<PAGE> 1
---------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
SCHEDULE 13D
Under the Securities Exchange Act of 1934
QUANTA SERVICES, INC.
(Name of Issuer)
---------------
COMMON STOCK, $.00001 PAR VALUE
(Title of Class of Securities)
---------------
(CUSIP Number)
74762E 10 2
---------------
Julia Murray
General Counsel-Finance
Enron Capital & Trade Resources Corp.
1400 Smith Street
Houston, Texas 77002
(713) 853-6161
(Name, Address and Telephone Number
of Person Authorized to Receive Notices
and Communications)
---------------
September 29, 1998
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
this acquisition that is the subject of this Schedule 13D, and is filing this
Schedule because of Rule 13d-1(e), Rule 13d-1(f) or Rule 13d-1(g), check the
following box: [ ]
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act.
---------------
Page 1 of 10 Pages
<PAGE> 2
Page 2 of 10 Pages
CUSIP NO.: 74762E 10 2
SCHEDULE 13D
================================================================================
1 NAME OF REPORTING PERSON; S.S. OR IRS IDENTIFICATION NUMBER
Enron Capital & Trade Resources Corp.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
- --------------------------------------------------------------------------------
8 SHARED VOTING POWER
3,589,090*
- --------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
- --------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,589,090*
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,589,090*
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.9%**
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
================================================================================
* Represents shares of Common Stock issuable upon conversion of US$49,350,000
principal amount of 6 7/8% Convertible Promissory Notes due 2010.
** Based on information provided by the Issuer as of September 29, 1998.
<PAGE> 3
Page 3 of 10 Pages
CUSIP NO.: 74762E 10 2
SCHEDULE 13D
================================================================================
1 NAME OF REPORTING PERSON; S.S. OR IRS IDENTIFICATION NUMBER
Enron Corp.
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Oregon
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
- --------------------------------------------------------------------------------
8 SHARED VOTING POWER
3,589,090*
- --------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
3,589,090*
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,589,090*
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
16.9%**
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
CO
================================================================================
* Represents shares of Common Stock issuable upon conversion of US$49,350,000
principal amount of 6 7/8% Convertible Promissory Notes due 2010.
** Based on information provided by the Issuer as of September 29, 1998.
<PAGE> 4
Page 4 of 10 Pages
CUSIP NO.: 74762E 10 2
SCHEDULE 13D
================================================================================
1 NAME OF REPORTING PERSON; S.S. OR IRS IDENTIFICATION NUMBER
Joint Energy Development Investments II Limited Partnership
- --------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [ ]
(b) [ X ]
- --------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------------------------------------------------------------------
4 SOURCE OF FUNDS
WC
- --------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEM 2(d) OR 2(e)
[ ]
- --------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
- --------------------------------------------------------------------------------
7 SOLE VOTING POWER
0
- --------------------------------------------------------------------------------
8 SHARED VOTING POWER
2,691,818*
- --------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
0
- --------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,691,818*
- --------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,691,818*
- --------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES*
[ ]
- --------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
13.3%**
- --------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON
PN
================================================================================
* Represents shares of Common Stock issuable upon conversion of US$49,350,000
principal amount of 6 7/8% Convertible Promissory Notes due 2010.
** Based on information provided by the Issuer as of September 29, 1998.
<PAGE> 5
Page 5 of 10 Pages
STATEMENT ON SCHEDULE 13D
Introductory Note: All information herein with respect to Quanta
Services, Inc., a Delaware corporation, is to the best knowledge and belief of
the Reporting Entities, as defined herein.
ITEM 1. SECURITY AND ISSUER.
This Statement on Schedule 13D relates to the shares of common stock,
par value $.00001 per share, of Quanta Services, Inc., a Delaware corporation
(the "Issuer"). The principal executive offices of the Issuer are located at
1360 Post Oak Boulevard, Suite 2100, Houston, Texas 77056.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is filed by (i) Enron Capital & Trade Resources Corp., a
Delaware corporation ("ECT"), whose principal business is the purchase of
natural gas, gas liquids and power through a variety of contractual arrangements
and marketing such energy products to local distribution companies, electric
utilities, cogenerators and commercial and industrial end users, as well as the
provision of risk management services, (ii) Enron Corp., an Oregon corporation
("Enron"), which is an integrated natural gas and electricity company that
engages, primarily through subsidiaries, in the transportation and wholesale
marketing of natural gas, the exploration for and production of natural gas and
crude oil, the production, purchase, transportation and worldwide marketing and
trading of natural gas liquids, crude oil and refined petroleum products, and
the purchasing and marketing of electricity and other energy-related
commitments, and (iii) Joint Energy Development Investments II Limited
Partnership, a Delaware limited partnership ("JEDI II"), which is engaged
primarily in the business of investing in and managing certain energy related
assets. ECT, Enron and JEDI II are referred to herein as the "Reporting
Entities". ECT is a wholly-owned subsidiary of Enron. Entities that may be
deemed to be control persons of JEDI II are (i) Enron Capital Management II
Limited Partnership, a Delaware limited partnership and the general partner of
JEDI II ("ECMLP II"), whose principal business is to manage oil and gas related
investments, (ii) Enron Capital II Corp., a Delaware corporation and the general
partner of ECMLP II ("ECC II"), whose principal business is to manage oil and
gas related investments, (iii) Enron, and (iv) ECT. ECC II is a wholly owned
subsidiary of ECT and an indirect, wholly owned subsidiary of Enron.
The address of the principal business offices of ECT, JEDI II, ECMLP
II, ECC II and Enron is 1400 Smith Street, Houston, Texas 77002. Schedule I
attached hereto sets forth certain additional information with respect to each
director and each executive officer of ECT, Enron and ECC II. The filing of this
statement on Schedule 13D shall not be construed as an admission that Enron,
ECMLP II, ECC II or any person listed on Schedule I hereto is, for the purposes
of Section 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended
(the "Act"), the beneficial owner of any securities covered by this statement.
None of the Reporting Entities, nor to their knowledge ECMLP II or ECC
II or any person listed on Schedule I hereto, has been during the last five
years (i) convicted of any criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to United States
federal or state securities laws or finding any violations with respect to such
laws.
<PAGE> 6
Page 6 of 10 Pages
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to a Securities Purchase Agreement dated as of September 29,
1998 among the Issuer, ECT and JEDI II (the "Purchase Agreement"), (i) ECT
purchased from the Issuer a 6 7/8% Convertible Promissory Note due 2010 in the
aggregate principal amount of $12,337,500.00 (the "ECT Note"), and (ii) JEDI II
purchased from the Issuer a 6 7/8% Convertible Promissory Note due 2010 in the
aggregate principal amount of $37,012,500.00 (the "JEDI Note"). The ECT Note and
the JEDI Note are referred to herein collectively as the "Convertible Notes".
The aggregate purchase price for the Convertible Notes was $49,350,000.00 in
cash, of which $12,337,500.00 was paid by ECT and $37,012,500.00 was paid by
JEDI II. See Item 4 for a more complete description of the Convertible Notes and
the transactions contemplated by the Securities Purchase Agreement.
The source of the funds used for the purchases of the Convertible Notes
by ECT and JEDI II was working capital on hand.
ITEM 4. PURPOSE OF THE TRANSACTION.
The purchase of the Convertible Notes of the Issuer was the result of a
negotiated transaction with the Issuer and were acquired for investment
purposes. ECT and JEDI II intend to review their investment in the Issuer on a
continuing basis and, depending upon the price of, and other market conditions
relating to, the Convertible Notes, subsequent developments affecting the Issuer
(including opportunities to provide financing from time to time to the Issuer
for expansion of its business), the Issuer's business and prospects, other
investment and business opportunities available to ECT or JEDI II, general stock
market and economic conditions, tax considerations and other factors deemed
relevant, may decide to increase or decrease the size of their investment in the
Issuer.
The Purchase Agreement, the Registration Rights Agreement (as defined
below) and the Convertible Notes are each attached as exhibits to this statement
on Schedule 13D and incorporated herein by reference, and the following
summaries of the terms of such agreements or instruments are qualified by
reference to the actual agreements or instruments.
Purchase Agreement. On September 29, 1998, ECT and JEDI II entered into
the Purchase Agreement which provided for the purchase by ECT and JEDI II of 6
7/8% Convertible Promissory Notes due 2010 in the aggregate principal amount of
$49,350,000.00. The number of shares of Common Stock issuable upon conversion of
the Subordinated Notes by ECT and JEDI II was determined by dividing
$49,350,000.00 by the conversion price of $13.75. The Purchase Agreement
includes customary representations and warranties and indemnification
provisions. The Purchase Agreement also contains provisions intended to limit
ECT's and JEDI II's obligations and liability to the Issuer. In addition, the
Purchase Agreement provides that ECT and JEDI II or their respective successors
and assigns are entitled to (i) designate one member of the Board of Directors
of the Issuer or (ii) designate one person to attend meetings of the Board of
Directors of the Issuer as an observer and to receive certain written
information and reports distributed to the Board of Directors. As of the date
hereof, ECT had not designated a representative to serve on the Board of
Directors.
The Purchase Agreement also contains an agreement by ECT and the Issuer
to facilitate communications between them in furtherance of the design,
construction, maintenance and timely and cost-effective completion of projects
aimed at ensuring the high quality of the transmission and distribution
<PAGE> 7
Page 7 of 10 Pages
systems, and fiber optic communication systems of ECT and its Affiliates (as
such term is defined in the Purchase Agreement). It is the expectation of ECT
and the Issuer that this relationship will work to establish open communications
resulting in mutually-beneficial business opportunities. It is, however, not
intended to create a right in favor of either party to any specific business
opportunity or opportunities.
The Convertible Notes. The Convertible Notes are dated October 5, 1998
and issued pursuant to the Purchase Agreement. Interest on the outstanding
principal amount of the Convertible Notes will accrue at the rate of 6 7/8% per
annum and be payable quarterly on each March 31, June 30, September 30 and
December 31, during the term of the Convertible Notes, beginning on December 31,
1998. The Convertible Notes mature on June 30, 2010, and on such date, or on
such earlier date the principal amount becomes payable in accordance with the
provisions of the Purchase Agreement, the Issuer will pay an amount equal to the
outstanding principal amount of the Convertible Notes, plus the accrued and
unpaid interest on the outstanding principal amount of the Convertible Notes.
The Convertible Notes are convertible, in whole or in part, at the
option of the Holder, at any time, into fully paid and nonassessable shares of
Common Stock at the price of $13.75 per share, subject to adjustment as set
forth in the Convertible Notes. The Convertible Notes rank subordinate in right
of payment to the Senior Indebtedness (as defined in the Purchase Agreement).
Registration Rights Agreement. In connection with the Purchase
Agreement, the Issuer, ECT and JEDI II entered into a Registration Rights
Agreement dated as of September 29, 1998 (the "Registration Rights Agreement"),
which requires the Issuer to register for sale under the Securities Act of 1933,
as amended (the "Securities Act"), the shares of Common Stock issuable upon
conversion of the Convertible Notes. The registration rights include (i) up to
two "demand" rights, exercisable after March 30, 1999, and (ii) unlimited "piggy
back" rights to include shares of Common Stock in any Registration Statement
(other than registration statements on Form S-4, S-8 or in connection with an
exchange offer or an offering of securities solely to the Issuer's existing
shareholders covering voting securities of the Issuer offered to the public for
cash).
Other than the transactions described herein, none of the Reporting
Entities, nor to their knowledge ECMLP II or ECC II or any person listed on
Schedule I hereto, has any plan or proposal that would result in any of the
consequences listed in paragraphs (a) - (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Neither ECT nor JEDI II directly owns any Common Stock of the
Issuer. As set forth in this Schedule 13D, ECT owns the ECT Note which is
convertible into 897,272 shares of Common Stock of the Issuer and JEDI II owns
the JEDI Note which is convertible into 2,691,818 shares of Common Stock of the
Issuer. If the Convertible Notes were converted in full by ECT or JEDI II,
respectively, the shares of Common Stock issuable upon such conversion would
represent approximately 4.9% and 13.3% of the outstanding Common Stock (based on
the number of shares of Common Stock outstanding as of September 29, 1998 as
represented by the Issuer in the Purchase Agreement). See Item 4.
Enron, ECT, ECMLP II and ECC II may be deemed to beneficially own the
shares of Common Stock issuable upon conversion of the Convertible Notes
described herein which are held by JEDI II. Enron
<PAGE> 8
Page 8 of 10 Pages
may also be deemed to beneficially own the shares of Common Stock issuable upon
exercise of the Convertible Notes described herein which are held by ECT. See
Item 2. Enron disclaims beneficial ownership of any shares of Common Stock
issuable upon conversion of the Convertible Notes. JEDI II disclaims beneficial
ownership of the shares of Common Stock issuable upon conversion of the ECT
Note. ECT disclaims beneficial ownership of the shares of Common Stock issuable
upon exercise of the JEDI Note.
(b) ECT and Enron may be deemed to share voting and dispositive power
over the shares of Common Stock issuable upon exercise of the ECT Note. In
addition, Enron, ECT, ECMLP II, ECC II and JEDI II may be deemed to share voting
and dispositive power over the shares of Common Stock issuable upon exercise of
the JEDI Note. See Item 2.
(c) Other than the transactions described herein, none of the Reporting
Entities, nor to their knowledge ECMLP II, ECC II or any of the persons named in
Schedule I hereto, has effected any transactions in the Common Stock during the
preceding sixty days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER.
See the description of the Purchase Agreement, the Convertible Notes
and the Registration Rights Agreement in Item 4 above.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
(i) Securities Purchase Agreement dated as of September 29, 1998
among the Issuer, ECT and JEDI II.
(ii) Registration Rights Agreement dated as of September 29, 1998,
by and among the Issuer, ECT and JEDI II.
(iii) Convertible Promissory Note of the Issuer in the principal
amount of $12,337,500.00 issued to ECT.
(iv) Convertible Promissory Note of the Issuer in the principal
amount of $37,012,500.00 issued to JEDI II.
(vi) Joint Filing Agreement by and among the Reporting Persons.
<PAGE> 9
Page 9 of 10 Pages
SIGNATURES
After reasonable inquiry and to the best of the undersigned's knowledge
and belief, each of the undersigned hereby certifies that the information set
forth in this statement is true, complete and correct.
Dated: October 9, 1998. ENRON CAPITAL & TRADE RESOURCES CORP.
By: /s/ Peggy B. Menchaca
----------------------------------
Name: Peggy B. Menchaca
Title: Vice President and Secretary
Dated: October 9, 1998 ENRON CORP.
By: /s/ Peggy B. Menchaca
----------------------------------
Name: Peggy B. Menchaca
Title: Vice President and Secretary
Dated: October 9, 1998 JOINT ENERGY DEVELOPMENT INVESTMENTS II
LIMITED PARTNERSHIP
By: Enron Capital Management II Limited
Partnership, its General Partner
By: Enron Capital II Corp., its
general partner
By: /s/ Peggy B. Menchaca
----------------------------------
Name: Peggy B. Menchaca
Title: Vice President and Secretary
<PAGE> 10
Page 10 of 10 Pages
INDEX TO EXHIBITS
(i) Securities Purchase Agreement dated as of September 29, 1998
among the Issuer, ECT and JEDI II.
(ii) Registration Rights Agreement dated as of September 29, 1998,
by and among the Issuer, ECT and JEDI II.
(iii) Convertible Promissory Note of the Issuer in the principal
amount of $12,337,500.00 issued to ECT.
(iv) Convertible Promissory Note of the Issuer in the principal
amount of $37,012,500.00 issued to JEDI II.
(vi) Joint Filing Agreement by and among the Reporting Persons.
<PAGE> 11
SCHEDULE I
DIRECTORS AND EXECUTIVE OFFICERS
ENRON CAPITAL & TRADE RESOURCES CORP.
<TABLE>
<CAPTION>
Name and Business Address Citizenship Position and Occupation
- ------------------------- ----------- -----------------------
<S> <C> <C>
1400 Smith Street
Houston, Texas 77002
- -----------------------------------------------------------------------------------------
Mark A. Frevert U.S.A. Director; President-ECT Europe and
Managing Director
- -----------------------------------------------------------------------------------------
Mark E. Haedicke U.S.A. Director; Managing Director - Legal
- -----------------------------------------------------------------------------------------
Kevin P. Hannon U.S.A. Director; President and Chief Operating
Officer
- -----------------------------------------------------------------------------------------
Kenneth D. Rice U.S.A. Director; Chairman of the Board; Chief
Executive Officer and Managing
Director; Chairman and Chief Executive
Officer--ECT North America
- -----------------------------------------------------------------------------------------
Gene E. Humphrey U.S.A. Vice Chairman
- -----------------------------------------------------------------------------------------
Amanda K. Martin U.S.A. President--Energy and Finance Services
- -----------------------------------------------------------------------------------------
Robert J. Hermann U.S.A. Vice President and General Tax Counsel
- -----------------------------------------------------------------------------------------
</TABLE>
S-1
<PAGE> 12
DIRECTORS AND EXECUTIVE OFFICERS
ENRON CORP.
<TABLE>
<CAPTION>
Name and Business Address Citizenship Position and Occupation
- ------------------------- ----------- -----------------------
<S> <C> <C>
Robert A Belfer Director; Chairman, President and Chief
767 Fifth Avenue, 46th Floor U.S.A. Executive Officer, Belco Oil & Gas Corp.
New York, New York 10153
- ------------------------------------------------------------------------------------------------
Norman P. Blake, Jr. Director; Chairman, United States Fidelity
USF&G Corporation U.S.A. and Guaranty Company
6225 Smith Avenue. LA0300
Baltimore, Maryland 21209
- ------------------------------------------------------------------------------------------------
Ronnie C. Chan Director; Chairman of Hang Lung
Hang Lung Development Company Development Group
Limited U.S.A.
28/F, Standard Chartered Bank
Building
4 Des Vouex Road Central
Hong Kong
- ------------------------------------------------------------------------------------------------
John H. Duncan
5851 San Felipe, Suite 850 U.S.A. Director; Investments
Houston, Texas 77057
- ------------------------------------------------------------------------------------------------
Joe H. Foy
404 Highridge Drive U.S.A. Director; Retired Senior Partner, Bracewell
Kerrville, Texas 78028 & Patterson, L.L.P.
- ------------------------------------------------------------------------------------------------
Wendy L. Gramm
P.O. Box 39134 U.S.A. Director; Former Chairman, U.S.
Washington, D.C. 20016 Commodity Futures Trading Commission
- ------------------------------------------------------------------------------------------------
Ken L. Harrison Director; Vice Chairman of Enron Corp.
121 S.W. Salmon Street U.S.A.
Portland, Oregon 97204
- ------------------------------------------------------------------------------------------------
Robert K. Jaedicke
Graduate School of Business U.S.A. Director; Professor (Emeritus), Graduate
Stanford University School of Business, Stanford University
Stanford, California 94305
- ------------------------------------------------------------------------------------------------
Charles A. LeMaistre
13104 Travis View Loop U.S.A. Director; President (Emeritus), University
Austin, Texas 78732 of Texas M.D. Anderson Cancer Center
- ------------------------------------------------------------------------------------------------
</TABLE>
S-2
<PAGE> 13
<TABLE>
<CAPTION>
Name and Business Address Citizenship Position and Occupation
- ------------------------- ----------- -----------------------
<S> <C> <C>
Jerome J. Meyer
26600 S.W. Parkway U.S.A. Director; Chairman and Chief Executive
Building 63, P. O. Box 1000 Officer, Tektronix, Inc.
Wilsonville, Oregon 97070-1000
- ------------------------------------------------------------------------------------------------------
John A. Urquhart
John A. Urquhart Associates U.S.A. Director; Senior Advisor to the Chairman
111 Beach Road of Enron Corp.; President, John A.
Fairfield, Connecticut 06430 Urquhart Associates
- ------------------------------------------------------------------------------------------------------
John Wakeham
Pingleston House Director; Former U.K. Secretary of State
Old Alresford U.K. for Energy and Leader of the Houses of
Hampshire S024 9TB Commons and Lords
United Kingdom
- ------------------------------------------------------------------------------------------------------
Charls E. Walker
Walker & Walker, LLC U.S.A. Director; Chairman, Walker & Walker,
10220 River Road, Suite 105 LLC
Potomac, Maryland 20854
- ------------------------------------------------------------------------------------------------------
Bruce G. Willison
4900 Rivergrade Road U.S.A. Director; President and Chief Operating
Irwindale, California 91706 Officer, Home Savings of America
- ------------------------------------------------------------------------------------------------------
Herbert S. Winokur, Jr.
Winokur & Associates, Inc. U.S.A. Director; President, Winokur & Associates,
30 East Elm Ct. Inc.
Greenwich, Connecticut 06830
- ------------------------------------------------------------------------------------------------------
Kenneth L. Lay
1400 Smith Street U.S.A. Director; Chairman and Chief Executive
Houston, Texas 77002 Officer, Enron Corp.
- ------------------------------------------------------------------------------------------------------
J. Clifford Baxter
1400 Smith Street U.S.A. Senior Vice President, Corporate
Houston, Texas 77002 Development; Enron Corp.
- ------------------------------------------------------------------------------------------------------
Richard A. Causey U.S.A. Senior Vice President, Chief Accounting,
1400 Smith Street Information and Administrative Officer,
Houston, Texas 77002 Enron Corp.
- ------------------------------------------------------------------------------------------------------
James V. Derrick, Jr.
1400 Smith Street U.S.A. Senior Vice President and General
Houston, Texas 77002 Counsel, Enron Corp.
- ------------------------------------------------------------------------------------------------------
</TABLE>
S-3
<PAGE> 14
<TABLE>
<CAPTION>
Name and Business Address Citizenship Position and Occupation
- ------------------------- ----------- -----------------------
<S> <C> <C>
Andrew S. Fastow
1400 Smith Street U.S.A. Senior Vice President and Chief Financial
Houston, Texas 77002 Officer, Enron Corp.
- ----------------------------------------------------------------------------------------------
Mark A. Frevert
1400 Smith Street U.S.A. President and Chief Executive Officer,
Houston, Texas 77002 Enron Europe, Ltd.
- ----------------------------------------------------------------------------------------------
Stanley C. Horton
1400 Smith Street U.S.A. Chairman and Chief Executive Officer,
Houston, Texas 77002 Enron Gas Pipeline Group
- ----------------------------------------------------------------------------------------------
Rebecca P. Mark
1400 Smith Street U.S.A. Vice Chairman, Enron Corp. and
Houston, Texas 77002 Chairman, Enron International, Inc.
- ----------------------------------------------------------------------------------------------
Lou L. Pai
1400 Smith Street U.S.A. Chairman and Chief Executive Officer,
Houston, Texas 77002 Enron Energy Services, Inc.
- ----------------------------------------------------------------------------------------------
Kenneth D. Rice U.S.A. Chairman and Chief Executive Officer,
1400 Smith Street Enron Capital and Trade Resources Corp.
Houston, Texas 77002 North America
- ----------------------------------------------------------------------------------------------
Jeffrey K. Skilling
1400 Smith Street U.S.A. Director; President and Chief Operating
Houston, Texas 77002 Officer, Enron Corp.
- ----------------------------------------------------------------------------------------------
Joseph W. Sutton
1400 Smith Street U.S.A. President and Chief Executive Officer,
Houston, Texas 77002 Enron International, Inc.
- ----------------------------------------------------------------------------------------------
</TABLE>
S-4
<PAGE> 15
DIRECTORS AND EXECUTIVE OFFICERS
ENRON CAPITAL II CORP.
<TABLE>
<CAPTION>
Name and Business Address Citizenship Position and Occupation
- ------------------------- ----------- -----------------------
<S> <C> <C>
1400 Smith Street
Houston, Texas 77002
- ------------------------------------------------------------------------------------------
James V. Derrick, Jr. U.S.A. Director
1400 Smith Street
Houston, Texas 77002
- ------------------------------------------------------------------------------------------
Mark A. Frevert U.S.A. Director
1400 Smith Street
Houston, Texas 77002
- ------------------------------------------------------------------------------------------
Kenneth D. Rice U.S.A. Director ; Chairman, Chief Executive
1400 Smith Street Officer and Managing Director
Houston, Texas 77002
- ------------------------------------------------------------------------------------------
Gene E. Humphrey U.S.A. President and Managing Director
1400 Smith Street
Houston, Texas 77002
- ------------------------------------------------------------------------------------------
Richard B. Buy U.S.A. Managing Director
1400 Smith Street
Houston, Texas 77002
- ------------------------------------------------------------------------------------------
Andrew S. Fastow U.S.A. Managing Director
1400 Smith Street
Houston, Texas 77002
- ------------------------------------------------------------------------------------------
Jeffrey McMahon U.S.A. Managing Director, Finance and
1400 Smith Street Treasurer
Houston, Texas 77002
- ------------------------------------------------------------------------------------------
Mark E. Haedicke U.S.A. Managing Director and General Counsel
1400 Smith Street
Houston, Texas 77002
- ------------------------------------------------------------------------------------------
</TABLE>
S-5
<PAGE> 1
===============================================================================
SECURITIES PURCHASE AGREEMENT
AMONG
QUANTA SERVICES, INC.
AND
ENRON CAPITAL & TRADE RESOURCES CORP.
AND
JOINT ENERGY DEVELOPMENT INVESTMENTS II
LIMITED PARTNERSHIP
DATED AS OF SEPTEMBER 29, 1998
$49,350,000 CONVERTIBLE SUBORDINATED NOTES DUE 2010
===============================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I
DEFINITIONS..............................................................................................1
Section 1.01 Definitions............................................................................1
Section 1.02 Accounting Procedures and Interpretation..............................................12
ARTICLE II
ISSUANCE OF SECURITIES; RIGHTS OF PURCHASERS............................................................12
Section 2.01 Issuance of Securities................................................................12
Section 2.02 The Closing...........................................................................12
Section 2.03 Delivery..............................................................................12
Section 2.04 Payment...............................................................................12
Section 2.05 Conversion............................................................................13
Section 2.06 Right to Participate in Certain Issuances by Borrower.................................13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BORROWER..........................................................14
Section 3.01 Corporate Existence...................................................................14
Section 3.02 Borrower SEC Documents................................................................15
Section 3.03 No Material Adverse Change............................................................15
Section 3.04 Litigation............................................................................16
Section 3.05 No Breach.............................................................................16
Section 3.06 Authority.............................................................................16
Section 3.07 Approvals.............................................................................17
Section 3.08 Use of Loans..........................................................................17
Section 3.09 Employee Benefit Matters..............................................................17
Section 3.10 Taxes.................................................................................17
Section 3.11 Assets................................................................................18
Section 3.12 No Material Misstatements.............................................................18
Section 3.13 Investment Company Act................................................................18
Section 3.14 Public Utility Holding Company Act....................................................18
Section 3.15 No Violation..........................................................................18
Section 3.16 Environmental Matters.................................................................18
Section 3.17 Insurance.............................................................................19
Section 3.18 Capitalization........................................................................19
Section 3.19 Conversion Shares.....................................................................20
Section 3.20 Certain Fees..........................................................................20
Section 3.21 Licenses..............................................................................20
Section 3.22 Undisclosed Liabilities...............................................................20
Section 3.23 Labor Relations.......................................................................20
</TABLE>
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS........................................................21
Section 4.01 Investment............................................................................21
Section 4.02 Nature of Purchasers..................................................................21
Section 4.03 Receipt of Information; Authorization.................................................21
Section 4.04 Anti-Hedging..........................................................................22
Section 4.05 Restricted Securities.................................................................22
Section 4.06 Certain Fees..........................................................................22
Section 4.07 No Implied Representations............................................................22
ARTICLE V
CLOSING ACTIONS.........................................................................................22
Section 5.01 Closing...............................................................................22
ARTICLE VI
AFFIRMATIVE COVENANTS...................................................................................24
Section 6.01 Financial Statements and Reports......................................................24
Section 6.02 Maintenance, Etc......................................................................25
Section 6.03 Further Assurances....................................................................25
Section 6.04 Performance of Obligations............................................................26
Section 6.05 Shares................................................................................26
Section 6.06 Hart-Scott-Rodino Compliance..........................................................26
Section 6.07 Board Representation..................................................................26
Section 6.08 Insurance.............................................................................27
ARTICLE VII
NEGATIVE COVENANTS......................................................................................27
Section 7.01 Debt..................................................................................27
Section 7.02 Dividends, Distributions and Redemptions..............................................27
Section 7.03 Nature of Business....................................................................27
Section 7.04 Proceeds of Notes.....................................................................28
Section 7.05 ERISA Compliance......................................................................28
Section 7.06 Transactions with Affiliates..........................................................28
Section 7.07 Negative Pledge Agreements............................................................28
ARTICLE VIII
PAYMENT OF THE NOTES....................................................................................28
Section 8.01 Repayment.............................................................................28
Section 8.02 Interest..............................................................................28
Section 8.03 Payments and Computations.............................................................30
Section 8.04 Mandatory Redemption..................................................................31
Section 8.05 Optional Redemption...................................................................31
Section 8.06 Subordination.........................................................................32
</TABLE>
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ARTICLE IX
DEFAULT AND REMEDIES....................................................................................35
Section 9.01 Events of Default.....................................................................35
Section 9.02 Remedies..............................................................................36
Section 9.03 Set-Off...............................................................................37
ARTICLE X
RELATIONSHIP OF THE PARTIES.............................................................................37
Section 10.01 Objectives and Purpose................................................................37
Section 10.02 Mutual Access and Cooperation.........................................................38
Section 10.03 Term of This Article..................................................................39
Section 10.04 Protection of Employees...............................................................39
Section 10.05 Confidentiality.......................................................................39
Section 10.06 Relationships of the Parties..........................................................40
Section 10.07 No Authority to Bind; No Fiduciary Relationship.......................................41
Section 10.08 Publicity.............................................................................41
Section 10.09 Business Opportunities................................................................41
Section 10.10 Borrower's Business Opportunities.....................................................42
ARTICLE XI
MISCELLANEOUS...........................................................................................42
Section 11.01 Interpretation and Survival of Provisions.............................................42
Section 11.02 Costs, Expenses and Taxes.............................................................43
Section 11.03 No Waiver; Modifications in Writing...................................................45
Section 11.04 Binding Effect; Assignment............................................................46
Section 11.05 Replacement Securities................................................................47
Section 11.06 Communications........................................................................47
Section 11.07 Governing Law.........................................................................48
Section 11.08 Arbitration...........................................................................48
Section 11.09 Execution in Counterparts.............................................................48
</TABLE>
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Exhibits:
Exhibit A - Form of Opinion of Counsel
Exhibit B - Form of Convertible Subordinated Notes
Schedules:
Schedule 3.01 - Subsidiaries
Schedule 3.03 - Material Adverse Change
Schedule 3.04 - Litigation
Schedule 3.07 - Approvals
Schedule 3.10 - Taxes
Schedule 3.16 - Environmental
Schedule 3.17 - Insurance
Schedule 3.18 - Capitalization
Schedule 3.21 - Licenses
Schedule 3.22 - Undisclosed Liabilities
Schedule 3.23 - Labor Relations
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of September 29, 1998 (this
"Agreement"), among QUANTA SERVICES, INC., a Delaware corporation ("Borrower"),
ENRON CAPITAL & TRADE RESOURCES CORP., a Delaware corporation ("ECT") and JOINT
ENERGY DEVELOPMENT INVESTMENTS II LIMITED PARTNERSHIP, a Delaware limited
partnership ("JEDI-II").
