Document:

EXHIBIT 10.3

 

EXECUTION COPY

 

SECURITY
AGREEMENT

 

THIS SECURITY AGREEMENT (this “Agreement”) dated as of July 31,
2004, among WASHINGTON GROUP INTERNATIONAL, INC., a Ohio corporation
(“Obligor”); the other Persons listed as Debtors on the signature pages hereof
(together with Obligor, collectively, “Original Debtors”); the Additional
Debtors (as defined herein) from time to time party to this Agreement (together
with Original Debtors, collectively, “Debtors”); and BNFL USA GROUP INC., a
Delaware corporation (“Secured Party”).

 

W  I  T  N
E  S  S  E  T  H :

 

WHEREAS, on or about the date hereof Obligor and Secured Party are
entering into a Second Amended and Restated Consortium Agreement (as the same
may be amended, restated, supplemented or modified from time to time, the
“Consortium Agreement”), pursuant to which Secured Party is agreeing, among
other things, to assign to Obligor all of Secured Party’s existing economic
rights and ownership interests in the WGES Assets, in exchange for Obligor’s
agreement, among other things, to make certain payments to Secured Party from
time to time;

 

WHEREAS, it is a condition precedent to the effectiveness of the
Consortium Agreement that Debtors shall have granted the security interests
contemplated by this Agreement in order to secure the payment and performance
of Obligor’s indebtedness and obligations under the Consortium Agreement; and

 

WHEREAS, each Debtor (other than Obligor) is or will be an affiliate of
Obligor, and each Debtor will benefit from Secured Party’s execution and
delivery of the Consortium Agreement.

 

NOW, THEREFORE, in consideration of the premises and in order to induce
Secured Party to enter into the Consortium Agreement, each Debtor hereby agrees
with Secured Party as follows:

 

SECTION 1. Definitions

 

1.1           Certain Defined Terms.  Terms defined in the Consortium Agreement
and not otherwise defined herein shall have the respective meanings provided
for in the Consortium Agreement.  The
following terms shall have the respective meanings provided for in the UCC (as
defined below):  “Accounts”, “Chattel
Paper”, “Commercial Tort Claim”, “Deposit Account”, “Documents”, “General
Intangibles”, “Instruments”, “Investment Property”, “Proceeds”,

 

1

 

“Securities Account”, and “Supporting Obligations”.  The following terms, as used herein, have
the meanings set forth below:

 

“Bank Facility Agent” means the “Agent” as defined in the
Intercreditor Agreement.

 

“Bank Facility Liens” means any and all liens and security
interests in favor of the Bank Facility Agent and its replacements, successors
and assigns, which liens and security interests are subordinated to the
Security Interests pursuant to the Intercreditor Agreement.

 

“Bank Obligations” means the “Credit Agreement Obligations” as
defined in the Intercreditor Agreement.

 

“Collateral” has the meaning assigned to that term in Section 2.

 

“Consortium Documents” means this Agreement, the Consortium
Agreement, the Intercreditor Agreement, and any and all other agreements,
documents, or instruments executed by any Debtor in connection with the
Consortium Agreement or this Agreement.

 

“Contracts” means, collectively, the following contracts,
whether now owned or existing or hereafter acquired or arising, together with
all replacements therefor and modifications thereto:

 

(a)           all
contracts and subcontracts entered into by a Debtor for services and/or goods
to be provided at or in respect of any of the Specified DOD/DOE Sites;

 

(b)           the
subcontract from Bechtel National Inc. (“BNI”) in furtherance of BNI’s contract
with DOE, Contract No. DE-AC27-01RV14136, for the Hanford Waste Treatment and
Immobilization Plant;

 

(c)           all
contracts for the use of TTT’s technologies;

 

(d)           all
DOE Contracts and DOE Subcontracts held by WSMS as of  July 30, 2004; and

 

(e)           all
other DOE Contracts and DOE Subcontracts awarded to Obligor or any affiliate of
Obligor on or after July 31, 2004.

 

“DOD” means the United States Department of Defense.

 

“DOE” means the United States Department of Energy.

 

“DOE Contract” means any contract for services and/or goods to
be provided to or in respect of DOE.

 

“DOE Subcontract” means any subcontract for services and/or
goods to be provided (directly or indirectly) to a prime contractor in respect
of a DOE Contract.

 

2

 

“Event of Default” means the occurrence of any of the following
events:

 

(a)           any Debtor fails to pay the Secured
Obligations when the same shall become due and payable;

 

(b)           any Debtor fails to perform any of its duties
or obligations as specified in any Consortium Document in any material respect;

 

(c)           at any time any representation, warranty,
statement, certificate, schedule or report made by any Debtor to the
Secured Party in any Consortium Document shall prove to have been false or
misleading in any material respect as of the time made or furnished;

 

(d)           any Debtor shall generally not pay its debts
as such debts become due, or admit in writing its inability to pay its debts
generally, or make a general assignment for the benefit of creditors;

 

(e)           any proceeding is instituted by or against
any Debtor seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment, protection,
relief or composition of it or its debt under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking the entry of an
order for relief or for any substantial part of its property; or

 

(f)            any Debtor is liquidated or dissolved
without prior written notice to the Secured Party of a successor entity that
shall assume the obligations of such Debtor.

 

“Intercreditor Agreement” means that certain Intercreditor
Agreement of even date herewith among Credit Suisse First Boston, as Bank
Facility Agent, Secured Party, and each Debtor.

 

“Person” means and includes natural persons, corporations,
limited liability companies, limited partnerships, general partnerships, joint
stock companies, joint ventures, associations, companies, trusts, banks, trust
companies, land trusts, business trusts or other organizations, whether or not
legal entities, and governments and agencies and political subdivisions
thereof.

 

“Qualified SPE”  means a
special-purpose entity set up to hold any Contract, which special-purpose
entity (i) has not and will not guarantee, become liable for, provide any
collateral security for, or otherwise provide any credit support for any Bank
Obligations or any other indebtedness and (ii) is otherwise acceptable to
Secured Party in Secured Party’s sole and absolute discretion.

 

“Secured Obligations” has the meaning assigned to that term in Section 3.

 

“Security Interests” means the security interests granted
pursuant to Section 2, as well as all other security interests
created or assigned as additional security for the Secured Obligations pursuant
to the provisions of this Agreement.

 

3

 

“Specified DOD/DOE Sites” means the following DOD or DOE sites:
Savannah River Site, South Carolina; Rocky Flats Environmental Technology Site,
Colorado; Waste Isolation Pilot Plant, Carlsbad, New Mexico; Anniston Chemical
Weapons Disposal Facility, Anniston, Alabama; and West Valley Demonstration
Project, West Valley, New York.

 

“TTT” means THOR Treatment Technologies, LLC and its successors
and assigns.

