EXHIBIT 10.30
EMPLOYMENT AGREEMENT
This Employment Agreement (the "Agreement"), by and between Quanta
Services, Inc., a Delaware corporation, and its affiliates (collectively,
"Employer"), and James F. O'Neil III ("Employee"), is hereby entered into as of
the 13th day of March 2002 ("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 position that is
critical to the Employer's continued operation.
C. 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.
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. 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
-2-
(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
-3-
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,
-4-
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
-5-
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.
-6-
(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.
(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
-7-
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 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
-8-
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)
two 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 second 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 two 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 second 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 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
-9-
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 case to the extent theretofore unpaid. If the
Employee voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason,
-10-
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 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.
-11-
(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 Arthur Andersen 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,
(iii) cooperate with the Employer in good faith in
order effectively to contest such claim, and
-12-
(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 sue 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 sue 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 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
-13-
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 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"
-14-
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 1360 Post Oak Boulevard, Suite 2100, Houston, Texas 77056,
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.
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.
-15-
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/ JAMES F. O'NEIL III
-----------------------
JAMES F. O'NEIL III
By: /s/ JOHN R. COLSON
---------------------------------------
John R. Colson, Chief Executive Officer
-16-