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EXHIBIT 10.23
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), by and among Quanta
Services, Inc., a Delaware corporation ("Employer"), and Xxxxx X. Xxxxxxx
("Employee"), is hereby entered into this April 1, 2001 (the "Execution Date").
RECITALS
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 confidential
relationship wherein Employee, in the course of Employee's employment with
Employer, has and will continue to become familiar with and aware of
Confidential Information (as defined in Section 9), all of which has been and
will be established and maintained at great expense to Employer and all or part
of which constitutes "trade secrets" of Employer and the valuable goodwill of
Employer.
AGREEMENTS
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. Employment and Duties.
(a) Employer hereby employs Employee as Executive Vice
President and Chief Operating Officer of Employer effective as of
February 5, 2001 (the "Effective Date"). As such, Employee shall have
responsibilities, duties and authority reasonably accorded to and
expected of an Executive Vice President and Chief Operating Officer of
Employer and will report directly to the Chief Executive Officer of
Employer (the "CEO"). Employee hereby accepts this employment upon the
terms and conditions herein contained and, subject to Section 1(c),
agrees to devote Employee's work time, attention and efforts to promote
and further the business of Employer.
(b) Employee shall faithfully adhere to, execute and fulfill
all policies established by the Board of Directors of Employer (the
"Board") and the CEO.
(c) Employee shall not, during the Term (as defined in Section
5) of this Agreement, be engaged in any other business activity pursued
for gain, profit or other pecuniary advantage if such activity
substantially interferes with Employee's duties and responsibilities
hereunder. The foregoing limitations shall not be construed as
prohibiting Employee from making personal investments in such form or
manner as will neither require Employee's services in the operation or
affairs of the companies or enterprises in which such investments are
made nor violate the terms of Section 3.
Employment Agreement -- Xxxxx X. Xxxxxxx 1
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2. Compensation. For all services rendered by Employee, Employer shall
compensate Employee as follows:
(a) Base Salary. The base salary payable to Employee beginning
as of the Effective Date shall be $300,000 per year, payable on a
regular basis in accordance with Employer's standard payroll procedures
but not less than monthly. On at least an annual basis, the Board will
review Employee's performance and may make increases to such base
salary if, in its discretion, any such increase is warranted. Such
recommended increase would, in all likelihood, require approval by the
Board or a duly constituted committee thereof.
(b) Bonus.
(i) Employee will participate in the Management
Incentive Bonus Plan developed by Employer for the fiscal year
ending December 31, 2001. The maximum bonus for which Employee
will be eligible pursuant to such plan will be 100% of his
base salary; provided, however, in no event will Employee's
bonus for the fiscal year ending December 31, 2001 be less
than $200,000.
(ii) Employee will participate in the Management
Incentive Bonus Plan developed by Employer for the fiscal year
ending December 31, 2002. The maximum bonus for which Employee
will be eligible pursuant to such plan will be 100% of
Employee's base salary. Employee will participate in future
incentive bonus plans made available by Employer during the
Term of this Agreement, provided that the maximum bonus for
which Employee will be eligible pursuant to any such plan will
be 100% of his base salary at the time the bonus is given.
(c) Executive Perquisites, Benefits, and Other Compensation.
Employee shall be entitled to receive, beginning as of the Effective
Date, additional benefits and compensation from Employer in such form
and to such extent as specified below:
(i) Payment of all premiums for coverage for Employee
and Employee's dependent family members under health,
hospitalization, disability, dental, life and other insurance
plans that Employer will have in effect.
(ii) Reimbursement for all business travel and other
out-of-pocket expenses reasonably incurred by Employee in the
performance of Employee's services pursuant to this Agreement.
All reimbursable expenses shall be appropriately documented in
reasonable detail by Employee upon submission of any request
for reimbursement, and in a format and manner consistent with
Employer's expense reporting policy.
(iii) Employer shall provide Employee with other
executive perquisites that are available to other executives
generally and participation in all other benefits and
compensation plans or programs as available to other
executives from time to time.
(iv) Four weeks paid vacation per year.
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(v) Payment of attorney's fees, up to a maximum of
$6,000, incurred by Employee for his review and negotiation of
this Agreement.
(d) Restricted Stock. Subject to the provisions of Section 20,
on or before the first to occur of (i) the adoption by Employer of an
employee benefit plan providing for the issuance of restricted stock
grants, (ii) a vesting event under clause (G) of Section 20(a)(xiii) or
(iii) June 1, 2001, Employer agrees that it shall issue to Employee
72,701 shares of Common Stock, $.00001 par value per share (the "Common
Stock"), of Employer.
(e) Stock Options. On or before the Execution Date, Employer
shall grant Employee nonqualified options to purchase 175,000 shares of
Common Stock under Employer's 1997 Stock Option Plan. Except for
extraordinary circumstances, on each successive anniversary of the
Effective Date during the Term of this Agreement, Employer shall grant
Employee nonqualified options to purchase 50,000 shares of Common Stock
under Employer's 1997 Stock Option Plan, as it may be amended from time
to time, or under, and subject to, the provisions of any similar plan
providing for the grant of nonqualified stock options that may be
adopted by Employer after the Execution Date. Options granted pursuant
to this subsection shall be granted at an exercise price per share
equal to the closing price of the Common Stock on the date of such
grant and shall be substantially in the form of the grant agreement
attached hereto as Exhibit A (the "Stock Option Agreement").
