Exhibit 10.1
CALENERGY CAPITAL TRUST II
6-1/4% TRUST CONVERTIBLE PREFERRED SECURITIES
(CONVERTIBLE PREFERRED SECURITIES)
(LIQUIDATION PREFERENCE $50 PER CONVERTIBLE PREFERRED SECURITY)
GUARANTEED TO A LIMITED EXTENT BY, AND
CONVERTIBLE INTO COMMON STOCK OF,
CALENERGY COMPANY, INC.
REGISTRATION RIGHTS AGREEMENT
February 26, 1997
LEHMAN BROTHERS INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
c/o Lehman Brothers Inc.
3 World Financial Center
New York, N.Y. 10285-1600
Ladies and Gentlemen:
CalEnergy Capital Trust II, a statutory business trust formed under the
laws of the State of Delaware (the "Trust") by CalEnergy Company, Inc., a
Delaware corporation (the "Guarantor"), proposes to issue and sell to Lehman
Brothers Inc. and Donaldson, Lufkin & Jenrette Securities Corporation (the
"Purchasers"), upon the terms set forth in the Purchase Agreement dated February
20, 1997 (the "Purchase Agreement"), among the Purchasers, the Guarantor and the
Trust 6-1/4% Convertible Preferred Securities (liquidation preference $50 per
Convertible Preferred Security) (the "Convertible Preferred Securities") (the
"Initial Placement"). As an inducement to you to enter into the Purchase
Agreement and in satisfaction of a condition to your obligations thereunder, the
Trust and the Guarantor agree with you, (i) for the benefit of the Purchasers
and (ii) for the benefit of the holders from time to time of the Convertible
Preferred Securities, the 6-1/4% Convertible Junior Subordinated Debentures Due
2012 (the "Debentures") and the Common Stock, par value $0.0675 per share (the
"Common Stock"), of the Guarantor (together with the related Rights) issuable
upon conversion of the Convertible Preferred Securities or the Debentures
(collectively, together with the Guarantee of the
Guarantor of the Convertible Preferred Securities, the "Securities"), including
the Purchasers (each of the foregoing a "Holder" and together the "Holders"),
as follows:
1. Definitions. Capitalized terms used herein without definition shall
have their respective meanings set forth in or pursuant to the Purchase
Agreement or the Confidential Offering Memorandum dated February 20, 1997, in
respect of the Convertible Preferred Securities. As used in this Agreement, the
following capitalized defined terms shall have the following meanings:
"Act" or "Securities Act" means the Securities Act of 1933, as amended.
"Affiliate" of any specified person means any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such specified person. For purposes of this definition, control of
a person means the power, direct or indirect, to direct or cause the direction
of the management and policies of such person whether by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Managing Underwriters" means the investment banker or investment
bankers and manager or managers selected or approved by the Trust and the
Guarantor in accordance with the provisions set forth in Section 6 hereof, that
shall administer an underwritten offering, if any.
"Prospectus" means the prospectus included in any Shelf Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities.
"Registrable Securities" means, with respect to any Holder, all
Securities held by such Holder; provided, however, that a Security ceases to be
a Registrable Security when (i) it has been effectively registered under the Act
and disposed of in accordance with the Shelf Registration Statement or (ii) it
is, in the written opinion of counsel to the Trust and the Guarantor, permitted
to be freely sold or distributed to the public pursuant to any exemption from
the registration requirements of the Securities Act, including subsection (k) of
Rule 144, but excluding Rule 144A; and provided that all references to
Registrable Securities herein shall mean, with respect to any Security or
Securities, collectively the associated Convertible Preferred Securities,
Debentures, shares of Common Stock, Rights and Guarantee of such Convertible
Preferred Securities and shall not be deemed to apply separately in respect of
such associated Securities.
"Shelf Registration" means a registration effected pursuant to
Section 2 hereof.
"Shelf Registration Period" has the meaning set forth in Section 2(b)
hereof.
"Shelf Registration Statement" means a "shelf" registration statement
covering resales of the Registrable Securities of the Trust and the Guarantor
pursuant to the provisions of Section 2 hereof filed with the Commission which
covers some or all of the Registrable Securities, as applicable, on an
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appropriate form under Rule 415 under the Act, or any similar rule that may be
adopted by the Commission, amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material
incorporated by reference therein.
