EXHIBIT 99
EXECUTION COPY
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PG&E Gas Transmission, Northwest Corporation
$100,000,000
6.62% Senior Notes due June 6, 2012
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NOTE PURCHASE AGREEMENT
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Dated as of June 6, 2002
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TABLE OF CONTENTS
Page
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1. AUTHORIZATION OF NOTES .......................................... 1
2. SALE AND PURCHASE OF NOTES ...................................... 1
3. CLOSING ......................................................... 2
4. CONDITIONS TO CLOSING ........................................... 2
4.1 Representations and Warranties ......................... 2
4.2 Performance; No Default ................................ 2
4.3 Compliance Certificates ................................ 2
4.4 Opinions of Counsel .................................... 3
4.5 Purchase Permitted by Applicable Law, etc. ............. 3
4.6 Sale of Other Notes .................................... 3
4.7 Payment of Purchaser's Counsel Fees .................... 3
4.8 Private Placement Number ............................... 3
4.9 Changes in Corporate Structure ......................... 4
4.10 Proceedings and Documents .............................. 4
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY ................... 4
5.1 Organization; Power and Authority ...................... 4
5.2 Authorization, etc. .................................... 4
5.3 Disclosure ............................................. 4
5.4 Organization and Ownership of Shares of Subsidiaries ... 5
5.5 Financial Statements ................................... 5
5.6 Compliance with Laws, Other Instruments, etc. .......... 5
5.7 Governmental Authorizations, etc. ...................... 6
5.8 Litigation; Observance of Statutes and Orders .......... 6
5.9 Taxes .................................................. 6
5.10 Title to Property; Leases .............................. 6
5.11 Licenses, Permits, etc. ................................ 7
5.12 Compliance with ERISA .................................. 7
5.13 Private Offering by the Company ........................ 8
5.14 Use of Proceeds; Margin Regulations .................... 8
5.15 Existing Debt .......................................... 8
5.16 Foreign Assets Control Regulations, etc. ............... 9
5.17 Environmental Matters .................................. 9
5.18 Status under Certain Statutes .......................... 9
6. REPRESENTATIONS OF THE PURCHASER ................................ 9
6.1 Purchase for Investment ................................ 9
6.2 Source of Funds ........................................ 9
7. INFORMATION AS TO THE COMPANY ................................... 10
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TABLE OF CONTENTS
Page
7.1 Financial and Business Information ..................... 10
7.2 Officer's Certificate .................................. 12
7.3 Inspection ............................................. 13
8. PAYMENTS ON THE NOTES ........................................... 13
8.1 Payment on the Maturity Date ........................... 13
8.2 Optional Prepayments with Make-Whole Amount ............ 14
8.3 Allocation of Partial Prepayments ...................... 14
8.4 Maturity; Surrender, etc. .............................. 14
8.5 Purchase of Notes ...................................... 14
8.6 Make-Whole Amount ...................................... 15
9. AFFIRMATIVE COVENANTS ........................................... 16
9.1 Compliance with Law .................................... 16
9.2 Insurance .............................................. 16
9.3 Maintenance of Properties .............................. 17
9.4 Payment of Taxes ....................................... 17
9.5 Corporate Existence, etc. .............................. 17
10. NEGATIVE COVENANTS .............................................. 17
10.1 Limitations on Debt Secured by Liens ................... 17
10.2 Limitation on Sale-Leaseback Transactions .............. 19
10.3 Debt to Capitalization ................................. 19
10.4 Mergers or Sales of Assets ............................. 19
11. EVENTS OF DEFAULT ............................................... 21
12. REMEDIES ON DEFAULT, ETC. ....................................... 22
12.1 Acceleration ........................................... 22
12.2 Other Remedies ......................................... 23
12.3 Rescission ............................................. 23
12.4 No Waivers or Election of Remedies, Expenses, etc. ..... 23
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES ................... 24
13.1 Registration of Notes .................................. 24
13.2 Transfer and Exchange of Notes ......................... 24
13.3 Replacement of Notes ................................... 24
14. PAYMENTS ON NOTES ............................................... 25
15. EXPENSES, ETC. .................................................. 25
15.1 Transaction Expenses ................................... 25
15.2 Survival ............................................... 26
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TABLE OF CONTENTS
Page
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT .... 26
17. AMENDMENT AND WAIVER ............................................ 26
17.1 Requirements ........................................... 26
17.2 Solicitation of Holders of Notes ....................... 26
17.3 Binding Effect, etc. ................................... 27
17.4 Notes held by the Company. ............................. 27
18. NOTICES ......................................................... 27
19. REPRODUCTION OF DOCUMENTS ....................................... 28
20. CONFIDENTIAL INFORMATION ........................................ 28
21. SUBSTITUTION OF PURCHASER ....................................... 29
22. MISCELLANEOUS ................................................... 29
22.1 Successors and Assigns ................................. 29
22.2 Payments Due on Non-Business Days ...................... 30
22.3 Severability ........................................... 30
22.4 Construction ........................................... 30
22.5 Counterparts ........................................... 30
22.6 Governing Law .......................................... 30
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SCHEDULE A -- Information Relating to Purchasers
SCHEDULE B -- Glossary
SCHEDULE 5.3 -- Disclosure Materials
SCHEDULE 5.4 -- Subsidiaries of the Company
and Ownership of Subsidiary Stock
SCHEDULE 5.5 -- Financial Statements
SCHEDULE 5.8 -- Litigation
SCHEDULE 5.11 -- Licenses, Permits, etc.
SCHEDULE 5.17 -- Environmental Matters
EXHIBIT 1 -- Form of Notes
EXHIBIT 4.4(a)(i) -- Form of Opinion of Special Counsel
for the Company
EXHIBIT 4.4(a)(ii) -- Form of Opinion of Counsel
for the Company
EXHIBIT 4.4(b) -- Form of Opinion of Special Counsel
for the Purchasers
PG&E GAS TRANSMISSION, NORTHWEST CORPORATION
1400 SW Fifth Avenue, Suite 900
Portland, Oregon 97201
6.62% Senior Notes due June 6, 2012
Dated as of June 6, 2002
TO EACH OF THE PURCHASERS LISTED
IN THE ATTACHED SCHEDULE A:
Ladies and Gentlemen:
PG&E Gas Transmission, Northwest Corporation, a California corporation
(the "Company"), agrees with you as follows:
1. AUTHORIZATION OF NOTES.
The Company will authorize the issue and sale of $100,000,000
aggregate principal amount of its 6.62% Senior Notes due June 6, 2012 (the
"Notes", such term to include any such notes issued in substitution therefor
pursuant to Section 13 of this Agreement or the Other Agreements (as hereinafter
defined)). The Notes shall be substantially in the form set out in Exhibit 1,
with such changes therefrom, if any, as may be approved by you and the Company.
Certain capitalized terms used in this Agreement are defined in Schedule B.
2. SALE AND PURCHASE OF NOTES.
Subject to the terms and conditions of this Agreement, the Company
will issue and sell to you and you will purchase from the Company, at the
Closing provided for in Section 3, Notes in the principal amount specified below
your name in Schedule A at the purchase price of 100% of the principal amount
thereof. Contemporaneously with entering into this Agreement, the Company is
entering into separate Note Purchase Agreements (the "Other Agreements")
identical to this Agreement with each of the other purchasers named in Schedule
A (the "Other Purchasers"), providing for the sale at such Closing to each of
the Other Purchasers of Notes in the principal amount specified below its name
in Schedule A. Your obligation hereunder and the obligations of the Other
Purchasers under the Other Agreements are several and not joint obligations and
you shall have no obligation under any Other Agreement and no liability to any
Person for the performance or nonperformance by any Other Purchaser thereunder.
3. CLOSING.
The sale and purchase of the Notes to be purchased by you and the
Other Purchasers shall occur at the offices of Orrick, Herrington & Sutcliffe
LLP, 400 Sansome Street, San Francisco, CA 94111, at 9:00 a.m., Pacific Standard
Time, at a closing (the "Closing") on June 6, 2002 or on such other Business Day
thereafter on or prior to June 30, 2002 as may be agreed upon by the Company,
you and the Other Purchasers. At the Closing, the Company will deliver to you
the Notes to be purchased by you in the form of a single Note (or such greater
number of Notes in denominations of at least $500,000 as specified in Schedule A
or as you may otherwise request) dated the Closing Date and registered in your
name (or in the name of your nominee as specified in Schedule A), against
delivery by you to the Company or its order of immediately available funds in
the amount of the purchase price therefor by wire transfer of immediately
available funds for the account of the Company to account number 063 096 at
Mellon Bank, 135 Santilli Highway, Everett, MA 02149, ABA number 011 001 234,
for the account of PG&E Gas Transmission, Northwest Corporation. If at the
Closing the Company shall fail to tender such Notes to you as provided above in
this Section 3, or any of the conditions specified in Section 4 shall not have
been fulfilled to your satisfaction, you shall, at your election, be relieved of
all further obligations under this Agreement, without thereby waiving any rights
you may have by reason of such failure or such nonfulfillment.
4. CONDITIONS TO CLOSING.
Your obligation to purchase and pay for the Notes to be sold to you at
the Closing is subject to the fulfillment to your satisfaction, prior to or on
the Closing Date, of the following conditions:
4.1 Representations and Warranties.
The representations and warranties of the Company in this Agreement
shall be correct when made and at the time of the Closing.
4.2 Performance; No Default.
The Company shall have performed and complied with all agreements and
conditions contained in this Agreement required to be performed or complied with
by it prior to or on the Closing Date and, after giving effect to the issue and
sale of the Notes and the application of the proceeds thereof as contemplated by
Section 5.14, no Default or Event of Default shall have occurred and be
continuing.
4.3 Compliance Certificates.
(a) Officer's Certificate. The Company shall have delivered to you an
Officer's Certificate, dated as of the Closing Date, certifying that the
conditions specified in Sections 4.1, 4.2 and 4.9 have been fulfilled.
(b) Secretary's Certificate. The Company shall have delivered to you
a certificate certifying as to the resolutions attached thereto and other
corporate proceedings relating to the authorization, execution and delivery of
the Notes and this Agreement.
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4.4 Opinions of Counsel.
You shall have received opinions in form and substance satisfactory to
you, dated the Closing Date, from (a) Orrick, Herrington & Sutcliffe LLP,
counsel for the Company, covering the matters set forth in Exhibit 4.4(a)(i) and
covering such other matters incident to the transactions contemplated hereby as
you or your counsel ("Purchaser's Counsel") may reasonably request (and the
Company hereby instructs its counsel to deliver such opinion to you); (b)
assistant general counsel of the Company, covering the matters set forth in
Exhibit 4.4(a)(ii) and covering such other matters incident to the transactions
contemplated hereby as you or Purchasers' Counsel may reasonably request; and
(c) Day, Berry & Howard LLP, Purchaser's Counsel, substantially in the form set
forth in Exhibit 4.4(b) and covering such other matters incident to such
transactions as you may reasonably request.
4.5 Purchase Permitted by Applicable Law, etc.
On the Closing Date, your purchase of Notes shall (a) be permitted by
the laws and regulations of each jurisdiction to which you are subject, without
recourse to provisions (such as Section 1405(a)(8) of the New York Insurance
Law) permitting limited investments by insurance companies without restriction
as to the character of the particular investment, (b) not violate any applicable
law or regulation (including, without limitation, Regulation T, U or X of the
Board of Governors of the Federal Reserve System) and (c) not subject you to any
tax, penalty or liability under or pursuant to any applicable law or regulation,
which law or regulation was not in effect on the date hereof. If requested by
you, you shall have received an Officer's Certificate certifying as to such
matters of fact as you may reasonably specify to enable you to determine whether
your purchase of Notes is so permitted.
4.6 Sale of Other Notes.
Contemporaneously with the Closing, the Company shall sell to the
Other Purchasers, and the Other Purchasers shall purchase, the Notes to be
purchased by them at the Closing as specified in Schedule A.
4.7 Payment of Purchaser's Counsel Fees.
Without limiting the provisions of Section 15.1, the Company shall
have paid, on or before the Closing Date, the fees, charges and disbursements of
Purchaser's Counsel to the extent reflected in a statement of such counsel
delivered to the Company at least one Business Day prior to the Closing Date.
4.8 Private Placement Number.
A Private Placement Number issued by Standard & Poor's CUSIP Service
Bureau (in cooperation with the Securities Valuation Office of the National
Association of Insurance Commissioners) shall have been obtained for the Notes.
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4.9 Changes in Corporate Structure.
The Company shall not have changed its jurisdiction of incorporation
or been a party to any merger or consolidation and shall not have succeeded to
all or any substantial part of the liabilities of any other entity, at any time
following December 31, 2001.
4.10 Proceedings and Documents.
All corporate and other proceedings in connection with the
transactions contemplated by this Agreement and all documents and instruments
incident to such transactions shall be satisfactory to you and Purchaser's
Counsel, and you and Purchaser's Counsel shall have received all such
counterpart originals or certified or other copies of such documents as you or
Purchaser's Counsel may reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to you that:
5.1 Organization; Power and Authority.
The Company is a corporation duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, and is duly
qualified as a foreign corporation and in good standing in each jurisdiction in
which such qualification is required by law, other than those jurisdictions as
to which the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. The Company has the corporate power and authority to own or hold
under lease the properties it purports to own or hold under lease, to transact
its business, to execute and deliver this Agreement, the Other Agreements and
the Notes and to perform the provisions hereof and thereof.
5.2 Authorization, etc.
This Agreement, the Other Agreements and the Notes have been duly
authorized by all necessary corporate action on the part of the Company, and
this Agreement constitutes, and upon execution and delivery thereof each Note
will constitute, a legal, valid and binding obligation of the Company
enforceable against the Company in accordance with their respective terms,
except as such enforceability may be limited by (a) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and (b) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) (the "Enforceability Exceptions").
5.3 Disclosure.
The Company, through its lead agents, The Royal Bank of Scotland plc,
New York Branch, and Fleet Securities, Inc., has delivered to you and each Other
Purchaser a copy of a Private Placement Memorandum, dated April 25, 2002 (the
"Memorandum"), relating to the transactions contemplated hereby. Except as
disclosed in Schedule 5.3, this Agreement, the Memorandum, the documents,
certificates or other writings identified in Schedule 5.3 and the
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financial statements listed in Schedule 5.5, taken as a whole, do not contain
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading in light of the
circumstances under which they were made. Except as disclosed in the Memorandum
or as expressly described in Schedule 5.3, or in one of the documents,
certificates or other writings identified therein, or in the financial
statements listed in Schedule 5.5, since December 31, 2001, there has been no
change in the financial condition, operations, business or properties of the
Company or any of its Subsidiaries except changes that, individually or in the
aggregate, would not reasonably be expected to have a Material Adverse Effect.
5.4 Organization and Ownership of Shares of Subsidiaries.
(a) Schedule 5.4 contains a complete and correct list of the
Company's Subsidiaries, showing, as to each Subsidiary, the correct name
thereof, the jurisdiction of its organization and the percentage of shares of
each class of its capital stock or similar equity interests outstanding owned by
the Company and each other Subsidiary.
(b) All of the outstanding shares of capital stock or similar equity
interests of each Subsidiary shown in Schedule 5.4 as being owned by the Company
or its Subsidiaries have been validly issued, are fully paid and nonassessable
and are owned by the Company or another Subsidiary free and clear of any Lien
other than Permitted Liens.
(c) Each Subsidiary identified in Schedule 5.4 is a corporation or
other legal entity duly organized, validly existing and in good standing under
the laws of its jurisdiction of organization, and is duly qualified as a foreign
corporation or other legal entity and in good standing in each jurisdiction in
which such qualification is required by law, other than those jurisdictions as
to which the failure to be so qualified or in good standing would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. Each such Subsidiary has the corporate or other power and
authority to own or hold under lease the properties it purports to own or hold
under lease and to transact its business.
5.5 Financial Statements.
The Company has delivered to you copies of the financial statements of
the Company and its Subsidiaries listed in Schedule 5.5. All of said financial
statements (including in each case the related schedules and notes) fairly
present in all Material respects the consolidated financial position of the
Company and its Subsidiaries as of the respective dates specified in Schedule
5.5 and the consolidated results of their operations and cash flows for the
respective periods so specified and have been prepared in accordance with GAAP
consistently applied throughout the periods involved except as set forth in the
notes thereto (subject, in the case of any interim financial statements, to
normal year-end adjustments).
5.6 Compliance with Laws, Other Instruments, etc.
The execution, delivery and performance by the Company of this
Agreement and the Notes will not (a) contravene, result in any breach of, or
constitute a default under, or result in the creation of any Lien in respect of
any property of the Company or any Subsidiary under, any indenture, mortgage,
deed of trust, loan, purchase or credit agreement, lease, corporate charter or
bylaws or any other Material agreement or instrument to which the Company or any
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Subsidiary is bound or by which the Company or any Subsidiary or any of their
respective properties may be bound or affected, (b) conflict with or result in a
breach of any of the terms, conditions or provisions of any order, judgment,
decree or ruling of any court, arbitrator or Governmental Authority applicable
to the Company or any Subsidiary or (c) violate any provision of any statute or
other rule or regulation of any Governmental Authority applicable to the Company
or any Subsidiary.
5.7 Governmental Authorizations, etc.
No consent, approval or authorization of, or registration, filing or
declaration with, any Governmental Authority is required in connection with the
execution, delivery or performance by the Company of this Agreement or the
Notes, other than filings under federal or state securities laws that have been
made or will be made by the Company on a timely basis.
5.8 Litigation; Observance of Statutes and Orders.
(a) Except as disclosed in Schedule 5.8, there are no actions, suits
or proceedings pending or, to the knowledge of the Company, threatened against
or affecting the Company or any Subsidiary or any property of the Company or any
Subsidiary in any court or before any arbitrator of any kind or before or by any
Governmental Authority that, individually or in the aggregate, would reasonably
be expected to have a Material Adverse Effect.
(b) Neither the Company nor any Subsidiary is in default under any
order, judgment, decree or ruling of any court, arbitrator or Governmental
Authority or is in violation of any applicable law, ordinance, rule or
regulation (including, without limitation, Environmental Laws) of any
Governmental Authority, which default or violation, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect.
5.9 Taxes.
The Company and its Subsidiaries have filed all income tax returns
that are required to have been filed in any jurisdiction, and have paid all
taxes shown to be due and payable on such returns and all other taxes and
assessments payable by them, to the extent such taxes and assessments have
become due and payable and before they have become delinquent, except for any
taxes and assessments (a) the amount of which is not, individually or in the
aggregate, Material or (b) the amount, applicability or validity of which is
currently being contested in good faith by appropriate proceedings and with
respect to which the Company or a Subsidiary, as the case may be, has
established adequate reserves in accordance with GAAP. The Federal income tax
liabilities of the Company and its Subsidiaries have been determined and paid by
the Company for all fiscal years up to and including the fiscal year ended
December 31, 2001.
5.10 Title to Property; Leases.
The Company and its Subsidiaries have good and sufficient title to
their respective Material properties, including all such properties reflected in
the most recent audited balance sheet listed in Section 5.5 or purported to have
been acquired by the Company or any Subsidiary after said date (except as sold
or otherwise disposed of in the ordinary course of
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business), in each case, free and clear of Liens other than Permitted Liens and
any defects in title and Liens that, individually or in the aggregate, would not
have a Material Adverse Effect. All Material leases to which the Company or any
Subsidiary is a party are valid and subsisting and are in full force and effect
in all Material respects.
5.11 Licenses, Permits, etc.
Except as disclosed in Schedule 5.11, the Company and its Subsidiaries
own or possess all Governmental Entitlements, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, that are Material to its
or their business as currently conducted, without known conflict with the rights
of others, except for those conflicts that, individually or in the aggregate,
would not have a Material Adverse Effect.
5.12 Compliance with ERISA.
(a) The Company and each of its Subsidiaries have operated and
administered each Plan in compliance with all applicable laws except for such
instances of noncompliance as have not resulted in and would not reasonably be
expected to result in a Material Adverse Effect. Neither the Company nor any of
its Subsidiaries has incurred any liability pursuant to Title I or IV of ERISA
or the penalty or excise tax provisions of the Code relating to employee benefit
plans (as defined in section 3 of ERISA), and no event, transaction or condition
has occurred or exists that would reasonably be expected to result in the
incurrence of any such liability by the Company or any of its Subsidiaries, or
in the imposition of any Lien other than Permitted Liens on any of the rights,
properties or assets of the Company or any of its Subsidiaries, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions
or to section 401(a)(29) or 412 of the Code, other than such liabilities or
Liens as would not be, individually or in the aggregate, Material.
(b) The present value of the aggregate benefit liabilities under each
of the Plans (other than Multiemployer Plans), determined as of the end of such
Plan's most recently ended plan year on the basis of the actuarial assumptions
specified for funding purposes in such Plan's most recent actuarial valuation
report, did not exceed the aggregate current value of the assets of such Plan
allocable to such benefit liabilities by more than $1,000,000 in the case of any
single Plan and by more than $2,000,000 in the aggregate for all Plans. The term
"benefit liabilities" has the meaning specified in section 4001 of ERISA and the
terms "current value" and "present value" have the meanings specified in section
3 of ERISA.
(c) The Company and its Subsidiaries have not incurred withdrawal
liabilities (and are not subject to contingent withdrawal liabilities) under
section 4201 or 4204 of ERISA in respect of Multiemployer Plans that,
individually or in the aggregate, are Material.
(d) The expected post-retirement benefit obligation (determined as of
December 31, 2001 in accordance with Financial Accounting Standards Board
Statement No. 106, without regard to liabilities attributable to continuation
coverage mandated by section 4980B of the Code) of the Company and its
Subsidiaries is disclosed in the audited consolidated financial statements of
the Company and its Subsidiaries for the fiscal year ended December 31, 2001.
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(e) The execution and delivery of this Agreement and the issuance and
sale of the Notes hereunder will not involve any transaction that is subject to
the prohibitions of section 406 of ERISA or in connection with which a tax could
be imposed pursuant to section 4975(c)(1)(A)(D) of the Code. The representation
by the Company in the first sentence of this Section 5.12(e) is made in reliance
upon and subject to the accuracy of your representation in Section 6.2 as to the
sources of the funds to be used to pay the purchase price of the Notes to be
purchased by you.
