EXHIBIT 10.4
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EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), by and between Quanta
Services, Inc., a Delaware corporation, and its affiliates (collectively,
"Employer"), and Xxxxx X. Xxxxxxx ("Employee"), is hereby entered into this 13th
day of March 2002 ("Execution Date").
R E C I T A L S
A. As of the Execution Date, Employer is engaged primarily in the business
of specialized construction contracting and/or maintenance services to: electric
utilities; telecommunication, cable television and natural gas operators;
governmental entities; the transportation industry; and commercial and
industrial customers.
B. Employee is employed hereunder by Employer in a position that is
critical to the Employer's continued operation.
C. The Special Committee of the Employer's Board of Directors (the
"Board"), has determined that it is in the best interests of the Employer and
its stockholders to assure that the Employer will have the continued dedication
of the Employee, notwithstanding the possibility, threat or occurrence of a
Change of Control (as defined below) of the Employer. The Board believes it is
imperative to diminish the inevitable distraction of the Employee by virtue of
the personal uncertainties and risks created by a pending or threatened Change
of Control and to encourage the Employee's full attention and dedication to the
Employer currently and in the event of any threatened or pending Change of
Control, and to provide the Employee with compensation and benefits arrangements
upon a Change of Control that ensure that the compensation and benefits
expectations of the Employee will be satisfied and that are competitive with
those of other corporations. Therefore, in order to accomplish these objectives,
the Board has caused the Employer to enter into this Agreement.
A G R E E M E N T S
In consideration of the mutual promises, terms, covenants and
conditions set forth herein and the performance of each, the parties hereto
hereby agree as follows:
1. Certain Definitions.
(a) The "Effective Date" shall mean the first date during the
Change of Control Period (as defined in Section 1(b)) on which a Change
of Control (as defined in Section 2) occurs. Anything in this Agreement
to the contrary notwithstanding, if a Change of Control occurs and if
the Employee's employment with the Employer is terminated prior to the
date on which the Change of Control occurs, and if the Employee
reasonably demonstrates that such termination of employment (i) was at
the request of a third party who has taken steps reasonably calculated
to effect a Change of Control or (ii) otherwise arose in connection
with or anticipation of a Change of Control, then for all purposes of
this Agreement the "Effective Date" shall mean the date immediately
prior to the date of such termination of employment.
(b) The "Change of Control Period" shall mean the period
commencing on the Execution Date hereof and ending on the third
anniversary of the Execution Date; provided, however, that commencing
on the date one year after the date hereof, and on each annual
anniversary of such date (such date and each annual anniversary thereof
shall be hereinafter referred to as the "Renewal Date"), unless
previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three years from such Renewal
Date, unless at least 60 days prior to the Renewal Date the Employer
shall give notice to the Employee that the Change of Control Period
shall not be so extended.
(c) The "Code" shall mean the Internal Revenue Code of 1986,
as amended.
(d) The "Earlier Employment Agreement" shall mean any
employment, severance or change in control agreement between the
Employer and the Employee that existed and was effective as of the
Execution Date. The Employee may elect in writing, on or before the
Employee's Date of Termination, to have any term, provision and/or
definition under the Employees' Earlier Employment Agreement apply in
lieu of any similar term, provision and/or definition of this
Agreement, except to the extent that such application would produce
duplicate payments or benefits under this Agreement and such Earlier
Employment Agreement.
2. Change of Control. For the purpose of this Agreement,
a "Change of Control" shall mean:
(a) Any person or entity, other than the Employer or an employee
benefit plan of the Employer, acquires directly or indirectly the
Beneficial Ownership (as defined in Section 13(d) of the Exchange Act)
of any voting security of the Employer and immediately after such
acquisition such person or entity is, directly or indirectly, the
Beneficial Owner of voting securities representing 50% or more of the
total voting power of all of the then-outstanding voting securities of
the Employer; or
(b) Individuals who, as of the date hereof, constitute the
Board, and any new director whose election by the Board or nomination
for election by the Employer's stockholders was approved by a vote of a
majority of the directors then still in office who were directors as of
the date hereof or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a
majority of the members of the Board; or
(c) The stockholders of the Employer shall approve a merger,
consolidation, recapitalization or reorganization of the Employer, a
reverse stock split of outstanding voting securities, or consummation
of any such transaction if stockholder approval is not obtained, other
than any such transaction that would result in at least 50% of the
total voting power represented by the voting securities of the
surviving entity outstanding immediately after such transaction being
Beneficially Owned by at least 50% of the holders of outstanding voting
securities of the Employer immediately prior to the transaction, with
the voting power of each such continuing holder relative to other such
continuing holders not substantially altered in the transaction; or
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(d) The stockholders of the Employer shall approve a plan of
complete liquidation of the Employer or an agreement for the sale or
disposition by the Employer of all or a substantial portion of the
Employer's assets (i.e., 50% or more of the total assets of the
Employer).