3. Non-Competition.
(a) Employee hereby agrees that Employee will not, during the
Term (as defined in Section 5) of this Agreement, and for a period of
one (1) year following the end of the Term, for any reason whatsoever,
directly or indirectly, for himself or on behalf of or in conjunction
with any other person, persons, company, partnership, corporation or
business of whatever nature:
(i) engage, as an officer, director, shareholder,
owner, partner, joint venturer or in a managerial capacity,
whether as an employee, independent contractor, consultant or
advisor or as a sales representative, in any Competitive
Business (as defined in Section 3(c)) or within 100 miles of
any other geographic area in which Employer or any of
Employer's direct or indirect subsidiaries conducts business,
including any territory serviced by Employer or any of its
subsidiaries (the "Territory");
(ii) call upon any person who is, at that time,
within the Territory, an employee of Employer (including the
subsidiaries thereof) for the purpose or with the intent of
enticing such employee away from or out of the employ of
Employer (including the direct or indirect subsidiaries
thereof);
(iii) call upon any person or entity which is, at
that time, or which has been, within one (1) year prior to
that time, a customer of Employer (including the direct or
indirect subsidiaries thereof) within the Territory for the
purpose of
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soliciting or selling products or services in a Competitive
Business within the Territory; or
(iv) call upon any prospective acquisition candidate,
on Employee's own behalf or on behalf of any competitor, which
candidate was, to Employee's actual knowledge after due
inquiry, either called upon by Employer including the direct
or indirect subsidiaries thereof) or for which Employer made
an acquisition analysis, for the purpose of acquiring such
entity.
Notwithstanding the above, the foregoing covenant shall not be deemed
to prohibit Employee from acquiring as an investment not more than two percent
(2%)of the capital stock of a competing business, whose stock is traded on a
national securities exchange or over-the-counter.
(b) Because of the difficulty of measuring economic losses to
Employer as a result of a breach of the foregoing covenant, and because
of the immediate and irreparable damage that could be caused to
Employer for which it would have no other adequate remedy, Employee
agrees that the foregoing covenant may be enforced by Employer in the
event of breach by him, by injunctions and restraining orders.
(c) It is agreed by the parties that the foregoing covenants
in this Section 3 impose a reasonable restraint on Employee in light of
the activities and business of Employer (including Employer's direct
and indirect subsidiaries) on the date of the execution of this
Agreement and the current plans of Employer (including Employer's
direct and indirect subsidiaries). "Competitive Business" means any
business that provides specialized construction contracting and/or
maintenance services to: electric utilities; telecommunication, cable
television or natural gas pipeline operators; governmental entities;
the transportation industry; or commercial and/or industrial customers.
It is further agreed by the parties hereto that, in the event that
Employee shall cease to be employed hereunder, and shall enter into a business
or pursue other activities the operation of which does not violate clause (a)(i)
of this Section 3, and such new business or activities are not in violation of
this Section 3 or of employee's obligations under this Section 3, Employee shall
not be chargeable with a violation of this Section 3 if Employer (including
Employer's direct and indirect subsidiaries) shall thereafter enter the same,
similar or a competitive (i) business, (ii) course of activities or (iii)
location, as applicable.
(d) The covenants in this Section 3 are severable and
separate, and the unenforceability of any specific covenant shall not
affect the provisions of any other covenant. Moreover, in the event any
court of competent jurisdiction shall determine that the scope, time or
territorial restrictions set forth are unreasonable, then it is the
intention of the parties that such restrictions be enforced to the
fullest extent which the court deems reasonable, and the Agreement
shall be reformed in accordance therewith.
(e) All of the covenants in this Section 3 shall be construed
as an agreement independent of any other provision in this Agreement,
and the existence of any claim or
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cause of action of Employee against Employer, whether predicated on
this Agreement or otherwise, shall not constitute a defense to the
enforcement by Employer of such covenants.
(f) Notwithstanding any other provision of this Agreement, if
Employee's employment is terminated by Employer for other than good
cause, then no non-competition provision shall be enforceable for any
period of time during which or for which the Employee is not receiving
or has not received severance compensation.
4. Place of Performance. Nothing contained herein shall be deemed to
require Employee to relocate from Employee's current residence to geographic
location other than the Houston, Texas metropolitan area to carry out Employee's
duties and responsibilities under this Agreement. In the event (i) Employer
requires Employee to relocate or (ii) Employer relocates its principal executive
office outside a 00-xxxx xxxxxx xx xxx Xxxx xx Xxxxxxx, Xxxxx without Employee's
written consent and as a result of such relocation Employee is the only
executive officer of Employer still based in Texas, Employee may immediately
terminate this Agreement, in which case (a) Employee shall receive from
Employer, in a lump-sum payment due on the effective date of termination of this
Agreement pursuant to the provisions of this Section 4, an amount equal to two
times Employee's base salary at the rate then in effect, (b) all options to
purchase Common Stock granted to Employee shall immediately vest and, for the
sole purpose of being eligible to exercise such options, Employee's employment
shall be deemed to continue for whatever time period is remaining under the
Initial Term or the then current Renewal Term of this Agreement, disregarding
the earlier termination of Employee's employment under this Section 4 and (c)
the Issued Shares (as defined in Section 20) shall vest in accordance with
clause (G) of the Vesting Schedule (as defined in Section 20(a)).
5. Term; Termination; Rights on Termination. The term of this Agreement
shall begin on the Effective Date and continue for three (3) years (the "Initial
Term"), and, unless terminated sooner as herein provided, shall continue
thereafter on a year-to-year basis (each a "Renewal Term" and together with the
Initial Term, the "Term") on the same terms and conditions contained herein in
effect as of the time of renewal. This Agreement and Employee's employment may
be terminated in any one of the followings ways:
(a) Death. The death of Employee shall immediately terminate
this Agreement with no severance compensation due to Employee's estate,
other than any payments provided for under any employee benefit plan or
program.
