Exhibit 10.1
AMENDED AND
RESTATED
EMPLOYMENT
AGREEMENT
This Amended and Restated Employment
Agreement (“ Agreement ”) is entered into and
effective on this day of June 2009, by and
between Peter R. Brown Construction, Inc., a Florida corporation
(the “ Company ”), and
(hereinafter, the “ Employee ”) and, solely for
purposes of guaranteeing the obligations of the Company under
Sections 4(b), 5(d) and 6(b), The PBSJ Corporation, a Florida
corporation (the “ Parent ”).
W
I T N
E S S E T H
:
WHEREAS , the Company, the Employee and the Parent are
parties to that certain Employment Agreement effective as of
December 31, 2008 (the “ Original Agreement
”) and desire to amend and restate the Original Agreement to
modify certain of the terms and conditions set forth
therein;
WHEREAS , entering into the Original Agreement was a
condition to the closing of that certain Stock Purchase Agreement
dated December 31, 2008 (the “ Purchase Agreement
”) pursuant to which all of the capital stock of the Company
owned by the Employee and the other shareholders of the Company was
purchased by the Parent as more particularly set forth therein;
and
WHEREAS , the continued employment by the Employee
hereunder was and remains a key component to the continued success
of the Company during the Term and the Parent expects the Employee
to serve as an Employee through December 31, 2011;
and
WHEREAS , the Employee will continue to be employed by
the Company as its Executive Vice President, and the Parent wishes
to document the terms and conditions of employment in this
Agreement, and the Employee wishes to accept such employment, upon
such terms and conditions as hereinafter set forth;
NOW, THEREFORE,
in consideration of the premises and
mutual covenants set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are mutually
acknowledged, the Company and the Employee hereby agree as
follows:
1. Definitions . When
used in this Agreement, the following terms shall have the
following meanings:
(a) “ Accrued
Obligations ” means:
(i) all accrued but unpaid Base
Salary through the end of the Term of Employment;
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(ii) any unpaid or unreimbursed
expenses incurred in accordance with Company policy, including
amounts due under Section 5(a) hereof, to the extent incurred
during the Term of Employment; and
(iii) any accrued but unpaid
benefits provided under the Company’s employee benefit plans,
subject to and in accordance with the terms of those
plans.
(b) “ Additional
Operational Controls ” has the meaning set forth in
Section 2(c).
(c) “ Additional
Performance Bonus ” means the Backlog Performance
Bonus and the EBIT Performance Bonus.
(d) “ Affiliate
” means any entity that controls, is controlled by, or is
under common control with, the Company, including the
Parent.
(e) “ Agreement
” means this Agreement, including all recitals and exhibits
hereto.
(f) “ Backlog
” means the amount of revenue that the Company, based on its
past practices for calculating such amounts materially consistent
with the calculation for the Backlog amounts attached hereto as
Exhibit A , reasonably expects to earn from:
(i) remaining work to be performed on uncompleted contracts in
progress, (ii) executed contracts on which work has not yet
begun and (iii) projects for which the Company has received
written notice of selection but not yet negotiated a
price.
(g) Backlog Performance
Bonus ” has the meaning set forth in
Section 4(b)(ii) hereof.
(h) “ Backlog
Target ” has the meaning set forth in
Section 4(b)(iv) hereof.
(i) “ Base
Salary ” means the salary provided for in
Section 4(a) hereof or any increased salary granted to
Employee pursuant to Section 4(a) hereof.
(j) “ Board
” means the Board of Directors of the Company.
(k) “ Cause
” means:
(i) any violation or inaction that
constitutes a material breach by the Employee of this Agreement,
violation of any material rule or regulation that may be
established from time to time for the conduct of the
Company’s business, including, without limitation, the
Additional Operational Controls, and which violation has, or is
reasonably likely to have, a material adverse effect on the
Company’s business, operations, assets, prospects or
condition (financial or otherwise) of the Company, taken as a
whole,
(ii) a willful and continuing
failure to perform Employee’s duties and responsibilities
hereunder (other than due to illness or disability),
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(iii) the Employee’s fraud,
embezzlement, misappropriation of funds in connection with his
services hereunder,
(iv) the Employee’s conviction
of, or plea of nolo contendere with respect to, any crime which
involves dishonesty or a breach of trust, or
(v) chronic addiction to alcohol,
drugs or other similar substances affecting the Employee’s
work performance.