3. Employment Period. The Employer hereby agrees to continue the Employee
in its employ, and the Employee hereby agrees to remain in the employ of the
Employer subject to the terms and conditions of this Agreement, for the period
commencing on the Effective Date and ending on the third anniversary of such
date (the "Employment Period").
4. Terms of Employment.
(a) Position and Duties.
(i) During the Employment Period, (A) the Employee's position
(including status, offices, titles and reporting requirements),
authority, duties and responsibilities shall be at least commensurate
in all material respects with the most significant of those held,
exercised and assigned at any time during the 120-day period
immediately preceding the Effective Date and (B) the Employee's
services shall be performed at the location where the Employee was
employed immediately preceding the Effective Date or any office or
location less than 35 miles from such location.
(ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Employee is entitled, the
Employee agrees to devote reasonable attention and time during normal
business hours to the business and affairs of the Employer and, to the
extent necessary to discharge the responsibilities assigned to the
Employee hereunder, to use the Employee's reasonable best efforts to
perform faithfully and efficiently such responsibilities. During the
Employment Period it shall not be a violation of this Agreement for
the Employee to (A) serve on corporate, civic or charitable boards or
committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments,
so long as such activities do not significantly interfere with the
performance of the Employee's responsibilities as an employee of the
Employer in accordance with this Agreement. It is expressly understood
and agreed that to the extent that any such activities have been
conducted by the Employee prior to the Effective Date, the continued
conduct of such activities (or the conduct of activities similar in
nature and scope thereto) subsequent to the Effective Date shall not
thereafter be deemed to interfere with the performance of the
Employee's responsibilities to the Employer.
(b) Compensation.
(i) Base Salary. During the Employment Period, the Employee shall
receive an annual base salary ("Annual Base Salary"), which shall be
paid at a monthly rate, at least equal to 12 times the highest monthly
base salary paid or payable, including any base salary that has been
earned but deferred, to the
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Employee by the Employer and its affiliated companies in respect of
the 12-month period immediately preceding the month in which the
Effective Date occurs. During the Employment Period, the Annual Base
Salary shall be reviewed no more than 12 months after the last salary
increase awarded to the Employee prior to the Effective Date and
thereafter at least annually. Any increase in Annual Base Salary shall
not serve to limit or reduce any other obligation to the Employee
under this Agreement. Annual Base Salary shall not be reduced after
any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used
in this Agreement, the term "affiliated companies" shall include any
company controlled by, controlling or under common control with the
Employer.
(ii) Annual Bonus. In addition to Annual Base Salary, the
Employee shall be awarded, for each fiscal year ending during the
Employment Period, an annual bonus (the "Annual Bonus") in cash at
least equal to the Employee's highest bonus under the Employer's
Management Incentive Bonus Plan, or any comparable bonus under any
predecessor or successor plan, for the last three full fiscal years
prior to the Effective Date (annualized in the event that the Employee
was not employed by the Employer for the whole of such fiscal year)
(the "Recent Annual Bonus"). Each such Annual Bonus shall be paid no
later than the end of the third month of the fiscal year next
following the fiscal year for which the Annual Bonus is awarded,
unless the Employee shall elect to defer the receipt of such Annual
Bonus.
(iii) Incentive, Savings and Retirement Plans. During the
Employment Period, the Employee shall be entitled to participate in
all incentive, savings and retirement plans, practices, policies and
programs applicable generally to other peer executives of the Employer
and its affiliated companies, but in no event shall such plans,
practices, policies and programs provide the Employee with incentive
opportunities (measured with respect to both regular and special
incentive opportunities, to the extent, if any, that such distinction
is applicable), savings opportunities and retirement benefit
opportunities, in each case, less favorable, in the aggregate, than
the most favorable of those provided by the Employer and its
affiliated companies for the Employee under such plans, practices,
policies and programs as in effect at any time during the 120-day
period immediately preceding the Effective Date or if more favorable
to the Employee, those provided generally at any time after the
Effective Date to other peer executives of the Employer and its
affiliated companies.
(iv) Welfare Benefit Plans. During the Employment Period, the
Employee and/or the Employee's family, as the case may be, shall be
eligible for participation in and shall receive all benefits under
welfare benefit plans, practices, policies and programs provided by
the Employer and its affiliated companies (including, without
limitation, medical, prescription, dental, disability, employee life,
group life, accidental death and travel accident insurance plans and
programs) to the extent applicable generally to other peer executives
of the Employer and its affiliated companies, but in no event shall
such plans, practices,
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policies and programs provide the Employee with benefits that are less
favorable, in the aggregate, than the most favorable of such plans,
practices, policies and programs in effect for the Employee at any
time during the 120-day period immediately preceding the Effective
Date or, if more favorable to the Employee, those provided generally
at any time after the Effective Date to other peer executives of the
Employer and its affiliated companies.
