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, $0.00001 par value
(Title of Class of Securities)
74762E102
(CUSIP Number)
Dale J. Wolf, Secretary, 20 West Ninth Street
Kansas City, Missouri 64105 (816) 421-6600
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
with a copy to:
Dennis P. Wilbert, Esq., Blackwell Sanders Peper Martin LLP, 2300 Main Street
Kansas City, Missouri 64108 (816) 983-8124.
September 21, 1999
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f), or 13d-1(g), check the following
box. [ ]
NOTE: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
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 (however, see the
Notes).
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CUSIP No. 74762E102
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
UtiliCorp United Inc. #440541877
- --------------------- ------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a)
(b) X
- --------------------- ------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------- ------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
BK
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
- --------------------- ------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
Delaware
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NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED
BY EACH REPORTING 8,133,685*
PERSON WITH
------------ -----------------------------------------------------------------------------------
8 SHARED VOTING POWER
None**
------------ -----------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
8,133,685
------------ -----------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
- --------------------- ------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,133,685
- --------------------- ------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)
X
- --------------------- ------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
25.7% ***
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14 TYPE OF REPORTING PERSON (See Instructions)
CO
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* If, however, the shares owned by Robert K. Green were to be included in
this number, UtiliCorp and Robert K. Green would cumulatively exercise sole
voting power over 8,143,685 shares of Issuer's outstanding common stock.
This number of shares would represent 25.7% of the issued and outstanding
common stock of the Issuer. See Item 5.
** This representation is qualified by the fact that, as described in Item 4
below, UtiliCorp has the ability to vote or direct the vote of the shares
subject to the Stockholder's Agreements only in two limited, tax-related
circumstances. UtiliCorp expressly disclaims beneficial ownership to any
shares of Common Stock that are subject to the Stockholder's Agreements.
*** Based on information provided by Issuer as of September 21, 1999.
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CUSIP No. 74762E102
- --------------------- ------------------------------------------------------------------------------------------------
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (entities only)
Robert K. Green
- --------------------- ------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (See Instructions)
(a)
(b) X
- --------------------- ------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- --------------------- ------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS (See Instructions)
PF
- --------------------- ------------------------------------------------------------------------------------------------
5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
- --------------------- ------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OR ORGANIZATION
United States Citizen
- --------------------- ------------ -----------------------------------------------------------------------------------
NUMBER OF SHARES 7 SOLE VOTING POWER
BENEFICIALLY OWNED 10,000
BY EACH REPORTING
PERSON WITH
------------ -----------------------------------------------------------------------------------
8 SHARED VOTING POWER
None
------------ -----------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
10,000
------------ -----------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
None
- --------------------- ------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
10,000
- --------------------- ------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (See Instructions)
X
- --------------------- ------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
10,000
- --------------------- ------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON (See Instructions)
IN
- --------------------- ------------------------------------------------------------------------------------------------
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INTRODUCTION
UtiliCorp United Inc., a Delaware corporation ("UtiliCorp"), hereby
files this Statement on Schedule 13D (the "Statement") on behalf of the
Reporting Persons identified in Item 2 below pursuant to the Agreement With
Respect to Schedule 13D attached hereto as an Exhibit.
ITEM 1. SECURITY AND ISSUER.
This Statement on Schedule 13D relates to the shares of common stock,
par value $0.00001 per share, of Quanta Services, Inc., a Delaware corporation
("Issuer") (the "Common Stock"), issuable on conversion of the Series A
convertible preferred stock, par value $0.00001 per share, of the Issuer
("Convertible Preferred Stock") and shares of Common Stock acquired in open
market and privately negotiated purchases. 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 UtiliCorp United Inc., a Delaware
corporation ("UtiliCorp"), and Robert K. Green, President and Chief Operating
Officer of UtiliCorp (collectively, the "Reporting Persons").
UtiliCorp is a publicly held company (trading symbol "UCU") whose
executive offices are located at 20 West Ninth Street, Kansas City, Missouri
64105, and its telephone number is (816) 421-6600. UtiliCorp is a multinational
energy and energy services business with regulated utility operations in seven
states within the United States and energy operations in New Zealand, Australia,
the United Kingdom and Canada. UtiliCorp also owns non-utility subsidiaries
involved in energy trading, natural gas gathering, processing and
transportation, energy efficiency services, and various other energy-related
businesses.
Robert K. Green, a United States citizen, resides at 2318 West 59th
Street, Mission Hills, Kansas 66208. Mr. Green is President and Chief Operating
Officer of UtiliCorp, which maintains its executive offices at the location
described above.
During the last five years, the Reporting Persons have not been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors) and have not been party to a civil proceeding of a judicial or
administrative body of a competent jurisdiction and as a result of such
proceeding was or are subject to a judgment, decree, or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violations with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to a Securities Purchase Agreement dated September 21, 1999
("Closing Date") between UtiliCorp and the Issuer ("Purchase Agreement"),
UtiliCorp purchased from the Issuer 1,860,000 shares of Convertible Preferred
Stock in the aggregate principal amount of $186,000,000 ("Purchase Price"). The
Convertible Preferred Stock is convertible into Common Stock at the option of
UtiliCorp. UtiliCorp purchased the Convertible Preferred Stock with funds
obtained pursuant to a Credit Agreement among UtiliCorp and numerous banks (with
CitiBank, N.A. as agent).
Between September 2, 1999 and September 29, 1999, UtiliCorp purchased
in a series of broker-assisted purchases on the open market and
privately-negotiated purchases 1,933,685 shares of Common
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Stock. The aggregate funding required for these purchases was $50,462,110, all
of which was funded by a Credit Agreement among UtiliCorp and numerous banks
(with CitiBank, N.A. as agent). 1
On June 30, 1999 Robert Green purchased 10,000 shares of Issuer's
outstanding common stock on the open market for an aggregate purchase price of
$390,000 with personal funds.
ITEM 4. PURPOSE OF THE TRANSACTION.
The purchase of the Convertible Preferred Stock of the Issuer was the
result of a negotiated transaction with the Issuer, and it was acquired for
investment purposes. UtiliCorp intends to review its investment in the Issuer on
a continuing basis and, depending upon the price of and other market conditions
relating to the Convertible Preferred Stock, subsequent developments affecting
the Issuer, the Issuer's business and prospects, other investment and business
opportunities available to UtiliCorp and its affiliations, general stock market
and economic conditions, tax considerations and other factors deemed relevant,
may decide to increase or decrease the size of its investment in the Issuer.
UtiliCorp's open market purchases of Common Stock were undertaken for
investment purposes as described in the preceding paragraph. UtiliCorp has also
purchased shares of Common Stock by, as of September 29, 1999, contracting with
21 of the Issuer's record stockholders for the purchase of 1,069,485 shares of
Common Stock for an aggregate purchase price of $27,806,610.2
Robert Green purchased 10,000 shares of Common Stock on the open market
for an aggregate purchase price of $390,000, such purchases were made for
investment purposes.
In addition to the Purchase Agreement, the following documents (as
described herein), which were conditions precedent to the signing of the
Purchase Agreement, are attached as exhibits to this Schedule and incorporated
herein by reference: Stockholder's Voting Agreements (the "Stockholder's
Agreements"), Strategic Alliance Agreement, Investor's Rights Agreement, Fee
Letter Agreement, and Certificate of Designation, Rights, and Limitations of the
Series A Convertible Preferred Stock of Quanta Services, Inc. (the "Certificate
of Designation"). The following summaries of the terms of such agreements are
qualified by reference to the actual agreements.
Purchase Agreement. On September 21, 1999, UtiliCorp and Issuer entered
into the Purchase Agreement which provided for the purchase by UtiliCorp of
Convertible Preferred Stock in the aggregate amount of $186,000,000. The number
of shares of Common Stock issuable upon conversion of the Convertible Preferred
Stock by UtiliCorp will be determined by dividing the price per share of the
Convertible Preferred Stock (i.e., $100) by the conversion price of $30.00
(subject to adjustment for any stock split, combination, and the like)
("Conversion Price"), approximately 6,200,000 shares of Common Stock, on an
as-converted basis, at the Closing Date. The Purchase Agreement includes
provisions customary in commercial investments, including, for purposes of
illustration only, inclusion of an anti-hedging provision (i.e., for a period of
10 years, UtiliCorp shall not engage in transactions intended to reduce its risk
of owning the Common Stock).
Stockholder's Agreements. The irrevocable Stockholder's Agreements
among UtiliCorp, Issuer, and various stockholders owning shares of the Common
Stock of the Issuer (cumulatively,
Page 5 of 9
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the "Stockholders"), dated September 21, 1999, obligate the Stockholders to vote
all shares of Common Stock owned by them, or over which they have voting
control, to approve the following proposals: (i) any proposal recommended by
Issuer's Board of Directors for the purpose of enabling UtiliCorp to exit its
investment in the Issuer in the most tax efficient manner; (ii) any proposal
recommended by Issuer's Board of Directors for the purpose of allowing UtiliCorp
to hold shares of the Issuer in the most tax efficient manner; and (iii) any
ancillary proposals that are necessary or appropriate to effectuate the
foregoing proposals. The Stockholder's Agreements terminate automatically if
UtiliCorp's Fully Diluted Ownership Ratio (as defined in the Certificate of
Designation) is less than 5%, and with respect to shares subject to the
Stockholder's Agreements that are subsequently sold by the Stockholders, the
Stockholder's Agreements cease to apply to such shares upon sale.
Strategic Alliance Agreement. On September 21, 1999, UtiliCorp and
Issuer entered into the Strategic Alliance Agreement which provides that the
Issuer is UtiliCorp's preferred contractor in outsourced transmission and
distribution infrastructure construction and maintenance and natural gas
distribution construction and maintenance in all areas serviced by UtiliCorp,
provided that the Issuer provides such services at a competitive cost that is
demonstrably equal to or better than current market rates for such services. The
Strategic Alliance Agreement terminates six years from the Closing Date,
although the parties thereto may engage in business relations with competitors
of the other party and its affiliates during such time. Neither UtiliCorp nor
the Issuer owe the other party any fiduciary duties (in fact, no relationship of
whatever kind or form exists) under the terms of the Strategic Alliance
Agreement.
Fee Letter Agreement. Signed on September 21, 1999 between the Issuer
and UtiliCorp, the Fee Letter Agreement entitles UtiliCorp to receive $3,720,000
for advisory services performed by UtiliCorp.
Investor's Rights Agreement. On September 21, 1999, UtiliCorp and
Issuer entered into the Investor's Rights Agreement which provides, among other
things, that UtiliCorp is entitled to (i) one demand registration with respect
to the Common Stock into which the Convertible Preferred Stock is convertible;
(ii) unlimited "piggyback" registrations; and (iii) a pre-emptive right to
purchase shares of common stock of the Issuer upon the Issuer's issuance of
shares to third parties. The Investor Rights Agreement also provides that
UtiliCorp shall not transfer any portion of its shares of Convertible Preferred
Stock to any competitor of the Issuer.
Certificate of Designation. Executed and filed with the Delaware
Secretary of State's Office on September 21, 1999 by the Issuer, the Certificate
of Designation designates 1,860,000 shares of the Issuer's preferred stock as
Series A Convertible Preferred Stock and sets forth the terms of the Convertible
Preferred Stock. The Certificate of Designation provides that UtiliCorp is
entitled to nominate and elect two directors to the Issuer's Board of Directors;
provided, however, (i) UtiliCorp may nominate a third director if it owns 30% or
more of the outstanding shares of the Issuer on a fully diluted basis, (ii)
UtiliCorp will only be entitled to nominate and elect one director to the
Issuer's Board of Directors if it disposes of at least 50%, but less than 75%,
of the total number of common stock into which the Convertible Preferred Stock
is then convertible, on a fully diluted basis, and (iii) UtiliCorp shall not be
entitled to elect any directors to the Issuer's Board of Directors if it sells
75% or more of the total number of shares of Common Stock into which the
Convertible Preferred Stock is then convertible, on a fully diluted basis. The
Certificate of Designation also provides that, for purposes of illustration
only, (i) the Convertible Preferred Stock is convertible at the discretion of
UtiliCorp without expiration, except that the Issuer is entitled to terminate
any obligation to pay the participating, preferred dividends beyond the sixth
anniversary from the date hereunder if the Common Stock of the Issuer is trading
in the open market above the Conversion Price at that time; and (ii) UtiliCorp
shall have that number of votes equal to the number of shares of Common Stock
into which the Convertible Preferred Stock is convertible at the appropriate
record date.
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In addition, the Certificate of Designation entitles UtiliCorp to
receive cash dividends, which are cumulative, at the rate of 0.5% per annum on
the Purchase Price of the Convertible Preferred Stock ("Preferred Dividend");
provided, however, that the Issuer may in its sole discretion terminate the
Preferred Dividend at any time after the sixth anniversary of the Closing Date
if the closing price of the Common Stock is greater than $30.00 per share
(subject to adjustment for any stock split, combination, and the like).
Other than the transactions described herein, the Reporting Persons nor
any of their affiliates have 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
UtiliCorp beneficially owns 1,860,000 shares of the Convertible
Preferred Stock at September 21, 1999, representing 100% of the outstanding
class as of that date. On an as-converted basis, the Convertible Preferred Stock
beneficially owned by UtiliCorp pursuant to the Purchase Agreement equals
approximately 6,200,0003 shares of Common Stock at September 21, 1999
representing 19.6%4 of the outstanding Common Stock at that date. UtiliCorp also
beneficially owns 1,933,685 shares of the issued and outstanding shares of
Common Stock, acquired by UtiliCorp in privately-negotiated or open market
purchases5. The aggregate amount of the stock described in the preceding
sentence represents 6.1% of the issued and outstanding Common Stock (based on
the number of shares of Common Stock of the Issuer outstanding as of the Closing
Date as represented by the Issuer in the Purchase Agreement) beneficially owned
by UtiliCorp. In aggregate, UtiliCorp beneficially ownership of 8,133,685 shares
of Issuer's outstanding common stock represents 25.7% of Issuer's issued and
outstanding common stock. A schedule of UtiliCorp's transactions in the Issuer's
outstanding common stock is attached as an exhibit.
Robert K. Green beneficially owns 10,000 shares of Issuer's common
stock, or 0.0% of the issued and outstanding shares of Issuer's common stock. A
schedule of UtiliCorp's transactions in the Issuer's outstanding common stock is
attached as an exhibit.
The Reporting Persons collectively own 8,143,685 shares, or 25.7%, of
the issued and outstanding shares of the Issuer's common stock.
Neither the directors or executive officers of UtiliCorp have any
agreements and understandings of any kind with UtiliCorp regarding the holding,
voting, acquisition or disposition of Common Stock. UtiliCorp expressly
disclaims membership in any group and beneficial ownership over any shares held
by third parties.6 Furthermore, Robert K. Green expressly disclaims membership
in any group and beneficial ownership in Common Stock owned and/or controlled by
UtiliCorp or any other third party.
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ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER.
See the descriptions of the attached exhibits as described in Item 4
above.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
(i) Securities Purchase Agreement dated September 21, 1999 between UtiliCorp
and Issuer.
(ii) Form of Stockholder's Voting Agreement dated September 21,
1999 among UtiliCorp, Issuer, and Certain Shareholders (and Schedule of
Participating Shareholders).
(iii)Strategic Alliance Agreement dated September 21, 1999 between the Issuer
and UtiliCorp.
(iv) Investor's Rights Agreement dated September 21, 1999 between the Issuer and
UtiliCorp.
(v) Certificate of Designation, Rights, and Limitations of the Series A
Convertible Preferred Stock of Quanta Services, Inc., dated September 21,
1999.
(vi) Agreement With Respect to Schedule 13D dated September 30, 1999 between
Robert K. Green and UtiliCorp.
(vii)Schedule of Purchases of Issuer's Outstanding Common Stock by the Reporting
Parties, as of September 29, 1999.
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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: September 30, 1999. UtiliCorp United Inc.
By: /s/ Dale J. Wolf
Name: Dale J. Wolf
Title: Secretary
/s/ Robert K. Green
Robert K. Green
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1 The information contained in this paragraph includes the shares of Common
Stock for which UtiliCorp has entered into a contract for sale with 21 record
stockholders of the Issuer, as described in Item 4 below.
2 UtiliCorp has offer letters outstanding with 28 additional stockholders
for the purchase of additional shares of Common Stock.
3 Represents shares of Common Stock issuable upon conversion of 1,860,000
shares of Series A Convertible Preferred Stock at this date.
4 Based on information provided by Issuer as of September 21, 1999.
5 This figure includes the shares of Common Stock that UtiliCorp has
contracted to purchase from 21 record stockholders of the Issuer, as described
in Item 4 above.
6 This representation is qualified by the fact that, as described in Item 4
above, UtiliCorp has the ability to vote or direct the vote of the shares
subject to the Stockholder's Agreements only in two limited, tax-related
circumstances. UtiliCorp expressly disclaims beneficial ownership to any shares
of Common Stock that are subject to the Stockholder's Agreements.
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================================================================================
SECURITIES PURCHASE AGREEMENT
BETWEEN
QUANTA SERVICES, INC.
AND
UTILICORP UNITED INC.
DATED AS OF SEPTEMBER 21, 1999
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TABLE OF CONTENTS
Page No.
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ARTICLE I DEFINITIONS...........................................................1
SECTION 1.01 DEFINITIONS............................................................1
SECTION 1.02 ACCOUNTING PROCEDURES AND INTERPRETATION...............................8
ARTICLE II AGREEMENT TO SELL AND PURCHASE.................................................8
SECTION 2.01 AUTHORIZATION OF SHARES................................................9
SECTION 2.02 SALE AND PURCHASE......................................................9
SECTION 2.03 CLOSING................................................................9
SECTION 2.04 DELIVERY...............................................................9
SECTION 2.05 CONVERSION.............................................................9
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................9
SECTION 3.01 CORPORATE EXISTENCE....................................................9
SECTION 3.02 COMPANY SEC DOCUMENTS.................................................10
SECTION 3.03 NO MATERIAL ADVERSE CHANGE............................................11
SECTION 3.04 LITIGATION............................................................11
SECTION 3.05 NO BREACH.............................................................11
SECTION 3.06 AUTHORITY.............................................................12
SECTION 3.07 APPROVALS.............................................................12
SECTION 3.08 EMPLOYEE BENEFIT MATTERS..............................................12
SECTION 3.09 TAXES.................................................................12
SECTION 3.10 ASSETS................................................................13
SECTION 3.11 NO MATERIAL MISSTATEMENTS.............................................13
SECTION 3.12 INVESTMENT COMPANY ACT................................................13
SECTION 3.13 PUBLIC UTILITY HOLDING COMPANY ACT....................................13
SECTION 3.14 NO VIOLATION..........................................................13
SECTION 3.15 ENVIRONMENTAL MATTERS.................................................13
SECTION 3.16 INSURANCE.............................................................14
SECTION 3.17 CAPITALIZATION........................................................14
SECTION 3.18 CONVERSION SHARES.....................................................15
SECTION 3.19 CERTAIN FEES..........................................................15
SECTION 3.20 LICENSES..............................................................15
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SECTION 3.21 UNDISCLOSED LIABILITIES...............................................15
SECTION 3.22 LABOR RELATIONS.......................................................16
SECTION 3.23 YEAR 2000 COMPLIANCE..................................................16
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER......................16
SECTION 4.01 INVESTMENT............................................................16
SECTION 4.02 NATURE OF PURCHASER...................................................17
SECTION 4.03 RECEIPT OF INFORMATION; AUTHORIZATION.................................17
SECTION 4.04 ANTI-HEDGING..........................................................17
SECTION 4.05 RESTRICTED SECURITIES.................................................17
SECTION 4.06 CERTAIN FEES..........................................................18
SECTION 4.07 NO IMPLIED REPRESENTATIONS............................................18
ARTICLE V CONDITIONS TO CLOSING................................................18
SECTION 5.01 CONDITIONS TO THE PURCHASER'S OBLIGATION TO PURCHASE THE SHARES.......18
SECTION 5.02 CONDITIONS TO OBLIGATIONS OF THE COMPANY..............................20
ARTICLE VI COVENANTS............................................................21
SECTION 6.01 FINANCIAL STATEMENTS AND REPORTS......................................21
SECTION 6.02 MAINTENANCE, ETC......................................................22
SECTION 6.03 FURTHER ASSURANCES....................................................23
SECTION 6.04 EFFORTS; PERFORMANCE OF OBLIGATIONS...................................23
SECTION 6.05 SHARES................................................................23
SECTION 6.06 INSURANCE.............................................................23
SECTION 6.07 USE OF PROCEEDS.......................................................23
SECTION 6.08 NOTIFICATION OF CERTAIN MATTERS.......................................23
SECTION 6.09 CO-OPERATION UPON PURCHASER'S EXIT....................................23
SECTION 6.10 CO-OPERATION UPON PURCHASER'S ACQUISITION OF COMMON STOCK.............24
SECTION 6.11 ASSISTANCE IN PURCHASING COMMON STOCK.................................24
SECTION 6.12 EXTENT OF PERMITTED DILUTION..........................................24
SECTION 6.13 TERMINATION OF CERTAIN COVENANTS......................................24
SECTION 6.14 ENFORCEABILITY OF BASIC DOCUMENTS.....................................24
SECTION 6.15 NOMINATION OF UTILICORP DIRECTOR DESIGNEE(S)..........................24
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ARTICLE VII MISCELLANEOUS........................................................25
SECTION 7.01 INTERPRETATION AND SURVIVAL OF PROVISIONS.............................25
SECTION 7.02 INDEMNIFICATION, COSTS AND EXPENSES...................................25
SECTION 7.03 NO WAIVER; MODIFICATIONS IN WRITING...................................28
SECTION 7.04 BINDING EFFECT; ASSIGNMENT............................................28
SECTION 7.05 REPLACEMENT SECURITIES................................................29
SECTION 7.06 COMMUNICATIONS........................................................29
SECTION 7.07 GOVERNING LAW.........................................................30
SECTION 7.08 ARBITRATION...........................................................30
SECTION 7.09 EXECUTION IN COUNTERPARTS.............................................30
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Exhibits:
Exhibit A - Certificate of Designation
Exhibit B - Form of Opinions of Counsel to the Company
Exhibit C - Investor's Rights Agreement
Exhibit D - Fee Letter Agreement
Exhibit E - Strategic Alliance Agreement
Exhibit F - Stockholder's Voting Agreement
Schedules:
Schedule 3.01 - Subsidiaries
Schedule 3.03 - Material Adverse Change
Schedule 3.04 - Litigation
Schedule 3.05 - No Breach
Schedule 3.07 - Approvals
Schedule 3.09 - Taxes
Schedule 3.15 - Environmental Matters
Schedule 3.16 - Insurance
Schedule 3.17 - Capitalization
Schedule 3.20 - Licenses
Schedule 3.21 - Undisclosed Liabilities
Schedule 3.22 - Labor Relations
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SECURITIES PURCHASE AGREEMENT
SECURITIES PURCHASE AGREEMENT, dated as of September 21, 1999 (this
"Agreement"), by and between QUANTA SERVICES, INC., a Delaware corporation (the
"Company"), and UTILICORP UNITED INC., a Delaware corporation ("Purchaser").
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:
"AAA" shall have the meaning specified in Section 7.08.
"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 7.08.
"Basic Documents" means, collectively, this Agreement, the Investor's
Rights Agreement, the Strategic Alliance Agreement, the Certificate of
Designation, the Stockholder's Voting Agreement and any and all other agreements
or instruments executed and delivered to Purchaser by the Company or any
Subsidiary or Affiliate of the Company on even date herewith, or any amendments,
supplements, continuations or modifications thereto.
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"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.
"Board of Directors" means the Board of Directors of the Company.
"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.
"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.
"CERCLA" shall have the meaning specified in the definition of
Environmental Laws in this Section 1.01.
"Certificate of Designation" shall have the meaning specified in Section
2.01.
"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 Company 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 Company entitled to vote generally in the election of directors;
or (ii) individuals who on the Closing Date constitute the Company'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 Company'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.
"Claims" shall have the meaning specified in the definition of
Environmental Claims in this Section 1.01.
"Closing" shall have the meaning specified in Section 2.03.
"Closing Date" means the date upon which a Closing occurs as provided in
Section 2.03.
"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
Company or such other class of securities as shall, after the date of this
Agreement, constitute the common equity of the Company.
"Company" shall have the meaning specified in the introductory paragraph.
"Company SEC Documents" shall have the meaning specified in Section 3.02.
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"Consolidated Net Income" means, for any period, the net income (or loss),
after provision for taxes, of the Company and its Subsidiaries on a consolidated
basis for such period, determined in accordance with GAAP.
"Consolidated Subsidiaries" shall mean each Subsidiary of the Company
(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 Company in accordance with GAAP.
"Conversion Shares" shall mean those shares of Capital Stock as such term
is defined in Section 2.01.
"Delist" or "Delisted" shall mean the delisting of the shares of stock of a
corporation from the exchange such shares are traded on.
"Dispute" shall have the meaning specified in Section 7.08.
"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 Company
or its Affiliates, with respect to which the Company or any ERISA Affiliate may
have any liability or any obligation to contribute, including a Plan or a
Multiemployer Plan.
"Enron Affiliates" means Enron Capital & Trade Resources Corp., a Delaware
corporation, Joint Energy Development Investments II Limited Partnership, a
Delaware limited partnership, and ECT Merchant Investment Corp., a Delaware
corporation, or other persons succeeding to an interest in the Enron Notes.
"Enron Notes" means those certain Convertible Subordinated Notes issued by
the Company to Enron Capital & Trade Resources Corp. in the amount of
$12,337,500 and Joint Energy Development Investments II Limited Partnership in
the amount of $37,012,500, dated in each case as of October 5, 1998, pursuant to
that certain Securities Purchase Agreement, dated September 29, 1998, among
certain of the Enron Affiliates and the Company (the "Enron Purchase
Agreement").
"Enron Purchase Agreement" shall have the meaning specified in the
definition of Enron Notes in this Section 1.01.
"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,
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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 Company
or any Subsidiary is conducting or at any time has conducted business, or where
any Property of the Company 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 Company or any Subsidiary is located establish a
meaning for "oil," "hazardous substance," "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 Company or any Subsidiary of the Company
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.
"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 Company and
representing the right to acquire shares of Common Stock from the Company upon
exchange, conversion or exercise thereof.
"Fee" shall have the meaning specified in Section 5.01(h).
"Financial Statements" means the financial statement or statements
described or referred to in Section 3.02.
"GAAP" means generally accepted accounting principles in the United States
of America in effect from time to time.
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"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
Company, 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.
"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 Company or
any of its Subsidiaries.
"HSR Fees" shall have the meaning specified in Section 5.01(h).
"Indemnified Party" shall have the meaning specified in Section 7.02(d).
"Indemnity Matters" shall have the meaning specified in Section 7.02(a).
"Investor's Rights Agreement" means the Investor's Rights Agreement, to be
entered into on the Closing Date, between the Company and Purchaser relating to
the registration of the Conversion Shares for public distribution, among other
things. "Legal Fees" shall have the meaning specified in Section 5.01(h).
"Licenses" shall have the meaning specified in Section 3.20.
"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.
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"Material Adverse Effect" means any material and adverse effect on (i) the
assets, liabilities, financial condition, business, operations or affairs of the
Company 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 Company 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 Company to consummate the
transactions under this Agreement and the other Basic Documents.
"Multiemployer Plan" means a Plan defined as such in Section 3(37) or
4001(a)(3) of ERISA.
"NYSE" shall have the meaning specified in Section 3.06.
"Obligations" means any and all amounts, liabilities and obligations owing
from time to time by Company to Purchaser, 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.
"OPA" shall have the meaning specified in the definition of Environmental
Laws in this Section 1.01.
"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 Company, 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 Company, 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.
"Purchaser" has the meaning set forth in the introductory paragraph.
"RCRA" shall have the meaning specified in the definition of Environmental
Laws in this Section 1.01.
"Related Parties" shall have the meaning specified in Section 7.02(a).
"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.
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Unless otherwise specified, all references to a Responsible Officer herein shall
mean a Responsible Officer of the Company.
"Securities" means the Series A Preferred Stock and, when issued, the
Conversion Shares.
"Securities Act" means the Securities Act of 1933, as amended from time to
time, and the rules and regulations of the Commission promulgated thereunder.
"Senior Credit Agreement" means the Credit Agreement dated as of June 14,
1999, among the Company, the Senior Loan Agent, 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.
"Senior Indebtedness" shall mean all obligations, including the obligation
to pay principal and accrued interest, arising under the Senior Loan Documents.
"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 Company under the Senior Credit
Agreement and the other Senior Loan Documents and all accrued but unpaid
interest thereon.
"Senior Loan Agent" means NationsBank, N.A. doing business as Bank of
America, N.A., and any substitute agent, as agent under the Senior Credit
Agreement, and any agent, if any, under any refinancing arrangement of the
Senior Loan.
"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.
"Series A Preferred Stock" means the Series A convertible preferred stock,
par value $0.00001 per share, of the Company to be issued to Purchaser pursuant
to Article II of this Agreement.
"Share Calculation Date" shall have the meaning specified in Section 3.17.
"Share Issuance Obligations" shall have the meaning specified in Section
3.17.
"Shares" shall have the meaning specified in Section 2.01.
"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
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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).
"Stockholders Rights Plan" means any plan adopted by the Company which (a)
(i) grants to the Company's then-current stockholders the right (in whatever
form) to purchase or otherwise obtain additional stock in the Company, or (ii)
otherwise deters or thwarts (or attempts to deter or thwart) an unsolicited
offer by a third party to acquire control of the Company and (b) could have the
effect of diluting the Purchaser's then-existing percentage interest in the
Company.
"Stockholder's Voting Agreement" means the Stockholder's Voting Agreement,
to be entered into on the Closing Date, among Purchaser, the Company, and
certain stockholders of the Company relating to the vote by such stockholders at
meetings of stockholders.
"Strategic Alliance Agreement" means the Strategic Alliance Agreement, to
be entered into on the Closing Date, between the Company and Purchaser regarding
the provision by the Company of services to Purchaser, among other things.
"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 Company.
"UtiliCorp's Fully Diluted Ownership Ratio" shall have the meaning
specified in subsection 3(b)(ii) of the Certificate of Designation.
"Year 2000 Compliant" shall have the meaning specified in Section 3.23.
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 Purchaser hereunder shall be prepared, in accordance
with GAAP applied on a consistent basis during the periods involved (except as
may be indicated in the Certificate of Designation 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.
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ARTICLE II.
AGREEMENT TO SELL AND PURCHASE
Section 2.01 Authorization of Shares. On or prior to the Closing, the
Company shall have authorized (a) the initial sale and issuance to Purchaser of
1,860,000 shares of Series A Preferred Stock (the "Shares") and (b) the issuance
of shares of Common Stock upon conversion of the Shares (the "Conversion
Shares"). The Shares and the Conversion Shares shall have the rights,
preferences, privileges and restrictions set forth in the Certificate of
Designation, Rights, and Limitations of the Series A Preferred Stock of the
Company in the form attached hereto as Exhibit A (the "Certificate of
Designation").
Section 2.02 Sale and Purchase. Subject to the terms and conditions hereof,
at the Closing (as defined in Section 2.03 below) the Company hereby agrees to
issue and sell to Purchaser, and Purchaser agrees to purchase from the Company,
the Shares having a total purchase price of $186,000,000 at a purchase price of
$100.00 per Share.
Section 2.03 Closing. The execution of the Basic Documents, delivery of the
certificate(s) representing the Shares, payment by Purchaser of the required
consideration and all other instruments required by this Agreement (the
"Closing") shall take place at 10:00 a.m. on the date of execution at the
offices of the Company, 1360 Post Oak Boulevard, Suite 2100, Houston, Texas
77056, or at such other time or place as the Company and Purchaser may mutually
agree (such date is hereinafter referred to as the "Closing Date").
Section 2.04 Delivery. At the Closing, subject to the terms and conditions
hereof, the Company will deliver to Purchaser all of the Shares by delivery of a
certificate or certificates evidencing the Shares to be purchased at the
Closing, free and clear of any liens, encumbrances or interests of any other
party other than those incurred by action or inaction of the Purchaser or its
Affiliates, and Purchaser will make payment to the Company of the purchase price
therefor by wire transfer of immediately available funds to an account
designated by the Company.
Section 2.05 Conversion. Purchaser shall have the right, at its option, to
convert shares of Series A Preferred Stock into shares of Common Stock upon the
terms and conditions (including antidilution adjustments) as more fully
specified in the Certificate of Designation.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Purchaser which representations and
warranties shall survive the Closing for a period of two years, as follows:
Section 3.01 Corporate Existence. The Company: (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 its business is now being or as its business is
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 Company nor any of its Subsidiaries is in default in
the performance, observance or fulfillment of any provision of, in the case of
the Company, its Certificate of Incorporation, as amended and restated, or
Bylaws, or, in
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the case of any Subsidiary, its Certificate of Incorporation, Bylaws or other
organizational documents. Schedule 3.01 identifies each Subsidiary of the
Company and the ownership of all outstanding Capital Stock of each such
Subsidiary. Each of the Company'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 necessary to own its assets and carry on its business as now being or
as proposed to be conducted. Each of the Company 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 Company 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 Company SEC Documents. Company 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
"Company SEC Documents"). The Company 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 Company SEC Document filed 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, (iii) 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 (iv) 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 Company 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 Company SEC Documents filed with the Commission as of the
date hereof or in Schedule 3.03, since June 30, 1999, each of Company and its
Subsidiaries has conducted its business in the ordinary course, consistent with
past practice, and there has been no (i) change that could reasonably be
expected to have a Material Adverse Effect in the business or financial
condition of Company 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 Company and its Subsidiaries but also
affect other Persons who participate or are engaged in the
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lines of business of which Company and its subsidiaries participate or are
engaged, (ii) Material Adverse Effect on the ability of Company to consummate
the transactions contemplated hereby, (iii) declaration, setting aside or
payment of any dividend or other distribution with respect to the Company's
Capital Stock, (iv) acquisition or disposition of any material asset by the
Company 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 Company SEC Documents, or (v) material change in the Company's accounting
principles, practices or methods.
Section 3.04 Litigation. Except as set forth in the Company SEC Documents
or as disclosed to Purchaser in Schedule 3.04, there is no Action pending or, to
the knowledge of the Company, contemplated or threatened against or affecting
the Company, 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 Company 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
Company of this Agreement, the Basic Documents and all other agreements and
instruments to be executed and delivered by the Company pursuant hereto or
thereto or in connection herewith or therewith, compliance by the Company with
the terms and provisions hereof and thereof, the issuance of the Series A
Preferred Stock by the Company 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 Company
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 Company or its Subsidiaries, (c) require any consent (other than consents
set forth on Schedule 3.05), 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 Company or any of its Subsidiaries is a party or by which
the Company 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 Company 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 Company 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 Company
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 Company, 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
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principles of equity. No approval from the stockholders of the Company is
required as a result of the Company's issuance of the Shares or the Conversion
Shares or the listing of the Conversion Shares with the New York Stock Exchange
(the "NYSE").
Section 3.07 Approvals. Except as set forth in 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 or any other Person is required in connection with
the execution, delivery or performance by the Company of this Agreement or any
of the Basic Documents or the issuance by the Company of the Series A Preferred
Stock 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 Employee Benefit Matters. The Company 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 Company or any ERISA Affiliate under any Employee Plan has occurred which
is reasonably likely to have a Material Adverse Effect.
Section 3.09 Taxes. Except as set forth in Schedule 3.09, the Company 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
Company 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
Company 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 Company and its
Subsidiaries, taken as a whole. Except as set forth in Schedule 3.09, the
Company has no knowledge of any tax deficiency which has been asserted against
the Company or any Subsidiary which the Company reasonably expects to have a
Material Adverse Effect.
Section 3.10 Assets. Neither the Company 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 Purchaser (as Affiliates of the Company
or otherwise) including any area of mutual interest, exclusivity,
non-competition or other similar agreement.
Section 3.11 No Material Misstatements. None of the representations or
warranties made by Company herein or in any Schedule hereto, or certificate
furnished by Company 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.
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Section 3.12 Investment Company Act. Neither the Company 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 3.13 Public Utility Holding Company Act. Neither the Company 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 3.14 No Violation. Neither the Company 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, (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, (d) 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) (x) affect the legality, validity
or enforceability by Purchaser of this Agreement or any of the Basic Documents
or (y) have a Material Adverse Effect.
Section 3.15 Environmental Matters.
(a) Environmental Laws. The Company 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 3.15, to the
knowledge of the Company, there are no pending, past or threatened
Environmental Claims against the Company or any of its Subsidiaries or any
property owned or operated by the Company or any of its Subsidiaries which
could reasonably be expected to have a Material Adverse Effect. Except as
set forth on Schedule 3.15, to the knowledge of the Company, there are no
conditions or occurrences on or emanating from any property owned or
operated by the Company 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
Company or any of its Subsidiaries or any property owned or operated by the
Company or any of its Subsidiaries or (ii) to cause any property owned or
operated by the Company 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 Company 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) Hazardous Materials. Except as set forth on Schedule 3.15, to the
knowledge of the Company (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 Company or any of its Subsidiaries in a
manner that has violated or could reasonably be expected to violate
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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 Company 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 3.16 Insurance. Except as set forth in Schedule 3.16, Company and
its Subsidiaries (for such time period after an entity became a Subsidiary of
the Company) 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 Company 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 Company 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 Company and its Subsidiaries are otherwise in compliance with the terms
of such policies and bonds. Company has no knowledge of any threatened
termination of, or material premium increase with respect to, any of such
policies. Schedule 3.16 identifies all risks, if any, of the Company or any of
its Subsidiaries which are self-insured which might have a Material Adverse
Effect.
Section 3.17 Capitalization. The authorized Capital Stock of the Company
consists of (a) 100,000,000 shares of Common Stock, par value $0.00001 per
share, of which 31,679,990 shares are issued and outstanding as of the end of
the day immediately preceding the Closing Date (the "Share Calculation Date");
(b) 3,345,333 shares of Limited Vote Common Stock, par value $0.00001 per share,
of which 3,331,451 shares are issued and outstanding as of the Share Calculation
Date; and (c) 10,000,000 shares of preferred stock, $0.00001 per share, of which
1,860,000 shares have been designated Series A Preferred Stock and, prior to the
issuance of the Shares pursuant to this Agreement, 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 3.17 or pursuant to the Company's 1997 Stock Option Plan, the
Company 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 3.17 or under
the Company's 1997 Stock Option Plan for which there are 4,289,534 shares
issuable under currently outstanding options as of the Share Calculation Date,
there are as of the Share Calculation Date no (i) outstanding securities
convertible into or exchangeable for Capital Stock of the Company or (ii)
contracts, commitments, agreements, understandings or arrangements of any kind
to which the Company is a party obligating the Company under any circumstance to
issue any Capital Stock, or any securities convertible into or exchangeable for
or rights to purchase or subscribe for Capital Stock of the Company, other than
this Agreement (the "Share Issuance Obligations"). Schedule 3.17 reasonably sets
forth information regarding the Share Issuance Obligations. Except as set forth
on Schedule 3.17 neither the Company 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 3.18 Conversion Shares. The Conversion Shares, when issued and
delivered in accordance with the terms of the Certificate of Designation, will
be duly and validly issued, fully paid, non-assessable, free of preemptive
rights of other stockholders and free from all Liens
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(except any Liens created or suffered to be created by Purchaser or its
Affiliates) and will not be subject to any restriction on the voting or transfer
thereof created by the Company, other than the restrictions set forth in Section
4.01 and Section 4.05 of this Agreement and pursuant to the Investor's Rights
Agreement. The Company has duly and validly reserved the Conversion Shares for
issuance upon conversion of the Shares.
Section 3.19 Certain Fees. Except for the fees payable to Purchaser
pursuant to this Agreement, no fees or commissions will be payable by the
Company to brokers, finders, investment bankers, or Purchaser with respect to
the issuance and sale of any of the Shares or the consummation of the
transaction contemplated by this Agreement. The Company agrees that it will
indemnify and hold harmless Purchaser from and against any and all claims,
demands, or liabilities for broker's, finders, placement, or other similar fees
or commissions incurred by the Company or alleged to have been incurred by the
Company in connection with the issuance or sale of the Shares or the
consummation of the transaction contemplated by this Agreement.
Section 3.20 Licenses. Except as set forth in Schedule 3.20, each of the
Company 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 3.21 Undisclosed Liabilities. Except (a) as and to the extent
disclosed or reserved against on the consolidated balance sheet of Company as of
June 30, 1999 or the notes thereto included in the Company SEC Documents or
otherwise disclosed in the Company SEC Documents filed with the Commission as of
the date hereof (b) those incurred in connection with the execution of the Basic
Documents (c) obligations incurred in the ordinary course of business subsequent
to June 30, 1999 or (d) as set forth in Schedule 3.21, neither Company 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
Material Adverse Effect.
Section 3.22 Labor Relations. Except as disclosed on Schedule 3.22, there
is no unfair labor practice litigation involving the Company or any of its
subsidiaries either pending before the National Labor Relations Board or a court
or, to the knowledge of Company, threatened against Company or any of its
subsidiaries. Except as disclosed on Schedule 3.22, there is no labor strike,
dispute, slowdown or stoppage, either pending or, to the knowledge of Company,
threatened against Company or any of its subsidiaries, nor has the Company
experienced any such labor interruptions over the past two years. The Company
considers its relationship with its employees to be good.
Section 3.23 Year 2000 Compliance. All devices, systems, machinery,
information technology, computer software and hardware, and other date sensitive
technology (jointly and severally its "systems") necessary for the Company and
its Subsidiaries to carry on their business as presently contemplated to be
conducted will be Year 2000 Compliant within a period of time calculated to
result in no material disruption of any of their business operations. For
purposes
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hereof, "Year 2000 Compliant" means that such systems are designed to be used
prior to, during and after the Gregorian calendar year 2000 A.D. and will
operate during each such time period without error relating to date data,
specifically including any error relating to, or the product of, date data which
represents or references different centuries or more than one century. The
Company and its Subsidiaries will (a) undertake an inventory, review and
assessment of all areas within their businesses and operations that could be
adversely affected by the failure of the Company and its Subsidiaries to be Year
2000 Compliant on a timely basis and (b) develop a plan and time line for
becoming Year 2000 Compliant on a timely basis. The Company, when it reasonably
determines such action necessary, will make written inquiry of each of its and
its Subsidiaries' key suppliers, vendors, and customers, and will obtain in
writing confirmations from all such Persons, as to whether such Persons have
initiated programs to become Year 2000 Compliant. For purposeshereof, "key
suppliers, vendors, and customers" refers to those suppliers, vendors, and
customers of the Company and its Subsidiaries whose business failure could
reasonably be expected to have a Material Adverse Effect. The Company does not
control third party hardware or software systems that may interfere or exchange
data with the Company's material hardware and software systems and the foregoing
representation specifically excludes any representation that such third party
hardware and software systems are Year 2000 Compliant.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
Purchaser represents and warrants to the Company, which representations and
warranties shall survive the execution of any Basic Document, that as of the
date of this Agreement:
Section 4.01 Investment. Purchaser represents and warrants to, and
covenants and agrees with, the Company that the Shares are being acquired for
its own account, not as a nominee or agent, and with no intention of
distributing or reselling the Shares or the Conversion Shares or any part
thereof and that 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 Purchaser's right at all times to sell
or otherwise dispose of all or any part of the Shares 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 Purchaser should in the future decide to dispose of any of the
Shares or the Conversion Shares, Purchaser understands and agrees (a) that it
may do so only (i) in compliance with the Securities Act and applicable state
securities law, as then in effect, and (ii) in the manner contemplated by any
registration statement pursuant to which such securities are being offered, and
(b) that stop-transfer instructions to that effect will be in effect with
respect to such securities. Purchaser agrees to the imprinting, so long as
appropriate, of a legend on each certificate representing the Securities to the
effect as set forth above.
Section 4.02 Nature of Purchaser. Purchaser represents and warrants to, and
covenants and agrees with, the Company that, (a) it is an "accredited investor"
within the meaning of Rule 501 of Regulation D promulgated by the Securities and
Exchange Commission pursuant to
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the Securities Act and (b) 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. Purchaser acknowledges
that it has had access to information regarding the business, assets,
operations, financial condition and results of operations of the Company and has
been provided a reasonable opportunity to ask questions of and receive answers
from representatives of the Company regarding such matters. Purchaser further
acknowledges that it is experienced in investing in corporations and businesses.
Purchaser represents and warrants that the purchase of the Shares by it has been
duly and properly authorized and this Agreement and each other Basic Document to
which Purchaser is (or will at the Closing be) a signatory have been (or, with
respect to the other Basic Documents, at the Closing will be) duly executed and
delivered by it or on its behalf.
Section 4.04 Anti-Hedging. Purchaser represents and warrants to, and
covenants and agrees with, the Company that it will not at any time prior to the
tenth anniversary of the Closing Date engage in any put, call, short-sale,
hedge, straddle or similar transactions in Company's Capital Stock intended to
reduce Purchaser's risk of owning the Company's Capital Stock, excluding index
options or similar basket hedges.
Section 4.05 Restricted Securities. 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 Company
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
Purchaser 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. Purchaser agrees that it will, jointly and
severally, indemnify and hold harmless the Company from and against any and all
claims, demands, or liabilities for broker's, finders, placement, or other
similar fees or commissions incurred by Purchaser or alleged to have been
incurred by Purchaser 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
Purchaser that the Company is not making any representation or warranty
whatsoever, express or implied, other than those representations and warranties
of Company expressly set forth in this Agreement.
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ARTICLE V.
CONDITIONS TO CLOSING
Section 5.01 Conditions to the Purchaser's Obligation to Purchase the
Shares. In addition to any other applicable conditions set forth herein,
Purchaser's obligation to purchase the Shares at the Closing is subject to the
satisfaction of the following conditions, each of which may be waived in the
sole discretion of Purchaser:
(a) Representations and Warranties True; Performance of Obligations.
The representations and warranties made by the Company in Article III
hereof shall be true and correct in all material respects as of the Closing
Date, except (A) for changes contemplated by this Agreement and (B) for
those representations and warranties that address matters only as of a
particular date (which representations and warranties which address matters
only as of a particular date shall be true and correct in all material
respects as of such particular date). The Company shall have performed all
obligations and conditions herein required to be performed or observed by
it on or prior to the Closing Date.
(b) Legal Investment. On the Closing Date, the sale and issuance of
the Shares shall be legally permitted by all laws, regulations and NYSE
listing rules to which Purchaser and the Company are subject.
(c) Consents, Permits, and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the
other Basic Documents (except for such as Purchaser determines may be
properly obtained subsequent to the Closing Date).
(d) Corporate Documents. The Company shall have delivered to Purchaser
or its counsel, copies of all corporate documents of the Company as
Purchaser shall reasonably request.
(e) Secretary's Certificate; Good Standing Certificate. The Company
shall have delivered to Purchaser a certificate executed by the Secretary
of the Company, dated the Closing Date, certifying as to (A) the
resolutions of the Board of Directors evidencing approval of the
transactions contemplated by and from this Agreement and the Basic
Documents and the authorization of the named officer or officers to execute
and deliver this Agreement and the Basic Documents, (B) the Certificate of
Incorporation and the Bylaws of the Company, in each case, as amended, and
(C) certain of the officers of the Company, their titles and examples of
their signatures. The Company shall have delivered to Purchaser a
certificate of the Secretary of State of the State of Delaware, dated a
recent date in relation to the Closing Date, that the Company is in good
standing.
(f) No Material Adverse Effect. No event or change has occurred which
has had, or could reasonably be expected to have, a Material Adverse
Effect.
(g) All Consents. All other consents, including without limitation any
required stockholder approval, and waivers necessary to complete the
transactions under this Agreement and the other Basic Documents shall have
been obtained by the Company.
(h) Fees. The Company shall pay (A) the reasonable legal fees and
costs of counsel to Purchaser incurred by Purchaser in the evaluation and
negotiation of the proposed transaction, but in no event shall the Company
be required to pay in excess of $50,000 for such
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fees and costs (the "Legal Fees"), (B) all filing fees associated with all
filings required under the Hart-Scott-Rodino Act 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") and (C) the fee ("Fee") pursuant to the Fee
Letter Agreement in the form attached hereto as Exhibit D.
(i) Legal Opinion. Purchaser shall have received from legal counsel to
the Company opinions addressed to it, dated as of the Closing Date, in the
form substantially similar in substance to the forms of opinion attached
hereto as Exhibits B-1 and B-2.
(j) Certificate of Designation. The Certificate of Designation, in the
form set forth in Exhibit A, shall have been adopted and executed by the
Company and filed with and certified by the Secretary of State of the State
of Delaware.
(k) Investor's Rights Agreement. The Investor's Rights Agreement, in
the form attached hereto as Exhibit C, shall have been executed and
delivered by the Company.
(l) Fee Letter Agreement. The Fee Letter Agreement, in the form
attached hereto as Exhibit D, shall have been executed and delivered by the
Company.
(m) Strategic Alliance Agreement. The Strategic Alliance Agreement, in
the form attached hereto as Exhibit E, shall have been executed and
delivered by the Company.
(n) Stockholder's Voting Agreement. A Stockholder's Voting Agreement,
in the form attached hereto as Exhibit H, shall have been executed and
delivered by the Company and the stockholders as set forth in Schedule
5.01(p).
(o) HSR Compliance. Any waiting period applicable to the purchase of
the Shares under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, shall have terminated or expired.
(p) Waiver of Preemptive Rights. The holders of the Company's
outstanding equity securities having preemptive rights in connection with
the issuance of the Shares to be issued to Purchaser pursuant to this
Agreement shall have waived all such rights.
(q) Waiver to Issuance of Dividends. The Enron Affiliates and a
majority of the Senior Lenders must waive (A) the prohibitions on the
Company's ability or authority to pay dividends on the Series A Preferred
Stock and (B) any other restrictions or negative covenants in the Enron
Purchase Agreement and the Senior Credit Agreement, respectively, which,
but for such waiver, would result in the failure of Purchaser to realize
the full benefits and rights issued, granted or transferred to it under the
Basic Documents.
(r) Board of Directors. Upon the Closing, the authorized size of the
Board of Directors of the Company shall consist of 10 members, and such
members shall include Purchaser's two designees.
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(s) Audit Committee. Upon the Closing, the authorized size of the
Audit Committee of the Board of Directors of the Company shall consist of 3
members, and such members shall include one designee of Purchaser.
(t) NYSE Listing of Shares. The Company shall have filed a listing
application and obtained the authorization of the NYSE for the issuance of
the Shares and the underlying Conversion Shares.
Section 5.02 Conditions to Obligations of the Company. In addition to any
other applicable conditions set forth herein, the Company's obligation to issue
and sell the Shares at the Closing is subject to the satisfaction, on or prior
to the Closing, of the following conditions, each of which may be waived in the
sole discretion of the Company:
(a) Representations and Warranties True. The representations and
warranties made by Purchaser in Article IV hereof shall be true and correct
in all material respects at the Closing Date with the same force and effect
as if they had been made on and as the Closing Date, and Purchaser shall
have performed all obligations and conditions herein required to be
performed or complied with by it on or before the Closing Date.
(b) Consents, Permits, and Waivers. The Company shall have obtained
any and all consents, permits and waivers necessary or appropriate for
consummation of the transactions contemplated by the Agreement and the
other Basic Documents (except for such as may be properly obtained
subsequent to the Closing Date).
(c) Strategic Alliance Agreement. The Strategic Alliance Agreement, in
the form attached hereto as Exhibit E, shall have been executed and
delivered by Purchaser.
(d) Investor's Rights Agreement. The Investor's Rights Agreement, in
the form attached hereto as Exhibit C, shall have been executed and
delivered by Purchaser.
(e) HSR Compliance. Any waiting period applicable to the purchase of
the Shares under the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended, shall have terminated or expired.
ARTICLE VI.
COVENANTS
Unless Purchaser's prior written consent to the contrary is obtained, the
Company will, for the benefit of Purchaser, 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 for so long as
Purchaser owns any Series A Preferred Stock or Conversion Shares.
Section 6.01 Financial Statements and Reports. The Company shall deliver,
or shall cause to be delivered, to Purchaser:
(a) Annual Financial Statements. As soon as available and in any event
within 90 days after the end of each fiscal year of the Company, the
audited consolidated
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statements of income, stockholders' equity, changes in financial position
and cash flow of the Company and its Consolidated Subsidiaries for such
fiscal year, and the related consolidated balance sheets of the Company 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 Loan Agents (or in the absence of a Senior Loan, Purchaser)
which opinion shall state that said financial statements fairly present the
consolidated financial condition and results of operations of the Company
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
Company 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 Company, consolidated
statements of income, stockholder's equity, changes in financial position
and cash flow of the Company 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 Company 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
Company timely files financial statements in accordance with, and meeting
the requirements of, the Exchange Act, without extension.
(c) SEC Filings, Etc. Promptly upon its becoming available, each
financial statement, report, notice or proxy statement sent by the Company
to stockholders generally and each regular or periodic report and any
registration statement or prospectus in respect thereof filed by the
Company with any securities exchange or the Commission or any successor
agency. The requirements of this Section 6.01(c) shall be deemed to be
satisfied as to those documents which are filed with the Commission,
available generally to the public and distributed to the stockholders upon
the timely filing of such documents with the Commission.
(d) 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 Company (including, without
limitation, any Plan or Multiemployer Plan and any reports or other
information required to be filed under ERISA) as Purchaser may reasonably
request; provided, however, that the Company 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.
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Section 6.02 Maintenance, Etc. The Company shall and shall cause each
Subsidiary to: (a) upon reasonable notice, permit representatives of Purchaser,
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
Purchaser; provided, however, that the Company 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; (b) 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; provided, however, that the Company may
purchase or otherwise acquire all or substantially all of the stock or assets
of, or otherwise acquire by merger or consolidation, any of its Subsidiaries,
and any such Subsidiary may merge into, or consolidate with, or purchase or
otherwise acquire all or substantially all of the assets or stock of, or sell
all or substantially all of its assets or stock to, any other Subsidiary of the
Company or the Company, in each case so long as (i) if the transaction is with
the Company, the Company shall be the surviving entity to any such merger or
consolidation or (ii) if the transaction is not with the Company, a Subsidiary
shall be the surviving entity to any such merger or consolidation; (c) 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; and (d) 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 Company will cure promptly any defects
in the creation and issuance of the Shares and the Conversion Shares and the
execution and delivery of the Basic Documents. The Company at its expense will
promptly execute and deliver to Purchaser, 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.
Section 6.04 Efforts; Performance of Obligations. Each party agrees to use
commercially reasonable efforts to take any and all actions required in order to
consummate the transactions contemplated in this Agreement and the other Basic
Documents. Each party will do and perform every act and discharge all of the
obligations to be performed and discharged by it under the Certificate of
Designation and the other Basic Documents, at the time and times and in the
manner specified.
Section 6.05 Shares. Company shall at all times during the term of the
Series A Preferred Stock maintain a sufficient number of shares of Common Stock
of the Company to be issued as Conversion Shares upon the conversion of all or
part of the Shares.
Section 6.06 Insurance. Company shall maintain such insurance as to comply
with all requirements of law and agreements to which the Company 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
Company and each Subsidiary.
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Section 6.07 Use of Proceeds. The net purchase price of the Shares shall be
used by the Company solely (a) for the Company's acquisition program, (b) for
general working capital, and (c) to reduce senior debt.
Section 6.08 Notification of Certain Matters. The Company shall give prompt
notice to Purchaser of the occurrence or non-occurrence of any event the
occurrence or non-occurrence of which would be likely to cause the failure of
the Company to comply with or satisfy any covenant or agreement under this
Agreement.
Section 6.09 Co-operation upon Purchaser's Exit. Purchaser and Company
mutually agree to use their best efforts (subject to the Company's fiduciary
duties to its stockholders) to take such actions that will enable Purchaser to
exit its investment in the Capital Stock of the Company in the most tax
efficient manner (as determined by Purchaser in the reasonable exercise of its
discretion) including, but not limited to, a redemption or a series of
redemption's at fair market value or a recapitalization of Purchaser's interest
in the Company and its operations on a pretax basis (and calling a stockholders'
meeting, if required, and recommending the approval of said exit, subject, in
all cases, to the Company's fiduciary duties to its stockholders). The Company
will use commercially reasonable efforts to secure the agreement of certain
mutually agreed upon stockholders of the Company to vote for such action,
consistent with the stockholders' fiduciary duties (if any) to the Company or
its stockholders.
Section 6.10 Co-operation Upon Purchaser's Acquisition of Common Stock. If
Purchaser acquires shares of Common Stock from stockholders of the Company in
privately negotiated or open market transactions, Purchaser and Company mutually
agree to use their best efforts (subject to the Company's fiduciary duties to
its stockholders) to take such actions that will enable Purchaser to hold such
shares in the most tax efficient manner (as determined by Purchaser in the
reasonable exercise of its discretion), including, but not limited to, the grant
of a right to convert or exchange such shares of Common Stock into or for a new
series of preferred stock or a different class of common stock, in each case,
having similar attributes as the Series A Preferred Stock (and calling a
stockholders' meeting at the earliest opportunity after a request by Purchaser
and recommending the approval of such actions, subject, in all cases, to the
Company's fiduciary duties to its stockholders). The Company will use
commercially reasonable efforts to secure the agreement of certain Stockholders
of the Company to vote for such action, consistent with the stockholders'
fiduciary duties (if any) to the Company or its stockholders.
Section 6.11 Assistance in Purchasing Common Stock. To assist Purchaser in
its efforts to acquire, in one or more privately negotiated transactions, Common
Stock currently outstanding, the Company shall identify current stockholders
that may potentially desire to sell their Common Stock and will provide contact
information regarding such holders.
Section 6.12 Extent of Permitted Dilution. The Company shall not adopt any
Stockholders Rights Plan that could have the effect of reducing UtiliCorp's
Fully Diluted Ownership Ratio below 49.9%.
Section 6.13 Termination of Certain Covenants. The covenants set forth in
Sections 6.01, 6.02, 6.06, 6.09, and 6.10 shall terminate and be of no further
force and effect if UtiliCorp's
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Fully Diluted Ownership Ratio is less than 5%. The covenant set forth in Section
6.12 shall terminate and be of no further force and effect if UtiliCorp's Fully
Diluted Ownership Ratio is less than 10%.
Section 6.14 Enforceability of Basic Documents. In the event a party
becomes aware of an actual or potential threat to the enforceability, legality
or validity of the Basic Documents, such party shall immediately notify the
other party of such threat, and the parties shall, through lawfully and
commercially reasonable efforts, defend the Basic Documents against such threat.
Section 6.15 Nomination of UtiliCorp Director Designee(s). If at any time
UtiliCorp would be entitled to elect one or more directors to the Company's
Board of Directors pursuant to the terms of Section 3(b) of the Certificate of
Designation, but for the unenforceability of such provision under applicable
law, the Company agrees to cause the person(s) that would have been designated
by UtiliCorp under such section to be nominated as directors to the Company's
Board of Directors.
ARTICLE VII.
MISCELLANEOUS
Section 7.01 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 Company has an obligation under the Basic Documents,
the expense of complying with that obligation shall be an expense of the Company
unless otherwise specified. Whenever any determination, consent, or approval is
to be made or given by Purchaser, such action shall be in Purchaser's 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 shall survive for the applicable two-year periods
identified in the first paragraph of Article III above, and the covenants made
in this Agreement, or any other Basic Document shall survive the closing of the
transactions described herein and remain operative and in full force and effect
regardless of (a) any investigation made by or on behalf of the Company or
Purchaser or (b) acceptance of any of the Securities and payment therefor and
repayment or repurchase thereof. All indemnification obligations of the Company
and the provisions of Section 7.02 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 7.02 Indemnification, Costs and Expenses .
24
<PAGE>
(a) Indemnification Regarding Company Activities. The Company agrees
to indemnify Purchaser, and its 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 Purchaser under Company'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 Purchaser or any Related Parties
under clauses (i), (ii), (iii) and (v) below (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 Company of the proceeds of
any sale of the Securities, (ii) the operations of the business of the
Company or any of its Affiliates, (iii) the failure of the Company or any
of its Affiliates to comply with any Governmental Requirement, (iv) the
breach of the representations, warranties and covenants of the Company
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
willful misconduct of any Indemnitee).
(b) Indemnification Regarding Taxes. The Company agrees to pay and
hold Purchaser 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 Purchaser 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 Purchaser for the full amount of taxes paid
by Purchaser (not to include income or gross receipt tax liability) in
respect of payments made or to be made under this Agreement 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.
(c) Indemnification Regarding Environmental Matters. The Company
agrees to indemnify and hold harmless from time to time Purchaser, 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 Purchaser 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 Purchaser or
any Related Parties (i) under any Environmental Law applicable to the
Company, any Subsidiary, or any of their respective Properties, (ii) as a
result of the breach or non-compliance by the Company or any Subsidiary
with any Environmental Law applicable to the Company or any Subsidiary, or
any of their respective Properties, (iii) due to the ownership by the
Company 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
25
<PAGE>
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 Company or any Subsidiary, or (v) any other environmental,
health, or safety condition in connection with this Agreement or any other
Basic Document.
(d) Indemnification Procedure. Promptly after 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
the Company written notice of such claim or the commencement of such action
or proceeding, but failure so to notify the Company will not relieve the
Company from any liability which it may have to such Indemnified Party
hereunder except to the extent that the Company is materially prejudiced by
such failure. Such notice shall state the nature and the basis of such
claim. The Company shall have the right to defend and settle, at its own
expense and by its own counsel, any such matter as long as the Company
pursues the same diligently and in good faith. If the Company 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
Company 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 Company with any books, records
and other information reasonably requested by the Company and in the
Indemnified Party's possession or control. Such cooperation of the
Indemnified Party shall be at the cost of the Company. After the Company
has notified the Indemnified Party of its intention to undertake to defend
or settle any such asserted liability, and for so long as the Company
diligently pursues such defense, the Company 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 Company 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 Company 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 Company or if the interests of
the Indemnified Party reasonably may be deemed to conflict with the
interests of the Company, 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 Company as incurred, and the Company 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 Company 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) Survival. The Company's obligations under this Section 7.02 shall
survive any termination of this Agreement and the payment of the
Obligations.
26
<PAGE>
(f) Acknowledgement. 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. COMPANY
AND PURCHASER ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE EXPRESS
NEGLIGENCE RULE AND IS CONSPICUOUS.
Section 7.03 No Waiver; Modifications in Writing.
(a) Delay. No failure or delay on the part of either party 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 a
party at law or in equity or otherwise.
(b) Specific Waiver. Except as otherwise provided herein, no
amendment, waiver, consent, modification, or termination of any provision
of this Agreement or any other Basic Document shall be effective unless
signed by the Company and Purchaser. Any amendment, supplement or
modification of or to any provision of this Agreement or any other Basic
Document, any waiver of any provision of this Agreement or any other Basic
Document, and any consent to any departure by the Company from the terms of
any provision of this Agreement 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 Company in any case shall entitle
the Company to any other or further notice or demand in similar or other
circumstances.
Section 7.04 Binding Effect; Assignment.
(a) Binding Effect. This Agreement shall be binding upon the Company,
Purchaser, 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.
(b) Assignment of Shares. All or any portion of Shares purchased
pursuant to this Agreement may be sold, assigned or pledged by Purchaser,
subject to compliance with applicable securities laws and the restrictions
on transfer set forth in the Investor's Rights Agreement. The Conversion
Shares may be sold, assigned or pledged by Purchaser, subject to compliance
with applicable securities laws and the Investor's Rights Agreement.
(c) Assignment of Rights. All or any portion of the rights and
obligations of Purchaser under this Agreement with respect to the Basic
Documents, except as set forth therein, may be transferred by Purchaser;
provided, however, that the rights set forth in the Investor's
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<PAGE>
Rights Agreement may not be transferred to a transferee of the Shares or
Conversion Shares without the prior written consent of the Company, except
in the case of transfers to one or more Affiliates of Purchaser in
accordance with the terms and conditions of the Investor's Rights
Agreement. Upon any permitted 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 Purchaser shall be
automatically released from any such obligations hereunder with respect to
the Basic Documents to the extent assigned, except in the case of an
assignment to an Affiliate of Purchaser in which event Purchaser shall (i)
not be released from its obligations under the Strategic Alliance Agreement
and (ii) be secondarily liable in respect of its obligations under the
other Basic Documents. Upon the request of Purchaser in connection with any
transfer of the Shares or Conversion Shares, the Company shall execute and
deliver any amendment to this Agreement, and the other Basic Documents
reasonably requested by Purchaser to reflect the transfer and delineate the
rights of the transferor and the transferee provided that the Company shall
not be liable for the expenses incurred in documenting such amendment.
Section 7.05 Replacement Securities. Upon receipt of evidence satisfactory
to the Company of the loss, theft, destruction, or mutilation of any certificate
or certificates representing Shares or Conversion Shares and, in the case of any
such loss, theft, or destruction, upon delivery of any indemnity or other
obligation reasonably requested by the Company or its transfer agent to the
Company or, in the case of any such mutilation, upon surrender or cancellation
thereof, the Company will issue a new certificate.
Section 7.06 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 Purchaser:
UtiliCorp United Inc.
20 West Ninth Street
Kansas City, Missouri 64105
Attention: Robert Green
Telecopier: (816) 467-3595
Email: [email protected]
If to the Company:
Quanta Services, Inc.
1360 Post Oak Boulevard, Suite 2100
Houston, Texas 77056
Attention: Vice President and General Counsel
Telecopier: (713) 629-7676
Email: [email protected]
or to such other address as the Company or any Purchaser may designate in
writing. All other communications may be by regular mail or Internet electronic
mail. All notices and communications
28
<PAGE>
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; upon actual receipt if sent by certified mail, return
receipt requested, or regular mail, if mailed; when receipt acknowledged, if
telecopied or sent via Internet electronic mail; and upon actual receipt when
delivered to an air courier guaranteeing overnight delivery.
Section 7.07 Governing Law. This Agreement will be construed in accordance
with and governed by the laws of the State of Missouri without regard to
principles of conflicts of laws.
Section 7.08 Arbitration. Any action, dispute, claim or controversy of any
kind between the Company 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 7.08, 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 Company, one designated by Purchaser and one designated
by the designees of the Company and Purchaser (collectively, the "Arbitrators").
Such arbitrators designated by each of the Company and Purchaser do not have to
be neutral. If either of the Company or Purchaser fails to designate an
arbitrator within 10 days after the filing of the Dispute with the AAA, or
either of the Company or Purchaser's arbitrators fails to designate a third
arbitrator within 30 days after the later of their appointments, the third
arbitrator shall be appointed by the AAA. An arbitration proceeding hereunder
shall be conducted in Kansas City, Missouri, 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 Company and
Purchaser as awarded by the Arbitrators.
Section 7.09 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.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
29
<PAGE>
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: President
.........UTILICORP UNITED INC.,
a Delaware corporation
.........By:./s/ Robert Green
.........Name: Robert Green
.........Title: President
SIGNATURE PAGE TO
SECURITIES PURCHASE AGREEMENT
30
<PAGE>
EXHIBIT A
CERTIFICATE OF DESIGNATION
<PAGE>
EXHIBIT B
FORMS OF OPINIONS OF COUNSEL TO THE COMPANY
<PAGE>
EXHIBIT C
INVESTOR'S RIGHTS AGREEMENT
<PAGE>
EXHIBIT D
FEE LETTER AGREEMENT
<PAGE>
EXHBIT E
STRATEGIC ALLIANCE AGREEMENT
<PAGE>
EXHBIT F
STOCKHOLDER'S VOTING AGREEMENT
<PAGE>
SCHEDULE 3.01
SUBSIDIARIES
<PAGE>
SCHEDULE 3.03
MATERIAL ADVERSE CHANGE
<PAGE>
SCHEDULE 3.04
LITIGATION
<PAGE>
SCHEDULE 3.05
NO BREACH
<PAGE>
SCHEDULE 3.07
APPROVALS
<PAGE>
SCHEDULE 3.09
TAXES
<PAGE>
SCHEDULE 3.15
ENVIRONMENTAL MATTERS
<PAGE>
SCHEDULE 3.16
INSURANCE
<PAGE>
SCHEDULE 3.17
CAPITALIZATION
<PAGE>
SCHEDULE 3.20
LICENSES
<PAGE>
SCHEDULE 3.21
UNDISCLOSED LIABILITIES
<PAGE>
SCHEDULE 3.22
LABOR RELATIONS
<PAGE>
SCHEDULE 5.01(p)
LIST OF STOCKHOLDERS TO EXECUTE A
STOCKHOLDER'S VOTING AGREEMENT
STOCKHOLDER'S VOTING AGREEMENT
THIS STOCKHOLDER'S VOTING AGREEMENT ("Agreement") is made as of this
21st day of September 1999, by and among UtiliCorp United Inc., a Delaware
corporation ("UtiliCorp"), Quanta Services, Inc., a Delaware corporation
("Quanta"), and the undersigned stockholder of Quanta (the "Stockholder").
RECITALS
A. The Stockholder owns certain outstanding shares of the capital stock of
Quanta.
B. UtiliCorp is purchasing, concurrently herewith pursuant to that certain
Securities Purchase Agreement of even date herewith (the "Purchase Agreement"),
shares of Quanta's Series A convertible preferred stock (the "Purchased
Shares").
C. The Stockholder and UtiliCorp wish to ensure that UtiliCorp is able to
hold and exit its investment in a tax-efficient manner.
D. Capitalized terms used herein but not otherwise defined herein shall
have the meanings ascribed to them in the Purchase Agreement.
AGREEMENT
In consideration of the benefits to be received by the Stockholder from
UtiliCorp's investment in the Purchased Shares, the consummation of the sale and
purchase of the Purchased Shares, and for other valuable consideration, the
sufficiency and receipt of which is hereby acknowledged, the parties hereto
agree as follows:
1. Voting of Shares. At any and all meetings of stockholders (or in any
written consent action of stockholders) of Quanta, called or held (or submitted)
for the purpose of voting to approve any of the following proposals, the
Stockholder shall vote or cause to be voted all shares of Quanta's Capital Stock
at any time owned by him or over which he has voting control ("Shares"), and
otherwise use his best efforts while he owns or has voting control over such
Shares, so as to approve:
(a) any proposal recommended by the Quanta Board of Directors for the
purpose of enabling UtiliCorp to exit its investment in the Capital Stock
of Quanta in the most tax efficient manner (as determined by UtiliCorp in
the reasonable exercise of its discretion), including, but not limited to,
a redemption or a series of redemptions at fair market price or a
recapitalization of UtiliCorp's interest in Quanta and its operations on a
pretax basis;
(b) any proposal recommended by the Quanta Board of Directors for the
purpose of enabling UtiliCorp to hold shares of Common Stock acquired in
open market or privately negotiated transactions in the most tax efficient
manner (as determined by UtiliCorp in the reasonable exercise of its
discretion), including but not limited to, the grant of a right to convert
or exchange such shares of Common Stock into or for a new series of
preferred stock
<PAGE>
or a different class of common stock, in each case, having attributes
similar to the Purchased Shares; and
(c) any ancillary actions that are necessary or appropriate to
effectuate and implement the foregoing proposals in paragraphs (a) and (b)
of this Section 1.
2. Binding Effect. This Agreement shall be binding upon the Stockholder and
his respective heirs, executors, administrators, legal representatives, and
successors.
3. Term and Termination. This Agreement will commence on the date first
above written and terminate automatically at any time that UtiliCorp's Fully
Diluted Ownership Ratio (as defined in Quanta's Certificate of Incorporation, as
amended) is less than 5%.
4. No Revocation. The voting agreements contained herein are coupled with
an interest and may not be revoked, except by written consent of UtiliCorp.
5. Deposit of Agreement. A counterpart of this Agreement will forthwith be
deposited with Quanta at its Secretary's office.
6. General.
(a) Severability. The provisions of this Agreement are severable, so
that the invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other term or
provision of this Agreement, which shall remain in full force and effect.
(b) Specific Performance. In addition to any and all other remedies
that may be available at law in the event of any breach of this Agreement,
UtiliCorp will be entitled to specific performance of the agreements and
obligations of Quanta and the Stockholder hereunder and to such other
injunctive or other equitable relief as may be granted by a court of
competent jurisdiction.
(c) Governing Law. This Agreement shall be governed by, and construed
and enforced in accordance with, the laws of the State of Missouri.
(d) Notices. Any and all notices required to be made under this
Agreement shall be in writing, signed by the party giving such notice and
will be delivered personally, or sent by registered or certified mail,
return receipt requested, telecopy, or air courier guaranteeing overnight
delivery to UtiliCorp, Quanta and the Stockholder at their respective
addresses as follows:
If to UtiliCorp:
UtiliCorp United Inc.
20 West Ninth Street
Kansas City, Missouri 64105
Attention: Robert K. Green, President
Telecopier: (816) 467-3595
E-mail: [email protected]
2
<PAGE>
If to the Company:
Quanta Services, Inc.
1360 Post Oak Boulevard, Suite 2100
Houston, Texas 77056
Attention: Vice President and General Counsel
Telecopier: (713) 629-7676
E-mail: [email protected]
If to the Stockholder:
(See address shown on the signature page).
(e) Complete Agreement; Amendments. This Agreement constitutes the
full and complete agreement of the parties hereto with respect to the
subject matter hereof. No amendment, modification or termination of any
provision of this Agreement shall be valid unless in writing and signed by
the parties hereto.
(f) Pronouns. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural, and vice-versa.
(g) Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall constitute one Agreement binding on all
the parties hereto.
(h) Captions. Captions of sections have been added only for
convenience and shall not be deemed to be a part of this Agreement.
THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
3
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by the parties hereto
as of the date first above written.
UILICORP UNITED INC.,
a Delaware corporation
By /s/ Robert K. Green
Name: Robert K. Green
Title: President
QUANTA SERVICES, INC.,
a Delaware corporation
By /s/Brad Eastman
Name: Brad Eastman
Title President
STOCKHOLDER
Name: ____________________________
Address: ____________________________
Fax: ____________________________
E-mail: ____________________________
SIGNATURE PAGE TO
STOCKHOLDER'S VOTING AGREEMENT
4
Schedule of Participating Shareholders*
Names of Participating Shareholders
i. Vince Foster
ii. Robert J. Urbanski
iii. John A. Martell
iv. John R. Wilson
v. Gary A. Tucci
vi. Timothy A. Soule
vii. Soule Trusts Partnership
viii. Ronald W. Soule
ix. James H. Haddox
x. Derrick Jensen
xi. John Colson
* Other than number of shares, the terms and conditions of the individual
Stockholder's Agreements (as listed above) are substantially similar in form or
substance.
8
STRATEGIC ALLIANCE AGREEMENT
This Strategic Alliance Agreement ("Agreement") is made and entered into as
of September 21, 1999, by and between Quanta Services, Inc., a Delaware
corporation ("Company") and UtiliCorp United Inc., a Delaware corporation
("UtiliCorp").
RECITAL
This Agreement is made pursuant to the Securities Purchase Agreement, dated
as of September 21, 1999, by and between the Company and UtiliCorp ("Securities
Purchase Agreement"). In order to provide mutual inducements to enter into the
Securities Purchase Agreement in addition to those expressly stated in the
Securities Purchase Agreement, the Company has agreed to use reasonable
commercial efforts to provide certain services to UtiliCorp and UtiliCorp has
agreed to use reasonable commercial efforts to contract with the Company for
such services on the terms and conditions set forth in this Agreement. Pursuant
to the Securities Purchase Agreement, UtiliCorp will acquire shares of the
Company's Convertible Preferred Stock ("Preferred Stock") which will entitle
UtiliCorp to convert the Preferred Stock into shares of Common Stock, par value
$0.00001 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). Capitalized terms used in this Agreement and not otherwise
defined herein shall have the meanings ascribed thereto in the Securities
Purchase Agreement.
AGREEMENT
The parties agree as follows:
Section 1. Services to be Performed by the Company.
UtiliCorp will use the Company, subject to the Company's ability to perform
services in designated locations, as a preferred contractor in outsourced
transmission and distribution infrastructure construction and maintenance and
natural gas distribution construction and maintenance in all areas serviced by
UtiliCorp, provided that the Company provides such services at a competitive
cost that is demonstrably equal to or better than current market rates for such
services when the quality of the Company's services is considered. UtiliCorp and
the Company will also discuss and explore the Company's potential purchase of
other electric transmission and distribution and natural gas contractors owned
by or affiliated with UtiliCorp and will negotiate in good faith with respect to
proposed terms of acquisition in the event that UtiliCorp determines to dispose
of any such contractors owned by or affiliated with UtiliCorp. In furtherance of
these objectives, the parties agree that UtiliCorp shall regularly provide the
Company the following to the extent pertinent to the provision of services
pursuant to this Agreement:
(a) Evaluation of "value engineering" proposals;
(b) Recommendations for improvement and cost reduction between UtiliCorp,
its Affiliates and the Company; and
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(c) Evaluations by UtiliCorp and its Affiliates of "value added" proposals
submitted by the Company and timely responses to inquiries or requests
for clarification or pertinent further documentation by the Company
related to any of the foregoing matters.
UtiliCorp and the Company acknowledge their mutual intent 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 systems of
UtiliCorp and its Affiliates. In addition, UtiliCorp and the Company acknowledge
the need to meet from time-to-time to evaluate each party's performance with
respect to the objectives provided for in this Agreement.
Section 2. Mutual Access and Cooperation.
The parties hereto desire and agree to use their respective reasonable
efforts to provide to the other party reasonable access from time-to-time to
their respective representatives: (i) to discuss service capabilities, goals and
informational requirements as outlined in Section 1 of this Agreement; (ii) to
present for consideration by the other party proposals and opportunities for the
provision of services pursuant hereto, (iii) for consultation with the other
party regarding acquisition and investment opportunities within the scope of
this Agreement or which would have a material effect upon the provision of
services contemplated hereby, (iv) to discuss matters in which such party 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 the Company and UtiliCorp might work
together to enhance their respective businesses.
In connection with the foregoing, the parties hereto shall, as appropriate,
use reasonable efforts (i) to arrange meetings from time-to-time between their
respective representatives to discuss such matters, (ii) to provide to the other
party from time-to-time reasonable access to information pertinent to the
objectives of this Agreement and (iii) to otherwise enhance cooperation and
communication between UtiliCorp and its Affiliates on the one hand and the
Company on the other hand to facilitate access to information and personnel,
subject, however, to limitations imposed by applicable law and existing
confidentiality obligations as well as internal policies regarding the
maintenance of the confidentiality of proprietary data and other commercially
sensitive information.
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.
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Section 3. Term.
This Agreement shall have a term of six (6) years, which can be extended at
the mutual agreement of the parties. Each party hereto may during the existence
of the arrangements between the Company and UtiliCorp engage in or have business
relations with competitors of the other parties and/or their Affiliates.
Section 4. Protection of Employees.
From and after the date hereof until the date one (1) year after the term
of this Agreement has expired, 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 Agreement or the transactions contemplated hereby and (ii)
none of the soliciting party's (or any of its Affiliates') personnel who have
knowledge of this Agreement 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 5. 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. 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, 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 Section by any of its Representatives. Each party may
also disclose the Confidential Information in order to comply with any
applicable law, order, regulation or ruling or stock exchange rule.
The term "person" as used in this Section 5 shall be broadly
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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 Agreement 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 Section: (i) information
that is or becomes generally available to the public other than as a
result of a breach of this Section 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 Section 5(a) 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 Section, or destroyed.
(d) Remedies. Both parties acknowledge that remedies at law may be
inadequate to protect the disclosing party against any actual or
threatened breach of this Agreement by the recipient, and without
prejudice to any other rights and remedies otherwise available to the
disclosing party, agree to the granting of injunctive relief in favor
of the disclosing party without proof of actual damages. If the
disclosing party is required to post a bond to obtain injunctive
relief, the parties agree that such bond shall not exceed One Thousand
Dollars ($1,000).
Section 6. 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 Agreement; any such relationship shall exist only as expressly stated in
any future definitive agreements.
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Section 7. Publicity.
Any press release or other public announcement regarding or relating to the
existence of this Agreement and its contents shall be mutually agreed upon by
the parties.
Section 8. Miscellaneous.
(a) Dispute Resolution. Any action, dispute, claim or controversy of any
kind now existing or hereafter arising between the Company and
UtiliCorp arising out of, pertaining to this Agreement or the
transactions contemplated hereby ("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 ("AAA") in accordance with the
terms of this Section 8, 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 UtiliCorp 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 calendar days after the filing of the Dispute
with the AAA, or the parties' arbitrators fail to designate a third
arbitrator within 30 calendar days after the later of their
appointments, such arbitrator shall be appointed by the AAA. An
arbitration proceeding hereunder shall be concluded within 180
calendar days of the filing of the Dispute with the AAA. Arbitration
proceedings shall be conducted in Kansas City, Missouri. 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
make specific written findings of fact and conclusions of law. The
decision of the arbitrators shall be final and binding on each party.
(b) Communications. All notices and other communications provided for or
permitted hereunder shall be made in writing by telecopy, courier
service or personal delivery:
i. if to UtiliCorp, initially at the address set forth in the
Securities Purchase Agreement, and
ii. if to the Company, initially at its address set forth in the
Securities Purchase Agreement,
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and thereafter in each case at such other address, notice of
which is given in accordance with the provisions of this Section
8.
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 or sent via Internet electronic
mail; and when actually received, if sent by any other means.
(c) Counterparts. This Agreement may be executed in any number of
counterparts and by the 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.
(d) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning
hereof.
(e) Governing Law. The laws of the State of Missouri shall govern this
Agreement without regard to principles of conflict of laws.
(f) 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.
(g) Entire Agreement. This Agreement is 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. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such
subject matter, except for provisions in other agreements between the
parties dealing with confidentiality and the protection of employees,
which provisions shall continue in full force and effect independently
of this Agreement.
(h) Attorney's Fees. In any action or proceeding brought to enforce any
provision of this Agreement or an arbitration award, the successful
party shall be entitled to recover reasonable attorneys' fees in
addition to its costs and expenses and any other available remedy.
(i) Amendment. This Agreement may be amended only by means of a written
amendment signed by the Company and UtiliCorp.
(j) No Presumption. In the event any claim is made by a party relating to
any conflict, omission, or ambiguity in this Agreement, no presumption
or burden of
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proof or persuasion shall be implied by virtue of the fact that this
Agreement was prepared by or at the request of a particular party or
its counsel.
(k) References to this Agreement. References to numbered or lettered
articles, section, and subsections refer to articles, sections, and
subsections, respectively, of this Agreement unless otherwise
expressly stated.
SIGNATURE PAGE FOLLOWS
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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
UTILICORP UNITED INC.
By: /s/ Robert K. Green
Name: Robert K. Green
Title: President
8
INVESTOR'S RIGHTS AGREEMENT
This Investor's Rights Agreement (this "Agreement") is made and entered
into as of September 21, 1999, by and between Quanta Services, Inc., a Delaware
corporation (the "Company"), and UtiliCorp United Inc., a Delaware corporation
("UtiliCorp").
RECITAL
This Agreement is made pursuant to the Securities Purchase Agreement,
dated as of September 21, 1999, by and between the Company and UtiliCorp (the
"Securities Purchase Agreement"). In order to induce UtiliCorp 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, UtiliCorp will acquire shares of the Company's
Series A Convertible Preferred Stock (the "Preferred Stock") which will entitle
UtiliCorp to convert the Preferred Stock into shares of Common Stock, par value
$0.00001 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).
AGREEMENT
The parties agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 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:
"AAA" has the meaning specified therefor in Section 5.1 of this Agreement.
"Affiliate" of any Person shall mean:
(a) For purposes of Article II, (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; and
(b) For purpose of Article III, (i) any Subsidiary of such Person or
(ii) a Parent of such Person.
<PAGE>
"Beneficial Ownership," "Beneficial Owner," and "Beneficially Own" have the
meanings ascribed to such terms in Rule 13d-3 under the Exchange Act.
"Commission" means the United States Securities and Exchange Commission.
"Common Stock" means the common stock, par value $0.00001 per share, of the
Company.
"Company" has the meaning specified therefor in the introductory paragraph
of this Agreement.
"Competitor" means (a) a provider for third parties of specialized
contracting and maintenance services, primarily for electric,
telecommunications, cable television, natural gas, and transportation
infrastructure (and with respect to natural gas and transportation
infrastructure, only if and when such business lines are a significant part of
the Company's overall business) and (b) in the United States and in other
countries, but only in any of such other countries if and when the Company
develops a substantial market for its services in such country.
"Conversion Shares" means the shares of Common Stock issuable on conversion
of the Preferred Stock.
"Enron Holders" has the meaning specified therefor in Section 2.1(d) of
this Agreement.
"Enron Registration Rights Agreement" has the meaning specified therefor in
Section 2.1(d) of this Agreement.
"Dispute" has the meaning specified therefor in Section 5.1 of this
Agreement.
"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.
"Inspectors" has the meaning specified therefor in Section 2.3(g) of this
Agreement.
"Losses" has the meaning specified therefor in Section 2.8 of this
Agreement.
"New Securities" has the meaning specified therefor in Section 3.2(b) of
this Agreement.
"Other Holders" has the meaning specified therefor in Section 2.1(d) of
this Agreement.
"Parent" means any corporation or other legal entity which at the time
directly or indirectly controls at least a majority of the equity of such entity
having by the terms thereof ordinary voting power to elect a majority of the
board of directors, managers, general partner(s), or other, equivalent governing
body of such entity (irrespective of whether or not at the time equity of any
other class or classes of such entity shall have or might have voting power by
reason of the happening of any contingency).
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"Person" means any individual, corporation, company, voluntary association,
partnership, joint venture, trust, limited liability company, unincorporated
organization, government or any agency, instrumentality or political subdivision
thereof, or any other form of entity.
"Pre-Emptive Purchasers" has the meaning specified therefor in Section 3.1
of this Agreement.
"Pre-Emptive Right" has the meaning specified therefor in Section 3.1 of
this Agreement.
"Preferred Stock" has the meaning specified therefor in the Recital of this
Agreement.
"Proportionate Number" has the meaning specified therefor in Section 3.2(a)
of this Agreement.
"Records" has the meaning specified therefor in Section 2.3(g) of this
Agreement.
"Registrable Securities" means the Conversion Shares and any other shares
of Common Stock (or securities convertible into Common Stock) acquired by
UtiliCorp in privately-negotiated or open market transactions as contemplated by
the parties until such time as such securities cease to be Registrable
Securities pursuant to Section 1.2 hereof.
"Registration Expenses" has the meaning specified therefor in Section
2.7(a) of this Agreement.
"Registration Statement" has the meaning specified therefor in Section
2.1(b) of this Agreement.
"Requesting Holder(s)" has the meaning specified therefor in Section 2.1(a)
and (b), as applicable, of this Agreement.
"Request Notice" has the meaning specified therefor in Section 2.1(a) this
Agreement.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Securities Purchase Agreement" has the meaning specified therefor in the
Recital of this Agreement.
"Selling Expenses" has the meaning specified therefor in Section 2.7(a) of
this Agreement.
"Selling Holder" means a Holder who is selling Registrable Securities
pursuant to a Registration Statement.
"Then Existing Shares" has the meaning specified therefor in Section 3.2(a)
of this Agreement.
"Transfer" has the meaning specified therefor in Section 4.1 of this
Agreement.
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"UtiliCorp" has the meaning specified therefor in the introductory
paragraph of this Agreement.
"Voting Securities" has the meaning specified therefor in Section 2.1(d) of
this Agreement.
Section 1.2 Registrable Securities. Any Registrable Security will cease to
be a Registrable Security when (a) a Registration Statement covering such
Registrable Security has been declared effective by the Commission and such
Registrable Security has been sold or disposed of pursuant to such effective
Registration Statement; (b) such Registrable Security is disposed of pursuant to
Rule 144 (or any similar provision then in force) under the Securities Act; (c)
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 (d) such Registrable
Security is held by the Company or one of its subsidiaries.
ARTICLE II
REGISTRATION RIGHTS
Section 2.1 Demand Registration.
(a) Request for Registration. After the expiration of 180 calendar
days after the Closing Date, any Holder or Holders who collectively
Beneficially Own at least 50% 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) Company's Obligations. Promptly following receipt of a Request
Notice, the Company shall (i) notify each Holder (except the Requesting
Holder) of the receipt of a Request Notice and (ii) shall use its
commercially reasonable efforts to effect such registration (including,
without limitation, preparing and filing a registration statement under the
Securities Act (each such registration statement, 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 calendar day after receipt of the notice sent by the Company)
(such other Holders and the Requesting Holders, 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 2.1 on one occasion only.
(c) Deferral by Company. If the Company has received a Request Notice,
whether or not a Registration Statement with respect thereto has been filed
or has become effective, or an event referred to in Section 2.3(e) has
occurred, and the Company furnishes to the Requesting Holders a copy of a
resolution of the Board of Directors of the Company certified
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<PAGE>
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 (i) to be filed on
or before the date such filing would otherwise be required hereunder, (ii)
to become effective or (iii) to be updated by post-effective amendment or
prospectus supplement because (A) such action would materially interfere
with a significant acquisition, corporate reorganization or other similar
transaction involving the Company, (B) such action would require premature
disclosure of material information that the Company has a bona fide
business purpose for preserving as confidential, or (C) the Company is
unable to comply with requirements of the Commission, the Company shall
have the right, but not more than once in any 365-day period 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 90 calendar days from the date the response period for
Holders pursuant to Section 2.1(b) expires).
(d) Participation Rights of Company and Others. The Company shall be
entitled to include in any Registration Statement filed pursuant to this
Section 2.1, 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 2.1 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 2.6 of this Agreement, the Company will not effect any other
registration of its Voting Securities (except with respect to Registration
Statements (i) on Form S-4 or S-8 or any forms succeeding thereto for
purposes permissible under such forms as of the date hereof or (ii) filed
in connection with an exchange offer or an offering of securities solely to
the Company's existing stockholders or such other Registration Statements
(A) for the resale of shares issued pursuant to an employee stock ownership
trust or other benefit plan of a business acquired in an acquisition by the
Company or (B) in connection with non-underwritten resales of securities
issued to owners of a business acquired in an acquisition by the Company),
whether for its own account or that of any Other Holder other than holders
of "Registerable Securties" (as such term is defined in that certain
Registration Rights Agreement, dated September 29, 1998, between Joint
Energy Development Investments II Limited Partnership, Enron Capital &
Trade Resources Corp. and the Company, as amended (the "Enron Registration
Rights Agreement")) under the Enron Registration Rights Agreement (the
"Enron Holders"), 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; provided, however, such restricted period shall not extend
beyond the date 90 calendar days subsequent to the effective date of such
Registration Statement.
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(e) Prohibition on Future Grants. 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 the 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, except and to the extent that, 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 2.2 Piggy-Back Registration.
(a) Company Notice. 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 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 calendar days prior to the anticipated filing date.
(b) Request. Upon the written request of any Holder received by the
Company no later than the 15th calendar 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.
(c) Underwriter's Cut-Back. 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 in the following manner of allocation: (i) first, to the Other
Holders demanding such registration; (ii) then equally (on a
share-for-share basis) to the Holders and Enron Holders; (iii) then to the
Company; and (iv) then to Other Holders or other stockholders of the
Company desiring to participate with the Company's consent (other than the
Other Holders entitled to participate under clause (i) or (ii)), and (b) in
the case of a Registration Statement the filing of which is initiated by
the Company, priority shall be given in the following order of allocation:
(i) first to the Company and (ii) then equally (on a share-for-share basis)
to the Holders and Other Holders. In the event that the number of
Registrable Securities to be included in a registration is to be reduced as
provided above, within 10 business
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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 or, if less, the number of
such shares allocable to Holders of Registrable Securities after reduction
for any allocations to the Company or Other Holders in accordance with the
priority provisions set forth in the preceding sentence, and if such
Holders are unable to agree among 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.
(d) Prohibition on Future Grants. 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, except and to the
extent that, 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.
Section 2.3 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
calendar 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 subsection (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
subsection (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
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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 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
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"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 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 90 calendar 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) cause all such Registrable Securities registered pursuant to this
Agreement to be listed on each securities exchange on which similar
securities issued by the Company are then listed;
(i) use its commercially reasonable efforts to keep effective and
maintain for the period specified in subsection (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;
(j) 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
(k) 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
2.3, 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 2.3 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 2.3 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 2.3 hereof or
the notice that they may resume use of the prospectus.
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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 2.4 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 2.5 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 business days before, and during the 90 calendar 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 on whom a restriction is
imposed; 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 2.6 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 business days
before, and during the 90 calendar 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 (a) the resale of shares issued pursuant to an employee stock
ownership trust or other benefit plan of a business acquired in an acquisition
by the Company or (b) in connection with non-underwritten commitments to
register the resale of securities issued to owners of a business acquired in an
acquisition by the Company. This section applies to the demand registration
right only.
Section 2.7 Expenses.
(a) Certain Definitions. "Registration Expenses" means all expenses
incident to the Company's performance under or compliance with this
Agreement, including, without
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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) Parties' Obligations. 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 2.8 Indemnification.
(a) By the Company. 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) (collectively,
"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 furnished by such Selling
Holder, such underwriter or such controlling Person in writing specifically
for use in such Registration Statement or prospectus.
(b) By the Selling Holder(s). 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
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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) Notice. 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 2.8. In any action brought against any indemnified party, 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 2.8 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) Contribution. If the indemnification provided for in this Section
2.8 is held by a court or government agency of competent jurisdiction to be
unavailable to the Company or the Selling Holders or is insufficient to
hold them harmless in respect of any Losses, 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 as well as any other relevant equitable considerations; provided,
however, that in no event shall a Selling Holder be required to contribute
an aggregate amount in excess of the dollar amount of proceeds (net of
Selling Expenses) received by such Selling Holder from the sale of
Registrable Securities giving rise to such indemnification. 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 statement 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.
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Section 2.9 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission that may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use commercially reasonable efforts to:
(a) Make and keep public information regarding the Company available,
as those terms are understood and defined in Rule 144 of the Securities
Act, at all times from and after the Closing Date;
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange
Act at all times from and after the Closing Date; and
(c) So long as a Holder owns any Registrable Securities, furnish to
the Holder forthwith upon written request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144
and of the Securities Act and the Exchange Act, a copy of the most recent
annual or quarterly report of the Company, and such other reports and
documents so filed as a Holder may reasonably request in availing itself of
any rule or regulation of the Commission allowing a Holder to sell any such
securities without registration.
Section 2.10 Transfer or Assignment of Registration Rights. The rights to
cause the Company to register Registrable Securities granted to UtiliCorp by the
Company under this Article II may be transferred or assigned by UtiliCorp to a
transferee or assignee of such Registrable Securities that is an Affiliate of
UtiliCorp, provided that the Company is given written notice prior to said
transfer or assignment, stating the name and address of such Affiliate and
identifying the securities with respect to which such registration rights are
being transferred or assigned, and, provided further, that the Affiliate assumes
in writing the obligations of UtiliCorp under this Agreement. Such registration
rights shall not otherwise be transferable.
Section 2.11 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.
ARTICLE III
PRE-EMPTIVE RIGHT
Section 3.1 Pre-Emptive Right. Subject to Section 3.5 hereof, the Company
hereby grants to each Holder (the "Pre-Emptive Purchasers") an irrevocable right
to purchase a Proportionate Number (as defined in Section 3.2(a)) of shares of
Common Stock in respect of the issuance or sale (or deemed issuance or sale) by
the Company, from time to time during each fiscal quarter of the Company, of New
Securities to third parties (the "Pre-Emptive Right"). The Pre-Emptive Right
shall be subject to the following provisions of this Article III.
Section 3.2 Certain Definitions and Determinations.
(a) Proportionate Number. The "Proportionate Number" of shares of
Common Stock that may be purchased by a Pre-Emptive Purchaser in respect of
the applicable
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fiscal quarter shall be determined by multiplying (as to each issuance or
sale to each third party) (i) the number of New Securities (as defined in
Section 3.2(b)) issued or sold (or deemed to be issued or sold) by the
Company to such third party during such applicable fiscal quarter of the
Company times (ii) a fraction of which (A) the numerator is the number of
Conversion Shares (on an as converted basis) owned by the Pre-Emptive
Purchaser on the date on which the shares of Preferred Stock were first
issued (collectively, the "Then Existing Shares") and (B) the denominator
is the total number of shares of Common Stock outstanding (assuming full
conversion of all outstanding securities and the full exercise of all
outstanding options, rights, and warrants to acquire Common Stock of the
Company) on the date on which the shares of Preferred Stock were first
issued. For purposes of this Article III, if the Pre-Emptive Purchaser is
not the original holder of the shares of Preferred Stock, then the number
of Conversion Shares (on an as converted basis) deemed owned by such
Pre-Emptive Purchaser on the date on which the shares of Preferred Stock
were first issued shall be the number of Conversion Shares (on an as
converted basis) it acquired from the original holder or other transferor
at any time (but without duplication for successive transfers and
retransfers of the same shares).
(b) "New Securities" shall mean (i) any Voting Capital Stock (as
defined in Section 3.2(c) below) of the Company whether now authorized or
not and (ii) in the case of the issuance or sale of rights, options, or
warrants to purchase such Voting Capital Stock, and securities of any type
whatsoever that are, or may become, convertible into Voting Capital Stock
(collectively, "Capital Stock Equivalents"), the Voting Capital Stock
issued upon the exercise or conversion of such Capital Stock Equivalents;
provided that the term "New Securities" does not include (i) securities
purchased under the Securities Purchase Agreement; (ii) securities issuable
upon conversion or exercise of the Preferred Stock; (iii) securities issued
in connection with any stock split, stock dividend or recapitalization of
the Company; (iv) securities issued upon conversion or exercise of any
currently outstanding Capital Stock Equivalents; or (v) securities issued
upon conversion or exercise of any Capital Stock Equivalents if the
Pre-Emptive Right was provided upon the issuance of such Capital Stock
Equivalent.
(c) "Voting Capital Stock" shall mean Common Stock or other capital
stock which is entitled to vote generally with the Common Stock upon the
election of directors and other matters submitted to a general vote of
stockholders.
(d) "Closing Price" shall mean on any particular date (i) 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, (ii) 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, (iii) 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 (iv) if the Common Stock is no longer
publicly traded, as determined in good faith by the Board of Directors of
the Company based upon the price that would be paid by a willing buyer of
the shares at issue, in a sale process designed
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to maximize value and attract a reasonable number of participants to
provide a fair determination of such value.
Section 3.3 Mechanics. In the event the Company issues or sells (or is
deemed to issue or sell) New Securities, within two business days after the end
of such fiscal quarter in which the New Securities were issued or sold, the
Company shall give each Pre-Emptive Purchaser written notice of the issuance,
describing the type of New Securities issued or sold, the date of the issuance
or sale (or deemed issuance or sale), the Proportionate Number of shares of
Common Stock related to the New Securities that it may acquire and the aggregate
purchase price payable by it upon exercise of its Pre-Emptive Right (including
relevant details as to the calculation of such purchase price). The purchase
price for each such share of Common Stock shall be equal to the Closing Price of
the Common Stock on the date of issuance or sale (or deemed issuance or sale) of
the corresponding New Security. Each Pre-Emptive Purchaser shall exercise its
Pre-Emptive Right (if at all) by delivering, within 10 business days after the
end of such fiscal quarter in which the New Securities were issued or sold (or
deemed to be issued or sold, (a) notice to the Company stating therein the
quantity of its Proportionate Number of shares of Common Stock to be purchased
and (b) payment to the Company of the aggregate purchase price for such shares
in immediately available funds. Thereupon, the Company shall promptly issue and
deliver such Pre-Emptive Purchaser a certificate or certificates for the number
of shares of Common Stock related to the New Securities which the Pre-Emptive
Purchaser has elected to purchase.
Section 3.4 Adjustments. The applicable purchase price and each component
of the definition of Proportionate Number shall be adjusted appropriately to
reflect stock dividends, combinations, splits, reclassifications, exchanges,
substitutions or other similar adjustments with respect to the New Securities
issued during the relevant fiscal quarter that occur prior to the exercise of
the applicable Pre-Emptive Right.
Section 3.5 Transfer of Pre-Emptive Right. The Pre-Emptive Right set forth
in this Article III may be transferred or assigned by UtiliCorp only to a
transferee or assignee of the Then Existing Shares that is an Affiliate of
UtiliCorp, provided that the Company is given written notice prior to said
transfer or assignment, stating the name and address or the Affiliate and
identifying the securities with respect to which such Pre-Emptive Rights are
being transferred or assigned, and, provided further, that the Affiliate of such
rights assumes in writing the obligations of such Pre-Emptive Purchaser under
this Agreement.
Section 3.6 Termination of Pre-Emptive Right. The Pre-Emptive Right granted
under this Agreement shall terminate on the first to occur of (a) expiration of
the 10-day exercise period after a fiscal quarter in which the Pre-Emptive
Purchaser fails to exercise its Pre-Emptive Right in full or (b) the Pre-Emptive
Purchaser's voluntary or involuntary, direct or indirect transfer, sale,
assignment, donation, pledge or other encumbrance of any shares of Preferred
Stock or Conversion Shares (except to an Affiliate).
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ARTICLE IV
TRANSFERS OF SHARES
Section 4.1 Transfers. Except as otherwise expressly provided herein and
subject to applicable law, a Holder may, voluntarily or involuntarily, directly
or indirectly, sell, transfer, assign, donate, pledge or otherwise encumber or
dispose of any interest in all or any portion of the shares of Preferred Stock
and the Conversion Shares (a "Transfer") without restriction.
Section 4.2 Securities Laws; Assignment of Obligations. A Holder shall not
effect any Transfer until:
(a) There is then in effect a Registration Statement covering such
proposed disposition and such disposition is made in accordance with such
Registration Statement; or
(b) Such Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement
of the circumstances surrounding the proposed disposition, and if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company,
that such disposition is exempt from registration under the Securities Act;
provided however, that it is agreed that the Company will not require
opinions of Holder's counsel for transactions made pursuant to Rule 144
except in unusual circumstances.
Section 4.3 Transfers to Competitors. A Holder may not Transfer any portion
of the Preferred Stock to any Competitor.
Section 4.4 Legend.
(a) Each certificate representing Preferred Stock shall (unless
otherwise permitted by the provisions of this Agreement) be stamped or
otherwise imprinted with a legend substantially similar to the following
(in addition to any legend required under applicable state securities
laws):
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS. THEY MAY NOT BE SOLD OR OFFERED FOR SALE,
PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT AS TO THE SECURITIES UNDER SAID ACT AND ANY APPLICABLE
STATE SECURITIES LAW OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED TO EFFECTUATE
SUCH TRANSACTION.
THE SALE, TRANSFER OR PLEDGE OF THIS CERTIFICATE IS SUBJECT TO THE TERMS AND
CONDITIONS OF A CERTAIN INVESTOR'S RIGHTS AGREEMENT BETWEEN THE COMPANY AND
CERTAIN HOLDERS OF ITS SECURITIES, AS THE SAME MAY BE AMENDED AND IN EFFECT FROM
TIME TO TIME. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO
THE SECRETARY OF THE COMPANY.
THE SALE, TRANSFER OR PLEDGE OF THIS CERTIFICATE IS SUBJECT TO THE TERMS AND
CONDITIONS OF THE AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF THE
COMPANY, AS THE SAME MAY BE AMENDED AND
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IN EFFECT FROM TIME TO TIME. COPIES OF SUCH CERTIFICATE MAY BE OBTAINED UPON
WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.
(b) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any Holder if the Holder shall have obtained
an opinion of counsel at such Holder's expense (which counsel may be
counsel to the Company) reasonably acceptable to the Company to the effect
that the securities proposed to be disposed of may lawfully be so disposed
of under Rule 144(k) (or any successor thereto or substantially equivalent
exemption) without registration, qualification or legend.
Section 4.5 Improper Transfer. Any attempt to Transfer any Preferred Stock
which is not in accordance with this Agreement shall be null and void, and the
Company shall not give any effect to such attempted Transfer in the records of
the Company.
ARTICLE V
MISCELLANEOUS
Section 5.1 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 calendar days after the filing of the
Dispute with the AAA, or the parties' arbitrators fail to designate a third
arbitrator within 30 calendar days after the later of their appointments, such
arbitrator shall be appointed by the AAA. An arbitration proceeding hereunder
shall be concluded within 180 calendar days of the filing of the Dispute with
the AAA. Arbitration proceedings shall be conducted in Kansas City, Missouri.
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 make specific written findings of fact and
conclusions of law. The decision of the arbitrators shall be final and binding
on each party.
Section 5.2 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, at the most current address given by such Holder
to the Company in accordance with the provisions of this Section 5.2, which
address initially is, with respect to UtiliCorp, the address set forth in
the Securities Purchase Agreement, and
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(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 5.2.
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 or sent via Internet electronic mail; and when
actually received, if sent by any other means.
Section 5.3 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 5.11.
Section 5.4 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 5.5 Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
Section 5.6 Governing Law. The laws of the State of Missouri shall govern
this Agreement without regard to principles of conflict of laws.
Section 5.7 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.
Section 5.8 Entire Agreement. This Agreement, the Strategic Alliance
Agreement, and 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 rights granted by the Company set forth herein. This
Agreement, the Strategic Alliance Agreement, and the Securities Purchase
Agreement supersede all prior agreements and understandings between the parties
with respect to such subject matter.
Section 5.9 Attorneys' Fees. In any action or proceeding brought to enforce
any provision of this Agreement or an arbitration award, the successful party
shall be entitled to recover reasonable attorneys' fees in addition to its costs
and expenses and any other available remedy.
Section 5.10 Amendment. This Agreement may be amended only by means of a
written amendment signed by the Company and by a majority of the Holders.
Section 5.11 Rights of Assignee. Subject to the provisions of Sections
2.10, 3.5 and 4.4 hereof, the rights of an assignee under this Section 5.11
shall be the same rights granted to
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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.
Section 5.12 No Presumption. In the event any claim is made by a party
relating to any conflict, omission, or ambiguity in this Agreement, no
presumption or burden of proof or persuasion shall be implied by virtue of the
fact that this Agreement was prepared by or at the request of a particular party
or its counsel.
Section 5.13 References to this Agreement. References to numbered or
lettered articles, section, and subsections refer to articles, sections, and
subsections, respectively, of this Agreement unless otherwise expressly stated.
* * * *
THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK
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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: President
UTILICORP UNITED INC.
By: /s/ Robert K. Green
Name: Robert K. Green
Title: President
SIGNATURE PAGE TO
INVESTOR'S RIGHTS AGREEMENT
20
CERTIFICATE OF DESIGNATION, RIGHTS, AND LIMITATIONS
OF THE SERIES A CONVERTIBLE PREFERRED STOCK
OF QUANTA SERVICES, INC.
Pursuant to Section 151(g), The General Corporation Law of the State of
Delaware, Quanta Services, Inc., a Delaware corporation (the "Corporation"),
DOES HEREBY CERTIFY:
That, pursuant to authority conferred upon the Board of Directors by
Article Fourth of the Amended and Restated Certificate of Incorporation, and
pursuant to the provisions of The General Corporation Law of the State of
Delaware, the Board of Directors on September 21, 1999, duly adopted a
resolution providing for the issuance of series A convertible preferred stock,
which resolution is as follows:
RESOLVED, that, pursuant to the authority expressly granted and vested in
the Board of Directors of the Corporation, and effective upon filing of this
Certificate of Designation, Rights, and Limitations (the "Certificate of
Designation"), there shall be designated a "Series A Convertible Preferred
Stock" (the "Series A Preferred Stock"), consisting of 1,860,000 shares of
preferred stock of the Corporation, $0.00001 par value per share.
FURTHER RESOLVED, that the Board of Directors be, and the same hereby is,
authorized to issue such shares of Series A Preferred Stock from time to time
and for such consideration and on such terms as the Board of Directors shall
determine; and
FURTHER RESOLVED, that, subject to the limitations provided by law and by
the Corporation's Amended and Restated Certificate of Incorporation, the powers,
designations, preferences and relative, participating, optional or other special
rights, powers or priorities of, and the qualifications, limitations or
restrictions upon, the Series A Preferred Stock shall be as follows:
1. Designation. One million eight hundred sixty thousand (1,860,000) shares
of the authorized and unissued preferred stock of the Corporation, $0.00001 par
value per share, are hereby designated "Series A Convertible Preferred Stock"
(the "Series A Preferred Stock").
2. Dividends.
(a) Preferred. Subject to Sections 2(c) and (d) below, the holders of
Series A Preferred Stock shall be entitled to receive dividends in cash at
the rate of 0.5% per annum on an amount equal to $100.00 (the "Purchase
Price"), plus all unpaid dividends accrued, on each outstanding share of
Series A Preferred Stock (as adjusted pursuant to Section 5 hereof with
respect to such share), when and as declared by the Board of Directors out
of the funds legally available for that purpose (the "Preferred Dividend").
The Preferred Dividend on each share of Series A Preferred Stock shall be
cumulative from the date of issuance of such share, whether or not earned,
whether or not funds of the Corporation are legally available for the
payment of dividends and whether or not declared by the Board of Directors,
but such dividend shall be payable only when, as, and if declared by the
Board of Directors. So long as any shares of Series
<PAGE>
A Preferred Stock shall be outstanding, (i) no dividend, whether in cash,
stock or property, shall be paid or declared, nor shall any other
distribution be made, on any shares of the common stock of the Corporation,
par value $0.00001 per share (the "Common Stock"), or any other class or
series of capital stock of the Corporation, (ii) nor shall any class or
series of capital stock of the Corporation be redeemed, purchased or
otherwise acquired for value by the Corporation (except for acquisitions of
Common Stock by the Corporation pursuant to (A) agreements which permit the
Corporation to repurchase such shares upon termination of services to the
Corporation entered into on or before the date on which the shares of
Series A Preferred Stock were first issued (the "Original Issue Date") or
(B) in satisfaction of an indemnification obligation to the Corporation
upon a breach by the holder of Common Stock of a representation, warranty
or covenant in any agreement for the acquisition by the Corporation of a
business (as defined in Rule 11-01(d) of Regulation S-X adopted by the
Securities and Exchange Commission) pursuant to the Corporation's
acquisition program (an "Acquisition")), in each case, until all dividends
set forth in this Section (2)(a) on the Series A Preferred Stock shall have
been paid or declared and set apart.
(b) Participating. In addition to the Preferred Dividend payable on
the Series A Preferred Stock, the shares of Series A Preferred Stock shall
be entitled to receive, out of any funds legally available therefor, the
amount of any cash or non-cash dividends or distributions declared and paid
on the shares of Common Stock, as if the shares of Series A Preferred Stock
had been converted immediately prior to the record date for payment of such
dividends or distributions.
(c) Corporation's Right to Terminate Preferred Dividend. At the option
of the Corporation (exercisable by delivery to the holder of notice
thereof), at any time after the sixth anniversary of the Original Issue
Date, if on the date of exercise by the Corporation, the Closing Price (as
defined in Section 4(b)(i) below) of the Corporation's Common Stock is
greater than $30.00 (subject to adjustment for any stock split,
combination, and the like), then the Corporation may terminate the
Preferred Dividend, effective on the date of receipt by the holder of the
relevant notice.
(d) Adjustment of Preferred Dividend. At the option of UtiliCorp
United Inc., a Delaware corporation, or one or more of its "affiliates" (as
defined in Rule 12b-2 under the Securities Exchange Act of 1934, as
amended) or all such persons together (collectively, "UtiliCorp"), at any
time after the sixth anniversary of the Original Issue Date, if on the date
of exercise by UtiliCorp the Closing Price (as defined in Section 4(b)(i)
below) of the Corporation's Common Stock is $30.00 or less (subject to
adjustment for any stock split, combination, and the like), then the
Preferred Dividend will be adjusted to the then "market coupon rate" (as
defined below). The "market coupon rate" shall be the Corporation's
after-tax cost of obtaining financing, excluding common stock, to replace
UtiliCorp's investment in the Corporation, as determined by mutual
agreement of the parties; provided, however, that if the parties are unable
to agree upon the market coupon rate within 10 days after the date of the
sixth anniversary of the Original Issue Date,
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<PAGE>
then the parties shall mutually agree upon a nationally recognized
investment banking firm skilled in the business aspects of the subject to
determine the market coupon rate, such determination shall be made by the
investment banking firm within a 30 days of being selected. If the parties
are unable to agree upon a nationally recognized investment banking firm
within 30 days after the date of the sixth anniversary of the Original
Issue Date, then the determination shall be made by a panel of three
nationally recognized investment banking firms skilled in the business
aspects of the subject. Each of the Corporation and the holder of a
majority of the shares of Series A Preferred Stock shall select one such
firm within five days after the expiration of above-mentioned 30-day period
(the "Initial Selection Period"), and the third such firm shall be selected
by the two investment banking firms within five days after the expiration
the Initial Selection Period. Within 15 days after the selection of the
third investment banking firm, the initial two firms shall submit to the
third firm their proposals of the market coupon rate and, within five days
after receipt thereof, the third firm shall adopt in its entirety one of
the proposals and shall not adopt a compromise between the proposals of the
initial two firms. The market coupon rate determined in accordance with the
above procedure shall, retroactive to the date immediately following the
sixth anniversary of the Original Issue Date and thereafter, be the
Preferred Dividend.
3. Voting Rights.
(a) General. Each holder of shares of Series A Preferred Stock shall
be entitled to the number of votes equal to the number of shares of Common
Stock into which the shares of Series A Preferred Stock held by such holder
are then convertible, at each meeting of stockholders of the Corporation
(and written actions of stockholders in lieu of meetings), with respect to
any and all matters presented to the stockholders of the Corporation for
their action or consideration. Except as provided by law or as otherwise
expressly provided herein, such holder shall have voting rights and powers
equal to the voting rights and powers of the Common Stock, and holders of
Series A Preferred Stock shall vote together with the holders of Common
Stock as a single class and be entitled to notice of any stockholders'
meeting in accordance with the By-laws of the Corporation. Fractional votes
shall not, however, be permitted and any fractional voting rights resulting
from the above formula (after aggregating all shares into which shares of
Series A Preferred Stock held by each holder could be converted) shall be
rounded to the nearest whole number (with one-half being rounded upward).
(b) Election of Directors. The Board of Directors of the Corporation
shall consist of 10 directors. The directors of the Corporation shall be
elected as follows:
(i) A majority of the outstanding shares of Series A Preferred
Stock and the shares of Common Stock issued upon conversion thereof
(the "Conversion Shares") (to the extent permitted by applicable law)
held by UtiliCorp, voting exclusively and as a separate class, shall
be entitled to elect two of the total number of directors of the
Corporation, subject to the limitations set forth in subsections
3(b)(ii), (iv) and (v) below.
(ii) In the event that the ratio of the total number of shares of
Common Stock owned by UtiliCorp (on an as-converted basis) to the
total number of shares of Common Stock outstanding, assuming full
conversion of all securities and full exercise of all outstanding
rights, options and warrants to acquire Common Stock (such ratio,
"UtiliCorp's Fully Diluted Ownership Ratio") is equal to or greater
than 30%, then a majority of the outstanding shares of Series A
Preferred Stock and the Conversion Shares (to the extent permitted by
applicable law) held by UtiliCorp, voting exclusively and as a
separate class, shall be entitled to elect three of the total number
of directors of the Corporation.
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<PAGE>
(iii) To the extent any nominee of the holders of the Series A
Preferred Stock is not an officer of UtiliCorp, the Board of Directors
of the Corporation shall have the right to approve such nominee, such
approval not to be unreasonably withheld. Only the holders of the
Series A Preferred Stock and the Conversion Shares (to the extent
permitted by applicable law) shall be entitled to remove from office
such directors nominated by the holders of the Series A Preferred
Stock and the Conversion Shares (to the extent permitted by applicable
law) or to fill any vacancy caused by the resignation, death or
removal of such directors.
(iv) In the event that UtiliCorp's Fully Diluted Ownership Ratio
(A) is less than 10% or (B) UtiliCorp sells or otherwise disposes of
at least 50%, but less than 75%, of the total number of shares of
Common Stock owned by it on the Original Issue Date (on an
as-converted basis), then a majority of the outstanding shares of
Series A Preferred Stock and the Conversion Shares (to the extent
permitted by applicable law) held by UtiliCorp shall only be entitled
(voting exclusively and as a separate class) to elect one of the total
number of directors of the Corporation.
(v) In the event that (A) UtiliCorp's Fully Diluted Ownership
Ratio is less than 5% or (B) UtiliCorp sells or otherwise disposes of
75% or more of the total number of shares of Common Stock owned by it
(on an as-converted basis), then a majority of the outstanding shares
of Series A Preferred Stock and the Conversion Shares (to the extent
permitted by applicable law) held by UtiliCorp shall have no right
(voting exclusively and as a separate class) to elect any directors to
the Board of Directors.
(vi) The holders of Limited Vote Common Stock, voting together as
a single class, shall be entitled to elect one member of the Board of
Directors, but shall not otherwise be entitled to vote in the election
of directors of the Corporation. Only holders of Limited Vote Common
Stock shall have the right to remove from office such director or to
fill any vacancy caused by the resignation, death or removal of such
director.
(vii) Except as provided in Sections 3(b)(i), (ii), (iii) and
(iv) above, the holders of Common Stock and the holders of Series A
Preferred Stock, voting together as a single class, shall be entitled
to elect all members of the Board of Directors.
(c) Veto Rights. So long as the outstanding shares of Series A
Preferred Stock represent 10% or more of the outstanding shares of Common
Stock (on an as-converted basis), the approval by the vote or written
consent of the holders of at least two-thirds of the then outstanding
shares of Series A Preferred Stock, voting together as a single class,
shall be necessary before the Corporation may:
(i) Authorize, issue or enter into any agreement providing for
the issuance (contingent or otherwise) of (A) any authorized but
unissued shares of Series A Preferred Stock or any other class or
series of capital stock senior to or on par with the Series A
Preferred Stock as to dividend rights or (B) any notes or debt
securities containing equity features, including, without limitation,
any notes or debt securities convertible into or exchangeable for
equity securities, having dividend rights on par with or senior to the
Series A Preferred Stock;
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<PAGE>
(ii) Redeem or purchase or otherwise acquire any of its capital
stock, now or hereafter issued, of any class, except for (A) any
repurchase of shares of capital stock pursuant to any employee benefit
plan adopted by the Corporation, (B) any payment or redemption of
certain convertible subordinated notes issued by the Corporation on
October 5, 1998 to Enron Capital & Trade Resources Corp. and Joint
Energy Development Investments II Limited Partnership, and (C) any
acquisition of shares of capital stock by the Corporation pursuant to
agreements which permit the Corporation to repurchase such shares (1)
upon termination of services to the Corporation entered into on or
before the Original Issue Date or (2) in satisfaction of an
indemnification obligation to the Corporation upon a breach by the
holder of Common Stock of a representation, warranty or covenant in
any agreement for an Acquisition;
(iii) Enter into a transaction or series of transactions
resulting in the sale, lease, transfer or other disposition of all or
substantially all of the assets of the Corporation in which the
holders of the Series A Preferred Stock would receive less than the
Common Stock for each share of Series A Preferred Stock held by them;
(iv) Liquidate, dissolve or wind up the Corporation in any form
of transaction; or
(v) Amend the Corporation's Certificate of Incorporation or
Bylaws or the organizational documents of a subsidiary of the
Corporation (including the filing of a certificate of designation), in
each case as amended, or file with any governmental authority any
resolution of the Board of Directors containing in each case any
provisions which would adversely affect or otherwise impair the voting
powers, preferences or other special rights or privileges,
qualifications, limitations or restrictions of the Series A Preferred
Stock (including, without limitation, an amendment or resolution to
increase the number of directors of the Corporation to a number
greater than 10).
4. Conversion. The Corporation and holders of the Series A Preferred Stock
shall have, and be subject to, the conversion rights as follows (the "Conversion
Rights"):
(a) Holder's Right to Convert. Subject to and in compliance with the
provisions of this Section 4, any shares of Series A Preferred Stock may,
at the option of the holder, be converted at any time into fully paid and
nonassessable shares of Common Stock. The number of shares of Common Stock
to which a holder of Series A Preferred Stock shall be entitled upon
conversion by the holder shall be the product obtained by multiplying the
Series A Preferred Stock Rate then in effect (determined as provided in
Section 4(b)(ii)) times the number of shares of Series A Preferred Stock
being converted by such holder. (b) Certain Definitions and Determinations.
As used in Sections 4 and 5, the following terms shall have the following
meanings:
(i) "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, (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
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<PAGE>
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, (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 based upon the price
that would be paid by a willing buyer of the shares at issue, in a
sale process designed to maximize value and attract a reasonable
number of participants to provide a fair determination of such value,
provided, that none of the transactions related to the foregoing shall
include purchases by any "affiliate" (as defined in Rule 12b-2 under
the Securities Act of 1933) of the Corporation.
(ii) The conversion rate in effect at any time for conversion of
the Series A Preferred Stock (the "Preferred Stock Rate") shall be the
quotient obtained by dividing the Original Issue Price (as defined
below) by the Conversion Price, calculated as provided in Section
4(b)(iv).
(iii) The "Original Issue Price" of the Series A Preferred Stock
shall equal the Purchase Price with respect to each share (as adjusted
for any stock dividends, combinations, splits and the like with
respect to such shares).
(iv) The conversion price shall initially be $30.00 (the
"Conversion Price"). The initial Conversion Price shall be adjusted
from time to time in accordance with the provisions of Section 5. All
references to the Conversion Price herein shall mean the Conversion
Price as so adjusted.
(c) Automatic Conversion Prior to Liquidation. In the event of a
liquidation of the Corporation, the Conversion Rights shall be
automatically exercised at the close of business on the first full business
day preceding the date fixed for the payment of any amounts distributable
on liquidation to the holders of Common Stock.
(d) Fractional Shares. No fractional shares of Common Stock shall be
issued upon conversion of the Series A Preferred Stock. All shares of
Common Stock (including fractions thereof) issuable upon conversion of more
than one share of Series A Preferred Stock by a holder shall be aggregated
for purposes of determining whether the conversion would result in the
issuance of any fractional share. In lieu of any fractional shares to which
the holder would otherwise be entitled, the Corporation shall pay cash
equal to such fractional share of Common Stock multiplied by the Closing
Price of the Common Stock on the business day immediately prior to the date
on which conversion is deemed to occur (as determined in subsection
4(e)(ii) below).
