EXHIBIT 10.3
NORTHERN NATURAL GAS COMPANY
SUBSCRIPTION AGREEMENT
NOVEMBER 9, 2001
TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS....................................................................1
1.1 Definitions; Interpretation....................................................1
ARTICLE II ISSUANCE AND SALE OF THE SECURITIES............................................5
2.1 Authorization of the Securities................................................5
2.2 Issuance, Sale and Delivery of the Securities..................................5
ARTICLE III CLOSING........................................................................6
3.1 Closing........................................................................6
3.2 Payment for and Delivery of Securities.........................................6
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE COMPANY..................................6
4.1 Existence; Qualification; Subsidiaries.........................................6
4.2 Authorization and Enforceability; Issuance of Preferred Shares.................6
4.3 Capitalization.................................................................7
4.4 Private Sale; Voting Agreements................................................7
4.5 Financial Statements; Disclosure...............................................7
4.6 Litigation.....................................................................8
4.7 Third-Party Approvals..........................................................8
4.8 No Undisclosed Liabilities.....................................................8
4.9 Agreements.....................................................................8
4.10 Environmental Matters..........................................................8
4.11 Transactions With Affiliates...................................................9
4.12 Taxes..........................................................................9
4.13 Certain Fees..................................................................10
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ENRON.......................................10
5.1 Existence; Qualification; Subsidiaries........................................10
5.2 Authorization and Enforceability; Issuance of Enron Common Stock..............11
ARTICLE VI REPRESENTATIONS AND WARRANTIES OF THE PURCHASER...............................11
6.1 Existence.....................................................................11
6.2 Authorization and Enforceability..............................................11
6.3 Governmental Approvals........................................................11
6.4 Third-Party Approvals.........................................................12
6.5 Investment Intent of Purchaser................................................12
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6.6 Status of Preferred Shares....................................................12
6.7 Certain Fees..................................................................12
6.8 Sophistication and Financial Condition of Purchaser; Information..............12
ARTICLE VII CONDITIONS PRECEDENT..........................................................13
7.1 Conditions Precedent for the Purchaser........................................13
7.2 Closing Deliveries to the Company.............................................14
7.3 Conditions Precedent for the Company..........................................14
ARTICLE VIII COVENANTS OF THE COMPANY AND ENRON............................................15
8.1 Affirmative Covenants.........................................................15
8.2 Negative Covenants............................................................16
8.3 Information Rights............................................................17
8.4 Sale of Preferred Shares of the Company.......................................18
8.5 Use of Proceeds...............................................................18
ARTICLE IX SURVIVAL......................................................................19
9.1 Survival......................................................................19
ARTICLE X INDEMNIFICATION...............................................................19
10.1 Indemnification by the Company................................................19
10.2 Indemnification by the Purchaser..............................................19
10.3 Indemnification Procedure.....................................................20
ARTICLE XI GENERAL PROVISIONS............................................................21
11.1 Successors and Assigns........................................................21
11.2 Entire Agreement..............................................................21
11.3 Notices.......................................................................21
11.4 Termination...................................................................22
11.5 Effect of Termination.........................................................22
11.6 Expenses......................................................................22
11.7 Confidentiality and Public Announcements......................................22
11.8 Amendment and Waiver..........................................................23
11.9 Counterparts..................................................................23
11.10 Headings......................................................................23
11.11 Specific Performance..........................................................23
11.12 Remedies Cumulative...........................................................23
11.13 Governing Law.................................................................23
11.14 No Third Party Beneficiaries..................................................23
11.15 Severability..................................................................24
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Schedule 4.1 Equity Interests
Schedule 4.3 Capitalization
Schedule 4.8 Undisclosed Liabilities
Schedule 8.2 Sales of Assets
Exhibit A Certificate of Designations
Exhibit B Financial Statements
Exhibit C Registration Rights Agreement
Exhibit D Forms of Promissory Notes
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SUBSCRIPTION AGREEMENT
SUBSCRIPTION AGREEMENT (this "Agreement"), dated as of
November 9, 2001, by and among Enron Corp., an Oregon corporation ("Enron"),
Northern Natural Gas Company, a Delaware corporation (the "Company") and Dynegy
Inc., an Illinois corporation (the "Purchaser").
WHEREAS, the Company has authorized the sale and issuance of
an aggregate of 1,000 shares of the Preferred Stock; and
WHEREAS, the Purchaser desires to purchase from the Company,
and the Company desires to issue to the Purchaser, upon the terms and conditions
set forth herein, shares of Preferred Stock.
NOW THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS; INTERPRETATION.
For purposes of this Agreement, the following terms have the
indicated meanings:
"Affiliate" shall mean, with respect to any Person, any other
Person that directly or indirectly through one or more intermediaries controls,
is controlled by or is under common control with, the Person in question;
provided, that none of Purchaser and its Affiliates shall be deemed to be an
Affiliate of the Company. For purposes of this definition of Affiliate,
"control" means the possession, direct or indirect, of the power to direct or
cause the direction of the management and policies of a Person, whether through
ownership of voting securities or general partnership or member interests, by
contract or otherwise. Without limiting the generality of the foregoing, a
Person shall be deemed to control any other Person in which it or any of its
Affiliates owns, directly or indirectly, a majority of the ownership interests.
"Board of Directors" means the Company's board of directors.
"Capital Expenditures" has the meaning ascribed such term
under GAAP.
"Cash Management Program" has the meaning set forth in Section
4.11.
"Certificate of Designations" means the Certificate of
Designations of the Company containing the rights and preferences of the
Preferred Stock adopted by the Board of Directors and attached hereto as Exhibit
A.
"Closing" has the meaning set forth in Section 3.1.
"Closing Date" has the meaning set forth in Section 3.1.
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"Code" means the Internal Revenue Code of 1986, as amended.
"Common Stock" means the common stock of the Company, $.01 par
value per share, and any securities into which such Common Stock is hereafter
converted or exchanged.
"Company" has the meaning set forth in the recitals hereof.
"Contingent Obligation" shall mean, as applied to any Person,
any direct or indirect liability, contingent or otherwise, of that Person with
respect to any indebtedness, lease, dividend, letter of credit or other similar
obligation of another, including, without limitation, any such obligation
directly or indirectly guaranteed, endorsed (other than for collection or
deposit in the Ordinary Course of Business) co-made or discounted or sold with
recourse by that Person, or in respect of which that Person is otherwise
directly or indirectly liable, including, without limitation, any such
obligation for which that Person is in effect liable through any agreement
(contingent or otherwise) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise), or to maintain the solvency or
any balance sheet, income or other financial condition of the obligor of such
obligation, or to make payment for any products, materials or supplies or for
any transportation, services or lease regardless of the non-delivery or
non-furnishing thereof, in any such case if the purpose or intent of such
agreement is to provide assurance that such obligation will be paid or
discharged, or that any agreements relating thereto will be complied with, or
that the holders of such obligation will be protected (in whole or in part)
against loss in respect thereof. The amount of any Contingent Obligation shall
be equal to the amount of the obligation, or portion thereof, so guaranteed or
otherwise supported.
"Current Balance Sheet" means the consolidated balance sheet
of the Company dated as of September 30, 2001.