(b) Disability. If, as a result of incapacity due to physical
or mental illness or injury, Employee shall have been absent from
Employee's full-time duties hereunder for four (4) consecutive months,
then thirty (30) days after receiving written notice (which notice may
occur before or after the end of such four (4) month period, but which
shall not be effective earlier than the last day of such four (4) month
period), Employer may terminate Employee's employment hereunder
provided Employee is unable to resume Employee's full-time duties at
the conclusion of such notice period. Also, Employee may terminate
Employee's employment hereunder if his health should become impaired to
an extent that makes the continued performance of Employee's duties
hereunder hazardous to Employee's physical or mental health or life,
provided that Employee shall have
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furnished Employer with a written statement from a qualified doctor to
such effect and provided, further, that, at Employer's request made
within thirty (30) days of the date of such written statement, Employee
shall submit to an examination by a doctor selected by Employer who is
reasonably acceptable to Employee or Employee's doctor and such doctor
shall have concurred in the conclusion of Employee's doctor. In the
event this Agreement is terminated as a result of Employee's
disability, Employee shall receive from Employer, in a lump-sum payment
due within ten (10) days of the effective date of termination,
Employee's base salary at the rate then in effect for whatever time
period is remaining under the Initial Term or the then current Renewal
Term of this Agreement, as applicable, or for one (1) year, whichever
amount is greater and any other required payments provided under any
welfare or benefit plan or program in which Employee is a participant.
(c) Good Cause Termination By Employer. Employer may terminate
the Agreement thirty (30) days after delivery of written notice to
Employee for good cause, which shall be: (1) Employee's willful,
material and irreparable breach of this Agreement; (2) Employee's gross
negligence in the performance or intentional nonperformance or
inattention continuing for thirty (30) days after receipt of written
notice of need to cure of any of Employee's material duties and
responsibilities hereunder; (3) Employee's willful dishonesty, fraud or
material misconduct with respect to the business or affairs of
Employer; (4) Employee's conviction of a felony crime; or (5) chronic
alcohol abuse or illegal drug abuse by Employee. In the event of a
termination for good cause, as enumerated above, Employee shall have no
right to any severance compensation.
(d) Without Good Cause. At any time after the commencement of
employment, either Employee or Employer may, without good cause,
terminate this Agreement and Employee's employment, effective thirty
(30) days after written notice is provided to the other party. Should
Employee be terminated by Employer without good cause during the Term,
(i) Employee shall receive from Employer, in a lump-sum payment due on
the effective date of termination, an amount equal to two times
Employee's base salary at the rate then in effect, (ii) any options to
purchase Common Stock granted to Employee that would have vested on the
next succeeding anniversary of the grant date following such
termination shall vest pro rata from the first day following the
anniversary of the grant date of such options immediately preceding
such termination, up to and including the effective date of termination
computed based on a 365-day year (or, if such termination occurs within
the first year, the number of days that have elapsed subsequent to the
Effective Date), and, for the sole purpose of being eligible to
exercise all of his vested options, Employee's employment shall be
deemed to continue for whatever time period is remaining under the
Initial Term or the then current Renewal Term of this Agreement,
disregarding its earlier termination on Employee's termination of
employment under this Section 5(d) and (iii) the Issued Shares shall
vest in accordance with clause (G) of the Vesting Schedule. If Employee
resigns or otherwise terminates Employee's employment without cause
pursuant to this Section 5(d), Employee shall receive no severance
compensation.
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(e) Change in Control of Employer. In the event of a Change in
Control (as defined in Section 13) of Employer during the Term of this
Agreement, refer to Section 13.
(f) Non-Renewal. In the event that Employer chooses not to
renew this Agreement upon the expiration of the Initial Term or the
then current Renewal Term of this Agreement, it shall give Employee
written notice of this intent ninety (90) days before the expiration of
such Initial Term or Renewal Term. In case of such non-renewal,
Employee shall receive from Employer, in a lump-sum payment due on the
date of expiration of such Initial Term or Renewal Term, an amount
equal to Employee's base salary then in effect. If Employee resigns or
otherwise terminates Employee's employment without cause pursuant to
this Section 5(f), Employee shall receive no severance compensation.
(g) Change in Place of Performance. If there is a change in
Employee's place of performance as set forth in Section 4, then
Employee may terminate this Agreement pursuant to the terms of Section
4.
(h) Other Effects of Termination Under Section 5(a)-(g). Upon
termination of this Agreement for any reason provided above, Employee
shall be entitled to receive all compensation earned and all benefits
and reimbursements due through the effective date of termination.
Additional compensation subsequent to termination, if any, will be due
and payable to Employee only to the extent and in the manner expressly
provided in this Section 5 or in Sections 4, 13 or 20(a)(xiii)(G). All
other rights and obligations of Employer and Employee under this
Agreement shall cease as of the effective date of termination, except
that Employer's obligations under Section 10 hereof and any other
statutorily required obligations and Employee's obligations under
Sections 3, 7, 8, 9, 11 and 17 hereof shall survive such termination in
accordance with their terms.
6. Good Cause Termination By Employee. If termination of Employee's
employment arises out of Employer's failure to pay Employee on a timely basis
the amounts to which he is entitled under this Agreement or as a result of any
other breach of this Agreement by Employer, Employer shall pay all amounts and
damages to which Employee may be entitled as a result of such breach, including
interest thereon at the maximum non-usurious rate and all reasonable legal fees
and expenses and other costs incurred by Employee to enforce Employee's rights
hereunder. A termination under this Section 6 will relieve Employee of all
obligations under Section 3.
