Exhibit 10.1
AMENDED AND RESTATED EMPLOYMENT AGREEMENT
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This Amended and Restated Employment Agreement is entered into this 4th day
of November, 2004, between Timothy R. Estes ("Employee") and Dycom Industries,
Inc. ("Employer").
1. Employment. Subject to the terms and conditions hereof, Employer hereby
agrees to continue to employ Employee as Executive Vice President and Chief
Operating Officer to perform such specific duties and have such responsibilities
as the Chief Executive Officer of the Employer and the Employer's Board of
Directors (the "Board") may from time to time establish; provided, however, that
such duties shall be consistent with the status, duties and responsibilities
typically accorded to a Chief Operating Officer. Employee hereby accepts
continued employment by Employer as Executive Vice President and Chief Operating
Officer of Employer, subject to the terms and conditions hereof, and agrees to
continue to devote his full business time and attention to his duties hereunder,
to the best of his abilities. This Employment Agreement supersedes that certain
Employment Agreement between the parties hereto made the 19th day of November,
2001 (the "Prior Agreement").
2. Term of Employment. Employee's period of employment pursuant to this
Employment Agreement (the "Term") shall commence on the date set forth above and
shall terminate upon the earlier to occur of (a) termination pursuant to
paragraph 5 hereof or (b) December 31, 2008, unless extended by the parties
hereto.
3. Compensation, Benefits and Expenses.
(a) At the commencement of Employee's term of employment pursuant to this
Employment Agreement, Employee shall be paid a base salary at an annual rate of
$420,000. Payment will be made on the regularly scheduled pay dates of Employer,
subject to all appropriate withholdings or other deductions required by law or
by Employer's established
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policies applicable to all employees of Employer. The Compensation Committee of
the Board shall review Employee's salary annually, and may increase Employee's
salary in its sole discretion, but shall not reduce such salary below the rate
established by this Employment Agreement (as it may be increased from time to
time hereunder) without Employee's written consent.
(b) In addition to any other compensation payable to Employee pursuant to
this Employment Agreement, Employee during the term of this Employment Agreement
shall participate in an annual bonus plan or otherwise be eligible for an annual
bonus, with a target of 100% of his base salary on such terms as may be
determined by the Compensation Committee, if applicable performance criteria are
fully achieved.
(c) Employee's services hereunder shall be performed at the principal
offices of Employer in Statesville, North Carolina, subject to such reasonable
travel as the performance of Employee's duties and the business of Employer may
require.
(d) In addition to compensation payable to Employee as described above,
Employee shall be entitled to participate in all employee benefit plans or
programs of Employer as are available to management employees of Employer
generally and such other benefit plans or programs as may be specified by the
Board, including any stock options that may be granted by the Board. Employer
also shall reimburse Employee for an annual physical examination by a physician
of Employee's choice.
(e) Employee shall receive a grant of 50,000 restricted shares of Employer
common stock (the "Restricted Stock") pursuant to the Dycom Industries, Inc.
2003 Long-Term Incentive Plan (the "LTIP") as follows: (I) 3,500 shares of
Restricted Stock shall be granted on or about the date of the Employer's 2004
annual general meeting of shareholders and (II) 46,500 shares of Restricted
Stock shall be granted on or about January 3, 2005. The Restricted Stock shall
(i) vest, on a pro-rata basis, at the rate of 25% percent on each of December
31, 2005,
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December 31, 2006, December 31, 2007 and December 31, 2008; provided, however,
that if, (A) Employee dies, (B) he becomes disabled (as set forth in paragraph
5(b) hereof), (C) the Company terminates his employment for any reason other
than for Cause (as defined in paragraph 5(a) hereof) or (D) he resigns his
employment for Good Reason (as defined in paragraph 5(c) hereof) on or before
December 31, 2005, then 3,500 shares of Restricted Stock shall be deemed to be
immediately and fully vested on the date of such termination or resignation and
(ii) otherwise be subject to the same terms and conditions applicable to shares
of Restricted Stock granted to other senior executives of Employer.
