1
EMPLOYMENT AGREEMENT
Recitals
This agreement is entered into between Xxxxxxx X. Xxxxxxx III (the "Employee")
and MYR Group Inc. (the "Company") as of January 1, 1997 whereby the Employee
is employed by the Company as its Chairman and Chief Executive Officer.
Covenants
I. Employment and Duties.
A. Employment. The Company hereby employs Employee as Chairman
and Chief Executive Officer of the Company, and the Employee hereby
accepts such employment, all on the terms and subject to the
conditions set forth in the Agreement. The Employee hereby agrees to
perform in good faith and to the best of the Employee's ability all
services which may be required of the Employee hereunder and which
are consistent with services which are typically performed by like
officers of like corporations.
B. Commitment of Time. Nothing in this Agreement shall preclude
the Employee from devoting a reasonable period of time required for
serving as a director or member of an advisory committee of any
organization involving no conflict of interest with the interests of
the Company and from managing his personal investments.
II. Term of Employment. Subject to Section 5 hereof, the term of this
Agreement shall be one year commencing January 1, 1997 and ending December
31, 1997 and shall renew automatically for successive one year terms
unless written notice is delivered by the party not intending to renew the
Agreement to the other Party not later than October 31 of the year prior
to renewal or unless the Agreement is terminated in accordance with
Section 5.
III. Compensation.
A. Base Compensation. As base compensation for the Employee's
services hereunder during the term of this Agreement, the Company
shall pay the Employee a salary at the minimum rate of $312,500 per
year, in accordance with the Company's regular payroll practices for
salaried employees.
B. Incentive Compensation. In addition to the base compensation
to be paid to the Employee during the term of this Agreement, the
Employee shall be entitled to receive incentive compensation as
follows:
1. The Employee shall be entitled to receive an annual
incentive ("Completed Year Incentive") to the extent provided in
the Company's short-term incentive plan as such plan may exist
from time to time (the "Incentive Plan").
2. The Employee shall be entitled also to receive an
annual bonus on December 31 of each such year in an amount equal
to the principal and interest due annually pursuant to the
Employee's promissory note held by the Company on the date of
this Agreement until such time as the note has been repaid.
C. Withholding Taxes. The Company shall deduct and withhold from
the compensation payable to the Employee during the term of this
Agreement, any and all applicable taxes or other required
withholdings.
D. Other Benefits. During the term of this Agreement, the
Employee shall be entitled to receive all other benefits of
employment (including but not limited to group health, accident and
life insurance) that are generally available to other senior
executive employees of Company.
35
2
E. Certain Additional Payments. In the event that any of the provisions
of Sections 3.1, 3.2 or 5.4 hereof result in the receipt of the
Employee of a "parachute payment" (as defined in Section 280G of the
Internal Revenue Code of 1986, as amended (the "Code")) because of a
change in the ownership or effective control of the Company or a
change in the ownership of a substantial portion of the assets of the
Company (as such terms are defined in Section 280G (b) (2) (A) of the
Code) which occurs during the term of this Agreement, then in such
event the Company shall make an additional payment to the Employee in
an amount in cash such that the amount of the after-tax proceeds of
the Employee from the payments provided for in Sections 3.1, 3.2 and
5.4 and the payment provided for in this Section 3.5, taking into
account federal and state income and excise taxes, is equal to the
amount of the after-tax proceeds the Employee would have received from
the payment provided for in Sections 3.1, 3.2 and 5.4, taking into
account Federal and state income taxes, had the payments provided in
Sections 3.1, 3.2 and 5.4 not resulted in the receipt by the Employee
of a parachute payment. The Employee agrees to give the Company
prompt written notice of any claim by the Internal Revenue Service
that any payments made pursuant to the provisions of Sections 3.1, 3.2
and 5.4 hereof result in the receipt by the Employee of a "parachute
payment". In such event the Company shall have the right to assume
and control the defense of any such claim with counsel of its own
selection. The Employee agrees to cooperate with the Company in
connection with any defense of such claim.
IV. Restrictive Covenants.
A. Use and Disclosure of Confidential Information; Agreement not
to Compete.
