Document:

ex10-2_sdbondpurch.htm

Execution Version

 

NorthWestern Corporation

$64,000,000

First Mortgage Bonds, 5.01% Series due May 1, 2025

______________

Bond Purchase Agreement

______________

Dated April 26, 2010

 

 

 

 

2791341_05_00 (2) (2).doc

1929892

  

  

  

Table of Contents

 

	
Section

	
Heading 

	
Page

 

	
Section 1.

	
Description of Bonds 

	
1

 

	
Section 2.

	
Sale and Purchase of Bonds 

	
1

 

	
Section 3.

	
Closing 

	
2

 

	
Section 4.

	
Conditions to Closing 

	
2

	
  

	
Section 4.1.

	
Representations and Warranties 

	
2

	
  

	
Section 4.2.

	
Performance; No Default 

	
2

	
  

	
Section 4.3.

	
Compliance Certificates 

	
3

	
  

	
Section 4.4.

	
Opinions of Counsel 

	
3

	
  

	
Section 4.5.

	
Purchase Permitted By Applicable Law, Etc 

	
3

	
  

	
Section 4.6.

	
Sale of Other Bonds 

	
3

	
  

	
Section 4.7.

	
Payment of Special Counsel Fees 

	
4

	
  

	
Section 4.8.

	
Private Placement Number 

	
4

	
  

	
Section 4.9.

	
Changes in Corporate Structure 

	
4

	
  

	
Section 4.10.

	
Funding Instructions 

	
4

	
  

	
Section 4.11.

	
Commission Approval 

	
4

	
  

	
Section 4.12.

	
UCC Financing Statements 

	
4

	
  

	
Section 4.13.

	
Compliance with Indenture 

	
4

	
  

	
Section 4.14.

	
Proceedings and Documents 

	
4

	
  

	
Section 4.15.

	
Montana Dakota Transaction 

	
5

 

	
Section 5.

	
Representations and Warranties of the Company 

	
5

	
  

	
Section 5.1.

	
Organization; Power and Authority 

	
5

	
  

	
Section 5.2.

	
Authorization, Etc 

	
5

	
  

	
Section 5.3.

	
Disclosure 

	
5

	
  

	
Section 5.4.

	
Organization and Ownership of Shares of Subsidiaries; Affiliates 

	
6

	
  

	
Section 5.5.

	
Financial Statements; Material Liabilities 

	
6

	
  

	
Section 5.6.

	
Compliance with Laws, Other Instruments, Etc 

	
7

	
  

	
Section 5.7.

	
Governmental Authorizations, Etc 

	
7

	
  

	
Section 5.8.

	
Litigation; Observance of Agreements, Statutes and Orders 

	
7

	
  

	
Section 5.9.

	
Taxes 

	
7

	
  

	
Section 5.10.

	
Title to Property; Leases 

	
8

	
  

	
Section 5.11.

	
Licenses, Permits, Etc 

	
8

	
  

	
Section 5.12.

	
Compliance with ERISA 

	
8

	
  

	
Section 5.13.

	
Private Offering by the Company; Qualification of Indenture 

	
9

	
  

	
Section 5.14.

	
Use of Proceeds; Margin Regulations 

	
10

	
  

	
Section 5.15.

	
Existing Indebtedness; Future Liens 

	
10

 

  

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Section 5.16.

	
Foreign Assets Control Regulations, Etc 

	
10

	
  

	
Section 5.17.

	
Status under Certain Statutes 

	
11

	
  

	
Section 5.18.

	
Environmental Matters 

	
11

	
  

	
Section 5.19.

	
Lien of Indenture 

	
11

	
  

	
Section 5.20.

	
Filings 

	
12

	
  

	
Section 5.21.

	
Class 

	
12

 

	
Section 6.

	
Representations of the Purchasers 

	
12

	
  

	
Section 6.1.

	
Purchase for Investment 

	
12

	
  

	
Section 6.2.

	
Source of Funds 

	
13

 

	
Section 7.

	
Information as to Company 

	

14

	
  

	
Section 7.1.

	
Financial and Business Information 

	

14

	
  

	
Section 7.2.

	
Officer’s Certificate 

	

17

	
  

	
Section 7.3.

	
Visitation 

	

17

 

	
Section 8.

	
Covenants 

	

18

 

	
Section 9.

	
Expenses, Etc 

	

18

	
  

	
Section 9.1.

	
Transaction Expenses 

	

18

	
  

	
Section 9.2.

	
Survival 

	

19

 

	
Section 10.

	
Survival of Representations and Warranties; Entire Agreement 

	
19

 

	
Section 11.

	
Amendments and Waivers 

	
19

 

	
Section 12.

	
Notices 

	
20

 

	
Section 13.

	
Indemnification 

	
20

 

	
Section 14.

	
Miscellaneous 

	
20

	
  

	
Section 14.1.

	
Successors and Assigns 

	
20

	
  

	
Section 14.2.

	
Accounting Terms 

	
21

	
  

	
Section 14.3.

	
Severability 

	
21

	
  

	
Section 14.4.

	
Construction, Etc 

	
21

	
  

	
Section 14.5.

	
Counterparts 

	
21

	
  

	
Section 14.6.

	
Governing Law 

	
21

	
  

	
Section 14.7.

	
Jurisdiction and Process; Waiver of Jury Trial 

	
21

 

 

	
Signature

	
 

	
23

 

  

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Schedule A                             —         Information Relating to Purchasers

Schedule B                              —         Defined Terms

Schedule 4.12                          —         UCC Filings

Schedule 5.3                            —         Disclosure Materials

Schedule 5.4                            —         Subsidiaries of the Company and Ownership of Subsidiary Stock

Schedule 5.5                            —         Financial Statements

Schedule 5.7                            —         Required Approvals

Schedule 5.15                          —         Existing Indebtedness

Schedule 5.20                          —         Filings

Exhibit A                                  —        Form of Supplement

Exhibit 4.4(a)(i)                        —        Form of Opinion of Special Counsel for the Company

Exhibit 4.4(a)(ii)                       —        Form of Opinion of Local Counsel for the Company

Exhibit 4.4(a)(iii)                      —        Form of Opinion of General Counsel for the Company

Exhibit 4.4(b)                            —       Form of Opinion of Special Counsel for the Purchasers

 

 

 

  

  

  

NorthWestern Corporation

3010 West 69th Street

Sioux Falls, South Dakota 57108

First Mortgage Bonds, 5.01% Series due May 1, 2025

April 26, 2010

To Each of the Purchasers Listed in

Schedule A Hereto:

 

Ladies and Gentlemen:

 

NorthWestern Corporation (formerly known as NorthWestern Public Service Company), a corporation organized and existing under the laws of the State of Delaware (the “Company”), agrees with each of the purchasers whose names appear at the end hereof (each, a “Purchaser” and, collectively, the “Purchasers”) as follows:

 

	
Section 1.

	
Description of Bonds.

 

The Company will authorize the issue and sale of $64,000,000 aggregate principal amount of its First Mortgage Bonds, 5.01% Series due May 1, 2025 (the “Bonds”).  The Bonds will be issued under and secured by a General Mortgage Indenture and Deed of Trust dated as of August 1, 1993 from the Company to The Bank of New York Mellon (successor to The Chase Manhattan Bank (National Association)) as Trustee (the “Original Indenture”), as amended and supplemented by eight supplemental indentures, including the first dated as of August 15, 1993, the second dated as of August 1, 1995, each of the third, fourth and fifth dated as of September 1, 1995, the sixth dated as of February 1, 2003, the seventh dated as of November 1, 2004 and the eighth dated as of May 1, 2008 and as further supplemented and amended by a ninth supplemental indenture dated as of May 1, 2010 (the “Supplement”) which will be substantially in the form attached hereto as Exhibit A, with such changes therein, if any, as shall be approved by the Purchasers and the Company.  The Original Indenture, as supplemented by each of the aforementioned nine supplemental indentures, including the Supplement, is hereinafter referred to as the “Indenture.”  Certain capitalized and other terms used in this Agreement are defined in Schedule B; and references to a “Schedule” or an “Exhibit” are, unless otherwise specified, to a Schedule or an Exhibit attached to this Agreement.

 

	
Section 2.

	
Sale and Purchase of Bonds.

 

Subject to the terms and conditions of this Agreement, the Company will issue and sell to each Purchaser and each Purchaser will purchase from the Company, at the Closing provided for in Section 3, Bonds in the principal amount specified opposite such Purchaser’s name in Schedule A at the purchase price of 100% of the principal amount thereof.  The Purchasers’ obligations hereunder are several and not joint obligations and no Purchaser shall have any liability to any Person for the performance or non-performance of any obligation by any other Purchaser hereunder.

Exhibit 4.4(b)

(to Bond Purchase Agreement)

  

  

  

 

	
Section 3.

	
Closing.

 

The execution and delivery of the Agreement will occur at the offices of Chapman and Cutler LLP, 111 West Monroe Street, Chicago, Illinois 60603 on April 26, 2010 (the “Execution Date”).

 

The sale and purchase of the Bonds to be purchased by each Purchaser shall occur at the offices of Chapman and Cutler LLP, 111 West Monroe, Chicago, IL, at 10:00 a.m., Chicago time, at a closing (the “Closing”) on May 27, 2010 or such other Business Day thereafter on or prior to May 28, 2010, as may be agreed upon by the Company and the Purchasers.  At the Closing the Company will deliver to each Purchaser the Bonds to be purchased by such Purchaser in the form of a single Bond (or such greater number of Bonds in denominations of at least $1,000 as such Purchaser may request) dated the date of the Closing, authenticated by the Trustee and registered in such Purchaser’s name (or in the name of its nominee), against delivery by such Purchaser 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 153910224325 at  US Bank N.A., 800 Nicollet Mall, Minneapolis, MN 55402, ABA:  123000848, Account Name - NorthWestern Corporation General Account.  If at the Closing the Company shall fail to tender such Bonds to any Purchaser as provided above in this Section 3, or any of the conditions specified in Section 4 shall not have been fulfilled to such Purchaser’s satisfaction, such Purchaser shall, at its election, be relieved of all further obligations under this Agreement, without thereby waiving any rights such Purchaser may have by reason of such failure or such nonfulfillment.

 

	
Section 4.

	
Conditions to Closing.

 

Each Purchaser’s obligation to execute and deliver this Agreement on the Execution Date and to purchase and pay for the Bonds to be sold to such Purchaser at the Closing is subject to the fulfillment to such Purchaser’s reasonable satisfaction, prior to or at the Execution Date and/or the Closing, as the case may be, of the following conditions:

 

                          Section 4.1.Representations and Warranties.  The representations and warranties of the Company in this Agreement shall be correct when made on the Execution Date and at the time of the Closing.

 

                          Section 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 Execution Date and at the Closing and after giving effect to the issue and sale of the Bonds (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.

 

  

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                          Section 4.3.Compliance Certificates.  The Company shall have performed and complied with all agreements and conditions contained in the Indenture which are required to be performed or complied with by the Company for the issuance of the Bonds.  In addition the Company shall have delivered the following certificates:

 

                 (a)Officer’s Certificates.  The Company shall have delivered to such Purchaser (i) an Officer’s Certificate certifying that the conditions specified in Section 4 have been fulfilled, (ii) an Officer’s Certificate regarding  no Event of Default pursuant to Section 4.01(a)(vi) of the Indenture and (iii) an Officer’s Certificate regarding retired bonds pursuant to Section 4.04(b)(ii) of the Indenture, in each case, dated the date of the Closing.

 

                 (b)Secretary’s Certificate.  The Company shall have delivered to such Purchaser a certificate of its Secretary or Assistant Secretary, dated the date of Closing, certifying as to the resolutions attached thereto and other corporate proceedings relating to the authorization, execution and delivery of the Bonds and this Agreement.

 

                          Section 4.4.Opinions of Counsel.  Such Purchaser shall have received opinions in form and substance satisfactory to such Purchaser, dated the date of the Closing (a) (i) from Leonard, Street and Deinard, counsel for the Company, (ii) from local South Dakota, North Dakota, Iowa and Nebraska counsel for the Company (which may be in-house counsel for the Company), and (iii) from general counsel for the Company covering the matters set forth in Exhibits 4.4(a)(i), 4.4(a)(ii) and 4.4(a)(iii), respectively, and covering such other matters incident to the transactions contemplated hereby as such Purchaser or its counsel may reasonably request (and the Company hereby instructs its counsel to deliver such opinions to the Purchasers) and (b) from Chapman and Cutler LLP, the Purchasers’ special counsel in connection with such transactions, substantially in the form set forth in Exhibit 4.4(b) and covering such other matters incident to such transactions as such Purchaser may reasonably request.

 

                          Section 4.5.Purchase Permitted By Applicable Law, Etc.  On the date of the Closing such Purchaser’s purchase of Bonds shall (a) be permitted by the laws and regulations of each jurisdiction to which such Purchaser is 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 such Purchaser 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 such Purchaser, such Purchaser shall have received an Officer’s Certificate certifying as to such matters of fact regarding the Company and its Subsidiaries as such Purchaser may reasonably specify to enable such Purchaser to determine whether such purchase is so permitted.

 

                          Section 4.6.Sale of Other Bonds.  Contemporaneously with the Closing the Company shall sell to each other Purchaser and each other Purchaser shall purchase the Bonds to be purchased by it at the Closing as specified in Schedule A.

 

  

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                          Section 4.7.Payment of Special Counsel Fees.  Without limiting the provisions of Section 9, the Company shall have paid on or before the date of the Closing the reasonable fees, charges and disbursements of the Purchasers’ special counsel referred to in Section 4.4 to the extent reflected in a statement of such counsel rendered to the Company at least one Business Day prior to the date of the Closing.

 

                          Section 4.8.Private Placement Number.  On or before the date of the Closing, a Private Placement Number issued by Standard & Poor’s CUSIP Service Bureau (in cooperation with the SVO) shall have been obtained for the Bonds.

 

                          Section 4.9.Changes in Corporate Structure.  The Company shall not have changed its jurisdiction of incorporation or organization, as applicable, or been a party to any merger or consolidation or succeeded to all or any substantial part of the liabilities of any other entity, at any time following the date of the most recent financial statements referred to in Schedule 5.5.

 

                          Section 4.10.Funding Instructions.  At least three Business Days prior to the date of the Closing, each Purchaser shall have received written instructions signed by a Responsible Officer on letterhead of the Company confirming the information specified in Section 3 including (i) the name and address of the transferee bank, (ii) such transferee bank’s ABA number and (iii) the account name and number into which the purchase price for the Bonds is to be deposited.

 

                          Section 4.11.Commission Approval.  The Federal Energy Regulatory Commission (the “FERC”) shall have issued an appropriate order authorizing the issue and sale of the Bonds, and said order shall remain in full force and effect as of the date of Closing.  The issuance and effectiveness of such order shall be a condition precedent to the Company’s obligations to sell the Bonds.

 

                          Section 4.12.UCC Financing Statements and the Supplement.  All UCC Financing Statements, the Supplement, or other instruments with respect thereto as may be necessary, shall have been duly filed or recorded by any debtor party in such manner and in such places as is described in Schedule 4.12 (the “Collateral Filings”) and no other UCC Financing Statements or instruments shall be required to be filed to perfect the security interests and Liens of the Trustee in the Mortgaged Property created by or pursuant to the Indenture that can be perfected by filing a UCC Financing Statement under the UCC.

 

                          Section 4.13.Compliance with Indenture.  On or before the date of the Closing, the Company shall have performed and complied with all agreements and conditions contained in the Indenture which are required to be performed or complied with by the Company for the issuance of the Bonds.

 

                          Section 4.14.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 such Purchaser and its special counsel, and such Purchaser and its special counsel shall have received all such counterpart originals or certified or other copies of such documents as such Purchaser or such special counsel may reasonably request.

 

  

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                          Section 4.15.Montana Transaction.  The simultaneous closing of the transactions contemplated by that certain Bond Purchase Agreement of even date herewith between the Company and the purchasers listed on Schedule A thereto relating to the issuance of first mortgage bonds under the Company’s Mortgage and Deed of Trust dated as of October 1, 1945 between The Bank of New York Mellon (formerly The Bank of New York) (as successor to Guaranty Trust Company of New York), as corporate trustee, Ming Ryan (as indirect successor to Arthur E. Burke) as co-trustee, and the Company (as successor to NorthWestern Energy, L.L.C., in turn successor to The Montana Power Company), as Issuer, as amended and supplemented, shall be a condition precedent to the Company’s obligations to sell the Bonds to the Purchasers.

 

	
Section 5.

	
Representations and Warranties of the Company.

 

The Company represents and warrants to each Purchaser, on the Execution Date and the date of the Closing, that:

 

                          Section 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 is 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 could 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 the business it transacts and proposes to transact, to execute and deliver the Financing Agreements and to perform the provisions hereof and thereof.

 

                          Section 5.2.Authorization, Etc.  The Financing Agreements have been duly authorized by all necessary corporate action on the part of the Company, and the Financing Agreements constitute, and upon execution and delivery thereof by the Company and authentication by the Trustee, each Bond will constitute, a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights generally and (ii) general principles of equity (regardless of whether such enforceability is considered in a proceeding in equity or at law).

 

                          Section 5.3.Disclosure.  The Company, through its agent, JPMorgan Securities, Inc.,  has delivered to each Purchaser a copy of a Memorandum, dated April 7, 2010 (the “Memorandum”), relating to the transactions contemplated hereby.  This Agreement, the Memorandum and the documents, certificates or other writings delivered to the Purchasers by or on behalf of the Company in connection with the transactions contemplated hereby and identified in Schedule 5.3, and the financial statements listed in Schedule 5.5 (this Agreement, the Memorandum and such documents, certificates or other writings and such financial statements delivered to each Purchaser prior to April 8, 2010 being referred to, collectively, as the “Disclosure Documents”), 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.  Without limiting the foregoing, the Disclosure Documents fairly describe, in all material respects, the general nature of the business and principal properties of the Company and its Subsidiaries.  Except as disclosed in the Disclosure Documents, since December 31, 2009, there has been no change in the financial condition, operations, business, properties or prospects of the Company or any Subsidiary except changes that individually or in the aggregate could not reasonably be expected to have a Material Adverse Effect.  There is no fact known to the Company that could reasonably be expected to have a Material Adverse Effect that has not been set forth herein or in the Disclosure Documents.

 

  

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                          Section 5.4.Organization and Ownership of Shares of Subsidiaries; Affiliates.  (a) Schedule 5.4 contains (except as noted therein) complete and correct lists (i) 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, (ii) of the Company’s Affiliates, other than Subsidiaries, and (iii) of the Company’s directors and senior officers.

 

              (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 and 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 (except as otherwise disclosed in Schedule 5.4).

 

              (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 is 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 could 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 the business it transacts and proposes to transact.

 

              (d)No Subsidiary is a party to, or otherwise subject to any legal, regulatory, contractual or other restriction (other than this Agreement, the agreements listed on Schedule 5.4 or Schedule 5.15 and customary limitations imposed by corporate law or similar statutes) restricting the ability of such Subsidiary to pay dividends out of profits or make any other similar distributions of profits to the Company or any of its Subsidiaries that owns outstanding shares of capital stock or similar equity interests of such Subsidiary.

 

                          Section 5.5.Financial Statements; Material Liabilities.  The Company has delivered to each Purchaser copies of the financial statements of the Company and its Subsidiaries listed on 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 such Schedule 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).  The Company and its Subsidiaries do not have any Material liabilities that are not disclosed on such financial statements or otherwise disclosed in the Disclosure Documents.

 

  

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                          Section 5.6.Compliance with Laws, Other Instruments, Etc.  The execution, delivery and performance by the Company of the Financing Agreements will not (a) contravene, result in any breach of, or constitute a default under, or result in the creation of any Lien (other than the continuing Lien of the Indenture) 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 by-laws, or any other agreement or instrument to which the Company or any 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.

 

                          Section 5.7.Governmental Authorizations, Etc.   No consent, approval, authorization, or order of, or filing with, or declaration with, any Governmental Authority or body or any court is required for the consummation of the transactions contemplated by the Financing Agreements in connection with the issuance and sale of the Bonds by the Company except for filings with or the orders of the FERC, or as have already been obtained and which are set forth in Schedule 5.7.  The issuance and sale of the Bonds has been authorized by order of the FERC, which is in full force and effect.  No comment or notice of protest or intervention has been filed with the FERC by any third party in respect of the FPA Section 204 authorization issued by FERC on April 2, 2010 (the “FERC 204 Approval”), and the Company in good faith does not expect the FERC 204 Approval to be overturned, amended or modified during the applicable appeal period therefor.

 

                          Section 5.8.Litigation; Observance of Agreements, Statutes and Orders.  (a) There are no actions, suits, investigations 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, could reasonably be expected to have a Material Adverse Effect.

 

              (b)Neither the Company nor any Subsidiary is in default under any term of any agreement or instrument to which it is a party or by which it is bound, or 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 or the USA Patriot Act) of any Governmental Authority, which default or violation, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect.

 

                          Section 5.9.Taxes.  The Company and its Subsidiaries have filed all 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 levied upon them or their properties, assets, income or franchises, 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 Company knows of no basis for any other tax or assessment that could reasonably be expected to have a Material Adverse Effect.  The charges, accruals and reserves on the books of the Company and its Subsidiaries in respect of Federal, state or other taxes for all fiscal periods are adequate.  The Federal income tax liabilities of the Company and its Subsidiaries have been finally determined (whether by reason of completed audits or the statute of limitations having run) for all fiscal years up to and including the fiscal year ended December 31, 2000.

 

  

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                          Section 5.10.Title to Property; Leases.  The Company has good and marketable fee simple title to all properties owned by it which are subject to the Indenture, subject only (a) to the Lien of the Indenture, (b) to Permitted Liens (as defined in the Indenture) and (c) to minor exceptions and defects which do not, in the aggregate, materially interfere with the use by the Company of such properties for the purposes for which they are held, materially detract from the value of said properties or in any material way impair the security afforded by the Indenture.  Such properties constitute and comprise substantially all of the utility properties directly owned by the Company in the States of South Dakota, North Dakota, Nebraska and Iowa.  All leases that individually or in the aggregate are Material are valid and subsisting and are in full force and effect in all material respects.

 

                          Section 5.11.Licenses, Permits, Etc.  (a) The Company and its Subsidiaries own or possess all licenses, permits, franchises, authorizations, patents, copyrights, proprietary software, service marks, trademarks and trade names, or rights thereto, that individually or in the aggregate are Material, without known conflict with the rights of others.

 

              (b)To the best knowledge of the Company, no product of the Company or any of its Subsidiaries infringes in any material respect any license, permit, franchise, authorization, patent, copyright, proprietary software, service mark, trademark, trade name or other right owned by any other Person.

 

              (c)To the best knowledge of the Company, there is no Material violation by any Person of any right of the Company or any of its Subsidiaries with respect to any patent, copyright, proprietary software, service mark, trademark, trade name or other right owned or used by the Company or any of its Subsidiaries.

 

                          Section 5.12.Compliance with ERISA.  (a) The Company and each ERISA Affiliate have operated and administered each Plan in compliance with all applicable laws except for such instances of noncompliance as have not resulted in and could not reasonably be expected to result in a Material Adverse Effect.  Neither the Company nor any ERISA Affiliate 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 could reasonably be expected to result in the incurrence of any such liability by the Company or any ERISA Affiliate, or in the imposition of any Lien on any of the rights, properties or assets of the Company or any ERISA Affiliate, 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 or section 4068 of ERISA, other than such liabilities or Liens as would not be individually or in the aggregate Material.

 

  

-8-

  

 

              (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 $25,000,000 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 meaning specified in section 3 of ERISA.

 

              (c)The Company and its ERISA Affiliates 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 postretirement benefit obligation (determined as of the last day of the Company’s most recently ended fiscal year 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 not more than $20,000,000.

 

              (e)The execution and delivery of this Agreement and the issuance and sale of the Bonds 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 to each Purchaser in the first sentence of this Section 5.12(e) is made in reliance upon and subject to the accuracy of such Purchaser’s representation in Section 6.2 as to the sources of the funds used to pay the purchase price of the Bonds to be purchased by such Purchaser.

 

                          Section 5.13.Private Offering by the Company; Qualification of Indenture.  (a) Neither the Company nor anyone acting on its behalf has offered the Bonds 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 the Purchasers and not more than 75 other Institutional Investors, each of which has been offered the Bonds 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 Bonds to the registration requirements of Section 5 of the Securities Act or to the registration requirements of any securities or blue sky laws of any applicable jurisdiction.

 

              (b)Neither the execution and delivery of the Financing Agreements nor the consummation of the transactions contemplated thereby, including the issuance and sale of the Bonds , will require the qualification of the Indenture under the Trust Indenture Act of 1939, as amended.

 

  

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                          Section 5.14.Use of Proceeds; Margin Regulations.  The Company will apply the proceeds of the sale of the Bonds to refinance a portion of the Company’s outstanding 5.875% Senior Secured Notes due November 1, 2014.  No part of the proceeds from the sale of the Bonds 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 221), 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).  Margin stock does not constitute more than 5% of the value of the consolidated assets of the Company and its Subsidiaries and the Company does not have any present intention that margin stock will constitute more than 5% of the value of such assets.  As used in this Section, the terms “margin stock” and “purpose of buying or carrying” shall have the meanings assigned to them in said Regulation U.

 

                          Section 5.15.Existing Indebtedness; Future Liens.  (a) Schedule 5.15 sets forth a complete and correct list of all outstanding Indebtedness of the Company and its Subsidiaries as of December 31, 2009 (including a description of the obligors and obligees, principal amount outstanding and collateral therefor, if any, and Guaranty thereof, if any), since which date there has been no Material change in the amounts, interest rates, sinking funds, installment payments or maturities of the Indebtedness of the Company or its Subsidiaries.  Neither the Company nor any Subsidiary is in default and no waiver of default is currently in effect, in the payment of any principal or interest on any Indebtedness of the Company or such Subsidiary and no event or condition exists with respect to any Indebtedness of the Company or any Subsidiary that would permit (or that with notice or the lapse of time, or both, would permit) one or more Persons to cause such Indebtedness to become due and payable before its stated maturity or before its regularly scheduled dates of payment.

 

              (b)Except as disclosed in Schedule 5.15, neither the Company nor any Subsidiary has agreed or consented to cause or permit in the future (upon the happening of a contingency or otherwise) any of its property, whether now owned or hereafter acquired, to be subject to a Lien.

 

              (c)Neither the Company nor any Subsidiary is a party to, or otherwise subject to any provision contained in, any instrument evidencing Indebtedness of the Company or such Subsidiary, any agreement relating thereto or any other agreement (including, but not limited to, its charter or other organizational document) which limits the amount of, or otherwise imposes restrictions on the incurring of, Indebtedness of the Company, except as specifically indicated in Schedule 5.15.

 

                          Section 5.16.Foreign Assets Control Regulations, Etc.  (a) Neither the sale of the Bonds 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.

 

              (b)Neither the Company nor any Subsidiary (i) is a Person described or designated in the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control or in Section 1 of the Anti-Terrorism Order or (ii) engages in any dealings or transactions with any such Person.  The Company and its Subsidiaries are in compliance, in all material respects, with the USA Patriot Act.

 

  

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              (c)No part of the proceeds from the sale of the Bonds hereunder will be used, directly or indirectly, for any payments to any governmental official or employee, political party, official of a political party, candidate for political office, or anyone else acting in an official capacity, in order to obtain, retain or direct business or obtain any improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as amended, assuming in all cases that such Act applies to the Company.

 

                          Section 5.17.Status under Certain Statutes.  Neither the Company nor any Subsidiary is subject to regulation under the Investment Company Act of 1940, as amended, the Public Utility Holding Company Act of 2005, as amended, or the ICC Termination Act of 1995, as amended.

 

                          Section 5.18.Environmental Matters.  (a) Neither the Company nor any Subsidiary has knowledge of any claim or has received any notice of any claim, and no proceeding has been instituted raising any claim against the Company or any of its Subsidiaries or any of their respective real properties now or formerly owned, leased or operated by any of them or other assets, alleging any damage to the environment or violation of any Environmental Laws, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect.

 

              (b)Neither the Company nor any Subsidiary has knowledge of any facts which would give rise to any claim, public or private, of violation of Environmental Laws or damage to the environment emanating from, occurring on or in any way related to real properties now or formerly owned, leased or operated by any of them or to other assets or their use, except, in each case, such as could not reasonably be expected to result in a Material Adverse Effect.

 

              (c)Neither the Company nor any Subsidiary has stored any Hazardous Materials on real properties now or formerly owned, leased or operated by any of them and has not disposed of any Hazardous Materials in a manner contrary to any Environmental Laws in each case in any manner that could reasonably be expected to result in a Material Adverse Effect; and

 

              (d)All buildings on all real properties now owned, leased or operated by the Company or any Subsidiary are in compliance with applicable Environmental Laws, except where failure to comply could not reasonably be expected to result in a Material Adverse Effect.

 

                          Section 5.19.Lien of Indenture.  The Indenture (excluding the Supplement) constitutes, and the Indenture, when the Supplement shall have been duly filed for recording and recorded, will constitute, a valid and enforceable first mortgage lien for the equal and proportionate security of the mortgage bonds issued or to be issued thereunder, upon substantially all of the physical properties of the Company (other than the Excepted Property) which are specifically described therein as subject to the lien thereof and which are used or useful in the conduct of the Company’s utility business in South Dakota, North Dakota, Nebraska and Iowa, free from all prior liens, charges or encumbrances other than (a) Permitted Liens (as defined in the Indenture); and (b) in the case of property acquired after the date of the original execution and delivery of the Indenture, vendors’ liens, purchase money mortgages and any other liens thereon at the time of acquisition thereof, except to the extent that enforceability of such lien may be limited by the effect that the law of the jurisdictions in which the physical properties covered thereby are located may have upon the remedies provided in the Indenture.  Such limitations, however, do not make the remedies afforded inadequate for the realization of the material benefits of the security provided by the Indenture; provided that (x) enforceability of such lien may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforcement of creditors’ rights, and (y) the availability of specific performance, injunctive relief, or other equitable remedies is subject to the discretion of the court before which any proceeding therefor may be brought.  The after-acquired property clause in the Indenture subjects to the lien thereof all after-acquired utility property of the Company’s utility business in South Dakota, North Dakota, Nebraska and Iowa as provided therein (except such after-acquired property as may be deemed to be Excepted Property or is otherwise expressly excepted from the lien of the Indenture), provided, however, that with respect to after-acquired real property in the states of Nebraska and Iowa, a supplemental indenture must be recorded in order to subject such after-acquired property to the Lien of the Indenture.

 

  

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                          Section 5.20.Filings.  Except for those filings described in Schedule 5.20, no filing or recording of the Supplement is necessary to perfect the lien of the Indenture upon the properties now owned by the Company and intended to be subject thereto or to extend such lien for the benefit of the Bonds to be issued thereunder; no re-recording or refiling of the Indenture or any other instruments or documents (except for periodic filings which extend the effectiveness of financing statements) is required to preserve and protect the lien of the Indenture.  Under the present laws of the states in which the property intended to be subject to the lien of the Indenture is located, no further supplemental indentures or other instruments or documents are required to be executed, filed and/or recorded to extend the lien of the Indenture to after-acquired property; provided, however, that with respect to after-acquired real property in the states of Nebraska and Iowa, a supplemental indenture must be recorded in order to subject such after-acquired property to the Lien of the Indenture.  Notwithstanding the preceding sentence, the Company is required pursuant to Section 6.08 of the Indenture to promptly record and file the Supplement.

 

                          Section 5.21.Class “A” Bonds.  No Class “A” Bonds or other obligations are outstanding under any Class “A” Mortgage as of the date of Closing.

 

	
Section 6.

	
Representations of the Purchasers.

 

                          Section 6.1.Purchase for Investment.  Each Purchaser severally represents that it is purchasing the Bonds for its own account or for one or more separate accounts maintained by such Purchaser or for the account of one or more pension or trust funds and not with a view to the distribution thereof, provided that the disposition of such Purchaser’s or their property shall at all times be within such Purchaser’s or their control.  Each Purchaser severally represents that it and each party referenced in the preceding sentence on whose account Bonds are purchased by such Purchaser is an “accredited investor” within the meaning of Regulation D promulgated under the Securities Act.  Each Purchaser understands that the Bonds 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 Bonds and that a legend will be placed on the Bonds reflecting these circumstances.

 

  

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                          Section 6.2.Source of Funds.  Each Purchaser severally represents that at least one of the following statements is an accurate representation as to each source of funds (a “Source”) to be used by such Purchaser to pay the purchase price of the Bonds to be purchased by such Purchaser hereunder:

 

                 (a)the Source is an “insurance company general account” (as the term is defined in the United States Department of Labor’s Prohibited Transaction Exemption (“PTE”) 95-60) in respect of which the reserves and liabilities (as defined by the annual statement for life insurance companies approved by the National Association of Insurance Commissioners (the “NAIC Annual Statement”)) for the general account contract(s) held by or on behalf of any employee benefit plan together with the amount of the reserves and liabilities for the general account contract(s) held by or on behalf of any other employee benefit plans maintained by the same employer (or affiliate thereof as defined in PTE 95-60) or by the same employee organization in the general account do not exceed 10% of the total reserves and liabilities of the general account (exclusive of separate account liabilities) plus surplus as set forth in the NAIC Annual Statement filed with such Purchaser’s state of domicile; or

 

                 (b)the Source is a separate account that is maintained solely in connection with such Purchaser’s fixed contractual obligations under which the amounts payable, or credited, to any employee benefit plan (or its related trust) that has any interest in such separate account (or to any participant or beneficiary of such plan (including any annuitant)) are not affected in any manner by the investment performance of the separate account; or

 

                 (c)the Source is either (i) an insurance company pooled separate account, within the meaning of PTE 90-1 or (ii) a bank collective investment fund, within the meaning of the PTE 91-38 and, except as disclosed by such Purchaser to the Company in writing pursuant to this clause (c), 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

 

                 (d)the Source constitutes assets of an “investment fund” (within the meaning of Part V of PTE 84-14 (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 clause (d); or

 

  

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                 (e)the Source constitutes assets of a “plan(s)” (within the meaning of Section IV of PTE 96-23 (the “INHAM Exemption”)) managed by an “in-house asset manager” or “INHAM” (within the meaning of Part IV of the INHAM Exemption), the conditions of Part I(a), (g) and (h) of the INHAM Exemption are satisfied, neither the INHAM nor a person controlling or controlled by the INHAM (applying the definition of “control” in Section IV(d) of the INHAM Exemption) owns a 5% or more interest in the Company and (i) the identity of such INHAM and (ii) the name(s) of the employee benefit plan(s) whose assets constitute the Source have been disclosed to the Company in writing pursuant to this clause (e); or

 

                 (f)the Source is a governmental plan; or

 

                 (g)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 clause (g); or

 

                 (h)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,” and “separate account” shall have the respective meanings assigned to such terms in section 3 of ERISA.

 

	
Section 7.

	
Information as to Company.

 

                          Section 7.1.Financial and Business Information.  The Company shall deliver to each holder of Bonds that is an Institutional Investor:

 

                 (a)Quarterly Statements — within 60 days (or such shorter period as is 15 days greater than the period applicable to the filing of the Company’s Quarterly Report on Form 10-Q (the “Form 10-Q”) with the SEC regardless of whether the Company is subject to the filing requirements thereof) 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,

 

                 (i)a consolidated balance sheet of the Company and its Subsidiaries as at the end of such quarter, and

 

                 (ii)consolidated statements of income, changes in stockholders’ 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,

 

  

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setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year, all 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 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 Form 10-Q prepared in compliance with the requirements therefor and filed with the SEC shall be deemed to satisfy the requirements of this Section 7.1(a), provided, further, that the Company shall be deemed to have made such delivery of such Form 10-Q if it shall have timely made such Form 10-Q available on “EDGAR” and on its home page on the worldwide web (at the date of this Agreement located at:  http//www.northwesternenergy.com) and shall have given each Purchaser prompt notice of such availability on EDGAR and on its home page in connection with each delivery (such availability and notice thereof being referred to as “Electronic Delivery”);

 

                 (b)Annual Statements — within 105 days (or such shorter period as is 15 days greater than the period applicable to the filing of the Company’s Annual Report on Form 10-K (the “Form 10-K”) with the SEC regardless of whether the Company is subject to the filing requirements thereof) 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, changes in stockholders’ 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 public accountants of recognized national standing, which opinion shall state that such financial statements present fairly, in all material respects, the 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 that the delivery within the time period specified above of the Company’s Form 10-K for such fiscal year (together with the Company’s annual report to stockholders, if any, prepared pursuant to Rule 14a-3 under the Exchange Act) prepared in accordance with the requirements therefor and filed with the SEC, shall be deemed to satisfy the requirements of this Section 7.1(b), provided, further, that the Company shall be deemed to have made such delivery of such Form 10-K if it shall have timely made Electronic Delivery thereof;

 

  

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                 (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 its principal lending banks as a whole (excluding information sent to such banks in the ordinary course of administration of a bank facility, such as information relating to pricing and borrowing availability) or to its public securities holders generally, and (ii) each regular or periodic report, each registration statement (without exhibits except as expressly requested by such holder), and each prospectus and all amendments thereto filed by the Company or any Subsidiary with the SEC and of all press releases and other statements made available generally by the Company or any Subsidiary to the public concerning developments that are Material; provided that the Company shall be deemed to have made such delivery of such materials in clauses (i) and (ii) of this Section 7.1(c) if it shall have timely made Electronic Delivery thereof (to the extent delivery in such manner is available).

 

                 (d)Notice of Default or Event of Default — promptly, and in any event within five days after a Responsible Officer becoming aware of the existence of any Default or Event of Default or that any Person has given any notice or taken any action with respect to a claimed default hereunder or that any Person has given any notice or taken any action with respect to a claimed 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 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 an ERISA Affiliate proposes to take with respect thereto:

 

                 (i)with respect to any Plan, any reportable event, as defined in section 4043(c) 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 ERISA Affiliate of a notice from a Multi-employer Plan that such action has been taken by the PBGC with respect to such Multi-employer Plan; or

 

                 (iii)any event, transaction or condition that could result in the incurrence of any liability by the Company or any ERISA Affili­ate 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 ERISA Affiliate 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, could reasonably be expected to have a Material Adverse Effect;

 

  

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                 (f)Notices from Governmental Authority — promptly, and in any event within 30 days of receipt thereof, copies of any notice to the Company or any Subsidiary from any Federal or state Governmental Authority relating to any order, ruling, statute or other law or regulation that could reasonably be expected to have a Material Adverse Effect;

 

                 (g)Supplemental Indentures — promptly, and in any event within five days after the execution and delivery thereof, a copy of any indenture supplemental to the Indenture that the Company from time to time may hereafter execute and deliver; and

 

                 (h)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 (including, but without limitation, actual copies of the Company’s Form 10-Q and Form 10-K) or relating to the ability of the Company to perform its obligations hereunder and under the Bonds as from time to time may be reasonably requested by any such holder of Bonds.

 

                          Section 7.2.Officer’s Certificate.  Each set of financial statements delivered to a holder of Bonds pursuant to Section 7.1(b) shall be accompanied by a certificate of a Senior Financial Officer setting forth (which, in the case of Electronic Delivery of any such financial statements, shall be by separate concurrent delivery of such certificate to each holder of Bonds):

 

Event of Default — a statement that such Senior Financial 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 annual period covered by the statements then being furnished to the date of the certificate and that such review shall not have 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.

 

                          Section 7.3.Visitation.  The Company shall permit the representatives of each holder of Bonds 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) its independent public accountants, 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

 

  

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                 (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.

 

	
Section 8.

	
Covenants.

 

              (a)The Company will not, and will not allow any Subsidiary to, issue Class “A” Bonds under any Class “A” Mortgage or to incur any other obligations under any Class “A” Mortgage while the Bonds are outstanding.

 

              (b)The Company shall file the Supplement in a timely manner in all locations necessary in South Dakota, North Dakota, Nebraska and Iowa and in any event, the Company shall use commercially reasonable best efforts to file such Supplement within 60 days of the date of Closing.

 

              (c)The Company will not and will not permit any Affiliate to purchase, redeem, prepay or otherwise acquire, directly or indirectly, any of the outstanding Bonds except (a) upon the payment or prepayment of the Bonds in accordance with the terms of the Supplement and the Bonds or (b) pursuant to an offer to purchase made by the Company or an Affiliate pro rata to the holders of all Bonds at the time outstanding upon the same terms and conditions.  Any such offer 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 10% of the principal amount of the Bonds 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 Bonds of such offer shall be extended by the number of days necessary to give each such remaining holder at least 5 Business Days from its receipt of such notice to accept such offer.  The Company will promptly cancel all Bonds acquired by it or any Affiliate pursuant to any payment, prepayment or purchase of Bonds pursuant to any provision of the Supplement or this Section 8(c) and no Bonds may be issued in substitution or exchange for any such Bonds.

 

	
Section 9.

	
Expenses, Etc.

 

                          Section 9.1.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 by the Required Holders, local or other counsel) incurred by the Purchasers and each other holder of a Bond in connection with such transactions and in connection with any amendments, waivers or consents under or in respect of any Financing Agreement (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 any Financing Agreement or in responding to any subpoena or other legal process or informal investigative demand issued in connection with any Financing Agreement, or by reason of being a holder of any Bond, (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 work-out or restructuring of the transactions contemplated hereby and by the Bonds and (c) the costs and expenses incurred in connection with the initial filing of any Financing Agreement and all related documents and financial information with the SVO provided, that such costs and expenses under this clause (c) shall not exceed $3,000.  The Company will pay, and will save each Purchaser and each other holder of a Bond harmless from, all claims in respect of any fees, costs or expenses, if any, of brokers and finders (other than those, if any, retained by a Purchaser or other holder in connection with its purchase of the Bonds).

 

  

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                          Section 9.2.Survival.  The obligations of the Company under this Section 9 will survive the payment or transfer of any Bond, the enforcement, amendment or waiver of any provision of this Agreement or the Bonds, and the termination of this Agreement and the discharge of the Indenture.

 

	
Section 10.

	
Survival of Representations and Warranties; Entire Agreement.

 

All representations and warranties contained herein shall survive the execution and delivery of this Agreement and the Bonds, the purchase or transfer by any Purchaser of any Bond or portion thereof or interest therein and the payment of any Bond, and may be relied upon by any subsequent holder of a Bond, regardless of any investigation made at any time by or on behalf of such Purchaser or any other holder of a Bond.  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, the Financing Agreements embody the entire agreement and understanding between each Purchaser and the Company and supersede all prior agreements and understandings relating to the subject matter hereof.

 

	
Section 11.

	
Amendments and Waivers.

 

 Any term of this Agreement may be amended and the observance of any term hereof may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the holders of more than 50% in principal amount of the Bonds at the time outstanding.  Any amendment or waiver effected in accordance with this Section 11 shall be binding upon each holder of any Bond at the time outstanding, each future holder of any Bond and the Company.  Bonds directly or indirectly held by the Company or any Affiliate of the Company shall not be deemed outstanding for purposes of determining whether any amendment or waiver has been effected in accordance with this Section 11.

 

  

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Section 12.

	
Notices.

 

All notices and communications provided for hereunder shall be in writing and sent (a) by telecopy if the sender on the same day sends a confirming copy of such notice by a recognized overnight delivery service (charges prepaid), or (b) by registered or certified mail with return receipt requested (postage prepaid), or (c) by a recognized overnight delivery service (with charges prepaid).  Any such notice must be sent:

 

                 (i)if to any Purchaser or its nominee, to such Purchaser or nominee at the address specified for such communications in Schedule A, or at such other address as such Purchaser or nominee shall have specified to the Company in writing,

 

                 (ii)if to any other holder of any Bond, to such holder at such address as such other holder shall have specified to the Company in writing,

 

                 (iii)if to the Company, to the Company at its address set forth at the beginning hereof to the attention of the Treasurer, or at such other address as the Company shall have specified to the holder of each Bond in writing; or

 

                 (iv)if to the Trustee, to the Trustee at its address set forth in Section 1.08 of the Indenture or at such other address as the Trustee shall have specified to the Company and each other party hereto in writing.

 

Notices under this Section 12 will be deemed given only when actually received.

 

	
Section 13.

	
Indemnification.

 

The Company hereby agrees to indemnify and hold the Purchasers harmless from, against and in respect of any and all loss, liability and expense (including reasonable attorneys’ fees) arising from any misrepresentation or nonfulfillment of any undertaking on the part of the Company under this Agreement, or from any misrepresentation in, or omission from, this Agreement or any other instrument given, or to be given, to the Purchasers pursuant to this Agreement.  The indemnification obligations of the Company under this Section 13 shall survive the execution and delivery of this Agreement, the delivery of the Bonds to the Purchasers and the consummation of the transactions contemplated herein.

 

	
Section 14.

	
Miscellaneous.

 

                          Section 14.1.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 Bond) whether so expressed or not.

 

  

-20-

  

 

                          Section 14.2.Accounting Terms.  All accounting terms used herein which are not expressly defined in this Agreement have the meanings respectively given to them in accordance with GAAP.  Except as otherwise specifically provided herein, (i) all computations made pursuant to this Agreement shall be made in accordance with GAAP, and (ii) all financial statements shall be prepared in accordance with GAAP.

 

                          Section 14.3.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 law) not invalidate or render unenforceable such provision in any other jurisdiction.

 

                          Section 14.4.Construction, Etc.  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.

 

For the avoidance of doubt, all Schedules and Exhibits attached to this Agreement shall be deemed to be a part hereof.

 

                          Section 14.5.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.

 

                          Section 14.6.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 excluding choice-of-law principles of the law of such State that would permit the application of the laws of a jurisdiction other than such State.

 

                          Section 14.7.Jurisdiction and Process; Waiver of Jury Trial.  (a) The Company irrevocably submits to the non-exclusive jurisdiction of any New York State or federal court sitting in the Borough of Manhattan, The City of New York, over any suit, action or proceeding arising out of or relating to this Agreement or the Bonds.  To the fullest extent permitted by applicable law, the Company irrevocably waives and agrees not to assert, by way of motion, as a defense or otherwise, any claim that it is not subject to the jurisdiction of any such court, any objection that it may now or hereafter have to the laying of the venue of any such suit, action or proceeding brought in any such court and any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum.

 

              (b)The Company consents to process being served by or on behalf of any holder of Bonds in any suit, action or proceeding of the nature referred to in Section 14.7(a) by mailing a copy thereof by registered or certified mail (or any substantially similar form of mail), postage prepaid, return receipt requested, to it at its address specified in Section 12 or at such other address of which such holder shall then have been notified pursuant to said Section.  The Company agrees that such service upon receipt (i) shall be deemed in every respect effective service of process upon it in any such suit, action or proceeding and (ii) shall, to the fullest extent permitted by applicable law, be taken and held to be valid personal service upon and personal delivery to it.  Notices hereunder shall be conclusively presumed received as evidenced by a delivery receipt furnished by the United States Postal Service or any reputable commercial delivery service.

 

  

-21-

  

 

              (c)Nothing in this Section 14.7 shall affect the right of any holder of a Bond to serve process in any manner permitted by law, or limit any right that the holders of any of the Bonds may have to bring proceedings against the Company in the courts of any appropriate jurisdiction or to enforce in any lawful manner a judgment obtained in one jurisdiction in any other jurisdiction.

 

              (d)The parties hereto hereby waive trial by jury in any action brought on or with respect to this Agreement, the Bonds or any other document executed in connection herewith or therewith.

*    *    *    *    *

  

-22-

  

 

If you are in agreement with the foregoing, please sign the form of agreement on a counterpart of this Agreement and return it to the Company, whereupon this Agreement shall become a binding agreement between you and the Company.

  

	
  

	
Very truly yours,

 

	
  

	
NorthWestern Corporation

	
  

	
By  /s/ Brian B. Bird                            

	
  

	
Name:  Brian B. Bird

	
  

	
Title: Vice President, Chief Financial Officer and Treasurer

  

-23-

  

This Agreement is hereby accepted and agreed to as of the date thereof.

	
  

	
Thrivent Financial for Lutherans

	
  

	
By  /s/ Alan D. Onstad                           

	
  

	
Name:  Alan D. Onstad

	
  

	
Title:  Senior Director

	
  

	
Protective Life Insurance Company

	
  

	
By  /s/ Philip E. Passafiume                     

	
  

	
Name:  Philip E. Passafiume

	
  

	
Title:  Director, Fixed Income

	
  

	
Standard Insurance Company

	
  

	
By  /s/ Floyd Chadee                                

	
  

	
Name:  Floyd Chadee

	
  

	
Title:    Sr VP & CFO

	
  

	
PHL Variable Insurance Company

	
  

	
By  /s/ Christopher M. Wilkos                      

	
  

	
Name:  Christopher M. Wilkos, CFA

	
  

	
Title: Executive Vice President & Chief Investment Officer

 

  

-24-

  

 

	
  

	
Metropolitan Life Insurance Company

	
  

	
By:  /s/ John A. Tanyeri                                

	
  

	
Name: John A. Tanyeri

	
  

	
Title: Director

	
  

	
Union Fidelity Life Insurance Company

	
  

	
By:

	
MetLife Investment Advisors Company, LLC, its investment adviser

	
  

	
By:  /s/ John A. Tanyeri                                

	
  

	
Name: John A. Tanyeri

	
  

	
Title: Director

  

-25-

  

Acknowledgement and Consent

 

The undersigned hereby acknowledges receipt of an executed copy of this Agreement.

	
  

	
The Bank of New York Mellon, as Trustee

	
  

	
By  /s/ Larry O’Brien                                     

	
  

	
Authorized Signatory

  

-26-

  

	
  

	
Defined Terms

 

As used herein, the following terms have the respective meanings set forth below or set forth in the Section hereof following such term:

 

“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, and, with respect to the Company, shall include any Person beneficially owning or holding, directly or indirectly, 10% or more of any class of voting or equity interests of the Company or any Subsidiary or any corporation of which the Company and its Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly, 10% or more of any class of voting or equity interests.  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.

 

“Anti-Terrorism Order” means Executive Order No. 13,224 of September 24, 2001, Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit or Support Terrorism, 66 U.S. Fed. Reg. 49, 079 (2001), as amended.

 

“Bonds” is defined in Section 1.

 

“Business Day” means 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 New York, New York are required or authorized to be closed.

 

“Capital Lease” means, at any time, a lease with respect to which the lessee is required concurrently to recognize the acquisition of an asset and the incurrence of a liability in accordance with GAAP.

 

“Class “A” Bonds” is defined in the Indenture.

 

“Class “A” Mortgage” is defined in the Indenture.

 

“Closing” is defined in Section 3.

 

“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.

 

“Collateral Filings” is defined in Section 4.12.

 

“Company” means NorthWestern Corporation, a Delaware corporation, d/b/a NorthWestern Energy, or any successor.

 

  

-27-

  

 

“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.

 

“Electronic Delivery” is defined in Section 7.1(a).

 

“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 Materials.

 

“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.

 

“ERISA Affiliate” means any trade or business  (whether or not incorporated) that is treated as a single employer together with the Company under section 414 of the Code.

 

“Event of Default” is defined in the Indenture.

 

“Execution Date” is defined in Section 3.

 

“FERC” is defined in Section 4.11.

 

“Financing Agreements” means this Agreement, the Indenture, including, without limitation, the Supplement, and the Bonds.

 

“Form 10-K” is defined in Section 7.1(b).

 

“Form 10-Q” is defined in Section 7.1(a).

 

“GAAP” means generally accepted accounting principles as in effect from time to time in the United States of America.

 

“Governmental Authority” means

 

                 (a)the government of

 

                 (i)the United States of America or any State or other political subdivision thereof, or

 

                 (ii)any other 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

 

  

-28-

  

 

                 (b)any entity exercising executive, legislative, judicial, regulatory or administrative functions of, or pertaining to, any such government.

 

“Guaranty” means, with respect to any Person, any obligation (except the endorsement in the ordinary course of business of negotiable instruments for deposit or collection) of such Person guaranteeing or in effect guaranteeing any indebtedness, dividend or other obligation of any other Person in any manner, whether directly or indirectly, including (without limitation) obligations incurred through an agreement, contingent or otherwise, by such Person:

 

                 (a)to purchase such indebtedness or obligation or any property constituting security therefor;

 

                 (b)to advance or supply funds (i) for the purchase or payment of such indebtedness or obligation, or (ii) to maintain any working capital or other balance sheet condition or any income statement condition of any other Person or otherwise to advance or make available funds for the purchase or payment of such indebtedness or obligation;

 

                 (c)to lease properties or to purchase properties or services primarily for the purpose of assuring the owner of such indebtedness or obligation of the ability of any other Person to make payment of the indebtedness or obligation; or

 

                 (d)otherwise to assure the owner of such indebtedness or obligation against loss in respect thereof.

 

In any computation of the indebtedness or other liabilities of the obligor under any Guaranty, the indebtedness or other obligations that are the subject of such Guaranty shall be assumed to be direct obligations of such obligor.

 

“Hazardous Material” means any and all pollutants, toxic or hazardous wastes or other substances that might pose a hazard to health and safety, the removal of which may be required or the generation, manufacture, refining, production, processing, treatment, storage, handling, transportation, transfer, use, disposal, release, discharge, spillage, seepage or filtration of which is or shall be restricted, prohibited or penalized by any applicable law including, but not limited to, asbestos, urea formaldehyde foam insulation, polychlorinated biphenyls, petroleum, petroleum products, lead based paint, radon gas or similar restricted, prohibited or penalized substances.

 

“holder” means, with respect to any Bond the Person in whose name such Bond is registered in the register maintained by the Company.

 

“Indebtedness” with respect to any Person means, at any time, without duplication,

 

                 (a)its liabilities for borrowed money and its redemption obligations in respect of mandatorily redeemable Preferred Stock;

 

  

-29-

  

 

                 (b)its liabilities for the deferred purchase price of property acquired by such Person (excluding accounts payable arising in the ordinary course of business but including all liabilities created or arising under any conditional sale or other title retention agreement with respect to any such property);

 

                 (c)(i) all liabilities appearing on its balance sheet in accordance with GAAP in respect of Capital Leases and (ii) all liabilities which would appear on its balance sheet in accordance with GAAP in respect of Synthetic Leases assuming such Synthetic Leases were accounted for as Capital Leases;

 

                 (d)all liabilities for borrowed money secured by any Lien with respect to any property owned by such Person (whether or not it has assumed or otherwise become liable for such liabilities);

 

                 (e)all its liabilities in respect of letters of credit or instruments serving a similar function issued or accepted for its account by banks and other financial institutions (whether or not representing obligations for borrowed money);

 

                 (f)the aggregate Swap Termination Value of all Swap Contracts of such Person; and

 

                 (g)any Guaranty of such Person with respect to liabilities of a type described in any of clauses (a) through (f) hereof.

 

Indebtedness of any Person shall include all obligations of such Person of the character described in clauses (a) through (g) to the extent such Person remains legally liable in respect thereof notwithstanding that any such obligation is deemed to be extinguished under GAAP.

 

“Indenture” is defined in Section 1.

 

“Institutional Investor” means (a) any Purchaser of a Bond, (b) any holder of a Bond holding (together with one or more of its affiliates) more than 5% of the aggregate principal amount of the Bonds then outstanding, (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, and (d) any Related Fund of any holder of any Bond.

 

“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).

 

“Material” means material in relation to the business, operations, affairs, financial condition, assets, properties, or prospects of the Company and its Subsidiaries taken as a whole.

 

  

-30-

  

 

“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 Bonds, or (c) the validity or enforceability of this Agreement or the Bonds.

 

“Memorandum” is defined in Section 5.3.

 

“Mortgaged Property” is defined in the Indenture.

 

“Multiemployer Plan” means any Plan that is a “multiemployer plan” (as such term is defined in section 4001(a)(3) of ERISA).

 

“NAIC” means the National Association of Insurance Commissioners or any successor thereto.

 

“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.

 

“PBGC” means the Pension Benefit Guaranty Corporation referred to and defined in ERISA or any successor thereto.

 

“Person” means an individual, partnership, corporation, limited liability company, association, trust, unincorporated organization, business entity or Governmental Authority.

 

“Plan” means an “employee benefit plan” (as defined in section 3(3) of ERISA) subject to Title I 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 ERISA Affiliate or with respect to which the Company or any ERISA Affiliate may have any liability.

 

“Preferred Stock” means any class of capital stock of a Person that is preferred over any other class of capital stock (or similar equity interests) of such Person as to the payment of dividends or the payment of any amount upon liquidation or dissolution of such Person.

 

“property” or “properties” means, unless otherwise specifically limited, real or personal property of any kind, tangible or intangible, choate or inchoate.

 

“PTE” is defined in Section 6.2(a).

 

“Purchaser” is defined in the first paragraph of this Agreement.

 

“Qualified Institutional Buyer” means any Person who is a “qualified institutional buyer” within the meaning of such term as set forth in Rule 144A(a)(1) under the Securities Act.

 

  

-31-

  

 

“Related Fund” means, with respect to any holder of any Bond, any fund or entity that (a) invests in Securities or bank loans, and (b) is advised or managed by such holder, the same investment advisor as such holder or by an affiliate of such holder or such investment advisor.

 

“Required Holders” means, at any time, the holders of at least 51% in principal amount of the Bonds at the time outstanding (exclusive of Bonds 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.

 

“SEC” shall mean the Securities and Exchange Commission of the United States, or any successor thereto.

 

“Securities” or “Security” shall have the meaning specified in Section 2(1) of the Securities Act.

 

“Securities Act” means the Securities Act of 1933, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

 

“Senior Financial Officer” means the chief financial officer, principal accounting officer, treasurer or comptroller of the Company.

 

“Subsidiary” means, as to any Person, any other Person in which such first Person or one or more of its Subsidiaries or such first 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 second Person, and any partnership or joint venture if more than a 50% interest in the profits or capital thereof is owned by such first Person or one or more of its Subsidiaries or such first 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.

 

“Supplement” is defined in Section 1.

 

“SVO” means the Securities Valuation Office of the NAIC or any successor to such Office.

 

“Swap Contract” means (a) any and all interest rate swap transactions, basis swap transactions, basis swaps, credit derivative transactions, forward rate transactions, commodity swaps, commodity options, forward commodity contracts, equity or equity index swaps or options, bond or bond price or bond index swaps or options or forward foreign exchange transactions, cap transactions, floor transactions, currency options, spot contracts or any other similar transactions or any of the foregoing (including, but without limitation, any options to enter into any of the foregoing), and (b) any and all transactions of any kind, and the related confirmations, which are subject to the terms and conditions of, or governed by, any form of master agreement published by the International Swaps and Derivatives Association, Inc., any International Foreign Exchange Master Agreement.

 

  

-32-

  

 

“Swap Termination Value” means, in respect of any one or more Swap Contracts, after taking into account the effect of any legally enforceable netting agreement relating to such Swap Contracts, (a) for any date on or after the date such Swap Contracts have been closed out and termination value(s) determined in accordance therewith, such termination value(s), and (b) for any date prior to the date referenced in clause (a), the amounts(s) determined as the mark-to-market values(s) for such Swap Contracts, as determined based upon one or more mid-market or other readily available quotations provided by any recognized dealer in such Swap Contracts.

 

“Synthetic Lease” means, at any time, any lease (including leases that may be terminated by the lessee at any time) of any property (a) that is accounted for as an operating lease under GAAP and (b) in respect of which the lessee retains or obtains ownership of the property so leased for U.S. federal income tax purposes, other than any such lease under which such Person is the lessor.

 

“Trustee” is defined in the Indenture.

 

“USA Patriot Act” means United States Public Law 107-56, Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism (USA PATRIOT ACT) Act of 2001, as amended from time to time, and the rules and regulations promulgated thereunder from time to time in effect.

  

-33-tenone.htm

    EXHIBIT
10.1

     

    TEXTRON
INC. SHORT-TERM INCENTIVE PLAN

     

    (As
amended and restated effective January 3, 2010)

     

    

    SECTION
1. ESTABLISHMENT AND PURPOSE

     

    1.1   Establishment
of the Plan.   Textron Inc., a Delaware company (the “Company”),
hereby establishes a short-term incentive compensation plan to be known as the
Textron Inc. Short-Term Incentive Plan (the “Plan”). The Plan permits the
awarding of cash bonuses to Employees (as defined below), based on the
achievement of performance goals that are pre-established by the Board of
Directors of the Company (the “Board”) or by the Committee (as defined
below).

     

    The Plan,
as adopted by the Board and approved by the shareholders of the Company at the
2007 annual general meeting of shareholders, is effective as of January 1, 2007
and shall continue until December 31, 2016, unless terminated earlier as set
forth in Section 10.  The Plan is amended and restated as follows,
effective July 25, 2007, to incorporate those terms necessary or advisable to
ensure that awards under the Plan are exempt from or comply with Section 409A of
the Internal Revenue Code.

     

    The Plan
has been amended from time to time since the previous
restatement.  This restatement of the Plan reflects all amendments
adopted through the date of this restatement.

     

    1.2   Purpose.   The
purposes of the Plan are to (i) provide greater motivation for certain employees
of the Company and its Subsidiaries (as defined below) to attain and maintain
the highest standards of performance, (ii) attract and retain employees of
outstanding competence, and (iii) direct the energies of employees towards the
achievement of specific business goals established for the Company and its
Subsidiaries.

     

    The
purposes of the Plan shall be carried out by the payment to Participants (as
defined below) of short-term incentive cash awards, subject to the terms and
conditions of the Plan. All compensation payable under this Plan to Participants
who are Executive Officers (as defined below) is intended to be deductible by
the Company under Section 162(m) of the Code (as defined below).

     

    SECTION
2. DEFINITIONS

     

    As used
in the Plan, the following terms shall have the meanings set forth below (unless
otherwise expressly provided).

     

    “Award
Opportunity” means the various levels of incentive awards which a Participant
may earn under the Plan, as established by the Committee pursuant to Section
5.1.  For

     

     

     

    
      
        DC:
2469936-5

      

      
        
        

        
          

        

      

      
        
        

      

      an individual, the Award Opportunity is
typically expressed as a minimum and maximum percentage of the individual’s
Target Incentive Award (as defined below) that define a range within which the
actual incentive award will fall.  

       

      "Base
Salary” shall mean the regular annualized base salary (determined as of January
1 of each Plan Year with respect to Executive Officers) earned by a Participant
during a Plan Year prior to any salary reduction contributions made to any
deferred compensation plans sponsored or maintained by the Company or by any
Subsidiary; provided, however, that Base Salary shall not include awards under
this Plan, any bonuses, equity awards, the matching contribution under any plan
of the Company or any of its Subsidiaries (as applicable) providing such,
overtime, relocation allowances, severance payments or any other special awards
as determined by the Committee.

    

     

    “Beneficial
Owner” shall have the meaning ascribed to such term in Rule 13d-3 of the General
Rules and Regulations under the Exchange Act.

     

    “Board”
has the meaning set forth in Section 1.1.

     

    “Code”
means the Internal Revenue Code of 1986, as amended, and the regulations
promulgated thereunder.

     

    “Committee”
means the Organization and Compensation Committee of the Board, provided that
the Committee shall consist of three or more individuals, appointed by the Board
to administer the Plan, pursuant to Section 3, who are “outside directors” to
the extent required by and within the meaning of Section 162(m) of the Code, as
amended from time to time.

     

    “Company”
has the meaning set forth in Section 1.1.

     

    “Effective
Date” means the date the Plan becomes effective, as set forth in Section 1.1
herein.

     

    “Employee”
means an employee of the Company or a Subsidiary.

     

    “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to
time.

     

    “Executive
Officer” means a “covered employee” within the meaning of Section 162(m)(3) of
the Code or any other executive designated by the Committee for purposes of
exempting compensation payable under the Plan from the deduction limitations of
Section 162(m) of the Code.

     

    “Final Award” means the actual award earned during a
Plan Year by a Participant, as determined by the Committee at the end of such
Plan Year.

     

     

     

    
      
        
        

      

      
        - 2
-

        
          

        

      

      
        
        

      

    

     

    “Participant”
means an Employee who is participating in the Plan pursuant to Section
4.

     

    “Plan”
means this Textron Inc. Short-Term Incentive Plan.

     

    “Plan
Year” means the calendar year, commencing on January 1st and ending on December
31st, or any other period that the Committee designates as the performance
period for a particular performance goal pursuant to Section 5.1.

     

    “Subsidiary”
means any company or corporation in which the Company beneficially owns,
directly or indirectly, 50% or more of the securities entitled to vote in the
election of the directors of the corporation.

     

    “Target
Incentive Award” means the target award to be paid to a Participant when
performance measures are achieved, as established by the Committee. For an
individual, the Target Incentive Award is typically expressed as a percentage of
the individual’s Base Salary (as defined above).

     

    “Textron”
means Textron Inc., a Delaware corporation, and any successor of Textron
Inc.

     

    SECTION
3. ADMINISTRATION

     

    The Plan
shall be administered by the Committee. Subject to the limitations set forth in
the Plan, the Committee shall: (i) select from the Employees of the Company and
its Subsidiaries, those who shall participate in the Plan, (ii) establish Award
Opportunities in such forms and amounts as it shall determine, (iii) impose such
limitations, restrictions, and conditions upon such Award Opportunities as it
shall deem appropriate, (iv) interpret the Plan and adopt, amend, and rescind
administrative guidelines and other rules and regulations relating to the Plan,
(v) make any and all factual and legal determinations in connection with the
administration and interpretation of the Plan, (vi) correct any defect or
omission or reconcile any inconsistency in this Plan or in any Award Opportunity
granted hereunder, and (vii) make all other necessary determinations and take
all other actions necessary or advisable for the implementation and
administration of the Plan. The Committee's determinations on matters within its
authority shall be conclusive and binding upon all parties.

     

    Except with respect to the matters that under Section
162(m) of the Code and Treasury Regulation Section 1.162-27(e) are required to
be determined or established by the Committee to qualify awards to Executive
Officers under the Plan as qualified performance-based compensation, the
Committee shall have the power to delegate to any officer or employee of the
Company the authority to administer and interpret the procedural aspects of the
Plan, subject to the Plan's terms, including adopting and enforcing rules to
decide procedural and administrative issues. To the extent of any such

     

     

     

    
      
        
        

      

      
        - 3
-

        
          

        

      

      
        
        
delegation, references to the “Committee” herein shall
be deemed to refer to the relevant delegate.

    

     

    Subject
to applicable laws, rules and regulations:  (i) no member of the
Committee (or its delegates) shall be liable for any good faith action or
determination made in connection with the operation, administration or
interpretation of the Plan and (ii) the members of the Committee (and its
delegates) shall be entitled to indemnification and reimbursement in the manner
provided in the Company’s Certificate of Incorporation as it may be amended from
time to time. In the performance of its responsibilities with respect to the
Plan, the Committee shall be entitled to rely upon information and/or
advice
furnished by the Company’s officers or employees, the Company’s accountants, the
Company’s counsel and any other party the Committee deems necessary, and no
member of the Committee shall be liable for any action taken or not taken in
reliance upon any such information and/or advice.

     

    SECTION
4. ELIGIBILITY AND PARTICIPATION

     

    4.1   Eligibility.   Each
Employee who is included in the Plan by the Committee, shall be eligible to
participate in the Plan for such Plan Year and all subsequent Plan Years,
subject to the limitations of Section 7 herein.

     

    4.2   Participation.   Participation
in the Plan shall be determined annually by the Committee based upon the
criteria set forth in the Plan. Participation in the Plan during the applicable
Plan Year shall be limited to those Employees (“Participants”) who are selected
by the Committee. Employees who are eligible to participate in the Plan shall be
notified of the performance goals and related Award Opportunities for the
relevant Plan Year.

     

    4.3   Right
to Reduce or End Eligibility.   The Committee may elect to reduce
the Award Opportunity (as described in Section 5.2 herein) or end it altogether
for any single Participant or group of Participants at any time.

     

    SECTION
5. AWARD DETERMINATION

     

    5.1   Performance
Goals.   Prior to the beginning of each Plan Year, or as soon as
practicable thereafter, the Committee shall approve or establish in writing the
performance goals for that Plan Year. Performance goals may include financial
and/or non-financial goals.

     

    Performance goals and their relative weight may vary by
job. After the performance goals are established, the Committee will align the
achievement of the performance goals with the Award Opportunities (as described
in Section 5.2 herein), such that the level of achievement at the end of the
Plan Year as compared to the pre-established performance goals set at the
beginning of the Plan Year will determine the amount of the 

     

     

     

    
      
        
        

      

      
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Final Award. The Committee also shall have the authority
to exercise subjective discretion in the determination of Final Awards to reduce
or increase a calculated award based on the Committee's qualitative assessment
of performance.

    

     

    The
performance period with respect to which awards may be payable under the Plan
shall generally be the Plan Year; provided, however, that the Committee shall
have the authority and discretion to designate different performance periods
under the Plan, in which case references to Plan Year shall be deemed to refer
to such other performance period.

     

    5.2   Award
Opportunities.   Prior to the beginning of each Plan Year, or as
soon as practicable thereafter, the Committee shall establish an Award
Opportunity for each Participant. In the event a Participant changes job levels
during a Plan Year, the Participant's Award Opportunity may be adjusted to
reflect the amount of time at each job level during the Plan Year. In addition,
if a Participant changes jobs during the year, the Participant’s goals may
change as of the effective date of the job change to reflect the different
performance goals. Each job’s performance goals will continue to be assessed on
a full-year basis to determine payouts, with the proportion of time in each job
applied to determine the final payout amount.  In the case of an Award
Opportunity that the Committee has designated as “performance-based
compensation” for purposes of Section 162(m) or Section 409A of the Code, the
Committee shall have the right to adjust the Award Opportunity as described in
this Section 5.2 only to the extent that the adjustment would not cause the
Award Opportunity to fail to qualify as “performance-based compensation” for
purposes of Section 162(m) or Section 409A, as applicable.

     

    5.3   Adjustment
of Performance Goals.   The Committee shall have the right to
adjust the performance goals and the Award Opportunities (either up or down)
during a Plan Year if it determines that the occurrence of external changes or
other unanticipated business conditions have materially affected the fairness of
the goals and have unduly influenced the Company's ability to meet them,
including without limitation, events such as material acquisitions, changes in
the capital structure of the Company, and extraordinary accounting changes. In
addition, performance goals and Award Opportunities will be calculated without
regard to any changes in accounting standards that may be required by the
Financial Accounting Standards Board after such performance goals or Award
Opportunities are established. Further, in the event of a Plan Year of less than
twelve months, the Committee shall have the right to adjust the performance
goals and the Award Opportunities accordingly, at its sole
discretion.  In the case of an Award Opportunity that the Committee
has designated as “performance-based compensation” for purposes of Section
162(m) or Section 409A of the Code, the Committee shall have the right to adjust
the performance goals or Award Opportunity as described in this Section 5.3 only
to the extent that the adjustment would not cause the Award Opportunity to fail
to qualify as “performance-based compensation” for purposes of Section 162(m) or
Section 409A, as applicable.

     

     

     

    
      
        
          
          

        

        
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5.4   Final Award
Determinations.   At the end of each Plan Year, Final Awards
shall be computed for each Participant as determined by the Committee. Each
Final Award shall be based upon the (i) Participant’s Target Incentive Award
percentage, multiplied by his Base Salary and (ii) percent satisfaction of
performance goals (as set by the Committee). Final Award amounts may vary above
or below the Target Incentive Award, based on the level of achievement of the
pre-established performance goals.

      

    

     

    5.5   Limitations.   The
amount payable to a Participant for any Plan Year shall not exceed U.S.
$4,000,000.

     

    5.6   Award
Opportunities under Section 409A.  The Committee may, in its
discretion, establish Award Opportunities that will qualify as
“performance-based compensation” under Section 409A of the Code.  An
Award Opportunity intended to qualify as “performance-based compensation” under
Section 409A of the Code shall meet the following requirements:

     

    
      	
              (a)  

            	
              For
      any Participant who is eligible to participate in the Plan on the first
      day of the performance period, the performance period shall include at
      least 12 consecutive months;

            

    

     

    
      	
              (b)  

            	
              Performance
      goals shall be established no later than 90 days after the beginning of
      the performance period, and at a time when it is not substantially certain
      that the performance goals will be met.  Performance goals may
      not be adjusted after the first 90 days of the performance period, except
      that the Committee may, consistent with Section 409A, make adjustments it
      deems necessary to reflect corporate events, such as recapitalizations or
      mergers, that would otherwise affect the performance goals;
      and

            

    

     

    
      	
              (c)  

            	
              No
      Final Award shall be paid unless the pre-established performance goals are
      satisfied.

            

    

     

    SECTION
6. PAYMENT OF FINAL AWARDS

     

    6.1   Form and Timing of
Payment.   As soon as practicable after the end of each Plan
Year, the Committee shall determine the extent to which the Company and each
Participant has achieved the performance goals for such Plan Year, including the
specific target objective(s) and the satisfaction of any other material terms of
the awards, and the Committee shall approve the amount of each Participant's
Final Award for the relevant period. Final Award payments shall be payable to
the Participant, or to his estate in the case of death, in a single lump-sum
cash payment, as soon as practicable after the end of each Plan Year, after the
Committee, in its sole discretion, has certified in writing the extent to which
the specified performance goals were achieved, but in no event later than

     

     

     

    
      
        
        

      

      
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March 15th of the year following the calendar year in
which the applicable performance period ends..

    

     

    6.2   Payment
of Partial Awards.   In the event a Participant no longer meets
the eligibility criteria as set forth in the Plan during the course of a
particular Plan Year, the Committee may, in its sole discretion, compute and pay
a partial award in a lump sum on the scheduled date in Section 6.1 for the
portion of the Plan Year that an Employee was a Participant. Unless such payment
is specifically approved by the Committee, no such payments will be made, and
continued service through the end of the Plan Year shall be required to earn an
award. Unless the Committee determines otherwise, a Participant who has earned a
Final Award with respect to a completed Plan Year who subsequently terminates
employment or otherwise ceases eligibility before the date that the Final Award
is to be paid shall be paid such Final Award on the scheduled date.

     

    6.3   Unsecured
Interest.   No Participant or any other party claiming an
interest in amounts earned under the Plan shall have any interest whatsoever in
any specific asset of the Company or of any Subsidiary. To the extent that any
party acquires a right to receive payments under the Plan, such right shall be
equivalent to that of an unsecured general creditor of the Company.

     

    SECTION
7. TERMINATION OF ELIGIBILITY OR EMPLOYMENT

     

    7.1   Termination
of Eligibility.   In the event a Participant ceases to be
eligible to participate in the Plan during a Plan Year but remains employed by
the Company or a Subsidiary through the end of such Plan Year, the Final Award
determined in accordance with Section 5.4 herein shall be reduced to reflect
participation prior to such cessation of eligibility only. The reduced award
shall be based upon the proportionate amount of Base Salary earned during the
Plan Year prior to cessation of eligibility.

     

    The Final
Award thus determined shall be payable in a lump sum as soon as practicable
following certification of the relevant performance goals by the Committee for
the Plan Year in which such termination occurs, or sooner (except with respect
to Executive Officers), as determined by the Committee in its sole
discretion.  A participant’s Final Award shall be paid no later than
March 15 of the year following the calendar year in which the applicable
performance period ends.

     

    7.2   Termination
of Employment.   In the event a Participant's employment is
terminated for any reason, all of the Participant's rights to a Final Award for
the Plan Year then in progress shall be forfeited. However, the Committee, in
its sole discretion, may pay a partial award for the portion of that Plan Year
that the Participant was employed by the Company, computed as determined by the
Committee and paid in a lump sum no later than March 15 of the year following
the calendar year in which the applicable performance period ends.

     

     

     

    
      
        
          
          

        

        
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SECTION 8. RIGHTS OF
PARTICIPANTS

      

    

     

    8.1   Employment.   Nothing
in the Plan shall interfere with or limit in any way the right of the Company to
terminate any Participant's employment at any time, nor confer upon any
Participant any right to continue in the employ of the Company.

     

    8.2   Nontransferability.   No
right or interest of any Participant in the Plan shall be assignable or
transferable, or subject to any lien, directly, by operation of law, or
otherwise, including, but not limited to, execution, levy, garnishment,
attachment, pledge, and bankruptcy.

     

    SECTION
9. EXECUTIVE OFFICERS

     

    9.1   Applicability.   The
provisions of this Section 9 shall apply only to Executive Officers and are
intended to apply additional terms, conditions and limitations required for
amounts payable hereunder to Executive Officers to qualify as performance-based
compensation exempt from Section 162(m) of the Code. In the event of any
inconsistencies between this Section 9 and the other Plan provisions, the
provisions of this Section 9 shall control with respect to Executive
Officers.

     

    9.2   Performance Goals and Award
Opportunities.   With respect to Executive Officers, objective
written performance goals and Award Opportunities for a Plan Year shall be
established by the Committee (and the Committee only, with no delegation) (i)
while the attainment of the performance goals for the Plan Year is substantially
uncertain and (ii) no more than 90 days after the commencement of the Plan Year
(or a number of days equal to 25% of the Plan Year, if less). The performance
goals applicable to the Executive Officers shall be limited to the performance
goals listed below. The Committee may select one or more of the performance
goals specified for each Plan Year which need not be the same for each Executive
Officer in a given year. Performance goals will consist of specified levels of
one or more of the following performance criteria as the Committee deems
appropriate: operating cash flows from continuing operations, operating working
capital, free cash flow, revenues, segment profit, corporate expenses, special
charges, gain (loss) on sale of business, income from continuing operations, net
income, EBITDA—earnings before interest, taxes, depreciation and amortization,
EBIT—earnings before interest and taxes, EPS—earnings per share, as adjusted
EPS, ROA—return on assets, ROS—return on sales, ROE—return on equity,
ROIC—return on invested capital, WACC—weighted average cost of capital, total
shareholder return, stock price appreciation, growth in managed assets, organic
growth, cost performance, net cost reductions, inventory turns, selling and
administrative expense as a percentage of sales, days sales outstanding, ratio
of income to fixed charges, segment profit margins, total profit margin,
EVA—economic value added, intrinsic value and effective income tax rate. In each
case, performance goals shall be determined in accordance with generally
accepted accounting principles (subject to modifications approved by the
Committee) and shall be consistently applied on a 

     

     

     

    
      
        
        

      

      
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business unit, divisional, subsidiary or consolidated
basis or any combination thereof. Performance goals may be described in terms of
objectives that are related to the individual Participant or objectives that are
Company-wide or related to a Subsidiary, division, department, region, function
or business unit and may be measured on an absolute or cumulative basis or on
the basis of percentage of improvement over time, and may be measured in terms
of Company performance (or performance of the applicable Subsidiary, division,
department, region, function or business unit) or measured relative to selected
peer companies or a market index. In addition, for awards not intended to
qualify as “performance-based compensation” under Section 162(m) of the Code,
the Committee may establish performance goals based on other criteria as it
deems appropriate. Notwithstanding the above, for any award or portion of an
award designated to be “performance-based compensation” under Section 162(m) of
the Code, the Committee does not retain any right to increase any amount
otherwise determined under the provisions of the Plan.

    

     

    9.3   Certification
of Achievement of Performance Goals.   At the end of the Plan
Year and prior to payment, the Committee shall certify in writing the extent to
which the performance goals and any other material terms were satisfied. Final
Awards shall be computed for each Executive Officer based on (i) the
Participant's Target Incentive Award percentage, multiplied by his Base Salary
and (ii) percent satisfaction of performance goals (as certified by the
Committee). Final Award amounts may vary above or below the Target Incentive
Award based on the level of achievement of the pre-established performance
goals.

     

    9.4   Non-adjustment
of Performance Goals.   Once established, performance goals shall
not be changed during the Plan Year except as permitted consistent with the
qualified performance-based compensation exception under Section 162(m) of the
Code.

     

    9.5   Discretionary
Adjustments.   The Committee retains the discretion to eliminate
or decrease the amount of the Final Award otherwise payable to a Participant.
For any Final Award or portion of a Final Award designated to be
“performance-based compensation” under Section 162(m) of the Code, the Committee
shall not retain any right to increase any amount otherwise determined under the
provisions of the Plan.

     

     

     

    
      
        
        

      

      
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    SECTION
10. AMENDMENT AND MODIFICATION

     

    10.1  Amendment
by Board .  Subject to applicable laws, rules, and regulations, the
Board, in its sole discretion, without notice, at any time and from time to
time, may modify or amend, in whole or in part, any or all of the provisions of
the Plan, or may suspend or terminate the Plan entirely, by written resolution
or other formal action reflected in writing.

     

    10.2  Delegation
of Amendment Authority.  The Board may, to the extent permitted by
applicable law, make a non-exclusive written delegation of the authority to
amend the Plan  to a committee of the Board or to one or more officers
of Textron.  The Board may, to the extent permitted by applicable law,
authorize a committee of the Board to make a further delegation of the authority
to amend the Plan.

     

    SECTION
11. MISCELLANEOUS

     

    11.1   Jurisdiction,
Venue and Governing Law.   Except as to matters of federal law,
the Plan, and all agreements hereunder, shall be governed by and construed in
accordance with the laws of Rhode Island. Any dispute, controversy or claim
arising out of or relating to the Plan or any award under the Plan shall be
brought only in a court of competent jurisdiction in the State of Rhode Island,
and no other court, agency or tribunal shall have jurisdiction to resolve any
such dispute, controversy or claim.

     

    11.2   Withholding
Taxes.   The Company and its Subsidiaries shall have the right to
deduct from all payments under the Plan any federal, state, local and/or foreign
income, employment or other applicable payroll taxes required by law to be
withheld with respect to such payments.

     

    11.3   Gender
and Number.   Except where otherwise indicated by the context,
any masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.

     

    11.4   Severability.   In
the event any provision of the Plan shall be held illegal or invalid for any
reason, the illegality or invalidity shall not affect the remaining parts of the
Plan, and the Plan shall be construed and enforced as if the illegal or invalid
provision had not been included.

     

    11.5   Costs
of the Plan.   All costs of implementing and administering the
Plan shall be borne by the Company.

     

    11.6   Successors.   All
obligations of the Company and its Subsidiaries under the Plan shall be binding
upon and inure to the benefit of any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, 

     

     

     

    
      
        
        

      

      
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amalgamation, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the
Company.

    

     

    11.7  Compliance With Code Section 409A.  The
Plan is intended, and shall be interpreted, to provide compensation that is
exempt from Code Section 409A under the short-term deferral rule (unless a
Participant makes a valid deferral election under a separate
plan).  The Company does not warrant that the Plan will comply with
Code Section 409A with respect to any Participant or with respect to any
payment, however.  In no event shall the Company; any affiliate of the
Company; any director, officer, or employee of the Company or an affiliate; or
any member of the Committee be liable for any additional tax, interest, or
penalty incurred by a Participant as a result of the Plan’s failure to satisfy
the requirements of Code Section 409A, or as a result of the Plan’s failure to
satisfy any other requirements of applicable tax laws.

     

     

     

    
      
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