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FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT
AND REGISTRATION RIGHTS AGREEMENT
This FIRST AMENDMENT TO SECURITIES PURCHASE AGREEMENT AND REGISTRATION
RIGHTS AGREEMENT, dated as of September 21, 1999 (this "First Amendment"), is
among QUANTA SERVICES, INC., a corporation duly organized and existing under the
laws of the State of Delaware (the "Borrower"), ECT MERCHANT INVESTMENTS CORP.,
a corporation duly organized and existing under the laws of the State of
Delaware ("EMIC"), and JOINT ENERGY DEVELOPMENT INVESTMENTS II LIMITED
PARTNERSHIP, a limited partnership duly organized and existing under the laws of
the State of Delaware ("JEDI-II").
Recitals
a. The Borrower, Enron Capital & Trade Resources Corp., a Delaware
corporation ("ECT") and JEDI-II entered into that certain Securities Purchase
Agreement dated as of September 29, 1998 (the "Securities Agreement") pursuant
to which the Borrower has issued certain convertible subordinated notes to ECT
and JEDI-II, all upon the terms and conditions provided for in the Securities
Agreement. ECT assigned its interest in the Notes and the Securities Agreement
to EMIC and EMIC is successor to ECT with respect to the Notes and the
Securities Agreement.
b. The Borrower, ECT and JEDI-II are parties to that certain Registration
Rights Agreement dated as of September 29, 1998 (the "Registration Agreement")
pursuant to which the Borrower has agreed to provide certain registration and
other rights, all upon the terms and conditions provided for in the Registration
Agreement. ECT assigned its interest therein to EMIC and EMIC is successor to
ECT with respect to the Registration Agreement.
c. The Borrower, EMIC and JEDI-II have agreed to amend certain provisions
of the Securities Agreement and Registration Agreement and to take certain other
actions as described in this First Amendment.
d. Borrower has agreed to issue preferred stock to UtiliCorp United Inc.,
a Delaware corporation ("UtiliCorp.") and contemplate entering into the
Investor's Rights Agreement between UtiliCorp and Borrower (the "Investor's
Rights Agreement").
e. NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Section 1. Defined Terms. Unless otherwise defined in this First
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Amendment, each capitalized term used in this First Amendment which is defined
in the Securities Agreement has the meaning assigned to such term in the
Securities Agreement.
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Section 2. Amendments to Securities Agreement. The Securities Agreement
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is amended as follows:
a. New and Replaced Definitions. Section 1.01 of the Securities Agreement
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is amended by inserting the following definitions as appropriate:
"EBIT" means, for any period, on a trailing four fiscal quarter basis,
the sum of Consolidated Net Income plus each of the following to the extent
actually deducted in determining Consolidated Net Income, (a) Consolidated
Interest Expense, and (b) provisions for taxes based on income or revenues, all
calculated on a consolidated basis for the Borrower and its Subsidiaries and as
determined in accordance with GAAP.
"Management Fee" means the management fee due from the Borrower to
UtiliCorp under the terms of the Management Services Agreement between the
Borrower and UtiliCorp under which UtiliCorp will provide to the Borrower advice
regarding (a) corporate and strategic planning, (b) the development, evaluation
and marketing of the Borrower's products and services, (c) identifying potential
acquisition candidates and additional business opportunities, and (d) other
similar or related services.
"Minimum Interest Coverage Ratio" means, for any period, the ratio of
(a) EBIT plus the amount of the Management Fee expensed during such period, to
(b) the sum of the Consolidated Interest Expense, plus the amount of any
dividend or distribution in respect of the Preferred Stock paid or scheduled to
be paid during such period, plus the amount of the Management Fee paid during
such period.
"Obligations" means any and all amounts, liabilities and obligations
owing from time to time by Borrower to the Purchasers or any Successors,
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.
"Participation" means, for each Purchaser or any Successor, such
Purchaser's or Successor's proportionate share pertaining to the Obligations.