(v) Expenses. During the Employment Period, the Employee shall be
entitled to receive prompt reimbursement for all reasonable expenses
incurred by the Employee in accordance with the most favorable
policies, practices and procedures of the Employer and its affiliated
companies in effect for the Employee at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable
to the Employee, as in effect generally at any time thereafter with
respect to other peer executives of the Employer and its affiliated
companies.
(vi) Fringe Benefits. During the Employment Period, the Employee
shall be entitled to fringe benefits, including, without limitation,
tax and financial planning services, payment of club dues, and, if
applicable, use of an automobile and payment of related expenses, in
accordance with the most favorable plans, practices, programs and
policies of the Employer and its affiliated companies in effect for
the Employee at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Employee, as
in effect generally at any time thereafter with respect to other peer
executives of the Employer and its affiliated companies.
(vii) Office and Support Staff. During the Employment Period, the
Employee shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal
secretarial and other assistance, at least equal to the most favorable
of the foregoing provided to the Employee by the Employer and its
affiliated companies at any time during the 120-day period immediately
preceding the Effective Date or, if more favorable to the Employee, as
provided generally at any time thereafter with respect to other peer
executives of the Employer and its affiliated companies.
(viii) Vacation. During the Employment Period, the Employee shall
be entitled to paid vacation in accordance with the most favorable
plans, policies, programs and practices of the Employer and its
affiliated companies as in effect for the Employee at any time during
the 120-day period immediately preceding the Effective Date or, if
more favorable to the Employee, as in effect generally at any time
thereafter with respect to other peer executives of the Employer and
its affiliated companies.
5. Termination of Employment.
(a) Death or Disability. The Employee's employment shall
terminate automatically upon the Employee's death during the
Employment Period. If the
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Employer determines in good faith that the Disability of the Employee
has occurred during the Employment Period (pursuant to the definition
of Disability set forth below), it may give to the Employee written
notice in accordance with Section 14 of this Agreement of its
intention to terminate the Employee's employment. In such event, the
Employee's employment with the Employer shall terminate effective on
the 30th day after receipt of such notice by the Employee (the
"Disability Effective Date"), provided that, within the 30 days after
such receipt, the Employee shall not have returned to full-time
performance of the Employee's duties. For purposes of this Agreement,
"Disability" shall mean the absence of the Employee from the
Employee's duties with the Employer on a full-time basis for 180
consecutive business days as a result of incapacity due to mental or
physical illness that is determined to be total and permanent by a
physician selected by the Employer or its insurers and acceptable to
the Employee or the Employee's legal representative.
(b) Cause. The Employer may terminate the Employee's employment
during the Employment Period for Cause. For purposes of this
Agreement, "Cause" shall mean:
(i) the willful and continued failure of the Employee to
perform substantially the Employee's duties with the Employer or
one of its affiliates (other than any such failure resulting from
incapacity due to physical or mental illness), after a written
demand for substantial performance is delivered to the Employee
by the Board or the Chief Executive Officer of the Employer that
specifically identifies the manner in which the Board or the
Chief Executive Officer believes that the Employee has not
substantially performed the Employee's duties, or
(ii) the willful engaging by the Employee in illegal conduct
or gross misconduct that is materially and demonstrably injurious
to the Employer.
For purposes of this provision, no act or failure to act, on the part
of the Employee, shall be considered "willful" unless it is done, or
omitted to be done, by the Employee in bad faith or without reasonable
belief that the Employee's action or omission was in the best
interests of the Employer. Any act, or failure to act, based upon
authority given pursuant to a resolution duly adopted by the Board or
upon the instructions of the Chief Executive Officer or a senior
officer of the Employer or based upon the advice of counsel for the
Employer shall be conclusively presumed to be done, or omitted to be
done, by the Employee in good faith and in the best interests of the
Employer. The cessation of employment of the Employee shall not be
deemed to be for Cause unless and until there shall have been
delivered to the Employee a copy of a resolution duly adopted by the
affirmative vote of not less than three-quarters of the entire
membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Employee and
the Employee is given an opportunity, together with counsel, to be
heard before the Board), finding that, in the good faith opinion of
the Board, the Employee is guilty of the conduct described in
subparagraph (i) or (ii) above, and specifying the particulars thereof
in detail.
