EXHIBIT 10.5
PURCHASE OPTION AGREEMENT
This PURCHASE OPTION AGREEMENT (this "Agreement") dated as of November
9, 2001 is by and among CGNN Holding Company, Inc., a Delaware corporation (the
"Grantee"), MCTJ Holding Co. LLC, a Delaware limited liability company (the
"Company"), Northern Natural Gas Company, a Delaware corporation ("NNGC"), Enron
Corp., an Oregon corporation ("Enron" and, together with Grantee, the "Enron
Parties"), Dynegy Holdings, Inc., a Delaware corporation ("Dynegy Holdings"),
and Dynegy Inc., an Illinois corporation ("Dynegy" and, together with Dynegy
Holdings, "Grantor" or the "Dynegy Parties").
RECITALS
A. Merger Agreement. Concurrently with the execution of this Agreement,
Dynegy, Stanford, Inc., a Delaware corporation, Badin, Inc., an Illinois
corporation, Sorin, Inc., an Oregon corporation, and Enron entered into an
Agreement and Plan of Merger (the "Merger Agreement").
B. Equity Interest. The Company owns 100% of the capital stock of NNGC
Holding Company, Inc., a Delaware corporation ("NNGC Holding"). NNGC Holding
owns 100% of the common stock, par value $1.00 per share, of NNGC. Grantee is
the sole member of, and owns all of the membership interests in, the Company.
NOW THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:
1. Capitalized Terms. Those capitalized terms used in this Agreement
that are not defined in this Agreement are defined in Annex A hereto and are
used herein with the meanings ascribed to them therein.
2. Purchase Option.
2.1. Grant of Purchase Option. Subject to the terms and
conditions set forth herein, (a) Dynegy Holdings hereby grants to the Grantee an
irrevocable option to purchase all, but not less than all, of the outstanding
membership interests in the Company (the "Option Interests") and (b) Dynegy
hereby grants to the Grantee an irrevocable option to purchase all, but not less
than all, of the outstanding shares of Series A Preferred Stock (the "Preferred
Shares"). The options of Dynegy and Dynegy Holdings are collectively referred to
herein as the "Purchase Option." The Purchase Option must be exercised for all
the Option Interests and all the Preferred Shares simultaneously.
2.2. Option Term. The Purchase Option shall be exercisable (a)
until the later of (i) 180 days after the date hereof and (ii) 90 days after a
Closing under the Option Agreement upon an exercise pursuant to Section 2.5.1.4
thereof or (b) until 90 days after a Closing under
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the Option Agreement pursuant to Section 2.5.1.1, 2.5.1.2 or 2.5.1.3 thereof
(the "Option Term"). If the Purchase Option has not been exercised prior to the
expiration of the Option Term, then the rights and obligations set forth in this
Agreement shall expire and terminate.
2.3. Exercise Price of Purchase Option. (a) The exercise price
of the Purchase Option for the Option Interests (the "Option Interests Exercise
Price") shall be the total sum of (i) $24 million, plus (ii) $950 million, minus
(iii) the aggregate amount of outstanding principal indebtedness under the Bank
Credit Facility and the Senior Notes and any Permitted Refinancing Debt related
thereto on the Closing Date, plus (iv) the positive or negative change in
Working Capital calculated from the Closing Date of the Option Agreement to the
Estimated Working Capital based on the definition of Working Capital provided in
this Agreement, minus (v) any increase in long-term debt (other than Debt
referred to in (iii) above) between the closing under the Option Agreement and
the Closing under this Agreement, plus (vi) any decrease in long-term Debt
(other than Debt referred to in (iii) above) between the closing under the
Option Agreement and the Closing under this Agreement, plus (vii) any accrued
but unpaid dividends on the Series A Preferred Stock as of the Closing under the
Option Agreement.
(b) The exercise price of the Purchase Option for all
the shares of the Series A Preferred Stock (the "Series A Exercise Price") shall
be $1.5 billion.
