Document:

Exhibit 4.20

 

FOSTER WHEELER
LTD.

 

Certificate of
Designation

of

Series B Convertible Preferred Shares

 

1.                                      Number
and Description.  (a)  The Company’s preferred shares shall include
a series of
[                          ]
preferred shares, which shall be designated as its Series B Convertible
Preferred Shares (the “Preferred Shares”), par value U.S.$1.00 per
share.

 

(b)                                 All
Preferred Shares shall be denominated in United States currency, and all
payments and distributions thereon or with respect thereto shall be made in
United States currency.  All references
herein to “U.S.$”, “$” or “dollars” refer to United States currency.

 

(c)                                  Preferred
Shares may be issued by the Company only on full payment of the consideration
payable therefor, which shall be equal to at least the nominal value of
U.S.$1.00 per share, so that all Preferred Shares shall be issued as fully
paid.

 

2.                                      Issuance.  The Company may not increase or decrease the
number of Preferred Shares designated as Preferred Shares and may not issue
additional Preferred Shares after the date of first issuance of any Preferred
Shares which shall be the date the Exchange Offer is consummated (the “Original
Issue Date”) without obtaining the prior written consent of the Holders,
provided that the Company may issue additional Preferred Shares up to the full
number of Preferred Shares designated in Section 1(a) on the closing date
of one subsequent offering period, if any (the “Subsequent Offering Period”)
announced by the Company on the business day following the expiration date of
the exchange offer pursuant to which Preferred Shares are first issued (the
“Second Issue Date”).

 

3.                                      Conversion.  (a) 
Subject to adjustment pursuant to Section 9, the Preferred Shares
will become convertible, at the option of the Holder, into Common Shares on a 1
(one) to
[                 ]
basis (the “Conversion Ratio”) in the manner specified in this Section 3,
subject to and effective immediately upon: (i) approval of the Increase of
Capital (as defined in Section 3(b)) by the Members, and (ii) approval of
the Bonus Issue (as defined in Section 3(c)) by the Board of Directors,
which approval shall be subject to the Increase of Capital.

 

(b)                            (i)                                     As soon as
practicable after the Original Issue Date, the Board of Directors shall call a
general meeting (the “General Meeting”) of all Members entitled to vote for the
purpose of the Members considering, and, if thought fit, effecting and
approving an increase in the authorized capital of the Company from
US$161,500,000, consisting of 160,000,000 Common Shares, par value US$1.00 each
and 1,500,000 preferred shares, par value US$1.00 each (including the Preferred
Shares) to
US$[                   ]
by the creation of an additional
[            ]
Common Shares, par value US$1.00 each, or to such greater amount and number of
Common Shares as may be necessary to ensure that the Company has sufficient
authorized Common Shares to meet any increase of Common Shares issuable under
the Conversion Ratio set forth in Section 3 hereof, as adjusted in

 

 

accordance with Section 9 hereof, ranking pari passu in all
respects with the existing Common Shares and having the rights and restrictions
set out in the Bye-laws (the “Increase of Capital”).

 

(ii)                                  The Company, at all
times following the Increase of Capital, if any, shall reserve that number of
Common Shares sufficient to allow the Conversion of all of the issued and
outstanding Preferred Shares on such date.

 

(c)                                  On
the date this Certificate of Designation is approved by the authority of the
Board of Directors in final form, the Board of Directors shall resolve, in
substantially the form of Exhibit “A” to this Certificate of Designation (the
“Bonus Resolution”) and subject to the approval of the Increase of Capital by
the Members, to bonus issue fully paid Common Shares to the holders of the
Preferred Shares, such Bonus Resolution to be effective [two Business Days
after the Second Issue Date]/[on the Original Issue Date](1) (the “Bonus
Issue”), in preference to and to the exclusion of the holders of Common Shares,
by capitalizing an amount of [US$
                ]
standing to the credit of the share premium account of the Company (the
“Capitalization”) to pay up the full nominal value of such number of Common
Shares for each of the Preferred Shares as is equal to the Conversion Ratio
less one, or with respect to any fractional Preferred Share, less such fraction
(the “Bonus Issue Shares”), pursuant to Bye-law 64 and Section 40 of the
Companies Act 1981 of Bermuda (the “Act”). 
The issuance of Bonus Issue Shares to any Holder is subject to and
conditional upon the Company having sufficient share premium (which shall be
reserved in the Bonus Resolution) to fully effect the Capitalization and is
further conditional upon the conversion of the Preferred Share(s) held by such
Holder into Common Shares in accordance with this Section 3 (a
“Conversion”) in each case.  Such Bonus
Issue Shares may be issued to any one or more Holders in discrimination to and
to the exclusion of any one or more other Holders who have not effected a
Conversion of their Preferred Shares. 
The Capitalization shall be effected and the Bonus Issue Shares shall be
issued, in respect of each Preferred Share or fraction thereof, subject to and
upon a Holder’s delivery to the Company of a Notice of Conversion in respect of
such Preferred Share(s) or fraction thereof in accordance with
Section 3(d).  The Company (i)
shall not take any action that would impair, rescind or alter the Bonus
Resolution following its adoption as described in this paragraph (c) and (ii)
shall at all times after the Increase in Capital reserve that number of Common
Shares sufficient to allow, and maintain sufficient share premium to effect,
the Bonus Issue.

 

(d)                                 In
order to effect a Conversion, a Holder shall deliver (via facsimile or
otherwise) a copy of a fully executed Notice of Conversion, in the form
attached hereto, to the Company at its principal office (Attention: Secretary).
Upon receipt by the Company of a Notice of Conversion, the Company shall
promptly send, via facsimile if possible, a confirmation to such Holder stating
that the Notice of Conversion has been received and the name and telephone
number of a contact person at the Company regarding the Conversion.

 

(e)                                  Upon
receipt by the Company of the Notice of Conversion from a Holder and to effect
a Conversion of the Holder’s Preferred Shares:

 

(1)  Select one, as appropriate.  The effective date will be determined at the Original Issue Date,
after determining whether there will be a Subsequent Offering Period.

 

2

 

(i)                                     the
Bonus Issue Shares in respect of each Preferred Share or fractional Preferred
Share being converted shall be issued to such Holder as an integral part of the
Conversion and the Capitalization of the par value of such Bonus Issue Shares
shall be effected in full and reflected in the Company’s records;

 

(ii)                                  simultaneously
with and following upon the action set forth in (i) above, each Preferred Share
or fraction thereof described in such Notice of Conversion will immediately
cease to have the rights and restrictions of a Preferred Share or fraction
thereof and each such Preferred Share will become one fully paid Common Share
and each such fraction of Preferred Share will become an equal fraction of a
Common Share;

 

(iii)                               the
Company will reflect the Conversion in its Register of Members; and

 

(iv)                              the
Company will pay all stamp and transfer taxes, if any, payable upon any
Conversion provided, however, that (i) a Holder shall pay any such tax which is
due because the Holder requests the Common Shares issuable in respect of its
Preferred Shares upon a Conversion to be issued in a name other than the
Holder’s name, and (ii) the Company (or the transfer agent) may refuse to issue
Common Shares to be issued in a name other than the Holder’s name until it
receives cash from the Holder in an amount sufficient to pay any tax referred
to in (i) above.

 

(f)                                    Upon
a Conversion, the relevant Preferred Shares shall no longer be in
existence.  Share certificates
representing the converted Preferred Shares shall be deemed cancelled if not
returned to the Company on or prior to the date of Conversion for cancellation;
provided that a new certificate shall be issued by the Company for the Common
Shares resulting from the Conversion if requested by a Holder.

 

4.                                      Ranking.  For so long as any of the Preferred Shares
remain issued and outstanding the Company may authorize or issue any classes or
series of shares ranking on a parity with or senior to the Preferred Shares as
to dividends, distributions out of contributed surplus or distributions upon
liquidation, winding-up and dissolution of the Company.

 

5.                                      Liquidation
Preference and Rights.  (a) 
Each Preferred Share shall have a liquidation preference of U.S.$0.01
per share (the “Liquidation Preference”).

 

(b)                                 In
the event of any voluntary or involuntary liquidation, dissolution or
winding-up of the Company the Holders shall be entitled to be paid out of the
assets of the Company available for distribution to its Members an amount in cash
equal to the Liquidation Preference before any distribution shall be made or
any assets distributed in respect of the Common Shares of the Company.  Thereafter, the Preferred Shares shall rank
equally with the Common Shares and Holders shall share equally and ratably with
holders of Common Shares in the assets, if any, remaining after the payment of
all of the Company’s debts and liabilities as if each Preferred Share had been
converted into Common Shares in accordance with the Conversion Ratio prior to
such liquidation, dissolution or winding up, whether or not the Company has
sufficient authorized capital to effect such conversion in accordance with the
terms hereof.