5.13 Private Offering by the Company.
Neither the Company nor anyone acting on its behalf has offered the
Notes or any similar securities for sale to, or solicited any offer to buy any
of the same from, or otherwise approached or negotiated in respect thereof with,
any Person other than you, the Other Purchasers and not more than 40 other
Institutional Investors, each of which has been offered the Notes at a private
sale for investment. Neither the Company nor anyone acting on its behalf has
taken, or will take, any action that would subject the issuance or sale of the
Notes to the registration requirements of section 5 of the Securities Act.
5.14 Use of Proceeds; Margin Regulations.
The Company will apply the net proceeds of the sale of the Notes to
repay Debt and for general corporate purposes. No part of the proceeds from the
sale of the Notes hereunder will be used, directly or indirectly, for the
purpose of buying or carrying any margin stock within the meaning of Regulation
U of the Board of Governors of the Federal Reserve System (12 CFR 207), or for
the purpose of buying or carrying or trading in any securities under such
circumstances as to involve the Company in a violation of Regulation X of said
Board (12 CFR 224) or to involve any broker or dealer in a violation of
Regulation T of said Board (12 CFR 220). The Company and its Subsidiaries own no
margin stock and the Company does not have any present intention that margin
stock will constitute more than 5% of the value of the consolidated assets of
the Company and its Subsidiaries. As used in this Section 5.14, the terms
"margin stock" and "purpose of buying or carrying" shall have the meanings
assigned to them in said Regulation G.
5.15 Existing Debt.
The Company's financial statements for the fiscal year ended December
31, 2001 sets forth a complete and correct list of all outstanding Debt of the
Company and its Subsidiaries as of such date (the "Existing Debt"), since which
date, except as disclosed in Schedule 5.3, there has been no Material change in
the amounts, interest rates, sinking funds, installment payments or maturities
of the Debt of the Company or its Subsidiaries other than borrowings under the
Company's revolving line of credit facility after such date. Neither the Company
nor any Subsidiary is in default in, and no waiver of default is currently in
effect with respect to, the payment of any principal or interest on any Debt of
the Company or such Subsidiary and no event or condition exists with respect to
any Debt of the Company or any Subsidiary the outstanding principal amount of
which exceeds $50,000,000 that would permit (or that with notice or the lapse of
time, or both, would permit) one or more Persons to cause such Debt to
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become due and payable before its stated maturity or before its regularly
scheduled dates of payment.
5.16 Foreign Assets Control Regulations, etc.
Neither the sale of the Notes by the Company hereunder nor its use of
the proceeds thereof will violate the Trading with the Enemy Act, as amended, or
any of the foreign assets control regulations of the United States Treasury
Department (31 CFR, Subtitle B, Chapter V, as amended) or any enabling
legislation or executive order relating thereto.
5.17 Environmental Matters.
Except as disclosed in Schedule 5.17, the Company is in compliance
with applicable Environmental Laws except for such non-compliance as would not
have a Material Adverse Effect.
5.18 Status under Certain Statutes.
Neither the Company nor any Subsidiary is an "investment company"
registered or required to be registered under the Investment Company Act of
1940, as amended, or is subject to regulation under the Public Utility Holding
Company Act of 1935, as amended, the United States Transportation Acts, as
amended, or the Federal Power Act, as amended.
6. REPRESENTATIONS OF THE PURCHASER.
6.1 Purchase for Investment.
You represent that you are purchasing the Notes for your own account
or for one or more separate accounts maintained by you or for the account of one
or more pension or trust funds and not with a view to the distribution thereof
in violation of the Securities Act, provided that the disposition of your or
their property shall at all times be within your or their control. You
understand that the Notes have not been registered under the Securities Act and
may be resold only if registered pursuant to the provisions of the Securities
Act or, if an exemption from registration is available, except under
circumstances where neither such registration nor such an exemption is required
by law, and that the Company is not required to register the Notes.
6.2 Source of Funds.
You represent that at least one of the following statements is an
accurate representation as to each source of funds (a "Source") to be used by
you to pay the purchase price of the Notes to be purchased by you hereunder:
(a) the Source is an "insurance company general account" within the
meaning of Department of Labor Prohibited Transaction Exemption ("PTE") 95-60
(issued July 12, 1995) and there is no employee benefit plan, treating as a
single plan all plans maintained by the same employer or employee organization,
with respect to which the amount of the general account reserves and liabilities
for all contracts held by or on behalf of such plan exceed ten percent (10%) of
the total reserves and liabilities of such general account (exclusive of
separate
9
account liabilities) plus surplus, as set forth in the National Association of
Insurance Commissioners Annual Statement filed with your state of domicile; or
(b) the Source is either (i) an insurance company pooled separate
account, within the meaning of PTE 90-1 (issued January 29, 1990), or (ii) a
bank collective investment fund, within the meaning of the PTE 91-38 (issued
July 12, 1991) and, except as you have disclosed to the Company in writing
pursuant to this paragraph (b), no employee benefit plan or group of plans
maintained by the same employer or employee organization beneficially owns more
than 10% of all assets allocated to such pooled separate account or collective
investment fund; or
(c) the Source constitutes assets of an "investment fund" (within the
meaning of Part V of the QPAM Exemption) managed by a "qualified professional
asset manager" or "QPAM" (within the meaning of Part V of the QPAM Exemption),
no employee benefit plan's assets that are included in such investment fund,
when combined with the assets of all other employee benefit plans established or
maintained by the same employer or by an affiliate (within the meaning of
Section V(c)(1) of the QPAM Exemption) of such employer or by the same employee
organization and managed by such QPAM, exceed 20% of the total client assets
managed by such QPAM, the conditions of Part I(c) and (g) of the QPAM Exemption
are satisfied, neither the QPAM nor a person controlling or controlled by the
QPAM (applying the definition of "control" in Section V(e) of the QPAM
Exemption) owns a 5% or more interest in the Company and (i) the identity of
such QPAM and (ii) the names of all employee benefit plans whose assets are
included in such investment fund have been disclosed to the Company in writing
pursuant to this paragraph (c); or
(d) the Source is a governmental plan; or
(e) the Source is one or more employee benefit plans, or a separate
account or trust fund comprised of one or more employee benefit plans, each of
which has been identified to the Company in writing pursuant to this paragraph
(e); or
(f) the Source does not include assets of any employee benefit plan,
other than a plan exempt from the coverage of ERISA.
As used in this Section 6.2, the terms "employee benefit plan," "governmental
plan," "party in interest" and "separate account" shall have the respective
meanings assigned to such terms in section 3 of ERISA.
7. INFORMATION AS TO THE COMPANY.
7.1 Financial and Business Information.
The Company shall deliver to each holder of Notes that is an
Institutional Investor:
(a) Quarterly Statements -- within 90 days after the end of each
quarterly fiscal period in each fiscal year of the Company (other than the last
quarterly fiscal period of each such fiscal year), duplicate copies of:
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(i) a consolidated balance sheet of the Company and its
Subsidiaries as at the end of such quarter, and
(ii) consolidated statements of income, common stock equity and
cash flows of the Company and its Subsidiaries, for such quarter and (in the
case of the second and third quarters) for the portion of the fiscal year ending
with such quarter,
setting forth, in each case, in comparative form the figures for the
corresponding periods in the previous fiscal year or, with respect to the
balance sheet, the figures for the end of the previous fiscal year, and in
reasonable detail, prepared in accordance with GAAP applicable to quarterly
financial statements generally, and certified by a Senior Financial Officer as
fairly presenting, in all Material respects, the consolidated financial position
of the companies being reported on and their results of operations and cash
flows, subject to changes resulting from year-end adjustments, provided that
delivery within the time period specified above of copies of the Company's
Quarterly Report on Form 10Q prepared in compliance with the requirements
therefor and filed with the Securities and Exchange Commission shall be deemed
to satisfy the requirements of this Section 7.1(a);
(b) Annual Statements - within 120 days after the end of each fiscal
year of the Company, duplicate copies of:
(i) a consolidated balance sheet of the Company and its
Subsidiaries, as at the end of such year, and
(ii) consolidated statements of income, common stock equity and
cash flows of the Company and its Subsidiaries for such year,
setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall state that such financial
statements present fairly, in all Material respects, the consolidated financial
position of the companies being reported upon and their results of operations
and cash flows and have been prepared in conformity with GAAP, and that the
examination of such accountants in connection with such financial statements has
been made in accordance with generally accepted auditing standards, and that
such audit provides a reasonable basis for such opinion in the circumstances,
provided, however, that the delivery within the time period specified above of
the Company's Annual Report on Form 10K for such fiscal year prepared in
accordance with the requirements therefor and filed with the Securities and
Exchange Commission shall be deemed to satisfy the requirements of this Section
7.1(b);
(c) SEC and Other Reports -- promptly upon their becoming available,
one copy of (i) each financial statement, report, notice or proxy statement sent
by the Company or any Subsidiary to public securities holders generally, and
(ii) each regular or periodic report, each registration statement that shall
have become effective (without exhibits except as expressly requested by such
holder), and each final prospectus and all amendments thereto filed by the
Company or any Subsidiary with the Securities and Exchange Commission;
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(d) Notice of Default or Event of Default -- promptly, and in any
event within five Business days after a Responsible Officer becoming aware of
the existence of any Default or Event of Default, a written notice specifying
the nature and period of existence thereof and what action the Company is taking
or proposes to take with respect thereto;
(e) ERISA Matters -- promptly, and in any event within five Business
Days after a Responsible Officer becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any, that the
Company or any of its Subsidiaries proposes to take with respect thereto:
(i) with respect to any Plan, any reportable event, as defined
in section 4043(b) of ERISA and the regulations thereunder, for which notice
thereof has not been waived pursuant to such regulations as in effect on the
date hereof; or
(ii) the taking by the PBGC of steps to institute, or the
threatening by the PBGC of the institution of, proceedings under section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer, any
Plan, or the receipt by the Company or any of its Subsidiaries of a notice from
a Multiemployer Plan that such action has been taken by the PBGC with respect to
such Multiemployer Plan; or
(iii) any event, transaction or condition that would reasonably
be expected to result in the incurrence of any liability by the Company or any
of its Subsidiaries pursuant to Title I or IV of ERISA or the penalty or excise
tax provisions of the Code relating to employee benefit plans, or in the
imposition of any Lien on any of the rights, properties or assets of the Company
or any of its Subsidiaries pursuant to Title I or IV of ERISA or such penalty or
excise tax provisions, if such liability or Lien, taken together with any other
such liabilities or Liens then existing, would reasonably be expected to have a
Material Adverse Effect; and
(f) Requested Information -- with reasonable promptness, such other
data and information relating to the business, operations, affairs, financial
condition, assets or properties of the Company or any of its Subsidiaries or
relating to the ability of the Company to perform its obligations hereunder and
under the Notes as from time to time may be reasonably requested by any such
holder of Notes.
In lieu of furnishing to you hard copies of the financial
statements described in paragraph (a) and (b) above or the SEC reports described
in paragraph (c) above, the Company may make such documents available to you at
its website located at www.pge-nw.com, through the United States Securities and
Exchange Commission's EDGAR system or by transmitting such documents
electronically to you, unless you have requested that the Company deliver to you
hard copies of such financial statements and SEC reports as indicated on
Schedule A or as otherwise requested in writing by any such holder of Notes.
7.2 Officer's Certificate.
Each set of financial statements delivered to a holder of Notes that
is an Institutional Investor pursuant to Section 7.1(a) or Section 7.1(b) hereof
shall be accompanied by a certificate of a Senior Financial Officer setting
forth:
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(a) Covenant Compliance -- the information (including detailed
calculations) required in order to establish whether the Company was in
compliance with the requirements of Section 10.3 during the quarterly or annual
period covered by the statements then being furnished (including the
calculations of the maximum or minimum amount, ratio or percentage, as the case
may be, permissible under the terms of Section 10.3, and the calculation of the
amount, ratio or percentage then in existence); and
(b) Event of Default -- a statement that such officer has reviewed
the relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company and its
Subsidiaries from the beginning of the quarterly or annual period covered by the
statements then being furnished to the date of the certificate and that such
review has not disclosed the existence during such period of any condition or
event that constitutes a Default or an Event of Default or, if any such
condition or event existed or exists (including, without limitation, any such
event or condition resulting from the failure of the Company or any Subsidiary
to comply with any Environmental Law), specifying the nature and period of
existence thereof and what action the Company shall have taken or proposes to
take with respect thereto.
If financial statements are permitted to be delivered to you through
the EDGAR system or other electronic means in accordance with Section 7.1, then
such certificate shall be separately delivered to you in hard copy in accordance
with Section 18.
7.3 Inspection.
The Company shall permit the representatives of each holder of Notes
that is an Institutional Investor:
(a) No Default -- if no Default or Event of Default then exists, at
the expense of such holder and upon reasonable prior notice to the Company, to
visit the principal executive office of the Company, to discuss the affairs,
finances and accounts of the Company and its Subsidiaries with the Company's
officers and, with the consent of the Company (which consent will not be
unreasonably withheld), to visit the other offices and properties of the Company
and each Subsidiary, all at such reasonable times and as often as may be
reasonably requested in writing; and
(b) Default -- if a Default or Event of Default then exists, at the
expense of the Company, to visit and inspect any of the offices or properties of
the Company or any Subsidiary, to examine all their respective books of account,
records, reports and other papers, to make copies and extracts therefrom, and to
discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the Company
authorizes said accountants to discuss the affairs, finances and accounts of the
Company and its Subsidiaries), all at such times and as often as may be
requested.
8. PAYMENTS ON THE NOTES.
8.1 Payment on the Maturity Date.
As provided in the Notes, the entire then outstanding principal amount
of each
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Note, together with interest thereon accrued to the date of payment, shall be
due and payable on June 6, 2012.
8.2 Optional Prepayments with Make-Whole Amount.
The Company may, at its option, upon notice as provided below, prepay
at any time all, or from time to time any part of, the Notes, in an amount not
less than 5% of the aggregate principal amount of the Notes then outstanding in
the case of a partial prepayment, at 100% of the principal amount so prepaid,
together with interest thereon to the date of such prepayment, plus the
Make-Whole Amount determined for the prepayment date with respect to such
principal amount. The Company will give each holder of Notes written notice of
each optional prepayment under this Section 8.2 not less than 30 days and not
more than 60 days prior to the date fixed for such prepayment. Each such notice
shall specify such date, the aggregate principal amount of the Notes to be
prepaid on such date, the principal amount of each Note held by such holder to
be prepaid (determined in accordance with Section 8.3), and the interest to be
paid on the prepayment date with respect to such principal amount being prepaid,
and shall be accompanied by a certificate of a Senior Financial Officer as to
the estimated Make-Whole Amount due in connection with such prepayment
(calculated as if the date of such notice were the date of the prepayment),
setting forth the details of such computation. Two Business Days prior to such
prepayment, the Company shall deliver to each holder of Notes a certificate of a
Senior Financial Officer specifying the calculation of such Make-Whole Amount as
of the specified prepayment date.
8.3 Allocation of Partial Prepayments.
In the case of each partial prepayment of the Notes, the principal
amount of the Notes to be prepaid shall be allocated among all of the Notes at
the time outstanding in proportion, as nearly as practicable, to the respective
unpaid principal amounts thereof not theretofore called for prepayment.
8.4 Maturity; Surrender, etc.
In the case of each prepayment of Notes pursuant to this Section 8,
the principal amount of each Note to be prepaid shall mature and become due and
payable on the date fixed for such prepayment, together with interest on such
principal amount accrued to such date and the applicable Make-Whole Amount, if
any. From and after such date, unless the Company shall fail to pay such
principal amount when so due and payable, together with the interest and
Make-Whole Amount, if any, as aforesaid, interest on such principal amount shall
cease to accrue. Any Note paid or prepaid in full shall be surrendered to the
Company and cancelled and shall not be reissued, and no Note shall be issued in
lieu of any prepaid principal amount of any Note.
8.5 Purchase of Notes.
The Company will not, and will not permit any Affiliate to, purchase,
redeem, prepay or otherwise acquire, directly or indirectly, any of the
outstanding Notes except (a) upon the payment or prepayment of the Notes in
accordance with the terms of this Agreement and the Notes or (b) pursuant to an
offer to purchase made by the Company or an Affiliate pro rata to the holders of
all Notes at the time outstanding upon the same terms and conditions. Any such
offer
14
shall provide each holder with sufficient information to enable it to make an
informed decision with respect to such offer, and shall remain open for at least
15 Business Days. If the holders of more than 50% of the principal amount of the
Notes then outstanding accept such offer, the Company shall promptly notify the
remaining holders of such fact and the expiration date for the acceptance by
holders of Notes of such offer shall be extended by the number of days necessary
to give each such remaining holder at least 10 Business Days from its receipt of
such notice to accept such offer. The Company will promptly cancel all Notes
acquired by it or any Affiliate pursuant to any payment, prepayment or purchase
of Notes pursuant to any provision of this Agreement and no Notes may be issued
in substitution or exchange for any such Notes.
8.6 Make-Whole Amount.
The term "Make-Whole Amount" means, with respect to any Note, an
amount equal to the excess, if any, of the Discounted Value of the Remaining
Scheduled Payments with respect to the Called Principal of such Note over the
amount of such Called Principal, provided that the Make-Whole Amount may in no
event be less than zero. For the purposes of determining the Make-Whole Amount,
the following terms have the following meanings:
"Called Principal" means, with respect to any Note, the principal of
such Note that is to be prepaid pursuant to Section 8.2 or has become or is
declared to be immediately due and payable pursuant to Section 12.1, as the
context requires.
"Discounted Value" means, with respect to the Called Principal of any
Note, the amount obtained by discounting all Remaining Scheduled Payments
with respect to such Called Principal from the Settlement Date to the
respective scheduled due dates with respect to such Called Principal, in
accordance with accepted financial practice and at a discount factor
(applied on the same periodic basis as that on which interest on the Notes
is payable) equal to the Reinvestment Yield with respect to such Called
Principal.
"Reinvestment Yield" means, with respect to the Called Principal of
any Note, 0.50% over the yield to maturity implied by (i) the yields
reported, as of 10:00 A.M. (New York City time) on the second Business Day
preceding the Settlement Date with respect to such Called Principal, on the
display designated as page "PX1" on the Bloomberg Financial Markets
Services Screen (or such other display as may replace page PX1 on the
Bloomberg Financial Markets Services Screen) for actively traded U.S.
Treasury securities having a maturity equal to the Remaining Average Life
of such Called Principal as of such Settlement Date, or (ii) if such yields
are not reported as of such time or the yields reported as of such time are
not ascertainable, the Treasury Constant Maturity Series Yields reported,
for the latest day for which such yields have been so reported as of the
second Business Day preceding the Settlement Date with respect to such
Called Principal, in Federal Reserve Statistical Release H.15 (519) (or any
comparable successor publication) for actively traded U.S. Treasury
securities having a constant maturity equal to the Remaining Average Life
of such Called Principal as of such Settlement Date. Such implied yield
will be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between (1) the actively traded
U.S. Treasury security with the constant maturity closest to and greater
than the
15
Remaining Average Life and (2) the actively traded U.S. Treasury security
with the constant maturity closest to and less than the Remaining Average
Life.
"Remaining Average Life" means, with respect to any Called Principal,
the number of years (calculated to the nearest one-twelfth year) obtained
by dividing (i) such Called Principal into (ii) the sum of the products
obtained by multiplying (a) the principal component of each Remaining
Scheduled Payment with respect to such Called Principal by (b) the number
of years (calculated to the nearest one-twelfth year) that will elapse
between the Settlement Date with respect to such Called Principal and the
scheduled due date of such Remaining Scheduled Payment.
"Remaining Scheduled Payments" means, with respect to the Called
Principal of any Note, all payments of such Called Principal and interest
thereon that would be due after the Settlement Date with respect to such
Called Principal if no payment of such Called Principal were made prior to
its scheduled due date, provided that if such Settlement Date is not a date
on which interest payments are due to be made under the terms of the Notes,
then the amount of the next succeeding scheduled interest payment will be
reduced by the amount of interest accrued to such Settlement Date and
required to be paid on such Settlement Date pursuant to Section 8.2 or
12.1.
"Settlement Date" means, with respect to the Called Principal of any
Note, the date on which such Called Principal is to be prepaid pursuant to
Section 8.2 or has become or is declared to be immediately due and payable
pursuant to Section 12.1, as the context requires.
9. AFFIRMATIVE COVENANTS.
The Company covenants that so long as any of the Notes are
outstanding:
9.1 Compliance with Law.
The Company will, and will cause each of its Subsidiaries to, comply
with all laws, ordinances or governmental rules or regulations to which each of
them is subject, including, without limitation, Environmental Laws, and will
obtain and maintain in effect all Governmental Entitlements necessary to the
ownership of their respective properties or to the conduct of their respective
businesses, in each case to the extent necessary to ensure that noncompliance
with such laws, ordinances or governmental rules or regulations or failures to
obtain or maintain in effect such Governmental Entitlements would not reasonably
be expected, individually or in the aggregate, to have a Material Adverse
Effect.
9.2 Insurance.
The Company will, and will cause each of its Subsidiaries to, maintain
with financially sound and reputable insurers, insurance with respect to their
respective properties and businesses against such casualties and contingencies,
of such types, on such terms and in such amounts (including deductibles,
co-insurance and self-insurance, if adequate reserves are maintained with
respect thereto) as is customary in the case of entities of established
reputations engaged in the same or a similar business and similarly situated.
16
9.3 Maintenance of Properties.
The Company will, and will cause each of its Subsidiaries to, maintain
and keep, or cause to be maintained and kept, their respective properties in
good repair, working order and condition (other than ordinary wear and tear), so
that the business carried on in connection therewith may be properly conducted
at all times, provided that this Section 9.3 shall not prevent the Company or
any Subsidiary from discontinuing the operation and the maintenance of any of
its properties if such discontinuance is desirable in the conduct of its
business and the Company has concluded that such discontinuance would not
reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect.
9.4 Payment of Taxes.
The Company will, and will cause each of its Subsidiaries to, file all
income tax or similar tax returns required to be filed in any jurisdiction and
to pay and discharge all taxes shown to be due and payable on such returns and
all other taxes, assessments, governmental charges or levies payable by any of
them, to the extent such taxes and assessments have become due and payable and
before they have become delinquent, provided that neither the Company nor any
Subsidiary need pay any such tax or assessment if (a) the amount, applicability
or validity thereof is contested by the Company or such Subsidiary on a timely
basis in good faith and in appropriate proceedings, and the Company or a
Subsidiary has established adequate reserves therefor in accordance with GAAP on
the books of the Company or such Subsidiary or (b) the nonpayment of all such
taxes and assessments in the aggregate would not reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect.
9.5 Corporate Existence, etc.
Subject to Section 10.4, the Company will at all times preserve and
keep in full force and effect its corporate existence. Subject to Section 10.4,
the Company will at all times preserve and keep in full force and effect the
corporate or other legal existence of each of its Subsidiaries and all rights
and franchises of the Company and its Subsidiaries unless, in the good faith
judgment of the Company, the termination of or failure to preserve and keep in
full force and effect such corporate or other legal existence, right or
franchise would not reasonably be expected, individually or in the aggregate, to
result in a Material Adverse Effect.
10. NEGATIVE COVENANTS.
The Company covenants that so long as any of the Notes are outstanding:
10.1 Limitations on Debt Secured by Liens.
(a) The Company will not, nor will it permit any Subsidiary to, issue,
assume or guarantee any Debt, if such Debt is secured by a Lien upon any
Principal Property of the Company or of any Principal Subsidiary or upon any
Subsidiary Stock of any Principal Subsidiary (whether such Principal Property or
Subsidiary Stock is now owned or hereafter acquired), without in any such case
effectively providing, concurrently with the issuance, assumption or guarantee
of such Debt, that the Notes (together with, if the Company shall so determine,
any other Debt of or guaranteed by the Company or such Principal Subsidiary
ranking
17
equally with the Notes then outstanding and existing or thereafter created)
shall be secured equally and ratably with (or prior to) such Debt; provided,
however, that the foregoing restriction shall not apply to Debt secured by:
(i) Liens on Principal Property acquired, constructed or
improved by the Company or any Principal Subsidiary after the Closing Date that
are created or assumed contemporaneously with, or within 270 days after such
acquisition (or, in the case of Principal Property constructed or improved,
within 270 days after the completion or commencement of commercial operation of
such Principal Property, whichever is later) to secure or provide for the
payment of any part of the purchase price of such Principal Property or cost of
such construction or improvement; provided, that if a commitment to so finance
such a payment is obtained prior to or within such 270-day period and the
related Lien is created within 90 days after the expiration of such 270-day
period, the applicable Lien shall be deemed to be included in this clause (i),
provided, further, that, in the case of any such construction or improvement the
Lien shall not apply to any Principal Property theretofore owned by the Company
or any Principal Subsidiary, other than any theretofore unimproved real property
on which the Principal Property so constructed, or the improvement, is located;
(ii) Liens on any Principal Property existing at the time of
acquisition thereof (including Liens on Principal Property acquired from a
Person which is consolidated with or merged with or into the Company or a
Subsidiary) and Liens outstanding at the time any Person becomes a Subsidiary;
(iii) Liens in favor of the Company or any Principal Subsidiary;
(iv) Liens in favor of the United States of America, any State or
the District of Columbia, any foreign country or any department, agency or
instrumentality or political subdivision of any such jurisdiction, to secure
partial, progress, advance or other payments pursuant to any contract or statute
or to secure any Debt incurred for the purpose of financing all or any part of
the purchase price or the cost of constructing or improving the Principal
Property subject to such Liens, including Liens to secure Debt of the pollution
control or industrial revenue bond type; and
(v) any extension, renewal or replacement (or successive
extensions, renewals or replacements), in whole or in part, of any Lien referred
to in the foregoing clauses (i) to (iv), inclusive; provided, however, that the
principal amount of Debt secured thereby shall not exceed the principal amount
of Debt so secured at the time of such extension, renewal or replacement, and
that such extension, renewal or replacement shall be limited to all or a part of
the Principal Property which secured the Lien so extended, renewed or replaced
(plus improvements on such Principal Property).
(b) In addition to Debt secured by Liens permitted under Section
10.1(a), the Company or any Principal Subsidiary may issue, assume or guarantee
Debt secured by Liens which would otherwise be subject to the foregoing
restriction, without equally and ratably securing the Notes, in an aggregate
amount which, together with all other such Debt under this Section 10.1(b) and
the Attributable Debt in respect of Sale-Leaseback Transactions under Section
10.2(d), does not exceed 20% of Net Tangible Assets, as shown on or derived from
a
18
consolidated balance sheet, as of a date not more than 90 days prior to the
proposed transaction, prepared by the Company in accordance with GAAP.
10.2 Limitation on Sale-Leaseback Transactions.
The Company shall not, and shall not permit any Principal Subsidiary
to, enter into a Sale-Leaseback Transaction unless:
(a) the lease has a term, calculated by including lessee renewal
rights, of three years or less;
(b) the lease is between the Company and a Principal Subsidiary or
between Principal Subsidiaries;
(c) the Company or a Principal Subsidiary under Section 10.1(a) could
issue, assume or guarantee secured Debt;
(d) the Company or a Principal Subsidiary under Section 10.1(b) could
issue, assume or guarantee secured Debt in an amount at least equal to the
amount of the Attributable Debt for the lease without equally and ratably
securing the Notes; or
(e) the Company or a Principal Subsidiary within 180 days of the
effective date of the Sale-Leaseback Transaction retires Debt of the Company or
a Principal Subsidiary (other than such Debt owed to the Company or any
Principal Subsidiary) at least equal in amount to the Attributable Debt for the
leased or purchased property that will constitute Principal Property for an
amount at least equal to the Attributable Debt for the lease. The Company or a
Principal Subsidiary may not receive credit for retirement of Debt that is
subordinated to the Notes or that is effected by payment at maturity.
10.3 Debt to Capitalization.
The Company shall not permit at any time the ratio of Total Debt to
Total Capitalization, determined as of the end of each fiscal quarter, to be
greater than 70%.
10.4 Mergers or Sales of Assets.
(a) Subject to Section 10.4(b), nothing contained in this Agreement or
in any of the Notes shall prevent any consolidation of the Company with or the
merger of the Company into any other Person or any merger of any other Person
into the Company, or successive consolidations or mergers to which the Company
or its successor or successors shall be a party or parties, or shall prevent any
Transfer of the properties of the Company as an entirety or substantially as an
entirety to any other Person lawfully entitled to acquire the same.
(b) The Company covenants and agrees that it will not consolidate with
or merge into any other Person or Transfer its properties as an entirety or
substantially as an entirety, unless, and the Company covenants and agrees that
any such consolidation, merger or Transfer shall be upon the conditions that:
19
(i) the successor Person shall be organized under the laws of
the United States or a state thereof or the District of Columbia;
(ii) the due and punctual payment of the principal of, and
Make-Whole Amount, if any, and interest, if any, on, all the Notes, and the due
and punctual performance and observance of all the terms, covenants and
conditions of this Agreement to be performed or observed by the Company, shall,
by a written assumption agreement, be expressly assumed by the successor Person,
if other than the Company, formed by or surviving any such consolidation or
merger or to which such Transfer shall have been made, as fully and effectively
as if such successor Person had been an original party to this Agreement, and
(iii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing.
Every such successor Person, if other than the Company, upon executing such
assumption agreement, in form satisfactory to the Required Holders, shall
succeed to and be substituted for the Company with the same effect as if it had
been an original party hereto, and shall possess and from time to time may
exercise each and every power of the Company under this Agreement, and, in the
case of any such Transfer, the Person named as the "Company" in the first
paragraph of this Agreement or any successor Person which shall theretofore have
become such in the manner prescribed in this Section 10.4 shall be released from
its liability hereunder and as obligor on all the Notes. Such change in
phraseology and form (but not in substance) may be made in the Notes as may be
appropriate in view of such consolidation, merger or Transfer.
(c) The Company covenants and agrees that if it shall consolidate
with or merge into any other Person, or if it shall Transfer its properties as
an entirety or substantially as an entirety, the Company will promptly furnish
to you:
(i) an Officers' Certificate stating that the conditions and
covenants of the Company contained in Section 10.4(b) have been complied with;
(ii) an executed counterpart of any instrument or instruments
executed by the Company in the performance of such conditions and covenants;
(iii) an Opinion of Counsel to the successor Person stating that
in the opinion of such counsel the assumption agreement executed by such
successor Person pursuant to Section 10.4(b)(ii) above and all other documents
executed by such successor Person in connection therewith have been duly
authorized, executed and delivered and are enforceable against the successor
Person in accordance with their terms, except as such enforceability may be
limited by the Enforceability Exceptions; and
(iv) an Opinion of Counsel to the Company stating that in the
opinion of such counsel such conditions and covenants have been complied with
and that any instrument or instruments executed by the Company in the
performance of such conditions and covenants comply with the requirements of
such conditions and covenants, which Opinion of Counsel shall be considered
conclusive evidence that any such consolidation, merger or Transfer, any such
assumption and any such assumption agreement comply with this Section 10.4.
20
11. EVENTS OF DEFAULT.
An "Event of Default" shall exist if any of the following conditions
or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or Make-Whole
Amount, if any, on any Note when the same becomes due and payable, whether at
maturity or at a date fixed for prepayment or by declaration or otherwise; or
(b) the Company defaults in the payment of any interest on any Note
for more than five Business Days after the same becomes due and payable; or
(c) the Company defaults in the performance of or compliance with any
term contained in Sections 10.1 through 10.6, inclusive; or
(d) the Company defaults in the performance of or compliance with any
term contained herein (other than those referred to in paragraphs (a), (b) and
(c) of this Section 11) and such default is not remedied within 60 days after
the earlier of (i) a Responsible Officer obtaining actual knowledge of such
default and (ii) the Company receiving written notice of such default from any
holder of a Note (any such written notice to be identified as a "notice of
default" and to refer specifically to this Section 11(d)); or
(e) any representation or warranty made in writing by or on behalf of
the Company or by any officer of the Company in this Agreement or in any writing
furnished in connection with the transactions contemplated hereby proves to have
been false or incorrect and has resulted or would reasonably be expected to
result in a Material Adverse Effect; provided, however, that no incorrectness in
any such representation or warranty to the extent pertaining to litigation or
ERISA matters shall result in a Default or Event of Default; or
(f) Debt of the Company or any of its Principal Subsidiaries shall not
be paid when due or is accelerated by the holders thereof, the total amount of
such unpaid or accelerated Debt exceeds $50,000,000, and such default is
continuing; or
(g) the Company or any Principal Subsidiary (i) is generally not
paying, or admits in writing its inability to pay, its debts as they become due,
(ii) files, or consents by answer or otherwise to the filing against it of, a
petition for relief or reorganization or arrangement or any other petition in
bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency,
reorganization, moratorium or other similar law of any jurisdiction, (iii) makes
an assignment for the benefit of its creditors, (iv) consents to the appointment
of a custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v) is
adjudicated as insolvent or to be liquidated, or (vi) takes corporate action for
the purpose of any of the foregoing; or
(h) a court or governmental authority of competent jurisdiction enters
an order appointing, without consent by the Company or any of its Principal
Subsidiaries, a custodian, receiver, trustee or other officer with similar
powers with respect to it or with respect to any substantial part of its
property, or constituting an order for relief or approving a petition for relief
or reorganization or any other petition in bankruptcy or for liquidation or to
take advantage of
21
any bankruptcy or insolvency law of any jurisdiction, or ordering the
dissolution, winding-up or liquidation of the Company or any of its Principal
Subsidiaries, or any such petition shall be filed against the Company or any of
its Principal Subsidiaries and such petition shall not be dismissed within 60
days; or
(i) a final judgment or judgments for the payment of money in excess
of $50,000,000 are rendered against one or more of the Company and its Principal
Subsidiaries and which judgments are not, within 60 days after entry thereof,
bonded, discharged or stayed pending appeal, or are not discharged within 60
days after the expiration of such stay; or
(j) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a waiver of
such standards or extension of any amortization period is sought or granted
under section 412 of the Code, (ii) a notice of intent to terminate any Plan
shall have been or is reasonably expected to be filed with the PBGC or the PBGC
shall have instituted proceedings under ERISA section 4042 to terminate or
appoint a trustee to administer any Plan or the PBGC shall have notified the
Company or any of its Subsidiaries that a Plan may become a subject of any such
proceedings, (iii) the aggregate "amount of unfunded benefit liabilities"
(within the meaning of section 4001(a)(18) of ERISA) under all Plans other than
Multiemployer Plans, determined in accordance with Title IV of ERISA, shall
exceed $30,000,000, (iv) the Company or any of its Subsidiaries shall have
incurred or is reasonably expected to incur any liability pursuant to Title I or
IV of ERISA or the penalty or excise tax provisions of the Code relating to
employee benefit plans, (v) the Company or any of its Subsidiaries withdraws
from any Multiemployer Plan, or (vi) the Company or any Subsidiary establishes
or amends any employee welfare benefit plan that provides post-employment
welfare benefits in a manner that would increase the liability of the Company or
any Subsidiary thereunder; and any such event or events described in clauses (i)
through (vi) above, either individually or together with any other such event or
events, would reasonably be expected to have a Materially Adverse Effect.
As used in Section 11(j), the terms "employee benefit plan" and "employee
welfare benefit plan" shall have the respective meanings assigned to such terms
in section 3 of ERISA.
12. REMEDIES ON DEFAULT, ETC.
12.1 Acceleration.
(a) If an Event of Default with respect to the Company described in
paragraph (g) or (h) of Section 11 (other than an Event of Default described in
clause (i) of paragraph (g) or described in clause (vi) of paragraph (g) by
virtue of the fact that such clause encompasses clause (i) of paragraph (g)) has
occurred, all the Notes then outstanding shall automatically become immediately
due and payable.
(b) If any other Event of Default has occurred and is continuing, the
Required Holders may at any time at its or their option, by notice or notices to
the Company, declare all the Notes then outstanding to be immediately due and
payable.
(c) If any Event of Default described in paragraph (a) or (b) of
Section 11 has occurred and is continuing, any holder or holders of Notes at the
time outstanding affected by
22
such Event of Default may at any time, at its or their option, by notice or
notices to the Company, declare all the Notes held by it or them to be
immediately due and payable.
Upon any Notes becoming due and payable under this Section 12.1,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus (i) all accrued and
unpaid interest thereon and (ii) the Make-Whole Amount determined in respect of
such principal amount (to the full extent permitted by applicable law), shall
all be immediately due and payable, in each and every case without presentment,
demand, protest or further notice, all of which are hereby waived. The Company
acknowledges, and the parties hereto agree, that each holder of a Note has the
right to maintain its investment in the Notes free from repayment by the Company
(except as herein specifically provided for) and that the provision for payment
of a Make-Whole Amount by the Company in the event that the Notes are prepaid or
are accelerated as a result of an Event of Default, is intended to provide
compensation for the deprivation of such right under such circumstances.
12.2 Other Remedies.
If any Default or Event of Default has occurred and is continuing, and
irrespective of whether any Notes have become or have been declared immediately
due and payable under Section 12.1, the holder of any Note at the time
outstanding may proceed to protect and enforce the rights of such holder by an
action at law, suit in equity or other appropriate proceeding, whether for the
specific performance of any agreement contained herein or in any Note, or for an
injunction against a violation of any of the terms hereof or thereof, or in aid
of the exercise of any power granted hereby or thereby or by law or otherwise.
12.3 Rescission.
At any time after any Notes have been declared due and payable
pursuant to clause (b) or (c) of Section 12.1, the Required Holders, by written
notice to the Company, may rescind and annul any such declaration and its
consequences if (a) the Company has paid all overdue interest on the Notes, all
principal of and Make-Whole Amount, if any, on any Notes that are due and
payable and are unpaid other than by reason of such declaration, and all
interest on such overdue principal and Make-Whole Amount, if any, and (to the
extent permitted by applicable law) any overdue interest in respect of the
Notes, at the Default Rate, (b) all Events of Default and Defaults, other than
nonpayment of amounts that have become due solely by reason of such declaration,
have been cured or have been waived pursuant to Section 17, and (c) no judgment
or decree has been entered for the payment of any monies due pursuant hereto or
to the Notes. No rescission and annulment under this Section 12.3 will extend to
or affect any subsequent Event of Default or Default or impair any right
consequent thereon.
12.4 No Waivers or Election of Remedies, Expenses, etc.
No course of dealing and no delay on the part of any holder of any
Note in exercising any right, power or remedy shall operate as a waiver thereof
or otherwise prejudice such holder's rights, powers or remedies. No right, power
or remedy conferred by this Agreement or any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or
23
otherwise. Without limiting the obligations of the Company under Section 15, the
Company will pay to the holder of each Note on demand such further amount as
shall be sufficient to cover all costs and expenses of such holder incurred in
any enforcement or collection under this Section 12, including, without
limitation, reasonable attorneys' fees, expenses and disbursements.
13. REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES.
13.1 Registration of Notes.
The Company shall keep at its principal executive office a register
for the registration and registration of transfers of the Notes. The name and
address of each holder of one or more Notes, each transfer thereof and the name
and address of each transferee of one or more Notes shall be registered in such
register. Prior to due presentment for registration of transfer, the Person in
whose name any Note shall be registered shall be deemed and treated as the owner
and holder thereof for all purposes hereof, and the Company shall not be
affected by any notice or knowledge to the contrary. The Company shall give to
any holder of a Note that is an Institutional Investor promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
13.2 Transfer and Exchange of Notes.
Upon surrender of any Note at the principal executive office of the
Company for registration of transfer or exchange (and in the case of a surrender
for registration of transfer, duly endorsed or accompanied by a written
instrument of transfer duly executed by the registered holder of such Note or
its attorney duly authorized in writing and accompanied by the address for
notices of each transferee of such Note or part thereof), the Company shall
execute and deliver, at the Company's expense (except as provided below), one or
more new Notes (as requested by the holder thereof) in exchange therefor, in an
aggregate principal amount equal to the unpaid principal amount of the
surrendered Note. Each such new Note shall be payable to such Person as such
holder may request and shall be substantially in the form of Exhibit 1. Each
such new Note shall be dated and bear interest from the date to which interest
shall have been paid on the surrendered Note or dated the date of the
surrendered Note if no interest shall have been paid thereon. The Company may
require payment of a sum sufficient to cover any stamp tax or governmental
charge imposed in respect of any such transfer of Notes. Notes shall not be
transferred in denominations of less than $500,000, provided that if necessary
to enable the registration of transfer by a holder of its entire holding of
Notes, one Note may be in a denomination of less than $500,000. Any transferee,
by its acceptance of a Note registered in its name (or the name of its nominee),
shall be deemed to have made the representation set forth in Section 6.2.
13.3 Replacement of Notes.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the ownership of and the loss, theft, destruction or mutilation of any Note
(which evidence shall be, in the case of an Institutional Investor, notice from
such Institutional Investor of such ownership and such loss, theft, destruction
or mutilation) and
24
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it (provided that if the holder of such Note is, or is a nominee
for, an original purchaser or another holder of a Note with a minimum net worth
of at least $100,000,000, such Person's own unsecured agreement of indemnity
shall be deemed to be satisfactory), or
(b) in the case of mutilation, upon surrender and cancellation
thereof,
the Company at its own expense shall execute and deliver, in lieu thereof, a new
Note, dated and bearing interest from the date to which interest shall have been
paid on such lost, stolen, destroyed or mutilated Note or dated the date of such
lost, stolen, destroyed or mutilated Note if no interest shall have been paid
thereon.
14. PAYMENTS ON NOTES.
So long as you or your nominee shall be the holder of any Note, and
notwithstanding anything contained in such Note to the contrary, the Company
will pay all sums becoming due on such Note for principal, Make-Whole Amount, if
any, and interest by the method and at the address specified for such purpose
below your name in Schedule A, or by such other method or at such other address
as you shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of any
notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full of
any Note, you shall surrender such Note for cancellation, reasonably promptly
after any such request, to the Company at its principal executive office. Prior
to any sale or other disposition of any Note held by you or your nominee you
will, at your election, either endorse thereon the amount of principal paid
thereon and the last date to which interest has been paid thereon or surrender
such Note to the Company in exchange for a new Note or Notes pursuant to Section
13.2. The Company will afford the benefits of this Section 14 to any
Institutional Investor that is the direct or indirect transferee of any Note
purchased by you under this Agreement and that has made the same agreement
relating to such Note as you have made in this Section 14.
15. EXPENSES, ETC.
15.1 Transaction Expenses.
Whether or not the transactions contemplated hereby are consummated,
the Company will pay all costs and expenses (including reasonable attorneys'
fees of a special counsel and, if reasonably required, local or other counsel)
incurred by you and each Other Purchaser or holder of a Note in connection with
such transactions and in connection with any amendments, waivers or consents
under or in respect of this Agreement or the Notes (whether or not such
amendment, waiver or consent becomes effective), including, without limitation:
(a) the costs and expenses incurred in enforcing or defending (or determining
whether or how to enforce or defend) any rights under this Agreement or the
Notes or in responding to any subpoena or other legal process or informal
investigative demand issued in connection with this Agreement or the Notes, or
by reason of being a holder of any Note, and (b) the costs and expenses,
including financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Company or any Subsidiary or in connection with any workout
or restructuring of the
25
transactions contemplated hereby and by the Notes. The Company will pay, and
will save you and each other holder of a Note harmless from, all claims in
respect of any fees, costs or expenses if any, of brokers and finders (other
than those retained by you).
15.2 Survival.
The obligations of the Company under this Section 15 will survive the
payment or transfer of any Note, the enforcement, amendment or waiver of any
provision of this Agreement or the Notes, and the termination of this Agreement.
16. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE AGREEMENT.
All representations and warranties contained herein shall survive the
execution and delivery of this Agreement and the Notes, the purchase or transfer
by you of any Note or portion thereof or interest therein and the payment of any
Note, and may be relied upon by any subsequent holder of a Note, regardless of
any investigation made at any time by or on behalf of you or any other holder of
a Note. All statements contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant to this Agreement shall be
deemed representations and warranties of the Company under this Agreement.
Subject to the preceding sentence, this Agreement and the Notes embody the
entire agreement and understanding between you and the Company and supersede all
prior agreements and understandings relating to the subject matter hereof.
17. AMENDMENT AND WAIVER.
17.1 Requirements.
This Agreement and the Notes may be amended, and the observance of
any term hereof or of the Notes may be waived (either retroactively or
prospectively), with (and only with) the written consent of the Company and the
Required Holders, except that (a) no amendment or waiver of any of the
provisions of Section 1, 2, 3, 4, 5, 6 or 21 hereof, or any defined term (as it
is used therein), will be effective as to you unless consented to by you in
writing, and (b) no such amendment or waiver may, without the written consent of
the holder of each Note at the time outstanding affected thereby, (i) subject to
the provisions of Section 12 relating to acceleration or rescission, change the
amount or time of any prepayment or payment of principal of, or reduce the rate
or change the time of payment or method of computation of interest or of the
Make-Whole Amount on, the Notes, (ii) change the percentage of the principal
amount of the Notes the holders of which are required to consent to any such
amendment or waiver, or (iii) amend any of Sections 8, 11(a), 11(b), 12, 17 or
20.
17.2 Solicitation of Holders of Notes.
(a) Solicitation. The Company will provide each holder of the Notes
(irrespective of the amount of Notes then owned by it) with sufficient
information, sufficiently far in advance of the date a decision is required, to
enable such holder to make an informed and considered decision with respect to
any proposed amendment, waiver or consent in respect of any of the provisions
hereof or of the Notes. The Company will deliver executed or true and
26
correct copies of each amendment, waiver or consent effected pursuant to the
provisions of this Section 17 to each holder of outstanding Notes promptly
following the date on which it is executed and delivered by, or receives the
consent or approval of, the requisite holders of Notes.
(b) Payment. The Company will not directly or indirectly pay or
cause to be paid any remuneration, whether by way of supplemental or additional
interest, fee or otherwise, or grant any security, to any holder of Notes as
consideration for, or as an inducement to, the entering into by any holder of
Notes of any waiver or amendment of any of the terms and provisions hereof
unless such remuneration is concurrently paid, or security is concurrently
granted, on the same terms, ratably to each holder of Notes then outstanding
even if such holder did not consent to such waiver or amendment.
17.3 Binding Effect, etc.
Any amendment or waiver consented to as provided in this Section 17
applies equally to all holders of Notes and is binding upon them and upon each
future holder of any Note and upon the Company without regard to whether such
Note has been marked to indicate such amendment or waiver. No such amendment or
waiver will extend to or affect any obligation, covenant, agreement, Default or
Event of Default not expressly amended or waived or impair any right consequent
thereon. No course of dealing between the Company and the holder of any Note nor
any delay in exercising any rights hereunder or under any Note shall operate as
a waiver of any rights of any holder of such Note. As used herein, the term
"this Agreement" and references thereto shall mean this Agreement as it may from
time to time be amended or supplemented.
17.4 Notes held by the Company.
Solely for the purpose of determining whether the holders of the
requisite percentage of the aggregate principal amount of Notes then outstanding
approved or consented to any amendment, waiver or consent to be given under this
Agreement or the Notes, or have directed the taking of any action provided
herein or in the Notes to be taken upon the direction of the holders of a
specified percentage of the aggregate principal amount of Notes then
outstanding, Notes directly or indirectly owned by the Company or any of its
Affiliates shall be deemed not to be outstanding.
18. NOTICES.
All notices and communications provided for hereunder shall be in
writing and sent by (a) facsimile (with receipt of appropriate confirmation of
complete transmission), (b) registered or certified mail with return receipt
requested (postage prepaid), or (c) a recognized overnight delivery service
(with charges prepaid). Any such notice must be sent:
(i) if to you or your nominee, to you or it at the address specified
for such communications in Schedule A, or at such other address as you or
it shall have specified to the Company in writing,
(ii) if to any other holder of any Note, to such holder at such
address as such other holder shall have specified to the Company in
writing, or
27
(iii) if to the Company, to the Company at its address set forth at
the beginning hereof to the attention of the Chief Financial Officer, or at
such other address as the Company shall have specified to the holder of
each Note in writing.
Notices under this Section 18 will be deemed given only when actually
received or, if delivery is refused, will be deemed to have been given when such
delivery is refused.
19. REPRODUCTION OF DOCUMENTS.
This Agreement and all documents relating hereto, including, without
limitation, (a) consents, waivers and modifications that may hereafter be
executed, (b) documents received by you at the Closing (except the Notes
themselves), and (c) financial statements, certificates and other information
previously or hereafter furnished to you, may be reproduced by you by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and you may destroy any original document so reproduced. The
Company agrees and stipulates that, to the extent permitted by applicable law,
any such reproduction shall be admissible in evidence as the original itself in
any judicial or administrative proceeding (whether or not the original is in
existence and whether or not such reproduction was made by you in the regular
course of business) and any enlargement, facsimile or further reproduction of
such reproduction shall likewise be admissible in evidence. This Section 19
shall not prohibit the Company or any other holder of Notes from contesting any
such reproduction to the same extent that it could contest the original, or from
introducing evidence to demonstrate the inaccuracy of any such reproduction.
20. CONFIDENTIAL INFORMATION.
For the purposes of this Section 20, "Confidential Information" means
information delivered to you by or on behalf of the Company or any Subsidiary in
connection with the transactions contemplated by or otherwise pursuant to this
Agreement that is proprietary in nature and that was clearly marked or labeled
or otherwise adequately identified when received by you as being confidential
information of the Company or such Subsidiary, provided that such term does not
include information that (a) was publicly known or otherwise known to you prior
to the time of such disclosure (other than as a result of a disclosure by you or
your employees or agents in violation of this Agreement), (b) subsequently
becomes publicly known through no act or omission by you or any Person acting on
your behalf, (c) otherwise becomes known to you other than through disclosure by
the Company or any Subsidiary, provided that such source is not and was not
known by you to be bound by a confidentiality agreement that protected such
Confidential Information or (d) constitutes financial statements delivered to
you under Section 7.1 that are otherwise publicly available. You will maintain
the confidentiality of such Confidential Information in accordance with
procedures adopted by you in good faith to protect confidential information of
third parties delivered to you, provided that you may deliver or disclose
Confidential Information to (i) your directors, officers, employees, agents,
attorneys and affiliates, (to the extent such disclosure reasonably relates to
the administration of the investment represented by your Notes), (ii) your
financial advisors and other professional advisors who agree to hold
confidential the Confidential Information substantially in accordance with the
terms of this Section 20, (iii) any other holder of any Note, (iv) any
Institutional Investor to which you sell or offer to sell such Note or any part
thereof or any participation
28
therein (if such Person has agreed in writing prior to its receipt of such
Confidential Information to be bound by the provisions of this Section 20), (v)
any Person from which you offer to purchase any security of the Company (if such
Person has agreed in writing prior to its receipt of such Confidential
Information to be bound by the provisions of this Section 20), (vi) any federal
or state regulatory authority having jurisdiction over you, (vii) the National
Association of Insurance Commissioners or any similar organization, or any
nationally recognized rating agency that requires access to information about
your investment portfolio, or (viii) any other Person to which such delivery or
disclosure may be necessary or appropriate (A) to effect compliance with any
law, rule, regulation or order applicable to you, (B) in response to any
subpoena or other legal process, (C) in connection with any litigation to which
you are a party or (D) if an Event of Default has occurred and is continuing, to
the extent you may reasonably determine such delivery and disclosure to be
necessary or appropriate in the enforcement or for the protection of the rights
and remedies under your Notes and this Agreement. Each holder of a Note, by its
acceptance of a Note, will be deemed to have agreed to be bound by and to be
entitled to the benefits of this Section 20 as though it were a party to this
Agreement. On reasonable request by the Company in connection with the delivery
to any holder of a Note of information required to be delivered to such holder
under this Agreement or requested by such holder (other than a holder that is a
party to this Agreement or its nominee), such holder will confirm in writing
that it is bound by the provisions of this Section 20 and agree to enter into
further agreements with language no more burdensome on the holder than the
language contained in this Section 20 as reasonably requested by the Company in
order to comply with Regulation FD.
21. SUBSTITUTION OF PURCHASER.
You shall have the right to substitute any one of your Affiliates as
the purchaser of the Notes that you have agreed to purchase hereunder, by
written notice to the Company, which notice shall be signed by both you and such
Affiliate, shall contain such Affiliate's agreement to be bound by this
Agreement and shall contain a confirmation by such Affiliate of the accuracy
with respect to it of the representations set forth in Section 6. Upon receipt
of such notice, wherever the word "you" is used in this Agreement (other than in
this Section 21), such word shall be deemed to refer to such Affiliate in lieu
of you. In the event that such Affiliate is so substituted as a purchaser
hereunder and such Affiliate thereafter transfers to you all of the Notes then
held by such Affiliate, upon receipt by the Company of notice of such transfer,
wherever the word "you" is used in this Agreement (other than in this Section
21), such word shall no longer be deemed to refer to such Affiliate, but shall
refer to you, and you shall have all the rights of an original holder of the
Notes under this Agreement.
22. MISCELLANEOUS.
22.1 Successors and Assigns.
All covenants and other agreements contained in this Agreement by or
on behalf of any of the parties hereto bind and inure to the benefit of their
respective successors and assigns (including, without limitation, any subsequent
holder of a Note) whether so expressed or not.
29
22.2 Payments Due on Non-Business Days.
Anything in this Agreement or the Notes to the contrary
notwithstanding, any payment of principal of or Make-Whole Amount or interest on
any Note that is due on a date other than a Business Day shall be made on the
next succeeding Business Day without including the additional days elapsed in
the computation of the interest payable on such next succeeding Business Day.
22.3 Severability.
Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall (to the full extent permitted by applicable law) not
invalidate or render unenforceable such provision in any other jurisdiction.
22.4 Construction.
Each covenant contained herein shall be construed (absent express
provision to the contrary) as being independent of each other covenant contained
herein, so that compliance with any one covenant shall not (absent such an
express contrary provision) be deemed to excuse compliance with any other
covenant. Where any provision herein refers to action to be taken by any Person,
or which such Person is prohibited from taking, such provision shall be
applicable whether such action is taken directly or indirectly by such Person.
22.5 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original but all of which together shall constitute one
instrument. Each counterpart may consist of a number of copies hereof, each
signed by less than all, but together signed by all, of the parties hereto.
22.6 Governing Law.
This Agreement shall be construed and enforced in accordance with,
and the rights of the parties shall be governed by, the law of the State of New
York (including, without limitation, section 5-1401 of the General Obligations
Law of the State of New York but excluding choice-of-law principles of the law
of such State that would require the application of the laws of a jurisdiction
other than such State).
* * * * *
30
If you are in agreement with the foregoing, please sign the form of
agreement on the accompanying counterpart of this Agreement and return it to the
Company, whereupon the foregoing shall become a binding agreement between you
and the Company.
Very truly yours,
PG&E GAS TRANSMISSION, NORTHWEST CORPORATION
By: ________________________________________
Name:
Title:
The foregoing is hereby
agreed to as of the
date thereof.
[ADD PURCHASER SIGNATURE BLOCKS]
31
SCHEDULE B
GLOSSARY
The terms defined in this Schedule B include the plural as well as the
singular and the singular as well as the plural. Except as otherwise indicated,
all the agreements or instruments herein defined mean such agreements or
instruments as the same may from time to time be supplemented or amended or the
terms thereof waived or modified to the extent permitted by, and in accordance
with, the terms thereof and of this Agreement. References in a document to
statutes, sections or regulations are to be construed as including all statutory
or regulatory provisions consolidating, amending, replacing, succeeding or
supplementing the statute, section or regulation referred to; the words
including, "includes" and "include" are deemed to be followed by the words
"without limitation" or "but not limited to" or words of similar import;
references in a document to articles, sections (or subdivisions of sections),
exhibits, annexes or schedules are to those of such document unless otherwise
indicated; and references to a Person includes such Person's successors and
permitted assigns.
"Affiliate" means, at any time, and with respect to any Person, any
other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person. As used in this definition, "Control" means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of a Person, whether through the ownership of voting
securities, by contract or otherwise. Unless the context otherwise clearly
requires, any reference to an "Affiliate" is a reference to an Affiliate of the
Company.
"Attributable Debt" means, with respect to any Sale-Leaseback
Transaction as of any particular time, the present value discounted at the rate
of interest implicit (in the reasonable judgment of the Company) in the terms of
the lease of the obligations of the lessee under such lease for net rental
payments (net of insurance, taxes and indemnity and other similar charges)
during the remaining term of the lease (including any period for which such
lease has been extended).
"Board of Directors" means either the Board of Directors of the
Company or any committee or member of such Board duly authorized to act on
behalf of the Board of Directors.
"Business Day" means (a) for the purposes of Section 8.5 only, any day
other than a Saturday, a Sunday or a day on which commercial banks in New York
City are required or authorized to be closed, and (b) for the purposes of any
other provision of this Agreement, any day other than a Saturday, a Sunday or a
day on which commercial banks in Portland, Oregon or New York City are required
or authorized to be closed.
"Capital Lease" means any lease or agreement for the use of property
(whether real, personal or mixed) which is required to be capitalized on a
balance sheet of the lessee or other user of property in accordance with GAAP.
"Capital Lease Obligations" means, with respect to any Person, the
aggregate
1
amount which, in accordance with GAAP, is required to be reported as a liability
on the balance sheet of such Person at such time in respect of such Person's
interest as lessee under Capital Leases.
"Closing" is defined in Section 3.
"Closing Date" means the date of the Closing.
"Code" means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time.
"Company" means PG&E Gas Transmission, Northwest Corporation, a
California corporation.
"Confidential Information" is defined in Section 20.
"Debt" means all indebtedness for borrowed money, obligations
evidenced by bonds, debentures, notes or other similar investments, and purchase
money obligations which in accordance with GAAP would be shown on the
consolidated balance sheet of the Company and its Subsidiaries as a liability.
"Default" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"Default Rate" means that rate of interest that is the greater of (i)
2.00% per annum above the rate of interest stated in clause (a) of the first
paragraph of the Notes or (ii) 2.00% over the rate of interest publicly
announced by Morgan Guaranty Trust Company in New York, New York as its "base"
or "prime" rate.
"Environmental Laws" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including, but
not limited to, those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the rules and regulations promulgated thereunder
from time to time in effect.
"Event of Default" is defined in Section 11.
"Existing Debt" is defined in Section 5.15.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
2
"Governmental Authority" means (a) the government of (i) the United
States of America or any State or other political subdivision thereof, or (ii)
any jurisdiction in which the Company or any Subsidiary conducts all or any part
of its business, or which asserts jurisdiction over any properties of the
Company or any Subsidiary, or (b) any entity exercising executive, legislative,
judicial, regulatory or administrative functions of, or pertaining to, any such
government.
"Governmental Entitlements" means, collectively, those certain
governmental permits, licenses, certificates, approvals, franchises,
concessions, authorizations, consents, orders and variances issued by a
Governmental Authority to a Person, as amended from time to time, and
applications therefor.
"holder" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant to
Section 13.1.
"Institutional Investor" means (a) any original purchaser of a Note,
(b) any holder of a Note holding more than 25% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"Lien" means, with respect to any Person, any mortgage, lien, pledge,
charge, security interest or other encumbrance, or any interest or title of any
vendor, lessor, lender or other secured party to or of such Person under any
conditional sale or other title retention agreement or Capital Lease, upon or
with respect to any property or asset of such Person (including in the case of
stock, stockholder agreements, voting trust agreements and all similar
arrangements).
"Make-Whole Amount" is defined in Section 8.6.
"Material" means material in relation to the business, operations,
affairs, financial condition, assets or properties of the Company and its
Subsidiaries taken as a whole.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations, affairs, financial condition, assets or properties of the
Company and its Subsidiaries taken as a whole, or (b) the ability of the Company
to perform its obligations under this Agreement and the Notes, or (c) the
validity or enforceability of this Agreement or the Notes.
"Memorandum" is defined in Section 5.3.
"Multiemployer Plan" means any Plan that is a "multiemployer plan" (as
such term is defined in section 4001(a)(3) of ERISA).
"Net Tangible Assets" means the aggregate amount of assets of the
Company and its consolidated Subsidiaries (less applicable reserves and other
properly deductible items) after deducting therefrom (a) all current liabilities
(other than the current portion of funded indebtedness) and (b) all goodwill,
trade names, trademarks, patents, unamortized debt discount
3
and expense (to the extent included in such aggregate amount of assets) and
other like intangibles (except regulatory assets, recorded on the balance sheet
in accordance with GAAP).
"Notes" is defined in Section 1.
"Officer's Certificate" means a certificate of a Senior Financial
Officer or of any other officer of the Company whose responsibilities extend to
the subject matter of such certificate.
"Opinion of Counsel" means an opinion in writing signed by independent
counsel of recognized national standing or other counsel reasonably satisfactory
to the Required Holders.
"Other Agreements" is defined in Section 2.
"Other Purchasers" is defined in Section 2.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
defined in ERISA or any successor thereto.
"Permitted Liens" means the following Liens:
(a) Liens for taxes, assessments or other governmental charges which
are not yet due and payable or the payment of which is not at the time required
by Section 9.4;
(b) Liens incidental to the conduct of business or the ownership of
properties and assets (including landlords', carriers', warehousemen's,
mechanics', materialmen's and other similar Liens) for sums not yet due and
payable and Liens to secure (i) the performance of bids, tenders, leases or
trade contracts or (ii) statutory obligations (including obligations under
workers compensation, unemployment insurance and other social security
legislation), surety or appeal bonds or other Liens incurred in the ordinary
course of business and not in connection with the borrowing of money;
(c) any attachment or judgment Lien, unless the judgment it secures
shall not, within 90 days after the entry thereof, have been discharged or
execution thereof stayed pending appeal, or shall not have been discharged
within 90 days after the expiration of any such stay;
(d) leases or subleases granted to others, easements, rights-of-way,
restrictions and other similar charges or encumbrances, in each case incidental
to, and not interfering with, the ordinary conduct of the business of the
Company or any of its Subsidiaries, provided that such Liens do not, in the
aggregate, materially detract from the value of such property;
(e) any Lien created to secure all or any part of the purchase price,
or to secure Debt incurred or assumed to pay all or any part of the purchase
price or cost of construction, of property (or any improvement thereon) acquired
or constructed by the Company or a Subsidiary after the Closing Date, provided
that
4
(i) any such Lien shall extend solely to the item or items of
such property (or improvement thereon) so acquired or constructed and, if
required by the terms of the instrument originally creating such Lien, other
property (or improvement thereon) which is an improvement to or is acquired for
specific use in connection with such acquired or constructed property (or
improvement thereon) or which is real property being improved by such acquired
or constructed property (or improvement thereon),
(ii) the principal amount of the Debt secured by any such Lien
shall at no time exceed an amount equal to the lesser of (A) the total purchase
price of such property (and any improvements thereon), or (B) the fair market
value (as determined in good faith by the board of directors of the Company) of
such property (and any improvements thereon) at the time of such acquisition or
construction, and
(iii) any such Lien shall be created contemporaneously with, or
within the period beginning 365 days before and ending 365 days after days
after, the acquisition or construction of such property;
(f) any Lien existing on property of a Person immediately prior to
its being consolidated with or merged into the Company or a Subsidiary or its
becoming a Subsidiary, or any Lien existing on any property acquired by the
Company or any Subsidiary at the time such property is so acquired (whether or
not the Debt secured thereby shall have been assumed);
(g) any other Lien permitted pursuant to the terms of Section 10.1;
and
(h) any Lien renewing, extending or refunding any Lien permitted by
paragraphs (e), (f), or (g) above, provided that (i) the principal amount of
Debt secured by such Lien immediately prior to such extension, renewal or
refunding is not increased or the maturity thereof reduced, (ii) such Lien is
not extended to any other property, and (iii) immediately after such extension,
renewal or refunding no Default or Event of Default would exist.
"Person" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"Plan" means an "employee benefit plan" (as defined in section 3(3) of
ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any of its Subsidiaries
or with respect to which the Company or any of its Subsidiaries may have any
liability.
"Principal Property" means any natural gas pipeline, natural gas
gathering system or gas storage facilities located in the United States,
including any fixed, tangible natural gas facilities directly related to the
transportation, storage or distribution of natural gas, except any such property
that in the opinion of the Board of Directors is not of material importance to
the business conducted by the Company and its consolidated Subsidiaries taken as
a whole.
"Principal Subsidiary" means any Subsidiary which owns a Principal
Property.
5
"property" or "properties" means, unless otherwise specifically
limited, real or personal property of any kind, tangible or intangible, choate
or inchoate.
"Purchaser's Counsel" is defined in Section 4.4
"QPAM Exemption" means Prohibited Transaction Class Exemption 84-14
issued by the United States Department of Labor.
"Required Holders" means, at any time, the holders of at least 51% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by the Company or any of its Affiliates).
"Responsible Officer" means any Senior Financial Officer and any other
officer of the Company with responsibility for the administration of the
relevant portion of this Agreement.
"Sale-Leaseback Transaction" means an arrangement pursuant to which
the Company or a Principal Subsidiary now owns or hereafter acquires a Principal
Property, sells or transfers it to a Person, and rents or leases it back from
such Person.
"Securities Act" means the Securities Act of 1933, as amended from
time to time.
"Senior Financial Officer" means the chief financial officer,
principal accounting officer, treasurer or controller of the Company.
"Stockholders' Equity" means, as of the time any determination thereof
is to be made, the sum of the Company's capital stock (which shall exclude
treasury stock and any capital stock subject to mandatory redemption by the
holder thereof) and additional paid-in capital plus retained earnings (minus
accumulated deficit), all as shown on the consolidated balance sheet of the
Company and its Subsidiaries and based on GAAP as in effect on the date of such
determination.
"Subsidiary" means, as to any Person, any corporation, association or
other business entity in which such Person or one or more of its Subsidiaries or
such Person and one or more of its Subsidiaries owns sufficient equity or voting
interests to enable it or them (as a group) ordinarily, in the absence of
contingencies, to elect a majority of the directors (or Persons performing
similar functions) of such entity, and any partnership or joint venture if more
than a 50% interest in the profits or capital thereof is owned by such Person or
one or more of its Subsidiaries or such Person and one or more of its
Subsidiaries (unless such partnership or joint venture can and does ordinarily
take major business actions without the prior approval of such Person or one or
more of its Subsidiaries). Unless the context otherwise clearly requires, any
reference to a "Subsidiary" is a reference to a Subsidiary of the Company.
"Subsidiary Stock" means the stock (or any options or warrants to
purchase stock or other Securities exchangeable or convertible into stock) of
any Principal Subsidiary.
"Total Capitalization" shall mean the sum, at the time outstanding and
without
6
duplication, of (i) Total Debt, plus (ii) Stockholders' Equity.
"Total Debt" shall mean on a consolidated basis for the Company and
its Subsidiaries at any time a determination thereof is to be made, the sum
without duplication of: (a) all Debt, and (b) all obligations of such Person as
lessee under leases which have been or should be, in accordance with GAAP,
recorded as Capital Lease Obligations.
"Transfer" means, with respect to any Person, any transaction in which
such Person sells, conveys, transfers or leases (as lessor) any of its property,
including, without limitation, Subsidiary Stock.
7