"Debt" shall mean, with respect to any Person, the aggregate
amount of, without duplication, (i) all obligations for borrowed money; (ii) all
obligations evidenced by bonds, debentures, notes or other similar instruments;
(iii) all obligations to pay the deferred purchase price of property or
services; (iv) all capitalized lease obligations; (v) all obligations or
liabilities of others secured by a lien on any asset owned by such person
whether or not such obligation or liability is assumed, to the extent of the
lesser of such obligation or liability or the book value of such asset; (vi) all
Contingent Obligations of such Person; and (vii) any other obligations or
liabilities which are required by generally accepted accounting principles to be
shown as debt on a balance sheet, other than trade payables and liabilities
pursuant to the Tax Allocation Agreement.
"Environmental Laws" has the meaning set forth in Section
4.10(a).
"Exchange Agreement" means the Exchange Agreement dated the
date hereof by and between Purchaser and Enron.
"Financial Statements" means the audited consolidated
financial statements of the Company for the two most recent fiscal years and the
unaudited consolidated balance sheet dated September 30, 2001, all of which are
attached as Exhibit B hereto.
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"GAAP" means United States generally accepted accounting
principles as in effect from time to time, consistently applied.
"Enron Common Stock" means the common stock, no par value, of
Enron.
"Governmental Agency" means any federal, state, local, foreign
or other governmental agency, instrumentality, commission, authority, board or
body.
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended.
"Hazardous Materials" has the meaning set forth in Section
4.10(b).
"Intercompany Note Receivable" has the meaning set forth in
Section 8.2(a).
"Investment" as applied to any Person means (a) any direct or
indirect purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or ownership interest of any other Person and (b)
any capital contribution by such Person to any other Person.
"Liability" means any liability or obligation (whether
absolute or contingent, liquidated or unliquidated or due or to become due).
"Lien" means any lien, mortgage, pledge, security interest,
restriction, charge or other encumbrance.
"Material Adverse Change" means any material adverse change in
the business, condition (financial or otherwise) or results of operations of the
Company.
"Material Adverse Effect" means any material adverse effect on
(a) the business, condition (financial or otherwise) or results of operations of
the Company or (b) the transactions contemplated hereby or by the Related
Documents.
"Merger Agreement" means the Merger Agreement dated as of
November 9, 2001, by and among Dynegy Inc., Stanford, Inc., Badin, Inc. and
Sorin, Inc. and Enron.
"Option Agreement" means the Option Agreement dated the date
hereof among CGNN Holding Company, Inc., MCTJ Holding Co. LLC, Enron, Dynegy
Holdings Inc. and Dynegy Inc.
"Ordinary Course of Business" means the ordinary course of
business consistent with past custom and practice (including with respect to
quantity, quality and frequency).
"Permitted Liens" means (a) liens for taxes not yet due and
taxes for which adequate provision is made in the Current Balance Sheet, (b)
purchase money security interests in supplies and equipment, (c) statutory
landlord liens and precautionary liens filed by lessors with respect to leased
equipment, (d) encumbrances which are not substantial in amount, do not
materially detract from the value of the property subject thereto and do not
materially impair the
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use of the property subject thereto or the operation of the Company's business,
and (e) liens imposed by law arising in the Ordinary Course of Business such as
materialmen's, mechanics', warehousemen's and other similar liens.
"Permitted Refinancing Debt" shall mean any Debt of the
Company or any of its Subsidiaries issued in exchange for, or the net proceeds
of which are used to extend, refinance, renew, replace, defease or refund other
Debt of the Company or any of its Subsidiaries (other than intercompany Debt);
provided that:
(1) the principal amount of such Permitted Refinancing
Debt does not exceed the principal amount of, plus
accrued interest on, the Debt so extended,
refinanced, renewed, replaced, defeased or refunded
(plus the amount of necessary fees and expenses
incurred in connection therewith and any premiums
paid on the Debt so extended, refinanced, renewed,
replaced, defeased or refunded); and
(2) such Permitted Refinancing Debt has a final maturity
date no earlier than the final maturity date of, and
has a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity
of, the Debt being extended, refinanced, renewed,
replaced, defeased or refunded.
"Person" means any individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated organization or
other entity.
"Preferred Shares" has the meaning set forth in Section 2.1.
"Preferred Stock" means the Company's Series A Preferred
Stock, par value $1.00 per share, having the rights and preferences set forth in
the Certificate of Designations.
"Purchase Option Agreement" means the Purchase Option
Agreement dated the date hereof among CGNN Holding Company, Inc., MCTJ Holding
Co. LLC, Enron, Dynegy Holdings Inc. and Dynegy Inc.
"Purchase Price" has the meaning set forth in Section 3.2.
"Registration Rights Agreement" means the Registration Rights
Agreement dated the date hereof, by and between Enron and the Purchaser, in the
form of Exhibit C attached hereto.
"Related Documents" means the Certificate of Designations, the
Purchase Option Agreement, the Option Agreement, the Exchange Agreement, the
Registration Rights Agreement and certificates to be executed or adopted in
connection herewith and therewith.
"Required Initial Filing" means the initial filing by Enron
with either the Federal Trade Commission or the Department of Justice under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act in connection with the Option Agreement.
"Returns" has the meaning set forth in Section 4.12.
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"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary," when used with respect to any Person, shall mean
any corporation, limited liability company, partnership, association or other
business entity of which (a) if a corporation, a majority of the total voting
power of shares of stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such Person or
(b) if a partnership, limited liability company, association or other business
entity, a majority of the partnership or other similar ownership interest
thereof is at the time owned or controlled, directly or indirectly, by such
Person. For purposes hereof, a Person shall be deemed to have a majority
ownership interest in a partnership, limited liability company, association or
other business entity if such Person, directly or indirectly, is allocated a
majority of partnership, limited liability company, association or other
business entity gains or losses, or is or controls the managing director or
general partner of such partnership, limited liability company, association or
other business entity.
"Tax Allocation Agreement" means the tax allocation agreement
between Enron and the Company.
"Weighted Average Life to Maturity" shall mean, when applied
to any Debt at any date, the number of years obtained by dividing:
(1) the sum of the products obtained by multiplying (a)
the amount of each then remaining installment,
sinking fund, serial maturity or other required
payments of principal, including payment at final
maturity, in respect thereof, by (b) the number of
years (calculated to the nearest one-twelfth) that
will elapse between such date and the making of such
payment; by
(2) the then outstanding principal amount of such Debt.
ARTICLE II
ISSUANCE AND SALE OF THE SECURITIES
2.1 AUTHORIZATION OF THE SECURITIES. The Company has
authorized the issuance and sale to the Purchaser of an aggregate of 1,000
shares of the Preferred Stock (the "Preferred Shares").
2.2 ISSUANCE, SALE AND DELIVERY OF THE SECURITIES. Pursuant to
the terms and conditions set forth in this Agreement, on the Closing Date (as
defined below), the Company agrees to issue and sell to the Purchaser, and the
Purchaser hereby agrees to purchase from the Company, the Preferred Shares.
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ARTICLE III
CLOSING
3.1 CLOSING. Subject to the terms and conditions contained
herein, the closing of the transactions contemplated hereby (the "Closing")
shall take place three business days after the date that the Company has made
the Required Initial Filing, at the offices of ▇▇▇▇▇ ▇▇▇▇▇ L.L.P., Houston,
Texas or at such other time, place and/or date as shall be agreed upon by the
parties hereto. The date upon which the Closing occurs is referred to herein as
the "Closing Date".
