Exhibit 10.2
MORRISON KNUDSEN CORPORATION
KEY EMPLOYEE RETENTION INCENTIVE PLAN
Adopted
July 7, 1995
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Award". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 "Base Salary". . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 "Board of Directors" . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 "Cause". . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 "Change in Control of the Board" . . . . . . . . . . . . . . . . . 3
1.6 "Company". . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.7 "Covered Employee" . . . . . . . . . . . . . . . . . . . . . . . . 3
1.8 "Effective Date" . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.9 "Employer" . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
1.10 "Executive Officers" . . . . . . . . . . . . . . . . . . . . . . . 3
1.11 "Fair Market Value". . . . . . . . . . . . . . . . . . . . . . . . 4
1.12 "Involuntary Termination of Employment". . . . . . . . . . . . . . 4
1.13 "Plan" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.14 "Reduced Retention Incentive Award". . . . . . . . . . . . . . . . 4
1.15 "Retention Incentive Award". . . . . . . . . . . . . . . . . . . . 4
1.16 "Shares" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.17 "Term" . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE II PARTICIPATION. . . . . . . . . . . . . . . . . . . . . . . . . . 5
2.1 Covered Employees. . . . . . . . . . . . . . . . . . . . . . . . . 5
ARTICLE III SHARES SUBJECT TO PLAN . . . . . . . . . . . . . . . . . . . . . 5
3.1 Maximum Shares . . . . . . . . . . . . . . . . . . . . . . . . . . 5
3.2 Adjustment of Shares and Price . . . . . . . . . . . . . . . . . . 5
ARTICLE IV RETENTION INCENTIVE AWARDS AND OTHER BENEFITS. . . . . . . . . . 6
4.1 Amount of Retention Incentive Award . . . . . . . . . . . . . . . 6
4.2 Form and Timing of Payment of Retention Incentive
Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
4.3 Bankruptcy Filing. . . . . . . . . . . . . . . . . . . . . . . . . 7
4.4 Vesting and Involuntary Termination. . . . . . . . . . . . . . . . 9
4.5 Awards Paid in Shares. . . . . . . . . . . . . . . . . . . . . . . 10
4.6 Insufficient Shares. . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V TAX WITHHOLDING. . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE VI ADMINISTRATION OF PLAN . . . . . . . . . . . . . . . . . . . . . 12
6.1 The Committee. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.2 Committee Action . . . . . . . . . . . . . . . . . . . . . . . . . 12
6.3 Committee Authority. . . . . . . . . . . . . . . . . . . . . . . . 12
6.4 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VII EFFECTIVE DATE . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII AMENDMENT OR TERMINATION OF PLAN. . . . . . . . . . . . . . . . 14
8.1 Right to Amend or Terminate. . . . . . . . . . . . . . . . . . . . 14
8.2 Automatic Termination. . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IX METHOD OF FUNDING. . . . . . . . . . . . . . . . . . . . . . . . 14
9.1 Plan is Not Funded . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE X MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.1 Limitation on Rights . . . . . . . . . . . . . . . . . . . . . . . 15
10.2 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.3 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.4 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
10.5 Gender and Number. . . . . . . . . . . . . . . . . . . . . . . . . 15
INTRODUCTION
The Board of Directors (the "Board") of Morrison Knudsen
Corporation, a Delaware corporation (the "Company"), has considered the effect
that recent events have had on employees of the Company and its subsidiaries
(collectively, the "Employer"). The Board recognizes and understands the
concern such employees have for their careers and their personal financial
security. As a result, absent appropriate assurances, employees are likely to
seek more secure career opportunities, particularly if a reorganization or
restructuring transaction is proposed or threatened.
This Plan is designed to enable such employees to make career
decisions without the time pressure and financial uncertainty which may result
from a proposed or threatened transaction, to encourage such employees to remain
employees of the Employer notwithstanding the outcome of any such proposed
transaction.
As a result, the Board believes that this Plan will assist the
Company in attracting and retaining qualified employees. Accordingly, the
following Plan is hereby adopted.
ARTICLE I
DEFINITIONS
When used in this Plan and initially capitalized, the following
words and phrases shall have the following respective meanings unless the
context clearly requires otherwise:
1.1 "AWARD" shall mean an award granted pursuant to Section 4 of the
Plan.
