EXECUTION COPY
Resale Registration Rights Agreement
between
PG&E Corporation
and
The Purchasers Identified
On The Signature Pages Hereto
Dated as of June 25, 2002
TABLE OF CONTENTS
Page
----
1. Definitions .......................................................... 1
2. Shelf Registration ................................................... 5
3. Registration Failure Liquidated Damages ............................. 8
4. Registration Procedures ............................................. 9
5. Registration Expenses ............................................... 16
6. Indemnification and Contribution ...................................... 16
7. Rules 144 and 144A .................................................... 20
8. Participation in Underwritten Registrations ........................... 20
9. Selection of Underwriters ............................................. 20
10. Miscellaneous ......................................................... 21
Resale Registration Rights Agreement, dated as of June 25,
2002, between PG&E Corporation, a California corporation (together with any
successor entity, herein referred to as the "Issuer"), and the purchasers
identified on the signature pages hereto (individually, a "Purchaser" and
collectively, the "Purchasers").
Pursuant to the Purchase Agreement, dated the date hereof,
between the Issuer and the Purchasers (the "Purchase Agreement"), the Purchasers
have agreed to purchase from the Issuer $280,000,000 aggregate principal amount
of the Issuer's 7.50% Convertible Subordinated Notes due 2007 (together with any
PIK Securities or other securities that may be issued thereon, the
"Securities"). The Securities are convertible into Conversion Shares (as defined
below) on the terms, and subject to the conditions, set forth in the Indenture
(as defined herein). To induce the Purchasers to purchase the Securities, the
Issuer has agreed to provide the registration rights set forth in this Agreement
pursuant to the Purchase Agreement.
The parties hereby agree as follows:
1. Definitions. As used in this Agreement, the following
capitalized terms shall have the following meanings:
Agreement: This Resale Registration Rights Agreement, as
amended, modified or otherwise supplemented from time to time in
accordance with the terms hereof.
Applicable Amount: With respect to (i) each Security on any
day, the principal amount of the Security on such day and (ii) each
Conversion Share, the principal amount of the related Security from
which said share was converted.
Bankruptcy Code: Title 11 of the United States Code entitled
"Bankruptcy", as now or hereafter in effect, or any successor thereto.
Blue Sky Application: As defined in Section 6(a)(i) hereof.
broker-dealer: Any broker or dealer registered under the
Exchange Act.
Business Day: A day other than a Saturday or Sunday or any day
on which banking institutions in The City of New York or The City of
San Francisco are authorized or obligated by law or regulation to
close.
Closing Date: The date of this Agreement.
Commission: Securities and Exchange Commission.
Common Stock: The common stock, no par value, of the Issuer,
existing on the date of this agreement, or any other shares of capital
stock of the issuer into which such Common Stock shall be reclassified
or changed.
Conversion Shares: The shares of Common Stock issued or
issuable upon conversion of the Securities, including, for the
avoidance of doubt, upon the conversion of any PIK Securities.
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Damages Payment Date: Each interest Payment Date. For
purposes of this Agreement, if no Securities are outstanding, "Damages
Payment Date" shall mean each June 30 and December 31.
Effectiveness Period: As defined in Section 2(b)(iii) hereof.
Effectiveness Target Date: As defined in Section 2(b)(ii)
hereof.
Exchange Act: Securities Exchange Act of 1934, as amended, and
the rules and regulations of the Commission promulgated thereunder.
Holder: A Person who owns, beneficially or otherwise, Transfer
Restricted Securities.
Indemnified Holder: As defined in Section 6(a) hereof.
Indenture: The Indenture, dated the date hereof, between the
Issuer and the Trustee, pursuant to which the Securities are to be
issued, as such Indenture is amended, modified or supplemented from
time to time in accordance with the terms thereof.
Initial Effectiveness Period: As defined in Section 2(a)(iii)
hereof.
Initial Effectiveness Target Date: As defined in Section 2(a)
(ii) hereof.
Initial Registration Trigger Date: As defined in Section 2(a)
(i) hereof.
Initial Shelf Registration Statement: As defined in Section 2
(a)(i) hereof.
Interest Payment Date: As defined in the Indenture.
Issuer: As defined in the preamble hereto.
Majority of Holders: Holders holding more than 50% of the
aggregate principal amount of Securities outstanding at the time of
determination; provided that, for purpose of this definition, a holder
of Conversion Shares which constitute Transfer Restricted Securities
shall be deemed to hold an aggregate principal amount of Securities (in
addition to the principal amount of Securities held by such holder)
equal to the product of (x) the number of such Conversion Shares then
held by such holder and (y) the prevailing Conversion Price (as defined
in the Indenture) at the time of conversion.
NASD: National Association of Securities Dealers, Inc.
PIK Securities: As defined in the Indenture, including all
Conversion Shares issued or issuable with respect thereto.
Person: Any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization, or government or any agency or
political subdivision thereof.
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PG&E: Pacific Gas and Electric Company, a California
corporation.
Prospectus: The prospectus included in a Shelf Registration
Statement, as amended or supplemented by any prospectus supplement and
by all other amendments thereto, including post-effective amendments,
and all material incorporated by reference into such Prospectus.
Purchase Agreement: As defined in the preamble hereto.
Purchasers: As defined in the preamble hereto.
Questionnaire: As defined in Section 2(c) hereof.
Questionnaire Deadline: As defined in Section 2(c) hereof.
Record Holder: With respect to any Damages Payment Date, each
Person who is a Holder on the record date with respect to the Interest
Payment Date on which such Damages Payment Date shall occur. In the
case of a Holder of Conversion Shares, "Record Holder" shall mean each
Person who is a Holder of Conversion Shares which constitutes Transfer
Restricted Securities on the 15/th/ day preceding the relevant Damages
Payment Date.
Registration Default: As defined in Section 3(a) hereof.
Registration Failure Liquidated Damages: As defined in Section
3(a) hereof.
Registration Trigger Date: As defined in Section 2(a)(i)
hereof.
Securities: As defined in the preamble hereto.
Securities Act: Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
Shelf Registration Statement: As defined in Section 2(b)(i)
hereof.
Shelf Termination Election: Any election by the Issuer to
terminate the effectiveness of any Shelf Registration Statement.
Subject PIK Security: (i) Any PIK Security at the time it is
originally issued under the Indenture; and (ii) in connection with any
Shelf Termination Election, all PIK Securities outstanding at the date
thereof.
Subsequent Effectiveness Period: As defined in Section 2(b)
(iii) hereof.
Subsequent Effectiveness Target Date: As defined in Section 2
(b)(ii) hereof.
Subsequent Registration Trigger Date: As defined in Section 2
(b)(i) hereof.
Subsequent Shelf Registration Statement: As defined in Section
2(b)(i) hereof.
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Suspension Notice: As defined in Section 4(c) hereof.
Suspension Period: As defined in Section 4(b)(i) hereof.
Transfer Conditions: With respect to any Subject PIK Security
issued under the Indenture, means the delivery by the Issuer to the
Trustee and each Holder of such Subject PIK Security of (a) an
Officer's Certificate confirming that (i) such Subject PIK Security is
not required to bear the restricted securities legend provided for in
the Indenture and (ii) that such Subject PIK Security may be sold or
transferred by a person who is not an affiliate of the Issuer pursuant
to Rule 144(k) under the Securities Act (or any other similar provision
then in force), or is otherwise freely transferable, without regard to
any volume or manner of sale restrictions and (b) an Opinion of Counsel
(as defined in the Indenture), which shall be an opinion of outside
counsel, which confirms such conclusion and states that the holders of
the Subject PIK Securities are entitled to rely on such opinion or, if
such an Opinion of Counsel was previously delivered, a confirmation
from such counsel that there is no change in the opinion previously
delivered.
