Exhibit
10.1
EXEC
U
TION VERSION
STOCK
PURCHASE AGREEMENT
by
and among
PUGET
ENERGY, INC.
and
THE
PURCHASERS NAMED HEREIN
Dated
as of October 25, 2007
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Table of Contents
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Page
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ARTICLE
I. DEFINITIONS
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1
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Section
1.1.
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Definitions
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1
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ARTICLE
II. PURCHASE AND SALE OF THE SECURITIES
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7
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Section
2.1.
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Issuance and Sale of Securities
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7
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Section
2.2.
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Registration Rights
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7
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Section
2.3.
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Closing and Delivery
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7
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ARTICLE
III. REPRESENTATIONS AND WARRANTIES OF THE
COMPANY
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8
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Section
3.1.
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Shares
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9
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Section
3.2.
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WKSI Status
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9
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Section
3.3.
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Investment Company
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9
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Section
3.4.
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Authority; Non-Contravention; Approvals;
Compliance
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9
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Section
3.5.
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Litigation
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11
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Section
3.6.
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Brokers and Finders
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11
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Section
3.7.
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Additional Representations
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11
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Section
3.8.
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No Other Representations of the Company
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11
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ARTICLE
IV. REPRESENTATIONS AND WARRANTIES OF THE
PURCHASERS
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11
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Section
4.1.
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Organization and Qualification
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11
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Section
4.2.
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Authority; Non-Contravention; Approvals;
Compliance
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11
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Section
4.3.
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Litigation
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13
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Section
4.4.
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No Vote Required
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13
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Section
4.5.
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Ownership of Company Stock
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13
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Section
4.6.
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Purchase for Investment
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13
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Section
4.7.
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Approvals
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13
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Section
4.8.
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Trustee Power
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13
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Section
4.9.
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No Other Representations of the Purchasers
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14
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ARTICLE
V. COVENANTS
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14
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Section
5.1.
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Registration Rights
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14
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Section
5.2.
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Reservation of Company Stock
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14
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Section
5.3.
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Listing of Shares
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14
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Section
5.4.
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Regulatory Matters
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14
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Section
5.5.
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Voting
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15
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Section
5.6.
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WKSI Status
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15
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Section
5.7.
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Use of Proceeds
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15
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Section
5.8.
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Expenses
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15
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Section
5.9.
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Confidentiality
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15
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Section
5.10.
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Public Announcement
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16
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Section
5.11.
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Purchasers' Obligations Several
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16
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ARTICLE
VI. CONDITIONS TO CLOSING OF THE PURCHASERS
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17
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Section
6.1.
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Representations and Warranties Correct
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17
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Section
6.2.
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Performance
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17
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Section
6.3.
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Regulatory Consents
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17
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Section
6.4.
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Authorizations
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17
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Section
6.5.
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Company Material Adverse Effect
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17
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Section
6.6.
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Opinion of Company’s Counsel
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18
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Section
6.7.
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No Injunction
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18
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Section
6.8.
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Merger Agreement
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18
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Section
6.9.
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Compliance Certificate
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18
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ARTICLE
VII. CONDITIONS TO CLOSING OF THE COMPANY
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18
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Section
7.1.
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Representations
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18
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Section
7.2.
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Performance
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18
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Section
7.3.
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Regulatory Consents
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18
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Section
7.4.
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Authorizations
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19
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Section
7.5.
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No Injunction
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19
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Section
7.6.
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Compliance Certificate
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19
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ARTICLE
VIII. TRANSFER RESTRICTIONS
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19
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Section
8.1.
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Lock-up Period
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19
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Section
8.2.
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Permitted Transfers
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19
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ARTICLE
IX. STANDSTILL
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20
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Section
9.1.
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Standstill
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20
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ARTICLE
X. INDEMNIFICATION
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21
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Section
10.1.
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Company Indemnification
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21
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Section
10.2.
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Investor Indemnification
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22
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Section
10.3.
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Procedure
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22
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Section
10.4.
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Indemnification Non-Exclusive
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23
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Section
10.5.
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Limitation on Company Indemnification
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23
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ARTICLE
XI. TERMINATION
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23
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ARTICLE
XII. GENERAL PROVISIONS
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23
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Section
12.1.
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Survival of Representations and Warranties
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23
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Section
12.2.
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Notices
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24
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Section
12.3.
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Entire Agreement
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24
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Section
12.4.
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Severability
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25
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Section
12.5.
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Interpretation
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25
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Section
12.6.
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Counterparts; Effect
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25
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Section
12.7.
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No Third-Party Beneficiaries
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25
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Section
12.8.
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Trustee Liability
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25
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Section
12.9.
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Governing Law
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25
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Section
12.10.
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Venue
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25
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Section
12.11.
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Waiver of Jury Trial and Certain Damages
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26
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Section
12.12.
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Assignment
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26
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STOCK PURCHASE AGREEMENT
This
STOCK PURCHASE AGREEMENT, dated as of October 25, 2007 (this
“ Agreement ”), is entered into by and
among Puget Energy, Inc., a Washington corporation (the
“ Company ”), and the purchasers listed on
Schedule 1 hereto (the “ Purchasers
”).
RECITALS
WHEREAS,
the Company wishes to sell 12,500,000 (twelve million, five
hundred thousand) shares of its common stock, par value $0.01
per share (the “ Company Common Stock ”),
together with the associated preferred share purchase rights
(the “ Rights ”) (the number of such shares
of Company Common Stock together with the associated Rights,
the “ Shares ”), to the Purchasers, and the
Purchasers wish to purchase the Shares.
NOW,
THEREFORE, the parties hereto agree as follows:
ARTICLE
I.
DEFINITIONS
Section
1.1.
Definitions . For purposes of this Agreement, the
following terms shall have the following meanings:
“
2007 WUTC Rate Case ” means the filing of the
proceeding at the WUTC expected to be initiated by Puget Sound
Energy, Inc. in December 2007 to increase or otherwise change
rates, charges or revenue requirements for transmission,
distribution or generation services.
“
Affiliate ”, with respect to any Person, shall
have the meaning set forth in Rule 12b-2 of the Exchange Act
as in effect on the date hereof.
“
Agreement ” has the meaning specified in the
Introduction.
“
BCH ” has the meaning specified in Section 4.23
of Exhibit B.
“
Blackout Notice ” has the meaning specified in
Section 2(c) of Exhibit A.
“
Blackout Period ” has the meaning specified in
Section 2(c) of Exhibit A.
“
Business Day ” means a day (not being a Saturday
or Sunday or a public holiday in Australia, Canada or the
United States of America) on which banks are open for general
business in New York City.
“
Closing ” has the meaning specified in Section
2.3(a).
“
Closing Date ” has the meaning specified in
Section 2.3(a).
“
Code ” has the meaning specified in Section 4.9
of Exhibit B.
“
Company ” has the meaning specified in the
Introduction.
“
Company Common Stock ” has the meaning specified
in the Recitals.
“
Company Disclosure Letter ” means the letter,
dated as of the date hereof, delivered by the Company to the
Purchasers simultaneously with the execution and delivery of
this Agreement.
“
Company Financial Statements ” has the meaning
specified in Section 4.5 of Exhibit B.
“
Company Hedging Guidelines ” has the meaning
specified in Section 4.20(a) of Exhibit B.
“
Company Material Adverse Effect ” means any
event, change or occurrence or development of a set of
circumstances or facts, which, individually or together with
any other event, change, occurrence or development, has or
would have a material adverse effect on (x) the business,
assets, liabilities, properties, financial condition or
results of operations of the Company and the Company
Subsidiaries taken as a whole or (y) the ability of the
Company to consummate the transactions contemplated by, or to
perform its obligations under, this Agreement; provided
, however , that the term "Company Material Adverse
Effect" shall not include (i) any such effect resulting from
any change, including any change in law, rule, or regulation
of any Governmental Authority, that applies generally to
similarly situated Persons, (ii) any such effect relating to
or resulting from general changes in the electric or natural
gas utility industry, other than such effects having a
disproportionate impact on the Company as compared to
similarly situated Persons, (iii) any such effect relating to
or resulting from the 2007 WUTC Rate Case before the WUTC,
(iv) any such effect relating to or resulting from changes to
accounting standards, principles or interpretations, (v) any
such effect resulting from the announcement of the execution
of the Merger Agreement or the consummation of the
transactions contemplated thereby (except to the extent that
the Company has made an express representation with respect to
the effect of such consummation on the Company), including any
such change resulting therefrom in the market value of the
Company Common Stock or the Company's credit rating, or from
any action, suit or proceeding relating to the Merger
Agreement or the transactions contemplated thereby, including
any such action, suit or proceeding alleging a breach of
fiduciary duty in connection with the execution, delivery,
approval or consummation of the transactions contemplated by
the Merger Agreement, (vi) any such effect resulting from the
replacement of the Designated Credit Agreements as
contemplated by Section 7.17 of the Merger Agreement, or (vii)
any such effect resulting from any action taken by any of the
parties outside the ordinary course of its business that is
required to be taken in order to comply with any provision of
the Merger Agreement, including, to the extent applicable,
Section 6.1 thereof.
“
Company Net Position ” has the meaning specified
in Section 4.20(a) of Exhibit B.
“
Company Parties ” has the meaning specified in
Section 10.2.
“
Company Plans ” has the meaning specified in
Section 4.10(a) of Exhibit B.
“
Company Preferred Stock ” has the meaning
specified in Section 4.3 of Exhibit B.
“
Company Reports ” has the meaning specified in
Section 4.5 of Exhibit B.
“
Company SEC Reports ” has the meaning specified
in Section 4.5 of Exhibit B.
“
Company Series R Preferred Stock ” has the
meaning specified in Section 4.3 of Exhibit B.
“
Company Stock Issuance Approvals ” has the
meaning specified in Section 3.4(c).
“
Company Subsidiary ” means a Subsidiary of the
Company.
“
Contracts ” has the meaning specified in Section
4.14 of Exhibit B.
“
Control ” means the possession, direct or
indirect, of the power to direct or cause the direction of the
management and policies of a Person, whether through the
ownership of securities, by contract or otherwise, which, for
the avoidance of doubt, shall include through a Person’s
capacity as general partner, trustee, “Responsible
Entity,” nominee, manager or adviser or
otherwise.
“
Demand Notice ” has the meaning specified in
Section 2(b) of Exhibit A.
“
Department of Justice ” means the United States
Department of Justice.
“
Designated Credit Agreements ” means the
Company's credit agreements set forth on Section 1.1(a) of the
Company Disclosure Letter.
“
Easement ” has the meaning specified in Section
4.6(c) of Exhibit B.
“
Easement Real Property ” has the meaning
specified in Section 4.6(a) of Exhibit B.
“
Environmental Claim ” has the meaning specified
in Section 4.13(g)(i) of Exhibit B.
“
Environmental Laws ” has the meaning specified in
Section 4.13(g)(ii) of Exhibit B.
“
Environmental Permits ” has the meaning specified
in Section 4.13(b) of Exhibit B.
“
ERISA ” has the meaning specified in Section
4.10(a) of Exhibit B.
“
ERISA Affiliate ” has the meaning specified in
Section 4.10(a) of Exhibit B.
“
Exchange Act ” means the Securities Exchange Act
of 1934, as amended, and the rules and regulations promulgated
thereunder.
“
FERC ” has the meaning specified in Section 4.23
of Exhibit B.
“
FPA ” has the meaning specified in Section 4.5 of
Exhibit B.
“
FTC ” means the United States Federal Trade
Commission.
“
Fund ” means any unit trust, investment trust,
investment company, limited partnership, general partnership
or other collective investment scheme, pension fund, insurance
company or any body corporate or other entity, in each case,
the business, operations or assets of which are managed
professionally for investment purpose.
“
GAAP ” has the meaning specified in Section 4.5
of Exhibit B.
“
Governmental Authority ” means any court,
federal, state, local or foreign governmental or regulatory
body (including a national securities exchange or other
self-regulatory body), authority or other legislative,
executive or judicial entity.
“
Hazardous Materials ” has the meaning specified
in Section 4.13(g)(iii) of Exhibit B.
“
HEDC ” has the meaning specified in Section 4.23
of Exhibit B.
“
Hedging Contract ” has the meaning specified in
Section 4.14(b)(vii) of Exhibit B.
“
Holder ” has the meaning specified in Section 10
of Exhibit A.
“
HSR Act ” means the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.
“
Indemnified Party ” has the meaning specified in
Section 10.3.
“
Intellectual Property ” has the meaning specified
in Section 4.15(a) of Exhibit B.
“
Knowledge ” means when referring to the knowledge
of the Company or any Company Subsidiary the actual knowledge
of the Company officers listed on Section 1.1(b) of the
Company Disclosure Letter as would have been acquired in the
prudent exercise of their duties.
“
Leased Real Property ” has the meaning specified
in Section 4.6(a) of Exhibit B.
“
Lien ” has the meaning specified in Section
4.2(a) of Exhibit B.
“
Losses ” has the meaning specified in Section
7(a) of Exhibit A.
“
Material Contract ” has the meaning specified in
Section 4.14 of Exhibit B.
“
MBL ” means Macquarie Bank Limited and its
Affiliates.
“
Merger Agreement ” means the Agreement and Plan
of Merger, dated as of the date hereof, by and among Parent,
Padua Intermediate, Merger Sub and the Company.
“
Merger Sub ” means Padua Merger Sub, Inc., a
Washington corporation and a wholly owned subsidiary of Padua
Intermediate.
“
Options ” has the meaning specified in Section
4.10(m) of Exhibit B.
“
Owned Real Property ” has the meaning specified
in Section 4.6(a) of Exhibit B.
“
Padua Intermediate ” means Padua Intermediate
Holdings Inc., a Washington corporation and a wholly owned
subsidiary of the Parent.
“
Parent ” means Padua Holdings LLC, a Delaware
limited liability corporation.
“
PBGC ” has the meaning specified in Section
4.10(b) of Exhibit B.
“
Permitted Real Property Lien ” has the meaning
specified in Section 4.6(a) of Exhibit B.
“
Per Share Price ” has the meaning specified in
Section 2.1.
“
Person ” means any natural person, corporation,
general or limited partnership, limited liability company,
joint venture, trust, association or entity of any
kind.
“
Puget Sound Energy ” means Puget Sound Energy,
Inc., a Washington corporation and a wholly owned subsidiary
of the Company.
“
PUHCA ” has the meaning specified in Section 4.5
of Exhibit B.
“
PUHCA 2005 ” has the meaning specified in Section
4.23 of Exhibit B.
“
Purchaser Parties ” has the meaning specified in
Section 10.1.
“
Purchaser Required Statutory Approvals ” has the
meaning specified in Section 4.2(c).
“
Purchasers ” has the meaning specified in the
Introduction.
“
Purchaser’s Trust ” has the meaning
specified in Section 4.8.
“
Real Property ” has the meaning specified in
Section 4.6(a) of Exhibit B.
“
Real Property Lease ” has the meaning specified
in Section 4.6(c) of Exhibit B.
“
Registrable Shares ” means the Shares that are
not Transferable Shares, and any Company Common Stock or other
securities of the Company or any successor entity which may be
issued or distributed in respect of the Registrable Shares by
way of stock dividend or stock split or other distribution,
recapitalization, merger, conversion or
reclassification.
“
Registration Rights ” has the meaning specified
in Section 2.2.
“
Related Fund ” means, with respect to any Fund,
any other Person or Fund or subsidiary of a Fund which is
advised by, or the business, operations or assets of which are
managed (whether solely or jointly with others) from time to
time by or whose parent is managed by, the manager or adviser
of the Fund (or a Person that, directly or indirectly through
one or more intermediaries, Controls, is Controlled by, or is
under common Control with, that manager or adviser);
provided , however , (X) the term
“adviser” shall mean an entity which provides a
Person with advice in relation to the management of
investments of that Person; (Y) the term “manager”
with respect to any Fund shall mean any general partner,
trustee, responsible entity, nominee, manager, adviser or
other entity performing a similar function with respect to
such Fund; and (Z) no Person which is or holds shares for a
complying superannuation fund for the purposes of the
Australian Superannuation Industry (Supervision) Act 1996
shall deemed to be an affiliate of any Person which is or
holds shares for any other such Fund by reason of this
definition.
“
Release ” has the meaning specified in Section
4.13(g)(iv) of Exhibit B.
“
Rights ” has the meaning specified in the
Recitals.
“
Rights Agreement ” has the meaning specified in
Section 4.12 of Exhibit B.
“
SEC ” means the Securities and Exchange
Commission.
“
Securities Act ” means the Securities Act of
1933, as amended, and the rules and regulations promulgated
thereunder.
“
Selling Stockholders ” has the meaning specified
in Section 3 of Exhibit A.
“
Shares ” has the meaning specified in the
Recitals.
“
Shelf Registration Statement ” has the meaning
specified in Section 2(a) of Exhibit A.
“
SOX ” has the meaning specified in Section 4.5 of
Exhibit B.
“
Standstill Period ” means, with respect to any
Purchaser, the period commencing on the date hereof and ending
eighteen months after the date of the termination of the
Merger Agreement.
“
Subsidiary ” of a Person means any other Person
of which at least a majority of the voting power represented
by the outstanding capital stock or other voting securities or
interests having voting power under ordinary circumstances to
elect directors or similar members of the governing body of
such corporation or entity or fifty percent (50%) or more of
the equity interests in such corporation or entity shall at
the time be owned or controlled, directly or indirectly, by
such Person and/or by one or more of its
Subsidiaries.
“
Tax Return ” has the meaning specified in Section
4.9 of Exhibit B.
“
Taxes ” has the meaning specified in Section 4.9
of Exhibit B.
“
Title IV Company Plan ” has the meaning specified
in Section 4.10(d) of Exhibit B.
“
Trade Secrets ” has the meaning specified in
Section 4.15(a) of Exhibit B.
“
Transfer ” has the meaning specified in Section
8.1.
“
Transferable Shares ” means all or a portion of
the Shares that are eligible for resale pursuant to paragraph
(k) of Rule 144 under the Securities Act (or any similar
provision then in force).
“
Treasury Regulations ” has the meaning specified
in Section 4.9 of Exhibit B.
“
Violation ” has the meaning specified in Section
3.4(b).
“
WARN Act ” has the meaning specified in Section
4.11(e) of Exhibit B.
“
WUTC ” means the Washington Utilities and
Transportation Commission.
ARTICLE
II.
PURCHASE
AND SALE OF THE SECURITIES
Section
2.1.
Issuance and Sale of Securities . Upon the terms and
subject to the conditions of this Agreement, at the Closing, the
Company agrees to issue, sell and deliver to each Purchaser, and
each Purchaser severally agrees to purchase from the Company, the
number of Shares set forth opposite each Purchaser’s name on
Schedule 1 for a purchase price of $23.67 per Share (the “
Per Share Price ”).
Section
2.2.
Registration Rights . The Purchasers shall have the
rights to registration under the Securities Act of the Registrable
Shares, on the terms and subject to the conditions set forth in
Exhibit A (the “ Registration Rights ”);
provided , however , that such Registration Rights
may not be exercised prior to the termination of the lock-up period
contemplated by Section 8.1.
Section
2.3.
Closing and Delivery .
(a)
The
consummation of the purchase and sale of the Shares hereunder (the
“ Closing ”) shall take place on the fourth
Business Day immediately following the date on which the last of
the conditions set forth in Articles VI and VII hereof is fulfilled
or waived (other than any conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver
of those conditions at the Closing) at 10:00 a.m., local time, at
the offices of Latham & Watkins LLP, 885 Third Avenue, New
York, New York 10022, or such other date, time and place as the
Company and the Purchasers shall mutually agree in writing (the
date of the Closing being the “ Closing Date
”).
(b)
At
the Closing, the Company shall deliver to each Purchaser one or
more certificates, in such denominations and registered in such
Purchaser’s name as set forth on Schedule 1, representing the
number of Shares which such Purchaser is purchasing from the
Company, against delivery to the Company of a wire transfer of
immediately available funds in US dollars to the order of the
Company in the aggregate amount equal to the Per Share Price times
the relevant number of Shares to be purchased by such Purchaser in
accordance with Section 2.1, and the Company shall register the
Purchasers as the holders of the Shares in the register of holders
of the Company Common Stock.
Section
2.4.
Restrictive Legend . The certificates evidencing the
Shares shall bear the following legend until such time as (i) such
Shares are sold pursuant to an effective registration statement
under the Securities Act, (ii) such Shares are eligible for resale
in reliance on paragraph (k) of Rule 144 under the Securities Act,
or (iii) the Purchaser or any transferee thereof delivers an
opinion of counsel reasonably acceptable to the Company to the
effect that such legend is no longer required under the Securities
Act:
THESE
SECURITIES WERE SOLD IN A PRIVATE PLACEMENT, WITHOUT
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AND MAY BE
OFFERED OR SOLD ONLY IF REGISTERED UNDER THE SECURITIES ACT OF
1933 OR IF AN EXEMPTION FROM REGISTRATION IS
AVAILABLE. THESE SECURITIES ARE SUBJECT
TO THE PROVISIONS OF THE STOCK PURCHASE AGREEMENT, DATED AS OF
OCTOBER 25, 2007, BY AND AMONG THE COMPANY AND THE PURCHASERS
NAMED THEREIN AND MAY NOT BE SOLD OR TRANSFERRED EXCEPT IN
ACCORDANCE THEREWITH.
ARTICLE
III.
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company represents and warrants to each Purchaser that except
as set forth in (a) the Company Disclosure Letter, with
specific reference to the particular Section or Subsection of
this Agreement (or an exhibit hereto) to which the information
set forth in such letter relates (it being agreed that
disclosure of any item in any Section or Subsection of the
Company Disclosure Letter shall be deemed disclosure with
respect to any other Section or Subsection to which the
relevance of such item is reasonably apparent), or (b) for
purposes of Exhibit B and Section 3.4, the Company SEC Reports
filed by the Company with, or furnished by the Company to, the
SEC at any time on or after December 31, 2005 through the date
hereof and publicly available on the website of the SEC
through the Electronic Data Gathering, Analysis and Retrieval
System prior to the date hereof, other than information in the
"Risk Factors" or "Forward-Looking Statements" sections of
such Company SEC Reports, and any other similar disclosures
included in such Company SEC Reports that are predictive,
cautionary or forward-looking in nature; provided, however,
that nothing in the Company SEC Reports shall be deemed to
qualify, or be deemed to have been disclosed for the purposes
of, Exhibit B, Section 4.3:
Section
3.1.
Shares . The Shares to be issued, sold and delivered
pursuant to this Agreement have been duly authorized by all
requisite action of the Company and, when issued, will be validly
issued and outstanding, fully paid and nonassessable, and will not
be subject to any preemptive rights of the holders of any other
class or series of the capital stock of the
Company. Upon the issuance of the Shares, the Shares
will be free and clear of all transfer restrictions and Liens of
any nature whatsoever, with the exception of any restrictions on
transferability set forth herein or under the Securities Act or any
securities laws of any jurisdiction.
Section
3.2.
WKSI Status . The Company is a “well-known
seasoned issuer” and is not an “ineligible
issuer” (as such terms are defined in Rule 405 under the
Securities Act).
Section
3.3.
Investment Company . The Company is not and, after
giving effect to the offering and sale of the Shares and the
application of the proceeds thereof, will not be an
“investment company” or a company
“controlled” by an “investment company,” as
such terms are defined in the Investment Company Act of 1940, as
amended.
Section
3.4.
Authority; Non-Contravention; Approvals; Compliance
.
(a)
Authority . The Company has all requisite corporate
power and authority to enter into this Agreement and, subject to
the receipt of the applicable Company Stock Issuance Approvals, to
consummate the transactions contemplated hereby. The
execution and delivery of this Agreement and the consummation by
the Company of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly executed and
delivered by the Company and, assuming the due authorization,
execution and delivery hereof by the other signatories hereto,
constitutes the legal, valid and binding obligation of the Company
enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors’ rights and to general equity
principles.
(b)
Non-Contravention . Except as set forth in Section
3.4(b)(i) of the Company Disclosure Letter, the execution and
delivery of this Agreement by the Company does not, and the
consummation of the transactions contemplated hereby will not,
violate or result in a material breach of any provision of,
constitute a material default (with or without notice or lapse of
time or both) under, result in the termination or modification of,
accelerate the performance required by, result in a right of
termination, cancellation or acceleration of any obligation or the
loss of a material benefit under, or result in the creation of any
material Lien upon any of the properties or assets of the Company
or any of the Company Subsidiaries (any such violation, breach,
default, right of termination, modification, cancellation or
acceleration, loss or creation is referred to herein as a
“Violation” with respect to the Company and such term
when used in Article V has a correlative meaning with respect to
the Purchasers) pursuant to any provisions of (i) any debt
instruments relating to outstanding indebtedness for borrowed money
in amounts in excess of $25 million, the articles of incorporation,
by-laws or similar governing documents of the Company or any of the
Company Subsidiaries, (ii) the preferred stock and preference stock
of the Company and Puget Sound Energy, (iii) subject to obtaining
the Company Stock Issuance Approvals, any statute, law, ordinance,
rule, regulation, judgment, decree, order, injunction, writ, permit
or license of any Governmental Authority applicable to the Company
or any of the Company Subsidiaries or any of their respective
properties or assets or (iv) subject to obtaining the third-party
consents set forth in Section 3.4(b)(ii) of the Company Disclosure
Letter, any Material Contract or material note, bond, mortgage,
indenture, deed of trust, license, franchise, permit, concession,
contract, lease or other instrument, obligation or agreement of any
kind to which the Company or any of the Company Subsidiaries is a
party or by which they or any of their respective properties or
assets may be bound or affected, except in the case of clauses
(iii) or (iv) for any such Violation which, individually or in the
aggregate, would not reasonably be expected to result in a Company
Material Adverse Effect.
(c)
Statutory Approvals . Except as described in Section
3.4(c) of the Company Disclosure Letter (the “ Company
Stock Issuance Approvals ”), no declaration, report,
filing or registration with, or notice to or authorization, consent
or approval of, any Governmental Authority is necessary for the
execution and delivery of this Agreement by the Company or the
consummation by the Company of the transactions contemplated
hereby, except those that the failure of which to obtain,
individually or in the aggregate, would not reasonably be expected
to result in a Company Material Adverse Effect (it being understood
that references in this Agreement to “obtaining” such
Company Stock Issuance Approvals shall mean making such
declarations, filings or registrations; giving such notices;
obtaining such authorizations, consents or approvals; and having
such waiting periods expire as are necessary to avoid a violation
of law).
(d)
Compliance . Neither the Company nor any of the
Company Subsidiaries is in violation of, is, to the knowledge of
the Company, under investigation with respect to any violation of,
or has been given notice of or been charged with any violation of,
any law, statute, order, award, rule, regulation, ordinance or
judgment of any Governmental Authority, except for any such
violations which, individually or in the aggregate, would not
reasonably be expected to result in a Company Material Adverse
Effect. The Company and the Company Subsidiaries have
all permits, licenses, franchises and other governmental
authorizations, consents and approvals necessary to conduct their
businesses as presently conducted except those that the absence of
which, individually and in the aggregate, would not reasonably be
expected to result in a Company Material Adverse
Effect. Neither the Company nor any of the Company
Subsidiaries is in breach or violation of or in default in the
performance or observance of any term or provision of, and no event
has occurred which, with lapse of time or action by a third party,
would reasonably be expected to result in a default by the Company
or any Company Subsidiary under (i) their respective articles of
incorporation or by-laws or similar governing documents or (ii) any
contract, commitment, agreement, indenture, mortgage, loan
agreement, note, lease, bond, license, approval or other instrument
to which it is a party or by which the Company or any Company
Subsidiary is bound or to which any of their respective property is
subject, except in the case of clause (ii) for possible violations,
breaches or defaults which, individually or in the aggregate, would
not reasonably be expected to result in a Company Material Adverse
Effect.
(e)
Board Approval . The Board of Directors of the
Company has taken all action so that the Parent and the Purchasers
will not be prohibited from entering into or consummating a
"significant business transaction" with the Company (as such term
is used in Section 23B.19.010 et seq. of the Washington Business
Corporation Act) as a result of the execution of this Agreement or
the consummation of the transactions in the manner contemplated
hereby, and has taken all other necessary action such that the
consummation of the transactions contemplated by this Agreement
shall not be otherwise restricted or delayed pursuant to Chapter
23B.19 of the Washington Business Corporation Act.
Section
3.5.
Litigation . There is no suit, claim, action,
proceeding or investigation pending or, to the knowledge Company,
threatened against the Company that questions the validity or
legality of this Agreement or any action required to be taken by
the Company in connection with the consummation of the transactions
contemplated hereby or which individually or in the aggregate with
any other suits, claims, actions, proceedings or investigations
would reasonably be expected to prevent, materially delay or
materially impair the consummation of the transactions contemplated
by this Agreement.
Section
3.6.
Brokers and Finders . The Company has not entered
into any agreement or arrangement entitling any agent, broker,
investment banker, financial advisor or other firm or Person to any
broker’s or finder’s fee or any other commission or
similar fee in connection with any of the transactions contemplated
by this Agreement, except Morgan Stanley & Co. Incorporated,
whose fees and expenses will be paid by the Company in accordance
with the Company’s agreement with such firm. The
Company has made available to the Purchasers disclosure regarding
the amount of any such fee.
Section
3.7.
Additional Representations . In addition to the
representations and warranties of the Company set forth in Sections
3.1 through 3.6 of this Article III, the Company makes the
representations and warranties set forth in Exhibit B to each
Purchaser.
Section
3.8.
No Other Representations of the Company . Except for
the representations and warranties contained in this Article III
and Exhibit B, neither the Company nor any other Person acting on
behalf of the Company makes any representation or warranty, express
or implied, regarding the Company or any Company
Subsidiary.
ARTICLE
IV.
REPRESENTATIONS
AND WARRANTIES OF THE PURCHASERS
Each
Purchaser hereby severally represents and warrants to the
Company as follows:
Section
4.1.
Organization and Qualification . It is a corporation
or other entity duly organized and validly existing under the laws
of its jurisdiction of incorporation or organization, as the case
may be.
Section
4.2.
Authority; Non-Contravention; Approvals; Compliance
.
(a)
Authority . It has all requisite corporate or
limited liability company power and authority to enter into this
Agreement and, subject to the receipt of the applicable Purchaser
Required Statutory Approvals, to consummate the transactions
contemplated hereby. The execution and delivery of this
Agreement and the consummation by it of the transactions
contemplated hereby have been duly authorized by all necessary
corporate or limited liability company action on the part of such
Purchaser. This Agreement has been duly executed and
delivered by such Purchaser and, assuming the due authorization,
execution and delivery hereof by the other signatories hereto,
constitutes the valid and binding obligation of such Purchaser
enforceable against it in accordance with its terms, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors’ rights and to general equity
principles.
(b)
Non-Contravention . The execution and delivery of
this Agreement by it does not, and the consummation of the
transactions contemplated hereby will not, result in a Violation
pursuant to any provisions of (i) the certificate of incorporation,
certificate of formation, by-laws, limited liability company
operating agreement or similar governing documents, as applicable,
of such Purchaser and (ii) subject to obtaining the Purchaser
Required Statutory Approvals, any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or
license of any Governmental Authority applicable to such Purchaser
or any of its properties or assets except in the case of clause
(ii) for any such Violation which, individually or in the
aggregate, would not reasonably be expected to prevent, materially
delay or materially impair the consummation of the transactions
contemplated by this Agreement.
(c)
Statutory Approvals . Except as set forth on
Schedule 4.2(c) hereto (the “ Purchaser Required Statutory
Approvals ”), no declaration, report, filing or
registration with, or notice to or authorization, consent or
approval of, any Governmental Authority is necessary for the
execution and delivery of this Agreement by such Purchaser, or the
consummation by such Purchaser of the transactions contemplated
hereby, except those that the failure of which to obtain,
individually or in the aggregate (it being understood that
references in this Agreement to “obtaining” such
Purchaser Required Statutory Approvals shall mean making such
declarations, filings or registrations; giving such notices;
obtaining such authorizations, consents or approvals; and having
such waiting periods expire as are necessary to avoid a violation
of law), would not reasonably be expected to prevent, materially
delay or materially impair the consummation of the transactions
contemplated by this Agreement.
(d)
Compliance . Except as set forth in Schedule 4.2(d)
hereto, such Purchaser is not in violation of, is not, to such
Purchaser’s knowledge, under investigation with respect to
any violation of, and has not been given notice of or been charged
with any violation of, any law, statute, order, award, rule,
regulation, ordinance or judgment of any Governmental Authority,
except for any such violations which, individually or in the
aggregate, would not reasonably be expected to prevent, materially
delay or materially impair the consummation of the transactions
contemplated by this Agreement. Except as set forth in
Schedule 4.2(d) hereto, such Purchaser is not in breach or
violation of or in default in the performance or observance of any
term or provision of, and no event has occurred which, with lapse
of time or action by a third party, would reasonably be expected to
result in a default by such Purchaser under (i) its certificate of
incorporation, certificate of formation, by-laws, limited liability
company agreement or similar governing documents, as applicable, or
(ii) any contract, commitment, agreement, indenture, mortgage, loan
agreement, note, lease, bond, license, approval or other instrument
to which it is a party or by which it is bound or to which any of
its property is subject, except for possible violations, breaches
or defaults which, individually or in the aggregate, are not
reasonably likely to prevent, materially delay or materially impair
the consummation of the transactions contemplated by this
Agreement.
Section
4.3.
Litigation . There is no suit, claim, action,
proceeding or investigation pending or, to its knowledge,
threatened against it that questions the validity or legality of
this Agreement or any action required to be taken by it in
connection with the consummation of the transactions contemplated
hereby or which individually or in the aggregate with any other
suits, claims, actions, proceedings or investigations would
reasonably be expected to prevent, materially delay or materially
impair the consummation of the transactions contemplated by this
Agreement.
Section
4.4.
No Vote Required . No vote of the holders of any
class or series of the capital stock of such Purchaser is necessary
to approve this Agreement or the transactions contemplated
hereby.
Section
4.5.
Ownership of Company Stock . As of the date hereof,
neither such Purchaser nor any of its Affiliates (excluding for the
purposes of this Section 4.5 officers and directors of the
Purchasers) beneficially owns (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, shares of capital stock of
the Company. With respect to MBL, this representation
shall be limited to the knowledge of the Corporate Finance Division
of Macquarie Securities (USA) Inc.
Section
4.6.
Purchase for Investment . It acknowledges that the
Shares have not been registered under the Securities Act or under
any state securities laws. It (i) is acquiring the
Shares pursuant to an exemption from registration under the
Securities Act solely for investment with no present intention to
distribute any of the Shares to any Person, (ii) will not sell or
otherwise dispose of any of the Shares, except in compliance with
the registration requirements or exemption provisions of the
Securities Act and any other applicable securities laws, (iii) has
such knowledge and experience in financial and business matters and
in investments of this type that it is capable of evaluating the
merits and risks of its investment in the Shares and of making an
informed investment decision and (iv) is an accredited investor (as
that term is defined in Rule 501 promulgated under the Securities
Act).
Section
4.7.
Approvals . As of the date hereof, none of such
Purchaser’s officers (or persons holding a similar position)
know of any facts or circumstances relating to such Purchaser or
its Affiliates that are reasonably likely to prevent or materially
delay the receipt of the Purchaser Required Statutory
Approvals.
Section
4.8.
Trustee Power . To the extent a Purchaser has
entered into this Agreement in its capacity as a trustee or
responsible entity for another entity (such other entity, the
“ Purchaser’s Trust ”), such Purchaser (a)
has full rights to indemnification or reimbursement from assets of
such Purchaser’s Trust in connection with the performance of
all of its obligations under this Agreement, including the payment
or contribution of all funds required to be paid or contributed by
such Purchaser hereunder, (b) no approval or consent by any
Governmental Authority, third party or any other entity is
necessary in order for such Purchaser to exercise its rights to
indemnification or reimbursement from the assets of such
Purchaser’s Trust in connection with the performance of its
obligations under this Agreement, including the payment or
contribution of all funds required to be paid or contributed by
such Purchaser hereunder, and such Purchaser has not, and shall
not, take or omit to take any action that would eliminate or limit
such rights to indemnification or reimbursement, and (c) such
Purchaser’s Trust has sufficient assets from which to satisfy
all of such Purchaser’s obligations under this Agreement,
including the payment or contribution of all funds required to be
paid or contributed by such Purchaser hereunder.
Section
4.9.
No Other Representations of the Purchasers . Except
for the representations and warranties contained in this Article
IV, neither such Purchaser nor any other Person acting on its
behalf makes any representation or warranty, express or implied,
regarding such Purchaser.
ARTICLE
V.
COVENANTS
Section
5.1.
Registration Rights . The Company and each of the
Purchasers shall comply with the provisions contained in Exhibit A
regarding the Registration Rights.
Section
5.2.
Reservation of Company Stock . The Company shall
reserve and keep available out of its authorized but unissued
shares of Company Common Stock the Shares to be purchased and sold
at the Closing.
Section
5.3.
Listing of Shares . The Company shall cause the
Shares to be listed on the New York Stock Exchange prior to the
Closing Date.
Section
5.4.
Regulatory Matters .
(a)
HSR Filings . Each party hereto shall, as soon as
reasonably practicable after the date hereof, file or cause to be
filed with the FTC and the Department of Justice any notifications
required to be filed under the HSR Act, and the rules and
regulations promulgated thereunder, to the extent such act, rules
or regulations require the filing of such notification with respect
to such party and the transactions contemplated
hereby. Such parties will use their reasonable best
efforts to respond on a timely basis to any requests for additional
information made by either of such agencies.
(b)
Other Regulatory Approvals . Each party hereto shall
cooperate and use its reasonable best efforts to promptly prepare
and file all necessary documentation, to effect all necessary
applications, notices, petitions, filings and other documents, and
to use all commercially reasonable efforts to obtain all necessary
permits, consents, approvals and authorizations of all Governmental
Authorities necessary or advisable to obtain the Company Stock
Issuance Approvals and the Parent Required Statutory
Approvals. Each party hereto shall cooperate and use all
commercially reasonable efforts to obtain as promptly as reasonably
practicable all necessary permits, consents, approvals and
authorizations of all Governmental Authorities necessary or
advisable to obtain the Company Stock Issuance Approvals and the
Parent Required Statutory Approvals. Each party shall
have the right to review a reasonable time in advance and to
provide comments on any such filing.
(c)
Actions by Affiliates . Notwithstanding any other
provision of this Agreement, no Purchaser shall be required to, or
to cause any portfolio company, investment fund or other Affiliate
of any shareholder of such Purchaser or any director, officer,
employee, general partner, limited partner, member or manager of
any shareholder of such Purchaser to, take any action, undertake
any divestiture or restrict its conduct other than, in accordance
with the provisions of this Agreement, to provide responsive
information reasonably required to make any submission or
application to a Governmental Authority and to otherwise cooperate
in connection with any such submission or application as is
necessary and customary under the circumstances.
Section
5.5.
Voting . Prior to the termination of the Merger
Agreement, each Purchaser agrees that it shall vote all shares of
Company Common Stock beneficially owned by it with respect to any
matter to be voted on by the holders of the Company Common Stock
either (i) pro rata in proportion to the votes cast by the holders
of shares of Company Common Stock other than the Shares, or (ii) as
recommended by the board of directors of the Company, if the board
of directors has made a recommendation with respect to such matter,
so long as such shares of Company Common Stock may be lawfully
voted as so provided.
Section
5.6.
WKSI Status . The Company shall use its reasonable
best efforts to maintain its status as a “well-known seasoned
issuer,” and shall not become an “ineligible
issuer” (as such terms are defined in Rule 405 under the
Securities Act).
Section
5.7.
Use of Proceeds . The Company shall use the net
proceeds from the sale of the Shares to invest in Puget Sound
Energy for capital expenditures, debt redemption and working
capital.
Section
5.8.
Expenses . The Company and the Purchasers shall each
bear its own expenses and legal fees with respect to this Agreement
and the transactions contemplated hereby.
Section
5.9.
Confidentiality . Notwithstanding any other
agreements between the Purchasers and any of their Affiliates, on
the one hand, and the Company, on the other hand, the Purchasers
shall not, without the consent of the Company, disclose to any
Person non-public or confidential information concerning the
business or affairs of the Company and will hold all such
information in the strictest confidence; provided ,
however , that the Purchasers may disclose any such
information:
(i)
to
any Affiliate of the Purchasers or to the stockholders of the
Purchasers or of any such Affiliate; provided , that the
disclosure of such information is the subject of and protected by a
binding confidentiality agreement or obligation on comparable terms
to the provisions of the Nondisclosure Agreement, dated July 20,
2007, entered into by and between the Company and Macquarie
Securities (USA) Inc. (the “ Confidentiality Agreement
”);
(ii)
to
credit rating agencies;
(iii)
to
the extent such disclosure is required under applicable law,
including under securities laws (in particular, those relating to
continuous disclosure) or under the rules and
regulations of any national securities exchange (or comparable
international securities exchange) or over-the-counter market which
are applicable to the Purchaser or its Affiliates;
(iv)
to
a proposed permitted transferee of Shares that agrees to be bound
by a written confidentiality agreement on comparable terms to the
provisions of the Confidentiality Agreement; provided that
such confidentiality agreement shall not be required to include a
standstill provision unless after giving effect to such transfer,
the transferee, its affiliates and the other members of any group
of which such transferee is a member, would own 5% or more of the
Company Common Stock;
(v)
in
any case where a Purchaser is or holds the Shares for the benefit
of a private equity, infrastructure or any other investment fund,
to the manager of and investors in such fund (including but not
limited to limited partners, shareholders and beneficiaries of such
fund); provided , that the disclosure of such information is
the subject of and protected by a written confidentiality agreement
on comparable terms to the provisions of the Confidentiality
Agreement; and provided further that this provision
shall not prohibit such fund from providing its investors with
routine reports and other periodic information about the
fund’s investments;
(vi)
to
representatives of the Purchasers (including but not limited to
financial advisors, legal counsel and agents); provided ,
that the disclosure of such information is protected by an
obligation of confidentiality;
(vii)
that
has come into the public domain through no fault of the disclosing
Purchaser;
(viii)
to
a proposed purchaser or transferee of equity interests in the
Parent and to representatives (including but not limited to
financial advisors, legal counsel and agents) of such proposed
purchaser or transferee; provided , that the disclosure of
such information is the subject of and protected by a written
confidentiality agreement on comparable terms to the provisions of
the Confidentiality Agreement, or, in the case of its
representatives, is protected by an obligation of confidentiality;
and
(ix)
in
such other circumstances as may be agreed by the Company in writing
from time to time.
Section
5.10.
Public Announcement . Except as may be required by
law or by obligations pursuant to any listing agreement with or
rules of any national securities exchange, the Company and the
Purchasers shall consult with each other prior to issuing any press
release or otherwise making public announcements with respect to
the transactions contemplated by this Agreement. Each of
the Company and the Purchasers agrees that it will, to the extent
practicable, provide the other, reasonably in advance of its use,
with drafts of any press release or other widely disseminated
presentation or other information, in each case relating to the
transactions contemplated by this Agreement, and give reasonable
consideration to the comments of the other thereon. In
connection with the foregoing, the Company and the Purchasers may
share any such drafts with their respective investors and
representatives provided that any such investors or
representatives are bound by an obligation to maintain the
confidentiality of such information sufficient to satisfy the
requirements of Regulation FD promulgated under the Securities
Act. Each of the Company and the Purchasers will advise
the other in advance of the timing of any such press release,
presentation or other information relating to the transactions
contemplated by this Agreement and will provide the other with a
final copy of the same simultaneously with its public
release.
Section
5.11.
Purchasers’ Obligations Several . The
covenants of the Purchasers in this Agreement are several and not
joint or joint and several.
ARTICLE
VI.
CONDITIONS
TO CLOSING OF THE PURCHASERS
Each
Purchaser’s obligations to purchase the Shares at the
Closing is subject to the satisfaction or waiver by such
Purchaser on or prior to the Closing Date of each of the
following conditions:
Section
6.1.
Representations and Warranties Correct . The
representations and warranties made by the Company in Article III
and Exhibit B hereof shall be true and correct as of the date of
this Agreement and as of the Closing Date as though made on and as
of the Closing Date (except to the extent any such representation
or warranty expressly speaks as of an earlier date), except for
such failures of representations or warranties to be true and
correct (without giving effect to any materiality qualification or
standard contained in any such representations and warranties)
which, individually or in the aggregate, have not resulted in and
would not reasonably be expected to result in a Company Material
Adverse Effect.
Section
6.2.
Performance . All covenants, agreements and
conditions contained in this Agreement to be performed or complied
with by the Company on or prior to the Closing Date shall have been
performed or complied with in all material respects.
Section
6.3.
Regulatory Consents . All notices, reports and other
filings required to be made prior to the Closing by the Company or
any of its subsidiaries with, and all consents, registrations,
approvals, permits and authorizations required to be obtained prior
to the Closing by the Company or any of its subsidiaries from, any
Governmental Authority in connection with the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby by the Company shall have been made or obtained
and shall be effective on and as of the Closing Date.
Section
6.4.
Authorizations . All other authorizations, approvals
or permits, if any, of any Governmental Authority or regulatory
body that are required in connection with the lawful issuance and
sale of the Shares pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of the Closing Date,
other than any failures to obtain such authorizations, approvals or
permits that would not reasonably be expected to adversely affect
the Company in any material respect and except for such failures as
would not prevent or materially hinder or delay the consummation of
the purchases contemplated hereby.
Section
6.5.
Company Material Adverse Effect . No Company
Material Adverse Effect shall have occurred that is
continuing.
Section
6.6.
Opinion of Company’s Counsel . The Purchasers
shall have received from outside counsel to the Company an opinion
addressed to the Purchasers, dated the Closing Date, in form and
substance reasonably satisfactory to the Purchasers, to the effect
set forth in Exhibit C.
Section
6.7.
No Injunction . No temporary restraining order or
preliminary or permanent injunction or other order by any court of
competent jurisdiction preventing consummation of the transactions
contemplated by this Agreement shall have been issued and be
continuing in effect, and such transactions shall not have been
prohibited under any applicable federal or state law or
regulation.
Section
6.8.
Merger Agreement . The Merger Agreement shall be in
full force and effect and shall not have been
terminated.
Section
6.9.
Compliance Certificate . The Company shall have
delivered to the Purchasers a certificate of the Chief Executive
Officer or President of the Company, dated as of the Closing Date,
to the effect that the conditions set forth in Sections 6.1, 6.2,
6.3 and 6.4 have been satisfied. Such certificate shall
be substantially in the form set forth in Exhibit D.
ARTICLE
VII.
CONDITIONS
TO CLOSING OF THE COMPANY
The
Company’s obligation to sell the Shares at the Closing
is subject to the satisfaction or waiver by the Company on or
prior to the Closing Date of each of the following
conditions:
Section
7.1.
Representations . The representations and warranties
made by the Purchasers in Article IV hereof shall be true and
correct as of the date of this Agreement and as of the Closing Date
as though made on and as of the Closing Date (except to the extent
any such representation or warranty expressly speaks as of an
earlier date) except for such failures of representations or
warranties to be true and correct (without giving effect to any
materiality qualification or standard contained in any such
representations and warranties) which, individually or in the
aggregate, have not resulted in and would not reasonably be
expected to result in a any material adverse effect on the ability
of any Purchaser to consummate the transaction contemplated by this
Agreement.
Section
7.2.
Performance . All covenants, agreements and
conditions contained in this Agreement to be performed or complied
with by each Purchaser on or prior to the Closing Date shall have
been performed or complied with in all material
respects.
Section
7.3.
Regulatory Consents . All notices, reports and other
filings required to be made prior to the Closing by the Purchasers
or any of their respective subsidiaries with, and all consents,
registrations, approvals, permits and authorizations required to be
obtained prior to the Closing by the Purchasers or any of their
respective subsidiaries from, any Governmental Authority in
connection with the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby by the
Purchasers shall have been made or obtained and shall be effective
on and as of the Closing Date.
Section
7.4.
Authorizations . All other authorizations, approvals
or permits, if any, of any Governmental Authority or regulatory
body that are required in connection with the lawful issuance and
sale of the Shares pursuant to this Agreement shall have been duly
obtained and shall be effective on and as of the Closing Date,
other than any failures to obtain such authorizations, approvals or
permits that would not reasonably be expected to adversely affect
the Company in any material respect and except for such failures as
would not prevent or materially hinder or delay the consummation of
the purchases contemplated hereby.
Section
7.5.
No Injunction . No temporary restraining order or
preliminary or permanent injunction or other order by any court of
competent jurisdiction preventing consummation of the Merger shall
have been issued and be continuing in effect, and the Merger and
the other transactions contemplated hereby shall not have been
prohibited under any applicable federal or state law or
regulation.
Section
7.6.
Compliance Certificate . Each Purchaser shall have
delivered to the Company a certificate of an executive officer of
such Purchaser, dated as of the Closing Date, to the effect that
the conditions set forth in Sections 7.1, 7.2 and 7.3 have been
satisfied. Such certificate shall be substantially in
the form set forth in Exhibit E.
ARTICLE
VIII.
TRANSFER
RESTRICTIONS
Section
8.1.
Lock-up Period . Except as permitted by Section 8.2,
the Purchasers shall not (i) sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any
Shares (each, a “ Transfer ”) or (ii) enter into
any swap or other arrangement that transfers to another the
economic consequences of ownership of the Shares prior to the
earlier of (A) the consummation of the transactions contemplated by
the Merger Agreement; or (B) the termination of the Merger
Agreement.
Section
8.2.
Permitted Transfers . The restrictions on transfer
in Section 8.1 shall not apply to the following Transfers of Shares
(each of which exceptions shall be separate and not reduce the
scope or availability of any other exception):
(a)
(i)
to the Company, (ii) to any other Purchaser or to any Affiliate or
to any Related Fund of any Purchaser, (iii) to any party to the
Merger Agreement or (iv) to any equity holder or investor in
Parent; provided , in each case (other than a transfer to
the Company), that the transferee agrees in writing to the
covenants applicable to a Purchaser in Article V, the standstill
provisions applicable to a Purchaser in Article IX and the
restrictions on further transfers of such securities to the extent
provided in this Article VIII; or
(b)
in
sales pursuant to Rule 144 under the Securities Act.
Any
transfer made pursuant to this Section 8.2 shall comply with
all applicable federal and state securities laws and
regulations.
ARTICLE
IX.
STANDSTILL
Section
9.1.
Standstill .
(a)
During
the Standstill Period, except as provided in Section 9.1(b), and
except in respect of the transactions contemplated by this
Agreement and by the Merger Agreement, each Purchaser that
individually or as part of a “group” (as defined in the
Exchange Act) holds 2% or more of the outstanding shares of Company
Common Stock (collectively, the “ Standstill Entity
”) agrees that so long as such Standstill Entity holds 2% or
more of the outstanding shares of Company Common Stock it will not,
directly or indirectly, nor will it authorize or direct any of its
officers, employees, agents and other representatives to, in each
case, unless specifically consented to by the Board of Directors of
the Company:
(i)
form,
join, or in any way become a member of a “group” (as
defined in the Exchange Act) with any other Person (other than its
Affiliates or any other member of the Standstill Entity) with
respect to any voting securities of the Company;
(ii)
acquire
or agree, offer, seek or propose to acquire, or cause to be
acquired, beneficial ownership of, or participate in an acquisition
of, any securities or property of the Company or any of its
Subsidiaries, or any options, warrants or other rights (including,
without limitation, any convertible or exchangeable securities) to
acquire any such securities (except pursuant to a stock dividend,
stock split, reclassification, recapitalization or other similar
event by the Company that does not increase the percentage
ownership of the outstanding shares of Company Common Stock held by
such Standstill Entity);
(iii)
seek
to propose or propose, whether alone or in concert with others, any
tender offer, exchange offer, merger, business combination,
restructuring, liquidation, dissolution, recapitalization or
similar transaction involving the Company;
(iv)
make,
or in any way participate in, any “solicitation” of
“proxies” (as such terms are used in the proxy rules of
the SEC) with respect to the voting of any securities of the
Company or seek to advise or influence any Person with respect to
the voting of any securities of the Company;
(v)
nominate
any Person as a Director of the Company’s Board of Directors
or seek the removal of any Person as a Director of the
Company’s Board of Directors, or propose any matter to be
voted upon by the shareholders of the Company or seek to call a
meeting of the shareholders of the Company, or otherwise seek to
control the management or Board of Directors of the Company;
or
(vi)
take
any action with respect to or publicly announce or disclose any
intention, plan or arrangement inconsistent with the
foregoing.
(b)
Nothing
contained in Section 9.1(a) shall be deemed in any way to prohibit
or limit any transactions in the ordinary course of business and on
arm’s length terms between the Company and the Company
Subsidiaries, on the one hand, and a Purchaser and its Affiliates,
on the other hand, or in any way limit the full voting rights or
free transferability of the Shares.
(c)
Notwithstanding
anything to the contrary herein, in the case of MBL, the
restrictions in this Section 9.1 shall only apply to (i) the
Corporate Finance division of MBL, (ii) any other division of MBL
that beneficially owns Shares or has received non-public or
confidential information regarding the Company or any of its
Subsidiaries in connection with the negotiation or performance of
this Agreement or the Merger Agreement and (iii) any other Person
that is a Related Fund of MBL, in each case that beneficially owns
Shares or has received non-public or confidential information
regarding the Company or any of its Subsidiaries in connection with
the negotiation or performance of this Agreement or the Merger
Agreement.
(d)
Notwithstanding
anything to the contrary herein, in the case of CPP Investment
Board (USRE II) Inc. the restrictions in this Section 9.1 shall
only apply to CPP Investment Board (USRE II) Inc., any other Person
that is an Affiliate of CPP Investment Board (USRE II) Inc. and any
funds or similar vehicles managed by CPP Investment Board (USRE II)
Inc. or by an Affiliate of CPP Investment Board (USRE II) Inc., in
each case that beneficially owns Shares or has received non-public
or confidential information regarding the Company or any of its
Subsidiaries in connection with the negotiation or performance of
this Agreement or the Merger Agreement.
ARTICLE
X.
INDEMNIFICATION
Section
10.1.
Company Indemnification . The Company covenants and
agrees to indemnify and save and hold harmless the Purchasers,
together with their respective officers, directors, partners,
shareholders, members, employees, trustees, Affiliates, beneficial
owners, attorneys and representatives (collectively, the “
Purchaser Parties ”), from and against any and all
losses, costs, expenses, liabilities, claims or legal damages
(including, without limitation, reasonable fees and disbursements
of accountants and a single counsel selected by holders of a
majority of the Shares at such time and their costs and expenses
incident to any actual or threatened claim, suit, action or
proceeding, whether incurred in connection with a claim against the
Company or a third party claim) incurred by the Purchaser Parties,
up to the amount equal to the purchase price paid or to be paid by
such Purchaser under this Agreement, arising out of or resulting
from:
(a)
any
inaccuracy in or breach of any representation, warranty, covenant
or agreement made by the Company in this Agreement (including those
in Exhibit B) or in any writing delivered pursuant to this
Agreement; or
(b)
the
failure of the Company to perform or observe fully any covenant,
agreement or provision to be performed or observed by it pursuant
to this Agreement; provided , that the indemnity agreement
contained in this Section 10.1 shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if
such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld).
Section
10.2.
Investor Indemnification . Each Purchaser severally
covenants and agrees to indemnify and save and hold harmless the
Company, together with its officers, directors, shareholders,
employees, Affiliates, attorneys and representatives (collectively,
the “ Company Parties ”), from and against any
and all losses, costs, expenses, liabilities, claims or legal
damages (including, without limitation, reasonable fees and
disbursements of accountants and a single counsel and its costs and
expenses incident to any actual or threatened claim, suit, action
or proceeding, whether incurred in connection with a claim against
the Purchaser or a third party claim) incurred by the Company
Parties, up to the amount equal to the purchase price paid or to be
paid by such Purchaser under this Agreement, arising out of or
resulting from:
(a)
any
inaccuracy in or breach of any representation, warranty, covenant
or agreement made by such Purchaser in this Agreement or in any
writing delivered pursuant to this Agreement; or
(b)
the
failure of such Purchaser to perform or observe fully any covenant,
agreement or provision to be performed or observed by it pursuant
to this Agreement; provided, that the indemnity agreement contained
in this Section 10.2 shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Purchaser (which
consent shall not be unreasonably withheld).
Section
10.3.
Procedure . Any Person entitled to be indemnified
pursuant to Section 10.1 or 10.2 (each, an “ Indemnified
Party ”) shall notify the relevant Purchaser or the
Company, as the case may be, in writing of any action against such
Indemnified Party in respect of which the other party is or may be
obligated to provide indemnification on account of Section 10.1 or
10.2, promptly after the receipt of notice. The omission
of any Indemnified Party so to notify the other party of any such
action shall not relieve such other party from any liability which
it may have to such Indemnified Party except to the extent the
other party shall have been materially prejudiced by the omission
of such Indemnified Party so to notify it. In case any
such action shall be brought by a third party against any
Indemnified Party and it shall notify the other party of the
commencement thereof, the other party shall be entitled to
participate therein and, to the extent that such other party may
wish, to assume the defense thereof, with counsel reasonably
satisfactory to such Indemnified Party, and after notice from it to
such Indemnified Party of its election so to assume the defense
thereof, the other party will not be liable to such Indemnified
Party under Section 10.1 or 10.2 for any legal or other expense
subsequently incurred by such Indemnified Party in connection with
the defense thereof, or for any settlement thereof entered into
without the consent of the other party; provided ,
however , that if (i) the other party shall elect not to
assume the defense of such claim or action or (ii) the Indemnified
Party reasonably determines (x) that there may be a conflict
between the positions of the other party and of the Indemnified
Party in defending such claim or action or (y) that there may be
legal defenses available to such Indemnified Party different from
or in addition to those available to the other party, then separate
counsel for the Indemnified Party shall be entitled to participate
in and conduct the defense, in the case of clauses (i) and (ii)(x),
or such different defenses, in the case of clause (ii)(y), and the
other party shall be liable for any reasonable legal or other
expenses incurred by the Indemnified Party in connection with the
defense.
Section
10.4.
Indemnification Non-Exclusive . The foregoing
indemnification provisions are in addition to, and not in
derogation of, any statutory, equitable or common-law remedy any
party may have for breach of representation, warranty, covenant or
agreement.
Section
10.5.
Limitation on Company Indemnification . No payment
shall be due or payable by the Company in respect of any
indemnification obligation hereunder unless and until the Merger
Agreement has been terminated in accordance with the terms
thereof.
ARTICLE
XI.
TERMINATION
This
Agreement may be terminated (i) at any time prior to the
Closing Date by mutual written agreement of the Company and
the Purchasers, (ii) by the Purchasers if the Closing shall
not have occurred and the Merger Agreement shall have been
terminated (other than any termination of the Merger Agreement
by the Company pursuant to Section 9.1(f) thereof), (iii) by
the Company if the Closing shall not have occurred and the
Merger Agreement shall have been terminated by the Company
pursuant to Section 9.1(f) thereof or (iv) by the Company or
by the Purchasers who have agreed to purchase 90% of the
Shares if the Closing shall not have occurred on or prior to
January 31, 2008; provided , that the right to
terminate this Agreement shall not be available to any party
whose failure to fulfill any of its obligations under this
Agreement shall have proximately contributed to the failure of
the Closing to occur; and provided , further, that if
on January 31, 2008 the conditions to the Closing set forth in
Sections 6.3 or 7.3 shall not have been fulfilled but all
other conditions to the Closing shall be fulfilled or shall be
capable of being fulfilled, then such termination date shall
be extended to March 31, 2008. In the event of the
termination of this Agreement pursuant to this Article XI,
this Agreement shall forthwith become null and void and have
no effect, without any liability on the part of any Purchaser
or the Company and each of their respective officers,
directors, partners, shareholders, members, employees,
trustees, Affiliates, beneficial owners, attorneys and
representatives and all rights and obligations of any party
hereto shall cease, except for the agreements contained in
Sections 5.8 and 5.9 and Articles X and XII; provided ,
however , that nothing contained in this Article XI
shall relieve any party from liabilities or damages (i)
arising out of any fraud or willful breach by such party of
any of its representations, warranties, covenants or other
agreements contained in this Agreement (including those in
Exhibit B) or (ii) as otherwise provided in the Merger
Agreement.
ARTICLE
XII.
GENERAL
PROVISIONS
Section
12.1.
Survival of Representations and Warranties . The
representations and warranties of the parties in this Agreement
shall survive the Closing and the payment for and delivery of the
Shares, but shall not survive the Effective Time under the Merger
Agreement, if the Merger shall be consummated; provided ,
that, the Company shall not be liable to any Purchaser for any
breach of any representation or warranty unless and until the
Merger Agreement has been terminated in accordance with its
terms.
Section
12.2.
Notices . All notices and other communications
hereunder shall be in writing and shall be deemed given (a) when
delivered personally, (b) when sent by reputable overnight courier
service or (c) when telecopied or emailed (which is confirmed by
copy sent within one Business Day by a reputable overnight courier
service) to the parties at the following addresses (or at such
other address for a party as shall be specified by like
notice):
(i) If
to the Company, to:
Padua
10885
NE 4th Street, Suite 1200
Bellevue,
Washington 98004
Attn: Senior
Vice President and General Counsel
Telephone: (425)
462-3005
Telecopy: (425)
462-3300
Email: jennifer.o'connor@pse.com
with
a copy to:
Dewey
& LeBoeuf LLP
1301
Avenue of the Americas
New
York, New York 10019
Attn: William
S. Lamb, Esq.
Frederick
J. Lark, Esq.
Telephone: (212)
424-8170
Telecopy: (212)
424-8500
Email: blamb@dl.com
fjlark@dl.com
and
(ii) if
to the Purchasers, to the addresses set forth on Schedule
1;
with
a copy to:
Latham
& Watkins LLP
53rd
at Third
885
Third Avenue
New
York, New York 10022-4834
Attn: Edward
Sonnenschein, Esq.
David
Kurzweil, Esq.
Telephone: (212)
906-1200
Telecopy: (212)
751-4864
Email: ted.sonnenschein@lw.com
david.kurzweil@lw.com
Section
12.3.
Entire Agreement . This Agreement and the Merger
Agreement are being entered into simultaneously but are separate
transactions. Except as expressly set forth in this
Agreement, the provisions of the Merger Agreement are not intended
to, and in no way, modify or supplement the terms of this
Agreement. This Agreement, together with the exhibits
hereto and the Company Disclosure Letter delivered together
herewith, supersede all other prior agreements and understandings,
both written and oral, between the parties with respect to the
subject matter hereof; provided that nothing in this Agreement
shall affect the obligations of any party hereto pursuant to the
Confidentiality Agreement.
Section
12.4.
Severability . Any term or provision of this
Agreement that is held by a court of competent jurisdiction or
other authority to be invalid, void or unenforceable in any
situation in any jurisdiction shall not affect the validity or
enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in
any other situation or in any other jurisdiction. If the
final judgment of a court of competent jurisdiction or other
authority declares that any term or provision hereof is invalid,
void or unenforceable, the parties agree that the court making such
determination shall have the power to reduce the scope, duration,
area or applicability of the term or provision, to delete specific
words or phrases, or to replace any invalid, void or unenforceable
term or provision with a term or provision that is valid and
enforceable and that comes closest to expressing the intention of
the invalid or unenforceable term or provision.
Section
12.5.
Interpretation . When a reference is made in this
Agreement to Sections, Schedules or Exhibits, such reference shall
be to a Section, Schedule or Exhibit of this Agreement,
respectively, unless otherwise indicated. The table of
contents and headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Whenever the words
“include,” “includes” or
“including” are used in this Agreement, they shall be
deemed to be followed by the words “without
limitation,” if they are not already followed by such
words.
Section
12.6.
Counterparts; Effect . This Agreement may be
executed by facsimile and in one or more counterparts, each of
which shall be deemed to be an original, but all of which together
shall constitute one and the same agreement.
Section
12.7.
No Third-Party Beneficiaries . Except as otherwise
provided in Article X, this Agreement shall be binding upon and
inure solely to the benefit of each party hereto and each permitted
assignee hereof, and nothing in this Agreement, express or implied,
is intended to confer upon any other Person any rights or remedies
of any nature whatsoever under or by reason of this
Agreement.
Section
12.8.
Trustee Liability . Each of the parties hereto
covenants, agrees and acknowledges the terms of liability with
respect to trustees and responsible entities attached hereto as
Exhibit F.
Section
12.9.
Governing Law . This Agreement shall be governed by
and construed in accordance with the laws of the State of
Washington applicable to contracts entered into and to be performed
entirely within such State.
Section
12.10.
Venue . Each of the parties hereto irrevocably
agrees that any legal action or proceeding with respect to this
Agreement or the transactions contemplated hereby or for
recognition and enforcement of any judgment in respect hereof or
thereof, brought by any other party hereto or its successors or
assigns shall be brought and determined only in a federal or state
court loc
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