1
EXHIBIT 10.62
STOCK RESTRICTION AND REGISTRATION RIGHTS AGREEMENT
THIS STOCK RESTRICTION AND REGISTRATION RIGHTS AGREEMENT (the
"Agreement") dated as of December 9, 1997, is between ENRON CORP., an Oregon
corporation (the "Company"), and ENRON OIL & GAS COMPANY, a Delaware
corporation (the "Holder").
W I T N E S S E T H:
WHEREAS, the Holder owns a substantial number of options to purchase
shares of common stock, without par value (the "Common Stock"), of the Company
(the "Options");
WHEREAS, the Options are, and the Common Stock to be issued upon
exercise of such Options will be, "restricted securities" under the Securities
Act of 1933 (the "Securities Act"); and
WHEREAS, under the provisions of the Securities Act and the General
Rules and Regulations promulgated by the Securities and Exchange Commission
(the "SEC") thereunder, the Holder may be limited in the manner of selling the
shares of Common Stock owned by the Holder, absent registration under the
Securities Act of the sale of such Common Stock or the availability of another
exemption from the registration requirements of the Securities Act; and
WHEREAS, the Company and the Holder desire to set forth certain
registration rights as to such shares;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements contained herein, the parties hereby agree as follows:
1. Agreement Not to Sell or Transfer Restricted Stock For a
Period of Time. The Holder agrees that it will not offer, sell, contract to
sell or otherwise dispose of any Options or shares of Common Stock except
pursuant to a registration statement under the Securities Act or an applicable
exemption therefrom.
2. Demand Registration.
a. Request for Registration. As used in this Agreement,
"Restricted Stock" shall mean all shares of Common Stock issued upon exercise
of the Options, together with any securities issued or issuable with respect to
any such Common Stock by way of stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization or otherwise. As to any particular Restricted Stock, once issued
such securities shall cease to be Restricted Stock when (a) a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been
2
disposed of in accordance with such registration statement, (b) such securities
shall have been sold pursuant to Rule 144 (or any successor provision) under
the Securities Act, or (c) such securities shall have been otherwise
transferred, new certificates representing such securities not bearing a legend
restricting further transfer shall have been delivered by the Company and
subsequent disposition of such securities shall not require registration or
qualification of such securities under the Securities Act or any similar state
law then in force. The Holder and any permitted assignee of the Holder's rights
and duties hereunder are referred to herein as the "Holders." Unless the
context otherwise requires, any reference herein to a Holder or Holders of
Restricted Stock shall be deemed to include reference to a holder of Options,
and any reference herein to a number of shares of Restricted Stock, to a
majority in number of shares of Restricted Stock or to all or a portion of
shares of Restricted Stock of any Holder or Holders shall be deemed to include
reference to a number of shares of Restricted Stock issuable upon exercise
thereof or to a combination of shares of Restricted Stock issuable and issued
upon exercise of Options (provided that the Company shall not be required to
file any registration statement covering resales of Options). Subject to the
conditions and limitations set forth in Section 5 of this Agreement, the Holder
or Holders of Restricted Stock holding in the aggregate at least 500,000 shares
of Restricted Stock may make a written request for registration under the
Securities Act of all or part of its or their Restricted Stock pursuant to this
Section 2 ("Demand Registration"), provided that the number of shares of
Restricted Stock proposed to be sold shall be at least 500,000 shares (subject
to appropriate adjustment for any stock dividend, stock split, combination,
recapitalization, merger, consolidation, reorganization or other occurrence
affecting the number of shares of Restricted Stock). Such request will specify
the aggregate number of shares of Restricted Stock proposed to be sold and will
also specify the intended method of disposition thereof. Within ten days after
receipt of such request, the Company will give written notice of such
registration request to all other Holders of Restricted Stock and include in
such registration all Restricted Stock with respect to which the Company has
received written requests for inclusion therein within fifteen business days
after the receipt by the applicable Holder of the Company's notice. Each such
request will also specify the aggregate number of shares of Restricted Stock to
be registered and the intended method of disposition thereof. No other party,
including the Company (but excluding another Holder of Restricted Stock), shall
be permitted to offer securities under any such Demand Registration unless the
Holder or Holders requesting the Demand Registration shall consent in writing.