2.4. Working Capital Adjustment.
2.4.1. Calculation of Final Working Capital. Within
30 days of Closing, Grantee shall prepare
and deliver to Grantor a statement (the
"Final Working Capital Statement") setting
forth the amount of Final Working Capital.
Grantor shall have 30 days to review the
Final Working Capital Statement and
supporting documentation and shall have
reasonable access to the books, records and
personnel of Grantee and NNGC for purposes
of verifying the accuracy of the calculation
of Final Working Capital. Grantee's
calculation of Final Working Capital shall
be deemed final and binding unless Grantor
raises an objection in writing within 30
days of its receipt thereof, specifying in
reasonable detail the nature and extent of
such objection. If Grantor raises an
objection to the calculation of Final
Working Capital within such 30-day period,
and if Grantor and Grantee are unable to
resolve such objection within 30 days of the
date Grantee receives such objection, then
the disputed matter shall be submitted for
determination to an accounting firm of
national reputation mutually agreeable to
Grantor and Grantee. The determination of
such accounting firm shall be final and
binding for all purposes. The fees and
expenses of such accounting firm shall be
borne equally by Grantor and Grantee.
2.4.2. Settlement of Working Capital Adjustment. If
Final Working Capital exceeds Estimated
Working Capital, then Grantee will pay
Grantor the amount of such excess. If Final
Working Capital
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is less than Estimated Working Capital, then
Grantor will pay Grantee the amount of such
shortfall. Any such payments will be made
within five (5) Business Days of the
determination of the adjustment by wire
transfer of immediately available funds.
3. Exercise of Purchase Option; Conditions; Closing.
3.1. Notice; Closing Location. If the Grantee wishes to
exercise the Purchase Option, it shall send a written notice (an "Exercise
Notice") (the date of which being herein referred to as the "Notice Date") to
the Grantor specifying a date (as it may be extended from time to time, the
"Closing Date") not earlier than three (3) Business Days nor later than ten (10)
Business Days from the Notice Date for the closing of the purchase and sale
pursuant to the Purchase Option (the "Closing"). The Closing will take place at
the offices of Xxxxx Xxxxx L.L.P., 000 Xxxxxxxxx, Xxxxxxx, Xxxxx 00000.
3.2. Extension. If the Closing cannot be effected by reason of
the application of any Law, Regulation or Order, the Closing Date shall be
extended to the tenth Business Day following the expiration or termination of
the restriction imposed by such Law, Regulation or Order. Without limiting the
foregoing, if prior notification to, or Authorization of, any Governmental
Agency is required in connection with the purchase of the Option Interests or
the Preferred Shares by virtue of the application of such Law, Regulation or
Order, the Grantee and, if applicable, the Grantor and the Company shall
promptly file the required notice or application for Authorization and the
Grantee, with the cooperation of the Grantor and the Company, shall
expeditiously process the same.
3.3. Conditions to Closing. It shall be a condition to Closing
that:
3.3.1. HSR Clearance. The parties shall have
obtained clearance under the HSR Act, if
required by Law, to proceed with the
transactions contemplated hereby.
3.3.2. Release of Guarantees. Unless waived by
Dynegy, it shall be a condition to Closing
that (a) either any guaranty by Dynegy or
any Subsidiary of Dynegy (other than the
Company and NNGC Holding) of NNGC's
indebtedness under the Bank Credit Facility
be released or all indebtedness under the
Bank Credit Facility be repaid effective as
of the Closing and (b) any guaranty by
Dynegy or any Subsidiary of Dynegy (other
than NNGC Holding) of the Company's
indebtedness to NNGC be released effective
as of the Closing.
3.3.3. Officer's Certificate. At the Closing,
Dynegy will deliver an Officer's Certificate
to the effect that the Dynegy Parties have
the power to convey the Option Interests and
the Series A Stock and setting forth the
capitalization of the Company, NNGC Holding
and NNGC, and that from the Closing under
the Option Agreement through the Closing
hereunder, Grantors have
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operated NNGC in compliance with the
affirmative covenants set forth in Section
4.3 hereof.