Any determination of
“Cause,” shall require (i) a formal determination
by a majority of the members of the Board (other than the Employee)
and (ii) that the Employee shall have been provided with
written notice from the Board that there is a basis for termination
for “Cause” which notice shall specify in reasonable
detail specific facts regarding any such basis and, if such basis
is reasonably subject to being cured or remedied, the Employee has
been given not less than sixty (60) days from such written
notice within which to remedy or cure the problem or complaint. The
Board’s determination of Cause shall be final, binding and
conclusive with respect to all parties.
(l) “ Change in
Control ” means a change of control event of the
Company as described in Code Section 409A and guidance issued
thereunder, which provides that a change of control event occurs
upon the change in ownership or effective control, or in the
ownership of a substantial portion of the assets of the Company, as
follows:
(i) A change in ownership of the
Company shall occur on the date that any one person, or more than
one person acting as a group, acquires ownership of stock or other
equity interests of the Company that, together with stock or other
equity interest held by such person or group constitutes more
than fifty percent (50%) of the total fair market value
or total voting power of the stock or other equity interests of the
Company. However, if any one person, or more than one person acting
as a group, is considered to own more than fifty percent
(50%) of the total fair market value or total voting power of
the stock or other equity of the Company, the acquisition of
additional stock or other equity by the same person or persons is
not considered to cause a change in the ownership of the Company or
to cause a change in the effective control of the Company. An
increase in the percentage of stock or other equity owned by any
one person, or persons acting as a group, as a result of a
transaction in which the Company acquires its stock or other equity
in exchange for property will be treated as an acquisition of stock
or other equity for purposes of this section. This subsection
applies only when there is a transfer of stock or other equity (or
issuance of stock or other equity) and stock or other equity
remains outstanding after the transaction.
(ii) A change in the effective
control of the Company shall occur on the date any one person, or
more than one person acting as a group, acquires (or has acquired
during the twelve (12)-month period ending on the date of the most
recent acquisition by such person or persons) ownership of stock or
other equity of the Company possessing more than fifty percent
(50%) of the total voting power of the stock of the
Company.
(iii) A change in the ownership of a
substantial portion of the Company’s assets shall occur on
the date that any one person, or more than one person acting as a
group acquires (or has acquired during the twelve (12)-month period
ending on the date of
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the most recent acquisition by such person or
persons) assets from the Company that have a total gross fair
market value equal to or more than seventy five percent
(75%) of the total gross fair market value of all of the
assets of the Company immediately before such acquisition or
acquisitions. For this purpose, gross fair market value means the
value of the assets of the Company, or the value of the assets
being disposed of, determined without regard to any liabilities
associated with such assets.
A change of control does not occur
when there is a transfer to a related entity, as described in the
Treasury Regulations under Code Section 409A.
This definition shall be subject to
and interpreted in accordance with applicable Treasury Regulations
and other guidance describing a “change in control
event” for purposes of Code Section 409A.
(m) “ Commencement
Date ” means December 31, 2008.
(n) “ Competitive
Activity ” means an activity that is in direct
competition with the activities of the Company or any of its
Affiliates in the States of Florida, Georgia, and Alabama or in any
other States in which the Company is engaged in business during the
Term of Employment with respect to a business in which the Company
is engaged while the Employee was employed by the
Company.
(o) “ Confidential
Information ” means all trade secrets and information
disclosed to the Employee or known by the Employee as a consequence
of or through the unique position of his employment with the
Company (including information conceived, originated, discovered or
developed by the Employee and information acquired by the Company
or any of its Affiliates from others) prior to or after the
Commencement Date, and not generally or publicly known (other than
as a result of unauthorized disclosure by the Employee), about the
Company or any of its Affiliates or their respective
businesses.
(p) “ Cost of Living
Index ” has the meaning set forth in
Section 4(a) hereof.
(q) “ Disability
” means the Employee’s inability, or failure, to
perform the essential functions of his position, with or without
reasonable accommodation, for any period of six months or more in
any 12 month period by reason of any medically determinable
physical or mental impairment as determined by the written opinion
of an independent physician selected by the Board.
(r) “ EBIT
” means earnings determined in accordance with GAAP before
interest and taxes and consistent with the Ordinary Course prior to
the Commencement Date.
(s) “ EBIT Measuring
Period ” has the meaning set forth in
Section 4(b)(ii) hereof.
(t) “ EBIT Performance
Bonus ” has the meaning set forth in
Section 4(b)(ii) hereof.
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(u) “ EBIT
Target ” has the meaning set forth in
Section 4(b)(v) hereof.
(v) “ Expiration
Date ” means the date on which the Term of
Employment, including any renewal thereof under Section 3(b),
shall expire.