1.2 "BASE SALARY" as to any Covered Employee for any period, shall
mean (i) the base rate of salary paid to the Covered Employee by the Company at
the date of his or her inclusion in the Plan before reduction because of an
election between benefits or cash provided under a plan of the Company
maintained pursuant to Section 125 or 401(k) of the Internal Revenue Code of
1986, as amended, and before reduction for any other amounts contributed by the
Company on his or her behalf to any other employee-benefit plan or (ii) in the
event the Board acts to change the category in which the Covered Employee has
been placed, the base rate of salary paid to the Covered Employee by the
Employer (before any reductions provided in clause (i)) at the time the Board so
acts; PROVIDED, HOWEVER, that clause (ii) will not apply if its application
would adversely affect a Covered Employee's rights or benefits, contingent or
otherwise, under this Plan unless the Covered Employee consents to the
application of clause (ii).
1.3 "BOARD OF DIRECTORS" or "BOARD" shall mean the board of
directors of the Company.
1.4 "CAUSE" for termination by the Employer, shall mean termination
by the Employer for (i) the willful and continued failure by the Employee to
substantially perform the Employee's duties with the Employer (other than any
such failure resulting from the Employee's incapacity due to physical or mental
illness) or (ii) the willful engaging by the Employee in conduct which is
demonstrably and materially injurious to the
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Employer monetarily or otherwise. For purposes of clauses (i) and (ii) of this
definition, no act, or failure to act, on the Employee's part shall be deemed
"willful" unless done, or omitted to be done, by the Employee not in good faith
and without reasonable belief that the Employee's act, or failure to act, was in
the best interest of the Employer.
1.5 "CHANGE IN CONTROL OF THE BOARD" shall mean the event occurring
when, during any period of two consecutive years, individuals who at the
beginning of such period constituted the directors of the Company cease for any
reason to constitute a majority thereof (unless the election, or the nomination
for election by the Company's shareholders, of each director of the Company
first elected during such period was approved by a vote of at least two-thirds
of the directors then still in office who were directors of the Company at the
beginning of any such period).
1.6 "COMPANY" shall mean Morrison Knudsen Corporation, a Delaware
corporation, or any entity that is a successor to Morrison Knudsen Corporation
in ownership of a majority of its assets.
1.7 "COVERED EMPLOYEE" shall mean an employee described in Article
II of the Plan.
1.8 "EFFECTIVE DATE" shall mean July 7, 1995.
1.9 "EMPLOYER" shall mean the Company or one of its subsidiaries.
1.10 "EXECUTIVE OFFICERS" shall mean those individuals listed on
Schedule B of this Plan.
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1.11 "FAIR MARKET VALUE" shall mean as applied to a specific date,
the mean between the highest and lowest quoted selling price of a Share on the
New York Stock Exchange on such date, or if there are no reported sales on such
date, on the last preceding date on which sales were reported. The Fair Market
Value determined by the Committee in good faith in such manner shall be final,
binding and conclusive on all parties.
1.12 "INVOLUNTARY TERMINATION OF EMPLOYMENT" shall mean a termination
of employment with the Employer at the Employer's option other than for Cause.
An Involuntary Termination of Employment shall also occur upon the sale of
substantially all of the assets of a business unit or division of the Company or
upon the sale of a majority of the stock of a subsidiary of the Company.
1.13 "PLAN" shall mean this Morrison Knudsen Corporation Key Employee
Retention Incentive Plan.
1.14 "REDUCED RETENTION INCENTIVE AWARD" shall mean the Retention
Incentive Award as adjusted pursuant to Section 4.3(a).
1.15 "RETENTION INCENTIVE AWARD" shall mean the award provided to a
Covered Employee and calculated by multiplying the Covered Employee's Base
Salary times the applicable multiplier as set forth in Section 4.1.
1.16 "SHARES" shall mean shares of the Company's authorized but
unissued or reacquired $1.66 par value common stock, or other securities as may
be applicable pursuant to the provisions of Section 3.2 hereof.
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1.17 "TERM" shall mean the period commencing on the Effective Date
and ending one year after that date.
ARTICLE II
PARTICIPATION
2.1 COVERED EMPLOYEES. The key employees of the Employer set
forth on Schedule A shall be Covered Employees and shall be eligible to receive
Awards under the Plan.
ARTICLE III
SHARES SUBJECT TO PLAN
3.1 MAXIMUM SHARES. Subject to adjustment by the operation of
Section 3.2 hereof, the maximum number of Shares distributable under the Plan is
3,000,000. Shares distributable under the Plan may be either authorized and
unissued shares heretofore or hereafter reacquired and held as treasury shares.