 

“UCC” means the Uniform Commercial Code as in effect on the date
hereof in the State of Delaware, provided that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or non-perfection
of the Security Interest in any Collateral or the availability of any remedy
hereunder is governed by the Uniform Commercial Code as in effect on or after
the date hereof in any other jurisdiction, “UCC” means the Uniform Commercial
Code as in effect in such other jurisdiction for purposes of the provisions
hereof relating to such perfection or effect of perfection or non-perfection or
availability of such remedy.

 

“WSMS” means Washington Safety Management Solutions LLC and its
successors and assigns.

 

1.2           Other
Definition Provisions.  References
to “Sections”, “subsections”, “Exhibits” and “Schedules” shall be to Sections,
subsections, Exhibits and Schedules, respectively, of this Agreement unless
otherwise specifically provided.  Any of
the terms defined in subsection 1.1 may, unless the context
otherwise requires, be used in the singular or the plural depending on the
reference.  All references to statutes
and related regulations shall include (unless otherwise specifically provided
herein) any amendments of same and any successor statutes and regulations.

 

SECTION 2. Grant of Security Interests

 

In order to secure the payment and performance of the Secured
Obligations in accordance with the terms thereof, each Debtor hereby grants to
Secured Party a continuing security interest in and to all right, title and
interest of such Debtor in the following, whether now owned or existing or
hereafter acquired or arising and regardless of where located (all being
collectively referred to as the “Collateral”):

 

(A)          all
Contracts, including, without limitation, all rights to payment thereunder,
whether constituting Accounts, Chattel Paper, Instruments, General Intangibles
or otherwise;

 

(B)           all
ownership interests in each Qualified SPE, whether constituting Investment Property,
General Intangibles or otherwise, together with all other rights to payment
from a Qualified SPE, whether constituting Accounts, Chattel Paper,
Instruments, General Intangibles or otherwise (collectively, “Qualified SPE
Interests”); and

 

(C)           Proceeds
of all or any of the property described in subparts (A) and (B) above.

 

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SECTION 3. Security for Obligations

 

This Agreement secures the payment of all indebtedness and the
performance of all other obligations of each Debtor to Secured Party of every
type and description under the Consortium Documents, whether now existing or
hereafter arising, fixed or contingent, as primary obligor or as guarantor or
surety, acquired directly or by assignment or otherwise, liquidated or
unliquidated, regardless of how they arise (collectively, the “Secured
Obligations”).

 

SECTION 4. Debtors Remain Liable

 

Anything herein to the contrary notwithstanding: (a) each Debtor shall
remain liable under the contracts and agreements included in the Collateral to
the extent set forth therein to perform all of its duties and obligations
thereunder to the same extent as if this Agreement had not been executed; (b)
the exercise by Secured Party of any of the rights hereunder shall not release
any Debtor from any of its duties or obligations under the contracts and
agreements included in the Collateral; and (c) Secured Party shall not have any
obligation or liability under the contracts and agreements included in the
Collateral by reason of this Agreement, nor shall Secured Party be obligated to
perform any of the obligations or duties of any Debtor thereunder or to take
any action to collect or enforce any claim for payment assigned hereunder.

 

SECTION 5. Representations and Warranties

 

Debtor represents and warrants as follows:

 

5.1           Binding Obligation.  This Agreement is the legally valid and
binding obligation of Debtor, enforceable against Debtor in accordance with its
terms, except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium, or similar laws or equitable principles relating to
or limiting creditor’s rights generally.

 

5.2           Ownership of Collateral.  Except for the Bank Facility Liens, each
Debtor owns the Collateral free and clear of any lien, security interest or
encumbrance.  Except for financing
statements filed in order to perfect the Bank Facility Liens, no effective
financing statement or other form of lien notice covering all or any part of
the Collateral is on file in any recording office.

 

5.3           Office Locations; Debtor Names; State of
Organization.  With respect to each
Debtor:

 

(a)           At all times since March 1, 2001, the
chief place of business, the chief executive office and the office where such
Debtor keeps its books and records all have been located at the place specified
on Schedule 5.3(a) hereto.

 

(b)           Such Debtor does not do business nor, as of
the date hereof, has it done business during the past five years under any
corporate name, trade name or fictitious business

 

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name except for such Debtor’s legal name on the date hereof and except
as disclosed on Schedule 5.3(b) hereto.

 

(c)           Such Debtor was organized and remains
organized solely under the laws of the state of organization specified on Schedule 5.3(c)
hereto.  Debtor’s organizational
identification number is as specified on Schedule 5.3(c) hereto.

 

5.4           Perfection.  This Agreement, together with the UCC filings referenced herein,
create to secure the Secured Obligations a valid, perfected and first priority
security interest in the Collateral and all filings and other actions necessary
or desirable to perfect and protect such security interest have been duly
taken.

 

5.5           Governmental Authorizations; Consents.  No authorization, approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body or consent of any other Person is required either (a) for the grant by
Debtor of the Security Interests granted hereby or for the execution, delivery
or performance of this Agreement by Debtor or (b) for the perfection of or the
exercise by Secured Party of its rights and remedies hereunder (except as may
have been taken by or at the direction of Debtor or Secured Party) other than
the filing of financing statements in connection with the perfection of the
Security Interests.

 

5.6           Contracts.  To the best of each Debtor’s knowledge, each of the Contracts of
such Debtor constitutes the legally valid and binding obligation of the
customer obligated to pay the same.  The
amount from time to time represented by any Debtor to Secured Party as owing by
each customer to such Debtor is the correct amount actually and unconditionally
owing, except for normal cash discounts and allowances where applicable.  To the best of each Debtor’s knowledge, no
customer has any defense, set-off, claim or counterclaim against such Debtor
that can be asserted against Secured Party, whether in any proceeding to
enforce Secured Party’s rights in the Collateral or otherwise except defenses,
set-offs, claims or counterclaims that are not, in the aggregate, material to
the value of the Contracts of such Debtor. 
None of the Contracts (or Proceeds thereof) of any Debtor is evidenced
by a promissory note or other payment instrument other than a check.

 

5.7           Accurate Information.  All information heretofore, herein or
hereafter supplied to Secured Party by or on behalf of any Debtor with respect
to the Collateral is and will be accurate and complete in all material
respects.

 

SECTION 6. Further Assurances; Covenants

 

6.1           Other Documents and Actions.  Each Debtor will, from time to time, at its
expense, promptly execute and deliver all further instruments and documents and
take all further action that may be necessary or desirable, or that Secured Party
may reasonably request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable Secured Party to
exercise and enforce its rights and remedies hereunder with respect to any
Collateral.  Without limiting the
generality of the foregoing, each Debtor will: (a) authorize and/or execute
such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary or desirable, or as Secured
Party may reasonably

 

6

 

request, in order to perfect and preserve the security interests
granted or purported to be granted hereby; (b) at any reasonable time, upon
demand by Secured Party exhibit the Collateral to allow inspection of the
Collateral by Secured Party or persons designated by Secured Party and to
examine and make copies of the records of Debtor related thereto, and to
discuss the Collateral and the records of such Debtor with respect thereto
with, and to be advised as to the same by, such Debtor’s officers and employees
and, in the case of Accounts, Documents, General Intangibles and Instruments,
with any Person obligated thereon; and (c) upon Secured Party’s reasonable
request, appear in and defend any action or proceeding that may affect such
Debtor’s title to or Secured Party’s security interest in the Collateral.