3.2 PAYMENT FOR AND DELIVERY OF SECURITIES. At the Closing,
the Company shall issue and deliver to the Purchaser certificates representing
the Preferred Shares to be issued on the Closing Date, duly registered in the
name of such Purchaser and bearing appropriate legends. Payment for such
Preferred Shares shall be made by the Purchaser by wire transfer of immediately
available funds to an account designated by the Company in writing in the amount
of $1,500,000,000 (the aggregate amount to be delivered by the Purchaser to the
Company, the "Purchase Price").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser as
follows:
4.1 EXISTENCE; QUALIFICATION; SUBSIDIARIES. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to conduct
its business and own and operate its properties as now conducted, owned and
operated. The copies of the Certificate of Incorporation and By-Laws of the
Company and all amendments thereto (i) have been previously delivered to the
Purchaser and (ii) are true, correct and complete copies of such documents. The
Company is licensed or qualified as a foreign corporation and is in good
standing in all jurisdictions where it is required to be so licensed or
qualified, to the extent such concepts are recognized in such jurisdictions. The
Company has no Subsidiaries and, except for equity interests set forth on
Schedule 4.1 that are not individually or in the aggregate material to the
Company, owns no capital stock or other securities of, and has no other
Investment in, any other Person.
4.2 AUTHORIZATION AND ENFORCEABILITY; ISSUANCE OF PREFERRED
SHARES.
(a) The Company has the full power and authority and has
taken all required corporate and other action necessary to permit the Company to
execute and deliver this Agreement and the Related Documents, to adopt the
Certificate of Designations, and to carry out the terms hereof and thereof and
to issue and deliver the Preferred Shares, and none of such actions will (i)
violate any provision of the Company's Certificate of Incorporation or By-Laws
or any applicable law, regulation, order, judgment or decree or rule of any
stock exchange where the Common Stock is listed, or (ii) result in the breach
of, or constitute a default (or an event which, with notice or lapse of time or
both would constitute a default) under, any agreement, instrument or
understanding to which the Company is a party or by which it is bound, which, in
either case, is reasonably likely to have, individually or in the aggregate, a
Material Adverse
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Effect. This Agreement and each of the Related Documents constitutes a legal,
valid and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except to the extent limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws of general
application related to the enforcement of creditor's rights generally and (ii)
general principles of equity.
(b) The Preferred Shares have been duly authorized and,
when issued and delivered in accordance with this Agreement, will be validly
issued and outstanding and will be fully paid and nonassessable.
(c) The issuance and delivery of the Preferred Shares is
not subject to any preemptive right of any stockholder of the Company or to any
right of first refusal or other similar right in favor of any Person which has
not been waived.
4.3 CAPITALIZATION. As of the Closing Date after giving effect
to the transactions contemplated hereby, the authorized capital stock of the
Company shall be as set forth on Schedule 4.3 attached hereto. At the time of
the Closing, (i) all of the outstanding capital stock of the Company will be
validly issued, fully paid and nonassessable and will have been issued in
compliance with all applicable securities laws (including the provisions of the
Securities Act and the rules and regulations promulgated thereunder) and (ii) no
outstanding capital stock or other equity securities of the Company will rank
pari passu or senior in right of payment of dividends or redemption to the
Preferred Stock. Except as set forth on Schedule 4.3, as of the Closing Date,
the Company has not granted or issued any options, convertible securities,
warrants, phantom stock, stock appreciation rights, calls, pledges, transfer
restrictions (except restrictions imposed by federal and state securities laws),
Liens, rights of first offer, rights of first refusal, antidilution provisions
or commitments of any character relating to any issued or unissued shares of
capital stock of the Company other than as contemplated in the Related
Documents.
4.4 PRIVATE SALE; VOTING AGREEMENTS. The Company has not
violated any applicable federal or state securities laws in connection with the
offer, sale and issuance of any of its capital stock. When issued and delivered
in accordance with this Agreement, the offer, sale and issuance of the Preferred
Shares hereunder does not require registration under the Securities Act or any
state securities laws.
4.5 FINANCIAL STATEMENTS; DISCLOSURE. The Financial Statements
(including the related notes and schedules) fairly present in all material
respects the financial position of the Company as of their dates, and each of
the statements of operations, cash flows and changes in shareholders' equity
included in the Financial Statements (including any related notes and schedules)
fairly presents in all material respects the results of operations, cash flows
or changes in shareholders' equity, as the case may be, of the Company for the
periods set forth therein (subject, in the case of unaudited statements, to (x)
such exceptions as may be permitted by Form 10-Q of the SEC and (y) normal
year-end audit adjustments which will not be material), in each case in
accordance with generally accepted accounting principles consistently applied
during the periods involved, except as may be noted therein. Except as and to
the extent set forth on the Current Balance Sheet, including all notes thereto,
as of the date of such balance sheet, the Company does not have any Liabilities
or obligations of any nature (whether accrued, absolute,
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contingent or otherwise) that would be required to be reflected on, or reserved
against in, a balance sheet of the Company or in the notes thereto prepared in
accordance with generally accepted accounting principles consistently applied,
other than Liabilities or obligations which do not and are not reasonably likely
to have, individually or in the aggregate, a Material Adverse Effect. All
reserves or adjustments required by generally accepted accounting principles to
be reflected in the carrying value of the assets included in such balance sheet
have been taken other than reserves or adjustments which do not and are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect.
4.6 LITIGATION. As of the date hereof, no claims, suits,
proceedings or investigations are pending or, to the Company's knowledge,
threatened against the Company or any officer or director thereof which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect.
4.7 THIRD-PARTY APPROVALS. Assuming the accuracy of the
representations and warranties of the Purchaser contained in this Agreement and
except for filings under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act, the Company is not required
to obtain any order, consent, approval or authorization of, or to make any
declaration or filing with, any Governmental Agency or other third party
(including under any state securities or "blue sky" laws) in connection with the
execution and delivery of this Agreement or the Related Documents, or the
consummation of the transactions contemplated hereby or thereby to occur on the
Closing Date.
4.8 NO UNDISCLOSED LIABILITIES. The Company has no Liabilities
except (i) as disclosed on Schedule 4.8 or in the Financial Statements, (ii)
Liabilities incurred in the Ordinary Course of Business, and (iii) such other
Liabilities that will not result, individually or in the aggregate, in a
Material Adverse Effect.
4.9 AGREEMENTS. No event has occurred which, with notice or
lapse of time, would constitute a default with respect to the Company, under any
material agreement, arrangement or understanding to which the Company is a
party, and, to the knowledge of the Company, no other Person is in default under
any such agreement.
4.10 ENVIRONMENTAL MATTERS.
(a) The Company has been and is in compliance with all
applicable orders of any court, governmental authority or arbitration board or
tribunal and any applicable law, ordinance, rule, regulation or other legal
requirement (including common law) related to human health and the environment
("Environmental Laws") except for such matters as do not and are not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect.
There are no past or present facts, conditions or circumstances that interfere
with the conduct of any of its businesses in the manner now conducted or which
interfere with continued compliance with any Environmental Law, except for any
non-compliance or interference that is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect.
(b) Except for such matters as do not and are not
reasonably likely to have, individually or in the aggregate, a Material Adverse
Effect, (i) no judicial or administrative proceedings or governmental
investigations are pending or, to the knowledge of the Company,
8
threatened against the Company that allege the violation of or seek to impose
liability pursuant to any Environmental Law, and (ii) there are no past or
present facts, conditions or circumstances at, on or arising out of, or
otherwise associated with, any current (or, to the knowledge of the Company,
former) businesses, assets or properties of the Company, including but not
limited to on-site or off-site disposal, release or spill of any material,
substance or waste classified, characterized or otherwise regulated as
hazardous, toxic or otherwise harmful to human health or the environment under
Environmental Laws, including petroleum or petroleum products or byproducts
("Hazardous Materials") which facts, conditions or circumstances violate
Environmental Law or are reasonably likely to give rise to (x) costs, expenses,
Liabilities or obligations for any cleanup, remediation, disposal or corrective
action under any Environmental Law, (y) claims arising for personal injury,
property damage or damage to natural resources, or (z) fines, penalties or
injunctive relief.
