EXHIBIT 4.11
SENIOR CONVERTIBLE NOTE
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A)
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS OR (B) AN OPINION OF COUNSEL IN A
REASONABLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR
APPLICABLE STATE SECURITIES LAWS OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR
RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THIS NOTE AND THE
SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY BE PLEDGED IN CONNECTION WITH A
BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THIS
NOTE. ANY TRANSFEREE OF THIS NOTE SHOULD CAREFULLY REVIEW THE TERMS OF THIS
NOTE, INCLUDING SECTIONS 3(c)(iii) AND 18(a) HEREOF. THE PRINCIPAL AMOUNT
REPRESENTED BY THIS NOTE AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF MAY
BE LESS THAN THE AMOUNTS SET FORTH ON THE FACE HEREOF PURSUANT TO SECTION
3(c)(iii) OF THIS NOTE.
XCEL ENERGY INC.
Issuance Date: _______, 2002 Principal: U.S. $_____
FOR VALUE RECEIVED, XCEL ENERGY INC., a Minnesota corporation (the
"COMPANY"), hereby promises to pay to the order of [__________________] or
registered assigns ("HOLDER") the amount set out above as the Principal (as
reduced pursuant to the terms hereof pursuant to redemption, conversion or
otherwise, the "PRINCIPAL") when due, whether upon the Final Maturity Date (as
defined below), acceleration, conversion, redemption or otherwise (in each case
in accordance with the terms hereof) and to pay interest ("INTEREST") on any
outstanding Principal at the rate of eight percent (8%) per annum, subject to
periodic adjustment pursuant to Section 2 (the "INTEREST RATE"), from the date
set out above as the Issuance Date (the "ISSUANCE DATE") until the same becomes
due and payable, whether upon an Interest Date (as defined below), the Final
Maturity Date, acceleration, conversion, redemption or otherwise (in each case
in accordance with the terms hereof). This Convertible Note (including all
Convertible Notes issued in exchange, transfer or replacement hereof, this
"NOTE") is one of an issue of Convertible Notes (collectively, the "NOTES" and
such other Convertible Notes, the "OTHER NOTES") issued on the Issuance Date
pursuant to the Securities Purchase Agreement (as defined below). Certain
capitalized terms are defined in Section 28 and terms used herein but not
defined herein shall have the meanings set forth for such terms in the
Securities Purchase Agreement.
(1) MATURITY. On the Final Maturity Date, the Holder shall
surrender this Note to the Company and the Company shall pay to the Holder an
amount in cash representing all outstanding Principal, accrued and unpaid
Interest and accrued and unpaid Late Charges (as defined in Section 24(b)), if
any. The "MATURITY DATE" shall be the date that is 364 days after the Issuance
Date; provided that, if the Holder has given notice in writing to the Company of
its desire to extend the Maturity Date on or prior to the date that is 10
Business Days prior to the Maturity Date, the Maturity Date shall be extended
(on one or more occasions) for an additional 364 days; provided, further, that
the Maturity Date shall not be extended (except as provided in the following
proviso) to more than five years after the Issuance Date (such date that is five
years after the Issuance Date or such earlier Maturity Date prior to which the
Holder has not requested an extension thereof, the "FINAL MATURITY DATE"); and
provided, further, that the Final Maturity Date may be extended at the option of
the Holder (x) in the event that, and for so long as, an Event of Default (as
defined in Section 4(a)) shall have occurred and be continuing or any event
shall have occurred and be continuing which with the passage of time and the
failure to cure would result in an Event of Default and (y) through the date
that is ten days after a Change of Control Termination Date in the event that
the Announcement Date giving rise to such Change of Control Termination Date
occurred prior to the Final Maturity Date.
(2) INTEREST; INTEREST RATE. Interest on this Note shall commence
accruing on the Issuance Date and shall be computed on the basis of the actual
days elapsed during any period, and a calendar year of 365 or 366 calendar days,
as applicable, and shall be payable in cash on each May 1 and each November 1
during the period beginning on the Issuance Date and ending on, and including,
the Final Maturity Date (each an "INTEREST DATE"); provided that interest on any
Conversion Amount of this Note that is accrued but unpaid as of the Conversion
Date of such Conversion Amount shall be paid in shares of Common Stock at the
Conversion Rate. From and after the occurrence of an Event of Default (as
defined in Section 4(a)) or the failure to deliver timely the Non-Consolidation
Opinion (as defined in the Securities Purchase Agreement) pursuant to Section
4(f) of the Securities Purchase Agreement (the "NRG OPINION"), the Interest Rate
shall be increased by two percentage points (2%). In the event that such Event
of Default is subsequently cured, the adjustment referred to in the preceding
sentence shall cease to be effective as of the date of such cure; provided that
the Interest as calculated at such increased rate during the continuance of such
Event of Default shall continue to apply to the extent relating to the days
after the occurrence of such Event of Default through and including the date of
cure of such Event of Default. If the Company shall fail to credit the Holder's
balance account with DTC (as defined in Section 3(c)(i)) or, if requested in
writing by the Holder, to issue a certificate to the Holder for the number of
shares of Common Stock to which the Holder is entitled upon conversion of any
Conversion Amount or to issue a new Note (in accordance with Section 18(d))
representing the Principal portion of the Conversion Amount (as defined in
Section 3(b)(i)) to which the Holder is entitled, in each case within the time
periods set out in Section 3(c)(i) (in each case, a "CONVERSION FAILURE"), then
during each period beginning on and including the date of each such Conversion
Failure and ending on and including the date such Conversion Failure is cured,
the Interest Rate then in effect shall be increased by two percentage points
(2%). If (i) the Registration Statement (as defined in the Registration Rights
Agreement) covering all the Registrable Securities (as defined in the
Registration Rights Agreement) issuable upon conversion of this Note and
required to be filed by
2
the Company pursuant to the Registration Rights Agreement is not declared
effective by the Securities and Exchange Commission (the "SEC") on or before the
applicable Mandatory Effective Date (as defined in the Registration Rights
Agreement) or (ii) on any day after such Registration Statement has been
declared effective by the SEC that sales of all the Registrable Securities
required to be included on such Registration Statement cannot be made (other
than during an Allowable Grace Period (as defined in Section 3(t) of the
Registration Rights Agreement) pursuant to such Registration Statement
(including, without limitation, because of a failure to keep such Registration
Statement effective, to disclose such information as is necessary for sales to
be made pursuant to such Registration Statement or to register sufficient shares
of Common Stock) (collectively with the event described in the immediately
preceding clause (i), each a "REGISTRATION FAILURE"), then, as partial relief
for the damages to any holder by reason of any such delay in or reduction of its
ability to sell Registrable Securities (which remedy shall not be exclusive of
any other remedies available at law or in equity) the Interest Rate then in
effect shall be increased by two percentage points (2%) during each period
beginning on and including the first date of each such Registration Failure and
ending on and including the date such Registration Failure is cured.
(3) CONVERSION OF NOTES. This Note shall be convertible into
shares of the Common Stock, on the terms and conditions set forth in this
Section 3.
(a) Conversion Right. Subject to the provisions of Section
3(d), at any time or times on or after the Issuance Date, the Holder shall be
entitled to convert any portion of the outstanding and unpaid Conversion Amount
(as defined below) into fully paid and nonassessable shares of Common Stock in
accordance with Section 3(c), at the Conversion Rate (as defined below). The
Company shall not issue any fraction of a share of Common Stock upon any
conversion. If the issuance would result in the issuance of a fraction of a
share of Common Stock, the Company shall round such fraction of a share of
Common Stock up to the nearest whole share. The Company shall pay any and all
taxes that may be payable with respect to the issuance and delivery of Common
Stock upon conversion of any Conversion Amount.
(b) Conversion Rate. The number of shares of Common Stock
issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall
be determined by dividing (x) such Conversion Amount by (y) the Conversion Price
(as defined below) (the "CONVERSION RATE").
(i) "CONVERSION AMOUNT" means the sum of (A) the portion of the
Principal to be converted, redeemed or otherwise surrendered with
respect to which this determination is being made, (B) accrued and
unpaid Interest with respect to such Principal and (C) accrued and
unpaid Late Charges with respect to such Principal and Interest.
(ii) "CONVERSION PRICE" means 110% of the arithmetic average of the
Weighted Average Price of the Common Stock during the Tranche B Pricing
Period; provided that the Conversion Price (i) shall not exceed 110% of
the Tranche B Base Price and (ii) shall equal the Company Optional
Redemption Conversion Price until such time as the Tranche B Pricing
Period has concluded; provided further, that in the event that the
Company has not delivered a Company Optional Redemption Notice as of the
date that is
3
35 Business Days after the date of issuance of the First Notes and 110%
of the Closing Bid Price of the Common Stock on such date is less than
the Conversion Price then in effect, then the Conversion Price shall be
reduced to equal such price.