3.2 ADJUSTMENT OF SHARES AND PRICE. In the event that the Shares
are changed into or exchanged for a different kind or number of shares of Stock
or securities of the Company as the result of any stock dividend, stock split,
combination of shares, exchange of shares, merger, consolidation,
reorganization, recapitalization or other change in capital structure, then the
number of Shares subject to this Plan and distributable in partial payment of
Awards granted hereunder (and/or the purchase price for such Shares) shall be
equitably adjusted by the Committee to prevent the dilution or enlargement of
Awards, and any new stock or securities into which the Shares are changed or for
which they are exchanged shall be substituted for the Shares
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subject to this Plan; provided, however, that fractional Shares may be deleted
from any such adjustment or substitution.
ARTICLE IV
RETENTION INCENTIVE AWARDS AND OTHER BENEFITS
4.1 AMOUNT OF RETENTION INCENTIVE AWARD. The Company shall make
a Retention Incentive Award to each Covered Employee in an amount equal to the
Covered Employee's Annual Base Salary times the multiplier set forth opposite
the applicable category below:
Category Multiplier
-------- ----------
One: Senior Managers (as listed in Part I .625
of Schedule A)
Two: Senior Managers/Executive Officers .3125
(as listed in Part II of Schedule A)
Three: Salaried Employees (as listed in .55
Part III of Schedule A)
Four: Salaried Employees/Executive .275
Officers (as listed in Part IV of
Schedule A)
Five: Senior Executive managers/Executive .233
Officers (as listed in Part V of
Schedule A)
4.2 FORM AND TIMING OF PAYMENT OF RETENTION INCENTIVE AWARD.
Subject to the contingent application of Section 4.3 and the vesting rules set
forth in Section 4.4:
(a) The Company shall pay the Retention Incentive Award to
each Covered Employee other than Executive Officers, as
follows:
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(i) 1/6th of each such Covered Employee's Retention
Incentive Award shall be paid in cash on or about
December 15, 1995.
(ii) 1/6th of each such Covered Employee's Retention
Incentive Award shall be paid in cash on or about
July 1, 1996.
(iii) two-thirds of each such Covered Employee's
Retention Incentive Award shall be paid in Shares
on or about July 1, 1996.
(b) The Company shall pay the Retention Incentive Award to
each Executive Officer, as follows:
(i) 1/2 of each such Executive Officer's Retention
Incentive Award shall be paid in cash on or about
December 15, 1995.
(ii) 1/2 of each such Executive Officer's Retention
Incentive Award shall be paid in cash on or about
July 1, 1996.
4.3 BANKRUPTCY FILING. Subject to the vesting rules contained in
Section 4.4:
(a) In the event the Company files for bankruptcy prior to
making the payment described in 4.2(a)(i), the Company
shall make a Retention Incentive Award (the "Reduced
Retention Incentive Award") to each Covered Employee,
other than an Executive Officer, in an amount equal to
the Covered Employee's annual Base
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Salary times the multiplier set forth opposite the
applicable category below:
Category Multiplier
-------- ----------
One: Senior Managers (as .41666
listed in Part II of
Schedule A)
Two: Management/Professional/ .36666
Technical (as listed in
Part III of Schedule A)
The Reduced Retention Incentive Award shall be paid as
follows:
(i) One-half of such Covered Employee's Reduced
Retention Incentive Award shall be paid in cash
on or about December 15, 1995.
(ii) One-half of such Covered Employee's Reduced
Retention Incentive Award shall be paid in cash
on or about July 1, 1996.
The Company shall have no obligation to pay such Covered
Employees any other portion of the Retention Incentive
Award, either in Shares or otherwise.
(b) In the event the Company files for bankruptcy after
payment of the Award in 4.2(a)(i) but prior to the
payment of the Awards in 4.2(a)(ii) and 4.2(a)(iii), the
Company shall pay each Covered Employee, other than an
Executive Officer, in cash on or about July 1, 1996, an
amount equal to 1/2 of such Covered
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Employee's Reduced Retention Incentive Award. The
Company shall have no obligation to pay such Covered
Employees any other portion of the Retention Incentive
Award, either in Shares or otherwise.
(c) In the event the Company files for bankruptcy prior to
the payment of the Award in 4.2(b)(i), the Company shall
pay each Executive Officer:
(i) an amount equal to his Retention Incentive Award,
in cash on or about December 15, 1995, and
(ii) an additional amount equal to his Retention
Incentive Award, in cash on or about July 1,
1996.