(c) The Company has not (i) received any notice of
noncompliance with, violation of, or liability or potential liability under any
Environmental Law or (ii) entered into any consent decree or order or is subject
to any order of any court or governmental authority or tribunal under any
Environmental Law or relating to the cleanup of any Hazardous Materials, except
for any such matters as do not and are not reasonably likely to have a Material
Adverse Effect.
4.11 TRANSACTIONS WITH AFFILIATES. The Company is not party to
any agreement, arrangement or transaction with any officer, director or
Affiliate of the Company, other than (i) corporate services and similar
arrangements or transactions pursuant to which the Company obtains goods and
services used in its Ordinary Course of Business for which the Company is
charged expense allocations by Enron or its Affiliates consistent with past
practices, (ii) transactions occurring pursuant to the Company's participation
in the existing zero-balance cash management program of Enron (the "Cash
Management Program"), (iii) the Tax Allocation Agreement, (iv) operational
agreements between the Company and one or more of the Affiliates of Enron, such
as interconnect agreements, transportation agreements and other agreements,
related to the Company's facilities and services, and (v) arrangements relating
to the employment and compensation of employees and expense reimbursal and
advances for business purposes in the Ordinary Course of Business.
4.12 TAXES.
(a) All tax returns, statements, reports, declarations,
estimates and forms ("Returns") required to be filed by or with respect to the
Company (including any Return required to be filed by an affiliated,
consolidated, combined, unitary or similar group for a taxable year in which the
Company was included in such group) on or prior to the date hereof have been
properly filed on a timely basis with the appropriate governmental authorities,
except to the extent that any failure to file does not and is not reasonably
likely to have, individually or in the aggregate, a Material Adverse Effect, and
all taxes due with such Returns have been duly paid, or deposited in full on a
timely basis or adequately reserved for in accordance with GAAP, except to the
extent that any failure to pay or deposit or make adequate provision for the
payment of such taxes does not and is not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect. Representations
made in this Section 4.12 are made to the knowledge
9
of the Company to the extent that the representations relate to a corporation
which was, but is not currently, a part of the Company's affiliated,
consolidated, combined, unitary or similar group.
(b) Except to the extent not reasonably likely to have,
individually or in the aggregate, a Material Adverse Effect, (i) no audits or
other administrative proceedings or court proceedings are presently pending with
regard to any taxes or Returns of the Company as to which any taxing authority
has asserted in writing any claim; (ii) no governmental authority is now
asserting in writing any deficiency or claim for taxes or any adjustment to
taxes with respect to which the Company may be liable with respect to income and
other material taxes which have not been fully paid or finally settled; (iii)
the Company has no liability for taxes under Treas. Reg. ss. 1.1502-6 or any
similar provision of state, local, or non-U.S. tax law, except for taxes of the
affiliated group of corporations of which Enron is the common parent, within the
meaning of Section 1504(a)(1) of the Code or any similar provision of state,
local, or non-U.S. tax law; and (iv) the Company is not a party to, is bound by
or has any obligation under any tax sharing, allocation or indemnity agreement
or any similar agreement or arrangement, except for the Tax Allocation
Agreement.
(c) For purposes of this Agreement, "tax" or "taxes"
means all net income, gross income, gross receipts, sales, use, ad valorem,
transfer, accumulated earnings, personal holding company, excess profits,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property, disability, capital stock, or
windfall profits taxes, customs duties or other taxes, together with any
interest and any penalties, additions to tax or additional amounts imposed by
any taxing authority.
4.13 CERTAIN FEES. No fees or commissions will be payable by
the Company to any broker, financial advisor, finder, investment banker, or bank
with respect to the transactions contemplated by this Agreement, except that
Enron has retained ▇. ▇. ▇▇▇▇▇▇ Securities Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. as
its financial advisors. The Purchaser shall have no obligation with respect to
any fees or with respect to any claims made by or on behalf of any Persons for
fees of a type contemplated in this section that may be due in connection with
the transactions contemplated by this Agreement and which were incurred by the
Company. The Company shall indemnify and hold harmless the Purchaser, its
employees, officers, directors, agents and partners, and their respective
affiliates (as such term is defined under Rule 405 promulgated under the
Securities Act), from and against all claims, losses, damages, costs (including
the costs of preparation and attorney's fees) and expenses suffered in respect
to any such claimed or existing fees.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF ENRON
Enron hereby represents and warrants to the Purchaser as
follows:
5.1 EXISTENCE; QUALIFICATION; SUBSIDIARIES. Enron is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Oregon and has full corporate power and authority to conduct its
business and own and operate its properties as now conducted, owned and
operated. The copies of the Certificate of Incorporation and By-Laws of the
Company and all amendments thereto (i) have been previously delivered to the
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Purchaser and (ii) are true, correct and complete copies of such documents. The
Company is licensed or qualified as a foreign corporation and is in good
standing in all jurisdictions where it is required to be so licensed or
qualified, to the extent such concepts are recognized in such jurisdictions. The
Company is an indirect subsidiary of Enron.
5.2 AUTHORIZATION AND ENFORCEABILITY; ISSUANCE OF ENRON COMMON
STOCK. Enron has the full power and authority and has taken all required
corporate and other action necessary to permit Enron to execute and deliver this
Agreement and the Registration Rights Agreement and to carry out the terms
hereof and thereof, and none of such actions will violate any provision of
Enron's Articles of Incorporation or By-Laws or any applicable law, regulation,
order, judgment or decree or rule of any stock exchange where the Enron Common
Stock is listed, or result in the breach of, or constitute a default (or an
event which, with notice or lapse of time or both would constitute a default)
under, any agreement, instrument or understanding to which Enron is a party or
by which it is bound. This Agreement and the Registration Rights Agreement each
constitute a legal, valid and binding obligation of Enron, enforceable against
Enron in accordance with its terms, except to the extent limited by (i)
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
of general application related to the enforcement of creditor's rights generally
and (ii) general principles of equity.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company as follows:
6.1 EXISTENCE. The Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
formation and has full power and authority to conduct its business and own and
operate its properties as now conducted, owned and operated.
6.2 AUTHORIZATION AND ENFORCEABILITY. The Purchaser has the
full power and authority and has taken all action necessary to permit the
Purchaser to execute and deliver this Agreement and the Related Documents and to
carry out the terms hereof and thereof, and none of such actions will violate
any provision of the Purchaser's Certificate of Incorporation or any applicable
law, regulation, order, judgment or decree or rule, or result in the breach of,
or constitute a default (or an event which, with notice or lapse of time or both
would constitute a default) under, any agreement, instrument or understanding to
which the Purchaser is a party or by which it is bound. This Agreement and each
of the Related Documents constitutes a legal, valid and binding obligation of
the Purchaser, enforceable against the Purchaser in accordance with its terms,
except to the extent limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws of general application related to
the enforcement of creditor's rights generally and (ii) general principles of
equity.