(e) Mechanics of Conversion.
(i) In order for a holder of Series A Preferred Stock to convert
shares of Series A Preferred Stock into shares of Common Stock, such
holder shall surrender the certificate or certificates for such shares
of Series A Preferred Stock, at the office of the transfer
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<PAGE>
agent for the Series A Preferred Stock (or at the principal office of
the Corporation if the Corporation serves as its own transfer agent),
together with written notice that such holder elects to convert all or
any number of the shares of the Series A Preferred Stock represented
by such certificate or certificates. Such notice shall state such
holder's name or the names of the nominees in which such holder wishes
the certificate or certificates for shares of Common Stock to be
issued.
(ii) If required by the Corporation, certificates surrendered for
conversion shall be endorsed or accompanied by a written instrument or
instruments of transfer, in form satisfactory to the Corporation, duly
executed by the registered holder or his, her or its attorney duly
authorized in writing. Provided that the certificates of the Series A
Preferred Stock have been surrendered as provided above, the
Corporation shall, as soon as practicable, issue and deliver at such
office to such holder of Series A Preferred Stock, or to his, her or
its nominees, a certificate or certificates for the number of shares
of Common Stock to which such holder shall be entitled, together with
cash in lieu of any fraction of a share. In the event less than all
shares represented by such certificate are converted, a new
certificate shall be issued by the Corporation representing the
unconverted shares. Such conversion shall be deemed to have been made
at the close of business on the date of such surrender of the
certificates representing the shares of Series A Preferred Stock to be
converted, and the person entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes
as the record holder of such shares of Common Stock on such date.
(f) Reservation of Common Stock. The Corporation shall at all times
when the Series A Preferred Stock shall be outstanding reserve and keep
available (free from preemptive rights) out of its authorized but unissued
stock, for the purpose of issuing upon conversion of the Series A Preferred
Stock, such number of shares of Common Stock as shall then be issuable upon
the conversion of all outstanding Series A Preferred Stock. All shares of
Common Stock so issuable shall, upon issuance, be duly and validly issued
and fully paid and nonassessable. Before taking any action which would
cause an adjustment reducing the Conversion Price below the then par value
of the shares of Common Stock issuable upon conversion of the Series A
Preferred Stock, the Corporation will take any corporate action which may,
in the opinion of its counsel, be necessary in order that the Corporation
may validly and legally issue fully paid and nonassessable shares of Common
Stock at such adjusted Conversion Price.
(g) Notices. Any notice required by the provisions of Sections 2(c), 4
and 5 shall be in writing and shall be deemed effectively given: (i) upon
personal delivery to the party to be notified, (ii) when sent by confirmed
telex or facsimile if sent during normal business hours of the recipient;
if not, then on the next business day, (iii) five business days after
having been sent by registered or certified mail, return receipt requested,
postage prepaid, or (iv) one business day after deposit with a nationally
recognized overnight courier, specifying next day delivery, with written
verification of receipt. All notices shall be addressed to each holder of
record at the address of such holder appearing on the books of the
Corporation.
(h) Payment of Taxes. The Corporation will pay all taxes (other than
taxes based upon income or gross receipts) and other governmental charges
that may be imposed with respect to the issue or delivery of shares of
Common Stock upon conversion of shares of Series
7
<PAGE>
A Preferred Stock, excluding any tax or other charge imposed in connection
with any transfer involved in the issue and delivery of shares of Common
Stock in a name other than that in which the shares of Series A Preferred
Stock so converted were registered.
5. Antidilution Adjustments. The number and kind of securities issuable
upon the conversion of the Series A Preferred Stock shall be subject to
adjustment, without duplication, from time to time upon the happening of certain
events occurring on or after the Original Issue Date as follows:
(a) Adjustment for Stock Splits and Combinations. In case the
Corporation shall (i) subdivide its outstanding Common Stock into a greater
number of shares, (ii) combine its outstanding Common Stock into a smaller
number of shares, (iii) pay a dividend or make a distribution on its
outstanding Common Stock in shares of its capital stock or (iv) issue by
reclassification of its outstanding Common Stock (whether pursuant to a
merger or consolidation or otherwise) any other shares of capital stock of
the Corporation, the Series A Preferred Stock 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
Corporation which, if this Series A Preferred Stock 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.
(b) Adjustment for Common Stock Dividends and Distributions. In case
the Corporation shall pay a dividend or make a distribution on any class of
capital stock of the Corporation 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 (i) 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 (ii)
the denominator shall be the sum of such number of shares and the total
number of shares issued in such dividend or other distribution.
(c) Adjustment for Rights to Acquire Common Stock Below Market Price.
Subject to Section 5(m) below, in case the Corporation 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 Section 5(h) 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 (i) 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 (ii) 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 Section 5(c), the issuance of rights or
warrants to subscribe for or purchase securities
8
<PAGE>
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 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 (or in connection with) the exercise
of such securities for 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.
(d) Adjustment for Distribution of Debt or Assets. In case the
Corporation 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
Corporation and cash dividends out of retained earnings), or rights to
subscribe for Common Stock at a price less than the current market price
per share (excluding those referred to in Section 5(c) 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 (i) the numerator shall be the current market
price per share (determined as provided in Section 5(h) 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 (ii) 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.
(e) Adjustment for Sales of Common Stock Below Market Price (But Above
Conversion Price). If the Corporation shall issue any additional shares of
Common Stock (other than as provided in Sections 5(a) through 5(d) above)
at a price per share less than the current market price per share of Common
Stock but above the Conversion Price in respect of the Series A Preferred
Stock, then the Conversion Price shall be adjusted to the price determined
by multiplying the Conversion Price by a fraction of which (i) the
numerator shall be (A) the sum of (1) 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 (2) the
consideration, if any, received and deemed received by the Corporation upon
the issuance of such additional shares of Common Stock (B) divided by the
total number of shares of Common Stock outstanding immediately after the
issuance of such additional shares of Common Stock, and (ii) the
denominator shall be the current market price.
(f) Adjustment for Sales of Common Stock Below Conversion Price. If
the Corporation shall issue any additional shares of Common Stock (other
than as provided in Sections 5(a) through 5(e) above) at a price per share
less than the Conversion Price, then the Conversion Price shall be adjusted
to the price determined by multiplying the Conversion Price times a
fraction of which (i) the numerator shall be (A) the sum of (1) the number
of shares of Common Stock outstanding immediately prior to the issuance of
such additional shares of
9
<PAGE>
Common Stock multiplied by the Conversion Price and (2) the consideration,
if any, received and deemed received by the Corporation upon the issuance
of such additional shares of Common Stock (B) divided by the total number
of shares of Common Stock outstanding immediately after the issuance of
such additional shares of Common Stock, and (ii) the denominator shall be
the Conversion Price.
(g) Certain Determinations.
(i) In case the Corporation 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, for purposes of Sections 5(e) and (f), (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 (1)
the date on which the Corporation shall enter into a firm contract for
the issuance of such Common Stock Equivalent or (2) 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 Corporation 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 or deemed issuance of any shares of Common Stock
pursuant to the exercise of any conversion or exchange rights of any
Convertible Security or pursuant to the exercise of any warrants,
options, or other subscription or purchase rights, if any adjustments
shall previously have been made in the Conversion Price then in effect
upon the issuance of such Convertible Securities, warrants, options or
other rights pursuant hereto.
(ii) The following provisions shall be applicable to making of
adjustments in the Conversion Price hereinbefore provided in Sections
5(c), (d), (e) and (f):
(A) The consideration received by the Corporation shall be
deemed to be the following:
(1) (x) 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
Corporation therefor, or, (y) if such additional shares of
Common Stock or Common Stock Equivalents are offered by the
Corporation for subscription, the subscription price, or,
(z) 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
Corporation for and in the underwriting of, or otherwise in
connection with, the issue thereof;
10
<PAGE>
(2) 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 Board of Directors. In any case in which
the consideration to be received or paid shall be other than
cash, the Board of Directors of the Corporation shall notify
promptly each holder of the Series A Preferred Stock of its
determination of the fair market value of such
consideration;
(3) The consideration for any additional shares of
Common Stock issuable pursuant to any Common Stock
Equivalents shall be the consideration received by the
Corporation for issuing such Common Stock Equivalents, plus
the additional consideration payable to the Corporation upon
the exercise, conversion or exchange of such Common Stock
Equivalents; and
(4) 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 Corporation
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.
(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, (1) the number of shares 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, (2) 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 this Section 5 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 (3) 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 Corporation (computed as in clause (A) above) shall be deemed to have
been received by the Corporation.
(iii) 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 Corporation or
its subsidiaries.
(iv) No adjustments of the Conversion Price shall be made
pursuant to Sections 5(c), (e), and (f) upon the issuance of shares of
Common Stock that are issued pursuant to (x) any employee benefit
plan, program or policy approved by the Board of Directors of the
Corporation, 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 Corporation or its
"affiliates" (as defined in Rule 12b-2
11
<PAGE>
under the Securities Exchange Act of 1934, as amended) or (y) Acquisitions
made by the Corporation.
(h) Current Market Price. For the purpose of any computation under
Sections 5(c), (d) and (e) above, the current market price shall be deemed
to be the following:
(i) With respect to a bonafide underwritten public offering, the
offering price agreed to by the underwriter;
(ii) With respect to binding agreements made by the Corporation
to issue shares of Common Stock for a price that is (A) determined as
of the date of the agreement with reference to a market price
contemporaneous with the date of the binding agreement and (B) without
full adjustment to the Closing Price on the day of issuance, the price
as determined by such binding agreement; or
(iii) 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.
(i) Deferral of Share Issuance. In any case in which this Section 5
shall require that an adjustment as a result of any event becomes effective
from and after a record date, the Corporation my elect to defer until after
the occurrence of such event (i) issuing to the holder of Series A
Preferred Stock 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 (ii) paying
to such holder any amount in cash in lieu of a fractional share of Common
Stock pursuant to Section 4(d) above. In lieu of the shares the issuance of
which is deferred pursuant to this Section 5(i), the Corporation shall
issue or cause a transfer agent to issue due bills or other appropriate
evidence of the right to receive such shares promptly after the occurrence
of such event.
(j) De Minimis Adjustments. Any adjustment in the Conversion Price
otherwise required by this Section 5 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
Section 5 and not theretofore made) would not require an increase or
decrease of more than 1% in such price, but in the case of an adjustment
required as a result of a dividend or distribution on any class of capital
stock of the Corporation in shares of Common Stock, such adjustment must be
made no later than the earlier of (a) 3 years after the date of the stock
dividend or distribution or (b) the date as of which the aggregate stock
dividends or distributions for which adjustment of the Conversion Price has
not previously been made total at least 3% of the issued and outstanding
capital stock of the Corporation with respect to which such stock dividends
or distributions were made. All calculations under this Section 5 shall be
made to the nearest cent or to the nearest 1/100th of a share, as the case
may be.
(k) Applicability to Other Shares. In case at any time, as a result of
an adjustment made pursuant to Section 5(a)(iii) or (iv) above, the holders
of the Series A Preferred Stock thereafter surrendered for conversion shall
become entitled to receive any shares of capital stock of the Corporation
other than Common Stock, the number and kind of such other shares so
12
<PAGE>
receivable upon conversion of Series A Preferred Stock 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 (a) to (g), inclusive, above, and the other
provisions of this Section 5 with respect to the Common Stock shall apply
on like terms to any such other shares.
(l) Board Determinations. The Board of Directors may make such
reductions in the Conversion Price, in addition to those required by this
Section 5, as shall be determined by the Board of Directors to be advisable
in order to avoid taxation so far as practicable of 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, and (absent
manifest error by the Board of Directors) its action in so doing shall be
final and conclusive.
(m) Rights Plan. With respect to any stockholder rights plan (the
"Rights Plan") pursuant to which "rights" would be issued or issuable to
stockholders of the Corporation, 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 either (i) reserved for issuance in
connection with the issuance of Conversion Shares to the holders of Series
A Preferred Stock or (ii) are issued to holders of Series A Preferred Stock
on an as converted basis. Unless rights are so issued pursuant to clause
(ii) of this Section 5(m), 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.
(n) Notices of Adjustment. In each case of an adjustment or
readjustment of the Conversion Price for the number of shares of Common
Stock or other securities issuable upon conversion of shares of Series A
Preferred Stock, if the Series A Preferred Stock is then convertible
pursuant to Section 4, the Corporation, at its expense, shall compute such
adjustment or readjustment in accordance with the provisions hereof and
prepare a certificate showing such adjustment or readjustment, and shall
deliver such certificate to each registered holder of Series A Preferred
Stock. The certificate shall set forth such adjustment or readjustment,
showing in detail the facts upon which such adjustment or readjustment is
based, including (without limitation) a statement of (i) the consideration
received or deemed to be received by the Corporation for any additional
securities issued or sold or deemed to have been issued or sold, (ii) the
Conversion Price at the time in effect, (iii) the number of additional
securities and (iv) the type and amount, if any, of other property which at
the time would be received upon conversion of the Series A Preferred Stock.
(o) Notices of Record Date. Upon (i) any taking by the Corporation of
a record of the holders of any class of securities for the purpose of
determining the holders thereof who are entitled to receive any dividend or
other distribution or (ii) other capital reorganization of the Corporation,
any reclassification or recapitalization of the capital stock of the
Corporation, any merger or consolidation of the Corporation with or into
any other corporation, or any voluntary or involuntary dissolution,
liquidation or winding up of the Corporation, the Corporation shall send to
each holder of the Series A Preferred Stock at least 20 calendar days prior
to the record date specified therein a notice specifying (A) the date on
which any such record is to be taken for the purpose of such dividend or
distribution and a description of such
13
<PAGE>
dividend or distribution, (B) the date on which any such reorganization,
reclassification, transfer, consolidation, merger, dissolution, liquidation
or winding up is expected to become effective, and (C) the date, if any,
that is to be fixed as to when the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common
Stock (or other securities) for securities or other property deliverable
upon such reorganization, reclassification, transfer, consolidation,
merger, dissolution, liquidation or winding up.
THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK.
14
<PAGE>
IN WITNESS WHEREOF, QUANTA SERVICES, INC. has caused its corporate seal to
be affixed and this Certificate to be signed by its President and its Secretary
this 21st day of September, 1999.
QUANTA SERVICES, INC.
By: /s/ John R. Colson
John R. Colson, President
By: /s/ Brad Eastman
Brad Eastman, Secretary
SIGNATURE PAGE TO
CERTIFICATE OF DESIGNATION
15
<PAGE>
STATE OF TEXAS )
) ss.
COUNTY OF )
On this 21st day of September, 1999, before me appeared John R. Colson,
to me personally known, who, being by me duly sworn did say that he is the
President of Quanta Services, Inc., a corporation of the State of Delaware, and
that the seal affixed to the foregoing instrument is the corporate seal of said
corporation and that said instrument was signed and sealed on behalf of said
corporation by authority of its Board of Directors, and said President
acknowledged said instrument to be the free act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year last above written.
Notary Public
My Commission Expires:
[SEAL]
16
<PAGE>
STATE OF TEXAS )
) ss.
COUNTY OF )
On this 21st day of September, 1999, before me appeared Brad Eastman,
to me personally known, who, being by me duly sworn did say that he is the
Secretary of Quanta Services, Inc., a corporation of the State of Delaware, and
that the seal affixed to the foregoing instrument is the corporate seal of said
corporation and that said instrument was signed and sealed on behalf of said
corporation by authority of its Board of Directors, and said Secretary
acknowledged said instrument to be the free act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year last above written.
Notary Public
My Commission Expires:
[SEAL]
AGREEMENT WITH RESPECT TO SCHEDULE 13D
The undersigned hereby agree that any Statement on Schedule 13D to be
filed with the Securities and Exchange Commission by any of the undersigned,
including any amendment thereto, with respect to securities of Quanta Services,
Inc., a Delaware corporation, may be filed by UtiliCorp United Inc., a Delaware
corporation, on behalf of all of the undersigned.
IN WITNESS THEREOF, the undersigned have caused this Agreement to be
executed in counterparts by their duly authorized signatories, or in their
individual capacity as the case may be, as of the 30th day of September, 1999.
UtiliCorp United Inc.
By: /s/ Dale J. Wolf
Name: Dale J. Wolf
Title: Secretary
/s/ Robert K. Green
Robert K. Green
SCHEDULE OF PURCHASES BY THE REPORTING PERSONS
OF THE ISSUED AND OUTSTANDING SHARES
OF ISSUER'S COMMON STOCK
- --------------------------------------------------------------------------------
Date Purchaser # Shares Net $ Purchased
- --------------------------------------------------------------------------------
063099 Green 10,000 $390,000
090299 UtiliCorp 60,000 1,406,180
090799 UtiliCorp 55,000 1,393,383
090899 UtiliCorp 23,400 598,591
090999 UtiliCorp 196,000 5,287,024
091099 UtiliCorp 50,000 1,391,347
091599 UtiliCorp 140,000 3,597,793
091699 UtiliCorp 34,300 877,053
091799 UtiliCorp 16,700 421,909
092099 UtiliCorp 8,100 223,805
092199 UtiliCorp 227,000 6,030,098
092299 UtiliCorp 31,700 846,766
092499 UtiliCorp 7,000 185,117
092499 UtiliCorp 814,485 21,176,610*
092799 UtiliCorp 255,000 6,630,000*
092899 UtiliCorp 15,000 396,434
* Represents information accumulated in connection with UtiliCorp's contracts
to purchase 1,069,485 shares of Issuer's outstanding common stock from 21
shareholders of the Issuer's outstanding common stock for an aggregate
purchase price of $27,806,610, as of September 29, 1999.
