12 January 2002: Enron's Web site lists all its SEC filings:
http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=ENE&script=800
A check of Enron's bankruptcy cases shows a total of 209 cases involving the corporation.
11 January 2002
These are the Enron Corporation SEC 8-K filings on:
Restatement of earnings for 1997-2002, November 8, 2001Financing for Transwestern Pipeline Company and Northern Natural Gas Company, November 13, 2001
Failed merger proposal of Enron Corp. and Dynergy Inc., November 14, 2001
Bankruptcy or receivership, December 17, 2001
These name most of the principal corporate, special purpose entities, related-third party transactions, underwriting and auditing parties involved in the affair. The restatement describes the consequences of redefining "Special Purpose Entities and Related-Party Transactions." The pipeline and gas financing and proposed merger describe the alleged financial health of Enron one month before bankruptcy filing.
Press releases within the filings describe what the public was being told.
Prior 8-K filings of the parent Enron Corporation; there are many other filings of its multiple subsidiaries:
January 26, 1999
http://www.sec.gov/Archives/edgar/data/1024401/0000950129-99-000252.txtMarch 18, 1999
http://www.sec.gov/Archives/edgar/data/1024401/0001024401-99-000004.txtMay 19, 2000
http://www.sec.gov/Archives/edgar/data/1024401/0000950129-00-002545.txtJanuary 31, 2001
http://www.sec.gov/Archives/edgar/data/1024401/000095012901000416/0000950129-01-000416.txtFebruary 28, 2001
http://www.sec.gov/Archives/edgar/data/1024401/000090928101500005/0000909281-01-500005.txt
There are no Enron Corporation 8-K filings for 2002.
Source: http://www.sec.gov/Archives/edgar/data/1024401/000095012901503835/0000950129-01-503835.txt
-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
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<SEC-DOCUMENT>0000950129-01-503835.txt : 20011109
<SEC-HEADER>0000950129-01-503835.hdr.sgml : 20011109
ACCESSION NUMBER: 0000950129-01-503835
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 20011108
ITEM INFORMATION: Other events
ITEM INFORMATION: Financial statements and exhibits
FILED AS OF DATE: 20011108
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ENRON CORP/OR/
CENTRAL INDEX KEY: 0001024401
STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211]
IRS NUMBER: 470255140
STATE OF INCORPORATION: OR
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-13159
FILM NUMBER: 1777779
BUSINESS ADDRESS:
STREET 1: 1400 SMITH ST
CITY: HOUSTON
STATE: TX
ZIP: 77002-7369
BUSINESS PHONE: 7138536161
MAIL ADDRESS:
STREET 1: 1400 SMITH ST
CITY: HOUSTON
STATE: TX
ZIP: 77002-7369
FORMER COMPANY:
FORMER CONFORMED NAME: ENRON OREGON CORP
DATE OF NAME CHANGE: 19961008
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>h91831e8-k.txt
<DESCRIPTION>ENRON CORP. - NOVEMBER 8, 2001
<TEXT>
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: November 8, 2001
Commission File Number 1-13159
ENRON CORP.
(Exact name of registrant as specified in its charter)
Oregon 47-0255140
- ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
Enron Building
1400 Smith Street
Houston, Texas 77002
- ------------------------------- -------------------------------
(Address of principal executive (Zip Code)
Offices)
(713) 853-6161
----------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
ENRON CORP.
Item 5. Other Events.
Enron Corp. (NYSE: ENE) is providing information to investors concerning several
important matters:
o A required restatement of prior period financial statements to
reflect: (1) recording the previously announced $1.2 billion
reduction to shareholders' equity reported by Enron in the third
quarter of 2001; and (2) various income statement and balance
sheet adjustments required as the result of a determination by
Enron and its auditors (which resulted from information made
available from further review of certain related-party
transactions) that three unconsolidated entities should have been
consolidated in the financial statements pursuant to generally
accepted accounting principles. The restatement is outlined in
TABLE 1;
o Enron intends to restate its financial statements for the years
ended December 31, 1997 through 2000 and the quarters ended March
31 and June 30, 2001. As a result, the previously-issued
financial statements for these periods and the audit reports
covering the year-end financial statements for 1997 to 2000
should not be relied upon;
o The accounting basis for the $1.2 billion reduction to
shareholders' equity mentioned above;
o The Special Committee appointed by Enron's Board of Directors to
review transactions between Enron and related parties;
<PAGE>
-2-
o Information regarding the LJM1 and LJM2 limited partnerships
formed by Enron's then Chief Financial Officer, the former CFO's
role in the partnerships, the business relationships and
transactions between Enron and the partnerships, and the economic
results of those transactions as known thus far to Enron, which
are outlined in TABLE 2; and
o Transactions between Enron and other Enron employees.
The restatements discussed below affect prior periods. After taking into account
Enron's previously disclosed $1.2 billion adjustment to shareholders' equity in
the third quarter of 2001, these restatements have no effect on Enron's current
financial position.
As used herein, "Enron" means Enron Corp. or one or more of its subsidiaries or
affiliates. The dollar amounts and percentages set forth herein are rounded
amounts and percentages.
...............
1. Background on Special Purpose Entities and Related-Party Transactions
Enron, like many other companies, utilizes a variety of structured financings in
the ordinary course of its business to access capital or hedge risk. Many of
these transactions involve "special purpose entities," or "SPEs." Accounting
guidelines allow for the non-consolidation of SPEs from the sponsoring company's
financial statements in certain circumstances. Accordingly, certain transactions
<PAGE>
-3-
between the sponsoring company and the SPE may result in gain or loss and/or
cash flow being recognized by the sponsor, commonly referred to by financial
institutions as "monetizations."
LJM Cayman, L.P. ("LJM1") and LJM2 Co-Investment, L.P. ("LJM2") (collectively
"LJM") are private investment limited partnerships that were formed in 1999.
Andrew S. Fastow, then Executive Vice President and Chief Financial Officer of
Enron, was (from inception through July 2001) the managing member of the general
partners of LJM1 and LJM2. Enron believes that the LJM partnerships have as
limited partners a significant number of institutions and other investors that
are not related parties to Enron. These partnerships are a subject of the
Special Committee's investigation and it is possible that the Committee's review
will identify additional or different information concerning matters described
herein.
2. Restatement of Prior Period Financial Statements
Enron will restate its financial statements from 1997 to 2000 and the first and
second quarters of 2001 to: (1) reflect its conclusion that three entities did
not meet certain accounting requirements and should have been consolidated, (2)
reflect the adjustment to shareholders' equity described below, and (3) include
prior-year proposed audit adjustments and reclassifications (which were
previously determined to be immaterial in the year originally proposed).
Specifically, Enron has concluded that based on current information:
<PAGE>
-4-
o The financial activities of Chewco Investments, L.P. ("Chewco"),
a related party which was an investor in Joint Energy Development
Investments Limited Partnership ("JEDI"), should have been
consolidated beginning in November 1997;
o The financial activities of JEDI, in which Enron was an investor
and which was consolidated into Enron's financial statements
during the first quarter of 2001, should have been consolidated
beginning in November 1997; and
o The financial activities of a wholly-owned subsidiary of LJM1,
which engaged in derivative transactions with Enron to permit
Enron to hedge market risks of an equity investment in Rhythms
NetConnections, Inc., should have been consolidated into Enron's
financial statements beginning in 1999.
The effects of the restatements are outlined in Table 1. A description of the
restatements follows the table.
TABLE 1
ENRON CORP.
RESTATEMENTS
DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS
UNAUDITED
<TABLE>
<CAPTION>
1ST QTR 2ND QTR 3RD QTR
1997 1998 1999 2000 2001 2001 2001
------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Net income as reported $ 105(a) $ 703 $ 893 $ 979 $ 425 $ 404 $ (618)
Restatements:
Consolidation of JEDI and Chewco (45) (107) (153) (91) -- -- --
Consolidation of LJM1 subsidiary -- -- (95) (8) -- -- --
Raptor equity adjustment -- -- -- -- -- -- --
Prior year proposed audit
adjustments and reclassifications (51) (6) (2) (33) 17 5 (17)
------------------------------------------------------------------
NET INCOME RESTATED 9 590 643 847 442 409 (635)
------------------------------------------------------------------
Diluted EPS as reported 0.16 1.01 1.10 1.12 0.49 0.45 (0.84)
DILUTED EPS RESTATED (0.01) 0.86 0.79 0.97 0.51 0.46 (0.86)
------------------------------------------------------------------
Recurring net income as reported 515 698 957 1,266 406 404 393
Restatements:
Consolidation of JEDI and Chewco (45) (107) (153) (91) -- -- --
Consolidation of LJM1 subsidiary -- -- (95) (8) -- -- --
Raptor equity adjustment -- -- -- -- -- -- --
Prior year proposed audit
adjustments and reclassifications (51) (6) (2) (33) 17 5 (17)
------------------------------------------------------------------
RECURRING NET INCOME RESTATED 419 585 707 1,134 423 409 376
------------------------------------------------------------------
Diluted recurring EPS as reported 0.87 1.00 1.18 1.47 0.47 0.45 0.43
DILUTED RECURRING EPS RESTATED 0.71 0.85 0.87 1.33 0.49 0.46 0.41
------------------------------------------------------------------
Total assets as reported 22,552 29,350 33,381 65,503 67,260 63,392
Restatements:
Consolidation of JEDI and Chewco 447 160 187 (192) -- --
Consolidation of LJM1 subsidiary -- -- (222) -- -- --
Raptor equity adjustment -- -- -- (172) (1,000) (1,000)
Prior year proposed audit
adjustments and reclassifications (79) (87) (147) (364) (1,249) 247
------------------------------------------------------------------
TOTAL ASSETS RESTATED 22,920 29,423 33,199 64,775 65,011 62,639 61,177(b)
------------------------------------------------------------------
Debt as reported 6,254 7,357 8,152 10,229 11,922 12,812
Restatements:
Consolidation of JEDI and Chewco 711 561 685 628 -- --
Consolidation of LJM1 Subsidiary -- -- -- -- -- --
Raptor equity adjustment -- -- -- -- -- --
Prior year proposed audit
adjustments and reclassifications -- -- -- -- -- --
------------------------------------------------------------------
DEBT RESTATED 6,965 7,918 8,837 10,857 11,922 12,812 12,978(b)
------------------------------------------------------------------
Equity as reported 5,618 7,048 9,570 11,470 11,727 11,740
Restatements:
Consolidation of JEDI and Chewco (262) (391) (540) (810) -- --
Consolidation of LJM1 subsidiary -- -- (166) 60 60 60
Raptor equity adjustment -- -- -- (172) (1,000) (1,000)
Prior year proposed audit
adjustments and reclassifications (51) (57) (128) (242) (286) 11
------------------------------------------------------------------
EQUITY RESTATED 5,305 6,600 8,736 10,306 10,501 10,811 9,491(b)
------------------------------------------------------------------
</TABLE>
- ------------
(a) After effect of significant contract restructuring charge totaling
$463 million (after tax)
(b) Represents estimated balances pending completion of September 30, 2001
financial statements
A. Restatement Number 1
Enron's decision that Chewco should be consolidated beginning in November 1997
is based on current information that Chewco did not meet the accounting criteria
to qualify as an unconsolidated SPE. As a result of Chewco's failure to meet the
criteria, JEDI, in which Chewco was a limited partner, also did not qualify
for nonconsolidation treatment. Because of
<PAGE>
-5-
those consolidations, Enron's prior-year reported debt amounts will be increased
by both JEDI's and Chewco's borrowings. The net effect will reduce Enron's
prior-years' reported net income and shareholders' equity amounts. In addition,
Enron's net income is reduced for specific JEDI revenues previously allocated to
Chewco, relating to the appreciation in value of Enron stock, which eliminate
upon consolidation. This, in effect, reduces Enron's share of JEDI's earnings.
B. Restatement Number 2
Enron's decision that the LJM1 subsidiary should be consolidated in 1999 and
2000 is based on Enron's current assessment that the subsidiary did not qualify
for nonconsolidation treatment because of inadequate capitalization.
Accordingly, Enron now believes that the hedging transactions in which Enron
engaged with the LJM1 subsidiary (related to Enron's investment in the stock of
Rhythms NetConnections, Inc.) should have been consolidated into Enron's
financial statements for 1999 and 2000. This consolidation has the effect of
reducing Enron's net income in 1999 and 2000 and shareholders' equity in 1999
and increasing shareholders' equity in 2000, thus eliminating the income
recognized by Enron on these derivative transactions.
C. Restatement Number 3
As discussed in Section 3 below, concerning Enron's recent disclosure of a $1.2
billion reduction to shareholders' equity in the third quarter of 2001,
shareholders' equity will be reduced by $172 million beginning as of June 30,
2000, and by an additional $828 million beginning as of March 31, 2001, to
properly record notes receivable (described in Section 3 below) as a reduction
to equity.
<PAGE>
-6-
D. Restatement Number 4
The restatements will also include prior-year proposed audit adjustments and
reclassifications which were determined to be immaterial in the year originally
proposed.
3. Accounting Basis for $1.2 Billion Reduction in Shareholders' Equity
Enron's previously-announced $1.2 billion reduction of shareholders' equity
primarily involves the correction of the effect of an accounting error made in
the second quarter of 2000 and in the first quarter of 2001. As described in
more detail below, four SPEs known as Raptor I-IV (collectively, "Raptor") were
created in 2000, permitting Enron to hedge market risk in certain of its
investments. (LJM2 invested in these entities, but the related-party nature of
the transaction is not relevant to the accounting correction). As part of the
capitalization of these entities, Enron issued common stock in exchange for a
note receivable. Enron increased notes receivable and shareholders' equity to
reflect this transaction. Enron now believes that, under generally accepted
accounting principles, the note receivable should have been presented as a
reduction to shareholders' equity (similar to a shareholder loan). This
treatment would have resulted in no net change to shareholders' equity. The net
effect of this initial accounting entry was to overstate both notes receivable
and shareholders' equity by approximately $172 million (which represented less
than 2% of shareholders' equity at the time) in each of the second quarter,
third quarter, and year-end financial statements of Enron for the year 2000.
In the first quarter of 2001, Enron entered into contracts with Raptor that
could have obligated Enron to issue Enron common stock in the future in exchange
for notes receivable. Enron
<PAGE>
-7-
accounted for these transactions using the accounting treatment described in the
preceding paragraph. This resulted in an additional overstatement of both notes
receivable and shareholders' equity by $828 million. As a result of these
errors, shareholders' equity and notes receivable were overstated by a total of
$1 billion in the unaudited financial statements of Enron at March 31 and June
30, 2001.
In the third quarter of 2001, Enron purchased LJM2's equity interests in Raptor
for $35 million. As previously discussed, Enron accounted for this transaction
as a reduction to Enron shareholders' equity and notes receivable by $1.2
billion. Enron recorded a $200 million equity reduction (which was part of the
$1.2 billion reduction) related to the excess of the fair value of contracts
deliverable by Enron over the notes receivable recorded in shareholders' equity,
as adjusted.
Prior period financials will be restated to adjust shareholders' equity for all
periods affected as shown in Section 2.
4. The Special Committee
Based on various reports and information concerning Enron's transactions with
certain related parties, on October 31, 2001, the Board of Directors elected
William Powers, Dean of the University of Texas School of Law, to the Board, and
appointed Dean Powers as Chairman of a newly formed Special Committee of the
Board to conduct an independent investigation and review of transactions between
Enron and certain related parties. The Special Committee also was charged with
taking any disciplinary action that it deems appropriate, communicating with
<PAGE>
-8-
the Securities and Exchange Commission (which has commenced a formal
investigation of these matters), and recommending to the Board any other
appropriate actions. The other members of the Special Committee are independent
directors Frank Savage, CEO of Savage Holdings LLC, Paulo Ferraz Pereira,
Executive Vice President of investment bank Group Bozano, and Herbert S.
Winokur, Jr., Chairman and CEO of Capricorn Holdings, Inc.
The Special Committee has retained the law firm of Wilmer, Cutler & Pickering as
its counsel. The firm's representation is led by William R. McLucas, former head
of the Division of Enforcement of the SEC. Wilmer, Cutler has retained Deloitte
& Touche to provide related accounting advice to the law firm. The Special
Committee's review is in its early stages. It will include an analysis of both
the underlying substance and business purposes of the transactions, as well as
an analysis of their financial impact on Enron and, to the extent information is
available, on the related parties. The duration of the Special Committee's
review, and the ultimate results of that review, have not yet been determined.
While the information provided herein reflects Enron's current understanding of
the relevant facts, it is possible that the Special Committee's review will
identify additional or different information concerning these matters.
5. The LJM Limited Partnerships and Transactions with Enron
A. The LJM Partnerships.
As discussed above, LJM1 and LJM2 are private investment limited partnerships.
Enron believes that, under the LJM1 and LJM2 limited partnership agreements (as
with many similar agreements in private equity investing), the general partners
are entitled to receive a percentage of the profits in excess of their portions
of total capital contributed to the partnerships depending
<PAGE>
-9-
upon the performance of the partnerships' investments. Enron also believes that
the general partners are entitled to receive annual management fees based in
part on formulas that take into account the total amount of capital committed
and/or invested by the limited partners. Enron now believes that Mr. Fastow
received in excess of $30 million relating to his LJM management and investment
activities. Enron believes that the initial capital commitments to LJM1 were $16
million, and the aggregate capital commitments to LJM2 were $394 million.
LJM1 and LJM2 were described to the Enron Board of Directors as potential
sources of capital to buy assets from Enron, potential equity partners for Enron
investments, and counterparties to help mitigate risks associated with Enron
investments. The Board also was informed that LJM1 and LJM2 intended to transact
business with third parties. Prior to approving Mr. Fastow's affiliation with
LJM1 and LJM2, the Board determined that Mr. Fastow's participation in the
partnerships would not adversely affect the interests of Enron. The Board
approved the initial transaction with LJM1 and recognized that Enron may (but
was not required to) engage in additional transactions with LJM1.
The Board directed that certain controls be put into place relating to Mr.
Fastow's involvement with the partnerships and transactions between Enron and
the partnerships. The Board required review and approval of each transaction by
the Office of the Chairman, the Chief Accounting Officer and the Chief Risk
Officer. The Board also recognized the ability of the Chairman of the Board to
require Mr. Fastow to resign from the partnerships at any time, and directed
that the Audit and Compliance Committee conduct annual reviews of transactions
between Enron and
<PAGE>
-10-
LJM1 and LJM2 completed during the prior year. Whether these controls and
procedures were properly implemented is a subject of the Special Committee's
investigation.
Enron believes that, as of July 31, 2001, Mr. Fastow sold his interests in LJM1
and LJM2 to Michael J. Kopper, and that Mr. Fastow ceased to be the managing
member of their general partners. Prior to that time, Mr. Kopper reported to Mr.
Fastow as a non-executive officer of an Enron division. Enron believes Mr.
Kopper resigned from Enron immediately before purchasing Mr. Fastow's interests
in LJM2. Mr. Fastow is no longer working for Enron.
B. General Summary of LJM Transactions.
From June 1999 through September 2001, Enron and Enron-related entities entered
into 24 business relationships in which LJM1 or LJM2 participated. These
relationships were of several general types, including: (1) sales of assets by
Enron to LJM2 and by LJM2 to Enron; (2) purchases of debt or equity interests by
LJM1 or LJM2 in Enron-sponsored SPEs; (3) purchases of debt or equity interests
by LJM1 or LJM2 in Enron affiliates or other entities in which Enron was an
investor; (4) purchases of equity investments by LJM1 or LJM2 in SPEs designed
to mitigate market risk in Enron's investments; (5) the sale of a call option
and a put option by LJM2 on physical assets; and (6) a subordinated loan to LJM2
from an Enron affiliate. The financial results of these transactions are
summarized in Table 2 below.
<PAGE>
-11-
TABLE 2
UNAUDITED SUMMARY OF LJM TRANSACTIONS
(IN MILLIONS)
<Table>
<Caption>
IMPACT OF LJM
CASH AND TRANSACTIONS
LJM OTHER VALUE LJM NET ON ENRON'S
INVESTMENT RECEIVED BY LJM CASH FLOW PRE-TAX EARNINGS
------------------------------------------------------------
<S> <C> <C> <C> <C>
2001:
Sale of Assets $ -- $ -- $ -- $ 0.7
Purchases of Equity/Debt in
Enron-Sponsored Special Purpose
Entities -- 52.5 52.5 --
Investments in Enron Affiliates 3.4 49.7 46.3 --
Portfolio Special Purpose Entities -- 75.5 75.5 (166.2)(a)
Call Option -- -- -- --
Transactions with LJM and Other Entities -- -- -- --
Transaction with LJM and Whitewing -- -- -- --
------------------------------------------------------------
Total $ 3.4 $ 177.7 $ 174.3 $(165.5)
============================================================
2000:
Sale of Assets $ 30.0(b) $ 32.4 $ 2.4 $ 86.6
Purchases of Equity/Debt in
Enron-Sponsored Special Purpose
Entities 100.7 64.4 (36.3) --
Investments in Enron Affiliates 66.5 19.3 (47.2) --
Portfolio Special Purpose Entities 127.1 148.5 21.4 517.9(a,c)
Call Option 11.3 12.5 1.2 --
Transactions with LJM and Other Entities 7.5 11.7 4.2 --
Transaction with LJM and Whitewing 40.3 -- (40.3) --
------------------------------------------------------------
Total $ 383.4 $ 288.8 $ (94.6) $ 604.5
============================================================
1999:
Sale of Assets $ -- $ -- $ -- $ --
Purchases of Equity/Debt in
Enron-Sponsored Special Purpose
Entities 73.8 15.4 (58.4) 2.4
Investments in Enron Affiliates 44.5 1.0 (43.5) 16.9
Portfolio Special Purpose Entities 64.0 95.2(d) 31.2 119.5(c)
Call Option -- -- -- --
Transactions with LJM and Other Entities -- -- -- --
Transaction with LJM and Whitewing -- 38.5 38.5 --
------------------------------------------------------------
Total $ 182.3 $ 150.1 $ (32.2) $ 138.8
============================================================
Summary Totals:
Sale of Assets $ 30.0 $ 32.4 $ 2.4 $ 87.3
Purchases of Equity/Debt in
Enron-Sponsored Special Purpose
Entities 174.5 132.3 (42.2) 2.4
Investments in Enron Affiliates 114.4 70.0 (44.4) 16.9
Portfolio Special Purpose Entities 191.1 319.2 128.1 471.2
Call Option 11.3 12.5 1.2 --
Transactions with LJM and Other Entities 7.5 11.7 4.2 --
Transaction with LJM and Whitewing 40.3 38.5 (1.8) --
-----------------------------------------------------------
Total $ 569.1 $ 616.6 $ 47.5 $ 577.8
===========================================================
---------
Estimated Fair Value of Existing
LJM Investments $ 43.6(e)
=========
</Table>
(a) The pre-tax earnings impact of transactions with LJM2 through the
Raptor SPEs was approximately $532 million in 2000 and $545 million
for the nine months ended September 30, 2001. During 2000 and the
nine months ended September 30, 2001, the Raptor SPEs hedged losses
related to Enron investments of $501 million and $453 million
respectively. The 2001 pre-tax earnings amount includes a $711 million
pre-tax charge in the quarter ended September 30, 2001 related to
the termination of the Raptor SPEs.
(b) This amount excludes a seller financed note from Enron to LJM
of approximately $70 million.
(c) These pre-tax earnings resulted from a transaction with an LJM1
affiliate related to Enron's equity investment in Rhythms
Netconnections, Inc. As previously stated, Enron now believes, based on
current information, that the financial activities of the LJM1
affiliate should have been consolidated into its financial statements
in 1999 and 2000 and will be restating prior years' financial
statements to reflect this change. The pre-tax earnings / (loss) impact
of this transaction was approximately $119.5 million and ($14.1)
million in 1999 and 2000 respectively.