 

6.                                      Rights
to Dividends, Return of Capital. 
(a) Holders are entitled to dividends as set forth in this
Section 6, in each case subject to Section 54 of the Act.  Each Holder shall be

 

3

 

entitled to receive, out of the funds of the Company legally available
therefor, dividends, distributions of contributed surplus or any other
distributions on the Preferred Shares on a pro rata basis if, as and when
dividends are declared and paid, or distributions of contributed surplus or any
other distributions are made, by the Board of Directors on the Common Shares,
as though the Preferred Shares had been converted into Common Shares in
accordance with the Conversion Ratio prior to the declaration and payment of
such dividend or the making of such distribution, whether or not the Company has
sufficient authorized capital to effect such conversion in accordance with the
terms hereof.

 

(b)                                 Notwithstanding
any provision of the Act or the Bye-laws which would permit the Company to
return or distribute share capital or other property of the Company to the
holders of Common Shares, upon the Company’s return or distribution of any of
its share capital or of any other property of the Company, in accordance with
applicable law, to any holders of Common Shares, whether by way of a repurchase
of Common Shares, a reduction of issued share capital, a bonus issue of shares
(other than as described under Section 3 hereof) or otherwise (each such
event a “Capital Distribution”) each Holder shall be entitled to receive a pro
rata share of such Capital Distribution, as though the Preferred Shares had
been converted into Common Shares in accordance with the Conversion Ratio prior
to the Capital Distribution, whether or not the Company has sufficient
authorized capital to effect such conversion in accordance with the terms
hereof.

 

(c)                                  Within
five Business Days following the Original Issue Date (i) the Board of Directors
shall have increased the number of directors from seven to eight and, until the
actions described in clause (iii) of this paragraph (c) have been taken, the
Board of Directors shall not increase the number of directors to more than
eight; (ii) three of the six incumbent independent directors shall have
resigned; and (iii) the continuing members of Board of Directors shall have
nominated and appointed four directors proposed by the Holders who are party to
the No-Transfer Agreement that qualify as independent directors and are
reasonably acceptable to the continuing members of the Board of Directors.  If the Company has failed to take any of the
actions described in, or takes any action prohibited under, the first sentence
of this paragraph, then on the sixth Business Day following the Original Issue
Date, the Company shall declare and pay a dividend on the issued and
outstanding Preferred Shares in the aggregate amount of $2,500,000, in
preference to and to the exclusion of the holders of the Common Shares.  Thereafter on each quarterly anniversary of
the sixth Business Day following the Original Issue Date that occurs before the
Preferred Shares have become optionally convertible, if the Company has not
taken any of the actions described in, or takes any action prohibited under,
clauses (i), (ii) and (iii) of the first sentence of this paragraph, then the
Company shall declare and pay a dividend on the issued and outstanding
Preferred Shares in the aggregate amount of $2,500,000, in preference to and to
the exclusion of the holders of the Common Shares.  Notwithstanding the foregoing, the Company shall not be required
to declare or pay any dividend under this paragraph unless the Holders who were
party to the No-Transfer Agreement have delivered to the Company the names and
resumes of no less than seven potential nominees that are in each case
independent of management and are reasonably expected to be reasonably
acceptable to the continuing members of the Board on or before the date that is
two weeks prior to the date such dividends would have otherwise been required
to be declared and paid.

 

4

 

(d)                                 As
soon as practicable following the Original Issue Date and in any event no later
than thirty calendar days thereafter, file a preliminary proxy statement with
the Securities and Exchange Commission (the “SEC”) regarding meetings of its
shareholders in order to recommend adoption and approval of the following
actions: (A) to increase its authorized capital sufficient to allow conversion
of the Preferred Shares hereunder and (B) to authorize a reverse split (i.e.,
consolidation) of its issued and outstanding Common Shares on a one-to-four
basis.  If the Company has failed to
file such proxy statement, then on the thirty-first day following the Original
Issue Date, the Company shall declare and pay a dividend on the issued and
outstanding Preferred Shares in the aggregate amount of $1,000,000, in
preference to and to the exclusion of the holders of the Common Shares.  Thereafter on each quarterly anniversary of
the thirty-first day following the Original Issue Date, if the Company has not
filed such proxy statement, then the Company shall declare and pay a dividend
on the issued and outstanding Preferred Shares in the aggregate amount of
$1,000,000, in preference to and to the exclusion of the holders of the Common
Shares.

 

(e)                                  The
Company will mail the proxy statement described in paragraph (d) above within
five Business Days following the date that the SEC clears such proxy to be
mailed.  If the Company has failed to
take the action described in the first sentence of this paragraph, then on the
sixth day following such clearance date, the Company shall declare and pay a
dividend on the issued and outstanding Preferred Shares in the aggregate amount
of $1,000,000, in preference to and to the exclusion of the holders of the
Common Shares.  Thereafter on each
quarterly anniversary of the sixth day following such clearance date, if the
Company has not mailed such proxy, then the Company shall declare and pay a
dividend on the issued and outstanding Preferred Shares in the aggregate amount
of $1,000,000, in preference to and to the exclusion of the holders of the
Common Shares.

 

(f)                                    The
Company will convene meetings of its shareholders to approve the actions
described in clauses (A) and (B) of paragraph (d) above on or prior to
October 24, 2004.  If the Company
has failed to take the action described in the first sentence of this
paragraph, then on October 25, 2004, the Company shall declare and pay a
dividend on the issued and outstanding Preferred Shares in the aggregate amount
of $2,500,000, in preference to and to the exclusion of the holders of the
Common Shares.  Thereafter on each
quarterly anniversary of October 25, if the Company has not taken the
action described in the first sentence of this paragraph, then the Company
shall declare and pay a dividend on the issued and outstanding Preferred Shares
in the amount of $2,500,000, in preference to and to the exclusion of the
holders of the Common Shares.

 

(g)                                 The
Company will use its commercially reasonable best efforts to (i) list the
Common Shares on the New York Stock Exchange or the NASDAQ Stock Market as
promptly as practicable; provided that the Company shall not be
obliged to apply for such listing until such time as it reasonably believes it
meets the applicable listing criteria, and (ii) to cooperate to the extent
allowed by applicable laws or rules in facilitating the quotation of the
Preferred Shares on the OTC Bulletin Board or, at such time as the Company
meets the applicable listing criteria, to list the Preferred Shares on the New
York Stock Exchange or the NASDAQ Stock Market, in each case as promptly as
practicable if the Preferred Shares do not become convertible on or prior to
October 24, 2004, provided that, after the Preferred Shares have become
convertible, the Company will not apply to list, and if listed, will use its
reasonable best efforts (which in any

 

5

 

event shall include any action within the Company’s control) to
promptly delist, the Preferred Shares. 
If the Company has failed to use its commercially reasonable best
efforts to take such actions as may be required under clause (i) of the first
sentence of this paragraph, or to cooperate under clause (ii) of the first
sentence of this paragraph as it relates to listing but not the delisting of the
Preferred Shares, then on the 30th Business Day following the receipt of notice
of such failure from the holders of 25% of the Preferred Shares outstanding, if
such failure shall not have been cured prior to such date, the Company shall
declare and pay a dividend on the issued and outstanding Preferred Shares in
the aggregate amount of $1,000,000, in preference to and to the exclusion of
the holders of the Common Shares. 
Thereafter on each quarterly anniversary of the first such payment date,
if the Company has not used its commercially reasonable best efforts to take
such actions as may be required under clause (i) of the first sentence of this
paragraph, or to cooperate under clause (ii) of the first sentence of this
paragraph, then the Company shall declare and pay a dividend on the issued and
outstanding Preferred Shares in the aggregate amount of $1,000,000, in
preference to and to the exclusion of the holders of the Common Shares.