Notwithstanding the foregoing, in the event that Employee's employment is
terminated without Cause or Employee resigns for Good Reason during the 13-month
period commencing on the date of a Change of Control (as defined in paragraph
5(c) hereof), all outstanding and unvested shares of Restricted Stock shall
fully and immediately vest and all restrictions shall lapse.
(f) On or about the date of the Employer's 2004 annual general meeting of
shareholders, Employee shall receive a grant of 50,000 options to purchase
shares of Employer's common stock (the "Options") with an exercise price per
share equal to the closing price of a share of Employer's common stock on the
date the Options are granted. The Options shall (i) vest, on a pro-rata basis,
at the rate of twenty-five percent on each of the first four anniversaries of
the date that the Options are granted to Employee and (ii) otherwise be subject
to the same terms and conditions applicable to stock options granted to other
senior executives of Employer. Notwithstanding the foregoing, all Options
granted by Employer to Employee on or after the date of this Agreement shall
fully and immediately vest to the extent not already vested in the event that
Employee's employment is terminated without Cause or Employee resigns for Good
Reason during the 13-month period commencing on the date of a Change of Control.
All outstanding stock options granted by Employer to Employee pursuant to the
1998 Option Plan
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shall fully and immediately vest to the extent not already vested upon the
occurrence of a Change of Control.
(g) On a timely basis, Employer shall reimburse Employee for such
reasonable out-of-pocket expenses as Employee may incur for and on behalf of the
furtherance of Employer's business provided that Employee submits to Employer
satisfactory documentation or other support for such expenses in accordance with
Employer's expense reimbursement policy.
4. Covenants of Employee.
(a) During the Term and ending on the fifth anniversary following the
termination of Employee's employment with Employer for any reason, Employee
shall not divulge or appropriate to Employee's own use or to the use of others
any trade secrets or confidential information or confidential knowledge
pertaining in any respect to the business of Employer (collectively, the
"Proprietary Information"). The restrictions contained herein shall not apply
to, and Proprietary Information shall not include, any information which (i) was
already available to the public at the time of disclosure, or subsequently
became available to the public, otherwise than by breach of this Employment
Agreement or (ii) is or becomes available to Employee after the termination of
Employee's employment with Employer on a non-confidential basis from a
third-party source; provided that such third-party source is not bound by a
confidentiality agreement or any other obligation of confidentiality to
Employer.
(b) During Employee's employment with Employer and, in the event of his
termination of employment or resignation for any reason, for a period ending on
the first anniversary of such termination or resignation (the "Restricted
Period"), Employee shall not directly or indirectly engage in any business,
whether as proprietor, partner, joint venturer, employer, agent, employee,
consultant, officer or beneficial or record owner of more than one percent of
the stock of any corporation or association of any nature which is competitive
with the
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business conducted by Employer in the current geographical service area of
Employer or in any other geographical service area of Employer during the term
of Employee's employment.
(c) In addition, during the Restricted Period Employee shall not, directly
or indirectly, (i) interfere with any relationship between Employer and any of
its employees, consultants, agents or representatives, (ii) employ or otherwise
engage, or attempt to employ or otherwise engage, any current or former
employee, consultant, agent or representative of Employer in a business
competitive with Employer, (iii) solicit the business or accounts of Employer or
(iv) divert or attempt to divert from Employer any business or interfere with
any relationship between Employer and any of its clients or customers.
(d) Employee agrees that the breach by Employee of any of the foregoing
covenants is likely to result in irreparable harm, directly or indirectly, to
Employer. Employee, therefore, consents and agrees that if Employee violates any
of such covenants, Employer shall be entitled, among and in addition to any
other rights or remedies available under this Employment Agreement or at law or
in equity, to temporary and permanent injunctive relief to prevent Employee from
committing or continuing a breach of such covenants.
(e) It is the desire, intent and agreement of Employee and Employer that
the restrictions placed on Employee by this paragraph 4 be enforced to the
fullest extent permissible under the law and public policy applied by any
jurisdiction in which enforcement is sought. Accordingly, if and to the extent
that any portion of this paragraph 4 shall be adjudicated to be unenforceable,
such portion shall be deemed amended to delete therefrom or to reform the
portion thus adjudicated to be invalid or unenforceable, such deletion or
reformation to apply only with respect to the operation of such portion in the
particular jurisdiction in which such adjudication is made.