(d) In the event the Company files for bankruptcy after
payment of the Award in 4.2(b)(i), but prior to the
payment of the Award in 4.2(b)(ii) the Company shall pay
each Executive Officer an amount equal to his Retention
Incentive Award, in cash on or about July 1, 1996.
A Covered Employee will in no event be entitled to receive any
Shares under this Section 4.3.
4.4 VESTING AND INVOLUNTARY TERMINATION. A Covered Employee's
right to receive the benefits provided under Sections 4.2(a)(i), 4.2(b)(i),
4.3(a)(i) and 4.3(c)(i), as applicable, shall vest on December 15, 1995 and a
Covered Employee's right to receive the benefits provided in Sections
4.2(a)(ii), 4.2(b)(ii), 4.3(a)(ii), 4.3(b), 4.3(c)(ii) and 4.3(d), as
applicable, shall
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vest on July 1, 1996 if such Covered Employee is employed by the Employer on
such date; PROVIDED, HOWEVER, that: (a) if a Covered Employee suffers an
Involuntary Termination of Employment before December 15, 1995, such
employee's rights to receive payments under Section 4.2(a)(i) or 4.2(b)(i),
4.3(a)(i) and 4.3(c)(i), as applicable, shall vest and such amounts shall
become immediately payable and (b) if a Covered Employee suffers an
Involuntary Termination of Employment after December 15, 1995 but before July
1, 1996, such employee's right to receive payments under 4.2(a)(ii) or
4.2(b)(ii), 4.3(a)(ii), 4.3(b), 4.3(c)(ii) and 4.3(d), as applicable, shall
vest and such amounts shall become immediately payable.
4.5 AWARDS PAID IN SHARES. The number of Shares payable to a
Covered Employee under this Article IV in satisfaction of the Share portion of
Covered Employee's Award shall be calculated by dividing the dollar amount of
the portion of the Award payable in Shares by the lesser of (i) the average Fair
Market Value of a Share between July 1, 1995 and July 1, 1996 and (ii) the
average Fair Market Value of a Share between June 1, 1996 and July 1, 1996.
4.6 INSUFFICIENT SHARES. In the event that the number of Shares
payable to Covered Employee under this Article IV exceeds the number of Shares
available for distribution pursuant to Section 3.1, the Covered Employee's
Retention Incentive Award shall be reduced and the Company shall distribute the
available Shares pro-rata in accordance with each Covered Employee's Retention
Incentive Award. The Covered Employee shall not be
10
entitled to any additional payments in cash or Shares under this Article IV.
ARTICLE V
TAX WITHHOLDING
5.1 The Company shall have the right to withhold from amounts due
Participants or to collect from Participants directly, the amount which the
Company deems necessary to satisfy any taxes required by law to be withheld at
any time by reason of participation in the Plan and the obligations of the
Company under the Plan shall be conditional on payment of such taxes. The
Participant may, prior to the due date of any taxes, pay such amounts to the
Company in cash or, with the consent of the Committee, in Shares (which shall be
valued at their Fair Market Value on the date of payment). There is no
obligation under this Plan that any Participant be advised of the existence of
the tax or the amount required to be withheld. Without limiting the generality
of the foregoing, in any case where the Company determines that a tax is or will
be required to be withheld in connection with the issuance or transfer of Shares
under this Plan, the Company may, pursuant to such rules as the Committee may
establish, reduce the number of such Shares so issued or transferred by such
number of Shares as the Company may deem appropriate in its sole discretion to
accomplish such withholding or make such other arrangements as it deems
satisfactory. Notwithstanding any other provision of this Plan, the Committee
may impose such conditions on the payment of any withholding obligation as may
be required to satisfy applicable regulatory requirements.
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ARTICLE VI
ADMINISTRATION OF PLAN
6.1 THE COMMITTEE. The Plan shall be administered by the
Committee, which shall be comprised of three or more members of the Board of
Directors, each of whom shall be a "disinterested person" as defined in Rule
16b-3 (or successor provision) promulgated by the Securities and Exchange
Commission.