(c) Mechanics of Conversion.
(i) Optional Conversion. To convert any Conversion Amount into shares of
Common Stock on any date (a "CONVERSION DATE"), the Holder shall (A)
transmit by facsimile (or otherwise deliver), for receipt on or prior to
11:59 p.m., Central Time on such date, a copy of an executed notice of
conversion in the form attached hereto as Exhibit I (the "CONVERSION
NOTICE") to the Company and (B) if required by Section 3(c)(ii),
surrender this Note to a common carrier for delivery to the Company as
soon as practicable on or following such date (or an indemnification
undertaking with respect to this Note in the case of its loss, theft or
destruction). On or before the first Business Day following the
Company's receipt of a Conversion Notice, the Company shall transmit by
facsimile a confirmation of receipt of such Conversion Notice to the
Holder and the Transfer Agent (as defined below). On or before the
second Business Day following the date of receipt of a Conversion Notice
(the "SHARE DELIVERY DATE"), the Company shall (X) (if (Y) below does
not apply) issue and deliver to the address as specified in the
Conversion Notice, a certificate, registered in the name of the Holder
or its designee, for the number of shares of Common Stock to which the
Holder shall be entitled, or (Y) provided that the Company's transfer
agent (the "TRANSFER AGENT") is participating in The Depository Trust
Company ("DTC") Fast Automated Securities Transfer Program, upon the
request of the Holder, credit such aggregate number of shares of Common
Stock to which the Holder shall be entitled to the Holder's or its
designee's balance account with DTC through its Deposit Withdrawal Agent
Commission system. If this Note is physically surrendered for conversion
as required by Section 3(c)(ii) and the outstanding Principal of this
Note is greater than the Principal portion of the Conversion Amount
being converted, then the Company shall as soon as practicable and in no
event later than three Business Days after receipt of this Note (the
"NOTE DELIVERY DATE") and at its own expense, issue and deliver to the
holder a new Note (in accordance with Section 18(d)) representing the
outstanding Principal not converted. The person or persons entitled to
receive the shares of Common Stock issuable upon a conversion of this
Note shall be treated for all purposes as the record holder or holders
of such shares of Common Stock on the Conversion Date.
(ii) Book-Entry. Notwithstanding anything to the contrary set forth
herein, upon conversion of any portion of this Note in accordance with
the terms hereof, the Holder shall not be required to physically
surrender this Note to the Company unless (A) the full Conversion Amount
represented by this Note is being converted or (B) the Holder has
provided the Company with prior written notice (which notice may be
included in a Conversion Notice) requesting physical surrender and
reissue of this Note. The Holder and the Company shall maintain records
showing the Principal and Interest converted and the dates of such
conversions or shall use such other method, reasonably satisfactory to
the Holder and the Company, so as not to require physical surrender of
this Note upon conversion.
4
(iii) Pro Rata Conversion; Disputes. In the event that the Company
receives a Conversion Notice from more than one holder of the Notes or
the Separate Tranche Notes for the same Conversion Date and the Company
can convert some, but not all, of such portions of the Notes and the
Separate Tranche Notes submitted for conversion, the Company, subject to
Section 3(d), shall convert from each holder of the Notes and the
Separate Tranche Notes electing to have the Notes or Separate Tranche
Notes converted on such date a pro rata amount of such holder's portion
of its Notes or Separate Tranche Notes submitted for conversion based on
the principal amount of the Notes or Separate Tranche Notes submitted
for conversion on such date by such holder relative to the aggregate
principal amount of all the Notes and the Separate Tranche Notes
submitted for conversion on such date. In the event of a dispute as to
the number of shares of Common Stock issuable to the Holder in
connection with a conversion of this Note, the Company shall issue to
the Holder the number of shares of Common Stock not in dispute and
resolve such dispute in accordance with Section 23.
(d) Limitations on Conversions.
(i) Beneficial Ownership. The Company shall not effect any conversion of
this Note, and the Holder of this Note shall not have the right to
convert any portion of this Note pursuant to Section 3(a), to the extent
that after giving effect to such conversion, the Holder (together with
the Holder's affiliates) would beneficially own in excess of 5.0% of the
number of shares of Common Stock outstanding immediately after giving
effect to such conversion. For purposes of the foregoing sentence, the
number of shares of Common Stock beneficially owned by the Holder and
its affiliates shall include the number of shares of Common Stock
issuable upon conversion of this Note with respect to which the
determination of such sentence is being made, but shall exclude the
number of shares of Common Stock which would be issuable upon (A)
conversion of the remaining, nonconverted portion of this Note
beneficially owned by the Holder or any of its affiliates and (B)
exercise or conversion of the unexercised or nonconverted portion of any
other securities of the Company (including, without limitation, any
Other Notes, Separate Tranche Notes or warrants) subject to a limitation
on conversion or exercise analogous to the limitation contained herein
beneficially owned by the Holder or any of its affiliates. Except as set
forth in the preceding sentence, for purposes of this Section 3(d)(i),
beneficial ownership shall be calculated in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended. For purposes
of this Section 3(d)(i), in determining the number of outstanding shares
of Common Stock, the Holder may rely on the number of outstanding shares
of Common Stock as reflected in (x) the Company's most recent Form 10-Q
or Form 10-K, as the case may be, (y) a more recent public announcement
by the Company or (z) any other notice by the Company or the Transfer
Agent setting forth the number of shares of Common Stock outstanding.
For any reason at any time, upon the written or oral request of the
Holder, the Company shall within one Business Day confirm orally and in
writing to the Holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common
Stock shall be determined after giving effect to the conversion or
exercise of securities of the Company, including this Note, by the
Holder or its affiliates since the
5
date as of which such number of outstanding shares of Common Stock was
reported.
(ii) Principal Market Regulation. The Company shall not be obligated to
issue any shares of Common Stock pursuant to this Note if the issuance
of such shares of Common Stock would exceed that number of shares of
Common Stock which the Company may issue pursuant to the Notes and the
Separate Tranche Notes without breaching the Company's obligations under
the rules or regulations of the Principal Market (the "EXCHANGE CAP"),
except that such limitation shall not apply in the event that the
Company (A) obtains the approval of its shareholders as required by the
applicable rules of the Principal Market for issuances of Common Stock
in excess of such amount or (B) obtains a written opinion from outside
counsel to the Company that such approval is not required, which opinion
shall be reasonably satisfactory to the holders of the Notes and the
Separate Tranche Notes representing a majority of the principal amounts
of the Notes and the Separate Tranche Notes (voting as a single class)
then outstanding. Until such approval or written opinion is obtained, no
purchaser of the Notes or the Separate Tranche Notes pursuant to the
Securities Purchase Agreement (the "PURCHASERS") shall be issued, upon
conversion of the Notes or the Separate Tranche Notes, shares of Common
Stock in an amount greater than the product of the Exchange Cap
multiplied by a fraction, the numerator of which is the principal amount
of the Notes and the Separate Tranche Notes issued to such Purchaser
pursuant to the Securities Purchase Agreement as of the date of such
determination and the denominator of which is the aggregate principal
amount of all the Notes and the Separate Tranche Notes issued to the
Purchasers pursuant to the Securities Purchase Agreement as of the date
of such determination (with respect to each Purchaser, the "EXCHANGE CAP
ALLOCATION"). In the event that any Purchaser shall sell or otherwise
transfer any of such Purchaser's Notes or Separate Tranche Notes, the
transferee shall be allocated a pro rata portion of such Purchaser's
Exchange Cap Allocation, and the restrictions of the prior sentence
shall apply to such transferee with respect to the portion of the
Exchange Cap Allocation allocated to such transferee. In the event that
any holder of the Notes or the Separate Tranche Notes shall convert all
of such holder's Notes or Separate Tranche Notes into a number of shares
of Common Stock which, in the aggregate, is less than such holder's
Exchange Cap Allocation, then the difference between such holder's
Exchange Cap Allocation and the number of shares of Common Stock
actually issued to such holder shall be allocated to the respective
Exchange Cap Allocations of the remaining holders of the Notes and the
Separate Tranche Notes on a pro rata basis in proportion to the
aggregate principal amount of the Notes and the Separate Tranche Notes
then held by each such holder.
(4) RIGHTS UPON EVENT OF DEFAULT.