In consideration of the mutual covenants and agreements set forth
herein and for good and valuable consideration, the receipt of which is hereby
acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"1/9 Principal" shall have the meaning specified in Section 8.04(a).
"AAA" shall have the meaning specified in Section 11.08.
"Acceptance Notice" shall have the meaning specified in Section
2.06(b).
"Acquisition" shall mean the acquisition by the Borrower of a
"business" as defined in Rule 11-01(d) of Regulation S-X adopted by the
Commission.
"Action" against a Person means any lawsuit, action, proceeding,
investigation or complaint before any Governmental Authority, mediator or
arbitrator.
"Affiliate" of any Person shall mean (i) any Person directly or
indirectly controlled by, controlling or under common control with such first
Person, (ii) any director or officer of such first Person or of any Person
referred to in clause (i) above and (iii) if any Person in clause (i) above is
an individual, any member of the immediate family (including parents, spouse and
children) of such individual and any trust whose principal beneficiary is such
individual or one or more members of such immediate family and any Person who is
controlled by any such member or trust. For purposes of this definition, any
Person which owns directly or indirectly 20% or more of the securities having
ordinary voting power for the election of directors or other governing body of a
corporation or 20% or more of the partnership or other ownership interests of
any other Person (other than as a limited partner of such other Person) will be
deemed to "control" (including, with its correlative meanings, "controlled by"
and "under common control with") such corporation or other Person.
"Arbitrators" shall have the meaning specified in Section 11.08.
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"Base Rate" shall have the meaning specified in Section 8.02(a).
"Basic Documents" means, collectively, this Agreement, the Notes, the
Structuring Fee Agreement, the Registration Rights Agreement, and any and all
other agreements or instruments executed and delivered to the holders of the
Notes by the Borrower or any Subsidiary or Affiliate of the Borrower on even
date herewith, or any amendments, supplements, continuations or modifications
thereto.
"Beneficial Ownership," "Beneficial Owner" and "Beneficially Own" shall
have the meanings ascribed to them in Rule 13d-3 under the Exchange Act in
effect on the date hereof.
"Blockage Period" means that period starting on the day the written
notice of a default is delivered pursuant to Section 8.06(c) by holders of
Senior Indebtedness or their applicable representative, and ending on the 180th
day after such written notice is delivered.
"Board of Directors" means the Board of Directors of the Borrower.
"Borrower SEC Documents" shall have the meaning specified in Section
3.02.
"Business Day" means any day other than a Saturday, Sunday, or a legal
holiday for commercial banks in Houston, Texas, or New York, New York.
"Capitalized Lease Obligations" means, for any Person, the amount of
such Person's liabilities under all leases of real or personal property (or any
interest therein) which is required to be capitalized on the balance sheet of
such Person as determined in accordance with GAAP.
"Capital Stock" of any Person means any and all shares, interests,
participations, or other equivalents (however designated) of, or rights,
warrants, or options to purchase, corporate stock or any other equity interest
(however designated) of or in such Person.
"Change in Control" shall be deemed to have occurred if (i) any Person
acquires, directly or indirectly, the Beneficial Ownership of any voting
security of the Borrower and immediately after such acquisition such Person is,
directly or indirectly, the Beneficial Owner of voting securities representing
50% or more of the total voting power of all the then outstanding voting
securities of Borrower entitled to vote generally in the election of directors;
or (ii) individuals who on the Closing Date constitute the Borrower's Board of
Directors, or their successors approved in accordance with the terms below,
cease for any reason to constitute at least a majority thereof, unless the
election or nomination for the election by the Borrower's stockholders of each
new director was approved by vote of at least 2/3rds of the directors then still
in office who were directors on the Closing Date or their successors approved in
accordance with the terms hereof.
"Closing" has the meaning provided therefor in Section 2.02.
"Closing Date" means the date upon which the Closing occurs as provided
in Section 2.02.
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"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor statute.
"Commission" means the United States Securities and Exchange
Commission.
"Common Stock" means the common stock, par value $0.00001 per share, of
the Borrower or such other class of securities as shall, after the date of this
Agreement, constitute the common equity of the Borrower.
"Confidential Information " shall have the meaning specified in Section
10.05(b) . "Consolidated Interest Expense" means, for any period, total interest
expense of the Borrower and its Subsidiaries on a consolidated basis for such
period in connection with Indebtedness, determined in accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income (or
loss), after provision for taxes, of the Borrower and its Subsidiaries on a
consolidated basis for such period, determined in accordance with GAAP.
"Consolidated Subsidiaries" shall mean each Subsidiary of the Borrower
(whether now existing or hereafter created or acquired) the financial statements
of which shall be (or should have been) consolidated with the financial
statements of the Borrower.
"Conversion Date" shall mean the date that all the principal under the
Notes is converted into Conversion Shares as more fully provided for in Section
2.05.
"Conversion Shares" shall mean those shares of Capital Stock as such
term is defined in Section 3.19.
"Default" shall mean an Event of Default or an event which with notice
or lapse of time, or both, would become, an Event of Default.
"Delist" or "Delisted" shall mean the delisting of the shares of stock
of a corporation from the exchange such shares are traded on.
"Designee" shall have the meaning set forth in Section 6.07.
"Dispute" shall have the meaning specified in Section 11.08.
"DOJ" shall have the meaning specified in Section 6.06
"EBITDA" means, for any period, on a trailing four fiscal quarter
basis, (using the historical financial results of the Founding Companies, to the
extent necessary, for any period prior to the acquisition of the Founding
Companies by the Borrower on a pro forma basis, consistent with
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Commission regulations) the sum of (i) Consolidated Net Income plus each of the
following to the extent actually deducted in determining Consolidated Net Income
(a) Consolidated Interest Expense, and (b) provisions for taxes based on income
or revenues, plus (ii) the amount of all depreciation, amortization expense and
other non-cash charges deducted in determining Consolidated Net Income, all
calculated on a consolidated basis for the Borrower and its Subsidiaries and as
determined in accordance with GAAP. Upon the consummation of any Acquisition,
EBITDA shall be adjusted to include the historical financial results of the
acquired business (on a trailing four fiscal quarter pro forma basis consistent
with Commission regulations).
"Effective Date" means the date this Agreement is executed by all the
parties hereto.
"Employee Plan" means any employee benefit plan, program or policy
including thrift plans, stock purchase plans, stock bonus plans, stock options
plans, employee stock ownership plans or other incentive or profit sharing
arrangements for the benefit of employees, officers or directors of the Borrower
or its Affiliates, with respect to which the Borrower or any ERISA Affiliate may
have any liability or any obligation to contribute, including a Plan or a
Multiemployer Plan.
"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
non-compliance or violations, formal investigations or proceedings relating to
any Environmental Law ("Claims") or any permit issued under any Environmental
Law, including, without limitation, (i) any and all claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (ii)
any and all claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
a release or threatened release of Hazardous Materials.
"Environmental Laws" means any and all Government Requirements
pertaining to the environment in effect in any and all jurisdictions in which
the Borrower or any Subsidiary is conducting or at any time has conducted
business, or where any Property of the Borrower or any Subsidiary is located,
including, without limitation, the Oil Pollution Act of 1990 ("OPA"), as
amended, the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended, the
Federal Water Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and Recovery Act of
1976 ("RCRA"), as amended, the Safe Drinking Water Act, as amended, the Toxic
Substances Control Act, as amended, the Superfund Amendments and Reauthorization
Act of 1986, as amended, the Hazardous Materials Transportation Act, as amended,
and other environmental conservation or protection laws. As used in the
provisions hereof relating to Environmental Laws, the term "oil" has the meaning
specified in OPA; the terms "hazardous substance" and "release" (or "threatened
release") have the meanings specified in CERCLA, and the terms "solid waste" and
"disposal" (or "disposed") have the meanings specified in RCRA; provided,
however, that (i) in the event either OPA, CERCLA or RCRA is amended so as to
broaden the meaning of any term defined thereby, such broader meaning shall
apply subsequent to the effective date of such amendment, and (ii) to the extent
the laws of the state in which any Property of the Borrower or any Subsidiary is
located establish a meaning for "oil," "hazardous substance,"
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"release," "solid waste" or "disposal" which is broader than that specified in
either OPA, CERCLA or RCRA, such broader meaning shall apply.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time and any successor statute.
"ERISA Affiliate" shall mean each trade or business (whether or not
incorporated) which together with the Borrower or any Subsidiary of the Borrower
would be deemed to be a "single employer" within the meaning of Section
4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of section 414 of the
Code.
"Event of Default" shall have the meaning assigned such term in Section
9.01.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and the rules and regulations of the Commission promulgated
thereunder.
"Exchangeable Securities" shall mean a security of any type, including
but not limited to debt, warrants or other rights, issued by the Borrower and
representing the right to acquire shares of Common Stock from the Borrower upon
exchange, conversion or exercise thereof.
"FTC" shall have the meaning specified in Section 6.06.
"Financial Statements" means the financial statement or statements
described or referred to in Section 3.02.
"Fixed Charge Coverage Ratio" means, for any period, on a trailing four
fiscal quarter basis (using the historical financial results of the Founding
Companies, to the extent necessary, for any period prior to the acquisition of
the Founding Companies by the Borrower on a pro forma basis, consistent with
Commission regulations), the ratio of (i) the sum of, without duplication, (a)
EBITDA, minus (b) cash taxes, minus (c) all cash dividends, distributions or
payments made in respect of the Capital Stock of the Borrower to the extent
permitted hereunder; to (ii) the sum of, without duplication, (a) the portion of
Funded Debt due and payable within one (1) year of the date of determination,
plus (b) Consolidated Interest Expense for the four fiscal quarters then ended,
all calculated on a consolidated basis for the Borrower and its Subsidiaries and
as determined in accordance with GAAP. Upon the consummation of any Acquisition,
the Fixed Charge Coverage Ratio shall be determined including the historical
financial results of the acquired business (on a trailing four fiscal quarter
pro forma basis, consistent with Commission regulations).
"Founding Companies" means PAR Electrical Contractors, Inc., a Missouri
corporation, Union Power Construction Company, a Colorado corporation, TRANS
TECH Electric, Inc., an Indiana corporation and Potelco, Inc., a Washington
corporation.
"Funded Debt" means, as of any date of determination, the sum, without
duplication, of the following for the Borrower and its Subsidiaries: (i)
Indebtedness for borrowed money, all obligations
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evidenced by bonds, debentures, notes or similar instruments, and purchase money
obligations which in accordance with GAAP would be shown on the consolidated
balance sheet of the Borrower as a liability, (ii) all reimbursement obligations
relative to the face amount of all drawn letters of credit issued for the
account of the Borrower or any of its Subsidiaries, and (iii) all Capitalized
Lease Obligations.
"GAAP" means generally accepted accounting principles in the United
States of America in effect from time to time.
"Governmental Authority" shall include the country, the state, county,
city and political subdivisions in which any Person or such Person's Property is
located or which exercises valid jurisdiction over any such Person or such
Person's Property, and any court, agency, department, commission, board, bureau
or instrumentality of any of them including monetary authorities which exercises
valid jurisdiction over any such Person or such Person's Property. Unless
otherwise specified, all references to Governmental Authority herein shall mean
a Governmental Authority having jurisdiction over, where applicable, the
Borrower, the Subsidiaries or any of their Property or any Purchaser.
"Government Requirement" means any law, statute, code, ordinance,
order, determination, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other directive or requirement
(in the case of banking regulatory authorities whether or not having the force
of law), including without limitation, Environmental Laws, energy regulations
and occupational, safety and health standards or controls of any Governmental
Authority.
"Guaranty" by any Person means all contractual obligations (other than
endorsements in the ordinary course of business of negotiable instruments for
deposit or collection or similar transactions in the ordinary course of
business) of such Person guarantying any Indebtedness, dividend or other
obligation (including, without limitation, obligations in connection with sales
of any property) of any other Person (the "primary obligor") in any manner,
whether directly or indirectly, including, without limitation, all obligations
incurred through an agreement, contingent or otherwise, by such Person: (i) to
purchase such Indebtedness or obligation, or to purchase any property or assets
constituting security therefor, primarily for the purpose of assuring the owner
of such Indebtedness or obligations of the ability of the primary obligor to
make payment of the Indebtedness or obligation; or (ii) to advance or supply
funds (x) for the purchase or payment of such Indebtedness or obligation, or (y)
to maintain working capital or other balance sheet condition, or otherwise to
advance or make available funds for the purchase or payment of such Indebtedness
or obligation, in each case primarily for the purpose of assuring the owner of
such Indebtedness or obligation of the ability of the primary obligor to make
payment of the Indebtedness or obligation; or (iii) to lease property or to
purchase securities or other property or services of the primary obligor
primarily for the purpose of assuring the owner of such Indebtedness or
obligation of the ability of the primary obligor to make payment of the
Indebtedness or obligation; or (iv) otherwise to assure the owner of the
Indebtedness or obligation of the primary obligor against loss in respect
thereof. For the purpose of all computations made under this Agreement, the
amount of a Guaranty in respect of any obligation shall be deemed to be equal to
the amount that would apply if such obligation were the
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direct obligation of such Person rather than the primary obligor or, if less,
the maximum aggregate potential liability of such Person under the terms of the
Guaranty.
"Hazardous Material" shall have the meaning assigned to the term
Hazardous Substance in the Comprehensive Environmental Response Compensation and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Acts of 1986, and shall include any substance defined as
"hazardous" or "toxic" or words used in place thereof under any Environmental
Law applicable to the Borrower or any of its Subsidiaries.
"HSR Act" shall have the meaning specified in Section 6.06.
"HSR Fees" shall have the meaning specified in Section 11.02(e).
"Indebtedness" means, for any Person, the following obligations of such
Person, without duplication: (i) obligations of such Person for borrowed money;
(ii) obligations of such Person representing the deferred purchase price of
property or services other than accounts payable arising in the ordinary course
of business and other than amounts which are being contested in good faith and
for which reserves in conformity with GAAP have been provided; (iii) obligations
of such Person evidenced by bonds, notes, bankers acceptances, debentures or
other similar instruments of such Person or reimbursement obligations or other
obligations with respect to letters of credit issued for such Person's account
or letters of credit issued pursuant to such Person's application therefor; (iv)
obligations of other Persons, whether or not assumed, secured by Liens upon
property or payable out of the proceeds or production from property now or
hereafter owned or acquired by such Person, but only to the extent of such
property's fair market value; (v) Capitalized Lease Obligations of such Person;
(vi) obligations under Interest Rate Protection Agreements and under hedge,
swap, exchange, forward, future, collar or cap arrangements, fixed price
agreements and all other agreements or arrangements designed to protect against
fluctuations in commodity prices and currency exchange rates; and (vii)
obligations of such person pursuant to a Guaranty of any of the foregoing of
another Person. For purposes of this Agreement, the Indebtedness of any Person
shall include the Indebtedness of any partnership or joint venture to which such
Person is a party, to the extent the holder of such Indebtedness has recourse to
such Person.
"Indemnified Party" shall have the meaning specified in Section
11.02(d).
"Indemnity Matters" shall have the meaning specified in Section
11.02(a).
"Interest Expense" means interest on the Notes, and for purposes of
this definition, shall be calculated at the cash interest rate, whether paid in
cash or in kind.
"Interest Rate Protection Agreement" means any hedge, swap, exchange,
forward, future collar or cap arrangements, fixed price agreements or other
agreements or arrangements designed to protect against fluctuations in interest
rates.
"Legal Fees" shall have the meaning specified in Section 11.02(e).
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"Licenses" shall have the meaning specified in Section 3.21.
"Lien" means any interest in Property securing an obligation owed to,
or a claim by, a Person other than the owner of the Property, whether such
interest is based on the common law, statute or contract, and whether such
obligation or claim is fixed or contingent, and including but not limited to the
lien or security interest arising from a mortgage, encumbrance, pledge, security
agreement, conditional sale or trust receipt or a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting Property. For the
purpose of this Agreement, a Person shall be deemed to be the owner of any
Property which it has acquired or holds subject to a conditional sale agreement,
or leases under a financing lease or other arrangement pursuant to which title
to the Property has been retained by or vested in some other Person in a
transaction intended to create a financing.
"Lost Interest" shall have the meaning specified in Section 8.02(d).
"Majority Holders" means, at any time, the Purchasers or holders of
more than 66 2/3% of the principal owing under the Notes.
"Mandatory Redemption" shall mean the obligation of Borrower to redeem
the Notes as more fully set forth in Section 8.04(a).
"Mandatory Redemption Dates" shall mean the effective dates of any
Mandatory Redemption.
"Material Adverse Effect" means any material and adverse effect on (i)
the assets, liabilities, financial condition, business, operations or affairs of
the Borrower and its Subsidiaries taken as a whole, from those reflected in the
Financial Statements or from the facts represented or warranted in any Basic
Document, (ii) the ability of the Borrower and its Subsidiaries taken as a whole
to carry out their business as of the Closing Date or as proposed as of the
Closing Date to be conducted to meet their obligations under the Basic Documents
on a timely basis or (iii) the ability of the Borrower to consummate the
transactions under this Agreement and the other Basic Documents.
"Maturity Date" means June 30, 2010.
"Maximum Rate" means at any particular time in question, the maximum
nonusurious rate of interest, if any, which under applicable law may then be
charged on the Notes. If such maximum rate changes after the date hereof, the
Maximum Rate shall be automatically increased or decreased, as the case may be,
without notice to the Borrower from time to time as the effective date of each
change in such maximum rate.
"Multiemployer Plan" means a Plan defined as such in Section 3(37) or
4001(a)(3) of ERISA.
"Note Payments" shall have the meaning specified in Section 8.06(b).
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"Notes" means the Convertible Subordinated Notes of the Borrower issued
pursuant to Section 2.01 of this Agreement, in the aggregate principal amount of
$49,350,000, made by the Borrower and payable to the order of the Purchasers as
follows: (i) a $12,337,500.00 promissory note payable to ECT and (ii) a
$37,012,500.00 promissory note payable to JEDI-II.
"Notice Giver" shall have the meaning specified in Section 6.06.
"NYSE" shall have the meaning set forth in Section 9.01(j).
"Obligations" means any and all amounts, liabilities and obligations
owing from time to time by Borrower to the Purchasers, pursuant to any of the
Basic Documents and all renewals, extensions and/or rearrangements thereof,
whether such amounts, liabilities or obligations be liquidated or unliquidated,
now existing or hereafter arising, absolute or contingent.
"Offer Notice" shall have the meaning specified in Section 2.06(b).
"Optional Redemption" shall mean the rights of Borrower to redeem the
Notes as more fully set forth in Section 8.05.
"Optional Redemption Notice" shall have the meaning specified in
Section 8.05.
"Optional Redemption Right" shall have the meaning specified in Section
8.05.
"Participation" means, for each Purchaser, such Purchaser's
proportionate share pertaining to the Obligations. As of the Effective Date,
ECT's Participation shall be 25% and JEDI-II's Participation shall be 75%.
"Person" means any individual, corporation, company, voluntary
association, partnership, joint venture, trust, limited liability company,
unincorporated organization or government or any agency, instrumentality or
political subdivision thereof, or any other form of entity.
"Plan" means any employee pension benefit plan, as defined in Section
3(2) of ERISA, which (i) is currently or hereafter sponsored, maintained or
contributed to by the Borrower, any Subsidiary or an ERISA Affiliate or (ii) was
at any time during the preceding six calendar years sponsored, maintained or
contributed to, by the Borrower, any Subsidiary or an ERISA Affiliate.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Public Offering" shall mean a firm commitment underwritten public
offering registered under the Securities Act pursuant to a registration
statement which has been declared effective by the Commission under the
Securities Act.
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"Purchasers" means ECT and JEDI-II and/or, to the extent then
applicable, each assignee of ECT or JEDI-II or their respective successors or
assigns pursuant to Section 11.04.
"Purchaser's Account" means for any Purchaser, the account specified by
such Purchaser as its Purchaser's Account by notice in writing to the Borrower.
"Qualified Foreign Subsidiaries" means any Subsidiaries which have the
following characteristics:
(i) incorporated under the laws of any country or state
other than the United States of America or any state
thereof;
(ii) the sum of the Acquisition price and any investment or
loans by the Borrower or any other Subsidiary of the
Borrower is less than or equal to $15,000,000; and
(iii) any Indebtedness of the Subsidiary is not supported by
(i) any Guaranties of the Borrower or any other of its
Subsidiaries or (ii) any other collateral support
(other than Borrower pledging the stock of the
Subsidiary or a loan from Borrower to a Subsidiary) of
the Borrower or any other of its Subsidiaries.
"Redemption Price" shall mean, with respect to any Note or a portion
thereof, the Principal amount thereof to be redeemed in whole or in part, plus
the applicable premium, if any, payable upon redemption thereof pursuant to the
terms hereof.
"Redemption Notice" shall have the meaning specified in Section
8.04(b).
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the date hereof, made by the Borrower in favor of the Purchasers
relating to the Conversion Shares.
"Related Parties" shall have the meaning specified in Section 11.02(a).
"Response Period" shall have the meaning specified in Section 8.05.
"Responsible Officer" means, as to any Person, the Chief Executive
Officer, the President or any Vice President of such Person and the Chief
Financial Officer of such Person. Unless otherwise specified, all references to
a Responsible Officer herein shall mean a Responsible Officer of the Borrower.
"Representatives" shall have the meaning specified in Section 10.05(a).
"Securities" means the Notes and, when issued, the Conversion Shares.
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"Securities Act" means the Securities Act of 1933, as amended from time
to time, and the rules and regulations of the Commission promulgated thereunder.
"Securities Holders" shall have the meaning specified in Section
2.06(a).
"Senior Credit Agreement" means the Credit Agreement dated as of
August 3, 1998, among the Borrower, the Senior Loan Agents, and the Senior
Lenders, as it may from time to time be amended, modified, supplemented or
increased from time to time, and any Credit Agreement or similar agreement
executed in connection with any refinancing of the Senior Loan permitted
hereunder.
"Senior Indebtedness" shall mean all obligations, including the
obligation to pay principal and accrued interest, arising under the Senior Loan
Documents.
"Senior Loan Agents" means Bank One, Texas, National Association and
National City Bank, and any substitute agent, as agents under the Senior Credit
Agreement, and any agent, if any, under any refinancing arrangement of the
Senior Loan permitted hereunder.
"Senior Lenders" means each of the lenders from time to time under the
Senior Credit Agreement.
"Senior Loan" shall mean, collectively, any advance or advances of
principal made by the Senior Lenders to the Borrower under the Senior Credit
Agreement and the other Senior Loan Documents and all accrued but unpaid
interest thereon.
"Senior Loan Documents" means the Senior Credit Agreement and all
promissory notes, collateral documents and other agreements, documents and
instruments executed or delivered in connection therewith, as such agreements
may be amended, modified or supplemented from time to time.
"Share Issuance Obligations" shall have the meaning specified in
Section 3.18.
"Special Entity" means any joint venture, limited liability company or
partnership, general or limited partnership or any other type of partnership or
company other than a corporation, in which a Person or one or more of its other
Subsidiaries is a member, owner, partner or joint venturer and owns, directly or
indirectly, at least a majority of the equity of such entity or controls such
entity, but excluding any tax partnerships that are not classified as
partnerships under state law. For purposes of this definition, any Person which
owns directly or indirectly an equity investment in another Person which allows
the first Person to manage or elect managers who manage the normal activities of
such second Person will be deemed to "control" such second Person (e.g.,a sole
general partner controls a limited partnership).
"Structuring Fee Agreement" means the agreement between the Borrower
and ECT Securities Limited Partnership dated as of the date hereof.
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"Subsidiary" means (i) any corporation of which at least a majority of
the outstanding shares of stock having by the terms thereof ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether or not at the time stock of any other class or classes
of such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned or
controlled by a Person or one or more of its Subsidiaries or by a Person and one
or more of its Subsidiaries and (ii) any Special Entity. Unless otherwise
indicated herein, each reference to the term "Subsidiary" shall mean a
Subsidiary of the Borrower.
Section 1.02 Accounting Procedures and Interpretation. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
determinations with respect to accounting matters hereunder shall be made, and
all financial statements and certificates and reports as to financial matters
required to be furnished to the Purchasers hereunder shall be prepared, in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q promulgated by the Commission) and in
compliance as to form in all material respects with applicable accounting
requirements and with the published rules and regulations of the Commission with
respect thereto.
ARTICLE II
ISSUANCE OF SECURITIES; RIGHTS OF PURCHASERS
Section 2.01 Issuance of Securities. Subject to the terms and
conditions herein set forth, the Borrower agrees that it will issue the Notes to
the Purchasers and the Purchasers agree that they shall each purchase the Notes
from the Borrower in their respective Participations, for an aggregate cash
consideration of $49,350,000.
Section 2.02 The Closing. The execution of the Basic Documents,
delivery of the Notes by the Borrower to the Purchasers, payment by the
Purchasers to the Borrower of the consideration therefor as set forth in Section
2.01 and all other instruments required pursuant to Section 5.01, will take
place at a closing (the "Closing") to be held at the offices of Bracewell &
Patterson, L.L.P. The date and time at which the Closing occurs is the "Closing
Date".
Section 2.03 Delivery. Delivery of the Notes pursuant to this Agreement
shall be made on the Closing Date by the Borrower delivering to the Purchasers,
against payment of the purchase price therefor, one Note executed by the
Borrower in the principal amount of $12,337,500.00, payable to the order of ECT
and one Note executed by the Borrower in the principal amount of $37,012,500.00,
payable to the order of JEDI-II.
Section 2.04 Payment. Payment of the consideration for the Notes shall
be made by wire transfer of immediately available funds to such account of the
Borrower as shall have been designated to the Purchasers on the Closing Date.
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Section 2.05 Conversion. Each holder of a Note shall have the right, at
such holder's option, to convert such Note into shares of Common Stock upon the
terms and conditions including antidilution adjustments as more fully specified
in the Notes and after making all required antidilution adjustments.
Section 2.06 Right to Participate in Certain Issuances by Borrower.
(a) For so long as (i) ECT or JEDI-II is the Beneficial Owner
of Notes or Conversion Shares or (ii) any party is the Beneficial Owner of
twenty (20%) percent of the aggregate of all Conversion Shares issued or
issuable upon conversion of the Notes and such party acquired Notes and/or
Conversion Shares in a private transaction excluding resales under rule 144 of
the Securities Act (collectively, the "Securities Holders"), the Borrower shall
not issue any shares of Common Stock or any Exchangeable Securities, for any
consideration or in any type of transaction, unless the Borrower shall have
first complied with, in the case of an issuance other than pursuant to a Public
Offering, the provisions of Section 2.06(b) or, in the case of a Public
Offering, the provisions of Section 2.06(c).