6.2 COMMITTEE ACTION. A majority of the members of the Committee
at the time in office shall constitute a quorum for the transaction of business,
and any determination or action may be taken at a meeting by a majority vote or
may be taken without a meeting by a written resolution signed by all members of
the Committee. All decisions and determinations of the Committee shall be
final, conclusive and binding upon all Participants and upon all other persons
claiming any rights under the Plan with respect to any Awards. Members of the
Board of Directors and members of the Committee acting under the Plan shall be
fully-protected in relying in good faith upon the advice of counsel and shall
incur no liability except for willful misconduct in the performance of their
duties.
6.3 COMMITTEE AUTHORITY. In amplification of the Committee's
powers and duties, but not by way of limitation, the Committee shall have full
authority and power to:
(a) Construe and interpret the provisions of the Plan and
make rules and regulations for the administration of
the Plan not inconsistent with the Plan;
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(b) Decide all questions of eligibility for Plan
participation and for the grant of Awards;
(c) Adopt forms of Agreements and other documents
consistent with the Plan;
(d) Engage agents to perform legal, accounting and other
such professional services as it may deem proper for
administering the Plan; and
(e) Take such other actions as may be reasonably required
or appropriate to administer the Plan or to carry out
the Committee activities contemplated by other sections
of this Plan.
6.4 INDEMNIFICATION. In addition to such other rights of
indemnification as they may have as directors or as members of the Committee,
the Board of Directors and the members of the Committee shall be indemnified by
the Company against the reasonable expenses, including court costs and
reasonable attorneys' fees, actually incurred in connection with the defense of
any action, suit or proceeding, or in connection with any appeal therein, to
which they or any of them may be a party by reason of any action taken or
failure to act under or in connection with the Plan or any Award granted
hereunder and against all amounts paid by them in settlement thereof or paid by
them in satisfaction of a judgment in any such action, suit or proceeding,
except where such indemnification is expressly prohibited by applicable law.
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ARTICLE VII
EFFECTIVE DATE
7.1 The Effective Date of this Plan shall be July 7, 1995 (the
date the Plan was approved by the Board of Directors).
ARTICLE VIII
AMENDMENT OR TERMINATION OF PLAN
8.1 RIGHT TO AMEND OR TERMINATE. The Company reserves the right
by a resolution adopted by a majority of the members of the Board to change,
modify, or amend, the Plan; provided that no such amendment, modification, or
change shall adversely affect any benefit under the Plan previously paid or
provided to a Covered Employee (or his successor in interest) (unless such
amendment is required by law); further provided, however, that no amendment,
change or modification may be made by the Board following a Change in Control of
the Board. An amendment of this Plan shall automatically effect a corresponding
amendment to the rights of all Covered Employees under this Plan.
8.2 AUTOMATIC TERMINATION. This Plan will terminate
automatically as of the final payment. Termination pursuant to this Section
8.2 shall occur without any action on the part of the Company and shall be
effective without prior notice to or approval of any employee or former
employee of the Employer.
ARTICLE IX
METHOD OF FUNDING
9.1 PLAN IS NOT FUNDED. The Company shall pay benefits under the
Plan from its general assets. No property of the Employer is or shall be, by
reason of this Plan, held in trust for
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any employee of the Employer, nor shall any person have any interest in or any
lien or prior claim upon any property of the Employer by reason of the Plan or
the Company's obligations to make payments hereunder.
ARTICLE X
MISCELLANEOUS
10.1 LIMITATION ON RIGHTS. Participation in the Plan shall not
give any employee the right to be retained in the service of the Employer or any
rights to any benefits whatsoever, except to the extent specifically set forth
herein.
10.2 HEADINGS. Headings of Articles and Sections in this
instrument are for convenience only, and do not constitute any part of the Plan.
10.3 GOVERNING LAW. The validity, interpretation, construction
and performance of this Plan shall be governed by the laws of the State of
Idaho, without giving effect to the principles of conflict of laws of such
State.
10.4 SEVERABILITY. If a provision of this Plan shall be held
illegal or invalid, the illegality or invalidity shall not affect the remaining
parts of this Plan and this Plan shall be construed and enforced as if the
illegal or invalid provision had not been included.
10.5 GENDER AND NUMBER. Unless the context clearly indicates
otherwise, the masculine gender when used in the Plan
15
shall include the feminine, and the singular number shall include the plural and
the plural number the singular.
EXECUTED in Boise, Idaho on this 21st day of August, 1995.
------------- ----
MORRISON KNUDSEN CORPORATION
/s/ Stephen G. Hanks
-----------------------------------
By: Stephen G. Hanks
Executive Vice President &
Chief Legal Officer
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