MASTER GUARANTEE AGREEMENT
This MASTER GUARANTEE AGREEMENT, dated as of May 25, 2001 (this
"Guarantee Agreement"), is made by Foster Wheeler LLC, a Delaware limited
liability company ("FW LLC"), Foster Wheeler International Holdings Inc., a
Delaware corporation ("FW International" and together with FW LLC, the
"Guarantors") and Foster Wheeler Ltd., a Bermuda company ("FW Ltd." or the
"Supplemental Guarantor") for the benefit of the Beneficiaries and the Officers
(each as defined below). Capitalized terms used herein and not otherwise defined
shall have the definitions given such terms in the Merger Agreement (defined
below).
W I T N E S S E T H:
WHEREAS, (1) pursuant to an Agreement and Plan of Merger among
Foster Wheeler Corporation, a New York corporation, ("FWC"), FW Ltd. and FW LLC,
dated May 25, 2001 (the "Merger Agreement"), FWC will merge with and into FW
LLC, with FW LLC being the surviving entity, and with each outstanding share of
FWC common stock (other than those shares held by FWC or any direct or indirect
subsidiary of FWC) automatically converting into one common share of FW Ltd. and
all current stockholders of FWC becoming shareholders of FW Ltd., and (2) FWC
and /or its successor will take certain actions to reorganize the internal
structure of FWC so that FWC and/or its successor may take certain actions,
including the creation of new subsidiaries, the transfer and/or sale of certain
assets, liabilities and stock to the wholly-owned subsidiaries of FWC and /or
its successor, the execution of intercompany notes between the subsidiaries
and/or FWC, the amendment of certain employee benefit plans, employment
agreements and stock option plans (the "Reorganization");
WHEREAS, in connection with the Reorganization, the
sponsorship of those certain employee and director benefit plans and incentive
compensation plans listed in Annex 1 attached hereto (the "Plans") shall be
transferred from FWC to Foster Wheeler US Holdings, Inc., a Delaware corporation
("FW US"), including any assets, obligations and liabilities to each participant
or beneficiary of the Plans (collectively the "Beneficiaries") thereunder;
WHEREAS, in connection with the Reorganization, FW US shall
enter into certain change of control employment agreements, substantially in
the form attached as Annex 2 hereto, with each officer (collectively the
"Officers") listed in Annex 3 attached hereto (each agreement a "New Change of
Control Agreement" and collectively the "New Change of Control Agreements"), as
of the Effective Time;
WHEREAS, each Guarantor will obtain benefits from the
Reorganization and, accordingly, desires to execute this Guarantee Agreement in
order to guarantee FW US's obligations under the Plans and/or the New Change of
Control Agreements; and
WHEREAS, FW Ltd. will obtain benefits from the Reorganization
and, accordingly, desires to execute this Guarantee Agreement in order to
guarantee the performance of the obligations of the Guarantors hereunder with
respect to the New Change of Control Agreements and to undertake certain other
obligations under the New Change of Control Agreements.
NOW, THEREFORE, in consideration of the foregoing and other
benefits accruing to each Guarantor, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto hereby agree as follows:
Section 1.On and after the Effective Time, the Guarantors
hereby jointly, severally, irrevocably and unconditionally guarantee FW US's
performance of its obligations under the Plans, as if the Guarantors sponsored
or maintained the Plans. This guarantee shall be a continuing, absolute and
unconditional guarantee and shall remain in full force and effect until all
obligations under the Plans have been performed in full by FW US or either of
the Guarantors, as the case may be.
Section 2.On and after the Effective Time, the Guarantors
hereby jointly, severally, irrevocably and unconditionally guarantee FW US's
performance of its obligations under the New Change of Control Agreements, as if
the Guarantors had entered into the New Change of Control Agreements with each
respective Officer. This guarantee shall be a continuing, absolute and
unconditional guarantee and shall remain in full force and effect until all
obligations under the New Change of Control Agreements have been performed in
full by FW US or either of the Guarantors, as the case may be.