(d) This amount represents Enron's estimate of the value received in
Enron common stock, a portion of which was restricted. The estimate was
based on a 36% discount off of the screen price on the date of issuance
for shares that were restricted and estimated proceeds received by LJM
from the sale of the unrestricted shares.
(e) This amount represents Enron's estimated fair value of the six
investments made by LJM that remain outstanding.
C. Sale of Assets.
In June 2000, LJM2 purchased dark fiber optic cable from Enron for a purchase
price of $100 million. LJM2 paid Enron $30 million in cash and the balance in an
interest-bearing note for $70 million. Enron recognized $67 million in pre-tax
earnings in 2000 related to the asset sale. Pursuant to a marketing agreement
with LJM2, Enron was compensated for marketing the fiber to others and providing
operation and maintenance services to LJM2 with respect to the fiber. LJM2 sold
a portion of the fiber to industry participants for $40 million, which resulted
in Enron recognizing agency fee revenue of $20.3 million. LJM2 sold the
remaining dark fiber for $113 million in December 2000 to an SPE that was formed
to acquire the fiber. In December 2000, LJM2 used a portion of the proceeds to
pay in full the note and accrued interest owed to Enron. At the time of LJM2's
sale of the fiber to the SPE, Enron entered into a derivative contract which
served as credit support for the benefit of some of the debt holders of a
third-party investor in the SPE. This credit support provided the lender with a
specified rate of return. As a result, Enron's credit exposure under the $70
million note was replaced with $61 million in remaining exposure under the
derivative contract. LJM2 earned $2.4 million on its resale of the fiber.
D. Purchases of Equity/Debt in Enron-Sponsored SPEs.
Between September 1999 and December 2000, LJM1 or LJM2 purchased equity or debt
interests in nine Enron-sponsored SPEs. LJM1 and LJM2 invested $175 million in
the nine SPEs. These transactions enabled Enron to monetize assets and generated
pre-tax earnings to Enron of $2 million in 1999.
<PAGE>
-12-
Enron believes that LJM received cash of $15 million, $64 million and $53
million in 1999, 2000 and 2001, respectively, relating to its investments in
these entities. In three instances, third-party financial institutions also
invested in the entities. LJM invested on the same terms as the third-party
investors. In one of these nine transactions, Enron entered into a marketing
agreement with LJM2 that provided Enron with the right to market the underlying
equity. This arrangement gave Enron profit potential in proceeds received after
LJM2 achieved a specified return level. In six of these nine transactions, Enron
repurchased all or a portion of the equity and debt initially purchased by LJM.
The SPEs owned, directly or indirectly, a variety of operating and financial
assets. For example, Yosemite Securities Trust was a finance entity which
facilitated Enron's ability to raise funds in the capital markets through the
use of credit-linked notes, a standard financing arrangement offered by
investment banks. Osprey Trust is beneficially-owned by a number of financial
institutions and is a limited partner in Whitewing Associates, L.P., an Enron
unconsolidated affiliate ("Whitewing"). Enron is the other partner. Whitewing
purchased certain Enron investments for future sale.
In addition, as a result of these transactions, Enron was able to monetize
equity interests with investment banks. These monetizations resulted in Enron's
recognizing $146 million and $5 million in pre-tax earnings in 2000 and 2001,
respectively, and $252 million in cash inflows, all in 2000.
<PAGE>
-13-
E. Investment in Enron Affiliates.
In two transactions, LJM2 made direct and indirect investments in stock (and
warrants convertible into stock) of New Power Holdings, Inc. ("NPW"). NPW
initially was a wholly-owned subsidiary of Enron, subsequently included other
strategic and financial investors, and in October 2000 became a public company.
NPW is engaged in the retail marketing and retail sale of natural gas,
electricity and other commodities, products and services to residential and
small commercial customers in the United States. In January 2000, LJM2 invested
$673,000 in Cortez Energy Services LLC ("Cortez"), a limited liability company
formed by Enron and LJM2, and Enron contributed five million shares of NPW stock
to Cortez. In July 2000, in a private placement, LJM2 purchased warrants
exercisable for NPW stock for $50 million on the same terms as third-party
investors. Enron believes that LJM2 still owns these investments.
In September 1999, LJM1 acquired from Enron a 13% equity interest in a company
owning a power project in Brazil for $10.8 million, and acquired redeemable
preference shares in a related company for $500,000. Enron recognized a $1.7
million loss on the sale of these interests to LJM1. Enron recognized revenues
of $65 million, $14 million and $5 million from a commodity contract with the
company owning the power project in 1999, 2000 and 2001, respectively. As part
of an exclusive marketing arrangement to sell LJM1's equity in the project to
third-parties and to limit LJM1's return, Enron paid LJM1 a $240,000 fee in May
2000. In 2001, Enron repurchased LJM1's 13% equity interest and the redeemable
preference shares for $14.4 million. Enron currently owns this equity interest.
In December 1999, LJM2 paid Enron $30 million for a 75% equity interest in a
power project in Poland. Enron recognized a $16 million gain in 1999 on the
sale. Enron paid $750,000 to LJM2
<PAGE>
-14-
as an equity placement fee. In March 2000, Enron repurchased 25% of the equity
in the Polish power project from LJM2 for $10.6 million, and Whitewing acquired
the remaining 50% from LJM2 for $21.3 million. Enron and Whitewing still own
their respective equity interests.
In December 1999, LJM2 acquired a 90% equity interest in an Enron entity with
ownership rights to certain natural gas reserves for $3 million. As a result,
Enron recognized $3 million in revenue from an existing commodity contract.
Subsequently, LJM2 assigned a portion of its ownership interest in the entity to
Enron and Whitewing at no cost (to achieve certain after-tax benefits). Enron
believes LJM2 continues to own its remaining interest.
F. Portfolio SPEs.
Enron and LJM established a series of SPEs in order to mitigate market exposures
on Enron investments, including investments in NPW, Rhythms NetConnections,
Inc., and other technology, energy, and energy-related companies. LJM made $191
million in equity investments in five separate SPEs, three of which (Raptor I,
II and IV) were also capitalized with Enron stock and derivatives which could
have required the future delivery of Enron stock. Raptor III was capitalized
with an economic interest in warrants convertible into stock of NPW. The fifth
SPE is discussed in Section 2B above. Enron subsequently engaged in hedging
transactions with these SPEs, which included price swap derivatives, call
options and put options. The derivatives and options generally were intended to
hedge Enron's risk in certain investments having an aggregate notional amount of
approximately $1.9 billion.
<PAGE>
-15-
With respect to the four Raptor SPEs, Enron acquired LJM2's equity in the SPEs
during the third quarter of 2001 for $35 million. Enron recognized pre-tax
earnings (losses) relating to risk management activities of $119 million, $518
million and ($166) million in 1999, 2000 and 2001, respectively, including the
effect of a $711 million pre-tax charge recognized in 2001, related to the
termination of the Raptor SPEs. During 2000 and the nine months ended September
30, 2001, the Raptor SPEs hedged losses of $501 million and $453 million,
respectively. The fifth SPE was used to hedge Enron's exposure arising from an
investment in the stock of Rhythms NetConnections, Inc. However, it was
subsequently determined that it did not meet the criteria to qualify for
unconsolidated treatment. (See Section 2B for a discussion of the restatement
related to the fifth SPE.)
In total, LJM1 and LJM2 invested $191 million and received $319 million (an
estimated $95 million of which is non-cash value from the receipt of 3.6 million
shares of Enron restricted stock) related to their investments in these five
SPEs.
G. Call Option.
In May 2000, Enron purchased a call option from LJM2 on two gas turbines, at the
same time that LJM2 contracted to purchase the gas turbines from the
manufacturer. Enron paid LJM2 $1.2 million for this right during a seven-month
period in 2000. The call option gave Enron the right to acquire these turbines
from LJM2 at LJM2's cost, which was $11.3 million. The call option was
subsequently assigned from Enron to an Enron-sponsored SPE capitalized by a
third-party financial institution. In December 2000, the call option was
exercised by the SPE and it acquired the turbines from LJM2 at cost.
<PAGE>
-16-
H. Transactions with LJM and Other Entities.
Enron sold its contractual right to acquire a gas turbine to a utility for $15.8
million in July 2000. Enron recognized a pre-tax gain of $3.5 million on the
transaction. At the same time, the utility entered into a put option agreement
with LJM2 relating to the turbine under which the utility paid LJM2 $3.5
million. Subsequently, upon the execution of an engineering, procurement and
construction contract with a wholly-owned subsidiary of Enron, the utility
assigned the contractual right to acquire the gas turbine to that subsidiary.
In December 1999, Enron sold an equity investment in Enron Nigeria Barge Ltd. to
an investment bank and provided seller financing. In June of 2000, LJM2
purchased this equity investment directly from the investment bank for $7.5
million and the assumption of the seller-financed note from Enron. In September
2000, LJM2 sold the equity investment to an industry participant for $31.2
million. The proceeds from LJM2's sale were used by LJM2 to repay the principal
and interest on the note from Enron in the amount of $23.0 million. The
remaining $8.2 million repaid LJM2's $7.5 million purchase price and provided a
profit of $700,000 to LJM2.
I. Transaction between LJM and Whitewing.
In December 1999, a wholly-owned subsidiary of Whitewing entered into a $38.5
million credit agreement with LJM2, the borrower. The loan had a term of one
year and carried an interest rate of LIBOR+2.5%. The loan amount (including
interest) of $40.3 million was repaid by LJM2 in 2000.
<PAGE>
-17-
J. Currently Outstanding LJM2 Transactions.
Enron believes that LJM2 currently has interests in six of the investments
described above in which LJM2 originally invested $124 million, and that LJM2
has received cash inflows of $27 million from these investments. These
investments include $23 million in equity in two Enron-sponsored SPEs, $32.5
million in equity in Osprey Trust $3 million in equity in an Enron affiliate,
and $50.7 million in direct equity investments in NPW (representing two
transactions).
Enron and LJM2 also entered into various agreements relating to cash management
services, employee services, and office space provided by Enron to LJM2. In
addition, Enron paid LJM2 a management fee for certain transactions, and other
transaction fees described above. Enron also reimbursed LJM2 for
transaction-related expenses (such as legal and tax fees and other costs)
associated with some of the transactions described above.
6. Other Transactions
Like many other companies involved in trade and finance, Enron (through
affiliates, subsidiaries, and SPEs) routinely engages in financing arrangements
with third-party financial institutions, including commercial banks, investment
banks and institutional investors, to fund acquisitions of assets or businesses,
project development activities, and similar business arrangements. These
activities are transacted with third parties using structures similar in some
respects to the arrangements entered into with LJM. Enron provides credit
support to the creditors of SPEs through the use of financial guarantees and
hedging contracts. The payment of fees to third-party
<PAGE>
-18-
financial institutions and institutional investors, such as debt and equity
placement fees and structuring fees, is common in debt and equity syndications.
7. Other Employee Transactions
From June 1993 through November 1997, an Enron subsidiary was the general
partner of JEDI and a third-party, the California Public Employees' Retirement
System ("CalPERS"), was the limited partner. In November 1997, JEDI made a
liquidating distribution to CalPERS of $383 million. Concurrently, Chewco
purchased a limited partnership interest in JEDI for $383 million, $132 million
of which was financed by an interest-bearing loan from JEDI to Chewco, and $240
million of which was borrowed from a third-party financial institution
(supported by a guarantee from Enron). The restatement resulting from the Chewco
transaction is discussed in 2A. Based on current information, Enron believes
that a non-executive officer of an Enron division, Michael J. Kopper, was an
investor in the general partner of Chewco and, at the time of the purchase, also
was the manager of the Chewco general partner.
From December 1997 to December 2000, Chewco received distributions of $433
million from JEDI. Among other things, Chewco used a portion of these
distributions to make repayments on its JEDI loan and to repay an additional
borrowing from the third-party financial institution.
In December 1999, Chewco purchased a $15 million equity interest in Osprey
Trust, an Enron-sponsored SPE, from LJM1.
<PAGE>
-19-
In March 2001, Enron purchased Chewco's limited partnership interest in JEDI for
$35 million. In September 2001, Enron paid an additional $2.6 million to Chewco
in connection with a tax indemnification agreement between JEDI, Chewco and
Enron. Of the total purchase consideration, $26 million was used by Chewco to
make a payment on the JEDI loan. Chewco currently has an outstanding balance due
on the JEDI loan of $15 million. JEDI is currently a wholly-owned subsidiary of
Enron.
Enron now believes that Mr. Kopper also was the controlling partner of a limited
partnership that (through another limited partnership) in March 2000 purchased
interests in affiliated subsidiaries of LJM1. Enron also now believes that four
of the six limited partners of the purchaser were, at the time of the
investment, non-executive officers or employees of Enron, and a fifth limited
partner was an entity associated with Mr. Fastow. These officers and employees,
and their most recent job titles with Enron, were Ben Glisan, Managing Director
and Treasurer of Enron Corp.; Kristina Mordaunt, Managing Director and General
Counsel of an Enron division; Kathy Lynn, Vice President of an Enron division;
and Anne Yaeger, a non-officer employee. Enron is terminating the employment of
Mr. Glisan and Ms. Mordaunt. Ms. Lynn and Ms. Yaeger are no longer associated
with Enron and Enron believes they are now associated with LJM2. At the time
these individuals invested in the limited partnership, LJM1 had ceased entering
into new transactions with Enron. However, some pre-existing investments
involving LJM1 and Enron were still in effect, and Enron believes that these
investments resulted in distributions or payments to LJM1 and to the limited
partnership in which these individuals invested.
<PAGE>
-20-
Pursuant to a services agreement among Enron, LJM1, and LJM2, Enron made
available to LJM1 and LJM2 a portion of the time of certain of its employees to
provide administrative assistance to the general partners of LJM1 and LJM2. Mr.
Kopper, Ms. Lynn and Ms. Yaeger, among other Enron employees, were made
available to LJM1 or LJM2 from time to time during their employment by Enron.
This statement includes forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. The Private Securities Litigation Reform Act of 1995 provides a safe
harbor for forward-looking statements made by Enron or on its behalf. These
forward-looking statements are not historical facts, but reflect Enron's current
expectations, estimates and projections. All statements contained herein which
address future operating performance, events or developments that are expected
to occur in the future (including statements relating to earnings expectations)
are forward-looking statements. Important factors that could cause actual
results to differ materially from those in the forward-looking statements herein
include results of the Special Committee's review and results of the SEC
investigation.
<PAGE>
-21-
Item 7. Exhibits.
(c) Exhibits.
Exhibit 99.1 - Enron Corp. press release dated November 8,
2001 regarding related party and off-balance
sheet transactions and restatement of
earnings
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENRON CORP.
Date: November 8, 2001 By: /s/ RICHARD A. CAUSEY
--------------------------------------
Richard A. Causey
Executive Vice President and Chief
Accounting Officer
(Principal Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
NO. DESCRIPTION
---- -----------
Exhibit 99.1 - Enron Corp. press release dated November 8,
2001 regarding related party and off-balance
sheet transactions and restatement of
earnings
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>h91831ex99-1.txt
<DESCRIPTION>PRESS RELEASE DATED NOVEMBER 8, 2001
<TEXT>
<PAGE>
[ENRON LOGO] Enron
P.O.Box 1188
Houston, TX 77251-1188
Mark Palmer
(713) 853-4738
ENRON PROVIDES ADDITIONAL INFORMATION ABOUT RELATED PARTY AND OFF-BALANCE SHEET
- -------------------------------------------------------------------------------
TRANSACTIONS; COMPANY TO RESTATE EARNINGS FOR 1997-2001
- -------------------------------------------------------
FOR IMMEDIATE RELEASE: Thursday, Nov. 8, 2001
HOUSTON - Enron Corp. (NYSE: ENE) today provided additional
information about various related party and off-balance sheet transactions in
which the company was involved. The information was posted today on the
company's website at www.enron.com/corp/sec and also made available in a Form
8-K Report filed today with the Securities and Exchange Commission (SEC).
Specifically, Enron's filing provides information about:
o a required restatement of prior period financial statements to
reflect the previously disclosed $1.2 billion reduction to
shareholders' equity, as well as various income statement and
balance sheet adjustments required as the result of a
determination by Enron and its auditors, based on current
information, that certain off-balance sheet entities should have
been included in Enron's consolidated financial statements
pursuant to generally accepted accounting principles;
o the restatement of its financial statements for 1997 through 2000
and the first two quarters of 2001. As a result, financial
statements for these periods and the audit reports relating to
the year-end financial statements for 1997 through 2000 should
not be relied upon;
o the accounting basis for the above-mentioned reduction to
shareholders' equity;
<PAGE>
o the special committee appointed by the Enron Board of Directors
to review transactions between Enron and related parties;
o information regarding the two LJM limited partnerships formed by
Enron's then Chief Financial Officer, his role in the
partnerships, the business relationships and transactions between
Enron and the partnerships, and the economic results of those
transactions as known thus far; and
o transactions between Enron and certain other Enron employees.
"We believe that the information we have made available addresses a
number of the concerns that have been raised by our shareholders and the SEC
about these matters," said Ken Lay, Enron Chairman and CEO. "We will continue
our efforts to respond to investor requests for information about our
operational and financial condition so they can evaluate, appreciate and
appropriately value the strength of our core businesses."
Restatement of Earnings
- -----------------------
As further described on Enron's website, and its Form 8-K Report,
Enron will restate prior years' financial statements to reflect its review of
current information concerning the transactions discussed below. After taking
into account Enron's previously disclosed adjustment to shareholders' equity in
the third quarter of 2001, these restatements have no effect on Enron's current
financial position.
Based on this review, Enron has determined that:
o the financial activities of Chewco Investments, L.P. (Chewco), a
related party which was an investor in Joint Energy Development
Investments Limited Partnership (JEDI), should have been
consolidated beginning in November 1997;
<PAGE>
o the financial activities of JEDI in which Enron was an investor
and which was consolidated into Enron's financial statements
during the first quarter of 2001, should have been consolidated
beginning in 1997; and
o the financial activities of a wholly-owned subsidiary of LJM1,
which engaged in structured transactions with Enron that were
designed to permit Enron to mitigate market risks of an equity
investment in Rhythms NetConnections, Inc., should have been
consolidated into Enron's financial statements beginning in 1999.
Enron's current assessment indicates that the restatement will include
a reduction to reported net income of approximately $96 million in 1997, $113
million in 1998, $250 million in 1999 and $132 million in 2000, increases of
$17 million for the first quarter of 2001 and $5 million for the second quarter
and a reduction of $17 million for the third quarter of 2001. These changes to
net income are the result of the retroactive consolidation of JEDI and Chewco
beginning in November 1997, the consolidation of the LJM1 subsidiary for 1999
and 2000 and prior year proposed audit adjustments. The consolidation of JEDI
and Chewco also will increase Enron's debt by approximately $711 million in
1997, $561 million in 1998, $685 million in 1999 and $628 million in 2000. The
restatement will have no negative impact on Enron's reported earnings for the
nine month period ending Sept. 2001.
Enron is one of the world's leading energy, commodities and services
companies. The company markets electricity and natural gas, delivers energy and
other physical commodities, and provides financial and risk management services
to customers around the world. Enron's Internet address is www.enron.com. The
stock is traded under the ticker symbol "ENE."
This press release includes forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements made by Enron or on its
behalf. These forward-looking statements are not historical facts, but reflect
Enron's current expectations, estimates and projections. All statements
contained in this press release which address future operating performance,
events or developments that are expected to occur in the future (including
statements relating to earnings expectations) are forward-looking statements.
Important factors that could cause actual results to differ materially from
those in the forward-looking statements herein include results of the Special
Committee's review and results of the S.E.C. investigation.
###
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
Originator-Key-Asymmetric:
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<SEC-DOCUMENT>0000950129-01-503913.txt : 20011114
<SEC-HEADER>0000950129-01-503913.hdr.sgml : 20011114
ACCESSION NUMBER: 0000950129-01-503913
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 5
CONFORMED PERIOD OF REPORT: 20011109
ITEM INFORMATION: Financial statements and exhibits
FILED AS OF DATE: 20011113
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ENRON CORP/OR/
CENTRAL INDEX KEY: 0001024401
STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211]
IRS NUMBER: 470255140
STATE OF INCORPORATION: OR
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-13159
FILM NUMBER: 1781249
BUSINESS ADDRESS:
STREET 1: 1400 SMITH ST
CITY: HOUSTON
STATE: TX
ZIP: 77002-7369
BUSINESS PHONE: 7138536161
MAIL ADDRESS:
STREET 1: 1400 SMITH ST
CITY: HOUSTON
STATE: TX
ZIP: 77002-7369
FORMER COMPANY:
FORMER CONFORMED NAME: ENRON OREGON CORP
DATE OF NAME CHANGE: 19961008
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>h91831ae8-k.txt
<DESCRIPTION>ENRON CORP. - NOVEMBER 9, 2001
<TEXT>
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: November 9, 2001
Commission File Number 1-13159
ENRON CORP.
(Exact name of registrant as specified in its charter)
Oregon 47-0255140
- ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
Enron Building
1400 Smith Street
Houston, Texas 77002
- ------------------------------- -------------------------------
(Address of principal executive (Zip Code)
Offices)
(713) 853-6161
----------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
Item 7. Exhibits.
Enron is filing as exhibits to this Form 8-K documents relating to the
previously announced financing commitment letters for Transwestern Pipeline
Company and Northern Natural Gas Company.
(c) Exhibits.
Exhibit 99.1 - Transwestern Pipeline Company: Form of $550
million 364-Day Revolving Credit Facility
Commitment Letter dated October 31, 2001
Exhibit 99.2 - Summary of Terms and Conditions: $550 million
Transwestern Pipeline Company Revolving
Facility
Exhibit 99.3 - Northern Natural Gas Company: Form of $450
million 364-Day Revolving Credit Facility
Commitment Letter dated October 31, 2001
Exhibit 99.4 - Summary of Terms and Conditions: $450 million
Northern Natural Gas Company Revolving
Facility
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENRON CORP.
Date: November 9, 2001 By: /s/ RICHARD A. CAUSEY
--------------------------------------
Richard A. Causey
Executive Vice President and Chief
Accounting Officer
<PAGE>
INDEX TO EXHIBITS
NO. DESCRIPTION
---- -----------
Exhibit 99.1 - Transwestern Pipeline Company: Form of $550
million 364-Day Revolving Credit Facility
Commitment Letter dated October 31, 2001
Exhibit 99.2 - Summary of Terms and Conditions: $550 million
Transwestern Pipeline Company Revolving
Facility
Exhibit 99.3 - Northern Natural Gas Company: Form of $450
million 364-Day Revolving Credit Facility
Commitment Letter dated October 31, 2001
Exhibit 99.4 - Summary of Terms and Conditions: $450 million
Northern Natural Gas Company Revolving
Facility
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>h91831aex99-1.txt
<DESCRIPTION>TRANSWESTERN PIPELINE CO. FORM OF REV. CREDIT LTR.
<TEXT>
<PAGE>
October 31, 2001
Transwestern Pipeline Company
1111 South 103rd Street
Omaha, NE
68124-1000
Attention: Rod Hayslett,
Managing Director and Chief Financial Officer
$550 MILLION 364-DAY REVOLVING CREDIT FACILITY
COMMITMENT LETTER
Ladies and Gentlemen:
Each of Citibank, N.A. ("Citibank") and The Chase Manhattan Bank ("Chase") is
pleased to inform Transwestern Pipeline Company (the "Borrower") of its several
commitment to provide the Borrower up to, in the case of Citibank, $330 million
and, in the case of Chase, $220 million of a $550 million 364-day revolving
credit facility (the "Facility") and to act as a Co-Administrative Agent for the
Facility, in each case subject to the terms and conditions of this letter and
the attached Annex I (collectively, and together with the Fee Letter referred to
below, this "Commitment Letter"). Also, Citibank is pleased to inform the
Borrower of its commitment to act as the Paying Agent for the Facility, subject
to the terms and conditions of this Commitment Letter. In addition, Salomon
Smith Barney Inc. ("SSBI") and J.P. Morgan Securities Inc. ("JP Morgan"), are
pleased to inform the Borrower that they may arrange a syndicate of lenders (the
"Lenders") of the Facility after the closing of the Facility, subject to the
terms and conditions of this Commitment Letter.