(b) If the Borrower determines to issue any shares of Common
Stock or any Exchangeable Securities, other than in a Public Offering, then the
Borrower shall provide written notice ("Offer Notice") of such determination to
the Securities Holders, which notice shall include all the terms of such
issuance and shall offer to the Securities Holders the right to purchase, at the
same price and on the same terms as the Borrower proposes to issue such shares
of Common Stock or Exchangeable Securities to others (or, if the Borrower
proposes to issue such shares of Common Stock or any Exchangeable Securities
other than for cash, at a price equal to the fair market value of the assets
acquired by the Borrower (as determined in good faith by agreement between the
Borrower and the Securities Holders, or if the parties are unable to agree, by
an investment banking firm or other asset valuation firm of national reputation
selected by the Borrower and the Securities Holders, the cost of which shall be
borne by the Borrower) divided by either the number of shares of Common Stock or
Exchangeable Securities issued in exchange for such assets), a number or amount
of the shares of Common Stock or Exchangeable Securities that represents the
right to acquire upon exercise, exchange or conversion of such Exchangeable
Securities, a number of shares of Common Stock so that, upon closing of the
transaction, the Securities Holders will Beneficially Own the same percentage of
the then to be outstanding Common Stock as was Beneficially Owned prior to the
transaction closing. If the Securities Holders determine to accept the offer
contained in the Offer Notice, the Securities Holders shall deliver a written
notice to the Borrower indicating its acceptance within 30 days after its
receipt of the Offer Notice or such longer period as is available to others,
which notice shall indicate whether the Securities Holders have accepted such
offer in whole or in part, and, if accepted in part, the number or amount of
shares of Common Stock or Exchangeable Securities as to which such offer has
been accepted (an "Acceptance Notice"). Any acceptance of the offer contained in
an Offer Notice by delivery of an Acceptance Notice shall be irrevocable and
shall constitute a commitment by the Securities Holders to purchase from the
Borrower, and by the Borrower to sell to the Securities Holders the number or
amount of shares of Common Stock or Exchangeable Securities covered by such
Acceptance Notice upon the terms contained in the Offer Notice.
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(c) If at any time and from time to time, the Borrower
determines to issue any shares of Common Stock or any Exchangeable Security in a
Public Offering, then (y) the Borrower shall provide written notice of such
offering to the Securities Holders, which notice shall include the proposed size
and other terms of such issuance, to the extent then known, the name or names of
any managing underwriter or placement agent(s) and the date when it is proposed
that any such issuance will be made, and (z) the Borrower shall either sell
directly or cause the underwriters or placement agent(s) to offer to the
Securities Holders the right to purchase from the Borrower directly or from the
underwriters or placement agent(s), at the applicable offering price, a number
or amount of the shares of Common Stock, Exchangeable Securities or other
securities proposed to be issued such that, if purchased by to the Securities
Holders, it would permit such holders to Beneficially Own the same percentage of
the then to be outstanding Common Stock as was Beneficially Owned prior to the
Public Offering.
(d) Notwithstanding the foregoing, the rights set forth in
this Section 2.06 shall not be exercisable on the issuance of shares of the
Common Stock or Exchangeable Securities as follows:
(i) in connection with an issuance pursuant to
an Acquisition; or
(ii) in connection with an issuance pursuant to
an Employee Plan.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE BORROWER
The Borrower represents and warrants to the Purchasers, for the benefit
of each of the holders of the Notes, which representations and warranties shall
survive the execution of any Basic Document for a period of two years, that as
of the date of this Agreement:
Section 3.01 Corporate Existence. The Borrower: (i) is a corporation
duly organized, legally existing and in good standing under the laws of the
State of Delaware; (ii) has all requisite power, and has all material
governmental licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to be
conducted; and (iii) is qualified to do business in all jurisdictions in which
the nature of the business conducted by it makes such qualifications necessary
and where failure so to qualify would have a Material Adverse Effect. Neither
the Borrower nor any of its Subsidiaries is in default in the performance,
observance or fulfillment of any provision of, in the case of the Borrower, its
Certificate of Incorporation, as amended and restated, or Bylaws, or, in the
case of any Subsidiary, its Certificate of Incorporation, Bylaws or other
organizational documents. Schedule 3.01 identifies each Subsidiary of the
Borrower and the ownership of all outstanding Capital Stock of each such
Subsidiary. Each of the Borrower's Subsidiaries that is a corporation is a
corporation duly organized, validly existing and in good standing under the laws
of the State or other jurisdiction of its incorporation and has all requisite
power, and has all material governmental licenses, authorizations, consents and
approvals
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necessary to own its assets and carry on its business as now being or as
proposed to be conducted. Each of the Borrower and each of its Subsidiaries that
is a corporation is duly qualified or licensed and in good standing as a foreign
corporation, and is authorized to do business, in each jurisdiction in which the
ownership or leasing of its respective properties or the character of its
respective operations makes such qualification necessary, except where the
failure to obtain such qualification, license, authorization or good standing
would not have a Material Adverse Effect. Each Subsidiary of the Borrower that
is not a corporation has been duly formed and is duly qualified or licensed and
authorized to do business in each jurisdiction in which the ownership or leasing
of its respective properties or the character of its respective operations makes
such qualification necessary, except where the failure to obtain such
qualification, license or authorization would not have a Material Adverse
Effect.
Section 3.02 Borrower SEC Documents. Borrower has timely filed with the
Commission all forms, registrations and proxy statements, reports, schedules and
statements required to be filed by it since December 31, 1997 under the Exchange
Act or the Securities Act (all documents filed since such date, collectively
"Borrower SEC Documents"). The Borrower SEC Documents, including, without
limitation, any financial statements or schedules included therein, at the time
filed (in the case of registration statements and proxy statements, solely on
the dates of effectiveness and the dates of mailing, respectively) (except to
the extent corrected by a subsequently filed Borrower SEC Document which such
filing is made prior to the Closing Date) (i) did not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, and (ii) complied
in all material respects with the applicable requirements of the Exchange Act
and the Securities Act, as the case may be. The financial statements of Borrower
included in the Borrower SEC Documents at the time filed (and, in the case of
registration statements and proxy statements, solely on the date of
effectiveness and the date of mailing, respectively) complied as to form in all
material respects with applicable accounting requirements and with the published
rules and regulations of the Commission with respect thereto, were prepared in
accordance with GAAP applied on a consistent basis during the periods involved
(except as may be indicated in the notes thereto or, in the case of unaudited
statements, as permitted by Form 10-Q of the Commission), and fairly present
(subject in the case of unaudited statements to normal, recurring and year-end
audit adjustments) in all material respects the consolidated financial position
of Borrower as at the dates thereof and the consolidated results of its
operations and cash flows for the periods then ended.
Section 3.03 No Material Adverse Change. Except as set forth in or
contemplated by the Borrower SEC Documents filed with the Commission as of the
date hereof or in Schedule 3.03, since June 30, 1998, each of Borrower and its
Subsidiaries has conducted its business in the ordinary course, consistent with
past practice, and there has been no (i) material adverse change in the business
or financial condition of Borrower and its subsidiaries taken as a whole, other
than those occurring as a result of general economic or financial conditions or
other developments which are not unique to Borrower and its subsidiaries but
also affect other Persons who participate or are engaged in the lines of
business of which Borrower and its subsidiaries participate or are engaged, (ii)
material adverse effect on the ability of Borrower to consummate the
transactions contemplated
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hereby, (iii) declaration, setting aside or payment of any dividend or other
distribution with respect to the Borrower's capital stock, (iv) acquisition or
disposition of any material asset by the Borrower or any of its Subsidiaries or
any contract or arrangement therefore, otherwise than for fair value in the
ordinary course of business or as disclosed in the Borrower SEC Documents, or
(v) material change in the Borrower's accounting principles, practices or
methods.
Section 3.04 Litigation. Except as set forth in the Borrower SEC
Documents or as disclosed to the Purchasers in Schedule 3.04, there is no Action
pending or, to the knowledge of the Borrower, contemplated or threatened against
or affecting the Borrower, any of its Subsidiaries or any of their respective
officers, directors, properties or assets, which relates to or challenges the
legality, validity or enforceability of this Agreement, any of the Basic
Documents or any other documents or agreements executed or to be executed by the
Borrower pursuant hereto or thereto or in connection herewith or therewith, or
which (individually or in the aggregate) reasonably could be expected to have a
Material Adverse Effect.
Section 3.05 No Breach. The execution, delivery and performance by the
Borrower of this Agreement, the Basic Documents and all other agreements and
instruments to be executed and delivered by the Borrower pursuant hereto or
thereto or in connection herewith or therewith, compliance by the Borrower with
the terms and provisions hereof and thereof, the issuance of the Notes by the
Borrower and the application of the proceeds thereof in compliance herewith do
not and will not (a) violate any provision of any law, statute, rule or
regulation, order, writ, judgment, injunction, decree, governmental permit,
determination or award having applicability to the Borrower or any of its
Subsidiaries or any of their respective properties or assets, (b) conflict with
or result in a violation of any provision of the charter or bylaws of the
Borrower or its Subsidiaries, (c) require any consent (other than consents set
forth on Schedule 3.07), approval or notice under or result in a violation or
breach of or constitute (with or without due notice or lapse of time or both) a
default (or give rise to any right of termination, cancellation or acceleration)
under (i) any note, bond, mortgage, license, or loan or credit agreement to
which the Borrower or any of its Subsidiaries is a party or by which the
Borrower or any of its Subsidiaries or any of their respective properties may be
bound or (ii) any other such agreement, instrument or obligation, or (d) result
in or require the creation or imposition of any Lien upon or with respect to any
of the properties now owned or hereafter acquired by the Borrower or any of its
Subsidiaries; with the exception of the conflicts stated in clause (b) of this
Section 3.05, except where such conflict, violation, default, breach,
termination, cancellation, failure to receive consent or approval, or
acceleration with respect to the foregoing provisions of this Section 3.05 would
not, individually or in the aggregate, reasonably be likely to have a Material
Adverse Effect.
Section 3.06 Authority. The Borrower has all necessary power and
authority to execute, deliver and perform its obligations under the Basic
Documents to which it is a party; and the execution, delivery and performance by
the Borrower of the Basic Documents to which it is a party, have been duly
authorized by all necessary action on its part; and the Basic Documents
constitute the legal, valid and binding obligations of the Borrower, enforceable
in accordance with their terms, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent transfer and similar laws affecting
creditors' rights generally or by general principles of equity. No approval from
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the stockholders of the Borrower is required as a result of the listing of the
Conversion Shares with the NYSE.
Section 3.07 Approvals. Except as set forth on Schedule 3.07, no
authorization, consent, approval, waiver, license, qualification or written
exemption from, nor any filing, declaration, qualification or registration with,
any Governmental Authority (including any filing with the Federal Trade
Commission or the Department of Justice pursuant to the HSR Act) or any other
Person is required in connection with the execution, delivery or performance by
the Borrower of this Agreement or any of the Basic Documents or the issuance by
the Borrower of the Notes or the Conversion Shares, except where the failure to
receive such authorization, consent, approval, waiver, license, qualification or
written exemption from, or to make such filing, declaration, qualification or
registration would not, individually or in the aggregate, reasonably be likely
to have a Material Adverse Effect.
Section 3.08 Use of Loans. The purchase price of the Notes shall be
used solely (i) to pay principal and interest outstanding on the Senior Loan,
(ii) for Borrower's acquisition and capital expenditure program and (iii) for
general corporate purposes. The Borrower is not engaged principally, or as one
of its important activities, in the business of extending credit for the
purpose, whether immediate, incidental or ultimate, or buying or carrying margin
stock (within the meaning of Regulation G, U or X of the Board of Governors of
the Federal Reserve System) and no part of the purchase price of the Notes will
be used to buy or carry any margin stock.
Section 3.09 Employee Benefit Matters. The Borrower and its
Subsidiaries and each ERISA Affiliate are in compliance in all material respects
with all applicable provisions of ERISA or the Code and published
interpretations thereunder with respect to all Employee Plans which are subject
to ERISA or the Code, except where the failure to be in compliance would not
reasonably be likely to have a Material Adverse Effect. No breach or violation
of or default by the Borrower or any ERISA Affiliate under any Employee Plan has
occurred which is reasonably likely to have a Material Adverse Effect.
Section 3.10 Taxes. Except as set out in Schedule 3.10, the Borrower
and each of its Subsidiaries have timely and properly prepared and filed all
necessary federal, state, local and foreign tax returns with respect to the
Borrower and its Subsidiaries which are required to be filed (taking into
consideration any extension periods) and have paid when due all taxes shown to
be due thereon and have paid, or made adequate provision (in accordance with
GAAP) for the payment of, all other taxes and assessments with respect to the
Borrower and its Subsidiaries to the extent that the same shall have become due
(taking into consideration any extension periods), except where the failure to
file such returns or to pay, or make provision for the payment of, such taxes
and assessments would not have a Material Adverse Effect on the Borrower and its
Subsidiaries, taken as a whole. Except as set forth in Schedule 3.10, the
Borrower has no knowledge of any tax deficiency which has been asserted against
the Borrower or any Subsidiary which the Borrower reasonably expects to have a
Material Adverse Effect.
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Section 3.11 Assets. Neither the Borrower nor any of its Affiliates is
a party to any contract, agreement, arrangement or understanding (other than
this Agreement and the agreements entered into hereunder) that by its terms
purports to obligate, restrict or otherwise bind the Purchasers (as Affiliates
of the Borrower or otherwise) including any area of mutual interest,
exclusivity, non-competition or other similar agreement.
Section 3.12 No Material Misstatements. None of the representations or
warranties made by Borrower herein or in any Schedule hereto, or certificate
furnished by Borrower pursuant to this Agreement, when all such documents are
read together in their entirety, contains any untrue statement of a material
fact, or omits to state any material fact necessary in order to make the
statements contained herein or therein, in light of the circumstances under
which made, not misleading.
Section 3.13 Investment Company Act. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 3.14 Public Utility Holding Company Act. Neither the Borrower
nor any Subsidiary is a "holding company," or a "subsidiary company" of a
"holding company," or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company," or a "public utility" within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
Section 3.15 No Violation. Neither the Borrower nor any of its
Subsidiaries is (a) in violation of its charter or bylaws, (b) in default (nor
has an event occurred which with notice or passage of time or both would
constitute such a default) under or in violation of any provision of any loan or
credit agreement or any other agreement or instrument to which it is a party or
by which it or any of its properties may be bound or (c) a party to any order of
any Governmental Authority arising out of any Action, which such violation,
default or action in clauses (b) and (c) could reasonably be expected to have a
Material Adverse Effect. Neither the Borrower nor any of its Subsidiaries is in
violation of any statute, rule or regulation of any Governmental Authority or
any governmental permit, which violation could reasonably be expected to
(individually or in the aggregate) (A) affect the legality, validity or
enforceability by the Purchasers of this Agreement or any of the Basic
Documents, or (B) have a Material Adverse Effect.
Section 3.16 Environmental Matters.
(a) Borrower and its Subsidiaries have complied with, and
will be in compliance with, all applicable Environmental Laws and the
requirements of any permits issued under such Environmental Laws except where
failure to so comply could not reasonably be expected to have a Material Adverse
Effect. Except as set forth in Schedule 3.16, to the knowledge of the Borrower,
there are no pending, past or threatened Environmental Claims against the
Borrower or any of its Subsidiaries or any property owned or operated by the
Borrower or any of its Subsidiaries which could reasonably be expected to have a
Material Adverse Effect. To the knowledge of the Borrower, there are no
conditions or occurrences on or emanating from any property owned or
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operated by the Borrower or any of its Subsidiaries or on any property adjoining
or in the vicinity of any such property that could reasonably be expected (i) to
form the basis of an Environmental Claim against the Borrower or any of its
Subsidiaries or any property owned or operated by the Borrower or any of its
Subsidiaries, or (ii) to cause any property owned or operated by the Borrower or
any of its Subsidiaries to be subject to any material restrictions on the
ownership, occupancy, the current or intended use or transferability of such
property by the Borrower or any of its Subsidiaries under any applicable
Environmental Law except for any such condition or occurrence described in
clauses (i) or (ii) which could not reasonably be expected to have a Material
Adverse Effect.
(b) To the knowledge of the Borrower (i) Hazardous Materials
have not at any time been generated, used, treated or stored on, or transported
to or from, any property owned or operated by the Borrower or any of its
Subsidiaries in a manner that has violated or could reasonably be expected to
violate any Environmental Law, except for such violation which could not
reasonably be expected to have a Material Adverse Effect, and (ii) Hazardous
Materials have not at any time been released on or from any property owned or
operated by the Borrower or any of its Subsidiaries in a manner that has
violated or could reasonably be expected to violate any Environmental Law,
except for such violation which could not reasonably be expected to have a
Material Adverse Effect.
Section 3.17 Insurance. Except as set forth on Schedule 3.17, Borrower
and its Subsidiaries (for such time period after an entity became a Subsidiary
of the Borrower) have policies of property and casualty insurance and bonds of
the type and in amounts customarily carried by persons conducting business or
owning assets similar to those of the Borrower and its Subsidiaries. There is no
material claim pending under any of such policies or bonds as to which coverage
has been, nor any basis for Borrower to reasonably believe that a material claim
will be, questioned, denied or disputed by the underwriters of such policies or
bonds. All premiums due and payable under all such policies and bonds have been
paid and Borrower and its Subsidiaries are otherwise in compliance with the
terms of such policies and bonds. Borrower has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies. Schedule 3.17 identifies all risks, if any, of the Borrower or any of
its Subsidiaries which are self insured which might have a Material Adverse
Effect.
Section 3.18 Capitalization. The authorized Capital Stock of the
Borrower consists of (a) 36,654,667 shares of Common Stock, par value $0.00001
per share, of which 17,615,233 shares are issued and outstanding; (b) 3,345,333
shares of Limited Vote Common Stock, par value $0.00001 per share, of which
3,345,333 shares are issued and outstanding; and (c) 10,000,000 shares of
Preferred Stock, $0.00001 per share, of which no shares are issued and
outstanding. All outstanding shares of Common Stock are validly issued, fully
paid and nonassessable and were issued free of preemptive rights. Except as set
forth on Schedule 3.18 or pursuant to the Borrower's 1997 Stock Option Plan, the
Borrower is not a party to any voting trust or other agreement with respect to
the voting of its Capital Stock. Except as set forth in Schedule 3.18 or under
the Borrower's 1997 Stock Option Plan for which there are 1,471,485 shares
issuable under currently outstanding options, there are no (i) outstanding
securities convertible into or exchangeable for Capital Stock of the Borrower or
(ii) contracts, commitments, agreements, understandings or arrangements of any
kind to which the Borrower is a party obligating the Borrower under any
circumstance to issue any Capital Stock,
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or any securities convertible into or exchangeable for or rights to purchase or
subscribe for Capital Stock of the Borrower, other than this Agreement (the
"Share Issuance Obligations"). Schedule 3.18 reasonably sets forth information
regarding the Share Issuance Obligations. Except as set forth on Schedule 3.18
neither the Borrower nor any of its Subsidiaries is a party to or bound by any
agreement with respect to any of its securities which grants registration rights
to any Person.
Section 3.19 Conversion Shares. The shares of Common Stock issuable
upon conversion of the Notes (the "Conversion Shares"), when issued and
delivered in accordance with the terms of the Notes, will be duly and validly
issued, fully paid, nonassessable, free of preemptive rights of other
stockholders and free from all Liens (except any Liens created or suffered to be
created by the Purchasers) and will not be subject to any restriction on the
voting or transfer thereof created by the Borrower, other than the restrictions
set forth in Section 4.01 and Section 4.04 of this Agreement. The Borrower has
duly and validly reserved the Conversion Shares for issuance upon conversion of
the Notes.
Section 3.20 Certain Fees. Except for the fees payable to ECT
Securities Limited Partnership pursuant to the Structuring Fee Agreement and
except as contemplated by this Agreement, no fees or commissions will be payable
by the Borrower to brokers, finders, investment bankers, or Purchasers with
respect to the issuance and sale of any of the Securities or the consummation of
the transaction contemplated by this Agreement. The Borrower agrees that it will
indemnify and hold harmless the Purchasers from and against any and all claims,
demands, or liabilities for broker's, finders, placement, or other similar fees
or commissions incurred by the Borrower or alleged to have been incurred by the
Borrower in connection with the issuance or sale of the Securities or the
consummation of the transaction contemplated by this Agreement.
Section 3.21 Licenses. Except as set forth in Schedule 3.21, each of
the Borrower and its Subsidiaries holds all licenses, franchises, permits,
consents, registrations, certificates and other approvals (including, without
limitation, those relating to environmental matters and worker health and
safety) (individually, a "License" and, collectively, "Licenses") required for
the conduct of its business as now being conducted, except where the failure to
hold any such License would not have a Material Adverse Effect.
Section 3.22 Undisclosed Liabilities. Except: (i) as and to the extent
disclosed or reserved against on the consolidated balance sheet of Borrower as
of June 30, 1998 or the notes thereto included in the Borrower SEC Documents or
otherwise disclosed in the Borrower SEC Documents filed with the Commission as
of the date hereof; (ii) those incurred in connection with the execution of the
Basic Documents; or (iii) as set forth in Schedule 3.22, neither Borrower nor
any of its subsidiaries have any liabilities or obligations of any nature,
whether known or unknown, absolute, accrued, contingent or otherwise and whether
due or to become due, and that would be required by GAAP to be disclosed and
that, individually or in the aggregate, have or would reasonably be expected to
have a Borrower Material Adverse Effect.
Section 3.23 Labor Relations. Except as disclosed on Schedule 3.23,
there is no unfair labor practice litigation involving the Borrower or any of
its subsidiaries either pending before the
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NLRB or a court or, to the knowledge of Borrower, threatened against Borrower or
any of its subsidiaries. Except as disclosed on Schedule 3.23, there is no labor
strike, dispute, slowdown or stoppage, either pending or, to the knowledge of
Borrower, threatened against Borrower or any of its subsidiaries, nor has the
Borrower experienced any such labor interruptions over the past two years. The
Borrower considers its relationship with its employees to be good.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each of the Purchasers, severally and not jointly, represent and
warrant to the Borrower, which representations and warranties shall survive the
execution of any Basic Document, that as of the date of this Agreement:
Section 4.01 Investment. Each Purchaser represents and warrants to, and
covenants and agrees with, the Borrower that the Securities are being acquired
for its own account, not as a nominee or agent, and with no intention of
distributing or reselling the Notes or the Conversion Shares or any part thereof
and that such Purchaser has no present intention of selling or granting any
participation in or otherwise distributing the same in any transaction which
would be in violation of the securities laws of the United States of America or
any State, without prejudice, however, to Purchasers' right at all times to sell
or otherwise dispose of all or any part of the Notes or the Conversion Shares
under a registration statement under the Securities Act and applicable state
securities laws or under an exemption from such registration available
thereunder (including, without limitation, if available, Rule 144 promulgated
thereunder). If either Purchaser should in the future decide to dispose of any
of the Notes or the Conversion Shares, the Purchasers understand and agree (i)
that it may do so only (A) in compliance with the Securities Act and applicable
state securities law, as then in effect, and (B) in the manner contemplated by
any registration statement pursuant to which such securities are being offered,
and (ii) that stop-transfer instructions to that effect will be in effect with
respect to such securities. The Purchasers agree to the imprinting, so long as
appropriate, of a legend on each Note and on each certificate representing the
Conversion Shares, to the effect as set forth above.
Section 4.02 Nature of Purchasers. Each Purchaser represents and
warrants to, and covenants and agrees with, the Borrower that, (i) it is an
"accredited investor" within the meaning of paragraphs (a)(3) or (8) of Rule 501
under the Securities Act and (ii) by reason of its business and financial
experience it has such knowledge, sophistication and experience in business and
financial matters so as to be capable of evaluating the merits and risks of the
prospective investment in the Securities, is able to bear the economic risk of
such investment and, at the present time, would be able to afford a complete
loss of such investment.
Section 4.03 Receipt of Information; Authorization. Each Purchaser
acknowledges that it has had access to information regarding the business,
assets, operations, financial condition and results of operations of the
Borrower and has been provided a reasonable opportunity to ask questions of and
receive answers from representatives of the Borrower regarding such matters.
Each Purchaser further acknowledges that it is experienced in investing in
corporations and businesses.
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Each Purchaser represents and warrants that the purchase of the Securities by it
has been duly and properly authorized and this Agreement and each Basic Document
to which the Purchasers are a signatory has been duly executed and delivered by
it or on its behalf.
Section 4.04 Anti-Hedging. Each Purchaser represents and warrants to,
and covenants and agrees with, the Borrower that each of the Purchasers will not
at any time, prior to the Mandatory Redemption Date engage in any put, call,
short-sale, hedge, straddle or similar transactions in Borrower's Capital Stock
intended to reduce the Purchaser's risk of owning Borrower's Capital Stock
excluding index options or similar basket hedges.
Section 4.05 Restricted Securities. Each Purchaser understands that the
Securities it is purchasing are characterized as "restricted securities" under
the federal securities laws inasmuch as they are being acquired from the
Borrower in a transaction not involving a public offering and that under such
laws and applicable regulations such securities may be resold without
registration under the Securities Act, only in certain limited circumstances. In
this connection, such Purchaser represents that it is familiar with Rule 144 of
the Commission promulgated under the Securities Act.
Section 4.06 Certain Fees. No fees or commissions will be payable by
the Purchasers to brokers, finders, or investment bankers with respect to the
purchase of any of the Securities or the consummation of the transaction
contemplated by this Agreement. Each Purchaser agrees that it will, jointly and
severally, indemnify and hold harmless the Borrower from and against any and all
claims, demands, or liabilities for broker's, finders, placement, or other
similar fees or commissions incurred by the Purchasers or alleged to have been
incurred by the Purchasers in connection with the purchase of the Securities or
the consummation of the transaction contemplated by this Agreement.
Section 4.07 No Implied Representations. Notwithstanding anything to
the contrary contained in this Agreement, it is the express understanding of the
Purchasers that the Borrower is not making any representation or warranty
whatsoever, express or implied, other than those representations and warranties
of Borrower expressly set forth in this Agreement.
ARTICLE V
CLOSING ACTIONS
Section 5.01 Closing. At Closing, the following shall occur:
(a) The Purchasers shall receive the following, each in form
and substance satisfactory to the Purchasers and in sufficient counterparts:
(i) Duly executed counterparts of this Agreement
signed by all the parties hereto.
(ii) The duly executed Structuring Fee Agreement
and the Registration Rights Agreement, dated as of the Closing Date in
form and substance satisfactory to Purchasers.
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(iii) Certificates of good standing as to the
Borrower issued by the Secretary of State of its state of
incorporation.
(iv) The duly executed certificate of the
Secretary of the Borrower setting forth (1) resolutions of its
directors in form and substance reasonably satisfactory to the
Purchasers with respect to the authorization of this Agreement and the
other Basic Documents to which it is a party and the transactions
contemplated hereby and thereby; (2) the names and true signatures of
the officers authorized to sign such instruments; and (3) copies of the
articles or certificate of incorporation and the bylaws of the
Borrower.
(v) Any other document which the Purchasers may
reasonably request, including opinions addressed to Purchasers, dated
as of the Closing Date, of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
and Brad Eastman, each counsel for the Borrower, substantially in the
forms of Exhibit A-1 and A-2 hereto, respectively.
(b) The Borrower shall execute and deliver the Notes,in
the form as attached hereto as Exhibit B.
(c) The Borrower shall receive consents to the Basic
Documents by the Senior Lenders.
(d) All other consents, including without limitation any
required shareholder approval, and waivers necessary to complete the
transactions under this Agreement and the other Basic Documents shall have been
obtained by the Borrower and the Purchasers.
(e) The Borrower shall pay to ECT Securities Limited
Partnership all payments required under the terms of the Structuring Fee
Agreement.
(f) If requested in writing by either of the Purchasers,
a Designee of the Purchasers shall be nominated for election to the Board of
Directors of the Borrower pursuant to Section 6.07.
(g) The Borrower shall duly and validly reserve the
Conversion Shares for issuance upon conversion of the Notes.
(h) Each of the Basic Documents shall be executed and
delivered by all the respective parties thereto and shall be in full force and
effect.
(i) The Borrower shall pay the Legal Fees.
(j) The Purchasers shall accept delivery of and make
payment for the Securities.
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ARTICLE VI
AFFIRMATIVE COVENANTS
Unless the Majority Holders' prior written consent to the contrary is
obtained, the Borrower will, for the benefit of each of the Purchasers, at all
times comply with the covenants contained in this Article VI (or cause each
Subsidiary's compliance with the applicable covenants), from the date hereof
and, with the exception of the covenant in Section 6.07 which shall survive for
as long as either ECT or JEDI-II or their respective Affiliates are Beneficial
Owners of Conversion Shares in excess of 727,273 shares of Common Stock, subject
to equitable adjustment, for so long as any part of the principal under the
Notes is outstanding.
Section 6.01 Financial Statements and Reports. The Borrower shall
deliver, or shall cause to be delivered, to the Purchasers with sufficient
copies for each of the Purchasers:
(a) Annual Financial Statements. As soon as available and in
any event within 90 days after the end of each fiscal year of the Borrower, the
audited consolidated statements of income, stockholder's equity, changes in
financial position and cash flow of the Borrower and its Consolidated
Subsidiaries for such fiscal year, and the related consolidated balance sheets
of the Borrower and its Consolidated Subsidiaries as at the end of such fiscal
year, and setting forth in each case in comparative form the corresponding
figures for the preceding fiscal year, and accompanied by the related opinion of
independent public accountants of recognized national standing acceptable to the
Senior Agent (or in the absence of a Senior Loan, the Purchasers) which opinion
shall state that said financial statements fairly present the consolidated
financial condition and results of operations of the Borrower and its
Consolidated Subsidiaries as at the end of, and for, such fiscal year and that
such financial statements have been prepared in accordance with GAAP except for
such changes in such principles with which the independent public accountants
shall have concurred and such opinion shall not contain a "going concern" or
like qualification or exception. The provisions of this Section 6.01(a) shall be
deemed satisfied as long as the Borrower timely files financial statements in
accordance with, and meeting the requirements of, the Exchange Act, without
extension.
