STOCK PURCHASE AGREEMENT by and among PUGET ENERGY, INC. and THE PURCHASERS NAMED HEREIN Dated as of October 25, 2007
Exhibit
10.1
EXECUTION
VERSION
by
and
among
PUGET
ENERGY, INC.
and
THE
PURCHASERS NAMED HEREIN
Dated
as
of October 25, 2007
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Table
of Contents
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Page
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ARTICLE
I. DEFINITIONS
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1
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Section
1.1.
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Definitions
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1
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ARTICLE
II. PURCHASE AND SALE OF THE SECURITIES
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7
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Section
2.1.
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Issuance
and Sale of Securities
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7
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Section
2.2.
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Registration
Rights
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7
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Section
2.3.
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Closing
and Delivery
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7
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ARTICLE
III. REPRESENTATIONS AND WARRANTIES OF THE COMPANY
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8
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Section
3.1.
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Shares
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9
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Section
3.2.
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WKSI
Status
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9
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Section
3.3.
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Investment
Company
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9
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Section
3.4.
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Authority;
Non-Contravention; Approvals; Compliance
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9
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Section
3.5.
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Litigation
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11
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Section
3.6.
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Brokers
and Finders
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11
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Section
3.7.
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Additional
Representations
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11
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Section
3.8.
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No
Other Representations of the Company
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11
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ARTICLE
IV. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
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11
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Section
4.1.
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Organization
and Qualification
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11
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Section
4.2.
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Authority;
Non-Contravention; Approvals; Compliance
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11
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Section
4.3.
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Litigation
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13
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Section
4.4.
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No
Vote Required
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13
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Section
4.5.
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Ownership
of Company Stock
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13
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Section
4.6.
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Purchase
for Investment
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13
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Section
4.7.
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Approvals
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13
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Section
4.8.
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Trustee
Power
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13
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Section
4.9.
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No
Other Representations of the Purchasers
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14
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ARTICLE
V. COVENANTS
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14
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Section
5.1.
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Registration
Rights
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14
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Section
5.2.
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Reservation
of Company Stock
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14
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Section
5.3.
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Listing
of Shares
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14
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Section
5.4.
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Regulatory
Matters
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14
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Section
5.5.
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Voting
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15
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Section
5.6.
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WKSI
Status
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15
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Section
5.7.
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Use
of Proceeds
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15
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Section
5.8.
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Expenses
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15
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Section
5.9.
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Confidentiality
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15
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Section
5.10.
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Public
Announcement
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16
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Section
5.11.
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Purchasers'
Obligations Several
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16
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ARTICLE
VI. CONDITIONS TO CLOSING OF THE PURCHASERS
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17
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Section
6.1.
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Representations
and Warranties Correct
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17
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Section
6.2.
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Performance
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17
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Section
6.3.
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Regulatory
Consents
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17
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Section
6.4.
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Authorizations
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17
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Section
6.5.
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Company
Material Adverse Effect
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17
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Section
6.6.
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Opinion
of Company’s Counsel
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18
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Section
6.7.
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No
Injunction
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18
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Section
6.8.
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Merger
Agreement
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18
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Section
6.9.
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Compliance
Certificate
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18
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ARTICLE
VII. CONDITIONS TO CLOSING OF THE COMPANY
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18
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Section
7.1.
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Representations
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18
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Section
7.2.
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Performance
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18
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Section
7.3.
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Regulatory
Consents
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18
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Section
7.4.
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Authorizations
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19
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Section
7.5.
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No
Injunction
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19
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Section
7.6.
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Compliance
Certificate
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19
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ARTICLE
VIII. TRANSFER RESTRICTIONS
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19
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Section
8.1.
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Lock-up
Period
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19
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Section
8.2.
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Permitted
Transfers
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19
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ARTICLE
IX. STANDSTILL
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20
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Section
9.1.
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Standstill
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20
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ARTICLE
X. INDEMNIFICATION
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21
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Section
10.1.
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Company
Indemnification
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21
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Section
10.2.
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Investor
Indemnification
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22
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Section
10.3.
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Procedure
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22
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Section
10.4.
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Indemnification
Non-Exclusive
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23
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Section
10.5.
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Limitation
on Company Indemnification
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23
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ARTICLE
XI. TERMINATION
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23
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ARTICLE
XII. GENERAL PROVISIONS
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23
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Section
12.1.
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Survival
of Representations and Warranties
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23
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Section
12.2.
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Notices
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24
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Section
12.3.
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Entire
Agreement
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24
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Section
12.4.
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Severability
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25
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Section
12.5.
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Interpretation
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25
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Section
12.6.
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Counterparts;
Effect
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25
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Section
12.7.
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No
Third-Party Beneficiaries
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25
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Section
12.8.
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Trustee
Liability
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25
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Section
12.9.
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Governing
Law
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25
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Section
12.10.
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Venue
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25
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Section
12.11.
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Waiver
of Jury Trial and Certain Damages
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26
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Section
12.12.
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Assignment
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26
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This
STOCK PURCHASE AGREEMENT, dated as of October 25, 2007 (this
“Agreement”), is entered into by and among Puget Energy, Inc., a
Washington corporation (the “Company”), and the purchasers listed on
Schedule 1 hereto (the “Purchasers”).
RECITALS
WHEREAS,
the Company wishes to sell 12,500,000 (twelve million, five hundred thousand)
shares of its common stock, par value $0.01 per share (the “Company Common
Stock”), together with the associated preferred share purchase rights (the
“Rights”) (the number of such shares of Company Common Stock together
with the associated Rights, the “Shares”), to the Purchasers, and the
Purchasers wish to purchase the Shares.
NOW,
THEREFORE, the parties hereto agree as follows:
ARTICLE
I.
DEFINITIONS
Section
1.1. Definitions. For
purposes of this Agreement, the following terms shall have the following
meanings:
“2007
WUTC Rate Case” means the filing of the proceeding at the WUTC expected to
be initiated by Puget Sound Energy, Inc. in December 2007 to increase or
otherwise change rates, charges or revenue requirements for transmission,
distribution or generation services.
“Affiliate”,
with respect to any Person, shall have the meaning set forth in Rule 12b-2
of
the Exchange Act as in effect on the date hereof.
“Agreement”
has the meaning specified in the Introduction.
“BCH”
has the meaning specified in Section 4.23 of Exhibit B.
“Blackout
Notice” has the meaning specified in Section 2(c) of Exhibit A.
“Blackout
Period” has the meaning specified in Section 2(c) of Exhibit A.
“Business
Day” means a day (not being a Saturday or Sunday or a public holiday in
Australia, Canada or the United States of America) on which banks are open
for
general business in New York City.
“Closing”
has the meaning specified in Section 2.3(a).
“Closing
Date” has the meaning specified in Section 2.3(a).
“Code”
has the meaning specified in Section 4.9 of Exhibit B.
“Company”
has the meaning specified in the Introduction.
“Company
Common Stock” has the meaning specified in the Recitals.
“Company
Disclosure Letter” means the letter, dated as of the date hereof, delivered
by the Company to the Purchasers simultaneously with the execution and delivery
of this Agreement.
“Company
Financial Statements” has the meaning specified in Section 4.5 of Exhibit
B.
“Company
Hedging Guidelines” has the meaning specified in Section 4.20(a) of Exhibit
B.
“Company
Material Adverse Effect” means any event, change or occurrence or
development of a set of circumstances or facts, which, individually or together
with any other event, change, occurrence or development, has or would have
a
material adverse effect on (x) the business, assets, liabilities, properties,
financial condition or results of operations of the Company and the Company
Subsidiaries taken as a whole or (y) the ability of the Company to consummate
the transactions contemplated by, or to perform its obligations under, this
Agreement; provided, however, that the term "Company Material
Adverse Effect" shall not include (i) any such effect resulting from any change,
including any change in law, rule, or regulation of any Governmental Authority,
that applies generally to similarly situated Persons, (ii) any such effect
relating to or resulting from general changes in the electric or natural gas
utility industry, other than such effects having a disproportionate impact
on
the Company as compared to similarly situated Persons, (iii) any such effect
relating to or resulting from the 2007 WUTC Rate Case before the WUTC, (iv)
any
such effect relating to or resulting from changes to accounting standards,
principles or interpretations, (v) any such effect resulting from the
announcement of the execution of the Merger Agreement or the consummation of
the
transactions contemplated thereby (except to the extent that the Company has
made an express representation with respect to the effect of such consummation
on the Company), including any such change resulting therefrom in the market
value of the Company Common Stock or the Company's credit rating, or from any
action, suit or proceeding relating to the Merger Agreement or the transactions
contemplated thereby, including any such action, suit or proceeding alleging
a
breach of fiduciary duty in connection with the execution, delivery, approval
or
consummation of the transactions contemplated by the Merger Agreement, (vi)
any
such effect resulting from the replacement of the Designated Credit Agreements
as contemplated by Section 7.17 of the Merger Agreement, or (vii) any such
effect resulting from any action taken by any of the parties outside the
ordinary course of its business that is required to be taken in order to comply
with any provision of the Merger Agreement, including, to the extent applicable,
Section 6.1 thereof.
“Company
Net Position” has the meaning specified in Section 4.20(a) of Exhibit
B.
“Company
Parties” has the meaning specified in Section 10.2.
“Company
Plans” has the meaning specified in Section 4.10(a) of Exhibit
B.
“Company
Preferred Stock” has the meaning specified in Section 4.3 of Exhibit
B.
“Company
Reports” has the meaning specified in Section 4.5 of Exhibit B.
“Company
SEC Reports” has the meaning specified in Section 4.5 of Exhibit
B.
“Company
Series R Preferred Stock” has the meaning specified in Section 4.3 of
Exhibit B.
“Company
Stock Issuance Approvals” has the meaning specified in Section
3.4(c).
“Company
Subsidiary” means a Subsidiary of the Company.
“Contracts”
has the meaning specified in Section 4.14 of Exhibit B.
“Control”
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of securities, by contract or otherwise, which, for the avoidance
of
doubt, shall include through a Person’s capacity as general partner, trustee,
“Responsible Entity,” nominee, manager or adviser or otherwise.
“Demand
Notice” has the meaning specified in Section 2(b) of Exhibit A.
“Department
of Justice” means the United States Department of Justice.
“Designated
Credit Agreements” means the Company's credit agreements set forth on
Section 1.1(a) of the Company Disclosure Letter.
“Easement”
has the meaning specified in Section 4.6(c) of Exhibit B.
“Easement
Real Property” has the meaning specified in Section 4.6(a) of Exhibit
B.
“Environmental
Claim” has the meaning specified in Section 4.13(g)(i) of Exhibit
B.
“Environmental
Laws” has the meaning specified in Section 4.13(g)(ii) of Exhibit
B.
“Environmental
Permits” has the meaning specified in Section 4.13(b) of Exhibit
B.
“ERISA”
has the meaning specified in Section 4.10(a) of Exhibit B.
“ERISA
Affiliate” has the meaning specified in Section 4.10(a) of Exhibit
B.
“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder.
“FERC”
has the meaning specified in Section 4.23 of Exhibit B.
“FPA”
has the meaning specified in Section 4.5 of Exhibit B.
“FTC”
means the United States Federal Trade Commission.
“Fund”
means any unit trust, investment trust, investment company, limited partnership,
general partnership or other collective investment scheme, pension fund,
insurance company or any body corporate or other entity, in each case, the
business, operations or assets of which are managed professionally for
investment purpose.
“GAAP”
has the meaning specified in Section 4.5 of Exhibit B.
“Governmental
Authority” means any court, federal, state, local or foreign governmental or
regulatory body (including a national securities exchange or other
self-regulatory body), authority or other legislative, executive or judicial
entity.
“Hazardous
Materials” has the meaning specified in Section 4.13(g)(iii) of Exhibit
B.
“HEDC”
has the meaning specified in Section 4.23 of Exhibit B.
“Hedging
Contract” has the meaning specified in Section 4.14(b)(vii) of Exhibit
B.
“Holder”
has the meaning specified in Section 10 of Exhibit A.
“HSR
Act” means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended.
“Indemnified
Party” has the meaning specified in Section 10.3.
“Intellectual
Property” has the meaning specified in Section 4.15(a) of Exhibit
B.
“Knowledge”
means when referring to the knowledge of the Company or any Company Subsidiary
the actual knowledge of the Company officers listed on Section 1.1(b) of the
Company Disclosure Letter as would have been acquired in the prudent exercise
of
their duties.
“Leased
Real Property” has the meaning specified in Section 4.6(a) of Exhibit
B.
“Lien”
has the meaning specified in Section 4.2(a) of Exhibit B.
“Losses”
has the meaning specified in Section 7(a) of Exhibit A.
“Material
Contract” has the meaning specified in Section 4.14 of Exhibit
B.
“MBL”
means Macquarie Bank Limited and its Affiliates.
“Merger
Agreement” means the Agreement and Plan of Merger, dated as of the date
hereof, by and among Parent, Padua Intermediate, Merger Sub and the
Company.
“Merger
Sub” means Padua Merger Sub, Inc., a Washington corporation and a wholly
owned subsidiary of Padua Intermediate.
“Options”
has the meaning specified in Section 4.10(m) of Exhibit B.
“Owned
Real Property” has the meaning specified in Section 4.6(a) of Exhibit
B.
“Padua
Intermediate” means Padua Intermediate Holdings Inc., a Washington
corporation and a wholly owned subsidiary of the Parent.
“Parent”
means Padua Holdings LLC, a Delaware limited liability corporation.
“PBGC”
has the meaning specified in Section 4.10(b) of Exhibit B.
“Permitted
Real Property Lien” has the meaning specified in Section 4.6(a) of Exhibit
B.
“Per
Share Price” has the meaning specified in Section 2.1.
“Person”
means any natural person, corporation, general or limited partnership, limited
liability company, joint venture, trust, association or entity of any
kind.
“Puget
Sound Energy” means Puget Sound Energy, Inc., a Washington corporation and a
wholly owned subsidiary of the Company.
“PUHCA”
has the meaning specified in Section 4.5 of Exhibit B.
“PUHCA
2005” has the meaning specified in Section 4.23 of Exhibit B.
“Purchaser
Parties” has the meaning specified in Section 10.1.
“Purchaser
Required Statutory Approvals” has the meaning specified in Section
4.2(c).
“Purchasers”
has the meaning specified in the Introduction.
“Purchaser’s
Trust” has the meaning specified in Section 4.8.
“Real
Property” has the meaning specified in Section 4.6(a) of Exhibit
B.
“Real
Property Lease” has the meaning specified in Section 4.6(c) of Exhibit
B.
“Registrable
Shares” means the Shares that are not Transferable Shares, and any Company
Common Stock or other securities of the Company or any successor entity which
may be issued or distributed in respect of the Registrable Shares by way of
stock dividend or stock split or other distribution, recapitalization, merger,
conversion or reclassification.
“Registration
Rights” has the meaning specified in Section 2.2.
“Related
Fund” means, with respect to any Fund, any other Person or Fund or
subsidiary of a Fund which is advised by, or the business, operations or assets
of which are managed (whether solely or jointly with others) from time to time
by or whose parent is managed by, the manager or adviser of the Fund (or a
Person that, directly or indirectly through one or more intermediaries,
Controls, is Controlled by, or is under common Control with, that manager or
adviser); provided, however, (X) the term “adviser” shall mean an
entity which provides a Person with advice in relation to the management of
investments of that Person; (Y) the term “manager” with respect to any Fund
shall mean any general partner, trustee, responsible entity, nominee, manager,
adviser or other entity performing a similar function with respect to such
Fund;
and (Z) no Person which is or holds shares for a complying superannuation fund
for the purposes of the Australian Superannuation Industry (Supervision) Xxx
0000 shall deemed to be an affiliate of any Person which is or holds shares
for
any other such Fund by reason of this definition.
“Release”
has the meaning specified in Section 4.13(g)(iv) of Exhibit B.
“Rights”
has the meaning specified in the Recitals.
“Rights
Agreement” has the meaning specified in Section 4.12 of Exhibit
B.
“SEC”
means the Securities and Exchange Commission.
“Securities
Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
“Selling
Stockholders” has the meaning specified in Section 3 of Exhibit
A.
“Shares”
has the meaning specified in the Recitals.
“Shelf
Registration Statement” has the meaning specified in Section 2(a) of Exhibit
A.
“SOX”
has the meaning specified in Section 4.5 of Exhibit B.
“Standstill
Period” means, with respect to any Purchaser, the period commencing on the
date hereof and ending eighteen months after the date of the termination of
the
Merger Agreement.
“Subsidiary”
of a Person means any other Person of which at least a majority of the voting
power represented by the outstanding capital stock or other voting securities
or
interests having voting power under ordinary circumstances to elect directors
or
similar members of the governing body of such corporation or entity or fifty
percent (50%) or more of the equity interests in such corporation or entity
shall at the time be owned or controlled, directly or indirectly, by such Person
and/or by one or more of its Subsidiaries.
“Tax
Return” has the meaning specified in Section 4.9 of Exhibit B.
“Taxes”
has the meaning specified in Section 4.9 of Exhibit B.
“Title
IV Company Plan” has the meaning specified in Section 4.10(d) of Exhibit
B.
“Trade
Secrets” has the meaning specified in Section 4.15(a) of Exhibit
B.
“Transfer”
has the meaning specified in Section 8.1.
“Transferable
Shares” means all or a portion of the Shares that are eligible for resale
pursuant to paragraph (k) of Rule 144 under the Securities Act (or any similar
provision then in force).
“Treasury
Regulations” has the meaning specified in Section 4.9 of Exhibit
B.
“Violation”
has the meaning specified in Section 3.4(b).
“WARN
Act” has the meaning specified in Section 4.11(e) of Exhibit B.
“WUTC”
means the Washington Utilities and Transportation Commission.
ARTICLE
II.
PURCHASE
AND SALE OF THE SECURITIES
Section
2.1. Issuance
and Sale of Securities. Upon the terms and subject to the
conditions of this Agreement, at the Closing, the Company agrees to issue,
sell
and deliver to each Purchaser, and each Purchaser severally agrees to purchase
from the Company, the number of Shares set forth opposite each Purchaser’s name
on Schedule 1 for a purchase price of $23.67 per Share (the “Per Share
Price”).
Section
2.2. Registration
Rights. The Purchasers shall have the rights to registration
under the Securities Act of the Registrable Shares, on the terms and subject
to
the conditions set forth in Exhibit A (the “Registration Rights”);
provided, however, that such Registration Rights may not be
exercised prior to the termination of the lock-up period contemplated by Section
8.1.
Section
2.3. Closing
and Delivery.
(a) The
consummation of the purchase and sale of the Shares hereunder (the
“Closing”) shall take place on the fourth Business Day immediately
following the date on which the last of the conditions set forth in Articles
VI
and VII hereof is fulfilled or waived (other than any conditions that by their
nature are to be satisfied at the Closing, but subject to the satisfaction
or
waiver of those conditions at the Closing) at 10:00 a.m., local time, at the
offices of Xxxxxx & Xxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
or such other date, time and place as the Company and the Purchasers shall
mutually agree in writing (the date of the Closing being the “Closing
Date”).
(b) At
the
Closing, the Company shall deliver to each Purchaser one or more certificates,
in such denominations and registered in such Purchaser’s name as set forth on
Schedule 1, representing the number of Shares which such Purchaser is purchasing
from the Company, against delivery to the Company of a wire transfer of
immediately available funds in US dollars to the order of the Company in the
aggregate amount equal to the Per Share Price times the relevant number of
Shares to be purchased by such Purchaser in accordance with Section 2.1, and
the
Company shall register the Purchasers as the holders of the Shares in the
register of holders of the Company Common Stock.
Section
2.4. Restrictive
Legend. The certificates evidencing the Shares shall bear the
following legend until such time as (i) such Shares are sold pursuant to an
effective registration statement under the Securities Act, (ii) such Shares
are
eligible for resale in reliance on paragraph (k) of Rule 144 under the
Securities Act, or (iii) the Purchaser or any transferee thereof delivers an
opinion of counsel reasonably acceptable to the Company to the effect that
such
legend is no longer required under the Securities Act:
THESE
SECURITIES WERE SOLD IN A PRIVATE PLACEMENT, WITHOUT REGISTRATION UNDER THE
SECURITIES ACT OF 1933, AND MAY BE OFFERED OR SOLD ONLY IF REGISTERED UNDER
THE
SECURITIES ACT OF 1933 OR IF AN EXEMPTION FROM REGISTRATION IS
AVAILABLE. THESE SECURITIES ARE SUBJECT TO THE PROVISIONS
OF THE STOCK PURCHASE AGREEMENT, DATED AS OF OCTOBER 25, 2007, BY AND AMONG
THE
COMPANY AND THE PURCHASERS NAMED THEREIN AND MAY NOT BE SOLD OR TRANSFERRED
EXCEPT IN ACCORDANCE THEREWITH.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to each Purchaser that except as set forth
in
(a) the Company Disclosure Letter, with specific reference to the particular
Section or Subsection of this Agreement (or an exhibit hereto) to which the
information set forth in such letter relates (it being agreed that disclosure
of
any item in any Section or Subsection of the Company Disclosure Letter shall
be
deemed disclosure with respect to any other Section or Subsection to which
the
relevance of such item is reasonably apparent), or (b) for purposes of Exhibit
B
and Section 3.4, the Company SEC Reports filed by the Company with, or furnished
by the Company to, the SEC at any time on or after December 31, 2005 through
the
date hereof and publicly available on the website of the SEC through the
Electronic Data Gathering, Analysis and Retrieval System prior to the date
hereof, other than information in the "Risk Factors" or "Forward-Looking
Statements" sections of such Company SEC Reports, and any other similar
disclosures included in such Company SEC Reports that are predictive, cautionary
or forward-looking in nature; provided, however, that nothing in the Company
SEC
Reports shall be deemed to qualify, or be deemed to have been disclosed for
the
purposes of, Exhibit B, Section 4.3:
Section
3.1. Shares. The
Shares to be issued, sold and delivered pursuant to this Agreement have been
duly authorized by all requisite action of the Company and, when issued, will
be
validly issued and outstanding, fully paid and nonassessable, and will not
be
subject to any preemptive rights of the holders of any other class or series
of
the capital stock of the Company. Upon the issuance of the Shares,
the Shares will be free and clear of all transfer restrictions and Liens of
any
nature whatsoever, with the exception of any restrictions on transferability
set
forth herein or under the Securities Act or any securities laws of any
jurisdiction.
Section
3.2. WKSI
Status. The Company is a “well-known seasoned issuer” and is not
an “ineligible issuer” (as such terms are defined in Rule 405 under the
Securities Act).
Section
3.3. Investment
Company. The Company is not and, after giving effect to the
offering and sale of the Shares and the application of the proceeds thereof,
will not be an “investment company” or a company “controlled” by an “investment
company,” as such terms are defined in the Investment Company Act of 1940, as
amended.
Section
3.4. Authority;
Non-Contravention; Approvals; Compliance.
(a) Authority. The
Company has all requisite corporate power and authority to enter into this
Agreement and, subject to the receipt of the applicable Company Stock Issuance
Approvals, to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation by the Company
of
the transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of the Company. This Agreement has been
duly executed and delivered by the Company and, assuming the due authorization,
execution and delivery hereof by the other signatories hereto, constitutes
the
legal, valid and binding obligation of the Company enforceable against it in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors’ rights and to general equity
principles.
(b) Non-Contravention. Except
as set forth in Section 3.4(b)(i) of the Company Disclosure Letter, the
execution and delivery of this Agreement by the Company does not, and the
consummation of the transactions contemplated hereby will not, violate or result
in a material breach of any provision of, constitute a material default (with
or
without notice or lapse of time or both) under, result in the termination or
modification of, accelerate the performance required by, result in a right
of
termination, cancellation or acceleration of any obligation or the loss of
a
material benefit under, or result in the creation of any material Lien upon
any
of the properties or assets of the Company or any of the Company Subsidiaries
(any such violation, breach, default, right of termination, modification,
cancellation or acceleration, loss or creation is referred to herein as a
“Violation” with respect to the Company and such term when used in Article V has
a correlative meaning with respect to the Purchasers) pursuant to any provisions
of (i) any debt instruments relating to outstanding indebtedness for borrowed
money in amounts in excess of $25 million, the articles of incorporation,
by-laws or similar governing documents of the Company or any of the Company
Subsidiaries, (ii) the preferred stock and preference stock of the Company
and
Puget Sound Energy, (iii) subject to obtaining the Company Stock Issuance
Approvals, any statute, law, ordinance, rule, regulation, judgment, decree,
order, injunction, writ, permit or license of any Governmental Authority
applicable to the Company or any of the Company Subsidiaries or any of their
respective properties or assets or (iv) subject to obtaining the third-party
consents set forth in Section 3.4(b)(ii) of the Company Disclosure Letter,
any
Material Contract or material note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other instrument,
obligation or agreement of any kind to which the Company or any of the Company
Subsidiaries is a party or by which they or any of their respective properties
or assets may be bound or affected, except in the case of clauses (iii) or
(iv)
for any such Violation which, individually or in the aggregate, would not
reasonably be expected to result in a Company Material Adverse
Effect.
(c) Statutory
Approvals. Except as described in Section 3.4(c) of the Company
Disclosure Letter (the “Company Stock Issuance Approvals”), no
declaration, report, filing or registration with, or notice to or authorization,
consent or approval of, any Governmental Authority is necessary for the
execution and delivery of this Agreement by the Company or the consummation
by
the Company of the transactions contemplated hereby, except those that the
failure of which to obtain, individually or in the aggregate, would not
reasonably be expected to result in a Company Material Adverse Effect (it being
understood that references in this Agreement to “obtaining” such Company Stock
Issuance Approvals shall mean making such declarations, filings or
registrations; giving such notices; obtaining such authorizations, consents
or
approvals; and having such waiting periods expire as are necessary to avoid
a
violation of law).
(d) Compliance. Neither
the Company nor any of the Company Subsidiaries is in violation of, is, to
the
knowledge of the Company, under investigation with respect to any violation
of,
or has been given notice of or been charged with any violation of, any law,
statute, order, award, rule, regulation, ordinance or judgment of any
Governmental Authority, except for any such violations which, individually
or in
the aggregate, would not reasonably be expected to result in a Company Material
Adverse Effect. The Company and the Company Subsidiaries have all
permits, licenses, franchises and other governmental authorizations, consents
and approvals necessary to conduct their businesses as presently conducted
except those that the absence of which, individually and in the aggregate,
would
not reasonably be expected to result in a Company Material Adverse
Effect. Neither the Company nor any of the Company Subsidiaries is in
breach or violation of or in default in the performance or observance of any
term or provision of, and no event has occurred which, with lapse of time or
action by a third party, would reasonably be expected to result in a default
by
the Company or any Company Subsidiary under (i) their respective articles of
incorporation or by-laws or similar governing documents or (ii) any contract,
commitment, agreement, indenture, mortgage, loan agreement, note, lease, bond,
license, approval or other instrument to which it is a party or by which the
Company or any Company Subsidiary is bound or to which any of their respective
property is subject, except in the case of clause (ii) for possible violations,
breaches or defaults which, individually or in the aggregate, would not
reasonably be expected to result in a Company Material Adverse
Effect.
(e) Board
Approval. The Board of Directors of the Company has taken all
action so that the Parent and the Purchasers will not be prohibited from
entering into or consummating a "significant business transaction" with the
Company (as such term is used in Section 23B.19.010 et seq. of the Washington
Business Corporation Act) as a result of the execution of this Agreement or
the
consummation of the transactions in the manner contemplated hereby, and has
taken all other necessary action such that the consummation of the transactions
contemplated by this Agreement shall not be otherwise restricted or delayed
pursuant to Chapter 23B.19 of the Washington Business Corporation
Act.
Section
3.5. Litigation. There
is no suit, claim, action, proceeding or investigation pending or, to the
knowledge Company, threatened against the Company that questions the validity
or
legality of this Agreement or any action required to be taken by the Company
in
connection with the consummation of the transactions contemplated hereby or
which individually or in the aggregate with any other suits, claims, actions,
proceedings or investigations would reasonably be expected to prevent,
materially delay or materially impair the consummation of the transactions
contemplated by this Agreement.
Section
3.6. Brokers
and Finders. The Company has not entered into any agreement or
arrangement entitling any agent, broker, investment banker, financial advisor
or
other firm or Person to any broker’s or finder’s fee or any other commission or
similar fee in connection with any of the transactions contemplated by this
Agreement, except Xxxxxx Xxxxxxx & Co. Incorporated, whose fees and expenses
will be paid by the Company in accordance with the Company’s agreement with such
firm. The Company has made available to the Purchasers disclosure
regarding the amount of any such fee.
Section
3.7. Additional
Representations. In addition to the representations and
warranties of the Company set forth in Sections 3.1 through 3.6 of this Article
III, the Company makes the representations and warranties set forth in Exhibit
B
to each Purchaser.
Section
3.8. No
Other Representations of the Company. Except for the
representations and warranties contained in this Article III and Exhibit B,
neither the Company nor any other Person acting on behalf of the Company makes
any representation or warranty, express or implied, regarding the Company or
any
Company Subsidiary.
ARTICLE
IV.
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASERS
Each
Purchaser hereby severally represents and warrants to the Company as
follows:
Section
4.1. Organization
and Qualification. It is a corporation or other entity duly
organized and validly existing under the laws of its jurisdiction of
incorporation or organization, as the case may be.
Section
4.2. Authority;
Non-Contravention; Approvals; Compliance.
(a) Authority. It
has all requisite corporate or limited liability company power and authority
to
enter into this Agreement and, subject to the receipt of the applicable
Purchaser Required Statutory Approvals, to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and
the consummation by it of the transactions contemplated hereby have been duly
authorized by all necessary corporate or limited liability company action on
the
part of such Purchaser. This Agreement has been duly executed and
delivered by such Purchaser and, assuming the due authorization, execution
and
delivery hereof by the other signatories hereto, constitutes the valid and
binding obligation of such Purchaser enforceable against it in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating
to
or affecting creditors’ rights and to general equity principles.
(b) Non-Contravention. The
execution and delivery of this Agreement by it does not, and the consummation
of
the transactions contemplated hereby will not, result in a Violation pursuant
to
any provisions of (i) the certificate of incorporation, certificate of
formation, by-laws, limited liability company operating agreement or similar
governing documents, as applicable, of such Purchaser and (ii) subject to
obtaining the Purchaser Required Statutory Approvals, any statute, law,
ordinance, rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any Governmental Authority applicable to such Purchaser or any
of
its properties or assets except in the case of clause (ii) for any such
Violation which, individually or in the aggregate, would not reasonably be
expected to prevent, materially delay or materially impair the consummation
of
the transactions contemplated by this Agreement.
(c) Statutory
Approvals. Except as set forth on Schedule 4.2(c) hereto (the
“Purchaser Required Statutory Approvals”), no declaration, report, filing
or registration with, or notice to or authorization, consent or approval of,
any
Governmental Authority is necessary for the execution and delivery of this
Agreement by such Purchaser, or the consummation by such Purchaser of the
transactions contemplated hereby, except those that the failure of which to
obtain, individually or in the aggregate (it being understood that references
in
this Agreement to “obtaining” such Purchaser Required Statutory Approvals shall
mean making such declarations, filings or registrations; giving such notices;
obtaining such authorizations, consents or approvals; and having such waiting
periods expire as are necessary to avoid a violation of law), would not
reasonably be expected to prevent, materially delay or materially impair the
consummation of the transactions contemplated by this Agreement.
(d) Compliance. Except
as set forth in Schedule 4.2(d) hereto, such Purchaser is not in violation
of,
is not, to such Purchaser’s knowledge, under investigation with respect to any
violation of, and has not been given notice of or been charged with any
violation of, any law, statute, order, award, rule, regulation, ordinance or
judgment of any Governmental Authority, except for any such violations which,
individually or in the aggregate, would not reasonably be expected to prevent,
materially delay or materially impair the consummation of the transactions
contemplated by this Agreement. Except as set forth in Schedule
4.2(d) hereto, such Purchaser is not in breach or violation of or in default
in
the performance or observance of any term or provision of, and no event has
occurred which, with lapse of time or action by a third party, would reasonably
be expected to result in a default by such Purchaser under (i) its certificate
of incorporation, certificate of formation, by-laws, limited liability company
agreement or similar governing documents, as applicable, or (ii) any contract,
commitment, agreement, indenture, mortgage, loan agreement, note, lease, bond,
license, approval or other instrument to which it is a party or by which it
is
bound or to which any of its property is subject, except for possible
violations, breaches or defaults which, individually or in the aggregate, are
not reasonably likely to prevent, materially delay or materially impair the
consummation of the transactions contemplated by this Agreement.
Section
4.3. Litigation. There
is no suit, claim, action, proceeding or investigation pending or, to its
knowledge, threatened against it that questions the validity or legality of
this
Agreement or any action required to be taken by it in connection with the
consummation of the transactions contemplated hereby or which individually
or in
the aggregate with any other suits, claims, actions, proceedings or
investigations would reasonably be expected to prevent, materially delay or
materially impair the consummation of the transactions contemplated by this
Agreement.
Section
4.4. No
Vote Required. No vote of the holders of any class or series of
the capital stock of such Purchaser is necessary to approve this Agreement
or
the transactions contemplated hereby.
Section
4.5. Ownership
of Company Stock. As of the date hereof, neither such Purchaser
nor any of its Affiliates (excluding for the purposes of this Section 4.5
officers and directors of the Purchasers) beneficially owns (as defined in
Rule
13d-3 under the Exchange Act), directly or indirectly, shares of capital stock
of the Company. With respect to MBL, this representation shall be
limited to the knowledge of the Corporate Finance Division of Macquarie
Securities (USA) Inc.
Section
4.6. Purchase
for Investment. It acknowledges that the Shares have not been
registered under the Securities Act or under any state securities
laws. It (i) is acquiring the Shares pursuant to an exemption from
registration under the Securities Act solely for investment with no present
intention to distribute any of the Shares to any Person, (ii) will not sell
or
otherwise dispose of any of the Shares, except in compliance with the
registration requirements or exemption provisions of the Securities Act and
any
other applicable securities laws, (iii) has such knowledge and experience in
financial and business matters and in investments of this type that it is
capable of evaluating the merits and risks of its investment in the Shares
and
of making an informed investment decision and (iv) is an accredited investor
(as
that term is defined in Rule 501 promulgated under the Securities
Act).
Section
4.7. Approvals. As
of the date hereof, none of such Purchaser’s officers (or persons holding a
similar position) know of any facts or circumstances relating to such Purchaser
or its Affiliates that are reasonably likely to prevent or materially delay
the
receipt of the Purchaser Required Statutory Approvals.
Section
4.8. Trustee
Power. To the extent a Purchaser has entered into this Agreement
in its capacity as a trustee or responsible entity for another entity (such
other entity, the “Purchaser’s Trust”), such Purchaser (a) has full
rights to indemnification or reimbursement from assets of such Purchaser’s Trust
in connection with the performance of all of its obligations under this
Agreement, including the payment or contribution of all funds required to be
paid or contributed by such Purchaser hereunder, (b) no approval or consent
by
any Governmental Authority, third party or any other entity is necessary in
order for such Purchaser to exercise its rights to indemnification or
reimbursement from the assets of such Purchaser’s Trust in connection with the
performance of its obligations under this Agreement, including the payment
or
contribution of all funds required to be paid or contributed by such Purchaser
hereunder, and such Purchaser has not, and shall not, take or omit to take
any
action that would eliminate or limit such rights to indemnification or
reimbursement, and (c) such Purchaser’s Trust has sufficient assets from which
to satisfy all of such Purchaser’s obligations under this Agreement, including
the payment or contribution of all funds required to be paid or contributed
by
such Purchaser hereunder.
Section
4.9. No
Other Representations of the Purchasers. Except for the
representations and warranties contained in this Article IV, neither such
Purchaser nor any other Person acting on its behalf makes any representation
or
warranty, express or implied, regarding such Purchaser.
ARTICLE
V.
COVENANTS
Section
5.1. Registration
Rights. The Company and each of the Purchasers shall comply with
the provisions contained in Exhibit A regarding the Registration
Rights.
Section
5.2. Reservation
of Company Stock. The Company shall reserve and keep available
out of its authorized but unissued shares of Company Common Stock the Shares
to
be purchased and sold at the Closing.
Section
5.3. Listing
of Shares. The Company shall cause the Shares to be listed on the
New York Stock Exchange prior to the Closing Date.
Section
5.4. Regulatory
Matters.
(a) HSR
Filings. Each party hereto shall, as soon as reasonably
practicable after the date hereof, file or cause to be filed with the FTC and
the Department of Justice any notifications required to be filed under the
HSR
Act, and the rules and regulations promulgated thereunder, to the extent such
act, rules or regulations require the filing of such notification with respect
to such party and the transactions contemplated hereby. Such parties
will use their reasonable best efforts to respond on a timely basis to any
requests for additional information made by either of such
agencies.
(b) Other
Regulatory Approvals. Each party hereto shall cooperate and use
its reasonable best efforts to promptly prepare and file all necessary
documentation, to effect all necessary applications, notices, petitions, filings
and other documents, and to use all commercially reasonable efforts to obtain
all necessary permits, consents, approvals and authorizations of all
Governmental Authorities necessary or advisable to obtain the Company Stock
Issuance Approvals and the Parent Required Statutory Approvals. Each
party hereto shall cooperate and use all commercially reasonable efforts to
obtain as promptly as reasonably practicable all necessary permits, consents,
approvals and authorizations of all Governmental Authorities necessary or
advisable to obtain the Company Stock Issuance Approvals and the Parent Required
Statutory Approvals. Each party shall have the right to review a
reasonable time in advance and to provide comments on any such
filing.
(c) Actions
by Affiliates. Notwithstanding any other provision of this
Agreement, no Purchaser shall be required to, or to cause any portfolio company,
investment fund or other Affiliate of any shareholder of such Purchaser or
any
director, officer, employee, general partner, limited partner, member or manager
of any shareholder of such Purchaser to, take any action, undertake any
divestiture or restrict its conduct other than, in accordance with the
provisions of this Agreement, to provide responsive information reasonably
required to make any submission or application to a Governmental Authority
and
to otherwise cooperate in connection with any such submission or application
as
is necessary and customary under the circumstances.
Section
5.5. Voting. Prior
to the termination of the Merger Agreement, each Purchaser agrees that it shall
vote all shares of Company Common Stock beneficially owned by it with respect
to
any matter to be voted on by the holders of the Company Common Stock either
(i)
pro rata in proportion to the votes cast by the holders of shares of Company
Common Stock other than the Shares, or (ii) as recommended by the board of
directors of the Company, if the board of directors has made a recommendation
with respect to such matter, so long as such shares of Company Common Stock
may
be lawfully voted as so provided.
Section
5.6. WKSI
Status. The Company shall use its reasonable best efforts to
maintain its status as a “well-known seasoned issuer,” and shall not become an
“ineligible issuer” (as such terms are defined in Rule 405 under the Securities
Act).
Section
5.7. Use
of
Proceeds. The Company shall use the net proceeds from the sale of
the Shares to invest in Puget Sound Energy for capital expenditures, debt
redemption and working capital.
Section
5.8. Expenses. The
Company and the Purchasers shall each bear its own expenses and legal fees
with
respect to this Agreement and the transactions contemplated hereby.
Section
5.9. Confidentiality. Notwithstanding
any other agreements between the Purchasers and any of their Affiliates, on
the
one hand, and the Company, on the other hand, the Purchasers shall not, without
the consent of the Company, disclose to any Person non-public or confidential
information concerning the business or affairs of the Company and will hold
all
such information in the strictest confidence; provided, however,
that the Purchasers may disclose any such information:
(i) to
any
Affiliate of the Purchasers or to the stockholders of the Purchasers or of
any
such Affiliate; provided, that the disclosure of such information is the
subject of and protected by a binding confidentiality agreement or obligation
on
comparable terms to the provisions of the Nondisclosure Agreement, dated July
20, 2007, entered into by and between the Company and Macquarie Securities
(USA)
Inc. (the “Confidentiality Agreement”);
(ii) to
credit
rating agencies;
(iii) to
the
extent such disclosure is required under applicable law, including under
securities laws (in particular, those relating to continuous disclosure)
or under the rules and regulations of any national securities
exchange (or comparable international securities exchange) or over-the-counter
market which are applicable to the Purchaser or its Affiliates;
(iv) to
a
proposed permitted transferee of Shares that agrees to be bound by a written
confidentiality agreement on comparable terms to the provisions of the
Confidentiality Agreement; provided that such confidentiality agreement
shall not be required to include a standstill provision unless after giving
effect to such transfer, the transferee, its affiliates and the other members
of
any group of which such transferee is a member, would own 5% or more of the
Company Common Stock;
(v) in
any
case where a Purchaser is or holds the Shares for the benefit of a private
equity, infrastructure or any other investment fund, to the manager of and
investors in such fund (including but not limited to limited partners,
shareholders and beneficiaries of such fund); provided, that the
disclosure of such information is the subject of and protected by a written
confidentiality agreement on comparable terms to the provisions of the
Confidentiality Agreement; and providedfurther that this provision
shall not prohibit such fund from providing its investors with routine reports
and other periodic information about the fund’s investments;
(vi) to
representatives of the Purchasers (including but not limited to financial
advisors, legal counsel and agents); provided, that the disclosure of
such information is protected by an obligation of confidentiality;
(vii) that
has
come into the public domain through no fault of the disclosing
Purchaser;
(viii) to
a
proposed purchaser or transferee of equity interests in the Parent and to
representatives (including but not limited to financial advisors, legal counsel
and agents) of such proposed purchaser or transferee; provided, that the
disclosure of such information is the subject of and protected by a written
confidentiality agreement on comparable terms to the provisions of the
Confidentiality Agreement, or, in the case of its representatives, is protected
by an obligation of confidentiality; and
(ix) in
such
other circumstances as may be agreed by the Company in writing from time to
time.
Section
5.10. Public
Announcement. Except as may be required by law or by obligations
pursuant to any listing agreement with or rules of any national securities
exchange, the Company and the Purchasers shall consult with each other prior
to
issuing any press release or otherwise making public announcements with respect
to the transactions contemplated by this Agreement. Each of the
Company and the Purchasers agrees that it will, to the extent practicable,
provide the other, reasonably in advance of its use, with drafts of any press
release or other widely disseminated presentation or other information, in
each
case relating to the transactions contemplated by this Agreement, and give
reasonable consideration to the comments of the other thereon. In
connection with the foregoing, the Company and the Purchasers may share any
such
drafts with their respective investors and representatives provided that
any such investors or representatives are bound by an obligation to maintain
the
confidentiality of such information sufficient to satisfy the requirements
of
Regulation FD promulgated under the Securities Act. Each of the
Company and the Purchasers will advise the other in advance of the timing of
any
such press release, presentation or other information relating to the
transactions contemplated by this Agreement and will provide the other with
a
final copy of the same simultaneously with its public release.
Section
5.11. Purchasers’
Obligations Several. The covenants of the Purchasers in this
Agreement are several and not joint or joint and several.
ARTICLE
VI.
CONDITIONS
TO CLOSING OF THE PURCHASERS
Each
Purchaser’s obligations to purchase the Shares at the Closing is subject to the
satisfaction or waiver by such Purchaser on or prior to the Closing Date of
each
of the following conditions:
Section
6.1. Representations
and Warranties Correct. The representations and warranties made
by the Company in Article III and Exhibit B hereof shall be true and correct
as
of the date of this Agreement and as of the Closing Date as though made on
and
as of the Closing Date (except to the extent any such representation or warranty
expressly speaks as of an earlier date), except for such failures of
representations or warranties to be true and correct (without giving effect
to
any materiality qualification or standard contained in any such representations
and warranties) which, individually or in the aggregate, have not resulted
in
and would not reasonably be expected to result in a Company Material Adverse
Effect.
Section
6.2. Performance. All
covenants, agreements and conditions contained in this Agreement to be performed
or complied with by the Company on or prior to the Closing Date shall have
been
performed or complied with in all material respects.
Section
6.3. Regulatory
Consents. All notices, reports and other filings required to be
made prior to the Closing by the Company or any of its subsidiaries with, and
all consents, registrations, approvals, permits and authorizations required
to
be obtained prior to the Closing by the Company or any of its subsidiaries
from,
any Governmental Authority in connection with the execution and delivery of
this
Agreement and the consummation of the transactions contemplated hereby by the
Company shall have been made or obtained and shall be effective on and as of
the
Closing Date.
Section
6.4. Authorizations. All
other authorizations, approvals or permits, if any, of any Governmental
Authority or regulatory body that are required in connection with the lawful
issuance and sale of the Shares pursuant to this Agreement shall have been
duly
obtained and shall be effective on and as of the Closing Date, other than any
failures to obtain such authorizations, approvals or permits that would not
reasonably be expected to adversely affect the Company in any material respect
and except for such failures as would not prevent or materially hinder or delay
the consummation of the purchases contemplated hereby.
Section
6.5. Company
Material Adverse Effect. No Company Material Adverse Effect shall
have occurred that is continuing.
Section
6.6. Opinion
of Company’s Counsel. The Purchasers shall have received from
outside counsel to the Company an opinion addressed to the Purchasers, dated
the
Closing Date, in form and substance reasonably satisfactory to the Purchasers,
to the effect set forth in Exhibit C.
Section
6.7. No
Injunction. No temporary restraining order or preliminary or
permanent injunction or other order by any court of competent jurisdiction
preventing consummation of the transactions contemplated by this Agreement
shall
have been issued and be continuing in effect, and such transactions shall not
have been prohibited under any applicable federal or state law or
regulation.
Section
6.8. Merger
Agreement. The Merger Agreement shall be in full force and effect
and shall not have been terminated.
Section
6.9. Compliance
Certificate. The Company shall have delivered to the Purchasers a
certificate of the Chief Executive Officer or President of the Company, dated
as
of the Closing Date, to the effect that the conditions set forth in Sections
6.1, 6.2, 6.3 and 6.4 have been satisfied. Such certificate shall be
substantially in the form set forth in Exhibit D.
ARTICLE
VII.
CONDITIONS
TO CLOSING OF THE COMPANY
The
Company’s obligation to sell the Shares at the Closing is subject to the
satisfaction or waiver by the Company on or prior to the Closing Date of each
of
the following conditions:
Section
7.1. Representations. The
representations and warranties made by the Purchasers in Article IV hereof
shall
be true and correct as of the date of this Agreement and as of the Closing
Date
as though made on and as of the Closing Date (except to the extent any such
representation or warranty expressly speaks as of an earlier date) except for
such failures of representations or warranties to be true and correct (without
giving effect to any materiality qualification or standard contained in any
such
representations and warranties) which, individually or in the aggregate, have
not resulted in and would not reasonably be expected to result in a any material
adverse effect on the ability of any Purchaser to consummate the transaction
contemplated by this Agreement.
Section
7.2. Performance. All
covenants, agreements and conditions contained in this Agreement to be performed
or complied with by each Purchaser on or prior to the Closing Date shall have
been performed or complied with in all material respects.
Section
7.3. Regulatory
Consents. All notices, reports and other filings required to be
made prior to the Closing by the Purchasers or any of their respective
subsidiaries with, and all consents, registrations, approvals, permits and
authorizations required to be obtained prior to the Closing by the Purchasers
or
any of their respective subsidiaries from, any Governmental Authority in
connection with the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by the Purchasers shall
have been made or obtained and shall be effective on and as of the Closing
Date.
Section
7.4. Authorizations. All
other authorizations, approvals or permits, if any, of any Governmental
Authority or regulatory body that are required in connection with the lawful
issuance and sale of the Shares pursuant to this Agreement shall have been
duly
obtained and shall be effective on and as of the Closing Date, other than any
failures to obtain such authorizations, approvals or permits that would not
reasonably be expected to adversely affect the Company in any material respect
and except for such failures as would not prevent or materially hinder or delay
the consummation of the purchases contemplated hereby.
Section
7.5. No
Injunction. No temporary restraining order or preliminary or
permanent injunction or other order by any court of competent jurisdiction
preventing consummation of the Merger shall have been issued and be continuing
in effect, and the Merger and the other transactions contemplated hereby shall
not have been prohibited under any applicable federal or state law or
regulation.
Section
7.6. Compliance
Certificate. Each Purchaser shall have delivered to the Company a
certificate of an executive officer of such Purchaser, dated as of the Closing
Date, to the effect that the conditions set forth in Sections 7.1, 7.2 and
7.3
have been satisfied. Such certificate shall be substantially in the
form set forth in Exhibit E.
ARTICLE
VIII.
TRANSFER
RESTRICTIONS
Section
8.1. Lock-up
Period. Except as permitted by Section 8.2, the Purchasers shall
not (i) sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant
to
purchase, lend, or otherwise transfer or dispose of, directly or indirectly,
any
Shares (each, a “Transfer”) or (ii) enter into any swap or other
arrangement that transfers to another the economic consequences of ownership
of
the Shares prior to the earlier of (A) the consummation of the transactions
contemplated by the Merger Agreement; or (B) the termination of the Merger
Agreement.
Section
8.2. Permitted
Transfers. The restrictions on transfer in Section 8.1 shall not
apply to the following Transfers of Shares (each of which exceptions shall
be
separate and not reduce the scope or availability of any other
exception):
(a) (i)
to
the Company, (ii) to any other Purchaser or to any Affiliate or to any Related
Fund of any Purchaser, (iii) to any party to the Merger Agreement or (iv) to
any
equity holder or investor in Parent; provided, in each case (other than a
transfer to the Company), that the transferee agrees in writing to the covenants
applicable to a Purchaser in Article V, the standstill provisions applicable
to
a Purchaser in Article IX and the restrictions on further transfers of such
securities to the extent provided in this Article VIII; or
(b) in
sales
pursuant to Rule 144 under the Securities Act.
Any
transfer made pursuant to this Section 8.2 shall comply with all applicable
federal and state securities laws and regulations.
ARTICLE
IX.
STANDSTILL
Section
9.1. Standstill.
(a) During
the Standstill Period, except as provided in Section 9.1(b), and except in
respect of the transactions contemplated by this Agreement and by the Merger
Agreement, each Purchaser that individually or as part of a “group” (as defined
in the Exchange Act) holds 2% or more of the outstanding shares of Company
Common Stock (collectively, the “Standstill Entity”) agrees that so long
as such Standstill Entity holds 2% or more of the outstanding shares of Company
Common Stock it will not, directly or indirectly, nor will it authorize or
direct any of its officers, employees, agents and other representatives to,
in
each case, unless specifically consented to by the Board of Directors of the
Company:
(i) form,
join, or in any way become a member of a “group” (as defined in the Exchange
Act) with any other Person (other than its Affiliates or any other member of
the
Standstill Entity) with respect to any voting securities of the
Company;
(ii) acquire
or agree, offer, seek or propose to acquire, or cause to be acquired, beneficial
ownership of, or participate in an acquisition of, any securities or property
of
the Company or any of its Subsidiaries, or any options, warrants or other rights
(including, without limitation, any convertible or exchangeable securities)
to
acquire any such securities (except pursuant to a stock dividend, stock split,
reclassification, recapitalization or other similar event by the Company that
does not increase the percentage ownership of the outstanding shares of Company
Common Stock held by such Standstill Entity);
(iii) seek
to
propose or propose, whether alone or in concert with others, any tender offer,
exchange offer, merger, business combination, restructuring, liquidation,
dissolution, recapitalization or similar transaction involving the
Company;
(iv) make,
or
in any way participate in, any “solicitation” of “proxies” (as such terms are
used in the proxy rules of the SEC) with respect to the voting of any securities
of the Company or seek to advise or influence any Person with respect to the
voting of any securities of the Company;
(v) nominate
any Person as a Director of the Company’s Board of Directors or seek the removal
of any Person as a Director of the Company’s Board of Directors, or propose any
matter to be voted upon by the shareholders of the Company or seek to call
a
meeting of the shareholders of the Company, or otherwise seek to control the
management or Board of Directors of the Company; or
(vi) take
any
action with respect to or publicly announce or disclose any intention, plan
or
arrangement inconsistent with the foregoing.
(b) Nothing
contained in Section 9.1(a) shall be deemed in any way to prohibit or limit
any
transactions in the ordinary course of business and on arm’s length terms
between the Company and the Company Subsidiaries, on the one hand, and a
Purchaser and its Affiliates, on the other hand, or in any way limit the full
voting rights or free transferability of the Shares.
(c) Notwithstanding
anything to the contrary herein, in the case of MBL, the restrictions in this
Section 9.1 shall only apply to (i) the Corporate Finance division of MBL,
(ii)
any other division of MBL that beneficially owns Shares or has received
non-public or confidential information regarding the Company or any of its
Subsidiaries in connection with the negotiation or performance of this Agreement
or the Merger Agreement and (iii) any other Person that is a Related Fund of
MBL, in each case that beneficially owns Shares or has received non-public
or
confidential information regarding the Company or any of its Subsidiaries in
connection with the negotiation or performance of this Agreement or the Merger
Agreement.
(d) Notwithstanding
anything to the contrary herein, in the case of CPP Investment Board (USRE
II)
Inc. the restrictions in this Section 9.1 shall only apply to CPP Investment
Board (USRE II) Inc., any other Person that is an Affiliate of CPP Investment
Board (USRE II) Inc. and any funds or similar vehicles managed by CPP Investment
Board (USRE II) Inc. or by an Affiliate of CPP Investment Board (USRE II) Inc.,
in each case that beneficially owns Shares or has received non-public or
confidential information regarding the Company or any of its Subsidiaries in
connection with the negotiation or performance of this Agreement or the Merger
Agreement.
ARTICLE
X.
INDEMNIFICATION
Section
10.1. Company
Indemnification. The Company covenants and agrees to indemnify
and save and hold harmless the Purchasers, together with their respective
officers, directors, partners, shareholders, members, employees, trustees,
Affiliates, beneficial owners, attorneys and representatives (collectively,
the
“Purchaser Parties”), from and against any and all losses, costs,
expenses, liabilities, claims or legal damages (including, without limitation,
reasonable fees and disbursements of accountants and a single counsel selected
by holders of a majority of the Shares at such time and their costs and expenses
incident to any actual or threatened claim, suit, action or proceeding, whether
incurred in connection with a claim against the Company or a third party claim)
incurred by the Purchaser Parties, up to the amount equal to the purchase price
paid or to be paid by such Purchaser under this Agreement, arising out of or
resulting from:
(a) any
inaccuracy in or breach of any representation, warranty, covenant or agreement
made by the Company in this Agreement (including those in Exhibit B) or in
any
writing delivered pursuant to this Agreement; or
(b) the
failure of the Company to perform or observe fully any covenant, agreement
or
provision to be performed or observed by it pursuant to this Agreement;
provided, that the indemnity agreement contained in this Section 10.1
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company (which consent shall not be unreasonably withheld).
Section
10.2. Investor
Indemnification. Each Purchaser severally covenants and agrees to
indemnify and save and hold harmless the Company, together with its officers,
directors, shareholders, employees, Affiliates, attorneys and representatives
(collectively, the “Company Parties”), from and against any and all
losses, costs, expenses, liabilities, claims or legal damages (including,
without limitation, reasonable fees and disbursements of accountants and a
single counsel and its costs and expenses incident to any actual or threatened
claim, suit, action or proceeding, whether incurred in connection with a claim
against the Purchaser or a third party claim) incurred by the Company Parties,
up to the amount equal to the purchase price paid or to be paid by such
Purchaser under this Agreement, arising out of or resulting from:
(a) any
inaccuracy in or breach of any representation, warranty, covenant or agreement
made by such Purchaser in this Agreement or in any writing delivered pursuant
to
this Agreement; or
(b) the
failure of such Purchaser to perform or observe fully any covenant, agreement
or
provision to be performed or observed by it pursuant to this Agreement;
provided, that the indemnity agreement contained in this Section 10.2 shall
not
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the Purchaser
(which consent shall not be unreasonably withheld).
Section
10.3. Procedure. Any
Person entitled to be indemnified pursuant to Section 10.1 or 10.2 (each, an
“Indemnified Party”) shall notify the relevant Purchaser or the Company,
as the case may be, in writing of any action against such Indemnified Party
in
respect of which the other party is or may be obligated to provide
indemnification on account of Section 10.1 or 10.2, promptly after the receipt
of notice. The omission of any Indemnified Party so to notify the
other party of any such action shall not relieve such other party from any
liability which it may have to such Indemnified Party except to the extent
the
other party shall have been materially prejudiced by the omission of such
Indemnified Party so to notify it. In case any such action shall be
brought by a third party against any Indemnified Party and it shall notify
the
other party of the commencement thereof, the other party shall be entitled
to
participate therein and, to the extent that such other party may wish, to assume
the defense thereof, with counsel reasonably satisfactory to such Indemnified
Party, and after notice from it to such Indemnified Party of its election so
to
assume the defense thereof, the other party will not be liable to such
Indemnified Party under Section 10.1 or 10.2 for any legal or other expense
subsequently incurred by such Indemnified Party in connection with the defense
thereof, or for any settlement thereof entered into without the consent of
the
other party; provided, however, that if (i) the other party shall
elect not to assume the defense of such claim or action or (ii) the Indemnified
Party reasonably determines (x) that there may be a conflict between the
positions of the other party and of the Indemnified Party in defending such
claim or action or (y) that there may be legal defenses available to such
Indemnified Party different from or in addition to those available to the other
party, then separate counsel for the Indemnified Party shall be entitled to
participate in and conduct the defense, in the case of clauses (i) and (ii)(x),
or such different defenses, in the case of clause (ii)(y), and the other party
shall be liable for any reasonable legal or other expenses incurred by the
Indemnified Party in connection with the defense.
Section
10.4. Indemnification
Non-Exclusive. The foregoing indemnification provisions are in
addition to, and not in derogation of, any statutory, equitable or common-law
remedy any party may have for breach of representation, warranty, covenant
or
agreement.
Section
10.5. Limitation
on Company Indemnification. No payment shall be due or payable by
the Company in respect of any indemnification obligation hereunder unless and
until the Merger Agreement has been terminated in accordance with the terms
thereof.
ARTICLE
XI.
TERMINATION
This
Agreement may be terminated (i) at any time prior to the Closing Date by mutual
written agreement of the Company and the Purchasers, (ii) by the Purchasers
if
the Closing shall not have occurred and the Merger Agreement shall have been
terminated (other than any termination of the Merger Agreement by the Company
pursuant to Section 9.1(f) thereof), (iii) by the Company if the Closing shall
not have occurred and the Merger Agreement shall have been terminated by the
Company pursuant to Section 9.1(f) thereof or (iv) by the Company or by the
Purchasers who have agreed to purchase 90% of the Shares if the Closing shall
not have occurred on or prior to January 31, 2008; provided, that the
right to terminate this Agreement shall not be available to any party whose
failure to fulfill any of its obligations under this Agreement shall have
proximately contributed to the failure of the Closing to occur; and
provided, further, that if on January 31, 2008 the conditions to the
Closing set forth in Sections 6.3 or 7.3 shall not have been fulfilled but
all
other conditions to the Closing shall be fulfilled or shall be capable of being
fulfilled, then such termination date shall be extended to March 31,
2008. In the event of the termination of this Agreement pursuant to
this Article XI, this Agreement shall forthwith become null and void and have
no
effect, without any liability on the part of any Purchaser or the Company and
each of their respective officers, directors, partners, shareholders, members,
employees, trustees, Affiliates, beneficial owners, attorneys and
representatives and all rights and obligations of any party hereto shall cease,
except for the agreements contained in Sections 5.8 and 5.9 and Articles X
and
XII; provided, however, that nothing contained in this Article XI
shall relieve any party from liabilities or damages (i) arising out of any
fraud
or willful breach by such party of any of its representations, warranties,
covenants or other agreements contained in this Agreement (including those
in
Exhibit B) or (ii) as otherwise provided in the Merger Agreement.
ARTICLE
XII.
GENERAL
PROVISIONS
Section
12.1. Survival
of Representations and Warranties. The representations and
warranties of the parties in this Agreement shall survive the Closing and the
payment for and delivery of the Shares, but shall not survive the Effective
Time
under the Merger Agreement, if the Merger shall be consummated; provided,
that, the Company shall not be liable to any Purchaser for any breach of any
representation or warranty unless and until the Merger Agreement has been
terminated in accordance with its terms.
Section
12.2. Notices. All
notices and other communications hereunder shall be in writing and shall be
deemed given (a) when delivered personally, (b) when sent by reputable overnight
courier service or (c) when telecopied or emailed (which is confirmed by copy
sent within one Business Day by a reputable overnight courier service) to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(i) If
to the Company, to:
Padua
00000
XX
0xx Xxxxxx, Xxxxx 0000
Xxxxxxxx,
Xxxxxxxxxx 00000
Attn: Senior
Vice President and General Counsel
Telephone: (000)
000-0000
Telecopy: (000)
000-0000
Email: xxxxxxxx.x'xxxxxx@xxx.xxx
with
a
copy to:
Xxxxx
& XxXxxxx LLP
0000
Xxxxxx xx xxx Xxxxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000
Attn: Xxxxxxx
X. Xxxx, Esq.
Xxxxxxxxx
X. Xxxx, Esq.
Telephone: (000)
000-0000
Telecopy: (000)
000-0000
Email: xxxxx@xx.xxx
xxxxxx@xx.xxx
and
(ii) if
to the Purchasers, to the addresses set forth on Schedule 1;
with
a
copy to:
Xxxxxx
& Xxxxxxx LLP
53rd
at
Third
000
Xxxxx
Xxxxxx
Xxx
Xxxx,
Xxx Xxxx 00000-0000
Attn: Xxxxxx
Xxxxxxxxxxxx, Esq.
Xxxxx
Xxxxxxxx, Esq.
Telephone: (000)
000-0000
Telecopy: (000)
000-0000
Email: xxx.xxxxxxxxxxxx@xx.xxx
xxxxx.xxxxxxxx@xx.xxx
Section
12.3. Entire
Agreement. This Agreement and the Merger Agreement are being
entered into simultaneously but are separate transactions. Except as
expressly set forth in this Agreement, the provisions of the Merger Agreement
are not intended to, and in no way, modify or supplement the terms of this
Agreement. This Agreement, together with the exhibits hereto and the
Company Disclosure Letter delivered together herewith, supersede all other
prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof; provided that nothing in this Agreement
shall affect the obligations of any party hereto pursuant to the Confidentiality
Agreement.
Section
12.4. Severability. Any
term or provision of this Agreement that is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable in any
situation in any jurisdiction shall not affect the validity or enforceability
of
the remaining terms and provisions hereof or the validity or enforceability
of
the offending term or provision in any other situation or in any other
jurisdiction. If the final judgment of a court of competent
jurisdiction or other authority declares that any term or provision hereof
is
invalid, void or unenforceable, the parties agree that the court making such
determination shall have the power to reduce the scope, duration, area or
applicability of the term or provision, to delete specific words or phrases,
or
to replace any invalid, void or unenforceable term or provision with a term
or
provision that is valid and enforceable and that comes closest to expressing
the
intention of the invalid or unenforceable term or provision.
Section
12.5. Interpretation. When
a reference is made in this Agreement to Sections, Schedules or Exhibits, such
reference shall be to a Section, Schedule or Exhibit of this Agreement,
respectively, unless otherwise indicated. The table of contents and
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this
Agreement. Whenever the words “include,” “includes” or “including”
are used in this Agreement, they shall be deemed to be followed by the words
“without limitation,” if they are not already followed by such
words.
Section
12.6. Counterparts;
Effect. This Agreement may be executed by facsimile and in one or
more counterparts, each of which shall be deemed to be an original, but all
of
which together shall constitute one and the same agreement.
Section
12.7. No
Third-Party Beneficiaries. Except as otherwise provided in
Article X, this Agreement shall be binding upon and inure solely to the benefit
of each party hereto and each permitted assignee hereof, and nothing in this
Agreement, express or implied, is intended to confer upon any other Person
any
rights or remedies of any nature whatsoever under or by reason of this
Agreement.
Section
12.8. Trustee
Liability. Each of the parties hereto covenants, agrees and
acknowledges the terms of liability with respect to trustees and responsible
entities attached hereto as Exhibit F.
Section
12.9. Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington applicable to contracts
entered into and to be performed entirely within such State.
Section
12.10. Venue. Each
of the parties hereto irrevocably agrees that any legal action or proceeding
with respect to this Agreement or the transactions contemplated hereby or for
recognition and enforcement of any judgment in respect hereof or thereof,
brought by any other party hereto or its successors or assigns shall be brought
and determined only in a federal or state court located in and for Seattle,
Washington. Each of the parties hereto hereby irrevocably submits
with regard to any such action or proceeding for itself and in respect of its
property, generally and unconditionally, to the personal jurisdiction of the
aforesaid court. Each of the parties hereto hereby irrevocably
waives, and agrees not to assert, by way of motion, as a defense, counterclaim
or otherwise, in any action or proceeding with respect to this Agreement, or
the
transactions contemplated hereby (i) any claim that it is not personally subject
to the jurisdiction of the above-named courts for any reason other than the
failure to serve in accordance with Section 12.2, (ii) that it or its property
is exempt or immune from jurisdiction of such court or from any legal process
commenced in such courts (whether through service of notice, attachment prior
to
judgment, attachment in aid of execution of judgment, execution of judgment
or
otherwise) and (iii) to the fullest extent permitted by the applicable law,
that
(x) the suit, action or proceeding in such court is brought in an inconvenient
forum, (y) the venue of such suit, action or proceeding is improper and (z)
this
Agreement or the subject mater hereof, may not be enforced in or by such
courts.
Section
12.11. Waiver
of Jury Trial and Certain Damages. EACH PARTY TO THIS AGREEMENT
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, (A) ANY RIGHT IT
MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, SUIT OR PROCEEDING ARISING
OUT
OF OR RELATING TO THIS AGREEMENT, WHETHER IN TORT OR IN CONTRACT, AND (B) ANY
RIGHT IT MAY HAVE TO RECEIVE DAMAGES FROM ANY OTHER PARTY BASED ON ANY THEORY
OF
LIABILITY FOR ANY SPECIAL, INDIRECT, CONSEQUENTIAL (INCLUDING LOST PROFITS)
OR
PUNITIVE DAMAGES.
Section
12.12. Assignment. Except
as provided in Section 8.2, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any party hereto
(whether by operation of law or otherwise) without the prior written consent
of
the other party; provided, however, that any Purchaser may,
without the consent of the Company, assign its Registration Rights to any
permitted transferee of its Shares.
IN
WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly
authorized officers of the parties hereto as of the date first written
above.
PUGET
ENERGY, INC.
|
By:
/s/Xxxxxxx X. Xxxxxxxx
|
|
|
Name:
Xxxxxxx X. Xxxxxxxx
|
|
| Title: Chairman, President and CEO |
MACQUARIE
INFRASTRUCTURE PARTNERS A, L.P., by its general partner
MACQUARIE INFRASTRUCTURE PARTNERS U.S. GP LLC, by its manager
and attorney-in-fact MACQUARIE
INFRASTRUCTURE PARTNERS INC.
|
By:
/s/Xxxxxx Xxxxxx
|
|
| Name: Xxxxxx Xxxxxx | |
|
Title:
Assistant Secretary
|
|
By:
/s/Xxxx Xxxx
|
|
|
Name:
Xxxx Xxxx
|
|
|
Title:
Treasurer
|
MACQUARIE
INFRASTRUCTURE PARTNERS CANADA, L.P., by its general partner MACQUARIE
INFRASTRUCTURE PARTNERS CANADA GP LTD,
by its manager and attorney-in-fact MACQUARIE
INFRASTRUCTURE PARTNERS INC.
|
By:
/s/Xxxxxx Xxxxxx
|
|
|
Name:
Xxxxxx Xxxxxx
|
|
|
Title:
Assistant Secretary
|
|
By:
/s/Xxxx Xxxx
|
|
|
Name:
Xxxx Xxxx
|
|
|
Title:
Treasurer
|
MACQUARIE
INFRASTRUCTURE PARTNERS INTERNATIONAL, L.P.,
by its general partner MACQUARIE
INFRASTRUCTURE PARTNERS U.S. GP LLC,
by its manager and attorney-in-fact MACQUARIE
INFRASTRUCTURE PARTNERS INC.
|
By:
/s/Xxxxxx Xxxxxx
|
|
|
Name:
Xxxxxx Xxxxxx
|
|
|
Title:
Assistant Secretary
|
|
By:
/s/Xxxx Xxxx
|
|
|
Name:
Xxxx Xxxx
|
|
|
Title:
Treasurer
|
PADUA
MG HOLDINGSINC.
|
By:
/s/Xxxxxxxxx Xxxxxx
|
|
|
Name:
Xxxxxxxxx Xxxxxx
|
|
|
Title:
Secretary
|
|
By:
/s/Xxxxxxxx Kupchak
|
|
|
Name:
Xxxxxxxx Kupchak
|
|
|
Title:
Director
|
MACQUARIE
FSS INFRASTRUCTURE TRUST
| By: MACQUARIE SPECIALISED ASSET MANAGEMENT LIMITED in its capacity as responsible entity of MACQUARIE FSS INFRASTRUCTURE TRUST |
|
By:
/s/Xxxxx Xxxxxx
|
|
|
Name:
Xxxxx Xxxxxx
|
|
|
Title:
Attorney
|
CPP
INVESTMENT BOARD (USRE II) INC.
|
By:
/s/Xxxx X. Xxxxxxx
|
|
|
Name:
Xxxx X. Xxxxxxx
|
|
|
Title:
Authorized Signatory
|
|
By:
/s/Xxxxxx X. Xxxxxx
|
|
|
Name:
Xxxxxx X. Xxxxxx
|
|
|
Title:
Authorized Signatory
|
6860141
CANADA, INC. as Trustee of the
PADUA INVESTMENT TRUST
|
By:
/s/Lincoln Xxxx
|
|
|
Name:
Lincoln Xxxx
|
|
|
Title:
President
|
PIP2PX
(PAD) LTD
|
By:
/s/Xxxxxxx XxXxxxxx
|
|
|
Name:
Xxxxxxx XxXxxxxx
|
|
|
Title:
Director
|
PIP2GV
(PAD) LTD
|
By:
/s/Xxxxxxx XxXxxxxx
|
|
|
Name:
Xxxxxxx XxXxxxxx
|
|
|
Title:
Director
|
SCHEDULE
1
PURCHASERS
AND PURCHASED SHARES. NAME AND ADDRESS OF PURCHASER
|
Name
and Address of Purchaser
|
Number
of Shares of Company Common Stock Purchased
|
Total
Purchase Price
|
|
MACQUARIE
INFRASTRUCTURE PARTNERS A, L.P.
000
Xxxx 00xx Xxxxxx, X00,
Xxx
Xxxx, Xxx Xxxx 00000
Attention: Xxxxx
Xxxxxx
Telephone:
0(000) 000-0000
Telecopy:
0(000) 000-0000
Email: Xxxxx.xxxxxx@xxxxxxxxx.xxx
|
1,753,788
|
$41,512,161.96
|
|
MACQUARIE
INFRASTRUCTURE PARTNERS INTERNATIONAL, L.P.
000
Xxxx 00xx Xxxxxx, X00,
Xxx
Xxxx, Xxx Xxxx 00000
Attention: Xxxxx
Xxxxxx
Telephone: 0(000)
000-0000
Telecopy: 0(000)
000-0000
Email: Xxxxx.xxxxxx@xxxxxxxxx.xxx
|
1,830,864
|
$43,336,550.88
|
|
MACQUARIE
INFRASTRUCTURE PARTNERS CANADA, L.P.
000
Xxxx 00xx Xxxxxx, X00,
Xxx
Xxxx, Xxx Xxxx 00000
Attention: Xxxxx
Xxxxxx
Telephone:
0(000) 000-0000
Telecopy: 0(000)
000-0000
Email: Xxxxx.xxxxxx@xxxxxxxxx.xxx
|
393,158
|
$9,306,049.86
|
|
PADUA
MG HOLDINGS, INC.
000
Xxxx 00xx Xxxxxx, X00,
Xxx
Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx
Kupchak
Telephone: 0(000)
000-0000
Telecopy: 0(000)
000-0000
Email: Xxxxxxxx.Xxxxxxx@xxxxxxxxx.xxx
|
1,988,905
|
$47,077,381.35
|
|
MACQUARIE
FSS INFRASTRUCTURE TRUST
Xxx
00, 0 Xxxxxx Xxxxx
Xxxxxx
XXX 0000
Xxxxxxxxx
Attention: Xxxxx
Xxxxxx
Telephone: (00)
0-0000-0000
Telecopy: (00)
0-0000-0000
Email:.
xxxxx.xxxxxx@xxxxxxxxx.xxx
|
465,404
|
$11,016,112.68
|
|
CPP
INVESTMENT BOARD (USRE II) INC.
Xxx
Xxxxx Xxxxxx Xxxx, Xxxxx 0000
X.X.
Xxx 000
Xxxxxxx,
Xxxxxxx
X0X
0X0
Attention: Xxxxxx
Xxxxxx
Telephone: 000-000-0000
Telecopy: 416.868.4755
Email: xxxxxxx@xxxxx.xx
|
3,517,612
|
$83,261,876.04
|
|
PADUA
INVESTMENT TRUST
c/o
its Trustee 6860141 Canada Inc.
British
Columbia Investment Management Corporation
Sawmill
Point, Suite 000-0000 Xxxxxxx Xxxx
Xxxxxxxx,
Xxxxxxx Xxxxxxxx Xxxxxx X0X 0X0
Attention: Lincoln
Xxxx
Telephone: 0(000)
000-0000
Telecopy: 0(000)
000-0000
Email: Xxxxxxx.xxxx@xxxxx.xxx
|
1,758,806
|
$41,630,938.02
|
|
PIP2PX
(PAD) LTD
000
Xxxxxxx Xxxxxxxx
0000-000
Xxxxxx
Xxxxxxxx,
Xxxxxxx
X0X
0X0
Attention: Xxxx
XxXxxxxx
Telephone: 0(000)
000-0000
Telecopy:
0(000) 000-0000
Email: xxxx.xxxxxxxx@xxx.xx.xx
|
490,707
|
$11,615,034.69
|
|
PIP2GV
(PAD) LTD
000
Xxxxxxx Xxxxxxxx
0000-000
Xxxxxx
Xxxxxxxx,
Xxxxxxx
X0X
0X0
Attention: Xxxx
XxXxxxxx
Telephone:
0(000) 000-0000
Telecopy: 0(000)
000-0000
Email: xxxx.xxxxxxxx@xxx.xx.xx
|
300,756
|
$7,118,894.52
|
EXHIBIT
A
REGISTRATION
RIGHTS
Section
1. Effectiveness
of Registration Rights. The registration rights pursuant to
Sections 2 and 3 hereof shall become effective on the Closing Date.
Section
2. Registration
Rights Generally.
(a) Shelf
Registration. The Company shall cause to be filed or become
effective, no later than ten (10) business days after the termination of the
Merger Agreement, a registration statement (the “Shelf Registration
Statement”) filed with the SEC on Form S-3 (or any successor form) and such
other documents as may be necessary to permit offerings and sales of Registrable
Shares by Holders pursuant to Rule 415 under the Securities
Act. Subject to Section 2(c), the Company shall maintain such Shelf
Registration Statement effective and current until the earlier of (i) the time
all Registrable Shares are sold pursuant to such registration statement and
(ii)
the time when all Shares are Transferable Shares. The Company shall
supplement and amend the Shelf Registration Statement if required by the rules,
regulations or instructions applicable to the registration form used for such
Shelf Registration Statement or if required by the Securities Act.
(b) Contingent
Demand Registration. Subject to Section 10, in the event that the
Company has failed to or is unable to file and maintain a Shelf Registration
Statement as contemplated by Section 2(a) and until such failure or inability
is
remedied, one or more Holders holding individually or in the aggregate at least
10% of the Registrable Shares outstanding as of the Closing Date shall have
the
right to make a written demand upon the Company (a “DemandNotice”)
to have the Company as promptly as practical register under the Securities
Act
for offer and sale all Registrable Shares specified to the Company by such
Holders within ten (10) business days of the date of the Demand Notice, and
the
Company agrees to so register such Registrable Shares. If a Demand
Notice has been made on the Company, no subsequent Demand Notice may be made
on
the Company for ninety (90) days unless the Company has failed to comply with
its obligations with respect to the Demand Notice. The Holders shall
have the right to exercise registration rights pursuant to this Section 2(b)
up
to six (6) times; provided, however, that any such exercise shall relate to
not
less than 300,000 shares of Company Common Stock.
(c) Blackout
Period. Notwithstanding Section 2(a) above, if the Company shall
furnish to the Holders a certificate signed by the Chief Executive Officer
of
the Company (each, a “Blackout Notice”) stating that there is a
reasonable likelihood that such disclosure, such registration statement or
related prospectus to be filed, amended or supplemented, or any other action
to
be taken in connection with the prospectus, would materially and adversely
affect or interfere with any financing, acquisition, merger, disposition of
assets (outside the ordinary course of business), corporate reorganization
or
other similar transaction involving the Company, the Company shall be entitled
to suspend the use of the registration statement or delay the delivery or
filing, but not the preparation, of any amendment or supplement to the
registration statement or otherwise delay the completion of any sale of
Registrable Shares pursuant to the registration statement for a reasonable
period of time, but not to exceed thirty (30) days (the “Blackout
Period”) within the ninety (90) day period beginning on the first day of a
Blackout Period; provided, however, that the Company shall not deliver a
Blackout Notice more than twice in any 365-day period; and provided, further,
that any Blackout Period shall only be effective when and for so long as other
holders, if any, of registration rights with respect to the Company’s securities
are restricted from exercising their registration rights to the same or greater
extent as the Holders. Upon receipt of a Blackout Notice, the Holders
shall not effect sales of Registrable Shares pursuant to the registration
statement. The Company shall promptly deliver written notice to the
Holders of the expiration or earlier termination of any Blackout
Period.
Section
3. Incidental
Registration Rights. Subject to Section 10, for a period of two
(2) years following the termination of the Merger Agreement, in the event that
the Company has failed to or is unable to file and maintain a Shelf Registration
Statement as contemplated by Section 2(a) and until such failure or inability
is
remedied, if the Company proposes to register (including for this purpose a
registration effected by the Company for security holders of the Company other
than any Holder) any Company Common Stock for sale under the Securities Act
or
effect or participate in an offering of Company Common Stock under the
Securities Act (other than (i) pursuant to Section 2 hereof, (ii) securities
to
be issued pursuant to a stock option or other employee benefit or similar plan,
or (iii) securities proposed to be issued in exchange for securities or assets
of, or in connection with a merger or consolidation with, another corporation)
the Company shall, as promptly as practicable, give written notice to the
Holders of the Company’s intention to effect such registration or effect or
participate in such an offering. If, within ten (10) days after
receipt of such notice, any Holder submits a written request to the Company
specifying the amount of Registrable Shares that it proposes to sell or
otherwise dispose of in accordance with this Section 3, the Company shall use
its reasonable best efforts to include the Registrable Shares specified in
the
contemplated offering. If the offering is to be made by or through
underwriters, the Company, any selling Holder and such underwriter shall execute
an underwriting agreement in customary form; provided, however, that if the
Company and any selling Holder are advised in writing in good faith by the
lead
underwriter of the Company’s securities that the amount to be sold by Persons
other than the Company (collectively, “Selling Stockholders”) is greater
than the amount that can be offered without adversely affecting the offering
(taking into consideration the interests of the Company and the Holders), the
Company may reduce the amount offered for the accounts of Selling Stockholders
(including such holders of Registrable Shares) to a number reasonably deemed
satisfactory by such lead underwriter; provided that the shares that shall
be
excluded shall be excluded in the following order: (i) first, securities held
by
any Persons not having any contractual or incidental “piggy-back” rights in
respect of the offering contemplated by this Section 3, (ii) second, Registrable
Shares held by the Holders sought to be included in the offering pursuant to
this Section 3 and Company Common Stock sought to be included in such offering
by Persons having contractual or incidental “piggy-back” rights, (iii) third,
Company Common Stock sought to be offered and sold by other Persons having
demand rights with respect to such an offering and (iv) fourth, Company Common
Stock sought to be sold by the Company. Any reduction of the number
of Registrable Shares indicated under (ii) shall be made on a pro rata basis
based upon the aggregate number of shares of Company Common Stock sought to
be
registered pursuant to this section by the relevant Holders and other
Persons.
Section
4. Underwriting
and Broad Distribution.
(a) At
the request of any Holder, with respect to a sale of Registrable Shares by
such
Holder, the Company shall enter into an underwriting, agency, placement,
subscription or other agreement, in usual and customary form and substance
(including but not limited to usual and customary indemnities, the provision
by
independent counsel to the Company of customary opinions and the provision
of
customary certificates by officers of the Company and the provision by the
Company’s independent accountants of customary comfort letters as reasonably
requested by such Holder and the lead underwriters of such offering) with
managing underwriters to be selected by such Holder and not disapproved by
the
Company acting reasonably, and the Company shall perform its obligations in
connection therewith.
(b) The
Company shall be required to enter into an underwriting, agency, placement,
subscription or other agreement pursuant to Section 4(a) only if such
Registrable Shares are to be offered and sold in a manner intended to result
in
a broad distribution within or outside the United States (simultaneously or
both), such that no single purchaser of the Registrable Shares will acquire
in
such offering more than two percent of the Company Common Stock outstanding
at
the time of such purchase and sale.
Section
5. Registration
Mechanics.
(a) Company
Obligations. In connection with any registration of Registrable
Shares pursuant to Section 2 or 3, the Company shall:
(i) prepare
and file with the SEC such amendments and supplements to such registration
statement and the prospectus used in connection with such registration statement
as may be necessary to comply with the provisions of the Securities Act and
the
rules promulgated thereunder with respect to the sale or other disposition
of
all of the securities proposed to be registered by such registration
statement;
(ii) furnish
to the Holders such number of copies of any prospectus (including preliminary,
amended and supplemental prospectuses and any “issuer free writing prospectuses”
(as such term is defined in Rule 433 under the Securities Act)) and conformed
copies of the registration statement (including amendments or supplements
thereto and, in each case, all exhibits) and such other documents as it may
reasonably request, but only while the Company shall be
required under the provisions hereof to cause the registration statement to
remain effective;
(iii) (A) use
its best efforts to register or qualify the Registrable Shares covered by such
registration statement under such other securities or blue sky laws of such
jurisdictions as the Holders or any underwriter shall reasonably request, and
do
any and all other acts and things which may be necessary or advisable to enable
such Holders or any underwriter to consummate the disposition of Registrable
Shares in such jurisdictions and (B) keep such registration or qualification
in
effect for so long as the registration statement remains in effect; provided,
however, that the Company shall not be obligated to qualify to do business
as a
foreign corporation under the laws of any jurisdiction in which it shall not
then be qualified or to file any general consent to service of process in any
jurisdiction in which such a consent has not been previously filed;
(iv) use
commercially reasonable efforts to furnish, or cause to be furnished, to the
Holders, addressed to them, (A) an opinion of counsel for the Company, dated
the
date of the closing under the underwriting agreement relating to any
underwritten offering, and (B) a “cold comfort” letter signed by the independent
public accountants who have certified the Company’s financial statements
included in such registration statement, covering substantially the same matters
with respect to such registration statement (and the prospectus included
therein) and, in the case of such accountants’ letter, with respect to events
subsequent to the date of such financial statements, as are customarily covered
in opinions of issuer’s counsel and in accountants’ letters delivered to
underwriters in underwritten public offerings of securities and such other
matters as such Holders may reasonably request;
(v) use
its reasonable best efforts to cause all Registrable Shares proposed to be
registered by such registration statement to be registered with or approved
by
such other federal or state government agencies or authorities as may be
necessary in the opinion of counsel to the Company to enable the Holders to
consummate the disposition of such Registrable Shares;
(vi) within
a reasonable time before each filing of the registration statement or prospectus
or amendments or supplements thereto with the SEC, furnish to one counsel
selected by the Holders copies of such documents proposed to be filed, which
documents shall be subject to the reasonable approval of such counsel, and
promptly provide such counsel with all written comments from the SEC with
respect to such documents;
(vii) make
available to the Holders, any underwriter participating in any disposition
pursuant to a registration statement, and any attorney, accountant or other
agent or representative retained by any selling Holder or underwriter, upon
request, all financial and other records, pertinent corporate documents and
properties of the Company and Company Subsidiaries, including access to due
diligence meetings involving the senior executives of the Company, as shall
be
reasonably necessary to enable the Holders, representatives of the Holders
and
the underwriters to conduct reasonable due diligence and cause the Company’s
officers, directors and employees to supply all information reasonably requested
by any such person in connection with such registration statement subject,
in
each case, to such confidentiality agreements as the Company shall reasonably
request and that in the case of the Holders, this obligation shall only apply
to
one attorney, accountant or other representative designated by the Requesting
Holders;
(viii) make
available executive officers and other members of senior management of the
Company (including the principal executive and financial officers of the
Company) at “road shows” or other investor presentations conducted in connection
with offerings of Registrable Shares;
(ix) notify
the Holders any time a prospectus relating to the offering of Registrable Shares
is required to be delivered or filed under the Securities Act upon discovery
that, or upon the occurrence of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state any material facts required
to be
stated therein or necessary to make the statements therein not misleading,
in
light of the circumstances under which they were made, and (subject to the
good
faith determination of the board of directors of the Company as to whether
to
cease all sales under such registration statement), at the request of the
Holders prepare and furnish to it a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall not
include 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, in the light of the circumstances under which they were
made;
(x) use
reasonable efforts to comply with all applicable rules and regulations of the
SEC; and
(xi) cause
the Registrable Shares covered by such registration statement to be listed
on
the New York Stock Exchange and on any other principal securities exchange
on
which Company securities of the same class as the Registrable Shares are then
listed.
(b) Holder
Obligations. Each
Holder agrees that:
(i) it
shall
be a condition precedent to the obligations of the Company to complete the
registration pursuant hereto with respect to any Holder’s Registrable Shares
that the Holder shall furnish to the Company such information regarding Holder,
the Registrable Shares held by Holder and the intended method of disposition
of
the Registrable Shares held by the Holder as shall be reasonably required to
effect the registration of such Registrable Shares and shall execute such
documents in connection with such registration as the Company may reasonably
request. At least ten (10) days prior to the first anticipated filing
date of the registration statement, the Company shall notify the Holders of
the
information the Company requires from each Holder (the “Requested
Information”) if any of such Holder’s Registrable Shares are eligible for
inclusion in the registration statement. If at least two (2) business
days prior to the filing date the Company has not received the Requested
Information from any such Holder (at such time Holder becoming a
“Non-Responsive Holder”), then the Company may file the registration
statement without including the Non-Responsive Holder’s Shares but shall not be
relieved of its obligation to file a registration statement with the SEC
relating to the Shares of Non-Responsive Holder promptly after Non-Responsive
Holder provides the Requested Information;
(ii) it
shall
not prepare or use any Free Writing Prospectus (as such term is defined in
Rule
405 under the Securities Act) unless any and all issuer information included
therein has been approved by the Company (such approval not to be unreasonably
withheld);
(iii) as
promptly as practicable after becoming aware of such event, it shall notify
the
Company of the occurrence of any event, as a result of which the prospectus
included in a registration statement, as then in effect, includes an untrue
statement of a material fact or omits to state a material fact required to
be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; and
(iv) upon receipt
of any notice from the Company of the occurrence of any event of the kind
described in Section 5(a)(ix), it will forthwith discontinue its disposition
of
Registrable Shares pursuant to the registration statement relating to such
Registrable Shares until it receives copies of the supplemented or amended
prospectus contemplated by Section 5(a)(ix) and, if so directed by the Company,
it will deliver to the Company all copies then in their possession of the
prospectus relating to such Registrable Shares, current at the time of receipt
of such notice. If a Holder’s disposition of Registrable Shares in
connection with a Demand Notice is discontinued pursuant to the foregoing
sentence, unless the Company thereafter extends the effectiveness of the
registration statement to permit dispositions of Registrable Shares by any
selling Holders at least thirty (30) consecutive days and for an aggregate
of
one hundred and eighty (180) days, whether or not consecutive, the registration
statement shall not be counted for purposes of determining whether the Holders
have exercised a Demand Notice pursuant to Section 2(b).
Section
6. Expenses. The
Company shall pay or cause to be paid all of the Company’s fees and expenses in
connection with any registration and sale of Registrable Shares pursuant to
the
Registration Rights (including, without limitation, all registration and filing
fees, all printing costs, all fees and expenses of counsel and independent
accountants for the Company, all fees and expenses of complying with securities
or blue sky laws).
Section
7. Indemnification
and Contribution.
(a) Indemnification
by the Company. With respect to any offering and sale registered
pursuant to these Registration Rights, the Company agrees to indemnify and
hold
any selling Holder, each underwriter, if any, of the Registrable Shares under
such registration, and each Person who controls any of the foregoing within
the
meaning of Section 15 of the Securities Act, and any directors and officers
of
the foregoing, harmless against any and all losses, claims, damages, or
liabilities (including reasonable legal fees and other reasonable expenses
incurred in the investigation and defense thereof) to which they or any of
them
may become subject under the Securities Act or otherwise (collectively
“Losses”), insofar as any such Losses shall arise out of or shall be
based upon (i) any untrue statement or alleged untrue statement of a material
fact contained in the registration statement relating to the sale of such
Registrable Shares, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement
of
a material fact contained in the prospectus relating to the sale of such
Registrable Shares, or the omission or alleged omission to state therein a
material fact necessary in order to make the statements therein, in light of
the
circumstances under which they were made, not misleading, or (iii) any violation
or alleged violation by the Company of the Securities Act, the Exchange Act,
any
applicable state securities law or any rule or regulation promulgated under
the
Securities Act, the Exchange Act or any applicable state securities law;
provided, however, that the indemnification contained in this Section 7 shall
not apply to such Losses which shall arise out of or shall be based upon any
such untrue statement, or any such omission or alleged omission, which shall
have been made in reliance upon and in conformity with information furnished
in
writing to the Company by any selling Holder or any underwriter, as the case
may
be, specifically for use in connection with the preparation of the registration
statement or prospectus contained in the registration statement or any such
amendment thereof or supplement therein.
(b) Indemnification
by the Holders. In the case of each offering and sale registered
pursuant to this Article II, any selling Holder and each underwriter, if any,
participating therein shall severally indemnify and hold harmless the Company
and each Person, if any, who controls the Company within the meaning of Section
15 of the Securities Act, and the directors and officers of the Company, with
respect to any statement in or omission from such registration statement or
prospectus contained in such registration statement (as amended or as
supplemented, if amended or supplemented as aforesaid) if such statement or
omission shall have been made in reliance upon and in conformity with
information furnished in writing to the Company by any selling Holder or such
underwriter, as the case may be, specifically for use in connection with the
preparation of such registration statement or prospectus contained in the
registration statement or any such amendment thereof or supplement
thereto.
(c) Notice. Each
party indemnified under this Section 7 shall promptly after receipt of notice
of
the commencement of any claim against such indemnified party in respect of
which
indemnity may be sought hereunder, notify the indemnified party in writing
of
the commencement thereof. The failure of any indemnified party to
notify an indemnifying party shall not relieve the indemnifying party from
any
liability in respect of such action which it may have to such indemnified party
on account of the indemnity contained in this Section 7, unless (and only to
the
extent) the indemnifying party was prejudiced by such failure, and in no event
shall such failure relieve the indemnifying party from any other liability
which
it may have to such indemnified party. In case any action in respect
of which indemnification may be sought hereunder shall be brought against any
indemnified party and it shall notify an indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate therein and,
to
the extent that it may desire, jointly with any other indemnifying party
similarly notified, to assume the defense thereof through counsel reasonably
satisfactory to the indemnified party, and after notice from the indemnifying
party to such indemnified party of its election to assume the defense thereof,
the indemnifying party shall not be liable to such indemnified party under
this
Section 7 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof, other than reasonable
costs of investigation (unless such indemnified party reasonably objects to
such
assumption on the grounds that there may be defenses available to it which
are
different from or in addition to those available to such indemnifying party
in
which event the indemnifying party shall not be entitled to assume the defense
thereof with respect to such defenses). No indemnifying party shall,
without the prior written consent of the indemnified party, effect any
settlement of any claim or pending or threatened proceeding in respect of which
the indemnified party is or could have been a party and indemnity could have
been sought hereunder by such indemnified party, unless such settlement includes
an unconditional release of such indemnified party from all liability arising
out of such claim or proceeding.
(d) Contribution. If
the indemnification provided for in this Section 7 is unavailable to an
indemnified party or is insufficient to hold such indemnified party harmless
from any Losses in respect of which this Section 7 would otherwise apply by
its
terms (other than by reason of exceptions provided herein), then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid or payable by such indemnified party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the indemnifying party, on the one hand, and such indemnified party,
on
the other hand, in connection with the offering to which such contributions
relates as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, each
party’s relative knowledge and access to information concerning the matter with
respect to which the claim was asserted, and the opportunity to correct and
prevent any statement or omission. The amount paid or payable by a
party as a result of any Losses shall be deemed to include any legal or other
fees or expenses incurred by such party in connection with any investigation
or
proceeding to the extent such party would have been indemnified for such
expenses if the indemnification provided for in this Section 7 was available
to
such party. The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 7(d) were determined by
pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the preceding
paragraph. 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.
Section
8. Exchange
Act Reports. With a view to making available to the Holders the
benefits of Rule 144 and any other rule or regulation of the SEC that may at
any
time permit an Investor to sell securities of the Company to the public without
registration, the Company agrees to use its reasonable best efforts
to:
(a) make
and keep public information available, as those terms are understood and defined
in Rule 144, at all times, and take all action as may be required as a condition
to the availability of Rule 144;
(b) so
long as a Holder owns any Registrable Shares, furnish to any Holders upon its
reasonable written request a written statement certifying the Company’s
compliance with the reporting requirements of Rule 144 or any similar rule,
and
a copy of the most recent annual, periodic or current report of the Company
filed pursuant to the Exchange Act and such other reports and documents as
reasonably requested by such Holder in availing itself of any rule or regulation
of the SEC allowing the sale of the Registrable Shares without
registration;
(c) file
with the SEC in a timely manner all reports and other documents required of
the
Company under the Securities Act and the Exchange Act; and
(d) facilitate
and expedite transfers of Registrable Shares sold pursuant to SEC Rule 144,
including providing timely notice to its transfer agent to expedite such
transfers.
Section
9. Other
Agreements.
(a) The
Company shall not grant, and has not granted, any other Person rights to
register securities of the Company on terms that would be reasonably likely
to
restrict the ability of the Company fully to perform its obligations to the
Holders in connection with the Registration Rights.
(b) The
Company shall not amend any registration rights agreement with any other Person
nor shall the Company waive any provision under any registration rights
agreement that it would be entitled to waive thereunder if such waiver would
be
reasonably likely to adversely affect any Holder’s Registration
Rights.
Section
10. Benefits
of Registration Rights. The Purchasers and any permitted holder
of the Shares under the Stock Purchase Agreement may exercise and have the
benefits of the Registration Rights initially granted to the Purchasers
hereunder in such manner and in such proportion as shall be determined by such
Purchaser (such Purchaser and such holders exercising Registration Rights each
shall be termed a “Holder” hereunder); provided, that each Holder shall also be
subject to the obligations provided hereunder.
EXHIBIT
B
ADDITIONAL
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section
1. [Intentionally
Omitted]
Section
2. [Intentionally
Omitted]
Section
3. [Intentionally
Omitted]
Section
4.1. Organization
and Qualification. The Company and each of the Company
Subsidiaries is a corporation, limited liability company or limited partnership
duly organized, validly existing and in good standing, as applicable, under
the
laws of its jurisdiction of incorporation or organization. The
Company and each of the Company Subsidiaries has all requisite power and
authority to own, lease and operate its assets and properties to the extent
owned, leased and operated and to carry on its business as it is now being
conducted and is duly qualified and in good standing to do business in each
jurisdiction in which the nature of its business or the ownership or leasing
of
its assets and properties makes such qualification necessary other than in
such
jurisdictions where the failure to be so qualified or in good standing would
not, individually or in the aggregate, reasonably be expected to result in
a
Company Material Adverse Effect.
Section
4.2. Subsidiaries;
Corporate Documents.
(a) Section
4.2(a)(i) of the Company Disclosure Letter sets forth a complete list, as of
the
date hereof, of all of the Company Subsidiaries and their respective
jurisdictions of incorporation or organization and the jurisdictions in which
they are qualified to do business, and Section 4.2(a)(ii) of the Company
Disclosure Letter sets forth each of the Company's Subsidiaries and the
ownership interest of the Company in each such Subsidiary, as well as the
ownership interest of any other Person or Persons in each such Subsidiary,
and
the Company's or its Subsidiaries' capital stock, equity interest or other
direct or indirect ownership interest in any other Person other than securities
in a publicly traded company held for investment by the Company or any of its
Subsidiaries and consisting of less than 1% of the outstanding capital stock
of
such company. The Company does not own, directly or indirectly, any
minority interest in any Person that requires an additional filing by the
Purchasers under the HSR Act. Except as set forth in Section 4.2 of
the Company Disclosure Letter, all of the issued and outstanding shares of
capital stock or other securities of each Company Subsidiary are duly
authorized, validly issued, fully paid and nonassessable, and are owned,
directly or indirectly, beneficially and of record by the Company free and
clear
of any mortgages, liens, security interests, pledges, charges, easements, rights
of way, options, claims, restrictions or encumbrances of any kind (each a "Lien"
or collectively, the "Liens").
(b) Prior
to
the date hereof, the Company has made available to the Parent true, complete
and
correct copies of the Company's and its Subsidiaries' articles of incorporation
and by-laws or comparable governing documents, each current as of the date
hereof, and each as so made available is in full force and effect.