7. Return of Company Property. All records, designs, patents, business
plans, financial statements, manuals, memoranda, lists and other property
delivered to or compiled by Employee by or on behalf of Employer, or its
representatives, vendors or customers which pertain to the business of Employer
shall be and remain the property of Employer, and be subject at all times to its
discretion and control. Likewise, all correspondence, reports, records, charts,
advertising materials, and other similar data pertaining to the business,
activities or future plans of Employer which is collected by Employee shall be
delivered promptly to Employer without request by it upon termination of
Employee's employment. Because of the difficulty of measuring economic losses to
Employer as a result of a breach of this Section 7, and because of
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the immediate and irreparable damage that could be caused to Employer for which
it would have no other remedy, Employee agrees that this Section 7 may be
enforced by Employer in the event of breach by him, by injunctions and
restraining orders.
8. Inventions. Employee shall disclose promptly to Employer any and all
significant conceptions and ideas for inventions, improvements and valuable
discoveries, whether patentable or not, which are conceived or made by Employee,
solely or jointly with another, during the Term of this Agreement or within one
(1) year hereafter, and which are directly related to the business or activities
of Employer and which Employee conceives as a result of Employee's employment by
Employer. Employee hereby assigns and agrees to assign all of Employee's
interests therein to Employer or its nominee. Whenever requested to do so by
Employer, Employee shall execute any and all applications, assignments or other
instruments that Employer shall deem necessary to apply for and obtain Letters
Patent of the United States or any foreign country or to otherwise protect
Employer's interest therein.
9. Confidentiality. Employee acknowledges and agrees that all
Confidential Information (as defined below) is confidential and a valuable,
special and unique asset of Employer that gives Employer an advantage over its
actual and potential, current and future competitors. Employee further
acknowledges and agrees that Employee owes Employer a fiduciary duty to preserve
and protect all Confidential Information from unauthorized disclosure or
unauthorized use; certain Confidential Information constitutes "trade secrets"
under the laws of the State of Texas; and unauthorized disclosure or
unauthorized use of the Confidential Information would irreparably injure
Employer.
(a) Both during the term of Employee's employment and after
the termination of Employee's employment for any reason (including
wrongful termination), Employee shall hold all Confidential Information
in strict confidence, and shall not use any Confidential Information
except for the benefit of Employer, in accordance with the duties
assigned to Employee by Employer. Employee shall not, at any time
(either during or after the term of Employee's employment), disclose
any Confidential Information to any person or entity (except other
employees of Employer who have a need to know the information in
connection with the performance of their employment duties), or copy,
reproduce, modify, decompile or reverse engineer any Confidential
Information, or remove any Confidential Information from Employer's
premises, without the prior written consent of Employer, or permit any
other person to do so. Employee shall take reasonable precautions to
protect the physical security of all documents and other material
containing Confidential Information (regardless of the medium on which
the Confidential Information is stored). This Agreement applies to all
Confidential Information, whether now known or later to become known to
Employee. It shall not be a violation of this Section 9(a) for Employee
to disclose Confidential Information to the extent he is required to do
so by law or order of any court; provided, however, that Employer shall
be given notice of any such required disclosure.
(b) Upon the termination of Employee's employment with
Employer for any reason (including wrongful termination), and upon
request of Employer at any other time, Employee shall promptly
surrender and deliver to Employer all documents and other written
material of any nature containing or pertaining to any Confidential
Information
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and shall not retain any such document or other material. Within five
days of any such request, Employee shall certify to Employer in writing
that all such materials have been returned.
(c) As used in this Agreement, the term "Confidential
Information" shall mean any information or material known to or used by
or for Employer or any entity controlled by or under common control
with Employer (each, an "Affiliate") (whether or not owned or developed
by Employer or such Affiliate and whether or not developed by Employee)
that (i) is not generally known to the public and (ii) was not
disclosed to Employee by a third party having a legal right to disclose
such information. Confidential Information includes, but is not limited
to, the following: (A) all trade secrets of Employer and its
Affiliates; (B) all information that Employer or any Affiliate has
marked as confidential or has otherwise described to Employee (either
in writing or orally) as confidential; (C) all nonpublic information
concerning Employer's and its Affiliates' products, services,
prospective products or services, research, product designs, prices,
discounts, costs, marketing plans, marketing techniques, market
studies, competition, test data, customers, customer lists and records,
suppliers or contracts; (D) all business records and plans of Employer
and its Affiliates; (E) all personnel files of Employer and its
Affiliates; (F) all financial information of or concerning Employer and
its Affiliates; (G) all information relating to operating system
software, application software, software and system methodology,
hardware platforms, technical information, inventions, computer
programs and listings, source codes, object codes, copyrights, or other
intellectual property; (H) all technical specifications; (I) any
proprietary information belonging to Employer or any Affiliate; and (J)
all of Employer's or any Affiliate's computer hardware or software,
training or instruction manuals and data and computer system passwords
and user codes.
Because of the difficulty of measuring economic losses to Employer as a
result of a breach of this Section 9, and because of the immediate and
irreparable damage that could be caused to Employer for which it would have no
other adequate remedy, Employee agrees that this Section 9 may be enforced by
Employer in the event of a breach by Employee by injunctions and restraining
orders.
10. Indemnification. In the event Employee is made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by Employer
against Employee), by reason of the fact that Employee is or was performing
services under this Agreement, then Employer shall indemnify Employee against
all expenses (including attorneys' fees), judgments, fines and amounts paid in
settlement, as actually and reasonably incurred by Employee in connection
therewith. In the event that both Employee and Employer are made a party to the
same third-party action, complaint, suit or proceeding, Employer agrees to
engage competent legal representation, and Employee agrees to use the same
representation, provided that if counsel selected by Employer shall have a
conflict of interest that prevents such counsel from representing Employee,
Employee may engage separate counsel and Employer shall pay all attorneys' fees
of such separate counsel. Further, while Employee is expected at all times to
use Employee's best efforts to faithfully discharge his duties under this
Agreement, Employee cannot be held liable to Employer for errors or omissions
made in good faith where Employee has not exhibited gross,
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willful or wanton negligence or misconduct or performed criminal and fraudulent
acts which materially damage the business of Employer.
