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CONTRIBUTION AND SUBSCRIPTION AGREEMENT
BY AND AMONG
EMW ENERGY SERVICES CORP.
ENRON ENERGY SERVICES, LLC
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.
CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM
ONTARIO TEACHERS' PENSION PLAN BOARD
AND
▇▇▇▇▇▇ ENERGY SERVICES, LLC
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TABLE OF CONTENTS
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PAGE
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ARTICLE I
DEFINITIONS AND GENERAL INTERPRETATION
1.1 Definitions....................................................................................1
1.2 Rules of Construction..........................................................................4
1.3 Headings.......................................................................................4
ARTICLE II
CONTRIBUTIONS AND RELATED TRANSACTIONS
2.1 Contributions by EES...........................................................................5
2.2 Cash Contributions by the Investors............................................................7
2.3 Stockholders Agreement.........................................................................8
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EES
3.1 Organization; Good Standing of EES, ▇▇▇▇▇▇ and the Company; Capitalization.....................8
3.2 Authority......................................................................................9
3.3 Due Execution and Enforceability..............................................................10
3.4 No Restrictions Against Performance...........................................................10
3.5 Third-Party and Governmental Consents.........................................................10
3.6 Litigation....................................................................................10
3.7 No Operating History..........................................................................11
3.8 No Broker's Fees..............................................................................11
3.9 Entire Business...............................................................................11
3.10 Contracts.....................................................................................11
3.11 Compliance with Laws..........................................................................12
3.12 Books and Records.............................................................................12
3.13 Disclosure....................................................................................12
3.14 Intellectual Property.........................................................................12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
4.1 Organization; Good Standing...................................................................13
4.2 Authority.....................................................................................13
4.3 Due Execution and Enforceability..............................................................13
4.4 No Restrictions Against Performance...........................................................13
4.5 Third-Party and Governmental Consents.........................................................14
4.6 Accredited Investors..........................................................................14
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ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Full Access...................................................................................15
5.2 Confidentiality...............................................................................15
5.3 Publicity.....................................................................................16
5.4 Expenses......................................................................................16
5.5 Reimbursement to EES..........................................................................16
5.6 Conduct of Business Prior to Closing..........................................................16
5.7 Compliance with Conditions; Commercially Reasonable Efforts...................................16
5.8 HSR Act Notification..........................................................................16
5.9 Consents and Approvals........................................................................17
5.10 Further Assurances............................................................................17
5.11 Certain Regulatory Matters....................................................................17
5.12 Employee Matters..............................................................................17
5.13 Termination...................................................................................18
ARTICLE VI
CLOSING; CONDITIONS TO CLOSING
6.1 Location and Time of Closing..................................................................18
6.2 Conditions to Obligations of EES, ▇▇▇▇▇▇ and the Company......................................18
6.3 Conditions to Obligations of the Investors....................................................19
ARTICLE VII
INDEMNIFICATION
7.1 Survival......................................................................................20
7.2 EES's Agreement to Indemnify..................................................................20
7.3 Investors' Agreement to Indemnify.............................................................20
7.4 Matters Involving Third Parties...............................................................21
7.5 Exclusive Remedy; Limitation on Damages.......................................................22
7.6 Express Negligence Clause.....................................................................22
ARTICLE VIII
GENERAL PROVISIONS
8.1 Entire Agreement; Termination of Prior Agreement..............................................23
8.2 Waivers and Amendments........................................................................23
8.3 Notices.......................................................................................23
8.4 Governing Law; Venue; Submission to Service of Process........................................25
8.5 Binding Effect; Assignment....................................................................25
8.6 Representation by Counsel.....................................................................26
8.7 Severability..................................................................................26
8.8 Counterparts..................................................................................26
8.9 Specific Performance..........................................................................26
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EXHIBITS:
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EXHIBIT 1.1(a) - Amended and Restated Certificate of Incorporation
EXHIBIT 1.1(b) - Business Opportunity Agreement
EXHIBITS 1.1(c)(i) AND (ii) - Master Purchase and Sales Agreements
EXHIBIT 1.1(d) - Form of Investor Warrant
EXHIBIT 1.1(e) - Noncompetition Agreement
EXHIBIT 1.1(f) - Services Agreement
EXHIBIT 1.1(g) - Software Agreement
EXHIBIT 1.1(h) - Form of Special Warrant
EXHIBIT 1.1(i) - Stockholders Agreement
EXHIBIT 6.2 - Opinions to be delivered on behalf of each Investor
EXHIBIT 6.3 - Opinions to be delivered on behalf of Enron, EES, ▇▇▇▇▇▇ and
the Company
SCHEDULES:
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SCHEDULE 2.1(a)(i) - Contributed Contracts
SCHEDULE 3.1 - Company Obligations to Issue Common Stock
SCHEDULE 3.4 - Restrictions Against Performance
SCHEDULE 3.5 - Required Approvals
SCHEDULE 3.6 - Litigation
SCHEDULE 3.11 - Compliance with Laws
SCHEDULE 5.12 - Employees
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CONTRIBUTION AND SUBSCRIPTION AGREEMENT
THIS CONTRIBUTION AND SUBSCRIPTION AGREEMENT, dated as of December 23,
1999 (this "Agreement") is by and among 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 ▇.▇., ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇, ▇.▇, ▇▇▇ EAB Partners, L.P., DLJ ESC II, L.P. (together,
the "DLJMB Investors"), G.E. Capital Equity Investments, Inc. ("GE"), the
California Public Employees' Retirement System ("CalPERS"), the Ontario
Teachers' Pension Plan Board ("OTP") (together, the "Investors"), Enron Energy
Services, LLC, a Delaware limited liability company ("EES"), ▇▇▇▇▇▇ Energy
Services, LLC, a Delaware limited liability company ("▇▇▇▇▇▇"), and EMW Energy
Services Corp. (the "Company").
WHEREAS, EES has agreed to contribute or cause to be contributed to the
Company certain assets in exchange for shares of Common Stock and Special
Warrants on the terms set forth herein;
WHEREAS, the Investors have agreed to contribute to the Company an
aggregate of $100 million cash in exchange for shares of Common Stock, Special
Warrants and Investor Warrants on the terms set forth herein; and
WHEREAS, the purpose of the Company shall be to engage in the retail
marketing and retail sale of natural gas, electricity and other commodities,
products and services to residential and small commercial customers in the
United States;
NOW, THEREFORE, for and in consideration of the foregoing premises,
mutual covenants, rights and obligations set forth herein, the benefits to be
derived therefrom and for other good and valuable consideration, the receipt and
sufficiency of which are hereby expressly acknowledged by the parties hereto,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND GENERAL INTERPRETATION
1.1 DEFINITIONS. The following terms shall be used in this
Agreement with the meanings set forth in this Section 1.1:
"AMENDED CHARTER" means the Amended and Restated Certificate of
Incorporation of the Company to be adopted in the form attached as EXHIBIT
1.1(a) hereto.
"AOL AGREEMENT" means the Interactive Marketing Agreement dated as of
November 24, 1999 between the Company and America Online, Inc.
"AOL SUBSCRIPTION AGREEMENT" means the Subscription Agreement to be
entered into between the Company and America Online, Inc at the Closing in the
form attached to the AOL Agreement.
"ASSUMED LIABILITIES" has the meaning set forth in Section 2.1(c).
"BUSINESS" means the business of selling natural gas and electricity to
residential customers that is currently conducted by EES.
"BUSINESS OPPORTUNITY AGREEMENT" means the Business Opportunity
Agreement to be entered into between the Company and Enron Corp. in the form
attached as EXHIBIT 1.1(b) hereto.
"CLOSING" has the meaning set forth in Section 6.1.
"COMMODITY SUPPLY AGREEMENTS" means the Master Purchase and Sales
Agreements to be entered into between the Company and Enron Energy Services,
Inc. in the forms attached as EXHIBITS 1.1(c)(i) AND (ii) hereto.
"COMMON STOCK" means the voting common stock, par value $.01 per share,
of the Company, having the terms set forth in the Amended Charter.
"COMPANY INTELLECTUAL PROPERTY" means, to the extent developed or used
by EES or its subsidiaries and related solely to the business of selling natural
gas and electricity and related products to residential customers as currently
contemplated to be engaged in by the Company, (i) all trademarks, service marks,
trade dress, domain names, logos, trade names, together with all translations,
adaptations, derivations, and combinations thereof and including all goodwill
associated therewith, and all applications, registrations and renewals in
connection therewith, (ii) all copyrightable works, all copyrights, and all
applications, registrations and renewals in connection therewith, (iii) all
trade secrets and confidential information (including ideas, research and
development, know-how, formulas, compositions, manufacturing and production
processes and techniques, technical data, designs, drawings, specifications,
customer and supplier lists, pricing and cost information, books and records,
and business and marketing plans and proposals), (iv) all other proprietary
rights, (v) all copies and tangible embodiments thereof (in whatever form or
medium), and (vi) all rights granted or retained in licenses in respect of any
of the foregoing; PROVIDED that any of the foregoing that is transferred or
licensed in or covered by the Software Agreement shall not be deemed to be
Company Intellectual Property for purposes of this Agreement.
"CONTRIBUTED ASSETS" has the meaning set forth in Section 2.1.
"CONTRIBUTED CONTRACTS" has the meaning set forth in Section 2.1(a)(i).
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"DAMAGES" has the meaning set forth in Section 7.2(a).