Section 1. Conditions Precedent. Each of the respective commitments and
agreements above of Citibank, SSBI, Chase and JP Morgan hereunder is subject to:
(i) the preparation, execution and delivery of mutually acceptable loan
documentation (the "Operative Documents"); (ii) the absence of (A) any material
adverse change in the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower and its subsidiaries, taken
as a whole, since December 31, 2000, (B) except as publicly disclosed or
disclosed in writing to Citibank, SSBI, Chase and JP Morgan before the execution
of this Commitment Letter, a material adverse change in the business, condition
(financial or otherwise), operations, performance, properties or prospects of
Enron Corp. and its subsidiaries, taken as a whole, since December 31, 2000, and
(C) any circumstance, change or condition (including the continuation of any
existing condition) in the loan syndication, financial or capital markets
generally that, in the judgment of SSBI, Citibank, JP Morgan, or Chase, would
materially impair syndication of the Facility; (iii) the accuracy and
completeness in all material respects, as set forth in Article 8, of all
representations that the Borrower and Enron Corp. make to Citibank, SSBI, Chase
or JP Morgan and all information that the Borrower and Enron Corp. furnish to
Citibank, SSBI, Chase or JP Morgan and the Borrower's and Enron Corp.'s
compliance with the terms of this Commitment Letter; (iv) completion of due
diligence with results satisfactory to Citibank, SSBI, Chase, and JP Morgan,
including, without limitation, with respect to Enron Corp. and the Borrower and
their respective subsidiaries and affiliates; (v) receipt of a review report
from Arthur Andersen on the Borrower's third quarter 2001 unaudited
<PAGE>
financial statements satisfactory to Citibank, SSBI, Chase and JP Morgan; (vi)
receipt of documentation satisfactory to Citibank, SSBI, Chase and JP Morgan
whereby the Borrower assumes approximately $135,000,000 of the obligations under
the Citibank, N.A. $250,000,000 prepayment transaction with Enron Corp. or one
of its subsidiaries ("Assumption Documents"); (vii) the Borrower's issuance of,
or the transfer by its shareholder of, a to be determined amount of the
Borrower's capital stock to a trust the beneficiary of which is the Paying Agent
and the amendment of the Borrower's certificate of incorporation to provide that
a voluntary bankruptcy petition for the Borrower may only be approved by a vote
of all the Borrower's shareholders pursuant to documents satisfactory to
Citibank, SSBI, Chase and JP Morgan ("Corporate Amendment Documents"); (viii) an
opinion from Borrower's counsel with respect to the enforceability of the
Assumption Documents and the Corporate Amendment Documents; (ix) satisfaction of
the conditions to Closing set forth in Annex I; and (x) the payment in full of
all fees, expenses and other amounts payable under this Commitment Letter.
Section 2. Commitment Termination. Each of the respective commitments of
Citibank, SSBI, Chase and JP Morgan hereunder will terminate on the earlier of
(a) the date the Operative Documents become effective, and (b) November 16,
2001. Before such date, each of Citibank, SSBI, Chase, and JP Morgan may
terminate its commitment hereunder if any event occurs or information becomes
available that, in its reasonable judgment, results or is reasonably likely to
result in the failure to satisfy any condition set forth in Section 1.
Section 3. Syndication. Subject to the Borrower's acceptance of the Lenders,
SSBI and JP Morgan will manage all aspects of the syndication of the Facility in
consultation with the Borrower, including the timing of all offers to potential
Lenders, the determination of the amounts offered to potential Lenders, the
acceptance of commitments of the Lenders and the compensation to be provided to
the Lenders.
Each of the Borrower and Enron Corp. shall actively assist SSBI and JP Morgan in
forming a syndicate acceptable to SSBI and JP Morgan. The Borrower's and Enron
Corp.'s assistance in forming such a syndicate shall include but not be limited
to (i) making senior management and representatives of the Borrower and Enron
Corp. available to participate in information meetings with potential Lenders,
if required, at such times and places as SSBI and JP Morgan may reasonably
request; (ii) using the Borrower's and Enron Corp.'s commercially reasonable
efforts to ensure that the syndication efforts benefit from the Borrower's and
Enron Corp.'s existing lending relationships; and (iii) providing SSBI and JP
Morgan with all information reasonably deemed necessary by SSBI or JP Morgan in
connection with the syndication process.
To ensure an effective syndication of the Facility, each of the Borrower and
Enron Corp. agrees that, until the termination of the syndication (as determined
by SSBI and JP Morgan), neither the Borrower nor Enron Corp. will or will permit
any of Enron Corp.'s 90% or greater directly or indirectly owned subsidiaries
to, syndicate or issue, attempt to syndicate or issue, announce or authorize the
announcement of the syndication or issuance of, or engage in discussions
concerning the syndication or issuance of, any debt facility or debt security
(including any renewals thereof) in the commercial bank market, without the
prior written consent of SSBI and JP Morgan; provided, however, that the
foregoing shall not limit (i) Enron Corp. and its subsidiaries' ability to issue
commercial paper, other short-term debt programs currently in place, equity or
public debt securities, (ii) Northern Natural Gas Company's ability to enter
into a loan facility with Citibank and Chase, or (iii)(A) the Florida Gas
Transmission Company's ability to enter into a $210,000,000 bank credit
facility, (B) the Wessex Water Services' ability to enter into a 40 million
pounds sterling index linked private placement, (C) Azurix Europe Limited's
ability to enter into a 425 million pounds sterling revolving credit facility,
(D) Elektro's ability to enter into a R$180 million bond issue, and (E)
increases in existing accounts receivable and working capital facilities and
entering into new accounts receivable and working capital facilities that are
limited solely to those purposes.
-2-
<PAGE>
Citibank and Chase will act as the sole Co-Administrative Agents for the
Facility, Citibank will act as sole Paying Agent for the Facility, and SSBI and
JP Morgan will act as sole arrangers for the Facility. No additional agents,
co-agents or arrangers will be appointed, or other titles conferred, without the
consent of Citibank, SSBI, Chase, JP Morgan and the Borrower.
Section 4. Fees. In addition to the fees described in Annex I, the Borrower
shall pay the non-refundable fees set forth in that certain letter agreement
dated the date hereof (the "Fee Letter") among the Borrower, Citibank, SSBI,
Chase and JP Morgan. The terms of the Fee Letter are an integral part of the
respective commitments of Citibank, SSBI, Chase and JP Morgan hereunder and
constitute part of this Commitment Letter for all purposes hereof.
Section 5. Indemnification. Each of the Borrower and Enron Corp. shall indemnify
and hold harmless SSBI, JP Morgan, Citibank, Chase, and each of their respective
affiliates and each of their respective officers, directors, employees, agents,
advisors and representatives (each, an "Indemnified Party") from and against any
and all claims, damages, losses, liabilities and reasonable out-of-pocket
expenses (including, without limitation, reasonable fees and disbursements of
counsel) (collectively, "Losses"), joint or several, that may be incurred by or
asserted or awarded against any Indemnified Party (including, without
limitation, in connection with any investigation, litigation or proceeding or
the preparation of a defense in connection therewith), in each case arising out
of or in connection with or by reason of this Commitment Letter or the
transactions contemplated hereby or thereby or any actual or proposed use of any
proceeds or any letter of credit under the Facility, except to the extent such
Losses resulted from the loss of anticipated profits or such Indemnified Party's
gross negligence or willful misconduct or from a claim asserted by another
Indemnified Party. In the case of an investigation, litigation or other
proceeding to which the indemnity in this paragraph applies, such indemnity
shall be effective whether or not such investigation, litigation or proceeding
is brought by the Borrower or Enron Corp., any of its directors, security
holders or creditors, or any other person (other than an Indemnified Party) or
whether or not an Indemnified Party is otherwise a party thereto and whether or
not the transactions contemplated hereby are consummated.
No Indemnified Party shall have any liability (whether in contract, tort or
otherwise) to the Borrower or Enron Corp. or any of its security holders or
creditors for or in connection with the transactions contemplated hereby, except
for direct damages (as opposed to special, indirect, consequential or punitive
damages (including, without limitation, any loss of profits, business or
anticipated savings)) resulting from such Indemnified Party's gross negligence
or willful misconduct. Except as set forth in the next succeeding sentence,
neither the Borrower nor Enron Corp. shall have any liability to any Indemnified
Party (whether in contract, tort or otherwise) in connection with the Facility
for punitive, exemplary or treble damages. If (a) an Indemnified Party is
required to pay damages of the type specified in the preceding sentence to
another person (that is not an Indemnified Party), and (b) such Indemnified
Party would be entitled to indemnification under this Section 5 but for the
limitation set forth in the preceding sentence, then the Indemnified Party shall
nonetheless be entitled to indemnification for such Losses.
The foregoing provisions of this Section 5 apply to Losses resulting from events
occurring prior to the closing of the Facility. From and after the closing of
the Facility, the indemnification provisions of the Operative Documents shall be
applicable.
Section 6. Costs and Expenses. Promptly following demand, the Borrower shall
pay, or reimburse Citibank, SSBI, Chase and JP Morgan (as the case may be) for,
all reasonable out-of-pocket costs and expenses incurred by Citibank, SSBI,
Chase or JP Morgan (whether incurred on, before or after the date hereof) in
connection with the Facility and the preparation, negotiation, execution and
delivery of this Commitment Letter, including the reasonable fees and expenses
of Bracewell & Patterson, L.L.P., Davis, Polk & Wardwell, and Shearman &
Sterling and any reasonably required local counsel, in each case
-3-
<PAGE>
incurred on or before the closing date of the Facility, regardless of whether
any of the transactions contemplated hereby are consummated. The Borrower shall
also pay all reasonable out-of-pocket costs and expenses of Citibank, SSBI,
Chase and JP Morgan, as the case may be (including, without limitation, the
reasonable fees and disbursements of counsel), incurred in connection with the
enforcement of any of its rights and remedies hereunder.
Section 7. Confidentiality. By accepting delivery of this Commitment Letter,
each of the Borrower and Enron Corp. agrees that this Commitment Letter is for
the Borrower's and Enron Corp.'s confidential use only and that neither its
existence nor the terms hereof will be disclosed by the Borrower or Enron Corp.
to any person other than the Borrower's and Enron Corp.'s officers, directors,
employees, accountants, attorneys and other consultants or advisors, and then
only on a confidential and "need to know" basis in connection with the
transactions contemplated hereby; provided, however, that each of the Borrower
and Enron Corp. may make such other public disclosures of the terms and
conditions hereof as the Borrower is required by law or regulation, in the
opinion of the Borrower's or Enron Corp.'s counsel, to make (including, without
limitation, in response to any subpoena or court order) and each of the Borrower
and Enron Corp. may make disclosure hereof in response to a request of any
governmental authority having jurisdiction over the Borrower or Enron Corp., as
the case may be, and Enron may make a disclosure hereof (except for the Fee
Letter) in any form 8K filing with the SEC. Notwithstanding the foregoing, each
of the Borrower and Enron Corp. may disclose the Commitment Letter (except for
the Fee Letter) after the date that is two years from the date hereof.
Section 8. Representations and Warranties. Each of the Borrower, for itself
only, and Enron Corp. represents and warrants that (i) all information (other
than projections) that has been or will hereafter be made available to Citibank,
SSBI, Chase, JP Morgan, any other Lender or any potential Lender by the Borrower
or Enron Corp. or any of its representatives and that is included in any
information memo or similar document pertaining to the Facility is and will be
complete and correct in all material respects and does not and will not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading in
light of the circumstances under which such statements were or are made and (ii)
all projections, if any, that have been or will be prepared by the Borrower or
Enron Corp. and made available to Citibank, SSBI, Chase, JP Morgan, any other
Lender or any potential Lender in connection with the Facility have been or will
be prepared in good faith based upon reasonable assumptions (it being understood
that such projections are subject to significant uncertainties and
contingencies, many of which are beyond the Borrower's or Enron Corp.'s control,
and that no assurance can be given that the projections will be realized). Each
of the Borrower and Enron Corp. agrees to supplement the information and
projections from time to time until the earlier of the date the Operative
Documents become effective and December 31, 2001, so that the representations
and warranties contained in this paragraph remain correct.
In providing this Commitment Letter, each of Citibank, SSBI, Chase and JP Morgan
is relying on the accuracy of the information furnished to it by or on behalf of
the Borrower or Enron Corp. or any of its representatives or affiliates without
independent verification thereof.
Section 9. No Third Party Reliance, Etc. The agreements of each of Citibank,
SSBI, Chase and JP Morgan hereunder and of any other Lender that issues a
commitment to provide financing under the Facility are made solely for the
benefit of the Borrower and may not be relied upon or enforced by any other
person. Please note that those matters that are not covered or made clear herein
are subject to mutual agreement of the parties. Except as provided in the
Operative Documents, no party hereto may assign or delegate any of its rights or
obligations hereunder without the prior written consent of each of the other
parties hereto. This Commitment Letter may not be amended or modified except in
a written agreement signed by all parties hereto. This Commitment Letter is not
intended to create a fiduciary relationship among the parties hereto.
-4-
<PAGE>
The Borrower and Enron Corp. should be aware that Citibank, SSBI, Chase, JP
Morgan and/or one or more of their respective affiliates may be providing
financing or other services to parties whose interests may conflict with the
Borrower's or Enron Corp.'s interests. Consistent with the longstanding policy
of Citibank, SSBI, Chase and JP Morgan to hold in confidence the affairs of its
customers, neither Citibank, SSBI, Chase, JP Morgan nor any of their respective
affiliates will furnish confidential information obtained from the Borrower or
Enron Corp. to any of their other customers. Furthermore, neither Citibank,
SSBI, Chase, JP Morgan nor any of their respective affiliates will make
available to the Borrower or Enron Corp. confidential information that Citibank,
SSBI, Chase, JP Morgan or any such affiliate obtained or may obtain from any
other customer.
Section 10. Governing Law, Etc. This Commitment Letter shall be governed by, and
construed in accordance with, the law of the State of New York. This Commitment
Letter sets forth the entire agreement between the parties with respect to the
matters addressed herein and supersedes all prior communications, written or
oral, with respect hereto. This Commitment Letter may be executed in any number
of counterparts, each of which, when so executed, shall be deemed to be an
original and all of which, taken together, shall constitute one and the same
Commitment Letter. Delivery of an executed counterpart of a signature page to
this Commitment Letter by telecopier shall be as effective as delivery of an
original executed counterpart of this Commitment Letter. Sections 3 through 7
and 10 hereof shall survive the termination of any commitment hereunder. Each
party to this Commitment letter hereby irrevocably waive any right it may have
to a jury trial and, to the fullest extent it may effectively do so under
applicable law, (i) each of the parties hereto hereby irrevocably and
unconditionally to the non-exclusive jurisdiction of the Supreme Court of the
State of New York, Commercial Division, Civil Branch sitting in the Borough of
Manhattan and of the United States District Court of the Southern District of
New York, and any appellate court from any appeal thereof, in any action or
proceeding arising out of or relating to this Commitment Letter or the Fee
Letter or any other instrument or document furnished pursuant hereto or in
connection herewith or for recognition or enforcement of any judgment, and each
of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of such action or proceeding may be heard and determined in
any such court; (ii) each of the parties hereto hereby irrevocably and
unconditionally waives the defense of an inconvenient forum to the maintenance
of such action or proceeding and any objection that it may now or hereafter have
to the laying of venue of any such action or proceeding in any such court; (iii)
the Borrower hereby agrees that service of copies of the summons and complaint
and any other process which may be served in any such action or proceeding may
be made by mailing or delivering a copy of such process to the Borrower at its
address specified above; and (iv) each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
Please indicate the Borrower's and Enron Corp.'s acceptance of the provisions
hereof by signing the enclosed copy of this Commitment Letter and the Fee Letter
and returning them to Chris Lyons, Salomon Smith Barney Inc., 1200 Smith Street,
Suite 2000, Houston, Texas 77002 (fax: 713 654-2849) and to George Serice, J.P.
Morgan Securities Inc., 700 Travis Street, 20th Floor, Houston, Texas 77002
(fax: 713 216-4583) at or before 5 p.m. (Houston time) on October 31, 2001, the
time at which the respective commitments hereunder of Citibank, SSBI, Chase and
JP Morgan (if not so accepted prior thereto) will terminate.
-5-
<PAGE>
If the Borrower and Enron Corp. elect to deliver this Commitment Letter by
telecopier, please arrange for the executed original to follow by next-day
courier.
Very truly yours,
SALOMON SMITH BARNEY INC.
By:
-----------------------------------------
Name:
Title:
CITIBANK, N.A.
By:
-----------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By:
-----------------------------------------
Name:
Title:
J.P. MORGAN SECURITIES INC.
By:
-----------------------------------------
Name:
Title:
-6-
<PAGE>
ACCEPTED AND AGREED on October 31, 2001:
TRANSWESTERN PIPELINE COMPANY
By:
-----------------------------------------
Name:
Title:
ENRON CORP.
By:
-----------------------------------------
Name:
Title:
-7-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>4
<FILENAME>h91831aex99-2.txt
<DESCRIPTION>SUMMARY OF TERMS - TPC REVOLVING FACILITY
<TEXT>
<PAGE>
CONFIDENTIAL
- --------------------------------------------------------------------------------
ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
$550 MM TRANSWESTERN PIPELINE COMPANY REVOLVING FACILITY
BORROWER: Transwestern Pipeline Company (the
"Borrower").
GUARANTOR: Enron Corp.
FACILITY: Secured $550 million revolving credit
facility, of which approximately $135,000,000
of Citibank, N.A.'s initial advances shall be
deemed to be conversions of the obligations
assumed under the Assumption Documents (as
defined in the Commitment Letter) (the
"Assumption Obligations") and, upon such
conversion, the obligations assumed under the
Assumption Documents shall be cancelled (the
"Facility"). Citibank, N.A., The Chase
Manhattan Bank, and the Borrower will
determine the appropriate structure for the
conversion of the Assumption Obligations in
the Credit Agreement.
ACCORDION FEATURE: Provided no default exists at such time, the
Borrower may, without consent of the Lenders,
increase the size of the Facility to an amount
not to exceed $650 million. No Lender is in
any way obligated to participate in such
increase by increasing its own commitment
amount, which decision shall be made in the
sole discretion of each Lender at the time the
Borrower elects to exercise its option to
increase the Facility.
PAYING AGENT: Citibank, N.A.
CO-ARRANGERS: Salomon Smith Barney Inc. and J.P. Morgan
Securities Inc.
CO-ADMINISTRATIVE AGENTS: Citibank, N.A. and The Chase Manhattan Bank.
LENDERS: Citibank, N.A. and The Chase Manhattan Bank
and such other Lenders acceptable to Citibank,
N.A. and The Chase Manhattan Bank.
SECURITY: A first priority perfected security interest
securing the obligations under the Facility in
(i) all capital stock of the Borrower; (ii) an
unsecured subordinated intercompany note by
Enron Corp. payable to the order of the
Borrower ("Intercompany Note"); and (iii)
subject to agreed exceptions, all other assets
of the Borrower ("Collateral").
USE OF PROCEEDS: Working capital and loans to Enron Corp., such
loans to be subordinated to all other debt of
Enron Corp.
MATURITY DATE: 364 days after the Closing Date.
-1-
<PAGE>
CONFIDENTIAL
- --------------------------------------------------------------------------------
ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
CLOSING DATE: On or before November 16, 2001 or, with the
consent of Citibank, N.A. and The Chase
Manhattan Bank, such other date on which
Citibank, N.A. and The Chase Manhattan Bank
shall be satisfied that all conditions
precedent set forth in the Commitment Letter
have been met.
INTEREST RATES
AND FEES: At the Borrower's option, Advances will be
available to it at the rates and for the
Interest Periods set forth below:
(a) Base Rate Option: Base Rate plus 1.50%.
The Base Rate is a fluctuating rate per
annum equal at all times to the highest
of: (i) Citibank's publicly announced
"base rate", (ii) 1/2 of 1% per annum
above the latest three-week moving average
of secondary market morning offering rates
in the United States for three-month
certificates of deposit of major U.S.
money center banks, adjusted for reserve
requirements and FDIC assessment rates,
and (iii) 1/2 of 1% per annum above the
weighted average of the rates on overnight
Federal funds transactions with members of
the Federal Reserve System arranged by
Federal funds brokers.
(b) Eurodollar Rate Option: LIBOR plus 2.50%.
LIBOR is the rate per annum (rounded
upward to the nearest 1/100 of 1% per
annum) appearing on Telerate Page 3750 (or
any successor page) as the London
interbank offered rate for deposits in
dollars at approximately 11:00 a.m.
(London time) two business days before the
first day of the relevant Interest Period
for a term comparable to such Interest
Period. If for any reason such rate is not
available, LIBOR shall be the rate per
annum (rounded upward to the nearest 1/100
of 1% per annum) appearing on Reuters
Screen LIBO page as the London interbank
offered rate for deposits in dollars at
approximately 11:00 a.m. (London time) two
business days before the first day of the
relevant Interest Period for a term
comparable to such Interest Period;
provided, however, if more than one rate
is specified on Reuters Screen LIBO page,
the applicable rate shall be the
arithmetic mean of all such rates. If
neither the Telerate Page 3750 nor the
Reuters Screen LIBO page rate is
available, then LIBOR shall be the rate
per annum at which dollar deposits are
offered by the principal office of
Citibank in London to prime banks in the
London interbank market at 11:00 A.M.
(London time) two business days before the
first day of the relevant Interest Period
and with a maturity equal to such Interest
Period. The
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<PAGE>
CONFIDENTIAL
- --------------------------------------------------------------------------------
ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
Borrower may select Interest Periods of 1,
2 or 3 months for LIBOR Advances. The
Borrower will reimburse each Lender, upon
demand, for the cost of reserve
requirements actually incurred.
DEFAULT RATE: When an event of default exists, all unpaid
amounts under the Facility will bear interest
payable on demand at the Base Rate plus 3.50%.
COMMITMENT FEE: A commitment fee of 0.50% per annum shall
accrue on the daily average unused
commitments.
INTEREST AND FEE
PAYMENTS: Interest on Base Rate Advances and commitment
fees will be payable quarterly in arrears.
Interest on LIBOR Advances will be payable at
the end of the relevant Interest Period.
Interest will be computed on a 365/366-day
basis for Base Rate Advances and on a 360-day
basis for LIBOR Advances. Commitment fees will
be computed on a 360-day basis.
BORROWINGS: Borrowings shall be in minimum principal
amounts of $25,000,000 for LIBOR Advances and
$10,000,000 for Base Rate Advances. All
Advances under the Facility will be made by
the Lenders ratably in proportion to their
respective commitments in the Facility.
Borrowings will be available on same day
notice (by 11:00 a.m. New York City time) for
Base Rate Advances and three business days'
notice for Eurodollar Rate Advances. On the
Closing Date the Borrower shall request an
initial Borrowing of an amount sufficient to
convert all the Assumption Obligations to
advances.
OPTIONAL PREPAYMENTS: Advances may be prepaid in an amount of at
least $10,000,000 on same day notice for Base
Rate Advances and three business days notice
for LIBOR Advances. The Borrower will bear all
losses and costs (but not lost profits)
related to prepayment of LIBOR Advances prior
to the last day of the relevant Interest
Period.
MANDATORY PREPAYMENTS: Subject to agreed exceptions, the Advances
shall be paid and the commitments permanently
reduced by an amount equal to the net cash
proceeds the Borrower receives from (i) any
asset sales, (ii) equity issuances, or (iii)
capital markets transactions.