Section
4.3. Capitalization.
(a) The
authorized capital stock of the Company consists of 250,000,000 shares of
Company Common Stock, par value $0.01 per share; and 50,000,000 shares of
preferred stock, par value $0.01 per share ("Company Preferred Stock"), of
which
2,000,0000 shares have been designated Series R Participating Cumulative
Preferred Stock ("Company Series R Preferred Stock"). At the close of
business on October 23, 2007, (i) 117,176,878 shares of Company Common Stock
were issued and outstanding and (ii) no shares of Company Series R Preferred
Stock were issued or outstanding. Except for issuances pursuant to
Company Plans and other issuances not in excess of 5,000 shares of Company
Common Stock in the aggregate, from the close of business on October 23, 2007
to
the date hereof, the Company has not issued any shares of Company Common
Stock. All outstanding shares of Company Common Stock have been duly
authorized and are validly issued, fully paid and nonassessable. As
of the date hereof, the Company has no capital stock or other securities
(including securities convertible into, or exercisable or exchangeable for,
capital stock) of the Company reserved for issuance and there are no preemptive
or other outstanding rights, options, warrants, calls, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, commitments,
arrangements, agreements or rights of any character to which the Company or
any
Company Subsidiary is a party or by which any of them are bound obligating
the
Company or any Company Subsidiary to issue, deliver or sell, or cause to be
issued, delivered or sold, additional shares of capital stock or other
securities or rights (including securities or rights convertible into, or
exercisable or exchangeable for, additional shares of capital stock) of the
Company or any Company Subsidiary, or obligating the Company or any Company
Subsidiary to grant, extend or enter into any such preemptive or other
outstanding rights, options, warrants, calls, conversion rights, stock
appreciation rights, redemption rights, repurchase rights, commitments,
arrangements, agreements or rights. The Company does not have
outstanding any bonds, debentures, notes or other obligations the holders of
which have the right to vote (or convertible into or exercisable for securities
having the right to vote) with the stockholders of the Company on any
matter.
(b) The
authorized capital stock of Puget Sound Energy consists of (i) 150,000,000
shares of common stock, par value $10.00 per share, of which 85,903,791 shares
are issued and outstanding and all of which are duly authorized, validly issued,
fully paid and nonassessable and owned by the Company free and clear of any
Liens, (ii) 13,000,000 shares of preferred stock, par value $25.00 per share,
none of which are issued or outstanding, (iii) 3,000,000 shares of preferred
stock, par value $100.00 per share, of which, as of the close of business on
October 23, 2007, (A) 14,583 shares designated 4.84% Preferred Stock were issued
and outstanding and (B) 4,311 shares designated 4.70% Preferred Stock were
issued and outstanding, and (iv) 700,000 shares of preference stock, par value
$50.00 per share, none of which are issued or outstanding.
Section
4.4. [Intentionally
Omitted]
Section
4.5. Reports
and Financial Statements. Since December 31, 2004, the Company
and the Company Subsidiaries have filed or furnished, as applicable, on a timely
basis (taking into account all applicable grace periods) all forms, statements,
certifications, reports and documents required to be filed or furnished by
them
under the Securities Act, the Exchange Act, the Public Utility Holding Company
Act of 1935, as amended and in effect prior to its repeal effective February
8,
2006 ("PUHCA"), the Energy Policy Act of 2005, the Federal Power Act of 1935,
as
amended (the "FPA"), the Communications Act of 1934 and applicable state public
utility laws and regulations (collectively, the "Company
Reports"). The Company Reports have complied, as of their respective
dates, or if not yet filed or furnished, will comply, with all applicable
requirements of the appropriate statutes and the rules and regulations
thereunder, except for such failures which, individually or in the aggregate,
would not reasonably be expected to result in a Company Material Adverse
Effect. As of their respective dates, (or, if amended prior to the
date hereof, as of the date of such amendment), each form, certification,
report, schedule, registration statement, definitive proxy statement or other
document filed with or furnished to the SEC after December 31, 2004 by the
Company or Puget Sound Energy (the "Company SEC Reports"), did not, or if not
yet filed or furnished, will not, contain any 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, in light of the circumstances under which they
were made, not misleading. Each of the Company SEC Reports, at the
time of its filing or being furnished, complied in all material respects, or
if
not yet filed or furnished, will comply in all material respects, with the
applicable requirements of the Securities Act, the Exchange Act and the
Xxxxxxxx-Xxxxx Act of 2002 ("SOX") and any rules and regulations promulgated
thereunder applicable to the Company SEC Reports. The Company is in
compliance in all material respects with the applicable listing and corporate
governance rules and regulations of the New York Stock Exchange. Each
of the audited consolidated financial statements and unaudited interim financial
statements of the Company included in or incorporated by reference into the
Company SEC Reports (including the related notes and schedules) (collectively,
the "Company Financial Statements") has been, and in the case of Company SEC
Reports filed after the date hereof will be, prepared in accordance with United
States generally accepted accounting principles ("GAAP"), consistently applied
during the periods involved (except as may be indicated therein or in the notes
thereto and subject, in the case of unaudited statements, to normal year-end
audit adjustments) and fairly presents, or, in the case of Company SEC Reports
after the date hereof, will fairly present, the consolidated financial position
of the Company and the Company Subsidiaries as of the dates thereof and the
results of its operations and cash flows for the periods then ended, subject,
in
the case of the unaudited interim financial statements, to normal year-end
audit
adjustments.
Section
4.6. Real
Property.
(a) The
Company or Puget Sound Energy has (x) valid title to all real
property owned in fee by Company or Puget Sound Energy (the "Owned Real
Property") (y) valid title to the leasehold estate (as lessee) in all real
property and interests in real property leased or subleased by Company or Puget
Sound Energy as lessee or sublessee (the "Leased Real Property"), and (z) valid
title to the easements in all real property and interests in real property
over
which the Company or Puget Sound Energy has easement (the "Easement Real
Property" and, together with the Owned Real Property and Leased Real Property,
the "Real Property"), in each case free and clear of all Liens, except the
following ("Permitted Real Property Liens"):
(i) Liens
that secure indebtedness as reflected on the Company Financial Statements or
indebtedness listed on Section 4.6 of the Company Disclosure
Letter;
(ii) easements,
covenants, conditions, rights of way, encumbrances, restrictions, defects of
title and other similar matters, including matters that an accurate survey
ALTA
survey would disclose, whether or not of public record or which may be asserted
by persons in possession of Real Property, or claiming to be in possession
thereof (other than such matters that, individually or in the aggregate,
materially adversely impair the current use of the Real Property by the Company
or Puget Sound Energy);
(iii) zoning,
planning, building and other applicable laws regulating the use, development
and
occupancy of real property and permits, consents and rules under such
laws;
(iv) Liens
that have been placed by a third party on the fee title of Leased Real Property
or Easement Real Property that are subordinate to the rights therein of the
Company or Puget Sound Energy or that, if foreclosed, would not materially
adversely impair the conduct of the business of the Company or Puget Sound
Energy as presently conducted;
(v) Liens
that, individually or in the aggregate, do not materially adversely impair
the
continued use or operation of the specific parcel of Real Property to which
they
relate or the conduct of the business of the Company and Puget Sound Energy
as
presently conducted;
(vi) subleases
identified in Section 4.6 of the Company Disclosure Letter;
(vii) Indian
treaty or aboriginal rights other than the rights reasonably necessary for
the
conduct of the business of the Company and Puget Sound Energy as presently
conducted over land within the boundaries of any recognized Indian reservation
or over land known by the Company or Puget Sound Energy (whether by
actual or constructive knowledge from recorded documents) to be claimed under
Indian treaties or as aboriginal rights;
(viii) equitable
servitudes for hunting and fishing in favor of Indian tribes;
(ix) any
of
the following: (aa) unpatented mining claims; (bb) reservations or
exceptions in patents or in Acts authorizing the issuance thereof; or
(cc) water rights, claims or title to water, whether or not the
matters excepted under (aa), (bb), or (cc) are shown by the public records;
and
any prohibition or limitation on the use, occupancy or improvement of the land,
which arises from the rights of the public or riparian owners to use any waters
which may cover the land or to use any portion of the land which is now or
may
formerly have been covered by water (other than the matters described in this
subsection (ix) that, individually or in the aggregate, materially adversely
impair the current use of the Real Property by the Company or Puget Sound
Energy);
(x) questions
as to whether Puget Sound Energy's title or right to use (a) railroad
rights of way, or (b) utility corridors that purports to be Owned Real Property
is actually Easement Real Property because such title or right traces from
rights denominated by deed as a "right-of-way" or similar term;
(xi) Liens
that, to the knowledge of the Company, could be remedied by exercise of the
authority to acquire property or rights therein by eminent domain for an amount
of compensation that would not result in a Company Material Adverse Effect;
and
(xii) such
other matters that, individually or in the aggregate, would not reasonably
be
expected to result in a Company Material Adverse Effect.
(b) Neither
Company nor Puget Sound Energy is obligated under, or a party to, any option,
right of first refusal or other contractual right or obligation to sell, assign
or dispose of any Real Property or any portion thereof or interest therein
that,
in each case, is valued in excess of $5,000,000 (or $1,000,000 if the Owned
Real
Property is otherwise used or useful in the utility operations of Puget Sound
Energy), or that, if such sale, assignment or disposition is consummated, could
individually or in the aggregate materially adversely impair the conduct of
the
business of the Company or Puget Sound Energy as presently
conducted.
(c) (i) Each
lease or sublease for real property under which Company or Puget Sound Energy
is
a lessee or sublessee (each, a "Real Property Lease") and each easement or
subeasement for real property under which the Company or Puget Sound Energy
owns
an easement interest (each, an "Easement") is, to the knowledge of the Company,
in full force and effect and is the valid and binding obligation of the Company
or Puget Sound Energy, enforceable against the Company or Puget Sound Energy
in
accordance with its terms and, to the knowledge of the Company, the other party
or parties thereto, subject to Permitted Real Property Liens, subject to the
effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or
similar laws affecting rights of creditors generally and subject to the effect
of general principles of equity (regardless of whether considered in a
proceeding at law or in equity), (ii) no notices of default under any Real
Property Lease or Easement have been received by the Company or Puget Sound
Energy that have not been resolved, (iii) neither the Company nor Puget Sound
Energy is in default in any material respect under any Real Property Lease,
and,
to the knowledge of the Company, no landlord, sublandlord, land owner or the
owner of an easement who has granted a subeasement thereunder is in default
in
any material respect, and (iv) no event has occurred which, with notice, lapse
of time or both, would constitute a breach or default under any Real Property
Lease or Easement by the Company or Puget Sound Energy, except in each case
((c)(i), (ii), (iii) and (iv)), as do not materially adversely impair the use
or
occupancy of the Real Property or prevent, materially delay or materially impair
the consummation of the transactions contemplated by this
Agreement.
(d) With
respect to the Real Property, neither Company nor Puget Sound Energy has
received any written notice of, nor to the knowledge of the Company does there
exist as of the date of this Agreement, any pending, threatened or contemplated
condemnation (other than condemnations in connection with municipal road
improvement projects, state highway improvement projects or other public
transportation projects) or similar proceedings, or any sale or other
disposition of any Real Property or any part thereof in lieu of condemnation
that, individually or in the aggregate, would reasonably be expected to
materially adversely impair the use, occupancy or value of any Real
Property. The Company and Puget Sound Energy have lawful rights of
use and access to all land and other real property rights, subject to Permitted
Real Property Liens, necessary to conduct their businesses substantially as
presently conducted. No affiliate of the Company other than Puget
Sound Energy controls rights with respect to land and other real property rights
necessary to conduct the businesses of the Company and Puget Sound Energy
substantially as presently conducted.
(e) Each
of
the Company Subsidiaries other than Puget Sound Energy has good and
marketable title to all fee real property, valid title to
all leasehold estates and valid title to all easements of such Company
Subsidiary, free and clear of all Liens other than Permitted Real Property
Liens, except where the failure to do so, individually or in the aggregate,
would not reasonably be expected to result in a Company Material Adverse
Effect.
Section
4.7. Internal
Controls and Procedures. The Company has established and
maintains "disclosure controls and procedures" (as defined in Rules 13a-15(e)
and 15d-15(e) promulgated under the Exchange Act) that are reasonably designed
(but without making any representation or warranty as to the effectiveness
of
any such controls or procedures so designed) to ensure that material information
(both financial and non-financial) relating to the Company and the Company
Subsidiaries required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed, summarized
and
reported within the time periods specified in the rules and forms of the SEC,
and that such information is accumulated and communicated to the Company's
principal executive officer and principal financial officer, or persons
performing similar functions, as appropriate, to allow timely decisions
regarding required disclosure and to make the certifications of the "principal
executive officer" and the "principal financial officer" of the Company required
by Section 302 of SOX with respect to such reports. Each of the
principal executive officer of the Company and the principal financial officer
of the Company (or each former principal executive officer of the Company and
each former principal financial officer of the Company, as applicable) has
made
all certifications required by Sections 302 and 906 of SOX and the rules and
regulations promulgated thereunder with respect to the Company SEC Reports
and
the statements contained in such certifications are true and accurate in all
material respects as of the date hereof. Except as set forth in
Section 4.7 of the Company Disclosure Letter, there are no "significant
deficiencies" or "material weaknesses" (as defined by SOX) in the design or
operation of the Company's internal controls and procedures which could
adversely affect the Company's ability to record, process, summarize and report
financial data.
Section
4.8. Litigation;
Undisclosed Liabilities; Restrictions on Dividends; No General
Liens. (a) There are no pending or, to the knowledge of the
Company, threatened claims, suits, actions or proceedings before any court,
governmental department, commission, agency, instrumentality or authority or
any
arbitrator, nor are there, to the knowledge of the Company, any investigations
or reviews by any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator pending or threatened against,
relating to or affecting the Company or any of the Company Subsidiaries which,
individually or in the aggregate, have resulted in since December 31, 2006
or
would reasonably be expected to result in a Company Material Adverse Effect
or
prevent, materially delay or materially impair the consummation of the
transactions contemplated by this Agreement, (b) there have not been any
significant developments since December 31, 2006 with respect to claims, suits,
actions, proceedings, investigations or reviews that, individually or in the
aggregate, have resulted in since December 31, 2006 or would reasonably be
expected to result in a Company Material Adverse Effect or prevent, materially
delay or materially impair the consummation of the transactions contemplated
by
this Agreement and (c) there are no judgments, decrees, injunctions, rules
or
orders of any court, governmental department, commission, agency,
instrumentality or authority or any arbitrator applicable to the Company or
any
of the Company Subsidiaries except for such that, individually or in the
aggregate, have not resulted in since December 31, 2006 or would not reasonably
be expected to result in a Company Material Adverse Effect. Except
for matters reflected as liabilities or reserved against in the balance sheet
(or notes thereto) as of December 31, 2006, included in the Company Financial
Statements, as of the date of this Agreement, neither the Company nor any
Company Subsidiary has any liabilities or obligations (whether absolute,
accrued, contingent, fixed or otherwise, or whether due or to become due) of
any
nature and whether or not required by GAAP to be reflected on a consolidated
balance sheet of the Company and its consolidated Subsidiaries (including the
notes thereto), except liabilities or obligations (i) that were incurred since
December 31, 2006 in the ordinary course of business consistent in kind and
amount with past practice, or (ii) that, individually or in the aggregate,
have
not had and would not reasonably be expected to have a Company Material Adverse
Effect. Except as may be set forth in any Company Required Statutory
Approval or Parent Required Statutory Approval, there are no restrictions
(contractual or regulatory) limiting the ability of Puget Sound Energy from
making distributions, dividends or other return of capital to the
Company. Neither the Company nor Puget Sound Energy has granted a
consensual security interest in the portion of its assets defined as Collateral
in the Loan and Servicing Agreement dated December 20, 2005 by and between
Puget
Sound Energy and PSE Funding, Inc. other than in connection with the
transactions contemplated by such agreement, including the grant set forth
in
Section 1.7 of the Receivable Sales Agreement dated December 20, 2005 by and
between Puget Sound Energy and PSE Funding, Inc.; it being understood that
this
representation is not intended to address statutory or contractual rights of
set
off or Liens or security interests arising or existing by operation of
law.
Section
4.9. Tax
Matters. Except as to matters that would not reasonably be
expected, considered individually or in the aggregate with other matters, to
result in a Company Material Adverse Effect: (i) the Company and each of the
Company Subsidiaries have timely filed (or there have been filed on their
behalf) with appropriate taxing authorities all Tax Returns (as defined below)
required to be filed by them on or prior to the date hereof, such Tax Returns
are correct, complete and accurate in all respects, and all Taxes (as defined
below) due and payable have been paid; (ii) there are no audits, claims,
assessments, levies, administrative or judicial proceedings pending against
the
Company or any Company Subsidiary by any taxing authority; (iii) there are
no
Liens for Taxes upon any property or assets of the Company or any of the Company
Subsidiaries, except for Liens for Taxes (A) not yet due and payable, or if
due
and payable, are not delinquent and may thereafter be paid without penalty
or
(B) that are being contested in good faith through appropriate proceedings,
are
listed in Section 4.9 of the Company Disclosure Letter and have been accrued
for
or otherwise taken into account in accordance with GAAP on the Company Financial
Statements; (iv) there are no outstanding written requests, agreements, consents
or waivers to extend the statutory period of limitations applicable to the
assessment or collection of any Taxes or deficiencies against the Company or
any
of the Company Subsidiaries; (v) all Taxes that the Company or any Company
Subsidiary is obligated to withhold from amounts owing to any employee, creditor
or third party have been paid over to the appropriate taxing authorities in
a
timely manner, to the extent due and payable; (vi) neither the Company nor
any
Company Subsidiary has been a party to any distribution occurring during the
two-year period prior to the date of this Agreement in which the parties to
such
distribution treated the distribution as one to which Section 355 of the
Internal Revenue Code of 1986, as amended (the "Code"), applied, (vii) neither
the Company nor any Company Subsidiary has participated in any "listed
transactions" or, to the knowledge of the Company, any "reportable transactions"
within the meaning of Treasury Regulations Section 1.6011-4, and neither the
Company nor any Company Subsidiary has been a "material advisor" to any such
transactions within the meaning of Section 6111 of the Code; (viii) neither
the
Company nor any Company Subsidiary (A) has any liability for the Taxes of any
Person (other than the Company or the Company Subsidiaries) under Treasury
Regulation Section 1.1502-6 (or any similar provision of state, local or foreign
law), as a transferee or successor, or pursuant to any contractual obligation
(other than pursuant to any commercial agreement or contract not primarily
related to Tax) or (B) is a party to or bound by any Tax sharing agreement,
Tax
allocation agreement or Tax indemnity agreement (other than the Material
Contracts or any commercial agreements or contracts not primarily related to
Tax); and (ix) the Company has made available to the Parent correct and complete
copies of all income and all other material Tax Returns, material examination
reports and material statements of deficiencies assessed against or agreed
to by
the Company or any Company Subsidiary for taxable periods beginning after
December 31, 2003. As used in this Agreement: (i) the term "Tax"
includes all federal, state, local and foreign income, profits, franchise,
gross
receipts, environmental, customs duty, capital stock, severance, stamp, payroll,
sales, employment, unemployment, disability, use, property, withholding, excise,
production, value added, occupancy and other taxes, duties or assessments of
any
nature whatsoever, together with all interest, penalties and additions imposed
with respect thereto; (ii) the term "Tax Return" includes all returns and
reports (including elections, declarations, disclosures, schedules, estimates
and information returns) required to be supplied to a Tax authority relating
to
Taxes, including any amendments to such returns and reports; and (iii) the
term
"Treasury Regulations" means the regulations promulgated by the U.S. Department
of the Treasury pursuant to the Code.
Section
4.10. Employee
Benefits; ERISA.
(a) Company
Plans. Section 4.10(a) of the Company Disclosure Letter contains
a true and complete list of each deferred compensation and each bonus or other
incentive compensation, stock purchase, stock option and other equity
compensation plan, program, policy, agreement or arrangement; each severance
or
termination pay, medical, surgical, hospitalization, life insurance and other
"welfare plan," fund or program (within the meaning of Section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")); each
profit-sharing, stock bonus or other "pension plan," fund or program (within
the
meaning of Section 3(2) of ERISA); each employment, termination or severance
contract, arrangement, policy or agreement; and each other employee benefit
plan, fund, program, policy, agreement or arrangement; in each case, that (i)
is
sponsored, maintained or contributed to or required to be contributed to by
the
Company, any Company Subsidiary or any trade or business, whether or not
incorporated, that together with the Company or any Company Subsidiary is deemed
a "single employer" under Section 4001(b) of ERISA (an "ERISA Affiliate"),
or to
which the Company or an ERISA Affiliate is a party, for the benefit of any
employee or former employee of the Company or any Company Subsidiary or with
respect to which the Company or any Company Subsidiary to its knowledge has
any
liability, and (ii) is material to the Company and the Company Subsidiaries
taken as a whole (the "Company Plans").
(b) Deliveries. With
respect to each Company Plan, the Company has heretofore delivered or made
available to the Parent true and complete copies of (i) each of the Company
Plans as currently in effect; (ii) if the Company Plan is funded through a
trust
or any third party funding vehicle, a copy of the trust or other funding
agreement; (iii) the most recent determination or opinion letter received from
the Internal Revenue Service with respect to each Company Plan intended to
qualify under Section 401 of the Code; (iv) if applicable, the most recent
annual report (Form 5500 series) filed with the Internal Revenue Service; (v)
if
applicable, the most recent actuarial report prepared for such Company Plan;
and
(vi) for the last three years, all material correspondence with the
Internal Revenue Service, the United States Department of Labor, the Pension
Benefit Guaranty Corporation (the "PBGC"), the SEC and any other Governmental
Authority regarding the operation or the administration of any Company
Plan.
(c) Absence
of Liability. No material liability under Title IV of ERISA has
been incurred by the Company, any Company Subsidiary or any ERISA Affiliate
that
has not been satisfied in full and, to the knowledge of the Company, no
condition exists that presents a material risk to the Company, any Company
Subsidiary or any ERISA Affiliate of incurring any such liability, other than
liability for premiums due to the PBGC (which premiums have been paid when
due). No notice of a "reportable event," within the meaning of
Section 4043 of ERISA for which the reporting requirement has not been waived
or
extended, other than pursuant to PBGC Reg. Section 4043.33 or 4043.66, has
been
required to be filed for any Company Plan within the 12-month period ending
on
the date hereof or will be required to be filed in connection with the
transactions contemplated by this Agreement. No notices have been
required to be sent to participants and beneficiaries or the PBGC under Section
302 or 4011 of ERISA or Section 412 of the Code with respect to the most recent
three fiscal years of the applicable Company Plan ended prior to the Closing
Date.
(d) Present
Value of Accrued Benefits. With respect to each Company Plan
subject to Title IV of ERISA (a "Title IV Company Plan"), the present value
of
accrued benefits under such plan, based upon the actuarial assumptions used
for
funding purposes in the most recent actuarial report prepared by such plan's
actuary with respect to such plan, did not exceed, as of the end of the most
recent fiscal year of such plan ended prior to the Closing Date, the then
current value of the assets of such plan allocable to such accrued benefits
by
an amount that is material to the Company and the Company subsidiaries taken
as
a whole.
(e) Funding. No
Title IV Company Plan has incurred any "accumulated funding deficiency" (as
defined in Section 302 of ERISA and Section 412 of the Code), whether or not
waived, as of the last day of the most recent fiscal year of such Title IV
Company Plan ended prior to the Closing Date. Except as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, all material contributions required to be made with
respect to any Company Plan on or before the date hereof have been made and
all
obligations in respect of each Company Plan as of the date hereof have been
accrued and reflected in the Company Financial Statements to the extent required
by GAAP.
(f) Multiemployer
Plans. No Title IV Company Plan is a "multiemployer plan," as
defined in Section 4001(a)(3) of ERISA, nor is any Title IV Company Plan a
plan
described in Section 4063(a) of ERISA.
(g) No
Violations. Each Company Plan has been operated and administered
in all material respects in accordance with its terms and applicable law,
including but not limited to ERISA and the Code. As of the date
hereof, there is no material pending or, to the knowledge of the Company
threatened, litigation relating to the Company Plans. Neither the
Company nor any Company Subsidiary has engaged in a transaction with respect
to
any Company Plan that, assuming the taxable period of such transaction expired
as of the date hereof, would subject the Company or any Company Subsidiary
to a
tax or penalty imposed by either Section 4975 of the Code or Section 502(i)
of
ERISA in an amount which would be material to the Company and the Company
Subsidiaries taken as a whole. Neither the Company nor any Company
Subsidiary has incurred or reasonably expects to incur a tax or penalty imposed
by Section 4980 of the Code or Section 502 of ERISA or any liability under
Section 4071 of ERISA, in any such case, in an amount which would be material
to
the Company and the Company Subsidiaries taken as a whole. To the
knowledge of the Company, neither the Company nor any Company Subsidiary has
any
material liability with respect to any misclassification of any Person as an
independent contractor rather than as an employee. Since January 1,
2005, each Company Plan that is subject to Section 409A of the Code has been
administered in all material respects in good faith compliance with Section
409A
of the Code.
(h) Section
401(a) Qualification. Each Company Plan intended to be
"qualified" within the meaning of Section 401(a) of the Code has received a
determination letter from the Internal Revenue Service covering all tax law
changes prior to the Economic Growth and Tax Relief Reconciliation Act of 2001
or has remaining a period of time under the Code or applicable Treasury
Regulations or Internal Revenue Service pronouncements in which to request,
and
make any amendments necessary to obtain, such a letter from the Internal Revenue
Service; and the Company is not aware of any circumstances likely to result
in
the loss of the qualification of such Company Plan under Section 401(a) of
the
Code.
(i) Post-Employment
Benefits. No Company Plan provides medical, surgical, vision,
hospitalization, death or similar benefits (whether or not insured) for
employees or former employees of the Company or any Company Subsidiary for
periods extending beyond their respective dates of retirement or other
termination of service, other than (i) coverage mandated by applicable law,
(ii)
death benefits under any "pension plan," (iii) benefits the full cost of which
is borne by the current or former employee (or his beneficiary), (iv) retiree
medical subsidies as set forth in the IBEW Collective Bargaining Agreement,
or
(v) other retiree medical subsidies as described in Section 4.10(i) of the
Company Disclosure Letter.
(j) Effect
of Transaction. Neither the execution of this Agreement nor the
consummation of the transactions contemplated hereby will (w) result in payments
(whether in cash or property or the vesting of property) to any employee,
officer or director of the Company or any Company Subsidiary who is a
"disqualified individual" (as such term is defined in Treasury Regulation
Section 1.280G-1) under any employment, severance or termination agreement,
other compensation arrangement or any of the Company Plans that would not be
deductible under Section 162(m) or that would be characterized as an "excess
parachute payment" (as defined in Section 280G(b)(1) of the Code), (x) entitle
any employees of the Company or any Company Subsidiary to severance pay or
any
increase in severance pay upon any termination of employment after the date
hereof, or (y) accelerate the time of payment or vesting or result in any
payment or funding (through a grantor trust or otherwise) of compensation or
benefits under, increase the amount payable or result in any other material
obligation pursuant to, any of the Company Plans. There has been no
amendment to, announcement by the Company or any Company Subsidiary relating
to,
or change in employee participation or coverage under, any Company Plan which
would increase materially the expense of maintaining such plan above the level
of the expense incurred therefor for the most recently completed fiscal year
of
the Company.
(k) Claims. There
are no material pending, or to the knowledge of the Company threatened, material
claims by or on behalf of any Company Plan, by any employee or beneficiary
covered under any Company Plan, or otherwise involving any Company Plan (other
than routine claims for benefits).
(l) No
Foreign Company Plans. No Company Plan is maintained for the
benefit of employees outside of the United States or is otherwise subject to
the
laws of any jurisdiction other than the United States or a political subdivision
thereof.
(m) Options. All
stock options on Company Common Stock granted under any plan, program, agreement
or arrangement maintained by the Company to provide for grants of equity-based
awards (the "Options") have an exercise price per share that was not less than
the "fair market value" of a share of Company Common Stock on the date of grant,
as determined in accordance with the terms of the applicable plan, program,
agreement or arrangement maintained by the Company to provide for grants of
equity-based awards and, to the extent applicable, Sections 409A and 422 of
the
Code. All Options have been properly accounted for by the Company in
accordance with GAAP, and no change is expected in respect of any prior Company
Financial Statement relating to expenses for stock
compensation. There is no pending audit, investigation or inquiry by
any Governmental Authority or by the Company with respect to the Company's
stock
option granting practices or other equity compensation practices.
Section
4.11. Labor
and Employee Relations.
(a) As
of the
date of this Agreement, except for employees represented by the International
Brotherhood of Electrical Workers Union and the United Association of Plumbers
and Pipefitters, no employee of the Company or any of its Subsidiaries is
represented by any union or covered by any collective bargaining agreement.
As
of the date of this Agreement, no labor organization or group of employees
of
the Company or any of its Subsidiaries has made a pending demand for recognition
or certification, and there are no representation or certification proceedings
or petitions seeking a representation proceeding presently pending or, to the
knowledge of the Company, threatened to be brought or filed, with the National
Labor Relations Board or any other labor relations tribunal or
authority;
(b) there
are
no pending or, to the knowledge of the Company, threatened employee strikes,
work stoppages, slowdowns, picketing or material labor disputes with respect
to
any employees of the Company or the Company Subsidiaries which, individually
or
in the aggregate, would reasonably be expected to result in a Company Material
Adverse Effect, and during the past five years, neither the Company nor any
of
the Company Subsidiaries has experienced any strike, work stoppage, lock-up,
slow-down or other material labor dispute;
(c) neither
the Company nor any of the Company Subsidiaries has to its knowledge, within
the
last two years, engaged in any unfair labor practice and there are no complaints
against the Company or any of the Company Subsidiaries pending before the
National Labor Relations Board or any similar state or local labor agency by
or
on behalf of any employee of the Company or any of the Company
Subsidiaries;
(d) the
Company and the Company Subsidiaries are (a) in compliance in all material
respects with all federal and state laws respecting employment and employment
practices, terms and conditions of employment, collective bargaining,
immigration, wages, hours and benefits, non-discrimination in employment,
workers compensation, the collection and payment of withholding and/or payroll
taxes and similar taxes (except for any non-compliance which, individually
or in
the aggregate, would not reasonably be expected to result in a Company Material
Adverse Effect), including but not limited to the Civil Rights Act of 1964,
the
Age Discrimination in Employment Act of 1967, the Equal Employment Opportunity
Act of 1972, the Employee Retirement Income Security Act of 1974, the Equal
Pay
Act, the National Labor Relations Act, the Americans with Disabilities Act
of
1990, the Vietnam Era Veterans Reemployment Act, the Uniformed Services
Employment and Reemployment Rights Act and the Family and Medical Leave Act
and
any and all similar applicable state and local laws, and all material applicable
requirements of the Occupational Safety and Health Act of 1970 within the United
States and comparable regulations and orders thereunder; and (b) to the
knowledge of the Company, neither the Company nor any of the Company
Subsidiaries has committed a material unfair labor practice as defined in the
National Labor Relations Act;
(e) each
of
the Company and the Company Subsidiaries is, and during the 90-day period prior
to the date of this Agreement, has been in compliance in all material respects
with the Worker Adjustment Retraining Notification Act of 1988, as amended
("WARN Act"), or any similar state or local law.
Section
4.12. Rights
Agreement. The Company has made available to the Parent a true
and complete copy of the Rights Agreement dated as of December 21, 2000 between
the Company and Xxxxx Fargo Shareowner Services (replacing Mellon Investor
Services LLC), as Rights Agent, (the "Rights Agreement") as in effect on the
date of this Agreement. The Company has (i) taken all action
necessary so that the entering into of this Agreement and the Merger Agreement
and the consummation of the transactions contemplated hereby and thereby
(including the Merger) do not and will not result in the ability of any Person
to exercise any rights under the Rights Agreement or enable or require the
Company rights to separate from the shares of Company Common Stock to which
they
are attached or to be triggered or become exercisable; and (ii) amended the
Rights Agreement in the form of Amendment No. 1 to the Rights Agreement, as
set
forth in Section 4.12 of the Company Disclosure Letter.
Section
4.13. Environmental
Protection.
(a) Compliance. The
Company and each of the Company Subsidiaries are in compliance with all
applicable Environmental Laws (as defined in Section 4.13(g)(ii)) except where
the failure to so comply is not, individually or in the aggregate, reasonably
likely to have a Company Material Adverse Effect, and neither the Company nor
any of the Company Subsidiaries has received any written communication that
has
not been resolved from any Governmental Authority that alleges that the Company
or any of the Company Subsidiaries is not in such compliance with applicable
Environmental Laws.
(b) Environmental
Permits. The Company and each of the Company Subsidiaries have
obtained or have applied for or otherwise in the ordinary course of business
expect to apply for all environmental, health and safety permits and
governmental authorizations (collectively, the "Environmental Permits")
necessary for the construction of their facilities or the conduct of their
operations under applicable Environmental Laws except where such failures to
so
obtain are not, individually or in the aggregate, reasonably likely to have
a
Company Material Adverse Effect, and all such Environmental Permits are in
good
standing or, where applicable, a renewal application has been timely filed
and
is pending agency approval, except where such deficiencies or failures to timely
renew are not, individually or in the aggregate, reasonably likely to have
a
Company Material Adverse Effect, and the Company and the Company Subsidiaries
are in material compliance with all terms and conditions of the Environmental
Permits, except where failures to so comply are not, individually or in the
aggregate, reasonably likely to have a Company Material Adverse
Effect.
(c) Environmental
Claims. There is no Environmental Claim (as defined in Section
4.13(g)(i)) outstanding which, individually or in the aggregate, is reasonably
likely to have a Company Material Adverse Effect pending (A) against the Company
or any of the Company Subsidiaries, or (B) against any real or personal property
or operations which the Company or any of the Company Subsidiaries owns, leases
or manages, in whole or in part.
(d) Releases. The
Company has no knowledge of any Releases (as defined in Section 4.13(g)(iv))
of
any Hazardous Material (as defined in Section 4.13(g)(iii)) that would be
reasonably likely to be the subject of any Environmental Claim against the
Company or any of the Company Subsidiaries, except for any Environmental Claims
which, individually or in the aggregate, are not reasonably likely to have
a
Company Material Adverse Effect.
(e) Environmental
Orders. Neither the Company nor any of the Company Subsidiaries
is subject to any environmental consent orders, decrees or settlements which,
individually or in the aggregate, are reasonably likely to have a Company
Material Adverse Effect.
(f) Exclusive
Representations and Warranties. This Section 4.13(a) contains the
sole and exclusive representations and warranties of the Company with respect
to
environmental matters.
(g) Definitions. As
used in this Agreement:
(i) "Environmental
Claim" means any and all written administrative or judicial actions, suits,
demands, demand letters, directives, claims, Liens, investigations, proceedings
or notices of noncompliance or violation by any Person (including any
Governmental Authority), alleging potential liability (including, without
limitation, potential responsibility for or liability for enforcement,
investigatory costs, cleanup costs, governmental response costs, removal costs,
remedial costs, natural resources damages, property damages, personal injuries
or penalties) arising out of, based on or resulting from (A) the presence,
Release or threatened Release into the environment of any Hazardous Materials
at
any location, whether or not owned, operated, leased or managed by the Company
or any of the Company Subsidiaries; (B) circumstances forming the basis of
any
violation or alleged violation of any applicable Environmental Law; or (C)
any
and all claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting
from
the presence or Release of any Hazardous Materials.
(ii) "Environmental
Laws" means all federal, state and local laws (including common law), rules
and regulations relating to pollution, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or protection of human health as it relates to Releases or threatened
Releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials.
(iii) "Hazardous
Materials" means (A) any petroleum or petroleum products, radioactive
materials, asbestos in any form that is or could become friable, urea
formaldehyde foam insulation and transformers or other equipment that contain
dielectric fluid containing polychlorinated biphenyls; (B) any chemicals,
materials or substances which are now defined as or included in the definition
of "hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," or words of similar import under any applicable Environmental
Law
and (C) any other chemical, material, substance or waste, exposure to which
is
now prohibited, limited or regulated under any applicable Environmental Law
in a
jurisdiction in which the Company or any of the Company Subsidiaries is subject
(for purposes of this Section 4.13).
(iv) "Release"
means any release, spill, emission, leaking, injection, deposit, disposal,
discharge, dispersal, leaching or migration into the atmosphere, soil, surface
water, groundwater or property.
Section
4.14 Material
Contracts.
(a) All
Material Contracts or material note, bond, mortgage, indenture, deed of trust,
license, franchise, permit, concession, contract, lease or other instrument,
obligation or agreement of any kind (collectively, "Contracts"), including
amendments thereto, required to be filed as an exhibit to any report of the
Company filed pursuant to the Exchange Act of the type described in
Item 601(b)(10) of Regulation S-K promulgated by the SEC have been
filed, and no such Contract has been amended or modified, except for such
amendments or modifications which have been filed as an exhibit to a
subsequently dated and filed Company SEC Report. All such filed
Contracts (excluding any redacted portions thereof) shall be deemed to have
been
made available to the Parent.
(b) Other
than the Contracts set forth in clause (a) above which were filed in an
unredacted form, Section 4.14(b) of the Company Disclosure Letter sets
forth a correct and complete list as of the date of this Agreement, and the
Company has made available to the Parent correct and complete copies (including
all material amendments, modifications, extensions or renewals with respect
thereto, but excluding all names, terms and conditions that have been redacted
in compliance with applicable laws governing the sharing of information), of
any
Contract to which the Company or any of its Subsidiaries is a party to or bound
by which has not expired or been terminated with no further obligation or
liability of the Company or any of the Company Subsidiaries prior to the date
hereof in accordance with its terms:
(i) that
is
reasonably likely to require (x) annual payments or other transfers of value
to
or from the Company and its Subsidiaries of more than $15 million or (y)
aggregate payments or other transfers of value to or from the Company and its
Subsidiaries of more than $25 million (other than Contracts relating to
purchases of transformers or related infrastructure and Contracts for the
wholesale purchase and sale of electric power);
(ii) for
any
wholesale purchase and sale of electric power that are reasonably likely to
require annual payments or other transfers of value to or from the Company
and
its Subsidiaries of more than $10 million, other than Hedging
Contracts;
(iii) that
relates to the sale of a business by the Company or any Company Subsidiary
pursuant to which the Company or any Company Subsidiary has any potential
indemnity or other payment obligation of more than $25 million;
(iv) other
than with respect to any partnership that is wholly-owned by the Company or
any
wholly-owned Subsidiary of the Company, that represents any partnership, joint
venture or other similar agreement or arrangement relating to the formation,
creation, operation, management or control of any partnership or joint venture
material to the Company or any of its Subsidiaries or in which the Company
owns
more than a 20% voting or economic interest, or any interest valued at more
than
$25 million without regard to percentage voting or economic
interest;
(v) that
is
any non-competition Contract or other Contract that (w) purports to limit in
any
material respect either the type of business in which the
Company, its Subsidiaries (or, after the Effective Time of the Merger
under the Merger Agreement, Parent or its Subsidiaries) or any of their
affiliates may engage or the manner or geographic area in which any of them
may
so engage in any business, except for franchise agreements (or agreements
pursuant to Chapter 54.48 of the Revised Code of Washington) containing
customary provisions between the Company or one of its Subsidiaries and the
applicable jurisdictions, (x) would require the disposition of any material
assets or line of business of the Company, its Subsidiaries (or, after the
Effective Time of the Merger under the Merger Agreement, Parent or its
Subsidiaries) or any of their affiliates as a result of the consummation of
the
transactions contemplated by this Agreement, (y) is a material Contract that
grants "most favored nation" status that, following the Merger, would apply
to
the Parent and its Subsidiaries, including the Company and its Subsidiaries
or
(z) prohibits or limits, in any material respect, the right of the Company
or
any of its Subsidiaries to make, sell or distribute any products or services
or
use, transfer, license, distribute or enforce any of their respective
Intellectual Property rights;
(vi) under
which the Company or any Company Subsidiary has created, incurred, assumed
or
guaranteed (or may create, incur, assume or guarantee) indebtedness for borrowed
money in excess of $10 million;
(vii) that
is a
swap, cap, floor, collar, futures contract, forward contract, option and any
other derivative financial instrument, contract or arrangement, based on any
commodity, security, instrument, asset, rate or index of any kind or nature
whatsoever, whether tangible or intangible, including electricity, natural
gas,
crude oil and other commodities, currencies, interest rates and indices, and
forward contracts for physical delivery, physical output of assets and physical
load obligations (a "Hedging Contract"), with a term of ninety days or longer
and a notional value in excess of $5 million; and
(viii) with
provisions that, in the event of a Company ratings downgrade below "investment
grade," would require a cash payment or posting of collateral, in each case
with
a value in excess of $10 million, or the termination of such contract, other
than Hedging Contracts.
The
Contracts described in clauses (a) and (b) together with all exhibits and
schedules to such Contracts, as amended through the date hereof, are referred
to
herein as "Material Contracts".
(c) A
true
and correct copy of each Material Contract has previously been made available
to
the Parent and each such Contract is a valid and binding agreement of the
Company or one of its Subsidiaries, as the case may be, and is in full force
and
effect, and neither the Company nor any of its Subsidiaries nor, to the
knowledge of the officers of the Company, any other party thereto is in default
or breach in any respect under the terms of any such agreement, contract, plan,
lease, arrangement or commitment, except for such default or breach as would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.
Section
4.15 Intellectual
Property.
(a) Except
as
to matters that, individually or in the aggregate, would not reasonably be
expected to result in a Company Material Adverse Effect: (i) the Company and
its
Subsidiaries have sufficient rights to use all Intellectual Property used in
its
business as presently conducted; (ii) to the knowledge of the Company, the
conduct of the Company and Puget Sound Energy does not and has not in the past
three (3) years infringed or otherwise violated the Intellectual Property rights
of any third party; (iii) there is no litigation, opposition, cancellation,
proceeding, objection or claim pending, asserted in writing or, to the Company's
knowledge, threatened against the Company or Puget Sound Energy concerning
the
ownership, validity, registrability, enforceability, infringement or use of,
or
licensed right to use, any Intellectual Property used by the Company or Puget
Sound Energy; (iv) to the Company's knowledge, no Person is violating any
Intellectual Property right that the Company or Puget Sound Energy holds
exclusively; and (v) the Company and Puget Sound Energy have taken commercially
reasonable measures to protect the confidentiality of all Trade Secrets that
are
owned, used or held by the Company or Puget Sound Energy. For
purposes of this Agreement, "Intellectual Property" means all (i) trademarks,
service marks, brand names, collective marks, Internet domain names, logos,
symbols, trade dress, trade names, and other indicia of origin, all applications
and registrations for the foregoing, and all goodwill associated therewith
and
symbolized thereby, including all renewals of same; (ii) inventions, to the
extent patentable, and all patents, registrations, invention disclosures and
applications therefor, including divisions, continuations, continuations-in-part
and renewal applications, and including renewals, extensions and reissues;
(iii)
confidential business information, trade secrets and know-how, including
processes, schematics, business methods, formulae, drawings, prototypes, models,
designs, unpatentable discoveries and inventions (collectively, "Trade
Secrets"); and (iv) published and unpublished works of authorship, whether
copyrightable or not (including without limitation databases and other
compilations of information), copyrights therein and thereto, and registrations
and applications therefor, and all renewals, extensions, restorations and
reversions thereof.
(b) The
Company and Puget Sound Energy have implemented reasonable backup, security
and
disaster recovery technology that, to the Company's knowledge, is consistent
with industry practices. The Company and Puget Sound Energy take such measures
as are required by applicable law to ensure the confidentiality of customer
financial and other confidential information and to comply with the Company's
privacy policy. The Company’s and the Company Subsidiaries’
computers, computer software, firmware, middleware, servers, workstations,
routers, hubs, switches, data communications lines, and all other information
technology equipment operate and perform in all material respects in accordance
with their documentation and functional specifications and otherwise as required
by the Company or Puget Sound Energy in connection with its business as
presently conducted, and have not materially malfunctioned or failed within
the
past three (3) years.
Section
4.16 Absence
of Certain Changes or Event. Except as expressly contemplated or
permitted by this Agreement, since December 31, 2006, the Company and each
of
the Company Subsidiaries have conducted their respective businesses only in
the
ordinary course of business consistent with past practice and there has not
been
any change or development or combination of developments affecting the Company
or any Company Subsidiary, of which the Company has knowledge, that would,
individually or in the aggregate, reasonably be expected to result in a Company
Material Adverse Effect.
Section
4.17 [Intentionally
Omitted]
Section
4.18 [Intentionally
Omitted]
Section
4.19 Insurance. Except
for failures to maintain insurance or self-insurance that, individually or
in
the aggregate, have not had and would not reasonably be expected to have a
Company Material Adverse Effect, since January 1, 2004 each of the Company
and
its Subsidiaries and their respective properties and assets has been
continuously insured with financially responsible insurers or has self-insured,
in each case in such amounts and with respect to such risks and losses as (i)
are required by applicable law or by the Company's Material Contracts and (ii)
are customary for companies in the United States of America conducting the
business conducted by the Company and its Subsidiaries and, to the knowledge
of
the Company, there is no condition specific to the Company or its Subsidiaries
which would prevent the Company or the Company Subsidiaries from obtaining
insurance policies for such risks and losses. All material insurance
policies of the Company and each Company Subsidiary are in full force and
effect. All premiums due and payable through the date hereof under
all such policies and Contracts have been paid and the Company and its
Subsidiaries are otherwise in compliance in all respects with the terms of
such
policies and Contracts, except for such failures to be in compliance which
would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Neither the Company nor any of its
Subsidiaries has received any notice of cancellation or termination with respect
to any such policy or Contract, except with respect to any cancellation or
termination that, individually or in the aggregate, has not had and would not
reasonably be expected to have a Company Material Adverse Effect.
Section
4.20 Hedging
Activities.
(a) The
Company has established risk parameters, limits and guidelines in compliance
with the risk management policy approved by the Company Board of Directors
(or
committee thereof) (the "Company Hedging Guidelines") to (i) restrict the level
of risk that the Company and its Subsidiaries are authorized to take with
respect to, among other things, the net position resulting from all physical
and
financial electricity contacts, natural gas hedge contracts, gas adjustment
clauses, exchange-traded futures and options transactions, over-the-counter
transactions and derivatives thereof, interest rate swap agreements, and similar
transactions (the "Company Net Position") and (ii) monitor compliance with
the
Company Hedging Guidelines by the Company and its Subsidiaries with such risk
parameters. The Company has provided the Company Hedging Guidelines
to the Parent prior to the date hereof.
(b) (i)
The
Company Net Position is within the risk parameters that are set forth in the
Company Hedging Guidelines and (ii) the exposure of the Company and its
Subsidiaries with respect to the Company Net Position resulting from all
transactions described in Section 4.20(a) would not reasonably be expected
to
result in a material loss to the Company and its Subsidiaries, taken as a whole,
based on market prices in existence as of the date hereof. Since
December 31, 2006, neither the Company nor any of its Subsidiaries has, in
accordance with its xxxx-to-market accounting policies, experienced an aggregate
net loss in its hedging and related operations that would be material to the
Company and its Subsidiaries taken as a whole taking into account the
recognition of any underlying commodity sales and the regulatory treatment
and
allowances for hedge transactions.
Section
4.21
[Intentionally Omitted]
Section
4.22 Regulatory
Proceedings. As of the date hereof, neither the Company nor any
of its Subsidiaries, all or part of whose rates or services are regulated by
a
Governmental Authority, (i) has rates which have been or are being collected
subject to refund, pending final resolution of any proceeding pending before
a
Governmental Authority or on appeal to the courts, or (ii) except as identified
in Section 4.8 of the Company Disclosure Letter, is a party to any proceeding
before a Governmental Authority or on appeal from orders of a Governmental
Authority, in each case which individually or in the aggregate, have resulted
in
or would reasonably be expected to result in a Company Material Adverse
Effect.
Section
4.23 Regulation
as a Utility. (a) The Company together with its
subsidiary companies is a "single state holding company system" under the Public
Utility Holding Company Act of 2005 ("PUHCA 2005"). Puget Sound
Energy and its indirect wholly-owned exempt wholesale generator subsidiary
Black
Creek Hydro, Inc. ("BCH") are each a "public utility"
within the meaning of Section 201(e) of the FPA. Puget Sound Energy
is not regulated as a "natural gas company" under the Natural Gas Act, except
in
two limited aspects of its business which subject it only to limited
jurisdiction of the Federal Energy Regulatory Commission (“FERC"): (i) to the
extent that Puget Sound Energy makes natural gas sales for resale in interstate
commerce, it has a limited jurisdiction blanket marketing certificate as
contained in the regulations of the FERC; and (ii) in its capacity as Project
Operator of the Xxxxxxx Prairie Storage Project (which otherwise does not
subject it to regulation as a "natural gas company"). Puget Sound Energy
is also regulated as a "public service company," "gas
company" and "electrical company" under Washington state law. Except
for regulation of BCH, Hydro Energy Development Corp. ("HEDC") and Puget Sound
Energy by the FERC under the FPA, PUHCA
2005 and regulation of Puget Sound Energy by the
Washington Utilities and Transportation Commission, neither the Company nor
any
Company Subsidiary is subject to regulation as a public utility or public
service company (or similar designation) by the FERC, any state in the United
States or in any foreign nation. Puget Sound Energy has been
authorized by FERC to make wholesale sales of energy and capacity at
market-based rates pursuant to Section 205 of the FPA, which blanket authority
has not been limited in any material respect through a Puget Sound
Energy-specific rate cap or mitigation measure. All sales of energy
and/or capacity by BCH are made pursuant to power sale agreements or tariffs
filed with and accepted by FERC pursuant to Section 205 of the FPA.
Neither
the Company nor any Company Subsidiary owns, holds or controls nuclear materials
or nuclear related facilities that are subject to the regulation of the Nuclear
Regulatory Commission under the Atomic Energy Act.
EXHIBIT
C
FORM
OF OPINION OF COMPANY COUNSEL
(i) The
Company and Puget Sound Energy have been duly incorporated and are validly
existing under the laws of the State of Washington, except any failure to be
so
qualified or have such power or authority as would not, individually or in
the
aggregate, have a Company Material Adverse Effect.
(ii) The
Company has the corporate power and authority to execute and deliver the
Agreement and to consummate the transactions contemplated thereby.
(iii) The
Shares have been duly authorized and when delivered and paid for in accordance
with the terms of the Stock Purchase Agreement will be validly issued, fully
paid and non-assessable; and the issuance of the Shares will not be subject
to
any preemptive or similar rights under the Company’s charter or bylaws or under
Washington law.
(iv) The
Agreement has been duly and validly authorized, executed and delivered by the
Company and constitutes a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except to the extent
enforcement thereof may be limited by applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar laws of general
applicability relating to or affecting creditors’ rights and to general
principles of equity (regardless whether such enforcement is sought in equity
or
at law).
(v) The
execution, delivery and performance by the Company of the Agreement will not
(i)
constitute a violation of, or breach or default under, or result in the creation
or imposition of any lien upon any property or assets of the Company or Puget
Sound Energy under, the terms of any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
is
bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject and, in each case, that is filed as an exhibit to the
Company's Annual Report on Form 10-K for the year ended December 31, 2006,
(ii)
result in any violation of the provisions of the charter or by-laws or similar
organizational documents of the Company or Puget Sound Energy or (iii) result
in
the violation of any Washington State or Federal law, statute, rule or
regulation or any judgment or order of any court or governmental or regulatory
authority having jurisdiction over the Company that, in each case, in the
experience of such counsel, is normally applicable to transactions of the type
contemplated by the Agreement and that, in the case of orders and judgments,
are
known to such counsel, except, in the case of clauses (i) and (iii) above,
for
any such conflict, breach, violation or default that would not, individually
or
in the aggregate, have a Company Material Adverse Effect. We do not
express any opinion, however, on whether the execution, delivery or performance
by the Company of the Agreement will constitute a violation of, or constitute
a
default under, any covenant, restriction or provision with respect to financial
ratios or tests or any aspect of the financial condition or results of
operations of the Company or any of its subsidiaries.
(vi) No
consent, approval, authorization, filings, order, registration or qualification
of or with any Washington State or Federal court or governmental or regulatory
authority is required for the execution, delivery and performance by the Company
of the Agreement and the consummation of the transactions contemplated thereby,
except for such consents, approvals, authorizations, orders and registrations
or
qualifications as have been obtained.
The
foregoing opinion may be subject to customary assumptions, qualifications and
exclusions and shall be rendered by outside counsel for the Company reasonably
acceptable to the Purchasers.
EXHIBIT
D
FORM
OF COMPANY COMPLIANCE CERTIFICATE
I,
______________, [Chief Executive Officer][President] of Puget Energy, Inc.,
a
Washington corporation (the “Company”), pursuant to Section 6.8 of the
Stock Purchase Agreement, dated October 25, 2007 (the “Stock Purchase
Agreement”), among the Company and the purchasers named therein, hereby
certify that:
1. The
representations and warranties made by the Company in Article III of the Stock
Purchase Agreement and Exhibit B thereof were true and correct as of the date
of
the Stock Purchase Agreement and as of the Closing Date as though made on and
as
of the Closing Date (except to the extent any such representation or warranty
expressly speaks as of an earlier date), except for such failures of
representations or warranties to be true and correct (without giving effect
to
any materiality qualification or standard contained in any such representations
and warranties) which, individually or in the aggregate, have not resulted
in
and would not reasonably be expected to result in a Company Material Adverse
Effect.
2. All
covenants, agreements and conditions contained in this Agreement to be performed
or complied with by the Company on or prior to the date hereof have been
performed or complied with in all material respects.
3. All
notices, reports and other filings required to be made prior to the date hereof
by the Company or any of the Company Subsidiaries with, and all consents,
registrations, approvals, permits and authorizations required to be obtained
prior to the date hereof by the Company or any of the Company Subsidiaries
from,
any Governmental Authority in connection with the execution and delivery of
the
Stock Purchase Agreement and the consummation of the transactions contemplated
thereby by the Company have been made or obtained and are effective on and
as of
the date hereof.
4. No
Company Material Adverse Effect shall have occurred that is
continuing.
5. The
number of shares of Company Common Stock outstanding as of the day immediately
preceding the Closing Date is [ ].
Capitalized
terms used but not defined herein shall have the meanings set forth in the
Stock
Purchase Agreement.
[Remainder
of page intentionally left blank]
IN
WITNESS WHEREOF, I have hereunto signed my name on behalf of the
Company.
Dated: _________________________
By:____________________________
Name:__________________________
Title:___________________________
EXHIBIT
E
FORM
OF PURCHASER COMPLIANCE CERTIFICATE
I,
______________, [INSERT TITLE] of [INSERT NAME OF PURCHASER], a [INSERT
JURISDICTION] [corporation] (the “Purchaser”), pursuant to Section 7.5 of
the Stock Purchase Agreement, dated October 25, 2007 (the “Stock Purchase
Agreement”), among Puget Energy, Inc. (the “Company”) and the
purchasers named therein, hereby certify that:
1. The
representations and warranties made by the Purchasers in Article IV of the
Stock
Purchase Agreement were true and correct as of the date of the Stock Purchase
Agreement and as of the Closing Date as though made on and as of the Closing
Date (except to the extent any such representation or warranty expressly speaks
as of an earlier date) except for such failures of representations or warranties
to be true and correct (without giving effect to any materiality qualification
or standard contained in any such representations and warranties) which,
individually or in the aggregate, have not resulted in and would not reasonably
be expected to result in a any material adverse effect on the ability of the
Purchaser to consummate the transaction contemplated by this
Agreement.
2. All
covenants, agreements and conditions contained in the Stock Purchase Agreement
to be performed or complied with by the Purchaser on or prior to the date hereof
have been performed or complied with in all material respects.
3. All
notices, reports and other filings required to be made prior to the date hereof
by the Purchaser or any of its subsidiaries with, and all consents,
registrations, approvals, permits and authorizations required to be obtained
prior to the date hereof by the Purchaser or any of its subsidiaries from,
any
Governmental Authority in connection with the execution and delivery of the
Stock Purchase Agreement and the consummation of the transactions contemplated
thereby by the Purchaser have been made or obtained and are effective on and
as
of the date hereof.
Capitalized
terms used but not defined herein shall have the meanings set forth in the
Stock
Purchase Agreement.
[Remainder
of page intentionally left blank]
IN
WITNESS WHEREOF, I have hereunto signed my name on behalf of the
Purchaser.
Dated:______________________________
By: ________________________________
Name: ______________________________
Title: _______________________________
EXHIBIT
F
LIABILITY
OF TRUSTEES AND RESPONSIBLE ENTITIES
If
(i) a
Person (a “Trustee”) enters into the Stock Purchase Agreement as trustee
or responsible entity of a trust (“its Trust”) and (ii) the Trustee
notifies the Company or another party that it is acting as trustee or
responsible entity of its Trust, the following provisions shall apply in respect
of the Trustee and its Trust:
1. the
Trustee enters into this Agreement and holds Shares only in its capacity as
responsible entity or trustee (as applicable) of its Trust and in no other
capacity. A liability arising under or in connection with this
Agreement is limited to, and can be enforced against the Trustee only to, the
extent to which it can be satisfied out of the assets of its Trust out of which
the Trustee is actually indemnified for such liability. This
limitation of the Trustee’s liability applies despite any other provision of
this Agreement and extends to all liabilities and obligations of the relevant
party in any way connected with any representation, warranty, conduct, omission,
agreement or transaction related to this Agreement;
2. no
party may xxx the Trustee in any capacity other than as responsible entity
or
Trustee (as applicable) of its Trust, including to seek the appointment of
a
receiver (except in relation to property of its Trust), a liquidator, an
administrator, or any similar person to the Trustee or prove in any bankruptcy,
insolvency, liquidation, administration or arrangement of or affecting the
Trustee (except in relation to property of its Trust);
3. the
provisions of this Exhibit E do not apply to any obligation or liability of
the
Trustee to the extent that it is not satisfied because under the agreement
governing its Trust or by operation of law there is a reduction in the extent
of
the Trustee’s indemnification out of the assets of its Trust, as a result of the
Trustee’s fraud, negligence or breach of trust;
4. no
attorney, agent, receiver or receiver and manager appointed in accordance with
this Agreement has authority to act on behalf of the Trustee in a way which
exposes the Trustee to any personal liability, and no act or omission of any
such person will be considered fraud, negligence or breach of trust of the
relevant party for the purpose of Section 3 of this Exhibit F;
5. the
Trustee warrants to each party to this Agreement that it has the rights of
indemnification referred to in Section 1 of this Exhibit F (the “Trustee
Indemnity”); and
6. the
Trustee warrants to each party to the Stock Purchase Agreement that it has
not
done and has omitted to do, and undertakes that it will not, during the term
of
this Agreement, do or omit to do, anything which has or would limit, affect,
amend or in any manner whatsoever restrict the Trustee Indemnity.
For
the
avoidance of doubt, this Exhibit F applies to each representation and warranty
given by the Purchaser in Article IV of the Stock Purchase Agreement, including
those given in respect of a Purchaser’s Trust in Section
4.8.