As of the Effective Date, ECT's Participation shall be 25% and JEDI-II's
Participation shall be 75%.
"Purchasers" means EMIC and JEDI-II and any of their respective
Affiliates who may become the holders of any Securities, but does not include
any Person who becomes a holder of any Securities who is not an Affiliate of
EMIC or JEDI-II.
"Purchaser's Account" means for any Purchaser or Successor, the
account specified by such Purchaser or Successor as its Purchaser's Account by
notice in writing to the Borrower.
"Successors" means the successors and permitted assigns of the
Purchasers that are not Affiliates of Purchasers.
b. Section 1.02, Article III, Sections 6.01 through 6.06, Section 6.08,
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Articles VIII and IX, and Sections 11.01, 11.02, 11.03 and 11.08. Section 1.02,
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Article III, Sections 6.01 through 6.06, Section 6.08, Articles VIII and IX, and
Sections 11.01, 11.02, 11.03 and 11.08 are each amended by replacing all
references to "Purchaser" or "Purchasers" contained therein with respectively,
"Purchaser and/or any Successor" and "Purchasers and/or any Successors."
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c. Sections 2.06 and 6.07. Sections 2.06 and 6.07 are amended by
----------------------
replacing (i) "ECT or JEDI-II" with "EMIC, JEDI-II or any of their respective
Affiliates" and (ii) "ECT and JEDI-II" with "EMIC, JEDI-II and any of their
respective Affiliates that become Purchasers."
d. Section 7.01. Section 7.01 is amended by deleting the first sentence
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and replacing it with the following:
The Borrower will not, and will not permit any Subsidiary to,
create, incur, assume, guarantee or in any other manner become
directly or indirectly liable (as to new Indebtedness) for the
payment of (a) any Prohibited Subordinated Indebtedness, as
hereafter defined, or (b) any other Indebtedness unless the
Borrower's Minimum Interest Coverage Ratio is greater than or
equal to the Minimum Interest Coverage Ratio permitted by the
Senior Credit Agreement, but in no event shall such ratio be
less than 2.76 to 1.0.
e. Section 11.04. Section 11.04 is amended by replacing such section in
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its entirety with the following:
This Agreement shall be binding upon the Borrower, the
Purchasers, and their respective Successors. 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 Borrower, the Purchasers, and their
respective Successors. All or any portion of the rights and
obligations of the Purchasers and their Successors under this
Agreement with respect to the Basic Documents may be sold,
assigned or pledged by any Purchaser or Successor.
Notwithstanding the foregoing, the Purchasers may transfer the
rights provided in Sections 2.06, 6.07 or 10.09 only to other
Purchasers. Upon any assignment of the Basic Documents, the
assignee shall succeed to all of the assignor's rights and
obligations under the Basic Documents to the extent assigned
and the assigning Purchaser or Successor, as applicable, shall
be automatically released from any such obligations hereunder
with respect to the Basic Documents to the extent assigned,
other than the obligations arising under Article X hereof. The
Conversion Shares may be sold, assigned or pledged and upon any
assignment complying with the terms of the Registration Rights
Agreement and upon any such assignment, the holders of the
Conversion Shares shall succeed to the Purchaser's or any
Successor's rights and obligations under the Registration
Rights Agreement. Upon request of any Purchaser or any
Successor in connection with any transfer of the Notes, the
Borrower shall execute and deliver any amendment to this
Agreement, the Notes, and the other Basic Documents reasonably
requested by the Purchaser or the Successor to reflect the
transfer and delineate the rights of the transferor and the
transferee provided that the Borrower shall not be liable for
the expenses incurred in documenting such amendment. In the
event that a Purchaser or a Successor grants participations in
its Note to other Persons, each of such other Persons shall
have the rights of setoff against any amounts due by the
Borrower hereunder and similar rights or Liens to the same
extent as made available to the Purchasers or any Successors.