Transfer Restricted Securities: Each (a) Conversion Share and
(b) any other securities issued or issuable with respect to such
Conversion Share by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization or otherwise, until the earlier
of:
(i) the date on which such Conversion Share or other
security has been registered under the Securities Act on a
registration statement which has been declared effective by
the Commission and disposed of in accordance with such
registration statement;
(ii) the date on which such Conversion Share or other
security (A) has been transferred in compliance with Rule 144
under the Securities Act or (B) may be sold or transferred by
a person who is not an affiliate of the Issuer pursuant to
Rule 144(k) under the Securities Act (or any other similar
provision then in force) without regard to any volume or
manner of sale restrictions thereunder; provided, however,
that, in the case of Conversion Shares issuable upon
conversion of any PIK Securities, the Transfer Conditions have
been satisfied or the date as of which this determination is
made is at least two years after the issue date of such PIK
Security; or
(iii) the date on which, following the issuance of such
Conversion Share upon conversion of Securities, such
Conversion Share or other security ceases to be outstanding
(whether as a result of repurchase and cancellation,
conversion or otherwise).
Trustee: U.S. Bank, N.A., as trustee under the Indenture, and
any subsequent trustee thereunder.
Underwritten Registration or Underwritten Offering: A
registration in which securities of the Issuer are sold to an
underwriter for reoffering to the public.
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VWAP: For any security as of any date, the dollar-weighted
average price for such security on the principal United States
securities exchange on which such security is traded (which is
currently the New York Stock Exchange with respect to the Common Stock)
during the period beginning at 9:30 a.m. (New York time) (or such other
time as such exchange publicly announces is the official open of
trading), and ending at 4:00 p.m. (New York time) (or such other time
as such exchange publicly announces is the official close of trading)
as reported by Bloomberg Financial Markets (or any successor thereto,
"Bloomberg") through its "Volume at Price" functions and ignoring any
block trade (which for purposes of this definition means any transfer
of more than 100,000 shares (subject to adjustment to reflect stock
dividends, stock splits, stock combinations or other similar
transactions after the date of this Agreement) of such security
pursuant to an individual transaction), or, if the foregoing does not
apply, the dollar 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 such exchange publicly announces is the official
open of trading), and ending at 4:00 p.m. (New York time) (or such
other time as such exchange publicly announces is the official close of
trading) as reported by Bloomberg and ignoring any block trade (which
for purposes of this definition means any transfer of more than 100,000
shares (subject to adjustment to reflect stock dividends, stock splits,
stock combinations or other similar transactions after the date of this
Agreement) of such security pursuant to an individual transaction), or
if no dollar weighted average price is reported for such security by
Bloomberg for such hours, the average of the highest closing bid price
and 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 VWAP cannot be calculated for such security on such
date on any of the foregoing bases, the VWAP of such security on such
date shall be the fair market value as mutually determined by the
Company and a Majority of Holders.
2. Shelf Registration. (a) The Issuer shall:
(i) use its best efforts to not later than the
date that is 90 days after the date of the consummation of a
"plan of reorganization" under the Bankruptcy Code with
respect to PG&E (the "Initial Registration Trigger Date"),
cause to be filed a registration statement pursuant to Rule
415 under the Securities Act (together with any amendments
thereto, the "Initial Shelf Registration Statement"), which
Initial Shelf Registration Statement shall provide for resales
of all Transfer Restricted Securities held by, or issuable to,
the Holders (or which may be issued to the Holders at any time
upon conversion of any PIK Securities, as reasonably
determined by the Issuer) that have provided the information
required pursuant to the terms of Section 2(c) hereof;
(ii) use its best efforts to cause the Initial
Shelf Registration Statement to be declared effective by the
Commission not later than 180 days after the Registration
Trigger Date (the "Initial Effectiveness Target Date"); and
(iii) after such Initial Shelf Registration
Statement has been declared effective, keep the Initial Shelf
Registration Statement continuously effective,
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supplemented and amended as required by the provisions of
Section 4(b) hereof to the extent necessary to ensure that (A)
it is available for resales by the Holders of Transfer
Restricted Securities entitled to the benefit of this
Agreement and (B) conforms with the requirements of this
Agreement and the Securities Act for a period (the "Initial
Effectiveness Period") ending on the earlier of:
(1) June 25, 2004, or, if any PIK Securities
have been issued prior to such date, the earlier of
(A) the second anniversary of the most recent date on
which any such PIK Securities were authenticated by
the Trustee pursuant to the Indenture and (B) the
date on which the Transfer Conditions are satisfied;
or
(2) such shorter period that will terminate
when (x) all of the Holders of Transfer Restricted
Securities are able to sell all Transfer Restricted
Securities immediately without restriction pursuant
to Rule 144(k) under the Securities Act or any
successor rule thereto; provided, however, that, in
the case of Conversion Shares issued or issuable upon
conversion of any PIK Securities, the Transfer
Conditions have been satisfied or the date as of
which this determination is made is at least two
years after the issue date of such PIK Security, (y)
all Securities and Transfer Restricted Securities
have ceased to be outstanding (whether as a result of
repurchase and cancellation, conversion or otherwise)
or (z) all Transfer Restricted Securities have been
registered under the Initial Shelf Registration
Statement and have been sold in accordance therewith.
(b) Following the expiration of the Initial Effectiveness
Period, the Issuer may make a Shelf Termination Election by delivering written
notice thereof and, evidence of the satisfaction of the Transfer Conditions to
each Holder of Securities or Transfer Restricted Securities. In the event,
however, that, following the expiration of the Initial Effectiveness Period and
the making of such Shelf Termination Election, the Issuer issues any PIK
Securities and the Transfer Conditions have not been satisfied with respect to
any such issuance then the Issuer shall:
(i) use its best efforts to file, not later than 20
days after the date on which such PIK Securities are issued
(the "Subsequent Registration Trigger Date" and, together with
the Initial Registration Trigger Date, a "Registration Trigger
Date") cause to be filed a registration statement pursuant to
Rule 415 under the Securities Act (together with any
amendments thereto, the "Subsequent Shelf Registration
Statement" and, together with the Initial Shelf Registration
Statement, a "Shelf Registration Statement") which Subsequent
Shelf Registration Statement shall provide for resales of all
Transfer Restricted Securities held by Holders (or which may
be issued to the Holders at any time upon conversion of any
PIK Securities) that have provided the information required
pursuant to the terms of Section 2(c) hereof;
(ii) use its best efforts to cause the Subsequent
Shelf Registration Statement to be declared effective by the
Commission not later than 60 days after
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the Subsequent Registration Trigger Date (the "Subsequent
Effectiveness Target Date" and, together with the Initial
Effectiveness Target Date, the "Effectiveness Target Date");
and
(iii) after such Subsequent Shelf Registration
Statement has been declared effective, keep the Subsequent
Shelf Registration Statement continuously effective,
supplemented and amended as required by the provisions of
Section 4(b) hereof to the extent necessary to ensure that (A)
it is available for resales by the Holders of Transfer
Restricted Securities entitled to the benefit of this
Agreement and (B) conforms with the requirements of this
Agreement and the Securities Act for a period (the "Subsequent
Effectiveness Period" and, together with the Initial
Effectiveness Period, the "Effectiveness Period") ending on
the earlier of:
(1) the earlier of (A) the second anniversary
of the most recent date on which any such PIK
Securities were authenticated by the Trustee pursuant
to the Indenture and (B) the date on which the
Transfer Conditions are satisfied; or
(2) such shorter period that will terminate
when (x) all of the Holders of Transfer Restricted
Securities are able to sell all Transfer Restricted
Securities immediately without restriction pursuant to
Rule 144(k) under the Securities Act or any successor
rule thereto; provided, however, that, in the case of
any Conversion Shares issued or issuable upon
conversion of any PIK Securities, the Transfer
Conditions have been satisfied or the date as of which
this determination is made is at least two years after
the issue date of such PIK Security, (y) when no
Securities or Transfer Restricted Securities remain
outstanding (whether as a result of repurchase and
cancellation, conversion or otherwise) or (z) all
Transfer Restricted Securities have been registered
under the Subsequent Shelf Registration Statement and
have been sold in accordance therewith.
(c) No Holder of Transfer Restricted Securities shall be
permitted to include any of its Transfer Restricted Securities in any Shelf
Registration Statement pursuant to this Agreement unless such Holder completes a
Selling Securityholder Notice and Questionnaire, substantially in the form
attached hereto as Exhibit A (as the same may be amended or modified from time
to time to reasonably reflect changes in applicable law) (the "Questionnaire"),
and delivers it to the Issuer prior to or on the 15th Business Day after such
Holder's receipt of the Questionnaire from the Issuer (each such deadline, a
"Questionnaire Deadline"). Prior to such time, each Holder may complete the
Questionnaire and deliver it to the Issuer prior to such request and, as a
result, shall be entitled to have its Transfer Restricted Securities included in
the applicable Shelf Registration Statement filed with the Commission. In
addition, upon receipt of one or more written requests for additional
information from the Issuer, each Holder who intends to be named as a selling
securityholder in the applicable Shelf Registration Statement shall furnish to
the Issuer in writing, within 15 Business Days after such Holder's receipt of
such request, such additional information regarding such Holder and the proposed
distribution by such Holder of its Transfer Restricted Securities, in connection
with the Shelf Registration Statement
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or Prospectus or Preliminary Prospectus included therein and in any application
to be filed with or under state securities law, as the Issuer may reasonably
request. No Holder of Transfer Restricted Securities shall be entitled to
Registration Failure Liquidated Damages pursuant to Section 3 hereof unless such
Holder shall have provided such reasonably requested information prior to or on
the applicable Questionnaire Deadline. Each Holder whose Transfer Restricted
Securities are being registered pursuant to a Shelf Registration Statement
agrees to furnish promptly to the Issuer all information required to be
disclosed in order to make information previously furnished to the Issuer by
such Holder not materially misleading.
3. Registration Failure Liquidated Damages.
(a) If:
(i) any Shelf Registration Statement has not been
declared effective by the Commission on or prior to the
applicable Effectiveness Target Date; or
(ii) except as provided in Section 4(b)(i) hereof,
any Shelf Registration Statement is filed and declared
effective but, during the applicable Effectiveness Period,
shall thereafter cease to be effective or fail to be usable
for its intended purpose without there being filed with the
Commission within ten Business Days a post-effective amendment
to such Shelf Registration Statement, a supplement to the
Prospectus or a report pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act that cures such failure and, in the
case of a post-effective amendment, is itself immediately
declared effective;
(each such event referred to in foregoing clauses (i) and (ii), a "Registration
Default"), the Issuer hereby agrees, subject to Section 2(c), to pay liquidated
damages ("Registration Failure Liquidated Damages") with respect to the Transfer
Restricted Securities from and including the day following the Registration
Default to but excluding the day on which the Registration Default has been
cured, accruing at a rate:
(A) in respect of the Securities, to each holder of
Securities, equal to 0.50% per annum of the Applicable Amount
of the Securities; and
(B) in respect of any Conversion Shares, to each
holder of Conversion Shares, equal to 0.50% per annum of the
Applicable Amount of the Conversion Shares.
(b) All accrued Registration Failure Liquidated Damages
shall be paid in arrears to Record Holders by the Issuer on each Damages Payment
Date (i) by wire transfer of immediately available funds or by federal funds
check or (ii) in PIK Securities. Following the cure of all Registration Defaults
relating to any particular Security or Conversion Share, the accrual of
Registration Failure Liquidated Damages with respect to such Security or
Conversion Share will cease. The Issuer agrees to deliver all notices,
certificates and other documents contemplated by the Indenture in connection
with the payment of Registration Failure Liquidated Damages.
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All obligations of the Issuer set forth in this Section 3 that are
outstanding with respect to any Transfer Restricted Security at the time such
security ceases to be a Transfer Restricted Security shall survive until such
time as all such obligations with respect to such Transfer Restricted Security
shall have been satisfied in full; provided, however, that the Registration
Failure Liquidated Damages shall cease to accrue on the last day of the
Effectiveness Period.
The Registration Failure Liquidated Damages set forth above
shall be the exclusive monetary remedy available to the Holders of Transfer
Restricted Securities for such Registration Default; provide, however, that the
Holders of Transfer Restricted Securities shall be entitled to any remedy
(including, without limitation, monetary damages) which the Holders
may have at
law or in equity in the event that the Issuer engages in conduct which either is
grossly negligent or intentionally malfeasant; provided, further, however, that
in no event shall the Issuer's filing and prosecution in good faith of a Shelf
Registration Statement in accordance with the terms of this Agreement and advice
of a firm of qualified securities counsel be considered as grossly negligent or
intentionally malfeasant for purposes of this Agreement
4. Registration Procedures.
(a) In connection with any Shelf Registration Statement, the Issuer
shall comply with all the provisions of Section 4(b) hereof and shall use its
best efforts to effect such registration to permit the sale of the Transfer
Restricted Securities being sold in accordance with the intended method or
methods of distribution thereof, and pursuant thereto, shall as expeditiously as
possible prepare and file with the Commission a Shelf Registration Statement
relating to the registration on any appropriate form under the Securities Act.
(b) In connection with any Shelf Registration Statement and any
Prospectus required by this Agreement to permit the sale or resale of Transfer
Restricted Securities, the Issuer shall:
(i) subject to any notice by the Issuer in accordance with this
Section 4(b) of the existence of any fact or event of the kind
described in Section 4(b)(iii)(D), use its best efforts to keep the
Shelf Registration Statement continuously effective during the
Effectiveness Period; upon the occurrence of any event that would
cause such Shelf Registration Statement or the Prospectus contained
therein (A) to contain a material misstatement or omission or (B) not
be effective and usable for resale of Transfer Restricted Securities
during the Effectiveness Period, the Issuer shall file promptly an
appropriate amendment to such Shelf Registration Statement, a
supplement to the Prospectus or a report filed with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, in
the case of clause (A), correcting any such misstatement or omission,
and, in the case of either clause (A) or (B), use its best efforts to
cause such amendment to be declared effective and such Shelf
Registration Statement and the related Prospectus to become usable for
their intended purposes as soon as practicable thereafter.
Notwithstanding the foregoing, the Issuer may suspend the
effectiveness of any Shelf Registration Statement by written notice
(which notice shall not contain any material nonpublic information) to
the Holders for a period
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(each such period, a "Suspension Period"); provided that the Company
shall promptly notify the Holders in writing (which notice shall not
contain any material non-public information) of the date the
Suspension Period will begin and the expected duration of such period;
and provided, further, that no Suspension Period shall exceed 45
consecutive days and all such Suspension Periods shall not exceed an
aggregate of 90 days within any consecutive twelve-month period if:
(x) an event occurs and is continuing as a result of which
such Shelf Registration Statement would, in the Issuer's
reasonable judgment, 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
(y) the Issuer reasonably determines that the disclosure of
such event at such time would have a material adverse effect on
the business of the Issuer (and its subsidiaries, if any, taken
as a whole);
Notwithstanding the foregoing, in the event that any Holder has, prior
to the receipt of notice of the commencement of a Suspension Period,
entered into a binding contract to sell any Conversion Shares pursuant
to a Shelf Registration Statement, and in accordance with the plan of
distribution therein, the Issuer agrees not to prevent its transfer
agent from delivering such Conversion Shares to the purchaser thereof
without any restrictive legend and otherwise in accordance with the
applicable requirements of the Indenture. The Issuer shall use its
commercially reasonable efforts to provide any documents, opinions or
other information reasonably requested by the transfer agent in
connection with any such sale.
(ii) Prepare and file with the Commission such amendments
(including post-effective amendments) and supplements to such Shelf
Registration Statement as may be necessary to keep such Shelf
Registration Statement continuously effective during the Effectiveness
Period; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 (or any similar provisions then in force) under the
Securities Act, and to comply fully with the applicable provisions of
Rules 424 and 430A under the Securities Act in a timely manner; and
comply with the provisions of the Securities Act and the Exchange Act
with respect to the disposition of all securities covered by such
Shelf Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Shelf Registration Statement as so
amended or in such Prospectus as so supplemented.
(iii) Advise the underwriter(s), if any, and selling Holders
promptly (but in any event within five Business Days) and, if
requested by such Persons, to confirm such advice in writing
(provided, however, that in no event shall such advice contain any
material non-public information):
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(A) when the Prospectus or any Prospectus supplement or
post-effective amendment has been filed, and, with respect to any
Shelf Registration Statement or any post-effective amendment
thereto, when the same has become effective,
(B) of any request by the Commission for amendments to any
Shelf Registration Statement or amendments or supplements to the
Prospectus or for additional information relating thereto,
(C) of the issuance by the Commission of any stop order
suspending the effectiveness of any Shelf Registration Statement
under the Securities Act or any notification with respect to the
suspension by any state securities commission of the
qualification or exemption from qualification of any of the
Transfer Restricted Securities for offering or sale in any
jurisdiction, or the initiation or threatening of any proceeding
for any of the preceding purposes, or
(D) of the existence of any fact or the happening of any
event (the nature of which need not be disclosed) during the
Effectiveness Period, that makes any statement of a material fact
made in any Shelf Registration Statement, the Prospectus, any
amendment or supplement thereto, or any document incorporated by
reference therein untrue, or that requires the making of any
additions to or changes in any Shelf Registration Statement or
the Prospectus in order to make the statements therein not
misleading, and that in the case of a Prospectus, it will not
contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading.
Each Holder of Securities, by accepting the same, agrees to hold any
communication from the Company pursuant to this Section 4(b)(iii) in
confidence.
If at any time the Commission shall issue any stop order suspending
the effectiveness of any Shelf Registration Statement, or any state
securities commission or other regulatory authority shall issue an
order suspending the qualification or exemption from qualification of
the Transfer Restricted Securities under state securities or Blue Sky
laws, the Issuer shall use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time and will
provide to the Purchasers and each Holder who is named in such Shelf
Registration Statement prompt notice of the withdrawal of any such
order (provided that in no event shall such notice contain any
material non-public information).
(iv) Furnish to each of the selling Holders and each of the
underwriter(s), if any, before filing with the Commission, one copy of
any Shelf Registration Statement and copies of any Prospectus included
therein or any
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amendments or supplements to such Shelf Registration Statement or
Prospectus (other than documents incorporated by reference after the
initial filing of such Shelf Registration Statement), which documents
will be subject to the review of such Holders and underwriter(s), if
any, for a period of at least ten Business Days (in the case of a
Shelf Registration Statement and the initial Prospectus contained
therein) and two Business Days (in the case of any amendment or
supplement thereto), and the Issuer will not file such Shelf
Registration Statement or initial Prospectus or any amendment or
supplement to the Shelf Registration Statement or Prospectus (other
than documents incorporated by reference) to which a selling Holder of
Transfer Restricted Securities covered by the Shelf Registration
Statement or the underwriter(s), if any, shall reasonably object
within ten Business Days prior to the filing of such Shelf
Registration Statement and Prospectus and within two Business Days
prior to the filing of any amendment or supplement thereto. A selling
Holder or underwriter, if any, shall be deemed to have reasonably
objected to such filing only if a Shelf Registration Statement,
amendment, Prospectus or supplement, as applicable, as proposed to be
filed, contains a material misstatement or omission with respect to
the information concerning such Holder or its intended plan of
distribution with respect to the Transfer Restricted Securities.
(v) Make available at reasonable times for inspection by one or
more representatives of the selling Holders, designated in writing by
a Majority of Holders whose Transfer Restricted Securities are
included in a Shelf Registration Statement, any underwriter
participating in any distribution pursuant to such Shelf Registration
Statement, and any attorney or accountant retained by such selling
Holders or any of the underwriter(s), all financial and other records,
pertinent corporate documents and properties of the Issuer as shall be
reasonably necessary to enable them to exercise any applicable due
diligence responsibilities, and cause the Issuer's officers,
directors, managers and employees to supply all information reasonably
requested by any such representative or representatives of the selling
Holders, underwriter, attorney or accountant in connection with the
Shelf Registration Statement after the filing thereof and before its
effectiveness, provided, however, that any information designated by
the Issuer as confidential at the time of delivery of such information
shall be kept confidential by the recipient thereof; provided,
further, that in no event shall the Issuer be required to furnish any
material nonpublic information pursuant to this subsection (v).
(vi) If reasonably requested by any selling Holders or the
underwriter(s), if any, promptly incorporate in a Shelf Registration
Statement or Prospectus, pursuant to a supplement or post-effective
amendment if necessary, such information as such selling Holders and
underwriter(s), if any, may reasonably request to have included
therein, including, without limitation: (1) information relating to
the "Plan of Distribution" of the Transfer Restricted Securities, (2)
information with respect to the number of shares of Common Stock being
sold to such underwriter(s), (3) the purchase price being paid
therefor and (4) any other terms of the offering of the Transfer
Restricted Securities to be sold in such offering; provided, however,
that with respect to any information
13
requested for inclusion by a selling Holder, this clause (vi) shall
apply only to such information that relates to the Transfer Restricted
Securities to be sold by such selling Holder; and make all required
filings of such Prospectus supplement or post-effective amendment as
soon as reasonably practicable after the Issuer is notified of the
matters to be incorporated in such Prospectus supplement or
post-effective amendment.
(vii) Deliver to each selling Holder and each of the
underwriter(s), if any, without charge, upon the effectiveness of any
Shelf Registration Statement, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or
supplement thereto as such Persons reasonably may request; subject to
any notice by the Issuer in accordance with this Section 4(b) of the
existence of any fact or event of the kind described in Section
4(b)(iii) (D), the Issuer hereby consents to the use of the Prospectus
and any amendment or supplement thereto by each of the selling Holders
and each of the underwriter(s), if any, in connection with the
offering and the sale of the Transfer Restricted Securities covered by
the Prospectus or any amendment or supplement thereto.
(viii) The Issuer shall:
(A) upon request, furnish to each selling Holder and each
underwriter in the case of an underwritten registration where an
underwriting agreement is entered into, if any, in such substance and
scope as they may reasonably request and as are customarily made by
issuers to underwriters in primary underwritten offerings for selling
security holders, upon the date of closing of any sale of Transfer
Restricted Securities in an Underwritten Registration:
(1) opinions, each dated the date of such closing, of
counsel to the Issuer covering such of the matters as are
customarily covered in legal opinions to underwriters in
connection with underwritten offerings of securities; and
(2) customary comfort letters, dated the date of such
closing, from the Issuer's independent accountants (and from any
other accountants whose report is contained or incorporated by
reference in the Shelf Registration Statement) in the customary
form and covering matters of the type customarily covered in
comfort letters to underwriters in connection with underwritten
offerings of securities;
(B) set forth in full in the underwriting agreement, if any,
indemnification provisions and procedures which provide rights no less
protective than those set forth in Section 6 hereof with respect to
all parties to be indemnified by the Issuer; and
(C) deliver such other documents and certificates as may be
reasonably requested by such parties to evidence compliance with
clause (A) above and with
14
any customary conditions contained in the underwriting agreement or
other agreement entered into by the selling Holders pursuant to this
clause (ix).