1. The Employee agrees that he will not, except for the
sole benefit of or with the written consent of the Company:
a. during and after the term of his employment
thereunder, use or disclose any of the confidential
information (defined as information or data not known
generally outside of the Company concerning its business,
or the business of its subsidiaries or affiliates,
including, but not limited to all technical information,
customer information, such as customer lists, pricing
information, business plans, or market strategies) to any
person, firm or corporation for any purpose whatsoever for
so long as and to the extent that such information has not
become generally known to or available for use by the
public other than by any act or omission of the Employee;
or
b. during the term of employment hereunder and
thereafter for a period of two years after the expiration
or any termination of this Agreement directly or
indirectly engage, anywhere in the United States in any
business which would be competitive with the business
conducted by the Company on the date of such expiration or
termination, or acquire or retain any financial interest in
any business which is so engaged, provided, however, that
the Employee shall not be prohibited from acquiring up to
2% in value of any class of outstanding debt or equity
securities of any corporation if such securities are
publicly traded in an established securities market.
2. If any provision of this section 4.1, as applied to
any party or to any circumstances, is adjudged by a court to be
invalid or unenforceable, the same will in no way affect any of
this Section or other part of this Agreement, the application of
such provision in any other circumstances or the validity or
enforceability of this Agreement. If any such provision, or any
part hereof, is held to be unenforceable because of the duration
of such provision or the area covered thereby, the parties agree
that the court making such determination will have the power to
reduce the duration and/or area of such provision, and/or to
delete specific works or phrases, and in its reduced form such
provision will then be enforceable and will be enforced. Upon
breach of any provision of this Section 4.1, the Company will be
entitled to injunctive relief, since the remedy at law would be
inadequate and insufficient. In addition, the Company will be
entitled to such damages as it can show it has sustained by
reason of such breach.
36
3
B. Survival of Restrictive Covenants. The provisions of Section
4.1 of this Agreement shall survive the expiration or any termination
of this Agreement.
V. Termination of Employment.
A. Termination in the Event of Disability or Death. The
Employee's employment under this Agreement shall terminate in the
event of his disability or death. In the event of such termination,
the Company shall (a) pay to the employee or to the estate of the
Employee, as the case may be, an amount equal to the Employee's
annual salary in effect at the date of the termination of his
employment plus an incentive equivalent equal to 55% of such amount;
(b) pay to the Employee or his estate, as the case may be, an amount
equal to the Completed Year Incentive for the year prior to the year
in which the termination of employment occurs if such termination
occurs on or after January 1 and prior to the date upon which annual
incentives are paid for the prior year; (c) pay to the Employee or
to his estate, as the case may be an amount equal to the Partial Year
Incentive (as hereinafter defined) for the year in which termination
of employment occurs; (d) immediately fully vest any and all shares
of restricted stock or stock options previously granted to the
Employee under the Company's Stock Option and Restricted Stock Plans;
and (e) immediately forgive all remaining unpaid principal and
interest due the Company under the promissory note referenced in
Section 3.2.2.
1. For purposes of determining the amount of the Completed Year
Incentive under 5.1.(b) above for the year prior to the year
during which the termination of employment occurs, the amount of
the payment (if any) shall be the amount of the Completed Year
Incentive calculated in accordance with the terms of the
Incentive Plan.
2. For purposes of determining the amount of Partial
Year Incentive under 5.1.(c) above, the Company shall calculate
the amount of the Completed Year Incentive which the Employee
would have been entitled to receive under Section 3.2.1 as if
the Company had achieved 100% of the target performance provided
for in its business plan, multiplied by a fraction, the
numerator of which is equal to the number of days that the
Employee was employed during the year through the date of
termination of employment and the denominator of which is 365
3. For purposes of this Agreement, the term "Disability"
shall mean the Employee's inability to substantially perform the
services required of the Employee hereunder for a period in
excess of 180 consecutive days or 180 days during any 270-day
period.
B. Termination by the Company for Good Cause. The Company shall
have the right to terminate the Employee's employment under this
Agreement for Good Cause. In the event of such termination the
Company shall have no further liability to the Employee under this
Agreement except for the obligation to pay to the Employee, within 30
days after the effective date of the termination, his base
compensation accrued but unpaid as of the date of such termination
and such other obligations as may be imposed upon the Company as a
matter of law. For purposes of this Agreement, the term "Good Cause"
shall mean (i) the Employee's commission of a felony, (ii) the
Employee's material breach of any of his obligations or duties,
including the Employee's willful failure to substantially perform his
duties as provided for in this Agreement (other than as a result of
his incapacity due to illness or injury), (iii) the Employee's
commission of a willful act, such as embezzlement, against the
Company intended to enrich the Employee at the expense of the
Company, or (iv) the Employee willfully furnishing materially false
information to the board of directors of the Company, or the willful
omission to furnish material information to the board of directors of
the Company, in connection with a matter which the board of directors
is considering. No termination for Good Cause may be effected under
clause (ii) of the preceding sentence unless (a) the Company shall
have given written notice to the Employee specifying with
particularity the basis for the Company's decision to terminate the
Employee's employment, and (b) the Employee shall have failed to
cease or correct the performance (or nonperformance) which forms the
basis for the Company's decision within 30 days following the date of
the Company's written notice.
