EXHIBIT 99.2
EXECUTION COPY
$280,000,000 Aggregate Principal Amount
PG&E CORPORATION
7.50% CONVERTIBLE SUBORDINATED NOTES DUE 2007
PURCHASE AGREEMENT
June 25, 2002
Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxxxx Investment Fund Ltd.
c/o Citadel Investment Group, L.L.C.
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Citadel Credit Trading Ltd.
c/o Citadel Investment Group, L.L.C.
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Citadel Equity Fund Ltd.
c/o Citadel Investment Group, L.L.C.
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
PG&E Corporation, a California corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell
$280,000,000 aggregate principal amount of its 7.50% Convertible Subordinated
Notes, in the respective principal amounts set forth in Schedule 1 hereto
(together with any PIK Securities (as defined in the Indenture) that may be
issued thereon, the "Securities"), to Xxxxxx Brothers Inc., Xxxxxxx Investment
Fund Ltd., Citadel Credit Trading Ltd. and Citadel Equity Fund Ltd. (each
individually, a "Purchaser" and collectively, the "Purchasers"). This is to
confirm the agreement between the Company and the Purchasers concerning the
offer, issue and sale of the Securities.
The Securities will be offered and sold to the Purchasers without being
registered under the Securities Act of 1933, as amended, and the rules and
regulations of the Securities and Exchange Commission (the "Commission")
thereunder (collectively, the "Securities Act"), in reliance upon an exemption
therefrom. It is understood by the parties hereto that if the
conversion price of the Securities meets the requirements of Rule 144A(d)(3)(i)
promulgated under the Securities Act, the Securities will be eligible to be
resold pursuant to Rule 144A.
The Securities will be issued pursuant to an indenture (the
"Indenture"), the form of which is contained in Annex A hereof, dated as of the
date hereof (the "Closing Date"), between the Company and U.S. Bank, N.A., as
Trustee (the "Trustee"). The Securities will be convertible into shares of
common stock, no par value (the "Common Stock"), of the Company (such shares,
the "Conversion Shares") on the terms, and subject to the conditions, set forth
in the Indenture.
Holders of the Securities (including the Purchasers and their
respective transferees) will be entitled to the benefits of a Resale
Registration Rights Agreement, dated as of the Closing Date, between the Company
and the Purchasers (the "Registration Rights Agreement"), the form of which is
contained in Annex B hereof, pursuant to which the Company will agree, among
other things, to use its best efforts to file with the Commission a shelf
registration statement pursuant to Rule 415 under the Securities Act (the
"Registration Statement") covering the resale of the Conversion Shares, and to
use its best efforts to cause the Registration Statement to be declared
effective within the time periods specified therein.
This Agreement, the Indenture, the Securities and the Registration
Rights Agreement are referred to herein collectively as the "Transaction
Documents".
1. Representations, Warranties and Agreements of the Company. The
Company represents, warrants to and agrees with, each of the Purchasers
acquiring Securities hereunder that, as of the date hereof:
(a) The documents filed by the Company with the Commission
since December 31, 2001 under the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder
(collectively, the "Exchange Act"), when they were filed with the
Commission, conformed in all material respects to the requirements of
the Exchange Act and none of such documents (collectively, the
"Exchange Act Documents") contained any untrue statement of a material
fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
(b) The Company and each of PG&E National Energy Group, LLC,
a Delaware limited liability company, PG&E National Energy Group, Inc.,
a Delaware corporation, PG&E Gas Transmission, Northwest Corporation, a
California corporation, PG&E Energy Trading Holdings Corporation, a
California corporation, PG&E Generating Company, LLC, a Delaware
limited liability company, USGen New England, Inc., a Delaware
corporation, GTN Holdings LLC, a Delaware limited liability company and
PG&E Energy Trading Holdings, LLC, a Delaware limited liability company
(each a "Subsidiary" and, collectively, the "Subsidiaries"), have been
duly organized and are validly existing as corporations or limited
liability companies, as the case may be, in good standing under the
laws of their respective jurisdictions of organization, are duly
qualified to do business and are in good standing as foreign
corporations or limited liability companies, as the case may be, in
each jurisdiction in which their respective
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ownership or lease of property or the conduct of their respective
businesses requires such qualification, and have all power and
authority necessary to own, lease or hold their respective properties
and to conduct the businesses in which they are engaged, except, in
each case, where the failure to be so qualified or in good standing
would not result in a material adverse effect on the business,
financial condition or results of operations of the Company and its
subsidiaries taken as a whole or on the authority or the ability of the
Company to perform its obligations under the Transaction Documents (a
"Material Adverse Effect").
(c) Immediately prior to the transactions contemplated hereby
and by the Amended and Restated Credit Agreement, dated as of the date
hereof (the "Credit Agreement"), among the Company, Xxxxxx Commercial
Paper Inc. ("LCPI") and the other lenders party thereto and the Warrant
Agreement, dated as of the date hereof, by and between the Company, LB
I Group Inc. and each other entity signatory thereto (the "Warrant
Agreement"), the authorized, issued and outstanding capital stock of
the Company is as set forth in the Exchange Act Documents (except with
respect to (i) changes occurring in the ordinary course of business and
(ii) changes in outstanding Common Stock resulting from transactions
relating to employee benefit plans or dividend reinvestment, stock
option, stock award and stock purchase plans), and all of the issued
shares of capital stock of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable; and all of
the issued shares of capital stock of each Subsidiary have been duly
and validly authorized and issued and are fully paid and non-assessable
and (except for directors' qualifying shares and as disclosed in the
Exchange Act Documents) are owned directly or indirectly by the
Company, free and clear of all material liens, encumbrances, equities,
claims or adverse interests (collectively, "Liens") of any nature.