 

(h)                                 The
Company will take all steps necessary to adopt the appropriate amendments to
its organizational documents to effect the actions described in the first
sentence of paragraph (d) hereof, including (A) adopting board resolutions
recommending such actions, (B) distributing timely notice of such meetings to
its shareholders, (C) complying with applicable proxy solicitation requirements
as soon as practicable, (D) if a quorum is not present on a scheduled date of
any such meeting, postponing and reconvening such meeting at least twice and
(E) with respect to the action described in clause (B) of paragraph (d), duly
convening and holding a separate general meeting of the holders of Common
Shares.  If the Company has failed to
take such actions as may be required under the first sentence of this
paragraph, then on the 30th Business Day following receipt of notice of such
failure from the holders of 25% of the Preferred Shares outstanding, if such
failure shall not have been cured prior to such date, the Company shall declare
and pay a dividend on the issued and outstanding Preferred Shares in the
aggregate amount of $1,000,000, in preference to and to the exclusion of the
holders of the Common Shares. 
Thereafter, on each quarterly anniversary of the first such payment
date, if the Company has failed to take such action as may be required under
the first sentence of this paragraph, then subject to Section 54 of the
Act, the Company shall declare and pay a dividend on the issued and outstanding
Preferred Shares in the aggregate amount of $1,000,000, in preference to and to
the exclusion of the holders of the Common Shares.

 

(i)                                     Pursuant
to Section 3(c) hereof, the Board of Directors is required (i) to adopt
the Bonus Resolution on the date this Certificate of Designation is approved in
final form, with effect [two Business Days after the Second Issue Date]/[on the
Original Issue Date] and (ii) following its adoption, the Company is required
(x) to refrain from taking any action to impair, rescind or alter the Bonus
Resolution following its adoption in accordance with Section 3(c) and (y)
to at all times after the Increase in Capital reserve that number of Common
Shares sufficient to allow, and maintain sufficient share premium to effect,
the Bonus Issue.  If the Board of
Directors has failed to take the action described in clause (i), or if the
Company has failed to take or to refrain from taking, as the case may be, the
actions described in clause (ii) of the first sentence of this paragraph, then
on the sixth day following its failure, the Company shall declare and pay a
dividend on the issued and outstanding Preferred Shares in the aggregate amount
of $2,500,000, in preference to and to the exclusion of the holders of the
Common Shares.

 

6

 

Thereafter on each quarterly anniversary of the first such payment
date, if the Board of Directors has not taken the action described in clause
(i) (or refrain from taking the action described in clause (ii)) of the first
sentence of this paragraph, then the Company shall declare and pay a dividend
on the issued and outstanding Preferred Shares in the aggregated amount of
$2,500,000, in preference to and to the exclusion of the holders of the Common
Shares.

 

(j)                                     All
dividends payable under this Section shall be cumulative.  Without limiting any other rights of the
Holders hereunder (including, without limitation, the rights to receive
dividends payable under this Section), at law or otherwise, upon the default of
the equivalent of six quarterly dividends on the Preferred Shares, the Holders
may, voting as a class, elect at least two members of the Board of Directors at
each Annual General Meeting of the Company, such right to continue until all
dividends payable hereunder have been paid in full.

 

7.                                      Voting
Rights.  (a)  Prior to the Preferred Shares becoming
convertible, each Holder shall have the number of votes for each Preferred
Share that such Holder would have if that Preferred Share had been converted
into Common Shares in accordance with the Conversion Ratio, whether or not the
Company has sufficient authorized capital to effect such conversion in
accordance with the terms hereof.  Until
the Preferred Shares have become convertible, the Holders shall vote with the
holders of Common Shares as a single class on all matters brought before the
Members of the Company except as set forth herein or in the Bye-laws or as
required under applicable law and, for greater certainty, shall be entitled to
notice of and to attend and vote at all general meetings of the Company
including, without limitation, the General Meeting.  If and when the preferred shares become convertible at each
Holder’s option, they will cease to vote except in limited circumstances as
required by Bermuda law and as set forth herein.

 

(b)                                 Any
amendment, alteration or repeal of the terms of the Memorandum of Association,
the Bye-laws, this Certificate of Designation or the Adopting Resolution or any
change in the terms of the Preferred Shares, however effected (including by
merger, amalgamation or scheme of arrangement or similar reorganization), in
each case that would affect the powers, preferences or rights of the Preferred
Shares will require the approval of Holders of at least three-fourths of the
issued and outstanding Preferred Shares consenting or voting as a separate
class.  This approval can be evidenced
either by unanimous consent in writing or by a resolution passed at a special
general meeting of the Holders at which a quorum consisting of at least two
persons holding or representing one-third of the issued and outstanding Preferred
Shares is present.

 

(c)                                  Notice
of all general meetings of the Company at which the Holders are entitled to
vote and of any special general meeting of the Holders shall be given by the
Company to the Holders in accordance with the provisions of the Bye-laws
relating to notice for general meetings and notice to Members.

 

8.                                      Redemption,
Pre-emptive Rights and Sinking Fund. 
(a)  Holders have no redemption,
pre-emptive or sinking fund rights.

 

9.                                      Anti-Dilution.  The Conversion Ratio as set forth in Section 3
shall be subject to the following adjustments:

 

7

 

(a)                                  Share Splits; Subdivisions; Reverse Splits;
Consolidations and Divisions; and Combinations.  If the issued and outstanding Common Shares
are subdivided, split or reclassified into a greater number of Common Shares on
or after the Original Issue Date, the Conversion Ratio in effect at the opening
of business on the day following the day upon which such subdivision, split or
reclassification becomes effective shall be proportionately increased.  Conversely, if the outstanding Common Shares
shall be combined, consolidated and divided or reclassified into a smaller
number of Common Shares, the Conversion Ratio in effect at the opening of
business on the day following the day upon which such combination,
consolidation and division or reclassification becomes effective shall be
proportionately reduced.  Such increase
or reduction, as the case may be, will become effective immediately after the
opening of business on the day following the day upon such subdivision, split,
reclassification or consolidation and division or combination becoming
effective.  Without limiting the
foregoing, the Conversion Ratio and the Bonus Issue for purposes of the
Conversion of the Preferred Shares shall be adjusted in accordance with this
Section 9 following the Increase of Capital if the reverse split (i.e.,
consolidation) referred to in clause (B) of Section 6(d) is duly approved
by the Members and the holders of the Common Shares of the Company in
accordance with the Bye-laws and Bermuda law.

 

(b)                                 Reorganization Events. 
In the event:

 

(i)                                     any
consolidation, amalgamation or merger of the Company with or into another
person or of another person with or into the Company; or

 

(ii)                                  any
sale, transfer, lease or conveyance to another person of the assets of the
Company as an entirety or substantially as an entirety; or

 

(iii)                               any
reclassification, reorganization or recapitalization (other than a
reclassification to which paragraph (a) of this Section 9 applies),

 

(any of subsections (i) - (iii), a “Reorganization Event”), were
to occur after the Original Issue Date, and pursuant to the terms of such
Reorganization Event, shares or other securities, property or assets of the
Company, the resulting company, successor or transferee or affiliate thereof,
or the acquiror or affiliate thereof, or any other person, or cash are to be
received by or distributed to the holders of Common Shares, then each Holder of
Preferred Shares shall be entitled to receive upon the occurrence of a
Conversion, the number of shares or other securities, property or assets of the
Company, the resulting company, successor or transferee or affiliate thereof,
or the acquiror or affiliate thereof, or any other person, or cash received by
or distributable upon or as a result of such Reorganization Event to a holder
of the number of Common Shares into which such Preferred Shares are convertible
at the Conversion Ratio applicable prior to such Reorganization Event whether or
not the Company has sufficient authorized capital to effect such conversion in
accordance with the terms hereof.

 

In the event of such a Reorganization Event, the person formed by
consolidation or merger or resulting from amalgamation or the person that acquires
the assets of the Company shall execute and deliver to the transfer agent for
the Common Shares an agreement providing that the Holder of each Preferred
Share that remains issued and outstanding after the Reorganization Event (if
any) shall have the rights provided by this Section 9.  Such

 

8

 

supplemental agreement shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental agreement, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section 9.  The above provisions of this subsection (b) shall similarly
apply to successive Reorganization Events.

 

(c)                                  Notice of Adjustment. 
Whenever the Conversion Ratio is adjusted in accordance with this
Section 9, the Company shall: (i) forthwith compute the Conversion Ratio
in accordance with this Section 9 and prepare and transmit to the transfer
agent for the Common Shares an Officer’s Certificate setting forth the adjusted
Conversion Ratio, the method of calculation thereof in reasonable detail, and
the facts requiring such adjustment and upon which such adjustment is based;
and (ii) as soon as practicable following the occurrence of an event that
requires an adjustment to the Conversion Ratio pursuant to this Section 9
(or if the Company is not aware of such occurrence, as soon as practicable
after becoming so aware), provide a written notice to the Holders of the
occurrence of such event and a statement setting forth in reasonable detail the
method by which the adjustment to the Conversion Ratio was determined and
setting forth the adjusted Conversion Ratio.