CONDITIONS PRECEDENT
TO CLOSING: Customary for financings of this nature,
including:
(a) the execution and delivery of the
following, in form and substance satisfactory
to the Co-Administrative Agents, for the
Facility: (i) a credit agreement, (ii)
certificates with respect to resolutions,
charter, by-
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<PAGE>
CONFIDENTIAL
- --------------------------------------------------------------------------------
ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
laws, incumbency and signatures and certified
copies of all other relevant documents
evidencing any necessary corporate action and
governmental approvals, (iii) all security
documents necessary to obtain a first
perfected security interest (subject to agreed
exceptions) in the Collateral securing the
Facility only (other than certain of the
Borrower's real estate and pipelines and
fixtures that the Co-Administrative Agents
agree may be obtained after the Closing Date
("Post-Closing Collateral")), including
execution and delivery of pledge agreements
covering all of the Borrower's capital stock
and the Intercompany Note and a security
agreement covering all the Borrower's personal
property, (iv) a solvency and corporate
separateness certificate by the Borrower's
chief financial officer, and (v) favorable
legal opinions from counsel for the Borrower
and Enron Corp., including an opinion as to
the enforceability of all loan documents and
the perfection and enforceability of the
security interests and an opinion regarding
governmental approvals for the Facility (such
opinions to be subject to customary exceptions
and qualifications including bankruptcy,
preference, fraudulent transfer or conveyance,
equitable principles, and customary
qualifications as to the enforceability of
indemnities); and
(b) (i) the Paying Agent's obtaining a
first perfected security interest, subject to
agreed exceptions, in the Collateral (other
than the Post-Closing Collateral), (ii)
satisfactory arrangements for repayment of the
Borrower's outstanding senior notes, and (iii)
receipt of all charters, bylaws, partnership
agreements, or other similar documents for
each of Enron Corp.'s subsidiaries that
directly or indirectly has any interest in the
Borrower.
POST-CLOSING REQUIREMENT: Within 60 days (except as agreed) after the
Closing Date, (i) the Borrower shall have
executed all security documents necessary to
obtain a first perfected security interest
(subject to agreed exceptions) securing the
Facility only in the Post-Closing Collateral
and (ii) the Paying Agent shall have received
satisfactory opinions of counsel with respect
thereto.
CONDITIONS PRECEDENT TO
INITIAL ADVANCE: o Enron Corp. shall have a rating of at
least BBB- and Baa3 by S&P and Moody's,
respectively, and if such rating is
BBB- and Baa3, such rating must be
accompanied with a "stable" outlook
("Investment Grade").
o Neither Co-Administrative Agent shall
have determined that, except as
publicly disclosed or disclosed in
writing to the Co-Administrative Agents
before the execution of the Commitment
Letter, since December 31, 2000 a
material adverse change in the
business, condition (financial or
otherwise), operations,
-4-
<PAGE>
CONFIDENTIAL
- --------------------------------------------------------------------------------
ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
performance, properties or prospects of
Enron Corp. and its subsidiaries, taken
as a whole, shall have occurred.
CONDITIONS PRECEDENT TO
ALL ADVANCES: Customary for financings of this nature, including
the following:
o All representations and warranties are
correct on and as of the date of the
borrowing before and after giving
effect to such borrowing and to the
application of the proceeds therefrom
(other than those representations and
warranties that expressly relate solely
to a specific earlier date, which shall
remain correct as of such earlier
date), as though made on and as of such
date.
o No event or condition exists or would
result from such borrowing which
constitutes an event of default or
would constitute an event of default
but for the requirement that notice be
given or time elapse or both.
o The Paying Agent shall have received
such other approvals, opinions or
documents as any Lender through the
Paying Agent may reasonably request.
REPRESENTATIONS
AND WARRANTIES OF THE
BORROWER: Usual and customary for transactions of this
nature, including but not limited to: (i)
confirmation of corporate status and authority of
the Borrower and its subsidiaries, (ii)
documentation and performance duly authorized and
do not contravene laws, corporate documents,
judgments, orders or material agreements, (iii)
documentation, including the Corporate Amendment
Documents and the Assumption Documents, are legal,
valid, binding and enforceable, (iv) financial
statements, (v) since December 31, 2000, no
material adverse change in the business, condition
(financial or otherwise), operations, performance,
properties or prospects of the Borrower and its
subsidiaries, taken as a whole, (vi) no litigation
having a material adverse effect, (vii) ERISA,
(viii) environmental condition, (ix) taxes, (x)
status under Investment Company Act and Public
Utility Holding Company Act, (xi) full and
complete disclosure, (xii) solvency, and (xiii)
corporate separateness.
COVENANTS: Usual and customary for transactions of this
nature including: (i) periodic financial
statements, certificates of compliance with
financial covenant, notice of default, certain
ERISA information, and other information
-5-
<PAGE>
CONFIDENTIAL
- --------------------------------------------------------------------------------
ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
reasonably requested from time to time, (ii)
compliance with laws, including environmental
compliance, (iii) use of proceeds, (iv)
maintenance of existence, (v) insurance, (vi)
visitation rights, (vii) prohibition on liens and
negative pledges subject to agreed exceptions,
(viii) prohibition on debt subject to agreed
exceptions, (ix) no sale, lease, transfer or other
disposition of the Borrower's or any of its
subsidiaries' assets with a value of more than
$25,000,000 in the aggregate after the closing
date or the Borrower's pipeline, (x) no merger or
consolidation by the Borrower unless no default
exists or results and the Borrower is survivor,
(xi) limitation on investments, (xii) tangible net
worth in accordance with GAAP of at least
$750,000,000, (xiii) no change in lines of
business, (xiv) corporate separateness, (xv)
limitations on transactions with affiliates, (xvi)
prohibition on distributions; (xvii) subject to
agreed exceptions, prohibition on intercompany
advances when a default has occurred and is
continuing or would result therefrom, when the sum
of the Borrower's unrestricted cash and the
availability under the Facility after giving
effect thereto is less than $10,000,000, or when
Enron Corp. is no longer Investment Grade, (xviii)
completion of expansion as disclosed to the
Co-Administrative Agents, and (xix) no
subsidiaries.
EVENTS OF DEFAULT: Customary events of default for transactions of
this nature, including: (i) failure to pay
principal when due or interest and commitment fees
after 5-day grace period, (ii) representations and
warranties untrue when made, (iii) failure to
comply with affirmative covenants if not cured
within 30 days after written notice, (iv) failure
to comply with negative covenants, (v) cross
default or acceleration of Debt of the Borrower or
a subsidiary for borrowed money greater than
$10,000,000 or the occurrence and continuance of
an Event of Default under the $1,750,000,000
364-Day Revolving Credit Agreement dated as of May
14, 2001 among Enron Corp., the banks party
thereto and Citibank, N.A. and The Chase Manhattan
Bank, as Co-Administrative Agents for such banks
or the $1,250,000,000 Long-Term Revolving Credit
Agreement dated as of May 18, 2000 among Enron
Corp., the banks party thereto and Citibank, N.A.
and The Chase Manhattan Bank, as Co-Administrative
Agents for such banks, (vi) bankruptcy or
insolvency of Enron Corp. or the Borrower or any
of its subsidiaries, (vii) any unsatisfied
judgment against the Borrower or any of its
subsidiaries for payment of money greater than
$10,000,000 unless enforcement stayed by appeal or
otherwise, (viii) occurrence of certain
circumstances respecting ERISA plans, (ix) except
as agreed, Enron Corp. shall cease to own directly
or indirectly 100% of the Borrower's capital
stock, (x) an event of default under the Guaranty
shall occur, (xi) any loan document, including the
Guaranty or a security document (subject to agreed
exceptions), fails to remain in full force or
effect or any action is taken to discontinue or to
assert the invalidity or unenforceability thereof
or any obligor under a loan
-6-
<PAGE>
CONFIDENTIAL
- --------------------------------------------------------------------------------
ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
document, including the Guaranty or a security
document, shall disclaim an obligation thereunder,
(xii) subject to agreed upon matters, any
collateral document fails to create a valid and
perfected first priority security interest
(subject to agreed exceptions) in any Collateral
purported to be covered thereby, or (xiii) the
Borrower shall fail to comply with the terms of
the Fee Letter.
GUARANTY: Unconditional guaranty of payment, not of
collection. The Guaranty will include customary
representations and warranties, including the
following: (i) confirmation of corporate status
and authority, (ii) documentation and performance
duly authorized and do not contravene laws,
corporate documents, judgments, orders or material
agreements, (iii) documentation legal, valid,
binding and enforceable, (iv) full disclosure, (v)
corporate separateness between Enron Corp. and the
Borrower, (vi) solvency, (vii) except as publicly
disclosed or disclosed in writing to the
Co-Administrative Agents before the execution of
the Commitment Letter , since December 31, 2000 no
material adverse change in the business, condition
(financial or otherwise), operations, performance,
properties or prospects of Enron Corp. and its
subsidiaries, taken as a whole, has occurred.
The Guaranty will also include customary
affirmative and negative covenants, including (i)
each of the covenants contained in Enron Corp.'s
revolving credit agreements, as in effect from
time to time, (ii) prohibition on liens and
negative pledges for Enron Corp. and its
subsidiaries subject to agreed exceptions, and
(iii) maintenance of corporate separateness
between Enron Corp. and the Borrower.
TRANSFERS AND
PARTICIPATIONS: Lenders permitted to assign commitments and loans
under the Facility, in whole or part, to another
Lender in the Facility, and, with the consent of
the Paying Agents and, so long as no default
exists, the Borrower (which consents shall not be
unreasonably withheld), to a person that is not a
Lender. Lenders may sell participations in the
Facility provided that the assigning Lender
retains all voting rights (except as specified in
the definitive loan documentation) and all
obligations under the Facility.
OTHER: The documentation will include customary agency
language, and Majority Lenders for the Facility
will be defined as those holding at least 66-2/3%
of the Commitments under the Facility. The loan
documentation will contain customary provisions
regarding taxes, illegality, increased costs and
capital adequacy, subject to certain limitations,
a waiver of jury trial, and a consent to New York
jurisdiction.
-7-
<PAGE>
CONFIDENTIAL
- --------------------------------------------------------------------------------
ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
EXPENSES; INDEMNITY: All reasonable expenses incurred (i) by the
Lenders in connection with the preparation,
execution, delivery, modification, amendment and
administration of the loan documentation
(including reasonable fees and expenses of counsel
to the Lenders) or (ii) by either
Co-Administrative Agent or any Lender in
connection with the enforcement of the loan
documentation (including reasonable legal
expenses), are for the Borrower's account. To the
fullest extent permitted by law, the Borrower will
indemnify and hold harmless each Co-Administrative
Agent, each Lender and each of their respective
officers, directors, employees and agents (each an
"Indemnified Party") from and against any and all
claims, damages, losses, liabilities and expenses
(including reasonable fees and expenses of
counsel) that may be incurred by or asserted
against any Indemnified Party (other than by
either Co-Administrative Agent or another Lender
or any of their respective successors and
assigns), in each case arising out of or in
connection with any environmental claim or by
reason of any investigation, litigation or
proceeding arising out of, related to or in
connection with the loan documentation or any
transaction in which any proceeds of the Facility
are applied, excluding any claim, damage, loss,
liability or expense attributable to such
Indemnified Party's gross negligence or willful
misconduct. No Indemnified Party shall have any
liability (whether in contract, tort or otherwise)
to the Borrower or any of its security holders or
creditors for or in connection with the
transactions contemplated hereby, except for
direct damages (as opposed to special, indirect,
consequential or punitive damages (including,
without limitation, any loss of profits, business
or anticipated savings)) resulting from such
Indemnified Party's gross negligence or willful
misconduct. Except as set forth in the next
succeeding sentence, Borrower shall not have any
liability to any Indemnified Party (whether in
contract, tort or otherwise) in connection with
the Facility for punitive, exemplary or treble
damages. If (a) an Indemnified Party is required
to pay damages of the type specified in the
preceding sentence to another person (that is not
an Indemnified Party), and (b) such Indemnified
Party would be entitled to indemnification under
this provision but for the limitation set forth in
the preceding sentence, then the Indemnified Party
shall nonetheless be entitled to indemnification
for such Losses.
GOVERNING LAW: New York.
COUNSEL TO THE
CO-ADMINISTRATIVE AGENTS: Bracewell & Patterson, L.L.P.
-8-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>5
<FILENAME>h91831aex99-3.txt
<DESCRIPTION>NORTHERN NATURAL GAS CO. FORM OF REVOLVING CREDIT
<TEXT>
<PAGE>
October 31, 2001
Northern Natural Gas Company
1111 South 103rd Street
Omaha, NE
68124-1000
Attention: Rod Hayslett,
Managing Director and Chief Financial Officer
$450 MILLION 364-DAY REVOLVING CREDIT FACILITY
COMMITMENT LETTER
Ladies and Gentlemen:
Each of The Chase Manhattan Bank ("Chase") and Citibank, N.A. ("Citibank") is
pleased to inform Northern Natural Gas Company (the "Borrower") of its several
commitment to provide the Borrower up to, in the case of Chase, $180 million and
in the case of Citibank, $270 million of a $450 million 364-day revolving credit
facility (the "Facility") and to act as a Co-Administrative Agent for the
Facility, in each case subject to the terms and conditions of this letter and
the attached Annex I (collectively, and together with the Fee Letter referred to
below, this "Commitment Letter"). Also, Citibank is pleased to inform the
Borrower of its commitment to act as the Paying Agent for the Facility, subject
to the terms and conditions of this Commitment Letter. In addition, J.P. Morgan
Securities Inc. ("JP Morgan") and Salomon Smith Barney Inc. ("SSBI"), are
pleased to inform the Borrower that they may arrange a syndicate of lenders (the
"Lenders") of the Facility after the closing of the Facility, subject to the
terms and conditions of this Commitment Letter.
Section 1. Conditions Precedent. Each of the respective commitments and
agreements above of Citibank, SSBI, Chase and JP Morgan hereunder is subject to:
(i) the preparation, execution and delivery of mutually acceptable loan
documentation (the "Operative Documents"); (ii) the absence of (A) any material
adverse change in the business, condition (financial or otherwise), operations,
performance, properties or prospects of the Borrower and its subsidiaries, taken
as a whole, since December 31, 2000, (B) except as publicly disclosed or
disclosed in writing to Citibank, SSBI, Chase and JP Morgan before the execution
of this Commitment Letter, a material adverse change in the business, condition
(financial or otherwise), operations, performance, properties or prospects of
Enron Corp. and its subsidiaries, taken as a whole, since December 31, 2000, and
(C) any circumstance, change or condition (including the continuation of any
existing condition) in the loan syndication, financial or capital markets
generally that, in the judgment of SSBI, Citibank, JP Morgan, or Chase, would
materially impair syndication of the Facility; (iii) the accuracy and
completeness in all material respects, as set forth in Article 8, of all
representations that the Borrower and Enron Corp. make to Citibank, SSBI, Chase
or JP Morgan and all information that the Borrower and Enron Corp. furnish to
Citibank, SSBI, Chase or JP Morgan and the Borrower's and Enron Corp.'s
compliance with the terms of this Commitment Letter; (iv) completion of due
diligence with results satisfactory to Citibank, SSBI, Chase, and JP Morgan,
including, without limitation, with respect to Enron Corp. and the Borrower and
their respective subsidiaries and affiliates; (v) receipt of a review report
from Arthur Andersen on the Borrower's third quarter 2001 unaudited
<PAGE>
financial statements satisfactory to Citibank, SSBI, Chase and JP Morgan; (vi)
receipt of documentation satisfactory to Citibank, SSBI, Chase and JP Morgan
whereby the Borrower assumes approximately $115,000,000 of the obligations under
the Citibank, N.A. $250,000,000 prepayment transaction with Enron Corp. or one
of its subsidiaries ("Assumption Documents"); (vii) the Borrower's issuance of,
or the transfer by its shareholder of, a to be determined amount of the
Borrower's capital stock to a trust the beneficiary of which is the Paying Agent
and the amendment of the Borrower's certificate of incorporation to provide that
a voluntary bankruptcy petition for the Borrower may only be approved by a vote
of all the Borrower's shareholders pursuant to documents satisfactory to
Citibank, SSBI, Chase and JP Morgan ("Corporate Amendment Documents"); (viii) an
opinion from Borrower's counsel with respect to the enforceability of the
Assumption Documents and the Corporate Amendment Documents; (ix) satisfaction of
the conditions to Closing set forth in Annex I; and (x) the payment in full of
all fees, expenses and other amounts payable under this Commitment Letter.
Section 2. Commitment Termination. Each of the respective commitments of
Citibank, SSBI, Chase and JP Morgan hereunder will terminate on the earlier of
(a) the date the Operative Documents become effective, and (b) November 16,
2001. Before such date, each of Citibank, SSBI, Chase, and JP Morgan may
terminate its commitment hereunder if any event occurs or information becomes
available that, in its reasonable judgment, results or is reasonably likely to
result in the failure to satisfy any condition set forth in Section1.
Section 3. Syndication. Subject to the Borrower's acceptance of the Lenders,
SSBI and JP Morgan will manage all aspects of the syndication of the Facility in
consultation with the Borrower, including the timing of all offers to potential
Lenders, the determination of the amounts offered to potential Lenders, the
acceptance of commitments of the Lenders and the compensation to be provided to
the Lenders.
Each of the Borrower and Enron Corp. shall actively assist SSBI and JP Morgan in
forming a syndicate acceptable to SSBI and JP Morgan. The Borrower's and Enron
Corp.'s assistance in forming such a syndicate shall include but not be limited
to (i) making senior management and representatives of the Borrower and Enron
Corp. available to participate in information meetings with potential Lenders,
if required, at such times and places as SSBI and JP Morgan may reasonably
request; (ii) using the Borrower's and Enron Corp.'s commercially reasonable
efforts to ensure that the syndication efforts benefit from the Borrower's and
Enron Corp.'s existing lending relationships; and (iii) providing SSBI and JP
Morgan with all information reasonably deemed necessary by SSBI or JP Morgan in
connection with the syndication process.
To ensure an effective syndication of the Facility, each of the Borrower and
Enron Corp. agrees that, until the termination of the syndication (as determined
by SSBI and JP Morgan), neither the Borrower nor Enron Corp. will or will permit
any of Enron Corp.'s 90% or greater directly or indirectly owned subsidiaries)
to, syndicate or issue, attempt to syndicate or issue, announce or authorize the
announcement of the syndication or issuance of, or engage in discussions
concerning the syndication or issuance of, any debt facility or debt security
(including any renewals thereof) in the commercial bank market, without the
prior written consent of SSBI and JP Morgan; provided, however, that the
foregoing shall not limit (i) Enron Corp. and its subsidiaries' ability to issue
commercial paper, other short-term debt programs currently in place, equity or
public debt securities, (ii) Transwestern Pipeline Company's ability to enter
into a loan facility with Citibank and Chase, or (iii)(A) the Florida Gas
Transmission Company's ability to enter into a $210,000,000 bank credit
facility, (B) the Wessex Water Services' ability to enter into a 40 million
pounds sterling index linked private placement, (C) Azurix Europe Limited's
ability to enter into a 425 million pounds sterling revolving credit facility,
(D) Elektro's ability to enter into a R$180 million bond issue, and (E)
increases in existing accounts receivable and working capital facilities and
entering into new accounts receivable and working capital facilities that are
limited solely to those purposes.
-2-
<PAGE>
Citibank and Chase will act as the sole Co-Administrative Agents for the
Facility, Citibank will act as sole Paying Agent for the Facility, and SSBI and
JP Morgan will act as sole arrangers for the Facility. No additional agents,
co-agents or arrangers will be appointed, or other titles conferred, without the
consent of Citibank, SSBI, Chase, JP Morgan and the Borrower.
Section 4. Fees. In addition to the fees described in Annex I, the Borrower
shall pay the non-refundable fees set forth in that certain letter agreement
dated the date hereof (the "Fee Letter") among the Borrower, Citibank, SSBI,
Chase and JP Morgan. The terms of the Fee Letter are an integral part of the
respective commitments of Citibank, SSBI, Chase and JP Morgan hereunder and
constitute part of this Commitment Letter for all purposes hereof.
Section 5. Indemnification. Each of the Borrower and Enron Corp. shall indemnify
and hold harmless SSBI, JP Morgan, Citibank, Chase, and each of their respective
affiliates and each of their respective officers, directors, employees, agents,
advisors and representatives (each, an "Indemnified Party") from and against any
and all claims, damages, losses, liabilities and reasonable out-of-pocket
expenses (including, without limitation, reasonable fees and disbursements of
counsel) (collectively, "Losses"), joint or several, that may be incurred by or
asserted or awarded against any Indemnified Party (including, without
limitation, in connection with any investigation, litigation or proceeding or
the preparation of a defense in connection therewith), in each case arising out
of or in connection with or by reason of this Commitment Letter or the
transactions contemplated hereby or thereby or any actual or proposed use of any
proceeds or any letter of credit under the Facility, except to the extent such
Losses resulted from the loss of anticipated profits or such Indemnified Party's
gross negligence or willful misconduct or from a claim asserted by another
Indemnified Party. In the case of an investigation, litigation or other
proceeding to which the indemnity in this paragraph applies, such indemnity
shall be effective whether or not such investigation, litigation or proceeding
is brought by the Borrower or Enron Corp., any of its directors, security
holders or creditors, or any other person (other than an Indemnified Party) or
whether or not an Indemnified Party is otherwise a party thereto and whether or
not the transactions contemplated hereby are consummated.
No Indemnified Party shall have any liability (whether in contract, tort or
otherwise) to the Borrower or Enron Corp. or any of its security holders or
creditors for or in connection with the transactions contemplated hereby, except
for direct damages (as opposed to special, indirect, consequential or punitive
damages (including, without limitation, any loss of profits, business or
anticipated savings)) resulting from such Indemnified Party's gross negligence
or willful misconduct. Except as set forth in the next succeeding sentence,
neither the Borrower nor Enron Corp. shall have any liability to any Indemnified
Party (whether in contract, tort or otherwise) in connection with the Facility
for punitive, exemplary or treble damages. If (a) an Indemnified Party is
required to pay damages of the type specified in the preceding sentence to
another person (that is not an Indemnified Party), and (b) such Indemnified
Party would be entitled to indemnification under this Section 5 but for the
limitation set forth in the preceding sentence, then the Indemnified Party shall
nonetheless be entitled to indemnification for such Losses.
The foregoing provisions of this Section 5 apply to Losses resulting from events
occurring prior to the closing of the Facility. From and after the closing of
the Facility, the indemnification provisions of the Operative Documents shall be
applicable.
Section 6. Costs and Expenses. Promptly following demand, the Borrower shall
pay, or reimburse Citibank, SSBI, Chase and JP Morgan (as the case may be) for,
all reasonable out-of-pocket costs and expenses incurred by Citibank, SSBI,
Chase or JP Morgan (whether incurred on, before or after the date hereof) in
connection with the Facility and the preparation, negotiation, execution and
delivery of this Commitment Letter, including the reasonable fees and expenses
of Bracewell & Patterson, L.L.P., Davis, Polk & Wardwell, and Shearman &
Sterling and any reasonably required local counsel, in each case
-3-
<PAGE>
incurred on or before the closing date of the Facility, regardless of whether
any of the transactions contemplated hereby are consummated. The Borrower shall
also pay all reasonable out-of-pocket costs and expenses of Citibank, SSBI,
Chase and JP Morgan, as the case may be (including, without limitation, the
reasonable fees and disbursements of counsel), incurred in connection with the
enforcement of any of its rights and remedies hereunder.