11. No Prior Agreements. Employee hereby represents and warrants to
Employer that the execution of this Agreement by Employee and his employment by
Employer and the performance of Employee's duties hereunder will not violate or
be a breach of any agreement with a former employer, client or any other person
or entity. Further, Employee agrees to indemnify Employer for any claim,
including but not limited to attorneys' fees and expenses of investigation, by
any such third party that such third party may now have or may hereafter come to
have against Employer based upon or arising out of any noncompetition agreement,
invention or secrecy agreement between Employee and such third party which was
in existence as of the Effective Date.
12. Assignment; Binding Effect. Employee understands that he has been
selected for employment by Employer on the basis of Employee's personal
qualifications, experience and skills. Employee, therefore, shall not assign all
or any portion of Employee's performance under this Agreement. Subject to the
preceding two (2) sentences and the express provisions of Section 13, this
Agreement shall be binding upon, inure to the benefit of and be enforceable by
the parties hereto and their respective heirs, legal representatives, successors
and assigns.
13. Change in Control.
(a) Employee understands and acknowledges that Employer may be
merged or consolidated with or into another entity and that such entity
shall automatically succeed to the rights and obligations of Employer
hereunder or that Employer may undergo another type of Change in
Control. In the event such a merger or consolidation or other Change in
Control is initiated prior to the end of the Term, then in no event
shall the Term of this Agreement expire prior to the first anniversary
of such Change in Control and the provisions of this Section 13 shall
be applicable during such period.
(b) In any Change in Control situation, Employee may, at his
sole discretion, elect to terminate this Agreement by providing written
notice to Employer at least five (5) business days prior to the
anticipated closing of the transaction giving rise to the Change in
Control. In such case, the applicable provisions of Section 5(d) will
apply as though Employer had terminated this Agreement without cause;
provided, however, under such circumstances (i) the amount of the
lump-sum severance payment due to the Employee shall be equal to one
and one-half times the amount calculated under the terms of Section
5(d)(i), (ii) all options to purchase Common Stock granted to Employee
shall immediately vest (to the extent not already fully vested under
the terms of the Stock Option Agreement) and, for the sole purpose of
being eligible to exercise such options, Employee's employment shall be
deemed to continue for whatever time period is remaining under the
Initial Term or the then current Renewal Term of this Agreement,
disregarding the earlier termination of Employee's employment under
this Section 13, (iii) the Issued Shares shall vest in accordance with
clause (G) of the Vesting Schedule as applicable to a Change in Control
and (iv) the noncompetition provisions of Section 3 shall not apply.
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(c) For purposes of applying Section 5 under the circumstances
described in subsection (b) above, the effective date of termination
will be the closing date of the transaction giving rise to the Change
in Control and all compensation, reimbursements and lump-sum payments
due Employee must be paid in full by Employer at or prior to such
closing. Further, Employee will be given sufficient time and
opportunity to elect whether to exercise all or any of Employee's
vested options to purchase Employer Common Stock, including any options
with accelerated vesting under the provisions of Employer's 1997 Stock
Option Plan, any subsequent plan and/or the Stock Option Agreement,
such that Employee may convert the options to shares of Common Stock at
or prior to the closing of the transaction giving rise to the Change in
Control, if Employee so desires.
(d) In the event that a successor in a pending Change in
Control gives notice that it will assume Employer's obligations under
this Agreement and Employee chooses not to terminate this Agreement
pursuant to the provisions of subsection (b) above, and at the time of
or within twelve (12) months following such Change in Control either
(i) Employee incurs a change that constitutes a Lesser Position (as
defined in Section 13(f)) or (ii) Employee is terminated other than
pursuant to Section 5(c), then effective as of the date Employee is
caused to be in a Lesser Position or the effective date of such
termination, whichever is applicable, such event shall be deemed to be
a termination of this Agreement by Employer without good cause during
the Term and the applicable portions of Section 5(d) will apply;
provided, however, under such circumstances, (A) the amount of the
lump-sum severance payment due to the Employee shall be equal to one
and one-half times the amount calculated under the terms of Section
5(d)(i), (B) all options to purchase Common Stock granted to Employee
shall immediately vest (to the extent not already fully vested under
the terms of the Stock Option Agreement) and, for the sole purpose of
being eligible to exercise such options, Employee's employment shall be
deemed to continue for whatever time period is remaining under the
Initial Term or the then current Renewal Term of this Agreement,
disregarding the earlier termination of Employee's employment under
this Section 13, (C) the Issued Shares shall vest in accordance with
clause (G) of the Vesting Schedule as applicable to a Change in Control
and (D) the noncompetition provisions of Section 3 shall not apply.
(e) A "Change in Control" shall be deemed to have occurred if:
(i) any person or entity, other than Employer or an
employee benefit plan of Employer, acquires directly or
indirectly the Beneficial Ownership (as defined in Section
13(d) of the Securities Exchange Act of 1934, as amended) of
any voting security of 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 Employer;
(ii) Xxxx X. Xxxxxx is not the Chief Executive
Officer of Employer, unless Employee has immediately succeeded
Xxxx X. Xxxxxx as Chief Executive Officer;
Employment Agreement -- Xxxxx X. Xxxxxxx 11
12
(iii) the stockholders of Employer shall approve a
merger, consolidation, recapitalization or reorganization of
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 which would result in at least 75% 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 75% of the
holders of outstanding voting securities of 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
(iv) the stockholders of Employer shall approve a
plan of complete liquidation of Employer or an agreement for
the sale or disposition by Employer of all or a substantial
portion of Employer's assets (i.e., 50% or more of the total
assets of Employer).