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5. Termination of Employment.
(a) Employer shall have the right to terminate Employee's employment at any
time with or without Cause. For purposes of this Employment Agreement, "Cause"
shall mean (A) Employee's indictment for any crime, whether a (i) felony or (ii)
misdemeanor, that materially impairs Employee's ability to perform the functions
of a Chief Operating Officer, in each case involving the purchase or sale of any
security, mail or wire fraud, theft, embezzlement, moral turpitude, or Employer
property; (B) Employee's repeated willful neglect of his duties to Employer; or
(C) Employee's willful material misconduct in connection with the performance of
his duties or other willful material breach by Employee of this Agreement. No
act or omission on Employee's part shall be considered "willful" if it is done
by Employee in good faith and with reasonable belief that Employee's conduct was
in the best interests of Employer. Employer may not terminate Employee's
employment for Cause under clauses (B) and (C) above unless: (w) Employer gives
Employee at least 30 days' written notice in which to cure such act or failure,
(x) if Employee fails to timely cure such act or failure, Employer gives
Employee at least 15 days' prior written notice of a special Board meeting
called to make a determination that Employee should be terminated for Cause, (y)
Employee and his legal counsel are given the opportunity to address such meeting
prior to a vote of the Board and (z) a determination that Cause exists is made
and approved by three-quarters of the Board. Anything in the foregoing to the
contrary notwithstanding, if Employee has been terminated ostensibly for Cause
because he has been indicted for a crime described in clause (A) of the
definition of Cause, and if he is not convicted of, or does not plead guilty or
no contest to, such crime or a lesser offense (based on the same operative
facts), such termination shall be deemed to be a termination by Employer without
Cause as of the relevant date of termination.
(b) Unless otherwise terminated earlier pursuant to the terms of this
Employment Agreement, Employee's employment under this Employment Agreement will
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terminate upon Employee's death and may be terminated by Employer or Employee
upon giving not less than 30 days written notice to the other party in the event
that Employee, because of physical or mental disability or incapacity, is unable
to perform Employee's duties hereunder for an aggregate of 180 working days
during any 12-month period. All questions arising under this Employment
Agreement as regards Employee's disability or incapacity shall be determined by
a reputable physician mutually selected by Employer and Employee at the time
such question arises. If Employer and Employee cannot agree upon the selection
of a physician within a period of seven days after such question arises, then
the chief of staff of Good Samaritan Hospital, West Palm Beach, Florida shall be
asked to select a physician to make such determination. The determination of the
physician selected pursuant to the above provisions of this paragraph 5(b) as to
such matters shall be conclusively binding upon the parties hereto.
(c) Employee may resign from his employment hereunder at any time with or
without Good Reason, upon 30 days' prior written notice. For purposes of this
Agreement, "Good Reason" shall exist if (i) Employer fails to pay any portion of
the compensation or provide Employee any employee benefit due Employee
hereunder, (ii) Employer materially changes the duties and responsibilities
performed by Employee as Chief Operating Officer, (iii) any successor to
Employer fails to appoint Employee as Executive Vice President and Chief
Operating Officer of a company listed on a North American stock exchange, (iv)
Employer relocates Employee's principal place of business by more than 25 miles
without Employee's consent or (v) Employer fails to cause a successor to assume
this Employment Agreement in accordance with paragraph 7(b) hereof. In addition,
any resignation by Employee during the one-month period commencing on the first
anniversary of a Change of Control shall be deemed a resignation for Good Reason
for purposes of this Employment Agreement. For purposes of this Employment
Agreement, a "Change of Control" shall be deemed to have occurred with respect
to Employer if any one or more of the following events occur:
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(i) An acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 (the
"Exchange Act")) (a "Person") of beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of 20% or more of either (A) the
then outstanding shares of Employer's common stock (the "Outstanding Common
Stock") or (B) the combined voting power of the then outstanding voting
securities of Employer entitled to vote generally in the election of directors
(the "Outstanding Voting Securities"); excluding, however, the following: (1)
any acquisition directly from Employer, other than an acquisition by virtue of
the exercise of a conversion privilege unless the security being so converted