6.3 GOVERNMENTAL APPROVALS. The Purchaser is not required to
obtain any order, consent, approval or authorization of, or to make any
declaration or filing with, any Governmental Agency in connection with the
execution and delivery of this Agreement and the other documents and instruments
to be executed by it pursuant hereto or the consummation of
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the transactions contemplated hereby and thereby, except for such order,
consent, approval, authorization, declaration or filing as which has been or
will be obtained or made.
6.4 THIRD-PARTY APPROVALS. Assuming the accuracy of the
representations and warranties of the Company contained in this Agreement, the
Purchaser is not required to obtain any order, consent, approval or
authorization of, or to make any declaration or filing with, any Governmental
Agency or other third party (including under any state securities or "blue sky"
laws) in connection with the execution and delivery of this Agreement or the
Related Documents, or the consummation of the transactions contemplated hereby
or thereby to occur on the Closing Date.
6.5 INVESTMENT INTENT OF PURCHASER. The Purchaser is acquiring
the Preferred Shares for its own account for investment and not with a view to
distribution. The Purchaser is acquiring the Preferred Shares with no past,
present or future intention of violating the Securities Act in any material
respect.
6.6 STATUS OF PREFERRED SHARES. The Purchaser has been
informed by the Company that the Preferred Shares have not been and will not be
registered under the Securities Act or under any state securities laws and are
being offered and sold in reliance upon federal and state exemptions for
transactions not involving any public offering. The Purchaser acknowledges that
any certificate representing the Preferred Shares will bear a customary legend
regarding restrictions on the transferability of such Preferred Shares.
6.7 CERTAIN FEES. No fees or commissions will be payable by
the Purchaser to any broker, financial advisor, finder, investment banker, or
bank with respect to the transactions contemplated by this Agreement, except
that Purchaser has retained ▇▇▇▇▇▇ Brothers Inc. as its financial advisor.
Except as otherwise set forth in this Agreement, the Company shall have no
obligation with respect to any fees or with respect to any claims made by or on
behalf of any Persons for fees of a type contemplated in this section that may
be due in connection with the transactions contemplated by this Agreement and
which were incurred by the Purchaser. Except as otherwise set forth in this
Agreement, the Purchaser shall indemnify and hold harmless the Company, its
employees, officers, directors, agents and partners, and their respective
affiliates (as such term is defined under Rule 405 promulgated under the
Securities Act), from and against all claims, losses, damages, costs (including
the costs of preparation and attorney's fees) and expenses suffered in respect
to any such claimed or existing fees.
6.8 SOPHISTICATION AND FINANCIAL CONDITION OF PURCHASER;
INFORMATION. The Purchaser represents and warrants to the Company that it
considers itself to be an experienced and sophisticated investor and to have
such knowledge and experience in financial and business matters as are necessary
to evaluate the merits and risks of an investment in the Preferred Shares. The
Purchaser is able to bear the economic risk of this investment regarding the
Company, is able to hold the Preferred Shares indefinitely and has a sufficient
net worth to sustain a loss of its entire investment in the Company in the event
such loss should occur. The Purchaser (a) has been furnished with such
information about the Company and the Preferred Shares as it has requested, (b)
has made its own independent inquiry and investigation into, and based thereon,
has formed an independent judgment concerning the Company and the Preferred
Shares, (c) is an "accredited" investor within the meaning of "accredited
investor" under
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Regulation D of the Securities Act, as currently in effect, and (d) is not
acquiring the Preferred Shares with a view to distribution.
ARTICLE VII
CONDITIONS PRECEDENT
7.1 CONDITIONS PRECEDENT FOR THE PURCHASER. The obligation of
the Purchaser to purchase the Preferred Shares and close the transactions
contemplated hereby on the Closing Date is subject to the following conditions.
(a) Representations, Warranties and Covenants of the
Company. The representations and warranties of the Company and Enron contained
herein and in any writing delivered pursuant hereto shall be true and correct
when made and as of the time of the Required Initial Filing. All acts or
covenants required hereunder to be performed by each of the Company and Enron
prior to the Required Initial Filing shall have been fully performed by it.
(b) Litigation. No action, suit, investigation or
proceeding shall be pending or threatened as of the date of the Required Initial
Filing before any court or Governmental Agency to restrain, prohibit, collect
damages as a result of or otherwise challenge this Agreement or any Related
Document or any transaction contemplated hereby or thereby.
(c) No Material Adverse Change. No Material Adverse
Change shall have occurred between September 30, 2001 and the date of the
Required Initial Filing.
(d) ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇. The Company shall have made the
Required Initial Filing.
(e) No Termination of Merger Agreement. The Merger
Agreement shall not have been terminated and shall not be terminable as of the
Closing Date by any party thereto.
(f) Cancellation of Intercompany Debt of the Company.
There shall have been cancelled and forgiven the net amount of any Debt of the
Company owing to Enron and its Affiliates.
(g) Certificate of Designations. The Certificate of
Designations shall have been filed with the Secretary of State of the State of
Delaware.
(h) Closing Deliveries. The following documents and items
shall be delivered to the Purchaser at or prior to the date of the Required
Initial Filing:
(i) Evidence reasonably acceptable to the Purchaser
of (A) the adoption by, and due filing with the appropriate Governmental
Agencies by, the Company of the Certificate of Designations and (B) the vote of
the Board of Directors and shareholders of the Company, as applicable, approving
this Agreement and the Related Documents (including the Certificate of
Designations) and the consummation of the transactions contemplated hereby and
thereby;
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(ii) Fully executed and delivered counterparts of the
Registration Rights Agreement and the Exchange Agreement; and
(iii) Certificate of a duly authorized officer of
Enron dated as of the date of the Required Initial Filing:
(A) stating that the conditions set forth in
Sections 7.1(a), (b), (c), (e) and (f) have been satisfied as of the date of the
Required Initial Filing; and
(B) setting forth the resolutions of the Board
of Directors authorizing the execution and delivery of this Agreement and the
Related Documents (including the Certificate of Designations), and the
consummation of the transactions contemplated hereby and thereby, and certifying
that such resolutions were duly adopted and have not been rescinded or amended.
7.2 CLOSING DELIVERIES TO THE COMPANY. The Purchaser will
deliver to the Company the Purchase Price for the Preferred Shares to be
acquired on the Closing Date by payment by wire transfer of immediately
available funds to an account designated in writing by the Company. In addition,
the following documents and items shall be delivered to the Company at or prior
to the Required Initial Filing:
(a) Evidence reasonably acceptable to the Company of the
authorization by the Purchaser of this Agreement and the Related Documents to
which the Purchaser is a party and the consummation of the transactions
contemplated hereby and thereby;
(b) Fully executed and delivered counterparts of the
Registration Rights Agreement and the Exchange Agreement; and
(c) Certificate of a duly authorized officer of the
Purchaser dated as of the date of the Required Initial Filing:
(i) stating that the conditions set forth in Sections
7.3(a), (b) and (c) have been satisfied as of the date of the Required Initial
Filing; and
(ii) setting forth the resolutions of the Purchaser
authorizing the execution and delivery of this Agreement and the Related
Documents to which it is a party and the consummation of the transactions
contemplated hereby and thereby, and certifying that such resolutions were duly
adopted and have not been rescinded or amended.
7.3 CONDITIONS PRECEDENT FOR THE COMPANY. The Company's
obligation to issue and sell the Preferred Shares on the Closing Date to the
Purchaser is subject to the satisfaction, on or prior to the date of the
Required Initial Filing, of the following conditions:
(a) Representations and Warranties. The representations
and warranties of the Purchaser contained herein and in any writing delivered
pursuant hereto shall be true and correct when made and as of the date of the
Required Initial Filing. All acts and
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covenants required hereunder to be performed or complied with by the Purchaser
prior to the Required Initial Filing shall have been performed by it.