(ix) Before any public offering of Transfer Restricted
Securities, cooperate with the selling Holders, the underwriter(s),
if any, and their respective counsel in connection with the
registration and qualification of the Transfer Restricted Securities
for offer and sale under the securities or Blue Sky laws of such
jurisdictions in the United States as the selling Holders or
underwriter(s), if any, may reasonably request, use best efforts to
keep each such registration or qualification (or exemption therefrom)
effective during the Effectiveness Period and do any and all other
acts or things necessary or advisable to enable the disposition in
such jurisdictions of the Transfer Restricted Securities covered by a
Shelf Registration Statement; provided, however, that the Issuer
shall not be required (A) to register or qualify as a foreign
corporation or a dealer of securities where it is not now so
qualified or to take any action that would subject it to the service
of process in any jurisdiction where it is not now so subject or (B)
to subject itself to taxation in any such jurisdiction if it is not
now so subject.
(x) Cooperate with the selling Holders and the underwriter(s),
if any, to facilitate the timely preparation and delivery of
certificates representing Transfer Restricted Securities to be sold
and not bearing any restrictive legends (unless required by
applicable securities laws); and enable such Transfer Restricted
Securities to be in such denominations and registered in such names
as the Holders or the underwriter(s), if any, may request at least
two Business Days before any sale of Transfer Restricted Securities
made by such selling Holders or underwriter(s).
(xi) Use its best efforts to cause the Transfer Restricted
Securities covered by a Shelf Registration Statement to be registered
with or approved by such other U.S. governmental agencies or
authorities as may be necessary to enable the selling Holders or the
underwriter(s), if any, to consummate the disposition of such
Transfer Restricted Securities pursuant to such Shelf Registration
Statement.
(xii) Subject to Section 4(b)(i) hereof, if any fact or event
contemplated by Section 4(b)(iii)(D) hereof shall exist or have
occurred, use its best efforts to prepare a supplement or
post-effective amendment to a Shelf Registration Statement or related
Prospectus or any document incorporated therein by reference or file
any other required document so that, as thereafter delivered to any
purchasers of Transfer Restricted Securities, the Prospectus will not
contain an untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were
made, not misleading.
(xiii) [Reserved]
15
(xiv) Cooperate and assist in any filings required to be made
with the NASD and in the performance of any due diligence
investigation by any underwriter that is required to be retained in
accordance with the rules and regulations of the NASD.
(xv) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and all reporting
requirements under the Exchange Act.
(xvi) Cause all Transfer Restricted Securities covered by any
Shelf Registration Statement to be listed or quoted, as the case may
be, on each securities exchange or automated quotation system on
which similar securities issued by the Issuer are then listed or
quoted and, if not so listed, to be listed on the NASD automated
quotation system.
(xvii) Provide to each Holder upon written request each document
filed with the Commission pursuant to the requirements of Section 13
and Section 15 of the Exchange Act after the effective date of the
applicable Shelf Registration Statement.
(xviii) If reasonably requested by the underwriters, make
appropriate officers of the Issuer available to the underwriters for
meetings with prospective purchasers of the Transfer Restricted
Securities and prepare and present to potential investors customary
"road show" or marketing materials in a manner consistent with other
new issuances of other securities similar to the Transfer Restricted
Securities; but in no event more than once in any 12 month period.
(c) Each Holder agrees by acquisition of a Transfer Restricted
Security that, upon receipt of any notice (a "Suspension Notice") (which notice
shall not contain any material nonpublic information) from the Issuer of the
existence of any fact of the kind described in Section 4(b)(iii)(D) hereof, such
Holder will, and will use its reasonable best efforts to cause any
underwriter(s) in an Underwritten Offering to, forthwith discontinue disposition
of Transfer Restricted Securities pursuant to any Shelf Registration Statement
until:
(i) such Holder has received copies of the supplemented or
amended Prospectus contemplated by Section 4(b)(xii) hereof; or
(ii) such Holder is advised in writing by the Issuer that the
use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings that are incorporated by reference
in the Prospectus.
If so directed by the Issuer, each Holder will deliver to the Issuer (at the
Issuer's expense) all copies, other than permanent file copies then in such
Holder's possession, of the Prospectus covering such Transfer Restricted
Securities that was current at the time of receipt of such notice of suspension.
16
5. Registration Expenses. All expenses incident to the Issuer's
performance of or compliance with this Agreement shall be borne by the Issuer
regardless of whether a Shelf Registration Statement becomes effective,
including, without limitation:
(i) all registration and filing fees and expenses (including
filings made by the Purchasers or Holders with the NASD);
(ii) all fees and expenses of compliance with federal securities
and state Blue Sky or securities laws;
(iii) all expenses of printing (including printing of
Prospectuses and certificates for the Conversion Shares) and the
Issuer's expenses for messenger and delivery services and telephone;
(iv) all fees and disbursements of counsel to the Issuer and,
subject to Section 5(b) below, the Holders of Transfer Restricted
Securities;
(v) all application and filing fees in connection with listing
(or authorizing for quotation) the Common Stock on a national
securities exchange or automated quotation system pursuant to the
requirements hereof; and
(vi) all fees and disbursements of independent certified public
accountants of the Issuer (including the expenses of any special
audit and comfort letters required by or incident to such
performance).
The Issuer shall bear its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal, accounting or other duties), the expenses of any annual audit and the
fees and expenses of any Person, including special experts, retained by the
Issuer.
(b) In connection with any Shelf Registration Statement required by
this Agreement, including any amendment or supplement thereto, and any other
documents delivered to any Holders, the Issuer shall reimburse the Purchasers
and the Holders of Transfer Restricted Securities being registered pursuant to
each such Shelf Registration Statement, as applicable, for the reasonable fees
and disbursements not to exceed $10,000, of not more than one counsel, which
shall be such counsel as may be chosen by a Majority of Holders for whose
benefit the Shelf Registration Statement is being prepared.
6. Indemnification and Contribution.
(a) The Issuer shall indemnify and hold harmless each Holder, such
Holder's officers, directors and employees and each person, if any, who controls
such Holder within the meaning of the Securities Act (each, an "Indemnified
Holder"), from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to resales of the Transfer
Restricted Securities) ("Liabilities"), to which such Indemnified Holder may
become subject, insofar as any such Liability arises out of, or is based upon:
17
(i) any untrue statement or alleged untrue statement of a material
fact contained in (A) any Shelf Registration Statement or Prospectus or
any amendment or supplement thereto or (B) any blue sky application or
other document or any amendment or supplement thereto prepared or executed
by the Issuer (or based upon written information furnished by or on behalf
of the Issuer expressly for use in such blue sky application or other
document or amendment on supplement) filed in any jurisdiction
specifically for the purpose of qualifying any or all of the Transfer
Restricted Securities under the securities law of any state or other
jurisdiction (such application or document being hereinafter called a
"Blue Sky Application"); or
(ii) the omission or alleged omission to state therein any material
fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading,
and shall reimburse each Indemnified Holder promptly upon demand for any legal
or other expenses reasonably incurred by such Indemnified Holder in connection
with investigating or defending or preparing to defend against any such
Liability as such expenses are incurred; provided, however, that the Issuer
shall not be liable to any Holder in any such case to the extent that any such
Liability arises out of, or is based upon, any untrue statement or alleged
untrue statement or omission or alleged omission made in a Shelf Registration
Statement or Prospectus or amendment or supplement thereto or Blue Sky
Application in reliance upon and in conformity with written information
furnished to the Issuer by or on behalf of such Holder or its related
Indemnified Holder specifically for use in such Shelf Registration Statement or
Prospectus and provided, further, however, that the Issuer shall not be liable
to the underwriter for any Holder or, in the case of any non-underwritten
offering, to any Holder or its related Indemnified Holder to the extent that (A)
such Liability arises out of or is based upon an untrue statement or omission
made in any preliminary prospectus if (i) such underwriter or Holder, as
applicable, failed to send or deliver a copy of the final prospectus with or
prior to the delivery of written confirmation of the sale by such Holder to the
Person asserting the claim from which such Liabilities arise, to the extent such
underwriter or Holder, as applicable, was required to send and deliver such
final prospectus, and (ii) the final prospectus would have corrected such untrue
statement or such omission; or (B) such Liability arises out of or is based upon
an untrue statement or omission in any such prospectus if (x) such untrue
statement or omission is corrected in an amendment or supplement to such
prospectus, and (y) having previously been furnished by or on behalf of the
Issuer with copies of such prospectus as so amended or supplemented, such
underwriter or Holder, as applicable, thereafter fails to deliver such
prospectus as so amended or supplemented prior to or concurrently with the sale
of a Security to the Person asserting the claim from which such Liability
arises. The foregoing indemnity agreement is in addition to any liability which
the Issuer may otherwise have to any Indemnified Holder. Such indemnity shall
remain in full force and effect regardless of any investigation made by or on
behalf of the Holder and shall survive the transfer of the Transfer Restricted
Securities by such Holder.
(b) Each Holder, severally and not jointly, shall indemnify and hold
harmless the Issuer, its officers, directors and employees and each person, if
any, who controls the Issuer within the meaning of the Securities Act, from and
against any Liability, joint or several, in
18
respect thereof, to which the Issuer or any such officer, director, employee or
controlling person may become subject, insofar as any such Liability arises out
of, or is based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in any Shelf Registration Statement or Prospectus or any
amendment or supplement thereto or any Blue Sky Application; or
(ii) the omission or the alleged omission to state therein any
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading,
but in each case only to the extent that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Issuer by or on behalf of
such Holder (or its related Indemnified Holder) specifically for use therein,
and shall reimburse the Issuer and any such director, officer, employee or
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by the Issuer or any such director, officer, employee or
controlling person in connection with investigating or defending or preparing to
defend against any such Liability as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Holder may
otherwise have to the Issuer or any of its directors, officers, employees or
controlling persons and any such director, officer, employee or controlling
person. Notwithstanding anything to the contrary contained herein, no Holder
shall be liable under this Section 6(b) for any amount in excess of the net
proceeds to such Holder as a result of the sale of Transfer Restricted
Securities pursuant to the applicable Shelf Registration Statement or
Prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 6, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 6 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 6.
If any such claim or action shall be brought against an indemnified party, and
it shall notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly with
any other similarly notified indemnifying party, to assume the defense thereof
with counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that a
Majority of Holders shall have the right to employ a single counsel to represent
jointly a Majority of Holders and their respective officers, employees and
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by a Majority of Holders against the
Issuer or any of its directors, officers, employees or controlling persons under
this Section 6; and, provided further, that if a Majority of Holders shall
19
have reasonably concluded that there may be one or more legal defenses available
to them and their respective officers, employees and controlling persons that
are different from or additional to those available to the Issuer and its
officers, directors, employees and controlling persons, the fees and expenses of
a single separate counsel shall be paid by the Issuer. No indemnifying party
shall:
(i) without the prior written consent of the indemnified parties
(which consent shall not be unreasonably withheld) settle or compromise or
consent to the entry of any judgment with respect to any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or
action) unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising
out of such claim, action, suit or proceeding, or
(ii) be liable for any settlement of any such action effected without
its written consent (which consent shall not be unreasonably withheld), but
if settled with its written consent or if there be a final judgment for the
plaintiff in any such action, the indemnifying party agrees to indemnify
and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 6 shall for
any reason be unavailable or insufficient to hold harmless an indemnified party
under Section 6(a) or 6(b) in respect of any Liability referred to therein, each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such Liability:
(i) in such proportion as is appropriate to reflect the relative
benefits received by the Issuer from the offering and sale of the Transfer
Restricted Securities on the one hand and a Holder with respect to the sale
by such Holder of the Transfer Restricted Securities on the other, or
(ii) if the allocation provided by clause (6)(d)(i) is not permitted
by applicable law, in such proportion as is appropriate to reflect not only
the relative benefits referred to in clause 6(d)(i) but also the relative
fault of the Issuer on the one hand and the Holders on the other in
connection with the statements or omissions or alleged statements or
alleged omissions that resulted in such Liability, as well as any other
relevant equitable considerations.
The relative benefits received by the Issuer on the one hand and a Holder on the
other with respect to such offering and such sale shall be deemed to be in the
same proportion as the total net proceeds from the offering of the Securities
purchased under the Purchase Agreement (before deducting expenses) received by
the Issuer on the one hand, bear to the total proceeds received by such Holder
with respect to its sale of Transfer Restricted Securities on the other. The
relative fault of the parties shall be determined by reference to 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 Issuer
on the one hand or the Holders on the other, the intent of the parties and their
relative knowledge, access to information and opportunity to
20
correct or prevent such statement or omission. The Issuer and each Holder agree
that it would not be just and equitable if the amount of contribution pursuant
to this Section 6(d) were determined by pro rata allocation or by any other
method of allocation that does not take into account the equitable
considerations referred to in the first sentence of this paragraph (d). The
amount paid or payable by an indemnified party as a result of the Liability
referred to above in this Section 6 shall be deemed to include, for purposes of
this Section 6, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending or preparing to
defend any such action or claim. Notwithstanding the provisions of this Section
6, no Holder shall be required to contribute any amount in excess of the amount
by which the total price at which the Transfer Restricted Securities purchased
by it were resold exceeds the amount of any damages which such Holder has
otherwise been required to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute as provided
in this Section 6(d) are several and not joint.
7. Rules 144 and 144A. The Issuer shall file the reports required
to be filed by it under the Securities Act and the Exchange Act in a timely
manner and, if at any time the Issuer is not required to file such reports, it
will, upon written request of any Holder of Transfer Restricted Securities, make
publicly available other information so long as necessary to permit sales of
their securities pursuant to Rules 144 and 144A, if the Conversion Price meets
the requirements of Rule 144A(d)(3)(i). The Issuer covenants that it will take
such further action as any Holder of Transfer Restricted Securities may
reasonably request, all to the extent required from time to time to enable such
Holder to sell such Transfer Restricted Securities without registration under
the Securities Act within the limitation of the exemptions provided by Rules 144
and 144A, if the Conversion Price meets the requirements of Rule 144A(d)(3)(i),
(including the requirements of Rule 144A(d)(4)). The Issuer will provide a copy
of this Agreement to prospective purchasers of Transfer Restricted Securities
identified to the Issuer upon request by any Purchaser. Upon the request of any
Holder of Transfer Restricted Securities, the Issuer shall deliver to such
Holder a written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Issuer to register any of its securities pursuant to the Exchange
Act.
8. Participation in Underwritten Registrations. No Holder may
participate in any Underwritten Registration hereunder unless such Holder:
(i) agrees to sell such Holder's Transfer Restricted Securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements; and
(ii) completes and executes all reasonable questionnaires, powers of
attorney, indemnities, underwriting agreements, lock-up letters and other
documents required under the terms of such underwriting arrangements.
9. Selection of Underwriters. The Holders of Transfer Restricted
Securities covered by a Shelf Registration Statement who desire to do so may
sell such Transfer Restricted
21
Securities in an Underwritten Offering if approved by the Issuer. In any such
Underwritten Offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Issuer;
provided that such investment bankers and managers must be reasonably
satisfactory to the Majority of Holders whose Transfer Restricted Securities are
included in such offering.
10. Miscellaneous.
(a) Remedies. The Issuer acknowledges and agrees that any failure by
the Issuer to comply with its obligations under Section 2 hereof may result in
material irreparable injury to the Purchasers or the Holders for which there is
no adequate remedy at law, that it will not be possible to measure damages for
such injuries precisely and that, in the event of any such failure, the
Purchasers or any Holder may obtain such relief as may be required to
specifically enforce the Issuer's obligations under Section 2 hereof. The Issuer
further agrees to waive the defense in any action for specific performance that
a remedy at law would be adequate.
(b) Adjustments Affecting Transfer Restricted Securities. The Issuer
shall not, directly or indirectly, take any action with respect to the Transfer
Restricted Securities as a class that would adversely affect the ability of the
Holders of Transfer Restricted Securities to include such Transfer Restricted
Securities in a registration undertaken pursuant to this Agreement.
(c) No Inconsistent Agreements. The Issuer will not, on or after the
date of this Agreement, enter into any agreement with respect to its securities
that is inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof. In addition, the Issuer shall
not grant to any of its security holders (other than the Holders of Transfer
Restricted Securities in such capacity) the right to include any of its
securities in any Shelf Registration Statement provided for in this Agreement
other than the Transfer Restricted Securities. The Issuer has not previously
entered into any agreement (which has not expired or been terminated) granting
any registration rights with respect to its securities to any Person which
rights conflict with the provisions hereof.
(d) Amendments and Waivers. This Agreement may not be amended,
modified or supplemented, and waivers or consents to or departures from the
provisions hereof may not be given, unless the Issuer has obtained the written
consent of a Majority of Holders.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, facsimile
transmission, or air courier guaranteeing overnight delivery:
(i) If to a Purchaser, at the address for such Purchaser set
forth below such Purchaser's signature on the signature page(s)
hereof;
(ii) if to a Holder who is not otherwise a Purchaser, at the
address set forth on the counterpart signature page to this Agreement
provided by such Holder pursuant to Section 10(f) below and
22
(iii) if to the Issuer:
PG&E Corporation
One Market, Spear Tower
Suite 2400
San Francisco, California 94105
Attention: Assistant Treasurer
Facsimile: (415) 267-7265
Telephone: (415) 267-7052
With copies to:
PG&E Corporation
One Market, Spear Tower
Suite 2400
San Francisco, California 94105
Attention: Chief Counsel - Corporate
Facsimile: (415) 817-8225
Telephone: (415) 817-8200
and
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, California 90071
Attention: Tom Sadler
Facsimile: (213) 891-8763
Telephone: (213) 485-1234
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five Business
Days after being deposited in the mail, postage prepaid, if mailed; when
answered back, if telexed; when receipt acknowledged, if transmitted by
facsimile; and on the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.
(f) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including without limitation and without the need for an express
assignment, subsequent Holders of Transfer Restricted Securities; provided,
however, that (i) this Agreement shall not inure to the benefit of or be binding
upon a successor or assign of a Holder unless and to the extent such successor
or assign is a Permitted Assign (as defined in the Purchase Agreement) or
acquired Transfer Restricted Securities from such Holder in compliance with any
restrictions on transfer applicable thereto and (ii) nothing contained herein
shall be deemed to permit any assignment, transfer or other disposition of
Transfer Restricted Securities in violation of the terms of the Purchase
Agreement or the Indenture. If any transferee of any Holder shall acquire
Transfer Restricted Securities, in any manner, whether by operation of law or
otherwise, such Transfer Restricted Securities shall
23
be held subject to all of the terms of this Agreement, and by taking and holding
such Transfer Restricted Securities such person shall be conclusively deemed to
have agreed to be bound by and to perform all of the terms and provisions of
this Agreement. The Issuer hereby agrees to extend the benefits of this
Agreement to subsequent Holders of Transfer Restricted Securities who execute a
counterpart signature page hereto.
(g) 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; provided that a facsimile
signature shall be considered due execution and shall be binding upon the
signatory thereto with the same force and effect as if the signature were an
original, not a facsimile signature.
(h) Securities Held by the Issuer or Its Affiliates. Whenever the
consent or approval of Holders of a specified percentage of Transfer Restricted
Securities is required hereunder, Transfer Restricted Securities held by the
Issuer or its "affiliates" (as such term is defined in Rule 405 under the
Securities Act) (other than the Purchasers or subsequent Holder of Transfer
Restricted Securities if such subsequent Holders are deemed to be affiliates
solely by reason of their holdings of such Transfer Restricted Securities) shall
not be counted in determining whether such consent or approval was given by the
Holders of such required percentage.
(i) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(j) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York.
(k) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, 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 contained herein shall not be affected or impaired or invalidated
thereby.
(l) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and the registration rights granted by the
Issuer with respect to the Transfer Restricted Securities. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein with respect to the registration rights granted by the
Issuer with respect to the Transfer Restricted Securities. This Agreement
supersedes all prior agreements and understandings between the parties with
respect to such subject matter.
[Signature pages follow]
In Witness Whereof, the parties have executed this Agreement as of
the date first written above.
PG&E CORPORATION
By: _____________________________
Name:
Title:
Jackson Investment Fund Ltd.
By:_____________________________
Name:
Title:
Address for notices:
c/o Citadel Investment Group, L.L.C.
225 West Washington Street
Chicago, Illinois 60606
Attention: Bradford Couri and
Kenneth A. Simpler
Facsimile: (312) 368-1348
with a copy to:
Katten Muchin Zavis Rosenman
525 West Monroe Street,
Suite 1600
Chicago, Illinois 60661
Attention: Robert Brantman, Esq.
Facsimile: 312-902-1061
Telephone: 312-902-5200
Citadel Credit Trading Ltd.
By:_____________________________
Name:
Title:
Address for notices:
c/o Citadel Investment Group, L.L.C.
225 West Washington Street
Chicago, Illinois 60606
Attention: Bradford Couri and
Kenneth A. Simpler
Facsimile: (312) 368-1348
with a copy to:
Katten Muchin Zavis Rosenman
525 West Monroe Street,
Suite 1600
Chicago, Illinois 60661
Attention: Robert Brantman, Esq.
Facsimile: 312-902-1061
Telephone: 312-902-5200
Citadel Equity Fund Ltd.
By:_____________________________
Name:
Title:
Address for notices:
c/o Citadel Investment Group, L.L.C.
225 West Washington Street
Chicago, Illinois 60606
Attention: Bradford Couri and
Kenneth A. Simpler
Facsimile: (312) 368-1348
with a copy to:
Katten Muchin Zavis Rosenman
525 West Monroe Street,
Suite 1600
Chicago, Illinois 60661
Attention: Robert Brantman, Esq.
Facsimile: 312-902-1061
Telephone: 312-902-5200
EXHIBIT A
PG&E CORPORATION
FORM OF SELLING SECURITYHOLDER NOTICE AND QUESTIONNAIRE
Beneficial owners that do not complete this Questionnaire within 20
Business Days of receipt hereof and deliver it to the Issuer as provided below
will not be named as selling securityholders in the prospectus and therefor will
not be permitted to sell any Transfer Restricted Securities pursuant to the
Shelf Registration Statement.
The undersigned beneficial holder of 7.50% Convertible Subordinated
Notes due 2007 (together with any PIK Securities or other securities that may be
issued thereon, the "Securities") of PG&E Corporation, a California corporation
(the "Issuer"), or shares of common stock, no par value per share, issuable upon
conversion of the Securities (the "Conversion Shares" and together with the
Securities, the "Transfer Restricted Securities") of the Issuer understands that
the Issuer has filed, or intends to file, with the Securities and Exchange
Commission (the "Commission") a registration statement (the "Shelf Registration
Statement"), for the registration and resale under Rule 415 of the Securities
Act of 1933, as amended (the "Securities Act"), of the Transfer Restricted
Securities in accordance with the terms of the Resale Registration Rights
Agreement, dated as of June 25, 2002 (the "Registration Rights Agreement")
between the Issuer and the Purchasers named therein. A copy of the Registration
Rights Agreement is available from the Issuer upon request at the address set
forth below. All capitalized terms not otherwise defined herein have the meaning
ascribed thereto in the Registration Rights Agreement.
Each beneficial owner of Transfer Restricted Securities is entitled to
the benefits of the Registration Rights Agreement. In order to sell or otherwise
dispose of any Transfer Restricted Securities pursuant to the Shelf Registration
Statement, a beneficial owner of Transfer Restricted Securities generally will
be required to be named as a selling securityholder in the related Prospectus,
deliver a Prospectus to purchasers of Transfer Restricted Securities and be
bound by those provisions of the Registration Rights Agreement applicable to
such beneficial owner (including certain indemnification provisions, as
described below).
Certain legal consequences arise from being named as a selling
securityholder in the Shelf Registration Statement and the related Prospectus.
Accordingly, holders and beneficial owners of Transfer Restricted Securities are
advised to consult their own securities law counsel regarding the consequences
of being named or not being named as a selling securityholder in the Shelf
Registration Statement and the related Prospectus.
NOTICE
The undersigned beneficial owner (the "Selling Securityholder") of
Transfer Restricted Securities hereby gives notice to the Issuer of its
intention to sell or otherwise dispose of Transfer Restricted Securities
beneficially owned by it and listed below in Item 3 (unless otherwise specified
under Item 3) pursuant to the Shelf Registration Statement. The
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undersigned, by signing and returning this Questionnaire, understands that it
will be bound by the terms and conditions of this Questionnaire and the
Registration Rights Agreement.
Pursuant to the Registration Rights Agreement and subject to the terms
thereof, the undersigned has agreed to indemnify and hold harmless the Issuer,
the Issuer's directors, the Issuer's officers who sign the Shelf Registration
Statement and each person, if any, who controls the Issuer within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act, from
and against certain losses set forth therein arising in connection with
statements concerning the undersigned made in the Shelf Registration Statement
or the related Prospectus in reliance upon the information provided in this
Questionnaire.
The undersigned hereby provides the following information to the Issuer
and represents and warrants that such information is accurate and complete:
QUESTIONNAIRE
2. Information Regarding Selling Securityholder
(a) Full legal name of Selling Securityholder: __________________
(b) Full legal name of registered holder (if not the same as (a)
above) through which Transfer Restricted Securities listed in
Item (3) below are held:
__________________________________________________________
(c) Full legal name of DTC participant (if applicable and if not
the same as (b) above) through which Transfer Restricted
Securities listed in Item (3) are held:
__________________________________________________
3. Address for Notices to Selling Securityholders
Telephone: ____________________________
Fax: _________________________________
Contact Person: ________________________
4. Beneficial Ownership of Transfer Restricted Securities
(a) Type of Transfer Restricted Securities beneficially owned,
and principal amount of Securities or number of Conversion
Shares, as the case may be, beneficially owned: _____________
__________________________________
(b) CUSIP No(s). of such Transfer Restricted Securities
beneficially owned: _________________________________________
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5. Beneficial Ownership of the Issuer's Securities Owned by the Selling
Securityholder
Except as set forth below in this Item (4), the undersigned is not the
beneficial or registered owner of any securities of the Issuer other than the
Transfer Restricted Securities listed above in Item (3) ("Other Securities").
(a) Type and amount of Other Securities beneficially owned by the
Selling Securityholder: _________________________________________
(b) CUSIP No(s). of such Other Securities beneficially owned:
_________________________________________________________________
6. Relationship with the Issuer
Except as set forth below, neither the undersigned nor any of its
affiliates, officers, directors or principal equity holders (5% or more) has
held any position or office or has had any other material relationship with the
Issuer (or its predecessors or affiliates) during the past three years.
State any exceptions here: ____________________________________________
7. Plan of Distribution
Except as set forth below, the undersigned (including its donees or
pledgees) intends to distribute the Transfer Restricted Securities listed above
in Item (3) pursuant to the Shelf Registration Statement only as follows (if at
all). Such Transfer Restricted Securities may be sold from time to time directly
by the undersigned or, alternatively, through underwriters, broker-dealers or
agents. If the Transfer Restricted Securities are sold through underwriters or
broker-dealers, the Selling Securityholder will be responsible for underwriting
discounts or commissions or agent's commissions. Such Transfer Restricted
Securities may be sold in one or more transactions at fixed prices, at
prevailing market prices at the time of sale, at varying prices determined at
the time of sale, or at negotiated prices. Such sales may be effected in
transactions (which may involve crosses or block transactions):
(i) on any national securities exchange or quotation service on
which the Transfer Restricted Securities may be listed or quoted at the
time of sale;
(ii) in the over-the-counter market;
(iii) in transactions otherwise than on such exchanges or
services or in the over-the-counter market; or
(iv) through the writing of options, whether such options are
listed on an options exchange or otherwise;
(v) ordinary brokers' transactions;
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(vi) purchases by brokers, dealers or underwriters as
principal and resale by these purchasers for their own accounts
pursuant to this prospectus;
(vii) "at the market," to or through market makers, or into an
existing market for our common stock;
(viii) in other ways not involving market makers or established
trading markets, including direct sales to purchasers or sales effected
through agents;
(ix) through transactions in swaps or other derivatives (
whether exchange-listed or otherwise); or
(x) to cover short sales.
In connection with sales of the Transfer Restricted Securities or
otherwise, the undersigned may enter into hedging transactions with
broker-dealers, which may in turn engage in short sales of the Transfer
Restricted Securities and deliver Transfer Restricted Securities to close out
such short positions, or loan or pledge Transfer Restricted Securities to
broker-dealers that in turn may sell such securities.
State any exceptions here: ___________________________________________
_______________________________________________________________________
Note: In no event will such method(s) of distribution take the form of
an underwritten offering of the Transfer Restricted Securities without the prior
agreement of the Issuer.
8. Instructions for Delivery of Questionnaire
Please return the completed and executed Questionnaire to PG&E
Corporation at:
PG&E Corporation
One Market, Spear Tower
Suite 2400
San Francisco, CA 94105
Attention: Assistant Treasurer
9. Acknowledgments
By signing below, the undersigned consents to the disclosure of the
information contained herein in its answers to items (1) through (7) above and
the inclusion of such information in the Shelf Registration Statement and the
related Prospectus. The undersigned understands that such information will be
relied upon by the Issuer in connection with the preparation or amendment of the
Shelf Registration Statement and the related Prospectus.
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IN WITNESS WHEREOF, the undersigned, by authority duly given, has
caused this Questionnaire to be executed and delivered either in person or by
its duly authorized agent.
Beneficial Owner
By: ________________________________
Name:
Title:
Date:
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