XXXXXXX X. XXXXX
PRESIDENT AND CHIEF EXECUTIVE OFFICER
November 15, 2001
VIA FACSIMILE
Xxxxxx X. Xxxxxxxxxx
00000 Xxxx Xxxxxxxx
Xxxxxx Xxxxx, XX 00000
Re: Terms and Conditions of Continued Service to
Washington Group International, Inc. and Consideration Therefor
Dear Xxxxxx:
This letter sets forth Washington Group International, Inc.'s (the
"Company") understanding of the agreement between you and the Company with
respect to the terms and conditions of your continued service to the Company and
the consideration therefor.
You agree to serve as Chairman of the board of directors of the Company
(the "Board"), without cash compensation, through the remainder of the pendency
of the Chapter 11 proceedings and at least until the second anniversary of the
Effective Date. The "Effective Date" is that business day on which all of the
conditions to the consummation of the Second Amended Joint Plan of
Reorganization of Washington Group International, Inc., ET AL., as modified (the
"Plan"), have been satisfied or waived as provided in the Plan.
In addition, at least until the second anniversary of the Effective
Date, you agree to use reasonable efforts to use your name, reputation,
influence, connections and expertise to assist the Company in (a) retaining
existing business, (b) acquiring new business, (c) obtaining sufficient bonding
capacity for projects to be undertaken by the Company, and (d) establishing
and/or maintaining strategic and/or operating relationships with customers and
joint venture partners, and to respond to reasonable requests by the Board to
participate in meetings, negotiations or other events where the Board believes
your participation will be beneficial to the Company relating to the foregoing.
While you are Chairman, you shall not (i) usurp any corporate opportunity of the
Company, (ii) work for or promote the interests of any competitor of the
Company, or (iii) disparage the Company's name or operations. Although you
regularly will participate in meetings and other activities of the Board, you
are not required to maintain an office or a presence at the Company.
Xxxxxx X. Xxxxxxxxxx
November 15, 2001
Page 2
You also agree that, prior to the second anniversary of the Effective
Date, (1) subject to the provisions below, you will take no action to terminate
the Non-Exclusive License Agreement, dated August 1, 2000, between Washington
Corporations and the Company with respect to the "W" mark (the "Trademark"), and
(2) you will take no other action that is inconsistent with the continued use of
the Washington name and Washington logo by the Company in connection with its
business and services.
In consideration for such services and agreements, pursuant to the
Company's 2001 Equity and Performance Incentive Plan (the "Option Plan"), the
Company will grant to you the Tranche A Washington Options, the Tranche B
Washington Options and the Tranche C Washington Options (collectively, the
"Options") in accordance with the provisions set forth in the Option Plan. The
Options will be non-transferable other than by will or the laws of descent and
distribution.
Upon a Change in Control (as defined in the Option Plan), or your
removal from the Board other than for cause, death or disability, all Options
shall vest and be exercisable immediately (and shall be exercisable for their
full term) and WGI's license to use the Trademark shall terminate. Upon your
removal for cause, death or disability, or if you leave the Company voluntarily,
the Washington Options vested before such event shall remain exercisable for
their full terms, all Washington Options not vested before such event shall
immediately expire, and you may terminate WGI's license to use the Trademark;
provided, however, that no such termination shall be effective prior to one year
from the Effective Date. "Removal for cause" shall mean removal as a result of
any of the following: (1) your willful and continued failure to perform your
duties under this Agreement (except due to your incapacity due to physical or
mental illness) after a written demand is delivered to you by the Board
specifically identifying the manner in which the Board believes that you have
failed to perform your duties, (2) your willful engagement in conduct materially
injurious to the Company, (3) your taking any action prohibited in the third
paragraph of this Agreement or (4) your conviction for any felony including
moral turpitude. For purposes of clauses (1) and (2) of this definition, no act,
or failure to act on your part shall be deemed "willful" unless done, or omitted
to be done, by you not in good faith and without reasonable belief that your
act, or failure to act, was in the best interests of Company.
All Tranche A Washington Options shall expire on the fifth anniversary
of the Effective Date. All Tranche B and C Washington Options shall expire on
the fourth anniversary of the Effective Date.
In addition, the Company agrees to continue other existing arrangements
with you, including reimbursement of private aircraft use.
Xxxxxx X. Xxxxxxxxxx
November 15, 2001
Page 3
Further, the Company agrees that its Certificate of Incorporation and
Bylaws, as of the Effective Date, will explicitly permit your accumulation of up
to 40% of the fully diluted shares of the Company in open market or privately
negotiated transactions, including the exercise of Options, and approval of such
provisions in the Certificate of Incorporation and the Bylaws and the approval
of the terms of this letter agreement shall constitute the approval by the Board
contemplated by Section 203(a)(1) of the Delaware General Corporation Law. The
Company further agrees to take no action (1) to amend or repeal such provisions,
(2) to adopt any provision inconsistent with such provisions, or (3) otherwise
inconsistent with such provisions.
Finally, the Company and you agree that this letter agreement is
subject to confirmation by the Bankruptcy Court of a plan of reorganization for
the Company not inconsistent with the terms set forth herein.
If the foregoing correctly sets forth our agreement with respect to the
subject matter of this letter, please evidence your agreement hereto by
executing a copy of this letter below and returning it to the Company.
Sincerely,
WASHINGTON GROUP INTERNATIONAL, INC.
------------------------------
Xxxxxxx X. Xxxxx
Chief Executive Officer and President
Xxxxxx X. Xxxxxxxxxx
November 15, 2001
Page 4
ACCEPTED AND AGREED TO as of November 15, 2001.
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Xxxxxx X. Xxxxxxxxxx
cc: Xxxxxxx X. Xxxxx
Xxxxxx Xxxx Xxxxx