(d) Except as set forth in the Exchange Act Documents, there
are no legal or governmental proceedings pending to which the Company
or any of the Subsidiaries is a party or of which any property or
assets of the Company or any of the Subsidiaries is subject which, if
determined adversely to the Company or any of the Subsidiaries, might
have a Material Adverse Effect and, to the best of the Company's
knowledge, no such proceedings are threatened by any governmental
authority or other entity.
(e) Except as set forth in the Exchange Act Documents and
except with respect to the rights contained in the Registration Rights
Agreement and the Equity Registration Rights Agreement, dated as of
June 25, 2002, among the Company, LB I Group Inc. and each other entity
signatory thereto (the "Equity Registration Rights Agreement"), there
are no contracts, agreements or other documents between the Company and
any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to
any securities of the Company owned or to be owned, directly or
indirectly, by such person.
(f) Except as set forth in the Exchange Act Documents,
neither the Company nor any of the Subsidiaries (i) is in violation of
its charter or by-laws, (ii) is in default, and no event has occurred
which, with notice or lapse of time or both, would
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constitute such a default, in the due performance or observance of any
term, covenant or condition contained in any indenture, mortgage, deed
of trust, loan agreement or other agreement or instrument to which it
is a party or by which it is bound or to which any of its properties or
assets is subject, or (iii) is in violation of any law, ordinance,
governmental rule, regulation or court decree to which it or its
property or assets may be subject or has failed to obtain any license,
permit, certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property or to the conduct of
its business, except, in the case of clauses (ii) and (iii) for any
such defaults, violations or failures which would not result in a
Material Adverse Effect.
(g) Except as set forth in the Exchange Act Documents,
neither the Company nor any of the Subsidiaries has sustained, since
the date of the latest audited financial statements included in the
Exchange Act Documents, any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, except for any such loss or interference which would
not result in a Material Adverse Effect.
(h) Except as set forth in the Exchange Act Documents, since
the date of the latest audited financial statements included in the
Exchange Act Documents, there has not been any material adverse change
in or affecting the general affairs, management, consolidated financial
position, stockholders' equity, results of operations, business or
prospects of the Company and its subsidiaries taken as a whole.
(i) (A) the financial statements (including the related notes
and supporting schedules) included in the Exchange Act Documents
present fairly the financial condition, results of operations and
changes in financial position of the Company and its subsidiaries on
the basis stated therein at the respective dates or for the respective
periods to which they apply, (B) such statements and related schedules
and notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved, (C) the supporting schedules, if any, included in the
Exchange Act Documents present fairly in accordance with generally
accepted accounting principles the information required to be stated
therein, and (D) the other financial information and data set forth in
the Exchange Act Documents are, in all material respects, accurately
presented and prepared on a basis consistent with such financial
statements (including the related notes and supporting schedules) and
the books and records of the Company.
(j) Except as set forth in the Exchange Act Documents, each
of the Company and the Subsidiaries has such permits, licenses,
consents, exemptions, franchises, authorizations and other approvals
(each, an "Authorization") of, and has made all filings with and
notices to, all governmental or regulatory authorities and
self-regulatory organizations and all courts and other tribunals,
including, without limitation, under any ordinance, rule, regulation,
order, judgment, decree or permit, as are necessary to own, lease,
license and operate its respective properties and to conduct its
business, except where the failure to have any such Authorization or to
make any such filing or notice would not have a Material Adverse Effect
(each such Authorization, a
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"Material Authorization"); each Material Authorization is valid and in
full force and effect and each of the Company and the Subsidiaries is
in compliance with all the terms and conditions thereof and with the
rules and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; and no event has occurred
(including, without limitation, the receipt of any notice from any
authority or governing body) which allows or, after notice or lapse of
time or both, would allow, revocation, suspension or termination of any
such Material Authorization or results or, after notice or lapse of
time or both, would result in any other impairment of the rights of the
holder of any such Material Authorization.
(k) Except as set forth in the Exchange Act Documents, the
Company and each of the Subsidiaries has filed all federal, state and
local income and franchise tax returns required to be filed through the
date hereof and has paid all taxes (including withholding taxes,
penalties and interest, assessments, fees and other charges) due
thereon, other than those being contested in good faith and for which
adequate reserves have been taken or which if not filed would not
result in a Material Adverse Effect; and no tax deficiency has been
determined adversely to the Company or any of the Subsidiaries which
has had (nor does the Company have any knowledge of any tax deficiency
which, if determined adversely to the Company or any of its
subsidiaries, might have) a Material Adverse Effect or for which
adequate reserves have not been provided.