 

6.2           Secured Party Authorized.  Each Debtor hereby authorizes Secured Party
at any time and from time to time to file in any filing office in any Uniform
Commercial Code jurisdiction any initial financing statements and amendments
thereto that (a) indicate the Collateral as being of an equal or lesser scope
or with greater detail, and (b) contain any other information required by part
5 of Article 9 of the UCC for the sufficiency or filing office acceptance
of any financing statement or amendment, including whether Debtor is an
organization, the type of organization and any organizational identification
number issued to Debtor.  Each Debtor
agrees to furnish any such information to Secured Party promptly upon
request.  Each Debtor also ratifies its
authorization for Secured Party to have filed in any Uniform Commercial Code
jurisdiction any like initial financing statements or amendments thereto if
filed prior to the date hereof

 

6.3           Corporate or Name Change.  Each Debtor will notify Secured Party
promptly in writing at least 30 days prior to (a) any change in such Debtor’s
name, identity, mailing address, jurisdiction of organization or corporate
structure and (b) such Debtor’s commencing the use of any trade name, assumed
name or fictitious name.

 

6.4           Business Locations.  Each Debtor will maintain its chief place of
business, its chief executive office and the office where such Debtor keeps its
books and records relating to the Collateral at the location specified for such
Debtor on Schedule 5.3(a) hereto. 
Each Debtor shall give Secured Party thirty (30) days prior written
notice of any change in its chief place of business, its chief executive office
and the office where such Debtor keeps its books and records relating to the
Collateral.  With respect to any new
location (which in any event shall be within the continental United States),
each Debtor shall execute such documents and take such actions as Secured Party
reasonably deems necessary to perfect and protect the Security Interests.

 

6.5           Instruments; Certificated Investment
Property.  Each Debtor shall deliver
and pledge to Secured Party all Instruments and certificated Investment
Property included within the Collateral, duly endorsed and accompanied by duly
executed instruments of transfer or assignment, all in form and substance
reasonably satisfactory to Secured Party.

 

6.6           Contract Covenants.  Except as otherwise provided in this subsection 6.6,
each Debtor shall continue to collect, at its own expense, all amounts due or
to become due such Debtor under its Contracts. 
In connection with such collections, each Debtor shall take such action
as such Debtor deems necessary or advisable in the exercise of prudent business
judgment to enforce collection of such Contracts; provided that Secured
Party shall have the right at any

 

7

 

time after the occurrence and during the continuance of an Event of
Default, upon notice to such Debtor to: (A) notify the customers or obligors
under the Contracts of the assignment of such Contracts to Secured Party and to
direct such customers or obligors to make payment of all amounts due or to
become due directly to Secured Party; (B) enforce collection of any such
Contracts; and (C) adjust, settle or compromise the amount or payment of such
Contracts.

 

6.7           Taxes and Claims.  Each Debtor will pay (a) all taxes,
assessments and other governmental charges imposed upon the Collateral before
any penalty accrues thereon and (b) all claims (including claims for labor,
services, materials and supplies) for sums that have become due and payable and
that by law have or may become a lien upon any of the Collateral before any
penalty or fine is incurred with respect thereto; provided that no such
tax, charge or claim need be paid if such Debtor is contesting same in good
faith by appropriate proceedings promptly instituted and diligently conducted
and if such Debtor has established such reserve or other appropriate provision,
if any, as shall be required in conformity with generally accepted accounting
principles consistently applied.

 

6.8           Collateral Description.  Each Debtor will furnish to Secured Party,
from time to time, statements and schedules further identifying and describing
the Collateral and such other reports in connection with the Collateral as
Secured Party may reasonably request, all in reasonable detail.

 

6.9           Use of Collateral.  No Debtor will use or permit any Collateral
to be used unlawfully or in violation of any provision of this Agreement or any
applicable statue, regulation or ordinance or any policy of insurance covering
any of the Collateral.

 

6.10         Records of Collateral.  Each Debtor shall keep full and accurate
books and records relating to the Collateral, consistent with its ordinary
business practices.

 

6.11         Federal Claims.  Upon the request of Secured Party, so long
as an Event of Default has occurred and is continuing, each Debtor, at its own
expense, shall take such steps as may be necessary to comply with any
applicable federal assignment of claims laws and other comparable laws.

 

6.12         Other Information.  Each Debtor will, promptly upon request,
provide to Secured Party all information and evidence it may reasonably request
concerning the Collateral to enable Secured Party to enforce the provisions of
this Agreement.

 

6.13         Dispute Resolution.  Notwithstanding anything herein to the
contrary, the provisions in Section 8.0 of the Consortium Agreement are
incorporated by reference as if fully set forth herein.

 

SECTION 7. Secured Party Appointed Attorney-in-Fact

 

Each Debtor hereby irrevocably appoints Secured Party as its
attorney-in-fact, with full authority in the place and stead of such Debtor and
in the name of such Debtor, Secured Party or

 

8

 

otherwise, from time to time in Secured Party’s discretion to take any
action and to execute any instrument that Secured Party may deem necessary or
advisable after the occurrence and during the continuation of an Event of
Default to accomplish the purposes of this Agreement, including, without
limitation:

 

(a)           to obtain and adjust insurance required to
be paid to Secured Party;

 

(b)           to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for monies due and to become due
under or in respect of any of the Collateral;

 

(c)           to file any claims or take any action or
institute any proceedings that Secured Party may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce the rights
of Secured Party with respect to any of the Collateral;

 

(d)           to pay or discharge taxes or liens, levied
or placed upon or threatened against the Collateral, the legality or validity
thereof and the amounts necessary to discharge the same to be determined by
Secured Party in its sole discretion, and such payments made by Secured Party
to become obligations of such Debtor, due and payable immediately without
demand and secured by the Security Interests; and

 

(e)           generally to sell, transfer, pledge, make
any agreement with respect to or otherwise deal with any of the Collateral as
fully and completely as though Secured Party were the absolute owner thereof
for all purposes, and to do, at Secured Party’s option and such Debtor’s
expense, at any time or from time to time, all acts and things that Secured
Party deems necessary to protect, preserve or realize upon the Collateral.

 

Neither Secured Party nor any Person designated by Secured Party shall
be liable for any acts or omissions or for any error of judgment or mistake of
fact or law other than as a result of Secured Party’s or such Person’s gross
negligence or willful misconduct.  This
power, being coupled with an interest, is irrevocable so long as this Agreement
shall remain in force.

 

SECTION 8. Transfers and Other Liens

 

With respect to each Debtor, such Debtor shall not without Secured
Party’s prior written consent:

 

(a)           Sell, assign (by operation of law or
otherwise) or otherwise dispose of, or grant any option with respect to, any of
the Collateral, except for the Bank Facility Liens.