3.3.4. No Violation of Law [Grantee]. Unless waived
by Grantee, the Closing shall not violate
any Law, Regulation or Order applicable to
Grantee or any of its Affiliates.
3.3.5. No Violation of Law [Grantor]. Unless waived
by Grantor, the Closing shall not violate
any Law, Regulation or Order applicable to
Grantor or any of its Affiliates.
3.3.6. Accuracy of Enron and Grantee's
Representations and Warranties. Unless
waived by Grantor, the representations and
warranties set forth in Section 5.1 are true
and correct as of the Closing Date.
3.3.7. Accuracy of Dynegy Parties' Representations
and Warranties. Unless waived by Grantee,
the representations and warranties set forth
in Section 5.2 are true and correct as of
the Closing Date.
3.4. Payment and Delivery of Certificates.
3.4.1. Payment. At the Closing, the Grantee shall
pay the Option Interests Exercise Price to
Dynegy Holdings and the Series A Exercise
Price to Dynegy in immediately available
funds by wire transfer to a bank account
designated by the applicable Grantor.
3.4.2. Delivery. At the Closing, simultaneously
with the delivery of immediately available
funds as provided above, Dynegy Holdings
shall deliver to the Grantee a certificate
or certificates representing the Option
Interests and Dynegy shall deliver to
Grantee a certificate or certificates
representing the Preferred Shares, which
Option Interests and Preferred Shares shall
be duly authorized, validly issued, fully
paid and nonassessable and free and clear of
all Liens, and the Grantee shall deliver to
Dynegy Holdings its written agreement that
the Grantee will not offer to sell or
otherwise dispose of such Option Interests
or Preferred Shares in violation of
applicable Law.
3.5. Certificates. (a) Certificates for the Option Interests
delivered at the Closing shall be endorsed with a restrictive legend that shall
read substantially as follows:
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE STATE SECURITIES LAWS AND PURSUANT TO THE TERMS
OF AN OPTION AGREEMENT DATED AS OF NOVEMBER 9, 2001 AND A PURCHASE
OPTION AGREEMENT DATED AS OF NOVEMBER 9, 2001. A COPY OF SUCH
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AGREEMENTS WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY THE COMPANY OF A WRITTEN REQUEST THEREFOR.
(b) Certificates for the Preferred Shares delivered
at the Closing shall be endorsed with a restrictive legend that shall read
substantially as follows:
THE TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND APPLICABLE STATE SECURITIES LAWS AND PURSUANT TO THE TERMS
OF A PURCHASE OPTION AGREEMENT DATED AS OF NOVEMBER 9, 2001. A COPY OF
SUCH AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE
UPON RECEIPT BY THE COMPANY OF A WRITTEN REQUEST THEREFOR.
3.6. Unlegended Certificates. A new certificate or
certificates evidencing the Option Interests and the Preferred Shares will be
issued to the Grantee in lieu of the certificate bearing the above legend, and
such new certificate shall not bear such legend, insofar as it applies to the
Securities Act, if the Grantee shall have delivered to the Company a copy of a
letter from the staff of the SEC, or an opinion of counsel in form and substance
reasonably satisfactory to the Company and its counsel, to the effect that such
legend is not required for purposes of the Securities Act.
4. Covenants.
4.1. Maintenance of 100% ownership of Option Interests and
Preferred Shares; no Liens. The Grantors hereby covenant that, from the Closing
Date under the Option Agreement through the end of the Purchase Option Term,
Dynegy Holdings will maintain ownership of 100% of the membership interests of
the Company, the Company will maintain ownership of 100% of the capital stock of
NNGC Holding, and NNGC Holding will maintain ownership of 100% of the common
stock of NNGC. The Grantors hereby covenant not to issue any equity interest or
any options to purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or commitments to
issue or sell, any equity interest in the Company, NNGC Holding or NNGC to any
entity other than Grantor from the date hereof through the earlier of Closing
Date or the expiration of the Option Term. Grantors, Enron, the Company, NNGC
Holding, and NNGC will not, directly or indirectly, offer for sale, contract to
sell, sell, distribute, grant any option, right or warrant to purchase, suffer
any Liens upon, pledge, hypothecate or otherwise dispose of any equity interest
in the Company, NNGC Holding or NNGC, any securities convertible into, or
exercisable or exchangeable for, an equity interest in the Company, NNGC Holding
or NNGC, or any other rights to acquire an equity interest in the Company, NNGC
Holding or NNGC, except for Liens, pledges and hypothecations in the equity
interest of NNGC to secure Debt.
4.2. Release of Guaranty. After receipt of the Purchase Option
Exercise Notice, and prior to the Closing Date, Grantee agrees to use its
reasonable commercial best efforts to cause the release of Dynegy's guarantee,
if any, under the Bank Credit Facility,
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including, if required, the substitution of Enron or an Affiliate of Enron as
the guarantor thereunder.
4.3. Affirmative Covenants Related to NNGC. Dynegy and the
Company covenant that during the Purchase Option Term, or if the Options granted
hereunder are exercised, until the Closing Date, they will cause NNGC to:
4.3.1. cause all properties owned by NNGC 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 NNGC from discontinuing the
maintenance of any of such properties if
such discontinuance is, in the judgment of
the management of NNGC, desirable in the
conduct of its business;
4.3.2. preserve and keep in full force and effect
the corporate existence, rights (charter and
statutory), licenses and franchises of NNGC;
provided, that NNGC 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 NNGC as a whole;
4.3.3. maintain the books, accounts and records of
NNGC in accordance with GAAP;
4.3.4. comply with all material legal requirements
and material contractual obligations
applicable to the operations and business of
NNGC and pay all applicable taxes as they
become due and payable; and
4.3.5. permit representatives of the Grantee and
its agents (including their counsel,
accountants and consultants) to have
reasonable access during business hours to
NNGC'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.
4.4. Negative Covenants Related to NNGC. For the period
between the closing under the Option Agreement and the Closing Date under this
Agreement, Dynegy, Grantors and the Company covenant that, without the approval
of the Grantee, NNGC will not:
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4.4.1. 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
dividends equal to NNGC's net income plus
accrued and unpaid dividends on the Series A
Preferred Stock;
4.4.2. Redemptions. Except as provided pursuant to
the terms of the Series A Preferred Stock,
directly or indirectly redeem, purchase or
otherwise acquire, any of NNGC's equity
securities;
4.4.3. 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);
4.4.4. Mergers. Merge or consolidate, or enter into
an agreement providing for any merger or
consolidation, with any Person if the
holders of NNGC's capital stock prior to the
transaction will own less than 100% of the
voting power of NNGC's capital stock after
the transaction;
4.4.5. Sale of Assets. Except as provided in
Schedule 4.4.5, sell, lease or otherwise
dispose of any assets of NNGC, 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;
4.4.6. 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;
4.4.7. Charter Amendments. Make any amendment to or
waive any provision of NNGC'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 Series A Stock;
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4.4.8. Investments and Loans. Make any investment
in any Person or any loans or advances to,
or guarantees for the benefit of, any
Affiliate, other than loans to any wholly
owned Subsidiary;
4.4.9. 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)
Debt incurred after the date hereof not
exceeding $450 million in the aggregate on
the terms contained in or with interest rate
and prepayment provisions not substantially
different from, the terms contained in that
Commitment Letter dated October 31, 2001
between NNGC and certain banks and (iii)
Permitted Refinancing Debt;
4.4.10. Capital Expenditures. Make, or permit NNGC
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.
4.5. Tax Indemnity. Dynegy shall indemnify Enron and its
Affiliates, including NNGC, against any liability for taxes of the affiliated
group of corporations filing a consolidated federal income tax return of which
Dynegy is the common parent under Treas. Xxx.xx. 1.1502-6 (or similar principles
of state, local or foreign law). Procedures similar to those set forth in
Sections 8.1 and 8.3 of the Option Agreement shall apply to claims pursuant to
this Section.
5. Representations and Warranties.
5.1. Representations and Warranties of Grantee. Enron and
Grantee hereby represent and warrant to Grantors as follows:
5.1.1. Existence; Qualification; Subsidiaries.
Grantee 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.
5.1.2. Authorization and Enforceability. Grantee
has the full power and authority and has
taken all action necessary to permit Grantee
to execute and deliver this Agreement and to
carry out the terms
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hereof, and none of such actions will
violate any provision of the Grantee'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 Grantee is a party or by which it is
bound. This Agreement constitutes a legal,
valid and binding obligation of Grantee,
enforceable against Grantee 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.
5.1.3. Investment Intent of Grantee. Grantee is
acquiring the Purchase Option and, if it
exercises the Purchase Option, will acquire
the Option Interests and the Series A
Preferred Stock for its own account for
investment and not with a view to
distribution.
5.1.4. Sophistication and Financial Condition;
Information. Grantee 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 and
the Option Interests. Grantee is able to
bear the economic risk of this investment
regarding the Company, is able to hold the
Option Interests and the Preferred Shares
indefinitely and has a sufficient net worth
to sustain a loss of its entire investment
in the Company and NNGC in the event such
loss should occur. Grantee (a) has been
furnished with such information about Dynegy
and Grantors, the Company and the Purchase
Option, the Preferred Shares and the Option
Interests as it has requested, (b) has made
its own independent inquiry and
investigation into, and based thereon, has
formed an independent judgment concerning
these investments and (c) is an "accredited"
investor within the meaning of Regulation D
of the Securities Act, as currently in
effect. The Grantee acknowledges that any
certificate representing the Preferred
Shares or the Option Interests will bear a
customary legend regarding restrictions on
the transferability of such Preferred Shares
or the Option Interests.
5.2. Representations and Warranties of Dynegy and Dynegy
Holdings. Each of Dynegy and Dynegy Holdings hereby represents and warrants to
Grantee as follows:
5.2.1. Existence; Qualification; Subsidiaries.
Grantors are corporations duly organized,
validly existing and in good standing under
the laws of the state of Delaware. Dynegy
and Dynegy Holdings
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have full corporate power and authority to
conduct their business and own and operate
their properties as now conducted, owned and
operated.
5.2.2. Authorization and Enforceability. Dynegy and
Dynegy Holdings have full power and
authority and have taken all required
corporate and other action necessary to
permit each to execute and deliver this
Agreement and to carry out the terms hereof,
and none of such actions will violate any
provision of each of their constituent
documents or any applicable law, regulation,
order, judgment or decree, 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 any of them is a party or by which it
is bound. This Agreement constitutes a
legal, valid and binding obligation of each
of them, enforceable against each of them 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.
5.2.3. Third-Party Approvals. Assuming the accuracy
of the representations and warranties of the
Grantee contained in this Agreement and
except for any required filings under the
HSR Act, neither Dynegy nor Dynegy Holdings
are 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 consummation of
the transactions contemplated hereby.
6. Guarantee by Dynegy of Dynegy Holdings' Obligations Hereunder.
Dynegy hereby unconditionally guarantees to Grantee the prompt, faithful and
full performance of all of the covenants and obligations of Dynegy Holdings
under the terms of this Agreement.
7. Miscellaneous.
7.1. Expenses. Except as otherwise provided in the Merger
Agreement or as otherwise expressly provided herein, each of the parties hereto
shall bear and pay all costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants and
legal counsel.
7.2. Waiver and Amendment. Any provision of this Agreement may
be waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not
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be modified, amended, altered or supplemented except upon the execution and
delivery of a written agreement executed by the parties hereto.
7.3. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in an acceptable manner to
the end that transactions contemplated hereby are fulfilled to the extent
possible.
7.4. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Texas, regardless of the
Laws that might otherwise govern under applicable principles of conflicts of
law.
7.5. Descriptive Headings. The descriptive headings contained
herein are for convenience or reference only, are not comprehensive, and shall
not affect in any way the meaning or interpretation of this Agreement.