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(c) Good Reason. The Employee's employment may be terminated by the
Employee for Good Reason. For purposes of this Agreement, "Good Reason"
shall mean:
(i) the assignment to the Employee of any duties inconsistent in
any respect with the Employee's position (including status, offices,
titles and reporting requirements), authority, duties or
responsibilities as contemplated by Section 4(a) of this Agreement, or
any other action by the Employer that results in a diminution in such
position, authority, duties or responsibilities, excluding for this
purpose an isolated, insubstantial and inadvertent action not taken in
bad faith and that is remedied by the Employer promptly after receipt
of notice thereof given by the Employee;
(ii) any failure by the Employer to comply with any of the
provisions of Section 4(b) of this Agreement, other than an isolated,
insubstantial and inadvertent failure not occurring in bad faith and
that is remedied by the Employer promptly after receipt of notice
thereof given by the Employee;
(iii) the Employer's requiring the Employee to be based at any
office or location other than as provided in Section 4(a)(i)(B) hereof
or the Employer's requiring the Employee to travel on Employer
business to a substantially greater extent than required immediately
prior to the Effective Date;
(iv) any purported termination by the Employer of the Employee's
employment otherwise than as expressly permitted by this Agreement;
(v) any failure by the Employer to continue in effect any cash or
stock-based incentive or bonus plan, retirement plan, welfare benefit
plan or other compensation, retirement or benefit plan, practice,
policy, and program, unless the aggregate value (as computed by an
independent employee benefits consultant selected by the Employer and
acceptable to the Employee or the Employee's legal representative) of
all such compensation, retirement or benefit plans, practices,
policies and programs provided to the Employee is not materially less
than their aggregate value as in effect at any time during the 120-day
period immediately preceding the Effective Date or if more favorable
to the Employee, those provided generally at any time after the
Effective Date to other peer executives of the Employer and its
affiliated companies ; or
(vi) any failure by the Employer to comply with and satisfy
Section 13(c) of this Agreement.
For purposes of this Section 5(c), any good faith determination of
"Good Reason" made by the Employee shall be conclusive. Anything in
this Agreement to the contrary notwithstanding, a termination by the
Employee for any reason during (x) the five-day period immediately
preceding the Effective Date and/or (y) the 30-day period immediately
following the six-month anniversary of the Effective Date, shall be
deemed to be a termination for Good Reason for all purposes of this
Agreement.
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(d) Notice of Termination. Any termination by the Employer for
Cause, or by the Employee for Good Reason, shall be communicated by
Notice of Termination to the other party hereto given in accordance
with Section 14 of this Agreement. For purposes of this Agreement, a
"Notice of Termination" means a written notice that (i) indicates the
specific termination provision in this Agreement relied upon, (ii) to
the extent applicable, sets forth in reasonable detail the facts and
circumstances claimed to provide a basis for termination of the
Employee's employment under the provision so indicated and (iii) if
the Date of Termination (as defined below) is other than the date of
receipt of such notice, specifies the termination date (which date
shall be not more than thirty days after the giving of such notice).
The failure by the Employee or the Employer to set forth in the Notice
of Termination any fact or circumstance that contributes to a showing
of Good Reason or Cause shall not waive any right of the Employee or
the Employer, respectively, hereunder or preclude the Employee or the
Employer, respectively, from asserting such fact or circumstance in
enforcing the Employee's or the Employer's rights hereunder.
(e) Date of Termination. "Date of Termination" means (i) if the
Employee's employment is terminated by the Employer for Cause, or by
the Employee for Good Reason, the date of receipt of the Notice of
Termination or any later date specified therein, as the case may be,
(ii) if the Employee's employment is terminated by the Employer other
than for Cause or Disability, the Date of Termination shall be the
date on which the Employer notifies the Employee of such termination
and (iii) if the Employee's employment is terminated by reason of
death or Disability, the Date of Termination shall be the date of
death of the Employee or the Disability Effective Date, as the case
may be.