 

(b)           Create or suffer to exist any lien, security
interest or other charge or encumbrance upon or with respect to any of the
Collateral except for the Security Interests and the Bank Facility Liens.

 

9

 

SECTION 9. Remedies

 

(a)           If any Event of Default shall have occurred
and be continuing, Secured Party may exercise in respect of the Collateral, in
addition to all other rights and remedies provided for herein or otherwise
available to it, all the rights and remedies of a secured party on default
under the UCC (whether or not the UCC applies to the affected Collateral).  Each Debtor agrees that, to the extent
notice of sale shall be required by law, at least ten days notice to such
Debtor of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification.  At any sale of the Collateral, if permitted
by law, Secured Party may bid (which bid may be, in whole or in part, in the
form of cancellation of indebtedness) for the purchase of the Collateral or any
portion thereof for the account of Secured Party.  Secured Party shall not be obligated to make any sale of
Collateral regardless of notice of sale having been given.  Secured Party may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned.  To
the extent permitted by law, each Debtor hereby specifically waives all rights
of redemption, stay or appraisal which it has or may have under any law now existing
or hereafter enacted.

 

SECTION 10. Limitation on Duty of Secured Party with Respect to
Collateral

 

Beyond the safe custody thereof, Secured Party shall have no duty with
respect to any Collateral in its possession or control (or in the possession or
control of any agent or bailee) or with respect to any income thereon or the
preservation of rights against prior parties or any other rights pertaining
thereto.  Secured Party shall be deemed
to have exercised reasonable care in the custody and preservation of the
Collateral in its possession if the Collateral is accorded treatment
substantially equal to that which it accords its own property.  Secured Party shall not be liable or
responsible for any loss or damage to any of the Collateral, or for any diminution
in the value thereof, by reason of the act or omission of any warehouseman,
carrier, forwarding agency, consignee or other agent or bailee selected by
Secured Party in good faith.

 

SECTION 11. Application of Proceeds

 

Upon the occurrence and during the continuance of an Event of Default, the
proceeds of any sale of, or other realization upon, all or any part of the
Collateral shall be applied: first, to all fees, costs and expenses
incurred by Secured Party with respect to the Collateral; second, to the
Secured Obligations then due and payable; and third, to serve as
continuing collateral for Secured Obligations not yet due and payable.

 

SECTION 12. Expenses

 

Each Debtor agrees to pay all insurance
expenses and all reasonable expenses of protecting the Collateral, all costs,
fees and expenses of perfecting and maintaining the Security Interests, and any
and all excise, property, sales and use taxes imposed by any state, federal or
local authority on any of the Collateral, or with respect to periodic
appraisals and inspections of the Collateral, or with respect to the sale or
other disposition thereof.  If any
Debtor fails promptly to pay any portion of the above expenses when due or to
perform any other obligation

 

10

 

of any Debtor under this Agreement, Secured Party may, at its option,
but shall not be required to, pay or perform the same, and each Debtor agrees
to reimburse Secured Party therefor on demand. 
All sums so paid or incurred by Secured Party for any of the foregoing,
any and all other sums for which any Debtor may become liable hereunder and all
costs and expenses (including reasonable attorneys’ fees, reasonable legal
expenses and court costs) incurred by Secured Party in enforcing or protecting
the Security Interests or any of their rights or remedies under this Agreement
shall be payable on demand, shall constitute Secured Obligations, shall bear
interest until paid at the rate provided in the Consortium Agreement and shall
be secured by the Collateral.

 

SECTION 13. Term

 

This Agreement, and the Security Interests created hereby, will remain
in effect at all times so long as (i) Obligor has any obligation (whether fixed
or contingent, liquidated or unliquidated) under the Consortium Agreement or
(ii) any other Secured Obligation remains outstanding.

 

SECTION 14. Notices

 

All notices under this Agreement shall be in writing and given either
in person or by telefax, overnight delivery service or first class mail,
postage and any other costs prepaid, to the address of the party to this
Agreement being given notice set forth below or to such other address as a
party to this Agreement may furnish to the other as provided in this sentence:

 

	
  If to Debtors:

  	
   

  	
  Washington Group International, Inc.

  
	
   

  	
   

  	
  Energy & Environment

  
	
   

  	
   

  	
  106 Newberry Street S.W.

  
	
   

  	
   

  	
  Aiken, SC  29801

  
	
   

  	
   

  	
  Attention:  President

  
	
   

  	
   

  	
  (presently E. Preston Rahe, Jr.)

  
	
   

  	
   

  	
  Facsimile No.:  803-502-9795

  
	
   

  	
   

  	
   

  
	
  with a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Washington Group International, Inc.

  
	
   

  	
   

  	
  720 Park Boulevard

  
	
   

  	
   

  	
  Boise, ID 83871

  
	
   

  	
   

  	
  Attention: General Counsel

  
	
   

  	
   

  	
  (presently Richard D. Parry, Esq.)

  
	
   

  	
   

  	
  Facsimile No.:  208-386-5220

  
	
   

  	
   

  	
   

  
	
  If to Secured Party:

  	
   

  	
  BNFL Inc.

  
	
   

  	
   

  	
  Crystal Gateway One

  
	
   

  	
   

  	
  1235 South Clark Street

  
	
   

  	
   

  	
  Suite 700

  
	
   

  	
   

  	
  Arlington, VA 22202

  
	
   

  	
   

  	
  Attention: Philip O. Strawbridge

  
	
   

  	
   

  	
  Facsimile No.: (703) 412-2567

  

 

 

11

 

	
  with a copy to:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  BNFL Inc.

  
	
   

  	
   

  	
  Crystal Gateway One

  
	
   

  	
   

  	
  1235 South Clark Street

  
	
   

  	
   

  	
  Suite 700

  
	
   

  	
   

  	
  Arlington, VA 22202

  
	
   

  	
   

  	
  Attention: Jonathan P. Carter, Esq.

  
	
   

  	
   

  	
  Facsimile No.: (703) 412-2571

  

 

Notice given via telefax shall be deemed received at the day and time
set forth on confirmation thereof. 
Notice given via overnight delivery service and first class mail shall
be deemed received one (1) and three (3) days after the date sent, respectively.  Notice given in person shall be received
when given.  A facsimile signature on
any such notice shall have the same effect for the purposes of this Agreement
as an original signature.

 

SECTION 15. Waivers, Non-Exclusive Remedies, Severability

 

No failure on the part of Secured Party to exercise, and no delay in
exercising and no course of dealing with respect to, any right under any
Consortium Document shall operate as a waiver thereof; nor shall any single or
partial exercise by Secured Party of any right under any Consortium Document
preclude any other or further exercise thereof or the exercise of any other
right.  The rights in the Consortium
Documents are cumulative and are not exclusive of any other remedies provided
by law.

