Exhibit 10.16
KAT CONSTRUCTION SERVICES, INC.
NON-EMPLOYEE DIRECTOR AGREEMENT
This Non-Employee Director Agreement (this “Agreement”) is entered into as of October 28, 2026, and shall become effective upon the completion of the Company’s initial public offering of its common stock (the “Offering” and, the date of such completion, the “Effective Date”), by and between KAT Construction Services, Inc., a Delaware corporation (the “Company”), and David Montoya (the “Director”).
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RECITALS
WHEREAS, the Company desires that the Director serve as a member of the Board of Directors of the Company (the “Board”), subject to the Company’s Certificate of Incorporation and Bylaws and applicable law;
WHEREAS, the Director is not an employee of the Company or any of its subsidiaries, and the Company and the Director desire to set forth certain terms applicable to the Director’s Board service and compensation; and
WHEREAS, to the extent the Director is designated as an independent director or appointed to a Board committee requiring independence, the Board has determined, or prior to such service will determine, that the Director satisfies the applicable independence requirements of each of the New York Stock Exchange and NYSE Texas, Inc. (each, an “Exchange”), the Securities and Exchange Commission (the “SEC”), and applicable law.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties agree as follows:
| 1. | Board Service. |
The Director agrees to serve as a member of the Board and, if appointed, as a member or chair of one or more committees of the Board. The Director shall perform the duties customarily associated with service as a director of a publicly traded corporation and such other duties as are required by the Company’s Certificate of Incorporation, Bylaws, corporate governance policies and committee charters, each as amended from time to time, applicable law, SEC rules and regulations, and applicable Exchange rules. The Director shall devote such time and attention as is reasonably necessary to properly discharge the Director’s duties, including preparation for and attendance at Board and committee meetings. Nothing in this Agreement limits or modifies the fiduciary duties owed by the Director under applicable law.
| 2. | Term. |
The Director’s service on the Board shall be governed by the Company’s Certificate of Incorporation, Bylaws and applicable law, including provisions concerning election, reelection, resignation and removal of directors. This Agreement shall remain in effect for so long as the Director continues to serve as a non-employee director and shall automatically terminate when the Director ceases to serve as a member of the Board or becomes an employee of the Company or any subsidiary, except for provisions that expressly survive termination.
| 3. | Compensation. |
| (a) | Base Director Compensation. Subject to the Director’s continued Board service, commencing on the Effective Date, the Director shall receive compensation at the rate of $7,000 per month (the “Base Director Compensation”), consisting of $4,000 per month in cash and $3,000 per month in stock options. The cash component, equal to $4,000 per month, shall be paid monthly in arrears and prorated for any partial month of service. The Board or Compensation Committee may determine to pay the equity component in another form of equity award under the Plan having an equivalent value, in which case references in this Agreement to stock options shall include such other equity award. |
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| (b) | Option Component. The option component of the Base Director Compensation shall have a grant-date fair value of $3,000 for each month of service (or $36,000 on an annualized basis), determined in accordance with ASC Topic 718 or such other valuation methodology required by applicable accounting standards. The options may be granted monthly or in such other periodic installments as the Board or Compensation Committee determines, provided that the aggregate grant-date fair value corresponds to the option compensation earned for the applicable period. Each option shall be a nonqualified stock option unless otherwise expressly provided, shall be granted under the Company’s applicable equity incentive plan (the “Plan”) and a separate stock option award agreement, and shall have an exercise price per share equal to the Fair Market Value (as defined in the Plan) of a share of the Company’s common stock on the applicable grant date. The number of shares subject to each option grant shall be determined using the applicable grant-date fair value methodology and shall not be determined merely by dividing the dollar amount of compensation by the market price of the underlying common stock. |
| (c) | Committee Chair Compensation. In addition to the Base Director Compensation, a Director serving in any of the following capacities shall receive the following additional annual compensation: |
| Role | Annual Add-On | |||
| Chair of the Audit Committee | $ | 12,000 | ||
| Chair of the Compensation Committee | $ | 6,000 | ||
| Chair of the Nominating and Corporate Governance Committee | $ | 6,000 |
Unless otherwise determined by the Board or Compensation Committee, each committee-chair add-on shall be paid fifty percent (50%) in cash and fifty percent (50%) in stock options on the same basis described above. Add-ons shall be prorated for partial periods of service. If the Director simultaneously serves in more than one compensated chair role, the applicable add-ons shall be cumulative unless the Board or Compensation Committee determines otherwise. No additional compensation shall be payable solely for ordinary committee membership or attendance at Board or committee meetings unless otherwise approved by the Board.
| (d) | Option Terms; Plan Controls. Except as expressly provided in this Agreement, all stock options granted to the Director shall be subject to the Plan and the applicable stock option award agreement, including provisions regarding vesting, exercisability, expiration, termination of service, change in control, transferability and tax treatment. If this Agreement conflicts with the Plan or an applicable stock option award agreement with respect to an option, the Plan and applicable award agreement shall control. |
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| (e) | Prospective Changes. The Board or Compensation Committee may prospectively modify the Company’s non-employee director compensation program from time to time in accordance with applicable law, Exchange rules and the Plan; provided that no modification shall retroactively reduce compensation already earned or an option already granted. |
| 4. | Expenses. |
The Company shall reimburse the Director for reasonable and documented out-of-pocket expenses incurred in connection with Board service, including reasonable travel expenses incurred in attending Board and committee meetings, in accordance with the Company’s expense reimbursement policies.