Section 3.(a) On and after the Effective Time, the
Supplemental Guarantor hereby irrevocably and unconditionally guarantees the
Guarantors' performance of their obligations under the New Change of Control
Agreements. This guarantee shall be a continuing, absolute and unconditional
guarantee and shall remain in full force and effect until all obligations under
the New Change of Control Agreements have been performed in full by FW US, the
Guarantors or the Supplemental Guarantor, as the case may be.
(b) In addition to the guarantee in (a), the Supplemental
Guarantor hereby agrees to perform and be bound by its obligations under Section
11(d) of each New Change of Control Agreement.
Section 4. The obligations of each Guarantor and the
Supplemental Guarantor under this Guarantee Agreement are limited to the maximum
amount which, after giving effect to all other contingent and fixed liabilities
of such Guarantor or Supplemental Guarantor and after giving effect to any
collections from or payments made by or on behalf of any other Guarantor in
respect of the obligations of such other Guarantor under its Guarantee, will
result in the obligations of such Guarantor under the Guarantee not constituting
a fraudulent conveyance or fraudulent transfer under any applicable federal or
state law.
Section 5. Each payment to be made by a Guarantor or the
Supplemental Guarantor hereunder in respect of the obligations shall be made
without set-off, counterclaim, reduction or diminution of any kind or nature.
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Section 6.The obligations of each Guarantor hereunder are
and shall be absolute and unconditional and any monies or amounts expressed
to be owing or payable by each Guarantor hereunder which may not be recoverable
from such Guarantor on the basis of a guarantee shall be recoverable from such
Guarantor as a primary obligor and principal debtor in respect thereof.
Section 7. The obligations of each Guarantor and the
Supplemental Guarantor hereunder shall be continuing and shall remain in full
force and effect until all the obligations have been paid and satisfied in full.
Section 8.THIS GUARANTEE AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE BENEFICIARIES, THE OFFICERS AND THE UNDERSIGNED HEREUNDER
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF
NEW YORK.
Section 9.This Guarantee Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which counterparts when executed and delivered shall be an
original, but all of which shall together constitute one and the same
instrument.
Section 10. The invalidity or unenforceability of any
provision of this Guarantee Agreement shall not affect the validity or
enforceability of the remaining provisions herein.
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IN WITNESS WHEREOF, FW LLC, FW Ltd. and FW International have caused
this Guarantee Agreement to be duly executed and delivered by their respective
officers thereunto duly authorized, effective for all purposes as of the date
first written.
FOSTER WHEELER LLC
By: /S/ THOMAS R. O'BRIEN
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Title: Manager
FOSTER WHEELER LTD.
By: /S/ THOMAS R. O'BRIEN
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Title: President and CEO
FOSTER WHEELER International Holdings, Inc.
By: /S/ THOMAS R. O'BRIEN
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Title: Senior Vice President
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ANNEX 1
LIST OF BENEFIT PLANS AND STOCK INCENTIVE PLANS
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FW US Salaried Employees Pension Plan
FW US 401(k) Plan
Retirement Plan for Bargaining Unit Employees of Foster Wheeler USA Corporation
and Foster Wheeler Energy Corporation
FW US Management Incentive Life Insurance Program
FW US Survivor Income Plan
FW US Supplemental Employee Retirement Plan
FW US Deferred Compensation Plan for Directors
1995 Stock Option Plan of FW US
1984 Stock Option Plan of FW US
Directors' Stock Option Plan of FW US
FW US Directors Deferred Compensation and Stock Award Plan
FW US Executive Compensation Plan
FW US Executive Stock Ownership Plan
ANNEX 2
FORM OF
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CHANGE OF CONTROL EMPLOYMENT AGREEMENT
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ANNEX 3
LIST OF OFFICERS
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Henry E. Bartoli
John C. Blythe
Lisa Fries Gardner
Robert D. Iseman
Thomas R. O'Brien
Gilles A. Renaud
James E. Schessler