NONCOMPETITION AGREEMENT
This Noncompetition Agreement (this "Agreement") is made and entered
into effective as of the date set forth on the signature page hereof (the
"Effective Date"), by and among ENRON CORP., an Oregon corporation ("Enron"),
ENRON ENERGY SERVICES, LLC, a Delaware limited liability company ("EES"), and
EMW ENERGY SERVICES CORP., a Delaware corporation ("EMW"). Enron, EES and EMW
are sometimes individually referred to herein as a "Party" and sometimes
collectively referred to herein as the "Parties".
W I T N E S S E T H:
WHEREAS, as of the Effective Date and pursuant to that certain
Contribution and Subscription Agreement, dated as of December 23, 1999 (the
"Contribution Agreement"), among EES, EMW and certain other Persons (such
Persons other than EES and EMW are referred to herein collectively as the
"Investors"), EES has contributed certain assets and services to EMW and the
Investors have contributed cash to EMW, all on the terms and conditions set
forth in the Contribution Agreement;
WHEREAS, as a condition of and as an inducement to the Investors to
enter into the Contribution Agreement, the Parties agreed to enter into this
Agreement; and
WHEREAS, Enron and EES have indicated to the Investors, in order to
induce the Investors to enter into the Contribution Agreement, that it is their
intent and desire, from and after the Effective Date and until the date of
termination of this Agreement, to conduct any business that would constitute
Prohibited Business (as hereafter defined) through EMW, subject to the
exceptions referenced in Section 2.2 hereof;
NOW, THEREFORE, for and in consideration of the terms and conditions
set forth in the Contribution Agreement and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
1.1 The following capitalized terms when used in this Agreement
shall have the meanings set forth below for such terms (with terms defined in
the singular having the corresponding meaning when used in the plural and
vice versa), while other terms are defined where used in this Agreement:
"CHANGE OF CONTROL" means a transaction is consummated by which Enron
(or any successor of Enron) merges or consolidates with any other Person;
PROVIDED, HOWEVER, that any such merger or consolidation shall not constitute a
"Change of Control" in the event that (a) the stockholders of Enron on the date
immediately preceding the date of consummation of the merger or consolidation
(or if a tender or exchange offer was consummated in connection with such merger
or consolidation, then immediately preceding the date of consummation of such
tender or exchange offer) beneficially own, on the date immediately following
the consummation
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of such merger or consolidation, fifty-one percent (51%) or more of the
outstanding shares of common stock of the surviving Person (or if the
surviving Person is a subsidiary of another Person, then of such other
Person), or (b) the individuals who constitute the members of Enron's board
of directors on the date immediately preceding the date of consummation of
the merger or consolidation (or if a tender or exchange offer was consummated
in connection with such merger or consolidation, then immediately preceding
the date of consummation of such tender or exchange offer) constitute at
least a majority of the board of directors of the surviving Person (or if the
surviving Person is a subsidiary of another Person, then of such other
Person) on the date immediately following the consummation of such merger or
consolidation.
"COMMON STOCK" means shares of common stock of EMW, $.01 par value per
share.
"CONTROLLED AFFILIATE" means in the case of a Person, any other Person
in which the first Person (a) owns, directly or indirectly, more than fifty
percent (50%) of the outstanding voting securities of such other Person, or (b)
has, directly or indirectly, the power or authority, through the ownership of
voting securities, by contract or otherwise, to (i) designate or elect more than
fifty percent (50%) of the board of directors or governing body of such Person,
or (ii) direct or control the direction of the management of the other Person
(and not merely influence) in a manner comparable to that which would normally
be obtained by owning more than fifty percent (50%) of the outstanding voting
securities thereof, including by serving as a general partner in a general or
limited partnership or a managing member of a limited liability company. For
purposes of this Agreement only, Xxxxxx shall be deemed to be a Controlled
Affiliate of Enron, and EMW and its Controlled Affiliates shall in no event be
deemed to be a Controlled Affiliate of Enron, EES or any of their Controlled
Affiliates.
"XXXXXX" means Xxxxxx Energy Services, LLC, a Delaware limited
liability company.
"EQUITY SECURITIES" has the meaning set forth in Rule 3a11-1 under the
Securities Exchange Act.
"GOVERNMENTAL AUTHORITY" means a federal, state, local or foreign
governmental or regulatory authority, including the United States of America; a
state, province, commonwealth, territory or district thereof; a county or
parish, a city, town, township, village or other municipality; a district, xxxx
or other subdivision of any of the foregoing; any executive, legislative or
other governing body of any of the foregoing; any agency, authority, board,
department, system, service, office, commission, committee, council or other
administrative body of any of the foregoing; any court or other judicial body;
and any officer or other representative of any of the foregoing.
"HOLDER" means a holder of Initial Party Securities.
"INITIAL PARTY SECURITIES" means the Common Stock and Common Stock
Equivalents (each as defined in the Stockholders Agreement) that are then held
by any Investor Group Holder (as defined in the Stockholders Agreement) who is
an Initial Party (as defined in the Stockholders Agreement) or a Permitted
Investor Transferee (as defined in the Stockholders Agreement) thereof.
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"NONCOMPETITION PERIOD" means that period commencing on the Effective
Date and ending on the date which is the fifth (5th) year anniversary of the
Effective Date.
"PERSON" means a natural person, a corporation, a limited liability
company, a joint stock company, a partnership, a limited partnership, a joint
venture, a trust, an estate, an unincorporated organization, association, agency
or any other entity.
"RETAIL" means any marketing, sale or other business to or with a
Person who to the knowledge of Enron or EES or any of their respective
Controlled Affiliates is the ultimate recipient or ultimate customer of
commodities, products or services for final consumption or final use, and, to
the knowledge of Enron, EES or any of their respective Controlled Affiliates,
does not intend to resell, further distribute or disseminate such commodities,
products or services, or purchase them for the account of any other Person.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement dated as of
this Agreement by and among EMW, EES, DLJMB Funding II, Inc., DLJ Merchant
Banking Partners II, L.P., DLJ Merchant Banking Partners II-A, L.P., DLJ
Diversified Partners, L.P., DLJ Diversified Partners-A, L.P., DLJ Millennium
Partners, L.P., DLJ Millennium Partners-A, L.P., DLJ First ESC L.P., DLJ
Offshore Partners II, C.V., DLJ EAB Partners, L.P., DLJ ESC II, L.P., G.E.
Capital Equity Investments, Inc., the California Public Employees' Retirement
System, the Ontario Teachers' Pension Plan Board and Xxxxxx Energy Services,
LLC.
"UNITED STATES" means the fifty (50) states within the United States,
and the District of Columbia, but excluding any United States territories or
possessions, such as Puerto Rico.
1.2 Unless otherwise provided or unless the context clearly
requires otherwise, all references to "Articles" and "Sections" are to
Articles and Sections of this Agreement; and all uses of "include" or
"including" mean "including, without limitation" or "including, but not
limited to".
ARTICLE II
COVENANT OF NONCOMPETE
2.1 Except as permitted by Section 2.2 hereof, during the
Noncompetition Period neither Enron, EES nor any of their respective Controlled
Affiliates will:
(a) enter into a contract or agreement directly with any
natural Person for the Retail sale of natural gas or electricity to
such natural Person for his or her own account and not for commercial
purposes in the United States (such natural Persons meeting the
foregoing qualifications are referred to herein as "Residential Energy
Customers"); or
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(b) other than with respect to EMW and its Controlled
Affiliates, acquire any interest, directly or indirectly, in any Equity
Securities of any Person who has contracts or agreements directly with
any natural Person for the Retail sale of natural gas or electricity to
Residential Energy Customers; or
(c) other than with respect to EMW and its Controlled
Affiliates, operate, manage or otherwise conduct the business of
selling natural gas or electricity at Retail directly to any
Residential Energy Customers or provide consulting or advisory services
in connection with the operation or management of any such business;
provided that the foregoing shall not preclude the wholesale sale of
natural gas and/or electricity (or any derivative products or services
provided in connection therewith).
Any business or activities of Enron, EES or their respective Controlled
Affiliates prohibited or restricted by the terms of this Section 2.1 are
referred to individually and collectively as the "Prohibited Business."
2.2 Notwithstanding any provision in this Agreement to the
contrary, neither Enron, EES nor any of their respective Controlled
Affiliates shall be prohibited or restricted from any or all of the following
activities or businesses:
(a) The acquisition, directly or indirectly (including by
way of stock purchase, stock exchange or merger or consolidation), and
thereafter the ownership, by Enron, EES or any of their respective
Controlled Affiliates (the "Acquiring Person") of Equity Securities of
any Person which has a class of Equity Securities registered under the
Securities Exchange Act and is engaged in the Prohibited Business if,
immediately following such acquisition, Enron, EES (so long as EES is a
Controlled Affiliate of Enron) and their respective Controlled
Affiliates will not beneficially own, in the aggregate, Equity
Securities that represent more than five percent (5%) of the economic
or voting interest of such Person.
(b) The acquisition, directly or indirectly (including by
way of stock purchase, stock exchange or merger or consolidation), and
thereafter the ownership, by an Acquiring Person of less than all of
the Equity Securities of any Person engaged in the Prohibited Business
where the fair market value of the Prohibited Business of the Person
whose Equity Securities are acquired on the date of the acquisition (or
the date of the entering into of the agreement providing for such
acquisition, if earlier) constitutes no more than Twenty Million
Dollars (U.S.$20,000,000), as such fair market value is determined in
good faith by the Acquiring Person. Following any acquisition of less
than all of the Equity Securities of such a Person, if at any time the
Acquiring Person still holds some or all of such Equity Securities and
the fair market value of the Prohibited Business of the Person whose
Equity Securities are held by the Acquiring Person then exceeds Twenty
Million Dollars (U.S.$20,000,000), as determined in good faith by the
Acquiring Person, then Enron and EES shall not, and shall cause their
respective Controlled Affiliates not to, conduct business with the
Prohibited Business activities of such Person except in transactions
negotiated at arms-length and for fair value.
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(c) The acquisition, directly or indirectly (including by
way of stock purchase, stock exchange or merger or consolidation), and
thereafter the ownership, operation and conduct of business, by an
Acquiring Person of all of the Equity Securities of any Person engaged
in the Prohibited Business or all or any portion of the assets of any
Person engaged in the Prohibited Business where (i) in the case of an
acquisition of Equity Securities, the fair market value of the
Prohibited Business of the Person whose Equity Securities are acquired
on the date of the acquisition (or the date of the entering into of the
agreement providing for such acquisition, if earlier) constitutes no
more than Twenty Million Dollars (U.S.$20,000,000), as such fair market
value is determined in good faith by the Acquiring Person, and (ii) in
the case of an acquisition of assets, the fair market value of the
acquired assets constituting the Prohibited Business on the date of the
acquisition (or the date of the entering into of the agreement
providing for such acquisition, if earlier) constitutes no more than
Twenty Million Dollars (U.S.$20,000,000), as such fair market value is
determined in good faith by the Acquiring Person.
(d) The acquisition, ownership, operation and/or conduct
of business, directly or indirectly (including by way of stock purchase
or merger or consolidation), by Enron, EES or any of their respective
Controlled Affiliates of all or any portion of, or with, any Person (or
any of its securities, businesses or assets) that is classified or
commonly known as:
(i) a "public utility company," as such term is
defined in the Public Utility Holding Company Act of 1935, as
amended and in effect on the Effective Date hereof ("PUHCA"),
and is regulated under state law as a "public utility" and
subject to the jurisdiction of the applicable state public
utility or public service commission for regulation of Persons
with customers within franchise service areas (this exception
covers both "gas utility companies" and "electric utility
companies," and includes any "public utility company" that is
included within a holding company system under PUHCA);
(ii) a Governmental Authority or any Person
controlled, directly or indirectly, by a Governmental
Authority, including municipalities, municipal utility
districts, and public power authorities; or
(iii) a cooperative.
The activities permitted by this Section 2.2(d) shall apply whether or
not any Person in clauses (i), (ii) and (iii) of this Section 2.2(d)
engages in any Prohibited Business and whether or not Enron, EES or any
of their respective Controlled Affiliates serves as "default provider"
with respect to any Residential Energy Customers.
(e) Any business or activities that are conducted
directly or indirectly (including through Controlled Affiliates) by (i)
Azurix Corp., a Delaware corporation ("Azurix"), (ii) Citrus
Corporation, a Delaware corporation ("Citrus"), (iii) Enron Renewable
Energy Corp., a Delaware corporation ("EREC"), (iv) EOTT Energy
Partners, L.P., a Delaware limited partnership ("EOTT"), (v) Northern
Border Partners, L.P., a
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Delaware limited partnership ("NBP"), (vi) Portland General Electric
Company, an Oregon corporation ("PGE"), or (vii) any Person
(other than any Person referenced in clauses (i) through (vi) of this
subparagraph (e)) in whom Enron, EES or any Controlled Affiliate of
Enron or EES on the Effective Date owns fifty percent (50%) or less of
the issued and outstanding voting securities, PROVIDED, HOWEVER, that
clause (vii) shall not permit Enron, EES or any of their respective
Controlled Affiliates to, directly or indirectly, use such Person to
form or enter into a joint venture (of whatever structure or legal
entity) that will enter into any Prohibited Business. Enron and EES
agree that they and their respective Controlled Affiliates will not, in
their capacity as a stockholder of any of the Persons referenced in
clauses (i) through (vii) of this Section 2.2(e), unless otherwise
required by fiduciary duties under applicable law, vote their stock
held in such Persons in such a manner, or otherwise use their position
as a stockholder, so as to cause any activity prohibited by this
Agreement; PROVIDED, HOWEVER, that the foregoing agreement by Enron and
EES shall not restrict in any manner whatsoever the ability of any
officer, director or employee of any of the Persons referenced in
clauses (i) through (vii) of this Section 2.2(e) from exercising any of
their fiduciary duties under applicable law as an officer, director or
employee of any such Persons, whether or not such officer, director or
employee of such Person is also an officer, director or employee of
Enron, EES or any of their respective Controlled Affiliates. Enron
represents that as of the date hereof and to the actual knowledge of
the executive officers listed on EXHIBIT A hereto, none of Azurix,
Citrus, EREC, EOTT or NBP is currently engaged in or is planning to
engage in, directly or indirectly, any Prohibited Business, except that
EREC, through its Controlled Affiliates or other Persons, is or may be
engaging in activities within the Prohibited Business from or relating
to the sale of electric energy from wind turbines or projects developed
by such Persons involving wind turbines to Residential Energy
Customers.
(f) The acquisition, directly or indirectly (including by
way of stock purchase or merger or consolidation), by an Acquiring
Person of Equity Securities or assets of any Person that is engaged in
the Prohibited Business not permitted by the provisions of Section
2.2(a), (b), (c), (d) or (e) hereof; PROVIDED, HOWEVER, that prior to
or following such acquisition the Acquiring Person complies with the
provisions described in Section 2.3 hereof.
2.3 If an Acquiring Person acquires less than all of the Equity
Securities of a Person pursuant to Section 2.2(f) hereof, EMW shall have an
option to participate in the investment in the Equity Securities held by the
Acquiring Person (either directly or indirectly through the ownership of another
security or contract right with such Acquiring Person) in a manner that will
allow EMW to recognize the value of the Prohibited Business conducted by such
Person ("Investment Option") pursuant to the terms of this Section 2.3. If an
Acquiring Person acquires all of the Equity Securities of a Person engaged in
the Prohibited Business or all or any portion of the assets of a Person engaged
in the Prohibited Business pursuant to Section 2.2(f) hereof, EMW shall have an
option to either (at the election of the Acquiring Person) purchase the Equity
Securities of the Prohibited Business or the assets comprising the Prohibited
Business, including the capital stock of any subsidiary engaged in the
Prohibited Business (the "Offered Business"), as follows:
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(a) Prior to or within sixty (60) days following the
Acquiring Person's acquisition of Equity Securities or the Offered
Business referred to above, the Acquiring Person shall deliver to EMW
written notice of the Investment Option or the Offered Business, as the
case may be ("Option Notice"), which Option Notice shall specify the
terms and conditions by which EMW may participate in the investment of
the Equity Securities or acquire the Offered Business, including the
consideration to be paid by EMW and the projected closing date for such
investment or acquisition. The Acquiring Person also shall provide to
EMW (subject to the execution of a customary confidentiality agreement
and the receipt of any necessary consents from other Persons) in
conjunction with such Option Notice, any and all information concerning
the Investment Option or the Offered Business within the Acquiring
Person's possession as is requested by EMW.
(b) Within thirty (30) days following the receipt of the
Option Notice, EMW shall notify the Acquiring Person in writing of
whether EMW desires to (i) participate in the investment with respect
to the Investment Option or (ii) acquire the Offered Business. If EMW
delivers written notice to the Acquiring Person within such thirty (30)
day period that EMW desires to participate in the investment or acquire
the Offered Business (the "Election Notice"), then EMW and the
Acquiring Person shall thereafter negotiate in good faith for a period
of thirty (30) days with respect to the terms and conditions (including
the consideration to be paid by EMW) by which EMW will (A) participate
in the Investment Option or (B) acquire the Offered Business, and in
each case that will permit the Acquiring Person the ability to close
such investment or acquisition by the projected closing date specified
in the Option Notice.
(c) If (i) EMW fails to deliver to the Acquiring Person
an Election Notice within the thirty (30) day period afforded to EMW,
or (ii) EMW otherwise indicates to the Acquiring Person that it does
not wish to participate in the Investment Option or to acquire the
Offered Business, or (iii) EMW and the Acquiring Person are not able,
after negotiating in good faith, to mutually agree on the terms of the
Investment Option or for the purchase of the Offered Business within
the thirty (30) day period following the delivery of the Election
Notice, then in any such case the Acquiring Person may acquire the
Equity Securities or the Offered Business (if it has not already done
so) but must thereafter divest the Equity Securities (or that portion
of the value of the Equity Securities attributable to the Prohibited
Business of the issuer of the Equity Securities, by a sale of tracking
stock, derivatives or otherwise with respect to the Prohibited
Business, so that the Acquiring Person has effectively divested the
value of the Prohibited Business) or the Offered Business, as the case
may be, within one (1) year following the consummation of the
acquisition thereof, subject to the expiration of all waiting periods
and the receipt of all necessary approvals of any Governmental
Authority in connection therewith.
(d) For a period of thirty (30) days following the date
of the delivery of the Option Notice (or, if applicable, such earlier
date as EMW has notified the Acquiring Person that it will not make an
Election Notice), the Acquiring Person and EMW shall
7
negotiate exclusively with each other with respect to the transactions
contemplated by the Option Notice.
(e) The Acquiring Person and EMW agree that any
participation by EMW in the Investment Option or an acquisition of the
Offered Business shall be subject to compliance with all laws, rules
and regulations of any applicable Governmental Authority.
(f) The rights of EMW under this Section 2.3 with respect
to EMW's option to participate in an Investment Option or to acquire
the Offered Business may not be assigned or otherwise transferred by
EMW to any Person in whole or in part without the prior written consent
of the Acquiring Person, which may be granted or withheld in the sole
and unfettered discretion of the Acquiring Person.
2.4 This Agreement shall automatically terminate and be of no
force and effect, without further action by any Person, at any time following
the date which is the third (3rd) year anniversary of the Effective Date and
prior to the expiration of the Noncompetition Period in the event that both
of the following tests are satisfied:
(a) Enron and its Controlled Affiliates cease to,
individually or collectively, directly or indirectly, hold at any time
the beneficial interest in and to at least fifteen percent (15%) of the
aggregate number of shares of the then issued and outstanding Common
Stock calculated on a fully-diluted basis (determined by dividing (i)
the sum of the number of shares of Common Stock then owned by Enron and
its Controlled Affiliates and the number of shares of Common Stock then
issuable to Enron and its Controlled Affiliates pursuant to all
outstanding rights, warrants, options, convertible securities or
exchangeable securities, exercisable for or convertible or exchangeable
into, directly or indirectly, Common Stock (whether or not such
securities are then exercisable or convertible) by (ii) the sum of the
number of shares of Common Stock then outstanding and the number of
shares of Common Stock then issuable pursuant to all then outstanding
rights, warrants, options, convertible securities or exchangeable
securities, exercisable for or convertible or exchangeable into,
directly or indirectly, Common Stock (whether or not such securities
are then exercisable or convertible), with such quotient expressed as a
percentage); and
(b) fewer than fifteen percent (15%) of the directors of
EMW are Persons who are employees, officers or directors of Enron or
any of its Controlled Affiliates.
2.5 (a) In the event of a Change of Control that occurs after
an Initial Public Offering (as defined in the Stockholders Agreement),
this Agreement shall terminate and be of no force or effect immediately
upon such Change of Control. In the event of a Change of Control that
occurs prior to an Initial Public Offering, the surviving Person in any
merger or consolidation that results in such Change of Control (the
"Surviving Person"), whether or not such Surviving Person is Enron,
will continue to be subject to this Agreement as if the Surviving
Person were Enron, unless such Surviving Person makes an offer to
purchase the Initial Party Securities in the manner and on the terms
set
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forth below in this Section 2.5, in which case this Agreement shall
terminate and be of no force or effect as of such Change of Control,
subject to the Surviving Person complying with the provisions of this
Section 2.5, and regardless of whether or not any of the Initial Party
Securities are tendered and purchased pursuant to the offer made
pursuant hereto.
(b) If the Surviving Person elects to comply with the
provisions of this paragraph, it will by written notice to each of the
Holders (given in the manner set forth in the Stockholders Agreement),
make an offer (the "Change of Control Offer") to purchase from each
such Holder all, but not less than all, of the Initial Party Securities
held by such Holder at the fair market value thereof determined as set
forth below (the "Change of Control Value"). The Surviving Person shall
make the Change of Control Offer as promptly as practicable after the
consummation of the transaction resulting in the Change of Control.
Upon receipt of a Change of Control Offer, the Holders and the
Surviving Person shall have fifteen (15) days to attempt to agree upon
the Change of Control Value. If Holders of a majority of the Initial
Party Securities and the Surviving Person agree within such fifteen
(15)-day period on such Change of Control Value, then the Change of
Control Value as so agreed shall be the Change of Control Value at
which the Surviving Person will purchase all Initial Party Securities
that are tendered pursuant to the Change of Control Offer. If Holders
of a majority of the Initial Party Securities and the Surviving Person
cannot agree on such value, EMW, as soon as practicable following such
fifteen (15)-day period after receipt of the Change of Control Offer
(or earlier upon notice of the Surviving Person and the Holders of a
majority of the Initial Party Securities that they cannot agree on the
Change of Control Value), will cause the Change of Control Value to be
determined by an independent qualified appraiser (i.e., an appraiser
that is unaffiliated with any of the holders of the Initial Party
Securities, the Surviving Person or EMW and who has at least five years
experience in appraising equity securities of privately held companies)
selected by the Special Committee (as defined in the Stockholders
Agreement) and reasonably acceptable to the Surviving Person and
Holders of a majority of the Initial Party Securities (such appraisal
being herein referred to as the "Change of Control Appraisal"). In
conducting any Change of Control Appraisal, the appraiser shall, in
accordance with customary investment banking practice, determine the
Change of Control Value based on the proportionate value represented by
the Initial Party Securities of the value of the entire Fully-Diluted
Common Stock (as defined in the Stockholders Agreement) of EMW, without
discount for the fact that the Initial Party Securities are subject to
transfer restrictions or represent a minority interest in EMW, with any
warrants included in such Initial Party Securities being valued on an
as exercised basis net of exercise price whether or not they are then
exercisable. EMW shall furnish a copy of the Change of Control
Appraisal to the Surviving Person and the Holders of Initial Party
Securities. EMW shall use commercially reasonable efforts to have the
Change of Control Appraisal completed within thirty (30) days following
its receipt of the Change of Control Offer. The Change of Control Value
determined in the Change of Control Appraisal shall be the price used
for purposes of the Change of Control Offer. The cost of any Change of
Control Appraisal shall be borne by EMW.
(c) Following its receipt of the Change of Control
Appraisal or agreement as to the Change of Control Value as set forth
above, each Holder of Initial Party Securities
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shall have fifteen (15) days to give written notice to the Surviving
Person that such holder wishes to sell all, but not less than all, of
the Initial Party Securities then held by such Initial Party pursuant
to the terms of the Change of Control Offer at the Change of Control
Value, whereupon the Surviving Person shall purchase such Initial
Party Securities at such Change of Control Value in accordance with
Section 2.5(d), it being agreed for purposes of the foregoing that the
DLJMB Investors (as defined in the Stockholders Agreement) shall be
treated as a single Initial Party for purposes of this Section 2.5.
(d) The closing of the purchase of any Initial Party
Securities pursuant to a Change of Control Offer will take place at the
offices of EMW in Houston, Texas on the fifth Business Day after
expiration of the fifteen (15)-day period referred to in paragraph (b)
above, unless otherwise agreed by the Holders and the Surviving Person;
PROVIDED, HOWEVER, that any such closing shall be delayed, to the
extent required, until two Business Days following the expiration of
any required waiting periods under the HSR Act and FPA (each as defined
in the Stockholders Agreement) and the obtaining of all other
governmental approvals deemed reasonably necessary by any participating
Holder or the Surviving Person. At the closing, the Surviving Person
will pay the Change of Control Value for the Initial Party Securities
tendered pursuant to the Change of Control Offer in cash (by wire
transfer) solely upon each participating Holder's delivery to the
Surviving Person of valid certificates or instruments evidencing all of
the Initial Party Securities then being purchased from such Holder.
Certificates or instruments representing such Initial Party Securities
will be duly endorsed (with signature guaranteed) for delivery to the
Surviving Person. In connection with the delivery of such certificates
or instruments to the Surviving Person, the participating Holder will
execute such written evidence as the Surviving Person may reasonably
request to represent and warrant to the Surviving Person that the
Initial Party Securities are owned by such Holder free and clear of all
liens, adverse claims, and other encumbrances other than as provided in
the Stockholders Agreement. The holders of Initial Party Securities
will, as a condition to participating in the Change of Control Offer,
agree to promptly perform, whether before or after any such closing,
such additional acts (including, without limitation, executing and
delivering additional documents) as are reasonably required by the
Surviving Person to effect more fully the sale of any Initial Party
Securities as provided by this Section 2.5.
(e) The rights and obligations of the Surviving Person
under this Section 2.5 with respect to the purchase of any Initial
Party Securities may be transferred in whole but not in part by the
Surviving Person to a Controlled Affiliate of the Surviving Person so
long as the Surviving Person remains obligated hereunder in the event
such Person does not perform its obligation hereunder.
2.6 This Agreement shall be automatically terminated with respect
to EES (but not as to Enron), without further action by any Person, at such time
as EES ceases to be a Controlled Affiliate of Enron and PROVIDED that all Equity
Securities of EMW then held by EES, if any, are transferred to Enron or more or
more Controlled Affiliates of Enron at such time.
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ARTICLE III
MISCELLANEOUS
3.1 GOVERNING LAW; VENUE; SUBMISSION TO SERVICE OF PROCESS.
(a) THIS AGREEMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY
AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF DELAWARE, OTHER THAN THE CONFLICT OF LAWS RULES
THEREOF.
(b) THE PARTIES AGREE THAT THE STATE OF DELAWARE SHALL HAVE SOLE
AND EXCLUSIVE JURISDICTION OVER ANY ACTION BROUGHT TO ENFORCE THE TERMS OF THIS
AGREEMENT AND THAT THE PARTIES HEREBY CONSENT TO SUITS IN THE COURTS OF THE
STATE OF DELAWARE AND WAIVE THE DEFENSES OF PERSONAL JURISDICTION, SERVICE AND
VENUE.
3.2 EXCLUSIVE REMEDY; LIMITATION ON DAMAGES. NOTWITHSTANDING
ANYTHING CONTAINED TO THE CONTRARY IN ANY OTHER PROVISION OF THIS AGREEMENT AND
EXCEPT AS PROVIDED IN SECTION 3.3 OF THIS AGREEMENT, THE PARTIES AGREE THAT THE
RECOVERY BY ANY PARTY HERETO (THE "CLAIMANT") OF ANY DAMAGES SUFFERED OR
INCURRED BY IT AS A RESULT OF ANY BREACH BY ANY OTHER PARTY OR PARTIES (THE
"BREACHING PARTY") OF ANY OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS OR
OBLIGATIONS OR ANY OTHER MATTER OR CLAIM UNDER THIS AGREEMENT SHALL BE LIMITED
TO THE ACTUAL DAMAGES SUFFERED OR INCURRED BY THE CLAIMANT AS A RESULT OF THE
BREACH BY THE BREACHING PARTY OF ITS REPRESENTATIONS, WARRANTIES, COVENANTS OR
OBLIGATIONS UNDER THIS AGREEMENT, AND IN NO EVENT SHALL THE BREACHING PARTY BE
LIABLE TO THE CLAIMANT FOR ANY INDIRECT, CONSEQUENTIAL, SPECIAL, EXEMPLARY OR
PUNITIVE DAMAGES, EXCEPT TO THE EXTENT CONSTITUTING PART OF A THIRD PARTY CLAIM
SUFFERED OR INCURRED BY THE CLAIMANT AS A RESULT OF THE BREACH OR OTHER ACTION
OR MATTER BY THE BREACHING PARTY OF ANY OF ITS REPRESENTATIONS, WARRANTIES,
COVENANTS OR OBLIGATIONS UNDER THIS AGREEMENT.
3.3 SPECIFIC PERFORMANCE. The Parties agree that to the extent
permitted by applicable Law, the provisions of this Agreement may be
specifically enforced by a decree for the specific performance of any agreement
contained herein or by an injunction against a violation of any of the terms
hereof or otherwise.
3.4 NOTICES. Any notice or other communication required or
permitted hereunder shall be in writing and shall be delivered personally by
hand or by recognized overnight courier, telecopied or mailed (by registered
or certified mail, postage prepaid) as follows:
11
If to Enron, to:
Enron Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: 713/853-3920
If to EES, to:
Enron Energy Services, LLC
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: 713/646-2379
If to EMW, to:
EMW Energy Services Corp.
c/o Enron Energy Services, LLC
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: 713/646-2379
Each such notice or other communication shall be effective (a) if given
by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section 3.4 (with confirmation of transmission), or (b) if
given by any other means, when delivered at the address specified in this
Section 3.4. Any Party by notice given in accordance with this Section 3.4 to
the other Party may designate another address (or telecopier number) or person
for receipt of notices hereunder. Notices by a party may be given by counsel to
such party.
3.5 SEVERABILITY. In the event that any portion of this
Agreement or the application hereof to any circumstance shall be determined
to be unenforceable, the Parties expressly agree that the same shall not
affect, diminish or impair the other provisions of the Agreement or the
application of this Agreement to any other circumstances and that this
Agreement would be executed and delivered notwithstanding the
unenforceability of such portion of such Section or the application of this
Agreement to such circumstance. If the provisions of this Agreement should
ever be deemed to exceed the time, scope or geographic limitations permitted
by applicable law, then such provisions shall be reformed to the maximum
time, scope or geographic limitations permitted.
3.6 ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes
the entire agreement among the Parties with respect to the matters set forth
herein and this Agreement shall not be modified, altered, amended or revoked
except by an instrument in writing executed by all of the Parties.
12
3.7 BINDING EFFECT. This Agreement shall inure to the benefit of
and be binding upon the Parties and their respective successors and assigns.
3.8 COUNTERPARTS. The Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof, individually or taken together, shall bear the
signatures of all of the parties reflected hereon as the signatories.
EXECUTED EFFECTIVE as of the 6th day of January, 2000.
ENRON CORP.
By: /s/ J. XXXX XXXXX
------------------------------------------
Name: J. Xxxx Xxxxx
----------------------------------------
Title: Executive Vice President--Corp.
---------------------------------------
Development
---------------------------------------
ENRON ENERGY SERVICES, LLC
By: /s/ XXXX X. XXXXXX
------------------------------------------
Name: Xxxx X. Xxxxxx
----------------------------------------
Title: Sr. Vice President
---------------------------------------
EMW ENERGY SERVICES CORP.
By: /s/ XXXXXX X. XXXXXXXX
------------------------------------------
Name: Xxxxxx X. Xxxxxxxx
----------------------------------------
Title: Vice President
---------------------------------------
13
EXHIBIT A
TO
NONCOMPETITION AGREEMENT
ENRON OFFICERS' KNOWLEDGE
1. Xxxxxxx X. Xxx
2. Xxxxxxx X. Xxxxxxxx
3. Xxxxxx Xxxxxx
4. Xxx Xxx
5. Xxxx X. Xxxxxx
6. Xxxxxx Xxxxxxxx
7. Xxxxxx X. Xxxxxxxxxx