37
4
C. Termination for other than Good Cause or Termination for
Non-Renewal of the Agreement by the Company. If the Company
terminates Employee's employment for other than Good Cause or does
not renew the Agreement on any anniversary date, the Company shall
(a) pay to the Employee an amount equal to one and one-half times the
Employee's annual salary in effect at the date of the termination of
his employment plus an incentive equivalent equal to 55% of such
amount; (b) pay to the Employee an amount equal to the Completed Year
Incentive for the year prior to the year in which the termination of
employment occurs if such termination occurs on or after January 1
and prior to the date upon which annual incentives are paid for the
prior year, calculated in accordance with the provisions of Section
5.1.1 above; (c) pay to the Employee an amount equal to the Partial
Year Incentive for the year in which termination of employment occurs
calculated in accordance with the provisions of Section 5.1.2 above;
(d) immediately fully vest any and all shares of restricted stock or
stock options previously granted to the Employee under the Company's
Stock Option and Restricted Stock Plans; and (e) immediately forgive
all remaining unpaid principal and interest due the Company under the
promissory note referenced in Section 3.2.2.
D. Termination by the Company or Termination for Good Reason by
the Employee Following a Change of Control. In the event of a Change
of Control of the Company, the provisions of this section 5.4 shall
apply notwithstanding any other provisions of the Agreement to the
contrary. For purposes of this Agreement Change of Control shall be
defined as the occurrence of any of the following events:
(a) There is a report filed on Schedule 13D (or any successor
schedule, form or report) as promulgated pursuant to
the Exchange Act, disclosing that any person (as the term
"person" is used in Section 13(d) (3) of the Exchange Act,
other than the Employee, has become the beneficial owner
(as the term "beneficial owner" is defined under Rule 13d-3
or any successor rule or regulation promulgated under the
Exchange Act) of 20% or more of the issued and outstanding
shares of voting securities of the Company; or
(b) There is a report filed on Schedule 14D-1 (or any
successor schedule, form or report) as promulgated
pursuant to the Exchange Act disclosing that any person (as
the term "person" is used in Section 14(d) (2) of the
Exchange Act) has or intends to become the beneficial owner
(as the term "beneficial owner" is defined under Rule 13d-3
or any successor rule or regulation promulgated under the
Exchange Act) of 20% or more of the issued and outstanding
shares of voting securities of the Company; or
(c) During any period of two consecutive years, individuals
who at the beginning of such period constitute
directors of the Company cease for any reason to constitute
at least a majority of the Board of Directors thereof. For
purposes of this subsection (c) any new director whose
election, or whose nomination for election by the Company's
stockholders, was approved by a vote of at least two-thirds
of the directors of the Company then still in office who
were directors of the Company at the beginning of any such
period (including those directors deemed to be such
pursuant to this sentence) shall be deemed to be a director
of the Company as of the beginning of such period.
1. The Employee shall have the right to terminate his
employment under this Agreement for Good Reason. For purposes
of this Agreement, the term "Good Reason" shall mean any of the
following which occur without the consent of or at the direction
of the Employee: (i) any significant change in the nature of
Employee's principal duties without his consent, or any
diminution in the Employee's status or responsibilities, (ii)
any change in reporting relationships under which the Employee
would cease to report directly to a board of directors elected
by public stockholders, (iii) any decrease in the Employee's
salary below the level provided for by the terms of Section 3.1
(or such level to which his salary may be increased from time to
time in accordance with Section 3.1), any change in the
Incentive Plan which has the effect of reducing the amount of
any of the incentive awards which the Employee would otherwise
receive under Sections 3.2.1 and 3.2.2 or any failure by the
Company to provide the Employee with the compensation otherwise
provided for in Sections 3.1 through 3.5 hereof, (iv) the
Company's failure to obtain the agreement of a successor entity
to assume the obligations under this Agreement as required by
Section 6.1 hereof, or (v) the Company's requiring the Employee
to be based in any location which would materially increase the
Employee's commuting time. For purposes of clause (ii) of the
preceding
38
5
sentence, the Company shall be deemed to have public
shareholders only if the Company's common stock is traded on a
national securities exchange or quoted on the NASDAQ
inter-dealer quotation system. No termination for Good Reason
may be effected under clause (ii) of the first sentence of this
section 5.4.1 unless the Employee has first offered to the
Company to render such continued services, for a period which
shall not extend beyond the six-month anniversary of the change
described in such clause (ii) , as the board of directors deems
reasonably necessary to assist in an orderly transition of the
Company's management following such change. In the event the
Company accepts such offer, the effective date of the
termination shall be deemed to be the date on which the Employee
ceases to render such additional services.
