SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): March 13, 2002
QUANTA SERVICES, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-13831 74-2851603
(Commission File No.) (IRS Employer Identification No.)
1360 Post Oak Boulevard, Suite 2100
Houston, Texas 77056
(Address of principal executive offices, including ZIP code)
(713) 629-7600
(Registrant's telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
ITEM 5. OTHER EVENTS.
On March 13, 2002, the Special Committee of the Board of Directors of
Quanta Services, Inc., a Delaware corporation, consisting of all directors not
designated by Aquila Inc. (formerly known as UtiliCorp United, Inc.) approved
the following:
o An amendment to the Rights Agreement, dated March 30, 2000, by and
between Quanta and American Stock Transfer & Trust Company, as
rights agent, as amended by Amendment No. 1 and Amendment No. 2
thereto;
o The creation of a Stock Employee Compensation Trust; and
o The execution of Employment Agreements with certain specified
employees.
A summary of these actions follows.
Amendment to Rights Agreement
-----------------------------
Quanta entered into Amendment No. 3 to the Rights Agreement on March 13,
2002. The purpose of the Amendment is to exempt from the dilutive provisions of
the Rights Agreement an acquisition of Quanta made pursuant to a tender or
exchange offer meeting all of the following requirements:
o The offer must be for all of the outstanding shares of Quanta's common stock
and series A convertible preferred stock.
o The same per share price and consideration must be offered for all shares of
Quanta's common stock and series A convertible preferred stock (on an as
converted basis) and must be paid for all tendered or exchanged shares upon
consummation of the offer.
o Upon completion of the offer, the person who made the offer must own shares
of Quanta's voting stock representing 75% or more of the then outstanding
voting stock.
o Prior to commencing the offer, the person making the offer must irrevocably
commit to Quanta in writing to consummate a transaction promptly upon
completion of the offer, pursuant to which all shares of Quanta's common
stock and series A convertible preferred stock not beneficially owned by
that person at the completion of the offer will be acquired at the same
price, and for the same consideration, per share paid in the offer.
A copy of Amendment No. 3 is attached to this filing as an exhibit and
is incorporated herein by reference. The foregoing description is qualified
in its entirety by reference to Amendment No. 3.
Stock Employee Compensation Trust
---------------------------------
Quanta entered into a Trust Agreement, dated March 13, 2002, between
Quanta and Wachovia Bank, N.A., as trustee, pursuant to which the parties
established the Quanta Services, Inc. Stock Employee Compensation Trust (the
"SECT") to fund future employee benefit
obligations of Quanta using Quanta's common stock. Pursuant to the Common Stock
Purchase Agreement, dated March 13, 2002, between Quanta and Wachovia Bank,
N.A., as trustee, Quanta sold eight million shares of Quanta common stock to the
SECT in exchange for a promissory note and a cash amount equal to the aggregate
par value of the shares.
The SECT is a trust that holds shares of Quanta's common stock to be used
to fund Quanta's obligations during the term of the trust in respect of certain
benefit plans. The SECT will release the stock over the life of the trust, as
the note is paid down through contributions by Quanta, to satisfy certain
benefit requirements of Quanta's benefit plans. Compensation expense will be
recognized by Quanta based on the fair value of the shares as they are released
from the SECT. Unallocated shares held by the SECT will effectively not be
included in calculating Quanta's earnings per share.
The Trust Agreement contains confidential pass-through voting and
tendering provisions that are structured such that the individuals with an
economic interest in the performance of the stock control the voting and
tendering of such shares. The SECT is currently structured to enable
participants in Quanta's broad-based Employee Stock Purchase Plan to determine
the manner in which stock held by the trustee under the SECT is voted and
tendered.
Quanta may amend the SECT at any time, subject to certain limitations on
its ability to have an adverse effect on the contingent rights of participants
in the benefit plans without their consent. The SECT will terminate on July 1,
2017 or any earlier date on which the note is paid in full. The Board of
Directors of Quanta may terminate the SECT at any earlier time, and the SECT
will terminate automatically upon Quanta giving the trustee notice of a change
of control of Quanta (as defined in the Trust Agreement). Neither a change in a
majority of the Board of Directors following a proxy fight nor a public company
stock-for-stock merger would result in termination of the SECT and payments to
participants. Upon termination, the trust will fund any pending obligations
under the Plans and correspondingly reduce the remaining principal amount of the
note, sell an amount of stock and any other non-cash assets then held by it
sufficient to permit the trust to pay the amounts owned under the note, and pay
to Quanta an amount equal to the remaining principal amount plus any accrued
interest on the note, which payment will be deemed to terminate all remaining
obligations of the trust with respect to the note. Any funds remaining in the
SECT will be distributed to a broad cross-section of plan participants or to
employees of Quanta generally or to a plan covering a broad cross-section of
employees, as the Committee may in good faith determine taking into account the
best interests of a broad cross section of the individuals employed by Quanta
and its subsidiaries.
Copies of the Trust Agreement and the Stock Purchase Agreement are
attached to this filing as exhibits and are incorporated herein by reference.
The foregoing description is qualified in its entirety by reference to the Trust
Agreement and the Common Stock Purchase Agreement.
Employment Agreements
---------------------
Quanta entered into new employment agreements with certain employees,
as of March 13, 2002, which become effective upon a change of control (as
defined below) of Quanta. For some of these employees, the new employment
agreements
supplemented existing employment agreements already in effect. The new
employment agreements provide that, following a change of control, if Quanta
terminates the employee's employment other than for cause (as defined in the new
employment agreements), the employee terminates employment for good reason (as
defined in the new employment agreements), or the employee's employment
terminates due to death or disability, Quanta will pay certain amounts to the
employee, which vary with the level of the employee's responsibility and the
terms of the employee's prior employment arrangements.
For purposes of the new employment agreements, a change of control means:
o a person or entity, other than Quanta and its affiliates or an employee
benefit plan of Quanta or its affiliates, acquires beneficial ownership
of 50% or more of Quanta's total outstanding voting power;
o individuals on the Board of Directors as of the date of the employment
agreements, and any new individual who became a director with the
approval of a majority of directors then in office who were directors as
of the date of the employment agreements or whose election or nomination
for election was previously so approved, cease to constitute a majority
of the Board of Directors;
o Quanta's stockholders approve, or Quanta consummates, a merger,
consolidation, recapitalization, reorganization, or reverse stock split,
other than a transaction in which at least 50% of the total voting power
of the surviving entity immediately thereafter is beneficially owned by
at least 50% of the holders Quanta securities immediately prior to the
transaction without substantially altering their voting power; or
o Quanta's stockholders approve a complete liquidation or an agreement for
the sale of 50% or more of Quanta's assets.
The new employment agreements provide for payment of an amount equal to
all salary, bonus and other compensation due the employee at termination, plus
two or, in the case of 12 senior executives, three times the sum of the
employee's base salary and highest annual bonus (as defined in the new
employment agreements). Additionally, all stock options, restricted stock or
other awards made under Quanta's stock incentive plans will become fully vested,
and the employee's outstanding stock options will remain exercisable as if the
employee remained employed by Quanta for two or, in the case of 12 senior
executives, three years following his or her termination. The new employment
agreements also provide that Quanta will continue the employee's health and
welfare benefits for two or, in the case of 12 senior executives, three years
after his or her termination. The employee also will be considered
to have remained employed, for purposes of determining eligibility for retiree
medical benefits, until the expiration of two or, in the case of 12 senior
executives, three years following his or her termination. Quanta will also
provide the employee with outplacement services as selected by the employee.
The new employment agreements also provide that Quanta will make a gross
up payment to the employees if payments under the new employment agreements (or
otherwise) would be deemed "excess parachute payments" under Internal Revenue
Code Section 280G, subject to the excise tax imposed by Internal Revenue Code
Section 4999, so that the employee retains an amount of the gross-up payment
equal to the excise tax imposed upon the payments.
Employment agreements with 12 senior executives provide that Quanta will
make the payments described above if the employee terminates his or her
employment for any reason at all during a 30-day period beginning six months
after the date of the change of control. In addition, in order to conform the
new employment agreements with two of those senior executives to their existing
employment arrangements, their new employment agreements also provide that
Quanta will make these payments if the employee terminates his employment for
any reason during the five-day period immediately before the date of the change
of control. All of the new employment agreements provide that Quanta will make
the payments described above if, within three years following a change in
control, the employee terminates his or her employment for good reason (as
defined in the new employment agreements), the employee is terminated without
cause or the employee's employment terminates due to death or disability.
In order to preserve for Quanta the benefit of non-competition agreements
and other restrictive covenants of certain employees that were entered into in
connection with the acquisition of those employees' businesses, twenty of the
new employment agreements provide that such covenants will not cease, in the
case of agreements with the 30-day window termination provision described above,
upon the voluntary termination of the employee during that 30-day period or, for
the other agreements, in the event of a termination of that employee. In the
case of employees who did not sell businesses to Quanta, the new employment
agreements provide that the covenant of non-competition, and any other
restrictive covenants applicable to the employee under any employment or other
agreement between Quanta and the employee, will cease to apply effective as of
the employee's termination.
Copies of the new employment agreements with John R. Colson, Peter T.
Dameris, Dana A. Gordon, Nicholas M. Grindstaff, Frederick M. Haag, James H.
Haddox, Derrick A. Jensen, Elliott C. Robbins, Gary W. Smith, Luke T. Spalj,
Gary A. Tucci and John R. Wilson
are attached to this filing as exhibits and are incorporated herein by
reference. One additional employee signed a new employment agreement similar to
that of John Colson. An additional twenty-four employees signed new employment
agreements similar to that of Elliott Robbins, except that thirteen of those
twenty-four agreements do not provide for the cessation of covenants of
non-competition and other restrictive covenants as described above. The
foregoing description is qualified in its entirety by reference to the attached
Employment Agreements.
Press Release
-------------
On March 14, 2002, Quanta issued a press release announcing certain
actions taken by the Special Committee on March 13, 2002. A copy of the press
release is attached to this filing as an exhibit and is incorporated herein by
reference.
ITEM 7. EXHIBITS.
4.10 Amendment No. 3 to the Rights Agreement, dated as of March 13,
2002, by and between Quanta Services, Inc. and American Stock
Transfer & Trust Company, as rights agent
10.1 Stock Employee Compensation Trust Agreement, dated as of March
13, 2002, between Quanta Services, Inc. and Wachovia Bank, N.A.,
as trustee.
10.2 Common Stock Purchase Agreement, dated as of March 13, 2002,
between Quanta Services, Inc. and Wachovia Bank, N.A., as trustee.
10.3 Employment Agreement, dated March 13, 2002, by and between Quanta
Services, Inc. and John R. Colson.
10.4 Employment Agreement, dated March 13, 2002, by and between Quanta
Services, Inc. and Peter T. Dameris.
10.5 Employment Agreement, dated March 13, 2002, by and between Quanta
Services, Inc. and Dana A. Gordon.
10.6 Employment Agreement, dated March 13, 2002, by and between Quanta
Services, Inc. and Nicholas M. Grindstaff.
10.7 Employment Agreement, dated March 13, 2002, by and between Quanta
Services, Inc. and Frederick M. Haag.
10.8 Employment Agreement, dated March 13, 2002, by and between Quanta
Services, Inc. and James H. Haddox.
10.9 Employment Agreement, dated March 13, 2002, by and between Quanta
Services, Inc. and Derrick A. Jensen.
10.10 Employment Agreement, dated March 13, 2002, by and between Quanta
Services, Inc. and Elliott C. Robbins.
10.11 Employment Agreement, dated March 13, 2002, by and between Quanta
Services, Inc. and Gary W. Smith.
10.12 Employment Agreement, dated March 13, 2002, by and between Quanta
Services, Inc. and Luke T. Spalj.
10.13 Employment Agreement, dated March 13, 2002, by and between Quanta
Services, Inc. and Gary A. Tucci.
10.14 Employment Agreement, dated March 13, 2002, by and between Quanta
Services, Inc. and John R. Wilson.
99.2 Press Release of Quanta Services, Inc., dated March 14, 2002.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: March 21, 2002
QUANTA SERVICES, INC.
By: /s/ Dana A. Gordon
-----------------------------------
Name: Dana A. Gordon
Title: VP -- General Counsel