7.6. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered personally,
telecopied (with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses or sent by
electronic transmission to the telecopier number specified below:
If to Enron or the Grantee, to:
Enron Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with an information copy, which shall not
constitute notice to:
Xxxxxx & Xxxxxx L.L.P.
0000 Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xxxxxxx X. Xxxx, III, Esq.
Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
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If to Dynegy or Dynegy Holdings to:
Dynegy Inc.
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: General Counsel
Facsimile: (000) 000-0000
with an information copy, which shall not
constitute notice to:
Xxxxx Xxxxx L.L.P.
Xxx Xxxxx Xxxxx
000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000-0000
Attention: R. Xxxx Xxxxxxx, Esq.
J. Xxxxx Xxxxxxxx, Jr., Esq.
Facsimile: (000) 000-0000
7.7. Counterparts. This Agreement and any amendments hereto
may be executed in counterparts, each of which shall be deemed an original and
all of which taken together shall constitute but a single document.
7.8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be sold, assigned or otherwise disposed
of or transferred by either of the parties hereto (whether by operation of law
or otherwise) without the prior written consent of the other party, except that
the Grantee may assign this Agreement to an Affiliate or Subsidiary of the
Grantee; provided, however, that no such assignment shall have the effect of
releasing the Grantee from its obligations hereunder and the assignee shall be
subject to all of the terms and conditions of this Agreement as if it were the
Grantee. Subject to the preceding sentence, this Agreement shall be binding
upon, inure to the benefit of and be enforceable by the parties and their
respective successors and assigns.
7.9. Further Assurances. In the event of any exercise of the
Purchase Option by the Grantee, Enron and the Grantee shall execute and deliver
all other documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided for by
such exercise.
7.10. Specific Performance. The parties hereto hereby
acknowledge and agree that the failure of any party to this Agreement to perform
its agreements and covenants hereunder will cause irreparable injury to the
other party to this Agreement for which damages, even if available, will not be
an adequate remedy. Accordingly, each of the parties hereto hereby consents to
the granting of equitable relief (including specific performance and injunctive
relief) by any court of competent jurisdiction to enforce any party's
obligations hereunder. The parties further agree to waive any requirement for
the securing or posting of any bond in connection with the obtaining of any such
equitable relief and that this provision is without prejudice to any other
rights that the parties hereto may have for any failure to perform this
Agreement.
-12-
7.11. Complete Agreement; No Third Party Beneficiary. This
Agreement and the other documents and instruments referred to herein and therein
(i) constitutes the entire agreement and supersedes all prior agreements,
conversations, negotiations and understandings, both written and oral, between
the parties with respect to the subject matter hereof and (ii) is not intended
to confer upon any Person other than the parties hereto any rights or remedies
hereunder.
[Remainder of this page intentionally left blank.]
-13-
IN WITNESS WHEREOF, the parties hereto have caused this Purchase Option
Agreement to be signed by their respective officers thereunto duly authorized,
all as of the day and year first written above.
ENRON CORP.,
an Oregon corporation
By: /s/ XXXXXXX X. XXXXX, XX.
------------------------------------
Name: Xxxxxxx X. Xxxxx, Xx.
Title: Authorized Agent
CGNN HOLDING COMPANY, INC.,
a Delaware corporation
By: /s/ XXXX X. XXXXXX
------------------------------------
Name: Xxxx X. Xxxxxx
Title: Authorized Agent
MCTJ HOLDING CO. LLC,
a Delaware limited liability company
By: /s/ XXXX X. XXXXXX
------------------------------------
Name: Xxxx X. Xxxxxx
Title: Authorized Agent
NORTHERN NATURAL GAS COMPANY,
a Delaware corporation
By: /s/ XXXX X. XXXXXX
------------------------------------
Name: Xxxx X. Xxxxxx
Title: Authorized Agent
-00-
XXXXXX XXXXXXXX INC.,
a Delaware corporation
By: /s/ XXXX X. XXXXXXX
---------------------------------
Name: Xxxx X. Xxxxxxx
Title: Authorized Agent
DYNEGY INC.,
an Illinois corporation
By: /s/ XXXX X. XXXXXXX
---------------------------------
Name: Xxxx X. Xxxxxxx
Title: Authorized Agent
-15-
ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Option Agreement shall have the
meanings set forth below unless the context shall otherwise require:
"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 Dynegy and its Affiliates shall be deemed to be an Affiliate of
Enron. 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.