"EXCLUDED LIABILITIES" has the meaning set forth in Section 2.1(d).
"GOVERNMENTAL AUTHORITY" means any court, judicial or quasi-judicial or
administrative agency or body or commission or other governmental or other
regulatory authority or agency.
"HSR ACT" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended.
"INDEMNIFIED PARTY" has the meaning set forth in Section 7.4.
"INDEMNIFYING PARTY" has the meaning set forth in Section 7.4.
"INVESTOR WARRANTS" means the warrants to purchase shares of Non-Voting
Common Stock having the terms set forth in the form of warrant attached as
EXHIBIT 1.1(d) hereto.
"LAWS" means all (a) federal, state, local or foreign laws, statutes,
ordinances, judgments, decrees, rules and regulations, (b) orders, (c) permits
and (d) agreements with federal, state, local or foreign regulatory authorities
or agencies to which EES, the Company, ▇▇▇▇▇▇ or an Investor, as the case may
be, is a party or by which it is bound.
"LIEN" means, with respect to any asset, any mortgage, lien (including
mechanics, warehousemen, laborers and landlords liens), claim, pledge, charge,
security interest, preemptive right, right of first refusal, option, judgment or
encumbrance of any kind in respect of or affecting such asset.
"MATERIAL ADVERSE EFFECT" means any event, condition, effect or change
(or series of such occurrences, as a whole or individually) that is or would be
materially adverse to the business, results of operations, condition (financial
or otherwise), business, assets, liabilities or prospects of the Company.
"NONCOMPETITION AGREEMENT" means the Noncompetition Agreement to be
entered into among the Company, EES and Enron Corp. in the form attached as
EXHIBIT 1.1(e) hereto.
"NON-VOTING COMMON STOCK" means the non-voting common stock, par value
$.01 per share, of the Company, having the terms set forth in the Amended
Charter.
"ORIGINAL TERMINATION DATE" has the meaning set forth in Section
5.13(b).
"OTHER AGREEMENTS" means the Business Opportunity Agreement, the
Commodity Supply Agreements, the Software Agreement, the Noncompetition
Agreement, the Services Agreement and the Stockholders Agreement.
3
"PERMITS" has the meaning set forth in Section 3.5.
"REQUIRED APPROVALS" has the meaning set forth in Section 3.5.
"SECURITIES" has the meaning set forth in Section 4.6(a).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SERVICES AGREEMENT" means the Master Services Agreement to be entered
into among the Company, Enron Corp. and EES in the form attached as EXHIBIT
1.1(f) hereto.
"SOFTWARE AGREEMENT" means the Software Agreement to be entered into
between the Company and EES in the form attached as EXHIBIT 1.1(g) hereto.
"SPECIAL WARRANTS" means the warrants to purchase shares of Non-Voting
Common Stock having the terms set forth in the form of warrant attached as
EXHIBIT 1.1(h) hereto.
"STOCKHOLDERS AGREEMENT" means the Stockholders Agreement to be entered
into among the Company, EES, ▇▇▇▇▇▇ and the Investors in the form attached as
EXHIBIT 1.1(i) hereto.
"WARRANTS" has the meaning set forth in Section 3.1(f).
1.2 RULES OF CONSTRUCTION. The definitions in Section 1.1 herein
and elsewhere in this Agreement shall apply equally to both the singular and
plural forms of the terms defined. Whenever the context may require, any pronoun
shall include the corresponding masculine, feminine and neuter forms. The words
"include," "includes" and "including" shall be deemed to be followed by the
phrase "without limitation." The words "herein," "hereof," "hereto" and
"hereunder" and words of similar import refer to this Agreement in its entirety
and not to any part hereof unless the context shall otherwise require. All
references herein to "Sections" and "Articles" shall be deemed references to
sections and articles of this Agreement unless the context shall otherwise
require. Unless the context shall otherwise require, any references to any
agreement or other instrument or statute or regulation are to it as amended and
supplemented from time to time (and, in the case of a statute or regulation, to
any corresponding provisions of successor statutes or regulations).
1.3 HEADINGS. The Article and Section headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.
4
ARTICLE II
CONTRIBUTIONS AND RELATED TRANSACTIONS
2.1 CONTRIBUTIONS BY EES
(a) CONTRIBUTED ASSETS. Subject to the terms and conditions of
this Agreement, at the Closing, EES shall contribute or cause to be contributed
to the Company (or any designated subsidiary of the Company), and the Company
(or such subsidiary) shall accept, the following (collectively, the "Contributed
Assets"):
(i) the assignment free and clear of all Liens and
adverse claims of the retail gas and electricity sales contracts listed
on SCHEDULE 2.1(a)(i) (the "Contributed Contracts"), PROVIDED, HOWEVER,
the parties acknowledge and agree that such contracts may not be
actually assigned to the Company until receipt of required approvals
from certain Governmental Authorities and that, until such contracts
may lawfully be assigned to the Company or a subsidiary thereof, EES
will take such actions and enter into such agreements as shall be
necessary to transfer the economic benefits of such contracts to the
Company (or a designated subsidiary thereof) effective as of the
Closing Date, and the Company (or such subsidiary) will take such
actions and enter into such agreements as shall be necessary to bear
the economic burden of such contracts effective as of the Closing Date;
(ii) the ownership rights to the risk management systems
described in and pursuant to the terms of the Software Agreement;
(iii) the services to be provided by EES and its affiliates
pursuant to the Services Agreement that are to be provided free of
charge for the initial periods set forth in the Services Agreement; and
(iv) all right, title and interest of EES and its
subsidiaries in and to the Company Intellectual Property.
(b) OTHER AGREEMENTS OF EES. Subject to the terms and conditions
of this Agreement, at or prior to the Closing:
(i) EES shall, and shall cause the Company and the other
applicable parties to, enter into the Services Agreement;
(ii) EES shall, and shall cause the Company to, enter into
the Software Agreement;
(iii) EES shall cause the Company and the other applicable
parties to enter into the Commodity Supply Agreements;
5
(iv) EES shall, and shall cause the Company and Enron
Corp. to, enter into the Business Opportunity Agreement;
(v) EES shall, and shall cause the Company and Enron
Corp. to, enter into the Noncompetition Agreement; and
(vi) EES shall take such actions as shall be required to
cause the Amended Charter to be adopted, filed and made effective under
the Delaware General Corporation Law.
(c) ASSUMPTION OF LIABILITIES. Subject to the terms and conditions
of this Agreement, at the Closing the Company will assume the obligations of EES
under the Contributed Contracts required to be performed after the Closing Date
(the "Assumed Liabilities") by executing an undertaking in form reasonably
satisfactory to EES and the Investors, which undertaking shall be effective upon
assignment of such Contributed Contracts to the Company or its designated
subsidiary as contemplated by Section 2.1(a).
(d) EXCLUSION OF LIABILITIES. Notwithstanding any other provision
of this Agreement, the Company shall not assume or have any liability hereunder
with respect to any other liabilities or obligations of EES not specifically
included in the Assumed Liabilities, whether known or unknown, liquidated or
unliquidated, contingent or fixed (the "Excluded Liabilities"), including,
without limitation:
(i) liabilities arising out of the operation of the
Business or ownership of the Contributed Assets prior to the Closing
Date;
(ii) liabilities arising out of any other businesses
operated and assets owned by EES, whether incurred before or after the
Closing Date; and
(iii) liabilities or obligations for EES to pay any taxes
of any kind or nature, including any interest or penalties imposed with
respect hereto, and including any taxes incurred by EES arising out of
the operation of the Business or ownership of the Contributed Assets
prior to the Closing Date.
All Excluded Liabilities shall be paid, performed and discharged by EES as and
when due.
(e) ISSUANCE OF STOCK AND WARRANTS TO EES AND ▇▇▇▇▇▇. In
consideration for all of the foregoing, at the Closing, subject to the terms and
conditions of this Agreement, the Company will (i) issue to EES 49,000 shares of
Common Stock and 225,000 Special Warrants, and (ii) issue to EES 25,000 shares
of Common Stock, which EES will promptly contribute to ▇▇▇▇▇▇.
6
2.2 CASH CONTRIBUTIONS BY THE INVESTORS.
(a) CASH CONTRIBUTIONS. Subject to the terms and conditions of
this Agreement, at the Closing, the Investors shall contribute as a capital
contribution to the Company, and the Company shall accept from the Investors,
the following cash contributions:
Investor Cash Contribution
-------- -----------------
DLJMB Investors $35,000,000
GE $35,000,000
CalPERS $15,000,000
OTP $15,000,000
Such contributions shall be made by wire transfer of immediately available funds
to an account or accounts designated by the Company in writing and at least two
(2) Delaware business days prior to Closing.
(b) ISSUANCE OF STOCK AND WARRANTS TO THE INVESTORS. In
consideration for the foregoing, at the Closing, subject to the terms and
conditions of this Agreement, the Company will issue to the Investors the number
of shares of Common Stock, Special Warrants and Investor Warrants set forth
below:
Shares of Special Investor
Investor Common stock Warrants Warrants
-------- ------------ -------- --------
DLJMB Investors 8,750 26,250 18,065
GE 8,750 26,250 18,065
CalPERS 3,750 11,250 7,742
OTP 3,750 11,250 7,742
(c) ALLOCATION AMONG DLJMB INVESTORS. The DLJMB Investors jointly
agree that the cash contributions to be made by the DLJMB Investors pursuant to
Section 2.2(a) above and the securities to be issued to the DLJMB Investors
pursuant to Section 2.2(b) above shall be allocated among the DLJMB Investors in
such manner as the DLJMB Investors shall advise the Company at least 3 business
days prior to Closing.