Section 7. Confidentiality. By accepting delivery of this Commitment Letter,
each of the Borrower and Enron Corp. agrees that this Commitment Letter is for
the Borrower's and Enron Corp.'s confidential use only and that neither its
existence nor the terms hereof will be disclosed by the Borrower or Enron Corp.
to any person other than the Borrower's and Enron Corp.'s officers, directors,
employees, accountants, attorneys and other consultants or advisors, and then
only on a confidential and "need to know" basis in connection with the
transactions contemplated hereby; provided, however, that each of the Borrower
and Enron Corp. may make such other public disclosures of the terms and
conditions hereof as the Borrower is required by law or regulation, in the
opinion of the Borrower's or Enron Corp.'s counsel, to make (including, without
limitation, in response to any subpoena or court order) and each of the Borrower
and Enron Corp. may make disclosure hereof in response to a request of any
governmental authority having jurisdiction over the Borrower or Enron Corp., as
the case may be, and Enron may make a disclosure hereof (except for the Fee
Letter) in any form 8K filing with the SEC. Notwithstanding the foregoing, each
of the Borrower and Enron Corp. may disclose the Commitment Letter (except for
the Fee Letter) after the date that is two years from the date hereof.
Section 8. Representations and Warranties. Each of the Borrower, for itself
only, and Enron Corp. represents and warrants that (i) all information (other
than projections) that has been or will hereafter be made available to Citibank,
SSBI, Chase, JP Morgan, any other Lender or any potential Lender by the Borrower
or Enron Corp. or any of its representatives and that is included in any
information memo or similar document pertaining to the Facility is and will be
complete and correct in all material respects and does not and will not contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading in
light of the circumstances under which such statements were or are made and (ii)
all projections, if any, that have been or will be prepared by the Borrower or
Enron Corp. and made available to Citibank, SSBI, Chase, JP Morgan, any other
Lender or any potential Lender in connection with the Facility have been or will
be prepared in good faith based upon reasonable assumptions (it being understood
that such projections are subject to significant uncertainties and
contingencies, many of which are beyond the Borrower's or Enron Corp.'s control,
and that no assurance can be given that the projections will be realized). Each
of the Borrower and Enron Corp. agrees to supplement the information and
projections from time to time until the earlier of the date the Operative
Documents become effective and December 31, 2001, so that the representations
and warranties contained in this paragraph remain correct.
In providing this Commitment Letter, each of Citibank, SSBI, Chase and JP Morgan
is relying on the accuracy of the information furnished to it by or on behalf of
the Borrower or Enron Corp. or any of its representatives or affiliates without
independent verification thereof.
Section 9. No Third Party Reliance, Etc. The agreements of each of Citibank,
SSBI, Chase and JP Morgan hereunder and of any other Lender that issues a
commitment to provide financing under the Facility are made solely for the
benefit of the Borrower and may not be relied upon or enforced by any other
person. Please note that those matters that are not covered or made clear herein
are subject to mutual agreement of the parties. Except as provided in the
Operative Documents, no party hereto may assign or delegate any of its rights or
obligations hereunder without the prior written consent of each of the other
parties hereto. This Commitment Letter may not be amended or modified except in
a written agreement signed by all parties hereto. This Commitment Letter is not
intended to create a fiduciary relationship among the parties hereto.
-4-
<PAGE>
The Borrower and Enron Corp. should be aware that Citibank, SSBI, Chase, JP
Morgan and/or one or more of their respective affiliates may be providing
financing or other services to parties whose interests may conflict with the
Borrower's or Enron Corp.'s interests. Consistent with the longstanding policy
of Citibank, SSBI, Chase and JP Morgan to hold in confidence the affairs of its
customers, neither Citibank, SSBI, Chase, JP Morgan nor any of their respective
affiliates will furnish confidential information obtained from the Borrower or
Enron Corp. to any of their other customers. Furthermore, neither Citibank,
SSBI, Chase, JP Morgan nor any of their respective affiliates will make
available to the Borrower or Enron Corp. confidential information that Citibank,
SSBI, Chase, JP Morgan or any such affiliate obtained or may obtain from any
other customer.
Section 10. Governing Law, Etc. This Commitment Letter shall be governed by, and
construed in accordance with, the law of the State of New York. This Commitment
Letter sets forth the entire agreement between the parties with respect to the
matters addressed herein and supersedes all prior communications, written or
oral, with respect hereto. This Commitment Letter may be executed in any number
of counterparts, each of which, when so executed, shall be deemed to be an
original and all of which, taken together, shall constitute one and the same
Commitment Letter. Delivery of an executed counterpart of a signature page to
this Commitment Letter by telecopier shall be as effective as delivery of an
original executed counterpart of this Commitment Letter. Sections 3 through 7
and 10 hereof shall survive the termination of any commitment hereunder. Each
party to this Commitment letter hereby irrevocably waive any right it may have
to a jury trial and, to the fullest extent it may effectively do so under
applicable law, (i) each of the parties hereto hereby irrevocably and
unconditionally to the non-exclusive jurisdiction of the Supreme Court of the
State of New York, Commercial Division, Civil Branch sitting in the Borough of
Manhattan and of the United States District Court of the Southern District of
New York, and any appellate court from any appeal thereof, in any action or
proceeding arising out of or relating to this Commitment Letter or the Fee
Letter or any other instrument or document furnished pursuant hereto or in
connection herewith or for recognition or enforcement of any judgment, and each
of the parties hereto hereby irrevocably and unconditionally agrees that all
claims in respect of such action or proceeding may be heard and determined in
any such court; (ii) each of the parties hereto hereby irrevocably and
unconditionally waives the defense of an inconvenient forum to the maintenance
of such action or proceeding and any objection that it may now or hereafter have
to the laying of venue of any such action or proceeding in any such court; (iii)
the Borrower hereby agrees that service of copies of the summons and complaint
and any other process which may be served in any such action or proceeding may
be made by mailing or delivering a copy of such process to the Borrower at its
address specified above; and (iv) each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law.
Please indicate the Borrower's and Enron Corp.'s acceptance of the provisions
hereof by signing the enclosed copy of this Commitment Letter and the Fee Letter
and returning them to Chris Lyons, Salomon Smith Barney Inc., 1200 Smith Street,
Suite 2000, Houston, Texas 77002 (fax: 713 654-2849) and to George Serice, J.P.
Morgan Securities Inc., 700 Travis Street, 20th Floor, Houston, Texas 77002
(fax: 713 216-4583) at or before 5 p.m. (Houston time) on October 31, 2001, the
time at which the respective commitments hereunder of Citibank, SSBI, Chase and
JP Morgan (if not so accepted prior thereto) will terminate.
-5-
<PAGE>
If the Borrower and Enron Corp. elect to deliver this Commitment Letter by
telecopier, please arrange for the executed original to follow by next-day
courier.
Very truly yours,
SALOMON SMITH BARNEY INC.
By:
-----------------------------------------
Name:
Title:
CITIBANK, N.A.
By:
-----------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK
By:
-----------------------------------------
Name:
Title:
J.P. MORGAN SECURITIES INC.
By:
-----------------------------------------
Name:
Title:
-6-
<PAGE>
ACCEPTED AND AGREED on October 31, 2001:
NORTHERN NATURAL GAS COMPANY
By:
-----------------------------------------
Name:
Title:
ENRON CORP.
By:
-----------------------------------------
Name:
Title:
-7-
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.4
<SEQUENCE>6
<FILENAME>h91831aex99-4.txt
<DESCRIPTION>SUMMARY OF TERMS - NNGC REVOLVING FACILITY
<TEXT>
<PAGE>
CONFIDENTIAL
- --------------------------------------------------------------------------------
ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
$450 MM NORTHERN NATURAL GAS COMPANY REVOLVING FACILITY
BORROWER: Northern Natural Gas Company (the "Borrower").
GUARANTOR: Enron Corp.
FACILITY: Secured $450 million revolving credit
facility, of which approximately $115,000,000
of Citibank, N.A.'s initial advances shall be
deemed to be conversions of the obligations
assumed under the Assumption Documents (as
defined in the Commitment Letter) (the
"Assumption Obligations") and, upon such
conversion, the obligations assumed under the
Assumption Documents shall be cancelled (the
"Facility"). Citibank, N.A., The Chase
Manhattan Bank and the Borrower will determine
the appropriate structure for the conversion
of the Assumption Obligations in the Credit
Agreement.
ACCORDION FEATURE: Provided no default exists at such time, the
Borrower may, without consent of the Lenders,
increase the size of the Facility to an amount
not to exceed $550 million. No Lender is in
any way obligated to participate in such
increase by increasing its own commitment
amount, which decision shall be made in the
sole discretion of each Lender at the time the
Borrower elects to exercise its option to
increase the Facility.
PAYING AGENT: Citibank, N.A.
CO-ARRANGERS: Salomon Smith Barney Inc. and J.P. Morgan
Securities Inc.
CO-ADMINISTRATIVE AGENTS: The Chase Manhattan Bank and Citibank, N.A..
LENDERS: Citibank, N.A. and The Chase Manhattan Bank
and such other Lenders acceptable to Citibank,
N.A. and The Chase Manhattan Bank.
SECURITY: A first priority perfected security interest
securing the obligations under the Facility in
(i) all capital stock of the Borrower; (ii) an
unsecured subordinated intercompany note by
Enron Corp. payable to the order of the
Borrower ("Intercompany Note"); and (iii)
subject to agreed exceptions, all other assets
of the Borrower ("Collateral").
USE OF PROCEEDS: Working capital and loans to Enron Corp., such
loans to be subordinated to all other debt of
Enron Corp.
MATURITY DATE: 364 days after the Closing Date.
-1-
<PAGE>
CONFIDENTIAL
- --------------------------------------------------------------------------------
ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
CLOSING DATE: On or before November 16, 2001 or, with the
consent of Citibank, N.A. and The Chase
Manhattan Bank, such other date on which
Citibank, N.A. and The Chase Manhattan Bank
shall be satisfied that all conditions
precedent set forth in the Commitment Letter
have been met.
INTEREST RATES
AND FEES: At the Borrower's option, Advances will be
available to it at the rates and for the
Interest Periods set forth below:
(a) Base Rate Option: Base Rate plus 1.50%.
The Base Rate is a fluctuating rate per
annum equal at all times to the highest
of: (i) Citibank's publicly announced
"base rate", (ii) 1/2 of 1% per annum
above the latest three-week moving average
of secondary market morning offering rates
in the United States for three-month
certificates of deposit of major U.S.
money center banks, adjusted for reserve
requirements and FDIC assessment rates,
and (iii) 1/2 of 1% per annum above the
weighted average of the rates on overnight
Federal funds transactions with members of
the Federal Reserve System arranged by
Federal funds brokers.
(b) Eurodollar Rate Option: LIBOR plus 2.50%.
LIBOR is the rate per annum (rounded
upward to the nearest 1/100 of 1% per
annum) appearing on Telerate Page 3750 (or
any successor page) as the London
interbank offered rate for deposits in
dollars at approximately 11:00 a.m.
(London time) two business days before the
first day of the relevant Interest Period
for a term comparable to such Interest
Period. If for any reason such rate is not
available, LIBOR shall be the rate per
annum (rounded upward to the nearest 1/100
of 1% per annum) appearing on Reuters
Screen LIBO page as the London interbank
offered rate for deposits in dollars at
approximately 11:00 a.m. (London time) two
business days before the first day of the
relevant Interest Period for a term
comparable to such Interest Period;
provided, however, if more than one rate
is specified on Reuters Screen LIBO page,
the applicable rate shall be the
arithmetic mean of all such rates. If
neither the Telerate Page 3750 nor the
Reuters Screen LIBO page rate is
available, then LIBOR shall be the rate
per annum at which dollar deposits are
offered by the principal office of
Citibank in London to prime banks in the
London interbank market at 11:00 A.M.
(London
-2-
<PAGE>
CONFIDENTIAL
- --------------------------------------------------------------------------------
ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
time) two business days before the first
day of the relevant Interest Period and
with a maturity equal to such Interest
Period. The Borrower may select Interest
Periods of 1, 2 or 3 months for LIBOR
Advances. The Borrower will reimburse each
Lender, upon demand, for the cost of
reserve requirements actually incurred.
DEFAULT RATE: When an event of default exists, all unpaid
amounts under the Facility will bear interest
payable on demand at the Base Rate plus 3.50%.
COMMITMENT FEE: A commitment fee of 0.50% per annum shall
accrue on the daily average unused
commitments.
INTEREST AND FEE
PAYMENTS: Interest on Base Rate Advances and commitment
fees will be payable quarterly in arrears.
Interest on LIBOR Advances will be payable at
the end of the relevant Interest Period.
Interest will be computed on a 365/366-day
basis for Base Rate Advances and on a 360-day
basis for LIBOR Advances. Commitment fees will
be computed on a 360-day basis.
BORROWINGS: Borrowings shall be in minimum principal
amounts of $25,000,000 for LIBOR Advances and
$10,000,000 for Base Rate Advances. All
Advances under the Facility will be made by
the Lenders ratably in proportion to their
respective commitments in the Facility.
Borrowings will be available on same day
notice (by 11:00 a.m. New York City time) for
Base Rate Advances and three business days'
notice for Eurodollar Rate Advances. On the
Closing Date the Borrower shall request an
initial Borrowing of an amount sufficient to
convert all the Assumption Obligations to
advances.
OPTIONAL PREPAYMENTS: Advances may be prepaid in an amount of at
least $10,000,000 on same day notice for Base
Rate Advances and three business days notice
for LIBOR Advances. The Borrower will bear all
losses and costs (but not lost profits)
related to prepayment of LIBOR Advances prior
to the last day of the relevant Interest
Period.
MANDATORY PREPAYMENTS: Subject to agreed exceptions, the Advances
shall be paid and the commitments permanently
reduced by an amount equal to the net cash
proceeds the Borrower receives from (i) any
asset sales, (ii) equity issuances, or (iii)
capital markets transactions.
-3-
<PAGE>
CONFIDENTIAL
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ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
CONDITIONS PRECEDENT
TO CLOSING: Customary for financings of this nature,
including:
(a) the execution and delivery of the
following, in form and substance satisfactory
to the Co-Administrative Agents, for the
Facility: (i) a credit agreement, (ii)
certificates with respect to resolutions,
charter, by-laws, incumbency and signatures
and certified copies of all other relevant
documents evidencing any necessary corporate
action and governmental approvals, (iii) all
security documents necessary to obtain a first
perfected security interest (subject to agreed
exceptions) in the Collateral securing the
Facility only (other than certain of the
Borrower's real estate and pipelines and
fixtures that the Co-Administrative Agents
agree may be obtained after the Closing Date
("Post-Closing Collateral")), including
execution and delivery of pledge agreements
covering all of the Borrower's capital stock
and the Intercompany Note and a security
agreement covering all the Borrower's personal
property, (iv) a solvency and corporate
separateness certificate by the Borrower's
chief financial officer, and (v) favorable
legal opinions from counsel for the Borrower
and Enron Corp., including an opinion as to
the enforceability of all loan documents and
the perfection and enforceability of the
security interests and an opinion regarding
governmental approvals for the Facility (such
opinions to be subject to customary exceptions
and qualifications including bankruptcy,
preference, fraudulent transfer or conveyance,
equitable principles, and customary
qualifications as to the enforceability of
indemnities); and
(b) (i) the Paying Agent's obtaining a
first perfected security interest, subject to
agreed exceptions, in the Collateral (other
than the Post-Closing Collateral), and (ii)
receipt of all charters, bylaws, partnership
agreements, or other similar documents for
each of Enron Corp.'s subsidiaries that
directly or indirectly has any interest in the
Borrower.
POST-CLOSING REQUIREMENT: Within 60 days (except as agreed) after the
Closing Date, (i) the Borrower shall have
executed all security documents necessary to
obtain a first perfected security interest
(subject to agreed exceptions) securing the
Facility only in the Post-Closing Collateral
and (ii) the Paying Agent shall have received
satisfactory opinions of counsel with respect
thereto.
CONDITIONS PRECEDENT TO
INITIAL ADVANCE: o Enron Corp. shall have a rating of at
least BBB- and Baa3 by S&P and Moody's,
respectively, and if such rating is BBB-
and Baa3, such rating must be accompanied
with a "stable" outlook ("Investment
Grade").
o Neither Co-Administrative Agent shall have
determined that, except as publicly
disclosed or disclosed in writing to the
Co-Administrative Agents before the
execution of the Commitment
-4-
<PAGE>
CONFIDENTIAL
- --------------------------------------------------------------------------------
ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
Letter, since December 31, 2000 a material
adverse change in the business, condition
(financial or otherwise), operations,
performance, properties or prospects of
Enron Corp. and its subsidiaries, taken as
a whole, shall have occurred.
CONDITIONS PRECEDENT TO
ALL ADVANCES: Customary for financings of this nature, including
the following:
o All representations and warranties are
correct on and as of the date of the
borrowing before and after giving effect
to such borrowing and to the application
of the proceeds therefrom (other than
those representations and warranties that
expressly relate solely to a specific
earlier date, which shall remain correct
as of such earlier date), as though made
on and as of such date.
o No event or condition exists or would
result from such borrowing which
constitutes an event of default or would
constitute an event of default but for the
requirement that notice be given or time
elapse or both.
o The Paying Agent shall have received such
other approvals, opinions or documents as
any Lender through the Paying Agent may
reasonably request.
REPRESENTATIONS
AND WARRANTIES OF THE
BORROWER: Usual and customary for transactions of this
nature, including but not limited to: (i)
confirmation of corporate status and authority of
the Borrower and its subsidiaries, (ii)
documentation and performance duly authorized and
do not contravene laws, corporate documents,
judgments, orders or material agreements, (iii)
documentation, including the Corporate Amendment
Documents and the Assumption Documents, are legal,
valid, binding and enforceable, (iv) financial
statements, (v) since December 31, 2000, no
material adverse change in the business, condition
(financial or otherwise), operations, performance,
properties or prospects of the Borrower and its
subsidiaries, taken as a whole, (vi) no litigation
having a material adverse effect, (vii) ERISA,
(viii) environmental condition, (ix) taxes, (x)
status under Investment Company Act and Public
Utility Holding Company Act, (xi) full and
complete disclosure, (xii) solvency, and (xiii)
corporate separateness.
-5-
<PAGE>
CONFIDENTIAL
- --------------------------------------------------------------------------------
ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
COVENANTS: Usual and customary for transactions of this
nature including: (i) periodic financial
statements, certificates of compliance with
financial covenant, notice of default, certain
ERISA information, and other information
reasonably requested from time to time, (ii)
compliance with laws, including environmental
compliance, (iii) use of proceeds, (iv)
maintenance of existence, (v) insurance, (vi)
visitation rights, (vii) prohibition on liens
and negative pledges subject to agreed
exceptions, (viii) prohibition on debt subject
to agreed exceptions, (ix) no sale, lease,
transfer or other disposition of the
Borrower's or any of its subsidiaries' assets
with a value of more than $25,000,000 in the
aggregate after the closing date or the
Borrower's pipeline, (x) no merger or
consolidation by the Borrower unless no
default exists or results and the Borrower is
survivor, (xi) limitation on investments,
(xii) tangible net worth in accordance with
GAAP of at least $750,000,000, (xiii) no
change in lines of business, (xiv) corporate
separateness, (xv) limitations on transactions
with affiliates, (xvi) prohibition on
distributions; (xvii) subject to agreed
exceptions, prohibition on intercompany
advances when a default has occurred and is
continuing or would result therefrom, when the
sum of the Borrower's unrestricted cash and
the availability under the Facility after
giving effect thereto is less than
$30,000,000, or when Enron Corp. is no longer
Investment Grade, (xviii) completion of
expansion as disclosed to the
Co-Administrative Agents, and (xix) no
subsidiaries.
EVENTS OF DEFAULT: Customary events of default for transactions
of this nature, including: (i) failure to pay
principal when due or interest and commitment
fees after 5-day grace period, (ii)
representations and warranties untrue when
made, (iii) failure to comply with affirmative
covenants if not cured within 30 days after
written notice, (iv) failure to comply with
negative covenants, (v) cross default or
acceleration of Debt of the Borrower or a
subsidiary for borrowed money greater than
$10,000,000 or the occurrence and continuance
of an Event of Default under the
$1,750,000,000 364-Day Revolving Credit
Agreement dated as of May 14, 2001 among Enron
Corp., the banks party thereto and Citibank,
N.A. and The Chase Manhattan Bank, as
Co-Administrative Agents for such banks or the
$1,250,000,000 Long-Term Revolving Credit
Agreement dated as of May 18, 2000 among Enron
Corp., the banks party thereto and Citibank,
N.A. and The Chase Manhattan Bank, as
Co-Administrative Agents for such banks, (vi)
bankruptcy or insolvency of Enron Corp. or the
Borrower or any of its subsidiaries, (vii) any
unsatisfied judgment against the Borrower or
any of its subsidiaries for payment of money
greater than $10,000,000 unless enforcement
stayed by appeal or otherwise, (viii)
occurrence of certain circumstances respecting
ERISA plans, (ix) except as agreed, Enron
Corp. shall cease to own directly or
indirectly 100% of the Borrower's capital
stock, (x) an event of default under the
Guaranty shall occur, (xi) any loan document,
including the
-6-
<PAGE>
CONFIDENTIAL
- --------------------------------------------------------------------------------
ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
Guaranty or a security document (subject to
agreed exceptions), fails to remain in full
force or effect or any action is taken to
discontinue or to assert the invalidity or
unenforceability thereof or any obligor under
a loan document, including the Guaranty or a
security document, shall disclaim an
obligation thereunder, (xii) subject to agreed
upon matters, any collateral document fails to
create a valid and perfected first priority
security interest (subject to agreed
exceptions) in any Collateral purported to be
covered thereby, or (xiii) the Borrower shall
fail to comply with the terms of the Fee
Letter.
GUARANTY: Unconditional guaranty of payment, not of
collection. The Guaranty will include
customary representations and warranties,
including the following: (i) confirmation of
corporate status and authority, (ii)
documentation and performance duly authorized
and do not contravene laws, corporate
documents, judgments, orders or material
agreements, (iii) documentation legal, valid,
binding and enforceable, (iv) full disclosure,
(v) corporate separateness between Enron Corp.
and the Borrower, (vi) solvency, (vii) except
as publicly disclosed or disclosed in writing
to the Co-Administrative Agents before the
execution of the Commitment Letter , since
December 31, 2000 no material adverse change
in the business, condition (financial or
otherwise), operations, performance,
properties or prospects of Enron Corp. and its
subsidiaries, taken as a whole, has occurred.
The Guaranty will also include customary
affirmative and negative covenants, including
(i) each of the covenants contained in Enron
Corp.'s revolving credit agreements, as in
effect from time to time, (ii) prohibition on
liens and negative pledges for Enron Corp. and
its subsidiaries subject to agreed exceptions,
and (iii) maintenance of corporate
separateness between Enron Corp. and the
Borrower.
TRANSFERS AND
PARTICIPATIONS: Lenders permitted to assign commitments and
loans under the Facility, in whole or part, to
another Lender in the Facility, and, with the
consent of the Paying Agents and, so long as
no default exists, the Borrower (which
consents shall not be unreasonably withheld),
to a person that is not a Lender. Lenders may
sell participations in the Facility provided
that the assigning Lender retains all voting
rights (except as specified in the definitive
loan documentation) and all obligations under
the Facility.
OTHER: The documentation will include customary
agency language, and Majority Lenders for the
Facility will be defined as those holding at
least 66-2/3% of the Commitments under the
Facility. The loan documentation will contain
customary provisions regarding taxes,
illegality, increased costs and capital
-7-
<PAGE>
CONFIDENTIAL
- --------------------------------------------------------------------------------
ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
adequacy, subject to certain limitations, a
waiver of jury trial, and a consent to New
York jurisdiction.