b. Priority on Demand Registrations. If the Holders of a
majority in number of shares of the Restricted Stock to be registered in a
Demand Registration so elect, the offering of such Restricted Stock pursuant to
such Demand Registration shall be in the form of an underwritten offering. In
such event, if the managing underwriter or underwriters of such offering advise
the Company and the Holders in writing that in their opinion the aggregate
amount of Restricted Stock requested to be included in such offering is so
large that it will materially and adversely affect the success of such
offering, the Company will include in such registration the aggregate number of
shares of Restricted Stock which in the opinion of such managing underwriter or
underwriters can be sold without any such material adverse effect, and such
number of shares shall be allocated pro rata among the Holders of Restricted
Stock on the basis of the number of shares of Restricted Stock requested to be
included in such registration by their Holders. To the extent Restricted Stock
so
2
3
requested to be registered are excluded from the offering, then the Holders of
such Restricted Stock shall have the right to one additional Demand
Registration under this Section with respect to such Restricted Stock, provided
that the failure of such Restricted Stock to be registered is through no fault
of such Holder.
c. Selection of Underwriters and Counsel. If any Demand
Registration is in the form of an underwritten offering, the Holders of a
majority in number of shares of Restricted Stock to be registered will select
and obtain the services of the investment banker or investment bankers and
manager or managers that will administer the offering and the counsel to such
investment bankers and managers; provided that such investment bankers,
managers and counsel must be approved by the Company, which approval shall not
be unreasonably withheld.
3. Piggyback Registration. If the Company proposes to file a
registration statement under the Securities Act with respect to an offering for
its own account of any class of its equity securities (other than a
registration statement on Form S-8 (or any successor form) or any other
registration statement relating solely to employee benefit plans or filed in
connection with an exchange offer, a transaction to which Rule 145 under the
Securities Act applies or an offering of securities solely to the Company's
existing stockholders), then the Company shall in each case give written notice
of such proposed filing to the Holders of Restricted Stock as soon as
practicable (but no later than five business days) before the anticipated
filing date, and such notice shall offer such Holders the opportunity to
register such number of shares of Restricted Stock as each such Holder may
request. Each Holder of Restricted Stock desiring to have such Holder's
Restricted Stock included in such registration statement shall so advise the
Company in writing within five business days after the date of Company's
notice, setting forth the amount of such Holder's Restricted Stock for which
registration is requested. If the Company's offering is to be an underwritten
offering, the Company shall, subject to the further provisions of this
Agreement, use its reasonable efforts to cause the managing underwriter or
underwriters of a proposed underwritten offering to permit the Holders of the
Restricted Stock, requested to be included in the registration for such
offering, to include such securities in such offering on the same terms and
conditions as any similar securities of the Company included therein. Moreover,
if the registration of which the Company gives notice does involve an
underwriting, the right of each Holder to registration pursuant to this Section
3 shall, unless the Company otherwise assents, be conditioned upon such
Holder's participation as a seller in such underwriting and its execution of an
underwriting agreement with the managing underwriter or underwriters selected
by the Company. Notwithstanding the foregoing, if the managing underwriter or
underwriters of such offering deliver a written opinion to the Holders of
Restricted Stock that either because of (A) the kind of securities which the
Holders, the Company and any other person or entities intend to include in such
offering or (B) the size of the offering which the Holders, the Company and
other persons intend to make, the success of the offering would be materially
and adversely affected by inclusion of the Restricted Stock requested to be
included, then (i) in the event that the size of the offering is the basis of
such managing underwriter's opinion, the number of shares to be offered for the
accounts of Holders of Restricted Stock shall be reduced pro rata or to the
extent necessary to reduce the total amount of securities to be included in
such offering to the amount recommended by such managing underwriter or
underwriters; provided that if securities are being
3
4
offered for the account of other persons or entities as well as the Company,
such reduction shall not represent a greater fraction of the number or kind of
securities intended to be offered by Holders of Restricted Stock than the
fraction of similar reductions imposed on such other persons or entities over
the amount of securities of such kind they intended to offer; and (ii) in the
event that the combination of securities to be offered is the basis of such
managing underwriter's opinion, (x) the Restricted Stock to be included in such
offering shall be reduced as described in clause (i) above (subject to the
proviso in clause (i)) or, (y) if the actions described in clause (x) would, in
the judgment of the managing underwriter, be insufficient to substantially
eliminate the adverse effect that inclusion of the Restricted Stock requested
to be included would have on such offering, such Restricted Stock will be
excluded from such offering. Any Restricted Stock excluded from an underwriting
shall be withdrawn from registration and shall not, without the consent of the
Company and the manager of the underwriting, be transferred in a public
distribution prior to the earlier of 90 days (or such other shorter period of
time as the manager of the underwriting may require) after the effective date
of the registration statement or 150 days after the date the Holders of such
Restricted Stock are notified of such exclusion.
4. Registration Procedures. Whenever, pursuant to Section 2 or 3,
the Holders of Restricted Stock have requested that any Restricted Stock be
registered, the Company will, subject to the provisions of Section 5, use all
reasonable efforts to effect the registration and the sale of such Restricted
Stock in accordance with the intended method of disposition thereof as promptly
as practicable, and in connection with any such request, the Company will:
a. in connection with a request pursuant to Section 2,
prepare and file with the SEC, not later than 60 days after receipt of a
request to file a registration statement with respect to Restricted Stock, a
registration statement on any form for which the Company then qualifies and
which counsel for the Company shall deem appropriate and which form shall be
available for the sale of such Restricted Stock in accordance with the intended
method of distribution thereof, and use its reasonable efforts to cause such
registration statement to become effective; provided that if the Company shall
furnish to the Holders making such a request a certificate signed by either the
chief financial officer or the chief accounting officer of the Company stating
that in his good faith judgment it would be significantly disadvantageous to
the Company for such a registration statement to be filed on or before the date
filing would be required, the Company shall have an additional period of not
more than 90 days within which to file such registration statement; and
provided further, (i) that before filing a registration statement or prospectus
or any amendments or supplements thereto, the Company will furnish to one
counsel selected by the Holders of a majority in number of shares of the
Restricted Stock covered by such registration statement copies of all such
documents proposed to be filed, which documents will be subject to the review
of such counsel, and (ii) that after the filing of the registration statement,
the Company will promptly notify each selling Holder of Restricted Stock of any
stop order issued or, to the knowledge of the Company, threatened by the SEC
and take all reasonable actions to prevent the entry of such stop order or to
remove it if entered;
4
5
b. in connection with a registration pursuant to Section
2, prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may
be necessary to keep such registration statement effective for a period of not
less than 270 days or such shorter period as shall terminate when all
Restricted Stock covered by such registration statement have been sold (but not
before the expiration of the 90-day period referred to in Section 4(3) of the
Securities Act and Rule 174 thereunder, if applicable), and comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period in
accordance with the intended methods of disposition by the Selling Holders
thereof set forth in such registration statement;
c. as soon as reasonably practicable, furnish to each
selling Holder, prior to filing a registration statement, copies of such
registration statement as proposed to be filed, and thereafter furnish to such
selling Holder such number of copies of such registration statement, each
amendment and supplement thereto (in each case, if specified by such Holder,
including all exhibits thereto), the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents as
such selling Holder may reasonably request in order to facilitate the
disposition of the Restricted Stock owned by such selling Holder;
d. with reasonable promptness, use its reasonable efforts
to register or qualify such Restricted Stock under such other securities or
blue sky laws of such jurisdictions within the United States as any selling
Holder reasonably (in light of such selling Holder's intended plan of
distribution) requests and do any and all other acts and things which may be
reasonably necessary or advisable to enable such selling Holder to consummate
the disposition in such jurisdictions of the Restricted Stock owned by such
selling Holder; provided that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not otherwise be
required to qualify but for this subsection d., (ii) subject itself to taxation
in any such jurisdiction or (iii) consent to general service of process in any
such jurisdiction;
e. with reasonable promptness, use reasonable efforts to