 

10.                               Definitions;
Construction.

 

(a)                                  Definitions.  The following terms, as used herein, have
the following meanings:

 

“Act” has the meaning set forth in Section 3(c).

 

“Adopting Resolution” means the resolution or resolutions of the
Board of Directors adopting this Certificate of Designation.

 

“Board of Directors” has the same meaning as the definition of
the Board set forth in Bye-law 1(1)(i) of the Bye-laws.

 

“Bonus Issue” has the meaning set forth in Section 3(c).

 

“Bonus Issue Shares” has the meaning set forth in
Section 3(c).

 

“Bonus Resolution” has the meaning set forth in Section 3
(c).

 

“Business Day” means any day excluding
Saturday, Sunday or any day that shall be in the City of New York a legal
holiday or a day on which banking institutions are authorized or required by
law or other governmental actions to close.

 

“Bye-laws” means the bye-laws of the
Company as amended from time to time.

 

“Capital Distribution” has the meaning set forth in
Section 6(b).

 

“Capitalization” has the meaning set forth in Section 3(c).

 

“Common Shares” means common shares of the Company, par value
US$1.00 per share.

 

“Company” means Foster Wheeler Ltd.

 

9

 

“Conversion” has the meaning set forth in Section 3(c).

 

“Conversion Ratio” has the meaning set forth in
Section 3(a).

 

“Exchange Offer” has the meaning set forth in the No-Transfer
Agreement.

 

“General Meeting” has the meaning set forth in
Section 3(b).

 

“Holder” means each person who is entered in the register of
members of the Company as the holder of one or more Preferred Shares.

 

“Increase of Capital” has the meaning set forth in
Section 3(b).

 

“Liquidation Preference” has the
meaning set forth in Section 5(a).

 

“Members” has the meaning set forth in
Bye-law 1(1)(w) of the Bye-laws and includes the Holders.

 

“Memorandum of Association” means the Company’s memorandum of
association, as amended from time to time.

 

“Notice of Conversion” shall mean a notice in the form annexed
hereto.

 

“No-Transfer Agreement” means the No-Transfer Agreement dated
April 8, 2004 among the Company, Foster Wheeler LLC, a Delaware limited
liability company, and the security holders party thereto, as amended on May 4,
May 7 and May 19, 2004, and as further amended from time to time.

 

“Officer’s Certificate” means a certificate executed by a duly
appointed and authorized officer of the Company.

 

“Original Issue Date” has the meaning
set forth in Section 2.

 

 “person” means an
individual or a company, partnership, trust, incorporated or unincorporated
association, joint venture, joint stock company, limited liability company,
government (or any agency or political subdivision thereof) or other entity of
any kind.

 

“Preferred Shares” has the meaning set forth in Section 1.

 

“Reorganization Event” has the meaning set forth in
Section 9(b).

 

“SEC” has the meaning set forth in Section 6(d).

 

“Second Issue Date” has the meaning set forth in Section 2.

 

“Share Premium Account” has the
meaning set forth in Section 40(1) of the Act.

 

“Subsequent Offering Period” has the
meaning set forth in Section 2.

 

10

 

(b)                                 Rules
of Construction.  The definitions in
Section 10 shall apply equally to both the singular and plural forms of
the terms defined.  Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine
and neuter forms.  The words “include”,
“includes” and “including” shall be deemed to be followed by the
phrase “without limitation.”  References
to “Sections” are references to Sections of this Certificate of Designation
unless otherwise stated.

 

(c)                                  References.  Unless the context shall otherwise require,
all references herein to (i) persons include their respective permitted
successors and assigns or, in the case of governmental persons, persons
succeeding to the relevant functions of such persons, (ii) agreements and other
contractual instruments include subsequent amendments, assignments and other
modifications thereto to the date hereof and thereafter, but in the case of any
amendment, assignment or modification after the date hereof, only to the extent
such amendments, assignments or other modifications thereto are not prohibited
by their terms, (iii) statutes and related regulations include any amendments
of same and any successor statutes and regulations and (iv) time shall be
deemed to be to New York City, New York, U.S.A. time.

 

11.                               No
Impairment.  The Company will
not do any act or thing, whether by amendment of this Certificate of
Designation or through any reorganization, recapitalization, transfer of
assets, consolidation, merger or amalgamation, dissolution, issue or sale of
securities or any other voluntary action, to avoid or to seek to avoid the
observance or performance of any of the terms to be observed or performed
hereunder by the Company.

 

12.                               Bye-Laws.  This Certificate of Designation is adopted
pursuant to Section 44(3) of the Bye-laws and shall be attached to and
read in conjunction with the Bye-Laws.

 

13.                               Register
of Members.  The Company shall
maintain a current register of members in which the Holders from time to time
shall be entered in accordance with the Act.

 

11

 

ANNEX

 

NOTICE
OF CONVERSION

 

(To be executed by the registered Holder in
order to convert the

Series B Convertible Preferred Shares)

 

To:                              Foster
Wheeler Ltd.

 

The undersigned hereby irrevocably elects to convert (the “Conversion”)
                      
Series B Convertible Preferred Shares of Foster Wheeler Ltd. (the “Company”)
into common shares par value $1.00 of the Company (the “Common Shares”), in
accordance with the provisions of the Certificate of Designation of Series B
Convertible Preferred Shares, as of the date written below.  If securities are to be issued in the name
of a person other than the undersigned, the undersigned will pay all transfer
taxes payable with respect thereto.

 

It is understood that each holder of a Preferred Share will receive
that number of Common Shares equal to the Conversion Ratio, as adjusted in
accordance with Section 9 of the Certificate of Designation, and if not,
this Notice of Conversion shall not be effective.

 

Except as provided below, the Company shall electronically issue the
Common Shares issuable pursuant to the Conversion to the account of the
undersigned or its nominee (which is
                       )
with DTC through its Deposit Withdrawal Agent Commission System (“DTC
Transfer”).

 

o                                    In
lieu of receiving the Common Shares issuable pursuant to the Conversion by way
of DTC Transfer, the undersigned hereby requests that the Company issue the
Common Shares to the undersigned and deliver to the undersigned physical certificates
representing such Common Shares.

 

	
   

  	
  Date of Conversion:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Address:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  

 

12

 

Exhibit “A”

 

 

FOSTER
WHEELER LTD.

UNANIMOUS WRITTEN CONSENT OF THE BOARD OF DIRECTORS

 

The Undersigned, being all of the members of the Board of Directors
(the “Board”) of Foster Wheeler Ltd., a company incorporated and existing under
the laws of Bermuda (the “Company”), hereby consent to and unanimously adopt
the following resolutions and hereby direct that this Unanimous Written Consent
be filed with the minutes of the proceedings of the Board.

 

W H E R E A S:

 

1.                                       The Company has
undertaken an exchange offer (the “Exchange Offer”) as described in a Registration
Statement filed on Form S-4 (the “Registration Statement”) dated
[                                ]
2004, approved by the Board and filed by the Company and certain of its
subsidiaries with the US Securities and Exchange Commission (the “SEC”) under the
U.S. Securities Act of 1933, as amended and declared effective by the SEC on
[              ],
2004.

 

2.                                       Pursuant to the
terms of the Exchange Offer, inter alia, the Company has designated a
series of its preferred shares as Series B Convertible Preferred Shares, the
terms of which (the “Terms”) are set forth in the form of Certificate of
Designation (the “Certificate of Designation”) filed as Exhibit 4.20 to the
Registration Statement (the “Preferred Shares” which term includes any fraction
of such a share) and the Company has issued
[                ]
of the Preferred Shares.

 

3.                                       The Terms
require the Company to: (i) convene a general meeting of its shareholders in
order to increase its authorized capital to include at least
[               ]
additional US$1.00 par value common shares of the Company (the “Increase of
Capital”); and (ii) subject to the Increase of Capital, to approve the Bonus
Issue (as defined below).