The Borrower acknowledges that the Purchasers or any Successors
may "syndicate" the loan evidenced by the Notes, and the other
Basic Documents and agree to execute any amendments,
restatements and other modifications to the Basic Documents in
connection with such syndication, provided that the Borrower
shall not be liable for the expenses incurred by Purchasers or
any Successors in documenting such syndication. The Borrower
may deem and treat the
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original Purchasers as the owner of the Notes for the purpose
of receiving payment of principal of and premium (if any) and
interest on the Notes and for all other purposes whatsoever
until the Borrower is notified otherwise in writing pursuant to
Section 11.06 of this Agreement.
Section 3. Amendments to Registration Agreement. The Registration
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Agreement is amended as follows:
a. Defined Terms. For Section 3 only of this First Amendment, each
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capitalized term used in this Section 3 of the First Amendment which is defined
in the Registration Agreement and not in the Securities Agreement has the
meaning assigned to such term in the Registration Agreement.
b. Amended Definition. Section 1.01 of the Registration Agreement is
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amended by amending the definition of "Registrable Securities" to read, in its
entirety, as follows:
"Registrable Securities " means any of the following: (i) the
Conversion Shares (including shares of Common Stock actually
issued upon conversion of the Notes), (ii) other shares of
Common Stock acquired by EMIC and/or JEDI-II pursuant to
Section 2.06 of the Securities Purchase Agreement, and (iii)
the Indenture Notes (as defined below), the underlying
Conversion Shares and any replacement or substitute for, or
reissuance of, any Indenture Notes, until such time as any of
such securities cease to be Registrable Securities pursuant to
Section 1.02 hereof. Since the term Registrable Securities is
being amended to include debt securities as well as equity
securities, the context of each provision of this Agreement
will be interpreted in a manner so as to give maximum effect to
all provisions insofar as they are now applicable to debt
securities. When calculating a percentage of Registrable
Securities, the calculation shall be made using the amount of
shares of Common Stock beneficially owned as a result of owning
Registrable Securities.
c. Demand Registration. Section 2.01(d) is amended by replacing the last
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sentence of the first paragraph with the following:
Except as provided in this subsection (d) and in Section 2.05,
the Company will not effect any other registration of its
Voting Securities (except with respect to Registration
Statements on Form S-4 or S-8 or any forms succeeding thereto
for purposes permissible under such forms as of the date hereof
or filed in connection with an exchange offer or an offering of
securities solely to the Company's existing stockholders or
such other registration statements (i) for the resale of shares
issued pursuant to an employee stock ownership trust or other
benefit plan of a business acquired in an Acquisition or (ii)
in connection with non-underwritten resales of securities
issued to owners of a business acquired in an Acquisition),
whether for its own account or that of any Other Holder other
than holders of "Registrable Securities" (as such term is
defined in the Investor's Rights Agreement) under the
Investor's Rights Agreement, from the date of receipt of a
Request Notice requesting the registration of an underwritten
public offering (x) in the case of all underwritten public
offerings other than firm commitment, underwritten public
offerings, until the completion or abandonment of the
distribution by the underwriter of all securities thereunder,
or (y) in the case of firm commitment, underwritten public
offerings, until the earlier of (a) the date each underwriter
has completed the distribution of all
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securities purchased by it or (b) the date ninety (90) days
subsequent to the effective date of such registration
statement.
d. Piggy-Back Registration. Section 2.02 is amended by replacing the
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proviso at the end of the last sentence of the first paragraph with the
following:
provided, however, that (a) in the case of a Registration
Statement filed pursuant to the exercise of demand registration
rights of any Other Holders, priority shall be given first to
the Other Holders demanding such registration, then equally (on
a share for share basis) to the Holders and UtiliCorp, then to
the Company and then to Other Holders (other than the Other
Holders demanding such registration); and (b) in the case of a
Registration Statement the filing of which is initiated by the
Company, priority shall be given (A) first to the Company, then
(B) such priority shall be given equally (on a share for share
basis) to (x) the Other Holders (exercising their piggy back
registration rights) and (y) the Holders.
e. Assignees. Section 3.12 is amended by replacing the first sentence
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with the following:
The rights of any Holder under this Agreement may be assigned
to any Person who, in the aggregate, acquires or becomes the
Beneficial Owner of at least 10,000 shares of Common Stock
either issued or issuable on conversion of the Notes, which
such number shall be subject to equitable adjustment for stock
splits, stock dividends or combinations of shares.
f. Preparations for Registered Sales of Notes. In the event that any
------------------------------------------
Holder or Holders elect to exercise their demand registration rights with
respect to the Notes (the "Triggering Note Holder(s)"), then the following
actions shall be taken:
(1) The Triggering Note Holder(s) will notify the Borrower of
such determination;
(2) The Borrower shall (i) promptly notify all other Holders of
Notes of such determination and (ii) give such other Holders of Notes
7 days to elect to participate in the following procedures. Any Holder
of the Notes electing to participate within such 7 days shall
participate with Triggering Note Holder(s) on a pro-rata basis
(collectively, the "Participating Note Holder(s)"). Among the
Participating Note Holder(s), a simple majority on a dollar basis
shall control all decisions;
(3) The Borrower shall engage a nationally recognized indenture
trustee (the "Trustee") reasonably acceptable to the Participating
Note Holder(s);
(4) The Borrower and the Trustee shall enter into a customary
indenture (the "Indenture") acceptable to the Participating Note
Holder(s), which will cover all Notes (the "Indenture Notes"). The
Indenture shall require the vote of the Participating Note Holder(s)
holding Indenture Notes representing at least 66 2/3% of the principal
amount of outstanding Indenture Notes to either (i) amend or modify
the Indenture or (ii) remove or replace the Trustee; provided,
however, that, without the consent of each of the Holder(s) of the
Indenture Notes affected thereby, the Indenture and Indenture Notes
shall not be amended or modified to (a) extend the fixed maturity of
any Indenture Note, or reduce the rate or extend the time of payment
of interest thereon or reduce the principal amount thereof, or
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premium, if any, thereon, or make the principal thereof or premium, if
any, or interest thereon payable in any currency other than U.S.
dollars, (b) modify the subordination or conversion provisions of the
Indenture or Indenture Notes in any manner adverse to the interests of
the Participating Note Holder(s), or (c) reduce the 66 2/3rd
percentage for Participating Note Holder(s) who are required to
consent (i) to other amendments to, or modifications of, the Indenture
and Indenture Notes or (ii) to removal or replacement of the Trustee.
The form of Indenture Note will be included within the text of the
Indenture;
(5) The Indenture and the Indenture Notes, both of which must be
acceptable to the Participating Note Holder(s), shall contain the same
rights, terms and features, mutatis mutandis, as stated in the
Securities Agreement, the Registration Agreement and the underlying
Notes to be received in exchange; including, without limitation, the
right to convert into Conversion Shares, along with such other terms
as are required in order (i) for the Indenture Notes to be eligible
for sale pursuant to a Registration Statement and (ii) for the
Indenture to be eligible to be qualified under the Trust Indenture Act
of 1939, as amended (the "Trust Indenture Act"). The terms of any
provisions of the Securities Agreement, the Registration Agreement and
the Notes that are (x) to be retained by EMIC and/or JEDI-II and any
other specific Person and (y) not to be included in the Indenture, may
be contained in a separate agreement between EMIC and/or JEDI-II (or
such Person), on the one hand, and the Borrower, on the other hand;
(6) As of the date of the Indenture, the face amount of
underlying Notes of each Holder of a Note shall be exchanged with the
Borrower and the Trustee for Indenture Notes of an equal face amount.