was itself acquired directly from Employer; (2) any acquisition by Employer; (3)
any acquisition by any employee benefit plan (or related trust) sponsored or
maintained by Employer or any entity controlled by Employer; or (4) any
acquisition pursuant to a transaction which complies with clauses (A), (B) and
(C) of subparagraph (iii) of this definition of Change of Control; or
(ii) A change in the composition of the Board such that the individuals
who, as of the date hereof, constitute the Board (such Board shall be
hereinafter referred to as the "Incumbent Board") cease for any reason to
constitute at least a majority of the Board; provided, however, for purposes of
this paragraph, that any individual who becomes a member of the Board subsequent
to the date hereof, whose election, or nomination for election by Employer's
shareholders, was approved by a vote of at least a majority of those individuals
who are members of the Board and who were also members of the Incumbent Board
(or deemed to be such pursuant to this proviso) shall be considered as though
such individual were a member of the Incumbent Board; but provided further that
any such individual whose initial assumption of office occurs as a result of
either an actual or threatened election contest (as such terms are used in Rule
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14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of a Person other
than the Board shall not be so considered as a member of the Incumbent Board; or
(iii) Consummation of a reorganization, merger or consolidation or sale or
other disposition of all or substantially all of the assets of Employer
("Corporate Transaction"); excluding, however, such a Corporate Transaction
pursuant to which all of the following conditions are met: (A) all or
substantially all of the individuals and entities who are the beneficial owners,
respectively, of the Outstanding Common Stock and Outstanding Voting Securities
immediately prior to such Corporate Transaction will beneficially own, directly
or indirectly, more than 50% of, respectively, the outstanding shares of common
stock, and the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors, as the case may be, of
the corporation resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction owns Employer or
all or substantially all of Employer's assets either directly or through one or
more subsidiaries) in substantially the same proportions as their ownership,
immediately prior to such Corporate Transaction, of the Outstanding Common Stock
and Outstanding Voting Securities, as the case may be, (B) no Person (other than
Employer, any employee benefit plan (or related trust) of Employer or such
corporation resulting from such Corporate Transaction) will beneficially own,
directly or indirectly, 20% or more of, respectively, the outstanding shares of
common stock of the corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding voting securities of such corporation
entitled to vote generally in the election of directors except to the extent
that such ownership existed prior to the Corporate Transaction and (C)
individuals who were
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members of the Incumbent Board will constitute at least a majority of the
members of the board of directors of the corporation resulting from such
Corporate Transaction; or
(iv) The approval by the shareholders of Employer of a complete liquidation
or dissolution of Employer.
(d) In the event Employer terminates Employee's employment (other than by
reason of Cause or Employer's failure to renew this Employment Agreement on
substantially no less favorable terms to Employee as the then effective
Employment Agreement) or Employee resigns for Good Reason, Employee shall,
subject to his execution of a general release of claims against Employer and its
affiliates in a form satisfactory to Employer, receive as severance pay a cash
amount equal to two times the sum of (i) Employee's base salary then in effect,
plus (ii) the highest bonus paid to Employee during the three fiscal years
immediately preceding his termination or resignation of employment (the
"Severance Payment"). The Severance Payment shall be paid to Employee as soon as
administratively practical in substantially equal payments over the 18-month
period immediately following Employee's termination or resignation of employment
(the "Severance Period") in accordance with Employer's payroll practices;
provided, however, that after a Change of Control, any portion of the Severance
Payment that remains unpaid shall be paid to Employee in a single sum payment
within five business days of the Change of Control. If a termination or
resignation occurs after a Change of Control, the Severance Payment shall be
paid in a single sum payment within five business days following such
termination or resignation. In addition, during the Severance Period, Employee
and his dependents shall be entitled to continue to participate in all employee
benefit plans (other than equity-based plans, bonus plans or disability plans)
that Employer provides (and continues to provide) generally to its employees,
provided that Employee is entitled to continue to participate in such plans
under the terms thereof.
