Document:

Exhibit 10.4

SECURITY AGREEMENT

DATED:  [insert Closing Date]

This Security Agreement ("Security Agreement") is executed by nDivision, Inc., a Texas corporation ("Maker"), to secure all obligations under the Secured Promissory Note ("Note"), in favor of Gamwell Technologies Inc., a Texas corporation ("Holder"), made pursuant to that certain Asset Purchase Agreement of even date between Maker, Holder, Timothy Gamwell and Cecilia Gamwell ("Asset Purchase Agreement").

Maker hereby grants to Holder, a first lien security interest in the following described property:

The number of Purchased Contracts (as defined in the Asset Purchase Agreement) that have a value equal to the amount of the outstanding principal and unpaid interest due under the Note (the "Collateral"). The value of the Purchased Contracts for purposes of determining the Collateral shall be the amount that is equal to fourteen (14) multiplied by the MRR of such Purchased Contracts (as defined in the Asset Purchase Agreement), determined on the date any rights are exercised under this Security Agreement.

This security interest is given to secure payment of the Note.  Maker shall be in default ("Default") under this Security Agreement upon an Event of Default (as defined in the Note) and failure to cure such Default as provided in the Note. Upon the filing of a correct financing statement with the Secretary of State in Maker's state of formation, the Security Interest will be perfected to the extent such security interest can be perfected by the filing of a financing statement under the Uniform Commercial Code applicable to Maker.

Upon Default and notice and the opportunity to cure as provided in the Note, at any time thereafter Holder may declare all obligations secured hereby immediately due and payable and may proceed to enforce payment of the same and exercise any and all rights and remedies provided by the Texas Uniform Commercial Code ("UCC") as well as all other rights and remedies possessed by Holder, including but not limited to:  (i) the right to require Maker to assemble the Collateral;  (ii) the right to provide written notice of the assignment of the Collateral to Holder pursuant to the Security Agreement, and (iii) the right to provide written, authenticated direction to the individual account debtors to pay Holder directly or in such manner as Holder may direct in its sole discretion.  For purposes of enforcing payment and exercising any and all rights and remedies provided by the UCC, the Maker hereby appoints the Holder, its successors and assigns, as the true and lawful attorney-in-fact of the Maker, with full power of substitution, having full right and authority, in the name of the Maker, to collect or enforce for the account of the Holder, liabilities and obligations of third parties under the Collateral; to institute and prosecute all proceedings it may deem proper in order to enforce any claim to obligations owed under the Collateral, to defend and compromise any and all actions, suits or proceedings in respect of the Collateral, and to do all such acts in relation to the Collateral that the Holder may deem advisable.  The Maker agrees that the above-stated powers are coupled with an interest and shall be irrevocable by the Maker. The requirements of reasonable notice shall be met if such notice is mailed, certified mail, return receipt requested, to the address of Maker shown at the beginning of this Security Agreement at least thirty (30) days before the time of the sale or disposition.

 

 

 

Exhibit 10.4 -- Page 1

Upon fulfillment of the obligations of the Note, this Security Agreement shall terminate without further action by either party and the Holder shall forthwith (i) assign transfer and deliver to the Maker, such of the Collateral as has not been previously released or sold or otherwise applied pursuant to the terms hereof, and (ii) execute termination statements as appropriate under the UCC and deliver same to Maker for filing by Maker.

The provisions of Section 12.1 through Section 12.3 and 12.6 through 12.14 of the Asset Purchase Agreement apply mutatis mutandis to this Security Agreement.

[Signature Page to Follow]

Exhibit 10.4 -- Page 2

 

 

 

IN WITNESS WHEREOF, Maker has caused this Security Agreement to be executed as an instrument under seal as of the date first above written.

