EXHIBIT 10.3
SECURITYHOLDERS AND REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
NORTHWEST ENERGY CORPORATION
ENRON CORP.,
[COMMON STOCK PURCHASER],
[CLASS B PURCHASER]
AND
[FELINE PRIDES PURCHASER]
DATED AS OF ___________, 200_
TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined Terms..........................................1
Section 1.2 Other Definitional Provisions..................................9
ARTICLE II
CORPORATE GOVERNANCE OF THE COMPANY
Section 2.1 Board Representation..........................................10
Section 2.2 Initial Enron Representation..................................11
Section 2.3 Removal of Enron Designees....................................11
Section 2.4 Vacancies.....................................................11
Section 2.5 Resignation of Enron Directors................................12
Section 2.6 Available Financial Information...............................12
Section 2.7 Access........................................................12
Section 2.8 Consent Rights................................................14
Section 2.9 Actions Affecting Certain Distributions.......................15
Section 2.10 Shareholder Actions...........................................15
ARTICLE III
TRANSFERS
Section 3.1 Transfer Restrictions.........................................16
Section 3.2 Assignment of Rights Hereunder................................16
Section 3.3 Condition.....................................................17
Section 3.4 Transferee....................................................17
Section 3.5 Tax Transfer Restrictions.....................................17
ARTICLE IV
REGISTRATION RIGHTS
Section 4.1 Shelf Registration Statement..................................17
Section 4.2 Incidental Registrations......................................19
ARTICLE V
REGISTRATION PROCEDURES
Section 5.1 Registration Procedures.......................................20
Section 5.2 Information Supplied..........................................23
Section 5.3 Restrictions on Disposition...................................23
Section 5.4 Indemnification...............................................24
Section 5.5 Required Reports..............................................26
Section 5.6 Selection of Counsel..........................................26
Section 5.7 Holdback Agreement............................................27
Section 5.8 No Inconsistent Agreement.....................................27
ARTICLE VI
STANDSTILL
Section 6.1 Acquisition of Additional Voting Securities...................27
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ARTICLE VII
MISCELLANEOUS
Section 7.1 Notices.......................................................29
Section 7.2 Amendments and Waivers........................................29
Section 7.3 Successors, Assigns, Transferees..............................29
Section 7.4 Further Assurances............................................30
Section 7.5 Entire Agreement..............................................30
Section 7.6 Delays or Omissions...........................................30
Section 7.7 Governing Law, Jurisdiction...................................30
Section 7.8 Severability..................................................30
Section 7.9 Effective Date................................................30
Section 7.10 Enforcement; Limitations on Certain Damages...................30
Section 7.11 Titles and Subtitles..........................................31
Section 7.12 Counterparts; Facsimile Signatures............................31
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SECURITYHOLDERS AND REGISTRATION RIGHTS AGREEMENT
THIS SECURITYHOLDERS AND REGISTRATION RIGHTS AGREEMENT (this "Agreement"),
dated ___________, 200_, is by and among Northwest Energy Corporation (being the
Company herein), Enron Corp. (being Enron herein), ______________ (being the
Common Stock Purchaser herein), ____________ (being the Class B Purchaser
herein) and ____________ (being the FELINE PRIDES Purchaser herein).
RECITALS
Pursuant to the Stock Purchase Agreement by and among Enron, Enron
Northwest Assets, LLC, a Delaware limited liability company, the Company and
Northwest Natural Gas Company, an Oregon corporation, dated as of October __,
2001 (the "Stock Purchase Agreement"), at the Closing, the Company shall issue
and deliver (i) to the Common Stock Purchaser a number of shares of Common Stock
to be determined pursuant to the provisions of Section 1.5 of the Stock Purchase
Agreement, (ii) to the Class B Purchaser a number of shares of Class B Common
Stock to be determined pursuant to the provisions of Section 1.5 of the Stock
Purchase Agreement and (iii) to the FELINE PRIDES Purchaser 4,000,000 units of
the Company's FELINE PRIDES;
The parties hereto desire to enter into certain arrangements relating to
the Company, the Common Stock, the Class B Common Stock and the FELINE PRIDES to
be effective as of the Closing.
NOW, THEREFORE, in consideration of the foregoing recitals and of the
mutual promises hereinafter set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 CERTAIN DEFINED TERMS. As used herein, the following terms
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shall, unless the context shall otherwise require, have the following meanings:
"ACQUISITION" has the meaning assigned to such term in subsection (a) of
Section 6.1.
"ACQUISITION FINANCING" means the Debt Financing as such term is defined in
the Stock Purchase Agreement.
"ACQUISITION RESTRICTIONS" has the meaning assigned to such term in
subsection (a) of Section 6.1.
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly through one or more intermediaries, controls, is
controlled by or is under common control with, such specified Person.
"AGREEMENT" has the meaning assigned to such term in the first paragraph
hereof.
"APPLICABLE BOARDS" has the meaning assigned to such term in subsection (c)
of Section 2.1.
"ARTICLES" means the Amended and Restated Articles of Incorporation of the
Company, including the Certificate of Designation of the Preferred Shares, as in
effect on the date hereof and as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof and
the terms of this Agreement.
"AUDIT COMMITTEE" means a committee of the Company Board that performs the
functions generally required to be performed by an audit committee in accordance
with the rules and regulations of the NYSE.
"BENEFICIAL OWNER" or "BENEFICIALLY OWN" has the meaning given such term in
Rule 13d-3 under the Exchange Act, as of the date hereof, and a Person's
beneficial ownership of Common Stock, Class B Common Stock, FELINE PRIDES or
Preferred Shares shall be calculated in accordance with the provisions of such
Rule; provided, however, that for purposes of determining beneficial ownership,
a Person shall be deemed to be the beneficial owner of any security that may be
acquired by such Person whether within sixty (60) days or thereafter, through
the conversion, exchange or exercise of any warrants, options, rights or other
securities.
"BUSINESS COMBINATION" shall mean, with respect to the Company, Northwest
or PGE, any merger, consolidation, share exchange, sale of all or substantially
all of their respective assets or any other comparable transaction.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or other day
on which banks are required or authorized by law to be closed in the City of New
York or Portland, Oregon.
"CAPITAL STOCK" means, with respect to any Person at any time, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of capital stock, partnership interests (whether
general or limited), member interests or equivalent ownership interests in or
issued by such Person, including, in the case of the Company, any and all shares
of Common Stock, Class B Common Stock and Preferred Shares.
"CHANGE OF CONTROL" means, with respect to the Company, any event (a)
constituting a Business Combination, except where (i) shareholders of the
Company immediately prior to such Business Combination own (in substantially the
same proportion relative to each other as such shareholders owned the Capital
Stock of the Company immediately prior to such consummation) (x) 50% or more of
the voting stock of the surviving or resulting entity immediately after such
Business Combination, and (y) 50% or more of the outstanding common stock of the
surviving or resulting entity immediately after such Business Combination, (ii)
the members of the Company Board immediately prior to the entering into the
agreement relating to such Business Combination constitute at least a majority
of the board of directors of the surviving or resulting entity immediately after
such Business Combination under circumstances in which there are no agreements
or arrangements in place immediately after such consummation that would result
in the members of such board of directors immediately prior to the entering into
the agreement relating to such Business Combination ceasing to constitute at
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least a majority of the board of directors of the surviving or resulting entity
and (iii) no Person or Group is the beneficial owner of 15% or more of the total
outstanding voting stock or common stock of the surviving or resulting entity or
(b) pursuant to which any Person or Group acquires beneficial ownership of 50%
or more of the total outstanding Voting Securities of the Company.
"CLAIMS" has the meaning assigned to such term in subsection (a) of Section
5.4.
"CLASS B COMMON STOCK" means the Class B Common Stock of the Company,
having the rights and designations set forth in the Articles (and any securities
into which the shares of Class B Common Stock are converted or reclassified or
that are issued in respect of the Class B Common Stock, pursuant to any Business
Combination, recapitalization, stock dividend or other similar transaction).
"CLASS B PURCHASER" has the meaning assigned to such term in the first
paragraph hereof.
"CLOSING" has the meaning assigned to such term in the Stock Purchase
Agreement.
"CLOSING DATE" has the meaning assigned to such term in the Stock Purchase
Agreement.
"COMMON STOCK" means the Common Stock of the Company, having the rights and
designations set forth in the Articles (and any securities into which the shares
of Common Stock are converted or reclassified or that are issued in respect of
the Common Stock pursuant to any Business Combination, recapitalization, stock
dividend or other similar transaction).
"COMMON STOCK PURCHASER" has the meaning assigned to such term in the first
paragraph hereof.
"COMPANY" means Northwest Energy Corporation, an Oregon corporation,
together with its successors and assigns.
"COMPANY BOARD" means the Board of Directors of the Company.
"COMPANY INDEBTEDNESS RATING" means (i) with respect to senior secured
Indebtedness of the Company, a rating of Baa3 by Moody's and BB+ by Standard &
Poor's, (ii) with respect to senior unsecured Indebtedness of the Company, a
rating of Baa3 by Moody's and BB+ by Standard & Poor's and (iii) with respect to
Feline Prides or Preferred Shares, a rating of Ba2 by Moody's and BB- by
Standard & Poor's.
"COMPANY OFFERING" has the meaning assigned to such term in the definition
of Company Offering Event.
"COMPANY OFFERING EVENT" means the provision of a written opinion to the
Company by a nationally recognized investment banking firm selected by the
Company to the effect that resales of Registrable Securities pursuant to the
Shelf Registration Statement would materially jeopardize the success of a
proposed public offering by the Company of its securities with respect to which
the Company has commenced preparations prior to receiving notice from a Holder
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of a current intention to sell Registrable Securities pursuant to the Shelf
Registration Statement (a "Company Offering").
"COMPENSATION COMMITTEE" means a committee of the Company Board that
performs the functions customarily performed by compensation committees of
boards of directors of corporations subject to the reporting provisions of the
Exchange Act.