 

4.                                       In accordance
with the Terms and subject to the Increase of Capital, effective [two Business
Days (as defined in the Certificate of Designation) following the Second Issue
Date]/[on the Original Issue Date (as defined in the Certificate of
Designation)] (the “Effective Date”), the Board desires to bonus issue fully
paid common shares of the Company to the holders of the Preferred Shares (the
“Holders”) following the Increase of Capital (the “Bonus Issue”), by
capitalizing an amount standing to the credit of the share premium account of
the Company (the “Capitalization”) sufficient to pay up the full nominal value
of that number of common shares of US$1.00 par value each of the Company
issuable under the Conversion Ratio (as defined in the Certificate of
Designation) less one, or with respect to any fractional Preferred
Share, less such fraction, for each of the Preferred Shares (the “Bonus Issue
Shares”), pursuant to Bye-law 64 of the Bye-laws of the Company and
Section 40 of the Companies Act 1981 of Bermuda (the “Act”), the Bonus
Issue Shares to be issued, in the case of each Preferred

 

13

 

Share, to the Holder subject to and upon such Holder’s delivery to the
Company of a Notice of Conversion (as defined in the Certificate of
Designation) in respect of such Preferred Share(s) in accordance with the Terms
and for the purpose of a Conversion (as defined in the Certificate of
Designation) of such Preferred Share(s).

 

5.                                       The issuance of
the Bonus Issue Shares shall be subject to and conditional upon the Conversion
of the Preferred Shares by the Holder in each case, and the Bonus Issue Shares
may be issued to any one or more Holders, on Conversion (as defined in the
Certificate of Designation) of the Preferred Shares of such Holder, in
discrimination to and to the exclusion of any one or more other Holders who
have not effected such Conversion of their Preferred Shares.  The Bonus Issue shall be made to the Holders
in preference to and to the exclusion of the holders of common shares of the
Company.

 

6.                                       The
anti-dilution provisions set forth in Section 9 of the Certificate of
Designation shall apply to the Bonus Issue Shares.

 

RESOLVED
that:

 

1.               Subject to the Increase of Capital, the
Bonus Issue and the Capitalization be and are hereby approved with effect from
the Effective Date, pursuant to which the Bonus Issue Shares will be issued to
each Holder subject to and upon such Holder’s delivery to the Company of a
Notice of Conversion (as defined in the Certificate of Designation) in respect
of such Holder’s Preferred Share(s) in accordance with the Terms;

 

2.               the issuance of the Bonus Issue Shares
is subject to and conditional upon the Conversion of the Preferred Shares in
each case, and the Bonus Issue Shares shall be issued to any one or more
Holders in discrimination to and to the exclusion of any one or more other
Holders who have not effected such Conversion of their Preferred Shares, and
the Bonus Issue shall be made to the Holders in preference to and to the
exclusion of the holders of common shares of the Company;

 

3.               Such amount standing to the credit of
the share premium account of the Company as is sufficient to pay up the full
nominal value of all Bonus Issue Shares be and is hereby reserved for purposes
of the Capitalization;

 

4.               subject to the Increase of Capital, that
number of common shares of the Company equal to the Bonus Issue Shares be and
are hereby reserved for issuance as the Bonus Issue Shares upon Conversion of
the Preferred Shares in accordance with the Terms; and

 

5.               the anti-dilution provisions set forth
in section 9 of the Certificate of Designation shall apply to the Bonus
Issue Shares.

 

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Exhibit 10.10  

 
 

EMPLOYMENT AGREEMENT    
    

        THIS EMPLOYMENT AGREEMENT (this "Agreement") is made as of the 16th day of April 2004, by and among LEESPORT FINANCIAL CORP., a Pennsylvania business
corporation having a place of business at 1240 Broadcasting Road, Wyomissing, Pennsylvania 19610 ("Leesport"), LEESPORT BANK, a Pennsylvania banking institution having a place of business at 1240
Broadcasting Road, Wyomissing, Pennsylvania 19610 ("Leesport Bank"), and VITO A. DELISI, an adult individual ("Employee"). 

Background  

        1.     Employee
is serving as President and Chief Executive Officer of The Madison Bank ("Madison Bank"), a Pennsylvania banking institution and a wholly owned subsidiary of
Madison Bancshares Group, Ltd. ("Madison"), pursuant to an employment agreement, dated January 1, 2004 (the "Madison Employment Agreement"). 

        2.     Madison
has entered into an agreement and plan of merger (the "Merger Agreement") with Leesport, dated the date hereof (the "Merger Agreement"), providing, among other
things for the merger of Madison with and into Leesport, with Leesport as the surviving entity, and the subsequent merger of Madison Bank with and into Leesport Bank, with Leesport Bank as the
surviving entity. Defined terms used herein but otherwise not defined herein shall have the meanings ascribed to such terms in the Merger Agreement. 

        3.     Leesport
and Employee desire that Employee continue his employment with Leesport Bank after the Merger as President of the Madison Bank Division of Leesport Bank. In
connection therewith, Leesport and Employee have agreed that (i) Employee shall receive the payment provided in Section 20 of this Agreement in complete satisfaction of any amounts due
and owing to Employee under the Madison Employment Agreement as a result of the Merger, (ii) the Madison Employment Agreement shall be terminated on the Effective Date without further
obligations thereunder by any of the parties to the Madison Employment Agreement and (iii) Employee shall continue his employment with Leesport Bank on and after the Effective Date on the terms
and conditions set forth herein. 

        4.     Employee
agrees to accept employment with Leesport Bank on the terms and conditions set forth herein. 

        NOW,
THEREFORE, the parties hereto, intending to be legally bound, agree as follows: 

        1.    Incorporation of Background.    The Background provisions set forth above are hereby incorporated by reference
into this Agreement and made a part hereof as if set forth in their entirety in this Section 1. 

        2.    Employment.    Leesport Bank hereby employs Employee, and Employee hereby accepts employment with Leesport Bank,
as of the Effective Time of the Merger on the terms and conditions set forth in this Agreement. 

        3.    Duties of Employee.    Employee shall perform such duties as an officer of Leesport Bank as may be assigned to
Employee from time to time by the Board of Directors or the Chief Executive Officer of Leesport Bank, commensurate with his position as head of a major division of Leesport Bank. Employee shall be
employed as an Executive Vice President of Leesport Bank and President of the Madison Bank Division of Leesport Bank to be established in accordance with the provisions of the Merger Agreement, and
shall hold such other titles as may be given to him from time to time by the Board of Directors of Leesport Bank. Employee shall report directly to the Chief Executive Officer of Leesport Bank.
Employee shall devote his full business time, attention and energies to the business of 

1

 

Leesport
Bank during the Employment Period (as defined in Section 4 hereof); provided, however, that this Section 3 shall not be construed as preventing Employee from engaging in any of
the following activities provided that they do not unreasonably interfere with the performance of Employee's duties under this Agreement: (a) investing Employee's personal assets;
(b) performing volunteer work for civic and charitable institutions; (c) serving on the boards of directors of non-profit organizations or, with the prior consent of the
Chief Executive Officer of Leesport Bank, serving on the boards of directors of for-profit organizations that do not compete with Leesport, Leesport Bank or any of their affiliates; or
(d) being involved in any other activity with the prior approval of the Chief Executive Officer of Leesport Bank, which approval shall not be unreasonably withheld. 

        4.    Term of Agreement.    

        (a)   This
Agreement shall be for a period (the "Employment Period") commencing on the Effective Date and ending on December 31, 2007; provided, however, that the
Employment Period shall be automatically extended on January 1, 2008 and on the same date of each subsequent year thereafter (the "Annual Renewal Date") for a period ending one (1) year
from each Annual Renewal Date unless Leesport Bank or Employee provides written notice of nonrenewal to the other party at least sixty (60) days prior to an Annual Renewal Date, in which event
this Agreement shall terminate at the end of the then existing Employment Period. The term Employment Period shall include any renewals or extensions of the Employment Period. 

        (b)   Notwithstanding
the provisions of Section 4(a) hereof, this Agreement shall terminate automatically for Cause (as hereinafter defined) upon written notice from
the Chief Executive Officer of Leesport Bank to Employee. As used in this Agreement, "Cause" shall mean any of the following: 

        (i)    Employee's
conviction of or plea of guilty or nolo contendere to a felony or a crime of falsehood involving Leesport or Leesport Bank, or the actual incarceration of
Employee for a period of at least thirty (30) days relating to such matters; 

        (ii)   Employee's
willful failure to perform his material duties hereunder (other than a failure resulting from Employee's incapacity because of physical or mental illness)
after receipt of written notice, setting forth with particularity the allegations of such failure, from Leesport Bank and a failure to cure such violation within thirty (30) days of such
notice, unless it is apparent under the circumstances that Employee is unable to cure such violation, which failure results in material injury to Leesport, Leesport Bank or any of their subsidiaries
or affiliates, monetarily or otherwise; 

        (iii)  fraud
or gross negligence on the part of Employee in the performance of his duties which results in material injury to Leesport, Leesport Bank or any of their
subsidiaries or affiliates, monetarily or otherwise; 

        (iv)  disparaging
material public statements by Employee relating to Leesport, Leesport Bank or any of their subsidiaries or affiliates; 

        (v)   Employee's
breach of fiduciary duty involving personal profit; or 

        (vi)  Employee's
removal or prohibition from being an institution-affiliated party by a final order of an appropriate federal banking agency pursuant to Section 8(e)
of the Federal Deposit Insurance Act or by the Pennsylvania Department of Banking pursuant to state law. 