 

The invalidity, illegality or unenforceability of any provision in or
obligation under this Agreement shall not affect or impair the validity,
legality or enforceability of the remaining provisions or obligations under
this Agreement.

 

SECTION 16. Successors and Assigns

 

This Agreement is for the benefit of Secured Party and its successors
and assigns, and in the event of an assignment of all or any of the Secured
Obligations, the rights hereunder, to the extent applicable to the Secured
Obligations so assigned, may be transferred with such Secured Obligations.  This Agreement shall be binding on each
Debtor and its successors and assigns, provided that no Debtor shall assign
this Agreement without Secured Party’s prior written consent.

 

SECTION 17. Changes in Writing

 

No amendment, modification, termination or waiver of any provision of
this Agreement or consent to any departure by any Debtor therefrom, shall in
any event be effective without the written concurrence of Secured Party and
such Debtor.

 

12

 

SECTION 18. Applicable Law

 

THIS
AGREEMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.

 

SECTION 19. Failure or Indulgence Not Waiver; Remedies
Cumulative

 

No failure or delay on the part of Secured Party in the exercise of any
power, right or privilege hereunder shall impair such power, right or privilege
or be construed to be a waiver of any default or acquiescence therein, nor
shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or any other right, power or
privilege.  All rights and remedies
existing under this Agreement are cumulative to, and not exclusive of, any
rights or remedies otherwise available.

 

SECTION 20. Headings

 

Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive
effect.

 

SECTION 21. Counterparts

 

This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument and any of
the parties hereto may execute this Agreement by signing any such counterpart.

 

SECTION 22. Security Agreement Supplement

 

Debtors shall (a) cause each
and every Person (other than a Qualified SPE) that, after the date of this
Agreement,  (i) is or becomes an
affiliate of Obligor and (ii) holds or acquires any Contract, to execute and
deliver a security agreement supplement substantially in the form of Exhibit
A (each, a “Security Agreement Supplement”) and (b) cause each and every
Person that, after the date of this Agreement, 
(i) is or becomes an affiliate of Obligor and (ii) holds or acquires any
Qualified SPE Interests, to execute and deliver a Security Agreement
Supplement.  Upon a Person’s execution
and delivery of a Security Agreement Supplement, such Person shall be referred
to as an “Additional Debtor” and shall be and become a Debtor and each
reference in this Agreement to “Debtor” shall also mean and be a reference to
such Additional Debtor.

 

[Signature page follows]

 

13

 

Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the day first above written.

 

 

	
   

  	
  SECURED PARTY:

  
	
   

  	
   

  
	
   

  	
  BNFL USA GROUP INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John F. Edwards

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
					

 

 

	
   

  	
  DEBTORS:

  
	
   

  	
   

  
	
   

  	
  WASHINGTON GROUP

  INTERNATIONAL, INC., an Ohio

  corporation

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ George H. Juetten

  	
   

  
	
   

  	
   

  	
  George H. Juetten

  
	
   

  	
  Title:

  	
  Exec. VP & Chief Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WESTINGHOUSE GOVERNMENT

  SERVICES COMPANY LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ George H. Juetten

  	
   

  
	
   

  	
   

  	
  George H. Juetten

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WESTINGHOUSE SAVANNAH RIVER

  COMPANY LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ George H. Juetten

  	
   

  
	
   

  	
   

  	
  George H. Juetten

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WASHINGTON SAFETY

  MANAGEMENT SOLUTIONS LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ George H. Juetten

  	
   

  
	
   

  	
   

  	
  George H. Juetten

  
	
   

  	
  Title:

  	
  Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  WSMS MID-AMERICA LLC

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ George H. Juetten

  	
   

  
	
   

  	
   

  	
  George H. Juetten

  
	
   

  	
  Title:

  	
  Vice President

  

 

 

EXHIBIT
A

 

SECURITY AGREEMENT SUPPLEMENT

 

SECURITY AGREEMENT SUPPLEMENT, dated as of
                              
(the “Supplement”), made by                                     ,
a                               
(the “New Debtor”), in favor of BNFL USA GROUP INC. (the “Secured Party”).

 

1.     Reference is hereby made to the Security Agreement
dated as of
                                          ,
2004, made by Washington Group International, Inc. and [LIST OTHER ORIGINAL
DEBTORS], in favor of the Secured Party (as amended, supplemented or otherwise
modified as of the date hereof, the “Security Agreement”).  This Supplement supplements the Security Agreement,
forms a part thereof and is subject to the terms thereof.  Capitalized terms used and not defined
herein shall have the meanings given thereto or referenced in the Security
Agreement.

 

2.     The New Debtor hereby agrees, as of the date first
above written, to become a Debtor under the Security Agreement as if it were an
original party thereto and agrees that each reference in the Security Agreement
to “Debtor” shall also mean and be a reference to the New Debtor.

 

3.     In order to secure the Consortium Documents, in
accordance with the terms thereof, and to secure the payment and performance of
all of the Secured Obligations, the New Debtor hereby grants to the Secured
Party a continuing security interest in and to all of the New Debtor’s estate,
right, title and interest in and to all Collateral whether now or hereafter
owned or acquired by the New Debtor or 
in which the New Debtor now has or hereafter has or acquires any rights,
and wherever located (the “New Collateral”). 
The Schedules to the Security Agreement are hereby supplemented as set
forth on Annex I hereto.

 

4.     The New Debtor hereby makes each representation
and warranty set forth in the Security Agreement (as supplemented by the
attached Annex) to the same extent as each other Debtor and hereby agrees to be
bound as a Debtor by all of the terms and provisions of the Security Agreement
to the same extent as each other Debtor.

 

5.     The New Debtor agrees that “Collateral” as used
therein shall include all New Collateral pledged pursuant hereto and the
Security Agreement and “Security Agreement” or “Agreement” as used therein
shall mean the Security Agreement as supplemented hereby.

 

6.     The New Debtor hereby acknowledges it has received
a copy of the Security Agreement and that it has read and understands the terms
thereof.

 

 

7.     The New Debtor hereby agrees that it shall deliver
to the Secured Party such UCC Financing Statements and all other certificates
or other documents and take such action as the Agent shall reasonably request
in order to effectuate the terms hereof and the Security Agreement.

 

IN WITNESS WHEREOF, the undersigned hereby causes this Supplement to be
executed and delivered as of the date first above written.

 

	
   

  	
  [INSERT NAME OF NEW DEBTOR]

  
	
   

  	
   

  
	
  [CORPORATE SEAL]

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
  Title:Exhibit 10.1

 

Amended effective August 1,
2004

 

HOSPIRA, INC. NON-EMPLOYEE
DIRECTORS’ FEE PLAN

 

SECTION 1

PURPOSE

 

Hospira, Inc.
Non-Employee Directors’ Fee Plan (the “Plan”) has been established by Hospira,
Inc. (the “Company”), effective as of April 30, 2004 (the “Effective Date”)
to attract and retain as members of its Board of Directors persons who are not
employees of the Company or any of its subsidiaries but whose business
experience and judgment are a valuable asset to the Company and its subsidiaries.  The Plan provides for the payment to
Directors of fees in the form of some or all of the following: Annual Retainer
Fees, Committee Chairman Fees, Meeting Fees and
Restricted Stock awards (generally, the “Director Fees”).

