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EXHIBIT 10.7
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
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This Amended and Restated Employment Agreement is made this
14th day of December, 1998, between Steven E. Nielsen ("EMPLOYEE") and Dycom
Industries, Inc. ("EMPLOYER").
1. EMPLOYMENT. Subject to the terms and conditions hereof,
Employer hereby agrees to employ Employee as President and Chief Executive
Officer to perform such specific duties and have such responsibilities as
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 President and Chief Executive
Officer. Employee hereby accepts employment by Employer as President and Chief
Executive 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.
2. TERM OF EMPLOYMENT. Employee's employment pursuant to this
Employment Agreement shall commence on March 10, 1999 (or such earlier date as
may be determined by the Board) and shall terminate upon the earlier of (a)
termination pursuant to paragraph 5 hereof or (b) March 9, 2004, unless extended
by the parties hereto. Prior to the commencement of the term of employment
hereunder, Employee's employment shall continue to be governed by his Employment
Agreement with Employer dated March 11, 1997 and the Change of Control Agreement
dated March 11, 1997 (the "PRIOR AGREEMENTS").
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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 $364,000. 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 policies applicable to all
employees of Employer. Employer may increase Employee's salary at Employer's
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) During the term of employment, Employer shall provide
Employee with an automobile substantially equivalent in value to the automobile
provided by Employer prior to the date hereof or pay Employee an allowance in
the amount of $600 per month, plus the costs incurred by Employee for all fuel,
oil and lubrication related to the business use of Employee's automobile,
including travel from Employee's home to place of employment.
(c) In addition to any other compensation payable to Employee
pursuant to this Employment Agreement, Employee during the term of this
Employment Agreement may be paid an annual bonus as determined by and within the
sole discretion of the Board. In the event Employee's salary reaches $500,000
per annum, or Employee otherwise reasonably determines that any portion of his
compensation from Employer could become non-deductible by reason of the
application of Section 162(m) of the Internal Revenue Code, Employer promptly
shall establish an annual cash bonus plan satisfying the qualified
performance-based compensation exception to Section 162(m).
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(d) Employee's services hereunder shall be performed at the
principal offices of the Employer in Palm Beach Gardens, Florida, subject to
such reasonable travel as the performance of Employee's duties and the business
of Employer may require.
(e) 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 hereby waives Employee's waiting period for eligibility under
its medical benefits plan. Employer also shall reimburse Employee for an annual
physical examination by a physician of Employee's choice.
(f) Effective as of March 10, 1999, Employer shall grant
Employee options to acquire 100,000 shares of common stock of Employer (the "NEW
OPTIONS") pursuant to Employer's 1998 Incentive Stock Option Plan (the "OPTION
PLAN"). The New Options shall (i) vest in equal 25 percent installments on each
of the first four anniversaries of the date of grant, (ii) have a ten year term,
(iii) have an exercise price per share equal to the closing price of a share of
Employer's common stock as of March 10, 1999, (iv) be intended to qualify, to
the greatest extent possible, as incentive stock options within the meaning of
Section 422 of the Internal Revenue Code, and (v) shall otherwise be subject to
the same terms and conditions as the options previously granted by Employer to
Employee pursuant to the Option Plan. Notwithstanding the foregoing, all options
granted by Employer to Employee pursuant to the Option Plan or any other option
plan of Employer (including, but not limited to, the New Options) shall vest in
full to the extent not already vested upon the occurrence of a Change of Control
(as defined in paragraph 5(f) below).
(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.
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4. COVENANTS OF EMPLOYEE.
(a) During the term of this Employment Agreement or during the
term of his service with Employer, Employee shall not directly or indirectly
engage in any business, whether as a 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 business conducted by Employer.
(b) During the term of this Employment Agreement and ending on
the fifth anniversary following the termination of Employee's employment with
Employer, 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
(a) 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 (b) is or becomes available to Employee after the
termination of the 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.
(c) In the event Employee breaches this Employment Agreement
or if Employee's employment is terminated by Employer pursuant to paragraph 5(a)
of this Employment Agreement, Employee separately agrees, being fully aware that
the performance of this Employment Agreement is important to preserve the
present value of the property and business of Employer, that for twelve (12)
calendar months following the date of such termination, 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 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.
Within such geographical service areas and during
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such 12-month period, Employee shall not solicit or do business competitive with
the business conducted by Employer, with any customers, partners or associates
of Employer. Notwithstanding the foregoing, in the event of a Change of Control,
the Employee's obligations under this paragraph 4(c) shall terminate as of the
date a Change of Control has occurred.
(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.
(f) 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.
5. TERMINATION.
(a) Employer shall have the right to terminate Employee's
employment at any time for Cause for any of the following reasons:
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(i) Employee is convicted by a court of competent and final
jurisdiction of any crime, whether or not involving Employer, that
constitutes a felony in the jurisdiction involved;
(ii) (A) Employee commits any material and willful act of
fraud, misappropriation, embezzlement, unethical business conduct or
other act of dishonesty against Employer, or (B) Employee shall
materially breach a duty of loyalty owed to the Employer or ,as a
result of his gross negligence, breaches a duty of care owed to the
Employer; and/or
(iii) Employee materially breaches this Employment Agreement
or fails or refuses to perform any of his material duties as required
by this Employment Agreement in any material respect, after Employee
being given written notice of such breach, failure or refusal, and
Employee's failure to cure the same within 30 days of receipt of such
notice.
(b) Unless otherwise terminated earlier pursuant to the terms
of this Employment Agreement, Employee's employment under this Employment
Agreement will terminate upon Employee's death and may be terminated by Employer
or Employee upon giving not less than thirty (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.
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(c) Employee may terminate this Employment Agreement if
Employer materially breaches this Employment Agreement. For purposes of this
paragraph 5, Employer shall be deemed to have materially breached this
Employment Agreement if (i) Employer fails to pay any portion of the
compensation or provide Employee any employee benefit due Employee hereunder,
(ii) Employer discharges Employee without Cause, (iii) Employer materially
changes the duties and responsibilities performed by Employee as Chief Executive
Officer, (iv) any successor to Employer fails to appoint the Employee as
President and Chief Executive Officer of a company listed on a North American
stock exchange, (v) Employer relocates Employee's principal place of business by
more than 25 miles without Employee's consent, or (vi) Employer fails to cause a
successor to assume this Employment Agreement in accordance with paragraph 7(b)
hereof. If Employee shall terminate this Employment Agreement as provided in
this paragraph 5(c) then, provided Employer does not also have grounds to
terminate this Employment Agreement for Cause as defined in paragraph 5(a)
hereof, Employee shall not be liable to Employer for any damages as a result
thereof, shall not be bound by the provisions of paragraph 4(c) hereof and shall
receive severance in accordance with paragraph 5(d) hereof as if Employee's
employment was terminated without Cause. Notwithstanding the foregoing, if
Employee terminates this Employment Agreement as provided in this paragraph 5(c)
within six months after the date of a Change of Control, then Employee shall not
be liable to Employer for any damages as a result thereof, shall not be bound by
the provisions of paragraph 4(c) hereof and shall receive severance in
accordance with paragraph 5(d) hereof as if Employee's employment was terminated
without Cause; PROVIDED, HOWEVER, that Employer does not have grounds to
terminate Employee's employment for Cause as defined in paragraphs 5(a)(i) and
5(a)(ii)(A) hereof.
(d) In the event Employer terminates Employee's employment
other than by reason of Cause as defined in paragraph 5(a) hereof or Employee
resigns as a consequence of a material breach of this Employment Agreement as
described in paragraph 5(c) hereof, Employee shall receive as damages for breach
of this Employment Agreement a cash amount equal to three
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times the sum of (i) Employee's base salary then in effect, plus (ii) the
highest bonus paid to the Employee during the three fiscal years immediately
preceding his termination or resignation of employment (the "SEVERANCE
PAYMENT"). If such termination or resignation occurs prior to a Change of
Control, the Severance Payment shall be paid to the Employee as soon as
administratively practical in substantially equal payments over the 12-month
period immediately following the Employee's termination or resignation of
employment (the "SEVERANCE PERIOD") in accordance with the Employer's payroll
practices; PROVIDED, HOWEVER, that after a Change of Control, the remainder of
the Severance Payment, if any, shall be paid to the Employee in a lump sum
within five days. If a termination or resignation occurs after a Change of
Control, the Severance Payment shall be paid to the Employee in a lump sum
within five days. In addition, during the Severance Period, the 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 the Employee is entitled to continue to participate in such plans
under the terms thereof.
(e) In the event Employee's employment is terminated by
Employer for Cause, or if Employee quits or otherwise resigns for any reason
other than as a result of Employer's material breach of this Employment
Agreement as defined in paragraph 5(c) of this Employment Agreement, Employee
shall receive no severance pay.
(f) For purposes of this Employment Agreement, a "CHANGE OF
CONTROL" shall be deemed to have occurred with respect to the Employer if any
one or more of the following events occur:
(i) A tender offer is made and consummated for the
ownership of fifty percent (50%) or more of the outstanding
voting securities of the Employer;
(ii) A "person", within the meaning of Section 3(a)9
or Section 13(d) (as in effect on the date hereof) of the
Securities Exchange Act of 1934 shall acquire fifty percent
(50%) or more of the outstanding voting securities of the
Employer;
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(iii) Substantially all of the assets of the Employer
are sold or transferred to another person, corporation or
entity that is not a wholly-owned subsidiary of the Employer;
or
(iv) A change in the Board such that a majority of
the seats on the Board are occupied by individuals who were
neither nominated by a majority of the directors of the
Employer as of the close of business on November 25, 1996 nor
appointed by directors so nominated.
6. GROSS UP PAYMENTS AND BENEFITS AFTER CHANGE OF CONTROL
(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 the 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 the 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 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.
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(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 the Employer
(to the extend 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 and 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 and 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.
(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 the Employee and shall not be assignable or
transferrable. 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 the Employee and their
respective successors, permitted assigns, heirs, legal representatives,
executors, and administrators. If Employer shall be merged
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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 the 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 the Employee hereunder in the event of any
subsequent merger, consolidation, transfer of assets of such subsequent employer
or otherwise.
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:
Mr. Thomas R. Pledger
Chairman of the Board
Dycom Industries, Inc.
First Union Center
4440 PGA Boulevard, Suite 600
Palm Beach Gardens, Florida 33410
If to Employee:
Mr. Steven E. Nielsen
Dycom Industries, Inc.
First Union Center
4440 PGA Boulevard, Suite 600
Palm Beach Gardens, Florida 33410
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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.
The 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 set off,
counterclaim, recoupment, defense or other right which the 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 the Employer or otherwise, except as provided in paragraphs
6(c) and 6(d) hereof, or on account of any inability of the 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.
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14. LITIGATION.
If litigation shall be brought to challenge, enforce or
interpret any provision contained in this Agreement, the Employer agrees to
indemnify the Employee for his reasonable attorneys' fees and expenses incurred
in such litigation; PROVIDED, HOWEVER, that any litigation brought by the
Employee is brought in good faith.
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 Agreements, 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:
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Thomas R. Pledger
Chairman of the Board
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Steven E. Nielsen, individually