(b) Litigation. No action, suit, investigation or
proceeding shall be pending or threatened as of the date of the Required Initial
Filing before any court or Governmental Agency to restrain, prohibit, collect
damages as a result of or otherwise challenge this Agreement or any Related
Document or any transaction contemplated hereby or thereby.
(c) No Termination of Merger Agreement. The Merger
Agreement shall not have been terminated and shall not be terminable as of the
Closing Date by any party thereto.
ARTICLE VIII
COVENANTS OF THE COMPANY AND ENRON
8.1 AFFIRMATIVE COVENANTS. For the period between the
execution of this Agreement and the Closing Date, the Company shall, and shall
cause each Subsidiary to:
(a) cause all properties owned by the Company or used or
held for use in the conduct of its business to be maintained and kept in good
condition, repair and working order (reasonable wear and tear excepted) and
supplied with all necessary equipment and will cause to be made all necessary
repairs, renewals, replacements, betterments and improvements thereof, all as in
the judgment of the Board of Directors may be necessary so that the business
carried on in connection therewith may be properly and advantageously conducted
at all times; provided, that the foregoing shall not prevent the Company from
discontinuing the maintenance of any of such properties if such discontinuance
is, in the judgment of the management of the Company, desirable in the conduct
of its business and is not disadvantageous in any material respect to the
holders of Preferred Shares;
(b) preserve and keep in full force and effect the
corporate existence, rights (charter and statutory), licenses and franchises of
the Company; provided, that the Company shall not be required to preserve any
such right, license or franchise if the Board of Directors shall determine that
the preservation thereof is no longer desirable in the conduct of the business
of the Company as a whole and that the loss thereof is not disadvantageous in
any material respect to the holders of Preferred Shares;
(c) maintain the books, accounts and records of the
Company in accordance with GAAP;
(d) comply with all material legal requirements and
material contractual obligations applicable to the operations and business of
the Company and its Subsidiaries and pay all applicable taxes as they become due
and payable; and
(e) permit representatives of the Purchaser and its
agents (including their counsel, accountants and consultants) to have reasonable
access during business hours to the Company's books, records, facilities, key
personnel, officers, directors, customers, independent accountants and legal
counsel to the extent that such access is not prohibited by FERC marketing
affiliate rules.
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8.2 NEGATIVE COVENANTS. For the period between the execution
of this Agreement and the Closing Date, without the approval of the Purchaser,
the Company will not:
(a) Dividends. Directly or indirectly declare or pay, or
permit any Subsidiary to declare or pay, any dividends, or make or permit any
Subsidiary to make, any distributions upon any of its equity securities, other
than (i) any dividend or other distribution resulting from the cancellation by
the Company of Debt owed by Enron and its Affiliates to the Company (the
"Intercompany Note Receivable") under the Cash Management Program; provided that
such cancellation of Debt does not reduce the net amount of the Intercompany
Note Receivable to an amount less than $240 million plus accrued and unpaid
dividends on the Preferred Stock and (ii) dividends on the Preferred Stock.
(b) Redemptions. Except as provided pursuant to the terms
of the Preferred Stock, directly or indirectly redeem, purchase or otherwise
acquire, any of the Company's or any Subsidiary's equity securities;
(c) Issuances. Authorize, issue, or enter into any
agreement providing for the issuance (contingent or otherwise) of (x) any notes
or debt securities containing equity features (including, without limitation,
any notes or debt securities issued in connection with the issuance of equity
securities or containing profit participation features) or (y) any equity
securities (or any securities convertible into or exchangeable for any equity
securities, including any warrants or stock options);
(d) Mergers. Merge or consolidate, or enter into an
agreement providing for any merger or consolidation, with any Person if the
holders of the Company's capital stock prior to the transaction will own less
than 100% of the voting power of the Company's capital stock after the
transaction;
(e) Sale of Assets. Except as provided in Schedule 8.2,
sell, lease or otherwise dispose of any assets of the Company, other than
obsolete equipment or inventory and asset sales in the Ordinary Course of
Business consistent with past practice not to exceed an aggregate of $20 million
within any 12-month period;
(f) Bankruptcy. Pursuant to or within the meaning of
Title 11 of the United States Code or any similar federal, state or foreign law
for the relief of debtors, commence a voluntary case, consent to the entry of an
order for relief against it in an involuntary case, consent to the appointment
of a receiver, trustee, assignee, liquidator or similar official of it or for
all or substantially all of its property, or make a general assignment for the
benefit of its creditors;
(g) Charter Amendments. Make any amendment to or waive
any provision of the Company's certificate of incorporation or bylaws, or file
any resolution of the Board of Directors with the Secretary of State of
Delaware, in either case which materially and adversely affects the holders of
the Preferred Shares;
(h) Investments and Loans. Make, or permit any Subsidiary
to make, any Investment in any Person or any loans or advances to, or guarantees
for the benefit of, any Person, other than (i) loans to any wholly owned
Subsidiary, (ii) loans pursuant to the Cash
16
Management Program and (iii) Investments, loans, advances and guarantees made in
the Ordinary Course of Business;
(i) Indebtedness. Create, incur, assume or suffer to
exist, or permit any of its Subsidiaries to create, incur, assume or suffer to
exist, Debt, other than (i) the Debt outstanding as of the date hereof, (ii)
bank Debt incurred after the date hereof not exceeding $450 million in the
aggregate on the terms contained in, or with an interest rate and prepayment
provisions not substantially different from, the terms contained in, that
Commitment Letter dated October 31, 2001, between the Company and certain banks
and (iii) Permitted Refinancing Debt;
(j) Capital Expenditures. Make, or permit the Company and
its Subsidiaries, taken as a whole, to make Capital Expenditures (including,
without limitation, payments with respect to capitalized leases), (i) during the
period from the date hereof through December 31, 2001, totaling in excess of $40
million, (ii) during the year ending December 31, 2002, totaling in excess of
$115 million and (iii) thereafter, in excess of annual budgeted amounts, except
in each case for additional expenditures not ordinarily classified as Capital
Expenditures that are required to be classified as Capital Expenditures by
applicable regulatory requirements; and
(k) Note Receivable. Allow the Intercompany Note
Receivable to be less than $240 million plus accrued and unpaid dividends on the
Preferred Stock.