(f) "Lesser Position" shall mean a new position or a change in
Employee's position, which, compared with Employee's position
immediately prior to the Change in Control, (i) reduces Employee's
compensation (including base salary, fringe benefits or incentive
compensation opportunities (as determined in good faith by Employee)
under any corporate-performance based bonus and incentive programs), or
(ii) materially reduces Employee's duties, status, reporting
requirements or level of responsibility, or (iii) requires Employee to
change his place of performance as provided in Section 4.
(g) Employee shall be reimbursed by Employer or its successor
for all excise taxes that Employee incurs under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), as a result of
any "change in control," within the meaning of Section 280G of the Code
without regard as to whether such "parachute payment" is made pursuant
to this Agreement. In addition, Employee shall be reimbursed by
Employer or its successor for all taxes (including any penalties and
interest) and additional excise taxes attributable to the payment
pursuant to the preceding sentence and the payment pursuant to this
sentence. Such amount will be due and payable by Employer or its
successor on the date Employer is required to withhold such excise tax,
and in no event not later than within ten (10) days after Employee
delivers a written request for reimbursement accompanied by a copy of
Employee's tax return(s) showing the excise tax actually incurred by
Employee. Such amount shall not be subject to offset or reduction for
any amount owed or claimed to be owed to Employer or its successor by
Employee. If not paid by Employer when due, the amount due under this
subsection shall bear interest at the maximum non-usurious rate allowed
by law from the due date to the date of payment.
14. Complete Agreement. This Agreement supersedes any other agreements
or understandings, written or oral, between Employer and Employee, and Employee
has no oral representations, understandings or agreements with Employer or any
of its officers, directors or representatives covering the same subject matter
as this Agreement. This written Agreement is the final, complete and exclusive
statement and expression of the agreement between Employer and Employee and of
all the terms of this Agreement, and it cannot be varied, contradicted or
Employment Agreement -- Xxxxx X. Xxxxxxx 12
13
supplemented by evidence of any prior or contemporaneous oral or written
agreements. This written Agreement may not be later modified except by a written
instrument signed by a duly authorized officer of Employer and Employee, and no
term of this Agreement may be waived except by a written instrument signed by
the party waiving the benefit of such term
15. Notice. Whenever any notice is required hereunder, it shall be
given in writing addressed as follows:
To Employer: Quanta Services, Inc.
0000 Xxxx Xxx Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
To Employee: Xxxxx X. Xxxxxxx
0000 Xxxxxxx
Xxxxxxx, Xxxxx 00000
Notice shall be deemed given and effective three (3) days after the deposit in
the U.S. mail of a writing addressed as above and sent first class mail,
certified, return receipt requested, or when actually received. Either party may
change the address for notice by notifying the other party of such change in
accordance with this Section
16. 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.
17. Arbitration. Except with respect to injunctive relief as provided
in Sections 3(b), 7 and 9 (which relief may be sought from any court or
administrative agency with jurisdiction with respect thereto), any unresolved
dispute or controversy arising under or in connection with this Agreement shall
be settled exclusively by arbitration, conducted before a panel of three (3)
arbitrators in Houston, Texas, in accordance with the National 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. The
arbitrators shall not have the authority to add to, detract from or modify any
provision hereof nor to award punitive damages to any injured party. The
arbitrators shall have the authority to order back-pay, severance compensation,
vesting of options (or cash compensation in lieu of vesting of options),
reimbursement of costs and attorneys fees, including those incurred to enforce
this Agreement, and interest thereon in the event the arbitrators determine that
Employee was terminated without disability or good cause, as defined in Sections
5(b) and 5(c), respectively, or that Employer has otherwise materially breached
this Agreement. A decision by a majority of the arbitration panel shall be final
and binding. Judgment may be entered on the arbitrators' award in any court
having jurisdiction. The direct expense of any arbitration proceeding shall be
borne by Employer.
Employment Agreement -- Xxxxx X. Xxxxxxx 13
14
18. Governing Law. This Agreement shall in all respects be construed
according to the laws of the State of Texas.
19. Counterparts. This Agreement may be executed simultaneously in two
(2) or more counterparts, each of which shall be deemed an original and all of
which together shall constitute but one and the same instrument.
20. Provision Relating to Restricted Stock. All shares of Common Stock
issued pursuant to Section 2(d) shall be issued subject to the provisions of
this Section 20.
(a) Definitions. For purposes of this Section 20, the
following terms shall have the following meanings:
(i) "1933 Act" shall mean the Securities Act of 1933,
as amended.
(ii) "Cancellation Right" shall mean the right
granted to Employer in accordance with Section 20(f)(i).
(iii) "Code" shall mean the Internal Revenue Code of
1986, as amended.
(iv) "Corporate Transaction" shall mean either of the
following stockholder approved transactions:
(A) a merger or consolidation in which
securities possessing more than fifty percent (50%)
of the total combined voting power of Employer's
outstanding capital stock are transferred to a person
or persons different from the persons holding those
securities immediately prior to such transaction, or
(B) the sale, transfer or other disposition
of all or substantially all of Employer's assets in
complete liquidation or dissolution of Employer.
(v) "Issued Shares" shall mean all shares of Common
Stock issued pursuant to Section 2(d) of this Agreement.
(vi) "Permitted Transfer" shall mean (A) a gratuitous
transfer of the Issued Shares, provided and only if Employee
obtains Employer's prior written consent to such transfer, or
(B) a transfer of title to the Issued Shares effected pursuant
to Employee's will or the laws of intestate succession
following Employee's death.
(vii) "Purchase Price" shall mean the par value per
share of the Common Stock multiplied by the number of Issued
Shares.
(viii) "Recapitalization" shall mean any stock split,
stock dividend, recapitalization, combination of shares,
exchange of shares or other change
Employment Agreement -- Xxxxx X. Xxxxxxx 14
15
affecting Employer's outstanding Common Stock as a class
without Employer's receipt of consideration.