 

SECTION 2

DIRECTORS COVERED

 

As used in the Plan, the
term “Director” means any person who is elected to the Board of Directors of
the Company as of the Effective Date or at any time thereafter, and is not an
employee of the Company or any of its subsidiaries.

 

SECTION 3

FEES PAYABLE TO DIRECTORS

 

3.1                                 Annual
Retainer Fee.  Each Director shall be
entitled to an annual retainer fee (the “Retainer Fee”) to be paid quarterly,
on the last business day of each calendar quarter for which the Director served
in the capacity as a Director (excluding, on a pro rata basis, the partial
month in which he is first elected a Director and any whole months in which he
did not serve in such capacity).  The
amount of the Annual Retainer Fee shall be as determined from time to time in
the sole discretion of the Board of Directors of the Company (the “Board”),
with such amount initially set at Fifty Thousand Dollars ($50,000.00) per year.

 

3.2                                 Committee
Chairman Fee.  A Director who serves
as Chairman of any committee created by the Board shall be entitled to an
additional annual retainer fee (the “Committee Chairman Fee”) to be paid
quarterly, on the last business day of each calendar quarter for which the
Director served in the capacity as a committee chairman (excluding, on a pro
rata basis, the partial month in which he is first selected to be the committee
chairman and any whole months in which he did not serve in such capacity).  The amount of the Committee Chairman Fee
shall be as determined from time to time in the sole discretion of the Board,
with such amount initially set at Five Thousand Dollars ($5,000.00) per year.

 

3.3                                 Meeting
Fees.  A Director who attends a
meeting of the Board or any committee thereof shall be entitled to an
additional fee (the “Meeting Fee”) to be paid on the last business day of each
calendar quarter in which the meeting was held. 
The amount of the Meeting Fee shall be as determined from time to time
in the sole discretion of the Board, with such amount initially set at One
Thousand Dollars ($1,000.00) for each Board or Committee Meeting attended in
person and Five Hundred Dollars ($500.00) for each meeting attended other than
in person, in

 

 

a manner acceptable to the Board.  In the event there is held one or more
committee or Board meetings on the same date, there will be a Meeting Fee paid
for each such meeting for that date.

 

3.4                                 Chairman
of the Board.  As of the Effective
Date, the non-employee Director serving as the Company’s Chairman of the Board
shall be granted a one-time initial option to purchase such number of shares
and under such terms and conditions as shall be determined by the Board at the
time of grant.

 

SECTION 4

RESTRICTED STOCK

 

4.1                                 Annual
Restricted Stock Award.  Each
Director, who is elected a Non-Employee Director at the annual shareholders
meeting (or who retains such position if they were not subject to election at
such meeting), shall be granted shares of Company’s Common Stock, par value
$0.01 per share (the “Stock”), with such stock subject to certain restrictions
set forth below (the “Restricted Stock”). 
The Restricted Stock shall be granted automatically to the Director on
the last business day of the calendar quarter in which the annual shareholder
meeting occurs; provided, however, the first annual Restricted Stock grant
shall be granted as of the Effective Date. 
If more than one shareholder meeting occurs in a given calendar year,
only a single Restricted Stock award shall be granted for such year and such
award shall be granted as of the last business day of the calendar quarter in
which such first shareholder meeting occurs. 
The number of shares covered by the Restricted Stock award shall be
equal to that number of shares whose aggregate value (based on the Fair Market
Value of a share of Stock on the date of grant) equals Fifty Thousand Dollars
($50,000.00), rounded down to the next whole share; provided, however, the
first annual Restricted Stock grant will be equal to that number of shares
whose aggregate value equals Fifty Thousand Dollars ($50,000.00) based on the
opening price of the Company’s Common Stock on the first day of regular-way
trading immediately following the Effective Date, rounded down to the next
whole share.  Notwithstanding anything
contained in this Section 4.1 to the contrary, a Non-Employee Director,
who is elected at any time after the Effective Date but prior to the Company’s
first annual shareholders meeting or between any annual shareholders meetings,
shall automatically be granted Restricted Stock on the last business day of the
calendar quarter in which such Director is elected; provided, however, that the
number of shares of the Restricted Stock granted to such Director shall be
equal to that number of shares (rounded to the next whole share) whose
aggregate value (based on the Fair Market Value of a share of Stock on the date
of grant) equals Fifty Thousand Dollars ($50,000.00), multiplied by the
fraction of A over 12, with “A” being the number of whole calendar months
between the first day of the month coinciding with or immediately following
such Director’s election and first day of the month during which the next
annual shareholders meeting is scheduled to occur.  The term “Fair Market Value” shall be as
defined in the 2004 Plan (as defined in Section 6.6 below).

 

4.2                                 Issuance
of Certificates.  Each certificate
issued in respect of the Restricted Stock Award shall be registered in the name
of the Director and shall be deposited in a bank designated by the Company or
retained by the Company.  The
certification of shares is conditioned upon the Director endorsing in blank a
stock power for the covered shares. 
During the Restricted Period, all certificates evidencing the Restricted
Stock will be imprinted with the following legend: “The securities evidenced by
this certificate are subject to the transfer restrictions, forfeiture

 

2

 

restrictions and other provisions of the
Restricted Stock Agreement dated                   
between Hospira, Inc. and [insert Director
name].”  Upon lapse of the
Restriction Period, the Director shall be entitled to have the legend removed
from certificates representing the shares.

 

4.3                                 Rights.  Upon issuance of the certificates, the
Directors in whose names they are registered shall, subject to the restrictions
of this Section 4, have all of the rights of a shareholder with respect to
the shares represented by the certificate, including the right to vote such
shares and to receive cash dividends and other distributions thereon.

 

4.4                                 Forfeiture
Period.  All Restricted Stock granted
under this Section 4 shall be subject to forfeiture pursuant to Section 4.5
for a period (the “Forfeiture Period”) commencing with the date of the award
and ending on the earliest of the following events:

 

(i)                                     The
one-year anniversary of the date of grant of Restricted Stock

 

(ii)                                  The
first regularly scheduled annual shareholders meeting following the date of
grant;

 

(iii)                               The date of the Director’s
death or disability; or

 

(iv)                              The
date of a Change in Control (as defined in Section 5 of the 2004 Plan).

 

4.5                                 Forfeiture.  In the event that the Director’s date of
termination occurs during the Forfeiture Period, the Director shall forfeit any
and all rights and interests with respect to such unvested Restricted Stock (or
Restricted Stock Units, if a Deferral Election, under Section 10 below, is
applicable) and the Company shall have the right to cancel any such
certificates evidencing such Restricted Stock.

