EXHIBIT 10.7
MORRISON KNUDSEN CORPORATION
MORRISON KNUDSEN PLAZA
P. O. BOX 73/BOISE, IDAHO U.S.A. 83729
PHONE: (208)386-5199/TELEX:368439
FAX: (208)386-6421
RICHARD D. PARRY
VICE PRESIDENT - LAW
September 20, 1995
VIA FACSIMILE AND FEDERAL EXPRESS
Mr. William Agee
3398 17 Mile Drive
Pebble Beach, CA 95953
RE: SEPARATION AGREEMENT
Dear Mr. Agee:
This letter is to memorialize the agreement that has been reached regarding
the settlement of all contract issues relating to the separation of William J.
Agee ("Agee") from Morrison Knudsen Corporation ("MK"). In the course of the
past several months, extensive negotiations have occurred and the following
agreement has been reached:
1. WAIVER OF CLAIMS.
Agee waives his right to all compensation, including salary, bonuses,
unvested stock options, unvested restricted stock, and pensions, including
but not limited to MK's qualified employee pension plan and MK's
non-employee director pension plan, except as expressly set forth below.
2. SUPPLEMENTAL EMPLOYEE RETIREMENT PENSION PLAN.
a. Agee will receive, as full payment under a supplemental employee
retirement pension plan ("SERP"), the sum of $99,750.00 per year for
the term of his life, with a right of survivorship for the term of his
wife's life.
b. Payments under the SERP will be made on a monthly basis, on or about
the 10th of each month, at a rate of $8,312.50 per month, less
applicable taxes.
Mr. William Agee
September 20, 1995
Page 2
c. SERP payments will be made retroactive to Agee's separation from the
Company (as of February 10, 1995) and will commence upon the next
business day after signing of this letter (hereinafter "Payment
Date").
d. On the Payment Date, MK will pay Agee the sum of $66,500.00, less
applicable taxes, for the period February 10, 1995 through and
including October 9, 1995.
e. Commencing on or about October 10, 1995, and for each month
thereafter, the monthly SERP payment will be wire transferred to an
account as directed by Agee.
3. DEFERRED SAVINGS PLAN.
On the Payment Date, MK will remit to Agee all of his deferred savings plan
at the value of such plan at the close of business on September 20, 1995.
4. MEDICAL AND DENTAL INSURANCE.
a. Agee, his spouse and his unmarried dependent children under the age of
24 will be provided, at MK's expense, with comprehensive medical,
health and dental insurance benefits. The current such plan in which
the Agees will participate at least through the end of 1995 is the
Aetna Comprehensive Medical and Dental Plan.
b. Agee and his family will be provided with the same level and choice of
benefits offered to MK's retired employees or to retired non-employee
directors, whichever plan Agee or his survivor elects to participate
in on a yearly basis.
c. On the Payment Date, MK will pay to Agee the additional sum of
$4,344.75 as reimbursement for COBRA payments made by Agee for the
period of March 1, 1995 through and including December 31, 1995.
d. Commencing and effective on December 31, 1995, MK will pay all costs
associated with the above described medical, health and dental
insurance benefits for Agee, his spouse and his unmarried dependent
children under the age of 24. It is understood that MK will report
the cost of said coverage as ordinary income in the year of its
payment.
Mr. William Agee
September 20, 1995
Page 3
e. The medical and dental coverage provided to Agee's spouse and children
herein shall survive his death.
5. INDEMNIFICATION AND ADVANCE OF LEGAL EXPENSES.
a. In accordance with Section 145(f) of the General Corporation Law of
Delaware, MK hereby agrees to advance legal fees and expenses, and to
indemnify Agee against all expenses (including attorney's fees),
losses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with any claims, threatened
or filed, whether civil, criminal, administrative or investigative, by
reason of, or arising out of, or which refer or relate in any manner
to his tenure at MK, its subsidiaries and affiliates.
b. Notwithstanding the provisions of 5.a. above, MK further hereby agrees
to advance legal fees and expenses, and to indemnify Agee in
accordance with Sections 145(a), (d) and (e) of the General
Corporation Law of Delaware against all expenses (including attorney's
fees), losses, judgments, fines and amounts paid in settlement
actually and reasonably incurred in connection with the following
specific matters:
(i) The SEC investigation of MK and MK Rail and any claims based on
said investigation;
(ii) Final approval of the MK and MK Rail Securities Litigation, MK
Derivative Actions and MK Rail Derivative Actions;
(iii) Any post-approval challenges to (ii) above;
(iv) JACOBS, FRI AND NELSON V. AGEE, CA # 95-1168 (W.D. Tenn.) and any
claims based on the sale of Touchstone, Inc. to MK;
(v) STATE BOARD OF ADMINISTRATION OF FLORIDA V. MORRISON KNUDSEN,
CV OC 95024630 (Idaho);
(vi) Opt-outs in the MK Rail and MK Securities Litigation;
(vii) DANIEL PETE EVEN V. AGEE, ET AL., Cause No. 98320 (Idaho).
Mr. William Agee
September 20, 1995
Page 4
6. MUTUAL RELEASES.
a. In consideration of the terms and mutual promises set forth above, MK
and Agee hereby agree to mutual, full and complete releases as
follows:
Agee, on behalf of himself, his successors, heirs and
assigns, and MK, on behalf of itself, its subsidiaries,
agents, successors and assigns, do hereby mutually,
completely, voluntarily, knowingly, unconditionally and
forever release, remise, acquit and discharge one another
from any and all claims, actions, rights, causes of action,
demands, liabilities, losses and damages of every kind and
nature, whether known or unknown, direct or indirect, fixed
or contingent, anticipated or unanticipated under federal,
state or common law or any other law or regulation, or at
equity arising out of, based on, or which refers or relates
in any manner to Agee's tenure at MK.
b. In the event that the release provided herein is adjudged by a court
of competent jurisdiction not to be a complete defense to claims made
against Agee by MK, directly or derivatively, then the mutual releases
provided in 6.a. above will be null and void and of no legal force and
effect and all monthly SERP payments, as well as health and dental
insurance, provided to Agee and his family under this agreement, shall
immediately cease. If, at any time after the releases provided in
this agreement are declared to be null and void, Agee seeks
compensation from MK, any payments made to Agee and his family
pursuant to this agreement shall be an offset to any amounts which MK
may be adjudged to owe to Agee.
7. AUTHORITY.
The undersigned Assistant Secretary of Morrison Knudsen Corporation
represents and warrants (i) that he has full and complete authority to
enter into this letter agreement on behalf of MK; and (ii) that all
requisite Corporate action has been taken by MK to make this a binding and
enforceable agreement by and against MK.
Mr. William Agee
September 20, 1995
Page 5
8. PREVIOUS AGREEMENT.
This Agreement supersedes and replaces the previous letter agreement by and
between the parties, dated September 5, 1995, and that earlier Agreement is
of no further force and effect.
Sincerely,
MORRISON KNUDSEN CORPORATION
/s/ Richard D. Parry
Richard D. Parry
Assistant Secretary
ACCEPTED AND AGREED TO:
/s/ William J. Agee
______________________________
William J. Agee
Dated: September 20 , 1995
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