6. Obligations of the Employer upon Termination.
(a) Good Reason; Death; Disability; and Other Than for Cause. If,
during the Employment Period, the Employer shall terminate the
Employee's employment other than for Cause, the Employee shall
terminate employment for Good Reason, or the Employee's employment
shall terminate due to death or Disability:
(i) the Employer shall pay to the Employee in a lump sum in
cash within 30 days after the Date of Termination the aggregate
of the following amounts:
(A) the sum of (1) the Employee's Annual Base Salary
through the Date of Termination to the extent not
theretofore paid, (2) the product of (x) the higher of (I)
the Recent Annual Bonus and (II) the Annual Bonus paid or
payable, including any bonus or portion thereof which has
been earned but deferred (and annualized for any fiscal year
consisting of less than 12 full months or during which the
Employee was employed for less than 12 full months), for the
most recently completed fiscal year during the Employment
Period, if any (such higher amount being referred to as the
"Highest Annual Bonus") and (y) a fraction, the numerator of
which is the number of days in the current fiscal year
through the Date of Termination, and the denominator of
which is 365 and (3) any
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compensation previously deferred by the Employee (together
with any accrued interest or earnings thereon) and any
accrued vacation pay, in each case to the extent not
theretofore paid (the sum of the amounts described in
clauses (1), (2), and (3) shall be hereinafter referred to
as the "Accrued Obligations"); and
(B) the amount equal to the product of (1) three and
(2) the sum of (x) the Employee's Annual Base Salary and (y)
the Highest Annual Bonus;
(ii) all stock options, restricted stock or other awards
made or granted under the Quanta Services, Inc. 1997 Stock Option
Plan, the Quanta Services, Inc. 2001 Stock Incentive Plan and/or
any similar or successor stock plan or program, will become fully
vested immediately on or prior to the Employee's Date of
Termination. The Employer agrees that for purposes of determining
the continued exercisability of Employee's stock options
outstanding on the Date of Termination, Employee shall be
considered to have remained employed by the Employer until the
third anniversary of the Date of Termination. Nothing in this
subparagraph (ii) shall be deemed to extend the expiration date
of any stock option granted under the applicable stock plan(s) or
program(s) past the original expiration date of such stock option
as determined at the time of grant;
(iii) for three years after the Employee's Date of
Termination, or such longer period as may be provided by the
terms of the appropriate plan, program, practice or policy, the
Employer shall continue benefits to the Employee and/or the
Employee's family at least equal to those that would have been
provided to them in accordance with the plans, programs,
practices and policies described in Section 4(b)(iv) of this
Agreement if the Employee's employment had not been terminated
or, if more favorable to the Employee, as in effect generally at
any time thereafter with respect to other peer executives of the
Employer and its affiliated companies and their families,
provided, however, that if the Employee becomes reemployed with
another employer and is eligible to receive medical or other
welfare benefits under another employer provided plan, the
medical and other welfare benefits described herein shall be
secondary to those provided under such other plan during such
applicable period of eligibility. For purposes of determining
eligibility (but not the time of commencement of benefits) of the
Employee for retiree benefits pursuant to such plans, practices,
programs and policies, the Employee shall be considered to have
remained employed until the third anniversary of the Date of
Termination and to have retired on the last day of such period;
(iv) the Employer shall, at its sole expense as incurred,
provide the Employee with outplacement services the scope and
provider of which shall be selected by the Employee in his sole
discretion;
(v) to the extent not theretofore paid or provided, the
Employer shall timely pay or provide to the Employee any other
amounts or benefits required to
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be paid or provided or which the Employee is eligible to receive
under any plan, program, policy or practice or contract or
agreement of the Employer and its affiliated companies (such
other amounts and benefits shall be hereinafter referred to as
the "Other Benefits"); and
(vi) the covenant of non-competition, and any other
restrictive covenants applicable to the Employee under any
employment or other agreement between the Employer and the
Employee shall cease to apply effective as of the Date of
Termination.
(b) Death. If the Employee's employment is terminated by reason
of the Employee's death during the Employment Period, the Employer
shall pay the amounts and provide the benefits described in Section
6(a), pay the Accrued Obligations to the Employee's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of
the Date of Termination, and timely pay or provide the Other Benefits.
With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 6(b) shall include, without
limitation, and the Employee's estate and/or beneficiaries shall be
entitled to receive, benefits at least equal to the most favorable
benefits provided by the Employer and affiliated companies to the
estates and beneficiaries of peer executives of the Employer and such
affiliated companies under such plans, programs, practices and
policies relating to death benefits, if any, as in effect with respect
to other peer executives and their beneficiaries at any time during
the 120-day period immediately preceding the Effective Date or, if
more favorable to the Employee's estate and/or the Employee's
beneficiaries, as in effect on the date of the Employee's death with
respect to other peer executives of the Employer and its affiliated
companies and their beneficiaries.
(c) Disability. If the Employee's employment is terminated by
reason of the Employee's Disability during the Employment Period, the
Employer shall pay the amounts and provide the benefits described in
Section 6(a), pay the Accrued Obligations to the Employee's estate or
beneficiary, as applicable, in a lump sum in cash within 30 days of
the Date of Termination, and timely pay or provide the Other Benefits.
With respect to the provision of Other Benefits, the term Other
Benefits as utilized in this Section 6(c) shall include, and the
Employee shall be entitled after the Disability Effective Date to
receive, disability and other benefits at least equal to the most
favorable of those generally provided by the Employer and its
affiliated companies to disabled executives and/or their families in
accordance with such plans, programs, practices and policies relating
to disability, if any, as in effect generally with respect to other
peer executives and their families at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable
to the Employee and/or the Employee's family, as in effect at any time
thereafter generally with respect to other peer executives of the
Employer and its affiliated companies and their families.