"CONSENT PERIOD" means the period commencing on the date of this Agreement
and ending on the earlier of the date on which Enron, its Affiliates and any
Designated Transferees, as a group, own less than twenty-five percent (25%) of
the Securities or the fifth anniversary of the Closing Date.
"CONTROL" with respect to the relationship between or among two or more
Persons, means the possession, directly or indirectly, of the power to direct or
cause the direction of the affairs or management of a Person, whether through
the ownership of voting securities, as trustee or executor, by contract or
otherwise and "CONTROLS," "CONTROLLING," and "CONTROLLED" have the meanings
correlative to the foregoing.
"DESIGNATED TRANSFEREE" means any one or more Persons created in connection
with a monetization, securitization or other structured finance transaction by,
or on behalf of, Enron or any of its Affiliates.
"DIRECTOR" means any member of any of the Applicable Boards.
"EFFECTIVE PERIOD" means the period commencing with the effective date of
the Shelf Registration Statement and ending on the Second Disposition Date.
"ENRON" means Enron Corp., an Oregon corporation, and its successors and
assigns.
"ENRON DESIGNEES" means any Director of PGE or Northwest and any member of
the Audit Committee, in each case designated by Enron pursuant to subsection (c)
of Section 2.1 of this Agreement.
"ENRON DIRECTOR" means any Director of the Company designated by Enron
pursuant to subsection (a) of Section 2.1 of this Agreement.
"EQUITY OFFERING" means the issuance and sale of Equity Securities by the
Company to a Third Party after the Closing, other than (i) upon conversion of
Class B Common Stock to Common Stock, (ii) pursuant to a Purchase Contract,
(iii) pursuant to the Company's employee, officer or director stock incentive or
benefit plans, (iv) as consideration for any Business Combination or (v)
pursuant to a stock split, stock dividend, recapitalization or other similar
transaction.
"EQUITY SECURITIES" means any and all shares of Capital Stock of the
Company, securities of the Company convertible into, or exchangeable or
exercisable for, such shares, and options, warrants or other rights to acquire
such shares.
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"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder.
"EXECUTIVE COMMITTEE" means a committee of the Company Board that performs
the functions customarily performed by executive committees of boards of
directors of public corporations organized under the laws of states of the
United States.
"FELINE PRIDES" means units of securities to be issued by the Company to
the FELINE PRIDES Purchaser pursuant to the Stock Purchase Agreement, with each
unit consisting of (i) a Purchase Contract and (ii) either a Preferred Share
having a stated liquidation value of $50 or U.S. treasury securities or certain
demand promissory notes with a principal amount at maturity equal to $50.
"FIRST DISPOSITION DATE" means the date on which Enron, its Affiliates and
any Designated Transferees, as a group, own less than fifty percent (50%) of the
Securities.
"GAAP" means generally accepted accounting principles, as in effect in the
United States of America from time to time applied on a consistent basis.
"GROUP" has the meaning assigned to such term in Section 13(d)(3) of the
Exchange Act.
"HOLDER" means any holder of Registrable Securities.
"INCUR" or "INCURRENCE" means to incur, create, assume, guarantee or
otherwise become directly or indirectly liable with respect to any Indebtedness.
"INDEBTEDNESS" of any Person means, with respect to any Person, (a) all
indebtedness and other obligations of such Person for the repayment of money
borrowed (including without limitation reimbursement obligations with respect to
drawn letters of credit), whether or not represented by acceptances, bonds,
debentures, notes, or other instruments or securities, (b) all indebtedness and
other obligations of such Person for the deferred payment of the purchase price
of any property or assets (other than accounts payable on terms customary in the
trade), (c) all capitalized lease obligations of such Person, (d) all
indebtedness and other obligations, whether or not assumed by such Person,
secured by any lien on any property of such Person and (e) all guaranties of
payment or collection of any indebtedness of any other Person described in
clauses (a) to (d), inclusive, of this definition.
"INDEMNIFIED PARTIES" has the meaning assigned to such term in subsection
(a) of Section 5.4.
"INSIDER BOARD" means a Subsidiary Board that is, but for any Enron
Designees, composed solely of officers or employees of the Company or any
Subsidiary of the Company.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service and any successor thereto.
"NASD" means the National Association of Securities Dealers, Inc.
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"NORTHWEST" means Northwest Natural Gas Company, an Oregon corporation, and
its successors and assigns.
"NYSE" means The New York Stock Exchange, Inc.
"PERSON" means any individual, company, corporation, limited liability
company, limited or general partnership, joint venture, association, joint stock
company, union, trust, unincorporated organization, government or any agency or
political subdivisions thereof or any Group comprised of two or more of the
foregoing.
"PGE" means Portland General Electric Company, an Oregon corporation, and
its successors and assigns.
"PREFERRED SHARES" means the cumulative preferred shares of the Company
issued initially as part of the FELINE PRIDES, each having a stated liquidation
amount equal to $50.00 and having the rights and designations as set forth in
the Articles (and any securities into which the Preferred Shares are converted
or reclassified or that are issued in respect of the Preferred Shares, pursuant
to a Business Combination, recapitalizatiton, stock dividend or other similar
transaction).
"PROPORTIONAL" means, when used to determine the number of individuals that
Enron is entitled to nominate to any board of directors at any particular time,
the number (rounded to the nearest whole number) determined by multiplying the
aggregate number of members of such board by a fraction, the numerator of which
shall be the number of Enron Directors that Enron is entitled to designate to
the Company Board pursuant to subsection (a) of Section 2.1 at such time and the
denominator of which shall be the total number of directors constituting the
entire Company Board at such time; provided, however, that, notwithstanding the
foregoing, in no event shall such number be less than one (1).
"PUBLIC OFFERING" means a distribution of securities of the Company that is
required to be registered pursuant to the provisions of Section 5 of the
Securities Act.
"PUHCA" means the Public Utility Holding Company Act of 1935, as amended,
or any successor thereto.
"PURCHASE CONTRACT" means, with respect to each FELINE PRIDE, a purchase
contract pursuant to which the holder of such contract shall be obligated to
purchase from the Company on the fourth anniversary of the Closing Date, for an
amount of cash equal to $50, the number of shares of Class B Common Stock set
forth in such purchase contract.
"QUALIFIED EQUITY OFFERING" means an Equity Offering that, together with
any gross proceeds received by the Company from any other Equity Offering that
has been consummated, generates aggregate gross proceeds to the Company of at
least $300 million.
"REGISTRABLE SECURITIES" means any Common Stock, FELINE PRIDES and
Preferred Shares issued or to be issued by the Company (i) pursuant to the Stock
Purchase Agreement, (ii) upon conversion of the Class B Common Stock issued
pursuant to the Stock Purchase Agreement to Common Stock, (iii) upon conversion
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of the Class B Common Stock to be issued pursuant to a Purchase Contract to
Common Stock or (iv) in satisfaction of unpaid dividends on any Preferred
Shares. As to any particular Registrable Securities, once issued, such
Registrable Securities shall only cease to be Registrable Securities when (a) a
registration statement with respect to the sale by the Holder of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of in accordance with the method of distribution described in
such registration statement, (b) such securities shall have been distributed to
the public pursuant to Rule 144 or (c) such securities shall have ceased to be
outstanding.
"REGISTRATION EXPENSES" means any and all expenses incident to performance
of or compliance with Articles IV and V of this Agreement, including without
limitation (i) all SEC and NYSE or other securities exchange or NASD
registration and filing fees, (ii) all fees and expenses of complying with
securities or blue sky laws (including the reasonable fees and disbursements of
counsel for the underwriters in connection with blue sky qualifications of the
Registrable Securities), (iii) all printing, messenger and delivery expenses,
(iv) all fees and expenses incurred in connection with the listing of the
Registrable Securities on the NYSE or any other securities exchange or the NASD
pursuant to this Agreement and all rating agency fees, (v) the fees and
disbursements of counsel for the Company and its independent public accountants,
including the expenses of any special audits and/or "cold comfort" letters
required by or incident to such performance and compliance, (vi) the reasonable
fees and disbursements of counsel selected pursuant to Section 5.6, (vii) any
reasonable fees and disbursements of underwriters and their counsel customarily
paid by the issuers or sellers of securities, transfer taxes, fees and expenses
of any transfer agent or registrar, costs of insurance, and the reasonable fees
and expenses of special experts retained in connection with the requested
registration, but excluding underwriting discounts and selling commissions and
(viii) all expenses incurred in connection with any road shows (including the
reasonable out-of-pocket expenses of the Holder of the applicable Registrable
Securities).
"REPRESENTATIVES" of a Person means the officers, employees, independent
accountants, independent legal counsel and other representatives of such Person.
"RIGHTS AGREEMENT" has the meaning assigned to such term in subsection (a)
of Section 2.8.
"RULE 144" means Rule 144 (or any successor provision) under the Securities
Act.
"SEC" means the U.S. Securities and Exchange Commission or any other
federal agency then administering the Securities Act or the Exchange Act and
other federal securities laws.
"SECOND DISPOSITION DATE" means the date on which Enron, its Affiliates and
any Designated Transferees, as a group, own less than ten percent (10%) of the
Securities.
"SECURITIES" means the shares of the Common Stock, the Class B Common
Stock, the FELINE PRIDES and the Preferred Shares issued by the Company pursuant
to the Stock Purchase Agreement, including any Class B Common Stock issued
pursuant to a Purchase Contract and any Common Stock issued upon conversion of
any Class B Common Stock so issued. For purposes of calculating a percentage of
the Securities owned by any particular Person or a percentage of the Securities
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issued in connection with the Stock Purchase Agreement, in each case pursuant to
any of the provisions of this Agreement, the shares of Class B Common Stock
shall be deemed to be equivalent to the shares of Common Stock and each unit of
FELINE PRIDES shall be deemed to be equivalent to the minimum number of shares
of Class B Common Stock issuable on the Purchase Contract Settlement Date (as
such term is defined therein) in respect of such unit of FELINE PRIDES. For the
purpose of making any such determination, the Preferred Shares shall be deemed
to be synonymous with the FELINE PRIDES and shall not be deemed to represent
separate securities or to be included in the calculation.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"SECURITY HOLDERS" means Enron, the Common Stock Purchaser, the Class B
Purchaser and the FELINE PRIDES Purchaser and any Transferee to whom any of the
Securities have been transferred pursuant to the provisions of subsection (a) of
Section 3.1.