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(e) In the event Employer fails to renew this Employment Agreement
following the expiration of the Term on substantially no less favorable terms to
Employee as the then effective Employment Agreement, Employee shall, subject to
his execution of a general release of claims against Employer and its affiliates
in a form satisfactory to Employer, receive a cash payment equal to one times
the sum of (i) Employee's base salary then in effect, plus (ii) the highest
bonus paid to Employee during the three fiscal years immediately preceding his
termination or resignation of employment. Such amount shall be paid to Employee
as soon as practical in substantially equal payments over the 12-month period
immediately following such non-renewal in accordance with Employer's payroll
practices; provided, however, that after a Change of Control, any portion of
such amount that remains unpaid shall be paid to Employee as a single sum
payment within five business days following a Change of Control.
(f) In the event Employee's employment is terminated by Employer for Cause,
or if Employee resigns for any reason other than Good Reason, Employee shall
receive no severance pay.
6. Gross Up Payments.
(a) Anything in this Employment Agreement to the contrary or any
termination of this Employment Agreement notwithstanding, in the event that it
shall be determined that Employee becomes entitled to any payments or
distribution or benefits under this Employment Agreement or any benefit plan or
program of Employer which would be subject to the excise tax imposed by Section
4999 of the Internal Revenue Code of 1986, as amended (the "Code"), or any
interest or penalties are incurred by Employee with respect to such excise tax
(such excise tax, together with any such interest or penalties, are hereinafter
collectively referred to as the "Excise Tax"), then Employer shall pay Employee
an additional amount or amounts (each, a "Gross Up Payment") such that the net
amount or amounts retained by Employee, after deduction of any Excise Tax on any
of the above-described payments or
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benefits and any federal, state and local income tax and Excise Tax upon payment
provided for by this paragraph 6, shall be equal to the amount of such payments
or benefits prior to the imposition of such Excise Tax.
(b) For purposes of determining the amount of a Gross Up Payment, Employee
shall be deemed to pay federal income taxes at the highest marginal rate of
federal income taxation in the calendar year in which the Gross Up Payment is
payable and state and local income taxes at the highest marginal rate of
taxation in the state and locality of Employee's residence on the date the Gross
Up Payment is payable, net of the maximum reduction in federal income taxes
which could be obtained from any available deduction of such state and local
taxes.
(c) In the event that the amount of the Excise Tax is subsequently
determined to be less than the amount taken into account in calculating a Gross
Up Payment hereunder, Employee shall repay to Employer (to the extent actually
paid to Employee) at the time that the amount of such reduction in Excise Tax is
finally determined, the portion of the Gross Up Payment attributable to such
reduction (plus the portion of the Gross Up Payment attributable to the Excise
Tax and federal, state and local income tax imposed on the Gross Up Payment
being repaid by Employee if such repayment results in a reduction in, or a
refund of, Excise Tax and/or federal, state and local income tax) plus interest
on the amount of such payment at the rate provided in Section 1274(b)(2)(B) of
the Code.
(d) In the event that the amount of the Excise Tax is determined to exceed
the amount taken into account in calculating a Gross Up Payment hereunder
(including by reason of any payment the existence or amount of which cannot be
determined at the time of the Gross Up Payment), Employer shall pay an
additional Gross Up Payment in respect of such excess (plus any interest payable
with respect to such excess) at the time that the amount of such excess is
finally determined.
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(e) Each Gross Up Payment shall be paid by Employer on the date on which
Employee becomes entitled to the payment or benefits giving rise to such Gross
Up Payment.
7. Assignment and Succession.
(a) The services to be rendered and obligations to be performed by Employee
under this Employment Agreement are special and unique, and all such services
and obligations and all of Employee's rights under this Employment Agreement are
personal to Employee and shall not be assignable or transferable. In the event
of Employee's death, however, Employee's personal representative shall be
entitled to receive any and all payments then due under this Employment
Agreement.