| 5. | Independence; Qualifications. |
To the extent applicable to the Director’s Board or committee service, the Director represents that all information provided to the Company concerning relationships, transactions and other matters relevant to independence and committee eligibility is complete and accurate in all material respects. The Director shall promptly notify the Company of any change in circumstances that could reasonably affect (i) independence under Exchange rules, (ii) eligibility to serve on any Board committee, (iii) qualification as an “audit committee financial expert,” if applicable, (iv) disclosures required concerning the Director in an SEC filing, or (v) any actual or potential conflict of interest involving the Company. The Director shall timely complete director and officer questionnaires, beneficial ownership questionnaires, independence questionnaires and other compliance certifications reasonably requested by the Company.
| 6. | Compliance with Company Policies and Securities Laws. |
The Director agrees to comply with all policies applicable to members of the Board as adopted or amended from time to time, including the Company’s Code of Business Conduct and Ethics, Insider Trading Policy, Related Person Transaction Policy, Regulation FD and disclosure policies, clawback or recovery policy to the extent applicable, corporate governance guidelines and committee charters. The Director acknowledges that the Director may obtain material nonpublic information concerning the Company and agrees not to trade in Company securities or communicate such information except in accordance with applicable law and the Company’s Insider Trading Policy.
| 7. | Confidentiality. |
During and after Board service, the Director shall maintain in confidence all confidential and proprietary information concerning the Company and its subsidiaries obtained by reason of Board service and shall use such information solely in connection with the proper performance of the Director’s duties. This obligation does not apply to information that is publicly available other than through a breach of this Agreement, was lawfully known to the Director without restriction, is lawfully received from a third party without a duty of confidentiality, or is required to be disclosed by applicable law, regulation or legal process. Nothing in this Agreement prohibits or restricts the Director from communicating with the SEC, FINRA, any Exchange or another governmental or regulatory authority concerning a possible violation of law or from engaging in activity protected under applicable whistleblower laws. Upon cessation of Board service, the Director shall return or destroy confidential Company materials at the Company’s reasonable request, subject to applicable legal and document-retention requirements.
| 8. | Conflicts of Interest. |
The Director shall promptly disclose to the Board or the appropriate committee any actual or potential conflict of interest involving the Director and the Company. Nothing in this Agreement prohibits the Director from engaging in other business, professional or investment activities, including service on other boards, provided that such activities do not materially interfere with the Director’s duties to the Company or violate applicable law, fiduciary duties or Company policies.
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| 9. | Indemnification and D&O Insurance. |
The Company and the Director shall enter into a separate indemnification agreement providing for indemnification and advancement of expenses to the fullest extent permitted by applicable law and the Company’s Certificate of Incorporation and Bylaws. During the Director’s service and thereafter with respect to acts occurring during such service, the Director shall be covered by any directors’ and officers’ liability insurance policy maintained by the Company for its directors and officers on substantially the same terms as other similarly situated directors. The rights provided under this Section survive termination of this Agreement.
| 10. | No Employment Relationship. |
The Director’s service as a member of the Board does not constitute employment by the Company. The Director shall be responsible for taxes arising from compensation received for Board service except to the extent withholding is required by applicable law. The Director has no authority, solely by virtue of Board membership, to bind the Company except pursuant to authority properly granted by the Board.
| 11. | Public Disclosures. |
The Director acknowledges that the Company may disclose information relating to the Director, Board and committee service, compensation, beneficial ownership of Company securities, business experience and other information as required under applicable securities laws, SEC rules and Exchange requirements. The Director shall reasonably cooperate in preparing such disclosures and promptly advise the Company if the Director becomes aware that any information concerning the Director contained in an SEC filing or other public disclosure is materially inaccurate or incomplete.
| 12. | Governing Law. |
This Agreement and all matters arising out of or relating to this Agreement shall be governed by the laws of the State of Delaware, without giving effect to conflicts-of-law principles.
| 13. | Entire Agreement; Amendment. |
This Agreement, together with the Company’s governing documents, the Plan, applicable stock option award agreements and the Director’s indemnification agreement, constitutes the agreement between the parties with respect to the subject matter addressed herein. If the Offering is not completed, this Agreement shall be of no force or effect. This Agreement may be amended only by a written instrument approved by the Board or an authorized committee and executed by the Company and the Director, except that the Board or Compensation Committee may prospectively modify the Company’s generally applicable non-employee director compensation program as provided in Section 3(e).
| 14. | Miscellaneous. |
This Agreement may be executed in counterparts and by electronic signature, each of which shall constitute an original and all of which together shall constitute one agreement. If any provision is determined to be invalid or unenforceable, the remaining provisions shall remain in full force and effect. Sections 7, 9, 11, 12, 13 and 14, and any other provision that by its nature should survive, shall survive termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
| KAT CONSTRUCTION SERVICES, INC. | DIRECTOR | |||
| By: | /s/ Robert Finley | By: | /s/ David Montoya | |
| Name: | Robert Finley | Name: | David Montoya | |
| Title: | Chief Executive Officer |
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