Exhibit 10. 4

 

Integrated Electrical Services, Inc.

MUTUAL SETTLEMENT AGREEMENT AND RELEASE

 

This Mutual Settlement Agreement and Release (“Agreement”), dated as of November
9, 2004, is between Richard L. China (“China”) and Integrated Electrical
Services, Inc. (“IES”).

 

RECITALS

 

Richard L. China and IES wish to terminate their employment relationship
amicably, settle existing disputes and to set forth their remaining obligations
to one another. In order to provide for a smooth transition and to foreclose any
potential claims or disputes existing or arising between the parties, Richard L.
China and IES have agreed to enter this Agreement.

 

AGREEMENT

 

In consideration of the foregoing recitals, the mutual agreements and
undertakings of the parties set forth below, and other good and valuable
consideration that is addition to any rights China may already have and the
receipt, adequacy and sufficiency of which are hereby expressly acknowledged,
China and IES agree as follows:

 

1. Separation Date

 

China and IES hereby terminate their employment relationship effective November
9, 2004 (“Separation Date”). China acknowledges that he is subject to an
employment contract and that all obligations of IES under that contract have
been fulfilled or are fulfilled in full by this agreement and that IES has the
right to terminate his employment without any further liability of any kind to
IES or its officers, directors or employees, including but not limited to
payments of any kind pursuant to such contract.

 

2. Severance Payment

 

In return for this entire Agreement and particularly for the releases set forth
in paragraph 4, 9 and 10 below, IES will pay China a lump sum severance payment
of $103,609.99 (less applicable state and federal taxes, Medicare, FICA and
other customary deductions) as set out in paragraph 6 below. Additionally, China
will receive additional severance of $610,500.24 that will be paid in the form
of base salary continuation in accordance with IES’s regular payroll schedule.
These severance amounts will be paid as indicated following receipt of the
Mutual Agreement and Release by the Company and within five (5) days of the
satisfaction of the revocation period as set out in paragraph 6 below. Salary
continuation payments shall be made until the full severance benefit has been
paid. Additionally, IES will pay the cost of continuing medical and dental
health care coverage for China and eligible dependents under COBRA for a period
of 18 months. The total severance payment to be paid to China is $714,110.23
(less applicable state and federal taxes, Medicare, FICA and other customary
deductions).

 

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China agrees that IES may retain any amounts owed to IES and credit it to any
amounts owed to IES from China. Such credited amounts will be considered paid to
China for the purpose of this Agreement and will not affect the validity of this
Agreement and the releases contained herein. China acknowledges that the
severance payment constitutes good and valuable consideration for the promises,
releases, waivers and assignments contained in this Agreement. The severance
payment set forth in this paragraph includes the severance amount due to China
under any contract, plan, policy, practice or guideline of IES. China agrees
that, without his signature on this Agreement, IES is not required to pay any
sum as severance.

 

The final payment for all work and services provided by China before the
Separation Date has been paid separately and such payment has fully satisfied
all obligations for compensation that IES owed to China through such date.

 

3. Other Benefit and Compensation Plans

 

This Agreement does not affect any previously vested rights to funds or benefits
under the IES welfare or benefit plans. All benefits and distributions under
those plans will be paid according to the terms and conditions of those plans.
IES agrees that China may exercise any presently vested and exercisable stock
options according to the terms and provisions of the relevant stock option plan,
provided he does not have insider information.

 

PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES A COMPLETE RELEASE OF ALL KNOWN
AND UNKNOWN CLAIMS.

 

4. Release and Waiver

 

As a material inducement to IES to enter into this Agreement and the severance
benefit payment discussed in paragraph 2 above, Richard L. China, on behalf of
himself and his heirs and assigns, does hereby RELEASE, ACQUIT, AND FOREVER
DISCHARGE Integrated Electrical Services, Inc., its successors, present and
former employees, corporate officers, directors, corporate affiliates (“the
parties released”), of and from any and all liability of any kind and character,
including attorney’s fees, whatsoever arising from, growing out of, or in any
way connected with his employment with IES or separation there from or the
negligent or intentional acts, statements or omissions of the parties released
at any time up to and including the date of execution of this Agreement. China
declares that it is his intention to fully release IES and all of the parties
released from any and all liability of any kind and character whatsoever arising
from, growing out of, or in any way connected with his employment with IES or
separation there from including, but not limited to, known and unknown claims,
in negligence, contract or in tort, which arose at any time prior to the
execution of this Agreement, under any Federal or State statute including, but
not limited to, the Age Discrimination in Employment Act, as amended, 29 U.S.C.
§§ 621 - 634; Older Workers Benefit Protection Act, as amended, 29 U.S. §§ 621,
623; Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. §§ 2000e -
2000e-17; the Fair Labor Standards Act of 1938 as amended; the Equal Pay Act of
1963, as amended, 29 U.S.C. §§ 206(d); the Employee Retirement Income Security
Act of 1974, as amended, 29 U.S.C. §§ 1001 - 1461; the Worker Adjustment and
Retraining Notification Act, as amended, 29 U.S.C. § 2101 et seq.; the

 

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National Labor Relations Act, as amended, 29 U.S.C. §§ 151-169; Family and
Medical Leave Act of 1993, as amended, 29 U.S.C. § 825 et seq. Americans with
Disability Act of 1990, as amended, 42 U.S.C. §§ 12101 et. seq.; infliction of
emotional distress, defamation, personal injury, breach of contract, the Texas
Commission on Human Rights Act; Tex. Lab. Code §§ 21.001 – 21.405; the Civil Law
of the State of Texas; and the statutory and common law of these United States,
collectively and singularly.

 

This is a full and final release, without limitation, of all known, unknown, and
suspected claims. This complete release is intended to be for the benefit of the
parties released. China waives all rights to re-employment, reinstatement or
independent contractor status with IES and agrees not to apply for
re-employment, reinstatement or future employment with IES. The preceding
sentence does not restrict IES from contacting China for future employment or
independent contractor services. This Agreement is not intended to and does not
affect the rights, if any, that China may have for medical plan reimbursements,
unemployment compensation or presently pending worker’s compensation claims.

 

5. Indemnification

 

As a further part of this Agreement, China hereby agrees to indemnify and hold
the parties released harmless from and against any and all loss, costs, damages,
or expenses, including, without limitation, attorney’s fees, incurred by the
parties released and arising out of any negligent or intentional breach of the
Agreement by China or because any of the representations made herein by China
were false when made. China also hereby assigns to the parties released all
causes of actions he or his heirs or assigns may have arising from his
employment or termination thereof.

 

6. Review and Revocation of Release; Effective Date

 

China acknowledges that he has had a full and fair opportunity to review this
Agreement and has been allowed at least twenty-one (21) (“Review Period”) days
to consider whether to accept the benefits of the Agreement in return for the
release. China hereby certifies and represents that the decision to execute this
Agreement was made after adequate reflection concerning the purposes and effects
of this Agreement, and was not coerced by the parties released or anyone acting
on their behalf or in concert with them. China represents that he understands
the reasons for his employment termination and has had the opportunity to fully
consider the terms, contents and conditions of this Agreement. Consequently,
China has fully informed himself and warrants and represents that he knowingly
and voluntarily executed this Agreement after his separation from employment
with IES. The waivers contained herein are not intended to release any claims
arising after the full execution of this Agreement.

 

China and IES agree that he shall have seven (7) calendar days (the “Revocation
Period”) following the date he executes this Agreement to revoke his acceptance
of this Agreement and the Release set forth in paragraph 4 of this Agreement.
China and IES agree and acknowledge that a revocation of this Agreement must be
received before the expiration of the Revocation Period to Margery M. Harris;
1800 West Loop South, Suite 500, Houston, Texas 77027. This Agreement will
become effective, binding and irrevocable upon signing this agreement. Severance
payment, in the form of lump sum amount and base salary continuation will
commence after IES’s receipt of

 

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a completely executed copy of this Agreement and within five (5) days of the
satisfaction of the revocation period.

 

7. Confidentiality of Agreement

 

China agrees that the terms and conditions of this Agreement shall be treated as
confidential, and agrees not to disclose such terms and conditions to any third
party. The preceding sentence shall not be applicable to disclosure or
discussion with representatives of the Internal Revenue Service or the Social
Security Administration, China’s immediate family members or professionals from
whom legal or financial advice is sought (provided they are instructed and agree
to keep the information confidential), or as otherwise required by law.

 

8. Confidentiality of Information

 

China acknowledges that while he was employed by IES, China had access to
confidential business information of IES and its subsidiaries and affiliated
companies, including technical ideas; concepts and information; business
strategies; long-term and short-term goals; business opportunities; and
financial data and other business information (cumulatively referred to herein
as IES’s “Proprietary Information”). China represents to IES that he has
returned to IES all documents and things (including magnetic media) belonging to
IES, including all documents embodying or containing any of IES’s Proprietary
Information. China acknowledges his continuing obligation to maintain in
confidence IES’s Proprietary Information and to refrain from using such
Proprietary Information or disclosing it to any other person, company or entity.
China agrees not to communicate with any third party (including reporters,
editors, and employees of trade publications, newspapers, magazines, etc.)
concerning any matter involving the IES’s business and/or confidential
information or Proprietary Information. The foregoing paragraph is not intended
and does not restrict the personal use of the confidential information for the
sole purpose of formulating, arranging and proposing to IES and offer to buy one
or more of the wholly owned subsidiaries of IES.

 

9. Transition and Cooperation

 

Upon IES’s reasonable request, Employee agrees to cooperate fully and consult
with IES, their officers and employees, at all times concerning his former areas
of responsibility. This obligation includes, without limitation, full and good
faith cooperation with IES and their officers, employees and/or attorneys
concerning any litigation where Employee is or may be a witness or have relevant
information.

 

China agrees that he further agree they will not now and will not in future
disparage either parties name, reputation or business, IES Integrated Electrical
Services, Inc. or of its officers, directors, affiliates or employees to any
third party particularly including any customers or vendors. This
non-disparagement includes an agreement to not participate or cooperate in any
litigation contrary to the interest of IES, Integrated Electrical Services, Inc.
or any of its subsidiaries, to the degree allow by law. If any governmental or
private entity requests any information or statement about the Company or its
officers, directors, affiliates or employees, China will give the Company
immediate notice of such request to allow the Company to defend against the
disclosure of such information.

 

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10. Non-Solicitation Obligations

 

In addition to any other similar obligation owed by Employee agrees that for a
period of six (6) months from the Separation Date, he shall not, directly or
indirectly, for himself or for others’ solicit, request or induce (i) any
employee of IES or any of its subsidiaries or affiliated companies to terminate
his employment with the IES or such subsidiaries or affiliates, or (ii) any
customer, contractor or representative having a business relationship with IES
or any of its subsidiaries or affiliated companies to alter, affect, modify,
change, diminish or terminate such business relationship; or retain, hire or
otherwise employ any individual who was employed by IES as of the Separation
Date. As used herein, the term “subsidiary or affiliated IES shall mean an
entity that directly or indirectly controlled by or under the common control of
IES. The foregoing paragraph will be waived to the extent and only to the extent
that the Board of Directors approves of and China makes bids for one or more
wholly owned subsidiaries of IES and in that event, this paragraph is waived
only with respect to the employees at those subsidiaries.

 

Further, China agrees the following provisions of his employment agreement dated
August 12, 2003 shall survive: Non-Competition, Return of Company Property,
Inventions, Trade Secrets, and Confidentiality. The Non-Competition provision of
China’s employment agreement is waived to the extent necessary to allow him to
own, run, manage or otherwise operate any wholly owned subsidiaries that are
purchased from IES or its subsidiaries.

 

11. Miscellaneous

 

The provisions of the Agreement are severable, and if any part of it is found to
be unlawful or unenforceable, then such part will be deemed changed or deleted
to the minimal extent necessary to make the entire Agreement lawful and
enforceable. The other provisions of this Agreement shall remain fully valid and
enforceable to the maximum extent consistent with applicable law.

 

China acknowledges and agrees (i) he is responsible for any tax liability that
may result as a consequence of the receipt of the severance benefits described
herein, (ii) IES makes no representation of the taxability of these funds and
(iii) IES has encouraged him to seek advice from a personal tax advisor
regarding the duty and manner to report any possible tax consequences. The money
paid under this Agreement does not come from a qualified retirement plan and
therefore it may not be rolled into any other qualified plan or Individual
Retirement Account.

 

China represents and agrees that he: (i) was specifically advised to and fully
understands his rights to discuss all aspects of this Agreement with an
attorney, his immediate family and financial counselor, (ii) has, to the extent
he desires, availed himself of these rights, (iii) has carefully read and fully
understands all the provisions of this Agreement, and (iv) has entered into and
executed this Agreement knowingly and without duress or coercion from any
source.

 

China understands and agrees that this Agreement may not be used as evidence in
any proceeding against the parties released except in a proceeding based solely
upon a specific allegation that the parties released have breached this
Agreement or in a proceeding in which either party presents testimony about
matters covered by this Agreement. The parties released

 

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believe and assert that China has been treated in a fair and lawful manner, and
it is agreed between the parties that nothing herein is intended or shall be
construed as an admission of fault or liability by the parties released.

 

China understands and agrees that this Agreement is being executed by IES on
behalf of itself, and its corporate affiliates and that all of the rights of IES
under this Agreement and all of China’s obligations and duties under this
Agreement will inure to the benefit of and may be enforced by IES, or any of
their affiliates or any of the parties released.

 

This Agreement sets forth the entire agreement between the parties and fully
supersedes all prior written and oral agreements, understandings and
representations between the parties. China represents, warrants and agrees that
he does not rely and has not relied upon any representation or statement made by
any officer, director, agent or representative of IES, or any subsidiary or
affiliate of IES with regard to the subject matter, background or effect of this
Agreement, except as expressly set forth in this Agreement.

 

This Agreement shall be governed and construed under the laws of the State of
Texas. Any legal proceeding arising as a result of or relating to this
Agreement, China’s employment or separation shall be filed and heard in the City
of Houston, Harris County, Texas without regard to conflicts of law.

 

This Agreement is executed in duplicate originals and is effective and
enforceable only after both parties have signed the Agreement and an original
executed Agreement has been returned to IES. China acknowledges that he has read
this Agreement, has understood it and knowingly and voluntarily desires to sign
it.

 

Accepted, Understood and Agreed       IES Management, L.P.        

By: IES Residential Group, Inc.

Its Managing General Partner

                  By:     Richard L. China           Margery M. Harris

Date:

         

Title:

  Sr. Vice President, Human Resources            

Date:

   

 

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