(b) This Employment Agreement shall inure to the benefit of and be binding
upon and enforceable by Employer and Employee and their respective successors,
permitted assigns, heirs, legal representatives, executors and administrators.
If Employer shall be merged into or consolidated with another entity, the
provisions of the Employment Agreement shall be binding upon and inure to the
benefit of the entity surviving such merger or resulting from such
consolidation. Employer will require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially all of
the business and/or assets of Employer, by agreement in form and substance
satisfactory to Employee, to expressly assume and agree to perform this
Employment Agreement in the same manner that Employer would be required to
perform it if no such succession had taken place. The provisions of this
paragraph 7(b) shall continue to apply to each subsequent employer of Employee
hereunder in the event of any subsequent merger, consolidation, transfer of
assets of such subsequent employer or otherwise.
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8. Notices.
Any notice, request or other communication to be given by any party to this
Employment Agreement shall be in writing and be sent by certified mail, postage
prepaid, addressed to the parties as follows:
If to Employer:
First Union Center
4440 PGA Boulevard, Suite 600
Palm Beach Gardens, Florida 33410
Attention: General Counsel
If to Employee:
Mr. Timothy R. Estes
Dycom Industries, Inc.
First Union Center
4440 PGA Boulevard, Suite 600
Palm Beach Gardens, Florida 33410
or to such other address as the parties respectively may designate by notice
given in like manner, and any such notice, request or other communication shall
be deemed to have given when mailed as described above.
9. Waiver of Breach.
The waiver by Employer or Employee of a breach of any provision of this
Employment Agreement by either party shall not operate or be construed as a
waiver by the other party of any subsequent breach.
10. Amendment.
This Employment Agreement may be amended only by written instrument signed
by all parties hereto.
11. Full Settlement.
Employer's obligation to pay Employee the amounts required by this
Employment Agreement shall be absolute and unconditional and shall not be
affected by any circumstances, including, without limitation, any offset,
counterclaim, recoupment, defense or
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other right which Employer may have against Employee or anyone else. All
payments and benefits to which Employee is entitled under this Employment
Agreement shall be made and provided without offset, deduction, or mitigation on
account of income that Employee may receive from employment from Employer or
otherwise, except as provided in paragraphs 6(c) and 6(d) hereof, or on account
of any inability of Employer to take a tax deduction with respect to any such
payments or benefits.
12. Voluntary Limitation.
Employee may elect to limit amounts payable under this Employment Agreement
by notifying Employer, prior to Employee's receipt of such amounts, that
Employee elects to receive either none or some portion of such amounts.
13. Partial Invalidity.
The invalidity or unenforceability of any provision hereof shall in no way
affect the validity or enforceability of any other provision.
14. Arbitration; Legal Fees.
Any controversy or claim arising out of or relating to this Employment
Agreement shall be settled by arbitration in Palm Beach County, Florida, in
accordance with the rules then in effect of the American Arbitration
Association, and judgment upon the award rendered may be entered in any court
having jurisdiction thereon. The arbitrator(s) shall have the right and ability
to award attorneys' fees to the prevailing party in any such arbitration
proceeding. If an arbitration shall be commenced to challenge, enforce or
interpret any provision contained in this Agreement, Employer agrees to
indemnify Employee for his reasonable attorneys' fees and expenses incurred in
such arbitration; provided, however, that any arbitration commenced by Employee
is done so in good faith.
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15. Governing Law.
This Employment Agreement shall be governed by the laws of the State of
Florida without giving effect to choice of law principles.
16. Entire Agreement.
All prior negotiations and agreements between the parties hereto with
respect to the matters contained herein are superseded by this Employment
Agreement, including without limitation, the Prior Agreement, and there are no
representations, warranties, understandings or agreements with respect to the
subject matter hereof other than those expressly set forth herein.
IN WITNESS WHEREOF, the parties have entered into this Employment Agreement
as of the date set forth above.
DYCOM INDUSTRIES, INC.
By: /s/ Steven E. Nielsen
-----------------------------
Name: STEVEN E. NIELSEN
Title:
/s/ Timothy R. Estes
-----------------------------
TIMOTHY R. ESTES
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