"underwriter" means any underwriter of Registrable Securities in
connection with an offering thereof under a Shelf Registration Statement,
selected or approved by the Trust and the Guarantor in accordance with the
provisions set forth in Section 6 hereof.
2. Shelf Registration. (a) The Trust and the Guarantor shall, within
180 days following the date of original issuance (the "Issue Date") of the
Convertible Preferred Securities, prepare and file with the Commission a Shelf
Registration Statement relating to the offer and sale of the Registrable
Securities by the Holders from time to time in accordance with the methods of
distribution set forth in such Shelf Registration Statement and, thereafter,
shall each use its reasonable best efforts to cause such Shelf Registration
Statement to be declared effective under the Act (subject to Section 2(d) below)
no later than 270 days after the Issue Date, provided, however, that no Holder
shall be entitled to have the Registrable Securities held by it covered by such
Shelf Registration unless such Holder is in compliance with Section 3(m) hereof.
(b) The Trust and the Guarantor shall each use its reasonable best
efforts (i) to keep the Shelf Registration Statement continuously effective in
order to permit the Prospectus forming part thereof to be usable by Holders for
a period of two years from the date the Shelf Registration Statement is declared
effective or such shorter period that will terminate upon the earlier of the
following: (A) when all the Convertible Preferred Securities covered by the
Shelf Registration Statement have been sold pursuant to the Shelf Registration
Statement, (B) when all Debentures issued to Holders in respect of Convertible
Preferred Securities that had not been sold pursuant to the Shelf Registration
Statement have been sold pursuant to the Shelf Registration Statement, (C) when
all shares of Common Stock (together with the related Rights) issued upon
conversion of any such Convertible Preferred Securities or any such Debentures
that had not been sold pursuant to the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement or (D) when, in the written
opinion of counsel to the Trust and the Guarantor, all outstanding Securities
held by persons which are not Affiliates of the Trust or the Guarantor have
ceased to be Registrable Securities (in any such case, such period being called
the "Shelf Registration Period") and (ii) after the effectiveness of the Shelf
Registration Statement, promptly upon the request of any Holder to take any
action reasonably necessary to register the sale of any Registrable Securities
of such Holder on such Shelf Registration Statement and to identify such Holder
as a selling securityholder.
(c) In the event of a "Registration Default" (as defined in the
Indenture governing the Debentures (the "Indenture") and in the Amended and
Restated Declaration of Trust of the Trust, dated as of February 26, 1997 (the
"Declaration")) additional interest ("Liquidated Damages") will accrue on the
Debentures and the Convertible Preferred Securities from and including the day
following the day such Registration Default shall occur (or be deemed to occur
as described in the Indenture and the Declaration) to but excluding the day on
which such Registration Default has been cured (or be deemed to be cured as
described in the Indenture and the Declaration). Liquidated Damages will be paid
quarterly in arrears, with the first quarterly payment due on the first interest
or distribution payment date, as applicable, following the date on which such
Liquidated Damages begin to accrue, and will accrue at a rate per annum equal to
an additional one-quarter of one percent (0.25%) of the principal amount or
liquidation amount, as applicable, to and including the 90th day following such
Registration Default and one-half of
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one percent (0.50%) thereof from and after the 91st day following such
Registration Default. Following the cure of a Registration Default, Liquidated
Damages will cease to accrue with respect to such Registration Default.
(d) Notwithstanding any other provision hereof, the Trust and the
Guarantor or the Guarantor acting alone may postpone or suspend the filing or
the effectiveness of the Shelf Registration Statement (or any amendments or
supplements thereto), or the sale of Securities pursuant thereto, if (i) such
action is required by applicable law or regulation, or (ii) such action is taken
in good faith and for valid business reasons (not including avoidance of the
Trust's and Guarantor's obligations hereunder), including the acquisition or
divestiture of assets, other pending corporate developments, public filings with
the Commission or other similar events, so long as the Trust and the Guarantor
promptly thereafter comply with the requirements of Section 3(i) hereof, if
applicable. The Trust and the Guarantor shall be deemed not to have used their
reasonable best efforts to keep the Shelf Registration Statement effective
during the requisite period if either the Trust or the Guarantor intentionally
takes any action not referred to in clause (i) or (ii) of this Section 2(d) that
would result in Holders of Registrable Securities covered thereby not being able
to offer and sell any such Registrable Securities during that period.
Notwithstanding the occurrence of any event referred to in such clauses (i) or
(ii) (a "Suspension"), such event shall not, except as set forth in the
Indenture and the Declaration, suspend, postpone or in any other manner affect
the running of the time period by which the Shelf Registration Statement must be
filed, declared effective, or during which it must remain effective, in order to
prevent the occurrence of a Registration Default pursuant to the Indenture or
the Declaration, and, if the filing or effectiveness of the Shelf Registration
Statement is postponed or suspended as a result of a Suspension, a Registration
Default shall nonetheless exist under the Indenture and the Declaration if all
other requirements set forth for the occurrence of a Registration Default shall
be satisfied, and the provisions of the Debentures and the Convertible Preferred
Securities requiring the payment of additional interest during the period of
such Registration Default, as set forth in the Indenture and the Declaration,
shall be applicable. The Trust and the Guarantor agree to notify the Holders of
the occurrence of a Suspension as promptly as practicable after such occurrence
and to mail notice thereof to Holders reasonably promptly following the
termination of any suspension.
3. Registration Procedures. In connection with any Shelf Registration
Statement, the following provisions shall apply:
(a) The Trust and the Guarantor shall furnish to the Purchasers, prior
to the filing thereof with the Commission, a copy of any Shelf Registration
Statement, and each amendment thereof and each amendment or supplement, if any,
to the Prospectus included therein (provided that, for this purpose, amendments
or supplements shall not be deemed to include documents incorporated by
reference into such Shelf Registration Statement) and shall each use its
reasonable best efforts to reflect in each such document, when so filed with the
Commission, such comments as the Purchasers reasonably may propose on a timely
basis.
(b) The Trust and the Guarantor shall take such action as may be
necessary so that (i) any Shelf Registration Statement and any amendment thereto
and any Prospectus forming part thereof and any amendment or supplement thereto
(and each report or other document incorporated therein by reference in each
case) complies in all material respects with the Securities Act and the Exchange
Act and the respective rules and regulations thereunder, (ii) any Shelf
Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any Prospectus forming part of any Shelf
Registration Statement, and any amendment or
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supplement to such Prospectus, does not include an untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements, in the light of the circumstances under which they were made, not
misleading (except, in each case, for any untrue statements of a material fact
or omissions of a material fact made in reliance on and in conformity with
information furnished to the Guarantor or the Trust by or on behalf of Holders
or underwriters).
(c) (1) The Trust and the Guarantor shall advise the Purchasers and,
in the case of clause (i), the Holders and, if requested by the Purchasers or
any such Holder, confirm such advice in writing:
(i) when a Shelf Registration Statement and any
amendment thereto has been filed with the Commission and when
the Shelf Registration Statement or any post-effective
amendment thereto (exclusive of documents incorporated by
reference) has become effective; and
(ii) of any request by the Commission for amendments
or supplements to the Shelf Registration Statement or the
Prospectus included therein or for additional information.
(2) The Trust and the Guarantor shall advise the Purchasers
and the Holders and, if requested by the Purchasers or any such Holder,
confirm such advice in writing:
(i) of the issuance by the Commission of any stop
order suspending the effectiveness of the Shelf Registration
Statement or the initiation of any proceedings for that
purpose;
(ii) of the receipt by the Trust or the Guarantor of
any notification with respect to the suspension of the
qualification of the securities included therein for sale in
any jurisdiction or the initiation of any proceeding for such
purpose;
(iii) of the happening of any event that requires the
making of any changes in the Shelf Registration Statement or
the Prospectus (exclusive of documents incorporated by
reference) so that, as of such date, the Shelf Registration
Statement and the Prospectus do not contain an untrue
statement of a material fact and do not omit to state a
material fact required to be stated therein or necessary to
make the statements therein (in the case of the Prospectus, in
light of the circumstances under which they were made) not
misleading (which advice may be accompanied by an instruction
that such notice constitutes material non-public information
and to suspend the use of the Prospectus until the requisite
changes have been made), and which instruction shall require
that such Holders shall not communicate such material
non-public information to any third party and shall not sell
or purchase, or offer to sell or purchase any securities of
the Trust or the Guarantor after receipt of such advice and
prior to the effectiveness of any action required to be taken
by the Trust or the Guarantor pursuant to Section 3(i) hereof;
and
(iv) if the Guarantor determines that the filing of a
post-effective amendment to the Registration Statement would
be appropriate.