        If
this Agreement is terminated for Cause, Employee's rights under this Agreement shall cease as of the effective date of such termination, except that Employee shall be entitled to all
accrued compensation and benefits as of the effective date of termination (including, without limitation, Annual Base Salary, vacation and expense reimbursement but excluding any pro-rated
bonus) as of the effective date of termination. 

2

 

        (c)   Notwithstanding
the provisions of Section 4(a) hereof, this Agreement shall terminate automatically upon Employee's voluntary termination of employment (other
than in accordance with Section 6 hereof), retirement at Employee's election, or Employee's death, and Employee's rights under this Agreement shall cease as of the date of such voluntary
termination, retirement at Employee's election, or death; provided, however, that, if Employee dies after Employee delivers a Notice of Termination (as defined in Section 6(a) hereof), the
amounts provided for in Section 7 shall remain payable and the provisions of Section 15(b) hereof shall apply. 

        (d)   Notwithstanding
the provisions of Section 4(a) hereof, this Agreement shall terminate automatically upon Employee's disability and Employee's rights under this
Agreement shall cease as of the date of such termination; provided, however, that, if Employee becomes disabled after Employee delivers a Notice of Termination, Employee shall nevertheless be
absolutely entitled to receive all of the compensation and benefits provided for in, and for the term set forth in, Section 7 hereof. For purposes of this Agreement, "disability" shall mean
Employee's incapacitation by accident, sickness or otherwise which renders Employee mentally or physically incapable of performing the services required of Employee for the entire period of six
(6) consecutive months as determined by a physician selected by Leesport and reasonably satisfactory to Employee. During the six-month period referred to in the preceding sentence
in which Employee shall be mentally or physically incapable of performing the services required of Employee prior to a termination for disability, Employee shall be entitled to continue to receive the
salary, benefits and other compensation provided in Section 5 hereof. 

        (e)   Employee
agrees that, in the event his employment under this Agreement terminates for any reason, Employee shall concurrently resign as a director of Leesport, Leesport
Bank or any of their subsidiaries or affiliates, if he is then serving as a director of any such entities. 

        5.    Employment Period Compensation and Benefits.    

        (a)    Salary.    For services performed by Employee under this Agreement, Leesport Bank shall pay Employee an
annualized base salary in the aggregate amount of Two Hundred Thirty-Five Thousand Dollars ($235,000.00) per year during the Employment Period ("Annual Base Salary"), payable at the same
times as salaries are payable to other Employee employees of Leesport Bank. Leesport Bank may, from time to time, increase (but may not decrease) Employee's Annual Base Salary, and any and all such
increases shall be deemed to constitute amendments to this Section 5(a) to reflect the increased amounts, effective as of the date established for such increases by the Board of Directors or
any committee of the Board of Directors of Leesport Bank in the resolutions authorizing such increase. 

        (b)    Bonus.    For services performed by Employee under this Agreement, Employee shall be entitled to participate in
the incentive bonus program in effect from time to time for officers and employees of Leesport on the same basis as similarly situated officers of Leesport Bank. The payment of any such bonus in any
year shall not reduce or otherwise affect any other obligation to Employee provided for under this Agreement. 

        (c)    Vacation.    During the term of this Agreement, Employee shall be entitled to paid annual vacation in
accordance with the policies established for senior Employees of Leesport Bank, which currently is four (4) weeks paid vacation per year. Employee shall not be entitled to receive any
additional compensation from Leesport Bank for failure to take a vacation, nor shall Employee be able to accumulate unused vacation time from one year to the next, except to the extent specifically
authorized by the Board of Directors of Leesport Bank. 

        (d)    Employee Benefit Plans.    During the term of this Agreement, Employee shall be entitled to participate in and
receive the benefits of any employee benefit plan available from time to time to employees who are officers of Leesport Bank; provided, however, that nothing contained herein 

3

 

shall
be construed as prohibiting Leesport, Leesport Bank or any other subsidiary of Leesport from eliminating or limiting a plan or benefit provided that such elimination or limitation is applicable
to all officer employees generally. Employee shall receive past service credit for service under the employee benefit plans of Madison for purposes of determining Employee's eligibility and any
vesting requirements under any plans of Leesport. Employee shall also receive a waiver of all waiting periods and pre-existing condition exclusions under any Leesport plan to the extent
permitted under the terms of the applicable plan. Nothing paid to Employee under any plan or arrangement presently in effect or made available in the future shall be deemed to be in lieu of the salary
payable to Employee pursuant to Section 5(a) hereof. 

        (e)    Stock Options.    On the Effective Date of the Merger, the Employee shall be granted five thousand (5,000)
incentive stock options under Leesport's 1998 Employee Stock Incentive Plan, as amended (the "Stock Option Plan"). Such options shall be granted with an exercise price equal to fair market value of a
share of Leesport common stock on the Effective Date of the Merger, shall vest ratably over a period of three (3) years from the date of grant and shall otherwise be subject to the terms and
conditions of the Plan. Employee shall be eligible to participate in Leesport's stock option plans and programs in effect from time to time and will be eligible for consideration for grants under such
plans for calendar years commencing January 1, 2005, and thereafter, on the same basis as other officers of Leesport Bank. 

        (f)    Automobile Allowance.    During the Employment Period, Employee shall be entitled to receive a monthly
automobile allowance of One Thousand Dollars ($1,000.00) to cover all expenses, including lease payments, fuel, maintenance and other operating expenses, of an automobile for use in connection with
Employee's duties hereunder. 

        (g)    Split-Dollar Life Insurance Program.    After the Effective Date, Leesport shall continue to maintain the
split-dollar life insurance plan arrangement referenced in Section 2.4 of the Madison Employment Agreement on the same terms and conditions. 

        (h)    Country Club.    During the Employment Period, Leesport Bank shall reimburse the Employee or otherwise pay for
membership dues and all reimbursable business-related expenses associated with the Employee's membership in the Plymouth Country Club in accordance with Leesport's expense reimbursement policies in
effect from time. 

        (i)    Business Expenses.    Leesport Bank shall reimburse the Employee or otherwise pay for all reasonable expenses
incurred by the Employee in furtherance of or in connection with the business of Leesport
Bank or Leesport in accordance with Leesport's expense reimbursement policies in effect from time to time. 

        6.    Termination of Employment Following Change in Control.    

        (a)   If
a Change in Control (as defined in Section 6(b) hereof) shall occur and if thereafter at any time during the term of this Agreement there shall be: 

        (i)    an
involuntary termination of the Employee's employment, other than an involuntary termination permitted in Sections 4(b) and 4(d); 

        (ii)   a
material reduction in the Employee's duties or responsibilities as the same existed immediately prior to public announcement of a transaction involving an actual or
potential Change in Control, or as the same may be increased thereafter; 

        (iii)  a
reduction in the Employee's base compensation below a level that was in effect immediately prior to the public announcement of an actual or potential Change in
Control, or as may be increased thereafter; 

4

 

        (iv)  the
failure to provide the Employee with a total compensation package (salary, welfare and pension benefits, stock options and a bonus plan evaluated on the basis of
bonus potential) reasonably comparable to the compensation package provided to the Employee immediately prior to the public announcement of an actual or potential Change in Control, or as may be
increased thereafter; 

        (v)   the
reassignment of the Employee to a principal office which is more than thirty-five (35) miles from the Employee's primary residence as of the date
of the public announcement of an actual or potential Change in Control; or 

        (vi)  any
material breach of this Agreement by Leesport or Leesport Bank, coupled with the failure to cure the same within thirty (30) days after receipt of written
notice of such breach from the Employee. 

then,
at the option of Employee, exercisable by Employee within one hundred twenty (120) days of the occurrence of any of the foregoing events, Employee may resign from employment with Leesport
Bank (or, if involuntarily terminated, give notice of intention to collect benefits under this Agreement) by delivering a notice in writing (the "Notice of Termination") to Leesport and Leesport Bank
and the provisions of Section 7 of this Agreement shall apply. 