 

4.6                                 Restrictions
on Sale.  All Restricted Stock
granted under this Section 4 shall be subject to the following
restrictions on sale beginning on the date of grant and continuing for all
periods while the Director is actively serving as a Director of the Company
(the “Restricted Period”):

 

(i)                                     The
shares may not be sold, assigned, transferred, pledged, hypothecated or
otherwise disposed of.

 

(ii)                                  Any
additional common shares of the Company issued with respect to shares covered
by Awards granted under this Section 4 as a result of any stock dividend,
stock split or reorganization, shall be subject to the
restrictions and other provisions of this Section 4.

 

(iii)                               A
Director shall not be entitled to receive any shares prior to completion of all
actions deemed appropriate by the Company to comply with federal or state
securities laws and stock exchange requirements.

 

3

 

SECTION 5

CHANGE IN CONTROL

 

In the event of a Change
in Control, (i) all Restricted Stock awards shall become fully vested and shall
no longer be subject to the restrictions set forth in Section 4 of this
Plan, and (ii) all Deferred Fees shall be paid to the Director pursuant to such
Director’s Deferral Election.

 

SECTION 6

OPERATION AND
ADMINISTRATION

 

6.1                                 Administration.

 

(i)                                     The
Plan and all benefits pursuant hereto shall be administered by the full Board.

 

(ii)                                  The
Board shall have the authority and discretion to interpret and administer the
Plan, to establish, amend and rescind any rules and regulations relating to the
Plan and to determine the terms and provisions of any award agreement made
pursuant to the Plan.  All questions of
interpretation with respect to the Plan, the benefits established herein, the
number of shares of Stock, or other security, or rights granted and the terms
of any agreements evidencing any of the Director Fees (the “Award Agreements”),
including the timing, pricing, and amounts of Awards, shall be determined by
the Board, and its determination shall be final and conclusive upon all parties
in interest.  In the event of any
conflict between an Award Agreement and this Plan, the terms of this Plan shall
govern.

 

(iii)                               Except to the extent
prohibited by applicable law or the applicable rules of a stock exchange, the
Board may delegate to the officers or employees of the Company and its
subsidiaries the authority to execute and deliver such instruments and
documents, to do all such acts and things, and to take all such other steps
deemed necessary, advisable or convenient for the effective administration of
the Plan in accordance with its terms and purpose, except that the Board may
not delegate any discretionary authority with respect to substantive decisions
or functions regarding the Plan or benefits and awards thereunder, including,
but not limited to, decisions regarding the timing, eligibility, pricing,
amount or other material terms of such benefits or awards. Any such delegation
may be revoked by the Board at any time.

 

(iv)                              To
the extent that the Board determines that the restrictions imposed by the Plan
preclude the achievement of the material purposes of the benefit provided
herein in jurisdictions outside the United States, if applicable, the Board
will have the authority and discretion to modify those restrictions as the
Board determines to be necessary or appropriate to conform to applicable
requirements or practices of jurisdictions outside of the United States.

 

4

 

6.2                                 Limits
of Liability.

 

(i)                                     Any
liability of the Company or a subsidiary to any Director with respect to an
Award shall be based solely upon contractual obligations created by the Plan
and the applicable Award Agreement.

 

(ii)                                  Neither
the Company nor a subsidiary, nor any member of the Board or any other person
participating in any determination of any question under the Plan, or in the
interpretation, administration or application of the Plan, shall have any
liability to any party for any action taken or not taken in good faith under
the Plan except as may be expressly provided by statute.

 

6.3                                 Rights
of Director.  Nothing contained in
this Plan or in any Award Agreement (or in any other documents related to this
Plan or to any award or Award Agreement) shall confer upon any Director any
right to continue in the service of the Company or a subsidiary, constitute any
contract or limit in any way the right of the Company or a subsidiary to change
such person’s compensation or other benefits or to terminate the service of
such person with or without cause or confer any right on the part of such
person to be nominated for reelection to the Board, to be reelected to the
Board or to be appointed to any committee of the Board.

 

6.4                                 Form
and Time of Elections.  Any election
required or permitted shall be in writing, and shall be deemed to be filed when
timely delivered to the Secretary of the Company.

 

6.5                                 Action
by Company.  Any action required or
permitted to be taken by the Company shall be by resolution of the Board, or by
action of one or more members of the Board (including a committee of the Board)
who are duly authorized to act for the Board or (except to the extent
prohibited by the provisions of Rule 16b-3, applicable local law, the
applicable rules of any stock exchange, or any other applicable rules) by a
duly authorized officer of the Company.

 

6.6                                 Hospira,
Inc. 2004 Long-Term Stock Incentive Plan. 
Any shares of Stock awarded to, or subject to Awards granted to
Directors under this Plan as Director Fees shall be issued pursuant to the
Hospira, Inc. 2004 Long-Term Stock Incentive Plan (the “2004 Plan”), subject to
all of the terms and conditions herein. 
Except in the event of conflict, all provisions of the 2004 Plan shall
apply to this Plan.  In the event of any
conflict between the provisions of the 2004 Plan and this Plan, this Plan shall
control, provided that the Director Fees granted provided may not exceed the
share limitations set forth in the 2004 Plan.

 

SECTION 7

MISCELLANEOUS

 

7.1                                 Beneficiaries.  Each Director or former Director entitled to
payment of Director Fees hereunder, from time to time may name any person or
persons (who may be named contingently or successively) to whom any Director
Fees earned by him and payable to him are to be paid in case of his death
before he receives any or all of such Director Fees.  Each designation will revoke all prior designations
by the same Director or former Director, shall be in form prescribed by the
Company, and will be effective only when filed by the Director or former
Director in writing with the Secretary of the Company during his lifetime. If a
deceased Director

 

5

 

or former Director shall have failed to name a beneficiary in the
manner provided above, or if the beneficiary named by a Director or former
Director dies before him or before payment of all the Director’s or former
Director’s Director Fees, the Company, in its discretion, may direct payment in
a single sum of any remaining Director Fees to either:

 

(i)                                     any one or more or all of the next of kin (including the
surviving spouse) of the Director or former Director, and in such proportions
as the Company determines; or

 

(ii)                                  the legal representative or representatives of the estate of
the last to die of the Director or former Director and his last surviving
beneficiary.

 

The person or persons to
whom any deceased Director’s or former Director’s Director Fees are payable
under this section will be referred to as his “beneficiary.”

 

7.2                                 Alienation
of Rights.  Payment of Director Fees
will be made only to the person entitled thereto in accordance with the terms
of the Plan, and Director Fees are not in any way subject to the debts or other
obligations of persons entitled thereto, and may not be voluntarily or
involuntarily sold, transferred or assigned.