(ix) "Rule 144" shall mean Rule 144 promulgated by
the SEC pursuant to the 0000 Xxx.
(x) "SEC" shall mean the Securities and Exchange
Commission.
(xi) "Service" shall mean Employee's provision of
services to Employer or any Affiliate (including any successor
thereto).
(xii) "Unvested Shares" shall have the meaning
assigned to such term in Section 20(f)(i).
(xiii) "Vesting Schedule" shall mean, subject to
clause (G) below, the following:
(A) Upon the first anniversary of the
Effective Date, Employee shall acquire a vested
interest in, and the Cancellation Right shall lapse
with respect to, twelve and one-half percent (12.5%)
of such Issued Shares.
(B) Upon the second anniversary of the
Effective Date, Employee shall acquire a vested
interest in, and the Cancellation Right shall lapse
with respect to, an additional twelve and one-half
percent (12.5%) of such Issued Shares.
(C) Upon the third anniversary of the
Effective Date, Employee shall acquire a vested
interest in, and the Cancellation Right shall lapse
with respect to, an additional twenty-five percent
(25%) of such Issued Shares.
(D) Upon the fourth anniversary of the
Effective Date, Employee shall acquire a vested
interest in, and the Cancellation Right shall lapse
with respect to, an additional twenty-five percent
(25%) of such Issued Shares.
(E) Upon the fifth anniversary of the
Effective Date, Employee shall acquire a vested
interest in, and the Cancellation Right shall lapse
with respect to, an additional twelve and one-half
percent (12.5%) of such Issued Shares.
(F) Upon the sixth anniversary of the
Effective Date, Employee shall acquire a vested
interest in, and the Cancellation Right shall lapse
with respect to, the final twelve and one-half
percent (12.5%) of such Issued Shares.
Employment Agreement -- Xxxxx X. Xxxxxxx 15
16
(G) Notwithstanding anything to the contrary
in clauses (A)-(F) above, Employee shall immediately
acquire a vested interest in, and the Cancellation
Right shall lapse with respect to, (1) all of the
Issued Shares upon a Change in Control as defined in
Section 13 or if Employee's employment is terminated
pursuant to Section 4, and (2) if Employee's
employment is terminated by Employer pursuant to
Section 5(d), a pro rata number of the Issued Shares
that would have vested on the next succeeding
anniversary of the Effective Date following such
termination shall vest on such termination date based
on the number of days that have lapsed since the
anniversary of the Effective Date immediately
preceding such termination (or, if such termination
occurs within the first year, the number of days that
have lapsed subsequent to the Effective Date) up to
and including the date of such termination over 365.
(b) Purchase Price. Employer shall issue the Issued Shares,
subject to the terms and conditions set forth in this Section 20, upon
payment by Employee to Employer in cash of the Purchase Price.
(c) Stockholder Rights. Until such time as Employer exercises
the Cancellation Right, Employee shall have all the rights of a
stockholder (including voting, dividend and liquidation rights) with
respect to the Issued Shares, subject, however, to the restrictions
contained in this Section 20.
(d) Securities Law Compliance.
(i) Restricted Securities. If the Issued Shares have
not been registered under the 1933 Act and are being issued to
Employee in reliance upon the exemption for such registration
provided by Section 4(2) of the 1933 Act, Employee hereby
confirms that Employee has been informed that the Issued
Shares will be restricted securities under the 1933 Act and
may not be resold or transferred unless the Issued Shares are
first registered under the federal securities laws or unless
an exemption from such registration is available. Accordingly,
subject to the further provisions of this Section 20, Employee
hereby acknowledges that Employee is prepared to hold the
Issued Shares for an indefinite period and that Employee is
aware of the requirements of Rule 144 and other exemptions
from the registration requirements of the 1933 Act.
(ii) Restrictions on Disposition of Issued Shares.
Subject to the further provisions of this Section 20, if the
Issued Shares have not been registered under the 1933 Act, the
Employee shall make no disposition of the Issued Shares (other
than a Permitted Transfer) unless and until there is
compliance with all of the following requirements:
(A) Employee shall have furnished Employer
with a written summary of the terms and conditions of
the proposed disposition.
Employment Agreement -- Xxxxx X. Xxxxxxx 16
17
(B) Employee shall have complied with all
requirements of this Agreement applicable to the
disposition of the Issued Shares.
(C) Employee shall have provided Employer
with written assurances, in form and substance
satisfactory to Employer, that (1) the proposed
disposition does not require registration of the
Issued Shares under the 1933 Act or (2) all
appropriate action necessary for compliance with the
registration requirements of the 1933 Act or any
exemption from registration available under the 1933
Act (including Rule 144) has been taken.
(iii) Restrictive Legends.
(A) If the Issued Shares have not been
registered under the 1933 Act, the stock certificates
(and separate certificates may be issued for each
regularly scheduled vesting tranche) for all of the
Issued Shares shall be endorsed with the following
restrictive legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THE SHARES MAY NOT BE SOLD OR OFFERED FOR SALE
IN THE ABSENCE OF (a) AN EFFECTIVE REGISTRATION
STATEMENT FOR THE SHARES UNDER SUCH ACT, (b) A `NO
ACTION' LETTER OF THE SECURITIES AND EXCHANGE
COMMISSION WITH RESPECT TO SUCH SALE OR OFFER OR (c)
SATISFACTORY ASSURANCES TO THE ISSUER THAT
REGISTRATION UNDER SUCH ACT IS NOT REQUIRED WITH
RESPECT TO SUCH SALE OR OFFER."