(a) Event of Default. Each of the following events shall
constitute a "EVENT OF DEFAULT":
(i) the failure of the Registration Statement covering all Registrable
Securities (as defined in the Registration Rights Agreement) required to
be registered pursuant to the Registration Rights Agreement to be
declared effective by the SEC on or prior to the date that is 180 days
after the Issuance Date, or, while such Registration Statement is
required
6
to be maintained effective pursuant to the terms of the Registration
Rights Agreement, the effectiveness of such Registration Statement
lapses for any reason (including, without limitation, the issuance of a
stop order) or is unavailable to any holder of the Notes for sale of all
of such holder's Registrable Securities in accordance with the terms of
the Registration Rights Agreement, and such lapse or unavailability
continues for a period of five consecutive Business Days or for more
than an aggregate of 20 Business Days in any 365-day period;
(ii) the suspension from trading on the Principal Market for a period of
three consecutive Business Days or for more than an aggregate of three
Business Days in any 30-day Trading Day period or the delisting of the
Common Stock from the Principal Market;
(iii) the Company's (A) failure to cure a Conversion Failure by delivery
of the required number of shares of Common Stock or a new Note (in
accordance with section 18(d)), as applicable, within 10 days after the
receipt by the Company of a Conversion Notice or (B) notice, written or
oral, to any holder of the Notes, including by way of public
announcement or through any of its agents, at any time, of its intention
not to comply with a request for conversion of any Notes into shares of
Common Stock that is tendered in accordance with the provisions of the
Notes;
(iv) the Company's failure to pay to the Holder any amount of Principal,
Interest, Late Charges or other amounts when and as due under this Note,
the Securities Purchase Agreement, the Registration Rights Agreement or
any other agreement, document, certificate or other instrument delivered
in connection with the transactions contemplated hereby and thereby to
which the Holder is a party;
(v) any default under, redemption of or acceleration prior to maturity
of any Indebtedness (as defined in Section 3(r) of the Securities
Purchase Agreement) of the Company or any of its Subsidiaries (as
defined in Section 3(a) of the Securities Purchase Agreement) other than
NRG (as defined below) (including, without limitation, the Other Notes)
of at least $50,000,000;
(vi) the Company or any of its Subsidiaries other than NRG (as defined
below), pursuant to or within the meaning of Title 11, U.S. Code, or any
similar Federal or state law for the relief of debtors (collectively,
"BANKRUPTCY LAW"), (A) commences a voluntary case, (B) consents to the
entry of an order for relief against it in an involuntary case, (C)
consents to the appointment of a receiver, trustee, assignee, liquidator
or similar official (a "CUSTODIAN"), (D) makes a general assignment for
the benefit of its creditors or (E) admits in writing that it is
generally unable to pay its debts as they become due;
(vii) a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that (A) is for relief against the Company or any of
its Subsidiaries other than NRG (as defined below) in an involuntary
case, (B) appoints a Custodian of the Company or any of its Subsidiaries
other than NRG (as defined below) or (C) orders the liquidation of the
Company or any of its Subsidiaries other than NRG (as defined below); or
7
(viii) the Company breaches any representation, warranty, covenant
(other than any covenant to deliver the NRG Opinion) or other term or
condition of the Securities Purchase Agreement, the Registration Rights
Agreement, this Note or any other agreement, document, certificate or
other instrument delivered in connection with the transactions
contemplated thereby and hereby to which the Holder is a party, except,
in the case of a breach of a covenant which is curable, only if such
breach continues for a period of at least 10 consecutive days.
(b) Redemption Right. Promptly after the occurrence of an
Event of Default with respect to this Note or the Other Notes, the Company shall
deliver written notice thereof via facsimile and overnight courier (a "EVENT OF
DEFAULT NOTICE") to the Holder. At any time after the earlier of the Holder's
receipt of an Event of Default Notice and the Holder becoming aware of an Event
of Default, the Holder may require the Company to redeem all or any portion of
this Note by delivering written notice thereof (the "EVENT OF DEFAULT REDEMPTION
NOTICE") to the Company, which Event of Default Redemption Notice shall indicate
the portion of this Note the Holder is electing to redeem. Each portion of this
Note subject to redemption by the Company pursuant to this Section 4(b) shall be
redeemed by the Company at a price equal to the greater of (i) the product of
(x) the Conversion Amount and (y) the quotient determined by dividing (A) the
Closing Sale Price of the Common Stock immediately prior to such Event of
Default by (B) the Conversion Price and (ii) the product of (x) the Conversion
Amount and (y) the Redemption Premium (the "EVENT OF DEFAULT REDEMPTION PRICE").
Redemptions required by this Section 4(b) shall be made in accordance with the
provisions of Section 10.
(5) RIGHTS UPON CHANGE OF CONTROL.
(a) Change of Control. Each of the following events shall
constitute a "CHANGE OF CONTROL":
(i) the consolidation, merger or other business combination (including,
without limitation, a reorganization or recapitalization) of the Company
with or into another Person in which holders of the Company's voting
power immediately prior to the transaction cease after the transaction
to hold, directly or indirectly, a majority of the voting power of the
surviving entity or entities or the voting power necessary to elect a
majority of the members of the board of directors (or their equivalent
if other than a corporation) of such entity or entities;
(ii) the sale or transfer of all or substantially all of the Company's
assets; or
(iii) a purchase, tender or exchange offer made to and accepted by the
holders of more than the 50% of the outstanding shares of Common Stock.
(b) Assumption. Prior to the consummation of any Change of
Control, the Company will secure from any Person purchasing the Company's assets
or Common Stock or any successor resulting from such Change of Control (in each
case, an "ACQUIRING ENTITY") a written agreement (in form and substance
satisfactory to the holders of Notes representing a
8
majority of the aggregate principal amount of the Notes then outstanding) to
deliver to each holder of Notes in exchange for such Notes, a security of the
Acquiring Entity evidenced by a written instrument substantially similar in form
and substance to the Notes, including, without limitation, having a principal
amount and interest rate equal to the principal amounts and the interest rates
of the Notes held by such holder, and satisfactory to the holders of Notes
representing a majority of the principal amount of the Notes then outstanding.
In the event that an Acquiring Entity is directly or indirectly controlled by a
company or entity whose common stock or similar equity interest is listed,
designated or quoted on a securities exchange or trading market, the holders of
notes representing a majority of the aggregate principal amount of the Notes
then outstanding may elect to treat such Person as the Acquiring Entity for
purposes of this Section 5(b).
(c) Redemption Right. No sooner than 15 days nor later
than 10 days prior to the consummation of a Change of Control, but not prior to
the public announcement of such Change of Control, the Company shall deliver
written notice thereof via facsimile and overnight courier to the Holder (a
"CHANGE OF CONTROL NOTICE"). At any time on or after consummation of such Change
of Control, the Holder may require the Company to redeem all or any portion of
this Note by delivering written notice thereof ("CHANGE OF CONTROL REDEMPTION
NOTICE" and, collectively with an Event of Default Redemption Notice,
"REDEMPTION NOTICES" and, individually, each a "REDEMPTION NOTICE") to the
Company, which Change of Control Redemption Notice shall indicate the Conversion
Amount the Holder is electing to redeem. The portion of this Note subject to
redemption pursuant to this Section 5(c) shall be redeemed by the Company at a
price equal to the greater of (i) the product of (x) the Conversion Amount and
(y) the quotient determined by dividing (A) the Closing Sale Price of the Common
Stock immediately following the public announcement of such proposed Change of
Control by (B) the Conversion Price and (ii) 115% of the Conversion Amount (the
"CHANGE OF CONTROL REDEMPTION PRICE" and, together with the Event of Default
Redemption Price, the "REDEMPTION PRICE"). Redemptions required by this Section
5(c) shall be made in accordance with the provisions of Section 10 and shall
have priority to payments to other shareholders in connection with a Change of
Control.
(6) RIGHTS UPON ISSUANCE OF PURCHASE RIGHTS AND OTHER CORPORATE
EVENTS.
(a) Purchase Rights. If at any time the Company grants,
issues or sells any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property pro rata to the record holders of any
class of Common Stock (the "PURCHASE RIGHTS"), then the Holder will be entitled
to acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder had held the
number of shares of Common Stock acquirable upon complete conversion of this
Note (without taking into account any limitations or restrictions on the
convertibility of this Note) immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or, if no such
record is taken, the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.
9
(b) Other Corporate Events. Prior to the consummation of
any recapitalization, reorganization, consolidation, merger or other business
combination (other than a Change of Control) pursuant to which holders of Common
Stock are entitled to receive securities or other assets with respect to or in
exchange for Common Stock (a "CORPORATE EVENT"), the Company shall make
appropriate provision to insure that the Holder will thereafter have the right
to receive upon a conversion of this Note, (i) in addition to the shares of
Common Stock receivable upon such conversion, such securities or other assets to
which the Holder would have been entitled with respect to such shares of Common
Stock had such shares of Common Stock been held by the Holder upon the
consummation of such Corporate Event or (ii) in lieu of the shares of Common
Stock otherwise receivable upon such conversion, such securities or other assets
received by the holders of Common Stock in connection with the consummation of
such Corporate Event in such amounts as the Holder would have been entitled to
receive had this Note initially been issued with conversion rights for the form
of such consideration (as opposed to shares of Common Stock) at a conversion
rate for such consideration commensurate with the Conversion Rate. Provision
made pursuant to the preceding sentence shall be in a form and substance
satisfactory to the holders of Notes representing a majority of the aggregate
principal amount of the Notes then outstanding.