E. In the event the Employee terminates his employment under this
Agreement for Good Reason or in the event the Company terminates his
employment under this Agreement within two years following a Change
of Control the Company shall immediately (a) pay to the employee an
amount equal to two times the Employee's annual salary in effect at
the date of the termination of his employment plus an incentive
equivalent equal to 55% of such amount; (b) pay to the Employee an
amount equal to the Completed Year Incentive for the year prior to
the year in which the termination of employment occurs if such
termination occurs on or after January 1 and prior to the date upon
which annual incentives are paid for the prior year, calculated in
accordance with the provisions of Section 5.1.1 above; (c) pay to the
Employee an amount equal to the Partial Year Incentive for the year
in which termination of employment occurs calculated in accordance
with the provisions of Section 5.1.2 above; (d) immediately fully
vest any and all shares of restricted stock or stock options
previously granted to the Employee under the Company's Stock Option
and Restricted Stock Plans; and (e) immediately forgive all remaining
unpaid principal and interest due the Company under the promissory
note referenced in Section 3.2.2.
VI. Miscellaneous Other Benefits.
A. Successors. The Company agrees to require any successor to all
or substantially all of the business or assets of the Company and its
subsidiaries to expressly assume and agree to perform this Agreement
in the same manner and to the same extent that the Company would be
required to perform it if no such succession had taken place, except
that no such express agreement shall be required where such successor
succeeds to the obligations of the Company hereunder by operation by
law.
B. Binding Effect. This Agreement shall insure to the benefit of
and be enforceable by the Employee's personal or legal
representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.
C. Amendment and Modifications. The parties hereto may amend,
modify and supplement this Agreement in such manner as may be agreed
upon by them in writing.
D. Entire Agreement. This Agreement contains the entire agreement
of the parties hereto with respect to the employment of the Employee
by the Company and supersedes all prior understandings and agreements
of the parties with respect to the employment of the Employee by the
Company and supersedes all prior understandings and agreements of the
parties with respect to the subject matter hereof.
E. Severability. The provisions of this Agreement shall be deemed
severable, and the invalidity, unenforceability or illegality of any
provision of this Agreement shall not in any way affect or impair the
validity, enforceability or legality of the other provisions hereof.
F. Governing law. This Agreement shall be governed by and
construed in accordance with the laws of the Sate of Illinois
applicable to contracts made and to be performed in that state.
G. Headings. The descriptive headings in this Agreement are
inserted for convenience only and do not constitute a part of this
Agreement.
39
6
H. Execution in Counterpart. This Agreement may be executed in any
number of counter parts, each of which shall be deemed an original.
I. Legal Fees. In the event the Employee incurs legal fees and expenses
in seeking to obtain any benefit under this Agreement and it is
ultimately determined by a court of competent jurisdiction that the
Employee is entitled to receive all or any part of such benefit, then
the Company shall pay to the Employee the amount of reasonable legal
fees and expenses up to so incurred by him.
J. Notices. Any and all notices, demands or other communications
required or desired to be given hereunder by any party shall be in
writing and shall be validly given or made to another party if given
by personal delivery, telex, facsimile, telegram or if deposited in
the United States mail, certified or registered, postage prepaid,
return receipt requested is to be given as hereinafter set forth:
If to the Company:
MYR Group Inc.
Three Continental Towers
0000 Xxxx Xxxx Xxxx, Xxxxx 0000
Xxxxxxx Xxxxxxx, Xxxxxxxx 00000-0000
If to the Employee:
Xxxxxxx X. Xxxxxxx III
00000 Xxxxxx Xx. Xxxx'x Xxxx
Xxxxxxx, Xxxxxxxx 00000
Any party hereto may change its address for the purpose of receiving notices,
demands and other communications as herein provided by a written notice given
in the manner aforesaid to the other party or parties hereto.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the date first above written.
MYR GROUP INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Its: Senior Vice President
---------------------------
EMPLOYEE
/s/ Xxxxxxx X. Xxxxxxx III
--------------------------------
Xxxxxxx X. Xxxxxxx III
40