(B) In addition to any restrictive legend
required pursuant to clause (A) above, stock
certificates (and separate certificates may be issued
for each regularly scheduled vesting tranche)
representing Unvested Shares (as defined below) shall
be endorsed with the following restrictive legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO CERTAIN CANCELLATION RIGHTS GRANTED TO
THE ISSUER AND ACCORDINGLY MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, ENCUMBERED, OR IN ANY MANNER DISPOSED OF
EXCEPT IN CONFORMITY WITH THE TERMS OF A WRITTEN
AGREEMENT DATED AS OF MARCH 12, 2001 BETWEEN THE
ISSUER AND THE REGISTERED HOLDER OF THE SHARES FOR
THE PREDECESSOR IN INTEREST TO THE SHARES. A COPY OF
SUCH AGREEMENT IS MAINTAINED AT THE ISSUER'S
PRINCIPAL CORPORATE OFFICES.
(e) Transfer Restrictions.
(i) Restrictions on transfer. Except for a Permitted
Transfer, Employee shall not transfer, assign, encumber or
otherwise dispose of any of the Issued Shares that are subject
to the Cancellation Right.
Employment Agreement -- Xxxxx X. Xxxxxxx 17
18
(ii) Transferee Obligations. Each person to whom the
Issued Shares are transferred by means of a Permitted Transfer
must, as a condition precedent to the validity of such
transfer, acknowledge in writing to Employer that such person
is bound by the provisions of this Agreement and that the
transferred shares are subject to the Cancellation Right, to
the same extent such shares would be so subject if retained by
Employee.
(iii) Employer Obligations. Employer shall not be
required (A) to transfer on its books any Issued Shares that
have been sold or transferred in violation of the provisions
of this Agreement or (B) to treat as the owner of the Issued
Shares, or otherwise to accord voting, dividend or liquidation
rights to, any transferee to whom the Issued Shares have been
transferred in contravention of this Agreement.
(f) Cancellation Right.
(i) Grant. Employer is hereby granted the right (the
"Cancellation Right"), exercisable at any time during the
ninety (90) day period following the date Employee ceases for
any reason to remain in Service to cancel, without any
additional consideration, all or any portion of the Issued
Shares in which Employee is not, at the time of his cessation
of Service, vested in accordance with the Vesting Schedule,
including clause (G) thereof, (such shares to be hereinafter
referred to as the "Unvested Shares").
(ii) Exercise of the Cancellation Right. The
Cancellation Right shall be exercisable by written notice
delivered to Employee and any recipient of a Permitted
Transfer of Unvested Shares prior to the expiration of the
ninety (90) day exercise period. The notice shall indicate the
number of Unvested Shares to be cancelled. The cancellation
shall be effective immediately after giving of notice in
accordance with the terms of this Agreement and with no
further action on the part of the holder of Unvested Shares.
The certificates representing the shares so cancelled shall be
promptly delivered to Employer, but failure to deliver such
certificates shall not affect the effectiveness of such
cancellation.
(iii) Termination of the Cancellation Right. The
Cancellation Right shall terminate with respect to any
Unvested Shares for which it is not timely exercised under
Section 20(f)(ii). In addition, the Cancellation Right shall
terminate and cease to be exercisable with respect to any and
all Issued Shares in which Employee vests in accordance with
the Vesting Schedule, including clause (G) thereof.
(iv) Recapitalization. Any new substituted or
additional securities or other property (including cash paid
other than as a regular cash dividend) which is by reason of
any Recapitalization distributed with respect to the Issued
Shares shall be immediately subject to the Cancellation Right,
but only to the extent the related Issued Shares are at the
time covered by such right, and such Cancellation Right shall
lapse as to such other securities or property at the same time
as it
Employment Agreement -- Xxxxx X. Xxxxxxx 18
19
lapses or would lapse) with respect to the related Issued
Shares. Appropriate adjustments to reflect such distribution
shall be made to the number and/or class of Issued Shares
subject to this Agreement to reflect the effect of any such
Recapitalization upon Employer's capital structure.
(v) Corporate Transaction.
(A) The Cancellation Right shall be assignable to the
successor entity in any Corporate Transaction. However, to the
extent the successor entity does not accept such assignment,
the Cancellation Right shall lapse immediately prior to the
consummation of the Corporate Transaction.
(B) To the extent the Cancellation Right remains in
effect following a Corporate Transaction, such right shall
apply to the new capital stock or other property (including
any cash payments) received in exchange for the Issued Shares
in consummation of the Corporate Transaction, but only to the
extent the Issued Shares are at the time covered by such
right.
(g) Withholding of Taxes. At the time and to the extent vested
Issued Shares become compensation income to Employee for federal or
state income tax purposes, Employee either shall deliver to Employer
such amount of money as required to meet Employer's minimum obligation
under applicable tax laws or regulations, or, in lieu of cash,
Employee, in his sole discretion, may elect to surrender, or direct
Employer to withhold from the Issued Shares, shares of Common Stock
(valued at their fair market value on the date of surrender or
withholding of such shares) in such number as necessary to satisfy
either (i) Employer's minimum tax withholding obligations or (ii)
Employee's tax obligation as anticipated by Employee, by reason of such
compensation income, whichever Employee elects.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
Employment Agreement -- Xxxxx X. Xxxxxxx 19
20
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the Execution Date to be effective for all purposes as of the Effective Date.
QUANTA SERVICES, INC.
By: /s/ XXXX X. XXXXXX
----------------------------
Name: Xxxx X. Xxxxxx
Title: Chief Executive Officer
/s/ XXXXX X. XXXXXXX
----------------------------
Xxxxx X. Xxxxxxx
Employment Agreement -- Xxxxx X. Xxxxxxx 20
21
EXHIBIT A
FORM OF STOCK OPTION AGREEMENT
Employment Agreement -- Xxxxx X. Xxxxxxx