(d) Cause; Other than for Good Reason. If the Employee's
employment shall be terminated for Cause during the Employment Period,
this Agreement shall terminate without further obligations to the
Employee other than the obligation to pay to the Employee (x) his
Annual Base Salary through the Date of Termination, (y) the amount of
any compensation previously deferred by the Employee, and (z) Other
Benefits, in each
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case to the extent theretofore unpaid. If the Employee voluntarily
terminates employment during the Employment Period, excluding a
termination for Good Reason, this Agreement shall terminate without
further obligations to the Employee, other than for Accrued
Obligations and the timely payment or provision of Other Benefits. In
such case, all Accrued Obligations shall be paid to the Employee in a
lump sum in cash within 30 days of the Date of Termination.
7. Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Employee's continuing or future participation in any plan, program,
policy or practice provided by the Employer or any of its affiliated companies
and for which the Employee may qualify, nor, subject to Section 12, shall
anything herein limit or otherwise affect such rights as the Employee may have
under any contract or agreement with the Employer or any of its affiliated
companies. Amounts that are vested benefits or that the Employee is otherwise
entitled to receive under any plan, policy, practice or program of or any
contract or agreement with the Employer or any of its affiliated companies at or
subsequent to the Date of Termination shall be payable in accordance with such
plan, policy, practice or program or contract or agreement except as explicitly
modified by this Agreement.
8. Full Settlement. The Employer's obligation to make the payments provided
for in this Agreement and otherwise to perform its obligations hereunder shall
not be affected by any set-off, counterclaim, recoupment, defense or other
claim, right or action that the Employer may have against the Employee or
others. In no event shall the Employee be obligated to seek other employment or
take any other action by way of mitigation of the amounts payable to the
Employee under any of the provisions of this Agreement and such amounts shall
not be reduced whether or not the Employee obtains other employment. The
Employer agrees to pay as incurred, to the full extent permitted by law, all
legal fees and expenses that the Employee may reasonably incur as a result of
any contest (regardless of the outcome thereof) by the Employer, the Employee or
others of the validity or enforceability of, or liability under, any provision
of this Agreement or any guarantee of performance thereof (including as a result
of any contest by the Employee about the amount of any payment pursuant to this
Agreement), plus in each case interest on any delayed payment at the applicable
Federal rate provided for in Code Section 7872(f)(2)(A).
9. Certain Additional Payments by the Employer.
(a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the
Employer or its affiliates to or for the benefit of the Employee (whether
paid or payable or distributed or distributable pursuant to the terms of
this Agreement or otherwise, but determined without regard to any
additional payments required under this Section 9) (a "Payment") would be
subject to the excise tax imposed by Code Section 4999 or any interest or
penalties are incurred by the Employee with respect to such excise tax
(such excise tax, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the
Employee shall be entitled to receive an additional payment (a "Gross-Up
Payment") in an amount such that after payment by the Employee of all taxes
(including any interest or penalties imposed with respect to such taxes),
including, without limitation, any income taxes (and any interest and
penalties imposed with respect thereto) and Excise
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Tax imposed upon the Gross-Up Payment, the Employee retains an amount of
the Gross-Up Payment equal to the Excise Tax imposed upon the Payments.
(b) Subject to the provisions of Section 9(c), all determinations
required to be made under this Section 9, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and
the assumptions to be utilized in arriving at such determination, shall be
made by Xxxxxx Xxxxxxxx or such other certified public accounting firm as
may be designated by the Employee (the "Accounting Firm") which shall
provide detailed supporting calculations both to the Employer and the
Employee within 15 business days of the receipt of notice from the Employee
that there has been a Payment, or such earlier time as is requested by the
Employer. In the event that the Accounting Firm is serving as accountant or
auditor for the individual, entity or group effecting the Change of
Control, the Employee shall appoint another nationally recognized
accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm
hereunder). All fees and expenses of the Accounting Firm shall be borne
solely by the Employer. Any Gross-Up Payment, as determined pursuant to
this Section 9, shall be paid by the Employer to the Employee within five
days of the receipt of the Accounting Firm's determination. Any
determination by the Accounting Firm shall be binding upon the Employer and
the Employee. As a result of the uncertainty in the application of Code
Section 4999 at the time of the initial determination by the Accounting
Firm hereunder, it is possible that Gross-Up Payments that will not have
been made by the Employer should have been made ("Underpayment"),
consistent with the calculations required to be made hereunder. In the
event that the Employer exhausts its remedies pursuant to Section 9(c) and
the Employee thereafter is required to make a payment of any Excise Tax,
the Accounting Firm shall determine the amount of the Underpayment that has
occurred and any such Underpayment shall be promptly paid by the Employer
to or for the benefit of the Employee.