cause the Restricted Stock covered by such registration statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary by virtue of the business and operations of the Company to
enable the selling Holder or Holders thereof to consummate the disposition of
such Restricted Stock;
f. promptly notify each selling Holder of such Restricted
Stock, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the occurrence of any event known to the
Company requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Restricted Stock, such prospectus will not contain an untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein not misleading and promptly make
available to each selling Holder any such supplement or amendment;
5
6
g. in connection with a request pursuant to Section 2,
enter into an underwriting agreement in customary form, the form and substance
of such underwriting agreement being subject to the reasonable satisfaction of
the Company;
h. with reasonable promptness make available for
inspection by any selling Holder, any underwriter participating in any
disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such selling Holder or underwriter
(collectively, the "Inspectors"), all financial and other records, pertinent
corporate documents and properties of the Company (collectively, the
"Records"') as shall be reasonably necessary to enable them to exercise their
due diligence responsibility, and cause the Company's officers and employees to
supply all information reasonably requested for such purpose by any such
Inspector in connection with such registration statement; provided, however,
that the selection of any Inspector other than a selling Holder shall be
subject to the consent of the Company, which shall not be unreasonably
withheld. Each Inspector that actually reviews Records supplied by the Company
that include information that the Company determines, in good faith, to be
confidential ("Confidential Information") shall be required, prior to any such
review, to execute an agreement with the Company providing that such Inspector
shall not disclose any Confidential Information unless such disclosure is
required by applicable law or legal process. Each selling Holder of Restricted
Stock agrees that Confidential Information obtained by it as a result of such
inspections shall not be used by it as the basis for any transactions in
securities of the Company unless and until such information is made generally
available to the public. Each selling Holder of Restricted Stock further agrees
that it will, upon learning that disclosure of Confidential Information is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at its expense, to undertake appropriate action to prevent
disclosure of the Confidential Information. Each selling Holder also agrees
that the due diligence investigation made by the Inspectors shall be conducted
in a manner which shall not unreasonably disrupt the operations of the Company
or the work performed by the Company's officers and employees;
i. in the event such sale is pursuant to an underwritten
offering, use its reasonable efforts to obtain a comfort letter or letters from
the Company's independent public accountants in customary form and covering
such matters of the type customarily covered by comfort letters as the managing
underwriter reasonably requests;
j. otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering a
period of twelve months, beginning within three months after the effective date
of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act; and
k. with reasonable promptness, use its reasonable efforts
to cause all such Restricted stock to be listed on each securities exchange on
which the Common Stock of the Company is then listed, provided that the
applicable listing requirements are satisfied.
6
7
Each selling Holder of Restricted Stock agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in subsection f. hereof, such selling Holder will forthwith discontinue
disposition of Restricted Stock pursuant to the registration statement covering
such Restricted Stock until such selling Holder's receipt of the copies of the
supplemented or amended prospectus contemplated by subsection f. hereof, and,
if so directed by the Company, such selling Holder will deliver to the Company
(at the Company's expense) all copies, other than permanent file copies then in
such selling Holder's possession, of the prospectus covering such Restricted
Stock current at the time of receipt of such notice. In the event the Company
shall give any such notice, the Company shall extend the period during which
such registration statement shall be maintained effective pursuant to this
Agreement (including the period referred to in subsection b.) by the number of
days during the period from and including the date of the giving of such notice
pursuant to subsection f. hereof to and including the date when each selling
Holder of Restricted Stock covered by such registration statement shall have
received the copies of the supplemented or amended prospectus contemplated by
subsection f. hereof. Each selling Holder also agrees to notify the Company if
any event relating to such selling Holder occurs which would require the
preparation of a supplement or amendment to the prospectus so that such
prospectus will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading.
5. Conditions and Limitations.
a. The Company's obligations under Section 2 shall be
subject to the following limitations:
i. the Company need not file a registration
statement either (x) during the period starting with the date 60 days prior to
the Company's estimated date of filing of, and ending 90 days after the
effective date of, any registration statement pertaining to securities of the
Company (other than a registration of securities in a Rule 145 transaction or
exchange offer or with respect to an employee benefit plan or dividend
reinvestment plan), provided that if such Company registration statement is not
filed within 90 days after the first date on which the Company notifies a
Holder of Restricted Stock that it will delay a Demand Registration pursuant to
this clause (x), the Company may not further postpone such Demand Registration
pursuant to this clause; or (y) during the period specified in the first
proviso of subparagraph a. of Section 4;
ii. the Company shall not be required to furnish
any audited financial statements other than those audited statements
customarily prepared at the end of its fiscal year, or to furnish any unaudited
financial information with respect to any period other than its regularly
reported interim quarterly periods unless in the absence of such other
unaudited financial information the registration statement would contain an
untrue statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading;
7
8
iii. except as provided in Section 2.b., the
Company shall not be required to file more than two Demand Registrations. A
registration statement will not count as a Demand Registration until it has
become effective; and
iv. the Company shall have received the
information and documents specified in Section 6 and each selling Holder shall
have observed or performed its other covenants and conditions contained in such
section and Section 8.
b. The Company's obligation under Section 3 shall be
subject to the limitations and conditions specified in such section and in
clauses (i), (ii) and (iv) of subsection a. of this Section 5, and to the
condition that the Company may at any time terminate its proposal to register
its shares and discontinue its efforts to cause a registration statement to
become or remain effective.
6. Information from and Certain Covenants of Holders of Restricted
Stock. Notices and requests delivered to the Company by Holders for whom
Restricted Stock are to be registered pursuant to this Agreement shall contain
such information regarding the Restricted Stock to be so registered, the Holder
and the intended method of disposition of such Restricted Stock as shall
reasonably be required in connection with the action to be taken. Any Holder
whose Restricted Stock is included in a registration statement pursuant to this
Agreement shall execute all consents, powers of attorney, registration
statements and other documents reasonably required to be signed by it in order
to cause such registration statement to become effective. Each selling Holder
covenants that, in disposing of such Holder's shares, such Holder will comply
with Regulation M of the SEC adopted pursuant to the Securities Exchange Act of
1934 (the "Exchange Act").
7. Registration Expenses. All Registration Expenses (as defined
herein) will be borne by the Company. Underwriting discounts and commissions
applicable to the sale of Restricted Stock shall be borne by the Holder of the
Restricted Stock to which such discount or commission relates, and each selling
Holder shall be responsible for the fees and expenses of any legal counsel,
accountants or other agents retained by such selling Holder and all other
out-of-pocket expenses incurred by such selling Holder in connection with any
registration under this Agreement.
As used herein, the term Registration Expenses means all expenses
incident to the Company's performance of or compliance with this Agreement
(whether or not the registration in connection with which such expenses are
incurred ultimately becomes effective), including without limitation all
registration and filing fees, fees and expenses of compliance with securities
or blue sky laws (including reasonable fees and disbursements of counsel in
connection with blue sky qualifications of the Restricted Stock), rating agency
fees, printing expenses, messenger and delivery expenses incurred by the
Company, internal expenses incurred by the Company (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the fees and expenses incurred in connection with
the listing of the securities to be registered on each securities exchange on
which similar securities issued by the Company are then listed, and fees and
disbursements of counsel for the Company and its independent certified public
accountants (including the expenses of any special audit or comfort letters
required by or incident to such
8
9
performance), securities acts liability insurance (if the Company elects to
obtain such insurance), the reasonable fees and expenses of any special experts
retained by the Company in connection with such registration and the fees and
expenses of other persons retained by the Company.
8. Indemnification; Contribution.
a. Indemnification by the Company. The Company agrees to
indemnify and hold harmless each selling Holder of Restricted Stock, its
officers, directors and agents and each person, if any, who controls such
selling Holder within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable costs of investigation)
arising out of or based upon any untrue statement or alleged untrue statement
of a material fact contained in any registration statement or prospectus
relating to the Restricted Stock or in any amendment or supplement thereto or
in any preliminary prospectus relating to the Restricted Stock, or arising out
of or based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of, or are based upon, any such untrue statement or omission
or allegation thereof based upon information furnished in writing to the
Company by such selling Holder or on such selling Holder's behalf expressly for
use therein and provided further, that with respect to any untrue statement or
omission or alleged untrue statement or omission made in any preliminary
prospectus, the indemnity agreement contained in this subsection shall not
apply to the extent that any such loss, claim, damage, liability or expense
results from the fact that a copy of the final prospectus was not sent or given
to the person asserting any such losses, claims, damages, liabilities or
expenses at or prior to the written confirmation of the sale of the Restricted
Stock concerned to such person. The Company also agrees to include in any
underwriting agreement with any underwriters of the Restricted Stock provisions
indemnifying and providing for contribution to such underwriters, their
officers and directors and each person who controls such underwriters on
substantially the same basis as the provisions of this Section 8 indemnifying
and providing for contribution to the selling Holders.
b. Indemnification by Holders of Restricted Stock. Each
selling Holder agrees to indemnify and hold harmless the Company, its officers,
directors and agents and each person, if any, who controls the Company within
the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation) arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to the
Restricted Stock or in any amendment or supplement thereto or in any
preliminary prospectus relating to the Restricted Stock, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, provided (i) that such losses, claims, damages, liabilities or
expenses arise out of, or are based upon, any such untrue statement or omission
or allegation thereof based upon information furnished in writing to the
Company by such selling Holder or on such selling Holder's behalf expressly for
use therein, (ii) that with respect to any untrue statement or
9
10
omission or alleged untrue statement or omission made in any preliminary
prospectus, the indemnity agreement contained in this subsection shall not
apply to the extent that any such loss, claim, damage, liability or expense
results from the fact that a copy of the final prospectus was not sent or given
to the person asserting any such losses, claims, damages, liabilities or
expenses at or prior to the written confirmation of the sale of the Restricted
Stock concerned to such person, and (iii) that no selling Holder shall be
liable for any indemnification under this Section 8 in an aggregate amount
which exceeds the total net proceeds (before deducting expenses) received by
such selling Holder from the offering. Each selling Holder also agrees to
include in any underwriting agreement with underwriters of the Restricted Stock
provisions indemnifying and providing for contribution to such underwriters,
their officers and directors and each person who controls such underwriters on
substantially the same basis as the provisions of this Section 8 indemnifying
and providing for contribution to the Company.
c. Conduct of Indemnification Proceedings. If any action
or proceeding (including any governmental investigation) shall be brought or
asserted against any indemnified party in respect of which indemnity may be
sought from an indemnifying party, the indemnifying party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such indemnified party, and shall assume the payment of all expenses. Such
indemnified party shall have the right to employ separate counsel in any such
action and to participate in the defense thereof, but the fees and expenses of
such counsel shall be at the expense of such indemnified party unless (i) the
indemnifying party has agreed to pay such fees and expenses, or (ii) the
indemnifying party shall have failed to assume the defense of such action or
proceeding and employ counsel reasonably satisfactory to such indemnified party
or (iii) the named parties to any such action or proceeding (including any
impleaded parties) include both such indemnified party and such indemnifying
party, and such indemnified party shall have been advised by counsel that there
may be one or more legal defenses available to such indemnified party which are
different from or additional to those available to the indemnifying party (in
which case, if such indemnified party notifies the indemnifying party in
writing that it elects to employ separate counsel at the expense of the
indemnifying party, the indemnifying party shall not have the right to assume
the defense of such action or proceeding on behalf of such indemnified party,
it being understood, however, that the indemnifying party shall not, in
connection with any one such action or proceeding or separate but substantially
similar or related actions or proceedings in the same jurisdiction arising out
of the same general allegations or circumstances, be liable for the fees and
expenses of more than one separate firm of attorneys (together with appropriate
local counsel) at any time for such indemnified party, which firm shall be
designated in writing by such indemnified party). The indemnifying party shall
not be liable for any settlement of any such action or proceeding effected
without its written consent, but if settled with its written consent, or if
there is a final judgment for the plaintiff in any such action or proceeding,
the indemnifying party agrees to indemnify and hold harmless such indemnified
party from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment.
d. Contribution. If the indemnification provided for in
this Section 8 is unavailable to the Company or the selling Holders in respect
of any losses, claims, damages,
10
11
liabilities or judgments referred to therein, then each such indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities and judgments, in such proportion as is
appropriate to reflect the relative fault of each such party in connection with
such statements or omissions, as well as any other relevant equitable
considerations. The relative fault of each such party shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the selling Holders agree that it would not
be just and equitable if contribution pursuant to this Section 8.d.
were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations
referred to in the immediately preceding paragraph. The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the
limitations set forth above, any legal or other expenses reasonably
incurred by such indemnified party in connection with investigation or
defending any such action or claim. Notwithstanding the provisions of
this Section 8.d., no selling Holder shall be required to contribute
any amount in excess of the amount by which the total price at which
the Restricted Stock of such selling Holder were offered to the public
exceeds the amount of any damages which such selling Holder has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
9. Cashless Exercises. The Company agrees to cooperate with the
Holder in order to permit the Holder to effect "cashless exercises" of Options.
10. Amendments. This Agreement may be amended or modified upon the
written consent thereto of the Company and the Holders of not less than 66-2/3%
of Restricted Stock.
11. Assignments. This Agreement shall be binding on and inure to the
benefit of the respective successors and assigns of the parties hereto.
12. Entire Agreement; Governing Law. This Agreement constitutes the
entire agreement of the parties relating to the subject matter hereof; all
prior or contemporaneous written or oral agreements are merged herein; this
Agreement shall be governed by the laws of the State of Texas.
13. Notices. Any notice, request, instruction, correspondence or
other document to be given hereunder by either party to the other (herein
collectively called "Notice") shall be in writing and delivered personally or
mailed, postage prepaid, or by telegram or telecopier, as follows:
11
12
If to the Company:
Enron Corp.
0000 Xxxxx Xxxxxx
P. O. Xxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Vice President and Secretary
Telecopier No.: 000-000-0000
If to the Holder:
Enron Oil & Gas Company
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Telecopier No.: 000-000-0000
Notice given by personal delivery or mail shall be effective upon actual
receipt. Notice given by telegram or telecopier shall be effective upon actual
receipt if received during the recipient's normal business hours, or at the
beginning of the recipient's next business day after receipt if not received
during the recipient's normal business hours. Any party may change any address
to which Notice is to be given to it by giving Notice as provided above of such
change of address.
IN WITNESS WHEREOF, the Company and the Holder have caused this
Agreement to be signed by their respective officers thereunto duly authorized.
ENRON CORP.
By: /s/ J. XXXXXXXX XXXXXX
---------------------------------------
Name: J. Xxxxxxxx Xxxxxx
Title: Senior Vice President, Corporate
Development
ENRON OIL & GAS COMPANY
By: /s/ XXXXXXX X. XXXXXXX
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman of the Board and
Chief Executive Officer
12