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(d) The Trust and the Guarantor shall use their reasonable best efforts
to prevent the issuance, and if issued to obtain the withdrawal, of any order
suspending the effectiveness of any Shelf Registration Statement at the earliest
possible time.
(e) The Trust and the Guarantor shall furnish to each Holder of
Securities included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement and any
post-effective amendment thereto (including any reports or other documents
incorporated therein by reference), including financial statements and
schedules, and, if the Holder so requests in writing, all exhibits (including
those incorporated by reference).
(f) The Trust and the Guarantor shall, during the Shelf Registration
Period, deliver to each Holder of Securities included within the coverage of any
Shelf Registration Statement, without charge, as many copies of the Prospectus
(including each preliminary Prospectus) included in such Shelf Registration
Statement and any amendment or supplement thereto as such Holder may reasonably
request; and each of the Trust and the Guarantor consents to the use of the
Prospectus or any amendment or supplement thereto by each of the selling Holders
of Securities and the underwriters, if any, in connection with the offering and
sale of the Securities covered by the Prospectus or any amendment or supplement
thereto during the Shelf Registration Period, provided that such use complies
with this Agreement and with all applicable laws and regulations.
(g) Prior to any offering of Securities pursuant to any Shelf
Registration Statement, the Trust and the Guarantor shall register or qualify
such Securities or cooperate with the Holders of Securities included therein and
their respective counsel in connection with the registration or qualification of
such Securities for offer and sale under the securities or blue sky laws of such
jurisdictions in the United States as any such Holders reasonably request in
writing and do any and all other acts or things necessary or advisable to enable
the offer and sale in such jurisdictions of the Securities covered by such Shelf
Registration Statement; provided, however, that neither the Trust nor the
Guarantor will be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process or to taxation in any such jurisdiction
where it is not then so subject.
(h) Unless any Securities shall be in book-entry only form, the Trust
and the Guarantor shall cooperate with the Holders of Securities to facilitate
the timely preparation and delivery of certificates representing Securities to
be sold pursuant to any Shelf Registration Statement free of any restrictive
legends and in such permitted denominations and registered in such names as
Holders may request in connection with the sale of Securities pursuant to such
Shelf Registration Statement.
(i) Upon the occurrence of any event contemplated by Section
3(c)(2)(iii), subject to Section 2(d), the Trust and the Guarantor shall
reasonably promptly prepare a post-effective amendment to any Shelf Registration
Statement or an amendment or supplement to the related Prospectus or file any
other required document so that, as thereafter delivered to purchasers of the
Registrable Securities included therein, the Prospectus will not include an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading (except, in each case, for an untrue statement of
a material fact or omission of a material fact made in reliance on and in
conformity with written information furnished to the Guarantor or the Trust by
or on behalf of Holders or underwriters specifically for use therein). The Trust
and the Guarantor agree to notify the Holders to suspend use of the Prospectus
as promptly as practicable after the occurrence of such an event, and the
Holders shall suspend use of the Prospectus, and not
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communicate such material non-public information to any third party, and not
sell or purchase, or offer to sell or purchase, any securities of the Trust or
the Guarantor, until the Trust or the Guarantor have amended or supplemented
the Prospectus so it does not contain any such misstatement or omission. At
such time as such public disclosure is otherwise made or the Trust and the
Guarantor determine in good faith that such disclosure is not necessary, the
Trust and the Guarantor agree promptly to notify the Holders of such
determination and to amend or supplement the Prospectus if necessary, so it
does not contain any such untrue statement or omission therein and to furnish
the Holders such numbers of copies of the Prospectus as so amended or
supplemented as the Holders may reasonably request.
(j) Not later than the effective date of any Shelf Registration
Statement hereunder, the Trust and the Guarantor shall provide a CUSIP number
for the Convertible Preferred Securities and the Debentures in the event of and
at the time of any distribution thereof to Holders, registered under such Shelf
Registration Statement, and provide the applicable trustee with certificates for
such Securities, in a form eligible for deposit with The Depository Trust
Company.
(k) The Trust and the Guarantor shall use their best efforts to comply
with all applicable rules and regulations of the Commission and shall make
generally available to their security holders or otherwise provide in accordance
with Section 11(a) of the Securities Act as soon as practicable after the
effective date of the applicable Shelf Registration Statement an earnings
statement satisfying the provisions of Section 11(a) of the Securities Act.