(c) The Employee shall notify the Employer in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment
by the Employer of the Gross-Up Payment. Such notification shall be given
as soon as practicable but no later than ten business days after the
Employee is informed in writing of such claim and shall apprise the
Employer of the nature of such claim and the date on which such claim is
requested to be paid. The Employee shall not pay such claim prior to the
expiration of the 30-day period following the date on which it gives such
notice to the Employer (or such shorter period ending on the date that any
payment of taxes with respect to such claim is due). If the Employer
notifies the Employee in writing prior to the expiration of such period
that it desires to contest such claim, the Employee shall:
(i) give the Employer any information reasonably requested by the
Employer relating to such claim,
(ii) take such action in connection with contesting such claim as
the Employer shall reasonably request in writing from time to time,
including, without limitation, accepting legal representation with
respect to such claim by an attorney reasonably selected by the
Employer,
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(iii) cooperate with the Employer in good faith in order
effectively to contest such claim, and
(iv) permit the Employer to participate in any proceedings
relating to such claim;
provided, however, that the Employer shall bear and pay
directly all costs and expenses (including additional interest and
penalties) incurred in connection with such contest and shall indemnify
and hold the Employee harmless, on an after-tax basis, for any Excise
Tax or income tax (including interest and penalties with respect
thereto) imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing provisions of
this Section 9(c), the Employer shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or
forgo any and all administrative appeals, proceedings, hearings and
conferences with the taxing authority in respect of such claim and may,
at its sole option, either direct the Employee to pay the tax claimed
and xxx for a refund or contest the claim in any permissible manner,
and the Employee agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial jurisdiction
and in one or more appellate courts, as the Employer shall determine;
provided, however, that if the Employer directs the Employee to pay
such claim and xxx for a refund, the Employer shall advance the amount
of such payment to the Employee, on an interest-free basis and shall
indemnify and hold the Employee harmless, on an after-tax basis, from
any Excise Tax or income tax (including interest or penalties with
respect thereto) imposed with respect to such advance or with respect
to any imputed income with respect to such advance; and further
provided that any extension of the statute of limitations relating to
payment of taxes for the taxable year of the Employee with respect to
which such contested amount is claimed to be due is limited solely to
such contested amount. Furthermore, the Employer's control of the
contest shall be limited to issues with respect to which a Gross-Up
Payment would be payable hereunder and the Employee shall be entitled
to settle or contest, as the case may be, any other issue raised by the
Internal Revenue Service or any other taxing authority.
(d) If, after the receipt by the Employee of an amount advanced
by the Employer pursuant to Section 9(c), the Employee becomes
entitled to receive any refund with respect to such claim, the
Employee shall (subject to the Employer's complying with the
requirements of Section 9(c)) promptly pay to the Employer the amount
of such refund (together with any interest paid or credited thereon
after taxes applicable thereto). If, after the receipt by the Employee
of an amount advanced by the Employer pursuant to Section 9(c), a
determination is made that the Employee shall not be entitled to any
refund with respect to such claim and the Employer does not notify the
Employee in writing of its intent to contest such denial of refund
prior to the expiration of 30 days after such determination, then such
advance shall be forgiven and shall not be required to be repaid and
the amount of such advance shall offset, to the extent thereof, the
amount of Gross-Up Payment required to be paid.
10. Confidential Information. The Employee shall hold in a fiduciary
capacity for the benefit of the Employer all secret or confidential information,
knowledge or data relating to the
13
Employer or any of its affiliated companies, and their respective businesses,
which shall have been obtained by the Employee during the Employee's employment
by the Employer or any of its affiliated companies and which shall not be or
become public knowledge (other than by acts by the Employee or representatives
of the Employee in violation of this Agreement). After termination of the
Employee's employment with the Employer, the Employee shall not, without the
prior written consent of the Employer or as may otherwise be required by law or
legal process, communicate or divulge any such information, knowledge or data to
anyone other than the Employer and those designated by it. In no event shall an
asserted violation of the provisions of this Section 10 constitute a basis for
deferring or withholding any amounts otherwise payable to the Employee under
this Agreement.
11. Insurance and Indemnification. For the period from the Effective Date
through at least the tenth anniversary of the Employee's termination of
employment from the Employer, the Employer shall maintain the Employee as an
insured party on all directors' and officers' insurance maintained by the
Employer for the benefit of its directors and officers on at least the same
basis as all other covered individuals and provide the Employee with at least
the same corporate indemnification as it provides to the peer executives of the
Employer.
12. Earlier Employment Agreement. Except as provided in the following
sentence, from and after the Effective Date, this Agreement shall supersede any
other agreement between the parties with respect to the subject matter hereof.
The Employee may elect in writing to have any term, provision and/or definition
under the Employees' Earlier Employment Agreement apply in lieu of any similar
term, provision and/or definition of this Agreement, except to the extent that
such application would produce duplicate payments or benefits under this
Agreement and such Earlier Employment Agreement. All determinations required to
be made under this Section, including whether and when a term, provision and/or
definition under the Employees' Earlier Employment Agreement would produce
duplicate payments or benefits under this Agreement and such Earlier Employment
Agreement and the assumptions to be utilized in arriving at such determination,
shall be made by the Accounting Firm or such other nationally recognized
compensation and benefits consulting firm as the Employee may designate, which
shall provide detailed supporting calculations both to the Employer and the
Employee within 15 business days of the receipt of written notice from the
Employee, or such earlier time as is requested by the Employer. All fees and
expenses of the Accounting Firm (or such other firm designated) shall be borne
solely by the Employer.