(7) RIGHTS UPON ISSUANCE OF OTHER SECURITIES.
(a) Adjustment of Conversion Price upon Issuance of Common
Stock. If and whenever on or after the Issuance Date, the Company issues or
sells, or in accordance with this Section 7(a) is deemed to have issued or sold,
any shares of Common Stock (including the issuance or sale of shares of Common
Stock owned or held by or for the account of the Company, but excluding shares
of Common Stock deemed to have been issued or sold by the Company (I) in
connection with the Xcel Energy Direct Purchase Plan or any employee benefit
plan which has been approved by the Board of Directors of the Company or any of
its Subsidiaries, pursuant to which the Company's securities may be issued to
any employee, officer or director for services provided to the Company or its
Subsidiaries (each, an "APPROVED STOCK PLAN") or (II) upon conversion of the
Notes or the Separate Tranche Notes) for a consideration per share less than the
higher of the Closing Sale Price of the Common Stock on the date of such
issuance or sale or deemed issuance or sale and the Conversion Price in effect
immediately prior to such issuance or sale or deemed issuance or sale (such
higher price is referred to herein as the "APPLICABLE PRICE"), then immediately
after such issue or sale (subject to Section 7(a)(vi)), the Conversion Price
then in effect shall be reduced to an amount equal to the product of (x) the
Conversion Price in effect immediately prior to such issue or sale or deemed
issuance or sale and (y) the quotient determined by dividing (1) the sum of the
product of the Applicable Price and the number of shares of Common Stock Deemed
Outstanding immediately prior to such issue or sale or deemed issue or sale and
the consideration, if any, received by the Company upon such issue or sale, by
(2) the product of the Applicable Price multiplied by the number of shares of
Common Stock Deemed Outstanding immediately after such issue or sale or deemed
issue or sale. For purposes of determining the adjusted Conversion Price under
this Section 7(a), the following shall be applicable:
(i) Issuance of Options. If the Company in any manner grants or sells
any Options and the lowest price per share for which one share of Common
Stock is issuable upon the
10
exercise of any such Option or upon conversion, exercise or exchange of
any Convertible Securities issuable upon exercise of such Option is less
than the Applicable Price, then such share of Common Stock shall be
deemed to be outstanding and to have been issued and sold by the Company
at the time of the granting or sale of such Option for such price per
share. For purposes of this Section 7(a)(i), the "lowest price per share
for which one share of Common Stock is issuable upon the exercise of any
such Option or upon conversion, exercise or exchange of any Convertible
Securities issuable upon exercise of such Option" shall be equal to the
sum of the lowest amounts of consideration (if any) received or
receivable by the Company with respect to any one share of Common Stock
upon granting or sale of the Option, upon exercise of the Option and
upon conversion, exercise or exchange of any Convertible Security
issuable upon exercise of such Option. No further adjustment of the
Conversion Price shall be made upon the actual issuance of such Common
Stock or of such Convertible Securities upon the exercise of such
Options or upon the actual issuance of such Common Stock upon
conversion, exercise or exchange of such Convertible Securities. If the
Company issues or sells any Options which are Variable Securities, no
adjustment of the Conversion Price shall be made pursuant to this
Section 7(a), and no shares of Common Stock shall be deemed outstanding
with respect to such Variable Securities, as a result of the issuance of
such Variable Securities until the actual issuance of Common Stock or
Convertible Securities upon exercise of such Variable Securities, except
to the extent such Variable Security also includes as a component of the
exercise price a price which does not vary with the market price of the
Common Stock.
(ii) Issuance of Convertible Securities. If the Company in any manner
issues or sells any Convertible Securities and the lowest price per
share for which one share of Common Stock is issuable upon such
conversion, exercise or exchange thereof is less than the Applicable
Price, then such share of Common Stock shall be deemed to be outstanding
and to have been issued and sold by the Company at the time of the
issuance of sale of such Convertible Securities for such price per
share. For the purposes of this Section 7(a)(ii), the "price per share
for which one share of Common Stock is issuable upon such conversion,
exercise or exchange" shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with
respect to any one share of Common Stock upon the issuance or sale of
the Convertible Security and upon the conversion, exercise or exchange
of such Convertible Security. No further adjustment of the Conversion
Price shall be made upon the actual issuance of such Common Stock upon
conversion, exercise or exchange of such Convertible Securities, and if
any such issue or sale of such Convertible Securities is made upon
exercise of any Options for which adjustment of the Conversion Price had
been or are to be made pursuant to other provisions of this Section
7(a), no further adjustment of the Conversion Price shall be made by
reason of such issue or sale. If the Company issues or sells any
Convertible Securities which are Variable Securities, no adjustment of
the Conversion Price shall be made pursuant to this Section 7(a), and no
shares of Common Stock shall be deemed outstanding with respect to such
Variable Security, as a result of the issuance of such Variable
Securities until the actual issuance of Common Stock upon exercise of
such Variable Securities, except to the extent such Variable Security
also includes as a component of the conversion, exercise or exchange
price a price which does not vary
11
with the market price of the Common Stock.
(iii) Change in Option Price or Rate of Conversion. If the purchase
price provided for in any Options, the additional consideration, if any,
payable upon the issue, conversion or exchange of any Convertible
Securities, or the rate at which any Convertible Securities are
convertible into or exercisable or exchangeable for Common Stock changes
at any time, the Conversion Price in effect at the time of such change
shall be adjusted to the Conversion Price which would have been in
effect at such time had such Options or Convertible Securities provided
for such changed purchase price, additional consideration or changed
conversion rate, as the case may be, at the time initially granted,
issued or sold. For purposes of this Section 7(a)(iii), if the terms of
any Option or Convertible Security that was outstanding as of the
Issuance Date are changed in the manner described in the immediately
preceding sentence, then such Option or Convertible Security and the
Common Stock deemed issuable upon exercise, conversion or exchange
thereof shall be deemed to have been issued as of the date of such
change. No adjustment shall be made if such adjustment would result in
an increase of the Conversion Price then in effect.
(iv) Calculation of Consideration Received. In case any Option is issued
in connection with the issue or sale of other securities of the Company,
together comprising one integrated transaction in which no specific
consideration is allocated to such Options by the parties thereto, the
Options will be deemed to have been issued for a consideration of $.01.
If any Common Stock, Options or Convertible Securities are issued or
sold or deemed to have been issued or sold for cash, the consideration
received therefor will be deemed to be the net amount received by the
Company therefor. If any Common Stock, Options or Convertible Securities
are issued or sold for a consideration other than cash, the amount of
the consideration other than cash received by the Company will be the
fair value of such consideration, except where such consideration
consists of securities, in which case the amount of consideration
received by the Company will be the Closing Sale Price of such
securities on the date of receipt. If any Common Stock, Options or
Convertible Securities are issued to the owners of the non-surviving
entity in connection with any merger in which the Company is the
surviving entity, the amount of consideration therefor will be deemed to
be the fair value of such portion of the net assets and business of the
non-surviving entity as is attributable to such Common Stock, Options or
Convertible Securities, as the case may be. The fair value of any
consideration other than cash or securities will be determined jointly
by the Company and the holders of Notes representing a majority of the
principal amounts of the Notes then outstanding. If such parties are
unable to reach agreement within ten days after the occurrence of an
event requiring valuation (the "VALUATION EVENT"), the fair value of
such consideration will be determined within five Business Days after
the tenth day following the Valuation Event by an independent, reputable
appraiser jointly selected by the Company and the holders of Notes
representing a majority of the principal amounts of the Notes then
outstanding. The determination of such appraiser shall be deemed binding
upon all parties absent manifest error and the fees and expenses of such
appraiser shall be borne by the Company.
12
(v) Record Date. If the Company takes a record of the holders of Common
Stock for the purpose of entitling them (A) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible
Securities or (B) to subscribe for or purchase Common Stock, Options or
Convertible Securities, then such record date will be deemed to be the
date of the issue or sale of the shares of Common Stock deemed to have
been issued or sold upon the declaration of such dividend or the making
of such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be.
(vi) Common Stock Deemed Outstanding. "COMMON STOCK DEEMED OUTSTANDING"
means, at any given time, the number of shares of Common Stock actually
outstanding at such time, plus the number of shares of Common Stock
deemed to be outstanding pursuant to Sections 7(a)(i) and 7(a)(ii)
hereof regardless of whether the Options or Convertible Securities are
actually exercisable at such time, but excluding any shares of Common
Stock owned or held by or for the account of the Company or issuable
upon conversion of the Notes or the Separate Tranche Notes.
(vii) Delayed Adjustment. In addition to the foregoing provisions of
this Section 7(a), the Weighted Average Price, Closing Sales Price and
Closing Bid Price shall be subject to adjustment, in accordance with the
foregoing provisions, for any days during any measuring period,
including, without limitation, the Tranche B Pricing Period, used herein
that occur prior to any of the aforementioned events if such events
occur prior to the end of such measuring period.