8.3 INFORMATION RIGHTS. For so long as the Purchaser
continues to hold at least one Preferred Share, the Company shall deliver to the
Purchaser:
(a) as soon as available but in any event within
forty-five (45) days after the end of each quarterly accounting period in each
fiscal year, (i) unaudited consolidated statements of income and cash flows of
the Company and its Subsidiaries for such quarterly period and (ii) unaudited
consolidated balance sheets of the Company and its Subsidiaries as of the end of
such quarterly period, setting forth in each case comparisons to the Company's
annual budget and to the corresponding period in the preceding fiscal year, and
all such statements shall be prepared in accordance with GAAP (except as to the
absence of notes and comparative balances with respect to unaudited financial
statements);
(b) within one hundred twenty (120) days after the end of
each fiscal year, consolidated statements of income and cash flows of the
Company for such fiscal year, and consolidated balance sheets of the Company and
its Subsidiaries as of the end of such fiscal year, setting forth in each case
comparisons to the Company's annual budget and to the preceding fiscal year, all
prepared in accordance with GAAP certified by one of the "Big Five" independent
certified public accountant firms and accompanied by a copy of such firm's
annual management letter to the Board of Directors;
(c) promptly upon receipt thereof, any additional
reports, management letters or other written information concerning significant
aspects of the operations or financial affairs of the Company and its
Subsidiaries prepared for senior management or the Board of Directors (and not
otherwise contained in other materials provided hereunder);
17
(d) prior to the beginning of each fiscal year but in any
event no later than forty-five (45) days prior thereto, an annual budget
prepared on a quarterly basis for the Company and its Subsidiaries for such
fiscal year (displaying anticipated statements of income and cash flows and
balance sheets), and promptly upon preparation thereof any other significant
budgets prepared by the Company and any revisions of such annual or other
budgets;
(e) within ten (10) days after transmission thereof,
copies of all financial statements, proxy statements, reports and any other
general written communications which the Company sends to its stockholders or
holders of its indebtedness and copies of all registration statements and all
regular, special or periodic reports which it files, or any of its officers or
directors file with respect to the Company, with the Securities and Exchange
Commission or with any securities exchange on which any of its securities are
then listed, and copies of all press releases and other statements made
available generally by the Company to the public concerning material
developments in the Company's and its Subsidiaries' businesses; and
(f) with reasonable promptness, such other material
information and financial data concerning the Company as any Person entitled to
receive information under this Section 7.3 may reasonably request; provided,
however, that the disclosure of such information or financial data does not
violate applicable regulatory restrictions or unreasonably interfere with the
operations of the Company.
Each of the financial statements referred to in paragraphs (a)
and (b) shall be true and correct in all material respects as of the dates and
for the periods stated therein, subject in the case of the unaudited financial
statements to changes resulting from normal year-end adjustments for recurring
accruals.
8.4 SALE OF PREFERRED SHARES OF THE COMPANY. Each of the
Company and Enron agree that if the option granted pursuant to the Option
Agreement has become exercisable in accordance with the terms of the Option
Agreement prior to the receipt of clearance on the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act filing
made pursuant to Section 7.1(d), the Purchaser will have the option to (i) sell
the Preferred Shares to any other Person in a transaction which complies with
the Securities Act or (ii) notify the Company and Enron that the Purchaser
desires to have the Company sold. Upon such notification, the Company and Enron
agree to use their best efforts to effect, as soon as reasonably practicable,
the sale of the Company in which all of the outstanding Preferred Stock is sold
to a third party, redeemed or repurchased; provided, however, that the Purchaser
will determine in its sole discretion the acceptable consideration for such
sale.
8.5 USE OF PROCEEDS. The Company agrees that the Purchase
Price and the proceeds from any Debt incurred by the Company in compliance with
Section 8.2(i)(ii) hereof will be loaned to the indirect holder of all the
capital stock of the Company, MCTJ Holding Co. LLC, which loans will be
evidenced by promissory notes in the forms attached hereto as Exhibit D.
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ARTICLE IX
SURVIVAL
9.1 SURVIVAL. The representations and warranties of the
parties hereto contained herein, or in any writing delivered pursuant hereto,
shall survive the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby, regardless of any investigation made by
the Purchaser or on its behalf, and shall continue until the first anniversary
of the Closing Date, except for the representations and warranties set forth in
Sections 4.1, 4.2 and 4.3 hereof which shall survive indefinitely, and except
for the representations and warranties set forth in Section 4.12 hereof which
shall survive until the date that is ninety (90) days following the expiration
of the applicable statute of limitations.
ARTICLE X
INDEMNIFICATION
10.1 INDEMNIFICATION BY THE COMPANY. In consideration of the
Purchaser's execution and delivery of this Agreement and the acquisition of the
Preferred Shares hereunder and in addition to all of the Company's other
obligations under this Agreement, the Company shall defend, protect, indemnify
and hold harmless the Purchaser and all of its Affiliates, officers, directors,
employees and agents (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement) (collectively,
the "Purchaser Indemnitees") from and against any and all actions, causes of
action, suits, claims, losses, costs, penalties, fees, liabilities and damages,
expenses (including, without limitation, costs of suit and attorneys' fees and
expenses) in connection therewith (irrespective of whether any such Purchaser
Indemnitee is a party to the action for which indemnification hereunder is
sought (the "Indemnified Liabilities"), incurred by the Purchaser Indemnitees or
any of them as a result of, or arising out of, relating to any breach of any
representation, warranty, covenant or agreement made by the Company herein or in
any Related Document; provided, that with respect to any such claim based upon a
breach of a representation or warranty, a bona fide claim relating thereto has
been made within the applicable survival period specified in Section 9.1. The
Company shall reimburse the Purchaser Indemnitees for the Indemnified
Liabilities as such Indemnified Liabilities are incurred. To the extent that the
foregoing undertaking by the Company may be unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.
10.2 INDEMNIFICATION BY THE PURCHASER. In consideration of
the Company's execution and delivery of this Agreement and issuance of the
Preferred Shares hereunder and in addition to all of the Purchaser's other
obligations under this Agreement, the Purchaser shall defend, protect, indemnify
and hold harmless the Company and all of its Affiliates, officers, directors,
employees and agents (including, without limitation, those retained in
connection with the transactions contemplated by this Agreement) (collectively,
the "Company Indemnitees") from and against any and all Indemnified Liabilities
incurred by the Company Indemnitees or any of them as a result of, or arising
out of, or relating to any breach of any representation, warranty, covenant or
agreement made by the Purchaser herein or in any Related Document; provided,
that with respect to any such claim based upon a breach of a representation or
warranty, a bona fide claim relating thereto has been made within the applicable
survival period
19
specified in Section 9.1. The Purchaser shall reimburse the Company Indemnitees
for the Indemnified Liabilities as such Indemnified Liabilities are incurred. To
the extent that the foregoing undertaking by the Purchaser may be unenforceable
for any reason, the Purchaser shall make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.
10.3 INDEMNIFICATION PROCEDURE.
(a) In the case of any claim asserted by a third party
against a party entitled to indemnification under this Agreement (the
"Indemnified Party"), (i) notice setting forth with reasonable specificity the
facts and circumstances of which such Person has received notice shall be given
by the Indemnified Party (such notice, an "Indemnification Claim Notice") to the
party required to provide indemnification (the "Indemnifying Party") promptly
after such Indemnified Party has actual knowledge of any claim as to which
indemnity may be sought, and (ii) the Indemnified Party shall permit the
Indemnifying Party (at the expense of such Indemnifying Party) to assume the
defense of any claim or any litigation resulting therefrom; provided, that (i)
counsel for the Indemnifying Party who shall conduct the defense of such claim
or litigation shall be reasonably satisfactory to the Indemnified Party, and the
Indemnified Party may participate in such defense at such Indemnified Party's
expense, and (ii) the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its indemnification
obligation under this Agreement except to the extent that (x) such failure
results in a lack of actual notice to the Indemnifying Party and (y) such
Indemnifying Party is materially prejudiced as a result of such failure to give
notice. Except with the prior written consent of the Indemnified Party, no
Indemnifying Party, in the defense of any such claim or litigation, shall
consent to entry of any judgment or enter into any settlement that (x) provides
for injunctive or other nonmonetary relief affecting the Indemnified Party or
(y) does not include as an unconditional term thereof the giving by each
claimant or plaintiff to such Indemnified Party of a release from all liability
with respect to such claim or litigation.
