer | |||
| /s/ Xxxx X. Xxxxxx | ||||
| XXXX X. XXXXXX | ||||
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