13. Successors.
(a) This Agreement is personal to the Employee and without the prior
written consent of the Employer shall not be assignable by the Employee
otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the
Employee's legal representatives.
(b) This Agreement shall inure to the benefit of and be binding upon
the Employer and its successors and assigns.
(c) The Employer will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business
14
and/or assets of the Employer to assume expressly and agree to perform this
Agreement in the same manner and to the same extent that the Employer would
be required to perform it if no such succession had taken place. As used in
this Agreement, "Employer" shall mean the Employer as hereinbefore defined
and any successor to its business and/or assets as aforesaid which assumes
and agrees to perform this Agreement by operation of law, or otherwise.
14. Notice. Any notice required pursuant to this Agreement will be in
writing and will be deemed given upon the earlier of (i) delivery thereof, if by
hand, (ii) three business days after mailing if sent by mail (registered or
certified mail, postage prepaid, return receipt requested), (iii) the next
business day after deposit if sent by a recognized overnight delivery service,
or (iv) upon transmission if sent by facsimile transmission or by electronic
mail, with return notification (provided that any notice sent by facsimile or
electronic mail shall also promptly be sent by one of the means described in
clauses (i) through (iii) of this Section. Any notice or document required to be
given or filed with the Employer is properly given or filed if delivered to the
Employer at 0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000,
Attention: General Counsel. Any notice or document required to be given or filed
with a Employee is properly given or filed if delivered to the Employee at the
most recent address shown on the Employer's records. A party may change its
address for notice by the giving of notice thereof in the manner hereinabove
provided.
15. Severability, Headings. If any portion of this Agreement is held
invalid or inoperative, the other portions of this Agreement. shall be deemed
valid and operative and, so far as is reasonable and possible, effect shall be
given to the intent manifested by the portion held invalid or inoperative. The
section headings herein are for reference purposes only and are not intended in
any way to describe, interpret, define or limit the extent or intent of the
Agreement or of any part hereof.
16. Arbitration. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Houston, Texas, in accordance with the rules of the American Arbitration
Association for the Resolution of Employment Disputes in effect on the date of
the event giving rise to the claim or the controversy; provided, however, that
the evidentiary standards set forth in this Agreement shall apply. Judgment may
be entered on the arbitrator's award in any court having jurisdiction.
Notwithstanding any provision of this Agreement to the contrary, the Employee
shall be entitled to seek specific performance of the Employee's right to be
paid until the Employee's Date of Termination during the pendency of any dispute
or controversy arising under or in connection with this Agreement. A decision by
a majority of the arbitration panel shall be final and binding. The direct
expense of any arbitration proceeding shall be borne by Employer.
17. Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of Texas, without reference to principles of
conflict of laws. The captions of this Agreement are not part of the provisions
hereof and shall have no force or effect. This Agreement may not be amended or
modified otherwise than by a written agreement executed by the parties hereto or
their respective successors and legal representatives.
15
18. Withholding. The Employer may withhold from any amounts payable under
this Agreement such Federal, state, local or foreign taxes as shall be required
to be withheld pursuant to any applicable law or regulation.
19. No Waiver. The Employee's or the Employer's failure to insist upon
strict compliance with any provision of this Agreement or the failure to assert
any right the Employee or the Employer may have hereunder, including, without
limitation, the right of the Employee to terminate employment for Good Reason,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.
20. Claims. All claims by the Employee for payments or benefits under this
Agreement shall be directed to and determined by the Employer's Board of
Directors (or such committee to which the Board delegates authority under this
Section) and shall be in writing. Any denial by the Board (or such committee) of
a claim for benefits under this Agreement shall be delivered to the Employee in
writing and shall set forth the specific reasons for the denial and the specific
provisions of this Agreement relied upon. The Board (or committee) shall afford
the Employee a reasonable opportunity for a review of the decision denying a
claim and shall further allow the Employee to appeal the decision within 60 days
after the Board (or committee) gives notice that it has denied Employee's claim.
21. Counterparts. This Agreement may be executed simultaneously in two or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the Employee has hereunto set the Employee's hand and,
pursuant to the authorization from its Board of Directors, the Employer has
caused these presents to be executed in its name on its behalf, all as of the
day and year first above written.
QUANTA SERVICES, INC. /s/ Xxxxx X. Xxxxxxx
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[EMPLOYEE]
By: /s/ Xxxx X. Xxxxxx
---------------------------------
Its: Chief Executive Officer
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