"SECURITY PURCHASERS" means the Common Stock Purchaser, the Class B
Purchaser and the FELINE PRIDES Purchaser.
"SHELF REGISTRATION STATEMENT" has the meaning assigned to such term in
subsection (a) of Section 4.1.
"SIGNIFICANT ADVERSE EFFECT" has the meaning assigned to such term in
subsection (f) of Section 4.2.
"STANDARD & POOR'S" means Standard & Poor's Rating Services and any
successor thereto.
"STOCK PURCHASE AGREEMENT" has the meaning assigned to such term in the
first recital to this Agreement.
"SUBSIDIARY" of a Person means any corporation or other entity (including a
limited liability company, partnership or other business entity) in which such
Person, directly or indirectly, owns outstanding Capital Stock or other Voting
Securities having the power, under ordinary circumstances, to elect a majority
of the directors or members of the governing body of such corporation or other
entity or with respect to which such Person otherwise has the power to direct
the management and policies of such corporation or other entity.
"SUBSIDIARY BOARDS" has the meaning assigned to such term in subsection (c)
of Section 2.1.
"SUBSIDIARY INDEBTEDNESS RATING" means a rating for the senior secured
Indebtedness of PGE or Northwest of A3 by Moody's and BBB by Standard & Poor's.
"SUSPENSION EVENT" means the engagement by the Company in a material
transaction and that the disclosure thereof required by the filing of a
registration statement or any amendment or supplement thereto under the
8
Securities Act would, in the good faith reasonable judgment of the Company
Board, after consultation with its outside securities counsel, materially and
adversely affect the Company.
"SUSPENSION NOTICE" has the meaning assigned to such term in subsection (e)
of Section 4.1.
"TERMINATION DATE" means the earlier of the Second Disposition Date and the
fifth anniversary of the Closing Date.
"THIRD PARTY" has the meaning assigned to such term in subsection (b) of
Section 6.1.
"TRANSFER" means to sell, transfer, assign or otherwise dispose of, either
voluntarily or involuntarily, or to enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, assignment or
other disposition of, Equity Securities beneficially owned by a Person.
"TRANSFER RESTRICTIONS TERMINATION DATE" means the earliest of (i) the last
day of the 30th calendar month following the Closing Date, (ii) six months
following the consummation of a Qualified Equity Offering and (iii) the
occurrence of a Change of Control.
"TRANSFEREE" means any Person to whom the Common Stock Purchaser, the Class
B Purchaser, the FELINE PRIDES Purchaser or any Transferee thereof Transfers any
Common Stock, Class B Common Stock, Preferred Shares or FELINE PRIDES pursuant
to the provisions of subsection (a) of Section 3.1.
"VOTING SECURITIES" means, at any time, shares of any class of Equity
Securities that are ordinarily entitled to vote (without regard to the
occurrence of any additional event or contingency) generally in the election of
Directors.
SECTION 1.2 OTHER DEFINITIONAL PROVISIONS. (a) Unless the context otherwise
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requires, as used in this Agreement: (i) a term defined herein has the meaning
ascribed to it herein; (ii) an accounting term not otherwise defined herein has
the meaning ascribed to it in accordance with U.S. GAAP; (iii) "or" is not
exclusive; (iv) "including" means "including, without limitation;" (v) words in
the singular include the plural and vice versa; (vi) words applicable to one
gender apply to each gender; (vii) the terms "hereof," "herein," "hereby,"
"hereto" and derivative or similar words refer to this entire Agreement,
including the Annexes hereto; and (viii) the terms "Article", "Section" and
"Annex" refer to the specified Article, Section or Annex of or to this
Agreement.
(b) A reference to any Person includes such Person's successors and
permitted assigns.
(c) Any reference to "days" shall mean calendar days unless "Business
Days" (as defined herein) are expressly specified.
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ARTICLE II
CORPORATE GOVERNANCE OF THE COMPANY
SECTION 2.1 BOARD REPRESENTATION. During the period commencing on the date
--------------------------------
hereof and ending on the Termination Date, subject to the provisions of
applicable laws and regulations:
(a) Enron shall, subject to subsection (e) of this Section 2.1, be
entitled to nominate two individuals for election to the Company Board, and each
party hereto that holds Voting Securities agrees to vote such Voting Securities
in favor of the election of such individuals (the "Enron Directors") to the
Company Board; provided, however, that from and after the First Disposition
Date, Enron's entitlement under this subsection shall be reduced to the right to
nominate one individual for election to the Company Board;
(b) the Company agrees, by action of the Company Board, (i) to
establish, by appointment from among the members of the Company Board, and
maintain an Audit Committee and (ii) to appoint to the Audit Committee one of
the Enron Directors, as designated by Enron;
(c) the Company agrees to elect or to cause to be elected, through
action of the Company Board, to the board of directors of PGE and Northwest (the
"Subsidiary Boards" and, together with the Company Board, the "Applicable
Boards") a number of individuals designated by Enron, who need not be directors,
officers or employees of the Company or any of its Subsidiaries, that is, in the
case of each Subsidiary Board, as nearly as is practicable, Proportional to the
number of members of each such Subsidiary Board (together with Enron's
designated member of the Audit Committee, the "Enron Designees"); provided,
however, that if at any time during the duration of the Entitlement Period a
Subsidiary Board consists solely of officers or employees of the Company or any
of its Subsidiaries (an "Insider Board") and only for so long as such Subsidiary
Board remains an Insider Board, the Company shall not be obligated pursuant to
this subsection (c) to elect or cause to be elected the individuals so
designated by Enron to such Subsidiary Board;
(d) the Company agrees to permit one of the Enron Directors or, if
there are no Enron Directors, one individual designated by Enron, who need not
be a director, officer or employee of the Company or any of its Subsidiaries, to
attend as a non-voting observer all meetings of the Executive Committee and the
Compensation Committee and to transmit to such individual, at the time and in
the manner sent to other members of such committees, all information and
materials provided by the Company to such committee members;
(e) the Company agrees, to the extent that the Company reasonably
determines that applicable laws and regulations prohibit Enron from designating
members of any Applicable Board or of the Audit Committee but permit an
individual designated by Enron to attend such meetings, to permit one individual
designated by Enron, who need not be a director, officer or employee of the
Company or any of its Subsidiaries, to attend as a non-voting observer all
meetings of each such Applicable Board and the Audit Committee; and
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(f) the Company agrees to provide advance notice in accordance with
Section 60.034 of the Oregon Business Corporation Act and the Company's bylaws
to each Enron Director with respect to each regular and special meeting of the
Company Board and the Audit Committee which notice shall, in the case of each
special meeting, include a reasonable summary of the subject matter of the
meeting.
SECTION 2.2 INITIAL ENRON REPRESENTATION. To the extent permitted by
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applicable laws and regulations, each party hereto agrees to take such actions,
including actions as necessary or desirable to nominate and elect individuals to
the intended offices and, in the case of the Company, actions by the Company
Board, as shall be necessary or desirable in order that, effective as of the
opening of business on the Business Day immediately following the Closing Date:
(a) The Company Board shall include the Enron Directors;
(b) one of the Enron Directors shall have been elected to the class of
directors having the then longest remaining term and the other shall have been
elected to the class of directors having the then second longest remaining term;
(c) the Audit Committee shall include the Enron Director required by
Section 2.1; and
(d) each other Applicable Board shall include the Enron Designees to
the extent required by subsection (c) of Section 2.1.
SECTION 2.3 REMOVAL OF ENRON DESIGNEES. No Enron Director or Enron Designee
--------------------------------------
shall be subject to removal, without cause, from any Applicable Board or the
Audit Committee other than with the express written consent of Enron. If Enron
shall determine to remove any Enron Director or Enron Designee from any
Applicable Board or the Audit Committee, each party hereto agrees, upon written
notice to such effect from Enron, to take all actions reasonably necessary or
desirable , including the voting of outstanding Voting Securities held by such
party, in order to effect such action. Following such removal of an Enron
Director or Enron Designee, the parties shall comply with the other provisions
of this Article II to ensure that the removed individual is replaced by another
Enron Director or Enron Designee, as appropriate. Notwithstanding the foregoing,
if a Subsidiary Board becomes an Insider Board, Enron shall, to the extent that
there shall then be one or more Enron Designees on the Subsidiary Board, cause
each of the Enron Designees to resign promptly from the Subsidiary Board, and,
for so long as such Subsidiary Board remains an Insider Board, the Company shall
not be obligated to replace the removed individuals with other Enron Designees.
SECTION 2.4 VACANCIES. If a vacancy is created on any Applicable Board or
---------------------
the Audit Committee by virtue of the death, disability, retirement, resignation
or removal of any Enron Director or Enron Designee from any Applicable Board or
the Audit Committee, each party hereto shall, to the extent permitted by
applicable laws and regulations, take promptly any and all actions, including
the voting of outstanding Voting Securities held by such party and, in the case
of the Company, actions by the Company Board, necessary or desirable to fill
such vacancy with an individual designated in writing by Enron so as to give
effect to the provisions of Section 2.1. Any Designated Transferee to which
11
Voting Securities have been Transferred also agrees, pursuant to the assumption
contemplated by Section 3.2, to vote such Voting Securities in favor of any such
action.
SECTION 2.5 RESIGNATION OF ENRON DIRECTORS. Immediately following the First
------------------------------------------
Disposition Date, Enron shall, to the extent that there shall then be more than
one Enron Director or Enron Designee on any Applicable Board, cause one of the
Enron Directors or Enron Designees to resign from all of the Applicable Boards,
effective as of the First Disposition Date. Immediately following the
Termination Date, Enron shall cause the remaining Enron Director or Enron
Designee to resign from all of the Applicable Boards. Enron agrees to take all
actions reasonably necessary or desirable, including the voting of outstanding
Voting Securities held by it, in order to effect such action. Any Designated
Transferee to which Voting Securities have been Transferred also agrees,
pursuant to the assumption contemplated by Section 3.2, to vote such Voting
Securities in favor of any such action.
SECTION 2.6 AVAILABLE FINANCIAL INFORMATION. For so long as the Company is
-------------------------------------------
not a reporting issuer under the Exchange Act or, if having become such a
reporting issuer, it shall cease to be such a reporting issuer or for so long as
the Company shall fail to comply with its reporting obligations under the
Exchange Act, the Company shall, to the extent that Enron or any Holder
beneficially owns any of the Securities, deliver, or cause to be delivered, to
Enron and each Holder:
(a) as soon as practicable after the end of each fiscal year of the
Company, and in any event within ninety (90) days thereafter, a consolidated and
consolidating balance sheets of the Company as of the end of such fiscal year,
and consolidated and consolidating statements of income, changes in
shareholders' equity and cash flows of the Company for such year, prepared in
accordance with GAAP and setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail and followed
promptly thereafter (to the extent not then available) by such financial
statements accompanied by the audit report with respect thereto of independent
public accountants of recognized national standing selected by the Company; and
(b) as soon as practicable after the end of the first, second and
third quarterly accounting periods in each fiscal year of the Company, and in
any event within forty-five (45) days after the end of each such period, a
consolidated balance sheets of the Company as of the end of each such quarterly
period, and consolidated statements of income, changes in shareholders' equity
and cash flows of the Company for such period and for the current fiscal year to
date, prepared in accordance with GAAP and setting forth in comparative form the
figures for the corresponding periods of the previous fiscal year, subject to
changes resulting from normal year-end audit adjustments, all in reasonable
detail and certified by the principal financial or accounting officer of the
Company.
SECTION 2.7 ACCESS.
------------------
(a) During the period commencing on the date hereof and ending on the
Termination Date, the Company shall afford, provide and furnish, and shall cause
its Subsidiaries and the Representatives of the Company and its Subsidiaries to
12
afford, provide and furnish to Enron and each Designated Transferee, if any, and
their Representatives:
(i) during normal business hours and upon reasonable advance
notice, reasonable access to the Representatives, properties, plants and other
facilities and to all books and records of the Company and each of its
Subsidiaries;
(ii) all financial, operating and other data and information
regarding the Company and its Subsidiaries as the Security Holders and their
Representatives may reasonably request; and
(iii) the opportunity to discuss the affairs, finances,
operations and accounts of the Company and its Subsidiaries with the Company's
officers on a periodic basis;
provided, however, that the Company shall not be required to furnish or to cause
to be furnished any data or information or access to any data or information (i)
regarding the gas or electric power trading or marketing operations of the
Company and its Subsidiaries or (ii) to the extent that the furnishing of any
other data or information or the provision of access to such data or information
would violate applicable laws and regulations. Notwithstanding the foregoing,
the Company shall have the right to require that Enron and the Designated
Transferees coordinate their access to the Company pursuant to this Section 2.7
(including by way of example and not limitation, requiring that Representatives
of Enron and all of the Designated Transferees conduct visits to the Company's
premises as a group or requiring that Enron and the Designated Transferees
collectively submit requests for information) to keep the burdens on the Company
to a minimum.
(b) Enron and each of the Designated Transferees, if any, agrees that:
(i) the non-public business information furnished to it or its
Representatives pursuant to subsection (a) of this Section is by its nature
confidential (the "Confidential Information") and that it shall not disclose,
and shall cause Representatives not to disclose, for the period commencing with
the furnishing of such information until the first anniversary of the
Termination Date, such Confidential Information to any Third Party without the
prior written consent of the Company, except that such Person may disclose such
Confidential Information (A) to Representatives and financial advisors and to
entities that are potential sources of debt financing or equity for such Person
(which Representatives and financial advisors shall keep such Confidential
Information confidential on the same terms and conditions as are applicable to
Enron or the Designated Transferee that disclosed such Confidential Information)
and (B) to the extent compelled by judicial process, required by applicable Laws
and Regulations or by any Governmental Authority ; and
(ii) the term "Confidential Information" shall not, for purposes
of this paragraph, include (i) information that is in the public domain, (ii)
information that generally is available to the public other than as a result of
a disclosure by Enron or such Designated Transferee or any of its
Representatives thereof in breach of this Section or (iii) information that
becomes available to such Security Holder or its Representatives on a
non-confidential basis from a source other than another Security Holder or its
Representatives, provided that such source is not known by any of the
13
aforementioned parties to be bound by a confidentiality agreement with, or other
obligation of secrecy to, the Company.
SECTION 2.8 CONSENT RIGHTS.
--------------------------
(a) During the Consent Period, the approval of Enron shall be
necessary, in addition to any vote or consent of the Company Board or the
shareholders of the Company required by law or the Articles, in order to
authorize, effect or validate the following actions by the Company (and no such
action shall be effectual or have any force or effect without such approval):
(i) the authorization, creation or issuance of, or the increase in the
authorized amount of, any shares of any class or series of Capital Stock or any
security convertible into shares of any class or series of any Capital Stock
ranking equal or prior to the Preferred Shares in the payment of dividends or in
the distribution of assets on any liquidation, dissolution, or winding up of the
Company;
(ii) any action by the Company that would result in Enron, together
with its Affiliates and any Designated Transferees, holding in excess of 4.9% of
the Voting Securities or Enron, any of its Affiliates or any Designated
Transferee becoming subject to regulation under PUHCA as a "holding company" or
a "subsidiary company" or an "affiliate" of a "holding company" or a "public
utility company" (as such terms are defined in PUHCA);
(iii) any of the following actions that would result in (A) a
downgrade of the rating of any then existing Indebtedness of the Company or the
rating assigned to the FELINE PRIDES or Preferred Shares below the applicable
Company Indebtedness Rating, (B) an assignment of an initial rating below the
Company Indebtedness Rating to any new Indebtedness of the Company to be
Incurred in connection with any such transaction, (C) a downgrade of the rating
of any then existing senior unsecured Indebtedness of PGE or Northwest below the
Subsidiary Indebtedness Rating or (D) an assignment of an initial rating below
the Subsidiary Indebtedness Rating to any new Indebtedness of PGE or Northwest
to be Incurred in connection with any such transaction:
A. any merger or consolidation of the Company, PGE or Northwest with
or into any other Person, any acquisition of another Person by the Company, PGE
or Northwest, any sale or transfer of all or a material portion of the assets of
the Company, PGE or Northwest or any other Business Combination involving the
Company, PGE or Northwest, whether in a single transaction or a series of
related transactions;
B. any issuance of any equity securities of any of the Company's
Subsidiaries to any Third Party (other than the Company or any of its wholly
owned Subsidiaries); or
C. any spin-off, split-off, dividend or distribution by the Company or
any of its Subsidiaries (other than cash dividends declared and paid with
respect to the Preferred Shares, the Common Stock and the Class B Common Stock
as permitted by the terms of the Company's senior Indebtedness and other than
dividends and distributions declared and paid solely to the Company or a wholly
owned Subsidiary of the Company);
14
(iv) amend or supplement the Company's Rights Agreement (the "Rights
Agreement") to delete, amend, eliminate or otherwise change, or otherwise have
the effect of amending, eliminating or otherwise changing, the provisions of the
Rights Agreement as in effect as of the date of this Agreement that exempt
Enron, the Security Purchasers or any of their respective Affiliates from the
definition of "Acquiring Person" pursuant to the terms and conditions set forth
in the Rights Agreement as in effect on the date hereof, or take any action to
approve, adopt or implement a rights agreement or any other agreement having a
similar effect, whether upon the expiration or termination of the Rights
Agreement or otherwise unless such rights agreement or other agreement exempts
Enron, the Security Purchasers and their respective Affiliates from the
restrictions thereof to the same extent provided in the Rights Agreement as in
effect on the date hereof; or
(v) the entering into any arrangement or contract to do any of the
foregoing.
(b) In connection with the exercise of the consent rights set forth in
clause (v) of subsection (a) of this Section 2.8, the Company shall, prior to
entering into or taking any of the transactions or actions specified in such
clause, obtain a confirmation of the rating of any of its then existing
Indebtedness and the FELINE PRIDES or the Preferred Shares or, as appropriate,
an initial rating of any new Indebtedness to be Incurred as contemplated thereby
from each of ▇▇▇▇▇'▇ and Standard & Poor's.
(c) During the period commencing on the date hereof and ending on the
Termination Date, the approval of Enron shall be necessary, in addition to any
vote or consent of the Company Board or the shareholders of the Company required
by law or the Articles, in order to authorize, effect or validate any amendment,
repeal, alteration or change to subsection A.9. of Article V of the Company's
Articles in a manner that adversely affects Enron, any of its Affiliates or
Associates (as defined in the Company's Articles) or any of their successors or
assigns.
SECTION 2.9 ACTIONS AFFECTING CERTAIN DISTRIBUTIONS. The Company will not,
---------------------------------------------------
without the prior written consent of Enron, enter into any agreement that
contains provisions that restrict or limit the payment of dividends or the
making of distributions by the Company on the Preferred Shares and that are more
likely to prevent the Company from paying such dividends or making such
distributions than those included in the Debt Financing (as such term is defined
in the Stock Purchase Agreement); provided, however, that the Company may defer
the payment of dividends on the Preferred Shares in accordance with the terms of
the Preferred Shares as set forth in the Articles.
SECTION 2.10 SHAREHOLDER ACTIONS.
--------------------------------
(a) Enron agrees that its holdings of each class of Equity Securities
and those of its Affiliates will be represented at each meeting of the holders
of such class of Equity Securities and Enron and its Affiliates will, to the
extent that they hold Voting Securities, vote those Voting Securities in each
election of Directors of the Company in favor of the slate of nominees submitted
by the Company Board to the meeting of holders of Voting Securities. Any
Designated Transferee to which Voting Securities have been transferred also
15
agrees, pursuant to the assumption contemplated by Section 3.2, to take each of
the actions required of Enron by the immediately preceding sentence.
(b) Enron agrees that, subject to the provisions of Section 6.1,
neither Enron nor any of its Affiliates will take any action during the period
commencing on the Closing Date and ending on the Termination Date that will (i)
require the Company to register as a "holding company" under the PUHCA or (ii)
result in Enron or any of its Affiliates becoming a "holding company" or
"affiliate" of the Company, within the meaning of PUHCA. Each Designated
Transferee, if any, also agrees, in connection with the assumption contemplated
by Section 3.2, not to take any action that will (i) require the Company to
register as a "holding company" under the PUHCA or (ii) result in the Designated
Transferee becoming subject to regulation as a "holding company" or "affiliate"
of the Company, within the meaning of PUHCA.
ARTICLE III
TRANSFERS
SECTION 3.1 TRANSFER RESTRICTIONS. (a) Until the Transfer Restrictions
---------------------------------
Termination Date, no Security Purchaser or any Transferee permitted under this
subsection (a) of this Section 3.1 shall Transfer any of the Securities;
provided, however, that any Security Purchaser and any Designated Transferee
may:
(i) subject to the provisions of Section 3.3, Transfer all or any
portion of the Securities in any transaction not involving a Public Offering;
(ii) Transfer any of the Securities to any Designated Transferee; and
(iii) Transfer any of the Securities to Enron or any of its
Affiliates.
(b) At the time of any Transfer of any Securities by Enron or any of
its Affiliates to a Designated Transferee, Enron shall advise the Company in
writing as to the name of such Designated Transferee and, if a Person other than
Enron, each Person that controls such Designated Transferee and, generically, as
to the nature of the equity owners of such Designated Transferee or, if other
than Enron, of such other Person or Persons.
(c) The certificates representing the Securities shall bear an
appropriate legend referencing this Agreement and the restrictions on transfer
set forth in this Article III. The Company may also deliver "stop transfer"
instructions to its Transfer Agent and Registrar, if any, to assure compliance
with this Article III.
SECTION 3.2 ASSIGNMENT OF RIGHTS HEREUNDER. In connection with any Transfer
------------------------------------------
permitted by the provisions of subsection (a) of Section 3.1, a Security
Purchaser or any Transferee permitted thereunder may assign to a Transferee
permitted thereunder the Security Purchaser's rights, and shall provide for the
assumption by such Transferee of the Security Purchaser's obligations, under
Sections 2.1, 2.2 (it being understood that the rights accorded to Enron under
Sections 2.1 and 2.2 are personal to Enron and are not assignable), 2.4, 2.5,
2.6, 2.7, 2.10 and 3.1 and Articles IV, V, VI and VII. Any rights so assigned to
a Transferee and any obligations so assumed by a Transferee may be further
16
assigned to and assumed by a subsequent Transferee through compliance with this
Article III.
SECTION 3.3 CONDITION. Prior to the consummation of a Transfer permitted by
---------------------
Section 3.1 and as a condition thereto, the Security Purchaser (or a subsequent
Transferee) shall, if any rights are to be assigned to or obligations to be
assumed by the Transferee in accordance with Section 3.2, obtain the written
agreement of the Transferee to be bound by the terms and provisions of this
Agreement so assigned or assumed and obtain and provide to the Company complete
information for notices under this Agreement.
SECTION 3.4 TRANSFEREE. Except as provided in this Article III or in
----------------------
Section 7.3, no Transferee of any Security Purchaser (or of any subsequent
Transferee) shall be obligated by, or be entitled to any rights under, the
provisions of this Agreement.
SECTION 3.5 TAX TRANSFER RESTRICTIONS. As of the date hereof, each of the
-------------------------------------
Security Purchasers and Designated Transferees, if any, severally and not
jointly and as to itself only, represents and warrants to each other party
hereto that it is not as of the date of this Agreement subject to any binding
commitment to Transfer any portion of the Securities issued by the Company on
the date hereof, which Transfer would change the ownership of the Securities for
federal income tax purposes.
ARTICLE IV
REGISTRATION RIGHTS
SECTION 4.1 SHELF REGISTRATION STATEMENT.
----------------------------------------
(a) Subject to subsections (d) and (e) of this Section 4.1 and to
subsection (g) of Section 5.1, the Company shall:
(i) at least 30 days prior to the Transfer Restrictions Termination
Date, file an "evergreen" shelf registration statement on the form for which the
Company is eligible pursuant to Rule 415 under the Securities Act (or any
successor provisions) providing for an offering to be made on a continuous basis
of the Registrable Securities (the "Shelf Registration Statement"); provided,
however, that the inclusion of all or any part of the FELINE PRIDES or Preferred
Stock shall be at the election of the Holder or Holders thereof.
(ii) use its commercially reasonable efforts to cause the Shelf
Registration Statement to become effective as soon as practicable after the
Transfer Restrictions Termination Date (but in any event not later than 45 days
thereafter);
(iii) use its commercially reasonable efforts to maintain the Shelf
Registration Statement in effect for the Effective Period and, when necessary
for that purpose, to amend the Shelf Registration Statement or to supplement the
prospectus included therein, all as required by the Securities Act or as
reasonably requested by the Holders of (or any underwriter for) more than 10% of
the Common Stock (including any Common Stock issuable upon conversion of Class B
Common Stock) or 10% of the FELINE PRIDES and Preferred Shares covered by the
Shelf Registration Statement;
17
(iv) furnish to the Holders copies of any supplement or amendment to
the Shelf Registration Statement prior to the filing of such supplement or
amendment with the SEC or the use thereof; and
(v) pay all Registration Expenses in connection with the Shelf
Registration Statement.
(b) The Shelf Registration Statement shall not include any securities
other than the Registrable Securities.
(c) If at any time prior to the Registration Rights Termination Date
the Shelf Registration Statement ceases to be effective, then the Company shall
promptly file and use its commercially reasonable efforts to cause to become
effective a new "evergreen" shelf registration statement providing for an
offering to be made on a continuous basis of the Registrable Securities, which
registration statement shall also be referred to herein as the Shelf
Registration Statement.
(d) If the Company shall at any time furnish to the Holders a
certificate signed by its chairman of the board, chief executive officer or
president stating that a Suspension Event has occurred, the Company may postpone
the filing (but not the preparation) of the Shelf Registration Statement for up
to 60 days; provided, however, that the Company shall not be permitted to
postpone the filing of the Shelf Registration Statement pursuant to this
subsection (d) more than once. The Company shall promptly give the Holders
written notice of any postponement made in accordance with the preceding
sentence.
(e) If the Company shall at any time furnish to the Holders a
certificate signed by its chairman of the board, chief executive officer or
president (a "Suspension Notice") stating that a Suspension Event or a Company
Offering Event has occurred, the Holders may not effect any such resales until
(i) in the case of a Suspension Event, the earliest to occur of (A)
two Business Days following the public announcement by the Company of the
related transaction, (B) the abandonment by the Company of negotiations
regarding the related transaction (upon which the Company shall promptly notify
the Holders in writing) and (C) 90 days after the delivery of such Suspension
Notice; or
(ii) in the case of a Company Offering Event, the earliest to occur of
(A) 30 days after the completion of the related Company Offering, (B) after the
abandonment of the related Company Offering (upon which the Company shall
promptly notify the Holders in writing) and (C) 90 days after the delivery of
such Suspension Notice.
The Company shall be entitled to serve only one Suspension Notice
within any period of 365 consecutive days.
(f) The methods of distribution of the Registrable Securities
specified in the Shelf Registration Statement shall include an offering "at
market," a firm underwriting and a "best efforts" underwriting. Prior to the
Shelf Registration Statement becoming effective, the Holders of the Registrable
Securities included in the Shelf Registration Statement shall enter into an
18
agreement with the Company in form and substance substantially similar to the
form thereof attached hereto as Annex A (containing, among others, provisions
requiring advance notice by a Holder to the Company with respect to any sale of
Registrable Securities and provisions relating to the distribution of the
Registrable Securities in an "at market" offering).
(g) At the election of any Holder or group of Holders, in each case,
holding in excess of 10% of the aggregate amount of Securities (including any
Common Stock issuable upon conversion of the Class B Common Stock) included in
the Shelf Registration Statement, any resale pursuant to the Shelf Registration
Statement may involve an underwritten offering, and, in such case, the
underwriter(s) for such registration shall be selected by the Holders making
such election; provided, however, that such underwriter(s) shall be reasonably
satisfactory to the Company. The Company agrees to amend or supplement the Shelf
Registration Statement or any prospectus included therein as necessary to
disclose the method of distribution in accordance with the Securities Act.
SECTION 4.2 INCIDENTAL REGISTRATIONS.
-------------------------------------
(a) If, at any time after the Transfer Restrictions Termination Date,
the Company proposes to register Equity Securities for offering, sale and
delivery under the Securities Act (other than a registration on Form S-4 or S-8
for a purpose specified by either such Form as of the date hereof and a
registration on any successor or other forms promulgated for such specified
purposes and other than a registration statement relating to any dividend
reinvestment or direct stock purchase plan), whether or not for sale for its own
account, in a manner that would permit registration of Common Stock for sale to
the public under the Securities Act, it will, at each such time, give prompt
written notice to all Holders of Common Stock, Class B Common Stock and FELINE
PRIDES of its intention to do so and of such Holders' rights under this
Agreement.
(b) Upon the written request of any such Holder made within thirty
(30) days after the receipt of any such notice, the Company will use
commercially reasonable efforts to effect the registration under the Securities
Act under such registration statement of all shares of Common Stock that then
constitute Registrable Securities or are issuable on conversion of shares of
Class B Common Stock that then constitute Registrable Securities and that the
Company has been so requested to register by the Holders thereof. The foregoing
obligation in this subsection (b) is subject to the conditions that (i) if,
prior to the effective date of such registration statement, the Company shall
cease its efforts to register the initially proposed offering, sale and delivery
of Equity Securities, the Company may, at its election, give written notice of
such action to each Holder and, thereupon, shall be relieved of its obligation
hereunder to register any shares of Common Stock in connection with such
registration (but not from its obligation to pay the Registration Expenses
theretofore incurred) and (ii) if such registration involves an underwritten
offering, all Holders requesting inclusion of Common Stock in the registration
statement must offer, sell and deliver such Common Stock through the
underwriters selected for such offering on the same terms and conditions as
apply to the Company or the other sellers of the Equity Securities, with such
differences, including any with respect to indemnification and liability
insurance, as may be customary or appropriate in combined primary and secondary
offerings.
19
(c) If an offering to be registered pursuant to this Section 4.2
involves a firm underwriting, any Holder requesting inclusion of shares of
Common Stock in such offering and registration statement may elect in writing
prior to the effective date of the registration statement to delete all or any
part of such shares of Common Stock from such offering and such registration
statement.
(d) Nothing in this Section 4.2 shall operate to limit the right of
any Holder to request the registration of Common Stock issuable upon conversion,
exchange or exercise of securities, including Class B Common Stock, held by such
Holder notwithstanding the fact that at the time of request such Holder does not
hold the Common Stock underlying such securities. The registrations provided for
in this Section 4.2 are in addition to, and not in lieu of, registrations made
in accordance with Section 4.1.
(e) The Company will pay all Registration Expenses in connection with
each registration requested pursuant to this Section 4.2.
(f) If a registration pursuant to this Section 4.2 involves an
underwritten offering and the managing underwriter advises the Company in
writing that, in its opinion, the number of shares of Common Stock requested to
be included in such registration would be likely to have a significant adverse
effect on the price, timing or distribution of the other securities to be
offered in such offering (a "Significant Adverse Effect") then the Company shall
include in such registration, (a) first, 100% of the securities the Company
proposes to sell and, (b) second, to the extent of the amount of Registrable
Securities requested to be included in such registration which, in the opinion
of such managing underwriter, can be sold without having a Significant Adverse
Effect, the amount of Registrable Securities which the Holders have requested to
be included in such registration, such amount to be allocated pro rata among all
requesting Holders on the basis of the relative amount of Registrable Securities
that constitute Common Stock requested to be included by such Holder in such
registration statement (provided, that any such amount thereby allocated to any
such Holder that exceeds such Holder's request shall be reallocated among the
remaining requesting Holders and any other requesting holders in like manner).
ARTICLE V
REGISTRATION PROCEDURES
SECTION 5.1 REGISTRATION PROCEDURES. In connection with the Company's
-----------------------------------
obligations hereunder to cause the registration of the Registrable Securities
under the Securities Act, the Company shall, when required under the provisions
of Article IV, as expeditiously as possible:
(a) prepare and file with the SEC the registration statement and the
prospectus to be used in connection therewith, including all financial
statements required thereby, all exhibits thereto and all other documents and
instruments required under the Securities Act with respect to the method of
distribution of the securities to be registered thereby;
(b) prepare and file with the SEC such amendments and supplements to
the registration statement and the prospectus used in connection therewith as
may be necessary to cause such registration to become effective under the
Securities Act, to maintain the effectiveness of such registration statement in
20
accordance with the provisions of this Agreement and to comply with the
provisions of the Securities Act and the Exchange Act with respect to the
disposition of all securities covered by such registration statement during such
period in accordance with the intended methods of disposition by the Holders set
forth in such registration statement or any amendment or supplement thereto;
(c) before filing the registration statement or any amendments or
supplements thereto, furnish, on a timely basis so as to permit review thereof,
to any counsel selected pursuant to Section 5.6 hereof copies of all documents
proposed to be filed;
(d) furnish to each Holder such number of copies of the registration
statement and of each amendment and supplement thereto (in each case including
all exhibits filed therewith, including any documents incorporated by
reference), such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus and summary
prospectus), in conformity with the requirements of the Securities Act, and such
other related documents as such Holder may reasonably request in order to
facilitate the disposition of the Registrable Securities by such Holder;
(e) use commercially reasonable efforts to register or qualify the
Registrable Securities in such jurisdictions as each Holder shall reasonably
request, and do any and all other acts and things that may be reasonably
necessary or advisable to enable such Holder to consummate the distribution in
such jurisdictions of the Registrable Securities owned by such Holder, except
that the Company shall not for any such purpose be required to qualify generally
to do business as a foreign corporation in any jurisdiction where, but for the
requirements of this subsection (e), it would not be obligated to be so
qualified, to subject itself to taxation in any such jurisdiction or to consent
to general service of process in any such jurisdiction;
(f) use commercially reasonable efforts to cause the Registrable
Securities to be registered with or approved by such other governmental
authorities as may be necessary to enable the Holder or Holders thereof to
consummate the distribution of the Registrable Securities;
(g) immediately notify each Holder and each underwriter, if any, at
any time when a prospectus relating thereto is required to be delivered under
the Securities Act, of the Company becoming aware that the prospectus included
in the registration statement, as then in effect, includes an untrue statement
of a material fact or omits to state a material fact required to be stated
therein or necessary to make the statements therein not misleading in the light
of the circumstances then existing, and, at the request of any such Holder,
prepare and file with the SEC an amendment to the registration statement or a
supplement to the prospectus so that such prospectus shall not thereafter
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading in the light of the circumstances then existing and furnish as
promptly as practicable to such Holder a reasonable number of copies of the
prospectus as so amended or supplemented; provided, however, that, in the case
of the Shelf Registration Statement, the Company may defer the delivery of such
amended or supplemental prospectus in accordance with subsection (e) of Section
4.1 by delivery to each Holder of a Suspension Notice.
21
(h) otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC, and make available to its security holders, as soon
as reasonably practicable (but not more than eighteen (18) months) after the
effective date of the registration statement and the date of each subsequent
final prospectus supplement to the prospectus contained in the registration
statement, if any, an earnings statement which shall satisfy the provisions of
Section 11(a) of the Securities Act;
(i) use its commercially reasonable efforts to list all Registrable
Securities on the NYSE or any other national securities exchange on which
Registrable Securities of the same class are then listed and, if no such
Registrable Securities are so listed, on the NYSE or any national securities
exchange on which the Common Stock is then listed;
(j) enter into such customary agreements (including an underwriting
agreement in customary form), which may include indemnification provisions in
favor of underwriters and other Persons in addition to, or in substitution for
the provisions of Section 5.4 hereof, and take such other actions as the Holders
or the underwriters, if any, reasonably request in order to expedite or
facilitate the distribution of such Registrable Securities;
(k) obtain a "cold comfort" letter or letters from the Company's
independent public accountants in customary form and covering matters of the
type customarily covered by "cold comfort" letters as the Holders of such
Registrable Securities shall reasonably request;
(l) make available for inspection by any Holder, by any underwriter
participating in any distribution to be effected pursuant to the registration
statement and by any attorney, accountant or other agent retained by any such
Holder or any such underwriter all pertinent financial and other records,
pertinent corporate documents and properties of the Company, and cause all of
the Company's officers, directors and employees to supply all information
reasonably requested by any such Holder, underwriter, attorney, accountant or
agent in connection with such registration statement;
(m) notify counsel (selected pursuant to Section 5.6 hereof) for the
Holders and the managing underwriter or agent, as applicable, immediately, and
confirm the notice in writing, (i) when the registration statement, or any
post-effective amendment to the registration statement, shall have become
effective, or any supplement to the prospectus or any amendment to the
prospectus shall have been filed, (ii) of the receipt of any comments from the
SEC, (iii) of any request of the SEC to amend the registration statement or
amend or supplement the prospectus or for additional information, (iv) of the
issuance by the SEC or any other governmental agency or authority of any stop
order suspending the effectiveness of the registration statement, any order
preventing or suspending the use of any preliminary prospectus or any order
suspending the qualification of the securities for offering or sale in any
jurisdiction, or (v) of the institution or threat by the SEC or any other
governmental agency or authority of any proceedings for any of such purposes;
(n) use its best efforts to prevent the issuance of any stop order
suspending the effectiveness of the registration statement or of any order
preventing or suspending the use of any prospectus and, if any such order is
22
issued, to obtain the withdrawal of any such order at the earliest possible
moment;
(o) in the case of an underwritten offering and if requested by the
managing underwriter or agent or any Holder, promptly incorporate in a
prospectus supplement or post-effective amendment to the registration statement
such information as the managing underwriter or agent or such Holder reasonably
requests to be included therein, including, with respect to the number of
Registrable Securities being sold by such Holder to such underwriter or agent,
the purchase price being paid therefor by such underwriter or agent and with
respect to any other terms of any underwritten offering of the Registrable
Securities to be sold in such offering; and make all required filings of such
prospectus supplement or post-effective amendment as soon as practicable after
being notified of the matters incorporated in such prospectus supplement or
post-effective amendment;
(p) cooperate with the Holders and the managing underwriter or agent,
if any, to facilitate the timely preparation and delivery of certificates (not
bearing any restrictive legends) representing securities to be sold under the
registration statement, such certificates to be in such denominations and
registered in such names as the managing underwriter or agent, if any, or such
Holders may request;
(q) use its best efforts to obtain for delivery to the Holders and to
the managing underwriter or agent, if any, any opinion or opinions from counsel
for the Company reasonably requested by any Holder and in customary form and in
form, substance and scope reasonably satisfactory to such Holders, the managing
underwriter or agent and their counsel;
(r) cooperate with each Holder and each underwriter or agent, if any,
participating in the distribution of such Registrable Securities and their
respective counsel in connection with any filings required to be made with the
NYSE or any other securities exchange or the NASD; and
(s) use its best efforts to make available the executive officers of
the Company to participate with the Holders of Registrable Securities and any
underwriters in any "road shows" or other selling efforts that may be reasonably
requested by the Holders in connection with the methods of distribution for the
Registrable Securities.
SECTION 5.2 INFORMATION SUPPLIED. The Company may require each Holder, the
--------------------------------
Registrable Securities of which are being included in a registration statement
as required hereby, to furnish the Company with such information regarding such
Holder and pertinent to the disclosure requirements relating to the registration
and the distribution of such securities and reasonably necessary in order to
ensure compliance with applicable securities laws as the Company may from time
to time reasonably request in writing.
SECTION 5.3 RESTRICTIONS ON DISPOSITION. Each Holder agrees that, upon
---------------------------------------
receipt of any notice from the Company of the happening of any event of the kind
described in subsection (g) of Section 5.1, such Holder will forthwith
discontinue distribution of Registrable Securities pursuant to the Shelf
Registration Statement until such Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subsection (g) of Section
23
5.1, and, if so directed by the Company, such Holder will deliver to the Company
(at the Company's expense) all copies, other than permanent file copies then in
such Holder's possession, of the prospectus covering such Registrable Securities
current at the time of receipt of such notice.
SECTION 5.4 INDEMNIFICATION. (a) In the event of any registration of any
---------------------------
securities of the Company under the Securities Act pursuant to Article IV, the
Company shall, and it hereby does, indemnify and hold harmless, to the extent
permitted by law, the Holder of any Registrable Securities covered by such
registration statement, each Affiliate of such Holder and their respective
directors, officers, employees and stockholders or members or general and
limited partners (and any director, officer, Affiliate, employee, stockholder
and controlling Person of any of the foregoing), each Person who participates as
an underwriter in the offering or sale of such securities and each other Person,
if any, who controls such Holder or any such underwriter within the meaning of
the Securities Act (collectively, the "Indemnified Parties"), against any and
all losses, claims, damages or liabilities, joint or several, actions or
proceedings (whether commenced or threatened) in respect thereof ("Claims") and
expenses (including reasonable attorney's fees and reasonable expenses of
investigation) ("Expenses")to which such Indemnified Party may become subject
under the Securities Act, common law or otherwise, insofar as such Claims or
Expenses arise out of, relate to or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in or incorporated by
reference in any registration statement under which such securities were
registered under the Securities Act, any preliminary, final or summary
prospectus contained therein, or any amendment or supplement thereto or (ii) any
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein (in the case of a
prospectus, in light of the circumstances under which they were made) not
misleading; provided, however, that the Company shall not be liable to any
Indemnified Party in any such case to the extent that any such Claim or Expense
arises out of, relates to or is based upon any untrue statement or alleged
untrue statement or omission or alleged omission made in such registration
statement or amendment or supplement thereto or in any such preliminary, final
or summary prospectus in reliance upon and in conformity with written
information furnished to the Company by or on behalf of such Holder specifically
for use in the preparation thereof; and provided, further, that, with respect to
any such Claim and Expenses that arise out of or are based on an untrue
statement or alleged untrue statement in or omission or alleged omission from
any preliminary prospectus, the indemnity agreement contained in this
subparagraph shall not inure to the benefit of any Indemnified Party from whom
the person asserting such Claim and Expenses purchased the Securities concerned
to the extent that any such Claim and Expenses result from the fact that a copy
of the final prospectus was not sent or given to such person at or prior to the
written confirmation of the sale of such Securities as required by the
Securities Act if the untrue statement or alleged untrue statement in or
omission or alleged omission has been corrected in the final prospectus. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of any Indemnified Party and shall survive the transfer of
securities by any Holder.
(b) The Company may require, as a condition to including any
Registrable Securities in any registration statement filed in accordance with
Section 4.1 or Section 4.2 herein, that it shall have received an undertaking
reasonably satisfactory to it from the Holder of such Registrable Securities or
any underwriter acting for such Holder to indemnify and hold harmless (in the
same manner and to the same extent as set forth in subsection (a) of this
24
Section 5.4) the Company and all other prospective sellers or underwriters, as
the case may be, with respect to any untrue statement or alleged untrue
statement in or omission or alleged omission from such registration statement,
any preliminary, final or summary prospectus contained therein, or any amendment
or supplement thereto, if such untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
written information furnished to the Company by or on behalf of such Holder or
underwriter specifically for use in the preparation of such registration
statement, preliminary, final or summary prospectus or amendment or supplement,
or a document incorporated by reference into any of the foregoing. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any of the prospective sellers, or any of
their respective Affiliates, directors, officers or controlling Persons and
shall survive the transfer of securities by any seller. In no event shall the
liability of any Holder of Registrable Securities hereunder be greater in amount
than the dollar amount of the proceeds received by such Holder upon the sale of
the Registrable Securities giving rise to such indemnification obligation.
(c) Promptly after receipt by an Indemnified Party hereunder of
written notice of the commencement of any action or proceeding with respect to
which a claim for indemnification may be made pursuant to this Section 5.4, such
Indemnified Party will, if a claim in respect thereof is to be made against an
indemnifying party, give written notice to the latter of the commencement of
such action or proceeding; provided, however, that the failure of the
Indemnified Party to give notice as provided herein shall not relieve the
Company of its obligations under Section 5.4, except to the extent that the
Company is materially prejudiced by such failure to give notice. In case any
such action or proceeding is brought against an Indemnified Party, unless in
such Indemnified Party's reasonable judgment (after consultation with legal
counsel) a conflict of interest between such Indemnified Party and the Company
may exist in respect of such action or proceeding, the Company shall be entitled
to participate in and to assume the defense thereof (at its expense), jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel selected by the Company and reasonably satisfactory to such
Indemnified Party, and after notice from the Company to such Indemnified Party
of its election so to assume the defense thereof, the Company shall not be
liable to such Indemnified Party for any legal or other expenses subsequently
incurred by the latter in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that, if the Company
declines or fails to assume the defense of the action or proceeding or to employ
counsel reasonably satisfactory to the Indemnified Party, in either case within
a 30-day period, or if a court of competent jurisdiction determines that the
Company is not vigorously defending such action or proceeding, then such
Indemnified Party may employ counsel to represent or defend it in any such
action or proceeding and the Company shall pay the reasonable fees and
disbursements of such counsel or other representative as incurred. The Company
shall not settle any such action or proceeding or consent to the entry of any
judgment without the prior written consent of the Indemnified Party, unless such
settlement or judgment (i) includes as an unconditional term thereof the giving
by the claimant or plaintiff of a release to such Indemnified Party from all
liability in respect of such action or proceeding and (ii) does not involve the
imposition of equitable remedies or the imposition of any obligations on such
Indemnified Party and does not otherwise adversely affect such Indemnified
Party. No Indemnified Party shall settle any such action or proceeding or
25
consent to the entry of any judgment without the prior written consent of the
Company (such consent not to be unreasonably withheld).
(d) If the indemnification provided for in this Section 5.4 from the
Company is unavailable to an Indemnified Party hereunder in respect of any Claim
or Expenses referred to herein, then the Company, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Claim or Expenses in such proportion as is
appropriate to reflect the relative fault of the Company and Indemnified Party
in connection with the actions that resulted in such Claim or Expenses, as well
as any other relevant equitable considerations, including relevant benefits. The
relative fault of the Company and Indemnified Party shall be determined by
reference to, among other things, whether any action in question, including any
untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, has been made by, or relates to information
supplied by, the Company or the Indemnified Party, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such action. The amount paid or payable by a party under this subsection (d) as
a result of the Claim and Expenses referred to above shall be deemed to include
any legal or other fees or expenses reasonably incurred by such party in
connection with any action or proceeding.
(e) The parties hereto agree that it would not be just and equitable
if contribution pursuant to subsection (d) of this Section 5.4 were determined
by pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in subsection (d) of this
Section 5.4. No Person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation.
(f) Indemnification similar to that specified in this Section 5.4
(with appropriate modifications) shall be given by the Company and each Holder
of Registrable Securities with respect to any required registration or other
qualification of securities under any law or with any governmental authority
other than as required by the Securities Act.
(g) The obligations of the parties under this Section 5.4 shall be in
addition to any liability which any party may otherwise have to any other party.
SECTION 5.5 REQUIRED REPORTS. The Company covenants that it will file the
----------------------------
reports required to be filed by it under the Securities Act and the Exchange Act
(or, if the Company is not required to file such reports, it will, upon the
request of any Holder, make publicly available such information), and it will
take such further action as any Holder may reasonably request, all to the extent
required from time to time to enable such Holder to sell shares of Registrable
Securities without registration under the Securities Act but within the
limitation of the exemptions provided by (i) Rule 144 under the Securities Act,
as such Rule may be amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any Holder, the
Company will deliver to such Holder a written statement as to whether it has
complied with such requirements.
SECTION 5.6 SELECTION OF COUNSEL. In connection with any registration of
--------------------------------
Registrable Securities pursuant to Article IV hereof, the Holders of a majority
26
of the Registrable Securities covered by any such registration may select one
counsel to represent all Holders of Registrable Securities.
SECTION 5.7 HOLDBACK AGREEMENT. If any registration under Section 4.2
------------------------------
hereof or any sale of securities in connection with a registration under Section
4.1 hereof shall be in connection with an underwritten public offering, each
Holder that beneficially owns Common Stock or Class B Common Stock representing
at least 2% of the outstanding shares of Common Stock and Class B Common Stock,
taken as a whole, agrees not to effect any public offering, sale or delivery,
including any sale pursuant to Rule 144 under the Securities Act, of any Equity
Securities of the Company (in each case, other than as part of such underwritten
public offering), within seven (7) days before, or ninety (90) days (or such
lesser period as the managing underwriters may permit) after, the effective date
of any such registration pursuant to Section 4.2 or the closing of any sale of
securities in connection with a registration under Section 4.1 (except as part
of any such registration or sale), and the Company hereby also so agrees and
agrees to cause each other holder of any equity security of the Company
purchased from the Company (at any time other than in a public offering) to so
agree.
SECTION 5.8 NO INCONSISTENT AGREEMENT. The Company represents and warrants
-------------------------------------
that it will not enter into, or cause or permit any of its Subsidiaries to enter
into, any agreement which conflicts with or limits or prohibits the exercise of
the rights granted to the Holders in this Agreement.
ARTICLE VI
STANDSTILL
SECTION 6.1 ACQUISITION OF ADDITIONAL VOTING SECURITIES.