	 	
NDIVISION, INC.,

	 	
a Texas corporation

	 	 
	 	 
	 	
By:  _______________________________________

	 	
Name:  ____________________________________

	 	
Title:  _____________________________________

	 	 
	 	 
	 	 
	 	
GAMWELL TECHNOLOGIES, INC.,

	 	
a Texas corporation

	 	 
	 	 
	 	
By:  ____________________________________

	 	
Name:  ____________________________________

	 	
Title:  ____________________________________

  

 

 

 

 

 

 

 

 

 

 

 

Exhibit 10.4 -- Page 3EX-10.1

 Exhibit 10.1 
  

 
 Quanta Services, Inc. 

Term Sheet 
 2018 Annual
Incentive Plan – Corporate Employees 
 Participants 

Employees will be selected to participate in the Plan with the approval of the Compensation Committee after consultation with the CEO. 

Target Incentive 
 A target incentive amount,
representing a specified percentage of annual base salary, has been established for each participant in the Plan. 
 Performance Period 

One year beginning on January 1, 2018 through December 31, 2018. 

Company Performance Metrics and Weighting 
 Metrics
and Weighting, which are determined by Compensation Committee annually, are as follows for 2018: 
  

					
	 •   EBITDA
	  	 	60	% 
		
	 •   EBITDA Margin
	  	 	20	% 
		
	 •   Safety
	  	 	20	% 

 The payout on each metric will be determined based on the level of achievement as determined by the Compensation Committee
relative to pre-established goals, according to the following table: 
  

					
	 Percent of Achievement
	  	Payout Percentage	 
	 Less than Minimum Threshold
	  	 	0	% 
	 Minimum Threshold
	  	 	25	% 
	 50%
	  	 	50	% 
	 100%
	  	 	100	% 
	 150%
	  	 	150	% 
	 200%
	  	 	200	% 

 Administration and Limitations 
  

	 	•	 	The salary in effect on December 31, 2018 will be used in the calculation. 

  

	 	•	 	When performance falls between the designated points in the table, the incentive will be determined by interpolation. 

  

	 	•	 	Any incentive will be subject to (i) assessment of overall company performance to ensure that payout of incentives will not jeopardize the financial stability of the company, and (ii) discretion of Quanta
management regarding individual performance. 

  

	 	•	 	A participant must be employed by the company on the date incentive compensation under the Plan is paid. Any participant not employed by the company on the payment date forfeits any and all rights to such incentive
compensation. It is the company’s intention to pay incentive compensation earned under the plan in March following the end of the calculation period. 

	 	•	 	A new participant added to this Plan during the Plan year will be pro-rated from their date of hire unless otherwise determined by the CEO or, in the case of any executive
officer, the Compensation Committee. 

 Clawback Provision 

Notwithstanding anything herein to the contrary, any incentive based compensation, or any other compensation, paid or payable to any executive officer of
Quanta Services, Inc. pursuant to this plan which is subject to recovery under any law, government regulation, order or stock exchange listing requirement, shall be subject to such deductions and clawback (recovery), including by means of repayment
by the executive officer and/or withholding of future wages, as may be required to be made pursuant to law, government regulation, order, stock exchange listing requirement (or any policy of the company adopted pursuant to any such law, government
regulation, order or stock exchange listing requirement). 
 In addition, notwithstanding anything herein to the contrary, any incentive based compensation,
or any other compensation, paid or payable to any individual other than an executive officer of Quanta Services, Inc. pursuant to this plan which, if payable to an executive officer of Quanta Services, Inc., would be subject to recovery under any
law, government regulation, order or stock exchange listing requirement, shall be, at the discretion of the Compensation Committee, subject to such deductions and clawback (recovery), including by means of repayment by the individual and/or
withholding of future wages, to the same extent as may be required to be made pursuant to law, government regulation, order, stock exchange listing requirement (or any policy of the company adopted pursuant to any such law, government regulation,
order or stock exchange listing requirement) with respect to an executive officer of Quanta Services, Inc., but only to the extent that the circumstances requiring such deductions and clawback (recovery) are attributable in whole or in part to the
functional area or operating unit with whom the recipient of such compensation is associated. 
 Acceptance of an award pursuant to this plan renders a
recipient’s future wages subject to withholding by the Company to permit recovery of any amounts that may become due under this provision. This provision shall apply with respect to the performance period and shall survive to the extent
required by law, government regulation, order, stock exchange listing requirement (or any policy of the company adopted pursuant to any such law, government regulation, order or stock exchange listing requirement). Recipients may be required to
acknowledge and agree in writing to the foregoing as a condition to receipt of an award pursuant to this plan. 
 Incentive Payout 

Any incentive earned under the Annual Incentive Plan is intended to be paid in cash. 