(w) “ GAAP
” means generally accepted accounting principles in the
United States as in effect from time to time
(x) “ Good
Reason ” means the occurrence of any of the
following:
(i) failure to pay when due the
Employee’s Base Salary or the Performance Bonus or any other
material benefit described in Section 5 of this
Agreement;
(ii) a material change in the
geographic location at which the Employee must perform the services
under this Agreement;
(iii) any other action or inaction
that constitutes a material breach by the Company of this
Agreement;
(iv) the termination of the
Employment Agreements of any two of the following individuals, Judy
Mitchell, Eduardo Vargas or John Stewart, for Good Reason by such
employee or by the Company other than for Cause; or
(v) unless Majority Approval is
obtained, the occurrence of any of the following events:
(A) failing to timely pay the
Company’s subcontractors and material suppliers consistent
with the Ordinary Course prior to the Commencement Date and
pursuant to a written agreement;
(B) material diminution in the
Employee’s authority, duties, or responsibilities, including
restricting the authority of the Employee to hire and fire
employees and reorganize and/or relocate offices of the Company;
provided, however that notwithstanding anything set
forth in this Agreement, the Original Agreement or any other
agreement, the Employee acknowledges and agrees that his or her
removal from the Board of Directors of the Parent and/or the
Company (as the case may be) shall not constitute a material
diminution in the Employee’s authority, duties, or
responsibilities under this terms of this Agreement or the Original
Agreement;
(C) failing to provide the financial
support necessary for the Company to continue a surety program to
secure bonding for projects included within the then current
budgets and forecasts of the Company;
(D) terminating any employee set
forth on Exhibit B attached hereto other than for Cause;
and
(E) restricting the ability of the
Company to provide the annual cash retention bonuses to the
employees consistent with the Ordinary Course prior to the
Commencement Date, except if the Company does not have sufficient
funds to pay such bonuses.
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For purposes of this Agreement, Good Reason
shall not be deemed to exist unless the Employee’s
termination of employment for Good Reason occurs within 6 months
following the initial existence of one of the conditions specified
in clauses (i) through (v) above, the Employee provides
the Company with written notice of the existence of such condition
within ninety (90) days after the initial existence of the
condition, and the Company fails to remedy the condition within
sixty (60) days after its receipt of such notice. In no event
shall the Additional Operational Controls and the compliance
therewith be deemed to be or cause the Company to operate outside
the Ordinary Course. Notwithstanding the foregoing, Good Reason
shall not be deemed to exist if the Employee consents in writing to
such action.
(y) “ Majority
Approval ” means the written consent or approval of
any two of the following individuals: Judy Mitchell, Eduardo Vargas
or John Stewart.
(z) “ Ordinary
Course ” means the ordinary course and normal
day-to-day operations of the Company’s business consistent
with the past customs and practices of the Company (including past
practice with respect to quantity, amount, magnitude and frequency,
standard employment and payroll policies and past practice with
respect to management working capital).
(aa) “ Performance
Bonus ” means all performance bonuses the Employee
receives under Section 4(b) hereof.
(bb) “ Restricted
Period ” shall commence on the Commencement Date and
end at the end of the two (2) year period immediately
following the later of (i) the termination of the Term of
Employment, (ii) the date on which the last compensation
payment due pursuant to the terms of this Agreement, including any
severance payments, is paid and (iii) the last date on which
the Employee is employed by the Company or any of its
Affiliates.
(cc) “ Section
409A ” has the meaning set forth in Section 26
hereof.
(dd) “ Term of
Employment ” means the period during which the
Employee shall be employed by the Company pursuant to the terms of
this Agreement.
(ee) “ Termination
Date ” means the date on which the Term of Employment
ends.
2.
Employment.
(a) Employment and
Term . The Company hereby agrees to employ the Employee and
the Employee hereby agrees to serve the Company during the Term of
Employment on the terms and conditions set forth herein.
(b) Duties of Employee
. During the Term of Employment under this Agreement, the Employee
shall serve as the Executive Vice President of the Company, and
shall diligently perform all services, at such times and at such
places, as may be assigned to him from time to time by the Board.
The Employee shall devote his full time and attention to the
business and affairs of the Company,
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render such services to the best of his ability,
and use his reasonable best efforts to promote the interests of the
Company; provided, however, the Employee may attend to outside
investments, serve as a director and /or officer of a non-competing
company and serve as an officer or director of, or participant in,
educational, welfare, social, religious, and civic organizations so
long as those activities do not materially interfere with the
Employee’s employment under this Agreement.