        (b)   As
used in this Agreement, "Change in Control" shall mean the occurrence of any of the following: 

        (i)    any
"person" (as such term is used for purposes of Section 13(d) of the Securities Exchange Act of 1934 (the "Exchange Act") as in effect on the date hereof),
other than Leesport, a subsidiary of Leesport, or an employee benefit plan of Leesport or a subsidiary of Leesport (including a related trust), becomes the beneficial owner (as determined pursuant to
Rule 13d-3 under the Exchange Act), directly or indirectly of securities of Leesport representing more than 24.9% of (A) the combined voting power of Leesport's then
outstanding stock and securities or (B) the aggregate number of shares of Leesport's then outstanding common stock; 

        (ii)   the
occurrence of a sale of all or substantially all of the assets of Leesport or Leesport Bank to an entity which is not a direct or indirect subsidiary of Leesport; 

        (iii)  the
occurrence of a reorganization, merger, consolidation or similar transaction involving Leesport, unless (A) the shareholders of Leesport immediately prior
to the consummation of any such transaction initially thereafter own securities representing at least a majority of the voting power of the surviving or resulting corporation and (B) the
directors of Leesport immediately prior to the consummation of such transaction initially thereafter represent at least a majority of the directors of the surviving or resulting corporation; 

        (iv)  a
plan of liquidation or dissolution, other than pursuant to bankruptcy or insolvency, is adopted for Leesport or Leesport Bank; 

        (v)   during
any period of two consecutive years, individuals who, at the beginning of such period, constituted the Board of Directors of Leesport cease to constitute the
majority of such Board (unless the election of each new director was expressly or by implication approved by a majority of the Board members who were still in office and who were directors at the
beginning of such period); and 

        (vi)  the
occurrence of any other event which is irrevocably designated as a "change in control" for purposes of this Agreement by resolution adopted by a majority of the
then non-employee directors of Leesport. 

5

 

        7.    Rights in Event of Termination of Employment Following Change in Control.    

        (a)   In
the event that Employee delivers a Notice of Termination to Leesport and Leesport Bank, Employee shall be absolutely entitled to receive the compensation determined
in the manner set forth below: 

        (i)    Leesport
or Leesport Bank shall make (or cause to be made) a lump-sum cash payment to Employee no later than thirty (30) days following the date of
such termination in an amount equal to the greater of (A) two (2) times the sum of (i) Employee's then Annual Base Salary and (ii) the average of the amount(s) paid to him
(or otherwise accrued) annually under Section 5(b) during the Employment Period or (B) the present value of the series of payments that would be made to him, pursuant to
Section 8(a)(i), if his termination were governed by Section 8. 

        (ii)   For
purposes of Section 7(a)(i) hereof, the present value of each payment described in Clause (B) of Section 7(a)(i) shall be
determined using the relevant "applicable federal rate(s)" in effect under Section 1274 of the Internal Revenue Code of 1986, as amended (the "Code"), on the date of Employee's termination of
employment. 

        (iii)  In
no event shall the termination payment otherwise required under this section be made to the extent it would trigger a reduction in tax deductions under Code
Section 280G. If Code Section 280G would apply to such payment when made, the amount of such payment shall be reduced to the maximum amount that can be paid without triggering the
reduction in tax deductions. If Code Section 280G would become applicable to the termination payment after it is made, Employee shall be obligated to repay such amount as may be necessary to
avoid such application, determined as provided in the last sentence of Section 8(a) hereof. 

        (b)   Employee
shall not be required to mitigate the amount of any payment provided for in this Section 7 by seeking other employment or otherwise. The amount of
payment provided for in this Section 7 shall not be reduced by any compensation earned by Employee as the result of employment by another employer or by reason of Employee's receipt of or right
to receive any retirement or other benefits after the date of termination of employment or otherwise. 

        8.    Rights in Event of Termination of Employment Absent Change in Control.    

        (a)   Provided
that no Change in Control shall have occurred at the date of termination, in the event that Employee's employment is terminated by Leesport Bank other than for
death, disability or Cause or Employee terminates his employment for Good Reason (as hereinafter defined), Leesport or Leesport Bank shall: (i) pay (or cause to be paid), in the aggregate, to
Employee in cash, an amount equal to the sum of (A) Employee's Annual Base Salary in effect on the date of termination and (B) the average of the amount(s) paid to him (or otherwise
accrued) annually under Section 5(b) during the Employment Period, divided in each case by the number of pay periods during a year, for the greater of (1) a period of twelve
(12) months or (2) the remainder of the then existing Employment Period, paid at the same intervals as the salary is payable under Section 5(a) hereof; and (ii) maintain
and provide to the Employee, at no cost to the Employee, for a period ending at the earliest of (A) the expiration of twelve (12) months from the Employee's last day of active
employment, (B) the date of the Employee's full-time employment by another employer, (C) the date Employee receives medical benefit coverage equivalent to that provided to
Employee on the date of termination from another entity which has engaged Employee to perform services, or (D) the Employee's death, medical benefits coverage for the Employee which the
Employee would have been entitled to receive had his employment with Leesport Bank continued throughout such period. 

        (b)   Employee
shall not be required to mitigate the amount of any payment provided for in this Section 8 by seeking other employment or otherwise. The amount of
payments provided for in 

6

 

this
Section 8 shall not be reduced by any compensation earned by Employee as the result of employment by another employer or by reason of Employee's receipt of or right to receive any
retirement or other benefits after the date of termination of employment or otherwise. 

        (c)   The
amounts payable pursuant to this Section 8 shall constitute Employee's sole and exclusive remedy in the event of involuntary termination of Employee's
employment in the absence of a Change in Control. 

        (d)   As
used in this Agreement, "Good Reason" shall mean: (i) the material reduction in Employee's duties, responsibilities or authority or a change in titles (except
that a change in title relating to Employee's status as President of The Madison Bank Division of Leesport Bank at any time that such Division is no longer maintained by Leesport as permitted by the
terms of the Merger Agreement shall not constitute an event of Good Reason hereunder); (ii) a reduction by Leesport Bank or Leesport in Employee's Annual Base Salary or in other benefits, in
the aggregate, payable to the Employee hereunder (except that a reduction in benefits permitted by Section 5(d) of this Agreement shall not be considered of purposes of determining whether an
event of Good Reason has occurred hereunder); (iii) Leesport Bank or Leesport's failure to pay the Employee any amounts otherwise vested and due hereunder or under any plan or policy of the
Leesport Bank or Leesport; or (iv) a relocation of the Employee's primary place of employment, without the Employee's expressed written approval, to a
location more than twenty (20) miles from the location at which the Employee performed his duties as of the date of this Agreement (except that a relocation of the Employee's primary place of
employment to Leesport's corporate headquarters at such time in order for the Employee to accept a position of increased responsibilities, provided that such location is not more than seventy
(70) miles from the location at which the Employee performed his duties as of the date of this Agreement, shall not constitute an event of Good Reason hereunder). 

        9.    Covenant Not to Compete or Solicit.    

        (a)   Employee
hereby acknowledges and recognizes the highly competitive nature of the business of Leesport, Leesport Bank and their subsidiaries and affiliates and
accordingly agrees that, during the Employment Period and for a period of one (1) calendar year following termination of Employee's employment (except that this Section 9 shall not apply
if Leesport or Leesport Bank terminates the Employee's employment without Cause or the Employee terminates his employment for Good Reason), Employee shall not: 

        (i)    be
engaged, directly or indirectly, either for his own account or as agent, consultant, employee, partner, officer, director, proprietor, investor (except as an investor
owning less than five percent (5%) of the stock of a publicly owned company) or otherwise of any person, firm, corporation or enterprise engaged in (1) the banking (including bank holding
company) industry or (2) any other activity in which Leesport, Leesport Bank or any of their subsidiaries or affiliates is engaged (and in which Employee is also engaged) during the Employment
Period, with a 25-mile radius of any branch office of Leesport Bank (the "Non-Competition Area"); or 

        (ii)   provide
financial or other significant assistance to any person, firm, corporation, or enterprise engaged in (1) the banking (including bank holding company)
industry or (2) any other activity in which Leesport, Leesport Bank or any of their subsidiaries or affiliates is engaged (and in which Employee is also engaged) during the Employment Period,
in the Non-Competition Area; or 

        (iii)  solicit
any person, firm, corporation, or enterprise who or which at any time during the Employment Period was a customer of Leesport, Leesport Bank or any of their 

7

 

subsidiaries
or affiliates for the purpose of providing them with products or services competitive with those provided by any of such entities; or 

        (iv)  solicit
or hire any employees of Leesport, Leesport Bank or any of their subsidiaries or affiliates or induce any of such employees to terminate their employment
relationship with Leesport, Leesport Bank or any of such subsidiaries or affiliates. 

        (b)   It
is expressly understood and agreed that, although Employee and Leesport and Leesport Bank consider the restrictions contained in Section 9(a) hereof reasonable
for the purpose of preserving the good will and other proprietary rights of Leesport, Leesport Bank and their subsidiaries and affiliates, if a final judicial determination is made by a court having
jurisdiction that the time or territory or any other restriction contained in Section 9(a) hereof is an unreasonable or otherwise unenforceable restriction against Employee, the provisions of
Section 9(a) hereof shall not be rendered void but shall be deemed amended to apply as to such maximum time and territory and to such other extent as such court may judicially determine or
indicate to be reasonable. 

        10.    Unauthorized Disclosure.    During the term of his employment hereunder, or at any later time, Employee shall
not, without the written consent of the Board of Directors of Leesport, the Chief Executive Officer of Leesport or a person authorized by any of them, knowingly disclose to any person, other than an
employee of Leesport or Leesport Bank, or any of their respective subsidiaries or affiliates, or a person to whom disclosure is reasonably necessary or appropriate in connection with the performance
by Employee of his duties as an employee of Leesport Bank, any material confidential information obtained by him while in the employ of Leesport Bank with respect to any of Leesport's, Leesport Bank's
and their subsidiaries' and affiliates' services, products, improvements, formulas, designs or styles, processes, customers, methods of business or any business practices the disclosure of which could
be or will be damaging to Leesport, Leesport Bank or any of their subsidiaries or affiliates; provided, however, that confidential and proprietary information shall not include any information known
generally to the public (other than as a result of unauthorized disclosure by Employee or any person with the assistance, consent or direction of Employee) or any information of a type not otherwise
considered confidential by persons engaged in the same business or a business similar to that conducted by Leesport, Leesport Bank or any of their subsidiaries or affiliates, or any information that
must be disclosed as required by law or legal process. 

        11.    Notices.    Except as otherwise provided in this Agreement, any notice required or permitted to be given under
this Agreement shall be deemed properly given if in writing and if mailed by registered or certified mail, postage prepaid with return receipt requested, to Employee's residence, in the case of
notices to Employee, and to the principal Employee offices of Leesport and Leesport Bank, in the case of notices to Leesport and Leesport Bank. 

        12.    Waiver.    No provision of this Agreement may be modified, waived or discharged unless such waiver,
modification or discharge is agreed to in writing and signed by Employee and an executive officer specifically designated by the Board of Directors of Leesport or Leesport Bank. No waiver by a party
hereto at any time of any breach by the other party hereto of, or compliance with, any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar
or dissimilar provisions or conditions at the same or at any prior or subsequent time. 

        13.    Assignment.    This Agreement shall not be assignable by any party, except by Leesport and Leesport Bank to any
successor in interest to their respective businesses. 

        14.    Entire Agreement.    This Agreement contains the entire agreement of the parties relating to the subject matter
of this Agreement. 

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        15.    Successors, Binding Agreement.    

        (a)   Leesport
and Leesport Bank will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the
businesses and/or assets of Leesport and Leesport Bank to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Leesport and Leesport Bank would be
required to perform it if no such succession had taken place. Failure by Leesport and Leesport Bank to obtain such assumption and agreement prior to the effectiveness of any such succession shall
constitute a breach of this Agreement and the provisions of Sections 4, 6 and 7 of this Agreement shall apply. As used in this Agreement, "Leesport" and "Leesport Bank" shall mean Leesport and
Leesport Bank as defined previously and any successor to their respective businesses and/or assets as aforesaid which assumes and agrees to perform this Agreement by operation of law or otherwise. 

        (b)   This
Agreement shall inure to the benefit of and be enforceable by Employee's personal or legal representatives, executors, administrators, heirs, distributees, devisees
and legatees. If Employee should die after either a Notice of Termination is delivered by Employee, or following termination of Employee's employment without Cause, and any amounts would be payable to
Employee under this Agreement if Employee had continued to live, all such amounts shall be paid in accordance with the terms of this Agreement to Employee's devisee, legatee, or other designee, or, if
there is no such designee, to Employee's estate. 

        16.    Arbitration.    Leesport, Leesport Bank and Employee recognize that, in the event a dispute should arise
between them concerning the interpretation or implementation of this Agreement, lengthy and expensive litigation will not afford a practical resolution of the issues within a reasonable period of
time. Consequently, each party agrees that all disputes, disagreements and questions of interpretation concerning this Agreement are to be submitted for resolution in a location mutually agreed to by
Leesport and Employee, or, in the absence of such agreement, Philadelphia, Pennsylvania, to the American Arbitration Association (the "Association") in accordance with the Association's National Rules
for the Resolution of Employment Disputes or other applicable rules then in effect ("Rule"). Leesport and Leesport Bank or Employee may initiate an arbitration proceeding at any time by giving notice
to the other in accordance with the Rules. Leesport, Leesport Bank and Employee, may, as a matter or right, mutually agree on the appointment of a particular arbitrator from the Association's pool.
The arbitrator shall not be bound by the rules of evidence and procedure of the courts of the Commonwealth of Pennsylvania but shall be bound by the substantive law applicable to this Agreement. The
decision of the arbitrator, absent fraud, duress, incompetence or gross and obvious error of fact, shall be final and binding upon the parties and shall be enforceable in courts of proper
jurisdiction. Following written notice of a request for arbitration, Leesport, Leesport Bank and Employee shall be
entitled to an injunction restraining all further proceedings in any pending or subsequently filed litigation concerning this Agreement, except as otherwise provided herein. 

        17.    Validity.    The invalidity or unenforceability of any provision of this Agreement shall not affect the
validity or enforceability of any other provision of this Agreement, which shall remain in full force and effect. 

        18.    Applicable Law.    This Agreement shall be governed by and construed in accordance with the domestic, internal
laws of the Commonwealth of Pennsylvania, without regard to its conflicts of laws principles. 

        19.    Headings.    The section headings of this Agreement are for convenience only and shall not control or affect
the meaning or construction or limit the scope or intent of any of the provisions of this Agreement. 

        20.    Effective Date; Change in Control Payment; Termination of Madison Employment Agreement and Prior Severance
Agreements.    This Agreement shall become effective only at the Effective Time of the 

9

 

Merger.
Prior to the Effective Time, neither Leesport, Leesport Bank, nor any of their respective subsidiaries or affiliates shall have any obligation to Employee hereunder or otherwise. Effective at
the Effective Time of the Merger, the Madison Employment Agreement, and any other agreement, arrangement or understanding between Employee and Madison relating to Employee's employment or
compensation, shall terminate and be of no further force and effect. Notwithstanding the preceding sentence, on the Closing Date, Employee shall receive, in complete satisfaction of any rights of
Employee under the Madison Employment Agreement or any other agreement, arrangement or understanding with Madison (including without limitation Section 3.5 of the Madison Employment Agreement),
a lump-sum cash payment in the amount of Six Hundred Fifty-Two Thousand Six Hundred Fifty Dollars ($652,650.00) or such lesser amount as may be necessary such that such
payment, together with all other amounts or benefits provided to or on behalf of Employee in connection with the Merger would not result in the reduction of tax deductions under Code
Section 280G. 

[REMAINDER
OF PAGE INTENTIONALLY LEFT BLANK] 

10

 

        IN
WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written. 

	 	 	LEESPORT FINANCIAL CORP.
	

 	
 	

By:	

 
	 	 	 	
 Name: Raymond H. Melcher, Jr.

Title: Chairman, President and Chief Executive Officer
	

 	
 	

ATTEST:
	

 	
 	

By:	

 
	 	 	 	
 Name: Jenette L. Eck

Title: Secretary
	

 	
 	
"Leesport"
	
 	
 	

LEESPORT BANK
	

 	
 	

By:	

 
	 	 	 	
 Name: Raymond H. Melcher, Jr.

Title: Chairman, President and Chief Executive Officer
	

 	
 	

ATTEST:
	

 	
 	

By:	

 
	 	 	 	
 Name: Jenette L. Eck

Title: Secretary
	

 	
 	
"Leesport Bank"

	

WITNESS:	
 	

 	

 
	 	 	 	(SEAL)
	
	 	
 Vito A. DeLisi	 
	

 	
 	
"Employee"

11

QuickLinks

EMPLOYMENT AGREEMENT

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