-------------------------------------------------------
(a) Subject to subsection (b) of this Section 6.1, during the period
commencing on the date hereof and ending on the Termination Date, Enron hereby
agrees that it shall not, and that it shall cause each of its Affiliates not to
(and each Designated Transferee also agrees, pursuant to the assumption
contemplated by Section 3.2, not to), without the prior approval of the Company
Board (excluding, for purposes of such approval, the Enron Directors), (i)
acquire, offer or propose to acquire or agree to acquire (whether by purchase,
tender or exchange offer, through an acquisition of control of another Person
(including by way of merger or consolidation), by joining a partnership,
syndicate or other Group, or otherwise), the beneficial ownership of any Voting
Securities of the Company in excess of Voting Securities delivered at Closing
(or any warrants, options or other rights to purchase or acquire, or any
securities convertible into, or exchangeable for, any Voting Securities of the
Company); (ii) make any public announcement with respect to, or submit any
proposal for, any merger, consolidation, sale of substantial assets (other than
sales made in the ordinary course of business of Enron or its Subsidiaries) or
other business combination or extraordinary transaction involving the Company;
(iii) except in connection with the election of the Enron Directors and Enron
Designees, make, or in any way participate in, any "solicitation" of "proxies"
(as such terms are defined or used in Regulation 14A under the Exchange Act) to
vote any Voting Securities of the Company or seek to advise or influence any
Person (other than any Enron Affiliate or Designated Transferee) with respect to
the voting of any Voting Securities of the Company; (iv) otherwise act, either
27
alone or in concert with others, to seek control of the Company Board or (v)
publicly disclose any intention, proposal, plan or arrangement with respect to
any of the foregoing (collectively, the "Acquisition Restrictions"). The
Acquisition Restrictions contained in clause (i) above shall not apply to any
acquisition (each, an "Acquisition") of beneficial ownership of any additional
Voting Securities of the Company: (x) which is by way of stock dividends, stock
reclassifications or other distributions or offerings made available on a pro
rata basis to holders of Equity Securities of the Company generally, (y) that
involves Equity Securities acquired from the Company in accordance with the
provisions of the Stock Purchase Agreement or upon conversion of any Class B
Common Stock (including any Class B Common Stock issued pursuant to a Purchase
Contract) issued pursuant to the Stock Purchase Agreement, except that in no
event shall Enron, its Affiliates and any Designated Transferee, together,
acquire or hold direct ownership of more than 4.9% of the outstanding Voting
Securities of the Company or (z) from an Affiliate of Enron. Nothing contained
in this Section 6.1 shall be construed to limit or restrict any action taken in
good faith by the Enron Directors or Designees in their capacities as directors
of the Company Board or any other Applicable Board or by Enron or its Affiliates
pursuant to Article II.
(b) The foregoing Acquisition Restrictions will not apply if:
(i) a third party that is not an Affiliate of Enron or a Designated
Transferee (a "Third Party", which term shall include any Group, other than a
Group that includes Enron, any of its Affiliates or any Designated Transferee as
a member) commences or publicly announces its intention to commence a bona fide
tender or exchange offer for more than 15% of the outstanding Voting Securities
of the Company and the Company Board does not recommend against the tender or
exchange offer within 10 Business Days after the commencement thereof (which, in
the case of an exchange offer, shall be deemed to be the effective date of the
registration statement relating to the securities offered in such exchange offer
or, if permitted under the Exchange Act, such earlier date selected by the
offeror for commencement of the exchange offer) or such longer period as shall
then be permitted under SEC rules;
(ii) a Third Party acquires beneficial ownership of 15% or more of the
Company's outstanding Voting Securities;
(iii) a Third Party makes a bona fide proposal to acquire assets of
the Company that the Company Board is actively negotiating and the consummation
of which would require approval of the shareholders of the Company pursuant to
the Oregon Business Corporation Act;
(iv) a Third Party makes a bona fide proposal to enter into any
acquisition or other business combination transaction with the Company that the
Company Board is actively negotiating;
(v) the Company enters into (or publicly announces its intention to do
so) a definitive agreement, or an agreement contemplating a definitive
agreement, for any of the foregoing transactions described in clauses (i) to
(iv) above;
28
(vi) to any Transfer of Equity Securities between or among Enron, its
Affiliates and any Designated Transferee or Transferees; or
(vii) the Company is in material breach of its obligations under this
Agreement.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 NOTICES. All notices required or permitted hereunder shall be
-------------------
in writing and shall be deemed effectively given (i) upon personal delivery to
the party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient or, if not, then on the next
Business Day, (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid or (iv) one (1)
Business Day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All
communications shall be sent as follows:
(a) to the Company at its address specified in Section 10.3 of the
Stock Purchase Agreement;
(b) to Enron at the address specified in Section 10.3 of the Stock
Purchase Agreement;
(c) to the Common Stock Purchaser, the Class B Purchaser or the FELINE
PRIDES Purchaser at the address set forth under the name of each such party on
the signature page hereto;
(d) to any Transferee at the address provided pursuant to subsection
Section 3.3;
(e) to any other Holder (if other than pursuant to clause (b), (c) or
(d) above), to the address of such Holder as shown in the stock record books of
the Company; or
(f) to such other address for any party as it may specify by like
notice.
SECTION 7.2 AMENDMENTS AND WAIVERS. Except as otherwise provided herein, no
----------------------------------
modification, amendment or waiver of any provision of this Agreement shall be
effective against any party hereto unless such modification, amendment or waiver
is approved in writing by each party hereto; provided that, notwithstanding the
foregoing, no such approval shall be required of any Transferee that is made a
party hereto pursuant to Section 3.3 unless such modification, amendment or
waiver affects such Transferee. The failure of any party to enforce any of the
provisions of this Agreement shall in no way be construed as a waiver of such
provisions and shall not affect the right of such party thereafter to enforce
each and every provision of this Agreement in accordance with its terms.
SECTION 7.3 SUCCESSORS, ASSIGNS, TRANSFEREES. This Agreement shall bind the
--------------------------------------------
parties hereto and their respective successors and permitted assigns. Except as
expressly provided in this Agreement, this Agreement may not be assigned without
29
the prior written consent of each other party, except that Enron may assign its
rights and obligations hereunder to any Affiliate or Affiliates.
SECTION 7.4 FURTHER ASSURANCES. At any time or from time to time after the
------------------------------
date hereof, the parties agree to cooperate with each other and, at the request
of any other party, to execute and deliver any further instruments or documents
and to take all such further action as the other party may reasonably request in
order to evidence or effectuate the consummation of the transactions
contemplated hereby and to otherwise carry out the intent of the parties
hereunder.
SECTION 7.5 ENTIRE AGREEMENT. Except as otherwise expressly set forth
----------------------------
herein, the Stock Purchase Agreement and any other agreement executed in
connection with the transactions contemplated under the Stock Purchase Agreement
embody the complete agreement and understanding among the parties hereto with
respect to the subject matter hereof and supersede and preempt any prior
understandings, agreements or representations by or among the parties, written
or oral, that may have related to the subject matter hereof in any way.
SECTION 7.6 DELAYS OR OMISSIONS. No delay or omission to exercise any
-------------------------------
right, power or remedy accruing to any party upon any breach, default or
noncompliance by another party under this Agreement shall impair any such right,
power or remedy nor shall it be construed to be a waiver of any such breach,
default or noncompliance or of any subsequent breach, default or noncompliance.
Any waiver, permit, consent or approval of any kind or character on the part of
any party hereto of any breach, default or noncompliance under this Agreement or
any waiver on such party's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law or otherwise afforded to any party, shall be cumulative and
not alternative.
SECTION 7.7 GOVERNING LAW, JURISDICTION. This Agreement shall be governed
---------------------------------------
in all respects by the laws of the State of New York, except, in the case of the
Company and with respect to Section 2.1, to the extent that the Oregon Business
Corporation Act is applicable.
SECTION 7.8 SEVERABILITY. In case any provision of this Agreement shall be
------------------------
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 7.9 EFFECTIVE DATE. This Agreement shall become effective
--------------------------
immediately upon the Closing.
SECTION 7.10 ENFORCEMENT; LIMITATIONS ON CERTAIN DAMAGES. Each party hereto
--------------------------------------------------------
acknowledges that money damages would not be an adequate remedy in the event
that any of the covenants or agreements in this Agreement are not performed in
accordance with its terms, and it is therefore agreed that in addition to and
without limiting any other remedy or right it may have, the non-breaching party
will have the right to an injunction, temporary restraining order or other
equitable relief in any court of competent jurisdiction enjoining any such
breach and enforcing specifically the terms and provisions hereof.
Notwithstanding anything herein to the contrary, in connection with any claim by
30
a party hereto against another party hereto, the claiming party shall not be
entitled to recover any punitive, consequential, special, incidental or indirect
damages (including any exemplary damages, treble damages, penalties, or loss of
profits or income), whether based on statute, in tort, contract or otherwise,
regardless of whether such damages may be available under applicable law or
otherwise, and whether or not arising from a party's sole, joint or concurrent
negligence, strict liability or other fault, the parties hereto hereby waiving
their right, if any, to recover such damages in connection with any claims
hereunder.
SECTION 7.11 TITLES AND SUBTITLES. The titles of the sections and
---------------------------------
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
SECTION 7.12 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
-----------------------------------------------
executed in any number of counterparts, each of which shall be an original, but
all of which together shall constitute one instrument. This Agreement may be
executed by facsimile signature(s).
31
IN WITNESS WHEREOF, the parties hereto have executed this Securityholders
and Registration Rights Agreement as of the date set forth in the first
paragraph hereof.
ENRON CORP.
By:____________________________________
Name:
Title:
[COMMON STOCK PURCHASER]
By:____________________________________
Name:
Title:
Address: ___________________________
___________________________
[CLASS B PURCHASER]
By:____________________________________
Name:
Title:
Address: ____________________________
___________________________
[FELINE PRIDES PURCHASER]
By:____________________________________
Name:
Title:
Address: ___________________________
___________________________
32
NORTHWEST ENERGY CORPORATION
By:____________________________________
Name:
Title:
33