(b) Quarterly Financial Statements. As soon as available and
in any event within 45 days after the end of each of the first three fiscal
quarterly periods of each fiscal year of the Borrower, consolidated statements
of income, stockholder's equity, changes in financial position and cash flow of
the Borrower and its Consolidated Subsidiaries for such period and for the
period from the beginning of the respective fiscal year to the end of such
period, and the related consolidated balance sheets as of the end of the prior
fiscal year and at the end of such period, accompanied by the certificate of a
Responsible Officer, which certificate shall state that said financial
statements fairly present the consolidated financial condition and results of
operations of the Borrower and its Consolidated Subsidiaries in accordance with
GAAP, as at the end of, and for, such period (subject to normal year-end audit
adjustments). The provisions of this Section 6.01(b) shall be deemed satisfied
as long as the Borrower timely files financial statements in accordance with,
and meeting the requirements of, the Exchange Act, without extension.
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(c) Notice of Default. Promptly after the Borrower knows that
any Default or any Material Adverse Effect has occurred, a notice of such
Default or Material Adverse Effect, describing the same in reasonable detail and
the action the Borrower proposes to take with respect thereto.
(d) SEC Filings, Etc. Promptly upon its becoming available,
each financial statement, report, notice or proxy statement sent by the Borrower
to stockholders generally and each regular or periodic report and any
registration statement or prospectus in respect thereof filed by the Borrower
with any securities exchange or the Commission or any successor agency. The
requirements of this Section 6.01(d) shall deemed to be satisfied as to those
documents which are filed with the Commission, available generally to the public
and not distributed to the stockholders upon the timely filing of such documents
with the Commission.
(e) Other Matters. Subject to any applicable restrictions on
disclosure, from time to time such other information regarding the business,
affairs or financial condition of the Borrower (including, without limitation,
any Plan or Multiemployer Plan and any reports or other information required to
be filed under ERISA) as any Purchaser or the Purchasers may reasonably request;
provided, however, that the Borrower shall not be obligated pursuant to this
Section 6.01 to provide access to any information which it reasonably considers
to be a trade secret or similar confidential information.
Section 6.02 Maintenance, Etc. The Borrower shall and shall cause each
Subsidiary to: upon reasonable notice, permit representatives of the Purchasers,
during normal business hours, to examine, copy and make extracts from its
financial books and records, to inspect its Properties, and to discuss its
business and affairs with its officers, all to the extent reasonably required by
the Purchasers; provided, however, that the Borrower shall not be obligated
pursuant to this Section 6.02 to provide access to any information which it
reasonably considers to be a trade secret or similar confidential information;
preserve and maintain its corporate existence and all of its material attendant
rights, privileges and franchises, keep appropriate books of record and account
in relation to its business and activities; comply with all Governmental
Requirements, including, without limitation, any Environmental Laws, except
where the failure to comply would not reasonably be expected to have a Material
Adverse Effect; pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of its
Property, except for any such tax, assessment, charge or levy the payment of
which is being contested in good faith and by proper proceedings and against
which adequate reserves are being maintained.
Section 6.03 Further Assurances. The Borrower will cure promptly any
defects in the creation and issuance of the Notes and the execution and delivery
of the Basic Documents. The Borrower at its expense will promptly execute and
deliver to the Purchasers, upon request, all such other documents, agreements
and instruments to correct any omissions in the Basic Documents or to make any
recordings, to file any notices or obtain any consents, all as may reasonably be
necessary or appropriate in connection therewith.
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Section 6.04 Performance of Obligations. The Borrower will pay the
Notes according to the reading, tenor and effect thereof; and the Borrower will
do and perform every act and discharge all of the obligations to be performed
and discharged by them under the Basic Documents, at the time and times and in
the manner specified.
Section 6.05 Shares. Borrower shall at all times during the term of the
Notes maintain a sufficient number of shares of Common Stock of the Borrower to
be issued as Conversion Shares upon the exercise of all or part of the Notes.
The Borrower shall take such action as may be reasonably required to promptly
cause the Conversion Shares to be approved for listing on the NYSE, but in any
event, no later than ninety (90) days after the Closing Date.
Section 6.06 Hart-Scott-Rodino Compliance. As soon as practicable after
the receipt from either or both of the Purchasers (the "Notice Giver") of notice
of the conversion of the Notes as provided in Section 2.05, which conversion
would require a filing under the Hart-Scott-Rodino Antitrust Improvements Act of
1976 and the rules, regulations and formal interpretations thereunder, as
amended from time to time (the "HSR Act"), but in any event no later than the
15th Business Day after receipt of such notice, the Borrower will (i) prepare
and file with the Antitrust Division of the Department of Justice (the "DOJ")
and the Federal Trade Commission (the "FTC") the Notification and Report Form
(accompanied by all documentary attachments contemplated thereby) required by
the HSR Act, (ii) upon the request of the Purchasers (the "Notice Giver"),
request early termination of the waiting period imposed by the HSR Act, (iii)
coordinate and cooperate with the Notice Giver in responding to formal and
informal requests for additional information and documentary material from the
DOJ and the FTC in connection with such filing, and (iv) use its best efforts to
take, or cause to be taken, all reasonable action and to do, or cause to be
done, all things reasonably necessary and appropriate to permit the issuance to
the Notice Giver of the shares of common stock issuable upon the conversion of
the Notes with respect to which any filing is required under the HSR Act, and
(v) reimburse Purchasers for the entire amount of any filing fee and any
reasonable other costs and expenses incurred by Purchasers in connection
therewith (including legal fees), or as required to be paid under the HSR Act
and (vi) make payment of any HSR Fees payable by the Borrower or either of the
Purchasers.
Section 6.07 Board Representation. ECT and JEDI-II shall have the right
(a) to designate one member of the Board of Directors of the Borrower or (b) (i)
to designate one person to receive (and Borrower covenants and agrees to deliver
to such individual) prior notice of any proposed board action and to receive
(and Borrower covenants and agrees to deliver to such individual) reasonable
notice of and to attend any meeting of the Borrower's Board of Directors, (ii)
to receive (and Borrower covenants and agrees to deliver to such individual),
promptly after they are produced, subject to any confidentiality obligations,
all management reports and accounts relating to the Borrower that is provided to
the Board of Directors (or any committee thereof), (iii) upon reasonable notice,
to have reasonable access to the books and records, facilities and management of
the Borrower, including statutory books, minute books and customer lists and
(iv) receive copies of each written consent of directors and all related
information circulated to directors of the Borrower, in each case concurrently
with their delivery to the directors (the person so designated shall be the
"Designee"). In the event ECT and JEDI-II elect to designate a person to serve
as member of the
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Board of Directors of the Borrower, the Borrower shall (x) expand as required
the number of directors constituting the entire board, (y) fill the vacancy
created by such expansion with such Designee and (z) submit the name of such
Designee to the stockholders of the Borrower (together with a recommendation of
his or her election) at each meeting of stockholders at which directors are
elected, until requested otherwise by ECT and JEDI-II. To the extent such
Designee is not an employee, officer or director of ECT or any of its
Affiliates, the Borrower shall have the right to approve such Designee, such
approval not to be unreasonably withheld.
Section 6.08 Insurance. Borrower shall maintain such insurance as to
comply with all requirements of law and agreements to which the Borrower or any
subsidiary is a party and otherwise sufficient to adequately insure against such
risks as are usually insured against in the same general area by companies
engaged in the same or similar business for the assets and operations of the
Borrower and each Subsidiary.
ARTICLE VII
NEGATIVE COVENANTS
Unless the Majority Holders' prior written consent to the contrary is
obtained, for the benefit of the Note Holders, the Borrower will at all times
comply with the covenants contained in this Article VII (or cause each
Affiliate's compliance with the applicable covenants), from the date hereof and
for so long as any part of the principal under the Notes is outstanding:
Section 7.01 Debt. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume, guarantee or in any other manner become
directly or indirectly liable (as to new Indebtedness) for the payment of (a)
any Prohibited Subordinated Indebtedness, as hereafter defined, or (b) any other
Indebtedness unless the Borrower's Fixed Charge Coverage Ratio is greater than
or equal to the level permitted by the Senior Credit Agreement, but in no event
shall such ratio be less than 1.15 to 1.0. As used herein, "Prohibited
Subordinated Indebtedness" shall mean any Indebtedness that is either (i) both
subordinated in payment to the Senior Indebtedness in any manner and secured by
a lien on all or any portion of the Properties of the Borrower or any of its
Subsidiaries or (ii) is a general unsecured obligation of the Borrower and is
subordinated to the Senior Indebtedness pursuant to terms and covenants less
restrictive than Section 8.06 of this Agreement.
Section 7.02 Dividends, Distributions and Redemptions. Neither the
Borrower or any Subsidiary will declare or pay any dividend, purchase, redeem or
otherwise acquire for value any of its stock now or hereafter outstanding,
return any capital to its stockholders or make any distribution of its assets to
its partners, except to Borrower or any Subsidiary, other than dividends,
purchases, redemptions or acquisitions payable solely in Borrower's Capital
Stock.
Section 7.03 Nature of Business. Neither the Borrower nor any
Subsidiary will engage in any line of business other than the specialty electric
and telecommunications infrastructure contracting service business, electrical
and telecommunications contracting services, installation of
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transportation, control, lighting and airport fueling equipment and services or
business reasonably related thereto.
Section 7.04 Proceeds of Notes. The Borrower will not permit proceeds
of the Notes to be used for any purpose other than those permitted by Section
3.08. Neither the Borrower nor any Person acting on behalf of the Borrower has
taken or will take any action which might cause any of the Basic Documents to
violate Regulation G, U or X or any other regulation of the Board of Governors
of the Federal Reserve System or to violate Section 7 of the Exchange Act or any
rule or regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect.
Section 7.05 ERISA Compliance. The Borrower will not at any time incur,
or permit any ERISA Affiliate to incur, a liability to or on account of a Plan
which, in the aggregate for all such liabilities, could have a Material Adverse
Effect.
Section 7.06 Transactions with Affiliates. Neither the Borrower nor any
Subsidiary will enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property or the rendering of any service,
with any Affiliate (other than the Purchasers if they are Affiliates of the
Borrower) unless such transactions are otherwise not in violation of this
Agreement, are in the ordinary course of its business and are upon fair and
reasonable terms no less favorable to it than it would obtain in a comparable
arm's length transaction with a Person not an Affiliate or unless such
transaction is approved by a majority of the disinterested members of the Board
of Directors.
Section 7.07 Negative Pledge Agreements. With the exception of
Qualified Foreign Subsidiaries, the Borrower will not and will not permit any
Subsidiary to create, incur, assume or suffer to exist any contract, agreement
or understanding (other than the Basic Documents) which in any way prohibits or
restricts any Subsidiary from paying dividends or making any other distribution
to the Borrower or which requires the consent of a notice to other Persons in
connection with any of the foregoing, other than the Senior Loan Documents, so
long as the Senior Loan Documents permit the payment of dividends and making of
other distributions by the Subsidiaries to the Borrower for the purpose of
paying the Obligations.
ARTICLE VIII
PAYMENT OF THE NOTES
Section 8.01 Repayment. The Borrower shall pay to the Purchasers on the
Maturity Date, an amount equal to the outstanding principal amount of the Notes
plus the accrued and unpaid interest on the outstanding principal amount of the
Notes. Upon conversion of all or any part of a Note pursuant to Section 2.05,
the portion of the principal of the Note converted shall no longer be
outstanding following such conversion.
Section 8.02 Interest.
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(a) Subject to the provisions of Section 8.02(b), the
outstanding principal amount of the Notes shall bear interest at the rate of 6
7/8% per annum (the "Base Rate"). Accrued interest on the Notes shall be due and
payable in cash quarterly on each March 31, June 30, September 30, and
December 31, during the term of the Notes, commencing on December 31, 1998, and
on the Maturity Date or, in the event the maturity of the Notes is accelerated
pursuant to the term hereof, such earlier date as the Notes become due and
payable, or the date the Notes are paid in full, whichever first occurs.
(b) Upon the occurrence of an Event of Default as set forth
in Section 9.01(a) or 9.01(j) hereof, the rate that the Notes shall accrue
interest shall increase by 2% per annum over the Base Rate from the first date
of such Event of Default until such time as the Event of Default is cured. At
such time as the Event of Default is cured, the rate that the Notes accrue
interest shall revert to the Base Rate. If the Event of Default is a failure to
pay interest timely as more fully described in Section 9.01(a), the interest due
(calculated at the rates set forth in this Section 8.02(b)) that is unpaid shall
be deemed an advance of principal under the Notes and, as of the interest
payment date, shall be added to the outstanding principal balance of the Notes
(notwithstanding that the outstanding principal balance may exceed, in the
aggregate, the face amount of the Notes).
(c) Interest shall be computed based on a year of 365/366
days for the actual number of days elapsed commencing on the day immediately
following any advance of principal (or interest paid in kind) through and
including the date of payment of any principal amount.
(d) Notwithstanding anything herein or in the other Basic
Documents to the contrary, it is the intention of the parties hereto to conform
strictly to usury laws applicable to this transaction. Accordingly, if the
transactions contemplated hereby would be usurious under applicable law, then,
in that event, notwithstanding anything to the contrary in the Notes, this
Agreement or in any other Basic Document, it is agreed as follows: (a) the
aggregate of all consideration which constitutes interest under law applicable
to the holders of the Notes that is contracted for, taken, reserved, charged or
received under the Notes, this Agreement or under any of the other Basic
Documents or agreements or otherwise in connection with this transaction shall
under no circumstances exceed the maximum amount allowed by such applicable law,
and any excess shall be canceled automatically and, if already paid, shall be
credited by the Purchasers on the principal amount of the Obligations (or, to
the extent that the principal amount of the Obligations shall have been or would
thereby be paid in full, refunded to the Borrower); and (b) in the event that
the maturity of the Notes is accelerated by reason of an election of the
Purchasers resulting from any Event of Default under this Agreement or
otherwise, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest under law applicable to this transaction
may never include more than the maximum amount allowed by such applicable law,
and (c) excess interest, if any, provided for in this Agreement or otherwise in
connection with the Notes shall be canceled automatically and, if already paid,
shall be credited by the Purchasers on the principal amount of the Obligations
(or, to the extent that the principal amount of the Obligations shall have been
or would thereby be paid in full, refunded by the Purchasers to the Borrower).
The right to accelerate the maturity of the Notes does not include the right to
accelerate any interest which has not otherwise accrued on the date of such
acceleration, and no Purchaser intends to collect any
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unearned interest in the event of acceleration. All sums paid or agreed to be
paid to the Purchasers for the use, forbearance or detention of sums included in
the Obligations shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of the Notes until
payment in full so that the rate or amount of interest on account of the
Obligations does not exceed the applicable usury ceiling, if any. As used in
this Section 8.02(d), the term "applicable law" shall mean the laws which govern
this Agreement as described in Section 11.07 (or the law of any other
jurisdiction whose laws may be mandatorily applicable notwithstanding other
provisions of this Agreement), or law of the United States of America applicable
to the Purchasers and the Notes which would permit the Purchasers to contract
for, charge, take, reserve or receive a greater amount of interest than under
any other applicable law. If the stated rate of interest under this Agreement
ever exceeds the Maximum Rate, then the outstanding principal amount of the
Notes made hereunder shall bear interest at the Maximum Rate until the
difference between the interest which would have been due at the stated rates of
interest and the amount due at the Maximum Rate (the "Lost Interest") has been
recaptured by the Purchasers. If the Notes are repaid in full and the Lost
Interest has not been fully recaptured by the Purchasers pursuant to the
preceding sentence, then the Notes shall be deemed to have accrued interest at
the Maximum Rate since the date the initial advance under the Notes was made to
the extent necessary to recapture the Lost Interest not recaptured pursuant to
the preceding sentence and, to the extent allowed by law, the Borrower shall pay
to the Purchasers the amount of the Lost Interest remaining to be recaptured by
the holders of the Notes.
Section 8.03 Payments and Computations.
(a) All payments and obligations by Borrower under the Notes
or any other Basic Document shall be made to the Purchasers, without any
presentment and without any notation of such payment being made on the Notes (i)
by wire transfer in immediately available funds to such accounts as the
Purchasers may designate from time to time by written notice to the Borrower (as
to each Purchaser, the "Purchaser's Account") or (ii) in such other manner as
may be designated in writing to the Borrower by the Purchaser.
(b) The Borrower shall make each payment under this Agreement
and under the Notes not later than 2:00 p.m. (Houston, Texas time) on the day
when due in U.S. Dollars to the Purchasers at the location specified in
paragraph (a) above in immediately available funds. All payments by the Borrower
hereunder shall be made without any offset, abatement, withholding, or
reduction.
(c) Whenever any payment shall be stated to be due on a day
other than a Business Day, such payment shall be made on the next succeeding
Business Day, and such extension of time shall in such case be included in the
computation of payment of interest. If the time for payment for an amount
payable is not specified in the Basic Documents, or in any other document, the
payment shall be due and payable ten days after the date on which the Purchasers
demand payment therefor.
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(d) All payments and prepayments received shall be applied
first to accrued interest and second to the reduction of principal.
Section 8.04 Mandatory Redemption.
(a) To the extent that the Notes have not been converted as
provided for herein, beginning on June 30, 2006 and on each December 31 and
June 30 thereafter (the "Mandatory Redemption Dates"), the Borrower shall
redeem, at a Redemption Price of one hundred percent (100%) of one-ninth (1/9th)
of the original principal amount (the "1/9 Principal") of each of the Notes, on
each of the Mandatory Redemption Dates until the Maturity Date. In addition to
this 1/9 Principal, the Borrower shall at the time of redemption pay all accrued
and unpaid interest to the date of redemption. If, on the Mandatory Redemption
Dates, monies for the redemption of the principal and the accrued interest of
the Notes required by this Section 8.04(a) shall have been paid to the
Purchasers, then interest on the portion of the Notes redeemed shall cease to
accrue and become payable. The principal amount under the Notes still
outstanding on the Maturity Date shall be redeemed as of such date by the
Borrower at face value plus all accrued and unpaid interest thereon.
(b) Upon the occurrence of a Change of Control, each
Purchaser shall have the right to require that the Borrower redeem all, or at
the election of each Purchaser, that portion of the principal amount outstanding
under the respective Notes. The Borrower shall redeem the Notes at the
Redemption Prices (expressed in dollars to be paid per $100 of unpaid principal
amounts of the Notes to be redeemed) set forth below, plus accrued interest to
the date of redemption:
year 1: $107.00 per $100 of Principal
year 2: $106.13 per $100 of Principal
year 3: $105.25 per $100 of Principal
year 4: $104.38 per $100 of Principal
year 5: $103.50 per $100 of Principal
year 6: $102.63 per $100 of Principal
year 7: $101.75 per $100 of Principal
year 8: $100.88 per $100 of Principal
year 9 and thereafter: $100.00 per $100 of Principal.
The years stated above reflect the time periods beginning on the Closing Date
and ending on each anniversary of the Closing Date. Within three Business Days
following any Change of Control, the Borrower shall send a notice of the
occurrence of such Change of Control by first-class mail, postage prepaid to
each Purchaser. Purchasers may exercise the right to require the Borrower to
redeem their Notes by written notice to the Borrower addressed to its principal
office (a "Redemption Notice") given within 90 days following the date of notice
to such Purchasers of the occurrence of a Change of Control. The Borrower shall
make payment of the Redemption Price specified herein plus accrued interest in
cash no later than 10 days following the date of the Redemption Notice.
Section 8.05 Optional Redemption. At the option of the Borrower, the
Notes shall be redeemable beginning on the fourth anniversary of the Closing
Date (the "Optional Redemption
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Right"). Following such fourth anniversary, the Borrower shall have the right,
at its option, upon not less than sixty (60) days written notice to each
Purchaser (the "Optional Redemption Notice") to redeem all or, at the election
of the Borrower, that portion of the principal amount outstanding under the
respective Notes that Borrower so elects. The Borrower shall redeem the Notes at
the Redemption Prices (expressed in dollars to be paid per $100 of unpaid
principal amounts of the Notes to be redeemed) set forth below, plus accrued
interest to the date of redemption:
year 5: $103.50 per $100 of Principal
year 6: $102.63 per $100 of Principal
year 7: $101.75 per $100 of Principal
year 8: $100.88 per $100 of Principal
year 9 and thereafter: $100.00 per $100 of Principal.
The years stated above reflect time periods beginning on the fourth anniversary
of the Closing Date and ending on each anniversary of the Closing Date
thereafter. After the timely receipt of the Optional Redemption Notice by the
Purchasers, within thirty (30) days (the "Response Period") after receipt of the
Optional Redemption Notice, each Purchaser shall make an election as to a
conversion of the Notes, as such conversion right is more fully set forth in the
Notes. Should any of the Purchasers elect to convert or fail to make an election
prior to the end of the Response Period, the Notes shall not be redeemed but
shall be converted as provided for in the Notes. Should any of the Purchasers
elect to not convert, such Purchasers electing not to convert shall be redeemed
according to the schedule above. The Borrower shall make payment of the
Redemption Price specified herein plus accrued interest in cash no later than 10
days following the end of the Response Period. The Borrower shall have no right
of redemption at any time or pursuant to any procedure except for the Optional
Redemption Right as set forth in this Section 8.05.
Section 8.06 Subordination.
(a) The payment of principal of and interest on the Notes and
any payment on account of the acquisition or redemption of the Notes, including,
without limitation, pursuant to Section 8.04 or 8.05, shall be subordinated and
junior to the prior payment in full of all Senior Indebtedness to the extent and
in the manner provided in this Section 8.06, and each Purchaser agrees to be
bound by the subordination provisions contained herein and that these
subordination provisions are for the benefit of the holders of Senior
Indebtedness. This Section 8.06 shall constitute a continuing offer to all
Persons who become holders of, or continue to hold, Senior Indebtedness, and
such provisions are made for the benefit of the holders of Senior Indebtedness,
and such holders are made obligees hereunder and any one or more of them may
enforce such provisions.
(b) The Borrower shall not pay principal of, premium, if any,
or interest on the Notes or defease or acquire any of the Notes (including,
without limitation, repurchases of the Notes pursuant to Section 8.04 or 8.05)
for cash or property, or on account of the redemption provisions of the Notes or
on account of any fees, indemnities, expenses, or any other obligation owing
under or in respect of this Agreement or the Notes (collectively, the "Note
Payments"), during the period
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(the "Indefinite Blockage Period") beginning on the date that the Borrower and
the Purchasers receive written notice (a "Payment Notice") from the holders of
such Senior Indebtedness of (i) any default in payment (a "Payment Default") of
any principal of, premium, if any, or interest on any Senior Indebtedness or any
fees, indemnities, expenses or any other obligation owing under or in respect of
Senior Indebtedness, or (ii) the acceleration of the Senior Indebtedness in
accordance with its terms, and ending on the earliest of (A) the date that all
Senior Indebtedness is paid in full, (B) the date on which the Senior
Indebtedness to which such Payment Default relates is paid in full or such
Payment Default is cured or waived in writing in accordance with the applicable
Senior Loan Documents, and (C) the date on which the Purchasers receive from the
holders of the Senior Indebtedness or their successors that commenced the
Indefinite Blockage Period written notice that the Indefinite Blockage Period
has been terminated.
(c) If an event of default (as defined in the applicable
Senior Loan Documents) other than a Payment Default with respect to any Senior
Indebtedness (an "Other Default"), has occurred, is continuing and permits the
holders (or any requisite percentage thereof) to declare such Senior
Indebtedness due and payable prior to the date on which it would otherwise have
become due and payable, then during the period (the "Payment Blockage Period")
commencing on the date that the Borrower and the Purchasers receive written
notice of such Other Default (a "Default Notice") and ending on the earliest of
(i) 180 days after such date, (ii) the date on which the Senior Indebtedness to
which such Other Default relates is paid in full or such Other Default is cured
or waived in writing in accordance with the applicable Senior Loan Documents,
and (iii) the date on which the Purchasers receive from the holders of the
Senior Indebtedness or their successors that commenced the Payment Blockage
Period written notice that the Payment Blockage Period has been terminated, no
Note Payments shall be made by or on behalf of the Borrower. Notwithstanding any
other provision of this Agreement, the duration of any such Payment Blockage
Periods shall not, in the aggregate, exceed more than 180 days during any
consecutive 360-day period. Notwithstanding the provisions described in the
immediately proceeding sentence, unless the provisions of paragraph (b) above
prevent the making of Note Payments, the Borrower may resume making Note
Payments at the expiration of the Payment Blockage Period.
(d) The Purchasers each hereby agree to promptly deliver to
the holders of the Senior Indebtedness a copy of any notice of Default or Event
of Default sent to the Borrower. The Purchasers also each hereby agree that,
prior to enforcing any of their default remedies with respect thereto (including
any right to sue the Borrower or to file or participate in the filing of any
involuntary bankruptcy petition against the Borrower) (a "Collection Action"),
such Purchasers will provide prior written notice to the holders of the Senior
Indebtedness of such Purchasers' intention to exercise such Collection Action.
(e) In the event of any bankruptcy, insolvency, receivership,
assignment for the benefit of creditors, reorganization, or arrangement with
creditors of the Borrower, whether or not pursuant to bankruptcy laws, or any
dissolution, liquidation (full or material), or other marshaling of the assets
and liabilities of the Borrower, then all Senior Indebtedness shall be paid in
full in cash before the Purchasers shall be entitled to receive any Note
Payments. To this end, any Note Payments to which the Purchasers would have
been entitled but for the provision of this Section 8.06
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shall be paid or delivered by the Person making such payment directly to the
holders of Senior Indebtedness or their representative ratably according to the
respective amounts of the Senior Indebtedness held or represented by each, to
the extent necessary to make payment in full of all Senior Indebtedness
remaining unpaid, after giving effect to all concurrent payments and
distributions to or for the holders of such Senior Indebtedness.
(f) In the event that, notwithstanding the foregoing
provisions of this Section 8.06, any Note Payments shall be made by or on behalf
of the Borrower and received by any Purchaser at a time when such payment or
distribution was prohibited by the provisions of this Section 8.06, then, unless
such payment or distribution is no longer prohibited by this Section 8.06, such
payment or distribution shall be received and held in trust by such Purchaser
for the benefit of the holders of Senior Indebtedness, and shall be promptly
paid or delivered by such Purchaser to the holders of Senior Indebtedness or
their representative ratably according to the respective amounts of the Senior
Indebtedness held or represented by each, to the extent necessary to enable
payment in full of all Senior Indebtedness remaining unpaid, after giving effect
to all concurrent payments and distributions to or for the holders of such
Senior Indebtedness.
(g) Subject to and after the payment in full of all Senior
Indebtedness, the Purchasers shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments and distributions of cash, property, and
securities applicable to the Senior Indebtedness until the principal, interest,
premium, and other amounts payable on Notes shall be paid in full. No payment or
distribution of any character, whether in cash, securities, or other property to
which the Purchasers would have been entitled except for the provisions of this
Section 8.06 and which has been made to the holders of the Senior Indebtedness
shall, as between the Borrower, its creditors other than the holders of Senior
Indebtedness, and the Purchasers, be deemed to be a payment or distribution by
the Borrower to the holders of the Senior Indebtedness.
(h) The provisions of this Section 8.06 are solely for the
purposes of defining the relative rights of the holders of the Senior
Indebtedness, on the one hand, and the Purchasers, on the other hand. Nothing
herein shall impair, as between the Borrower and the Purchasers, the obligation
of the Borrower to pay to the Purchasers the principal, interest, premium, and
any other amounts due under the Notes when the same shall become due in
accordance with their terms, nor shall anything in this Agreement prevent the
Purchasers from exercising all remedies otherwise permitted by applicable law
upon default under this Agreement, subject, however, to the provisions of this
Section 8.06 and the rights of the holders of the Senior Indebtedness hereunder.
(i) No right of any present or future holders of any Senior
Indebtedness to enforce the subordination provisions contained in this Section
8.06 shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Borrower or any such holder, or by any
noncompliance by the Borrower with the terms of this Agreement, regardless of
any knowledge thereof which any such holder may have or be otherwise charged
with. The holders of Senior Indebtedness may extend, renew, modify, increase or
amend the terms of the Senior Indebtedness or any security therefor and release,
sell or exchange any such security and otherwise
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deal freely with the Borrower, all without affecting the liabilities and
obligations of the parties to this Agreement or the Purchaser under this Section
8.06.
(j) Nothing in this Section 8.06 shall modify or prohibit the
Purchasers from the exercise of its conversion rights or the discharge of the
obligations of the Borrower with respect to conversion of the Notes.