"Agreement" shall mean this Option Agreement.
"Authorization" shall mean any and all permits, licenses,
authorizations, orders certificates, registrations or other approvals granted by
any Governmental Agency.
"Bank Credit Facility" shall mean one or more bank credit facilities
providing credit availability to NNGC in an aggregate principal amount not to
exceed $450 million on the terms contained in, or not substantially different
from the terms contained in, that Commitment Letter dated October 31, 2001
between NNGC and certain banks.
"Business Day" shall mean a day other than Saturday, Sunday or a
federal holiday.
"Closing" shall have the meaning ascribed to such term in Section 3
herein.
"Closing Date" shall have the meaning ascribed to such term in Section
3 herein.
"Code" means the Internal Revenue Code of 1986, as amended.
"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
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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.
"Court" shall mean any court or arbitration tribunal of the United
States, any foreign country or any domestic or foreign state, and any political
subdivision thereof, and shall include the European Court of Justice.
"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.
"Enron Common Stock" means the common stock, no par value, of Enron.
"Estimated Working Capital" means Grantors' good faith estimate made
within five Business Days of Closing of Working Capital on the Closing Date.
"FERC" means the Federal Energy Regulatory Commission.
"Final Working Capital" means the Working Capital on the close of
business on the Closing Date as determined pursuant to Section 2.6.
"Final Working Capital Statement" has the meaning set forth in Section
2.4.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time, consistently applied.
"Governmental Agency" means any federal, state, local, foreign or other
governmental agency, instrumentality, commission, authority, board or body.
"HSR Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Intercompany Note Receivable" means any dividend or other distribution
resulting from the cancellation by NNGC of Debt owed by Enron and its Affiliates
to NNGC.
"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.
A-2
"Law" shall mean all laws, statutes and ordinances of the United
States, any state of the United States, any foreign country, any foreign state
and any political subdivision thereof, including all decisions of Courts having
the effect of law in each such jurisdiction.
"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 Effect" means a material adverse effect on (a) the
business condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries or (b) the transactions contemplated by this
Agreement.
"Merger" shall have the meaning ascribed to such term in the Merger
Agreement.
"NNGC Holding" means NNGC Holding Company, Inc., a Delaware corporation
and wholly owned Subsidiary of the Company.
"NNGC" means Northern Natural Gas Company, a Delaware corporation, and
its subsidiaries.
"Notice Date" shall have the meaning ascribed to such term in Section 2
herein.
"Option Agreement" means the Option Agreement among the parties hereto
(other than NNGC) entered into concurrently herewith.
"Order" shall mean any judgment, order or decree of any Court or
Governmental Agency, federal, foreign, state or local, of competent
jurisdiction.
"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 Refinancing Debt" shall mean any Debt of NNGC 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 NNGC 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);
(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
A-3
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.
"Regulation" shall mean any rule or regulation of any Governmental
Agency having the effect of Law or of any rule or regulation of any
self-regulatory organization, such as the NYSE.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"Series A Stock" means the Series A Preferred Stock, par value $0.01
per share, of NNGC.
"Subscription Agreement" means that certain Subscription Agreement
dated as of November 9, 2001, by and among Enron, NNGC and Dynegy, Inc., an
Illinois corporation.
"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, such 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.
"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.
"Working Capital" is equal to cash, plus (a) accounts receivable, plus
(b) transportation and exchange gas receivable, plus (c) intercompany accounts
receivable plus (d) the Intercompany Note Receivable less (e) accounts payable,
less (f) transportation and exchange gas payable, less (g) accrued taxes, less
(h) accrued interest, less (i) intercompany accounts payable.
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