EXPENSES; INDEMNITY: All reasonable expenses incurred (i) by the
Lenders in connection with the preparation,
execution, delivery, modification, amendment
and administration of the loan documentation
(including reasonable fees and expenses of
counsel to the Lenders) or (ii) by either
Co-Administrative Agent or any Lender in
connection with the enforcement of the loan
documentation (including reasonable legal
expenses), are for the Borrower's account. To
the fullest extent permitted by law, the
Borrower will indemnify and hold harmless each
Co-Administrative Agent, each Lender and each
of their respective officers, directors,
employees and agents (each an "Indemnified
Party") from and against any and all claims,
damages, losses, liabilities and expenses
(including reasonable fees and expenses of
counsel) that may be incurred by or asserted
against any Indemnified Party (other than by
either Co-Administrative Agent or another
Lender or any of their respective successors
and assigns), in each case arising out of or
in connection with any environmental claim or
by reason of any investigation, litigation or
proceeding arising out of, related to or in
connection with the loan documentation or any
transaction in which any proceeds of the
Facility are applied, excluding any claim,
damage, loss, liability or expense
attributable to such Indemnified Party's gross
negligence or willful misconduct. No
Indemnified Party shall have any liability
(whether in contract, tort or otherwise) to
the Borrower or any of its security holders or
creditors for or in connection with the
transactions contemplated hereby, except for
direct damages (as opposed to special,
indirect, consequential or punitive damages
(including, without limitation, any loss of
profits, business or anticipated savings))
resulting from such Indemnified Party's gross
negligence or willful misconduct. Except as
set forth in the next succeeding sentence,
Borrower shall not have any liability to any
Indemnified Party (whether in contract, tort
or otherwise) in connection with the Facility
for punitive, exemplary or treble damages. If
(a) an Indemnified Party is required to pay
damages of the type specified in the preceding
sentence to another person (that is not an
Indemnified Party), and (b) such Indemnified
Party would be entitled to indemnification
under this provision but for the limitation
set forth in the preceding sentence, then the
Indemnified Party shall nonetheless be
entitled to indemnification for such Losses.
GOVERNING LAW: New York.
COUNSEL TO THE
CO-ADMINISTRATIVE AGENTS: Bracewell & Patterson, L.L.P.
-8-
<PAGE>
CONFIDENTIAL
- --------------------------------------------------------------------------------
ANNEX I
SUMMARY OF TERMS AND CONDITIONS
================================================================================
-9-
</TEXT>
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Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0000950129-01-504015.txt : 20011115
<SEC-HEADER>0000950129-01-504015.hdr.sgml : 20011115
ACCESSION NUMBER: 0000950129-01-504015
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 14
CONFORMED PERIOD OF REPORT: 20011109
ITEM INFORMATION: Other events
ITEM INFORMATION: Financial statements and exhibits
FILED AS OF DATE: 20011114
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ENRON CORP/OR/
CENTRAL INDEX KEY: 0001024401
STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211]
IRS NUMBER: 470255140
STATE OF INCORPORATION: OR
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-13159
FILM NUMBER: 1785864
BUSINESS ADDRESS:
STREET 1: 1400 SMITH ST
CITY: HOUSTON
STATE: TX
ZIP: 77002-7369
BUSINESS PHONE: 7138536161
MAIL ADDRESS:
STREET 1: 1400 SMITH ST
CITY: HOUSTON
STATE: TX
ZIP: 77002-7369
FORMER COMPANY:
FORMER CONFORMED NAME: ENRON OREGON CORP
DATE OF NAME CHANGE: 19961008
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>h92082e8-k.txt
<DESCRIPTION>ENRON CORP. - NOVEMBER 9, 2001
<TEXT>
<PAGE>
UNITED STATES SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: November 9, 2001
Commission File Number 1-13159
ENRON CORP.
(Exact name of registrant as specified in its charter)
Oregon 47-0255140
- ------------------------------- -------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
Enron Building
1400 Smith Street
Houston, Texas 77002
- ------------------------------- -------------------------------
(Address of principal executive (Zip Code)
Offices)
(713) 853-6161
----------------------------------------------------
(Registrant's telephone number, including area code)
<PAGE>
ENRON CORP.
Item 5. Other Events.
On November 9, 2001, Enron Corp. and Dynergy Inc. issued a press release
announcing the proposed merger of the two companies and related financing
transactions. That press release is filed as Exhibit 99.1 hereto. Also filed as
exhibits to this report are the material agreements relating to these
transactions to which Enron or its subsidiaries are party.
<PAGE>
Item 7. Exhibits.
(c) Exhibits.
99.1 Press Release issued on November 9, 2001
99.2 Agreement and Plan of Merger among Dynegy Inc., Stanford,
Inc., Sorin, Inc., Badin, Inc. and Enron Corp. dated as of
November 9, 2001
99.3 Agreement among Dynegy Inc., Enron Corp. and ChevronTexaco
Corporation dated as of November 9, 2001
99.4 Shareholder Agreement dated as of November 9, 2001 by and
among Dynegy Inc., Enron Corp. and Chevron U.S.A. Inc.
99.5 Shareholder Agreement dated as of November 9, 2001 by and
between Enron Corp. and Charles L. Watson
99.6 Stockholder Agreement dated as of November 9, 2001 by and
among Stanford, Inc., Dynegy Inc., Enron Corp. and Chevron
U.S.A. Inc.
99.7 Subscription Agreement dated as of November 9, 2001 by and
among Enron Corp., Northern Natural Gas Company and Dynegy
Inc.
99.8 Certificate of Designations of Series A Preferred Stock of
Northern Natural Gas Company
99.9 Certificate of Correction of Certificate of Designations of
Series A Preferred Stock of Northern Natural Gas Company
99.10 Exchange Agreement dated as of November 9, 2001 by and between
Dynegy Inc. and Enron Corp.
99.11 Option Agreement dated as of November 9, 2001 by and among
CGNN Holding Company, Inc., MCTJ Holding Co. LLC, Enron Corp.,
Dynegy Holdings Inc. and, solely for the provisions of Section
5.1 thereof, Dynegy Inc.
99.12 Purchase Option Agreement dated as of November 9, 2001 by and
among CGNN Holding Company, Inc., MCTJ Holding Co. LLC,
Northern Natural Gas Company, Enron Corp., Dynegy Holdings,
Inc., and Dynegy Inc.
99.13 Registration Rights Agreement dated as of November 9, 2001 by
and between Enron Corp. and Dynegy Inc.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ENRON CORP.
Date: November 14, 2001 By: /s/ RICHARD A. CAUSEY
--------------------------------------
Richard A. Causey
Executive Vice President and Chief
Accounting Officer
(Principal Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
NO. DESCRIPTION
- ---- -----------
99.1 Press Release issued on November 9, 2001
99.2 Agreement and Plan of Merger among Dynegy Inc., Stanford, Inc., Sorin,
Inc., Badin, Inc. and Enron Corp. dated as of November 9, 2001
99.3 Agreement among Dynegy Inc., Enron Corp. and ChevronTexaco
Corporation dated as of November 9, 2001
99.4 Shareholder Agreement dated as of November 9, 2001 by and among Dynegy
Inc., Enron Corp. and Chevron U.S.A. Inc.
99.5 Shareholder Agreement dated as of November 9, 2001 by and between Enron
Corp. and Charles L. Watson
99.6 Stockholder Agreement dated as of November 9, 2001 by and among
Stanford, Inc., Dynegy Inc., Enron Corp. and Chevron U.S.A. Inc.
99.7 Subscription Agreement dated as of November 9, 2001 by and among Enron
Corp., Northern Natural Gas Company and Dynegy Inc.
99.8 Certificate of Designations of Series A Preferred Stock of Northern
Natural Gas Company
99.9 Certificate of Correction of Certificate of Designations of Series A
Preferred Stock of Northern Natural Gas Company
99.10 Exchange Agreement dated as of November 9, 2001 by and between Dynegy
Inc. and Enron Corp.
99.11 Option Agreement dated as of November 9, 2001 by and among CGNN Holding
Company, Inc., MCTJ Holding Co. LLC, Enron Corp., Dynegy Holdings Inc.
and, solely for the provisions of Section 5.1 thereof, Dynegy Inc.
99.12 Purchase Option Agreement dated as of November 9, 2001 by and among
CGNN Holding Company, Inc., MCTJ Holding Co. LLC, Northern Natural Gas
Company, Enron Corp., Dynegy Holdings, Inc., and Dynegy Inc.
99.13 Registration Rights Agreement dated as of November 9, 2001 by and
between Enron Corp. and Dynegy Inc.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>3
<FILENAME>h92082ex99-1.txt
<DESCRIPTION>PRESS RELEASE DATED NOVEMBER 9, 2001
<TEXT>
<PAGE>
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
NOVEMBER 9, 2001
DYNEGY AND ENRON ANNOUNCE MERGER AGREEMENT
o Significant earnings accretion to Dynegy in the first year
o Dynegy to provide immediate $1.5 billion asset-backed equity infusion
to Enron
o Watson to be chairman and chief executive officer upon merger
completion
o All stock merger at fixed ratio of 0.2685 Dynegy shares per Enron
share
o ChevronTexaco to invest $2.5 billion in new equity into Dynegy
o Unleashes value of Enron's core energy businesses
Houston (Nov. 9, 2001)-Dynegy Inc. (NYSE:DYN) and Enron Corp. (NYSE:ENE) today
announced the execution of a definitive agreement for a merger of the two
companies. The combined company, to be called Dynegy Inc., will be headquartered
in Houston, Texas. The new company will focus on the core businesses of North
American and European wholesale energy markets and commercial and industrial
energy users, and will capitalize on the opportunities generated by the combined
company's diversified asset-backed network supported by the strongest
intellectual capital in the industry.
Under the terms of the merger agreement, Enron shareholders will receive 0.2685
Dynegy shares per share of Enron common stock. Dynegy's current stockholders
(including ChevronTexaco Corp.) will own approximately 64 percent and Enron's
stockholders will own approximately 36 percent of the combined company's stock
at closing. The combination is expected to be strongly accretive to Dynegy's
earnings in the first year and thereafter. The boards of both companies have
unanimously approved the transaction, and ChevronTexaco, which owns
approximately 26 percent of Dynegy's outstanding common stock, has agreed to
invest a total of $2.5 billion into Dynegy.
<PAGE>
Chuck Watson, chairman and chief executive officer of Dynegy Inc., Steve
Bergstrom, president of Dynegy Inc., and Rob Doty, chief financial officer of
Dynegy Inc., will retain those positions in the combined company. Greg Whalley,
the current president and chief operating officer of Enron Corp., will become an
executive vice president of the new Dynegy. These executives will comprise the
Office of the Chairman upon merger completion.
The board of directors of the combined company will be comprised of 14 members.
Dynegy's 11 designees will include three from ChevronTexaco. Enron will have the
right to designate a minimum of three board members.
Chuck Watson, chairman and chief executive officer of Dynegy Inc., said, "This
strategic combination strengthens the value of our existing core business
franchises by uniting the two companies' diversified global energy delivery
networks, complementary wholesale strategies and strong marketing, trading and
risk management capabilities. In addition, the combination fuses our
intellectual capital and technology infrastructure, advancing the new Dynegy's
status as a global energy merchant, with superior physical delivery capabilities
and unparalleled experience navigating competitive markets for customers.
"The merger also validates Enron's core franchise and underscores Dynegy's
ongoing strategy to pursue transactions that accelerate our growth, while
enabling our shareholders, partners and customers to realize immediate and
long-term benefits," said Watson. "With its market-making capabilities, earnings
power and proven strategic approach to wholesale markets, Enron is the ideal
strategic partner for Dynegy. As a combined company, we will focus on leveraging
our core skill sets and, as always, we will keep a strong balance sheet and
straightforward financial structure as key priorities."
Kenneth L. Lay, chairman and chief executive officer of Enron Corp., said, "The
merger protects Enron's core franchise and enables the stockholders of both
companies to participate in the tremendous upside of the combined enterprise.
The company we are creating will have a strong balance sheet, a world-class
merchant energy operation and ample liquidity. It will build upon the strength
of our core wholesale gas and power franchise, and commercial and industrial
energy business. It also will solidify Houston's position as the energy capital
of the world and join two companies with deep roots in the Houston community and
the energy industry. I am personally committed to working with Chuck Watson,
Steve Bergstrom and their colleagues in the months ahead to accomplish the
merger and to build a solid foundation for future value creation."
Watson continued: "Dynegy and Enron's longstanding relationship as customers,
counter-parties and leading proponents of open, competitive wholesale markets
provides a common platform from which to integrate our two companies. Both
companies have talented, dedicated people and share a commitment to the safe
operation of our facilities and to the environment. Therefore, I expect a smooth
transition throughout and following the merger process.
<PAGE>
"Dynegy and Enron have strong histories of community involvement and economic
development, and the combined company will be committed to building on those
traditions in the communities where we live and work," he continued.
Steve Bergstrom, president of Dynegy Inc., said, "Our relationship with Enron
puts us in a unique position to recognize the significant value in and potential
of its core wholesale marketing and trading capabilities. The combination will
continue to pursue an asset-backed trading strategy and look for opportunities
to continually expand our energy network.
"Dynegy is aware of Enron's announcements with regard to related party
transactions and accounting restatements. We believe Enron has begun to address
these issues in a responsible manner and that they will not detract from the
value of Enron's core business," Bergstrom added.
Enron President and Chief Operating Officer Greg Whalley said, "Few of the
options we considered for our core businesses going forward provided us with the
earnings potential and immediate synergies that a merger with Dynegy could
deliver. Our leadership team believes that the new Dynegy offers the brightest
future for our shareholders, our employees and our customers. Together with
Enron's recently announced bank commitments, this cash infusion gives Enron
immediate liquidity, which we believe will enable the company to maintain its
investment grade credit rating and grow its energy marketing and trading
franchise and other core businesses."
The New Dynegy
Upon completion of the merger, the new Dynegy is expected to have revenues
exceeding $200 billion and $90 billion in assets. Together, the companies have
gas sales of approximately 40 billion cubic feet per day through the third
quarter of 2001 and power sales exceeding 500 million megawatt hours through the
third quarter of 2001. In addition, the new Dynegy's delivery network will
include more than 22,000 megawatts of generating capacity and 25,000 miles of
pipelines.
Equity Infusion
ChevronTexaco has committed to invest $2.5 billion of new equity in the combined
company, of which $1.5 billion will be invested in Dynegy immediately in order
to finance Dynegy's equity infusion into Enron. The balance of ChevronTexaco's
equity purchase will be made at closing. The pro forma combined balance sheet of
the new company will be strong and provide adequate credit strength to execute
its strategic plans.
Dynegy will use the initial $1.5 billion to acquire preferred stock and other
rights in an Enron subsidiary that owns the Northern Natural Gas pipeline. The
funds will provide Enron with additional cash liquidity to support its
operations. In the event that the merger is not completed, Dynegy will have the
right to acquire 100 percent of the equity in the Northern Natural Gas
subsidiary, thus providing Dynegy with the full value of its investment.
ChevronTexaco will be granted rights to purchase an additional $1.5 billion in
Dynegy common stock over a period of up to three years from merger completion.
Accounting
The business combination will be accounted for as a purchase of Enron by Dynegy.
At closing, Dynegy will adjust the historical book value of Enron's assets and
liabilities to their respective fair values.
<PAGE>
Earnings Accretion
The merger is expected to be strongly accretive to Dynegy earnings in the first
year and thereafter. With this transaction, Dynegy management establishes its
conservative initial guidance for 2002 for the combined companies on a full-year
pro forma 2002 basis of $3.40 to $3.50 recurring diluted earnings per share.
This represents accretion of 35 percent or $0.90 to $0.95 per share to current
Dynegy shareholders before taking into account expected merger synergies and
cost savings. While Dynegy continues to evaluate areas for potential synergies,
management estimates that the combined company will realize $400 to $500 million
in recurring annual pre-tax savings as a result of the merger from the continued
disposition or winding down of non-core businesses in the Enron portfolio,
elimination of duplicate activities, improved operating efficiencies and lower
capital costs.
Dividend Policy/Capitalization
It is anticipated that the combined company will adopt an initial annual
dividend of $0.30 per share, subject to financial conditions, results of
operations and capital requirements. It is expected that the board will review
the dividend on an annual basis. The new dividend is also consistent with the
company's strategic goals and would preserve capital to fund the combined
company's significant growth opportunities. Given the significant growth
opportunities available to the combined company, maintenance of a strong balance
sheet and a solid investment grade credit rating is a top priority.
Other Terms and Conditions
The merger is conditioned, among other things, on the approval of Dynegy's and
Enron's stockholders. The merger is also conditioned on approvals of the Federal
Energy Regulatory Commission and the Securities and Exchange Commission, as well
as expiration or termination of the Hart-Scott-Rodino waiting period.
The merger is expected to close by the end of the third quarter of 2002. Lehman
Brothers Inc. is acting as financial advisor and Baker Botts and Akin, Gump,
Strauss, Hauer & Feld are acting as counsel for Dynegy Inc. JPMorgan & Co. and
Salomon Smith Barney are acting as financial advisors and Vinson & Elkins and
Weil Gotshal & Manges LLP are acting as counsel for Enron Corp. Pillsbury
Winthrop is acting as counsel to ChevronTexaco Corp.
Conference Call Simulcast
Dynegy and Enron will simulcast a merger conference call live via the Internet
on Monday, November 12, 2001, at 8:00 a.m. CT, 9:00 a.m. ET. The webcast can be
accessed via dynegy.com (click on "Investor Relations "). The login number is
4365632 and the password is "Dynegy."
About Dynegy Inc.
Dynegy Inc. is one of the world's premier energy merchants. Through its global
energy delivery network and marketing, trading and risk management capabilities,
Dynegy provides innovative solutions to customers in North America, the United
Kingdom and Continental Europe.
<PAGE>
About Enron Corp.
Enron Corp. is one of the world's leading energy, commodities, and services
companies. The company markets electricity and natural gas, delivers energy and
other physical commodities, and provides financial and risk management services
to customers around the world. Enron's Internet address is www.enron.com.
Forward-looking Statements
Certain statements contained in this press release are forward-looking. Although
Dynegy and Enron believe these statements are accurate, their businesses are
dependent on various regulatory issues, general economic conditions and future
trends. The completion of the transaction is conditioned upon the fulfillment of
a number of conditions, and the success of the combination of the two companies
will be dependent on a wide range of issues. These factors can cause actual
results to differ materially from the forward-looking statements that have been
made. In particular:
The benefits that are expected to result from the combination are predicated
upon the belief that combining the complementary expertise and resources of
Dynegy and Enron will result in increased opportunities and decreased expenses.
Because of the complexity of the environments in which the two companies
operate, there can be no certainty that these benefits will be achieved to the
extent expected.
The estimate of the accretiveness of the transaction reflects the companies'
current best estimates based upon available information and numerous assumptions
and, accordingly, may or may not be achieved if business conditions change or
the assumptions that have been made do not prove to be accurate.
Significant regulatory approvals are necessary to complete the transaction,
including approvals under the HSR Act, the FERC, the SEC and certain state and
foreign authorities. There can be no assurances that the exemption and approvals
will be obtained on a timely basis and on acceptable terms. In addition, Dynegy
and Enron operate in regulated environments. Any significant changes in these
regulatory environments could negatively impact the transaction and the combined
entity.
Additional Information
In connection with the proposed transactions, Dynegy and Enron will file a joint
proxy statement/prospectus with the Securities and Exchange Commission.
Investors and security holders are urged to carefully read the joint proxy
statement/prospectus regarding the proposed transactions when it becomes
available, because it will contain important information. Investors and security
holders may obtain a free copy of the joint proxy statement/prospectus (when it
is available) and other documents containing information about Dynegy and Enron,
without charge, at the SEC's web site at www.sec.gov. Copies of the joint proxy
statement/prospectus and the SEC filings that will be incorporated by reference
in the joint proxy statement/prospectus may also be obtained for free by
directing a request to either: Investor Relations, Dynegy Inc., 1000 Louisiana,
Suite 5800, Houston, TX 77002, Phone: 713/507-6466, Fax: 713/767-6652; or
Investor Relations, Enron Corp., Enron Building, 1400 Smith Street, Houston, TX
77002, Phone: 713/853-3956, Fax: 713/646-3302.
<PAGE>
In addition, the identity of the persons who, under SEC rules, may be considered
"participants in the solicitation" of Dynegy and Enron shareholders in
connection with the proposed transactions, and any description of their direct
or indirect interests, by security holdings or otherwise, are available in an
SEC filing under Schedule 14A made by each of Dynegy and Enron.
- ----------
Contacts for Dynegy Contacts for Enron
Media: Media:
John Sousa Mark Palmer
Jennifer Rosser 713/853-4738
713/767-5800 Karen Denne
713/853-9757
Analysts/Investors:
Margaret Nollen Analysts/Investors:
Arthur Shannon Investor Relations Department
Katie Pipkin 713/853-3956
713/507-6466
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.2
<SEQUENCE>4
<FILENAME>h92082ex99-2.txt
<DESCRIPTION>AGREEMENT AND PLAN OF MERGER
<TEXT>
<PAGE>
EXHIBIT 99.2
================================================================================
AGREEMENT AND PLAN OF MERGER
among
DYNEGY INC.,
STANFORD, INC.,
SORIN, INC.,
BADIN, INC.
and
ENRON CORP.
Dated as of November 9, 2001
================================================================================
<PAGE>
TABLE OF CONTENTS
<Table>
<Caption>
Page
<S> <C>
ARTICLE 1 THE MERGERS.............................................................................................2
Section 1.1 The Mergers............................................................................2
Section 1.2 The Closing............................................................................2
Section 1.3 Effective Time.........................................................................2
ARTICLE 2 CERTIFICATE OF INCORPORATION AND BYLAWS OF NEWCO; ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING
ENTITIES........................................................................................3
Section 2.1 Certificate of Incorporation and Bylaws of Newco.......................................3
Section 2.2 Articles of Incorporation of the Enron Surviving Entity................................3
Section 2.3 Bylaws of the Enron Surviving Entity...................................................3
Section 2.4 Articles of Incorporation of the Dynegy Surviving Entity...............................3
Section 2.5 Bylaws of the Dynegy Surviving Entity..................................................3
ARTICLE 3 DIRECTORS AND OFFICERS OF NEWCO AND OF THE SURVIVING ENTITIES...........................................3
Section 3.1 Board of Directors of Newco............................................................3
Section 3.2 Certain Officers of Newco..............................................................4
Section 3.3 Board of Directors of Enron Surviving Entity...........................................4
Section 3.4 Officers of Enron Surviving Entity.....................................................4
Section 3.5 Board of Directors of Dynegy Surviving Entity..........................................4
Section 3.6 Officers of Dynegy Surviving Entity....................................................4
ARTICLE 4 CONVERSION OF COMMON STOCK..............................................................................4
Section 4.1 Enron Merger Ratio.....................................................................4
Section 4.2 Conversion of Capital Stock of Enron and Enron Merger Sub..............................5
Section 4.3 Conversion of Capital Stock of Newco, Dynegy and Dynegy Merger Sub.....................6
Section 4.4 Exchange of Certificates...............................................................7
Section 4.5 Options...............................................................................10
Section 4.6 Dynegy Dissenting Shares..............................................................12
Section 4.7 Adjustment of Enron Merger Ratio......................................................12
Section 4.8 Rule 16b-3 Approval...................................................................12
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF ENRON................................................................12
Section 5.1 Existence; Good Standing; Corporate Authority.........................................12
Section 5.2 Authorization, Validity and Effect of Agreements......................................13
Section 5.3 Capitalization........................................................................13
Section 5.4 Subsidiaries..........................................................................13
Section 5.5 Compliance with Laws; Permits.........................................................14
Section 5.6 No Conflict...........................................................................15
Section 5.7 SEC Documents.........................................................................15
Section 5.8 Litigation............................................................................17
</Table>
i
<PAGE>
<Table>
<S> <C>
Section 5.9 Absence of Certain Changes............................................................17
Section 5.10 Taxes.................................................................................17
Section 5.11 Employee Benefit Plans................................................................18
Section 5.12 Labor Matters.........................................................................19
Section 5.13 Environmental Matters.................................................................20
Section 5.14 Intellectual Property.................................................................21
Section 5.15 Decrees, Etc..........................................................................21
Section 5.16 Insurance.............................................................................21
Section 5.17 No Brokers............................................................................22
Section 5.18 Opinions of Financial Advisors........................................................22
Section 5.19 Dynegy Stock Ownership................................................................22
Section 5.20 Vote Required.........................................................................22
Section 5.21 Regulation as a Utility...............................................................22
Section 5.22 Capital Expenditure Program...........................................................23
Section 5.23 Improper Payments.....................................................................23
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF DYNEGY, NEWCO, DYNEGY MERGER SUB AND ENRON MERGER SUB................23
Section 6.1 Existence; Good Standing; Corporate Authority.........................................23
Section 6.2 Authorization, Validity and Effect of Agreements......................................23
Section 6.3 Capitalization........................................................................24
Section 6.4 Subsidiaries..........................................................................24
Section 6.5 Compliance with Laws; Permits.........................................................25
Section 6.6 No Conflict...........................................................................25
Section 6.7 SEC Documents.........................................................................26
Section 6.8 Litigation............................................................................27
Section 6.9 Absence of Certain Changes............................................................27
Section 6.10 Taxes.................................................................................28
Section 6.11 Employee Benefit Plans................................................................29
Section 6.12 Labor Matters.........................................................................30
Section 6.13 Environmental Matters.................................................................30
Section 6.14 Intellectual Property.................................................................31
Section 6.15 Decrees, Etc..........................................................................31
Section 6.16 Insurance.............................................................................31
Section 6.17 No Brokers............................................................................32
Section 6.18 Opinion of Financial Advisor..........................................................32
Section 6.19 Enron Stock Ownership.................................................................32
Section 6.20 Vote Required.........................................................................32
Section 6.21 Regulation as a Utility...............................................................32
Section 6.22 Improper Payments.....................................................................33
ARTICLE 7 COVENANTS..............................................................................................33
Section 7.1 Conduct of Business...................................................................33
Section 7.2 No Solicitation by Enron..............................................................37
Section 7.3 No Solicitation by Dynegy.............................................................39
Section 7.4 Meetings of Shareholders..............................................................40
Section 7.5 Filings; Commercially Reasonable Best Efforts, Etc....................................41
</Table>
ii
<PAGE>
<Table>
<S> <C>
Section 7.6 Inspection............................................................................42
Section 7.7 Publicity.............................................................................43
Section 7.8 Registration Statement on Form S-4....................................................43
Section 7.9 Listing Application...................................................................44
Section 7.10 Letters of Accountants................................................................44
Section 7.11 Agreements of Rule 145 Affiliates.....................................................44
Section 7.12 Expenses..............................................................................45
Section 7.13 Indemnification and Insurance.........................................................45
Section 7.14 Agreements Regarding Enron Supplemental Indentures....................................46
Section 7.15 No Hire...............................................................................46
Section 7.16 Employee Matters......................................................................47
Section 7.17 Alternative Structure.................................................................47
ARTICLE 8 CONDITIONS.............................................................................................48
Section 8.1 Conditions to Each Party's Obligation to Effect the Mergers...........................48
Section 8.2 Conditions to Obligation of Enron to Effect the Mergers...............................49
Section 8.3 Conditions to Obligation of Dynegy, Newco, Dynegy Merger Sub and Enron Merger Sub to
Effect the Mergers....................................................................50
ARTICLE 9 TERMINATION............................................................................................51
Section 9.1 Termination by Mutual Consent.........................................................51
Section 9.2 Termination by Dynegy or Enron........................................................51
Section 9.3 Termination by Enron..................................................................52
Section 9.4 Termination by Dynegy.................................................................53
Section 9.5 Effect of Termination.................................................................53
Section 9.6 Extension; Waiver.....................................................................55
ARTICLE 10 GENERAL PROVISIONS....................................................................................55
Section 10.1 Nonsurvival of Representations, Warranties and Agreements.............................55
Section 10.2 Notices...............................................................................55
Section 10.3 Assignment; Binding Effect; Benefit...................................................56
Section 10.4 Entire Agreement......................................................................57
Section 10.5 Amendments............................................................................57
Section 10.6 Governing Law.........................................................................57
Section 10.7 Counterparts..........................................................................57
Section 10.8 Headings..............................................................................57
Section 10.9 Interpretation........................................................................58
Section 10.10 Waivers...............................................................................58
Section 10.11 Incorporation of Disclosure Letters and Exhibits......................................59
Section 10.12 Severability..........................................................................59
Section 10.13 Enforcement of Agreement..............................................................59
Section 10.14 No Special Damages....................................................................59
</Table>
iii
<PAGE>
GLOSSARY OF DEFINED TERMS
<Table>
<Caption>
Defined Terms Where Defined
- ------------- -------------
<S> <C>
1935 Act .......................................................................................... Section 5.6(b)
9.142% Preferred Stock ............................................................................ Section 5.3
Action ............................................................................................ Section 7.13(a)
Agreement ......................................................................................... Preamble
Applicable Laws ................................................................................... Section 5.5(a)
Articles of Merger ................................................................................ Section 1.3
Assumed Plans ..................................................................................... Section 4.5(a)
Certificates ...................................................................................... Section 4.4(c)
Chevron ........................................................................................... Section 6.3
ChevronTexaco ..................................................................................... Recitals
Closing ........................................................................................... Section 1.2
Closing Date ...................................................................................... Section 1.2
Code .............................................................................................. Recitals
Confidentiality Agreement ......................................................................... Section 7.6
Contingent Obligation ............................................................................. Section 7.1(n)
Cutoff Date ....................................................................................... Section 7.2(d), Section
7.3(d)
Debt .............................................................................................. Section 7.1(n)
Draft Third Quarter Report ........................................................................ Section 5.7
Dynegy ............................................................................................ Preamble
Dynegy Acquisition Proposal ....................................................................... Section 7.3(a)
Dynegy Benefit Plans .............................................................................. Section 6.11(a)
Dynegy Certificates ............................................................................... Section 4.4(a)
Dynegy Class A Common Stock ....................................................................... Recitals
Dynegy Class B Common Stock ....................................................................... Recitals
Dynegy Common Stock ............................................................................... Recitals
Dynegy Consideration .............................................................................. Section 4.3(b)
Dynegy Disclosure Letter .......................................................................... Article 6 Preface
Dynegy Dissenting Share ........................................................................... Section 4.6
Dynegy Material Adverse Effect .................................................................... Section 10.9(c)
Dynegy Merger ..................................................................................... Recitals
Dynegy Merger Ratio ............................................................................... Section 4.3(b)
Dynegy Merger Sub ................................................................................. Preamble
Dynegy Option ..................................................................................... Section 4.5(a)
Dynegy Permits .................................................................................... Section 6.5(b)
Dynegy Preferred Stock ............................................................................ Section 6.3
Dynegy Real Property .............................................................................. Section 6.5(c)
Dynegy Regulatory Approvals ....................................................................... Section 6.6(b)
Dynegy Reports .................................................................................... Section 6.7
Dynegy Series B Preferred Stock ................................................................... Recitals
Dynegy Shareholder Agreement ...................................................................... Section 6.3
Dynegy Stock Plans ................................................................................ Section 4.5(a)
Dynegy Subscription Agreement ..................................................................... Recitals
Dynegy Superior Proposal .......................................................................... Section 7.3(a)
</Table>
iv
<PAGE>
<Table>
<S> <C>
Dynegy Surviving Entity ........................................................................... Section 1.1(b)
Effective Time .................................................................................... Section 1.3
Enron ............................................................................................. Preamble
Enron Acquisition Proposal ........................................................................ Section 7.2(a)
Enron Additional Securities ....................................................................... Section 4.1(a)
Enron Benefit Plans ............................................................................... Section 5.11(a)
Enron Capital Budget .............................................................................. Section 5.22
Enron Certificates ................................................................................ Section 4.2(b)
Enron Common Stock ................................................................................ Recitals
Enron Convertible Securities ...................................................................... Section 4.1(b)
Enron Disclosure Letter ........................................................................... Article 5 Preface
Enron Filed Reports ............................................................................... Section 5.8
Enron Material Adverse Effect ..................................................................... Section 10.9(c)
Enron Merger ...................................................................................... Recitals
Enron Merger Ratio. ............................................................................... Section 4.1(a)
Enron Merger Sub .................................................................................. Preamble
Enron Option ...................................................................................... Section 4.5(a)
Enron Parity Price ................................................................................ Section 4.1(c)
Enron Permits ..................................................................................... Section 5.5(b)
Enron Preferred Stock ............................................................................. Section 5.3
Enron Real Property ............................................................................... Section 5.5(c)
Enron Regulatory Approvals ........................................................................ Section 5.6(b)
Enron Reports ..................................................................................... Section 5.7
Enron Stock Plans ................................................................................. Section 4.5(a)
Enron Superior Proposal ........................................................................... Section 7.2(a)
Enron Surviving Entity ............................................................................ Section 1.1(a)
Enron Utility ..................................................................................... Section 5.21(a)
Environmental Laws ................................................................................ Section 5.13(a)
ERISA ............................................................................................. Section 5.11(a)
ERISA Affiliate ................................................................................... Section 5.11(b)
Exchange Act ...................................................................................... Section 4.8
Exchange Agent .................................................................................... Section 4.4(b)
Exchange Fund ..................................................................................... Section 4.4(b)
Excluded Convertible Securities ................................................................... Section 4.1(e)
Excluded Person ................................................................................... Section 7.13(a)
FERC .............................................................................................. Section 5.6(b)
Form S-4 .......................................................................................... Section 7.8(a)
Former Enron Directors ............................................................................ Section 3.1(a)
Former Dynegy Directors ........................................................................... Section 3.1(a)
Hazardous Materials ............................................................................... Section 5.13(b)
HSR Act ........................................................................................... Section 5.6(b)
IBCA .............................................................................................. Section 1.1(b)
Illinois Power .................................................................................... Section 6.21(a)
Illinova .......................................................................................... Section 6.21(a)
Indemnified Parties ............................................................................... Section 7.13(a)
Letter of Transmittal ............................................................................. Section 4.4(c)
</Table>
v
<PAGE>
<Table>
<S> <C>
Liens ............................................................................................. Section 5.4
Material Adverse Effect ........................................................................... Section 10.9(c)
Mergers ........................................................................................... Recitals
Newco ............................................................................................. Preamble
Newco Class A Common Stock ........................................................................ Recitals
Newco Class B Common Stock ........................................................................ Recitals
Newco Common Stock ................................................................................ Recitals
Newco Group ....................................................................................... Section 7.16
Newco Share Price ................................................................................. Section 4.4(f)
Non-U.S. Antitrust Laws ........................................................................... Section 7.5(a)(ii)
Northern .......................................................................................... Recitals
Northern Series A Preferred Stock ................................................................. Recitals
NYSE .............................................................................................. Section 4.1(c)
OBCA .............................................................................................. Section 1.1(a)
Original Outstanding Enron Shares ................................................................. Section 4.1(a)
Other Non-U.S. Jurisdictions ...................................................................... Section 8.1(c)
Proxy Statement/Prospectus ........................................................................ Section 7.8(a)
Returns ........................................................................................... Section 5.10(a)
Rule 145 Affiliates ............................................................................... Section 7.11
Rule 16b-3 ........................................................................................ Section 4.8
Sales Consideration ............................................................................... Section 4.1(d)
SEC ............................................................................................... Section 4.5(b)
Second Preferred Stock ............................................................................ Section 5.3
Securities Act .................................................................................... Section 4.4(e)
September 30, 2001 Balance Sheet .................................................................. Section 5.7
Series B Preferred Stock .......................................................................... Section 5.3
Series C Preferred Stock .......................................................................... Section 5.3
Significant Subsidiary ............................................................................ Section 5.4
Specified Jurisdictions ........................................................................... Section 8.1(c)
Subsidiary ........................................................................................ Section 10.9(d)
Tax qualified plans ............................................................................... Section 7.16
Taxes ............................................................................................. Section 5.10(d)
Termination Date .................................................................................. Section 9.2(a)
Third-Party Provisions ............................................................................ Section 10.3
Zeros ............................................................................................. Section 5.3
</Table>
vi
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as
of November 9, 2001, is by and among Dynegy Inc., an Illinois corporation
("Dynegy"), Stanford, Inc., a Delaware corporation and wholly owned subsidiary
of Dynegy ("Newco"), Sorin, Inc., an Oregon corporation and wholly owned
subsidiary of Newco ("Enron Merger Sub"), Badin, Inc., an Illinois corporation
and wholly owned subsidiary of Newco ("Dynegy Merger Sub"), and Enron Corp., an
Oregon corporation ("Enron").
RECITALS
A. The Enron Merger. At the Effective Time, the parties intend
to effect a merger of Enron Merger Sub with and into Enron, with Enron being the
surviving entity (the "Enron Merger"), pursuant to which each share of common
stock, no par value, of Enron ("Enron Common Stock") will be converted into
0.2685 shares of Class A common stock, par value $.01 per share, of Newco
("Newco Class A Common Stock"), subject to adjustment.
B. The Dynegy Merger. Concurrently with the Enron Merger, the
parties intend to effect a merger of Dynegy Merger Sub with and into Dynegy,
with Dynegy being the surviving entity (the "Dynegy Merger" and, together with
the Enron Merger, the "Mergers"), pursuant to which (i) each share of Class A
common stock, no par value, of Dynegy ("Dynegy Class A Common Stock") will be
converted into one share of Newco Class A Common Stock and (ii) each share of
Class B common stock, no par value, of Dynegy ("Dynegy Class B Common Stock"
and, together with the Dynegy Class A Common Stock, the "Dynegy Common Stock")
will be converted into one share of Class B common stock, par value $.01 per
share, of Newco ("Newco Class B Common Stock" and, together with the Newco Class
A Common Stock, the "Newco Common Stock").
C. Intended U.S. Tax Consequences. The parties to this
Agreement intend that, for federal income tax purposes, the Mergers shall
qualify as transfers of Enron Common Stock and Dynegy Common Stock to Newco in a
transaction qualifying under Section 351 of the Internal Revenue Code of 1986,
as amended (the "Code").
D. Intended U.S. Accounting Treatment. The parties to this
Agreement intend that the Mergers be treated as the purchase of Enron by Dynegy
for accounting purposes.
E. Preferred Stock Subscription Agreements. Concurrently with
the execution and delivery of this Agreement, (i) Dynegy is entering into a
Subscription Agreement with Northern Natural Gas Company ("Northern") and Enron
pursuant to which Dynegy is agreeing to purchase from Northern 1,000 shares of
its Series A Preferred Stock (the "Northern Series A Preferred Stock"); and (ii)
ChevronTexaco Corporation ("ChevronTexaco") is entering into a Subscription
Agreement with Dynegy (the "Dynegy Subscription Agreement") pursuant to which
ChevronTexaco is agreeing to purchase from Dynegy 150,000 shares of its Series B
Mandatorily Convertible Redeemable Preferred Stock, no par value (the "Dynegy
Series B Preferred Stock").
<PAGE>
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGERS
Section 1.1 The Mergers.
(a) Upon the terms and subject to conditions of this
Agreement, at the Effective Time, Enron Merger Sub shall be merged with and into
Enron in accordance with this Agreement, and the separate corporate existence of
Enron Merger Sub shall thereupon cease. Enron shall be the surviving entity in
the Enron Merger (sometimes hereinafter referred to as the "Enron Surviving
Entity"). The Enron Merger shall have the effects specified herein and in the
Business Corporation Act of the State of Oregon (the "OBCA").
(b) Upon the terms and subject to conditions of this
Agreement, at the Effective Time, Dynegy Merger Sub shall be merged with and
into Dynegy in accordance with this Agreement, and the separate corporate
existence of Dynegy Merger Sub shall thereupon cease. Dynegy shall be the
surviving entity in the Dynegy Merger (sometimes hereinafter referred to as the
"Dynegy Surviving Entity"). The Dynegy Merger shall have the effects specified
herein and in the Business Corporation Act of the State of Illinois (the
"IBCA").
Section 1.2 The Closing. Upon the terms and subject to the
conditions of this Agreement, the closing of the Mergers (the "Closing") shall
take place (a) at the offices of Baker Botts L.L.P., One Shell Plaza, 910
Louisiana, Houston, Texas 77002, at 9:00 a.m., local time, on the first business
day immediately following the day on which the last to be fulfilled or waived of
the conditions set forth in Section 8.1, or, if on such day any condition set
forth in Section 8.2 or Section 8.3 has not been fulfilled or waived, as soon as
practicable after all the conditions set forth in Article 8 (other than the
conditions that by their terms are only capable of being satisfied on the
Closing Date) have been fulfilled or waived in accordance herewith or (b) at
such other time, date or place as Dynegy and Enron may agree, but in no event
prior to the expiration of a period of six months after the initial purchase of
shares of Dynegy Series B Preferred Stock by ChevronTexaco pursuant to the
Dynegy Subscription Agreement. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
Section 1.3 Effective Time. On the Closing Date, (i) Dynegy,
Enron and Enron Merger Sub shall cause articles of merger meeting the
requirements of Section 60.494 of the OBCA to be properly executed and filed in
accordance with the OBCA and (ii) Dynegy, Enron and Dynegy Merger Sub shall
cause articles of merger meeting the requirements of Section 11.25 of the IBCA
to be properly executed and filed in accordance with the IBCA (collectively, the
"Articles of Merger"). The Mergers shall become effective at the time that
Dynegy and Enron shall have agreed upon and designated in the respective
Articles of Merger as the effective time thereof (the "Effective Time").
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ARTICLE 2
CERTIFICATE OF INCORPORATION AND BYLAWS OF NEWCO;
ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING ENTITIES
Section 2.1 Certificate of Incorporation and Bylaws of Newco.
At or prior to the Effective Time, Dynegy and Newco shall take all action as may
be necessary to cause Newco's certificate of incorporation and bylaws to be
amended and restated as of the Effective Time as set forth in Exhibits 2.1(a)
(subject to any adjustments necessary to permit Newco to fulfill its obligations
under Section 7.14) and 2.1(b) hereto, respectively, and to reflect that Newco
shall be named "Dynegy Inc."
Section 2.2 Articles of Incorporation of the Enron Surviving
Entity. As of the Effective Time, the articles of incorporation of Enron in
effect immediately prior to the Effective Time shall be the articles of
incorporation of the Enron Surviving Entity, until duly amended in accordance
with applicable law.
Section 2.3 Bylaws of the Enron Surviving Entity. As of the
Effective Time, the bylaws of Enron in effect immediately prior to the Effective
Time shall be the bylaws of the Enron Surviving Entity, until duly amended in
accordance with applicable law; provided that the number of directors of the
Enron Surviving Entity shall be changed to equal the number of directors of
Enron Merger Sub immediately prior to the Effective Time.
Section 2.4 Articles of Incorporation of the Dynegy Surviving
Entity. As of the Effective Time, the articles of incorporation of Dynegy in
effect immediately prior to the Effective Time shall be the articles of
incorporation of the Dynegy Surviving Entity, until duly amended in accordance
with applicable law.
Section 2.5 Bylaws of the Dynegy Surviving Entity. As of the
Effective Time, the bylaws of Dynegy Merger Sub in effect immediately prior to
the Effective Time shall be the bylaws of the Dynegy Surviving Entity, until
duly amended in accordance with applicable law; provided that the number of
directors of the Dynegy Surviving Entity shall be changed to equal the number of
directors of Dynegy Merger Sub immediately prior to the Effective Time.
ARTICLE 3
DIRECTORS AND OFFICERS OF NEWCO AND
OF THE SURVIVING ENTITIES
Section 3.1 Board of Directors of Newco.
(a) At the Effective Time, the Board of Directors of Newco
shall consist of not more than 15 members, at least three of which shall be
designated by Enron, after consultation with Dynegy, before the Effective Time
("Former Enron Directors"). Prior to the Effective Time, Dynegy shall, after
consultation with Enron, determine the total number of directors on the Board of
Directors of Newco effective as of the Effective Time and the number of Former
Enron Directors (in each case subject to the preceding sentence) and designate
the current members of the Dynegy Board of Directors that will serve on the
Newco Board of
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Directors as of the Effective Time ("Former Dynegy Directors"). Charles L.
Watson shall be the Chairman of the Board of Newco. From and after the Effective
Time, each person so designated shall serve as a director of Newco until such
person's successor shall be elected and qualified or such person's earlier
death, resignation or removal in accordance with the certificate of
incorporation and bylaws of Newco.
(b) Prior to the Effective Time, Dynegy shall cause Newco to
take such action as may be necessary to cause the Dynegy designees and the Enron
designees to be elected to the Board of Directors of Newco as of the Effective
Time.
Section 3.2 Certain Officers of Newco. From and after the
Effective Time, Charles L. Watson shall be the Chief Executive Officer of Newco
and Stephen W. Bergstrom shall be the President and Chief Operating Officer of
Newco.
Section 3.3 Board of Directors of Enron Surviving Entity. The
directors of Enron Merger Sub immediately prior to the Effective Time shall be
the directors of the Enron Surviving Entity as of the Effective Time, until
their successors shall be elected and qualified or their earlier death,
resignation or removal in accordance with the articles of incorporation and
bylaws of the Enron Surviving Entity.
Section 3.4 Officers of Enron Surviving Entity. The officers
of Enron immediately prior to the Effective Time shall be the officers of the
Enron Surviving Entity as of the Effective Time, until their successors shall be
appointed or their earlier death, resignation or removal in accordance with the
articles of incorporation and bylaws of the Enron Surviving Entity.
Section 3.5 Board of Directors of Dynegy Surviving Entity. The
directors of Dynegy Merger Sub immediately prior to the Effective Time shall be
the directors of the Dynegy Surviving Entity as of the Effective Time, until
their successors shall be elected and qualified or their earlier death,
resignation or removal in accordance with the articles of incorporation and
bylaws of the Dynegy Surviving Entity.
Section 3.6 Officers of Dynegy Surviving Entity. The officers
of Dynegy immediately prior to the Effective Time shall be the officers of the
Dynegy Surviving Entity as of the Effective Time, until their successors shall
be appointed or their earlier death, resignation or removal in accordance with
the articles of incorporation and bylaws of the Dynegy Surviving Entity.
ARTICLE 4
CONVERSION OF COMMON STOCK
Section 4.1 Enron Merger Ratio. For purposes of this
Agreement:
(a) The "Enron Merger Ratio" shall equal 0.2685, subject to
adjustment as provided in this Section 4.1. If, on or after the date of
this Agreement, Enron issues or sells any shares of Enron Common Stock
or any Enron Convertible Securities, other than Excluded Convertible
Securities and securities issued upon conversion, exercise or
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exchange of Excluded Convertible Securities (collectively, the "Enron
Additional Securities"), for Sales Consideration per share of Enron
Common Stock less than the Enron Parity Price as of the date a price is
determined pursuant to a binding agreement for such issuance or sale,
then the Enron Merger Ratio shall be adjusted by multiplying the Enron
Merger Ratio immediately prior to such adjustment by a fraction, (i)
the numerator of which is the sum of (a) the number of fully diluted
shares of Enron Common Stock outstanding (calculated using the treasury
stock method) immediately prior to the adjustment (the "Original
Outstanding Enron Shares") plus (b) the aggregate Sales Consideration
for such Enron Additional Securities divided by the Enron Parity Price,
and (ii) the denominator of which is the sum of the Original
Outstanding Enron Shares plus the number of shares of Enron Common
Stock represented by such Enron Additional Securities.
(b) "Enron Convertible Securities" means any shares of capital
stock or securities convertible into or exchangeable for Enron Common
Stock, or any options, rights or warrants exercisable to purchase Enron
Common Stock.
(c) "Enron Parity Price" means, with respect to any date, the
product of (i) the Enron Merger Ratio on such date multiplied by (ii)
the per share last reported price of the Dynegy Class A Common Stock as
reported on the consolidated transaction reporting system for
securities traded on the New York Stock Exchange, Inc. ("NYSE") (as
reported in the New York City edition of The Wall Street Journal or, if
not reported thereby, another authoritative source) on such date.