ARTICLE IX
DEFAULT AND REMEDIES
Section 9.01 Events of Default. The occurrence of any of the following
shall be an "Event of Default" for the purposes of this Agreement and the Notes:
(a) the Borrower shall default in the payment or prepayment
when due of any accrued interest; or
(b) the Borrower shall default in the payment of the
principal or the Redemption Price of any of the Notes when the same shall become
due and payable as more fully set forth in Article VIII; or
(c) (i) in the event that the Senior Loan is no longer in
existence, the Borrower shall, as to any related Indebtedness (other than the
Obligations and the Senior Loan) aggregating $2,000,000 in principal or more,
default in the payment when due of any principal of or interest, or any event
specified in any note, agreement, indenture or other document evidencing or
relating to any such Debt shall occur if the effect of such event is to cause,
or (with the giving of any notice or the lapse of time or both) to permit the
holder or holders of such Debt (or a trustee or agent on behalf of such holder
or holders) to cause, such Debt to become due prior to its stated maturity, or
(ii) as to the Senior Loan, there shall have occurred a default thereunder and
the holders of the Senior Loan shall have elected to accelerate the payment of
the Senior Loan (or it shall become accelerated automatically or otherwise be
due and payable in full prior to its stated maturity); or
(d) any representation, warranty or certification made herein
or in any other Basic Document by the Borrower, or any certificate furnished by
the Borrower to any of the Purchasers pursuant to the provisions hereof or any
Basic Document, shall prove to have been false or misleading as of the time made
or furnished in any material and adverse respect and such default shall continue
unremedied for a period of thirty (30) days after notice thereof to the Borrower
by the Purchasers; or
(e) the Borrower shall default in the performance of any of
its obligations under Articles VI and VII or any other Article of this Agreement
or under any other Basic Document to which it is a party (other than the payment
of amounts due which shall be governed by Section 9.01(a) and (b)) and such
default shall continue unremedied for a period of thirty (30) days after notice
thereof to the Borrower by the Purchasers; or
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(f) the Borrower shall admit in writing its inability to, or
be generally unable to, pay its debts as such debts become due; or
(g) the Borrower shall (i) apply for a consent to the
appointment of, or the taking of possession by, a receiver, custodian, trustee
or liquidator of itself or of all or a substantial part of its property, (ii)
make a general assignment for the benefit of its creditors, (iii) commence a
voluntary case under the Federal Bankruptcy Code (as now or hereafter in
effect), (iv) file a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding-up, liquidation or
composition or readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition filed against it in
a involuntary case under the Federal Bankruptcy Code, or (vi) take any corporate
action for the purpose of effecting any of the foregoing, or
(h) a proceeding or case shall be commenced, without the
application or consent of the Borrower, in any court of competent jurisdiction,
seeking (i) its liquidation reorganization, dissolution or winding-up, or the
composition or readjustment of its debt; (ii) the appointment of a trustee,
receiver, custodian, liquidator or the like of the Borrower of all or any
substantial part of its assets, or (iii) similar relief in respect of the
Borrower under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgement or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 60 days; or an order for relief against the Borrower
shall be entered in an involuntary case under the Federal Bankruptcy Code; or
(i) any of the Basic Documents after delivery thereof shall
for any reason, except to the extent permitted by the terms thereof, cease to be
in full force and effect and valid, binding and enforceable in all material
respects in accordance with their terms, or such Default shall continue
unremedied for a period of forty-five (45) days after notice thereof to the
Borrower by the Purchasers; or
(j) the Common Stock of the Borrower shall be Delisted (other
than due solely to a Change of Control where Borrower is not the surviving
entity) from the New York Stock Exchange ("NYSE"); or
(k) in the event that the Senior Loan is no longer in
existence, a judgment or judgments for the payment of money in excess of
$2,000,000 in the aggregate shall be rendered by a court against the Borrower
and the same shall not be discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be procured, within
forty-five (45) days from the date of entry thereof and the Borrower shall not,
within said period of 45 days, or such longer period during which execution of
the same shall have been stayed, appeal therefrom and cause the execution
thereof to be stayed during such appeal.
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Section 9.02 Remedies.
(a) Upon the happening of any Event of Default specified in
Section 9.01 (other than clauses (g) or (h) of Section 9.01, the Majority
Holders may by written notice to the Borrower declare the entire principal
amount of its respective Notes then outstanding, including interest accrued
thereon, to be immediately due and payable without presentment, demand, protest,
notice of protest or dishonor or other notice of default of any kind, all of
which are hereby expressly waived by the Borrower.
(b) Upon the happening of any Event of Default specified in
clauses (g) or (h) of Section 9.01, the entire principal amount of all
Obligations then outstanding, including interest accrued thereon, shall, without
notice or action by the Purchasers be immediately due and payable without
presentment, demand, protest, notice of protest or dishonor or other notice of
default of any kind, all of which are hereby expressly waived by the Borrower.
(c) In addition to the foregoing, upon the happening of any
of the events described in subsections (a) and (b) above, the Purchasers may
exercise any of the rights or remedies provided in the other Basic Documents or
avail itself of any rights or remedies provided by applicable law.
(d) All proceeds received after maturity of the Notes or
following a Mandatory Redemption Date, whether by acceleration or otherwise,
shall be applied first to reimbursement of expenses and indemnities provided for
in the Basic Documents; second to accrued interest on the Notes; third pro rata
to principal outstanding on the Notes and other Obligations; and any excess
shall be paid to the Borrower or as otherwise required by any Governmental
Requirement.
Section 9.03 Set-Off. Upon the occurrence of any Event of Default, any
Purchaser shall have the right to set-off any funds of the Borrower in the
possession of the Purchaser against any Debt then due by the Borrower to the
Purchaser. The Borrower agrees that any Purchaser or a participation in the
Notes may exercise any and all rights of counter-claim, set-off, banker's lien
and other liens with respect to any and all monies owing by the Borrower to such
holder as fully as if such holder of a participation were a holder of a Note in
the amount of such participation.
ARTICLE X
RELATIONSHIP OF THE PARTIES
Section 10.01 Objectives and Purpose. Borrower has the objective of
providing labor and equipment services for construction and maintenance of
transmission and distribution facilities and fiber optic communications systems
for ECT and its Affiliates including Portland General Electric Corp. In
furtherance of this objective, Borrower believes it to be instrumental to
receive the following:
(a) Current and updated forecasts for construction and
maintenance requirements of ECT and its Affiliates;
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(b) Detailed drawings, specifications and instructions for
construction and maintenance requirements of ECT and its Affiliates;
(c) Subject to legal requirements and existing contractual
obligations, special consideration in contract negotiations for the maintenance
of ECT and its Affiliates' transmission systems, distribution systems, and fiber
optic networks;
(d) Timely answers to any of its questions;
(e) Evaluation of "value engineering" proposals;
(f) Areas and projects for improvement and cost reduction
between ECT, its Affiliates and Borrower; and
(g) Evaluations by ECT and its Affiliates of "Value Added"
proposals submitted by Borrower.
ECT acknowledges the foregoing objectives and goals.
ECT and Borrower acknowledge that the purpose of this Article X is to facilitate
communications between ECT and Borrower in furtherance of the design,
construction, maintenance, and timely and cost-effective completion of projects
aimed at ensuring the high quality of the transmission and distribution systems,
and fiber optic communication systems of ECT and its Affiliates.
In addition, ECT and Borrower acknowledge the need to meet from time-to-time to
evaluate each other's performance provided for in this Article X.
Section 10.02 Mutual Access and Cooperation. Borrower desires, and ECT
agrees to use reasonable efforts to provide to Borrower, reasonable access from
time-to-time to representatives of ECT and its Affiliates (i) to discuss
Borrower's service capabilities and goals as outlined above; (ii) to present for
consideration by ECT and its Affiliates proposals and opportunities from
Borrower for the provision of services to ECT and its Affiliates, (iii) for
consultation with Borrower regarding acquisition and investment opportunities
identified by Borrower, (iv) to discuss matters in which ECT has, or may have,
general expertise (which areas of expertise may include, without limitation,
commodity trading, origination, engineering and the financial analysis, modeling
and structuring of proposed transactions) and (v) otherwise to explore and
evaluate ways in which Borrower and ECT might work together to enhance their
respective businesses.
In connection with the foregoing, ECT shall, as appropriate, use reasonable
efforts (i) to arrange meetings from time-to-time between representatives of
Borrower and representatives of ECT or its Affiliates to discuss such matters,
(ii) to provide to Borrower from time-to-time reasonable access to relevant
information of ECT and (iii) to otherwise enhance cooperation and communication
between ECT and its Affiliates on the one hand and Borrower on the other hand to
facilitate access to information and personnel, subject, however, to limitations
imposed by applicable law and
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existing confidentiality obligations as well as internal policies regarding the
maintenance of the confidentiality of proprietary data and other commercially
sensitive information.
Borrower agrees to use reasonable efforts to provide to representatives of ECT
and its Affiliates reasonable access from time to time to representatives of
Borrower and its Affiliates that it controls (i) to pursue the matters
referenced above and (ii) to discuss generally the industry in which Borrower
and such Affiliates are engaged and the objectives of companies in such
industry.
It is the intent of the parties to work cooperatively in connection with the
foregoing towards the goal of mutually beneficial discussions, relations and
transactions.
Section 10.03 Term of This Article. This Article shall run for a term
of two years. Each party hereto may during the existence of the arrangements
between Borrower and ECT engage in or have business relations with competitors
of the other parties and/or their Affiliates which relations are more fully
discussed in Sections 10.09 and 10.10.
Section 10.04 Protection of Employees. From and after the date hereof
until the date one year after which this Article X has been terminated, each
party hereto shall not, and shall cause its respective wholly owned subsidiaries
not to, solicit to employ any of the employees of the other party or its
Affiliates with whom the soliciting party or its Affiliates had contact in
connection with the transactions contemplated hereby; provided, however, that
any such solicitation shall not be a breach of this Section if (i) the personnel
who performed such solicitation have no knowledge of this Article or the
transactions contemplated hereby and (ii) none of the soliciting party's (or any
of its Affiliates') personnel who have knowledge of this Article or the
transactions contemplated hereby have actual knowledge of any such solicitation.
The term "solicit to employ" shall not be deemed to include general
solicitations of employment not specifically directed towards employees of a
party hereto or its Affiliates.
Section 10.05 Confidentiality. In connection with the matters described
in this Agreement, each party may provide to the other certain information that
is confidential, proprietary or otherwise not generally available to the public
(including information provided to the Designee). As a condition to furnishing
such information the parties agree as follows:
(a) Nondisclosure of Confidential Information. From and after
the date hereof, until the date two years after the disclosure of the particular
Confidential Information (as defined below), such Confidential Information shall
be used solely in connection with the matters contemplated by this Agreement
hereof and the recipient of the Confidential Information shall not disclose the
Confidential Information to any person other than those of its directors,
officers, employees, lenders, counsel, representatives and Affiliates, if any
(those such persons who actually receive any confidential information hereunder
being collectively, the "Representatives") who need to know the Confidential
Information. It is understood that (i) the Representatives shall be informed of
the confidential nature of the Confidential Information and the requirement that
it not be used other than for the purposes described herein and (ii) in any
event, the party receiving Confidential Information shall be responsible for any
breach of this Article by any of its Representatives. Each
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party may also disclose the Confidential Information in order to comply with any
applicable law, order, regulation or ruling. The term "person" as used in this
Article shall be broadly interpreted to include, without limitation, any
corporation, company, partnership, individual or other entity.
(b) Definition of "Confidential Information". As used herein,
"Confidential Information" means all information that is furnished under this
Article by a party hereto, and which is confidential, proprietary or otherwise
not generally available to the public. Notwithstanding the foregoing, the
following will not constitute Confidential Information for purposes of this
Article: (i) information that is or becomes generally available to the public
other than as a result of a breach of this Article by the party receiving such
information or its Representatives; (ii) information that, prior to being
furnished pursuant hereto, was already in the files of the party receiving such
information or its Representatives from another source not known to be subject
to any prohibition against transmitting the information; or (iii) information
that becomes available to the party receiving such information or its
Representatives from another source not known to be subject to any prohibition
against transmitting the information.
(c) Return of Information. The written Confidential
Information, except for that portion of the Confidential Information that may be
found in analyses, compilations, studies or other documents prepared by or for
the party receiving the Confidential Information, will be returned promptly upon
any request made during the two year period referred to in Paragraph 10.03
above, and no copies shall be retained by the party receiving the Confidential
Information or its Representatives. That portion of the Confidential Information
that may be found in analyses, compilations, studies or other documents prepared
by or for the party receiving the Confidential Information, oral Confidential
Information and written Confidential Information not so requested or returned
will be held by the party receiving the Confidential Information and kept
subject to the terms of this Article, or destroyed.
Section 10.06 Relationships of the Parties. The purpose of Article X is
to establish the intent of the parties to establish and promote open
communications with the objective of identifying mutually-beneficial business
opportunities. The parties' overall expectation is that a broader working
relationship will develop; however, it is not the intent of this Article or any
future action (not specifically set forth in a definitive agreement) by either
party to require that either party suffer any unreasonable burden or commitment
(including, without limitation, financial, time and human resource burdens and
commitments), or any constraint on its business. Nor is it the intent to create
a right in favor of either party to any specific business opportunity or
opportunities. The parties hereto acknowledge and agree that the terms of this
Article are subject in all respects to the terms and intent of Sections 10.09
and 10.10 hereof.
All activities contemplated hereby shall be performed in a mutually agreeable
manner designed to minimize the disruption of the business and operations of
each party and that of its Affiliates. Except as specifically contemplated in
this Article, the parties shall be unrestricted in the conduct of their
business; any actual commitments shall be set forth in a specific definitive
agreement governing the proposed transaction or commitment.
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The Borrower agrees that no term or provision in this Article X shall modify the
rights or remedies of the Purchasers contained in the other sections of this
Agreement including, without limitation, the right to repayment of principal and
interest under the Notes, the right of Mandatory Redemption, the remedies of the
Purchasers in an Event of Default, and the conversion rights set forth in
Section 2.05 hereof. No default under the terms of this Article X or claim by
either of ECT or the Borrower for any non-performance shall affect such rights
and remedies.
Section 10.07 No Authority to Bind; No Fiduciary Relationship. Neither
party hereto shall have the authority to bind or to purport to bind the other
party hereto. The parties agree that no employment, agency, joint venture,
partnership, advisory or fiduciary relationship shall be deemed to exist or
arise between them with respect to the transactions contemplated by this
Article; any such relationship shall exist only as expressly stated in any
future definitive agreements.
Section 10.08 Publicity. Any press release or other public announcement
regarding or relating to the existence of this Article and its contents shall be
mutually agreed upon by the parties.
Section 10.09 Business Opportunities. Notwithstanding anything to the
contrary of the foregoing, the Borrower recognizes that the Purchasers and their
respective Affiliates, and Designees, (a) have participated and will continue to
participate in venture capital and other direct investments in other Persons and
other similar transactions, (b) may have interests in, participate with, and
maintain seats on the boards of directors of such Persons and (c) may develop
business opportunities for such Persons. The Borrower also recognizes that such
other Persons and Affiliates of the Purchasers may be engaged in the business of
specialty electric and telecommunications infrastructure contracting services in
competition with the Borrower. The Borrower (i) acknowledges and agrees that
neither the Purchasers and their Affiliates nor the Designees shall be
restricted or proscribed by the terms of this Agreement or the relationship
between the Purchasers and the Borrower, or otherwise, from engaging in any of
the foregoing activities, regardless of whether such business activity is in
direct or indirect competition with the business or activities of the Borrower
and its Affiliates, and that neither the Purchasers and their respective
Affiliates nor any Designee has any obligation to offer the Borrower any
business opportunity presented to any of them, unless knowledge of such
opportunity was disclosed to such Purchaser or its Affiliate or to such Designee
solely by the Borrower or its Affiliates and (ii) waives any claim that any
business opportunity pursued by the Purchasers or any of their respective
Affiliates or any of such other Persons constitutes a corporate opportunity of
the Borrower that is or was misappropriated (provided that such waiver shall not
apply to any opportunity, the knowledge of which was disclosed to the Purchaser
or its Affiliate or to such Designee solely by the Borrower or its Affiliates,
or to any breach of the obligation of confidentiality or limitation on the use
of information set forth in this Agreement). Except as provided in this Section
10.09, nothing herein shall alter the duties of any Designee to the Borrower
while such Designee serves as a director of the Borrower. This Section 10.09
shall in no way allow a director to usurp a corporate opportunity solely for his
or her personal benefit without presenting and allowing time to the Borrower to
develop such opportunity. Neither the Borrower nor any of its Affiliates shall
enter into any contract, agreement, arrangement or understanding that by its
terms purports to obligate, restrict or otherwise bind the Purchasers (as
Affiliates of the Borrower or otherwise), including any area of mutual interest,
exclusivity, non-
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<PAGE> 47
competition or other similar agreement. The Borrower recognizes that the
provisions of this Section 10.09 constitute an inducement of the Purchasers to
enter into this Agreement and to purchase the Notes and that in absence of the
provisions contained in this Section 10.9, the Purchasers would not be willing
to make such investment in the Borrower.
Section 10.10 Borrower's Business Opportunities. Notwithstanding
anything to the contrary to the foregoing, the Purchasers recognize that the
Borrower and its Affiliates (a) have performed and will continue to perform
services for Persons that compete with the Purchasers and their respective
Affiliates and (b) may develop business opportunities with such Persons that
directly or indirectly compete with the services offered by Purchasers and their
Affiliates. The Purchasers (i) acknowledge and agree that neither the Borrower
nor its Affiliates shall be restricted or proscribed by the terms of this
Agreement or the relationship between the Purchasers and the Borrower, or
otherwise, from engaging in any of the foregoing activities, regardless of
whether such business activity is in direct or indirect competition with the
business or activities of the Purchasers and their respective Affiliates, and
neither the Borrower nor its Affiliates has any obligation to offer the
Purchasers or their Affiliates any business opportunity presented to any of
them, unless knowledge of such opportunity was disclosed to Borrower or its
Affiliates solely by a Purchaser and (ii) waive any claim that any business
opportunity constitutes a corporate opportunity of such Purchaser that is or was
misappropriated (provided that such waiver shall not apply to any opportunity,
the knowledge of which was disclosed to the Borrower or its Affiliates solely by
the Purchasers or their Affiliates, or to any breach of the obligations of
confidentiality or limitation on the use of information set forth in this
Agreement). Nothing in this Section 10.10 shall modify the obligations of
Borrower set forth in the second to last sentence of Section 10.09.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Interpretation and Survival of Provisions. Article,
Section, Schedule, and Exhibit references are to this Agreement, unless
otherwise specified. All references to instruments, documents, contracts, and
agreements are references to such instruments, documents, contracts, and
agreements as the same may be amended, supplemented, and otherwise modified from
time to time, unless otherwise specified. The word "including" shall mean
"including but not limited to." Whenever the Borrower has an obligation under
the Basic Documents, the expense of complying with that obligation shall be an
expense of the Borrower unless otherwise specified. Whenever any determination,
consent, or approval is to be made or given by the Purchasers or the Majority
Holders, such action shall be in the respective Purchasers' or the Majority
Holders' sole discretion unless otherwise specified in this Agreement. If any
provision in the Basic Documents is held to be illegal, invalid, not binding, or
unenforceable, such provision shall be fully severable and the Basic Documents
shall be construed and enforced as if such illegal, invalid, not binding, or
unenforceable provision had never comprised a part of the Basic Documents, and
the remaining provisions shall remain in full force and effect. The Basic
Documents have been reviewed and negotiated by sophisticated parties with access
to legal counsel and shall not be construed against the drafter. The
representation and warranties for a period of two years, and the covenants made
in this Agreement, the Notes or any other Basic Document shall survive the
closing of the transactions described herein
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<PAGE> 48
and remain operative and in full force and effect regardless of (a) any
investigation made by or on behalf of the Borrower or the Purchasers or (b)
acceptance of any of the Securities and payment therefor and repayment or
repurchase thereof. All indemnification obligations of the Borrower and the
provisions of Section 11.02 shall remain operative and in full force and effect
unless such obligations are expressly terminated in a writing referencing those
individual Sections, regardless of any purported general termination of this
Agreement.
Section 11.02 Costs, Expenses and Taxes.
(a) The Borrower agrees to indemnify the Purchasers, and
their respective officers, directors, employees, representatives, agents,
attorneys, and Affiliates (collectively, "Related Parties") from, hold each of
them harmless against and promptly upon demand pay or reimburse each of them
for, any and all actions, suits, proceedings (including any investigations,
litigation, or inquiries), claims, demands, and causes of action, and, in
connection therewith, all reasonable costs, losses, liabilities, damages, or
expenses of any kind or nature whatsoever, net of any insurance paid to
Purchasers under Borrower's insurance arrangements, (collectively the "Indemnity
Matters") which may be incurred by them or asserted against or involve any of
them as a result of a claim by a Person that is not an Affiliate of the
Purchasers or any Related Parties under (i), (ii), (iii) and (v) (whether or not
any of them is designated a party thereto) as a result of, arising out of, or in
any way related to (i) any actual or proposed use by the Borrower of the
proceeds of any sale of the Securities, (ii) the operations of the business of
the Borrower or any of its Affiliates, (iii) the failure of the Borrower or any
of its Affiliates to comply with any Governmental Requirement, (iv) the breach
of the representations, warranties and covenants of the Borrower contained
herein, provided such claim for indemnification relating to a breach of the
representations and warranties is made prior to the expiration of such
representations and warranties, or (v) any other aspect of this Agreement and
the other Basic Documents, including, without limitation, the reasonable fees
and disbursements of counsel and all other reasonable expenses incurred in
connection with investigating, defending or preparing to defend any such action,
suit, proceeding (including any investigations, litigation, or inquiries), or
claim and INCLUDING ALL INDEMNITY MATTERS ARISING BY REASON OF THE NEGLIGENCE OF
ANY INDEMNITEE (but not Indemnity Matters related solely to the gross negligence
or wilful misconduct of any Indemnitee).
(b) The Borrower agrees to pay and hold the Purchasers
harmless from and against any and all present and future stamp and other similar
taxes with respect to this Agreement and Basic Documents and save the Purchasers
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission to pay such taxes, and will indemnify the Purchasers
for the full amount of taxes paid by the Purchasers (not to include income or
gross receipt tax liability) in respect of payments made or to be made under
this Agreement, any Note, or any other Basic Document and any liability
(including penalties, interest, and expenses) arising therefrom or with respect
thereto, whether or not such taxes were correctly or legally asserted.
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<PAGE> 49
(c) The Borrower agrees to indemnify and hold harmless from
time to time the Purchasers, and their respective Related Parties from and
against any and all losses, claims, cost recovery actions, administrative orders
or proceedings, damages, and liabilities to which the Purchasers and their
respective Related Parties may incur, have asserted against them or involve any
of them pursuant to a claim by a Person that is not an Affiliate of the
Purchasers or any Related Parties (i) under any Environmental Law applicable to
the Borrower, any Subsidiary, or any of their respective Properties, (ii) as a
result of the breach or non-compliance by the Borrower or any Subsidiary with
any Environmental Law applicable to the Borrower or any Subsidiary, or any of
their respective Properties, (iii) due to the ownership by the Borrower or any
Subsidiary of their respective Properties or any activity on any of their
respective Properties, or any past activity on any of their respective
Properties which, though lawful and fully permissible at the time, could result
in present liability under any Environmental Law, (iv) the presence, use,
release, storage, treatment, or disposal of hazardous substances on or at any of
the properties owned or operated by the Borrower or any Subsidiary, or (v) any
other environmental, health, or safety condition in connection with this
Agreement or any other Basic Document, provided, however, no indemnity shall be
afforded under this Section 11.02(c) in respect of any Property for any
occurrence arising solely and directly from the acts or omissions of the
Purchasers during the period after which such Person, its successors or assigns
shall have acquired such Property through foreclosure or deed in lieu of
foreclosure.
(d) Promptly after the Purchaser or other Person indemnified
hereunder (hereinafter, the "Indemnified Party") has received notice or has
knowledge of any claim for indemnification hereunder, or the commencement of any
action or proceeding by a third person, which the Indemnified Party believes in
good faith is an indemnifiable claim under this Agreement, the Indemnified Party
shall give Borrower written notice of such claim or the commencement of such
action or proceeding. Such notice shall state the nature and the basis of such
claim. The Borrower shall have the right to defend and settle, at its own
expense and by its own counsel, any such matter as long as the Borrower pursues
the same diligently and in good faith. If the Borrower undertakes to defend or
settle, it shall promptly notify the Indemnified Party of its intention to do
so, and the Indemnified Party shall cooperate with the Borrower and its counsel
in all commercially reasonable respects in the defense thereof and the
settlement thereof. Such cooperation shall include, but shall not be limited to,
furnishing the Borrower with any books, records and other information reasonably
requested by the Borrower and in the Indemnified Party's possession or control.
Such cooperation of the Indemnified Party shall be at the cost of the Borrower.
After the Borrower has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Borrower diligently pursues such defense, the Borrower shall not be liable
for any additional legal expenses incurred by the Indemnified Party in
connection with any defense or settlement of such asserted liability; provided,
however, that the Indemnified Party shall be entitled (i) at its expense, to
participate in the defense of such asserted liability and the negotiations of
the settlement thereof or (ii) if (a) the Borrower has failed to assume the
defense and employ counsel or (b) if the defendants in any such action include
both the Indemnified Party and the Borrower and counsel to the Indemnified Party
shall have concluded that there may be
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<PAGE> 50
reasonable defenses available to the Indemnified Party that are different from
or additional to those available to the Borrower or if the interests of the
Indemnified Party reasonably may be deemed to conflict with the interests of the
Borrower, then the Indemnified Party shall have the right to select a separate
counsel and to assume such legal defense and otherwise to participate in the
defense of such action, with the expenses and fees of such separate counsel and
other expenses related to such participation to be reimbursed by the Borrower as
incurred, and the Borrower shall not settle any such claim without the consent
of the Indemnified Party unless the settlement thereof imposes no liability or
obligation on, and includes a complete release from liability of, the
Indemnified Party. If the Indemnified Party undertakes such a defense through
counsel of its choice, the Indemnified Party may settle such matter, and the
Borrower shall reimburse the Indemnified Party for the amount paid in such
settlement and any other liabilities or expenses incurred by the Indemnified
Party in connection therewith.
(e) At Closing, Borrower shall pay the Purchasers'
reasonable, invoiced legal fees, professional fees and other transaction costs
incurred in the evaluation and negotiation of the proposed transaction, but in
no event shall Borrower be required to pay any amounts in excess of $50,000 (the
"Legal Fees"). The Borrower shall also pay all filing fees associated with all
filings required under the HSR Act, if applicable, and any other notification or
request for consent, approval or permission that may be required by statute,
regulation or judicial decrees in connection with the proposed transaction (the
"HSR Fees").
(f) The Borrower's obligations under this Section 11.02 shall
survive any termination of this Agreement and the payment of the Obligations.
(g) THE INDEMNIFICATION AND RELEASE PROVISIONS PROVIDED FOR
IN THIS AGREEMENT SHALL BE APPLICABLE WHETHER OR NOT THE LOSSES, COSTS, EXPENSES
AND DAMAGES IN QUESTION AROSE SOLELY OR IN PART FROM (i) THE ACTIVE, PASSIVE OR
CONCURRENT NEGLIGENCE, OR OTHER FAULT OF ANY INDEMNIFIED PARTY OR (ii) ANY
ACTION THAT SUBJECTS THE INDEMNIFIED PARTY TO CLAIMS PREMISED IN WHOLE OR IN
PART IN STRICT LIABILITY. BORROWER AND THE PURCHASERS ACKNOWLEDGE THAT THIS
STATEMENT COMPLIES WITH THE EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.
Section 11.03 No Waiver; Modifications in Writing.
(a) No failure or delay on the part of the Borrower, the
Purchasers in exercising any right, power, or remedy hereunder shall operate as
a waiver thereof, nor shall any single or partial exercise of any such right,
power, or remedy preclude any other or further exercise thereof or the exercise
of any right, power, or remedy. The remedies provided for herein are cumulative
and are not exclusive of any remedies that may be available to the Borrower, the
Purchasers at law or in equity or otherwise.
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<PAGE> 51
(b) Except as otherwise provided herein, no amendment,
waiver, consent, modification, or termination of any provision of this
Agreement, the Notes or any other Basic Document, shall be effective unless
signed by the Borrower and the Purchasers. Any amendment, supplement or
modification of or to any provision of this Agreement or the Notes or any other
Basic Document, any waiver of any provision of this Agreement, the Notes or any
other Basic Document, and any consent to any departure by the Borrower from the
terms of any provision of this Agreement, the Notes or any other Basic Document,
shall be effective only in the specific instance and for the specific purpose
for which made or given. Except where notice is specifically required by this
Agreement, no notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances.
Section 11.04 Binding Effect; Assignment. This Agreement shall be
binding upon the Borrower, the Purchasers, and their respective successors and
permitted assigns. Except as expressly provided in this Agreement, this
Agreement shall not be construed so as to confer any right or benefit upon any
Person other than the parties to this Agreement, and their respective successors
and permitted assigns. All or any portion of the rights and obligations of the
Purchasers under this Agreement with respect to the Basic Documents may be sold,
assigned or pledged by any Purchaser. Upon any assignment of the Basic
Documents, the assignee shall succeed to all of the assignor's rights and
obligations under the Basic Documents to the extent assigned and the Purchaser
shall be automatically released from any such obligations hereunder with respect
to the Basic Documents to the extent assigned, other than the obligations
arising under Article X hereof. The Converted Shares may be sold, assigned or
pledged and upon any assignment complying with the terms of the Registration
Rights Agreement and upon any such assignment the holders of the Converted
Shares shall succeed to the Purchaser's rights and obligations under the
Registration Rights Agreement. Upon request of any Purchaser in connection with
any transfer of the Notes, the Borrower shall execute and deliver any amendment
to this Agreement, the Notes, and the other Basic Documents reasonably requested
by the Purchaser to reflect the transfer and delineate the rights of the
transferor and the transferee provided that the Borrower shall not be liable for
the expenses incurred in documenting such amendment. In the event that a
Purchaser grants participations in its Note to other Persons, each of such other
Persons shall have the rights of setoff against any amounts due by the Borrower
hereunder and similar rights or Liens to the same extent as made available to
the Purchasers. The Borrower acknowledges that the Purchasers may "syndicate"
the loan evidenced by the Notes, and the other Basic Documents and agree to
execute any amendments, restatements and other modifications to the Basic
Documents in connection with such syndication, provided that the Borrower shall
not be liable for the expenses incurred by Purchasers in documenting such
syndication. The Borrower may deem and treat the original Purchasers as the
owner of the Notes for the purpose of receiving payment of principal of and
premium (if any) and interest on the Notes and for all other purposes whatsoever
until the Borrower is notified otherwise in writing pursuant to Section 11.06 of
this Agreement.
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<PAGE> 52
Section 11.05 Replacement Securities. Upon receipt of evidence
satisfactory to the Borrower of the loss, theft, destruction, or mutilation of
the Notes, or Converted Shares and, in the case of any such loss, theft, or
destruction, upon delivery of any indemnity or other obligation reasonably
requested by the Borrower or its transfer agent to the Borrower or, in the case
of any such mutilation, upon surrender or cancellation thereof, the Borrower
will issue a new Note, or Conversion Shares, as applicable.
Section 11.06 Communications. All notices and demands provided for
hereunder shall be in writing and shall be given by registered or certified
mail, return receipt requested, telecopy, air courier guaranteeing overnight
delivery or personal delivery to the following addresses:
If to the Purchasers:
Joint Energy Development Investments II Limited Partnership
c/o Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: Donna Lowry
Telecopier: (713)646-4039
Enron Capital & Trade Resources Corp.
c/o Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: Donna Lowry
Telecopier: (713)646-4039
and
If to the Borrower:
Quanta Services, Inc.
1360 Post Oak Boulevard, Suite 2100
Houston, Texas 77056
Attention: President and General Counsel
Telecopier: (713) 629-7676
or to such other address as the Borrower or any Purchaser may designate in
writing. All other communications may be by regular mail. All notices and
communications shall be deemed to have been duly given: at the time delivered by
hand, if personally delivered; upon actual receipt if sent
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<PAGE> 53
by certified mail, return receipt requested, if mailed; when receipt
acknowledged, if telecopied; and upon actual receipt when delivered to an air
courier guaranteeing overnight delivery.
Section 11.07 Governing Law. This Agreement will be construed in
accordance with and governed by the laws of the State of Texas without regard to
principles of conflicts of laws.
Section 11.08 Arbitration. Any action, dispute, claim or controversy
of any kind between the Borrower and a Purchaser arising out of, or pertaining
to this Agreement or the transactions contemplated hereby (a "Dispute") shall be
resolved by binding arbitration in accordance with the terms hereof. Any party
may, by summary proceedings, bring an action in court to compel arbitration of
any Dispute. Any arbitration shall be administered by the American Arbitration
Association (the "AAA") in accordance with the terms of this Section, the
Commercial Arbitration Rules of the AAA, and, to the maximum extent applicable,
the Federal Arbitration Act. Judgment on any award rendered by an arbitrator may
be entered in any court having jurisdiction. Any arbitration shall be conducted
before a three person panel of arbitrators. Such panel shall consist of one
person designated by the Borrower, one designated by the Purchasers and one
designated by the nominees of the Borrower and the Purchasers (collectively, the
"Arbitrators"). Such arbitrators designated by each of the Borrower and the
Purchasers do not have to be neutral. If either of the Borrower or the
Purchasers fails to designate an arbitrator within ten (10) days after the
filing of the Dispute with the AAA, or either of the Borrowers or the Purchasers
arbitrators fail to designate a third arbitrator within thirty (30) days after
their appointments, the third arbitrator shall be appointed by the AAA. An
arbitration proceeding hereunder shall be conducted in Houston, Texas and shall
be concluded within 180 days of the filing of the Dispute with the AAA. The
Arbitrators shall be empowered to award sanctions and to take such other actions
as they deem necessary, to the same extent a judge could impose sanctions or
take such other actions pursuant to the Federal Rules of Civil Procedure and
applicable law. No award by the Arbitrators shall assess consequential, punitive
or exemplary damages or damages for lost profits but may assess costs and
expenses in a manner deemed equitable. The arbitrator shall make specific
written findings of fact and conclusions of law. The decision of the arbitrator
shall be final and binding on each party. All fees of the Arbitrators and any
engineer, accountant or other consultant engaged by the Arbitrators, shall be
paid by the Borrower and the Purchasers as awarded by the Arbitrators.
Section 11.09 Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which counterparts, when so executed and
delivered, shall be deemed to be an original and all of which counterparts,
taken together, shall constitute but one and the same Agreement.
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<PAGE> 54
IN WITNESS WHEREOF, the parties hereto execute this
Agreement, effective as of the date first above written.
QUANTA SERVICES, INC.,
a Delaware corporation
By: /s/ BRAD EASTMAN
-----------------------------------------
Name: Brad Eastman
---------------------------------------
Title: Vice President and General Counsel
--------------------------------------
JOINT ENERGY DEVELOPMENT
INVESTMENTS II LIMITED PARTNERSHIP,
a Delaware limited partnership, as Purchaser
By: Enron Capital Management II Limited
Partnership, its General Partner
By: Enron Capital II Corp., its
General Partner
By: /s/ ROBERT GREER
----------------------------
Name: Robert Greer
--------------------------
Title: Agent and Attorney-in-Fact
-------------------------
ENRON CAPITAL & TRADE RESOURCES
CORP., a Delaware corporation
By: /s/ ROBERT GREER
-----------------------------------------
Name: Robert Greer
---------------------------------------
Title: Vice President
--------------------------------------
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<PAGE> 1
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made and
entered into as of September 29, 1998 by and among Quanta Services, Inc., a
Delaware corporation (the "Company"), Joint Energy Development Investments II
Limited Partnership, a Delaware limited partnership ("JEDI"), and Enron Capital
& Trade Resources Corp., a Delaware corporation ("ECT").
This Agreement is made pursuant to the Securities Purchase Agreement
(the "Securities Purchase Agreement") dated as of even date herewith, by and
among the Company, ECT and JEDI. In order to induce ECT and JEDI to enter into
the Securities Purchase Agreement, the Company has agreed to provide the
registration and other rights set forth in this Agreement. Pursuant to the
Securities Purchase Agreement, ECT and JEDI will acquire the Convertible
Promissory Notes (the "Notes") which will entitle ECT and JEDI to convert the
Notes into shares of Common Stock, par value $.00001 per share, of the Company.
The execution and delivery of this Agreement shall occur contemporaneously with
the Closing (as defined in the Securities Purchase Agreement).
The parties agree as follows:
ARTICLE I
Section 1.01. Definitions. Capitalized terms used herein without
definition shall have the meanings given to them in the Securities Purchase
Agreement. The terms set forth below are used herein as so defined:
"Commission" has the meaning specified therefor in Section 1.02 of this
Agreement.
"Common Stock" means the common stock, par value $.00001 per share of
the Company.
"Conversion Shares" means the shares of Common Stock issuable on
conversion of the Notes.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Holder" means the record holder of any Registrable Securities.
"Inspector" has the meaning specified therefor in Section 2.03 of this
Agreement.
<PAGE> 2
"Losses" has the meaning specified therefor in Section 2.08 of this
Agreement.
"Person" means any individual, corporation, company, voluntary
association, partnership, joint venture, trust, limited liability company,
unincorporated organization or government or any agency, instrumentality or
political subdivision thereof, or any other form of entity.
"Records" has the meaning specified therefor in Section 2.03 this
Agreement.
"Registrable Securities" means the Conversion Shares and any other
shares of Common Stock acquired by ECT and JEDI pursuant to Section 2.06 of the
Securities Purchase Agreement until such time as such securities cease to be
Registrable Securities pursuant to Section 1.02 hereof.
"Requesting Holder(s)" has the meaning specified therefor in Section
2.01 this Agreement.
"Request Notice" has the meaning specified therefor in Section 2.01
this Agreement.
"Registration Statement" has the meaning specified therefor in Section
2.01 of this Agreement.
"Securities Act" has the meaning specified therefor in Section 1.02
this Agreement.
"Selling Holder" means a Holder who is selling Registrable Securities
pursuant to a Registration Statement (as defined herein).
"Voting Securities" has the meaning specified therefor in Section 2.01
this Agreement.
Section 1.02. Registrable Securities. Any Registrable Security will
cease to be a Registrable Security when (i) a Registration Statement (as defined
in Section 2.01(b)) covering such Registrable Security has been declared
effective by the Securities and Exchange Commission (the "Commission") and such
Registrable Security has been sold or disposed of pursuant to such effective
Registration Statement; (ii) such Registrable Security is disposed of pursuant
to Rule 144 (or any similar provision then in force) under the Securities Act of
1933, as amended (the "Securities Act"); (iii) such Registrable Security is
eligible to be, and at the time of determination can be, disposed of pursuant to
paragraph (k) of Rule 144 (or any similar provision then in force) under the
Securities Act; or (iv) such Registrable Security is held by the Company or one
of its subsidiaries.
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<PAGE> 3
ARTICLE II
Section 2.01. Demand Registration. (a) After the expiration of 180 days
after the Closing Date, any Holder or Holders who collectively Beneficially Own
at least 20% of the Registrable Securities may request (a "Request Notice") the
Company to register under the Securities Act all or any portion of the
Registrable Securities that are held by such Holder or Holders (collectively,
the "Requesting Holder") for sale in the manner specified in the Request Notice.
(b) Promptly following receipt of a Request Notice, the Company shall
notify each Holder (except the Requesting Holder) of the receipt of a Request
Notice and shall use its commercially reasonable efforts to file a registration
statement under the Securities Act (each such registration statement is
hereinafter referred to as a "Registration Statement") effecting the
registration under the Securities Act, for public sale in accordance with the
method of disposition specified in such Request Notice, of the Registrable
Securities specified in the Request Notice (and in any notices that the Company
receives from other Holders no later than the 15th day after receipt of the
notice sent by the Company) (such other Holders and the Requesting Holder are
hereinafter referred to as the "Requesting Holders"). If such method of
disposition shall be an underwritten public offering, the Company may designate
the managing underwriter of such offering, subject to the approval of the
Requesting Holders holding a majority of the Registrable Securities to be
registered, which approval shall not be withheld unreasonably. The Company shall
be obligated to register Registrable Securities pursuant to this Section 2.01 on
two occasions only.
(c) If the Company has received a Request Notice, whether or not a
Registration Statement with respect thereto has been filed or has become
effective, and furnishes to the Requesting Holders a copy of a resolution of the
Board of Directors of the Company certified by the Secretary of the Company
stating that in the good faith judgment of the Board of Directors it would not
be in the best interest of the Company's stockholders for such Registration
Statement (A) to be filed on or before the date such filing would otherwise be
required hereunder, or (B) to become effective because such action (x) would
materially interfere with a significant acquisition, corporate reorganization or
other similar transaction involving the Company, (y) would require premature
disclosure of material information that the Company has a bona fide business
purpose for preserving as confidential, or (z) the Company is unable to comply
with requirements of the Commission, the Company shall have the right, but not
more than once in any calendar year with respect to any Request Notice, to defer
such filing or effectiveness for such period as may be reasonably necessary
(which period shall not, in any event, exceed ninety days from the date the
response period for Holders pursuant to Section 2.01(b) expires).
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<PAGE> 4
(d) The Company shall be entitled to include in any Registration
Statement filed pursuant to this Section 2.01, for sale in accordance with the
method of disposition specified by the Requesting Holder, securities of the
Company entitled to vote generally in the election of directors (or any
securities convertible into or exchangeable for or exercisable for the purchase
of securities so entitled generally to vote in the election of directors)
(collectively, "Voting Securities") to be sold by the Company for its own
account, except as and to the extent that, in the opinion of the managing
underwriter (if such method of disposition shall be an underwritten public
offering), such inclusion would materially jeopardize the successful marketing
of the Registrable Securities to be sold. Any Person other than a Holder (the
"Other Holders") entitled to piggy-back registration rights with respect to a
Registration Statement filed pursuant to this Section 2.01 may include Voting
Securities of the Company with respect to which such rights apply in such
Registration Statement for sale in accordance with the method of disposition
specified by the Requesting Holder, except and to the extent that, in the
opinion of the managing underwriter (if such method of disposition shall be an
underwritten public offering) such inclusion would materially jeopardize the
successful marketing of the Registrable Securities to be sold. Except as
provided in this subsection (d) and in Section 2.05, the Company will not effect
any other registration of its Voting Securities (except with respect to
Registration Statements on Form S-4 or S-8 or any forms succeeding thereto for
purposes permissible under such forms as of the date hereof or filed in
connection with an exchange offer or an offering of securities solely to the
Company's existing stockholders or such other registration statements (i) for
the resale of shares issued pursuant to an employee stock ownership trust or
other benefit plan of a business acquired in an Acquisition or (ii) in
connection with non-underwritten resales of securities issued to owners of a
business acquired in an Acquisition), whether for its own account or that of any
Other Holder, from the date of receipt of a Request Notice requesting the
registration of an underwritten public offering until the completion or
abandonment of the distribution by the underwriters of all securities
thereunder.
From and after the date of this Agreement and until no Registrable
Securities remain outstanding, the Company shall not grant any demand
registration rights to any Person unless such rights are expressly made subject
to the right of Holders to include an equal number of shares of the Registrable
Securities along with the other Person's shares in any registration relating to
an underwritten public offering with respect to which, in the opinion of the
managing underwriter, the inclusion of all shares requested to be registered by
all Persons holding registration rights, would materially jeopardize the
successful marketing of the securities (including the Registrable Securities) to
be sold.
Section 2.02. Piggy-Back Registration. If the Company proposes to
register any Voting Securities under the Securities Act for sale to the public
for cash, whether for its own account or for the account of Other Holders or
both (except with respect to Registration Statements on Forms S-4 or S-8 or any
forms succeeding thereto for purposes permissible under such forms as of the
date
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<PAGE> 5
hereof or filed in connection with an exchange offer or an offering of
securities solely to the Company's existing stockholders), each such time it
will give written notice to all Holders of its intention to do so no less than
20 days prior to the anticipated filing date. Upon the written request of any
Holder received by the Company no later than the 15th day after receipt by such
Holder of the notice sent by the Company, to register, on the same terms and
conditions as the securities otherwise being sold pursuant to such registration,
any of its Registrable Securities (which request shall state the intended method
of disposition thereof), the Company will use its commercially reasonable
efforts to cause the Registrable Securities as to which registration shall have
been so requested to be included in the securities to be covered by the
Registration Statement proposed to be filed by the Company, on the same terms
and conditions as any similar securities included therein, all to the extent
requisite to permit the sale or other disposition by each Holder (in accordance
with its written request) of such Registrable Securities so registered;
provided, however, that the Company may at any time, in its sole discretion and
without the consent of any Holder, abandon the proposed offering in which any
Holder had requested to participate. The number of Registrable Securities to be
included in such a registration may be reduced or eliminated if and to the
extent, in the case of an underwritten offering, the managing underwriter shall
render to the Company its opinion that such inclusion would materially
jeopardize the successful marketing of the securities (including the Registrable
Securities) proposed to be sold therein; provided, however, that (a) in the case
of a Registration Statement filed pursuant to the exercise of demand
registration rights of any Other Holders, priority shall be given first to the
Other Holders demanding such registration, then to the Holders, then to the
Company and then to Other Holders (other than the Other Holders demanding such
registration) and (b) in the case of a Registration Statement the filing of
which is initiated by the Company, priority shall be given (A) first to the
Company, then (B) such priority shall be given equally to (x) the Other Holders
(exercising their piggy back registration rights) and (y) the Holders.
From and after the date of this Agreement and until no Registrable
Securities remain outstanding, the Company shall not grant any piggy-back
registration rights to any Person unless such rights are expressly made subject
to the prior right of Holders to include their Registrable Securities on a
pro-rata basis in any registration relating to an underwritten public offering
with respect to which, in the opinion of the managing underwriter, the inclusion
in the offering of all shares requested to be registered by all Persons holding
registration rights would materially jeopardize the successful marketing of the
securities (including the Registrable Securities) to be sold. In the event that
the number of Registrable Securities to be included in a registration is to be
reduced as provided above, within 10 days after receipt by each Holder proposing
to sell Registrable Securities pursuant to the registered offering of the
opinion of such managing underwriter, all such Selling Holders may allocate
among themselves the number of shares of such Registrable Securities which such
opinion states may be distributed without adversely affecting the distribution
of the securities covered by the Registration Statement, and if such Holders are
unable to agree among
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<PAGE> 6
themselves with respect to such allocation, such allocation shall be made in
proportion to the respective numbers of shares specified in their respective
written requests.
Section 2.03. Registration Procedures. If and whenever the Company is
required pursuant to this Agreement to effect the registration of any of the
Registrable Securities under the Securities Act, the Company will, as
expeditiously as possible:
(a) prepare and file as promptly as reasonably possible with the
Commission a Registration Statement, on a form available to the Company, with
respect to such securities (which filing shall be made within 30 days after the
receipt by the Company of a Request Notice) and use its commercially reasonable
efforts to cause such Registration Statement to become and remain effective for
the period of the distribution contemplated thereby (determined pursuant to
subparagraph (g) below);
(b) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective for
the distribution period (determined pursuant to subparagraph (g) below) and as
may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such Registration
Statement;
(c) furnish to each Selling Holder and to each underwriter such number
of copies of the Registration Statement and the prospectus included therein
(including each preliminary prospectus and each document incorporated by
reference therein to the extent then required by the rules and regulations of
the Commission) as such Persons may reasonably request in order to facilitate
the public sale or other disposition of the Registrable Securities covered by
such Registration Statement;
(d) if applicable, use its commercially reasonable efforts to register
or qualify the Registrable Securities covered by such Registration Statement
under the securities or blue sky laws of such jurisdictions as the Selling
Holders or, in the case of an underwritten public offering, the managing
underwriter, shall reasonably request, provided that the Company will not be
required to qualify generally to transact business in any jurisdiction where it
is not then required to so qualify or to take any action which would subject it
to general service of process in any such jurisdiction where it is not then so
subject;
(e) immediately notify each Selling Holder and each underwriter, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus contained in such Registration Statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material fact
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<PAGE> 7
required to be stated therein or necessary to make the statements therein not
misleading in the light of the circumstances then existing and as promptly as
practicable amend or supplement the prospectus or take other appropriate action
so that the prospectus does not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing;
(f) in the case of an underwritten public offering, furnish upon
request, (i) on the date that Registrable Securities are delivered to the
underwriters for sale pursuant to such Registration Statement, an opinion of
counsel for the Company dated as of such date and addressed to the underwriters
and to the Selling Holders, stating that such Registration Statement has become
effective under the Securities Act and that (A) to the best knowledge of such
counsel, no stop order suspending the effectiveness thereof has been issued and
no proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (B) the Registration Statement, the
related prospectus, and each amendment or supplement thereof, comply as to form
in all material respects with the requirements of the Securities Act and the
applicable rules and regulations thereunder of the Commission (except that such
counsel need express no opinion as to the financial statements, or any
expertized schedule, report or information contained or incorporated therein)
and (C) to such other effects as may reasonably be requested by counsel for the
underwriters, and (ii) on the effective date of the Registration Statement and
on the date that Registrable Securities are delivered to the underwriters for
sale pursuant to such Registration Statement, a letter dated such dates from the
independent accountants retained by the Company, addressed to the underwriters
and, if available, to the Selling Holders, stating that they are independent
public accountants within the meaning of the Securities Act and that, in the
opinion of such accountants, the financial statements of the Company and the
schedules thereto that are included or incorporated by reference in the
Registration Statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
requirements of the Securities Act and the published rules and regulations
thereunder, and such letter shall additionally address such other financial
matters (including information as to the period ending no more than five
business days prior to the date of such letter) included in the Registration
Statement in respect of which such letter is being given as the underwriters may
reasonably request;
(g) make available for inspection by one representative of the Selling
Holders, designated by a majority thereof, any underwriter participating in any
distribution pursuant to such Registration Statement, and any attorney,
accountant or other agent retained by such representative of the Selling Holders
or underwriter (the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the "Records"),
and cause the Company's officers, directors and employees to supply all
information reasonably requested by any such Inspector in connection with such
Registration Statement, provided, however, that with respect to any Records that
are confidential, the Inspectors shall take such action as the Company may
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<PAGE> 8
reasonably request in order to maintain the confidentiality of the Records. For
purposes of subsections (a) and (b) above with respect to demand registration
only, the period of distribution of Registrable Securities in a firm commitment
underwritten public offering shall be deemed to extend until the earlier of (a)
the date each underwriter has completed the distribution of all securities
purchased by it or (b) the date ninety (90) days subsequent to the effective
date of such registration statement, and the period of distribution of
Registrable Securities in any other registration shall be deemed to extend until
the earlier of the sale of all Registrable Securities covered thereby or one
year;
(h) use its commercially reasonable efforts to keep effective and
maintain for the period specified in subparagraph (g) a registration,
qualification, approval or listing obtained to cover the Registrable Securities
as may be necessary for the Selling Holders to dispose thereof and shall from
time to time amend or supplement any prospectus used in connection therewith to
the extent necessary in order to comply with applicable law;
(i) use its commercially reasonable efforts to cause the Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities as may be necessary by virtue of the business and operations of
the Company to enable the Selling Holders to consummate the disposition of such
Registrable Securities; and
(j) enter into customary agreements and take such other actions as are
reasonably requested by the Selling Holders or the underwriters, if any, in
order to expedite or facilitate the disposition of such Registrable Securities.
Each Selling Holder, upon receipt of notice from the Company of the
happening of any event of the kind described in subsection (e) of this Section
2.03, shall forthwith discontinue disposition of the Registrable Securities
until such Selling Holder's receipt of the copies of the supplemented or amended
prospectus contemplated by subsection (e) of this Section 2.03 or until it is
advised in writing by the Company that the use of the prospectus may be resumed,
and has received copies of any additional or supplemental filings which are
incorporated by reference in the prospectus, and, if so directed by the Company,
such Selling Holder will, or will request the managing underwriter or
underwriters, if any, to, deliver to the Company (at the Company's expense) all
copies in their possession or control, other than permanent file copies then in
such Selling Holder's possession, of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. If the Company shall
give any such notice, the time periods mentioned in subsection (g) of this
Section 2.03 shall be extended by the number of days during the period from and
including the date of the giving of such notice to and including the date when
each Selling Holder shall have received the copies of the supplemented or
amended prospectus contemplated by subsection (e) of this Section 2.03 hereof or
the notice that they may resume use of the prospectus.
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<PAGE> 9
In connection with each registration hereunder with respect to an
underwritten public offering, the Company and each Selling Holder agrees to
enter into a written agreement with the managing underwriter or underwriters
selected in the manner herein provided in such form and containing such
provisions as are customary in the securities business for such an arrangement
between underwriters and companies of the Company's size and investment stature.
Section 2.04 Cooperation by Selling Holders. The Company shall have no
obligation to include in such registration statement shares of a Selling Holder
who has failed to timely furnish such information which, in the written opinion
of counsel to the Company, is reasonably required in order for the registration
statement to comply with the Securities Act.
Section 2.05 Restrictions on Public Sale by Selling Holders of
Registrable Securities. To the extent not inconsistent with applicable law,
including insurance codes, each Selling Holder of Registrable Securities that is
included in a registration statement which registers Registrable Securities
pursuant to this Agreement agrees not to effect any public sale or distribution
of the issue being registered (or any securities of the Company convertible into
or exchangeable or exercisable for securities of the same type as the issue
being registered) during the 14 days before, and during the 90-day period
beginning on, the effective date of a registration statement filed by the
Company (except as part of such registration), but only if and to the extent
requested in writing (with reasonable prior notice) by the managing underwriter
or underwriters in the case of an underwritten public offering by the Company of
securities of the same type as the Registrable Securities, provided that the
duration of the foregoing restrictions shall be no longer than the duration of
the shortest restriction imposed by the underwriters on the officers or
directors or any other stockholder of the Company; and, provided further that to
the extent the Selling Holders do not participate in the underwritten public
offering, the period of time for which the Company is required to keep any other
registration statement which includes Registrable Securities that is effective
concurrently with the holdback period described above continuously effective
shall be increased by a period equal to such requested holdback period.
Section 2.06. Restrictions on Public Sale by the Company. To the extent
required by an underwriter in an underwritten public offering, the Company
agrees not to effect on its own behalf any public sale or distribution of any
securities similar to those being registered, or any securities convertible into
or exchangeable or exercisable for such securities, during the 14 days before,
and during the 90-day period beginning on, the effective date of any
registration statement in which the Selling Holders of Registrable Securities
are participating except pursuant to such registration statement or a
registration statement on Form S-8 or Form S-4 or such other registration
statements for (i) the resale of shares issued pursuant to an employee stock
ownership trust or other benefit plan of a business acquired in an Acquisition
or (ii) in connection with non-underwritten commitments
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<PAGE> 10
to register the resale of securities issued to owners of a business acquired in
an Acquisition. This section applies to demand registration rights only.
Section 2.07. Expenses.
(a) "Registration Expenses" means all expenses incident to the
Company's performance under or compliance with this Agreement, including without
limitation, all registration and filing fees, blue sky fees and expenses,
printing expenses, listing fees, fees and disbursements of counsel and
independent public accountants for the Company, fees of the National Association
of Securities Dealers, Inc., transfer taxes, fees of transfer agents and
registrars, costs of insurance and reasonable out-of-pocket expenses, ,
including, without limitation all reasonable expenses incurred directly by the
Selling Holders for one legal counsel, but excluding any Selling Expenses.
"Selling Expenses" means all underwriting fees, discounts and selling
commissions allocable to the sale of the Registrable Securities.
(b) The Company will pay all Registration Expenses in
connection with each Registration Statement filed pursuant to this Agreement,
whether or not the Registration Statement becomes effective, and the Selling
Holders shall pay all Selling Expenses in connection with any Registrable
Securities registered pursuant to this Agreement.
Section 2.08. Indemnification. (a) In the event of a registration of
any Registrable Securities under the Securities Act pursuant to this Agreement,
the Company will indemnify and hold harmless each Selling Holder thereunder and
each underwriter, pursuant to the applicable underwriting agreement with such
underwriter, of Registrable Securities thereunder and each Person, if any, who
controls such Selling Holder or underwriter within the meaning of the Securities
Act and the Exchange Act, against any losses, claims, damages or liabilities
(including reasonable attorneys' fees) ("Losses"), joint or several, to which
such Selling Holder or underwriter or controlling Person may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such Losses,
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement under which such Registrable Securities were registered
under the Securities Act pursuant to this Agreement, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereof,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each such Selling Holder,
each such underwriter and each such controlling Person for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such Loss or actions; provided, however, that the Company will not
be liable in any such case if and to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in conformity
with information
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<PAGE> 11
furnished by such Selling Holder, such underwriter or such controlling Person in
writing specifically for use in such Registration Statement or prospectus.
(b) Each Selling Holder agrees to indemnify and hold harmless
the Company, its directors, officers, employees and agents and each Person, if
any, who controls the Company within the meaning of the Securities Act or of the
Exchange Act to the same extent as the foregoing indemnity from the Company to
such Selling Holder, but only with respect to information regarding such Selling
Holder furnished in writing by or on behalf of such Selling Holder expressly for
inclusion in any Registration Statement or prospectus relating to the
Registrable Securities, or any amendment or supplement thereto; provided,
however, that the liability of such Selling Holder shall not be greater in
amount than the dollar amount of the proceeds (net of any Selling Expenses)
received by such Selling Holder from the sale of the Registrable Securities
giving rise to such indemnification.
(c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to any indemnified party other than under this Section 2.08. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel reasonably satisfactory to such
indemnified party and, after notice from the indemnifying party to such
indemnified party of its election so to assume and undertake the defense
thereof, the indemnifying party shall not be liable to such indemnified party
under this Section 2.08 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected; provided,
however, that, (i) if the indemnifying party has failed to assume the defense
and employ counsel or (ii) if the defendants in any such action include both the
indemnified party and the indemnifying party and counsel to the indemnified
party shall have concluded that there may be reasonable defenses available to
the indemnified party that are different from or additional to those available
to the indemnifying party or if the interests of the indemnified party
reasonably may be deemed to conflict with the interests of the indemnifying
party, then the indemnified party shall have the right to select a separate
counsel and to assume such legal defense and otherwise to participate in the
defense of such action, with the reasonable expenses and fees of such separate
counsel and other reasonable expenses related to such participation to be
reimbursed by the indemnifying party as incurred.
(d) If the indemnification provided for in this Section 2.08
is unavailable to the Company or the Selling Holders or is insufficient to hold
them harmless in respect of any Losses,
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<PAGE> 12
then each such indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such Losses as between the Company on the one hand and each
Selling Holder on the other, in such proportion as is appropriate to reflect the
relative fault of the Company on the one hand and of each Selling Holder on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company on the one hand and each
Selling Holder on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statements of a material fact or
the omission or alleged omission to state a material fact has been made by, or
relates to, information supplied by such party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who is not guilty of such fraudulent
misrepresentation.
ARTICLE III
Section 3.01. Dispute Resolution. Any action, dispute, claim or
controversy of any kind now existing or hereafter arising between the Company
and a Holder arising out of, pertaining to this Agreement or the transactions
contemplated hereby (a "Dispute") shall be resolved by binding arbitration in
accordance with the terms hereof. Any party may, by summary proceedings, bring
an action in court to compel arbitration of any Dispute. Any arbitration shall
be administered by the American Arbitration Association (the "AAA") in
accordance with the terms of this Section, the Commercial Arbitration Rules of
the AAA, and, to the maximum extent applicable, the Federal Arbitration Act.
Judgment on any award rendered by an arbitrator may be entered in any court
having jurisdiction. Any arbitration shall be conducted before a panel of three
arbitrators. Such panel shall consist of one person designated by the Company,
one designated by the Holder(s) and one designated by their designees. The
arbitrators designated by the parties are not required to be neutral. If a party
fails to designate an arbitrator within 10 days after the filing of the Dispute
with the AAA, or the parties, arbitrators fail to designate a third arbitrator
within 30 days after the later of their appointments, such arbitrator shall be
appointed by the AAA. An arbitration proceeding hereunder shall be concluded
within 180 days of the filing of the Dispute with the AAA. Arbitration
proceedings shall be conducted in Houston, Texas. Arbitrators shall be empowered
to award sanctions and to take such other actions as they deem necessary, to the
same extent a judge could impose sanctions or take such other actions pursuant
to the Federal Rules of Civil Procedure and applicable law. No award by the
arbitrators shall assess consequential, punitive or exemplary damages but may
assess costs and expenses in a manner deemed equitable. The arbitrators shall
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<PAGE> 13
make specific written findings of fact and conclusions of law. The decision of
the arbitrators shall be final and binding on each party.
Section 3.02. Communications. All notices and other communications
provided for or permitted hereunder shall be made in writing by telecopy,
courier service or personal delivery:
(a) if to a Holder of Registrable Securities, at the most
current address given by such Holder to the Company in accordance with the
provisions of this Section 3.02, which address initially is, with respect to
JEDI or ECT, the address set forth in the Securities Purchase Agreement, and
(b) if to the Company, initially at its address set forth in
the Securities Purchase Agreement and thereafter at such other address, notice
of which is given in accordance with the provisions of this Section 3.02.
All such notices and communications shall be deemed to have
been received at the time delivered by hand, if personally delivered; when
receipt acknowledged, if telecopied; and when actually received if delivered to
an air courier guaranteeing overnight delivery.
Section 3.03. Successor and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including subsequent holders of Registrable Securities as set forth in
Section 3.12.
Section 3.04. Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which counterparts, when so executed and delivered, shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
but one and the same Agreement.
Section 3.05. Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
Section 3.06. Governing Law. The laws of the State of Texas shall
govern this Agreement without regard to principles of conflict of laws.
Section 3.07. Severability of Provisions. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof or
affecting or impairing the validity or enforceability of such provision in any
other jurisdiction.
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<PAGE> 14
Section 3.08. Entire Agreement. This Agreement, together with the
Securities Purchase Agreement and the other Basic Documents (as defined in the
Securities Purchase Agreement) are intended by the parties as a final expression
of their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the securities
sold pursuant to the Securities Purchase Agreement. This Agreement, the
Securities Purchase Agreement and the other Basic Documents, supersede all prior
agreements and understandings between the parties with respect to such subject
matter.
Section 3.09. Attorneys' Fees. In any action or proceeding brought to
enforce any provision of this Agreement, the successful party shall be entitled
to recover reasonable attorneys' fees in addition to its costs and expenses and
any other available remedy.
Section 3.10. Amendment. This Agreement may be amended only by means of
a written amendment signed by the Company and by the Holders of a majority of
the Registrable Securities.
Section 3.11. Registrable Securities Held by the Company or Its
Affiliates. In determining whether the Holders of the required amount of
Registrable Securities have concurred in any direction, amendment, supplement,
waiver or consent, Registrable Securities owned by the Company or one of its
Affiliates shall be disregarded.
Section 3.12. Assignment of Rights. The rights of any Holder under this
Agreement may be assigned to any Person who acquires at least 10,000 shares of
Registrable Securities, which such number of shares shall be subject to
equitable adjustment for stock splits, stock dividends paid in shares of Common
Stock, or combinations of outstanding shares of Common Stock into a smaller
number of shares. Any assignment of registration rights pursuant to this Section
3.12 shall be effective only upon receipt by the Company of written notice from
such assigning Holder stating the name and address of any assignee. The rights
of an assignee under this Section 3.12 shall be the same rights granted to the
assigning Holder under this Agreement. In connection with any such assignment,
the term "Holder" as used herein shall, where appropriate to assign the rights
and obligations of the assigning Holder hereunder to such assignee, be deemed to
refer to the assignee.
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IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
QUANTA SERVICES, INC.
By: /s/ BRAD EASTMAN
-----------------------------------
Name: Brad Eastman
---------------------------------
Title: Vice President and General
Counsel
--------------------------------
JOINT ENERGY DEVELOPMENT
INVESTMENTS II LIMITED PARTNERSHIP
By Enron Capital Management II Limited
Partnership, its General Partner
By Enron Capital II Corp., its General Partner
By: /s/ ROBERT GREER
-----------------------------------
Name: Robert Greer
---------------------------------
Title: Agent and Attorney-in-Fact
--------------------------------
ENRON CAPITAL & TRADE RESOURCES CORP.
By: /s/ ROBERT GREER
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Name: Robert Greer
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Title: Vice President
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CONVERTIBLE PROMISSORY NOTE
THIS CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF CAPITAL STOCK ISSUABLE UPON
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND MAY NOT BE
SOLD, PLEDGED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR IN RELIANCE ON AN AVAILABLE EXEMPTION
FROM THE REGISTRATION PROVISIONS OF THE ACT AND ANY APPLICABLE STATE SECURITIES
OR BLUE SKY LAWS.
THIS NOTE IS SUBJECT TO CERTAIN SUBORDINATION AGREEMENTS AND PROVISIONS SET
FORTH IN THE PURCHASE AGREEMENT (AS DEFINED BELOW). NOTWITHSTANDING ANY
STATEMENT TO THE CONTRARY CONTAINED IN THIS INSTRUMENT, NO PAYMENT ON ACCOUNT OF
THE OBLIGATIONS HEREUNDER, WHETHER OF PRINCIPAL, INTEREST OR OTHERWISE, SHALL BE
MADE, PAID, RECEIVED OR ACCEPTED EXCEPT IN ACCORDANCE WITH THE EXPRESS TERMS OF
SUCH SUBORDINATION AGREEMENTS AND PROVISIONS.
U.S. $12,337,500 Houston, Texas October 5, 1998
QUANTA SERVICES, INC., a Delaware corporation (the "Borrower"), for
value received, hereby promises to pay to the order of ENRON CAPITAL & TRADE
RESOURCES CORP., a Delaware corporation (the "Purchaser"), the principal sum of
TWELVE MILLION THREE HUNDRED THIRTY-SEVEN THOUSAND FIVE HUNDRED AND NO/100
UNITED STATES DOLLARS (U.S. $12,337,500), interest on the unpaid balance of such
principal amount and premium on such principal amount in accordance with the
Securities Purchase Agreement referenced below (this "Note").
1. Securities Purchase Agreement.
This Note is the Borrower's Convertible Promissory Note to be issued
pursuant to the Securities Purchase Agreement dated as of September 29, 1998
among Borrower, Purchaser and Joint Energy Development Investments II Limited
Partnership (the "Purchase Agreement"). Capitalized Terms used herein but not
defined herein shall have the meanings given such terms in the Purchase
Agreement.
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2. Principal, Interest and Payments Generally.
Principal shall be advanced on even date herewith. Unless the
outstanding principal amount of this Note has been redeemed as provided in
Section 3 below or converted pursuant to Section 5 below, the Borrower shall pay
to the Purchaser the outstanding principal amount of this Note and all accrued
but unpaid interest on the Maturity Date. Except as set forth in Section 8.05 of
the Purchase Agreement, the Borrower shall not prepay the principal.
Interest shall accrue thereon as set forth in the Purchase Agreement.
Interest shall be payable quarterly as more fully set forth in the Purchase
Agreement.
3. Redemption.
The principal due to the Purchaser hereunder shall be subject to
Mandatory Redemption and Optional Redemption as more fully set forth in,
respectively, Sections 8.04 and 8.05 of the Purchase Agreement.
4. Default and Remedies.
It shall be an "Event of Default" under this Note to the extent the
Purchase Agreement so provides. During the continuation of an Event of Default,
the Purchaser may exercise, subject to the limitations set forth in the Purchase
Agreement, all of its rights under the Purchase Agreement and all other rights
at law or in equity. During the continuation of an Event of Default, the
Purchaser may exercise the conversion feature of this Note as set forth below.
During the continuation of an Event of Default, all payments received
in respect of obligations under this Note shall be applied in the order set
forth in the Purchase Agreement. No right, power, or remedy conferred to the
Purchaser in this Note or in any documents supporting this Note or now or
hereafter existing at law, in equity, by statute, or otherwise shall be
exclusive, and each such right, power, or remedy shall to the full extent
permitted by law be cumulative and in addition to every other such right, power
or remedy. No course of dealing and no delay in exercising any right, power, or
remedy conferred to the Purchaser shall operate as a waiver of or otherwise
prejudice any such right, power, or remedy. No notice to or demand upon the
Borrower shall entitle the Borrower to similar notices or demands in the future.
Without limiting the generality of this paragraph, no description of the right
to accelerate this Note, charge default interest under this Note, or otherwise
exercise remedies under this Note shall limit the right of the Purchaser to take
such actions with respect to this Note under the Purchase Agreement.
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5. Conversion.
5.1 Certain Definitions. As used in this Section 5, the following
terms shall have the following meanings:
"Closing Price" means on any particular date (a) the last sale price
per share of the Common Stock on such date on the principal stock exchange on
which the Common Stock has been listed or, if there is no such price on such
date, then the last sale price on such exchange on the date nearest preceding
such date, or (b) if the Common Stock is not listed on any stock exchange, the
final bid price for a share of Common Stock in the over-the-counter market, as
reported by the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") at the close of business on such date, or the last sales price
if such price is reported and final bid prices are not available, or (c) if the
Common Stock is not quoted on the NASDAQ, the bid price for a share of Common
Stock in the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding to its
functions of reporting prices), or (d) if the Common Stock is no longer publicly
traded, as determined by an investment banking firm selected in good faith by
the Board of Directors of the Borrower, provided, that none of the transactions
related to the foregoing shall include purchases by any "affiliate" (as such
term is defined in the General Rules and Regulations under the Securities Act of
1933) of the Borrower.
"Common Stock" means the Borrower's Common Stock, $.00001 par value
("Common Stock").
"Conversion Price" means U.S. $13.75, subject to adjustment as provided
in this Section 5.
5.2 Conversion Right and Conversion Price. At any time the
Purchaser may convert all, or at the election of Purchaser, any part, of the
outstanding principal amount of this Note into that number of fully paid and
non-assessable shares of Common Stock obtained by dividing the outstanding
principal amount of this Note to be so converted by the Conversion Price. The
Conversion Price is subject to adjustment in certain instances, as hereinafter
provided. This Note may be converted by surrender of this Note to the Borrower
at its principal office, accompanied by a duly executed notice of conversion and
a written instrument or instruments of transfer duly executed by the Purchaser
or the Purchaser's attorney-in-fact duly authorized in writing. Upon conversion
of this Note, the Purchaser shall be entitled to receive, in addition to the
number of shares of Common Stock issuable
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upon such conversion, all interest accrued to the date of conversion of this
Note. All such interest shall be payable in cash.
5.3 Issuance of Common Stock on Conversion. As promptly as practicable
after the surrender of this Note for conversion, the Borrower shall deliver or
cause to be delivered to the Purchaser certificates representing the number of
fully paid and nonassessable shares of Common Stock into which this Note may be
converted in accordance with the provisions of this Section 5. Such conversion
shall be deemed to have been made at the close of business on the date that this
Note shall have been surrendered for conversion so that the rights of the
Purchaser shall cease at such time and, subject to the following provisions of
this Section 5.3, the Purchaser shall be treated for all purposes as having
become the record holder of such Common Stock at such time and such conversion
shall be at the Conversion Price in effect at such time; provided, however, that
no such surrender on any date when the stock transfer books of the Borrower
shall be closed shall be effective to constitute the Purchaser as the record
holder of such Common Stock on such date, but such surrender shall be effective
to constitute the Purchaser as the record holder for all purposes at the close
of business on the next succeeding day on which such stock transfer books are
open; and, in that event such conversion shall be at the Conversion Price in
effect on the date that this Note shall have been surrendered for conversion, as
if the stock transfer books of the Borrower had not been closed. If the last day
for the exercise of the conversion right shall not be a Business Day, then such
conversion right may be exercised on the next succeeding Business Day. In case
this Note is called for Optional Redemption as provided for in Section 8.05 of
the Purchase Agreement, the right to convert this Note shall cease and terminate
at the close of business at the expiration of the Response Period, as such term
is defined in Section 8.05.
No fractional shares of Common Stock shall be issued upon conversion of
this Note. Instead of any fractional shares of Common Stock which would
otherwise be issuable upon conversion of this Note, the Borrower shall pay a
cash adjustment in respect of such fraction in an amount equal to such fraction
of a share multiplied by current market price.
5.4 Antidilution Adjustments. The number and kind of securities
issuable upon the conversion of the Note shall be subject to adjustment, without
duplication, from time to time upon the happening of certain events occurring on
or after the date of original issue of the Note as follows:
(i) In case the Borrower shall (A) subdivide its outstanding
Common Stock into a greater number of shares, (B) combine its
outstanding Common Stock into a smaller number of shares, (C) pay a
dividend or make a distribution on its outstanding Common Stock in
shares of its capital stock or (D) issue by
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reclassification of its outstanding Common Stock (whether pursuant to a
merger or consolidation or otherwise) any other shares of capital stock
of the Borrower, the holder of this Note surrendered for conversion
after the record date fixed by the Board of Directors for such
subdivision, combination, dividend, distribution or reclassification
shall be entitled to receive the aggregate number and kind of shares of
capital stock of the Borrower which, if this Note had been converted
immediately prior to such record date at the Conversion Price then in
effect, such holder would have been entitled to receive by virtue of
such subdivision, combination, dividend, distribution or
reclassification; and the Conversion Price shall be deemed to have been
adjusted after such record date to apply to such aggregate number and
kind of shares. Such adjustment shall be made successively whenever any
of the events listed above shall occur.
(ii) In case the Borrower shall pay a dividend or make a
distribution on any class of capital stock of the Borrower in shares of
Common Stock, the Conversion Price in effect immediately prior to the
record date for the determination of stockholders entitled to receive
such dividend or distribution shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding at the close of business
on the day immediately prior to such record date and of which the
denominator shall be the sum of such number of shares and the total
number of shares issued in such dividend or other distribution.
(iii) In case the Borrower shall issue to all holders of
Common Stock rights or warrants entitling them to subscribe for or
purchase Common Stock at a price per share less than the current market
price per share (as determined pursuant to clause (viii) below), the
Conversion Price in effect from and after the record date therefor
shall be reduced so that it shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to such
record date by a fraction, of which the numerator shall be the number
of shares of Common Stock outstanding on such record date plus the
number of shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock so offered for subscription
or purchase would purchase at such current market price and of which
the denominator shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of
Common Stock so offered for subscription or purchase. For the purpose
of this clause (iii), the issuance of rights or warrants to subscribe
for or purchase securities convertible into Common Stock shall be
deemed to be the issuance of rights or warrants to purchase the Common
Stock into which such securities are convertible (without regard to any
antidilution
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provision contained therein for a subsequent adjustment of such number)
at an aggregate offering price equal to the aggregate offering price of
such securities plus the minimum aggregate amount (if any) payable upon
conversion of such securities into Common Stock. Such adjustment shall
be made successively whenever such a record date is fixed. In case such
rights or warrants are not issued after such a record date has been
fixed, the Conversion Price shall be readjusted to the Conversion Price
which would have been in effect if such record date had not been fixed.
(iv) In case the Borrower shall distribute to all holders of
Common Stock (whether pursuant to a merger or consolidation or
otherwise) evidences of its indebtedness or assets (excluding shares of
capital stock of the Borrower and cash dividends out of retained
earnings), or rights to subscribe for Common Stock at a price less than
the then current market price per share (excluding those referred to in
clause (iii) above), then in each such case the Conversion Price in
effect from and after the record date therefor shall be adjusted so
that it shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to such record date by a fraction, of
which the numerator shall be the current market price per share
(determined as provided in clause (viii) below) of the Common Stock on
such record date less the fair market value (as determined by the Board
of Directors, whose determination in good faith shall be conclusive) of
the portion of the evidences of indebtedness or assets so distributed
or of such rights to subscribe applicable to one share of Common Stock
and of which the denominator shall be such current market price per
share of Common Stock. Such adjustment shall be made successively
whenever any such a record date is fixed. In case such distribution is
not made after such a record date has been fixed, the Conversion Price
shall be readjusted to the Conversion Price which would have been in
effect if such record date had not been fixed.
(v) If the Borrower shall issue any additional shares of
Common Stock (otherwise as provided in (i) through (iv) above) at a
price per share less than the current market price per share of Common
Stock but above the Conversion Price, then the Conversion Price shall
be adjusted to the price determined by multiplying the Conversion Price
by a fraction (A) the numerator of which shall be (1) the sum of (x)
the number of shares of Common Stock outstanding immediately prior to
the issuance of such additional shares of Common Stock multiplied by
the current market price and (y) the consideration, if any, received
and deemed received by the Borrower upon the issuance of such
additional shares of Common Stock (2) divided by the total number of
shares of Common Stock outstanding immediately after the
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issuance of such additional shares of Common Stock, and (B) the
denominator of which shall be the current market price.
(vi) If the Borrower shall issue any additional shares of
Common Stock prior to the second anniversary of the issuance of the
Notes (otherwise as provided in (i) through (v) above) at a price per
share less than the Conversion Price per share of Common Stock, then
the Conversion Price shall be adjusted to the price determined by
multiplying the Conversion Price by a fraction (A) the numerator of
which shall be (1) the sum of (x) the number of shares of Common Stock
outstanding immediately prior to the issuance of such additional shares
of Common Stock multiplied by the Conversion Price and (y) the
consideration, if any, received and deemed received by the Borrower
upon the issuance of such additional shares of Common Stock (2) divided
by the total number of shares of Common Stock outstanding immediately
after the issuance of such additional shares of Common Stock, and (B)
the denominator of which shall be the Conversion Price.
(vii) In case the Borrower shall issue any security or
evidence of indebtedness which is convertible into or exchangeable for
Common Stock ("Convertible Security"), or any warrant, option or other
rights to subscribe for or purchase Common Stock or any Convertible
Security (together with Convertible Securities, "Common Stock
Equivalent"), or if, after any such issuance, the price per share for
which such additional shares of Common Stock may be issuable thereunder
is amended, then the Conversion Price upon each such issuance or
amendment shall be adjusted as provided in the preceding paragraph
hereof on the basis that (A) the maximum number of additional shares of
Common Stock issuable pursuant to all such Common Stock Equivalents
(without regard to any antidilution provision contained therein for a
subsequent adjustment of such number) shall be deemed to have been
issued as of the earlier of (x) the date on which the Borrower shall
enter into a firm contract for the issuance of such Common Stock
Equivalent or (y) the date of actual issuance of such Common Stock
Equivalent; and (B) the aggregate consideration for such maximum number
of additional shares of Common Stock shall be deemed to be the minimum
consideration received and receivable by the Borrower for the issuance
of such additional shares of Common Stock pursuant to such Common Stock
Equivalent. No adjustment of the Conversion Price shall be made under
this paragraph upon the issuance of any Convertible Security which is
issued pursuant to the exercise of any warrants or other subscription
or purchase rights therefor, if any adjustments shall previously have
been made in the Conversion Price then in effect upon the issuance of
such warrants or other rights pursuant to subparagraphs (v) and (vi).
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The following provisions shall be applicable to making of
adjustments in the Conversion Price hereinbefore provided in
subparagraphs (iii), (iv), (v) and (vi):
(A) The consideration received by the Borrower shall
be deemed to be the following: to the extent that any
additional shares of Common Stock or any Common Stock
Equivalents shall be issued for cash consideration, the
consideration received by the Borrower therefor, or, if such
additional shares of Common Stock or Common Stock Equivalents
are offered by the Borrower for subscription, the subscription
price, or, if such additional shares of Common Stock or Common
Stock Equivalents are sold to underwriters or dealers for
public offering without a subscription offering, the initial
public offering price, in any such case excluding any amounts
paid or receivable for accrued interest or accrued dividends
and without deduction of any compensation, discounts,
commissions or expenses paid or incurred by the Borrower for
and in the underwriting of, or otherwise in connection with,
the issue thereof; to the extent that such issuance shall be
for a consideration other than cash, then, except as herein
otherwise expressly provided, the fair market value of such
consideration at the time of such issuance as determined in
good faith by the Borrower's Board of Directors. The
consideration for any additional shares of Common Stock
issuable pursuant to any Common Stock Equivalents shall be the
consideration received by the Borrower for issuing such Common
Stock Equivalents, plus the additional consideration payable
to the Borrower upon the exercise conversion or exchange of
such Common Stock Equivalents. In case of the issuance at any
time of any additional shares of Common Stock or Common Stock
Equivalents in payment or satisfaction of any dividend upon
any class of stock other than Common Stock, the Borrower shall
be deemed to have received for such additional shares of
Common Stock or Common Stock Equivalents a consideration equal
to the amount of such dividend so paid or satisfied. In any
case in which the consideration to be received or paid shall
be other than cash, the Board of Directors of the Borrower
shall notify promptly each holder of this Note of its
determination of the fair market value of such consideration.
(B) Upon the expiration of the right to convert,
exchange or exercise any Common Stock Equivalent the issuance
of which effected an adjustment in the Conversion Price, if
any such Common Stock Equivalent shall not have been
converted, exercised or exchanged, the number of shares
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of Common Stock deemed to be issued and outstanding by reason
of the fact that they were issuable upon conversion, exchange
or exercise of any such Common Stock Equivalent shall no
longer be computed as set forth above, and the Conversion
Price shall forthwith be readjusted and thereafter be the
price which it would have been (but reflecting any other
adjustments in the Conversion Price made pursuant to the
provisions of subparagraphs (d)(v) and (d)(vi) after the
issuance of such Common Stock Equivalent) had the adjustment
of the Conversion Price made upon the issuance or sale of such
Common Stock Equivalent been made on the basis of the issuance
only of the number of additional shares of Common Stock
actually issued upon exercise, conversion or exchange of such
Common Stock Equivalent and thereupon only the number of
additional shares of Common Stock actually so issued shall be
deemed to have been issued and only the consideration actually
received by the Borrower (computed as in paragraph (A) above)
shall be deemed to have been received by the Borrower.
(C) The number of shares of Common Stock at any time
outstanding shall not include any shares thereof then directly
or indirectly owned or held by or for the account of the
Borrower or its subsidiaries.
No adjustments of the Conversion Price shall be made pursuant
to subparagraphs (v) and (vi) upon the issuance of shares of Common
Stock that are issued pursuant to (x) Employee Plans, or (y)
Acquisitions.
(viii) For the purpose of any computation under clauses (iii),
(iv) and (v) above, the current market price shall be deemed to be the
following:
(A) With respect to a bonafide underwritten public
offering, the offering price agreed to by the underwriter;
(B) With respect to binding agreements made by the
Borrower to issue shares of Common Stock for a price that is
(y) determined as of the date of the agreement with reference
to a market price contemporaneous with the date of the binding
agreement and (z) without full adjustment to the Closing Price
on the day of issuance, the price as determined by such
binding agreement; or
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(C) With respect to all other situations, the average
of the daily Closing Prices for 30 consecutive trading days
commencing 45 trading days before the date in question.
(ix) In any case in which this subsection (d) shall require
that an adjustment as a result of any event becomes effective from and
after a record date, the Borrower may elect to defer until after the
occurrence of such event (A) issuing to the holder of this Note
converted after such record date and before the occurrence of such
event the additional shares of Common Stock issuable upon such
conversion over and above the shares issuable on the basis of the
Conversion Price in effect immediately prior to adjustment and (B)
paying to such holder any amount in cash in lieu of a fractional share
of Common Stock pursuant to Section 5.3 above. In lieu of the shares
the issuance of which is deferred pursuant to subclause (A) above, the
Borrower shall issue or cause a transfer agent to issue due bills or
other appropriate evidence of the right to receive such shares.
(x) Any adjustment in the Conversion Price otherwise required
by this Section 5.4 to be made may be postponed until the date of the
next adjustment otherwise required to be made if such adjustment
(together with any other adjustments postponed pursuant to this clause
(x) and not theretofore made) would not require an increase or decrease
of more than 1% in such price. All calculations under this Section 5.4
shall be made to the nearest cent or to the nearest 1/100th of a share,
as the case may be.
(xi) In case at any time, as a result of an adjustment made
pursuant to subclause (C) or (D) of clause (i) above, the holder of
this Note thereafter surrendered for conversion shall become entitled
to receive any shares of capital stock of the Borrower other than
Common Stock, the number and kind of such other shares so receivable
upon conversion of this Note shall thereafter be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock
contained in clauses (i) to (vii), inclusive, above, and the other
provisions of this Section 5.4 with respect to the Common Stock shall
apply on like terms to any such other shares.
(xii) The Board of Directors may make such reductions in the
Conversion Price, in addition to those required by this Section 5.4, as
shall be determined by the Board of Directors to be advisable in order
to avoid taxation so far as practicable of
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any dividend of stock or stock rights or any event treated as such for
federal income tax purposes to the recipients. The Board of Directors
shall have the power to resolve any ambiguity or correct any error in
this Section 5.4, and its action in so doing shall be final and
conclusive.
(xiii) With respect to any stockholder rights plan (the
"Rights Plan") pursuant to which "Rights" would be issued or issuable
to stockholders of the Borrower, no adjustment shall be made to the
Conversion Price as a result of such Rights Plan in the event that an
appropriate amount of "Rights" are reserved for issuance in connection
with issuance of Conversion Shares to the Purchaser. If and when the
Rights become exercisable, an appropriate adjustment to the Conversion
Price in accordance with the terms of the Rights Plan shall be made
pursuant to this Section 5.4.
5.5 Certain Notices and Calculations. Whenever the Conversion Price is
adjusted as provided in Section 5.4, the Borrower shall promptly deliver to the
holder hereof a certificate signed by two officers of the Borrower setting forth
the Conversion Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment and the computation thereof.
5.6 Reservation of Shares. The Borrower covenants that it will at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued shares of Common Stock, solely for the purpose of issue
upon conversion of this Note as herein provided, such number of shares of Common
Stock as shall then be issuable upon the conversion of this Note. The Borrower
covenants that all shares of Common Stock which shall be so issuable shall, upon
issuance, be duly and validly issued and fully paid and non-assessable. The
Borrower shall from time to time, in accordance with applicable law, use all
commercially reasonable efforts to seek necessary stockholder approval to
increase the authorized amount of its Common Stock if at any time the authorized
amount of shares of Common Stock remaining unissued shall not be sufficient to
permit the conversion of all Notes at the time outstanding. The Borrower shall
take such action as may be reasonably required to cause the Conversion Shares to
be approved for listing on the NYSE.
5.7 Certain Covenants. Before taking any action which would cause an
adjustment reducing the Conversion Price below the then stated or par value of
the Common Stock issuable upon conversion of this Note, the Borrower will take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Borrower may validly and legally issue fully paid and
non-assessable shares of such Common Stock at such adjusted Conversion Price.
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5.8 Certain Notices. In case:
(i) the Borrower shall authorize the distribution to all
holders of Common Stock of evidences of its indebtedness or assets
(other than cash dividends or other cash distributions paid out of
surplus); or
(ii) the Borrower shall authorize the granting to the holders
of Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock or any class or of any other rights; or
(iii) of any reclassification of the capital stock of the
Borrower (other than a subdivision or combination of its outstanding
shares of Common Stock), or of any consolidation or merger to which the
Borrower is a party and for which approval of any stockholders of the
Borrower is required, or of the sale, lease, or transfer of all or
substantially all of the property of the Borrower; or
(iv) of the voluntary or involuntary dissolution, liquidation,
or winding up of the Borrower;
then, in each case, the Borrower shall provide to the Purchaser at least 20
days, but not more than 45 days, prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution, rights, or warrants,
or, if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution, rights, or
warrants are to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, lease, transfer, dissolution, liquidation, or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale, lease, transfer,
dissolution, liquidation, or winding up.
5.9 Merger or Consolidation. In case of any consolidation or
merger of the Borrower with or into another corporation or entity (other than a
merger with another corporation in which the Borrower is the surviving
corporation and which does not result in any reclassification or change in the
Common Stock issuable upon conversion of this Note), or in the case of a
statutory share exchange in which all shares of Common Stock are exchanged for
shares of another corporation or entity, the holder of this Note shall have, and
the Borrower or such successor entity or purchaser shall covenant in the
constituent
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documents effecting any of the foregoing transactions that the holder of this
Note shall have, the right to obtain upon conversion of this Note, in lieu of
each share of Common Stock theretofore issuable upon exercise of the conversion
rights set forth herein, the kind and amount of shares of stock, other
securities, money and property receivable upon such consolidation or merger or
share exchange by a holder of one share of Common Stock issuable upon exercise
of the conversion rights set forth herein as if they had been exercised
immediately prior to such consolidation or merger or share exchange. The
constituent documents effecting any such consolidation or merger or share
exchange shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided in this paragraph. The provisions
of this paragraph shall apply similarly to successive consolidations or mergers
or shares exchanges.
6. Miscellaneous.
This Note shall be governed by the laws of the State of Texas without
regard to conflicts of law principles which would select another law.
EXECUTED as of the date first above written.
QUANTA SERVICES, INC.
By: /s/ BRAD EASTMAN
---------------------------------
Name: Brad Eastman
-------------------------------
Title: Vice President and
General Counsel
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CONVERTIBLE PROMISSORY NOTE
THIS CONVERTIBLE PROMISSORY NOTE AND THE SHARES OF CAPITAL STOCK ISSUABLE UPON
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "ACT"), OR ANY STATE SECURITIES OR BLUE SKY LAWS AND MAY NOT BE
SOLD, PLEDGED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT OR IN RELIANCE ON AN AVAILABLE EXEMPTION
FROM THE REGISTRATION PROVISIONS OF THE ACT AND ANY APPLICABLE STATE SECURITIES
OR BLUE SKY LAWS.
THIS NOTE IS SUBJECT TO CERTAIN SUBORDINATION AGREEMENTS AND PROVISIONS SET
FORTH IN THE PURCHASE AGREEMENT (AS DEFINED BELOW). NOTWITHSTANDING ANY
STATEMENT TO THE CONTRARY CONTAINED IN THIS INSTRUMENT, NO PAYMENT ON ACCOUNT OF
THE OBLIGATIONS HEREUNDER, WHETHER OF PRINCIPAL, INTEREST OR OTHERWISE, SHALL BE
MADE, PAID, RECEIVED OR ACCEPTED EXCEPT IN ACCORDANCE WITH THE EXPRESS TERMS OF
SUCH SUBORDINATION AGREEMENTS AND PROVISIONS.
U.S. $37,012,500 Houston, Texas October 5, 1998
QUANTA SERVICES, INC., a Delaware corporation (the "Borrower"), for
value received, hereby promises to pay to the order of ENRON CAPITAL & TRADE
RESOURCES CORP., a Delaware corporation (the "Purchaser"), the principal sum of
TWELVE MILLION THREE HUNDRED THIRTY-SEVEN THOUSAND FIVE HUNDRED AND NO/100
UNITED STATES DOLLARS (U.S. $12,337,500), interest on the unpaid balance of such
principal amount and premium on such principal amount in accordance with the
Securities Purchase Agreement referenced below (this "Note") .
1. Securities Purchase Agreement.
This Note is the Borrower's Convertible Promissory Note to be issued
pursuant to the Securities Purchase Agreement dated as of September 29, 1998
among Borrower, Purchaser and Joint Energy Development Investments II Limited
Partnership (the "Purchase Agreement"). Capitalized Terms used herein but not
defined herein shall have the meanings given such terms in the Purchase
Agreement.
<PAGE> 2
2. Principal, Interest and Payments Generally.
Principal shall be advanced on even date herewith. Unless the
outstanding principal amount of this Note has been redeemed as provided in
Section 3 below or converted pursuant to Section 5 below, the Borrower shall pay
to the Purchaser the outstanding principal amount of this Note and all accrued
but unpaid interest on the Maturity Date. Except as set forth in Section 8.05 of
the Purchase Agreement, the Borrower shall not prepay the principal.
Interest shall accrue thereon as set forth in the Purchase Agreement.
Interest shall be payable quarterly as more fully set forth in the Purchase
Agreement.
3. Redemption.
The principal due to the Purchaser hereunder shall be subject to
Mandatory Redemption and Optional Redemption as more fully set forth in,
respectively, Sections 8.04 and 8.05 of the Purchase Agreement.
4. Default and Remedies.
It shall be an "Event of Default" under this Note to the extent the
Purchase Agreement so provides. During the continuation of an Event of Default,
the Purchaser may exercise, subject to the limitations set forth in the Purchase
Agreement, all of its rights under the Purchase Agreement and all other rights
at law or in equity. During the continuation of an Event of Default, the
Purchaser may exercise the conversion feature of this Note as set forth below.
During the continuation of an Event of Default, all payments received
in respect of obligations under this Note shall be applied in the order set
forth in the Purchase Agreement. No right, power, or remedy conferred to the
Purchaser in this Note or in any documents supporting this Note or now or
hereafter existing at law, in equity, by statute, or otherwise shall be
exclusive, and each such right, power, or remedy shall to the full extent
permitted by law be cumulative and in addition to every other such right, power
or remedy. No course of dealing and no delay in exercising any right, power, or
remedy conferred to the Purchaser shall operate as a waiver of or otherwise
prejudice any such right, power, or remedy. No notice to or demand upon the
Borrower shall entitle the Borrower to similar notices or demands in the future.
Without limiting the generality of this paragraph, no description of the right
to accelerate this Note, charge default interest under this Note, or otherwise
exercise remedies under this Note shall limit the right of the Purchaser to take
such actions with respect to this Note under the Purchase Agreement.
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<PAGE> 3
5. Conversion.
5.1 Certain Definitions. As used in this Section 5, the following
terms shall have the following meanings:
"Closing Price" means on any particular date (a) the last sale price
per share of the Common Stock on such date on the principal stock exchange on
which the Common Stock has been listed or, if there is no such price on such
date, then the last sale price on such exchange on the date nearest preceding
such date, or (b) if the Common Stock is not listed on any stock exchange, the
final bid price for a share of Common Stock in the over-the-counter market, as
reported by the National Association of Securities Dealers Automated Quotation
System ("NASDAQ") at the close of business on such date, or the last sales price
if such price is reported and final bid prices are not available, or (c) if the
Common Stock is not quoted on the NASDAQ, the bid price for a share of Common
Stock in the over-the-counter market as reported by the National Quotation
Bureau Incorporated (or any similar organization or agency succeeding to its
functions of reporting prices), or (d) if the Common Stock is no longer publicly
traded, as determined by an investment banking firm selected in good faith by
the Board of Directors of the Borrower, provided, that none of the transactions
related to the foregoing shall include purchases by any "affiliate" (as such
term is defined in the General Rules and Regulations under the Securities Act of
1933) of the Borrower.
"Common Stock" means the Borrower's Common Stock, $.00001 par value
("Common Stock").
"Conversion Price" means U.S. $13.75, subject to adjustment as provided
in this Section 5.
5.2 Conversion Right and Conversion Price. At any time the
Purchaser may convert all, or at the election of Purchaser, any part, of the
outstanding principal amount of this Note into that number of fully paid and
non-assessable shares of Common Stock obtained by dividing the outstanding
principal amount of this Note to be so converted by the Conversion Price. The
Conversion Price is subject to adjustment in certain instances, as hereinafter
provided. This Note may be converted by surrender of this Note to the Borrower
at its principal office, accompanied by a duly executed notice of conversion and
a written instrument or instruments of transfer duly executed by the Purchaser
or the Purchaser's attorney-in-fact duly authorized in writing. Upon conversion
of this Note, the Purchaser shall be entitled to receive, in addition to the
number of shares of Common Stock issuable
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<PAGE> 4
upon such conversion, all interest accrued to the date of conversion of this
Note. All such interest shall be payable in cash.
5.3 Issuance of Common Stock on Conversion. As promptly as practicable
after the surrender of this Note for conversion, the Borrower shall deliver or
cause to be delivered to the Purchaser certificates representing the number of
fully paid and nonassessable shares of Common Stock into which this Note may be
converted in accordance with the provisions of this Section 5. Such conversion
shall be deemed to have been made at the close of business on the date that this
Note shall have been surrendered for conversion so that the rights of the
Purchaser shall cease at such time and, subject to the following provisions of
this Section 5.3, the Purchaser shall be treated for all purposes as having
become the record holder of such Common Stock at such time and such conversion
shall be at the Conversion Price in effect at such time; provided, however, that
no such surrender on any date when the stock transfer books of the Borrower
shall be closed shall be effective to constitute the Purchaser as the record
holder of such Common Stock on such date, but such surrender shall be effective
to constitute the Purchaser as the record holder for all purposes at the close
of business on the next succeeding day on which such stock transfer books are
open; and, in that event such conversion shall be at the Conversion Price in
effect on the date that this Note shall have been surrendered for conversion, as
if the stock transfer books of the Borrower had not been closed. If the last day
for the exercise of the conversion right shall not be a Business Day, then such
conversion right may be exercised on the next succeeding Business Day. In case
this Note is called for Optional Redemption as provided for in Section 8.05 of
the Purchase Agreement, the right to convert this Note shall cease and terminate
at the close of business at the expiration of the Response Period, as such term
is defined in Section 8.05.
No fractional shares of Common Stock shall be issued upon conversion of
this Note. Instead of any fractional shares of Common Stock which would
otherwise be issuable upon conversion of this Note, the Borrower shall pay a
cash adjustment in respect of such fraction in an amount equal to such fraction
of a share multiplied by current market price.
5.4 Antidilution Adjustments. The number and kind of securities
issuable upon the conversion of the Note shall be subject to adjustment, without
duplication, from time to time upon the happening of certain events occurring on
or after the date of original issue of the Note as follows:
(i) In case the Borrower shall (A) subdivide its outstanding
Common Stock into a greater number of shares, (B) combine its
outstanding Common Stock into a smaller number of shares, (C) pay a
dividend or make a distribution on its outstanding Common Stock in
shares of its capital stock or (D) issue by
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<PAGE> 5
reclassification of its outstanding Common Stock (whether pursuant to a
merger or consolidation or otherwise) any other shares of capital stock
of the Borrower, the holder of this Note surrendered for conversion
after the record date fixed by the Board of Directors for such
subdivision, combination, dividend, distribution or reclassification
shall be entitled to receive the aggregate number and kind of shares of
capital stock of the Borrower which, if this Note had been converted
immediately prior to such record date at the Conversion Price then in
effect, such holder would have been entitled to receive by virtue of
such subdivision, combination, dividend, distribution or
reclassification; and the Conversion Price shall be deemed to have been
adjusted after such record date to apply to such aggregate number and
kind of shares. Such adjustment shall be made successively whenever any
of the events listed above shall occur.
(ii) In case the Borrower shall pay a dividend or make a
distribution on any class of capital stock of the Borrower in shares of
Common Stock, the Conversion Price in effect immediately prior to the
record date for the determination of stockholders entitled to receive
such dividend or distribution shall be reduced by multiplying such
Conversion Price by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding at the close of business
on the day immediately prior to such record date and of which the
denominator shall be the sum of such number of shares and the total
number of shares issued in such dividend or other distribution.
(iii) In case the Borrower shall issue to all holders of
Common Stock rights or warrants entitling them to subscribe for or
purchase Common Stock at a price per share less than the current market
price per share (as determined pursuant to clause (viii) below), the
Conversion Price in effect from and after the record date therefor
shall be reduced so that it shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to such
record date by a fraction, of which the numerator shall be the number
of shares of Common Stock outstanding on such record date plus the
number of shares of Common Stock which the aggregate offering price of
the total number of shares of Common Stock so offered for subscription
or purchase would purchase at such current market price and of which
the denominator shall be the number of shares of Common Stock
outstanding on such record date plus the number of additional shares of
Common Stock so offered for subscription or purchase. For the purpose
of this clause (iii), the issuance of rights or warrants to subscribe
for or purchase securities convertible into Common Stock shall be
deemed to be the issuance of rights or warrants to purchase the Common
Stock into which such securities are convertible (without regard to any
antidilution
-5-
<PAGE> 6
provision contained therein for a subsequent adjustment of such number)
at an aggregate offering price equal to the aggregate offering price of
such securities plus the minimum aggregate amount (if any) payable upon
conversion of such securities into Common Stock. Such adjustment shall
be made successively whenever such a record date is fixed. In case such
rights or warrants are not issued after such a record date has been
fixed, the Conversion Price shall be readjusted to the Conversion Price
which would have been in effect if such record date had not been fixed.
(iv) In case the Borrower shall distribute to all holders of
Common Stock (whether pursuant to a merger or consolidation or
otherwise) evidences of its indebtedness or assets (excluding shares of
capital stock of the Borrower and cash dividends out of retained
earnings), or rights to subscribe for Common Stock at a price less than
the then current market price per share (excluding those referred to in
clause (iii) above), then in each such case the Conversion Price in
effect from and after the record date therefor shall be adjusted so
that it shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to such record date by a fraction, of
which the numerator shall be the current market price per share
(determined as provided in clause (viii) below) of the Common Stock on
such record date less the fair market value (as determined by the Board
of Directors, whose determination in good faith shall be conclusive) of
the portion of the evidences of indebtedness or assets so distributed
or of such rights to subscribe applicable to one share of Common Stock
and of which the denominator shall be such current market price per
share of Common Stock. Such adjustment shall be made successively
whenever any such a record date is fixed. In case such distribution is
not made after such a record date has been fixed, the Conversion Price
shall be readjusted to the Conversion Price which would have been in
effect if such record date had not been fixed.
(v) If the Borrower shall issue any additional shares of
Common Stock (otherwise as provided in (i) through (iv) above) at a
price per share less than the current market price per share of Common
Stock but above the Conversion Price, then the Conversion Price shall
be adjusted to the price determined by multiplying the Conversion Price
by a fraction (A) the numerator of which shall be (1) the sum of (x)
the number of shares of Common Stock outstanding immediately prior to
the issuance of such additional shares of Common Stock multiplied by
the current market price and (y) the consideration, if any, received
and deemed received by the Borrower upon the issuance of such
additional shares of Common Stock (2) divided by the total number of
shares of Common Stock outstanding immediately after the
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<PAGE> 7
issuance of such additional shares of Common Stock, and (B) the
denominator of which shall be the current market price.
(vi) If the Borrower shall issue any additional shares of
Common Stock prior to the second anniversary of the issuance of the
Notes (otherwise as provided in (i) through (v) above) at a price per
share less than the Conversion Price per share of Common Stock, then
the Conversion Price shall be adjusted to the price determined by
multiplying the Conversion Price by a fraction (A) the numerator of
which shall be (1) the sum of (x) the number of shares of Common Stock
outstanding immediately prior to the issuance of such additional shares
of Common Stock multiplied by the Conversion Price and (y) the
consideration, if any, received and deemed received by the Borrower
upon the issuance of such additional shares of Common Stock (2) divided
by the total number of shares of Common Stock outstanding immediately
after the issuance of such additional shares of Common Stock, and (B)
the denominator of which shall be the Conversion Price.
(vii) In case the Borrower shall issue any security or
evidence of indebtedness which is convertible into or exchangeable for
Common Stock ("Convertible Security"), or any warrant, option or other
rights to subscribe for or purchase Common Stock or any Convertible
Security (together with Convertible Securities, "Common Stock
Equivalent"), or if, after any such issuance, the price per share for
which such additional shares of Common Stock may be issuable thereunder
is amended, then the Conversion Price upon each such issuance or
amendment shall be adjusted as provided in the preceding paragraph
hereof on the basis that (A) the maximum number of additional shares of
Common Stock issuable pursuant to all such Common Stock Equivalents
(without regard to any antidilution provision contained therein for a
subsequent adjustment of such number) shall be deemed to have been
issued as of the earlier of (x) the date on which the Borrower shall
enter into a firm contract for the issuance of such Common Stock
Equivalent or (y) the date of actual issuance of such Common Stock
Equivalent; and (B) the aggregate consideration for such maximum number
of additional shares of Common Stock shall be deemed to be the minimum
consideration received and receivable by the Borrower for the issuance
of such additional shares of Common Stock pursuant to such Common Stock
Equivalent. No adjustment of the Conversion Price shall be made under
this paragraph upon the issuance of any Convertible Security which is
issued pursuant to the exercise of any warrants or other subscription
or purchase rights therefor, if any adjustments shall previously have
been made in the Conversion Price then in effect upon the issuance of
such warrants or other rights pursuant to subparagraphs (v) and (vi).
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<PAGE> 8
The following provisions shall be applicable to making of
adjustments in the Conversion Price hereinbefore provided in
subparagraphs (iii), (iv), (v) and (vi):
(A) The consideration received by the Borrower shall
be deemed to be the following: to the extent that any
additional shares of Common Stock or any Common Stock
Equivalents shall be issued for cash consideration, the
consideration received by the Borrower therefor, or, if such
additional shares of Common Stock or Common Stock Equivalents
are offered by the Borrower for subscription, the subscription
price, or, if such additional shares of Common Stock or Common
Stock Equivalents are sold to underwriters or dealers for
public offering without a subscription offering, the initial
public offering price, in any such case excluding any amounts
paid or receivable for accrued interest or accrued dividends
and without deduction of any compensation, discounts,
commissions or expenses paid or incurred by the Borrower for
and in the underwriting of, or otherwise in connection with,
the issue thereof; to the extent that such issuance shall be
for a consideration other than cash, then, except as herein
otherwise expressly provided, the fair market value of such
consideration at the time of such issuance as determined in
good faith by the Borrower's Board of Directors. The
consideration for any additional shares of Common Stock
issuable pursuant to any Common Stock Equivalents shall be the
consideration received by the Borrower for issuing such Common
Stock Equivalents, plus the additional consideration payable
to the Borrower upon the exercise conversion or exchange of
such Common Stock Equivalents. In case of the issuance at any
time of any additional shares of Common Stock or Common Stock
Equivalents in payment or satisfaction of any dividend upon
any class of stock other than Common Stock, the Borrower shall
be deemed to have received for such additional shares of
Common Stock or Common Stock Equivalents a consideration equal
to the amount of such dividend so paid or satisfied. In any
case in which the consideration to be received or paid shall
be other than cash, the Board of Directors of the Borrower
shall notify promptly each holder of this Note of its
determination of the fair market value of such consideration.
(B) Upon the expiration of the right to convert,
exchange or exercise any Common Stock Equivalent the issuance
of which effected an adjustment in the Conversion Price, if
any such Common Stock Equivalent shall not have been
converted, exercised or exchanged, the number of shares
-8-
<PAGE> 9
of Common Stock deemed to be issued and outstanding by reason
of the fact that they were issuable upon conversion, exchange
or exercise of any such Common Stock Equivalent shall no
longer be computed as set forth above, and the Conversion
Price shall forthwith be readjusted and thereafter be the
price which it would have been (but reflecting any other
adjustments in the Conversion Price made pursuant to the
provisions of subparagraphs (d)(v) and (d)(vi) after the
issuance of such Common Stock Equivalent) had the adjustment
of the Conversion Price made upon the issuance or sale of such
Common Stock Equivalent been made on the basis of the issuance
only of the number of additional shares of Common Stock
actually issued upon exercise, conversion or exchange of such
Common Stock Equivalent and thereupon only the number of
additional shares of Common Stock actually so issued shall be
deemed to have been issued and only the consideration actually
received by the Borrower (computed as in paragraph (A) above)
shall be deemed to have been received by the Borrower.
(C) The number of shares of Common Stock at any time
outstanding shall not include any shares thereof then directly
or indirectly owned or held by or for the account of the
Borrower or its subsidiaries.
No adjustments of the Conversion Price shall be made pursuant
to subparagraphs (v) and (vi) upon the issuance of shares of Common
Stock that are issued pursuant to (x) Employee Plans, or (y)
Acquisitions.
(viii) For the purpose of any computation under clauses (iii),
(iv) and (v) above, the current market price shall be deemed to be the
following:
(A) With respect to a bonafide underwritten public
offering, the offering price agreed to by the underwriter;
(B) With respect to binding agreements made by the
Borrower to issue shares of Common Stock for a price that is
(y) determined as of the date of the agreement with reference
to a market price contemporaneous with the date of the binding
agreement and (z) without full adjustment to the Closing Price
on the day of issuance, the price as determined by such
binding agreement; or
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<PAGE> 10
(C) With respect to all other situations, the average
of the daily Closing Prices for 30 consecutive trading days
commencing 45 trading days before the date in question.
(ix) In any case in which this subsection (d) shall require
that an adjustment as a result of any event becomes effective from and
after a record date, the Borrower may elect to defer until after the
occurrence of such event (A) issuing to the holder of this Note
converted after such record date and before the occurrence of such
event the additional shares of Common Stock issuable upon such
conversion over and above the shares issuable on the basis of the
Conversion Price in effect immediately prior to adjustment and (B)
paying to such holder any amount in cash in lieu of a fractional share
of Common Stock pursuant to Section 5.3 above. In lieu of the shares
the issuance of which is deferred pursuant to subclause (A) above, the
Borrower shall issue or cause a transfer agent to issue due bills or
other appropriate evidence of the right to receive such shares.
(x) Any adjustment in the Conversion Price otherwise required
by this Section 5.4 to be made may be postponed until the date of the
next adjustment otherwise required to be made if such adjustment
(together with any other adjustments postponed pursuant to this clause
(x) and not theretofore made) would not require an increase or decrease
of more than 1% in such price. All calculations under this Section 5.4
shall be made to the nearest cent or to the nearest 1/100th of a share,
as the case may be.
(xi) In case at any time, as a result of an adjustment made
pursuant to subclause (C) or (D) of clause (i) above, the holder of
this Note thereafter surrendered for conversion shall become entitled
to receive any shares of capital stock of the Borrower other than
Common Stock, the number and kind of such other shares so receivable
upon conversion of this Note shall thereafter be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as
practicable to the provisions with respect to the Common Stock
contained in clauses (i) to (vii), inclusive, above, and the other
provisions of this Section 5.4 with respect to the Common Stock shall
apply on like terms to any such other shares.
(xii) The Board of Directors may make such reductions in the
Conversion Price, in addition to those required by this Section 5.4, as
shall be determined by the Board of Directors to be advisable in order
to avoid taxation so far as practicable of
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<PAGE> 11
any dividend of stock or stock rights or any event treated as such for
federal income tax purposes to the recipients. The Board of Directors
shall have the power to resolve any ambiguity or correct any error in
this Section 5.4, and its action in so doing shall be final and
conclusive.
(xiii) With respect to any stockholder rights plan (the
"Rights Plan") pursuant to which "Rights" would be issued or issuable
to stockholders of the Borrower, no adjustment shall be made to the
Conversion Price as a result of such Rights Plan in the event that an
appropriate amount of "Rights" are reserved for issuance in connection
with issuance of Conversion Shares to the Purchaser. If and when the
Rights become exercisable, an appropriate adjustment to the Conversion
Price in accordance with the terms of the Rights Plan shall be made
pursuant to this Section 5.4.
5.5 Certain Notices and Calculations. Whenever the Conversion Price is
adjusted as provided in Section 5.4, the Borrower shall promptly deliver to the
holder hereof a certificate signed by two officers of the Borrower setting forth
the Conversion Price after such adjustment and setting forth a brief statement
of the facts requiring such adjustment and the computation thereof.
5.6 Reservation of Shares. The Borrower covenants that it will at all
times reserve and keep available, free from preemptive rights, out of its
authorized but unissued shares of Common Stock, solely for the purpose of issue
upon conversion of this Note as herein provided, such number of shares of Common
Stock as shall then be issuable upon the conversion of this Note. The Borrower
covenants that all shares of Common Stock which shall be so issuable shall, upon
issuance, be duly and validly issued and fully paid and non-assessable. The
Borrower shall from time to time, in accordance with applicable law, use all
commercially reasonable efforts to seek necessary stockholder approval to
increase the authorized amount of its Common Stock if at any time the authorized
amount of shares of Common Stock remaining unissued shall not be sufficient to
permit the conversion of all Notes at the time outstanding. The Borrower shall
take such action as may be reasonably required to cause the Conversion Shares to
be approved for listing on the NYSE.
5.7 Certain Covenants. Before taking any action which would cause an
adjustment reducing the Conversion Price below the then stated or par value of
the Common Stock issuable upon conversion of this Note, the Borrower will take
any corporate action which may, in the opinion of its counsel, be necessary in
order that the Borrower may validly and legally issue fully paid and
non-assessable shares of such Common Stock at such adjusted Conversion Price.
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<PAGE> 12
5.8 Certain Notices. In case:
(i) the Borrower shall authorize the distribution to all
holders of Common Stock of evidences of its indebtedness or assets
(other than cash dividends or other cash distributions paid out of
surplus); or
(ii) the Borrower shall authorize the granting to the holders
of Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock or any class or of any other rights; or
(iii) of any reclassification of the capital stock of the
Borrower (other than a subdivision or combination of its outstanding
shares of Common Stock), or of any consolidation or merger to which the
Borrower is a party and for which approval of any stockholders of the
Borrower is required, or of the sale, lease, or transfer of all or
substantially all of the property of the Borrower; or
(iv) of the voluntary or involuntary dissolution, liquidation,
or winding up of the Borrower;
then, in each case, the Borrower shall provide to the Purchaser at least 20
days, but not more than 45 days, prior to the applicable record or effective
date hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution, rights, or warrants,
or, if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution, rights, or
warrants are to be determined, or (y) the date on which such reclassification,
consolidation, merger, sale, lease, transfer, dissolution, liquidation, or
winding up is expected to become effective, and the date as of which it is
expected that holders of Common Stock of record shall be entitled to exchange
their shares of Common Stock for securities or other property deliverable upon
such reclassification, consolidation, merger, sale, lease, transfer,
dissolution, liquidation, or winding up.
5.9 Merger or Consolidation. In case of any consolidation or
merger of the Borrower with or into another corporation or entity (other than a
merger with another corporation in which the Borrower is the surviving
corporation and which does not result in any reclassification or change in the
Common Stock issuable upon conversion of this Note), or in the case of a
statutory share exchange in which all shares of Common Stock are exchanged for
shares of another corporation or entity, the holder of this Note shall have, and
the Borrower or such successor entity or purchaser shall covenant in the
constituent
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<PAGE> 13
documents effecting any of the foregoing transactions that the holder of this
Note shall have, the right to obtain upon conversion of this Note, in lieu of
each share of Common Stock theretofore issuable upon exercise of the conversion
rights set forth herein, the kind and amount of shares of stock, other
securities, money and property receivable upon such consolidation or merger or
share exchange by a holder of one share of Common Stock issuable upon exercise
of the conversion rights set forth herein as if they had been exercised
immediately prior to such consolidation or merger or share exchange. The
constituent documents effecting any such consolidation or merger or share
exchange shall provide for adjustments which shall be as nearly equivalent as
may be practicable to the adjustments provided in this paragraph. The provisions
of this paragraph shall apply similarly to successive consolidations or mergers
or shares exchanges.
6. Miscellaneous.
This Note shall be governed by the laws of the State of Texas without
regard to conflicts of law principles which would select another law.
EXECUTED as of the date first above written.
QUANTA SERVICES, INC.
By: /s/ BRAD EASTMAN
---------------------------------------
Name: Brad Eastman
-------------------------------------
Title: Vice President and General Counsel
------------------------------------
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<PAGE> 1
JOINT FILING AGREEMENT
The undersigned each agree that (i) the Statement on Schedule 13D
relating to the Common Stock, $.00001 par value, of Quanta Services, Inc. is
adopted and filed on behalf on each of them, (ii) all future amendments to such
Statement on Schedule 13D will, unless written notice to the contrary is
delivered as described below, be jointly filed on behalf of each of them, and
(iii) the provisions of Rule 13d-1(k) under the Securities Exchange Act of 1934
apply to each of them. This agreement may be terminated with respect to the
obligation to jointly file future amendments to such Statement on Schedule 13D
as to any of the undersigned upon such person giving written notice thereof to
each of the other persons signatory hereto, at the principal office thereof.
IN WITNESS WHEREOF, the undersigned hereby execute this Joint Filing
Agreement as of the date set forth below.
Dated: October 9, 1998. ENRON CAPITAL & TRADE RESOURCES CORP.
By: /s/ PEGGY B. MENCHACA
-----------------------------------
Name: Peggy B. Menchaca
Title: Vice President and Secretary
Dated: October 9, 1998 ENRON CORP.
By: /s/ PEGGY B. MENCHACA
-----------------------------------
Name: Peggy B. Menchaca
Title: Vice President and Secretary
Dated: October 9, 1998 JOINT ENERGY DEVELOPMENT INVESTMENTS II
LIMITED PARTNERSHIP
By: Enron Capital Management II Limited
Partnership, its General Partner
By: Enron Capital II Corp., its general
partner
By: /s/ PEGGY B. MENCHACA
-----------------------------------
Name: Peggy B. Menchaca
Title: Vice President and Secretary