 

 
 Quanta Services, Inc. 

Term Sheet 
 2018 Sr.
Leadership Long-Term Incentive Plan 
 Participants 

Employees will be selected to participate in the Plan with the approval of the Compensation Committee after consultation with the CEO. 

Target Incentive 
 A target incentive amount,
representing a specified percentage of annual base salary, has been established for each participant in the Plan. 
 Performance Period 

Three years beginning on January 1, 2018 through December 31, 2020.  

Company Performance Component 
 A specified
percentage (namely, 70% with respect to the CEO, 60% with respect to senior leadership personnel whose annual base salary rate is expected to exceed $350,000 as of December 31, 2018, and 50% with respect to other senior leadership personnel) of
a participant’s long-term incentive target value will be awarded in performance units that, subject to the terms of the applicable award agreement, cliff vest following the end of the three-year performance period at the rate determined by the
Committee based on the achievement of company financial performance metrics. 
 Company Performance Metrics and Weighting 

Metrics and Weighting, which are determined by Compensation Committee shortly following commencement of the performance period, are as follows for 2018-2020:

  

					
	 •   ROIC with TSR Modifier
	  	 	66	% 
		
	 •   Capital Efficiency
	  	 	34	% 

 The vesting rate or payout percentage on each metric will be determined following conclusion of the three-year performance
period based on the level of achievement relative to pre-established goals as certified by the Compensation Committee. 

Individual Component 
 The remaining percentage (or
30% with respect to the CEO, 40% with respect to senior leadership personnel whose annual base salary rate is expected to exceed $350,000 as of December 31, 2018, and 50% with respect to other senior leadership personnel) of a
participant’s long-term incentive target value will be awarded in time-vested restricted stock units that, subject to the terms of the applicable award agreement, vest ratably over a three-year period following the date of grant, and with
respect to certain executive officers, may include a financial performance condition. 
 Administration and Limitations 

 

	•	 	Any incentive will be subject to (i) assessment of overall company performance to ensure that payout of incentives will not jeopardize the financial stability of the company and (ii) discretion of Quanta
management regarding individual performance, and (iii) approval by the Compensation Committee. 

	•	 	It is intended that incentives pursuant to the Long-Term Incentive Plan be granted in equity-based awards, such as performance units and restricted stock units described above, that may be settled solely in common
stock. However, with the approval of the Compensation Committee after consultation with the CEO, incentives pursuant to this plan may be granted in (or substituted with) equity-based awards that may be settled in cash. 

 

	•	 	Generally, a participant must be employed by the company on the date of vesting to be eligible to receive the payout, and any participant not employed by the company on the vesting date forfeits any and all rights to
such payout. However, the Compensation Committee, after consultation with the CEO, may determine to permit a participant who leaves prior to the completion of the three-year performance period to receive his or her payout, or some portion of it.

  

	•	 	Awards to a new participant added to this Plan during the first nine months of the performance period generally will be pro-rated from their date of hire unless otherwise
determined by the Compensation Committee. 

 Clawback Provision 

Notwithstanding anything herein to the contrary, any incentive based compensation, or any other compensation, paid or payable to any executive officer of
Quanta Services, Inc. pursuant to this plan which is subject to recovery under any law, government regulation, order or stock exchange listing requirement, shall be subject to such deductions and clawback (recovery), including by means of repayment
by the executive officer and/or withholding of future wages, as may be required to be made pursuant to law, government regulation, order, stock exchange listing requirement (or any policy of the company adopted pursuant to any such law, government
regulation, order or stock exchange listing requirement). 
 In addition, notwithstanding anything herein to the contrary, any incentive based compensation,
or any other compensation, paid or payable to any individual other than an executive officer of Quanta Services, Inc. pursuant to this plan which, if payable to an executive officer of Quanta Services, Inc., would be subject to recovery under any
law, government regulation, order or stock exchange listing requirement, shall be, at the discretion of the Compensation Committee, subject to such deductions and clawback (recovery), including by means of repayment by the individual and/or
withholding of future wages, to the same extent as may be required to be made pursuant to law, government regulation, order, stock exchange listing requirement (or any policy of the company adopted pursuant to any such law, government regulation,
order or stock exchange listing requirement) with respect to an executive officer of Quanta Services, Inc., but only to the extent that the circumstances requiring such deductions and clawback (recovery) are attributable in whole or in part to the
functional area or operating unit with whom the recipient of such compensation is associated. 
 Acceptance of an award pursuant to this plan renders a
recipient’s future wages subject to withholding by the Company to permit recovery of any amounts that may become due under this provision. This provision shall apply with respect to the performance period and shall survive to the extent
required by law, government regulation, order, stock exchange listing requirement (or any policy of the company adopted pursuant to any such law, government regulation, order or stock exchange listing requirement). Recipients will be required to
acknowledge and agree in writing to the foregoing as a condition to receipt of an award pursuant to this plan. 

 

 
 Quanta Services, Inc. 

Term Sheet 
 2018
Discretionary Plan – All Employees 
 Participants 

Employees may be selected to receive an award pursuant to this Plan at the discretion of the CEO, provided that any such award to an executive officer shall be
subject to Compensation Committee approval. 
 Awards 

Awards may be made in cash, restricted stock units, or a combination thereof. 

Administration and Limitations 
  

	 	•	 	A participant must be employed by the company on the date the award is paid. Any participant not employed by the company on the payment date forfeits any and all rights to such award. It is the company’s intention
to pay the awards under the plan in March. 

 Clawback Provision 

Notwithstanding anything herein to the contrary, any incentive based compensation, or any other compensation, paid or payable to any executive officer of
Quanta Services, Inc. pursuant to this plan which is subject to recovery under any law, government regulation, order or stock exchange listing requirement, shall be subject to such deductions and clawback (recovery), including by means of repayment
by the executive officer and/or withholding of future wages, as may be required to be made pursuant to law, government regulation, order, stock exchange listing requirement (or any policy of the company adopted pursuant to any such law, government
regulation, order or stock exchange listing requirement). 
 In addition, notwithstanding anything herein to the contrary, any incentive based compensation,
or any other compensation, paid or payable to any individual other than an executive officer of Quanta Services, Inc. pursuant to this plan which, if payable to an executive officer of Quanta Services, Inc., would be subject to recovery under any
law, government regulation, order or stock exchange listing requirement, shall be, at the discretion of the Compensation Committee, subject to such deductions and clawback (recovery), including by means of repayment by the individual and/or
withholding of future wages, to the same extent as may be required to be made pursuant to law, government regulation, order, stock exchange listing requirement (or any policy of the company adopted pursuant to any such law, government regulation,
order or stock exchange listing requirement) with respect to an executive officer of Quanta Services, Inc., but only to the extent that the circumstances requiring such deductions and clawback (recovery) are attributable in whole or in part to the
functional area or operating unit with whom the recipient of such compensation is associated. 
 Acceptance of an award pursuant to this plan renders a
recipient’s future wages subject to withholding by the Company to permit recovery of any amounts that may become due under this provision. This provision shall apply with respect to the performance period and shall survive to the extent
required by law, government regulation, order, stock exchange listing requirement (or any policy of the company adopted pursuant to any such law, government regulation, order or stock exchange listing requirement). Recipients will be required to
acknowledge and agree in writing to the foregoing as a condition to receipt of an award pursuant to this plan.

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