 

7.3                                 Facility
of Payment.  When a person entitled
to a payment under the Plan is under legal disability or, in the Company’s
opinion, is in any way incapacitated so as to be unable to manage his financial
affairs, the Company may direct that payment be made to such person’s legal
representative, or to a relative or friend of such person for his benefit, and
with respect to the Director’s Stock Unit Account (defined in Section 9
below), if any, any distribution shall be pursuant to the Director’s
beneficiary designation form, as may be on file with the Company. Any payment
made in accordance with the preceding sentence shall be in complete discharge
of the Company’s obligation to make such payment under the Plan.

 

7.4                                 Unfunded
Plan.  Any obligation to pay cash or
Deferred Fees under this Plan shall constitute an unfunded unsecured obligation
of the Company.  The Company may, but
shall not be obligated to, establish a trust to hold assets for the purpose of
satisfying obligations under this Plan.

 

7.5                                 Adjustment Provisions.  In
the event of a corporate transaction involving the Company (including, without
limitation, any stock dividend, stock split, extraordinary cash dividend,
recapitalization, reorganization, merger, consolidation, split-up, spin-off,
combination or exchange of shares), in addition to any adjustments made
pursuant to Section 3.4 of the 2004 Plan, the Board may adjust the
Director Fees (including Deferred Fees) to preserve the benefits or potential
benefits of participation in the Plan.

 

7.6                                 Gender
and Number.  Where the context
admits, words in any gender shall include any other gender, words in the
singular shall include the plural and the plural shall include the singular.

 

6

 

SECTION 8

AMENDMENT AND DISCONTINUANCE

 

The Board may, at any
time, amend or terminate the Plan, and may amend any Award Agreement, provided
that no amendment or termination may, in the absence of written consent to the
change by the affected Director (or, if the Director is not then living, the
affected beneficiary), adversely affect the rights of any Director or beneficiary
under any Award granted under the Plan prior to the date such amendment is
adopted by the Board; and further provided, that adjustments pursuant to Section 9.4
shall not be subject to the foregoing limitations of this Section 8.  Any amendment or discontinuance of the Plan
shall be prospective in operation only, and shall not affect the payment of any
Director Fees theretofore earned by any Director, or the conditions under which
any such fees are to be paid or forfeited under the Plan, unless the Director
affected shall expressly consent thereto.

 

SECTION 9

ELECTIVE DEFERRALS

 

9.1                                 DEFERRAL ELECTION

 

(i)                                     General.  A Director who would otherwise be entitled to
receive Director Fees in the form of shares of Stock or a cash payment under
the terms of the Plan may instead elect to defer delivery of all or a portion
of such fees, subject to the following terms of this Section 9 (once
deferred, the “Deferred Fees”).

 

(ii)                                  Deferral Election.  An
election to defer the Director Fees shall be made on an election form as
provided by the Board (the “Deferral Election”).  Any Deferral Election shall be irrevocable as
of the first day of the year for which it is to be effective.  Deferral Elections shall remain in effect
with respect to any future year unless a new election with respect to such year
is filed in accordance with rules established by the Board prior to the first
day of the year for which it is to be effective.  Notwithstanding the foregoing, if the
election is being made with respect to the Director first becoming a member of
the Board, an election submitted within 30 days of becoming a Director shall be
effective for all fees paid following the date on which the election is
received by the Company.  A director may
elect to convert a Restricted Stock award into a Restricted Stock Unit award by
submitting a Deferral Election prior to the first day of the calendar year in
which the Forfeiture Period applicable to the Restricted Stock lapses.

 

The Deferral Election form shall provide for
the types and amounts of the Director Fees to be deferred and shall provide for
the timing and method of distribution at the end of the deferral period.

 

(iii)                               Conversion of Cash or
Restricted Stock to Stock Units. 
Deferred Fees shall be credited to a Stock Unit Account (as defined
below) under this Section 9 as follows:

 

(a)                                  Cash-based
Deferred Fees shall be converted to Stock Units by dividing the cash-based fees
the Director elected to defer by the Fair Market Value

 

7

 

of the Stock as of the date the
Director would have had a right to payment of such Director Fees had the
Director not made a Deferral Election.

 

(b)                                 Stock-based
Deferred Fees shall be converted to that number of Stock Units equal to that
number of shares of Restricted Stock the Director elected to defer.

 

9.2                                 ACCOUNTS

 

(i)                                     Stock Unit Account.  A “Stock Unit Account” shall be maintained on
behalf of each Director who elects to defer all or a portion of his Director
Fees under this Section 9, for the period during which delivery of such
fees is deferred. A Director’s Stock Unit Account shall be subject to the
following adjustments:

 

(a)                                  The
Stock Unit Account will be credited with Stock Units as of the date on which
the Director would have been entitled to payment of the cash-based fees or the
date on which the Director would have been granted the Restricted Stock award,
both as if the Director had not made a Deferral Election with respect to such
fees.

 

(b)                                 As
of each dividend payment date for the Stock, the Director’s Stock Unit Account
shall be credited with additional Stock Units (including fractional Stock
Units) equal to (i) the amount of the dividend that would be payable with
respect to the number of shares of Stock equal to the number of Stock Units
credited to the Director’s Stock Unit Account on the dividend record date, divided by
(ii) the Fair Market Value of a share of Stock on the dividend payment date.

 

(c)                                  As
of the date of any distribution with respect to a Director’s Stock Unit Account
under Section 9.3, the Stock Units credited to a Director’s Stock Unit
Account shall be reduced by the amounts distributed to the Director.

 

(ii)                                  Statement of Accounts.  As soon as practicable after the end of each
Plan Year, the Company shall provide each Director having an Stock Unit Account
under the Plan with a statement of the transactions in his Stock Unit Account
during that year and his account balance as of the end of the year.

 

9.3                                 DISTRIBUTIONS

 

(i)                                     General.  Subject to the terms of this Section 9.3,
a Director shall specify, as part of his Deferral Election with respect to
Deferred Fees, the time and manner of the distribution of the amounts deferred
pursuant to such election.  In the event
that no election is made with respect to the timing or method of distribution
as of the date of the Director’s termination, the Director’s entire Stock Unit
Account shall be distributed in a single lump sum stock payment as of the first
anniversary of the Director’s date of termination.

 

8

 

(ii)                                  If
a scheduled distribution date would otherwise occur after a dividend record
date but before the payment of the dividend, the distribution may, in the
discretion of the Board, be deferred (but not more than 30 days) until the
dividend payment date.

 

(iii)                               In determining a
Director’s right to distributions under this Section 9.3, the vesting
provisions of Section 4 of the Plan shall apply to the Stock Units
credited to the Director’s Stock Unit Account as though each unit represented
one share of Stock, and with all units attributable to payment of dividends
being fully vested as of the date they are credited to the Director’s Stock
Unit Account.

 

9.4                                 Termination
of Deferral by Company.  The Board
shall retain the right to terminate, at any time, for any reason, or no reason,
the deferral provisions under this Section 9 (which may, but need not, be
in conjunction with a termination of the Plan), and shall immediately
distribute all, but not less than all, of the Stock Unit Accounts as of the date
of such termination.

 

9

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