(d) Notwithstanding anything herein to the contrary, no party
shall have any liability to the other parties for any delay in fulfilling such
party's funding obligations at Closing that is caused by computer hardware or
software failures commonly referred to as "Year 2000" problems, provided any
such delay is remedied as soon as possible.
7
2.3 STOCKHOLDERS AGREEMENT. At the Closing, subject to the terms
and conditions of this Agreement, EES, ▇▇▇▇▇▇, the Company and each of the
Investors will enter into the Stockholders Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EES
EES represents and warrants to each of the Investors that:
3.1 ORGANIZATION; GOOD STANDING OF EES, ▇▇▇▇▇▇ AND THE COMPANY;
CAPITALIZATION.
(a) Each of EES and ▇▇▇▇▇▇ is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware, and has the limited liability company power and authority to own,
lease and operate its properties and assets and to carry on its business as
presently conducted.
(b) The Company is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, and has the
corporate power and authority to own, lease and operate its properties and
assets and to carry on its business as presently conducted. The Company is duly
qualified to do business and is in good standing in each jurisdiction in which
the ownership of the Contributed Assets requires such qualification, except
where the failure so to qualify and be in good standing would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect.
(c) The authorized membership interests of ▇▇▇▇▇▇ at Closing will
consist of Class A membership interests and Class B membership interests. At
Closing, EES will own 49 percent of the outstanding Class A membership interests
in ▇▇▇▇▇▇ and 100 percent of the outstanding Class B membership interests in
▇▇▇▇▇▇, and LJM 2 Co-Investment L.P. ("LJM") will own 51 percent of the
outstanding Class A membership interests in ▇▇▇▇▇▇. As of Closing, EES will be
the managing member of ▇▇▇▇▇▇. At Closing, there will be no outstanding options,
warrants, commitments, agreements or any other rights of any character entitling
any person or entity to acquire membership interests or securities convertible
into, or exchangeable for, membership interests in ▇▇▇▇▇▇. Except for activities
incident to the transactions contemplated by this Agreement, ▇▇▇▇▇▇ will not
have engaged in any business activities of any type whatsoever at or prior to
Closing. At Closing, ▇▇▇▇▇▇ will have no assets (other than minimum required
capitalization) or liabilities. At Closing, the limited liability company
agreement of ▇▇▇▇▇▇ will provide that, prior to the earlier of an Initial Public
Offering (as defined in the Stockholders Agreement) or five years from the
Closing Date, neither of the owners thereof may transfer their interests in
▇▇▇▇▇▇, except that such agreement will provide that (i) EES and LJM may
transfer their respective interests to an Affiliate of EES or Enron Corp. or
▇▇▇▇▇▇ if, but only if, at least 80% of the economic and voting interest
represented by such transferred interests continue to be held after such
transfer, directly or indirectly, by EES or Enron Corp., and (ii) EES may
transfer such interests in connection with a transfer in which EES or Enron
8
Corp. and their respective Affiliates retain substantially all of the economic
risks and benefits of ownership of such transferred membership interests.
(d) The authorized capital stock of the Company consists solely of
10,000 shares of Common Stock, par value $.01 per share, of which 1,000 shares
are issued and outstanding. Immediately following the Closing, the authorized
capital stock of the Company will consist of 1,000,000 shares of Common Stock of
which 100,000 will be issued and outstanding, (ii) 1,000,000 shares of
Non-Voting Common Stock, of which no shares will be issued and outstanding, and
(iii) 50,000 shares of preferred stock, par value $.01 per share, none of which
will be issued and outstanding. Each share of Common Stock and Non-Voting Common
Stock to be issued pursuant to this Agreement has been duly authorized, and,
upon payment therefor as contemplated by this Agreement, will be validly issued,
fully paid and non-assessable, and the issuance thereof will be free and clear
of any Liens (other than those arising under the Stockholders Agreement), and
will not have been subject to any preemptive rights or made in violation of any
applicable Law. The Company does not have any subsidiaries, and does not own any
equity interest in any other entity, except that prior to Closing, the Company
may form one or more wholly-owned subsidiaries for purposes of receiving the
Contributed Assets as contemplated by Section 2.1(a).
(e) EES owns 1,000 shares of Common Stock of the Company, which
constitutes all of the outstanding shares of capital stock in the Company. There
are no outstanding options, warrants, commitments, agreements or any other
rights of any character entitling any person or entity to acquire shares of
capital stock or securities convertible or exchangeable for capital stock in the
Company except for the Company's obligation to issue up to 12,903 shares of
Common Stock pursuant to the AOL Subscription Agreement and as contemplated by
this Agreement or as set forth on SCHEDULE 3.1 hereto.
(f) At Closing, the Investor Warrants and the Special Warrants
(together, the "Warrants") will be duly authorized and validly issued. At
Closing, the Common Stock or Non-Voting Common Stock, as the case may be, to be
issued, upon valid exercise of the Warrants in accordance with their terms, will
be duly authorized and adequately reserved in contemplation of the exercise of
the Warrants and, when issued and delivered in accordance with the terms of the
Warrants, will be validly issued, fully paid, non-assessable and free and clear
of all Liens (other than those arising under the Stockholders Agreement), and
the issuance thereof will not have been subject to any preemptive rights or made
in violation of any applicable Law.
3.2 AUTHORITY. Each of EES, ▇▇▇▇▇▇ and the Company has the
requisite limited liability or corporate power and authority to execute, deliver
and perform its obligations under this Agreement and the Other Agreements to
which it is a party and to consummate the transactions contemplated hereby and
thereby. Each of EES, ▇▇▇▇▇▇ and the Company have taken all necessary limited
liability company or corporate action to authorize the execution, delivery and
performance of this Agreement and the Other Agreements to which it is a party,
subject to the filing of the Amended Charter in accordance with the Delaware
General Corporation Law.
9
3.3 DUE EXECUTION AND ENFORCEABILITY. This Agreement constitutes a
legal, valid and binding obligation of EES, ▇▇▇▇▇▇ and the Company enforceable
against EES, ▇▇▇▇▇▇ and the Company in accordance with its terms, and the Other
Agreements to which EES, ▇▇▇▇▇▇ and the Company are party, when executed and
delivered by all parties thereto, will constitute legal, valid and binding
obligations of EES, ▇▇▇▇▇▇ and the Company, as applicable, enforceable against
EES, ▇▇▇▇▇▇ and the Company, as applicable, in accordance with their respective
terms, in each case except as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application referring to or affecting enforcement of creditors' rights and
general principles of equity.
3.4 NO RESTRICTIONS AGAINST PERFORMANCE. Except as set forth in
SCHEDULE 3.4 hereto, neither the execution, delivery nor performance of this
Agreement or the Other Agreements by EES, ▇▇▇▇▇▇ or the Company nor the
consummation by EES, ▇▇▇▇▇▇ or the Company of the transactions contemplated by
this Agreement or the Other Agreements will, with or without the giving of
notice or the passage of time, or both, violate any provisions of, conflict
with, result in a breach of, constitute a default under (or give rise to any
right of termination, cancellation or acceleration), or result in the creation
or imposition of any Lien under: (a) the organizational documents of EES, ▇▇▇▇▇▇
or the Company; (b) any Law that is applicable to EES, ▇▇▇▇▇▇, the Company or
any of their respective properties or assets; (c) any contract, indenture,
instrument, agreement, mortgage, lease, right or other obligation or restriction
to which EES, ▇▇▇▇▇▇ or the Company is a party or by which EES, ▇▇▇▇▇▇ or the
Company or any of their respective properties or assets is or may be bound; or
(d) any order, judgment, writ, injunction, decree, license, franchise, permit or
other authorization of any Governmental Authority by which EES, ▇▇▇▇▇▇ or the
Company or any of their respective properties or assets are or may be bound,
except in the case of clauses (b) and (c), as would not individually or in the
aggregate have a Material Adverse Effect on the Company or materially impair the
ability of EES, ▇▇▇▇▇▇ or the Company to consummate the transactions
contemplated hereby.
3.5 THIRD-PARTY AND GOVERNMENTAL CONSENTS. Except as set forth in
SCHEDULE 3.5 hereto, no approval, consent, waiver, order or authorization of, or
registration, qualification, declaration, or filing with, or notice to, any
Governmental Authority or other third party is required to be made or obtained
on the part of EES, ▇▇▇▇▇▇ or the Company in connection with the execution and
delivery of this Agreement or the Other Agreements to which they are a party or
the consummation of the transactions contemplated hereby or thereby. SCHEDULE
3.5 hereto sets out all permits, licenses, approvals, consents, certificates,
waivers, orders and authorizations ("Permits") from Governmental Authorities or
third parties necessary to be made or obtained to enable the Company to conduct
the Business as of Closing ("Required Approvals").
3.6 LITIGATION. Except as set forth in SCHEDULE 3.6, there is no
judicial or administrative action, suit, proceeding (whether adjudicatory,
rule-making, licensing or otherwise) or investigation pending or, to the
knowledge of EES, threatened in law or equity against EES, ▇▇▇▇▇▇ or the
10
Company, relating to the Company, the Contributed Assets or the transactions
contemplated by this Agreement before any Governmental Authority, that would
adversely affect the Company, the Contributed Assets or the ability of EES,
▇▇▇▇▇▇ or the Company to consummate the transactions contemplated hereby or to
carry on the Business as currently contemplated.
3.7 NO OPERATING HISTORY. The Company was formed on November 17,
1999 and has not conducted any business operations except execution of the AOL
Agreement and operations incident to the transactions contemplated by this
Agreement, and the Company has no assets (other than the minimum required
capitalization) or liabilities except as contemplated by the AOL Agreement.
3.8 NO BROKER'S FEES. No agent, broker or other person is or may
be entitled to a commission or finder's fee from the Company in connection with
the transactions contemplated by this Agreement.
3.9 ENTIRE BUSINESS. The Contributed Assets, together with the
services to be provided, or rights to be obtained, pursuant to the Other
Agreements, constitute all the assets, properties, rights and services used in,
or necessary for the operation of, and are adequate, sufficient and suitable for
the conduct of, the Business as currently conducted, subject to obtaining the
Required Approvals.
3.10 CONTRACTS.
(a) EES, the Company and any other entity operating the Business
each have, and at the Closing will each have, performed in all material respects
all obligations under the Contributed Contracts required to be performed by them
prior to such date. EES and the Company are not, and at the Closing will not be,
and, to the knowledge of EES, no other party is, in default, under any of the
Contributed Contracts and no event has occurred thereunder which, with or
without the lapse of time or the giving of notice or both, would constitute a
default by EES or the Company or such other entity or, to the knowledge of EES,
by any other party thereto, except to the extent that such default would not
have a Material Adverse Effect on the Company. Subject to obtaining the Required
Approvals, all of the Contributed Contracts are, and at Closing will be, capable
of being assigned to the Company in accordance with Section 2.1(a)(i) hereof
without the consent of any other party, except for any such Contributed
Contracts that have been terminated in accordance with their terms. The
Contributed Contracts are, and at the Closing will be, duly authorized, in full
force and effect, valid, binding and enforceable in accordance with their terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium and
similar laws affecting creditors' rights and remedies generally, except for any
such Contributed Contracts that have been terminated in accordance with their
terms. Copies of all of the Contributed Contracts have been made available to
the Investors.
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(b) The Company is not, and at the Closing will not be, and, to
the knowledge of EES or the Company, no other party is, in default, under the
AOL Agreement and no event has occurred thereunder which, with or without the
lapse of time or the giving of notice or both, would constitute a default by the
Company or, to the knowledge of EES or the Company, by any other party thereto.
The AOL Agreement is, and at the Closing will be, duly authorized by the
Company, and assuming it has been duly authorized by the other parties thereto,
in full force and effect, valid, binding and enforceable in accordance with its
terms against the Company, and to the knowledge of the Company, the other
parties thereto, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws affecting creditors' rights and remedies generally.
A copy of the AOL Agreement has been made available to the Investors.
(c) Other than the Contributed Contracts, the Other Agreements,
the AOL Agreement and the Letter of Intent with Simon Property Group L.P.
referred to in SCHEDULE 3.1, there are no contracts, agreements, undertakings or
commitments, whether written or oral, of EES, ▇▇▇▇▇▇ or the Company or any other
entity operating the Business solely relating to the Business.
3.11 COMPLIANCE WITH LAWS. The Business is being conducted by EES
in compliance with all applicable Laws, except as set forth in SCHEDULE 3.11.
EES holds all Permits from all Governmental Authorities and third parties
necessary for the lawful conduct of the Business. EES is and has been in
compliance with, and, to the knowledge of EES, is not under investigation with
respect to or been given notice of any violation of, any such Permit, except as
set forth in SCHEDULE 3.11.
3.12 BOOKS AND RECORDS. The books of account, minute books, stock
record books and other records of the Company are complete and correct in all
material respects and have been maintained in accordance with sound business
practices, including the maintenance of adequate systems of internal controls.
The minute books of the Company contain accurate and complete records of all
meetings held of, and material corporate action taken by, the stockholders, the
Board of Directors and any committees of the Board of Directors of the Company.
True and complete copies of the Certificate of Incorporation and Bylaws of the
Company as in effect on the date hereof have been made available to the
Investors.
3.13 DISCLOSURE. To the knowlege of EES, the representations or
warranties made by EES, ▇▇▇▇▇▇ or the Company contained in this Agreement, the
Other Agreements and the AOL Agreement, together with all written and oral
information provided to the Investors in connection with the transactions
contemplated hereby, do not contain an untrue statement of a material fact or
omit to state a material fact necessary to make the statements and facts
contained herein or therein, in light of the circumstances in which they were or
are made, not false or misleading.
3.14 INTELLECTUAL PROPERTY. On the Closing, the Company will be the
sole and exclusive owner of, or have a valid right to use the Company
Intellectual Property, in each case free and clear of any Liens. EES, ▇▇▇▇▇▇ and
the Company have taken reasonable measures to protect the secrecy
12
and confidentiality of, and their respective rights in, any Company Intellectual
Property that constitutes trade secrets or confidential information of the
Company.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE INVESTORS
Each Investor severally, and not jointly, represents and warrants to
EES, ▇▇▇▇▇▇ and the Company that:
4.1 ORGANIZATION; GOOD STANDING. Such Investor is duly organized,
validly existing and in good standing under the laws of the jurisdiction in
which it is organized, with full corporate or similar power and authority to
own, lease and operate its properties and assets and to carry on its business as
presently conducted.
4.2 AUTHORITY. Such Investor has the corporate or similar power
and authority to execute, deliver and perform its obligations under this
Agreement and the Stockholders Agreement and to consummate the transactions
contemplated hereby and thereby. Such Investor has taken all necessary corporate
or similar action to authorize its execution, delivery and performance of this
Agreement and the Stockholders Agreement.
4.3 DUE EXECUTION AND ENFORCEABILITY. This Agreement constitutes,
and the Stockholders Agreement when executed and delivered by the parties
thereto will constitute, a legal, valid and binding obligation of such Investor,
enforceable against such Investor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other laws of general application referring to or
affecting enforcement of creditors' rights and general principles of equity.
4.4 NO RESTRICTIONS AGAINST PERFORMANCE. Neither the execution,
delivery nor performance by such Investor of this Agreement or the Stockholders
Agreement nor the consummation by such Investor of the transactions contemplated
by this Agreement or the Stockholders Agreement will, with or without the giving
of notice or the passage of time, or both, violate any provisions of, conflict
with, result in a breach of, constitute a default under, or result in the
creation or imposition of any Lien under: (a) the organizational or governing
documents of such Investor; (b) any Law that is applicable to such Investor or
any of its properties or assets; (c) any contract, indenture, instrument,
agreement, mortgage, lease, right or other obligation or restriction to which
such Investor is a party or by which it or any of its properties or assets are
or may be bound; or (d) any order, judgment, writ, injunction, decree, license,
franchise, permit or other authorization of any Governmental Authority by which
such Investor or any of its properties or assets are or may be bound, except in
each of the foregoing cases as would not individually or in the aggregate have a
Material Adverse Effect or materially impair the ability of such Investor to
consummate the transactions contemplated hereby.
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4.5 THIRD-PARTY AND GOVERNMENTAL CONSENTS. Except as previously
obtained, no approval, consent, waiver, order or authorization of, or
registration, qualification, declaration, or filing with, or notice to, any
Governmental Authority or other third party is required on the part of such
Investor in connection with the execution and delivery of this Agreement or the
Stockholders Agreement by such Investor or the consummation of the transactions
contemplated hereby or thereby.
4.6 ACCREDITED INVESTORS.
(a) Such Investor is acquiring the Common Stock, Special Warrants
and Investor Warrants to be acquired by it under this Agreement (including, for
purposes of this representation and warranty, the shares of Non-Voting Common
Stock or Common Stock underlying such Special Warrants or Investor Warrants)
(collectively, the "Securities") for its own account, for investment purposes,
and not with a view to, or for resale in connection with, any public
distribution of the Securities in violation of the federal securities laws.
(b) Such Investor understands that the Securities have not been
registered under the Securities Act or any federal or state law by reason of
specific exemptions under the provisions thereof, the availability of which
depend in part upon the accuracy of its representations made in this Section
4.6.
(c) Such Investor understands that the Company is relying upon the
representations and agreements contained in this Section 4.6 for the purpose of
determining whether this transaction meets the requirements for such exemptions.
(d) Such Investor is an "accredited investor" as defined in Rule
501(a) of Regulation D under the Securities Act.
(e) Such Investor has such knowledge, skill and experience in
business, financial and investment matters that it is capable of evaluating the
merits and risks of an investment in the Securities. The undersigned recognizes
that an investment in the Securities is a speculative investment involving a
high degree of risk.
(f) Such Investor understands that the Securities are "restricted
securities" under applicable federal securities laws and that the Securities Act
and the rules of the Securities and Exchange Commission thereunder provide in
substance that it may dispose of the Securities only pursuant to an effective
registration statement under the Securities Act or an exemption therefrom, and
it understands that the Company has no obligation to register any of the
Securities or securities issuable upon conversion or exercise thereof,
thereunder, except as contemplated by the Stockholders Agreement.
14
(g) Such Investor has been furnished by EES and the Company all
information (or provided access to all information) regarding the business and
financial condition of the Company, its expected plans for future business
activities, the attributes of the Securities and the merits and risks of an
investment in the Securities that it has requested or otherwise needs to
evaluate the investment in the Securities.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 FULL ACCESS. Prior to the Closing, EES shall afford to the
Investors, their respective counsel, accountants, lenders, and other
representatives full access during normal business hours to the properties,
books, contracts and records of EES that relate to the Business, the Company and
the Contributed Assets in order that the Investors may have full opportunity to
make such investigations as they shall desire to make of the Business, the
Company and the Contributed Assets, and shall, upon request, promptly furnish to
each of the Investors all other information concerning the Business and the
Contributed Assets as the Investors may reasonably request, in each case subject
to confidentiality restrictions or obligations; PROVIDED, HOWEVER, that any such
investigation shall be conducted in such a manner as not to interfere
unreasonably with the operation of the businesses of EES.
5.2 CONFIDENTIALITY. Each party hereto shall hold and shall cause
its employees, auditors, attorneys, financial advisors, bankers and other
consultants to hold in strict confidence, unless compelled to disclose by
judicial or administrative process or by other requirements of Law, all
confidential or proprietary documents and information concerning any other party
furnished to it by such other party or its representatives in connection with
the transactions contemplated by this Agreement (except to the extent that such
information can be shown to have been (a) previously known by the party to which
it was furnished other than as a result of the evaluation or negotiation of the
transactions contemplated by this Agreement, or (b) in the public domain through
no fault of such party), and each party shall treat such information as the sole
property of the party furnishing the information and it shall not release or
disclose such information to any other person, except its employees, auditors,
attorneys, financial advisors, bankers and other consultants and advisors in
connection with this Agreement who agree to be bound by the forgoing. If the
transactions contemplated by this Agreement are not consummated, such confidence
shall be maintained except to the extent such information comes into the public
domain through no fault of the party required to hold it in confidence, and such
information shall not be used to the detriment of, or in relation to any
investment in, the other party, and all such documents (including copies
thereof) shall be destroyed or returned to the other party. Each party shall be
deemed to have satisfied its obligation to hold confidential, proprietary or
other information concerning or supplied by the other parties if it exercises
the same care as it takes to preserve confidentiality for its own similar
information.
15
5.3 PUBLICITY. None of the Company, EES, ▇▇▇▇▇▇, the Investors or
any of their affiliates shall make or issue, or cause to be made or issued, any
announcement or written statement concerning this Agreement, the Other
Agreements or the transactions contemplated hereby or thereby for dissemination
to the general public without the prior written consent of the other parties.
This provision shall not apply, however, to any announcement or written
statement required to be made by Law or the regulations of any federal, state or
local Governmental Authority or any stock exchange, except that the party hereto
required to make such announcement shall, whenever practicable, consult with the
other party concerning the content and timing of such announcement before such
announcement is made.
5.4 EXPENSES. All costs and expenses incurred in connection with
the transactions contemplated by this Agreement shall be paid by the party
incurring such cost or expense, PROVIDED THAT, within 60 days after the Closing,
the Company shall reimburse the Investors for all reasonable documented out of
pocket expenses (including the fees and expenses of Weil, Gotshal and ▇▇▇▇▇▇ LLP
as counsel to the Investors, but no other legal fees or expenses) incurred in
connection with the transactions contemplated by this Agreement, up to a maximum
of $600,000.
5.5 REIMBURSEMENT TO EES. At the Closing, subject to the terms and
conditions of this Agreement, the Company will pay to EES the sum of $10 million
by wire transfer of immediately available funds to an account or accounts
designated by EES prior to the Closing, in reimbursement for direct expenses
paid to AOL by EES in connection with the AOL Agreement.
5.6 CONDUCT OF BUSINESS PRIOR TO CLOSING. The Company shall not
take any action between execution of this Agreement and the Closing except such
actions as are incidental to or contemplated by this Agreement or the AOL
Agreement.
5.7 COMPLIANCE WITH CONDITIONS; COMMERCIALLY REASONABLE EFFORTS.
Each party hereto shall use commercially reasonable efforts to cause all
conditions precedent to its obligations to be satisfied. Upon the terms and
subject to the conditions of this Agreement, each party hereto will use its
commercially reasonable efforts to take, or cause to be taken, all action, and
to do, or cause to be done, all things necessary, proper or advisable consistent
with applicable law to consummate and make effective in the most expeditious
manner practicable the transactions contemplated hereby.
5.8 HSR ACT NOTIFICATION. To the extent required by the HSR Act,
each party shall, to the extent it has not already done so, (a) file or cause to
be filed, as promptly as practicable after the execution and delivery of this
Agreement, with the United States Federal Trade Commission and the Antitrust
Division of the United States Department of Justice, all reports and other
documents required to be filed by it, ▇▇▇▇▇▇ or the Company under the HSR Act
concerning the transactions contemplated hereby and (b) promptly comply with or
cause to be complied with any requests by the United States Federal Trade
Commission or the Antitrust Division of the United States Department of Justice
for additional information concerning such transactions, in each case so that
16
the waiting period applicable to this Agreement and the transactions
contemplated hereby under the HSR Act shall expire as soon as practicable after
the execution and delivery of this Agreement. EES agrees to request, and to
cooperate with the Investors in requesting, early termination of any applicable
waiting period under the HSR Act.
5.9 CONSENTS AND APPROVALS. At such time as the Special Committee
(as defined in the Stockholders Agreement) determines after the Closing Date,
EES and the Company shall use their best efforts to obtain the Required
Approvals and all necessary consents, waivers, authorizations and approvals
required in connection with the execution, delivery and performance of this
Agreement and the Other Agreements, including obtaining all necessary consents
from third parties to the assignment of the Contributed Contracts; PROVIDED THAT
the cost of obtaining any consents, registrations or approvals required to be
obtained by the Company from any Governmental Authorities necessary to conduct
the Business after the Closing Date shall be borne by the Company. The parties
hereto shall cooperate in preparing and filing all documents required to be
submitted to any Governmental Authority in connection with the transactions
contemplated by this Agreement and the Other Agreements (which cooperation shall
include, without limitation, timely furnishing of all information that counsel
reasonably determines is required to be included in such documents or would be
helpful in obtaining any such required consent, waiver, authorization or
approval).
5.10 FURTHER ASSURANCES. Each party hereto, upon the request of any
other party hereto, shall do all such further acts and execute, acknowledge and
deliver all such further instruments and documents as may be necessary or
desirable to carry out the transactions contemplated by this Agreement,
including, in the case of EES, such acts, instruments and documents as may be
necessary or desirable to convey and transfer to the Company the Contributed
Assets to be contributed or caused to be contributed by EES hereunder.
5.11 CERTAIN REGULATORY MATTERS. EES agrees that it will not, and
that it will cause Enron Corp. not to, agree to any voluntary settlement of the
matters referred to in Item 1 of SCHEDULE 3.6 that would impose obligations or
limitations or similar measures on the Company after the Closing (other than any
such settlement that does no more than either require payment of monetary fines
or penalties (which shall be paid by EES) and/or require the Company to agree to
comply with its obligations under applicable Laws in the future) unless such
settlement is approved by the Investors if such settlement is entered into at or
prior to Closing, or by Special Committee Approval (as defined in the
Stockholders Agreement) if such settlement is entered into after Closing, in
each case which approval may not be unreasonably withheld. EES acknowledges that
the foregoing matters constitute Excluded Liabilities for purposes of this
Agreement.
5.12 EMPLOYEE MATTERS. Subject to approval of the Special Committee
(as defined in the Stockholders Agreement), the Company agrees to use
commercially reasonable efforts to hire the current employees of EES or its
Affiliates who are listed on SCHEDULE 5.12 hereto, and EES agrees to cooperate
with the Company in order to facilitate the transition of such employees. EES
agrees
17
that EES or another Affiliate of EES or Enron Corp. will be responsible
for all compensation and other benefit expenses of such employees related to any
and all periods prior to the commencement of employment of such employees by the
Company.
5.13 TERMINATION.
(a) This Agreement may be terminated at any time prior to the
Closing by the mutual written consent of all the parties hereto.
(b) If the Closing has not occurred on or before January 10, 2000
(the "Original Termination Date", such date to be extended automatically if the
sole condition to Closing that is not satisfied or capable of being immediately
satisfied is the condition set forth in Sections 6.2(e) and 6.3(e), to the date
three business days after satisfaction of such condition but not later than the
30th day following the Original Termination Date), this Agreement shall
terminate automatically, unless otherwise agreed to in writing by the parties
hereto.
(c) Upon termination of this Agreement pursuant to this Section
5.13, the terms and provisions of this Agreement shall have no further force and
effect, except that Sections 5.2, 5.3, 5.4 and 8.4 shall survive any such
termination.
ARTICLE VI
CLOSING; CONDITIONS TO CLOSING
6.1 LOCATION AND TIME OF CLOSING. The closing (the "Closing") of
the transactions contemplated hereby shall take place on the later of January 6,
2000 or the third business day following satisfaction of the conditions to
Closing set forth in Sections 6.2 and 6.3 (other than conditions that by their
nature are to be satisfied at Closing) at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.,
First City Tower, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., local
time, or, at such other time or place as the parties hereto shall agree. The
date of the Closing is herein referred to as the "Closing Date."
6.2 CONDITIONS TO OBLIGATIONS OF EES, ▇▇▇▇▇▇ AND THE COMPANY. The
respective obligations of EES, ▇▇▇▇▇▇ and the Company to be performed at the
Closing are subject to the satisfaction of the conditions set forth in this
Section 6.2.
(a) No action or proceeding before any court or Governmental
Authority shall have been instituted seeking to restrain, prohibit, or otherwise
interfere with the transactions contemplated hereby.
(b) The Investors shall have performed in all material respects
all of their obligations under this Agreement required to be performed by them
on or prior to the Closing Date.
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(c) The representations and warranties of each Investor contained
in this Agreement that are qualified by reference to materiality or Material
Adverse Effect shall be true and correct, and any such representations and
warranties that are not so qualified shall be true and correct in all material
respects, at and as of the Closing Date, as if made at and as of such date,
except that representations and warranties made as of a specific date need be
true only as of that date.
(d) EES, ▇▇▇▇▇▇ and the Company shall have received an opinion of
counsel to each of the Investors (or in the case of OTP, other evidence)
reasonably satisfactory to EES, ▇▇▇▇▇▇ and the Company covering the matters
described on EXHIBIT 6.2 hereto.
(e) Any applicable waiting period under the HSR Act with respect
to the transactions contemplated by this Agreement shall have expired or been
terminated.
6.3 CONDITIONS TO OBLIGATIONS OF THE INVESTORS. The respective
obligations of each Investor to be performed at Closing are subject to the
satisfaction of the conditions set forth in this Section 6.3.
(a) Except with respect to matters contemplated by SCHEDULE 3.6
hereto, no action or proceeding before any court or Governmental Authority shall
have been instituted seeking to restrain, prohibit, or otherwise interfere with
the transactions contemplated hereby.
(b) EES, ▇▇▇▇▇▇ and the Company shall have performed in all
material respects all of their obligations under this Agreement required to be
performed by them on or prior to the Closing Date.
(c) The representations and warranties of EES contained in this
Agreement that are qualified by reference to materiality or Material Adverse
Effect shall be true and correct, and any such representations and warranties
that are not so qualified shall be true and correct in all material respects at
and as of the Closing Date, as if made at and as of such date, except that
representations and warranties made as of a specific date need be true only as
of that date.
(d) The Investors shall have received an opinion of ▇▇▇▇▇▇ &
▇▇▇▇▇▇ L.L.P. or other counsel to EES, the Company or ▇▇▇▇▇▇ reasonably
acceptable to the Investors covering the matters described on EXHIBIT 6.3
hereto.
(e) Any applicable waiting period under the HSR Act with respect
to the transactions contemplated by this Agreement shall have expired or been
terminated.
(f) Each of the agreements referred to in Section 2.1(b) shall
have been entered into by all parties thereto.
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ARTICLE VII
INDEMNIFICATION
7.1 SURVIVAL.
(a) All of the representations and warranties of EES, the Company,
▇▇▇▇▇▇ and the Investors shall survive the Closing hereunder and continue in
full force and effect for a period of two (2) years thereafter, after which they
shall terminate and be of no further force or effect; provided that the
representations set forth in Sections 3.1 and 4.1 shall survive the Closing for
the applicable statute of limitations.
(b) All of the covenants of the parties hereto that are intended
to be performed after the Closing shall survive the Closing.
7.2 EES'S AGREEMENT TO INDEMNIFY. Subject to the terms and
conditions of this Article VII:
(a) EES and the Company hereby agree to jointly and severally
indemnify, defend and hold harmless the Investors, from and against all demands,
claims, actions or causes of action, assessments, losses, damages, liabilities,
costs and expenses, including, without limitation, interest, penalties and
attorney's fees and expenses (collectively, "Damages"), asserted against,
resulting to, imposed upon or incurred by the Investors, directly or indirectly,
by reason of or resulting from any breach of any representation, warranty,
covenant or agreement of EES or the Company contained in or made pursuant to
this Agreement, provided that, in the case of a breach of a representation or
warranty, a written claim for indemnification against EES and the Company is
given pursuant to Section 8.3 below within the survival period set forth in
Section 7.1(a).
(b) EES hereby agrees to indemnify, defend and hold harmless the
Company and the Investors from and against any and all Damages asserted against,
resulting to, imposed upon or incurred by either the Company or the Investors,
directly or indirectly, by reason of or resulting from the Excluded Liabilities;
PROVIDED HOWEVER the foregoing shall not apply to any liabilities relating to or
arising out of the matters referred to in Item 1 of SCHEDULE 3.6 other than any
out of pocket costs and expenses, including without limitation monetary fines or
penalties, settlement payments and attorneys fees and expenses, incurred by the
Company in connection with such matters.
7.3 INVESTORS' AGREEMENT TO INDEMNIFY. Subject to the terms and
conditions of this Article VII, each Investor, severally and not jointly, hereby
agrees to indemnify, defend and hold harmless EES, ▇▇▇▇▇▇ and the Company, from
and against any and all Damages asserted against, resulting to, imposed upon or
incurred by either the Company, ▇▇▇▇▇▇ or EES, directly or indirectly, by reason
of or resulting from a breach of any representation, warranty or covenant of
such Investor
20
contained in or made pursuant to this Agreement, provided that, in
the case of a breach of a representation or warranty, a written claim for
indemnification against the Investors is given pursuant to Section 8.3 below
within the survival period set forth in Section 7.1(a).
7.4 MATTERS INVOLVING THIRD PARTIES. If any third party shall
notify any party hereto (the "Indemnified Party") with respect to any matter
which may give rise to a claim for indemnification against any other party
hereto (the "Indemnifying Party") under this Article VII, then the Indemnified
Party shall notify each Indemnifying Party thereof promptly; PROVIDED, HOWEVER,
that no delay on the part of the Indemnified Party in notifying any Indemnifying
Party shall relieve the Indemnifying Party from any liability or obligation
hereunder unless (and then solely to the extent) the Indemnifying Party thereby
is prejudiced as a result of such delay. In the event any Indemnifying Party
notifies the Indemnified Party within thirty (30) days after the Indemnified
Party has given notice of the matter that the Indemnifying Party is assuming the
defense thereof, (A) the Indemnifying Party will defend the Indemnified Party
against the matter with counsel of its choice reasonably satisfactory to the
Indemnified Party, (B) the Indemnified Party may retain separate co-counsel at
its sole cost and expense (except that the Indemnifying Party will be
responsible for the fees and expenses of the separate co-counsel to the extent
the Indemnified Party has been advised by counsel that (i) the counsel the
Indemnifying Party has selected has a conflict of interest or (ii) there may be
one or more legal defenses available to the Indemnified Party that are different
from or additional to those available to the Indemnifying Party), (C) the
Indemnified Party will not consent to the entry of any judgment or enter into
any settlement with respect to the matter without the written consent of the
Indemnifying Party (not to be withheld unreasonably), and (D) the Indemnifying
Party will not consent to the entry of any judgment with respect to the matter,
or enter into any settlement which does not include a provision whereby the
plaintiff or claimant in the matter releases the Indemnified Party from all
liability with respect thereto, without the written consent of the Indemnified
Party (not to be withheld unreasonably). In the event no Indemnifying Party
notifies the Indemnified Party within thirty (30) days after the Indemnified
Party has given notice of the matter that the Indemnifying Party is assuming the
defense thereof, however, the Indemnified Party may defend against, or enter
into any settlement with respect to, the matter in any manner it reasonably may
deem appropriate. At any time after commencement of any such action, any
Indemnifying Party may request an Indemnified Party to accept a bona fide offer
from the other parties to the action for a monetary settlement payable solely by
such Indemnifying Party (which does not burden or restrict the Indemnified Party
nor otherwise prejudice it) whereupon such action shall be taken unless the
Indemnified Party determines that the dispute should be continued, in which case
the Indemnifying Party shall be liable for indemnity hereunder only to the
extent of the lesser of (i) the amount of the settlement offer or (ii) the
amount for which the Indemnified Party may be liable with respect to such
action. In addition, the party controlling the defense of any third party claim
shall deliver, or cause to be delivered, to the other party copies of all
correspondence, pleadings, motions, briefs, appeals or other written statements
relating to or submitted in connection with the defense of the third party
claim, and timely notices of, and the right to participate in (as an observer)
any hearing or other court proceeding relating to the third party claim.
21
7.5 EXCLUSIVE REMEDY; LIMITATION ON DAMAGES.
(a) NOTWITHSTANDING ANYTHING HEREIN TO THE CONTRARY AND EXCEPT AS
PROVIDED IN THE PROVISO CLAUSE TO THIS SENTENCE AND IN SECTION 8.9, IN
CONNECTION WITH ANY CLAIM MADE BY A PARTY AGAINST ANOTHER PARTY HEREUNDER, THE
CLAIMING PARTY SHALL NOT BE ENTITLED TO RECOVER ANY PUNITIVE, CONSEQUENTIAL,
SPECIAL, INCIDENTAL OR INDIRECT DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY
EXEMPLARY DAMAGES, TREBLE DAMAGES, PENALTIES, OR LOSS OF PROFITS OR INCOME),
WHETHER BASED ON STATUTE, IN TORT, CONTRACT OR OTHERWISE, REGARDLESS OF WHETHER
SUCH DAMAGES MAY BE AVAILABLE UNDER APPLICABLE LAW OR OTHERWISE, AND WHETHER OR
NOT ARISING FROM A PARTY'S SOLE, JOINT OR CONCURRENT NEGLIGENCE, STRICT
LIABILITY OR OTHER FAULT, THE PARTIES HERETO HEREBY WAIVING THEIR RIGHT, IF ANY,
TO RECOVER SUCH DAMAGES IN CONNECTION WITH ANY CLAIMS HEREUNDER; PROVIDED,
HOWEVER, THAT (A) IN NO EVENT SHALL SUCH LIMITATIONS OR RESTRICTIONS PREVENT A
PARTY FROM RECOVERING ITS ACTUAL DAMAGES AND (B) THE FOREGOING LIMITATIONS AND
RESTRICTIONS SHALL NOT APPLY TO ANY SUCH DAMAGES THAT ARE ATTRIBUTABLE TO THE
GROSS NEGLIGENCE, WILLFUL MISCONDUCT OR FRAUD OF THE PARTY AGAINST WHOM SUCH
CLAIM IS MADE.
(b) EES, ▇▇▇▇▇▇, THE COMPANY AND THE INVESTORS AGREE THAT THEIR
SOLE RESPECTIVE RIGHTS FOR ANY RECOURSE OF ANY KIND WITH RESPECT TO ANY BREACHES
OF ANY REPRESENTATIONS, WARRANTIES OR COVENANTS UNDER THIS AGREEMENT SHALL BE
THEIR RESPECTIVE RIGHTS TO INDEMNIFICATION AS EXPRESSLY SET FORTH IN THIS
ARTICLE VII.
7.6 EXPRESS NEGLIGENCE CLAUSE. THE PARTIES HERETO INTEND THAT THE
INDEMNITIES SET FORTH IN THIS ARTICLE VII BE CONSTRUED AND APPLIED AS WRITTEN
ABOVE NOTWITHSTANDING ANY RULE OF CONSTRUCTION TO THE CONTRARY. WITHOUT LIMITING
THE FOREGOING, THE INDEMNITIES SHALL APPLY NOTWITHSTANDING ANY STATE'S "EXPRESS
NEGLIGENCE RULE" OR SIMILAR RULE THAT WOULD DENY COVERAGE BASED ON AN
INDEMNITEE'S SOLE, CONCURRENT OR CONTRIBUTORY ACTIVE OR PASSIVE NEGLIGENCE OR
GROSS NEGLIGENCE OR STRICT LIABILITY. IT IS THE INTENT OF THE PARTIES THAT, TO
THE EXTENT PROVIDED IN THIS ARTICLE VII, THE INDEMNITIES SET FORTH HEREIN SHALL
APPLY TO AN INDEMNITEE'S SOLE, CONCURRENT OR CONTRIBUTORY ACTIVE OR PASSIVE
NEGLIGENCE, GROSS NEGLIGENCE OR STRICT LIABILITY. THE PARTIES AGREE THAT THIS
PROVISION IS "CONSPICUOUS" FOR PURPOSES OF ALL STATE LAWS.
22
ARTICLE VIII
GENERAL PROVISIONS
8.1 ENTIRE AGREEMENT; TERMINATION OF PRIOR AGREEMENT. This
Agreement (including the exhibits and schedules) and the Other Agreements
contain the entire agreement among the parties with respect to the subject
matter hereof and the related transactions and supersede all prior agreements,
written or oral, with respect thereto.
8.2 WAIVERS AND AMENDMENTS. This Agreement may be amended,
superseded, canceled, renewed or extended only by a written instrument signed by
the parties hereto. The provisions hereof may be waived in writing by the
parties hereto. No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any waiver
on the part of any party of any such right, power or privilege, nor any single
or partial exercise of any such right, power or privilege, preclude any further
exercise thereof or the exercise of any other such right, power or privilege.
8.3 NOTICES.
(a) 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:
(i) If to DLJMB Investors, then to:
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to GE, then to:
GE Capital Services
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
23
(iii) If to CalPERS, then to:
California Public Employees' Retirement System
Lincoln Plaza
400 "P" Street
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Senior Investment Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇, Day, ▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. Brand, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
Pacific Corporate Group, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(iv) If to OTP, then to:
Ontario Teachers' Pension Plan Board
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(v) If to EES, then to:
Enron Energy Services, LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
24
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(vi) If to ▇▇▇▇▇▇ or the Company, then to:
c/o Enron Energy Services, LLC
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Each such notice or other communication shall be effective (i)
if given by telecopier, when such telecopy is transmitted to the telecopier
number specified in Section 8.3(a) (with confirmation of transmission), or (ii)
if given by any other means, when delivered at the address specified in Section
8.3(a). Any party by notice given in accordance with this Section 8.3 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.
8.4 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.
8.5 BINDING EFFECT; ASSIGNMENT. This Agreement and all of its
provisions, rights and obligations shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and permitted
assigns. This Agreement may not be assigned (including by operation of Law) by a
party without the express written consent of EES (in the case of assignment by
the Investors) or the Investors (in the case of assignment by the Company or EES
or ▇▇▇▇▇▇) and any purported assignment, unless so consented to, shall be void
and without effect. Nothing herein express or implied is intended or shall be
construed to confer upon or to give anyone other than the parties hereto and
their respective successors and permitted assigns any rights or benefits under
or
25
by reason of this Agreement and no other party shall have any right to
enforce any of the provisions of this Agreement.
8.6 REPRESENTATION BY COUNSEL. Each of the Investors acknowledges
that ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. has served as counsel to EES and Enron Corp. in
connection with the transactions contemplated hereby and not as counsel to the
Company or any of the other parties to this Agreement or the Other Agreements.
8.7 SEVERABILITY. If any term, provision, covenant or restriction
of this Agreement is held by a court of competent jurisdiction to be invalid,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall continue in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term,
provision, covenant or restriction is invalid, void or unenforceable, the
parties hereto shall negotiate in good faith to modify this Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.
8.8 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.
8.9 SPECIFIC PERFORMANCE. The parties hereto agree that, to the
extent permitted by law, the terms 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.
(SIGNATURE PAGE FOLLOWS)
* * * * *
26
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the
date first written above.
ENRON ENERGY SERVICES, LLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Title: Sr. Vice President
-----------------------------
EMW ENERGY SERVICES CORP.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Title: Vice President
-----------------------------
▇▇▇▇▇▇ ENERGY SERVICES, LLC
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------
Title: Vice President
-----------------------------
DLJ MERCHANT BANKING PARTNERS II, L.P.
By: DLJ Merchant Banking II, Inc.
Managing General Partner
By: /s/ ▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇
------------------------------
Title: Vice President
-----------------------------
27
DLJ MERCHANT BANKING PARTNERS II-A, L.P.
By: DLJ Merchant Banking II, Inc.
Managing General Partner
By: /s/ ▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇
------------------------------
Title: Vice President
-----------------------------
DLJ DIVERSIFIED PARTNERS, L.P.
By: DLJ Diversified Partners, Inc.
Managing General Partners
By: /s/ ▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇
------------------------------
Title: Vice President
-----------------------------
DLJ DIVERSIFIED PARTNERS-A, L.P.
By: DLJ Diversified Partners, Inc.
Managing General Partner
By: /s/ ▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇
------------------------------
Title: Vice President
-----------------------------
28
DLJ MILLENNIUM PARTNERS, L.P.
By: DLJ Merchant Banking II, Inc.
Managing General Partner
By: /s/ ▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇
------------------------------
Title: Vice President
-----------------------------
DLJ MILLENNIUM PARTNERS-A, L.P.
By: DLJ Merchant Banking II, Inc.
Managing General Partner
By: /s/ ▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇
------------------------------
Title: Vice President
-----------------------------
DLJ FIRST ESC L.P.
By: DLJ LBO Plans Management Corporation
General Partner
By: /s/ ▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇
------------------------------
Title: Vice President
-----------------------------
29
DLJ OFFSHORE PARTNERS II, C.V.
By: DLJ Merchant Banking II, Inc.
Managing General Partner
By: /s/ ▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇
------------------------------
Title: Vice President
-----------------------------
DLJ EAB PARTNERS, L.P.
By: DLJ LBO Plans Management Corporation
General Partner
By: /s/ ▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇
------------------------------
Title: Vice President
-----------------------------
DLJ ESC II, L.P.
By: DLJ LBO Plans Management Corporation
General Partner
By: /s/ ▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇
------------------------------
Title: Vice President
-----------------------------
DLJMB FUNDING II, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇ ▇▇▇▇▇
------------------------------
Title: Vice President
-----------------------------
30
G.E. CAPITAL EQUITY INVESTMENTS, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
------------------------------
Title: Vice Presodent
-----------------------------
CALIFORNIA PUBLIC EMPLOYEES'
RETIREMENT SYSTEM
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
------------------------------
Title: Investment Officer II
-----------------------------
ONTARIO TEACHERS' PENSION PLAN BOARD
By: /s/ D. ▇▇▇▇▇▇▇ ▇▇▇
--------------------------------
Name: D. ▇▇▇▇▇▇▇ ▇▇▇
-------------------------------
Title: Vice President
------------------------------
31
EXHIBIT 1.1(a)
AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
EXHIBIT 1.1(b)
BUSINESS OPPORTUNITY AGREEMENT
EXHIBIT 1.1(c)(i)
MASTER ENERGY PURCHASE AGREEMENT
EXHIBIT 1.1(c)(ii)
MASTER GAS PURCHASE AGREEMENT
EXHIBIT 1.1(d)
FORM OF INVESTOR WARRANT
EXHIBIT 1.1(e)
NONCOMPETITION AGREEMENT
EXHIBIT 1.1(f)
SERVICES AGREEMENT
EXHIBIT 1.1(g)
SOFTWARE AGREEMENT
EXHIBIT 1.1(h)
FORM OF SPECIAL WARRANT
EXHIBIT 1.1(i)
STOCKHOLDERS AGREEMENT
EXHIBIT 6.2
OPINIONS DELIVERED ON BEHALF OF EACH INVESTOR
1. Such Investor has the corporate or similar power and authority
to execute, deliver and perform its obligations under this Agreement and the
Stockholders Agreement and to consummate the transactions contemplated hereby
and thereby. Such Investor has taken all necessary corporate or similar action
to authorize its execution, delivery and performance of this Agreement and the
Stockholders Agreement. This Agreement and the Stockholders Agreement have been
duly executed and delivered by such Investor.
2. Neither the execution, delivery nor performance by such
Investor of this Agreement or the Stockholders Agreement nor the consummation by
such Investor of the transactions contemplated by this Agreement or the
Stockholders Agreement will violate any provisions of or conflict with the
organizational or governing documents of such Investor.
EXHIBIT 6.3
OPINIONS DELIVERED ON BEHALF OF ENRON, EES, ▇▇▇▇▇▇ AND THE COMPANY
1. Each of Enron, EES, ▇▇▇▇▇▇ and the Company has the requisite
limited liability or corporate power and authority to execute, deliver and
perform its obligations under this Agreement and the Other Agreements to which
it is a party and to consummate the transactions contemplated hereby and
thereby. Each of Enron, EES, ▇▇▇▇▇▇ and the Company have taken all necessary
limited liability company or corporate action to authorize the execution,
delivery and performance of this Agreement and the Other Agreements to which it
is a party. This Agreement and the Other Agreements have been duly executed and
delivered by each of Enron, EES, ▇▇▇▇▇▇ and the Company to the extent they are a
party thereto.
2. Except as set forth in SCHEDULE 3.4 hereto, neither the
execution, delivery nor performance of this Agreement or the Other Agreements by
Enron, EES, ▇▇▇▇▇▇ or the Company nor the consummation by Enron, EES, ▇▇▇▇▇▇ or
the Company of the transactions contemplated by this Agreement or the Other
Agreements to which they are a party, will violate any provisions of or conflict
with, result in a breach of, constitute a default under: (a) the organizational
documents of Enron, EES, ▇▇▇▇▇▇ or the Company; (b) any judgment, injunction,
order or decree known to such counsel, after reasonable inquiry, to be binding
upon Enron, EES, ▇▇▇▇▇▇ or the Company, or (c) any contractual or legal
restriction contained in any material agreement, indenture, loan or credit
agreement, bond or note or guaranties of any such obligations known to such
counsel to which Enron, EES, ▇▇▇▇▇▇ or the Company is subject (which in the case
of Enron means only those agreements that create a monetary liability of more
than $100 million).
3. Each share of Common Stock and Non-Voting Common Stock to be
issued pursuant to this Agreement has been duly authorized, and, upon payment
therefor as contemplated by this Agreement, will be validly issued, fully paid
and non-assessable.
4. The Common Stock or Non-Voting Common Stock, as the case may
be, to be issued, upon valid exercise of the Warrants in accordance with their
terms, will be duly authorized and, when issued and delivered in accordance with
the terms of the Warrants, will be validly issued, fully paid, non-assessable.
5. Assuming the accuracy of the representations of the Investors
set forth in Section 4.6 as of the date of Closing, the issuance of the Common
Stock and Warrants to be issued at Closing will not require registration under
the Securities Act.
SCHEDULE 2.1(a)(i)
CONTRIBUTED CONTRACTS
[SEE ATTACHED]
SCHEDULE 3.1
COMPANY OBLIGATIONS TO ISSUE COMMON STOCK
1. It is currently contemplated in the Confidential Letter of
Intent by and between Simon Property Group, L.P. ("Simon") and Enron Energy
Services Operations, Inc. dated October 11, 1999, a copy of which has been
provided to the Investors, that the Company will be obligated to issue certain
shares of Non-Voting Common Stock to Simon on terms set forth in such Letter of
Intent. The Company has the obligation to negotiate in good faith with Simon but
does not have the obligation to enter into definitive agreements unless approved
by the Special Committee as defined in the Stockholders Agreement.
2. It is currently contemplated that the Company will after
Closing issue to ▇▇▇ ▇▇▇ Special Warrants to acquire up to 10,322 shares of
Non-Voting Common Stock, which will be part of the agreed 10% allocation to
management.
SCHEDULE 3.4
RESTRICTIONS AGAINST PERFORMANCE
None, except as set forth in Schedules 3.5 and 3.6.
SCHEDULE 3.5
REQUIRED APPROVALS
1. An Application and Order granted under the Federal Power Act
for a "power marketing certificate" authorizing the Company to sell electricity
at wholesale at negotiated market-based rates.
2. Applications to and approvals by applicable state public
utility commissions or public service commissions, and other state or local
governmental authorities, for conduct of the Company's business at retail with
Small Commercial Customers and Residential Customers (as defined in the
Company's charter) within such states.
3. Qualifications or registrations of the Company to conduct
business in various states, including California and Ohio.
4. Compliance by the parties with the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act of
1976, as amended.
SCHEDULE 3.6
LITIGATION
ITEM 1
IN THE MATTER OF THE INVESTIGATION OF ENRON CORP. - District Attorney, Orange
County, CA
Enron Corp. received an administrative subpoena in December, 1997 from
the Assistant District Attorney for Orange County, California to attend and
testify and produce certain advertisements and related materials pertaining to
the marketing of electric service to residential consumers in the State of
California. Enron answered the subpoena in January, 1998 and periodically met
with Orange County officials through July, 1998 to discuss its marketing
activities, resolving many of the issues and questions raised (third party
marketing arrangements, sources of energy and marketing scripts). The
investigation focused on the contention that Enron's advertising implied that
the 10% rate reduction off 1997 rates was unique to Enron and could be obtained
while receiving clean electricity from solar and wind power and that Enron
failed to fully disclose the state deregulation plan by not mentioning the 4
year rate guarantee.
Enron received notice in January, 1999 that the Assistant District
Attorneys for Santa ▇▇▇▇▇ and Los Angles Counties had joined the investigation,
but contemporaneously received a joint settlement offer. Enron rejected the
offer and submitted an alternate proposal, which was rejected. Enron was
notified in August, 1999 that Los Angeles County was no longer pursuing the
matter and a received a second unsolicited settlement offer from the two
remaining counties.
The investigation is now focused on the alleged implications in Enron's
advertising that Enron's rate was unique to EES and failed to provide a full
disclosure of the state deregulatory statute. Enron continues to maintain that:
(1) it accurately advertised its product (a combined 10% rate reduction off
1997 rates and 2 free weeks of electricity after the first year of
service) and that it is unreasonable to ignore the 2 free weeks simply
because of the 1 year vesting requirement;
(2) the state mandated rate reductions apply only to the investor owned
utilities, and, given the inapplicable nature of such regulations to
Enron, disclosure of the state mandated regulatory scheme was not
required by Enron; and
(3) even the California utilities did not completely disclose the state
regulatory scheme.
The District Attorneys have now offered to settle for $415,000 and
injunctive relief. Enron met with the Assistant District Attorneys again in
December, 1999 to continue settlement negotiations. Enron does not believe that
the resolution of these matters reasonably can be expected to have a material
adverse effect on its business or results of operations.
ITEM 2
IN RE ENRON CORP.: ADMINISTRATIVE SUBPOENA, ATTORNEY GENERAL, STATE OF NEW
JERSEY:
Enron Corp. received an administrative subpoena in March, 1999 from the
New Jersey Attorney General's Office of Consumer Protection to produce certain
documents pertaining to the marketing of natural gas in the State of New Jersey
by Enron Energy Services, Inc. ("EESI"). The subpoena was part of an
investigation related to allegations of improper marketing practices by a
third-party telemarketing company retained by EESI to sell natural gas contracts
to commercial customers in New Jersey. The telemarketer had been terminated by
EESI in December, 1997. On September 26, 1999, EESI entered into a Consent Order
with the New Jersey Division of Consumer Affairs ("DCA") and Board of Public
Utilities ("BPU") resolving the investigation as it relates to EESI.
As set forth in the Consent Order, the DCA and BPU did not find that
EESI had engaged in any act that is unlawful under New Jersey Law. The Consent
Order requires EESI and its affiliates to:
1) comply with New Jersey laws in their natural gas and electricity
sales efforts;
2) maintain internal policies and training procedures to ensure such
compliance;
3) ensure that management level employees with direct responsibility
for marketing natural gas and electricity to customers in New
Jersey are familiar with the terms of the Consent Order; and
4) provide, for a period of two years, a copy of the Consent Order to
any affiliate filing for a retail energy sales license in New
Jersey and any independent contractor hired by it or its
affiliates to sell retail energy contracts in New Jersey.
EESI has agreed not to object to the introduction of the Consent Order
into the record with regard to an application of any Enron Corp. affiliate for a
license to sell natural gas or electricity in New Jersey; however, it is the
belief of the Enron Corp. Government Affairs Department that such introduction
will not adversely affect such licensure.
SCHEDULE 3.11
COMPLIANCE WITH LAWS
None, except as set forth in Schedule 3.6.
SCHEDULE 5.12
EMPLOYEES
MARKETING
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RISK MANAGEMENT
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REGULATORY
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ADMINISTRATION
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