EXHIBIT 10.20
RETENTION AGREEMENT
THIS RETENTION AGREEMENT (the "Agreement") is made as of this 20TH day of March
2001 between Washington Group International, Inc., a Delaware Corporation (the
"Company") and Xxxxxxx X. Xxxxx (the "Employee").
BACKGROUND
The Company has determined that it is in its best interests
to provide the payments described in this Agreement to the Employee to
assure that the Company will have the continued dedication of the
Employee over the ensuing several months, notwithstanding the
possibility or occurrence of a significant restructuring or change of
control of the Company. To accomplish these objectives, the Board has
authorized the Company to enter into this Agreement.
In consideration of the mutual promises set forth below, and
for other good and valuable consideration, the sufficiency of which is
acknowledged, the Company and the Employee hereby agree as follows:
AGREEMENT
1. EFFECTIVE DATE. This Agreement shall be effective as of the date first
noted above (the "Effective Date").
2. DEFINITIONS. The following capitalized terms used in this Agreement
shall have the meanings assigned to them below:
"BASE SALARY" means an amount equal to the annual base salary
rate in effect for the Employee from time to time but not
less than the base salary rate in effect on March 31, 2001.
"BOARD" means the Board of Directors of the Company.
"CAUSE" means the Company having "cause" to terminate the
Employee's employment or service upon (i) the determination
by the Company or the Board that the Employee has ceased to
perform his duties to the Company (other than as a result of
his incapacity due to physical or mental illness or injury),
which failure amounts to an intentional or extended neglect
of his duties to the Company, (ii) the Company's or Board's
determination that the Employee has engaged in or is about to
engage in conduct materially injurious to the Company, (iii)
the Employee having been convicted of, or plead guilty or no
contest to, a felony or (iv) the failure of the Employee to
follow instruction of the Board or his direct superiors.
"CHANGE OF CONTROL" means and includes the occurrence of any
one of the following events:
(i) individuals who, at the Effective Date, constitute the
Board (the "Incumbent Directors") cease for any reason to
constitute at least a majority of the Board, provided that
any person becoming a director after the Effective Date
and whose election or nomination for Election was approved
by a vote of at least a majority of the Incumbent
Directors then on the Board (either by a specific vote or
by approval of the proxy statement of the Company in which
such person is named as a nominee for director, without
written objection to such nomination) shall be an
Incumbent Director; PROVIDED, HOWEVER, that no individual
initially elected or nominated as a director of the
Company as a result of an actual or threatened election
contest (as described in Rule 14a-11 under the 1934 Act
("Election Contest") or other actual or threatened
solicitation of proxies or consents by or on behalf of any
"person" (as such term is defined in Section 3(a)(9) of
the 1934 Act and as used in Section 13(d)(3) and 14(d)(2)
of the 0000 Xxx) other than the Board ("Proxy Contest"),
including by reason of any agreement intended to avoid or
settle any Election Contest or Proxy Contest, shall be
deemed an Incumbent Director;
(ii) any person becomes a "beneficial owner" (as defined in
Rule 13d-3 under the 1934 Act), directly or indirectly, of
securities of the Company representing 50% or more of the
combined voting power of the Company's then outstanding
securities eligible to vote for the election of the Board
(the "Corporation Voting Securities"); PROVIDED, HOWEVER,
that the event described in this paragraph (ii) shall not
be deemed to be a Change in Control of the Company by
virtue of any of the following acquisitions: (A) any
acquisition by a person who is on the Effective Date the
beneficial owner of 25% or more of the outstanding
Corporation Voting Securities, (B) an acquisition by the
Company which reduces the number of Corporation Voting
Securities outstanding and thereby results in any person
increasing beneficial ownership to more than 25% of the
outstanding Corporation Voting Securities, (C) an
acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any
Parent or Subsidiary, (D) an acquisition by an underwriter
temporarily holding securities pursuant to an offering of
such securities, or (E) an acquisition pursuant to a
Non-Qualifying Transaction (as defined in paragraph
(iii)); or
(iii) the consummation of a reorganization, merger,
consolidation, statutory share exchange or similar form of
corporate transaction involving the Company that requires
the approval of the Company's stockholders, whether for
such transaction or the issuance of securities in the
transaction (a "Reorganization"), or the sale or other
disposition of all or substantially all of the Company's
assets to an entity that is not an affiliate of the
Company (a "Sale"), unless immediately following such
Reorganization or Sale; (A) more than 50% of the total
voting power of (x) the company resulting from such
Reorganization or the company which has acquired all
or substantially all of the assets of the Company (in
either case, the "Surviving Corporation"), or (y) if
applicable, the ultimate parent corporation that directly
or indirectly has beneficial ownership of 100% of the
voting securities eligible to elect directors of the
Surviving Corporation (the "Parent Corporation"), is
represented by the Company Voting Securities that were
outstanding immediately prior to such Reorganization or
Sale (or, if applicable, is represented by shares into
which such Corporation Voting Securities were converted
pursuant to such Reorganization or Sale), (B) no person
(other than (x) the Company, (y) any employee benefit plan
(or related trust) sponsored or maintained by the
Surviving Corporation or the Parent Corporation, or (z) a
person who immediately prior to the Reorganization or Sale
was the beneficial owner of 25% or more of the outstanding
Corporation Voting Securities) is the beneficial owner,
directly or indirectly, of 50% or more of the total voting
power of the outstanding voting securities eligible to
elect directors of the Parent Corporation (or, if there is
no Parent Corporation, the Surviving Corporation), and (C)
at least a majority of the members of the board of
directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation) following
the consummation of the Reorganization or Sale were
Incumbent Directors at the time of the Board's approval of
the execution of the initial agreement providing for such
Reorganization or Sale (any Reorganization or Sale which
satisfies all of the criteria specified in (A) (B) and (C)
above shall be deemed to be a "Non-Qualifying
Transaction"); or
(iv) approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company unless such
transaction is a Non-Qualifying Transaction.
"DISABILITY" means the inability of the Employee to perform
the essential functions of his regular duties and
responsibilities, with or without reasonable accommodation,
due to a medically determinable physical or mental illness
that has lasted (or can reasonably be expected to last) for a
period of 6 consecutive months. A Disability shall be deemed
to have occurred if the Employee makes application for
disability benefits under any Company-sponsored long-term
disability program (whether insured or self insured, basic or
supplemental) covering the Employee and qualifies for such
benefits. Alternatively, Disability may be determined by the
Board or may be established by certification of two
physicians mutually agreed upon by the Employee, or his
personal representative, and the Company.
"TARGET BONUS" means 120% of the Employee's Base Salary as in
effect on March 31, 2001.
3. RETENTION BONUS. The Company will pay to the Employee a total
retention bonus equal to 1.5 times the Employee's Target Bonus,
payable in cash in three equal installments on September 1, 2001,
March 1, 2002, and September 1, 2002; PROVIDED THAT the Employee must
be employed by the Company on the applicable payment date to receive
the
payment due on that date. (Notwithstanding the foregoing, if the
Employee's employment with the Company terminates before a particular
payment date because of the Employee's death or Disability, the
Company will pay to the Employee (or the Employee's estate in the case
of death) a prorated portion of the retention bonus payment otherwise
due on such payment date, based upon the number of days the Employee
remained employed by the Company since the previous payment date.)
This retention bonus will take the place of all other incentive
compensation, whether annual or long-term, for the Company's 2001
fiscal year (except for any project bonus the Employee may be eligible
to receive). If the Employee is eligible for a project bonus for 2001,
the retention bonus payments payable on September 1, 2001, and March
1, 2002, under this Agreement shall be offset against the project
bonus for 2001. The retention bonus payment payable on September 1,
2002, shall be offset against any annual incentive or project
incentive compensation otherwise payable for the Company's 2002 fiscal
year.
4. SEVERANCE BENEFIT. If there is a Change in Control of the Company
before December 31, 2002, or if the Employee's employment with the
Company or its subsidiaries is terminated before December 31, 2002
(other than a termination for Cause or by reason of the Employee's
death, Disability or voluntary resignation or retirement), the
Employee shall be entitled to an amount equal to the sum of the
Employee's Base Salary and the Employee's Target Bonus. In the case of
a termination of employment other than for Cause or by reason of the
Employee's voluntary resignation or retirement (whether before or
after a Change in Control), the Employee also shall be entitled to a
prorated portion of the next retention bonus payment, if any, that
otherwise would have been payable to the Employee under paragraph 3
above if no termination had occurred, based upon the number of days
the Employee remained employed by the Company since the previous
payment date. The Company shall pay the severance benefit to the
Employee in a single lump sum cash payment within fifteen (15) days
after the date of the Change in Control or the Employee's final
regular salary payment in the case of termination of employment. If,
before a Change in Control, the Employee's employment with the Company
or its subsidiaries is terminated for Cause or by reason of the
Employee's death, Disability or voluntary resignation or retirement,
the Employee is not entitled to any severance benefit under this
paragraph. Any amounts owed to the Employee under this paragraph shall
be subject to offset for amounts owed the Employee under any other
plan or agreement providing for continuation of Compensation after
termination of employment or for any other form of severance benefits
that duplicate the benefits provided hereunder. Notwithstanding the
foregoing, any compensation for services rendered or consulting fees
earned after the date of termination or Change in Control shall not
diminish the Employee's right to receive all severance benefits due
under this paragraph.
5. MITIGATION. The Employee shall not be required to mitigate the amount
of any payment provided for in paragraph 4 of this Agreement by
seeking employment or otherwise during the period he is entitled to
such payment.
6. COVENANT NOT TO COMPETE.
(a) If the Employee's employment with the Company terminates before
December 31, 2002 (other than a termination for Cause or by
reason of the Employee's death, Disability or voluntary
resignation or retirement), the Employee agrees that for a period
of one year following the termination of employment the Employee
shall not compete, either directly or indirectly (as a
shareholder, partner, employee, trustee or otherwise in any
person, firm, corporation, association, partnership or other
entity), with the Company or its subsidiaries by engaging,
through operations or sales anywhere in the United States, in
business in which the Company or its subsidiaries are now engaged
or such other businesses as the Company or its subsidiaries may
be engaged in at the time of such termination; PROVIDED, HOWEVER,
that the Employee may own securities of any publicly held
corporation so long as such ownership does not exceed one percent
(1%) of the outstanding voting securities of such corporation.
The Employee also agrees that for a period of one year following
the termination of employment the Employee shall not, directly or
indirectly, (1) solicit or accept any business similar to
business provided by the Company from customers of the Company,
including prospective customers with which the Company has met
within twelve (12) months, or request, induce or advise customers
of the Company to withdraw, curtail or cancel their business with
the Company, or (2) solicit for employment any employee of the
Company, or request, induce or advise any employee to leave the
employ of the Company.
(b) As consideration for the covenant contained in this paragraph 6,
the Employee shall be entitled to receive an aggregate amount
equal to the sum of the Employee's Base Salary as of the date of
termination and the Employee's Target Bonus, payable in twelve
equal monthly installments beginning at the end of the first
calendar month following the termination of employment. The
payment under this paragraph 6 is separate from and in addition
to any retention bonus payable under paragraph 3 or any severance
benefit payable under paragraph 4.
(c) If the Employee breaches the provisions of this paragraph 6, all
payments under this paragraph shall cease and the Company shall
be entitled, without the posting of a bond, to an injunction
restraining such breach and to an accounting and repayment of all
profits, compensation, commissions, remuneration or other
benefits that the Employee, directly or indirectly, may realize
from or related to any such violation. Nothing contained herein
shall be construed as prohibiting the Company from pursuing any
other remedy available to it for such breach.
7. LIMITATION ON PAYMENTS AND BENEFITS. Notwithstanding any provision of
this Agreement to the contrary, if any amount or benefit to be paid or
provided under this Agreement would be an "Excess Parachute Payment,"
within the meaning of Section 280G of the Internal Revenue Code of
1986, as amended (the "Code"), or any successor provision thereto, but
for the application of this sentence, then the payments and benefits
to be paid or provided under this Agreement will be reduced to the
minimum extent necessary (but
in no event to less than zero) so that no portion of any such payment
or benefit, as so reduced, constitutes an Excess Parachute Payment;
PROVIDED, HOWEVER, that the foregoing reduction will be made only if
and to the extent that such reduction would result in an increase in
the aggregate payment and benefits to be provided, determined on an
after-tax basis (taking into account the excise tax imposed pursuant
to Section 4999 of the Code, or any successor provision thereto, any
tax imposed by any comparable provision of state law, and any
applicable federal, state and local income and employment taxes).
Whether requested by the Employee or the Company, the determination of
whether any reduction in such payments or benefits to be provided
under this Agreement or otherwise is required pursuant to the
preceding sentence will be made at the expense of the Company by the
Company's independent accountants, as determined immediately prior to
the Change of Control. The fact that the Employee's right to payments
or benefits may be reduced by reason of the limitations contained in
this paragraph 7 will not of itself limit or otherwise affect any
other rights of the Employee other than pursuant to this Agreement. In
the event that any payment or benefit intended to be provided under
this Agreement or otherwise is required to be reduced pursuant to this
paragraph 7, the Employee will be entitled to designate the payments
and/or benefits to be so reduced in order to give effect to this
paragraph 7. The Company will provide the Employee with all
information reasonably requested by the Employee to permit the
Employee to make such designation. In the event that the Employee
fails to make such designation within 10 business days prior to the
date of termination of Employee's employment, the Company may effect
such reduction in any manner it deems appropriate.
8. SUCCESSORS, BINDING AGREEMENT.
(a) The Company will cause any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to
expressly assume and agree to perform this Agreement in the same
manner and to the same extent that the Company would be required
to perform it if no such succession had taken place.
(b) This Agreement shall inure to the benefit of and be enforceable
by the Company's successors and assigns and by the Employee's
personal or legal representatives, executors, administrators,
successors, heirs, distributees, devises and legatees.
9. MISCELLANEOUS.
(a) WITHHOLDING. The Employee agrees to make appropriate arrangements
with the Company for satisfaction of any applicable federal,
state or local income and excise tax withholding requirements or
like requirements to satisfy all obligations for the payment of
such taxes.
(b) ASSIGNABILITY. Payments due under this Agreement may not, at any
time, be assigned, alienated, pledged, attached, sold or
otherwise transferred or encumbered by the Employee, and any such
purported assignment, alienation, pledge, attachment, sale,
transfer or encumbrance shall be void and unenforceable against
the Company; PROVIDED
THAT the designation of a beneficiary shall not constitute an
assignment, alienation, pledge, attachment, sale, transfer or
encumbrance.
(c) DISCONTINUED BUSINESS. If the business conducted by the Company
shall be discontinued, any previously earned and unpaid payments
under this Agreement shall become immediately payable to the
Employee.
(d) AMENDMENTS. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or
discharge is agreed to in writing and signed by the Employee and
such officer of the Company as may be specifically designated by
the Board.
(e) WAIVERS. No waiver by either party hereto at any time of any
breach by the other party hereto of, or compliance with, any
condition or provision of this Agreement to be performed by such
other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or
subsequent time.
(f) ENTIRE AGREEMENT. No agreement or representations, oral or
otherwise, express or implied, with respect to the subject matter
hereof have been made by either party which are not expressly set
forth in this Agreement.
(g) GOVERNING LAW. The validity, interpretation, construction and
performance of this Agreement shall be governed by the laws of
the State of Idaho.
(h) SEVERABILITY. The invalidity or enforceability of any provision
of this Agreement shall not affect validity or enforceability of
any other provision of this Agreement, which shall remain in full
force and effect.
(i) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original but all of which
together will constitute one and the same instrument.
(j) ARBITRATION. Any dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by
arbitration in Idaho in accordance with the rules of the American
Arbitration Association then in effect. Judgment may be entered
on the arbitrator's award in any court having jurisdiction.
(k) COSTS OF ENFORCEMENT. Each party shall pay its own legal fees and
expenses incurred in connection with any arbitration (or other
proceeding whether or not instituted by the Company or the
Employee), relating to the interpretation or enforcement of any
provision of this Agreement (including any action seeking to
obtain or enforce any right or benefit provided by this
Agreement).
(l) NO RESTRICTION ON EMPLOYMENT RIGHTS. This contract is in relation
to certain benefits and compensation only and is not to be
construed as an employment contract for a definite term. Nothing
in this Agreement shall confer on the Employee any right to
continue in the employ of the Company or shall interfere with or
restrict the rights of the Company, which are expressly reserved,
to discharge the Employee at any time for any reason whatsoever,
with or without Cause. Nothing in this Agreement shall restrict
the right of the Employee to terminate his employment with the
Company at any time for any reason whatsoever.
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement as of the date first above written.
WASHINGTON GROUP INTERNATIONAL, INC.
By: /s/ Xxxxx X. Xxxxxxxxxx
---------------------------------
Director and Chairman of the
Compensation Committee
EMPLOYEE
/s/ X. X. Xxxxx
------------------------------------------
Xxxxxxx X. Xxxxx
