-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AVhXvbq+dISnkJMiDsKHd/CfIRXlhKEpJ8GP+23u2Ppq8f4gJt1PGJDZltyxjnwc FBDCZhEoR+ExUcels/JoXw== /in/edgar/work/20001102/0000929624-00-001508/0000929624-00-001508.txt : 20001106 0000929624-00-001508.hdr.sgml : 20001106 ACCESSION NUMBER: 0000929624-00-001508 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20001102 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: KENETECH CORP CENTRAL INDEX KEY: 0000807708 STANDARD INDUSTRIAL CLASSIFICATION: [4991 ] IRS NUMBER: 943009803 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: SEC FILE NUMBER: 005-43755 FILM NUMBER: 751649 BUSINESS ADDRESS: STREET 1: 500 SANSOME STREET SUITE 410 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4153983825 MAIL ADDRESS: STREET 1: 500 SANSOME STREET SUITE 410 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: LERDAL MARK D CENTRAL INDEX KEY: 0001052424 STANDARD INDUSTRIAL CLASSIFICATION: [4991 ] STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 500 SANSOME ST STE 300 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 BUSINESS PHONE: 4153983825 MAIL ADDRESS: STREET 1: 500 SANSOME STREET STREET 2: SUITE 300 CITY: SAN FRANCISCO STATE: CA ZIP: 94111 SC 13D/A 1 0001.txt SCHEDULE 13D AMENDMENT #3 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D/A Under the Securities Exchange Act of 1934 (Amendment No. 3)* KENETECH Corporation - -------------------------------------------------------------------------------- (Name of Issuer) Common Stock, $0.0001 Par Value - -------------------------------------------------------------------------------- (Title of Class of Securities) 488878109 --------------------------------------------------------------- (CUSIP Number) Dianne P. Urhausen c/o KENETECH Corporation 500 Sansome Street, 410 San Francisco, CA 94111 (415) 398-3825 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) October 25, 2000 - -------------------------------------------------------------------------------- (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 (S)(S)240.13d-1(e), 240.13d-1(f) or 240.13d-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(S)(S)240.13d-7 for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. 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). Schedule 13D/A 488878109 Page 2 - ------------------------------------------------------------------------------ NAME OF REPORTING PERSON 1 S.S OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Mark D. Lerdal - ------------------------------------------------------------------------------ CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* 2 (a) [_] (b) [_] Not Applicable - ------------------------------------------------------------------------------ SEC USE ONLY 3 - ------------------------------------------------------------------------------ SOURCE OF FUNDS* 4 PF - ------------------------------------------------------------------------------ CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT 5 TO ITEMS 2(d) or 2(e) [_] - ------------------------------------------------------------------------------ CITIZENSHIP OR PLACE OF ORGANIZATION 6 United States - ------------------------------------------------------------------------------ SOLE VOTING POWER 7 NUMBER OF 11,365,458 common shares SHARES ----------------------------------------------------------- SHARED VOTING POWER BENEFICIALLY 8 0 OWNED BY ----------------------------------------------------------- EACH SOLE DISPOSITIVE POWER 9 REPORTING 11,365,458 common shares PERSON ----------------------------------------------------------- SHARED DISPOSITIVE POWER WITH 10 0 - ------------------------------------------------------------------------------ AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 11 11,365,458 common shares - ------------------------------------------------------------------------------ CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* 12 [_] - ------------------------------------------------------------------------------ PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 13 35.6% - ------------------------------------------------------------------------------ TYPE OF REPORTING PERSON* 14 IN - ------------------------------------------------------------------------------ SCHEDULE 13D/A Page 3 Item 1. Security and Issuer: This statement relates to shares of Common Stock, $0.0001 par value per share ("Kenetech Shares"), of KENETECH Corporation ("Company"). The principal executive offices of the Company are located at 500 Sansome Street, Suite 410, San Francisco, CA 94111. Item 2. Identity and Background: (a) Mark D. Lerdal (b) 500 Sansome Street, Suite 410, San Francisco, CA 94111 (c) Chief Executive Officer and President of the Company (d) During the last five years, Mr. Lerdal has not been convicted in a criminal proceeding. (e) During the last five years, Mr. Lerdal has not been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. (f) Mr. Lerdal is a citizen of the United States. Item 3. Source and Amount of Funds or Other Consideration: The transaction being reported in this Amendment No. 2 to Schedule 13D is the agreement by Mr Lerdal to exchange 11,365,458 Kenetech Shares for 472,803 common shares ("KC Holdings Shares") of KC Holdings Corporation ("KC Holdings"), a Delaware company, in an agreement dated October 25, 2000. Mr. Lerdal acquired his Kenetech Shares as follows: Mr. Lerdal acquired 12,865,458 Kenetech Shares in a private sale consummated on December 29, 1997, from affiliates of the Hillman Company, 824 Market Street, Suite 900, Wilmington, Delaware, for an aggregate purchase amount of approximately $1,000. These shares were purchased with personal funds of Mr. Lerdal. On August 3, 1998 Mr. Lerdal disposed of 1,500,000 Kenetech Shares as a gift to an irrevocable trust established for the benefit of Mr. Lerdal's children. Item 4. Purpose of Transaction: On October 25, 2000 KC Holdings announced it would make a tender offer to the shareholders of the Company, other than Mr. Lerdal, pursuant to which it intends to purchase all of the outstanding shares of the Company. The tender offer will be subject to the customary terms and conditions, including the tender of 85% of the outstanding shares, (excluding those shares held by Mr. Lerdal). The Tender offer will expire on the later of December 7, 2000 or 20 business days after it is initiated. Mr. Lerdal has entered into a Subscription and Contribution Agreement ("Subscription Agreement") with KC Holdings and ValueAct Capital Partners, LP ("ValueAct") dated October 25, 2000 pursuant to which KC Holdings will issue to ValueAct 865,214 KC Holdings Shares for aggregate cash consideration of $21,630,350, subject to successful completion of the tender offer. The price per share of such KC Holdings Shares will be $25.00. In addition, pursuant to the terms of the Subscription Agreement, Mr. Lerdal will exchange all his outstanding 11,365,458 Kenetech Shares in exchange for 472,803 KC Holdings Shares on a date to be agreed upon by Mr. Lerdal and the Company, but in no event later than December 28, 2000. Upon successful completion of the tender offer and the consummation of the Subscription Agreement the parties intend to merge the Company and a subsidiary of KC Holdings, KC Merger Corporation ("KC Merger"). The Company is to be the surviving entity and become a wholly owned subsidiary of KC Holdings. The transactions are to be completed by the end of 2000. Mr. Lerdal, KC Holdings, and KC Merger entered into a Voting Agreement SCHEDULE 13D/A Page 4 ("Voting Agreement") dated October 25, 2000. The Voting Agreement prohibits Mr. Lerdal from tendering his Kenetech Shares and requires him to vote his Kenetech Shares in favor of the proposed merger. Item 5. Interest in Securities of the Issuer: (a) The aggregate number of shares of Common Stock of the Company which Mr. Lerdal has agreed to dispose of for the purpose of this Statement is 11,365,458 Shares, representing 35.6% of the outstanding shares of Common Stock of the Company based on 31,970,164 shares disclosed as outstanding by the Company in its most recent filing on Form 10-Q (b) Mr. Lerdal has the sole power to vote and the sole power to dispose of all 11,365,458 shares of common tock of the Company beneficially owned by him. (c) Mr. Lerdal has entered into a Subscription Agreement with KC Holdings and ValueAct, dated October 25, 2000 to dispose of the 11,365,458 Kenetech Shares, as reported herein. (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer: Except as disclosed herein Mr. Lerdal does not have any contract, arrangement, understanding or relationship with any person with respect to any securities of the Company. Item 7. Material to be Filed as Exhibits: Exhibit 1 Subscription Agreement, dated as of October 25, 2000, among the ValueAct, KC Holdings and Mr. Lerdal. Exhibit 2 Voting Agreement, dated as of October 25, 2000 among KC Holding, KC Merger and Mr. Lerdal. SCHEDULE 13D/A Page 5 SIGNATURE After reasonable inquiry and to the best of the undersigned's knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. November 2, 2000 MARK D. LERDAL By: /s/ Mark D. Lerdal ------------------------ Name: Mark D. Lerdal EX-1 2 0002.txt SUBSCRIPTION AGREEMENT EXHIBIT 1 SUBSCRIPTION AND CONTRIBUTION AGREEMENT --------------------------------------- THIS SUBSCRIPTION AND CONTRIBUTION AGREEMENT (this "Agreement") is --------- entered into as of October 24, 2000, by and among KC Holding Corporation, a Delaware corporation (the "Company"), ValueAct Capital Partners, L.P. ("VAC" or ------- --- the "Cash Investor"), and Mark D. Lerdal (the "Exchange Investor" and together -------------- ----------------- with the Cash Investor, the "Investors"). Each capitalized term used and not --------- otherwise defined herein has the meaning given to such term in Section 9 below. Subject to the terms and conditions set forth herein, the parties hereto desire to consummate the following integrated plan of corporate structuring: (i) the Company desires to receive from the Cash Investor, and the Cash Investor desires to deliver to the Company, the amount of cash consideration described herein in exchange for the Company's issuance to the Cash Investor of that certain number of Common Shares (as defined herein) described herein and (ii) the Company desires to receive from the Exchange Investor, and the Exchange Investor desires to contribute to the Company, that number of shares of Target Common Stock (as defined herein) described herein in exchange for the Company's issuance to the Exchange Investor of that certain number of Common Shares described herein. NOW, THEREFORE, in consideration of the mutual covenants, agreements, and understandings herein contained, the parties hereto agree as follows: 1. Authorization of Capital Stock. The Company's authorized capital stock consists of (i) 5,000,000 shares of common stock, par value $0.01 per share (the "Common Shares"), and (ii) 5,000 shares of undesignated preferred ------------- stock (the "Preferred Shares"). ---------------- 2. Purchase And Sale of Common Shares. (a) Subject to the terms and conditions hereof, on the Sale Closing Date (as defined herein) the Company shall issue to the Cash Investor, and the Cash Investor shall purchase from the Company, 865,214 Common Shares for the aggregate cash consideration of $21,630,350. The per share purchase price of such Common Shares is $25.00. (b) Subject to the terms and conditions hereof, on the Exchange Closing Date (as defined herein) the Company shall issue to the Exchange Investor, and the Exchange Investor shall purchase from the Company, 472,803 Common Shares (the "Exchange Shares") in exchange for an aggregate of 11,365,458 --------------- shares of common stock, par value $.000l per share ("Target Common Stock"), of ------------------- KENETECH Corporation, a Delaware corporation ("Target"). The value per share of ------ such shares of Target Common Stock transferred by the Exchange Investor to the Company is $1.04. (c) Against the delivery by each Investor of the consideration set forth herein or opposite such Investor's name on Schedule I, as the case may be, ---------- the Company shall effect the issuances and sales referred to in Sections 2(a) and 2(b) above by executing and delivering to each Investor duly executed certificates evidencing the Common Shares subscribed to by each such Investor, each certificate duly registered in such Investor's name. Any cash payment to be made by the Cash Investor shall be made by wire transfer. (d) The closing of the sale of the Common Shares to the Cash Investor (the "Closing") shall take place one business day after the date on which KC ------- Merger Corp., a Delaware corporation ("Merger Sub"), a wholly owned subsidiary ---------- of the Company, shall have accepted for payment the shares of Target Common Stock tendered in the Offer (as defined in that certain Agreement and Plan of Merger, entered into as of the date hereof, by and among the Company, Merger Sub and Target (the "Merger Agreement")). The closing of the exchange by the ---------------- Exchange Investor of Target Common Stock for Exchange Shares (the "Exchange -------- Closing") shall take place at such time on date mutually agreed upon by the - ------- Company and the Exchange Investor but in no event later than December 28, 2000. The Company will immediately contribute to Merger Sub: (i) the proceeds from the sale of the Common Shares to the Cash Investor, who shall immediately deposit such funds with the depository in order to fund the purchase of the shares of Target Common Stock pursuant to the Offer and (ii) the shares of Target Common Stock contributed to the Company by the Exchange Investor. The date of the Sale Closing is herein referred to as the "Sale Closing Date," the ----------------- date of the Exchange Closing is herein referred to as the "Exchange Closing ---------------- Date" and each are collectively referred to as the "Closing Dates." - ---- ------------- (e) On the applicable Closing Dates, the Company shall deliver to each Investor such officers' certificates, good standing certificates and instruments as shall be reasonably requested relating to the transactions contemplated hereby. (f) In order to facilitate the contribution of the Exchange Shares by the Exchange Investor, the Exchange Investor shall deliver within ten business days of the date hereof one or more certificates representing all of the Exchange Shares to be contributed by the Exchange Investor to the Company, together with stock powers or other instruments duly endorsed or otherwise sufficient for transfer (the "Exchange Instruments"). The Company shall hold the -------------------- Exchange Instruments in escrow pending the Exchange Closing. On the Exchange Closing Date, the Company is authorized to present the Exchange Instruments to the transfer agent for Target and instruct the transfer agent to register the Exchange Shares in the name of the Company or its designee. (g) The Exchange Investor agrees for U.S. federal income tax purposes to treat its exchange of Target Common Stock for Common Shares as described herein as a transaction described in Section 351(a) of the Internal Revenue Code of 1986, as amended. 3. Restrictions on Stock. None of the Common Shares (including any securities received as a result of dividends, splits or any other forms of recapitalization in respect of such Common Shares) shall be Transferred (as hereinafter defined), either voluntarily or involuntarily, directly or indirectly, except (i) pursuant to an effective registration under the Securities Act (as hereinafter defined), or in a transaction which, in the opinion of counsel reasonably satisfactory to 2 the Company, qualifies as an exempt transaction under the Securities Act and the rules and regulations promulgated thereunder and (ii) in accordance with the terms of the Stockholders Agreement, dated as of the Closing Date, by and among the Company and the Investors (as the same may be amended from time to time, the "Stockholders Agreement"), such agreement to be substantially in the form ---------------------- attached hereto as Exhibit A. 4. Representations and Warranties of the Company. The Company represents and warrants that: (a) The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Attached hereto as Exhibits B and C, respectively, are true and complete copies of the Certificate of Incorporation and the Bylaws of the Company as in effect on the date hereof. (b) The Company has been recently formed to enter into the Merger Agreement and to consummate the transactions contemplated thereby and has not conducted any business other than in connection therewith and certain start-up activities. Prior to the Exchange Closing Date, the Company will have no assets or liabilities other than those incurred in connection with the Company's incorporation and the Company's start-up activities, and those acquired or assumed pursuant to the Merger Agreement and those acquired or incurred in connection with the transactions contemplated thereby. (c) The execution, delivery and performance by the Company of this Agreement and the Merger Agreement and the consummation of the transactions contemplated hereby and thereby are within the corporate powers of the Company. The Board of Directors of the Company (the "Board") has authorized the ----- execution, delivery, and performance of this Agreement and the Merger Agreement, and each of the transactions contemplated hereby and thereby. No other corporate action is necessary to authorize such execution, delivery and performance, and upon such execution and delivery, each of this Agreement and the Merger Agreement shall constitute a valid and binding obligation of the Company, enforceable against the Company in accordance with its terms. The Board has authorized the issuance and delivery of the Common Shares in accordance with this Agreement. (d) The Common Shares to be issued and sold by the Company pursuant to this Agreement, when issued in accordance with the provisions hereof, will be validly issued, fully paid and nonassessable, and each Investor will acquire good title to such Common Shares, free and clear of any lien or claim of any kind, other than as contemplated by this Agreement and the Stockholders Agreement or any liens incurred by the Investors, and no stockholder of the Company has any preemptive rights to subscribe for any of such Common Shares. (e) Except for filings by the Investors, if any, under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the creation, authorization, issuance, offer and sale of the Common Shares do not require any consent, approval or authorization of, or filing, registration or qualification with, any governmental authority on the part of the Company or the vote, consent or 3 approval in any manner of the holders of any security of the Company as a condition to the execution and delivery of this Agreement or the creation, authorization, issuance, offer and sale of the Common Shares. The execution and delivery by the Company of this Agreement and the Merger Agreement and the performance by the Company of its obligations hereunder and thereunder will not violate (i) the terms and conditions of the Certificate of Incorporation or the Bylaws of the Company, or any agreement or instrument to which the Company is a party or by which it is bound or (ii) subject to the accuracy of the Investors' representations and warranties contained in Section 5 hereof, any federal or state law. (f) Immediately prior to the Sale Closing, the Company will have one outstanding Common Share. Immediately after the Exchange Closing, the outstanding capital stock of the Company will consist of 1,338,017 Common Shares and no Preferred Shares. There are, and immediately after the Closing there will be, no outstanding (i) securities of the Company convertible into or exchangeable for shares of capital stock or voting securities of the Company, (ii) options or other rights to acquire from the Company, or other obligations of the Company to issue any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of the Company or (iii) obligations of the Company to repurchase or otherwise acquire or retire any shares of capital stock or any convertible securities, rights or options of the type described in clause (i) or (ii). (g) Other than this Agreement, the Merger Agreement, and the Stockholders Agreement, no agreement or other arrangement regarding any class of capital stock of the Company exists between the Company, or any of its affiliates and any Person. The Company is not a party to, has not agreed to be a party to, and does not plan to become a party to any agreement or arrangement with any affiliate, stockholder or other person or entity who will become a stockholder of the Company in connection with the transactions contemplated by the Merger Agreement and this Agreement, which has not been disclosed to each Investor. (h) There is no investment banker, broker or finder which has been retained by, will be retained by or is authorized to act on behalf of the Company who will be entitled to any fee or commission from the Target or the Company upon consummation of the transactions contemplated by this Agreement. (i) Neither Company, Merger Sub nor any executive officer or director of Company or Merger Sub owns any shares of Target Common Stock (or any security exchangeable for or convertible into such shares). 5. Investor Representations. Each Investor and with respect to Section 5(h), solely the Exchange Investor, represents and warrants that: (a) Offering Exemption. The Investor understands that the Common ------------------ Shares have not been registered under the Securities Act, nor qualified under any state securities laws, and that 4 they are being offered and sold pursuant to an exemption from such registration and qualification based in part upon such Investor's representations contained herein. (b) Knowledge of Offer. The Investor is familiar with the business and operations of the Company and has been given the opportunity to obtain from the Company all information that such Investor has requested regarding its business plans and prospects. (c) Knowledge and Experience; Ability to Bear Economic Risks. The -------------------------------------------------------- Investor has such knowledge and experience in financial and business matters that the Investor is capable of evaluating the merits and risks of the investment contemplated by this Agreement; and the Investor is able to bear the economic risk of this investment in the Company (including a complete loss of this investment). (d) Limitations on Disposition. The Investor recognizes that no -------------------------- public market exists for the Common Shares, and none will exist in the future. The Investor understands that the Investor must bear the economic risk of this investment indefinitely unless the Common Shares are registered pursuant to the Securities Act or an exemption from such registration is available, and unless the disposition of such Common Shares is qualified under applicable state securities laws or an exemption from such qualification is available, and that the Company has no obligation or present intention of so registering the Common Shares. The Investor further understands that there is no assurance that any exemption from the Securities Act will be available, or, if available, that such exemption will allow the Investor to Transfer any or all of the Common Shares, in the amounts, or at the times the Investor might propose. The Investor understands at the present time Rule 144 promulgated under the Securities Act by the SEC ("Rule 144") is not applicable to sales of the Common Shares because -------- they are not registered under Section 12 of the Exchange Act (as defined herein) and there is not publicly available the information concerning the Company specified in Rule 144. The Investor further acknowledges that the Company is not presently under any obligation to register under Section 12 of the Exchange Act or to make publicly available the information specified in Rule 144 and that it may never be required to do so. The Investor further acknowledges the restrictions on disposition and other terms set forth in the Stockholders Agreement. (e) Investment Purpose. The Investor is acquiring the Common Shares ------------------ solely for its own account for investment and not with a view toward the resale, Transfer, or distribution thereof, nor with any present intention of distributing the Common Shares. No other Person (as hereinafter defined) has any right with respect to or interest in the Common Shares to be purchased by the Investor, nor has the Investor agreed to give any Person any such interest or right in the future. (f) Capacity. The Investor has full power and legal right to execute -------- and deliver this Agreement and to perform its obligations hereunder. (g) Previous Acquisitions of Target Common Stock. The Cash Investor -------------------------------------------- does not own any shares of Target Common Stock. The Exchange Investor has not acquired any shares of Target Common Stock (or any security exchangeable for or convertible into such shares) at a price in excess of the Offer Price (as defined in the Merger Agreement). 5 (h) Exchange Shares. Except as stated in a disclosure letter dated --------------- this same date, the Exchange Investor represents that he is the sole beneficial owner of his Exchange Shares, free and clear of any pledge, lien, security interest, mortgage, charge, claim, equity, option, proxy, voting restriction, voting trust or agreement, understanding, arrangement, right of first refusal, limitation on disposition, adverse claim of ownership or use or encumbrance of any kind, other than restrictions imposed by the securities laws or pursuant to this Agreement, that certain Voting Agreement, dated on or about October 24, 2000, by and between Target and the Exchange Investor, and the Merger Agreement. 6. Covenants. (a) Confidentiality. As to so much of the information and other material furnished under or in connection with this Agreement (whether furnished before, on or after the date hereof), as constitutes or contains confidential business, financial or other information of the Company or any subsidiary, each of the Investors covenants for itself, its directors, officers and partners and in its role as a director or officer of the Company or its Subsidiaries, if applicable, that it will use due care to prevent its officers, directors, partners, employees, counsel, accountants and other representatives, as the case may be, from disclosing such information to Persons other than their respective authorized employees, counsel, accountants, shareholders, partners, limited partners and other authorized representatives; provided, however, that each -------- ------- Investor may disclose or deliver any information or other material disclosed to or received by it should such Investor be advised by its counsel that such disclosure or delivery is required by law, regulation or judicial or administrative order. In the event of any termination of this Agreement prior to the Closing Date, each Investor shall return to the Company all confidential material previously furnished to such Investor or its officers, directors, partners, employees, counsel, accountants and other representatives in connection with this transaction. For purposes of this Section 6(a), "due care" means at least the same level of care that such Investor would use to protect the confidentiality of its sensitive or proprietary information, and this obligation shall survive termination of this Agreement. (b) Keeping of Books. The Company will keep proper books of record ---------------- and account, in which full and correct entries shall be made of all financial transactions and the assets and business of the Company and its subsidiaries in accordance with GAAP. (c) Lost, Etc. Certificates Evidencing Common Shares; Exchange. Upon ---------------------------------------------------------- receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of any certificate evidencing any Common Shares owned by any Investor, and (in the case of loss, theft or destruction) of an unsecured indemnity satisfactory to it, and upon reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of such certificate, if mutilated, the Company will make and deliver in lieu of such certificate a new certificate of like tenor and for the number of Common Shares evidenced by such certificate which remain outstanding. An Investor's agreement of indemnity shall constitute an indemnity satisfactory to the Company for purposes of this Section 6. Upon surrender of any certificate representing any Common Shares for exchange at the office of the Company, the Company at its expense will cause to be issued in exchange therefor new certificates in such denomination or denominations as may be requested for the same aggregate number of Common Shares represented by the certificate so 6 surrendered and registered as such holder may request. The Company will also pay the cost of all deliveries of certificates for such Common Shares to any Investor (including the cost of insurance against loss or theft in an amount satisfactory to the holders) upon any exchange provided for in this Section 6. 7. Securities Act Restrictions. In addition to the legend required by Section 1(a) of the Stockholders Agreement, the certificates evidencing the Common Shares will bear the following legend reflecting the restrictions on the transfer of such securities contained in this Agreement: "The securities evidenced hereby have not been registered under the Securities Act of 1933, as amended (the "Act"), and may not be transferred except pursuant to an effective registration under the Act or in a transaction which, in the opinion of counsel reasonably satisfactory to the Company, qualifies as an exempt transaction under the Act and the rules and regulations promulgated thereunder." 8. Other Agreements. On the Exchange Closing Date, the Company and each of the Investors shall execute and mutually deliver a counterpart of the Stockholders Agreement. The obligation of the Exchange Investor to contribute the Target Common Stock to the Company and the obligation of the Company to issue the Exchange Shares to the Exchange Investor in exchange for such shares of Target Common Stock are each expressly conditional upon, and subject to, the Board of Directors of Target taking all action necessary to render the Rights Agreement inapplicable to such transactions and any and all other transactions contemplated by this Agreement. 9. Interpretation of this Agreement. (a) Terms Defined. As used in this Agreement, the following terms ------------- have the respective meaning set forth below: Exchange Act: the Securities Exchange Act of 1934, as amended. GAAP: generally accepted accounting principles, consistently applied. Person: an individual, partnership, joint-stock company, corporation, limited liability company, trust or unincorporated organization, and a government or agency or political subdivision thereof. Rights Agreement: the Rights Agreement, dated May 4, 1999 between the Target and ChaseMellon Shareholder Services L.L.C. SEC: the Securities and Exchange Commission or any other federal agency at the time administering the Securities Act. Securities Act: the Securities Act of 1933, as amended. 7 Transfer: any sale, assignment, pledge, hypothecation, or other disposition or encumbrance. (b) Directly or Indirectly. Where any provision in this Agreement refers to action to be taken by any Person, or which such Person is prohibited from taking, such provision shall be applicable whether such action is taken directly or indirectly by such Person. (c) Governing Law. This Agreement shall be governed by and construed ------------- in accordance with the laws of the State of Delaware applicable to contracts made and to be performed entirely within such State. (d) Section Headings. The headings of the sections and subsections of ---------------- this Agreement are inserted for convenience only and shall not be deemed to constitute a part thereof. 10. Termination. (a) This Agreement may be terminated at any time upon mutual agreement of the Company, VAC and the Exchange Investor. This Agreement shall automatically terminate if the Merger Agreement is not executed and delivered by the parties thereto within five business days of the date hereof. (b) Upon a termination of this Agreement pursuant to Section 10(a), the Company shall promptly return any Exchange Instruments delivered to it pursuant to Section 2(f) to the Exchange Investor. 11. Miscellaneous. (a) Notices. All communications under this Agreement shall be in ------- writing and shall be delivered by hand or facsimile or mailed by overnight courier or by registered mail or certified mail, postage prepaid: (i) if to the Company: ValueAct Capital Partners, L.P. One Maritime Plaza, Suite 1400 San Francisco, CA 94111 Attention: Jeff Ubben Facsimile No.: (415) 362-5727 8 With a copy to: Kirkland & Ellis 200 East Randolph Drive Chicago, IL 60601 Attention: Dennis M. Myers Facsimile No.: (312) 861-2200 or at such other address or facsimile number as the Company may have furnished the other parties hereto in writing; (ii) if to any Cash Investor, at the address or facsimile number set forth below such Cash Investor's name on Schedule I ---------- hereto, or at such other address or facsimile number as such Cash Investor may have furnished the other parties hereto in writing. (iii) if to the Exchange Investor: Mark D. Lerdal c/o KENETECH Corporation 500 Sansome Street, #410 San Francisco, CA 94111 Facsimile No.: (415) 984-8102 With a copy to: Gibson, Dunn & Crutcher One Montgomery St., 31/st/ Floor San Francisco, CA 94114 Attention: Doug Smith Facsimile No.: (415) 986-5309 Any notice so addressed shall be deemed to be given: if delivered by hand or facsimile, on the date of such delivery, if a business day, otherwise the first business day thereafter; if mailed by courier, on the first business day following the date of such mailing; and if mailed by registered or certified mail, on the third business day after the date of such mailing. (b) Reproduction of Documents. This Agreement and all documents ------------------------- relating thereto, including, without limitation, (i) consents, waivers and modifications relating hereto which may hereafter be executed, (ii) documents received by the Investors on the Closing Date (except for certificates evidencing the Common Shares themselves), and (iii) financial statements, certificates and other information previously or hereafter furnished to the Investors, may be reproduced by the Investors by any photographic, photostatic, microfilm, micro-card, miniature photographic or other similar process and the Investors may destroy any original document so reproduced. All parties hereto agree and stipulate that any such reproduction shall be admissible in evidence as the original 9 itself in any judicial or administrative proceeding (whether or not the original is in existence and whether or not such reproduction was made by the Investors in the regular course of business) and that any enlargement, facsimile or further reproduction of such reproduction shall likewise be admissible in evidence. (c) Survival. All warranties, representations, and covenants made by -------- the Investors and the Company herein or in any certificate or other instrument delivered by any Investor or the Company under this Agreement shall be considered to have been relied upon by the Company or the Investors, as the case may be, and shall survive all deliveries to the Investors of the Common Shares, or payment to the Company for such Common Shares, regardless of any investigation made by the Company or any of the Investors, as the case may be, or on the Company's or the Investor's behalf. All statements in any such certificate or other instrument shall constitute representations and warranties by the Company hereunder. (d) Attorneys' Fees. In the event that any action or proceeding, --------------- including without limitation arbitration, is commenced by any party hereto for the purpose of enforcing any provision of this Agreement, the parties to such action, proceeding or arbitration shall receive as part of any award, judgment, decision or other resolution of such action, proceeding or arbitration their costs and reasonable attorneys' fees as determined by the person or body making such award, judgment, decision or resolution. Should any claim hereunder be settled short of the commencement of any such action or proceeding, including arbitration, the parties in such settlement shall be entitled to include as part of the damages alleged to have been incurred reasonable costs of attorneys or other professionals in investigation or counseling on such claim. (e) Successors and Assigns; Third Party Beneficiaries. This Agreement ------------------------------------------------- shall inure to the benefit of and be binding upon the successors and assigns of each of the parties. Each of the parties hereto agree and acknowledge that VAC shall be entitled to assign its rights and obligations under this agreement to one or more co-investors provided that each such co-investor agrees in writing to be bound by terms of this agreement with respect to such assignment. Notwithstanding the foregoing, no such assignment shall release VAC from its obligations hereunder. All references herein to "Cash Investor" shall be deemed to include all such co-investors in the event of any such assignment by VAC. Each of the parties hereto agree and acknowledge that the Target is a third party beneficiary of this Agreement with respect to the value being assigned to the Target Common Stock. Except for the foregoing, this Agreement is not intended to confer upon any person other than the parties hereto any rights or remedies hereunder. (f) Entire Agreement; Amendment and Waiver. This Agreement, the -------------------------------------- Stockholders Agreement and the Certificate of Incorporation of the Company constitute the entire understandings of the parties hereto and supersede all prior agreements or understandings with respect to the subject matter hereof among such parties. This Agreement may be amended, and the observance of any term of this Agreement may be waived, with (and only with) the written consent of the Company and each of the Investors and, with respect to any change in the value being assigned to the Target Common Stock, the Target. 10 (g) Severability. In the event that any part or parts of this ------------ Agreement shall be held illegal or unenforceable by any court or administrative body of competent jurisdiction, such determination shall not affect the remaining provisions of this Agreement which shall remain in full force and effect. (h) Limitation on Enforcement of Remedies. The Company hereby agrees ------------------------------------- that it will not assert against the partners of any of the Investors any claim it may have under this Agreement by reason of any failure or alleged failure by any of the Investors to meet its obligations hereunder. (i) Counterparts. This Agreement may be executed in one or more ------------ counterparts, each of which shall be deemed an original and all of which together shall be considered one and the same agreement. 11 IN WITNESS WHEREOF, the parties hereto have executed this SUBSCRIPTION AND CONTRIBUTION AGREEMENT on the date first written above. THE COMPANY: KC HOLDING CORPORATION By:____________________________________ Name:________________________________ Title:_______________________________ THE CASH INVESTOR: VALUEACT CAPITAL PARTNERS, L.P. By: VA Partners, L.L.C. Its: General Partners By:____________________________________ Its:___________________________________ THE EXCHANGE INVESTOR: Mark D. Lerdal SCHEDULE I: CASH INVESTORS -------------------------- Name and Address ---------------- ValueAct Capital Partners, L.P. One Maritime Plaza, Suite 1400 San Francisco, CA 94111 Attention: Jeff Ubben EX-2 3 0003.txt VOTING AGREEMENT EXHIBIT 2 VOTING AGREEMENT VOTING AGREEMENT, dated as of October 25, 2000 (the "Agreement"), --------- among KC Holding Corporation, a Delaware corporation ("Parent"), KC Merger ------ Corp., a Delaware corporation and a wholly owned subsidiary of Parent ("Purchaser"), and Mark D. Lerdal (the "Stockholder"), a stockholder in KENETECH --------- ----------- Corporation (the "Company"). ------- W I T N E S S E T H: WHEREAS, contemporaneously with the execution and delivery of this Agreement, Parent, Purchaser and the Company are entering into an Agreement and Plan of Merger, dated as of the date hereof (the "Merger Agreement"), which ---------------- provides for, upon the terms and subject to the conditions set forth therein, (i) the commencement by Purchaser of a tender offer (the "Offer") for all of the ----- issued and outstanding shares of common stock, par value $.0001 per share, of the Company, together with the associated rights attached thereto (the "Rights") ------ issued pursuant to that certain Rights Agreement (as defined in the Merger Agreement) (collectively, the "Company Common Stock"), at a purchase price of -------------------- $1.04 per Company Common Stock and (ii) the subsequent merger of Purchaser with and into the Company (the "Merger"); ------ WHEREAS, as of the date hereof, the Stockholder owns beneficially 11,365,458 shares of Company Common Stock (all such shares so owned and which may hereafter be acquired by such Stockholder prior to the termination of this Agreement, whether upon the exercise of options or by means of purchase, dividend, distribution or otherwise, being referred to herein as such Stockholder's "Shares"); ------ WHEREAS, on October 24, 2000, Stockholder entered into a Subscription and Contribution Agreement (the "Subscription Agreement") with Parent pursuant ---------------------- to which, on the terms set forth therein, Stockholder will contribute all of such Stockholder's Shares to Parent in exchange for shares of common stock, par value $.01 per share, of Parent; WHEREAS, as a condition to their willingness to enter into the Merger Agreement, Parent and Purchaser have requested that the Stockholder enter into this Agreement; and WHEREAS, in order to induce Parent and Purchaser to enter into the Merger Agreement, the Stockholder is willing to enter into this Agreement. NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, Parent, Purchaser and the Stockholder hereby agree as follows: Article 1. Transfer and Voting of Shares; and Other Covenants of the Stockholders Section 1.1. Voting Of Shares. From the date hereof until the ---------------- termination of this Agreement pursuant to Section 5.2 hereof (the "Term"), at ---- any meeting of the stockholders of the Company, however called, and in any action by consent of the stockholders of the Company, Stockholder shall vote his Shares (i) in favor of the Merger and the Merger Agreement (as amended from time to time; provided that Stockholder shall not be required to vote in favor of the Merger Agreement or the Merger if the Merger Agreement has been amended in any manner that is material and adverse to the Stockholder without such Stockholder's written consent), (ii) against any Takeover Proposal and against any proposal for action or agreement that would result in a breach of any covenant, representation or warranty or any other obligation or agreement of the Company under the Merger Agreement or which is reasonably likely to result in any of the conditions of the Company's obligations under the Merger Agreement not being fulfilled, any change in the directors of the Company, any change in the present capitalization of the Company or any amendment to the Company's Articles of Incorporation or By-Laws, any other material change in the Company's corporate structure or business, or any other action, which in the case of each of the matters referred to in this clause (ii) could reasonably be expected to impede, interfere with, delay, postpone or materially adversely affect the transactions contemplated by the Merger Agreement or the likelihood of such transactions being consummated and (iii) in favor of any other matter necessary for consummation of the transactions contemplated by the Merger Agreement which is considered at any such meeting of stockholders or in such consent, and in connection therewith to execute any documents which are necessary or appropriate in order to effectuate the foregoing, including the ability for Purchaser or its nominees to vote such Shares directly. Section 1.2. No Inconsistent Arrangements. Except as contemplated ---------------------------- by this Agreement and the Subscription Agreement, Stockholder shall not during the Term (i) transfer (which term shall include, without limitation, any sale, assignment, gift, pledge, hypothecation or other disposition), or consent to any transfer of, any or all of Stockholder's Shares or any interest therein, or create or, permit to exist any lien or other encumbrance on such Shares, (ii) enter into any contract, option or other agreement or understanding with respect to any transfer of any or all of such Shares or any interest therein, (iii) grant any proxy, power-of-attorney or other authorization in or with respect to such Shares, (iv) deposit such Shares into a voting trust or enter into a voting agreement or arrangement with respect to such Shares, or (v) take any other action that would in any way restrict, limit or interfere with the performance of his obligations hereunder or the transactions contemplated hereby or by the Merger Agreement. Section 1.3. Proxy. Stockholder hereby revokes any and all prior ----- proxies or powers of attorney in respect of his Shares and constitutes and appoints Purchaser and Parent, or any nominee of Purchaser and Parent, with full power of substitution and resubstitution, at any time during the Term, as his true and lawful attorney and proxy (his "Proxy"), for and in his name, place and ----- stead, to demand that the Secretary of the Company call a special meeting of the stockholders of the Company for the purpose of considering any matter referred to in Section 1.1 and to vote each 2 of such Shares as his Proxy, at every annual, special, adjourned or postponed meeting of the stockholders of the Company, including the right to sign his name (as stockholder) to any consent, certificate or other document relating to the Company that the General Corporate Law of the State of Delaware may permit or require as provided in Section 1.1. THE FOREGOING PROXY AND POWER OF ATTORNEY ARE IRREVOCABLE AND COUPLED WITH AN INTEREST THROUGHOUT THE TERM. Section 1.4. Waiver Of Appraisal Rights. Stockholder hereby waives -------------------------- any rights of appraisal or rights to dissent from the Merger. Section 1.5. Stop Transfer. Stockholder shall not request that the ------------- Company register the transfer (book-entry or otherwise) of any certificate or uncertificated interest representing any of his Shares, unless such transfer is made in compliance with this Agreement (including the provisions of Article III hereof) Section 1.6. No Solicitation. During the Term, Stockholder shall --------------- not, nor shall it permit or authorize any of his agents or representatives (collectively, the "Representatives") to, (i) solicit or initiate, or encourage, --------------- directly or indirectly, any inquiries regarding or the submission of, any Takeover Proposal, (ii) participate in any discussions or negotiations regarding, or furnish to any Person any information or data with respect to, or take any other action to knowingly facilitate the making of any proposal that constitutes, or may reasonably be expected to lead to, any Takeover Proposal or (iii) enter into any agreement with respect to any Takeover Proposal or approve or resolve to approve any Takeover Proposal. Upon execution of this Agreement, Stockholder shall, and he shall cause his Representatives to, immediately cease any existing activities, discussions or negotiations with any parties conducted heretofore with respect to any of the foregoing. Stockholder will promptly notify Parent of the existence of any proposal, discussion, negotiation or inquiry received by Stockholder, and Stockholder will immediately communicate to Parent the terms of any proposal, discussion, negotiation or inquiry which he may receive (and will promptly provide to Parent copies of any written materials received by him in connection with such proposal, discussion, negotiation or inquiry) and the identity of the Person making such proposal or inquiry or engaging in such discussion or negotiation. Nothing in this Agreement shall be construed to prohibit the Stockholder from taking an action solely in his capacity as an officer of the Company or a member of the Company's Board of Directors or from exercising his fiduciary duties as a member of such Board of Directors. Article 2. No Tender of Shares Section 2.1. No Tender. Stockholder shall not tender his Shares --------- pursuant to the Offer. 3 Section 2.2. Disclosure. Stockholder hereby authorizes Parent and ---------- Purchaser to publish and disclose in the Offer Documents and, if approval of the Company's stockholders is required under applicable law, the Proxy Statement (including all documents and schedules filed with the SEC), his identity and ownership of the Company Common Stock and the nature of his commitments, arrangements and understandings under this Agreement (provided that Stockholder and its counsel shall be afforded reasonable opportunity to review and comment thereon with respect to such disclosure, and Parent and Purchaser shall consult in good faith with Stockholder with respect to such comments). Article 3. Representations and Warranties of the Stockholder Except as stated in a disclosure letter dated this same date Stockholder hereby represents and warrants to Parent and Purchaser as follows: Section 3.1. Due Authorization, Etc. Stockholder has all requisite ---------------------- power and authority to execute, deliver and perform this Agreement, to appoint Purchaser and Parent as his Proxy and to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by or on behalf of Stockholder and constitutes a legal, valid and binding obligation of Stockholder, enforceable against Stockholder in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium or other similar laws and except that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding for such remedy may be brought. There is no beneficiary or holder of a voting trust certificate or other interest of any trust of which Stockholder is trustee whose consent is required for the execution and delivery of this Agreement or the consummation by Stockholder of the transactions contemplated hereby. Section 3.2. No Conflicts; Required Filings and Consents. ------------------------------------------- (1) The execution and delivery of this Agreement by Stockholder does not, and the performance of this Agreement by Stockholder will not, (i) conflict with or violate any trust agreement or other similar documents relating to any trust of which Stockholder is trustee, (ii) conflict with or violate any law applicable to Stockholder or by which Stockholder or any of Stockholder's properties is bound or affected or (iii) result in any breach of or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, acceleration or cancellation of, or result in the creation of a lien or encumbrance on any assets of Stockholder, including, without limitation, Stockholder's Shares, pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit, franchise or other instrument or obligation to which Stockholder is a party or by which Stockholder or any of Stockholder's assets is bound or affected, except, in the case of clauses (ii) and (iii), for any such breaches, defaults or other occurrences that would not prevent or delay the performance by Stockholder of Stockholder's obligations under this Agreement. 4 (2) The execution and delivery of this Agreement by Stockholder does not, and the performance of this Agreement by Stockholder will not, require any consent, approval, authorization or permit of, or filing with or notification to, any governmental or regulatory authority (other than any necessary filing under the HSR Act or the Exchange Act), domestic or foreign, except where the failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not prevent or delay the performance by Stockholder of his obligations under this Agreement. Section 3.3. No Finder's Fees. No broker, investment banker, ---------------- financial advisor or other person is entitled to any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated hereby based upon arrangements made by or on behalf of Stockholder. Stockholder, on behalf of itself and its affiliates, hereby acknowledges that it is not entitled to receive any broker's, finder's, financial advisor's or other similar fee or commission in connection with the transactions contemplated hereby or by the Merger Agreement. Article 4. Representations and Warranties of Parent and Purchaser Parent and Purchaser hereby, jointly and severally, represent and warrant to the Stockholder as follows: Section 4.1. Due Organization, Authorization, Etc. Purchaser and ------------------------------------ Parent are duly organized, validly existing and in good standing under the laws of their jurisdiction of incorporation. Purchaser and Parent have all requisite corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement and the consummation of the transactions contemplated hereby by each of Purchaser and Parent have been duly authorized by all necessary corporate action on the part of Purchaser and Parent, respectively. This Agreement has been duly executed and delivered by each of Purchaser and Parent and constitutes a legal, valid and binding obligation of each of Purchaser and Parent, enforceable against Purchaser and Parent in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency, moratorium or other similar laws and except that the availability of equitable remedies, including specific performance, is subject to the discretion of the court before which any proceeding for such remedy may be brought. Article 5. Miscellaneous Section 5.1. Definitions. Terms used but not otherwise defined in ----------- this Agreement have the meanings ascribed to such terms in the Merger Agreement. 5 Section 5.2. Termination. This Agreement shall terminate and be of ----------- no further force and effect (i) by the written mutual consent of the parties hereto, (ii) automatically and without any required action of the parties hereto upon the Effective Time or (iii) upon termination of the Merger Agreement in accordance with its terms. No such termination of this Agreement shall relieve any party hereto from any liability for any breach of this Agreement prior to termination. Section 5.3. Further Assurance. From time to time, at another ----------------- party's request and without consideration, each party hereto shall execute and deliver such additional documents and take all such further action as may be necessary or desirable to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement. Section 5.4. Certain Events. Stockholder agrees that this Agreement -------------- and Stockholder's obligations hereunder shall attach to Stockholder's Shares and shall be binding upon any person or entity to which legal or beneficial ownership of such Shares shall pass, whether by operation of law or otherwise, including, without limitation, Stockholder's heirs, guardians, administrators, or successors. Notwithstanding any transfer of Shares, the transferor shall remain liable for the performance of all its obligations under this Agreement. Section 5.5. No Waiver. The failure of any party hereto to exercise --------- any right, power, or remedy provided under this agreement or otherwise available in respect hereof at law or in equity, or to insist upon compliance by any other party hereto with its obligations hereunder, or any custom or practice of the parties at variance with the terms hereof shall not constitute a waiver by such party of its right to exercise any such or other right, power or remedy or to demand such compliance. Section 5.6. Specific Performance. Stockholder acknowledges that if -------------------- he fails to perform any of his obligations under this Agreement immediate and irreparable harm or injury would be caused to Parent and Purchaser for which money damages would not be an adequate remedy. In such event, Stockholder agrees that each of Parent and Purchaser shall have the right, in addition to any other rights it may have, to specific performance of this Agreement. Accordingly, if Parent or Purchaser should institute an action or proceeding seeking specific enforcement of the provisions hereof, Stockholder hereby waives the claim or defense that Parent or Purchaser, as the case may be, has an adequate remedy at law and hereby agrees not to assert in any such action or proceeding the claim or defense that such a remedy at law exists. Stockholder further agrees to waive any requirements for the securing or posting of any bond in connection with obtaining any such equitable relief. Section 5.7. Notice. All notices and other communications given or ------ made pursuant hereto shall be in writing and shall be deemed to have been duly given or made (i) as of the date delivered or sent by facsimile if delivered personally or by facsimile, and (ii) on the third business day after deposit in the U.S. mail, if mailed by registered or certified mail (postage prepaid, return receipt requested), in each case to the parties at the following addresses (or at such other address for 6 a party as shall be specified by like notice, except that notices of changes of address shall be effective upon receipt) (a) If to Parent or Purchaser: c/o ValueAct Capital Partners, L.P. One Maritime Plaza Suite 1400 San Francisco, California 94111 Attention: Jeff Ubben Facsimile: (415) 362-5727 With copies to: Kirkland & Ellis 200 E. Randolph Drive Chicago, Illinois 60601 Attention: Dennis M. Myers Facsimile: (312) 861-2200 (b) If to a Stockholder: Mark D. Lerdal c/o KENETECH Corporation 500 Sansome Street, #410 San Francisco, California 94111 Facsimile: (415) 984-8102 With copies to: Gibson, Dunn & Crutcher One Montgomery St., 31/st/ Floor San Francisco, CA 94114 Attention: Doug Smith Facsimile No.: (415) 986-5309 Section 5.8. Expenses. Except as otherwise expressly set forth -------- herein, all fees, costs and expenses incurred in connection with this Agreement or the Merger Agreement and the transactions contemplated hereby shall be paid by the party incurring such fees, costs and expenses. Section 5.9. Headings. The headings contained in this Agreement are -------- for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. 7 Section 5.10. Severability. If any term or other provision of this ------------ Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the maximum extent possible. Section 5.11. Attorneys' Fees. In the event that any action or --------------- proceeding, including without limitation arbitration, is commenced by any party hereto for the purpose of enforcing any provision of this Agreement, the parties to such action, proceeding or arbitration shall receive as part of any award, judgment, decision or other resolution of such action, proceeding or arbitration their costs and reasonable attorneys' fees as determined by the person or body making such award, judgment, decision or resolution. Should any claim hereunder be settled short of the commencement of any such action or proceeding, including arbitration, the parties in such settlement shall be entitled to include as part of the damages alleged to have been incurred reasonable costs of attorneys or other professionals in investigation or counseling on such claim. Section 5.12. Entire Agreement; No Third-Party Beneficiaries. This ---------------------------------------------- Agreement constitutes the entire agreement and supersedes any and all other prior agreements and undertakings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof, and this Agreement is not intended to confer upon any other person any rights or remedies hereunder. Section 5.13. Assignment. This Agreement shall not be assigned by ---------- operation of law or otherwise. Section 5.14. Governing Law. This Agreement shall be governed by, ------------- and construed in accordance with, the laws of the State of Delaware applicable to contracts executed in and to be performed entirely within that State. Section 5.15. Amendment. This Agreement may not be amended except by --------- an instrument in writing signed by the parties hereto. Section 5.16. Waiver. Any party hereto may (a) extend the time for ------ the performance of any of the obligations or other acts of the other parties hereto, (b) waive any inaccuracies in the representations and warranties of the other parties hereto contained herein or in any document delivered pursuant hereto and (c) waive compliance by the other parties hereto with any of their agreements or conditions contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only as against such party and only if set forth in an 8 instrument in writing signed by such party. The failure of any party hereto to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of those rights. Section 5.17. Counterparts. This Agreement may be executed in one or ------------ more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which shall constitute one and the same agreement. 9 IN WITNESS WHEREOF, Parent, Purchaser and the Stockholder have caused this Agreement to be executed as of the date first written above. KC HOLDING CORPORATION By: __________________________________ Name: __________________________________ Title: __________________________________ KC MERGER CORP. By: __________________________________ Name: __________________________________ Title: __________________________________ STOCKHOLDER: __________________________________ Mark D. Lerdal -----END PRIVACY-ENHANCED MESSAGE-----