(c) Additional Operational
Controls . The Employee understands and agrees that the
Company will need to adopt (or may have already adopted)
operational controls and policies and procedures that are
consistent with those of the Parent, as the same may be amended
from time to time, including the Parent’s code of conduct and
required trainings for employees, and as may be required to ensure
compliance with contractual terms and such laws, rules, regulations
and local regulations ordinances, including without limitation
Federal Acquisition Regulations, Family Medical Leave Act,
Affirmative Action requirements, securities laws, election laws and
foreign corrupt practices laws, controls over financial reporting
(as the same may be required from time to time by the
Parent’s board of directors, its auditors, GAAP, the
Sarbanes-Oxley Act, or otherwise required for the Parent and its
Affiliates to continue to conduct business in the ordinary
course)(collectively, the “ Additional Operational
Controls ”). Additionally, and as part of the Additional
Operational Controls, the Parent will have the right to
(i) appoint a controller (or similar officer) of the Company
who will report directly to the Parent (through its designated
officers) in addition to reporting to the appropriate officers of
the Company, (ii) schedule routine (monthly) meetings of an
operational and financial nature and (iii) adopt such other
Additional Operational Controls as it deems necessary.
3. Term .
(a) Initial Term . The
initial Term of Employment under this Agreement, and the employment
of the Employee hereunder, commenced on the Commencement Date and
shall expire on December 31, 2011, unless sooner terminated in
accordance with Section 6 hereof.
(b) Renewal Terms . At
the end of the Initial Term, the Company shall have the option, in
its sole discretion, to renew the Term of Employment for one
(1) additional year by providing written notice to the
Employee at least three (3) months prior to the Expiration
Date.
4. Compensation
.
(a) Base Salary . The
Employee shall receive a Base Salary at an initial annual rate of
$260,000 during the Term of Employment, with such Base Salary
payable in installments consistent with the Company’s normal
payroll schedule, subject to applicable withholding and other
taxes. The Base Salary shall be reviewed by the Company, at least
annually during the Term of Employment, for merit increases and, as
a result of such review in accordance with the Company’s
normal practice with respect to similarly situated employees, may
be increased by the Company in its sole discretion. In addition,
during the Term of Employment, commencing with the second year of
employment beginning on January 1, 2010 and each anniversary
thereafter, the Base Salary shall be increased, but shall not be
decreased, by that percentage by which the Consumer Price Index for
all Urban Users, for the Tampa-St.
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Petersburg-Clearwater area published by the
United States Department of Labor (the “ Cost of Living
Index ”) for the immediately preceding calendar year
exceeds such index for the calendar year immediately preceding the
immediately preceding calendar year. Any such increase shall take
effect immediately upon the publishing of Index for the applicable
year. If publication of the Index is discontinued, the parties
hereto shall accept comparable statistics on the cost of living for
the Tampa, Florida area as computed and published by any agency of
the United States government, or if no such agency computes and
publishes such statistics, by any regularly published national
financial periodical that does compute and publish such statistics.
In no event shall the Base Salary annual rate be reduced to less
than $260,000 plus any annual increase based on the Cost of Living
Index
(b) Performance Bonus
. During the initial three (3) year period of the Term of
Employment, the Employee shall receive, or be eligible to receive,
the following Performance Bonus:
(i) The Company shall pay the
Employee a cash performance bonus for prior services rendered of
$1,000,000 on or before July 1, 2009.
(ii) The Employee shall be eligible
to receive an Additional Performance Bonus based upon the
Company’s (A) Backlog at September 30, 2011 (the
“ Backlog Performance Bonus ”) and
(B) cumulative EBIT (the “ EBIT Performance Bonus
”) during the period from January 1, 2009 to
September 30, 2011 (the “ EBIT Measuring Period
”).
(iii) The target Additional
Performance Bonus pool for the Employee is $1,000,000 of which
(A) $333,333.33 will be based on the Backlog Target and
(B) $666,666.66 of which will be based on the EBIT
Target.
(iv) The Backlog Performance Bonus
of $333,333.33 will be due and payable to the Employee on or before
December 31, 2011 if the Company’s Backlog at
September 30, 2011 is equal to or greater than $375,000,000
(the “ Backlog Target ”).
(v) The EBIT Performance Bonus will
be due and payable to the Employee on or before December 31,
2011 based on the EBIT Target during the EBIT Measuring Period
(without giving effect to any adjustments to the EBIT Target for
any incremental cost items) and will equal the product of
(A) the percentage obtained, in an amount not to exceed 100%,
by dividing the Company’s cumulative EBIT during the EBIT
Measuring Period by $25,000,000 (the “EBIT Target”) and
(B) $666,666.66; provided, however, that no EBIT Performance
Bonus will be due or payable if this equation equals less than 75%.
For example, (i) if the Company achieves only 74.9% of the
cumulative EBIT Target during the EBIT Measuring Period, then no
EBIT Performance Bonus shall be due or payable and (ii) if the
Company achieves 125% of the cumulative EBIT Target during the EBIT
Measuring Period, then the EBIT Performance Bonus shall be
$666,666.66. If, in connection with an indemnification claim under
the Purchase Agreement, the Sellers (as such term is defined in the
Purchase Agreement) indemnify the Parent for any Losses (as such
term is defined in the Purchase Agreement) related to such
indemnification claim, then such Losses shall not be included as an
expense or otherwise reduce EBIT for purposes of calculating the
Performance Bonus pursuant to this Section 4(b).
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(vi) Each of the parties hereto
expressly acknowledges and agrees that notwithstanding the ability
to earn the Additional Performance Bonus under the terms of this
Agreement, the Employee shall perform his or her duties under this
Agreement consistent with the corporate objectives of the Parent
and the Company, to the extent that such objectives have been
communicated to the Employee, and the existence of the Additional
Performance Bonus shall not override the corporate objectives of
the Parent or the Company. This clause 4(b)(vi) is a material
inducement for the Amendment. For greater clarity, if the Parent or
the Company directs or determines to undertake (or not undertake) a
project or adopt a policy that would have the effect of diminishing
or otherwise adversely affecting the Additional Performance Bonus,
the Employee shall carry out the tasks set or policy adopted by the
Parent or the Company and shall not be entitled to any payment in
respect of the diminution of Additional Performance Bonus that
might or would otherwise have been earned.
(vii) Notwithstanding anything
contained herein to the contrary, upon a Change in Control prior to
December 31, 2011, the Company shall pay to the Employee an
amount equal to $666,667. As a condition to the payment under this
Section 4(b)(vii), the Employee shall provide a letter
terminating its rights under this Agreement including the right to
receive any payments hereunder (other than the payment required by
this Section 4(b)(vii)) and execute a general release of
claims in the form attached hereto as Exhibit D (subject to
such modifications as the Company reasonably may request). The
provisions of this Section 4(b)(vii) shall survive termination
of this Agreement until December 31, 2011.
5. Expense Reimbursement and
Other Benefits.
(a) Reimbursement of
Expenses. Upon the submission of proper substantiation by
the Employee, and subject to such rules and guidelines as the
Company may from time to time adopt, the Company shall reimburse
the Employee for all reasonable expenses actually paid or incurred
by the Employee during the Term of Employment in the course of and
pursuant to the business of the Company. The Employee shall account
to the Company in writing for all expenses for which reimbursement
is sought and shall supply to the Company copies of all relevant
invoices, receipts or other evidence reasonably requested by the
Company.
(b) Compensation/Benefit
Programs. During the Term of Employment, the Employee shall
be entitled to participate in such life insurance, medical, dental
and other benefit programs as may be approved from time to time by
the Company and any stock purchase or similar plan of the Parent
for which employees of subsidiaries of the Parent are eligible to
participate, subject to the general eligibility and participation
provisions set forth in such plans and applicable law. The Employee
further acknowledges and agrees that to the extent required by
applicable law, and notwithstanding anything provided in the
Original Agreement, this Agreement, the Purchase Agreement or any
other Agreement, the Parent may assume all of the Company’s
obligations under the Company’s 401(k) plan.
(c) Other Benefits.
The Employee shall be entitled to six (6) weeks of paid
vacation each calendar year during the Term of Employment, to be
taken at such times as the Employee and the Company shall mutually
determine and provided that no vacation time shall significantly
interfere with the duties required to be rendered by the Employee
hereunder. Any vacation time not taken by Employee during any
calendar year may be carried forward into any succeeding calendar
year only to the extent permitted by the
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Company’s policies, as determined by the
Board, in their sole discretion, from time to time. The Employee
shall be entitled to the additional benefits set forth on
Exhibit E attached hereto and shall receive such additional
benefits, if any, as the Board shall from time to time determine.
To the extent any such additional benefits would be taxable to the
employee as compensation, then to such extent the Employee shall
pay all applicable taxes associated therewith.
(d) Indemnification.
The Company shall, to the fullest extent permitted by law,
indemnify and hold harmless the Employee for all liabilities,
costs, expenses, and damages arising out of or in connection with
the Employee’s service to the Company under this Agreement.
The foregoing indemnification shall be in addition to any rights or
benefits that the Employee may have under statute, the Bylaws or
Articles of Incorporation of the Company, under a policy of
insurance or otherwise. The Company shall use commercially
reasonable efforts to maintain customary Directo