Any accrued but unpaid interest on the Notes as of the date of the
exchange shall be carried forward and shall be payable to the Holders
of Indenture Notes;
(7) The Borrower shall use commercially reasonable efforts to
cause the creation of the Indenture and the exchange of Notes to be
accomplished within 30 days after a determination has been made of
those Participating Note Holders; and
(8) When Holder(s) of Indenture Notes exercise their rights to
sell Indenture Notes pursuant to a Registration Statement, the
Borrower shall use its commercially reasonable efforts to cause the
Indenture to be qualified with the Securities and Exchange Commission
under the Trust Indenture Act.
g. Out of Pocket Expenses. All of the Borrower's and the Participating
----------------------
Note Holders' reasonable out of pocket expenses incurred to (a) engage and
compensate a Trustee, (b) create the Indenture, (c) qualify the Indenture under
the Trust Indenture Act, and (d) effect the exchange of Notes for Indenture
Notes shall be paid or reimbursed by the Participating Note Holders, pro rata in
accordance with the face amounts of such Indenture Notes.
Section 4. Representations and Warranties. The Borrower represents that:
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(i) as of the date hereof, no Default nor Material Adverse
Effect has occurred; and
(ii) the execution, delivery and performance by the Borrower of
this First Amendment: (a) is within the Borrower's corporate power;
(b) has been duly authorized by all necessary or proper corporate
action; (c) is not in contravention of any provision of the Borrower's
certificate of incorporation or bylaws; (d) will not violate (1) any
law or
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regulation or (2) any order or decree of any court or governmental
instrumentality; (e) will not conflict with or result in the breach or
termination of, constitute a default under or accelerate any
performance required by, any agreement or other instrument to which
the Borrower is a party or by which the Borrower or any of its
respective property is bound; and (f) does not require the consent or
approval of any governmental body, agency, authority or any other
Person that has not been duly obtained, made or complied with prior to
the date hereof.
Section 5. Limitations. The amendments set forth herein are limited
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precisely as written and shall not be deemed to (a) be a consent to, or waiver
or modification of, any other term or condition of the Securities Agreement or
Registration Agreement or any of the other Basic Documents, or (b) prejudice any
right or rights which the Purchasers may now have or may have in the future
under or in connection with the Securities Agreement or Registration Agreement
or any of the other Basic Documents. Except as expressly supplemented, amended
or modified hereby, the terms and provisions of the Securities Agreement or
Registration Agreement or any other Basic Documents are and shall remain in full
force and effect. In the event of a conflict between this First Amendment and
any of the foregoing documents, the terms of this First Amendment shall be
controlling.
Section 6. Governance. This First Amendment and the rights and
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obligations of the parties hereunder and under the Securities Agreement shall be
construed in accordance with and be governed by the laws of the State of Texas.
Any action, dispute, claim or controversy of any kind between the Borrower, on
the one hand, and EMIC and JEDI-II or any of their successors and assigns, on
the other hand, shall be arbitrated in accordance with the terms and provisions
of Section 11.08 of the Securities Agreement.
Section 7. Descriptive Headings, etc. The descriptive headings of the
--------------------------
several Sections of this First Amendment are inserted for convenience only and
shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
Section 8. Counterparts. This First Amendment may be executed in any
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number of counterparts and by different parties on separate counterparts and all
of such counterparts shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first written above.
QUANTA SERVICES, INC.,
A Delaware corporation
By: /s/ Xxxx Xxxxxxx
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Name: Xxxx Xxxxxxx
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Title: Vice President
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JOINT ENERGY DEVELOPMENT INVESTMENTS
II LIMITED PARTNERSHIP, a Delaware limited
partnership
By: Enron Capital Management II Limited
Partnership, its General Partner
By: Enron Capital II Corp., its
General Partner
By: /s/ Xxxxxxx X. Xxxxx, Xx.
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Name: Xxxxxxx X. Xxxxx, Xx.
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Title: Vice President and Treasurer
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ECT MERCHANT INVESTMENTS CORP.,
a Delaware corporation
By: /s/ Xxxxxx Xxxxx
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Name: Xxxxxx Xxxxx
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Title: Vice President
--------------------------