(l) The Trust and the Guarantor shall use their reasonable best efforts
to cause the Indenture, the Declaration and the Guarantee to be qualified under
the Trust Indenture Act in a timely manner.
(m) The Trust and the Guarantor may require each Holder of Securities
to be sold pursuant to any Shelf Registration Statement to furnish to the Trust
and the Guarantor such information regarding the Holder and the distribution of
such Securities as the Trust and the Guarantor may from time to time reasonably
require for inclusion in such Shelf Registration Statement and the Guarantor and
the Trust may exclude from such registration the Securities of any Holder that
fails to furnish such information within a reasonable time after receiving such
request.
(n) The Trust and the Guarantor shall, if requested, promptly
incorporate in a Prospectus supplement or post-effective amendment to a Shelf
Registration Statement, such information as the Managing Underwriters reasonably
agree should be included therein and to which the Trust and the Guarantor do not
reasonably object and shall make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after they are
notified of the matters to be incorporated in such Prospectus supplement or
post-effective amendment.
(o) Subject to Section 6 and Section 2(d), the Trust and the Guarantor
shall enter into such customary agreements (including underwriting agreements in
customary form) which are reasonably acceptable to the Trust and the Guarantor
and shall take all other reasonably requested actions in order to expedite or
facilitate the registration or the disposition of the Registrable Securities,
and in connection therewith, if an underwriting agreement is entered into, cause
the same to contain indemnification provisions and procedures substantially
identical to those set forth in Section 5 (or such other provisions and
procedures acceptable to the Managing Underwriters, if any, and reasonably
acceptable to the Guarantor and the Trust) with respect to all parties to be
indemnified pursuant to Section 5.
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(p) Subject to Section 6 and Section 2(d), the Trust and the Guarantor
shall (i) make reasonably available for inspection by the Holders of Securities
to be registered thereunder, any underwriter participating in any disposition
pursuant to such Shelf Registration Statement, and any attorney, accountant or
other agent retained by such Holders or any such underwriter all reasonably
requested customary and relevant financial and other records, pertinent
corporate documents and properties of the Trust and the Guarantor and its
subsidiaries; (ii) cause the Guarantor's officers, directors and employees and
the Trustees to supply all such information reasonably requested by such Holders
or any such underwriter, attorney, accountant or agent in connection with any
such Shelf Registration Statement as is customary for similar due diligence
examinations, in each case pursuant to confidentiality arrangements reasonably
requested by the Guarantor and the Trust; provided, however, that the foregoing
inspection and information gathering shall, to the greatest extent possible, be
coordinated on behalf of the Holders and the other parties entitled thereto by
one counsel designated by and on behalf of such Holders and reasonably
acceptable to the Guarantor and the Trust; (iii) make such representations and
warranties to the Holders of Securities registered thereunder and the
underwriters, if any, in form, substance and scope as are customarily made by
the Guarantor and the Trust to Holders or to underwriters in underwritten
offerings; (iv) obtain opinions of counsel to the Trust and the Guarantor (who
may be the General Counsel of the Guarantor) and updates thereof addressed to
each selling Holder and the underwriters, if any, covering such matters as are
customarily covered in opinions requested by Holders or underwriters in
underwritten offerings (it being agreed that the matters to be covered by such
opinion shall include, without limitation, as of the date of the opinion and as
of the effective date of the Shelf Registration Statement or most recent
post-effective amendment thereto, as the case may be, the absence from such
Shelf Registration Statement and the prospectus included therein, as then
amended or supplemented, including the documents incorporated by reference
therein, of an untrue statement of a material fact or the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading; (v) obtain "cold comfort" letters and updates
thereof from the independent certified public accountants of the Guarantor (and,
if necessary, any other independent certified public accountants of any
subsidiary of the Guarantor or of any business acquired by the Guarantor for
which financial statements and financial data are, or are required to be,
included in the Shelf Registration Statement), addressed to each such Holder of
Securities registered thereunder and the underwriters, if any, in customary form
and covering matters of the type customarily covered in "cold comfort" letters
delivered to Holders or underwriters in connection with underwritten offerings;
and (vi) deliver such customary documents and certificates as may be reasonably
requested by any such Holders and the Managing Underwriters, if any, including
those to evidence compliance with Section 3(i) and with any customary conditions
contained in the underwriting agreement or other agreement entered into by the
Trust and the Guarantor. The foregoing actions set forth in clauses (iii), (iv),
(v) and (vi) of this Section 3(p) shall be performed at each closing under any
underwritten offering to the extent required thereunder.