(b) In the event that the Indemnifying Party does not
assume and conduct the defense of any claim subject to indemnification hereunder
in accordance with the provisions of Section 10.3(a) above, the Indemnified
Party may take over and assume control over the defense, settlement,
negotiations or litigation relating to any such claim at the sole cost of the
Indemnifying Party; provided, that if the Indemnified Party does so take over
and assume control, (x) the Indemnified Party shall not settle such claim or
litigation without the written consent of the Indemnifying Party, such consent
not to be unreasonably withheld, (y) the Indemnified Party shall be reimbursed
by the Indemnifying Party for reasonable attorneys' fees and other expenses of
defending such claim upon the presentation of itemized bills for such expenses
to the Indemnifying Party, and (z) the Indemnifying Party will remain
responsible for any Indemnified Liabilities that the Indemnified Party may
suffer resulting from, arising out of, relating to, in the nature of, or caused
by such claim to the fullest extent provided in this Article IX.
20
ARTICLE XI
GENERAL PROVISIONS
11.1 SUCCESSORS AND ASSIGNS. This Agreement shall bind and
inure to the benefit of the parties hereto and their respective successors and
assigns, including each subsequent holder of Preferred Shares. Except as
otherwise specifically provided herein or in the Related Documents, neither this
Agreement nor the Preferred Shares shall be assignable by any party (whether by
operation of law or otherwise) unless the following conditions are satisfied:
(a) except for an assignment to an Affiliate, the other parties hereto consent
in writing to the assignment, and (b) in the case of an assignment by Purchaser,
Purchaser has concurrently assigned its rights under the Exchange Agreement and
the Registration Rights Agreement to the assignee and the assignee shall have
agreed, in a written instrument in form and substance satisfactory to Enron, to
become bound to each such agreement as the successor party of Purchaser under
such agreements.
11.2 ENTIRE AGREEMENT. This Agreement and the other writings
referred to herein or delivered pursuant hereto constitute the entire agreement
among the parties with respect to the subject matter hereof and supersede all
prior arrangements or understandings.
11.3 NOTICES. All notices, requests, consents and other
communications provided for herein shall be in writing and shall be (i)
delivered in person, (ii) transmitted by telecopy, (iii) sent by first-class,
registered or certified mail, postage prepaid, or (iv) sent by reputable
overnight courier service, fees prepaid, to the recipient at the address or
telecopy number set forth below, or such other address or telecopy number as may
hereafter be designated in writing by such recipient. Notices shall be deemed
given upon personal delivery, seven days following deposit in the mail as set
forth above, upon acknowledgment by the receiving telecopier or one day
following deposit with an overnight courier service.
If to the Company:
Northern Natural Gas Company
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to (which shall not constitute notice
to the Company):
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
21
If to the Purchaser:
Dynegy Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
Attention: General Counsel
with a copy to (which shall not constitute notice
to the Purchaser):
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: R. ▇▇▇▇ ▇▇▇▇▇▇▇
11.4 TERMINATION. This Agreement may be terminated at any
time prior to the Required Initial Filing: (a) by the mutual written consent of
the Company and the Purchaser; or (b) by either the Company or the Purchaser, if
the Required Initial Filing shall not have occurred on or before November 10,
2002, unless extended by the mutual written agreement of the Company and the
Purchaser; provided, however, that (x) the party seeking to terminate this
Agreement under this clause (b) is not then in material breach of this Agreement
and (y) the right to terminate this Agreement under this clause (b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of, or resulted in, the failure of the Required
Initial Filing to occur on or before such date.
11.5 EFFECT OF TERMINATION. In the event of termination of
this Agreement as provided in Section 11.4, written notice thereof shall
forthwith be given by the terminating party to the other party, and this
Agreement shall thereupon terminate and become void and have no effect, no party
shall have liability to any other party in respect of this Agreement, and the
transactions contemplated hereby shall be abandoned without further action by
the parties hereto, except that the provisions of Sections 11.5, 11.6, 11.7,
11.11, 11.12, and 11.14 shall survive the termination of this Agreement;
provided, that such termination shall not relieve any party of any liability for
any willful breach of any covenant or agreement contained in this Agreement.
11.6 EXPENSES. Except as otherwise provided in this
Agreement, all costs and expenses, including, without limitation, fees and
disbursements of counsel, financial advisors and accountants, incurred in
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such costs and expenses, whether or not the Closing
shall have occurred.
11.7 CONFIDENTIALITY AND PUBLIC ANNOUNCEMENTS. Unless
required by law or otherwise contemplated by this Agreement, the Company and the
Purchaser shall (i) keep confidential and (ii) shall not communicate to other
Persons (other than their respective employees, agents and advisors and other
than lenders or prospective lenders of the Company) or make any public
announcements in respect of this Agreement and matters discussed or disclosed
22
in connection herewith or therewith, without prior consent by the other party;
in the event such consent is given, the parties shall cooperate as to the timing
and contents of any such public announcement.
11.8 AMENDMENT AND WAIVER. No amendment of any provision of
this Agreement shall be effective, unless the same shall be in writing and
signed by the Company and the holders of at least a majority of the Preferred
Shares issued to the Purchaser on the Closing Date. Except as otherwise
expressly set forth herein, any failure of the Company to comply with any
provision hereof may only be waived in writing by the holders of at least a
majority of the Preferred Shares, and any failure of any holder of Preferred
Shares to comply with any provision hereof may only be waived in writing by the
Company. No such waiver shall operate as a waiver of, or estoppel with respect
to, any subsequent or other failure. No failure by any party to take any action
against any breach of this Agreement or default by any other party shall
constitute a waiver of such party's right to enforce any provision hereof or to
take any such action.
11.9 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but all
of which together shall constitute one agreement.
11.10 HEADINGS. The headings of the various sections of this
Agreement have been inserted for reference only and shall not be deemed to be a
part of this Agreement.
11.11 SPECIFIC PERFORMANCE. The Company, on the one hand, and
the Purchaser, on the other hand, acknowledge that money damages would not be a
sufficient remedy for any breach of this Agreement. It is accordingly agreed
that the parties shall be entitled to specific performance and injunctive relief
as remedies for any such breach, these remedies being in addition to any of the
remedies to which they may be entitled at law or equity.
11.12 REMEDIES CUMULATIVE. Except as otherwise provided
herein, the remedies provided herein shall be cumulative and shall not preclude
the assertion by any party hereto of any other rights or the seeking of any
other remedies against any other party hereto.
11.13 GOVERNING LAW. THE CORPORATE LAW OF DELAWARE SHALL
GOVERN ALL ISSUES CONCERNING THE RELATIVE RIGHTS OF THE COMPANY AND ITS
STOCKHOLDERS. ALL OTHER QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND
INTERPRETATION OF THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE DOMESTIC LAWS OF THE STATE OF
TEXAS, WITHOUT GIVING EFFECT
TO ANY CHOICE OF LAW OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE
OF
TEXAS OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE APPLICATION OF THE LAWS
OF ANY JURISDICTION OTHER THAN THE STATE OF
TEXAS.
11.14 NO THIRD PARTY BENEFICIARIES. Except as specifically
set forth or referred to herein, nothing herein is intended or shall be
construed to confer upon any Person other than the parties hereto and their
successors or assigns, any rights or remedies under or by reason of this
Agreement.
23
11.15 SEVERABILITY. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.
* * * *
24
IN WITNESS WHEREOF, the parties have caused their duly authorized
officers to execute this Agreement as of the date first above written.
ENRON CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
Title: Executive Vice President -
Finance and Treasurer
NORTHERN NATURAL GAS COMPANY
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President and
General Counsel
DYNEGY INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