(d) "Sales Consideration" with respect to any issuance or sale
of Enron Additional Securities means the aggregate of (i) the cash
consideration, (ii) the trading value (based on the average last
reported prices therefor for the five consecutive trading days ending
on the first trading day prior to such date as quoted by an
authoritative source agreed upon by Dynegy and Enron) for any listed or
traded securities, and (iii) the fair market value (as determined by
agreement of Dynegy and Enron) for any other consideration, in each
case received therefor or to be received upon the exercise of any
option or warrant. In the event of the issuance of any Enron
Convertible Securities, the shares of Enron Common Stock issuable with
respect to such Enron Convertible Securities shall be deemed to be
issued in such transaction on an as converted basis.
(e) "Excluded Convertible Securities" means (i) the Northern
Series A Preferred Stock, (ii) any Enron Convertible Securities
outstanding on the date of this Agreement and disclosed, or not
required to be disclosed, pursuant to this Agreement, other than the
first two items of Section 5.3 of the Enron Disclosure Letter, and
(iii) employee stock options granted after the date hereof permitted by
Section 7.1(f), provided that the exercise price thereof is not less
than the fair market value on the date of grant (as provided in the
applicable plan).
Section 4.2 Conversion of Capital Stock of Enron and Enron
Merger Sub.
(a) At the Effective Time, each share of common stock, no par
value, of Enron Merger Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Enron Merger and without any action on
the part of the holder thereof, be converted
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into and become the number of fully paid and nonassessable shares of common
stock, no par value, of the Enron Surviving Entity equal to the quotient of the
number of fully diluted shares of Enron Common Stock outstanding immediately
prior to the Effective Time divided by 1,000.
(b) At the Effective Time, each share of Enron Common Stock
issued and outstanding immediately prior to the Effective Time, including any
shares subject to employment-related restrictions (other than shares of Enron
Common Stock to be canceled without payment of any consideration therefor
pursuant to Section 4.2(c)), shall, by virtue of the Enron Merger and without
any action on the part of the holder thereof, be converted into a fraction of a
share of Newco Class A Common Stock equal to the Enron Merger Ratio and
thereupon shall cease to be outstanding and shall be canceled and retired and
shall cease to exist, and each holder of such shares of Enron Common Stock shall
thereafter cease to have any rights with respect to such shares of Enron Common
Stock, except the right to receive, without interest, certificates for shares of
Newco Class A Common Stock in accordance with Section 4.4(c) and cash for
fractional shares in accordance with Section 4.4(c) and Section 4.4(f) upon the
surrender of the certificate or certificates that immediately prior to the
Effective Time represented shares of Enron Common Stock ("Enron Certificates").
(c) Each share of Enron Common Stock held in Enron's treasury
and each share of Enron Common Stock owned by Enron, Newco, Dynegy, Dynegy
Merger Sub or Enron Merger Sub shall, at the Effective Time and by virtue of the
Enron Merger, cease to be outstanding and shall be canceled and retired without
payment of any consideration therefor, and no shares of capital stock of Newco
or other consideration shall be delivered in exchange therefor.
(d) At the Effective Time, each share of Enron Preferred Stock
issued and outstanding immediately prior to the Effective Time shall remain
outstanding and unaffected by the Enron Merger.
Section 4.3 Conversion of Capital Stock of Newco, Dynegy and
Dynegy Merger Sub.
(a) At the Effective Time, each share of common stock, no par
value, of Dynegy Merger Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Dynegy Merger and without any action on
the part of the holder thereof, be converted into and become one fully paid and
nonassessable share of common stock, no par value, of the Dynegy Surviving
Entity.
(b) At the Effective Time, (i) each share of Dynegy Class A
Common Stock issued and outstanding immediately prior to the Effective Time
(other than Dynegy Dissenting Shares and shares of Dynegy Class A Common Stock
to be canceled without payment of any consideration therefor pursuant to Section
4.3(c)) shall, by virtue of the Dynegy Merger and without any action on the part
of the holder thereof, be converted into one share (the "Dynegy Merger Ratio")
of Newco Class A Common Stock and (ii) each share of Dynegy Class B Common Stock
issued and outstanding immediately prior to the Effective Time (other than
Dynegy Dissenting Shares and shares of Dynegy Class B Common Stock to be
canceled without payment of any consideration therefor pursuant to Section
4.3(c)) shall, by virtue of the Dynegy Merger and without any action on the part
of the holder thereof, be converted into one share of
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Newco Class B Common Stock (collectively, the "Dynegy Consideration"). At the
Effective Time, each share of Dynegy Common Stock shall, by virtue of the Dynegy
Merger and without any action on the part of the holder thereof, cease to be
outstanding and shall be canceled and retired and shall cease to exist, and each
holder of shares of Dynegy Common Stock (other than Dynegy Dissenting Shares and
shares of Dynegy Common Stock to be canceled without payment of any
consideration therefor pursuant to Section 4.3(c)) shall thereafter cease to
have any rights with respect to such shares of Dynegy Common Stock.
(c) Each share of Dynegy Common Stock issued and held in
Dynegy's treasury and each share of Dynegy Common Stock owned by Enron shall, at
the Effective Time and by virtue of the Dynegy Merger, cease to be outstanding
and shall be canceled and retired without payment of any consideration therefor,
and no shares of capital stock of Newco or other consideration shall be
delivered in exchange therefor.
(d) At the Effective Time, each share of Dynegy Series B
Preferred Stock issued and outstanding immediately prior to the Effective Time,
if any, shall remain outstanding and unaffected by the Dynegy Merger.
(e) Each share of Newco Common Stock and all other shares of
capital stock of Newco issued and outstanding immediately prior to the Effective
Time shall, at the Effective Time and without any action on the part of Newco or
the holder thereof, cease to be outstanding and shall be canceled and retired
without payment of any consideration therefor, and no shares of capital stock of
Newco or other consideration shall be delivered in exchange therefor.
Section 4.4 Exchange of Certificates.
(a) From and after the Effective Time, each outstanding
certificate which prior to the Effective Time represented shares of Dynegy
Common Stock ("Dynegy Certificates") shall be deemed for all purposes to
evidence ownership of, and to represent, the shares of Newco Common Stock into
which the shares of Dynegy Common Stock represented by such Dynegy Certificate
have been converted as herein provided. The registered owner on the books and
records of Dynegy or its transfer agent of any such Dynegy Certificate as of the
Effective Time shall, until such Dynegy Certificate shall have been surrendered
for transfer or otherwise accounted for to Newco or its transfer agent, have and
be entitled to exercise any voting and other rights with respect to and to
receive any dividend and other distributions upon the shares of Newco Common
Stock evidenced by such Dynegy Certificate as above provided. Following the
Effective Time, each holder of record of one or more Dynegy Certificates may,
but shall not be required to, surrender any Dynegy Certificate for cancellation
to Newco or its transfer agent, and the holder of such Dynegy Certificate shall
be entitled to receive in exchange therefor a certificate representing that
number of shares of Newco Common Stock which such holder has the right to
receive pursuant to the provisions of this Article 4, and the Dynegy Certificate
so surrendered shall forthwith be canceled. In the event of a transfer of
ownership of shares of Dynegy Common Stock that is not registered in the
transfer records of Newco or Dynegy, a certificate representing the proper
number of shares of Newco Common Stock may be issued to such a transferee if the
Dynegy Certificate representing such shares of Dynegy Common Stock is presented
to Newco or its transfer agent, accompanied by all documents
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required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid.
(b) As of the Effective Time, Newco shall appoint Mellon
Investor Services LLC or such other party reasonably satisfactory to Enron as
exchange agent (the "Exchange Agent"), and Newco shall, when and as needed,
deposit, or cause to be deposited with the Exchange Agent for the benefit of the
holders of shares of Enron Common Stock for exchange in accordance with this
Article 4, certificates representing the shares of Newco Common Stock to be
issued pursuant to Section 4.2 and delivered pursuant to this Section 4.4 in
exchange for outstanding shares of Enron Common Stock. When and as needed, Newco
shall provide the Exchange Agent immediately following the Effective Time cash
sufficient to pay cash in lieu of fractional shares in accordance with Section
4.4(c) and (f) (such cash and certificates for shares of Newco Common Stock,
together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund").
(c) Promptly after the Effective Time, Newco shall cause the
Exchange Agent to mail to each holder of record of one or more Enron
Certificates (together with the Dynegy Certificates, the "Certificates") (other
than to holders of shares of Enron Common Stock that, pursuant to Section
4.2(c), are canceled without payment of any consideration therefor): (A) a
letter of transmittal (the "Letter of Transmittal"), which shall specify that
delivery shall be effected, and risk of loss and title to the Enron Certificates
shall pass, only upon delivery of the Enron Certificates to the Exchange Agent
and shall be in such form and have such other provisions as Newco may reasonably
specify and (B) instructions for use in effecting the surrender of the Enron
Certificates in exchange for certificates representing shares of Newco Common
Stock and cash in lieu of fractional shares, if any. Upon surrender of an Enron
Certificate for cancellation to the Exchange Agent together with such Letter of
Transmittal, duly executed and completed in accordance with the instructions
thereto, the holder of such Enron Certificate shall be entitled to receive in
exchange therefor (x) a certificate representing that number of whole shares of
Newco Common Stock and (y) a check representing the amount of cash in lieu of
fractional shares, if any, and unpaid dividends and distributions, if any, which
such holder has the right to receive pursuant to the provisions of this Article
4, after giving effect to any required withholding tax, and the Enron
Certificate so surrendered shall forthwith be canceled. No interest will be paid
or accrued on the cash in lieu of fractional shares and unpaid dividends and
distributions, if any, payable to holders of Enron Certificates. In the event of
a transfer of ownership of Enron Common Stock that is not registered in the
transfer records of Enron, a certificate representing the proper number of
shares of Newco Common Stock, together with a check for the cash to be paid in
lieu of fractional shares, if any, may be issued to such a transferee if the
Enron Certificate representing such Enron Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid.
(d) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared or made after the Effective Time with
respect to shares of Newco Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Enron Certificate with
respect to the shares of Newco Common Stock represented by such Enron
Certificate as a result of the conversion provided in Section 4.2(b) until such
Enron Certificate is surrendered as provided herein. Subject to the effect of
applicable laws,
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following surrender of any such Enron Certificate, there shall be paid to the
holder of the Enron Certificates so surrendered, without interest, (i) at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore payable and not paid with
respect to the number of whole shares of Newco Common Stock issued pursuant to
Section 4.2, less the amount of any withholding taxes, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Newco
Common Stock, less the amount of any withholding taxes.
(e) At or after the Effective Time, the Enron Surviving Entity
and the Dynegy Surviving Entity shall pay from funds on hand at the Effective
Time any dividends or make other distributions with a record date prior to the
Effective Time that may have been declared or made by Enron or Dynegy,
respectively, on shares of Enron Common Stock or Dynegy Common Stock,
respectively, that remain unpaid at the Effective Time, and after the Effective
Time, there shall be no transfers on the stock transfer books of the Enron
Surviving Entity of the shares of Enron Common Stock, or on the stock transfer
books of the Dynegy Surviving Entity of the shares of Dynegy Common Stock, that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Enron Certificates are presented to the Enron Surviving Entity
or Dynegy Certificates are presented to the Dynegy Surviving Entity, the
presented Certificates shall be canceled and exchanged for certificates
representing shares of Newco Common Stock and cash in lieu of fractional shares,
if any, deliverable in respect thereof pursuant to this Agreement in accordance
with the procedures set forth in this Article 4. Certificates surrendered for
exchange by any person constituting an "affiliate" of Dynegy or Enron for
purposes of Rule 145(c) under the Securities Act of 1933, as amended (the
"Securities Act"), shall not be exchanged until Newco has received a written
agreement from such person as provided in Section 7.11.
(f) No fractional shares of Newco Common Stock shall be issued
pursuant hereto. In lieu of the issuance of any fractional shares of Newco
Common Stock pursuant to Section 4.2(b), cash adjustments will be paid to
holders in respect of any fractional shares of Newco Common Stock that would
otherwise be issuable, and the amount of such cash adjustment shall be equal to
such fractional proportion of the Newco Share Price. For purposes of this
Agreement, the "Newco Share Price" shall mean the average of the per share last
reported prices of the Dynegy Class A Common Stock as reported on the
consolidated transaction reporting system for securities traded on the NYSE (as
reported in the New York City edition of The Wall Street Journal or, if not
reported thereby, another authoritative source) for the 20 consecutive trading
days ending on the fifth trading day prior to the Closing Date, appropriately
adjusted for any stock splits, reverse stock splits, stock dividends,
recapitalizations or other similar transactions.
(g) Any portion of the Exchange Fund (including the proceeds
of any investments thereof and any certificates for shares of Newco Common
Stock) that remains undistributed to the former shareholders of Enron one year
after the Effective Time shall be delivered to Newco. Any former shareholders of
Enron who have not theretofore complied with this Article 4 shall thereafter
look only to Newco for delivery of certificates representing their shares of
Newco Common Stock and cash in lieu of fractional shares, if any, and for any
unpaid
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dividends and distributions on the shares of Newco Common Stock deliverable to
such former shareholder pursuant to this Agreement.
(h) None of Newco, Dynegy, Enron, the Dynegy Surviving Entity,
the Enron Surviving Entity, the Exchange Agent or any other person shall be
liable to any person for any portion of the Exchange Fund properly delivered to
a public official pursuant to applicable abandoned property, escheat or similar
laws.
(i) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Newco, the
posting by such person of a bond in such reasonable amount as Newco may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate certificates representing the shares of Newco Common
Stock, cash in lieu of fractional shares, if any, and unpaid dividends and
distributions on shares of Newco Common Stock deliverable in respect thereof
pursuant to this Agreement.
Section 4.5 Options.
(a) At the Effective Time, (i) all options to acquire shares
of Enron Common Stock outstanding at the Effective Time under Enron's stock
plans (collectively, the "Enron Stock Plans") identified in Section 4.5(a) of
the Enron Disclosure Letter (individually, a "Enron Option" and collectively,
the "Enron Options") and (ii) all options to acquire shares of Dynegy Class A
Common Stock outstanding at the Effective Time under Dynegy's stock plans
(collectively, the "Dynegy Stock Plans") identified in Section 4.5(a) of the
Dynegy Disclosure Letter (individually, a "Dynegy Option" and collectively, the
"Dynegy Options") shall remain outstanding following the Effective Time, subject
to the modifications described in this Section 4.5(a). Prior to the Effective
Time, Enron, Dynegy and Newco shall take all actions (if any) as may be required
to permit the assumption of such Enron Options and Dynegy Options by Newco
pursuant to this Section 4.5(a). At the Effective Time, the Enron Options and
the Dynegy Options shall be assumed and adjusted by Newco in the manner set
forth herein and with respect to Dynegy Options that are incentive stock options
within the meaning of Section 422 of the Code in such manner that Newco is a
corporation "assuming a stock option in a transaction to which Section 424(a)
applies" within the meaning of Section 424 of the Code. Each Enron Option
assumed and adjusted by Newco shall be subject to the same terms and conditions
as under the applicable Enron Stock Plan and the applicable option agreement
entered into pursuant thereto, except that, immediately following the Effective
Time, (A) each Enron Option shall be an option for that whole number of shares
of Newco Class A Common Stock (rounded up to the next whole share) equal to the
number of shares of Enron Common Stock subject to such Enron Option immediately
prior to the Effective Time multiplied by the Enron Merger Ratio, and (B) the
exercise price per Newco share shall be an amount equal to the exercise price
per share of Enron Common Stock subject to such Enron Option in effect
immediately prior to the Effective Time divided by the Enron Merger Ratio (the
price per share, as so determined, being rounded down to the nearest whole
cent). Each Dynegy Option assumed and adjusted by Newco shall be subject to the
same terms and conditions as under the applicable Dynegy Stock Plan and the
applicable option agreement entered into pursuant thereto, except that,
immediately following the Effective Time, each Dynegy Option shall be an option
for the number of shares of Newco
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Class A Common Stock equal to the number of shares of Dynegy Common Stock
subject to such Dynegy Option immediately prior to the Effective Time. Without
limiting the foregoing, effective at the Effective Time, Newco shall assume the
Enron Corp. 1999 Stock Plan, Enron Corp. 1994 Stock Plan, Enron Corp. 1991 Stock
Plan, Dynegy Inc. 2000 Long Term Incentive Plan, Dynegy Inc. 2001 Non-Executive
Stock Incentive Plan and Dynegy Inc. 2001 Special Long-Term Incentive Plan
(collectively, the "Assumed Plans") for purposes of employing such plans to make
grants of stock options and other awards based on shares of Newco Class A Common
Stock following the Effective Time; to the extent that any obligation exists at
the Effective Time to issue Enron Common Stock or Dynegy Class A Common Stock
under any Assumed Plan, the obligation of Newco thereafter to issue Newco Common
Stock in fulfillment of such previous obligation shall be to issue the number of
shares of Newco Common Stock equal to (i) in the case of Enron Common Stock, the
number of shares (rounded to the nearest whole share) of Enron Common Stock
subject to such obligation multiplied by the Enron Merger Ratio and (ii) in the
case of Dynegy Class A Common Stock, the number of shares of Dynegy Class A
Common Stock subject to such obligation; provided, however, that, if the
obligation is an award of a specified dollar amount of Enron Common Stock or
Dynegy Common Stock, the substitution shall be effected simply by substituting
Newco Common Stock having the specified dollar value.
(b) At or prior to the Effective Time, Newco shall take all
corporate action necessary to reserve for issuance a number of shares of Newco
Class A Common Stock equal to the number of shares of Newco Class A Common Stock
available for issuance pursuant to the Assumed Plans (which number shall be the
sum of (i) the product (rounded to the nearest whole share) of the number of
shares of Enron Common Stock available for issuance immediately prior to the
Effective Time multiplied by the Enron Merger Ratio plus (ii) the number of
shares of Dynegy Common Stock available for issuance immediately prior to the
Effective Time). Promptly following the Closing Date, Newco shall file with the
Securities and Exchange Commission (the "SEC") a Registration Statement on Form
S-8 (or a post-effective amendment on Form S-8 with respect to the Form S-4 or
such other appropriate form) covering all such shares of Newco Class A Common
Stock and shall cause such registration statement to remain effective (and shall
cause the prospectus or prospectuses relating thereto to remain compliant with
applicable securities laws) for as long as there are outstanding any such Enron
Options or Dynegy Options or, with respect to Assumed Plans other than the Enron
Stock Plans or Dynegy Stock Plans, for as long as required under applicable
securities laws.
(c) Except as otherwise specifically provided by this Section
4.5, the terms of the Enron Options and Dynegy Options and the relevant Enron
Stock Plans and Dynegy Stock Plans, as in effect on the Effective Time, shall
remain in full force and effect with respect to the Enron Options and Dynegy
Options, as applicable, after giving effect to the Mergers and the assumptions
by Newco as set forth above; similarly, the terms of each other Assumed Plan
shall remain in full force and effect after giving effect to the Mergers and the
assumptions by Newco as set forth above. As soon as practicable following the
Effective Time, Newco shall deliver to the holders of Enron Options and Dynegy
Options and beneficiaries of awards under Assumed Plans other than Enron Stock
Plans and Dynegy Stock Plans appropriate notices setting forth the rights of
such holders and beneficiaries pursuant to the respective Enron Stock Plans and
Dynegy Stock Plans and other Assumed Plans and under the agreements evidencing
the grants of such Enron Options and Dynegy Options, and that such Enron Options
and Dynegy Options and such
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Assumed Plans shall be assumed by Newco and shall continue in effect on the same
terms and conditions (subject to any adjustments required by this Section 4.5).
Section 4.6 Dynegy Dissenting Shares. Notwithstanding anything
in this Agreement to the contrary, no share of Dynegy Common Stock the holder of
which shall have properly complied with the provisions of Section 11.70 of the
IBCA as to rights to dissent with respect to the Dynegy Merger (a "Dynegy
Dissenting Share") shall be deemed converted into and to represent the right to
receive the Dynegy Consideration hereunder; and the holders of Dynegy Dissenting
Shares, if any, shall be entitled to receive such consideration as shall be
determined pursuant to and in accordance with the provisions of such Section
11.70; provided, however, that, if any holder fails to properly perfect or
exercise his or her rights to payment as provided in such Section 11.70, such
holder shall forfeit such right to payment for such Dynegy Dissenting Shares and
each such Dynegy Dissenting Share shall thereupon be deemed to be converted into
the right to receive the Dynegy Consideration.
Section 4.7 Adjustment of Enron Merger Ratio. If, subsequent
to the date of this Agreement but prior to the Effective Time, Dynegy changes
the number of shares of Dynegy Common Stock, or Enron changes the number of
shares of Enron Common Stock, issued and outstanding as a result of a stock
split, reverse stock split, stock dividend, recapitalization or other similar
transaction, the Enron Merger Ratio and other items dependent thereon shall be
appropriately adjusted.
Section 4.8 Rule 16b-3 Approval. Newco agrees that its Board
of Directors shall, at or prior to the Effective Time, adopt resolutions
specifically approving, for purposes of Rule 16b-3 ("Rule 16b-3") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the receipt,
pursuant to Section 4.2 or Section 4.3, of shares of Newco Common Stock, and of
options to acquire shares of Newco Class A Common Stock, by executive officers
or directors of Enron or Dynegy who become executive officers or directors of
Newco subject to Rule 16b-3.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ENRON
Except as set forth in the disclosure letter delivered to
Dynegy by Enron at or prior to the execution hereof (the "Enron Disclosure
Letter"), Enron represents and warrants to Dynegy, Newco, Dynegy Merger Sub and
Enron Merger Sub that:
Section 5.1 Existence; Good Standing; Corporate Authority.
Enron is a corporation duly incorporated, validly existing and of active status
under the laws of the State of Oregon. Enron is duly qualified to do business
and, to the extent such concept or similar concept exists in the relevant
jurisdiction, is in good standing under the laws of any jurisdiction in which
the character of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary, except where the
failure to be so qualified does not and is not reasonably likely to have,
individually or in the aggregate, an Enron Material Adverse Effect. Enron has
all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as now conducted. The copies of Enron's
articles of
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incorporation and bylaws previously made available to Dynegy are true and
correct and contain all amendments as of the date hereof.
Section 5.2 Authorization, Validity and Effect of Agreements.
Enron has the requisite corporate power and authority to execute and deliver
this Agreement and all other agreements and documents required to be executed
and delivered by Enron pursuant to this Agreement. The consummation by Enron of
the transactions contemplated hereby has been duly authorized (i) by the Board
of Directors of Enron by unanimous vote of the directors present and (ii) by all
other requisite corporate action on behalf of Enron, other than the approval
referred to in Section 5.20. This Agreement constitutes the valid and legally
binding obligation of Enron, enforceable against Enron in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws relating to creditors' rights
and general principles of equity. Enron has taken all action necessary to render
the restrictions set forth in Section 60.825 to 60.845 of the OBCA and in
Article V of its articles of incorporation inapplicable to this Agreement and
the transactions contemplated hereby.
Section 5.3 Capitalization. The authorized capital stock of
Enron consists of 1,200,000,000 shares of Enron Common Stock and 16,500,000
shares of preferred stock, no par value ("Enron Preferred Stock"). As of October
31, 2001, there were (i) 743,905,381 outstanding shares of Enron Common Stock,
(ii) 85,479,162 shares of Enron Common Stock reserved for issuance upon exercise
of outstanding Enron Options, (iii) 6,400,000 shares of Enron Common Stock
reserved for issuance upon exercise of an option held by Bank of America, (iv)
167,053,369 shares of Enron Common Stock reserved for issuance upon conversion
of outstanding Enron convertible or exchangeable securities and (v)
1,570,934.568509 outstanding shares of Enron Preferred Stock, consisting of
1,137,991 shares of Cumulative Second Preferred Convertible Stock (the "Second
Preferred Stock"), 35.568509 shares of 9.142% Perpetual Second Preferred Stock
(the "9.142% Preferred Stock"), 250,000 shares of Mandatorily Convertible Junior
Preferred Stock, