EXECUTION COPY
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AMENDED AND RESTATED OPTION AGREEMENT
By and Among
PG&E NATIONAL ENERGY GROUP, INC.,
PG&E CORPORATION,
PG&E NATIONAL ENERGY GROUP, LLC,
and
THE HOLDERS
__________________________
Dated as of June 25, 2002
__________________________
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Table of Contents
Page
ARTICLE I Definitions............................................................ 1
SECTION 1.01. Definitions................................................... 1
ARTICLE II Grant of the Option................................................... 9
SECTION 2.01. Grant and Authorization of the Option......................... 9
ARTICLE III Representations, Warranties and Covenants............................ 10
SECTION 3.01. Representations, Warranties and Covenants of LLC.............. 10
SECTION 3.02. Representations, Warranties and Covenants of the Company...... 12
SECTION 3.03. Representations, Warranties and Covenants of the Initial
Holders...................................................... 15
ARTICLE IV Exercise Terms........................................................ 15
SECTION 4.01. Exercise Price................................................ 15
SECTION 4.02. Exercise Amounts.............................................. 15
SECTION 4.03. Manner of Exercise............................................ 16
SECTION 4.04. Transfer of Option Shares..................................... 16
SECTION 4.05. Fractional Option Shares...................................... 17
SECTION 4.06. Reservation of Option Shares.................................. 17
SECTION 4.07. Compliance with Law........................................... 17
ARTICLE V Transfer Restrictions.................................................. 17
SECTION 5.01. Restrictions on Transfers of Option and Option Shares......... 17
SECTION 5.02. Notation...................................................... 18
ARTICLE VI Holders' Put Rights................................................... 18
SECTION 6.01. Granting of Put; Put Option Purchase Price.................... 18
SECTION 6.02. Put Notice.................................................... 18
SECTION 6.03. Purchasing Party Notices...................................... 19
SECTION 6.04. Obligation to Purchase the Option............................. 19
ARTICLE VII Special Right of Call................................................ 19
SECTION 7.01. Granting of Call; Price....................................... 19
SECTION 7.02. Call Notice. The Call Notice shall:........................... 19
SECTION 7.03. Obligation to Call............................................ 20
ARTICLE VIII Registration, Drag-Along, Tag-Along and Preemptive Rights........... 20
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SECTION 8.01. Drag-Along................................................... 20
SECTION 8.02. Tag-Along.................................................... 21
SECTION 8.03. Expenses of Sale............................................. 21
ARTICLE IX Registration Rights................................................... 21
SECTION 9.01. Piggy-Back and Shelf Registration Rights..................... 21
SECTION 9.02. Demand Registration.......................................... 23
SECTION 9.03. Hold-Back Agreements; Restrictions on Public Sale by
Holders...................................................... 25
SECTION 9.04. Registration Procedures...................................... 25
SECTION 9.05. Registration Expenses........................................ 29
SECTION 9.06. Indemnification.............................................. 29
ARTICLE X Miscellaneous.......................................................... 32
SECTION 10.01. SEC Reports and other Financial Information.................. 32
SECTION 10.02. Persons Benefiting........................................... 32
SECTION 10.03. Amendments and Waivers....................................... 32
SECTION 10.04. Notices...................................................... 33
SECTION 10.05. Governing Law; Waiver of Jury Trial; Submission of
Jurisdiction................................................. 35
SECTION 10.06. Successors and Assigns....................................... 36
SECTION 10.07. Severability................................................. 36
SECTION 10.08. Entire Agreement............................................. 36
SECTION 10.09. Counterparts................................................. 36
SECTION 10.10. Headings..................................................... 36
SECTION 10.11. Publicity.................................................... 36
SECTION 10.12. Restricted Transactions...................................... 36
SECTION 10.13. Rule 144/145................................................. 37
SECTION 10.14. Remedies..................................................... 37
SECTION 10.15. Acknowledgment............................................... 37
SECTION 10.16. Waiver....................................................... 37
SECTION 10.17. Register..................................................... 37
SECTION 10.18. Intercreditor Agreement...................................... 38
Annex 1 Gross Up Analysis for Options Granted on Each Extension Date
Annex 2 Put Option Purchase Price (Original Option of GPSF)
Annex 3 Percentage of Options Held by Each Holder on the Closing Date
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AMENDED AND RESTATED OPTION AGREEMENT, dated as of June 25,
2002, by and among PG&E National Energy Group, Inc., a Delaware corporation (the
"Company"), PG&E Corporation, a California corporation (the "Borrower"), PG&E
National Energy Group, LLC, a Delaware limited liability company (the "LLC"),
GPSF-F Inc., a Delaware corporation ("GPSF"), and LB I Group Inc., a Delaware
corporation ("LBI"), (each, an "Initial Holder", and together the "Initial
Holders") and each entity named on the signature pages hereof as a "Subsequent
Holder" (each, a "Subsequent Holder").
W I T N E S S E T H:
WHEREAS, General Electric Capital Corporation and Xxxxxx
Commercial Paper Inc. (the "Initial Lenders") provided certain credit facilities
to the Borrower on the terms and conditions set forth in the Credit Agreement,
dated as of March 1, 2001, among the Borrower, the lenders from time to time
parties thereto and others (as amended, the "Existing Credit Agreement");
WHEREAS, pursuant to the Amended and Restated Credit
Agreement, dated as of the date hereof (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), among the Borrower, the
lenders from time to time parties thereto (the "Lenders") and others, the
Existing Credit Agreement is being amended and restated in its entirety to
modify certain of its terms and to provide additional loans to the Borrower;
WHEREAS, LLC owns 1,000 shares of the Common Stock of the
Company, which shares represent 100% of the outstanding Common Stock of the
Company;
WHEREAS, the Company, the Borrower, LLC, and the Holders are
parties to the Option Agreement, dated as of March 1, 2001 (the "Existing Option
Agreement");
WHEREAS, pursuant to the Existing Option Agreement, on the
Initial Closing Date, LLC granted the Original Option described herein to the
Initial Holders; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to agree to modify certain terms of, and to provide additional loans
under, the Existing Credit Agreement that the Existing Option Agreement shall
have been amended and restated as provided herein;
NOW, THEREFORE, intending to be legally bound, each party
hereto agrees as follows for the benefit of the other parties and for the equal
and ratable benefit of the Holders of the Option:
ARTICLE I
Definitions
SECTION 1.01. Definitions. Capitalized terms used but not
otherwise defined herein shall have the meanings ascribed to such terms in the
Credit Agreement and the principles of construction set forth in Appendix A to
the Credit Agreement shall apply to this Agreement.
"Additional Option" shall have the meaning provided in Section
2.01(b) hereof.
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"Advice" shall have the meaning set forth in Section 9.04
hereof.
"Agreement" shall mean this Amended and Restated Option
Agreement, as the same may be amended, modified or supplemented from time to
time.
"Approved Sale" shall have the meaning set forth in Section
8.01 hereof.
"Assignee" shall have the meaning set forth in Section 5.01
hereof.
"Board" shall mean the "Board of Control" of LLC or the board
of directors of the Company, as the case may be, or any committee thereof duly
authorized to act on behalf of such "Board of Control" or board of directors.
"Borrower" shall mean PG&E Corporation, a California
corporation.
"Business Day" shall mean any day except Saturday, Sunday and
any day that shall be a legal holiday or a day on which banking institutions in
the State of New York generally are authorized or required by law or other
government action to close.
"Call" shall mean the call right of the LLC pursuant to
Article VII hereof.
"Call Notice" shall have the meaning set forth in Section 7.01
hereof.
"Call Option Purchase Price" shall mean, with respect to the
right of LLC to purchase any Option pursuant to any Call Notice delivered under
Article VII hereof, for which the consideration includes (i) at any time prior
to the closing date of the IPO, the Current Market Price of an Option Share as
of the Call Repurchase Date multiplied by the Option Share Number in effect on
the date of delivery of the Call Notice ("Call Price") and (ii) after the
closing date of the IPO, at the election of LLC, (x) the delivery of a number of
shares of Common Stock of the Company equal to the Option Share Number in effect
on the Call Repurchase Date or (y) the Call Price.
"Call Repurchase Date" shall have the meaning set forth in
Section 7.02 hereof.
"Common Stock" shall mean, with respect to any Person, any and
all shares, interests, participations and/or rights in or other equivalents
(however designated, whether voting or nonvoting) in the common equity of such
Person, now or hereafter outstanding, and any and all rights, warrants or
options exchangeable for or convertible into any thereof.
"Common Stock Equivalent" shall mean any Convertible Security
or warrant, option or other right to subscribe for or purchase any shares of
Common Stock or any Convertible Security, other than an Option.
"Company" shall have the meaning set forth in the first
paragraph of this Agreement, and its successors and assigns.
"Convertible Securities" shall mean evidences of indebtedness,
shares of capital stock or other securities which are or may be at any time
convertible into or exchangeable for
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shares of Common Stock. The term "Convertible Security" shall mean one of the
Convertible Securities.
"Credit Agreement" shall have the meaning set forth in the
second recital of this Agreement.
"Current Market Price" of an Option Share shall mean, except
as hereinafter provided, the average of the daily market prices for the Common
Stock of the Company for the twenty (20) consecutive trading days preceding such
date. The market price for each such day shall be the last sale price on such
day as reported on the New York Stock Exchange consolidated tape, or, if such
Common Stock of the Company is not listed on the New York Stock Exchange, or
reported on such consolidated tape, then the last sale price on such day on the
principal domestic stock exchange on which such Common Stock of the Company is
then listed or admitted to trading, or, if no sale takes place on such day on
such exchange, the average of the closing bid and asked prices on such day as
officially quoted on such exchange, or, if such Common Stock of the Company is
not then listed or admitted to trading on any domestic stock exchange but is
quoted on the Nasdaq Stock Market's National Market, then the Current Market
Price for each such trading day shall be the last sale price on such day as
quoted on the Nasdaq Stock Market's National Market, or, if no sale takes place
on such day or if such Common Stock of the Company is neither listed or admitted
to trading on any domestic stock exchange nor quoted on such day on the Nasdaq
Stock Markets National Market, then the Current Market Price for each such
trading day shall be the average of the reported closing bid and asked price
quotations on such day in the over-the-counter market, as reported by the Nasdaq
Stock Market, or, if not so reported, as furnished by the National Quotation
Bureau, Inc., or, if such firm at the time is not engaged in the business of
reporting such prices, as furnished by any similar firm then engaged in such
business as selected by LLC or the Company, or, if there is no such firm, as
furnished by any member of the National Association of Securities Dealers, Inc.
selected by LLC or the Company with the written approval of a Majority in
Interest of Evaluating Holders.
If at any time the Common Stock of the Company is not listed
on any domestic exchange or quoted in the domestic over-the-counter market, the
Current Market Price of an Option Share shall be the fair market value per share
of the Common Stock of the Company as determined by a panel of two independent
appraisers (together, the "Independent Appraisers") who shall be independent
investment banks experienced in the evaluation of the value of securities of a
corporation of a type similar to the Company (one to be selected by the relevant
Purchasing Party, and the other by the relevant Holder or a Majority in Interest
of Evaluating Holders, as applicable), which determination shall not take into
account any discount attributable to the minority status of the Option and/or
Option Shares, or any other minority interest, or the illiquidity of the Option
and/or Option Shares.
In the event the Independent Appraisers are unable to agree
upon the Current Market Price within ten (10) days of their selection, then the
two Independent Appraisers shall select a third independent appraiser who shall
be an independent investment bank experienced in the evaluation of the value of
securities of a corporation of a type similar to the Company to determine the
Current Market Price within fifteen (15) days of its selection. A determination
by the Independent Appraiser of the Current Market Price shall be final and
binding upon the Borrower, LLC, the Company and the Holders.
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The relevant Purchasing Party shall pay the fees and expenses
of the independent appraiser it appoints. The relevant Holder or Evaluating
Holders, as applicable, shall pay the fees and expenses of the independent
appraiser it, or they, appoint; provided that, when applicable, such fees and
expenses shall be divided pro rata among the Evaluating Holders in proportion to
their respective ownership interests in the securities being evaluated.
Should a third independent appraiser be appointed, each of the
relevant Purchasing Party and the relevant Holder (or Evaluating Holders, where
applicable) shall pay fifty percent (50%) of the expense associated with such
appointment. Where applicable, the portion of the fees and expenses payable by
the Evaluating Holders shall be divided pro rata among such Evaluating Holders
in proportion to their respective ownership interests in the securities being
evaluated.
"Date Certain" shall have the meaning set forth in the Credit
Agreement.
"Demand" shall have the meaning set forth in Section 9.02(a)
hereof.
"Demand Registration" shall have the meaning set forth in
Section 9.02(a) hereof.
"Demand Registration Statement" shall have the meaning set
forth in Section 9.02(b) hereof.
"Dividend" shall mean any dividend or other distribution on
Common Stock whether in the form of money, evidences of the Company's
indebtedness, or any other properties or securities (other than shares of Common
Stock) or any options, warrants or other rights to subscribe for or to purchase
any of the foregoing.
"Evaluating Holders" shall mean, at any time and from time to
time, the Holders of the securities whose Current Market Price is being
ascertained at such time.
"Excess Additional Option Percentage" shall have the meaning
provided in Section 2.01(b) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the SEC promulgated pursuant
thereto.
"Exercise Price" shall have the meaning set forth in Section
4.01 hereof.
"Existing Credit Agreement" shall have the meaning set forth
in the first recital of this Agreement.
"Existing Option Agreement" shall have the meaning set forth
in the fifth recital of this Agreement.
"Extension Date" shall mean the first day of any period for
which the maturity of the Tranche A Loan has been extended, which period shall
expire on an Additional Extended Date Certain.
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"Extension Fee Loan" shall have the meaning provided in Section
2.01(b) hereof.
"Full Repayment Date" shall mean the date of repayment in full of the
Tranche A Loan.
"Fully Diluted Basis" shall mean, with respect to the Common Stock,
at any date as of which the number of shares thereof is to be determined, a
calculation based on all shares of Common Stock outstanding at such date and all
shares of Common Stock issuable pursuant to Convertible Securities or Common
Stock Equivalents, outstanding on such date together with any Option Shares
issuable pursuant to any Option.
"Governmental Authority" shall mean any federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality, or any court, in each case whether of the United States of
America or foreign.
"GPSF" shall have the meaning set forth in the first paragraph of
this Agreement.
"Holder" shall mean for purposes of the Original Option, the Initial
Holders and the Subsequent Holders, or for purposes of the Additional Option,
the Tranche A Lenders and the Assignees, designees or transferees of the Option
or any portion thereof or any Option Shares and/or Registrable Securities.
"HSR Act" shall have the meaning set forth in Section 3.01(f) hereof.
"Indemnified Party" shall have the meaning set forth in Section
9.06(c) hereof.
"Indemnifying Party" shall have the meaning set forth in Section
9.06(c) hereof.
"Independent Third Party" shall have the meaning set forth in Section
8.01 hereof.
"Initial Holders" shall have the meaning set forth in the preamble of
this Agreement.
"Initial Lenders" shall have the meaning set forth in the first
recital of this Agreement.
"IPO" shall mean the sale, in the initial underwritten offering,
registered under the Securities Act, of shares of the Company's Common Stock,
where, after such offering, the Common Stock sold in such offering is traded on
the Nasdaq National Market or a national securities exchange.
"LBI" shall have the meaning set forth in the first paragraph of this
Agreement.
"Lenders" shall have the meaning set forth in the preamble of this
Agreement.
"LLC" shall have the meaning set forth in the first paragraph of this
Agreement, and shall for purposes of Article III include the New LLC, and their
respective successors and assigns.
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"Losses" shall have the meaning set forth in Section 9.06(a) hereof.
"Majority Holders" shall mean the Holders of at least a 30% interest
in the Option or the Option Shares.
"Majority in Interest of Evaluating Holders" shall mean, at any time
and from time to time, the Holders of at least a 51% interest in the Option
Shares whose Current Market Price is being ascertained at such time.
"Material Adverse Change" shall mean, with respect to any Person, a
material adverse change in the condition (financial or otherwise), results of
operations, business, Properties, liabilities, management or prospects of such
Person.
"Material Adverse Effect" shall mean any event, circumstance or
condition which is reasonably likely to (A) have a material adverse effect on
the business, condition (financial or otherwise), results of operations,
properties, assets, liabilities or prospects of LLC, (B) materially and
adversely affect the ability of LLC or the Company to perform its obligations
under this Agreement or (C) materially and adversely affect the rights and
remedies of the Holders under this Agreement.
"Option" shall mean collectively the Original Option and the
Additional Option.
"Option Agreement" shall mean this Agreement.
"Option Share Number" shall mean, at any time, the aggregate number
of Option Shares which may at such time be purchased upon exercise of the
Option, after giving effect to all prior adjustments to such number made or
required to be made under the terms of this Agreement.
"Option Shares" shall mean all the shares of Common Stock of the
Company issuable or issued upon the exercise of the Option, or all the shares of
Common Stock of the Company, if any, deliverable upon the exercise by LLC of its
call right pursuant to Article VII hereof.
"Original Option" shall have the meaning provided in Section 2.01(a)
hereof.
"Person" means an individual, partnership, corporation, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.
"Piggy-Back Registration" shall have the meaning set forth in Section
9.01(a) hereof.
"Piggy-Back Registration Offer" shall have the meaning set forth in
Section 9.01(a) hereof.
"Preferred Stock" shall mean, with respect to any Person, any capital
stock issued by such Person which has a preference over such Person's Common
Stock.
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"Proceeding" shall mean an action, claim, suit or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened.
"Prospectus" shall mean the Prospectus included in any Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated pursuant to the
Securities Act), as amended or supplemented by an prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by a Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such Prospectus.
"Purchasing Party" shall mean either LLC or the Borrower, as
applicable.
"Put Effective Date" shall mean (i) with respect to the Original
Option, the earlier of the Full Repayment Date and, at each Holder's election,
(x) the Initial Date Certain, as such date may be extended pursuant to Section
2.9(a) of the Credit Agreement or (y) any Additional Extended Date Certain, if
the Initial Date Certain has been extended pursuant to Section 2.9(b) of the
Credit Agreement, and (ii) with respect to the Additional Option, the earlier of
the Full Repayment Date and the Date Certain.
"Put Notice" shall have the meaning set forth in Section 6.01 hereof.
"Put Option Price Loan" shall have the meaning provided in Section
6.04 hereof.
"Put Option Purchase Price" shall mean (a) subject to clause (b)
below, with respect to the exercise of any option to sell any Option pursuant to
any Put Notice delivered in accordance with Article VI hereof by any Holder of
an Option, the Current Market Price of an Option Share as of the Put Repurchase
Date multiplied by the Option Share Number in effect on the date of delivery of
the Put Notice and (b) with respect to the exercise of any option to sell any
Option pursuant to any Put Notice delivered in accordance with Section 6.01(b)
hereof by GPSF, the higher of (i) the Current Market Price of any Option Share
as of the Put Repurchase Date multiplied by the Option Share Number in effect on
the date of delivery of the Put Notice and (ii) the sum of the (x) the
applicable deemed Put Option Price of the Option Share in respect of the
Original Option of GPSF as set forth on Annex 2 hereto corresponding to the
relevant Put Repurchase Date within the period set forth in such Annex plus (y)
the Current Market Price of any Option Share in respect of the Additional
Option, if applicable, as of the Put Repurchase Date multiplied by the Option
Share Number in respect thereof in effect on the date of delivery of the Put
Notice; provided, however, that during the time that no Junior Obligee (as
defined in the Intercreditor Agreement) is continuing to exercise the rights and
remedies under the Financing Documents to foreclose on the Collateral, this
clause (b) shall not apply.
"Put Repurchase Date" shall mean, with respect to the exercise of any
put option pursuant to Article VI hereof, a date designated by the Purchasing
Party which is not earlier than ten (10) days, or more than thirty (30) days,
after the date of receipt by the Purchasing Party of the Put Notice; provided,
however, if the exercise of any put option pursuant to Article VI hereof
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is in connection with the refinancing in full of the Credit
Agreement, then the Put Repurchase Date shall be the earlier of (i) the date of
such refinancing or (ii) such thirty (30) day period; provided, further, that in
the event the Current Market Price shall not have been finally determined on any
date that otherwise would have been a Put Repurchase Date, then the Put
Repurchase Date shall be extended to the fifth Business Day following the date
of such final determination of the Current Market Price.
"Register" shall have the meaning set forth in Section 10.17 hereof.
"Registrable Securities" shall mean any of (i) the Option Shares
(whether or not the related Option has been exercised), (ii) any other
securities issued or issuable with respect to any Option Shares by way of stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization or otherwise,
until, in the case of any such Option Share or security, (A) it has been
registered effectively pursuant to the Securities Act and disposed of in
accordance with a Registration Statement covering it, (B) it ceases to be
outstanding or (C) it has been sold or otherwise transferred pursuant to Rule
144 or could be sold or otherwise transferred under Rule 144(k) under the
Securities Act and is not subject to any restrictive legend or stop transfer
order and (iii) any of the shares received pursuant to Section 7.01.
"Registration Expenses" shall have the meaning set forth in Section
9.05 hereof.
"Registration Statement" shall mean any registration statement
contemplated by Section 9.01 or Section 9.02 hereof, including the Prospectus,
amendments and supplements to such registration statement or Prospectus,
including pre- and post-effective amendments, all exhibits thereto, and all
material incorporated by reference or deemed to be incorporated by reference in
such registration statement.
"Rule 144 Transaction" shall mean a transfer of Common Stock (a)
complying with Rule 144 under the Securities Act as such rule or a successor
thereto is in effect on the date of such transfer (but not including a sale
other than pursuant to a "brokers transaction" as defined in clauses (i) and
(ii) of paragraph (g) of Rule 144 as in effect on the date hereof) and (b)
occurring at a time when the Common Stock or Preferred Stock is registered
pursuant to Section 12 of the Exchange Act.
"Sale Notice" shall have the meaning set forth in Section 8.01
hereof.
"Section 9.04(iii) Notice" shall have the meaning set forth in
Section 9.04 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended,
and the rules and regulations promulgated by the SEC thereunder.
"Shelf Registration" shall have the meaning set forth in Section
9.01(c) hereof.
"Special Counsel" shall mean any special counsel to the Holders, for
which Holders of Registrable Securities will be reimbursed pursuant to Section
9.04 hereof.
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"Subsequent Holder" shall have the meaning set forth in the preamble
of this Agreement.
"Tag-Along Notice" shall have the meaning set forth in Section 8.02
hereof.
"Transfer Agent" shall have the meaning set forth in Section 4.04
hereof.
"Underwritten Offering" shall mean a registration in connection with
which securities of the Company are sold to an underwriter for reoffering to the
public pursuant to an effective registration statement.
ARTICLE II
Grant of the Option
SECTION 2.01. Grant and Authorization of the Option. (a) In
consideration of the making of the loans by the Initial Lenders to the Borrower
under the Existing Credit Agreement as a condition to the lending of the loans
thereunder, LLC granted to the Initial Holders on the Initial Closing Date, an
unconditional, irrevocable option (the "Original Option") to purchase from LLC
subject to the terms hereof, up to three percent (3.0%) of the total common
equity of the Company computed on a Fully Diluted Basis, which Option may be
exercised as provided in Article IV.
(b) In consideration of the extension by the Tranche A Lenders of the
maturity date of the Tranche A Loan under Section 2.9(b) of the Credit Agreement
and as a condition to such extension of the maturity date thereunder, effective
on each Extension Date and only if such Extension Date occurs, LLC hereby grants
to the Holders (to be allocated among the Holders as described in the last
paragraph of this Section 2.01(b)), an unconditional, irrevocable option
(collectively, the "Additional Option") to purchase from LLC a percentage of the
total common equity of the Company outstanding on such Extension Date, computed
on a Fully Diluted Basis, as determined pursuant to Section 4.02(b) of this
Agreement, which Additional Option may be exercised as provided in Article IV
hereof; provided that to the extent that such percentage exceeds one percent
(1.0%) for each Additional Option (such excess only, the "Excess Additional
Option Percentage"), then, at the Borrower's option, (i) the Holders may receive
such Additional Option with respect to the Excess Additional Option Percentage,
or (ii) the Borrower may pay on such Extension Date to such Holders an amount
equal to the Put Option Purchase Price with respect to such Excess Additional
Option Percentage; provided, further, that the Borrower shall exercise its
option referred to in the foregoing proviso equally and on a non-discriminatory
basis with respect to all Holders entitled to a portion of such Excess
Additional Option Percentage.
Such Put Option Purchase Price may, at the Borrower's option, (x) be
paid in immediately available funds, or (y) be deemed to constitute a Tranche A
Loan made on such Put Repurchase Date in a principal amount equal to the amount
of such Put Option Purchase Price and all in accordance with the terms of
Section 2.10(c) of the Credit Agreement (the "Extension Fee Loan"); provided,
that the Borrower shall exercise its option referred to in this sentence equally
and on a non-discriminatory basis with respect to all Holders entitled to a
portion of such
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Put Option Purchase Price. For purposes of determining the Put Option Purchase
Price, the date immediately preceding the date on which the grant of the
Additional Option with respect to the Excess Additional Option Percentage would,
but for clause (ii) of the preceding paragraph, become effective shall be deemed
to be the date of delivery of a Put Notice with respect to such Excess
Additional Option Percentage and the Put Repurchase Date with respect to such
Excess Additional Option Percentage).
The Additional Option granted on such Extension Date shall be
distributed among the Holders based on the respective aggregate principal amount
of Tranche A Loans (other than Extension Fee Loans and Put Option Price Loans)
held by such Holders or their respective affiliates on such Extension Date;
provided, however, that any Excess Additional Option Percentage determined for
any Extension Date shall be distributed among the Holders pro rata based upon
the respective aggregate principal amount of Extension Fee Loans and Put Option
Price Loans held by such Holders or their respective affiliates on such
Extension Date (which amount shall include the most recently extended Put Option
Price Loan plus the aggregate principal amount of any Extension Fee Loan made
prior to such Extension Date).
ARTICLE III
Representations, Warranties and Covenants
SECTION 3.01. Representations, Warranties and Covenants of LLC. LLC
represents and warrants to, and agrees with, the Holders as follows:
(a) It is a limited liability company duly organized, validly
existing and in good standing under the laws of the state of Delaware.
(b) It has the corporate power and authority (i) to execute, deliver
and perform its obligations under this Agreement, (ii) to grant the Option,
(iii) to transfer the Option Shares transferable upon due exercise or call of
the Option, and (iv) to cause the Company to have the Transfer Agent record the
transfer of the Option Shares transferable upon due exercise or call of the
Option.
(c) LLC is (and at all times prior to the Closing Date from and after
January 12, 2001, was) the sole direct owner of all of the outstanding Capital
Stock of the Company free and clear of all Liens and adverse claim, other than
the Liens in favor of the Collateral Agent created by the Security Documents,
and indirectly owns the equity of the Company's Subsidiaries, or a portion
thereof, as applicable.
(d) This Agreement has been duly executed and delivered by LLC and
constitutes the legal, valid and binding obligation of LLC, enforceable against
LLC in accordance with its terms. The Option has been duly granted to the
Initial Holders and constitutes, the legal, valid and binding obligation of LLC,
enforceable against the LLC in accordance with its terms except that (A) the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
and (B) any
11
rights to indemnity or contribution thereunder may be limited by federal and
state securities laws and public policy considerations.
(e) Except as set forth in Part F of the Disclosure Letter, each of
(i) the execution, delivery and performance of this Agreement by LLC and the
Company, (ii) the offering, grant, and delivery of the Option and the Option
Shares transferable upon the exercise of the Option or the Call, and (iii) the
fulfillment of and compliance with the terms and provisions of this Agreement
(A) have been duly authorized by all requisite corporate and, if necessary,
member or stockholder action of LLC and the Company and (B) will not (1)
conflict with, violate or constitute a default under (x) any provision of the
certificate of formation, operating agreement or certificate of incorporation,
by-laws or other constitutive documents of LLC or the Company, (y) any law,
statute, rule or regulation or any order of any Governmental Authority
applicable to LLC, the Company or any of their subsidiaries or either of their
respective properties or (z) any provision of any indenture or other material
agreement or other material instrument to which LLC, the Company or any of their
subsidiaries are a party or by which they or any of their respective properties
are or may be bound, (2) be in conflict with, result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under, or
give rise to any right to accelerate or to require the prepayment, repurchase or
redemption of any obligation under, any such indenture, agreement or other
instrument or (3) result in the creation or imposition of any Lien upon or with
respect to any property or assets now owned or hereafter acquired by LLC, the
Company or any of their subsidiaries.
(f) No action, consent, waiver, authorization or approval of,
registration or filing with or any other action by any Governmental Authority or
any nongovernmental Person (including, without limitation, any creditor, partner
or shareholder of LLC or the Company, and any consent, approval, authorization,
declaration or filing or the expiration of any waiting period under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 ("HSR Act")) is or will be
required in connection with (i) the execution, delivery and performance of this
Agreement by LLC or the Company, (ii) the grant of the Option and the transfer
of the Option Shares pursuant to the exercise of the Option in accordance with
this Agreement, other than with respect to (A) the exercise by any Holder of its
right to convert the Option to Option Shares under this Agreement, or (B) the
delivery by LLC of Option Shares pursuant to its call right under Article VII of
this Agreement, which may require filing(s) under the HSR Act and (iii) the
performance by LLC or the Company of its obligations under this Agreement, or as
a condition to the legality, validity or enforceability of this Agreement or the
consummation of the transactions contemplated thereby, other than such
authorizations and approvals as have already been obtained and are in full force
and effect.
(g) Except as set forth in Section 5.6 of the Credit Agreement, there
are not any judicial, administrative, arbitral or other actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending or, to the knowledge of LLC, threatened against or affecting LLC or any
business, property, prospects or rights of LLC (i) that involve this Agreement
or the transactions contemplated thereby or (ii) which if adversely determined,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect or result in a Material Adverse Change to the Company
and the Significant Subsidiaries, taken as a whole.
12
(h) Subject to the accuracy of the Initial Holders' representations
set forth in Section 3.03 and, in the case of an Option transfer, compliance
with Section 5.01(b), the grant of the Option and the offering, sale and
delivery of the Option and the Option Shares under the circumstances
contemplated by this Agreement constitute exempt transactions under the
registration provisions of the Securities Act, and do not require the
registration of the Option or the Option Shares under the Securities Act.
(i) The Option Shares, when transferred and delivered against payment
of the Exercise Price therefor, will be duly authorized, validly issued, fully
paid and nonassessable, and subject to no Liens in respect of the issuance
thereof.
(j) LLC will not amend its Charter Document or enter into any
agreement inconsistent with this Agreement or that would make the LLC or the
Company unable to comply with the terms of this Agreement.
(k) At all times on or after the date of delivery of a Call Notice,
LLC shall promptly notify each Holder of any contemplated transaction, including
the entering into any agreement, letter of intent, commitment or memorandum of
understanding, whether binding or not, which could reasonably be expected to
have a material impact upon the value of the Common Stock of the Company, unless
such Holder has previously requested the LLC not to deliver such notice to such
Holder (upon which request the LLC shall be entitled to rely) ; provided,
however, (i) such information may not be used by such Holder in a manner which
would result in a violation of Section 10(b) of the Exchange Act, and the rules
promulgated thereunder, and (ii) each Holder shall keep such information
confidential, unless (A) LLC or the Company informs it that such information is
no longer confidential, which LLC or the Company shall do promptly upon the
information ceasing to be of a confidential nature, (B) such information becomes
generally available to the public (other than as a result of a breach of this
provision by the Holder), (C) the Holder is requested or required by a
Governmental Authority or in connection with a legal proceeding or pursuant to
legal process or otherwise required by law to disclose such information;
provided that (i) the Holder shall notify LLC prior to making any such
disclosure and (ii) the Holder shall not disclose any information solely for the
purpose of relieving itself of its obligations under Section 3.01(k)(i) hereof,
(D) such information was available to the Holder on a non-confidential basis
from a source (other than the Company, LLC or their representatives) that, to
the Holder's knowledge, is not and was not prohibited from disclosing such
information to the Holder by a contractual, legal or fiduciary obligation or (E)
such information is disclosed by any Holder to an independent appraiser in
connection with the determination of the Current Market Price of any Option
Shares; provided, however, that such independent appraiser agrees in writing to
keep such information confidential.
(l) LLC owns 1,000 shares of the Common Stock of the Company, which
shares represent 100% of the outstanding Common Stock of the Company. Such
shares of Common Stock are free and clear of all Liens and adverse claims, other
than the Liens in favor of the Collateral Agent created by the Financing
Documents.
SECTION 3.02. Representations, Warranties and Covenants of the
Company. The Company represents, warrants and covenants to, and agrees with, the
Holders as follows:
13
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the state of Delaware.
(b) The Company has the corporate power and authority (i) to execute,
deliver and perform its obligations under this Agreement and (ii) to cause its
Transfer Agent to record the transfer of Common Stock upon due exercise of the
Option.
(c) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except that (A)
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
and (B) any rights to indemnity or contribution hereunder may be limited by
federal and state securities laws and public policy considerations.
(d) Each of (i) the execution, delivery and performance of this
Agreement by the Company and (ii) the fulfillment of and compliance with the
terms and provisions of this Agreement (A) have been duly authorized by all
requisite corporate and, if necessary, stockholder action of the Company and (B)
will not (1) conflict with, violate or constitute a default under (x) any
provision of the certificate of incorporation, by-laws or other constitutive
documents of the Company, (y) any law, statute, rule or regulation or any order
of any Governmental Authority applicable to, the Company or any of its
subsidiaries or its properties or (z) any provision of any indenture or other
material agreement or other material instrument to which, the Company or any of
its subsidiaries are a party or by which they or any of their respective
properties are or may be bound, (2) be in conflict with, result in a breach of
or constitute (alone or with notice or lapse of time or both) a default under,
or give rise to any right to accelerate or to require the prepayment, repurchase
or redemption of any obligation under, any such indenture, agreement or other
instrument or (3) result in the creation or imposition of any Lien upon or with
respect to any property or assets now owned or hereafter acquired by the Company
or any of its subsidiaries.
(e) No action, consent, waiver, authorization or approval of,
registration or filing with or any other action by any Governmental Authority or
any nongovernmental Person (including, without limitation, any creditor, partner
or shareholder of the Company, and any consent, approval, authorization,
declaration or filing or the expiration of any waiting period under the HSR), is
or will be required in connection with (i) the execution, delivery and
performance of this Agreement by the Company, (ii) the transfer of the Common
Stock pursuant to the exercise of the Option in accordance with this Agreement,
other than with respect to (A) the exercise by any Holder of its right to
convert the Option to Option Shares under this Agreement, or (B) the delivery by
LLC of Option Shares pursuant to its call right under Article VII of this
Agreement, which may require filing(s) under the HSR Act and (iii) the
performance by the Company of its obligations under this Agreement, or as a
condition to the legality, validity or enforceability of this Agreement or the
consummation of the transactions contemplated hereby, other than such
authorizations and approvals as have already been obtained and are in full force
and effect.
14
(f) Except as set forth in Section 5.6 of the Credit Agreement, there
are not any judicial, administrative, arbitral or other actions, suits or
proceedings at law or in equity or by or before any Governmental Authority now
pending or, to the knowledge of the Company, threatened against or affecting the
Company or any business, property, prospects or rights of the Company (i) that
involve this Agreement or the transactions contemplated thereby or (ii) which if
adversely determined, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect or result in a Material Adverse
Change to the Company and the Significant Subsidiaries, taken as a whole.
(g) The Option Shares, when transferred and delivered against payment
of the Exercise Price therefor, will be duly authorized, validly issued, fully
paid and non-assessable, and subject to no Liens.
(h) The Company will not amend its Charter Document or enter into any
agreement inconsistent with this Agreement or that would make the Company unable
to comply with the terms of this Agreement.
(i) At all times on or after the date of delivery of a Call Notice,
the Company shall promptly notify each Holder of any contemplated transaction,
including the entering into any agreement, letter of intent, commitment or
memorandum of understanding, whether binding or not, which could reasonably be
expected to have a material impact upon the value of the Common Stock of the
Company, unless such Holder has previously requested the Company not to deliver
such notice to it (upon which request the Company shall be entitled to rely);
provided, however, (i) such information may not be used by such Holder in a
manner which would result in a violation of Section 10(b) of the Exchange Act,
and the rules promulgated thereunder, and (ii) each Holder shall keep such
information confidential, unless (A) LLC or the Company informs it that such
information is no longer confidential, which LLC or the Company shall do
promptly upon the information ceasing to be of a confidential nature, (B) such
information becomes generally available to the public (other than as a result of
a breach of this provision by the Holder), (C) the Holder is requested or
required by a governmental authority or in connection with a legal proceeding or
pursuant to legal process or otherwise required by law to disclose such
information; provided that (i) the Holder shall notify LLC prior to making any
such disclosure and (ii) the Holder shall not disclose any information solely
for the purpose of relieving itself of its obligations under Section 3.02(i)(i)
hereof, (D) such information was available to the Holder on a non-confidential
basis from a source (other than the Company, LLC or their representatives) that,
to the Holder's knowledge, is not and was not prohibited from disclosing such
information to the Holder by a contractual, legal or fiduciary obligation, or
(E) such information is disclosed by any Holder to an independent appraiser in
connection with the determination of the Current Market Value of any Option
Shares; provided, however, that such independent appraiser agrees in writing to
keep such information confidential.
(j) Immediately prior to the Closing, the Company's authorized
capital stock consists of 1,000 shares of Common Stock of which 1,000 shares are
validly issued and outstanding. Such 1,000 shares of Common Stock will be
validly issued and outstanding as of the Closing Date, free and clear of all
Liens and adverse claims, other than the Liens in favor of the Collateral Agent
created by the Financing Documents.
15
SECTION 3.03. Representations, Warranties and Covenants of the
Initial Holders. Each Initial Holder represents and warrants to, and agree with,
the Company, the Borrower and LLC that the Option and Option Shares are being
acquired by such Initial Holder for its own account and not with a view to or
for sale in connection with any distribution thereof that would violate the
registration provisions of the Securities Act or the applicable state securities
laws of any state, and each Initial Holder will not distribute the Option and
Option Shares in violation of the registration provisions of the Securities Act
or the applicable securities laws of any state.
ARTICLE IV
Exercise Terms
SECTION 4.01. Exercise Price. The Option shall entitle the Holders
thereof, subject to adjustment pursuant to the terms of this Agreement, to
purchase shares of Common Stock of the Company at an exercise price (the
"Exercise Price") of $1.00 for the percentage of the total shares of such Common
Stock set forth in Section 4.02. LLC shall, at all times that the Option or any
portion thereof remains outstanding, maintain a Register indicating the Holders'
respective ownership interests in the Option, as more fully set forth in Section
10.17 hereof.
SECTION 4.02. Exercise Amounts. (a) (i) Subject to the terms and
conditions set forth herein, the percentage (and no more than the percentage
indicated) of the total shares of Common Stock of the Company on a Fully Diluted
Basis as to which the pro rata portion of the Original Option held by a Holder
may be exercised in the aggregate shall be the corresponding pro rata portion of
3%. On the Closing Date, the pro rata portion of the Option held by each Holder
is set forth on Annex 3.
(b) The percentage of the total shares of Common Stock of the Company
on a Diluted Basis as to which the ratable portion (such ratable portion to be
determined as provided in the last sentence of Section 2.01(b)of this Agreement)
of the aggregate Additional Option held by a Holder under Section 2.01(b) hereof
shall be fixed on the date such Additional Option becomes effective under
Section 2.01(b) of this Agreement and shall be equal to the sum of the
following, expressed as a percentage:
(i) (0.8671%); plus
(ii) B - A; plus
-----
A
(iii) in the event that (1) the Borrower elects the option
described in clause (y) of the second paragraph of Section
2.01(b) hereof and (2) the calculation described in clause
(ii) above results in a positive number,
X;
-
A
16
Where: A = $600,000,000
B = the aggregate outstanding principal
amount of Tranche A Loans on such date (other
than any Extension Fee Loan made on such date);
and
X = an amount equal to the product of (i)
0.8671% multiplied by (ii) the percentage
determined pursuant to Section 4.02(b)(ii) hereof
multiplied by (iii) the Fair Market Value (as
defined in Section 9.26 of the Credit Agreement)
of the Company as of such date;
provided, that the sum of the percentages determined pursuant
to clauses (i), (ii) and (iii) above shall in no event be less than
0.75%. For purposes of illustration an example of the calculation of
such percentage is attached hereto as Annex 1.
(c) At any time, and from time to time, when the number of Option
Shares into which the Option of a Holder is convertible into is calculated
pursuant to this Section 4.02, the Company shall provide a certificate (which
shall be signed by its chief executive, chief financial officer or treasurer),
setting forth a detailed explanation of how the Option Share Number was
calculated.
SECTION 4.03. Manner of Exercise. An Option may be exercised upon
notice and payment to LLC of the Exercise Price for the Option Shares being
purchased upon such exercise.
The pro rata portion of the Option held by any Holder shall be
exercisable at the election of such Holder either in full or in part at any time
from and after the date hereof, or from time to time after the date hereof, but
in no event more than 45 days following the Date Certain; provided, that the
45-day period referred to above in this sentence shall not be deemed to commence
until (A) the Full Repayment Date has occurred and (B) the LLC has given notice
to the Holders that such Date Certain and Full Repayment Date have occurred.
SECTION 4.04. Transfer of Option Shares. Upon the payment of the
Exercise Price, LLC shall transfer and the Company shall cause its transfer
agent for the Common Stock, which may be the Company (the "Transfer Agent"), to
deliver with all reasonable dispatch to or upon the written order of the
respective Holder and in such name or names as such Holder may designate, a
certificate or certificates for the number of full Option Shares so purchased
upon the exercise of such Option. Such certificate or certificates shall be
deemed to have been issued and any Person so designated to be named therein
shall be deemed to have become a Holder of record of such Option Shares as of
the date of the payment of the Exercise Price.
LLC and the Company shall keep copies of this Agreement and any
notices given or received hereunder available for inspection by the Holders
during normal business hours at its offices at the address set forth in Section
10.04 hereof.
17
SECTION 4.05. Fractional Option Shares. Until the closing date of the
IPO, LLC shall be required to transfer fractional Option Shares on the exercise
of the Option. On or after the closing date of the IPO, if any fraction of an
Option Share would, except for the provisions of this Section 4.05, be issuable
on the exercise of the Option (or specified portion thereof), the number of
shares to be transferred will be rounded up to the nearest whole number.
SECTION 4.06. Reservation of Option Shares. LLC shall at all times
keep reserved out of the Common Stock it owns, a number of shares of Common
Stock free and clear of all liens, other than the Liens created by the Financing
Documents, sufficient to provide for (i) the exercise of the Option and (ii) the
transfer of all Option Shares transferable upon the exercise of the Option. LLC
and the Company will keep a copy of this Agreement on file with the Transfer
Agent. All Option Shares which may be transferred to the respective Holder upon
exercise of the Option shall, upon transfer and payment of the Exercise Price
pursuant to Section 4.04 hereof, be fully paid, nonassessable, free of
preemptive rights and free from all taxes, Liens, charges and security interests
with respect to the issue thereof. LLC or the Company will supply the Transfer
Agent with duly executed stock certificates for such purpose.
SECTION 4.07. Compliance with Law. If any shares of Common Stock
required to be reserved for purposes of exercise of the Option require, under
any Federal or state law or applicable governing rule or regulation of any
national securities exchange, registration with or approval of any Governmental
Authority or listing on any such national securities exchange before such shares
may be transferred upon exercise, LLC and the Company will in good faith and as
expeditiously as possible endeavor also to cause such shares to be duly
registered, approved or listed on the relevant national securities exchange, as
the case may be. LLC and the Company will take all such action as may be
necessary or appropriate in order that LLC may validly and legally transfer
fully paid and nonassessable Option Shares on the exercise of the Option from
time to time outstanding.
ARTICLE V
Transfer Restrictions
SECTION 5.01. Restrictions on Transfers of Option and Option Shares.
The following restrictions on transfer shall apply to the Option and Option
Shares:
(a) No Holder or transferee thereof shall sell, transfer or convey in
any manner whatsoever any Option or Option Shares except in accordance with the
terms and provisions of this Agreement.
(b) Each Holder may, without the consent of the Borrower, sell or
assign any part of the Option or Option Shares and the other rights and
obligations of such Holder to any Person or any assignee thereof (an "Assignee")
unless the sale or assignment of the Option or Option Shares and such other
rights and obligations of such Holder to such Person would reasonably put the
business of the Borrower at a competitive disadvantage, in which case such sale
or assignment shall require the consent of the Borrower; provided, however, that
such consent shall not be required if the Option or Option Shares are sold
pursuant to a public
18
distribution of such Option or Option Shares. The Assignee shall agree to be
bound by the terms of this Agreement and such Option and shall provide:
(i) if such Option or Option Shares are being transferred to
a qualified institutional buyer (as defined in Rule 144A under the
Securities Act) in accordance with Rule 144A under the Securities Act
or pursuant to an exemption from registration in accordance with Rule
144 under the Securities Act or Regulation S under the Securities Act
or pursuant to an effective registration statement under the Securities
Act, a certification to that effect and, with respect to transfers
pursuant to Rule 144 or Regulation S, an opinion of counsel reasonably
acceptable to the Company to the effect that such transfer does not
require registration under the Securities Act; or
(ii) if such Option or Option Shares are being transferred in
reliance on another exemption from the registration requirements of the
Securities Act, a certification to that effect and an opinion of
counsel reasonably acceptable to the Company to the effect that such
transfer does not require registration under the Securities Act,
and effective immediately upon such transfer or assignment, the
Assignee shall be deemed a Holder and shall have the rights and
obligation of a Holder pursuant to this Agreement.
(c) Notwithstanding any other provision contained in this
Agreement or any other Financing Document to the contrary, any Holder may assign
all or any portion of the Option or Option Shares held by it as collateral
security.
SECTION 5.02. Notation. A notation will be made in the
appropriate transfer records of the Company or the LLC, as applicable, with
respect to any such transfer of the Option and Option Shares referred to in this
Agreement.
ARTICLE VI
Holders' Put Rights
SECTION 6.01. Granting of Put; Put Option Purchase Price.
Subject to the limitations set forth herein, (a) provided that the Company shall
not have consummated an IPO prior to the Put Effective Date, at any time or from
time to time, after the Put Effective Date until 45 days thereafter, any Holder,
and (b) at any time or from time to time, after any Junior Obligee (as defined
in the Intercreditor Agreement) shall have commenced to exercise the rights and
remedies under the Financing Documents to foreclose on the Collateral pursuant
to the Intercreditor Agreement, GPSF, upon written notice to a Purchasing Party
(a "Put Notice"), shall be entitled to sell and such Purchasing Party shall be
obligated to purchase from such Holder, all of the Option held by any such
Holder at the Put Option Purchase Price; provided, that the 45-day period
referred to in clause (a) above in this sentence shall not be deemed to commence
until the LLC has given notice to the Holders that such Put Effective Date has
occurred.
SECTION 6.02. Put Notice. Each Put Notice delivered pursuant
to Section 6.01 hereof shall specify:
19
(a) the name of the Holder of the Option delivering such Put Notice;
(b) that such Holder is exercising its Option, pursuant to this
Article VI, and the percentage of the Option held by such Holder that is being
exercised thereunder.
SECTION 6.03. Purchasing Party Notices.(a) The Purchasing Party,
within ten (10) days of receipt of each such Put Notice, shall deliver to each
Holder other than a Holder that has delivered a Put Notice, a notice (i)
specifying the respective Put Repurchase Date and (ii) stating the percentage
(determined on a Fully-Diluted Basis) of the Option which is and will be held by
each such Holder both before and after the Put Repurchase Date, respectively
(assuming no other Holder elects to sell all or any portion of the Option held
by such Holder) (the "LLC Notice").
(b) The Purchasing Party, within two (2) days of the final
determination of the Put Option Purchase Price, shall deliver to the Holder or
Holders exercising its or their put option pursuant to this Article VI a notice
containing a detailed calculation of the Put Option Purchase Price with respect
to the Option which is to be so repurchased from such Holder.
SECTION 6.04. Obligation to Purchase the Option. The Purchasing Party
shall be obligated to purchase all of such Holder's Option which is the subject
of such Put Notice, and shall pay on the Put Repurchase Date with respect to
such Put Notice the Put Option Purchase Price in immediately available funds or,
at the Purchasing Party's option, the Put Option Purchase Price shall be deemed
to constitute a Tranche A Loan made on such Put Repurchase Date in a principal
amount equal to the amount of such Put Option Purchase Price and all in
accordance with the terms of Section 2.10(b) of the Credit Agreement (the "Put
Option Price Loan"); provided, that the Put Option Purchase Price in respect to
any Put Repurchase Date occurring on or after the Full Repayment Date shall be
paid in cash. The Company shall use its best efforts to cause the Put Option
Purchase Price to be determined as promptly as practicable after the receipt of
a Put Notice, and in any event by the date which is 45 days after the receipt of
such Put Notice.
ARTICLE VII
Special Right of Call
SECTION 7.01. Granting of Call; Price. Provided that all principal,
interest, accrued fees, and any other amounts due and payable under the
Financing Documents shall have been paid in full, at any time thereafter, LLC
may give not less than 60 days, prior irrevocable written notice to all (but not
less than all) Holders of the Option (a "Call Notice") to repurchase all, but
not less than all, of the unexercised Option then held by such Holders, at the
Call Option Purchase Price.
SECTION 7.02. Call Notice. The Call Notice shall:
(a) state that LLC intends to purchase the unexercised Option,
pursuant to this Article VII, from the Holders;
20
(b) specify the date, which shall be no earlier than 60 days from the
date of delivery of the Call Notice, on which LLC will repurchase the Option of
the Holders (the "Call Repurchase Date");
(c) contain a reasonably detailed calculation of the Call Option
Purchase Price and the Current Market Price with respect to the Option Shares;
and
(d) set forth any information required to be disclosed under Section
3.01(k) hereof.
SECTION 7.03. Obligation to Call. The Call Notice having been so given
to each Holder and each Holder having not exercised its Option within thirty
(30) days after receiving such Call Notice, LLC shall be obligated to purchase
the Option specified in the Call Notice with respect to each Holder, and shall
pay the Call Option Purchase Price, payable to each Holder in immediately
available funds, if applicable, on the Call Repurchase Date.
ARTICLE VIII
Registration, Drag-Along, Tag-Along and Preemptive Rights
SECTION 8.01. Drag-Along. If, prior to the closing date of the IPO,
LLC or the Company shall propose to sell or convey 75% or more of its shares of
the Company's Common Stock and Convertible Securities (calculated on an
as-converted basis), or any interest therein, to an Independent Third Party
(including, without limitation, a sale of the Company by merger, consolidation,
sale of all or substantially all of its assets, sale of all of the Company's
outstanding Common Stock and Convertible Securities or otherwise) (the "Approved
Sale"), LLC or the Company shall give prompt written notice (the "Sale Notice")
to the Holders setting forth the terms and conditions of the proposed transfer,
including the identity of the Independent Third Party, the number of shares of
the Company's Common Stock and Convertible Securities to be transferred, the per
share price to be paid for the shares of the Company's Common Stock and
Convertible Securities to be transferred and the type and nature of the
consideration to be received therefor. By so indicating in the Sale Notice, LLC
shall be entitled to require the Holders to sell to the Independent Third Party
in the same transaction their portion of the Option and Option Shares, on the
same terms and conditions set forth in the Sale Notice; provided, however, that
the provisions of this Section 8.01 shall not apply to the sale or conveyance of
any Common Stock of the Company pledged by LLC pursuant to the terms of the
Stock Pledge Agreement until such time as such Common Stock is no longer pledged
thereunder. Without limitation as to the foregoing, the Holders will consent to
and raise no objections against the Approved Sale. If the Approved Sale is
structured as a merger or consolidation, each Holder shall waive any dissenters
rights, appraisal rights or similar rights in connection with such merger or
consolidation. The Holders will take all necessary and desirable actions in
connection with the consummation of any Approved Sale. For purposes of this
Section 8.01, an "Independent Third Party" is any Person who, prior to such
sale, does not own in excess of 5% of the Company's Common Stock and Convertible
Securities in the aggregate on a Fully Diluted Basis, who is not controlling,
controlled by or under common control with any such 5% owner of the Company's
Common Stock and Convertible Securities in the aggregate and who is not the
21
spouse, ancestor or descendant (by birth or adoption) of any such 5% owner of
the Company's Common Stock and Convertible Securities in the aggregate.
SECTION 8.02. Tag-Along. If, prior to the closing date of the IPO, LLC
or the Company shall propose to sell or convey 75% or more of its shares of the
Company's Common Stock or Convertible Securities (calculated on an as-converted
basis) to an Independent Third Party, LLC shall provide each Holder with written
notice (the "Tag-Along Notice") setting forth the terms and conditions of the
proposed transfer, including the identity of the Independent Third Party, the
number of shares of the Company's Common Stock and/or Convertible Securities to
be transferred, the per share price to be paid for the shares of the Company's
Common Stock and/or Convertible Securities to be transferred and the type and
nature of the consideration to be received therefor. Each Holder, by written
notice to LLC delivered within 10 days after the date of such Tag-Along Notice,
shall be entitled to require LLC to include in the proposed sale to the
Independent Third Party in the same transaction all of its Option and Option
Shares (or, if LLC is selling less than all of the Company's Common Stock it
owns, a percentage of each such Holder's Option and Option Shares equivalent to
the percentage of the Company's Common Stock and Convertible Securities and
rights to acquire shares of the Company's Common Stock and Convertible
Securities to be sold by LLC or the Company), on the same terms and conditions
set forth in the Tag-Along Notice; provided, however, that the provisions of
this Section 8.02 shall not apply to the sale or conveyance of any Common Stock
of the Company pledged by LLC pursuant to the terms of the Stock Pledge
Agreement until such time as such Common Stock is no longer pledged thereunder.
All fractional shares resulting from the calculation contained in the prior
sentence will be rounded to the nearest whole share. LLC shall use its
reasonable best efforts to obtain the agreement of the prospective transferee(s)
to the participation of the Holders in any contemplated transfer and LLC shall
not transfer any of its shares to the prospective transferee(s) if the
prospective transferee(s) declines to allow participation of the Holders.
Following their compliance with the foregoing, LLC and any Holders who have
elected to participate in the contemplated transfer may, within 90 days after
the expiration of the 10-day period referenced above, transfer all of the shares
specified in the Tag-Along Notice to the transferee(s) specified in the
Tag-Along Notice at a price not less than the price per share specified in the
Tag-Along Notice and on other terms no less favorable to the transferors in any
material respect than the terms specified in the Tag-Along Notice.
SECTION 8.03. Expenses of Sale. As between the Holders and the Company,
the Company will pay the costs of any sale of the Option and Option Shares
pursuant to a sale pursuant to Section 8.01 or 8.02 of this Agreement to the
extent that such costs are incurred for the benefit of all holders of Common
Stock and rights to acquire Common Stock and are not otherwise paid by the
acquiring party. Costs incurred by the Holders on their own behalf will not be
considered costs of the transaction hereunder.
ARTICLE IX
Registration Rights
SECTION 9.01. Piggy-Back and Shelf Registration Rights. (a) If the
Company at any time in connection with, or after the consummation of, the IPO
proposes to file a registration statement under the Securities Act with respect
to any Underwritten Offering by the
22
Company for its own account or for the account of holders of any Common Stock,
Convertible Securities or Common Stock Equivalent to be offered for cash (other
than on Form S-4 or S-8) then the Company shall in each case give written notice
of such proposed filing to the Holders at least twenty (20) days before the
anticipated filing date, and such notice shall offer (a "Piggy-Back Registration
Offer") such Holders the opportunity to include all of the Registrable
Securities held by them in such registration statement (a "Piggy-Back
Registration"). In such event (x) the right of any Holder to registration
pursuant to this Section 9.01(a) may be conditioned upon such Holder's
participation in such underwriting and of the inclusion such Holder's
Registrable Securities in the underwriting to the extent provided herein and (y)
in cases initially involving the registration for sale of securities for the
account of a holder or holders exercising rights similar to those of the Holders
set forth in Section 9.02 of this Agreement, securities shall be registered in
such offering in the order of priority set forth in Section 9.02 hereof. If any
such Holder desires to have Registrable Securities registered and included in
such Underwritten Offering under this Section 9.01(a) such Holder shall so
notify the Company in writing within ten (10) days after the receipt by such
Holder of the written notice provided for in the preceding sentence (which
notification shall set forth the amount of Registrable Securities for which
registration is requested), and the Company will use its reasonable best efforts
to cause all such Registrable Securities to be registered under the Securities
Act to the extent requisite to permit the disposition in such Underwritten
Offering; provided, however, that if the managing underwriter or underwriters of
such offering, as selected by the Company, shall advise the Company in writing
that in its or their opinion the total amount or kind of securities that the
Holders, the Company and any other Persons or entities intend to include in such
offering exceeds the amount that can be sold in such offering without an adverse
effect on the price, timing or distribution of the securities offered by the
Company, the Company shall be required to include in such registration only the
amount of Registrable Securities and securities of other persons or entities, if
any, that the managing underwriter or underwriters determine, in its or their
sole discretion, can be sold without an adverse effect on the price, timing or
distribution of the securities offered. In such event, in cases initially
involving the registration for sale of securities for the Company's own account,
securities shall be registered in such offering in the following order of
priority: (i) first, the securities which the Company proposes to register, (ii)
second, the securities which may have been requested to be included in such
registration pursuant to this Agreement (pro rata based on the amount of
securities sought to be registered by such Persons) and (iii) third, the
securities of other Persons entitled to exercise "piggy-back" registration
rights pursuant to contractual commitments of the Company.
(b) At any time prior to the date of printing preliminary prospectuses
in connection with an Underwritten Offering under Section 9.01(a) hereof, a
Holder that previously requested Piggy-Back Registration thereof may withdraw
all or part of its Registrable Securities from such offering by providing notice
to such effect to the Company.
(c) (i) Within forty-five (45) days after delivery of a written notice
by Holders of more than 50% of the Registrable Securities which notice may be
delivered at any time after the date on which the Company becomes eligible to
prepare and file a shelf registration statement (the "Shelf Registration") on
Form S-3 (or such successor form to Form S-3 as the Company may at the time be
eligible to use), the Company shall file a registration statement for the
registration of securities under the Securities Act providing for the sale from
time to time by the Holders of all of their Registrable Securities then
outstanding, and all
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Registrable Securities issuable thereafter. The Company may include in the Shelf
Registration shares of Common Stock sold for the account of the Company, but no
other person. For the avoidance of doubt, it is hereby acknowledged and agreed
by all parties hereto that a request for a Shelf Registration pursuant to this
Section 9.01(c) shall not constitute a Demand for a Demand Registration and for
all purposes of this Agreement, a Shelf Registration shall not be counted in the
tabulation of the number of Demand Registrations under Section 9.02 hereof.
(ii) The registration rights of the Holders pursuant to this Section
9.01(c) and the ability to offer and sell Registrable Securities pursuant to
a Shelf Registration are subject to the following conditions and
limitations, and each of the Holders agrees with the Company that (i) if the
Company determines in its good faith judgment, at any time prior to or
during the effectiveness of the filing of a Shelf Registration pursuant to
this Section 9.01(c)(ii), that the Company possesses material non-public
information relating to a pending or imminent event or announcement or is
engaged in confidential negotiations or other confidential business
activities (including, but not limited to, information related to any
pending or proposed consolidation, merger, reorganization, recapitalization
or other similar transaction and any pending discussions related thereto),
upon written notice of such determination by the Company delivered to the
Holders, the rights of each of the Holders to publicly offer, publicly sell
or publicly distribute any Registrable Securities pursuant to such Shelf
Registration or to require the Company to take action with respect to the
registration or sale of any Registrable Securities pursuant to such Shelf
Registration (including any action contemplated by Section 9.04 hereof) will
be suspended until the date upon which the Company notifies the Holders in
writing that suspension of such rights for the grounds set forth in this
Section 9.01(c)(ii) is no longer necessary; provided, however, the Company
shall not be permitted to suspend the rights of the Holders pursuant to this
Section 9.01(c)(ii) for more than an aggregate of ninety (90) days within
any twelve-month period; provided, further, that no one suspension shall
last more than sixty (60) days.
SECTION 9.02. Demand Registration.
(a) Demand Registration Rights. At any time and from time to time after
the consummation of the IPO, the Majority Holders may make a written request to
the Company (each a "Demand") for registration with the SEC under and in
accordance with the provisions of the Securities Act of all or part of their
Registrable Securities (each a "Demand Registration").
Within ten (10) days after receipt of a Demand, the Company will send
to all of the other Holders written notice (the "Notice") of such Demand and,
subject to the conditions set forth in the following paragraph, the Company will
include in the Demand Registration all Registrable Securities of such other
Holders with respect to which the Company has received written requests for
inclusion therein within ten (10) days after receipt by the applicable Holder of
the Notice. Any Demand made pursuant to this Section 9.02(a) shall specify the
aggregate amount of the Registrable Securities to be registered and shall also
specify the intended methods of disposition thereof.
The Company will use its reasonable best efforts to cause all such
Registrable Securities to be registered under the Securities Act to the extent
requisite to permit the
24
disposition in such Demand Registration; provided, however, that if the managing
underwriter or underwriters of such offering, as selected by the Company, shall
advise the Company in writing that in its or their opinion the total amount or
kind of securities that the Holders, the Company and any other Persons or
entities intend to include in such offering exceeds the amount that can be sold
in such offering without an adverse effect on the price, timing or distribution
of the securities offered by the Holders, the Company shall be required to
include in such registration only the amount of Registrable Securities and
securities of the Company and such other persons or entities, if any, that the
managing underwriter or underwriters determine, in its or their sole discretion,
can be sold without an adverse effect on the price, timing or distribution of
the securities offered. In such event, securities shall be registered in such
offering in the following order of priority: (i) first, the securities which
have been requested to be included in such registration pursuant to this Section
9.02(a) and pursuant to "piggy back" registration rights pursuant to contractual
commitments of the Company (pro rata based on the amount of the securities
sought to be registered by the Holders and such other persons exercising "piggy
back" registration rights), and (ii) second, any securities which the Company
proposes to register.
(b) Effective Registration and Expenses. The Company agrees to use its
reasonable best efforts to file as soon as reasonably practicable (but in any
event within thirty (30) days), after any such Demand a registration statement
in respect of the Demand Registration (a "Demand Registration Statement"). The
Company agrees to use its reasonable best efforts to have such Demand
Registration Statement declared effective as soon as practicable after such
filing, but in any event, no later than ninety (90) days after filing of the
registration statement.
The Company agrees, if necessary, to supplement or amend any Demand
Registration Statement, as required by the registration form utilized by the
Company or by the instructions applicable to such registration form or by the
Securities Act or as reasonably requested (which request shall result in the
filing of a supplement or amendment subject to approval thereof by the Company,
which approval shall not be unreasonably withheld) by the Holders included in
the Demand Registration Statement, and the Company agrees to furnish to the
Holders copies of any such supplement or amendment prior to its being used
and/or filed with the SEC.
(c) Number of Demand Registrations. The Holders shall be entitled to
four (4) Demand Registrations. The Company shall not be deemed to have effected
a Demand Registration (i) unless and until the Demand Registration Statement is
declared effective and remains effective for a period of at least one hundred
and eighty (180) days or until all the securities registered pursuant thereto
have been sold, whichever is the first to occur; (ii) if, after the Registration
Statement has become effective, it is interfered with by any stop order,
injunction or other order or requirement of the SEC or other governmental agency
or court for any reason not attributable to the Holders, unless all stop orders,
injunctions and orders shall have been lifted or rescinded, all requirements
shall have been satisfied or waived, and the registration statement has
thereafter become effective again; (iii) if the customary conditions to closing
specified in the underwriting agreement, if any, entered into in connection with
such registration are not satisfied or waived, other than by reason of a failure
on the part of any Holder; or (iv) if the Holders initiating the Demand
Registration were unable to sell all of the securities they requested be
included in such Demand Registration.
25
(d) Selection of Underwriters and Counsel. The Company shall select
the lead managing underwriter in connection with a Demand Registration, subject
to the approval of the Holders initiating the Demand Registration, which
approval shall not be unreasonably withheld.
SECTION 9.03. Hold-Back Agreements; Restrictions on Public Sale by
Holders. The registration rights of the Holders pursuant to this Agreement and
the ability to offer and sell Registrable Securities pursuant to a Registration
Statement are subject to the following conditions and limitations, and each of
the Holders agrees with the Company that:
(i) If the Company determines in its good faith judgment, at any time
prior to the filing of a Registration Statement pursuant to Section 9.02
hereof, that the Company possesses material non-public information relating
to a pending or imminent event or announcement or is engaged in confidential
negotiations or other confidential business activities (including, but not
limited to, information related to any pending or proposed consolidation,
merger, reorganization, recapitalization or other similar transaction and
any pending discussions related thereto), upon written notice of such
determination by the Company delivered prior to the filing of a Registration
Statement pursuant to Section 9.02 hereof, the rights of each of the Holders
to publicly offer, publicly sell or publicly distribute any Registrable
Securities pursuant to such Registration Statement or to require the Company
to take action with respect to the registration or sale of any Registrable
Securities pursuant to such Registration Statement (including any action
contemplated by Section 9.04 hereof) will be suspended until the date upon
which the Company notifies the Holders in writing that suspension of such
rights for the grounds set forth in this Section 9.03 is no longer
necessary; provided, however, the Company shall not be permitted to suspend
the rights of the Holders pursuant to this Section 9.03(i) for more than an
aggregate of ninety (90) days within any twelve-month period; provided,
further, that no one suspension shall last more than sixty (60) days. If the
Company shall so postpone the filing of a Demand Registration Statement, the
Majority Holders shall have the right to withdraw the request for
registration by giving the Company written notice within twenty (20) days
after receipt of the notice of postponement (and, in the event of such
withdrawal, such request shall not be counted as the one Demand Registration
to which the Holders are entitled pursuant to Section 9.02(c) hereof).
(ii) In the case of the registration of any underwritten primary
offering of capital stock of the Company, each Holder agrees, in connection
with such Underwritten Offering, to enter into an underwriting agreement
containing such terms and covenants customary for such Underwritten
Offerings, including, but not limited to, representations of such Holders in
accordance with Section 9.04 of this Agreement; provided that nothing in
this Section 9.03 shall require any Holder to provide any indemnification or
contribution obligations inconsistent with Section 9.06 hereof.
SECTION 9.04. Registration Procedures. In connection with the Company's
registration obligations pursuant to Section 9.01 and Section 9.02 hereof, the
Company will:
(i) prepare and file with the SEC as expeditiously as possible (but in
any event within thirty (30) days after a Demand Request) a Registration
Statement on the
26
appropriate form available for the sale of such Registrable Securities and
use its reasonable best efforts to cause such Registration Statement to
become effective and remain effective until all Registrable Securities
covered by such Registration Statement have been sold but in no event longer
than 180 days from the effectiveness of such Registration Statement;
(ii) prepare and file with the SEC such amendments, including
post-effective amendments, to a Registration Statement as may be necessary
to keep such Registration Statement continuously effective until all
Registrable Securities covered by such Registration Statement have been sold
in accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such Registration Statement; cause the related
Prospectus to be supplemented by any required Prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 (or any similar provisions
then in force) under the Securities Act; and comply in all material respects
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 sellers thereof set forth in such Registration Statement as so amended
or in such Prospectus as so supplemented;
(iii) notify the Holders of Registrable Securities to be sold and their
Special Counsel, if any, immediately (a) when a Registration Statement or
any post-effective amendment thereto has become effective, (b) of any
request by the SEC or any other Federal or state governmental authority for
amendments or supplements to a Registration Statement or Prospectus or for
additional information, (c) of the issuance by the SEC of any stop order
suspending the effectiveness of a Registration Statement covering any or all
of the Registrable Securities or the initiation of any proceedings for that
purpose, (d) if at any time any of the representations and warranties of the
Company contained in any agreement (including any underwriting agreement)
contemplated hereby cease to be true and correct in all material respects,
(e) of the receipt by the Company of any notification with respect to the
suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation
or threatening of any proceeding for such purpose, and (f) of the happening
of any event that makes any statement made in a Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein
by reference untrue in any material respect or that requires the making of
any changes in a Registration Statement, Prospectus or documents so that, in
the case of a Registration Statement, it will not contain 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, and that in the case of a Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(iv) furnish to each Holder and their Special Counsel, if any, without
charge, at least one executed copy of each Registration Statement and each
amendment thereto, including financial statements and schedules, all
documents incorporated or deemed to be incorporated therein by reference,
and all exhibits (other than exhibits to documents incorporated by reference
into such Registration Statement) to the extent requested by
27
such person (including those previously furnished or incorporated by
reference) as soon as practicable after the filing of such documents with
the SEC;
(v) deliver to each Holder and their Special Counsel, if any,
without charge, as many copies of the Prospectus or Prospectuses (including
each form of prospectus and preliminary prospectus) and each amendment or
supplement thereto as such persons reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such persons; and the
Company hereby consents to the use of such Prospectus and each amendment or
supplement thereto by each of the selling Holders and the underwriters, if
any, in connection with the offering and sale of the Registrable Securities
covered by such Prospectus and any amendment or supplement thereto;
(vi) in connection with any public offering of Registrable Securities
pursuant to a Registration Statement, use its reasonable best efforts to
register or qualify such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States
as any Holder or managing underwriter reasonably requests in writing; use
its reasonable best efforts to keep each such registration or qualification
(or exemption therefrom) effective during the period such Registration
Statement is required to be kept effective and do any and all other acts or
things in the opinion of the Company necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by
such Registration Statement; provided, however, that the Company shall not
be required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action that would subject it to
general service of process in any such jurisdiction where it is not then so
subject or subject the Company to any tax in any such jurisdiction where it
is not then so subject;
(vii) upon the occurrence of any event contemplated by Section
9.04(iii)(f) hereof, prepare and furnish promptly to each Holder of
Registrable Securities to be sold a number of copies of a supplement or
amendment, including a post-effective amendment, to a Registration Statement
or a supplement to the related Prospectus or any document incorporated or
deemed to be incorporated therein by reference, and file any other required
document so that, as thereafter delivered to the purchasers of such
Registrable Securities such Prospectus will not contain an untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading;
(viii) use its reasonable best efforts to cause all Registrable
Securities relating to such Registration Statement to be listed on each
securities exchange, if any, on which similar securities issued by the
Company are then listed and if not so listed, to be listed on the NASD
automated quotation system;
(ix) obtain an opinion from the Company's counsel and a "cold
comfort" letter or letters from the Company's independent public accountants
in customary form and covering such matters as are customarily covered by
such opinions and "cold comfort" letters delivered to underwriters in
underwritten public offerings, which opinion and letter shall be reasonably
satisfactory to the underwriter (or to each Holder in the event there is
28
no underwriter participating in the offering), and furnish to each Holder
participating in the offering and to each underwriter, a copy of such
opinion and letter addressed to such Holder or underwriter;
(x) use its reasonable best efforts to promptly obtain the
withdrawal of any order suspending the effectiveness of the registration
statement;
(xi) provide a transfer agent and registrar for all such Registrable
Securities no later than the effective date of such registration statement;
and
(xii) make its employees and personnel available and otherwise provide
reasonable assistance to the underwriters (taking into account the needs of
the Company's business and the requirements of the marketing process
including, without limitation, the participation by such employees and
personnel in "road shows") in the marketing of Registrable Securities in any
Underwritten Offering.
The Company may require each seller of Registrable Securities to
furnish to the Company such information regarding the distribution of such
Registrable Securities as is required by law to be disclosed by such seller in a
Registration Statement and the Company may exclude from such registration the
Registrable Securities of any seller who unreasonably fails to furnish such
information within a reasonable time after receiving such request.
Each Holder agrees by acquisition of its Registrable Securities that,
upon receipt of any written notice from the Company of the happening of any
event of the kind described in Section 9.04(iii)(b), 9.04(iii)(c), 9.04(iii)(d),
9.04(iii)(e) or 9.04(iii)(f) hereof (such notice, a "Section 9.04(iii) Notice"),
such Holder will forthwith discontinue disposition of such Registrable
Securities pursuant to the Registration Statement covering such Registrable
Securities until such Holder's receipt of the copies of the supplemented
Prospectus and/or amended Registration Statement contemplated by Section
9.04(vii) hereof, or until it is advised in writing (the "Advice") by the
Company that the use of the applicable Prospectus may be resumed, and, in either
case, has received copies of any additional or supplemental filings that are
incorporated or deemed to be incorporated by reference in such Prospectus or
Registration Statement. In the event the Company provides the Holders a Section
9.04 (iii) Notice and does not provide Advice or a supplemented Prospectus
thereof, then the Majority Holders initiating a Demand Registration shall have
the right to withdraw the registration to which the Section 9.04(iii) Notice
relates by giving the Company written notice within ten days after receipt of
the Section 9.04(iii) Notice (and, in the event of such withdrawal, such
registration shall not be counted as the Demand Registration to which the
Holders are entitled pursuant to Section 9.02(c) hereof).
In connection with any underwriting agreement to be entered into by any
Holder with respect to any registration pursuant to Section 9.01 or 9.02 hereof,
(i) such Holder shall not be required to make any representations or warranties
to, or agreements with, the Company or any underwriter other than
representations, warranties or agreements as are customarily given by selling
Holders of securities regarding such Holder, such Holder's ownership of and
title to its Registrable Securities to be included in such offering, (ii) the
liability of such Holder to the Company, any underwriter or other person under
such underwriting agreement shall be limited to
29
liability arising from misstatements or omissions contained in any information
furnished in writing by such Holder expressly for use in the Registration
Statement relating to such offering and will be limited to an amount equal to
the net proceeds such Holder derives from such registration, and (iii) the
requirements of any lock-up provisions in the underwriting agreement shall be
limited to one hundred and eighty (180) days in the case of an IPO, and ninety
(90) days for each offering registered pursuant to the Exchange Act or the
Securities Act subsequent to the IPO.
SECTION 9.05. Registration Expenses. All fees and expenses
incident to the performance of or compliance with a Piggyback Registration,
Demand Registration or a Shelf Registration (the "Registration Expenses") shall
be borne by the Company whether or not a Registration Statement is filed or
becomes effective and whether or not any Registrable Securities are sold
pursuant to a Registration Statement. The fees and expenses referred to in the
foregoing sentence shall include, without limitation, (i) all registration and
filing fees (including, without limitation, fees and expenses (A) with respect
to filings required to be made with the National Association of Securities
Dealers, Inc. and (B) in compliance with state securities or Blue Sky laws
(including, without limitation, fees and disbursements of counsel for the
Company in connection with Blue Sky qualifications of the Registrable Securities
and determination of the eligibility of the Registrable Securities for
investment under the laws of such jurisdictions as the managing underwriter or
underwriters, if any, or the Holder initiating a Demand Registration or Shelf
Registration may designate)), (ii) printing expenses, (iii) messenger, telephone
and delivery expenses, (iv) transfer agent and listing fees, (v) fees and
disbursements of counsel for the Company and one Special Counsel for the
Holders, (vi) fees and disbursements of all independent certified public
accountants for the Company (including, without limitation, the expenses of any
special audit and "cold comfort" letters required by or incident to such
performance), (vii) Securities Act liability insurance, if the Company so
desires such insurance, (viii) fees and expenses payable to a Qualified
Independent Underwriter (as such term is defined in Rule 2720 of the National
Association of Securities Dealers, Inc.'s By-Laws), if required and (ix) fees
and expenses of all other persons retained by the Company; provided that the
discounts and commissions of any underwriter or underwriters will be borne by
the selling Holders included in a Registration Statement in the relative
proportion to the number of Registrable Securities of each such Holder included
in any Registration Statement. Notwithstanding the foregoing, the Company shall
in all events be responsible for its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees).
SECTION 9.06. Indemnification.
(a) Indemnification by the Company. The Company shall
indemnify and hold harmless each Holder, the officers, directors, agents and
employees of each of them, and each person who controls any such Holder (within
the meaning of Section 15 of the Securities Act or Section 20 of the Exchange
Act) and the directors, officers, agents and employees of such controlling
persons, to the fullest extent lawful, from and against any and all losses,
claims, damages and liabilities (collectively, "Losses"), arising out of or
based upon (i) any untrue or alleged untrue statement of a material fact
contained in a Registration Statement under which Registrable Securities held by
such Holder were registered under the Securities Act or offered for sale, in any
preliminary prospectus (if used prior to the effective date of such Registration
Statement) or in any Prospectus or any form of prospectus or in any amendment or
supplement
30
thereto (if used during the period the Company is required to keep the
Registration Statement effective), in each case on the effective date of such
Registration Statement or post-effective amendment, or the date of such
Prospectus, including any preliminary prospectus, or supplement, (ii) any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein (in the case of any Prospectus or form
of prospectus or supplement thereto, necessary to make the statements therein in
the light of the circumstances under which they were made) not misleading, and
(iii) any violation or alleged violation by the Company of either of the
Securities Act or the Exchange Act, or any rule or regulation promulgated
thereunder, or any state securities law, and will reimburse, as incurred, each
such indemnified party for any reasonable legal or other out-of-pocket expenses
reasonably incurred by them in connection with investigating or defending
against or appearing as a third party witness in connection with any such Losses
or action or threatened action in respect thereof; provided, however, that the
Company will not be liable in any such case to the extent, but only to the
extent, that any such Losses arise out of or are based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in such
Registration Statement, preliminary prospectus, Prospectus, form of prospectus
or any amendment or supplement thereto, in reliance upon and in conformity with
information regarding such Holder furnished in writing to the Company by or on
behalf of such Holder expressly for use therein.
(b) Indemnification by a Holder. In connection with a
Registration Statement in which a Holder is participating, such Holder shall
furnish to the Company in writing such information as is required by law to be
disclosed by such seller in a Registration Statement and agrees to indemnify and
hold harmless the Company, its directors, officers, agents and employees, each
person who controls the Company (within the meaning of Section 15 of the
Securities Act and Section 20 of the Exchange Act), and the directors, officers,
agents and employees of such controlling persons, to the fullest extent lawful,
from and against all Losses arising solely out of or based solely upon any
untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement, any Prospectus, or any form of prospectus or amendment
or supplement thereto, or arising solely out of or based solely upon any
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading to the extent, but only to the extent,
that such untrue statement or omission is contained in any information so
furnished in writing by such Holder to the Company expressly for use therein. In
no event shall the liability of any selling Holder hereunder be greater in
amount than the dollar amount of the net proceeds received by such Holder upon
the sale of the Registrable Securities giving rise to such indemnification
obligation.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party promptly shall so notify the
person from whom indemnity is sought (the "Indemnifying Party") in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided that the failure of any Indemnified Party to give such notice shall not
relieve the Indemnifying Party of its obligations pursuant to this Agreement,
except to the extent that it shall be finally determined by a court of competent
jurisdiction (which determination is not subject to appeal or further review)
that such failure to give notice shall have actually prejudiced the Indemnifying
Party.
31
Any such Indemnified Party shall have the right to employ
separate counsel in any such action, claim or proceeding and to participate in
the defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party or Parties unless: (1) the Indemnifying Party
has agreed to pay such fees and expenses; or (2) the Indemnifying Party shall
have failed promptly (but in any event, no later than 10 days after the
Indemnified Party provides notice to the Indemnifying Party of its failure to do
so) to assume the defense of such action, claim or proceeding and to employ
counsel reasonably satisfactory to such Indemnified Party in any such action,
claim or proceeding; or (3) the named parties to any such action, claim or
proceeding (including any impleaded parties) include both such Indemnified Party
and the Indemnifying Party, and such Indemnified Party shall (x) reasonably
conclude that one or more legal defenses are available to it that are not
available to the Indemnified Party or (y) have been advised by counsel that a
conflict of interest is likely to exist if the same counsel were to represent
such Indemnified Party and the Indemnifying Party (in which case, if such
Indemnified Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense thereof and
such counsel shall be at the expense of the Indemnifying Party), it being
understood, however, that, the Indemnifying Party shall not, in connection with
any one such action or proceeding or separate but substantially similar or
related actions or proceedings in the same jurisdiction arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local counsel) at
any time for all Indemnified Parties (other than counsel for which the
Indemnifying Party has agreed to pay under clause (1) above), which firm shall
be designated in writing by the Indemnified Parties. The Indemnifying Party
shall not be liable for any settlement of any such Proceeding effected without
its consent, which consent shall not be unreasonably withheld. No Indemnifying
Party shall, without the prior written consent of the Indemnified Party, effect
any settlement of any pending proceeding in respect of which any Indemnified
Party is a party and is entitled to indemnity hereunder unless such settlement
relates solely to the payment of money damages and (x) includes a full
unconditional release of such Indemnified Party from all liabilities on claims
that are the subject matter of such proceeding and (y) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of the Indemnified Party.
All fees and expenses of the Indemnified Party (including fees
and expenses to the extent incurred in connection with investigating or
preparing to defend such action or proceeding) for which the indemnifying party
is responsible pursuant to this Section 9.06(c) shall be paid to the Indemnified
Party, as incurred, within ten Business Days of written notice thereof to the
Indemnifying Party (regardless of whether it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder; provided that
the Indemnifying Party may require such Indemnified Party to undertake to
reimburse all such fees and expenses to the extent it is finally judicially
determined that such Indemnified Party is not entitled to indemnification
hereunder).
(d) Contribution. If indemnification under Section 9.06(a) or
9.06(b) hereof is unavailable or insufficient to cover losses of an Indemnified
Party, then each applicable Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses, in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in
32
connection with the actions, statements or omissions that resulted in such
Losses as well as any other relevant equitable considerations. The relative
fault of such Indemnifying Party 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 of a material fact, has been taken or made by, or relates to
information supplied by, such Indemnifying Party or Indemnified Party, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such action, statement or omission. The amount paid or
payable by a party as a result of any Losses shall be deemed to include, subject
to the limitations set forth in Section 9.06(c) hereof, any legal or other fees
or expenses incurred by such party in connection with any investigation or
Proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 9.06(d) were determined by
pro rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. Notwithstanding the provisions of this Section 9.06(d), an
Indemnifying Party that is a Holder shall not be required to contribute any
amount in excess of the amount by which the net proceeds actually received by
such Indemnifying Party from the sale of the Registrable Securities subject to
the Proceeding exceeds the amount of any damages that such Indemnifying Party
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
ARTICLE X
Miscellaneous
SECTION 10.01. SEC Reports and other Financial Information.
LLC shall provide the Holders, within fifteen (15) days after the Company files
same with the SEC, copies of the Company's annual report and of the information,
documents and other reports (or copies of such portions of any of the foregoing
as the SEC may by rules and regulations prescribe) which the Company is required
to file with the SEC pursuant to Section 13 or 15(d) of the Exchange Act.
Notwithstanding that the Company may not be required to remain subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall, subsequent to its IPO, continue to file such annual reports and
information, documents and other reports with the SEC and LLC shall provide the
Holders with such annual reports and such information, documents and other
reports as the Company provides to the holders of its Common Stock or other
securities.
SECTION 10.02. Persons Benefiting. Nothing in this Agreement
is intended or shall be construed to confer upon any Person other than LLC, the
Company and the Holders any right, remedy or claim under or by reason of this
Agreement or any part hereof.
SECTION 10.03. Amendments and Waivers. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be granted except by the written agreement of all the
parties hereto (or their transferees).
33
SECTION 10.04. Notices. (a) All notices, requests and other
communications provided for hereunder shall be in writing (including, unless the
context expressly otherwise provides, by facsimile transmission, provided that
any matter transmitted by LLC or the Company by facsimile (i) shall be
immediately confirmed by a telephone call to the recipient at the number
specified on the applicable signature page hereof and (ii) shall be followed
promptly by a hard copy original thereof by express courier) and faxed or
delivered, to the address or facsimile number specified for notices on the
applicable signature page hereof or to such other address as shall be designated
by such party in a written notice to the other parties hereto.
(b) All such notices, requests and communications (i) sent by
express courier will be effective upon delivery to or refusal to accept delivery
by the addressee and (ii) transmitted by facsimile will be effective when sent
and facsimile confirmation received; except that all notices and other
communications to any Holder shall not be effective until actually received.
(c) LLC acknowledges and agrees that any agreement of any Holder to
receive certain notices by telephone and facsimile is solely for the convenience
and at the request of LLC or the Company. The Holder shall be entitled to rely
on the authority of any Person purporting to be a Person authorized by LLC or
the Company to give such notice and the Holder shall not have any liability to
LLC or the Company or other Person on account of any action taken or not taken
by the Holder in reliance upon such telephonic or facsimile notice.
(d) If the notice or communication shall be in writing, then such
notice or communication shall be delivered to the following addresses:
if to LLC:
PG&E National Energy Group, LLC
0000 Xxx Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attention: General Counsel
Tel.: (000) 000-0000
Fax.: (000) 000-0000
if to the Company:
PG&E National Energy Group, Inc.
0000 Xxx Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000-0000
Attention: General Counsel
Tel.: (000) 000-0000
Fax.: (000) 000-0000
34
with a copy to:
Weil, Gotshal & Xxxxxx, LLP
000 Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Xxxxx X. Xxxx
Tel.: (000) 000-0000
Fax.: (000) 000-0000
if to GPSF:
c/o General Electric Capital Corporation
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: General Counsel - Structured Finance Group
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with copies to:
GE Capital Services Structured Finance Group, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Manager of Portfolio - Energy Group
and,
GE Capital Services Structured Finance Group, Inc.
000 Xxxx Xxxxx Xxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Manager - Legal Administration
if to LBI:
c/o Lehman Commercial Paper Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx Xxxxxx/Xxxx Xxxxxx
Telephone: (000) 000-0000/(000) 000-0000
Facsimile: (000) 000-0000/(000) 000-0000
Each party hereto by notice to the other parties may designate
additional or different addresses for subsequent notices or communications.
Failure to mail a notice or communication to a Holder or any
defect in it shall not affect its sufficiency with respect to any other Holders.
If a notice or communication is mailed in the manner provided above, it is duty
given, whether or not the addressee receives it.
35
SECTION 10.05. Governing Law; Waiver of Jury Trial; Submission of
Jurisdiction. (a) THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF (other than SECTION 5-1401 OF THE NEW YORK GENERAL
OBLIGATIONS LAW) SHALL GOVERN THE CONSTRUCTION, INTERPRETATION AND
ENFORCEABILITY OF THIS AGREEMENT AND ANY DISPUTE, CASE OR CONTROVERSY ARISING IN
OR UNDER OR RELATED TO OR CONNECTED WITH THIS AGREEMENT OR THE RELATIONSHIP
BETWEEN OR AMONG THE PARTIES HERETO, WHETHER SOUNDING IN TORT, CONTRACT OR OTHER
LEGAL OR EQUITABLE RELIEF.
(b) EACH OF LLC, THE COMPANY, THE BORROWER AND THE HOLDERS CONSENTS
AND AGREES TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT SITTING IN THE
COUNTY OF NEW YORK, STATE OF NEW YORK, AND WAIVES ANY OBJECTION BASED ON VENUE
OR FORUM NON CONVENIENS WITH RESPECT TO ANY ACTION INSTITUTED THEREIN, AND
AGREES THAT, EXCEPT WITH THE WRITTEN CONSENT OF THE HOLDERS, ANY DISPUTE
CONCERNING THE CONDUCT OF ANY PARTY IN CONNECTION WITH THIS AGREEMENT OR
OTHERWISE SHALL BE HEARD ONLY IN THE COURTS DESCRIBED ABOVE.
(c) EACH OF LLC, THE COMPANY, THE BORROWER AND THE HOLDERS HEREBY
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS MAY BE MADE BY HAND DELIVERY TO EACH SUCH PERSON AT ITS
ADDRESS SET FORTH ABOVE OR, AT THE OPTION OF A HOLDER, BY SERVICE UPON
CORPORATION SERVICE COMPANY, WHICH EACH OF LLC, THE COMPANY AND THE BORROWER
IRREVOCABLY APPOINTS AS SUCH PERSON'S AGENT FOR THE PURPOSE OF ACCEPTING SERVICE
OF PROCESS WITHIN THE STATE OF NEW YORK. LLC, THE COMPANY AND THE BORROWER
HEREBY CONSENTS TO SERVICE OF PROCESS AS AFORESAID.
(d) NOTHING IN THIS SECTION 10.05 SHALL AFFECT THE RIGHT OF THE
HOLDERS TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT
THE RIGHT OF THE HOLDERS TO BRING ANY ACTION OR PROCEEDING AGAINST LLC, THE
BORROWER OR THE COMPANY OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
(e) EACH OF LLC, THE COMPANY, THE BORROWER AND THE HOLDERS HEREBY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (i) ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR (ii) IN ANY WAY
CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO OR
ANY OF THEM IN RESPECT TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH OR THE TRANSACTIONS
RELATED HERETO, IN EACH CASE, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER SOUNDING IN
36
CONTRACT OR TORT OR OTHERWISE. EACH OF LLC, THE BORROWER, THE COMPANY, AND THE
HOLDERS HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE
OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND THAT ANY PARTY MAY
FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR
RIGHT TO TRIAL BY JURY.
SECTION 10.06. Successors and Assigns. All agreements of each of
the parties hereto in this Agreement shall inure to the benefit and be binding
upon their respective successors and permitted assigns. None of LLC, the
Borrower or the Company may assign its rights or obligations hereunder without
the prior written consent of each of the Holders.
SECTION 10.07. Severability. Any provision hereof which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and without affecting the validity
or enforceability of any provision in any other jurisdiction.
SECTION 10.08. Entire Agreement. This Agreement represents the
final and complete agreement of the parties hereto, and all prior negotiations,
representations, understandings, writings and statements of any nature are
hereby superseded in their entirety by the terms of this Agreement. There are no
restrictions, agreements, warranties or undertakings other than those set forth
or referred to herein, including with respect to the registration rights granted
by the Company with respect to the Option Shares.
SECTION 10.09. Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which shall together constitute one and the same instrument.
SECTION 10.10. Headings. The headings of the Articles and Sections
of this Agreement have been inserted for convenience of reference only, are not
intended to be considered a part hereof and shall not modify or restrict any of
the terms or provisions hereof.
SECTION 10.11. Publicity. Except as otherwise required by law, none
of the parties hereto shall issue any press release or make any other public
statement, in each case relating to, connected with or arising out of this
Agreement or the matters contained herein or therein, without obtaining the
prior approval of the Initial Holders and the Company to the contents and the
manner of presentation and publication thereof. No references to the Initial
Holders shall be made in any public statement without the Initial Holders'
consent.
SECTION 10.12. Restricted Transactions. Except as provided by the
Financing Documents, LLC and the Company will not, and will not permit any of
their Subsidiaries to, enter into any transaction or series of related
transaction, whether or not in the ordinary course of business, with any
Affiliate of the Company, the Borrower or LLC or any of their Subsidiaries,
which would adversely affect any of the right or benefit of the Holders with
respect to the
37
exercise of the Option or is intended to frustrate or defraud the Holders of
their ability to exercise the option hereunder.
SECTION 10.13. Rule 144/145. The Company agrees to timely file the
reports required to be filed by it under the Securities Act or the Exchange Act
and, after consummation of the IPO, to 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 Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (A) Rule 144
and Rule 145 under the Securities Act, as such Rules may be amended from time to
time, or (B) any similar rule or regulation hereafter adopted by the SEC. Upon
the request of any Holder after consummation of the IPO, LLC will deliver to
such Holder a written statement as to whether the Company has complied with such
requirements.
SECTION 10.14. Remedies. In the event of a breach by LLC, the
Company, the Borrower or a Holder of any of their obligations under this
Agreement, each Holder, LLC, the Borrower or the Company, as the case may be, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will be entitled to specific performance of its rights
under this Agreement. LLC, the Company, the Borrower and each Holder agree that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of any of the provisions of this Agreement and hereby
further agrees that, in the event of any action for specific performance in
respect of such breach, it shall waive the defense that a remedy at law would be
adequate. The remedies provided herein are cumulative and not exclusive of any
remedies provided by law.
SECTION 10.15. Acknowledgment. The parties hereto acknowledge,
accept and ratify the allocations provided for in Section 3.5 of the Credit
Agreement.
SECTION 10.16. Waiver. LLC and the Company waive any claim they may
have against any Holder for any consequential, exemplary or punitive damage now
or hereafter under or in connection with or relating to this Agreement or any
other Financing Document.
SECTION 10.17. Register. LLC hereby agrees to maintain a register
(the "Register") on which it will record the proportionate ownership percentages
of the Holders of the Option from time to time. With respect to any Holder, the
transfer of the Option of such Holder and the rights pursuant to such Option
shall not be effective until such transfer is recorded on the Register
maintained by the LLC with respect to ownership of such Option and prior to such
recordation all rights of the transferor with respect to such Option shall
remain the transferor's. The registration of assignment or transfer of all or
part of any Holder's Option shall be recorded promptly by LLC only upon the
receipt by LLC of a properly executed and delivered assignment and assumption
agreement pursuant to, and all other documents and instruments required under,
Section 5.01(b) hereof. Upon the request of any Holder, LLC shall at any time
and from time to time provide the requesting Holder, at no cost, a list of all
of the Holders of the Option and their respective ownership percentages. For the
avoidance of doubt, it is hereby acknowledged and agreed by all parties hereto
that the Register initially recorded that on the Initial Closing Date GPSF
acquired 60% of the Option, and that LBI Group Inc. acquired 40% of the Option;
subsequent to the Initial Closing Date 50% of the Option initially acquired by
LBI Group Inc.
38
was transferred pursuant to this Agreement to the Subsequent Holders, in
proportions set forth in the Register as of the Closing Date.
SECTION 10.18. Intercreditor Agreement. Nothwithstanding anything
provided herein to the contrary, the terms and provisions of the Intercreditor
Agreement shall govern the relationship among the Holders with respect to the
rights, remedies and obligations of the Holders under this Option Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed as of the date first written above.
PG&E NATIONAL ENERGY GROUP, INC.
By: _____________________________
Name:
Title:
PG&E CORPORATION
By: _____________________________
Name:
Title:
PG&E NATIONAL ENERGY GROUP, LLC
By: _____________________________
Name:
Title:
INITIAL HOLDERS:
---------------
LB I GROUP INC.
By: _____________________________
Name:
Title:
GPSF-F INC.
By: ________________________________
Name:
Title:
SUBSEQUENT HOLDERS:
FARALLON CAPITAL PARTNERS, L.P.,
as a Subsequent Holder
By:_________________________________
Name:
Title:
FARALLON CAPITAL INSTITUTIONAL
PARTNERS, L.P., as a Subsequent Holder
By:_________________________________
Name:
Title:
FARALLON CAPITAL INSTITUTIONAL
PARTNERS II, L.P., as a Subsequent Holder
By:_________________________________
Name:
Title:
FARALLON CAPITAL INSTITUTIONAL
PARTNERS III, L.P., as a Subsequent Holder
By:_________________________________
Name:
Title:
TINICUM PARTNERS, L.P., as a Subsequent
Holder
By:_________________________________________
Name:
Title:
FARALLON CAPITAL OFFSHORE INVESTORS, INC.,
as a Subsequent Holder
By:_________________________________________
Name:
Title:
Annex 1
[See Attached]
Annex 2
PUT OPTION PURCHASE PRICE (ORIGINAL OPTION OF GPSF)
Put Option Price of Original
Period Beginning Up To But Excluding Option of GPSF
May 2, 2002 June 2, 2002 $18,750,000
June 2, 2002 July 2, 2002 $20,000,000
July 2, 2002 August 2, 2002 $21,250,000
August 2, 2002 September 2, 2002 $22,500,000
September 2, 2002 October 2, 2002 $23,750,000
October 2, 2002 November 2, 2002 $25,000,000
November 2, 2002 December 2, 2002 $26,250,000
December 2, 2002 January 2, 2003 $27,500,000
January 2, 2003 February 2, 2003 $28,750,000
February 2, 2003 March 2, 2003 $30,000,000
March 2, 2003 April 2, 2003 $31,250,000
April 2, 2003 May 2, 2003 $32,500,000
May 2, 2003 June 2, 2003 $33,750,000
June 2, 2003 July 2, 2003 $35,000,000
July 2, 2003 August 2, 2003 $36,250,000
August 2, 2003 September 2, 2003 $37,500,000
September 1, 2003 October 2, 2003 $38,750,000
October 2, 2003 November 2, 2003 $40,000,000
November 2, 2003 December 2, 2003 $41,250,000
December 2, 2003 January 2, 2004 $42,500,000
January 2, 2004 February 2, 2004 $43,750,000
February 2, 2004 and thereafter $45,000,000
Annex 3
Holder Pro Rata Portion
GPSF-F 60%
LBI Group Inc. 20%
Farallon Capital Partners, L.P. 25% of 20%
Farallon Capital Institutional Partners, L.P. 23% of 20%
Farallon Capital Institutional Partners II, L.P. 5% of 20%
Farallon Capital Institutional Partners III, L.P. 5% of 20%
Tinicum Partners, L.P. 1% of 20%
Farallon Capital Offshore Investors, Inc. 41% of 20%