(q) The Trust and the Guarantor will use its reasonable best efforts to
cause the Common Stock relating to such Shelf Registration Statement to be
listed on each securities exchange, if any, on which any shares of Common Stock
are then listed.
(r) In the event that any broker-dealer registered under the Exchange
Act and selected or approved in accordance with the provisions set forth in
Section 6 hereof shall underwrite any Securities or participate as a member of
an underwriting syndicate or selling group or "assist in the distribution"
(within the meaning of the Conduct Rules and the By-Laws of the National
Association of Securities Dealers, Inc. ("NASD")) thereof, whether as a Holder
of such Securities or as an underwriter, a placement or sales agent or a broker
or dealer in respect thereof, or otherwise, the Guarantor and the
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Trust shall take reasonable steps to (subject to Section 2(d) and 3(p)) assist
such broker-dealer in complying with the requirements of such Rules and By-Laws,
including, without limitation, by (A) if such Rules or By-Laws, including Rule
2720 thereto, shall so require, engaging (at the expense of the Holders) a
"qualified independent underwriter" (as defined in Rule 2720) selected or
approved by the Trust and the Guarantor to participate in the preparation of the
Shelf Registration Statement relating to such Securities and to exercise usual
standards of due diligence in respect thereto, (B) indemnifying any such
qualified independent underwriter to the extent of the indemnification of
underwriters provided in Section 5 hereof and (C) providing such information to
such broker-dealer as may be required in order for such broker-dealer to comply
with the requirements of the Conduct Rules of the NASD.
(s) The Trust and the Guarantor shall use their reasonable best efforts
to comply with all applicable rules and regulation of the Commission.
4. Registration Expenses. Except as otherwise provided in Section 6,
the Guarantor shall bear all fees and expenses incurred in connection with the
performance of its obligations under Sections 2 and 3 hereof and shall bear or
reimburse the Holders for the reasonable fees and disbursements of one firm of
counsel designated by the Guarantor and reasonably acceptable to the Purchasers
to act as counsel for the Holders in connection therewith; provided, however
that the Trust and the Guarantor shall not be responsible for any fees and
expenses of any underwriter (including any discounts, commissions or legal fees
and expenses) other than the reasonable fees and expenses of counsel in
connection with state blue sky qualifications of the Registrable Securities.
5. Indemnification and Contribution. (a) In connection with any Shelf
Registration Statement, the Trust and the Guarantor, jointly and severally,
agree to indemnify and hold harmless each Purchaser and each Holder of
Securities covered thereby (including the Purchasers), each director, officer,
employee and agent of the Purchasers and each person who controls any Purchaser
or any such Holder within the meaning of either the Securities Act or the
Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such Purchaser or Holder may become subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Shelf Registration Statement as originally filed or in any
amendment thereof, or in any preliminary Prospectus or Prospectus or any
Exchange Act filing incorporated therein, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading and agrees to reimburse each such
indemnified party for any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that (i) the Guarantor and the Trust will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon an untrue statement or alleged untrue statement in, or omission
or alleged omission from, any of such documents in reliance upon and in
conformity with written information furnished to the Guarantor by any Purchaser
through Lehman Brother Inc. or any such Holder specifically for use therein and
(ii) the foregoing indemnity with respect to any untrue statement or alleged
untrue statement contained in, or omission or alleged omission from, any
preliminary prospectus relating to a Shelf Registration Statement shall not
inure to the benefit of any Holder (or any person controlling such Holder) from
whom the person asserting any such loss, claim, damage or liability purchases
any of the Securities that are the subject thereof if such person did not
receive a copy of the final prospectus (or the final prospectus as supplemented)
at or prior to the written confirmation of the sale of such Securities to such
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person and the untrue statement or alleged untrue statement or omission or
alleged omission contained in the preliminary prospectus was corrected in the
final prospectus (or the final prospectus as supplemented) and the corrected
prospectus was made available to such Holder prior to the time of such sale.
This indemnity agreement will be in addition to any liability which the
Guarantor or the Trust may otherwise have.
The Trust and the Guarantor, jointly and severally, also agree to
indemnify or contribute to Losses (as defined below) of, as provided in Section
5(d), any underwriters of Securities registered under the Shelf Registration
Statement, their officers, directors, employees and agents and each person who
controls such underwriters on substantially the same basis as that of the
indemnification of the Purchasers and the selling Holders provided in this
Section 5(a) and shall, if requested by any Holder, enter into an underwriting
agreement reflecting such agreement, as provided in Section 3(o) and Section 6
hereof.
(b) As a condition to the inclusion of a Holder's Registrable
Securities in a Shelf Registration Statement, such Holder shall agree to
indemnify and hold harmless (i) the Trust and the Guarantor, (ii) each of the
directors of the Guarantor, (iii) each of its officers who signs such Shelf
Registration Statement, and (iv) each person who controls the Trust or the
Guarantor within the meaning of either the Securities Act or the Exchange Act to
the same extent as the foregoing indemnity from the Trust and the Guarantor, but
only with reference to written information relating to such Holder furnished to
the Guarantor by or on behalf of such Holder specifically for inclusion in the
documents referred to in the foregoing indemnity. This indemnity agreement will
be in addition to any liability which any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under Section 5(a)
or (b) of notice of the commencement of any action, such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying party under
this Section 5, notify the indemnifying party of the commencement thereof; but
the omission so to notify the indemnifying party will not relieve it from any
liability it may have to any indemnified party otherwise than under Section 5(a)
or (b), except to the extent that it has been materially prejudiced by such
failure; and provided that such omission will not relieve it from any
liabilities which it may otherwise have to an indemnified party. In case any
such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section 5 for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation; provided, however,
that the indemnified party shall have the right to appoint counsel to represent
the indemnified party and their respective controlling persons who may be
subject to liability arising out of any claim in respect of which indemnity may
be sought by the indemnified party against the indemnifying party under this
Section 5 if the employment of such counsel shall have been authorized in
writing by the indemnifying party in connection with the defense of such action,
or if, in the written opinion of counsel to either the indemnifying party or the
indemnified party, representation of both parties by the same counsel would be
inappropriate due to actual or likely conflicts of interest between them, and in
that event the fees and expenses of one firm of separate counsel (in addition to
the fees and expenses of local counsel) shall be paid by the indemnifying party.
No indemnifying party shall, without the prior written consent of the
indemnified party, which consent shall not be unreasonably withheld, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a
10
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 on any claims that are the subject matter of such
action. The indemnifying party shall not be liable for any settlement of any
proceeding effected without its written consent, which consent shall not be
unreasonably withheld.
(d) In the event that the indemnity provided in Section 5(a) or (b) is
unavailable to or insufficient to hold harmless an indemnified party for any
reason, then each indemnifying party shall contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses reasonably
incurred in connection with investigating or defending same) (collectively
"Losses") to which such indemnified party may be subject in such proportion as
is appropriate to reflect the relative benefits received by such indemnifying
party, on the one hand, and such indemnified party, on the other hand, from the
Initial Placement and the Shelf Registration Statement which resulted in such
Losses; provided, however, that in no case shall the Purchasers or any
subsequent Holder of any Security be responsible, in the aggregate, for any
amount in excess of the amount by which the net proceeds received by such
Holders from the sale of the Securities pursuant to the Shelf Registration
Statement exceeds the amount of damages which such Holders have otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. If the allocation provided by the immediately preceding
sentence is unavailable for any reason, the indemnifying party and the
indemnified party shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of such
indemnifying party, on the one hand, and such indemnified party, on the other
hand, in connection with the statements or omissions which resulted in such
Losses as well as any other relevant equitable considerations. Relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the indemnifying
party, on the one hand, or by the indemnified party, on the other hand and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The parties agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation which does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this Section 5(d), 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. For purposes of this Section 5, each person who controls a
Holder within the meaning of either the Securities Act or the Exchange Act shall
have the same rights to contribution as such Holder, and each person who
controls the Guarantor or the Trust within the meaning of either the Securities
Act or the Exchange Act, each officer of the Guarantor who shall have signed the
Shelf Registration Statement and each director of the Guarantor shall have the
same rights to contribution as the Guarantor, subject in each case to the
applicable terms and conditions of this Section 5(d). No party shall be liable
for contribution with respect to any action, suit, proceeding or claim settled
without its written consent, which consent shall not be unreasonably withheld.
(e) The provisions of this Section 5 will remain in full force and
effect, regardless of any investigation made by or on behalf of any Holder or
the Guarantor or the Trust or any of the officers, directors, employees, agents
or controlling persons referred to in Section 5 hereof, and will survive the
sale by a Holder of Securities covered by the Shelf Registration Statement.
6. Underwritten Offering. The Holders of Registrable Securities covered
by the Shelf Registration Statement who desire to do so may sell such
Registrable Securities in an underwritten offering in accordance with the
conditions set forth below and subject to Section 2(d) and 3(p). In any such
underwritten offering, (a) the investment banker or bankers and manager or
managers that will
11
administer the offering will be selected or approved by the Guarantor and the
Trust, and (b) the underwriting arrangements with respect thereto will be
approved by the Holders of a majority of the Registrable Securities to be
included in such offering; provided, however, that such underwriting
arrangements must be reasonably acceptable to the Guarantor and the Trust. No
Holder may participate in any underwritten offering contemplated hereby unless
(a) such Holder agrees to sell such Holder's Registrable Securities in
accordance with such approved underwriting arrangements, (b) such Holder
completes and executes all reasonable questionnaires, powers of attorney,
indemnities, underwriting agreements, lock-up letters and other documents
required under the terms of such approved underwriting arrangements and (c) at
least 25% of the outstanding Registrable Securities held by all Holders are
included in such underwritten offering. The Holders participating in any
underwritten offering shall be responsible for any expenses customarily borne by
selling securityholders, including underwriting discounts and commissions and
fees and expenses of counsel to the selling securityholders and shall reimburse
the Trust and the Guarantor for the fees and disbursements of their counsel,
their independent public accountants and any printing expenses incurred in
connection with such underwritten offering.
7. Miscellaneous.
(a) No Inconsistent Agreements. The Trust and the Guarantor have not,
as of the date hereof, entered into, and shall not, on or after the date hereof,
enter into, any agreement with respect to their securities or otherwise that
conflicts with the rights granted to the Holders herein or the provisions
hereof.
(b) Amendments and Waivers. The provisions of this Agreement, including
the provisions of this sentence, may not be amended, qualified, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the Trust and the Guarantor have obtained the written
consent of the Purchasers.
(c) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such
Holder to the Guarantor in accordance with the provisions of this
Section 7(c), which address initially is, with respect to each Holder,
the address of such Holder set forth in the books and records of the
Trust or the registrar and transfer agent for the Securities;
(2) if to the Purchasers, initially at the address set forth
in the Purchase Agreement; and
(3) if to the Trust or the Guarantor, initially at its address
set forth in the Purchase Agreement.
All such notices and communications shall be deemed to have been duly
given when received.
The Purchaser or the Trust and the Guarantor by notice to the other may
designate additional or different addresses for subsequent notices or
communications.
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties and the
Holders, including, without the need for an
12
express assignment or any consent by the Trust or the Guarantor thereto,
subsequent Holders of Securities. The Trust and the Guarantor hereby agree to
extend the benefits of this Agreement to any Holder of Securities and any such
Holder may specifically enforce the provisions of this Agreement as if an
original party hereto.
(e) Counterparts. This agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
(h) Severability. In the event that any one of more of the provisions
contained herein, or the application thereof in any circumstances, is held
invalid, illegal or unenforceable in any respect for any reason, the validity,
legality and enforceability of any such provision in every other respect and of
the remaining provisions hereof shall not be in any way impaired or affected
thereby, it being intended that all of the rights and privileges of the parties
shall be enforceable to the fullest extent permitted by law.
13
If the foregoing is in accordance with the Purchasers' understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Trust and the Guarantor
and the several Purchasers in accordance with its terms.
Very truly yours,
CALENERGY CAPITAL TRUST II
By John G. Sylvia, solely in his ca-
pacity as trustee and not in his individ-
ual capacity,
/s/ John G. Sylvia
----------------------------------------
John G. Sylvia
By Steven A. McArthur, solely in his
capacity as trustee and not in his indi-
vidual capacity,
/s/ Steven A. McArthur
----------------------------------------
Steven A. McArthur
CALENERGY COMPANY, INC.
By /s/ Steven A. McArthur
-------------------------------------
Name: Steven A. McArthur
Title: Senior Vice President
The foregoing Registration Rights
Agreement is hereby confirmed and
accepted as of the date first above written.
LEHMAN BROTHERS INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By LEHMAN BROTHERS INC.
By /s/ Todd C. Guenther
---------------------
Name: Todd C. Guenther
Title: Associate