(l) Except as set forth in the Exchange Act Documents, the
Company and the Subsidiaries are in compliance with any and all
applicable foreign, federal, state and local laws and regulations
relating to the protection of human health and safety, the environment
or hazardous or toxic substances or wastes, pollutants or contaminants,
except where failure to so comply would not have, individually or in
the aggregate, a Material Adverse Effect.
(m) The Company has all necessary power and authority to
execute and deliver this Agreement and perform its obligations
hereunder; and this Agreement and the transactions contemplated hereby
have been duly authorized by the Company; assuming due authorization,
execution and delivery by the Purchasers, this Agreement constitutes a
legally valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally.
(n) The Company has all necessary power and authority to
execute and deliver the Indenture and perform its obligations
thereunder; the Indenture has been duly authorized by the Company and,
upon the effectiveness of the Registration Statement, will be qualified
under the Trust Indenture Act of 1939, as amended, and the rules and
regulations of the Commission thereunder (collectively, the "Trust
Indenture Act"); and, assuming due authorization, execution and
delivery of the Indenture by the Trustee, it will constitute a legally
valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, subject to the effects of
bankruptcy,
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insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally.
(o) The Company has all necessary power and authority to
execute, issue and deliver the Securities and perform its obligations
thereunder; the Securities have been duly authorized by the Company
and, assuming due authentication of the Securities by the Trustee, such
Securities will constitute legally valid and binding obligations of the
Company entitled to the benefits of the Indenture, enforceable against
the Company in accordance with their terms, subject to the effects of
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally.
(p) The Company has all necessary power and authority to
issue and deliver the Conversion Shares; the Conversion Shares have
been duly and validly authorized and reserved for issuance upon
conversion of the Securities and are free of preemptive rights; and all
Conversion Shares, when issued and delivered upon such conversion in
accordance with the terms of the Indenture, will be duly and validly
authorized and issued, fully paid and nonassessable and will be free
and clear of any liens, encumbrances, equities, claims or adverse
interests.
(q) The Company has all necessary power and authority to
execute and deliver the Registration Rights Agreement and perform its
obligations thereunder; the Registration Rights Agreement and the
transactions contemplated thereby have been duly authorized by the
Company and, assuming due authorization, execution and delivery by the
Purchasers, it will be a legally valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except as the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally.
(r) The execution, delivery and performance by the Company of
the Transaction Documents (other than the Securities), the issuance of
the Securities and the Conversion Shares, if at all, the compliance by
the Company with all the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby
(assuming, in each case, the compliance by the other parties thereto)
will not (i) conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under (or with
notice or the lapse of time or both, would constitute a default under),
any indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which the Company or any of the Subsidiaries
is a party or by which the Company or any of the Subsidiaries is bound
or to which any of the property or assets of the Company or any of the
Subsidiaries is subject, (ii) result in any violation of the provisions
of the charter or by-laws of the Company or any of the Subsidiaries,
(iii) result in any violation of any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Company or any of the Subsidiaries or any of
their properties or assets, (iv) result in the imposition or creation
of (or the obligation to create or impose) a Lien under any agreement
or instrument to which the Company or any of the Subsidiaries is a
party or by which the Company or any of the
6
Subsidiaries or their respective properties or assets is bound, or (v)
result in the suspension, termination or revocation of any Material
Authorization of the Company or any of the Subsidiaries or any other
impairment of the rights of the holder of any such Material
Authorization.
(s) Except (i) with respect to the transactions contemplated
by the Registration Rights Agreement as may be required under the
Securities Act, (ii) the qualification of the Indenture under the Trust
Indenture Act, (iii) as required by the state securities or "blue sky"
laws, (iv) for such consents, approvals, authorizations, orders,
filings or registrations which have been obtained or made and (v) with
respect to the matters covered by clause (v) of this Section 1, no
consent, approval, authorization or order of, or filing or registration
with, any court or governmental agency or governmental body is required
for the execution, delivery and performance of the Transaction
Documents (other than the Securities) by the Company, the issuance of
the Securities and the Conversion Shares, if at all, and the
consummation of the transactions contemplated hereby and thereby.
(t) Neither the Company nor any subsidiary is or, as of the
Closing Date, after giving effect to the issuance of the Securities and
the application of the net proceeds therefrom, will be an "investment
company" as defined, and subject to regulation, under the Investment
Company Act of 1940, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Investment Company Act").
(u) Except as disclosed in the Exchange Act Documents and,
subject to the terms and conditions of the transactions contemplated by
the Transaction Documents and, with respect to clauses (i) and (ii)
only, the Credit Agreement, the Warrant Agreement and the Equity
Registration Rights Agreement, (i) there are no outstanding securities
convertible into or exchangeable for, or warrants, options or rights
issued by the Company to purchase, any shares of the capital stock of
the Company, (ii) there are no statutory, contractual, preemptive or
other rights to subscribe for or to purchase any Common Stock and (iii)
there are no restrictions upon transfer of the Common Stock pursuant to
the Company's articles of incorporation or bylaws.
(v) Assuming the accuracy of the representations and
warranties of the Purchasers contained in Section 6 and their
compliance with the agreements set forth therein, it is not necessary
to register the Securities or the Conversion Shares under the
Securities Act or to qualify the Indenture under the Trust Indenture
Act in connection with the issuance and sale of the Securities to the
Purchasers on the date hereof and the conversion of the Securities into
Conversion Shares in the manner contemplated by the Indenture.
(w) Provided that the Conversion Price (as defined in the
Indenture) of the Securities meets the requirements set forth in Rule
144A(d)(3)(i) as of the date of the issuance of such Securities, no
securities of the same class (within the meaning of Rule 144A(d)(3)
under the Securities Act) as the Securities are listed on any national
securities exchange registered under Section 6 of the Exchange Act or
quoted on an automated inter-dealer quotation system.
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(x) None of the Securities have been registered under
Section 12 of the Exchange Act.
(y) None of the Company or any of its Affiliates (as defined
in Rule 501(b) of Regulation D of, the Securities Act ("Regulation D"),
an "Affiliate"), has, directly or through an agent, engaged in any form
of general solicitation or general advertising in connection with the
offering of the Securities or the Conversion Shares (as those terms are
used in Regulation D) under the Securities Act or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act; and the Company has not entered into any contractual
arrangement with respect to the distribution of the Securities or the
Conversion Shares, except for this Agreement, the Registration Rights
Agreement and the Company will not enter into any such arrangement. The
Company has retained Xxxxxx Brothers Inc. and no other party with
respect to the placement of the Securities and the Conversion Shares.
(z) None of the Company or any of its affiliates has,
directly or through any agent, sold, offered for sale, solicited offers
to buy or otherwise negotiated in respect of, any "security" (as
defined in the Securities Act) which is or will be integrated with the
sale of the Securities or the Conversion Shares in a manner that would
require the registration under the Securities Act of the Securities or
the Conversion Shares.
(aa) The Company has not sold or issued any shares of Common
Stock, any security convertible into shares of Common Stock, or any
security of the same class as the Securities during the six-month
period preceding the date of the Exchange Act Documents, including any
sales pursuant to Rule 144A under, or Regulation D or Regulation S of
the Securities Act, other than shares issued pursuant to employee
benefit plans, qualified stock options plans or other employee
compensation plans or pursuant to outstanding options, rights or
warrants.
(bb) Neither the Company, nor to its knowledge, any of its
affiliates, has taken, directly or indirectly, any action designed to
cause or result in, or which has constituted or which might reasonably
be expected to constitute, the stabilization or manipulation of the
price of the Securities or Common Stock to facilitate the sale or
resale of such the Securities.
(cc) As of the date hereof, the Existing Indebtedness (as
defined in the Indenture) of the Company consists of approximately $98
million of Indebtedness (as defined in the Indenture) represented by
inter-company notes and the Option Debt (as defined in the Indenture).
Each certificate signed by any officer of the Company and delivered to
a Purchaser or counsel to such Purchaser shall be deemed to be a representation
and warranty by the Company to such Purchaser as to the matters covered thereby.
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2. Purchase, Sale and Delivery of Securities. Subject to the terms and
conditions and in reliance upon the representations and warranties herein set
forth, the Company agrees to sell to each Purchaser, severally and not jointly,
and each Purchaser agrees to purchase from the Company, severally and not
jointly, at a purchase price of 100% of the principal amount thereof (the
"Purchase Price"), the aggregate principal amount of Securities set forth in
Schedule I opposite the name of each such Purchaser. The closing shall occur at
the offices of Xxxxxxx Xxxxxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, at 10:00 a.m., New York City time, on the Closing Date. Delivery of
the Securities by the Company shall be made to each Purchaser against payment of
the Purchase Price by the applicable Purchaser; and payment for the Securities
by each Purchaser shall be made against delivery to the applicable Purchaser of
the Securities as set forth below and effected either by wire transfer of
immediately available funds to an account with a bank in The City of New York,
the account number and the ABA number for such bank to be provided by the
Company to each Purchaser in advance of the Closing Date, or by such other
manner of payment as may be agreed by the Company and the Purchasers.
3. Further Agreements of the Company. The Company agrees:
(a) Promptly from time to time, to take such action as any
Purchaser may reasonably request, to qualify the Securities and the
Conversion Shares for offering and sale under the securities laws of
such jurisdictions as any Purchaser may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete the
resale of the Securities; provided that, in connection therewith, the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(b) To use its best efforts to have the Conversion Shares
approved by the New York Stock Exchange Inc. ("NYSE"), and each other
exchange on which the Common Stock is listed, if any, for listing prior
to the earlier of (i) one year after the Closing Date and (ii) the
effectiveness of the Registration Statement;
(c) If either (i) the Conversion Price (as defined in the
Indenture) of the Securities meets the requirements of Rule
144A(d)(3)(i) or (ii) the Securities have been registered under the
Registration Statement, to use its best efforts to cause the Securities
to be accepted for clearance and settlement through the facilities of
DTC;
(d) If the Conversion Price of the Securities is an amount
such that the Securities comply with Rule 144A(d)(3)(i), for so long as
any of the Securities are "restricted securities" within the meaning of
Rule 144(a)(3) under the Securities Act, to provide to any holder of
the Securities or to any prospective purchaser of the Securities
designated by any holder, upon request of such holder or prospective
purchaser, information required to be provided by Rule 144A(d)(4) of
the Securities Act if, at the time of such request, the Company is not
subject to the reporting requirements under Section 13 or 15(d) of the
Exchange Act;
(e) To ensure that each of the Securities and the Conversion
Shares will bear, to the extent applicable, the legend required by the
Indenture;
9
(f) Not to, and will cause its respective affiliates not to,
sell, offer for sale or solicit offers to buy or otherwise negotiate in
respect of any "security" (as defined in the Securities Act) in a
transaction that could be integrated with the sale of the Securities in
a manner that would require the registration under the Securities Act
of the Securities;
(g) No later than 8:15 a.m. New York time on the first
business day after the Closing, to file a Current Report on Form 8-K
(the "8-K Filing") with the Commission reporting the closing of the
sale of the Securities hereunder and the transactions contemplated by
the Credit Agreement (the "Reported Transactions"). The disclosure
contained in the 8-K Filing will be as, and to the extent, deemed by
the Company to be required by applicable law, but will include all
terms of the Reported Transactions that the Company deems to be
material information to purchasers and sellers of the publicly traded
Common Stock under the federal securities laws. Such Current Report on
Form 8-K shall include this Agreement, the Indenture and the
Registration Rights Agreement and the Credit Agreement, the Warrant
Agreement, the Equity Registration Rights Agreement, the Option
Agreement (as defined in the Credit Agreement), the LLC Pledge
Agreement (as defined in the Credit Agreement) and the Stock Pledge
Agreement (as defined in the Credit Agreement).
(h) The Company will use the proceeds from the sale of the
Securities and the loans under the Credit Agreement for working
capital, conversion of $92 million from Tranche A Loans to Tranche B
Loans under, and as defined in, the Credit Agreement, repayment of
indebtedness and transaction expenses;
(i) The Company will take all actions and cause its
Subsidiaries to take all actions reasonably required to comply in all
material respects with applicable Utility Regulations and each order
issued pursuant thereto; provided that, the foregoing shall not prevent
the Company or a Subsidiary from challenging the validity or effect of
any Utility Regulation or order in any proceeding provided the manner
of such challenge could not reasonably be expected to cause a Material
Adverse Effect. For purposes of this Section 3(i), "Utility Regulation"
means any law, regulation or rule of the Federal government, any state,
or any agency or political subdivision of the foregoing which is
applicable to an entity by virtue of (i) such entity's ownership or
operation of assets used for the generation, transmission, distribution
or sale of electric energy, (ii) such entity's transportation of
natural or manufactured gas, gasoline, oil, or similar fuels, steam,
chilled water or other products resulting in regulation similar to that
imposed on the foregoing, (iii) such entity's engaging in the sale or
provision of electric energy, natural gas or similar fuels, steam,
water, chilled water, or telephone or other public utility services;
provided that, such term shall not include laws, regulations or rules
of general applicability with respect to protection of the environment,
hazardous waste, or public health or safety; and
(j) The Company will not register the Securities pursuant to
Section 12 of the Exchange Act, unless it is required pursuant to the
requirements of the Exchange Act to do so as a result of the number of
holders of the Securities.
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4. Expenses. The Company agrees to pay the following expenses,
whether or not the transactions contemplated by this Agreement are consummated
or this Agreement is terminated:
(a) the costs incident to the authorization, issuance, sale
and delivery of the Securities and the Conversion Shares, if
applicable, and any taxes payable in that connection;
(b) the costs of producing and distributing the Transaction
Documents;
(c) any applicable listing or other fees and expenses in
connection with the application for inclusion of the Conversion Shares
on the NYSE and any other exchange on which the Common Stock is listed,
if any;
(d) the fees and expenses of qualifying the Securities and
the Conversion Shares under the securities laws of any jurisdiction as
provided in Section 3(a) and, if requested, of preparing, printing and
distributing a U.S. Blue Sky memorandum;
(e) the fees and expenses (including fees and disbursements
of counsel, if applicable) of Company, its accountants, the Trustee and
the costs and charges of any registrar, transfer agent, paying agent or
conversion agent under the Indenture; and
(f) all other costs and expenses incident to the performance
of the obligations of the Company under this Agreement.
Except as provided in this Section 4 and in Section 7, the Purchasers shall pay
their own costs and expenses, and any transfer taxes on the Securities that they
may sell.
5. Conditions of each Purchaser's Obligations. The obligations of
each Purchaser acquiring Securities hereunder are subject to the accuracy, of
the representations and warranties of the Company contained herein, to the
performance by the Company of its obligations hereunder, and to each of the
following additional terms and conditions:
(a) Xxxxxx & Xxxxxxx, counsel to the Company, shall have
furnished to each Purchaser who is acquiring Securities hereunder one
or more written opinions addressed to each such Purchaser and dated the
Closing Date, in form and substance reasonably satisfactory to each
such Purchaser addressing such matters as are agreed upon with such
counsel.
(b) Xxxx Xxxxxxx & Xxxxxx, special counsel to the Company,
shall have furnished to each Purchaser who is acquiring Securities
hereunder one or more written opinions addressed to each such Purchaser
and dated the Closing Date, in form and substance reasonably
satisfactory to each such Purchaser addressing such matters as are
agreed upon with such counsel.
(c) Xxxxxx Xxxxxxxxxx & Xxxxxxxxx, special counsel to the
Company, shall have furnished to each Purchaser who is acquiring
Securities hereunder one or more
11
written opinions and memoranda addressed to each such Purchaser and dated
the Closing Date, in form and substance reasonably satisfactory to each such
Purchaser addressing such matters as are agreed upon with such counsel.
(d) Xxxxx X. Xxxxxxxxxxx, Esq., Senior Vice President and General
Counsel of the Company shall have furnished to each Purchaser who is
acquiring Securities hereunder his written opinion addressed to each such
Purchaser and dated the Closing Date, in form and substance reasonably
satisfactory to each such Purchaser.
(e) The Company shall have furnished to each Purchaser who is acquiring
Securities hereunder a certificate, dated the Closing Date, of an authorized
officer of the Company, in form and substance reasonably satisfactory to
each such Purchaser, stating that the representations, warranties and
agreements of the Company in Section 1 of this Agreement are true and
correct as of the date hereof and as of the Closing Date; and the Company
has complied in all respects with all its agreements contained herein to be
performed prior to or on the Closing Date.
(f) The Indenture (in form and substance reasonably satisfactory to
each Purchaser who is acquiring Securities hereunder) shall have been duly
executed and delivered by the Company and the Trustee (and a copy thereof
shall have been delivered to each Purchaser who is acquiring Securities
hereunder), and the Securities shall have been duly executed and delivered
by the Company and duly authenticated by the Trustee.
(g) The Company shall have executed and delivered to each Purchaser who
is acquiring Securities hereunder the Registration Rights Agreement (in form
and substance satisfactory to each such Purchaser), and the Registration
Rights Agreement shall be in full force and effect.
(h) The transactions contemplated by the Credit Agreement shall have
closed and evidence thereof shall have been delivered to each Purchaser who
is acquiring Securities hereunder.
(i) The Company shall have delivered to each Purchaser who is acquiring
Securities hereunder a certificate evidencing the incorporation and good
standing of the Company and each Subsidiary in such corporation's state of
incorporation issued by the Secretary of State of such state of
incorporation as of a date within ten days of the Closing Date.
(j) The Company shall have delivered to each Purchaser who is acquiring
Securities hereunder a certified copy of the Company's Articles of
Incorporation as certified by the Secretary of State of the State of
California within ten days of the Closing Date.
(k) The Company shall have delivered to each Purchaser who is acquiring
Securities hereunder a certificate, executed by the Secretary of the
Company, dated as of the Closing Date, as to (i) the resolutions authorizing
the transactions
12
contemplated hereby adopted by the Company's board of directors,
(ii) the Company's Articles of Incorporation and (iii) the Company's
Bylaws, each as in effect at the Closing.
The Company shall have furnished to each Purchaser who is acquiring
Securities hereunder such further information, certificates and documents as
each such Purchaser or its Counsel may reasonably request to evidence compliance
with the conditions set forth in this Section 5. All opinions, letters, evidence
and certificates mentioned above or elsewhere in this Agreement shall be deemed
to be in compliance with the provisions hereof only if they are in form and
substance reasonably satisfactory to counsel to each Purchaser who is acquiring
Securities hereunder.
6. Representations, Warranties and Agreements of the Purchasers.
Each Purchaser, represents and warrants to, and agrees with, the Company,
severally and not jointly and with respect to only itself (except with respect
to the representation and warranty set forth in Section 6(f) which shall only be
made by Xxxxxx Brothers Inc.), as follows:
(a) Such Purchaser is knowledgeable, sophisticated and
experienced in business and financial matters and qualifies as an
"accredited investor" as defined in Rule 501(a) of Regulation D and as
a "qualified institutional buyer" as defined in Rule 144A under the
Securities Act.
(b) Such Purchaser has been afforded access to information
about the Company and the financial condition, results of operations,
business, property, management and prospects of the Company sufficient
to enable it to evaluate its investment in the Securities. Such
Purchaser and its advisors, if any, have been afforded the opportunity
to ask questions of the Company. Such Purchaser has sought such
accounting, legal and tax advice as it has considered necessary to make
an informed investment decision with respect to its acquisition of the
Securities. Neither such access or questions nor any other due
diligence investigations conduction by such Purchaser or its advisors,
if any, or representatives shall modify, amend or affect such
Purchaser's right to rely on the Company's representations, warranties
and agreements contained in this Agreement, the Indenture, the
Registration Rights Agreement and the Securities.
(c) Such Purchaser understands that its investment in the
Securities involves a high degree of risk. Such Purchaser is able to
bear the economic risk of its investment in the Securities and is
presently able to afford the complete loss of such investment.
(d) Such Purchaser is acquiring the Securities solely for its
own account and not as a nominee or agent for any other person and not
with a view to any distribution thereof that violates the Securities
Act or the securities laws of any State of the United States or any
applicable jurisdiction; provided, however, that by making the
representations herein, such Purchaser does not agree to hold any of
the Securities for any minimum or other specific term and reserves the
right to dispose of the Securities at any time in accordance with or
pursuant to a registration statement or an exemption under the
Securities Act.
13
(e) Xxxxxx Brothers Inc. has not offered or sold the
Securities by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) of Regulation D,
including (i) any advertisement, article, notice or other communication
published in any newspaper, magazine or similar medium or broadcast
over television or radio, or (ii) any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising in the United States.
(f) Such Purchaser has all necessary power and authority to
execute and deliver this Agreement and perform its obligations
hereunder; and this Agreement and the transactions contemplated hereby
have been duly authorized by such Purchaser; assuming due
authorization, execution and delivery by the Company, this Agreement
constitutes a legally valid and binding agreement of such Purchaser,
enforceable against such Purchaser in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally.
(g) Such Purchaser is a resident of that jurisdiction
specified in its address for notices set forth below the signature of
such Purchaser where it appears on the signature page(s) of this
Agreement.
(h) Such Purchaser is not acquiring the Securities with
assets of any "employee benefit plan" (within the meaning of Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) that is subject to Title I of ERISA or Section 4975 of the
Internal Revenue Code of 1986, as amended.
(i) Assuming the capitalization of the Company set forth in
its most recent report filed under the Exchange Act, such Purchaser,
together with its "affiliates" (as defined in Rule 144 promulgated
under the Securities Act), is the beneficial owner (as defined in Rule
13d-3 promulgated under the Exchange Act) of not more than 4.9% of the
outstanding shares of Common Stock immediately after the purchase of
the Securities hereunder.
The Company and, for purposes of the opinions to be delivered to you
pursuant to Section 5 hereof, counsel to the Company, General Counsel to the
Company and counsel to the Purchasers, will rely upon the accuracy and truth of
the foregoing representations as to factual matters and agreements and each
Purchaser hereby consents to such reliance.
14
7. Conditions of the Company's Obligations. The obligations of the
Company to each of the Purchasers hereunder are subject to the accuracy, of the
representations and warranties of such Purchaser contained herein, to the
performance by such Purchaser of its obligations hereunder, the delivery by such
Purchaser of the Purchase Price in consideration of the Securities being
purchased by such Purchaser and to the closing with respect to such Purchaser of
the transactions contemplated by the Credit Agreement.
8. Indemnification.
(a) The Company shall indemnify and hold harmless each
Purchaser who is acquiring Securities hereunder, its officers and
employees and each person, if any, who controls such Purchaser within
the meaning of the Securities Act, from and against any loss, claim,
damage or liability, joint or several, or any action in respect thereof
(including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of the Securities)
("Liabilities"), to which such Purchaser, officer, employee or
controlling person may become subject, insofar as such Liability arises
out of, or is based upon, any breach of any representation or warranty
made by it in this Agreement, and shall reimburse such Purchaser and
each such officer, employee or controlling person promptly upon demand
for any legal or other expenses reasonably incurred by such Purchaser,
officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such
Liability as such expenses are incurred. The foregoing indemnity
agreement is in addition to any liability which the Company may
otherwise have to such Purchaser or to any officer, employee or
controlling person of such Purchaser.
(b) Promptly after receipt by a Purchaser who is acquiring
Securities hereunder under this Section 8 of notice of any claim or the
commencement of any action, such Purchaser shall, if a claim in respect
thereof is to be made against the Company under this Section 8, notify
the Company in writing of the claim or the commencement of that action;
provided, however, that the failure to notify the Company shall not
relieve it from any liability which it may have under this Section 8
except to the extent it has been materially prejudiced by such failure
and, provided, further, that the failure to notify the Company shall
not relieve it from any liability which it may have to such Purchaser
otherwise than under this Section 8. If any such claim or action shall
be brought against such Purchaser, and it shall notify the Company
thereof, the Company shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel
satisfactory to such Purchaser. After notice from the Company to such
Purchaser of its election to assume the defense of such claim or
action, the Company shall not be liable to such Purchaser under this
Section 8 for any legal or other expenses subsequently incurred by such
Purchaser in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that such Purchaser shall
have the right to employ separate counsel to represent jointly such
Purchaser and its respective officers, employees and controlling
persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by such Purchaser against the
Company under this Section 8 if, in the reasonable judgment of such
Purchaser it is advisable for such Purchaser and such officers,
employees and controlling persons to be jointly represented
15
by separate counsel, and in that event the fees and expenses of such
separate counsel shall be paid by the Company. No indemnifying party
shall, (i) without the prior written consent of the indemnified parties
(which consent shall not be unreasonably withheld), settle or
compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent includes
an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding, or (ii) be
liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but
if settled with its written consent or if there be a final judgment of
the plaintiff in any such action, the Company agrees to indemnify and
hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(c) To the extent that the undertaking in this Section 8 by
the Company may be unenforceable for any reason, the Company shall make
the maximum contribution to the payment and satisfaction of the
Purchasers who are acquiring Securities hereunder which is permissible
under applicable law.
9. Notices, Etc. All statements, requests, notices and agreements
hereunder shall be in writing, , shall be delivered or sent by mail, telex or
facsimile transmission:
(a) if to the Company to PG&E Corporation, Xxx Xxxxxx, Xxxxx
Xxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention:
Assistant Treasurer (Fax: 000-000-0000, Telephone: 000-000-0000), with
copies to PG&E Corporation, Xxx Xxxxxx, Xxxxx Xxxxx, Xxxxx 0000, Xxx
Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Chief Counsel - Corporate (Fax:
000-000-0000, Telephone 000-000-0000) and Xxxxxx & Xxxxxxx, 000 Xxxx
0/xx/ Xxxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, Attention: Xxx Xxxxxx,
Esq. (Fax: 000-000-0000, Telephone: 000-000-0000); and
(b) if to a Purchaser, to the address for such Purchaser set
forth below such Purchaser's signature on the signature page(s) hereof.
16
10. Persons Entitled to Benefit of Agreement. This Agreement will
inure to the benefit of and be binding upon the Purchasers, the Company and
their respective successors and, with respect to the Purchasers, their Permitted
Assigns. This Agreement and the terms and provisions hereof are for the sole
benefit of only those persons, except that the representations, warranties,
indemnities and agreements of the Company contained in this Agreement will also
be deemed to be for the benefit of the officers and employees of each Purchaser
and the person or persons, if any, who control such Purchaser within the meaning
of Section 15 of the Securities Act. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 10, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein. For the purposes of
this Section 10, a "Permitted Assign" means: (i) a Purchaser, (ii) an
"affiliate" of a Purchaser that is a holder of Securities, (iii) any entity
which has the same investment advisor or manager or trading advisor or manager
as any of the Persons described in the immediately preceding clauses and (iv) a
pledgee (or a transferee of such pledgee) in connection with a bona fide margin
account or other loan or financing arrangement secured by the Securities. For
the purposes of this Section 10, the term "affiliate" means, with respect to any
Person, another Person, directly or indirectly, with (A) controls that Person,
(B) is controlled by that Person or (C) is under common control with that
Person. "Control" or "controls" for the purposes of this Section 10 means that
Person has the power, directly or indirectly, to conduct or govern the policies
of another Person.
11. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Purchasers contained in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, will survive the delivery of and payment for the Securities;
provided, however, that the representations and warranties contained in Section
1 paragraphs (d), (g), (h), (j), (k) and (l) shall expire on the second
anniversary of the date of this Agreement and will remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any of them or any person controlling any
of them.
12. Definition of the Term "Business Day". For purposes of this
Agreement, "business day" means any day other than a Saturday or a Sunday or any
other day on which banking institutions in the City of New York or the City of
San Francisco are authorized or obligated by law or regulation to close.
13. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
14. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument; provided that a facsimile
signature shall be considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the signature were an
original, not a facsimile signature.
15. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
17
16. Amendment and Waiver. This Agreement may not be amended,
modified or supplemented, and waivers or consents to or departures from the
provisions hereof, may not be given, without the written agreement of (i) the
Company and (ii) the Purchasers and their respective successors and Permitted
Assigns holding a majority of the then outstanding Securities held by the
Purchasers or their respective successors and Permitted Assigns or, in the event
that no such persons hold any Securities, then all of the Purchasers or their
respective successors and Permitted Assigns.
[Signature pages follow]
18
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first written above.
Very truly yours,
PG&E CORPORATION
By: _______________________________
Name:
Title:
S-1
Accepted and agreed by:
Xxxxxx Brothers Inc.
By:_______________________
Name:
Title:
Address for notices:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxx, Managing Director
Xxxxxxxxx: (000) 000-0000
with a copy to:
Xxxxxxx Xxxxxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx, Esq.
Facsimile: 000-000-0000
S-2
Xxxxxxx Investment Fund Ltd.
By: _______________________
Name:
Title:
Address for notices:
c/o Citadel Investment Group, L.L.C.
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxxx and
Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
000 Xxxx Xxxxxx Xxxxxx,
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Facsimile: 000-000-0000
Telephone: 000-000-0000
S-3
Citadel Credit Trading Ltd.
By: _______________________
Name:
Title:
Address for notices:
c/o Citadel Investment Group, L.L.C.
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxxx and
Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
000 Xxxx Xxxxxx Xxxxxx,
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Facsimile: 000-000-0000
Telephone: 000-000-0000
S-4
Citadel Equity Fund Ltd.
By: _______________________
Name:
Title:
Address for notices:
c/o Citadel Investment Group, L.L.C.
000 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxxx Xxxxx and
Xxxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxx Xxxxx Xxxxxxxx
000 Xxxx Xxxxxx Xxxxxx,
Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Facsimile: 000-000-0000
Telephone: 000-000-0000
S-5
SCHEDULE I
--------------------------------------------------------------------------------
Name of Purchaser Principal Amount of 7.50%
Convertible Subordinated
Notes
--------------------------------------------------------------------------------
Xxxxxx Brothers Inc. $ 0.00
--------------------------------------------------------------------------------
Xxxxxxx Investment Fund Ltd. $ 29,000,000
--------------------------------------------------------------------------------
Citadel Credit Trading Ltd. $ 15,000,000
--------------------------------------------------------------------------------
Citadel Equity Fund Ltd. $236,000,000
--------------------------------------------------------------------------------
Total $280,000,000
--------------------------------------------------------------------------------
ANNEX A
[FORM OF INDENTURE]
A-1
ANNEX B
[FORM OF REGISTRATION RIGHTS AGREEMENT]
A-1