(b) Adjustment of Conversion Price upon Subdivision or
Combination of Common Stock. If the Company at any time subdivides (by any stock
split, stock dividend, recapitalization or otherwise) one or more classes of its
outstanding shares of Common Stock into a greater number of shares, the
Conversion Price in effect immediately prior to such subdivision will be
proportionately reduced. If the Company at any time combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Conversion Price in effect
immediately prior to such combination will be proportionately increased.
(c) Other Events. If any event occurs of the type
contemplated by the provisions of this Section 7 but not expressly provided for
by such provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with equity features),
then the Company's Board of Directors will make an appropriate adjustment in the
Conversion Price so as to protect the rights of the Holder under this Note;
provided that no such adjustment will increase the Conversion Price as otherwise
determined pursuant to this Section 7.
(8) NONCIRCUMVENTION. The Company hereby covenants and agrees
that the Company will not, by amendment of its Articles of Incorporation or
through any reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities, or any other voluntary action, avoid
or seek to avoid the observance or performance of any of the terms of, or enter
into any agreement which by its terms restricts or otherwise impairs the
13
Company's performance of the terms of, this Note or any of the other Transaction
Documents (as defined in the Securities Purchase Agreement), and will at all
times in good faith carry out all of the provisions of this Note and take all
action as may be required to protect the rights of the Holder of this Note.
(9) RESERVATION OF AUTHORIZED SHARES.
(a) Reservation. The Company shall initially reserve out
of its authorized and unissued Common Stock a number of shares of Common Stock
for each of the Notes and the Separate Tranche Notes equal to 115% of the
Conversion Rate with respect to the Conversion Amount of each such Note and
Separate Tranche Note. Thereafter, the Company shall, so long as any of the
Notes or Separate Tranche Notes are outstanding, take all action necessary to
reserve and keep available out of its authorized and unissued Common Stock,
solely for the purpose of effecting the conversion of the Notes and Separate
Tranche Note, at least 100% of the number of shares of Common Stock as shall
from time to time be necessary to effect the conversion of all of the Notes and
the Separate Tranche Notes then outstanding; provided that at no time shall the
number of shares of Common Stock so reserved be less than the number of shares
required to be reserved by the previous sentence (without regard to any
limitations on conversions) (the "REQUIRED RESERVE AMOUNT"). The initial number
of shares of Common Stock reserved for conversions of the Notes and the Separate
Tranche Note and each increase in the number of shares so reserved shall be
allocated pro rata among the holders of the Notes and Separate Tranche Note
based on the principal amount of the Notes and Separate Tranche Notes held by
each holder at the time of Issuance Date or increase in the number of reserved
shares, as the case may be (the "AUTHORIZED SHARE ALLOCATION"). In the event
that a holder shall sell or otherwise transfer any of such holder's Notes, each
transferee shall be allocated a pro rata portion of such holder's Authorized
Share Allocation. Any shares of Common Stock reserved and allocated to any
Person which ceases to hold any Notes shall be allocated to the remaining
holders of Notes, pro rata based on the principal amount of the Notes then held
by such holders.
(b) Insufficient Authorized Shares. If at any time while
any of the Notes or Separate Tranche Note remain outstanding the Company does
not have a sufficient number of authorized and unreserved shares of Common Stock
to satisfy its obligation to reserve for issuance upon conversion of the Notes
and the Separate Tranche Notes at least a number of shares of Common Stock equal
to the Required Reserve Amount (an "AUTHORIZED SHARE FAILURE"), then the Company
shall immediately take all action necessary to increase the Company's authorized
shares of Common Stock to an amount sufficient to allow the Company to reserve
the Required Reserve Amount for the Notes and Separate Tranche Note then
outstanding. Without limiting the generality of the foregoing sentence, as soon
as practicable after the date of the occurrence of an Authorized Share Failure,
but in no event later than 60 days after the occurrence of such Authorized Share
Failure, the Company shall hold a meeting of its shareholders for the approval
of an increase in the number of authorized shares of Common Stock. In connection
with such meeting, the Company shall provide each shareholder with a proxy
statement and shall use its best efforts to solicit its shareholders' approval
of such increase in authorized shares of Common Stock and to cause its board of
directors to recommend to the shareholders that they approve such proposal.
14
(10) REDEMPTION.
(a) Mechanics. In the event that the Holder has sent a
Redemption Notice to the Company pursuant to Section 4(b) or Section 5(c), the
Holder shall promptly submit this Note to the Company. The Company shall deliver
the applicable Event of Default Redemption Price to the Holder within five
Business Days after the Company's receipt of the Holder's Event of Default
Redemption Notice and thereafter the Holder shall promptly deliver this Note to
the Company. If the Holder has submitted a Change of Control Redemption Notice
in accordance with Section 5(c), the Company shall deliver the applicable Change
of Control Redemption Price to the Holder concurrently with the consummation of
such Change of Control if such notice is received prior to the consummation of
such Change of Control and within five Business Days after the Company's receipt
of such notice otherwise. In the event of a redemption of less than all of the
Conversion Amount of this Note, the Company shall promptly cause to be issued
and delivered to the Holder a new Note (in accordance with Section 18(d))
representing the outstanding Principal which has not been redeemed. In the event
that the Company does not pay the Redemption Price to the Holder within the time
period required above in this Section 10(a) at any time thereafter and until the
Company pays such unpaid Redemption Price in full, the Holder shall have the
option to, in lieu of redemption, require the Company to promptly return to the
Holder all or any portion of this Note representing the Conversion Amount that
was submitted for redemption and for which the applicable Redemption Price
(together with any Late Charges thereon) has not been paid. Upon the Company's
receipt of such notice, (x) the Redemption Notice shall be null and void with
respect to such Conversion Amount, (y) the Company shall immediately return this
Note, or issue a new Note (in accordance with Section 18(d)) to the Holder
representing such Conversion Amount and (z) the Conversion Price of this Note or
such new Notes shall be adjusted to the lesser of (A) the Conversion Price as in
effect on the date on which the Redemption Notice is voided and (B) the lowest
Closing Bid Price during the period beginning on and including the date on which
the Redemption Notice is delivered to the Company and ending on and including
the date on which the Redemption Notice is voided. The Holder's delivery of a
notice voiding a Redemption Notice and exercise of its rights following such
notice shall not affect the Company's obligations to make any payments of Late
Charges which have accrued prior to the date of such notice with respect to the
Conversion Amount subject to such notice.
(b) Redemption by Other Holders. Upon the Company's
receipt of notice from any of the holders of the Other Notes or the Separate
Tranche Notes for redemption or repayment as a result of an event or occurrence
substantially similar to the events or occurrences described in Section 4(b) or
Section 5(c) (each an "OTHER REDEMPTION NOTICE"), the Company shall immediately
forward to the Holder by facsimile a copy of such notice. If the Company
receives a Redemption Notice and one or more Other Redemption Notices during the
seven Business Day period beginning on and including the date which is three
Business Days prior to the Company's receipt of the Holder's Redemption Notice
and ending on and including the date which is three Business Days after the
Company's receipt of the Holder's Redemption Notice and the Company is unable to
redeem all principal, interest and other amounts designated in such Redemption
Notice and such Other Redemption Notices received during such seven Business Day
period, then the Company shall redeem a pro rata amount from each holder of the
Notes and the Separate Tranche Notes (including the Holder) based on the
principal amount of
15
the Notes and the Separate Tranche Notes submitted for redemption pursuant to
such Redemption Notice and such Other Redemption Notices received by the Company
during such seven Business Day period.
(c) Redemption at the Option of the Company. (i) Except as
provided in this Section 10(c) or in connection with the satisfaction by the
Company of its obligations to redeem the Notes under Sections 4(b) and 5(c)
hereof, without the prior written consent of the Holder the Company shall not
have the right to prepay, redeem, repurchase, defease or otherwise retire any
Note prior to the Final Maturity Date.
(ii) Provided the Company has consummated a Qualified 144A
Offering at any time during the Company Optional Redemption Period, the Company
may deliver an irrevocable written notice to the Holder and the Transfer Agent
(the "COMPANY OPTIONAL REDEMPTION NOTICE") within one (1) Business Day after
consummation of the Qualified 144A Offering, indicating that the Company has
elected to redeem, and is requiring the Holder to submit for redemption, in
whole but not in part, the outstanding Principal of this Note plus accrued
Interest thereon for the Company Optional Redemption Consideration (a "COMPANY
OPTIONAL REDEMPTION"). The Company Optional Redemption Notice shall be sent by
facsimile and overnight courier to the Holder and shall indicate (x) the date
fixed for redemption, which shall be five (5) Business Days after the expiration
of the Company Optional Redemption Period (the "COMPANY OPTIONAL REDEMPTION
DATE") and (y) the place or places where this Note is to be surrendered for
payment of the Company Optional Redemption Consideration. If the Company has
elected a Company Optional Redemption, the Company shall on the Company Optional
Redemption Date pay to the Holder the Cash Optional Redemption Consideration, by
wire transfer of immediately available funds to an account designated in writing
by such Holder.
(11) RESTRICTION ON REDEMPTION. Until all of the Notes
have been converted, redeemed or otherwise satisfied in accordance with their
terms, the Company shall not, directly or indirectly, redeem its capital stock
without the prior express written consent of the holders of Notes representing
at least two-thirds of the aggregate principal amount of the Notes then
outstanding.
(12) SUBORDINATION; ADDITIONAL INDEBTEDNESS. Payments of
Principal and Interest and other payments due under this Note shall rank pari
passu in right of payment with all (and shall not be subordinated to any)
unsecured, unsubordinated indebtedness of the Company and will be senior in
right of payment to all subordinated indebtedness of the Company.
(13) COVENANTS.
(a) Indebtedness. The Company shall not create,
incur, assume, guarantee or suffer to exist, or otherwise become or remain
liable with respect to, any Indebtedness other than Permitted Indebtedness and
Subordinated Indebtedness. "Subordinated Indebtedness" shall mean Indebtedness
that is unsecured and subordinated in right of payment to the Notes and other
obligations owing to the Holders in accordance with a subordination agreement in
form and substance satisfactory to the Holders. "Permitted Indebtedness" shall
16
mean any Indebtedness that is unsecured and is not senior in right of payment to
the Notes and is otherwise on terms that are no more favorable to the holders
thereof than the terms of the Indebtedness evidenced by the Notes unless such
more favorable terms are offered to the Holders.
(b) Liens. The Company shall not create, incur,
assume or suffer to exist, or permit any of its Subsidiaries (other than NRG
Energy Inc. or its subsidiaries (collectively, "NRG")) to create, incur, assume
or suffer to exist, any Lien upon or with respect to any of its properties,
whether now owned or hereafter acquired; sign or suffer to exist any security
agreement authorizing any secured party thereunder to file a Uniform Commercial
Code financing statement (or the equivalent thereof) as notice of a Lien on any
property of the Company or its Subsidiaries; sell any of its property or assets
subject to an understanding or agreement, contingent or otherwise, to repurchase
such property or assets (including sales of accounts receivable) with recourse
to it or any of its Subsidiaries or assign or otherwise transfer, or permit any
of its Subsidiaries (other than the Existing Utility Subsidiaries (as defined in
the Bank Facility)) to assign or otherwise transfer, any account or other right
to receive income; other than, as to all of the above, Permitted Liens. As used
herein, "Permitted Liens" shall have the meaning of that term as defined in the
Five-Year Credit Agreement, dated as of November 10, 2000, among the Company and
the banks listed therein (as the same maybe amended from time to time, the "BANK
FACILITY"). As used herein, "Liens" means any mortgage, deed of trust, pledge,
lien (statutory or otherwise), security interest, charge or other encumbrance or
security or preferential arrangement of any nature, including, without
limitation, any conditional sale or title retention arrangement, any capitalized
lease and any assignment, deposit arrangement or financing lease intended as, or
having the effect of, security.
(c) Transactions With Affiliates. The Company shall not,
and shall not permit any Subsidiary to, directly or indirectly, effect any
transaction with any Affiliate (as defined in the Bank Facility) that is (a)
outside the ordinary course of business or (b) on a basis less favorable than
would at the time be obtainable for a comparable transaction in arms-length
dealing with an unrelated third party, provided that notwithstanding the
foregoing, no loan, payment or other form of contribution shall be made to NRG
unless it is in an amount not in excess of (i) $300 Million payable pursuant to
the Support Agreement and Capital Subscription Agreement, dated as of May 29,
2002, by and between the Company and NRG Energy Inc. and (ii) $250 Million in
respect of guarantee obligations relating to the power marketing business of
NRG; provided further that with respect to any payment permitted pursuant to
clause (ii) above, the Company shall, in the context of a restructuring of NRG,
use its reasonable best efforts to obtain a full release of all obligations and
liabilities of the Company relating to NRG.
(d) Leverage Ratio. The Company shall not permit the
Leverage Ratio set forth in the Bank Facility to be exceeded.
(e) Restrictive Agreements. The Company shall not, and
shall not permit any Significant Subsidiary (as defined in the Bank Facility)
other than NRG to, enter into any agreement after the date of this Note that
imposes any restriction on the ability of such Significant Subsidiary to make
payments, directly or indirectly, to its shareholders by way of dividends,
advances, repayment of loans or intercompany charges, expenses or accruals or
other
17
returns on investments that is more restrictive than any such restriction
applicable to such Significant Subsidiary on the issuance date of the First
Notes.
(f) Scope of Business. The Company shall, and shall cause
each Subsidiary to, engage only in energy-related business, functionally related
businesses (as interpreted under PUHCA, as defined in the Securities Purchase
Agreement)or such other businesses as maybe permitted pursuant to an order
issued by the SEC pursuant to PUHCA.
(14) VOTING RIGHTS. The Holder shall have no voting rights as the
holder of this Note, except as required by law, including but not limited to the
Minnesota Business Corporation Act, and as expressly provided in this Note.
(15) PARTICIPATION. The Holder, as the holder of this Note, shall
be entitled to (i) all extraordinary or special dividends paid and distributions
made to the holders of Common Stock to the same extent as if the Holder had
converted this Note into Common Stock (without regard to any limitations on
conversion herein or elsewhere) and had held such shares of Common Stock on the
record date for such dividends and distributions and (ii) regular cash dividends
and distributions paid to the holders of the Common Stock only with respect to
that portion of such dividends that exceeds $0.1875 per share of Common Stock in
any calendar quarter (subject to adjustment for stock splits, stock dividends,
stock combinations and other similar transactions after the Issuance Date).
Payments under the preceding sentence shall be made concurrently with the
dividend or distribution to the holders of Common Stock.
(16) VOTE TO ISSUE, OR CHANGE THE TERMS OF, NOTES. The
affirmative vote at a meeting duly called for such purpose or the written
consent without a meeting, of the holders of Notes representing not less than
two-thirds of the aggregate principal amount of the then outstanding Notes,
shall be required for any change or amendment to this Note or the Other Notes.
(17) TRANSFER. This Note may be offered, sold, assigned or
transferred by the Holder without the consent of the Company, subject only to
the provisions of Section 2(f) of the Securities Purchase Agreement.
(18) REISSUANCE OF THIS NOTE.
(a) Transfer. If this Note is to be transferred, the
Holder shall surrender this Note to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Note (in
accordance with Section 18(d)), registered as the Holder may request,
representing the outstanding Principal being transferred by the Holder and, if
less then the entire outstanding Principal is being transferred, a new Note (in
accordance with Section 18(d)) to the Holder representing the outstanding
Principal not being transferred. The Holder and any assignee, by acceptance of
this Note, acknowledge and agree that, by reason of the provisions of Section
3(c)(iii) and this Section 18(a), following conversion or redemption of any
portion of this Note, the outstanding Principal represented by this Note may be
less than the Principal stated on the face of this Note.
18
(b) Lost, Stolen or Mutilated Note. Upon receipt by the
Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the Holder to the Company in
customary form and, in the case of mutilation, upon surrender and cancellation
of this Note, the Company shall execute and deliver to the Holder a new Note (in
accordance with Section 18(d)) representing the outstanding Principal.
(c) Note Exchangeable for Different Denominations. This
Note is exchangeable, upon the surrender hereof by the Holder at the principal
office of the Company, for a new Note or Notes (in accordance with Section 18(d)
and in principal amounts of at least $100,000) representing in the aggregate the
outstanding Principal of this Note, and each such new Note will represent such
portion of such outstanding Principal as is designated by the Holder at the time
of such surrender.
(d) Issuance of New Notes. Whenever the Company is
required to issue a new Note pursuant to the terms of this Note, such new Note
(i) shall be of like tenor with this Note, (ii) shall represent, as indicated on
the face of such new Note, the Principal remaining outstanding (or in the case
of a new Note being issued pursuant to Section 18(a) or Section 18(c), the
Principal designated by the Holder which, when added to the principal
represented by the other new Notes issued in connection with such issuance, does
not exceed the Principal remaining outstanding under this Note immediately prior
to such issuance of new Notes), (iii) shall have an issuance date, as indicated
on the face of such new Note which is the same as the Issuance Date of this
Note, (iv) shall have the same rights and conditions as this Note, and (v) shall
represent accrued Interest and Late Charges on the Principal and Interest of
this Note, from the Issuance Date.
(19) REMEDIES, CHARACTERIZATIONS, OTHER OBLIGATIONS, BREACHES AND
INJUNCTIVE RELIEF. The remedies provided in this Note shall be cumulative and in
addition to all other remedies available under this Note, the Securities
Purchase Agreement and the Registration Rights Agreement, at law or in equity
(including a decree of specific performance and/or other injunctive relief), and
nothing herein shall limit the Holder's right to pursue actual and consequential
damages for any failure by the Company to comply with the terms of this Note.
Amounts set forth or provided for herein with respect to payments, conversion
and the like (and the computation thereof) shall be the amounts to be received
by the Holder and shall not, except as expressly provided herein, be subject to
any other obligation of the Company (or the performance thereof). The Company
acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach
may be inadequate. The Company therefore agrees that, in the event of any such
breach or threatened breach, the Holder shall be entitled, in addition to all
other available remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other security being
required.
(20) PAYMENT OF COLLECTION, ENFORCEMENT AND OTHER COSTS. If (a)
this Note is placed in the hands of an attorney for collection or enforcement or
is collected or enforced through any legal proceeding or the Holder otherwise
takes action to
19
collect amounts due under this Note or to enforce the provisions of this Note or
(b) there occurs any bankruptcy, reorganization, receivership of the Company or
other proceedings affecting Company creditors' rights and involving a claim
under this Note, then the Company shall pay the costs incurred by the Holder for
such collection, enforcement or action or in connection with such bankruptcy,
reorganization, receivership or other proceeding, including but not limited to
attorneys fees and disbursements.
(21) CONSTRUCTION; HEADINGS. This Note shall be deemed to be
jointly drafted by the Company and all the Purchasers and shall not be construed
against any person as the drafter hereof. The headings of this Note are for
convenience of reference and shall not form part of, or affect the
interpretation of, this Note.
(22) FAILURE OR INDULGENCE NOT WAIVER. No failure or delay on the
part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege.
(23) DISPUTE RESOLUTION. In the case of a dispute as to the
determination of the Redemption Price or the arithmetic calculation of the
Conversion Rate or the Redemption Price or any other calculation hereunder, the
Company shall submit the disputed determinations or arithmetic calculations via
facsimile within one Business Day of receipt of the Conversion Notice or
Redemption Notice giving rise to such dispute, as the case may be, to the
Holder. If the Holder and the Company are unable to agree upon such
determination or calculation of the Conversion Rate within one Business Day of
such disputed determination or arithmetic calculation being submitted to the
Holder, then the Company shall, within one Business Day submit via facsimile (a)
the disputed determination of the Weighted Average Price, the Closing Bid Price
or the Closing Sale Price or any other calculation hereunder to an independent,
reputable investment bank selected by the Company and approved by the Holder or
(b) the disputed arithmetic calculation of the Conversion Rate or the Redemption
Price to the Company's independent, outside accountant. The Company, at the
Company's expense, shall cause the investment bank or the accountant, as the
case may be, to perform the determinations or calculations and notify the
Company and the Holder of the results no later than five Business Days from the
time it receives the disputed determinations or calculations. Such investment
bank's or accountant's determination or calculation, as the case may be, shall
be binding upon all parties absent demonstrable error.
(24) NOTICES; PAYMENTS.
(a) Notices. Whenever notice is required to be given under
this Note, unless otherwise provided herein, such notice shall be given in
accordance with Section 9(f) of the Securities Purchase Agreement. The Company
shall provide the Holder with prompt written notice of all actions taken
pursuant to this Note, including in reasonable detail a description of such
action and the reason therefore. Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) immediately
upon any adjustment of the Conversion Price, setting forth in reasonable detail,
and certifying, the calculation of such adjustment and (ii) at least twenty days
prior to the date on which the Company closes its books
20
or takes a record (A) with respect to any dividend or distribution upon the
Common Stock, (B) with respect to any grants, issues or sales of any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to holders of Common Stock or (C) for determining rights
to vote with respect to any Change of Control, dissolution or liquidation,
provided in each case that such information shall be made known to the public
prior to or in conjunction with such notice being provided to such holder.
Notwithstanding the foregoing, Section 4(j) of the Securities Purchase Agreement
shall apply to all notices given pursuant to this Note.
(b) Payments. Whenever any payment of cash is to be made
by the Company to any Person pursuant to this Note, such payment shall be made
in lawful money of the United States of America by a check drawn on the account
of the Company and sent via overnight courier service to such Person at such
address as previously provided to the Company in writing (which address, in the
case of each of the Purchasers (as defined in Section 3(d)(ii)), shall initially
be as set forth on the Schedule of Buyers attached to the Securities Purchase
Agreement); provided that the Holder may elect to receive a payment of cash via
wire transfer of immediately available funds by providing the Company with prior
written notice setting out such request and the Holder's wire transfer
instructions. Whenever any amount expressed to be due by the terms of this Note
is due on any day which is not a Business Day, the same shall instead be due on
the next succeeding day which is a Business Day and, in the case of any Interest
Date which is not the date on which this Note is paid in full, the extension of
the due date thereof shall not be taken into account for purposes of determining
the amount of Interest due on such date. Any amount of Interest, Principal or
other amount due under the Transaction Documents (as defined in the Securities
Purchase Agreement) which is not paid when due shall result in a late charge
being incurred and payable by the Company in an amount equal to interest on such
amount at the rate of 12% per annum from the date such amount was due until the
same is paid in full ("LATE CHARGE").
(25) CANCELLATION. After all Principal, accrued Interest and
other amounts at any time owed on this Note has been paid in full, this Note
shall automatically be deemed canceled, shall be surrendered to the Company for
cancellation and shall not be reissued.
(26) WAIVER OF NOTICE. To the extent permitted by law, the
Company hereby waives demand, notice, protest and all other demands and notices
in connection with the delivery, acceptance, performance, default or enforcement
of this Note and the Securities Purchase Agreement.
(27) GOVERNING LAW. This Note shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Note shall be governed by, the internal
laws of the State of Illinois, without giving effect to any choice of law or
conflict of law provision or rule (whether of the State of Illinois or any other
jurisdictions) that would cause the application of the laws of any jurisdictions
other than the State of Illinois.
(28) CERTAIN DEFINITIONS. For purposes of this Note, the
following terms shall have the following meanings:
21
(a) "BUSINESS DAY" means any day other than Saturday,
Sunday or other day on which commercial banks in The City of New York are
authorized or required by law to remain closed.
(b) "CASH OPTIONAL REDEMPTION CONSIDERATION" means an
amount in cash equal to the greater of (i) 102% of the Conversion Amount of the
Note being redeemed in the Company Optional Redemption and (ii) the sum of (A)
the product determined by multiplying the Conversion Amount of the Note being
redeemed in the Company Optional Redemption by a quotient determined by dividing
(X) the Closing Bid Price of the Common Stock on the date of delivery of the
Company Optional Redemption Notice by (Y) the Company Optional Redemption
Conversion Price and (B) 12% of the Conversion Amount of the Note being redeemed
in the Company Optional Redemption; provided, however, that in the event that
the Company Optional Redemption Notice is delivered on or after the date that is
10 Business Days after the execution of the Securities Purchase Agreement, the
Holder shall have the option, upon delivery of written notice thereof to the
Company at any time prior to the Company Optional Redemption Date, to receive in
lieu of all or any portion of the Cash Optional Redemption Consideration a
number of shares of Common Stock not to exceed the Company Optional Redemption
Conversion Shares, in which event the Cash Optional Redemption Consideration
shall be reduced by an amount equal to the product determined by multiplying (I)
the number of shares of Common Stock the Holder has elected to receive and (II)
the Company Optional Redemption Conversion Price.
(c) "CHANGE OF CONTROL TERMINATION DATE" shall mean, with
respect to any proposed Change of Control for which a public announcement that
it proposes or intends to effect a Change of Control of the Company (the date of
such announcement, the "ANNOUNCEMENT DATE") has been made, the date upon which
the Company or other Person proposing to effect such Change of Control
consummates or publicly announces the termination or abandonment of the proposed
Change of Control which was the subject of the previous public announcement.
(d) "CLOSING BID PRICE" and "CLOSING SALE PRICE" means,
for any security as of any date, the last closing bid price and last closing
trade price, respectively, for such security on The New York Stock Exchange,
Inc. (the "PRINCIPAL MARKET") as reported by Bloomberg Financial Markets
("BLOOMBERG"), or, if the Principal Market begins to operate on an extended
hours basis and does not designate the closing bid price or the closing trade
price, as the case may be, then the last bid price or last trade price,
respectively, of such security prior to 4:00:00 p.m. Eastern Time as reported by
Bloomberg, or, if the Principal Market is not the principal securities exchange
or trading market for such security, the last closing bid price or last trade
price, respectively, of such security on the principal securities exchange or
trading market where such security is listed or traded as reported by Bloomberg,
or if the foregoing do not apply, the last closing bid price or last trade
price, respectively, of such security in the over-the-counter market on the
electronic bulletin board for such security as reported by Bloomberg, or, if no
closing bid price or last trade price, respectively, is reported for such
security by Bloomberg, the average of the bid prices, or the ask prices,
respectively, of any market makers for such security as reported in the "pink
sheets" by the National Quotation Bureau, Inc. If the Closing
22
Bid Price or the Closing Sale Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Closing Bid Price or the
Closing Sale Price, as the case may be, of such security on such date shall be
the fair market value as mutually determined by the Company and the Holder. If
the Company and the Holder are unable to agree upon the fair market value of
such security, then such dispute shall be resolved pursuant to Section 23. All
such determinations to be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during any applicable
calculation period.
(e) "COMMON STOCK" means (i) the Company's common stock,
par value $2.50 per share, and (ii) any capital stock resulting from a
reclassification of such Common Stock.
(f) "COMPANY OPTIONAL REDEMPTION CONVERSION PRICE" shall
mean 110% of the arithmetic average of the Weighted Average Price of the Common
Stock for each of the Trading Days during the Tranche B Pricing Period through
the date the Company delivers to the Holder the Company Optional Redemption
Notice, but in no event shall the Company Optional Redemption Conversion Price
exceed, and prior to the commencement of the Tranche B Pricing Period it shall
equal, 110% of the Tranche B Base Price.
(g) "COMPANY OPTIONAL REDEMPTION CONVERSION SHARES" shall
mean that number of shares of Common Stock determined by dividing (i) the
Conversion Amount of the Note being redeemed in the Company Optional Redemption
by (ii) the Company Optional Redemption Conversion Price.
(h) "COMPANY OPTIONAL REDEMPTION PERIOD" means the period
commencing on the Business Day immediately following the issuance date of the
First Notes and ending on and including the date that is 35 Business Days after
the execution of the Securities Purchase Agreement.
(i) "COMPANY OPTIONAL REDEMPTION CONSIDERATION" means the
Cash Optional Redemption Consideration.
(j) "PERSON" means an individual, a limited liability
company, a partnership, a joint venture, a corporation, a trust, an
unincorporated organization, any other entity and a government or any department
or agency thereof.
(k) "QUALIFIED 144A OFFERING" shall mean an underwritten
offering by the Company of debt securities of the Company that are convertible
into Common Stock, with an effective conversion premium (as defined in Section
(d)(3)(i) of Rule 144A of the Securities Act of 1933, as amended ("Rule 144A"))
of not less than 10%, with such offering to be conducted either pursuant to Rule
144A or pursuant to a registered offering of such securities, in either case led
by Merrill Lynch & Co. and yielding gross unrestricted cash proceeds to the
Company of not less than $150 million.
(l) "REDEMPTION PREMIUM" means (i) in the case of the
Events of Default described in Section 4(a)(i), (ii), (iii), (iv) and (viii),
115% or (ii) in the case of the
23
Events of Default described in Section 4(a)(v) - (vii), 100%.
(m) "REGISTRATION RIGHTS AGREEMENT" means that certain
registration rights agreement between the Company and the initial holders of the
Notes relating to the registration of the resale of the shares of Common Stock
issuable upon conversion of the Notes.
(n) "SECURITIES PURCHASE AGREEMENT" means that certain
securities purchase agreement between the Company and the initial holders of the
Notes pursuant to which the Company issued the Notes.
(o) "SEPARATE TRANCHE NOTES" means the First Notes, First
Call Notes, Second Call Notes, Third Notes and the Third Call Notes,
collectively.
(p) "TRADING DAY" means any day on which the Common Stock
is traded on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock, then on the principal securities
exchange or securities market on which the Common Stock is then traded; provided
that "Trading Day" shall not include any day on which the Common Stock is
scheduled to trade on such exchange or market or actually trades on such
exchange or market for less than 4.5 hours.
(q) "TRANCHE B BASE PRICE" means the Weighted Average
Price of the Common Stock on the Tranche B Closing Date (subject to adjustments
for stock splits, stock dividends, stock combinations and similar transactions).
(r) "TRANCHE A PRICING PERIOD" means the twenty
consecutive Trading Days commencing on the fifth Trading Day immediately
following the issuance date of the First Notes.
(s) "TRANCHE B PRICING PERIOD" means the ten consecutive
Trading Days commencing on the first Trading Day immediately following the end
of the Tranche A Pricing Period.
(t) "VARIABLE SECURITIES" means any stock or securities
other than Options directly or indirectly convertible into or exchangeable for
Common Stock ("CONVERTIBLE SECURITIES") or any rights, warrants or option to
subscribe for or purchase Common Stock or Convertible Securities ("OPTIONS")
that are convertible into or exchangeable, directly or indirectly, for Common
Stock at a price which varies or may vary with the market price of the Common
Stock, including by way of one or more adjustments or resets to a fixed price (a
"VARIABLE PRICE").
(u) "WEIGHTED AVERAGE PRICE" means, for any security as of
any date, the dollar volume-weighted average price for such security on the
Principal Market during the period beginning at 9:30 a.m., New York Time (or
such other time as the Principal Market publicly announces is the official open
of trading), and ending at 4:00 p.m., New York Time (or such other time as the
Principal Market publicly announces is the official close of trading), as
reported by Bloomberg through its "Volume at Price" functions (ignoring any
trade of more than
24
100,000 shares of such security pursuant to an individual transaction (subject
to adjustment for stock splits, stock dividends, stock combinations and other
similar transactions involving such security after the Issuance Date)), or, if
the Principal Market is not the principal securities exchange or trading market
for such security, the dollar volume-weighted average price for such security on
the principal securities exchange or trading market where such security is
listed or traded during the period beginning at 9:30 a.m., New York Time (or
such other time as such principal securities exchange or trading market publicly
announces is the official open of trading), and ending at 4:00 p.m., New York
Time (or such other time as such principal securities exchange or trading market
publicly announces is the official close of trading), as reported by Bloomberg
through its "Volume at Price" functions (ignoring any trade of more than 100,000
shares of such security pursuant to an individual transaction (subject to
adjustment for stock splits, stock dividends, stock combinations and other
similar transactions involving such security after the Issuance Date)), or, if
the foregoing does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30 a.m., New York Time (or such
other time as the Principal Market publicly announces is the official open of
trading), and ending at 4:00 p.m., New York Time (or such other time as the
Principal Market publicly announces is the official close of trading), as
reported by Bloomberg, or, if no dollar volume-weighted average price is
reported for such security by Bloomberg for such hours, the average of the
highest closing bid price and the lowest closing ask price of any of the market
makers for such security as reported in the "pink sheets" by the National
Quotation Bureau, Inc. If the Weighted Average Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Weighted
Average Price of such security on such date shall be the fair market value as
mutually determined by the Company and the Holder. If the Company and the Holder
are unable to agree upon the fair market value of such security, then such
dispute shall be resolved pursuant to Section 23. All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock combination or
other similar transaction during applicable calculation period.
[SIGNATURE PAGE FOLLOWS]
25
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed
as of the Date of Issuance set out above.
XCEL ENERGY INC.
By:
---------------------------------------------
Name:
Title: Chief Executive Officer
EXHIBIT I
XCEL ENERGY INC.
CONVERSION NOTICE
Reference is made to the Convertible Note (the "NOTE") issued to the undersigned
by XCEL ENERGY INC. (the "COMPANY"). In accordance with and pursuant to the
Note, the undersigned hereby elects to convert the Conversion Amount (as defined
in the Note) of the Note indicated below into shares of Common Stock, par value
$2.50 per share (the "COMMON STOCK"), of the Company as of the date specified
below.
Date of Conversion:
-----------------------------------------------------
Aggregate Conversion Amount to be converted:
----------------------------
Please confirm the following information:
Conversion Price:
-------------------------------------------------------
Number of shares of Common Stock to be issued:
--------------------------
Please issue the Common Stock into which the Note is being converted and, if
applicable, any check drawn on an account of the Company in the following name
and to the following address:
Issue to:
---------------------------------------------------------------
---------------------------------------------------------------
---------------------------------------------------------------
Facsimile Number:
-------------------------------------------------------
Authorization:
----------------------------------------------------------
By:
--------------------------------------------------------------
Title:
-------------------------------------
Dated:
--------------------------------------------------------------------------
Account Number:
---------------------------------------------------------
(if electronic book entry transfer)
Transaction Code Number:
------------------------------------------------
(if electronic book entry transfer)
ACKNOWLEDGMENT
The Company hereby acknowledges this Conversion Notice and hereby
directs [TRANSFER AGENT] to issue the above indicated number of shares of Common
Stock in accordance with the Transfer Agent Instructions dated November 8, 2002
from the Company and acknowledged and agreed to by [TRANSFER AGENT].
XCEL ENERGY INC.
By:
---------------------------------------------
Name:
Title: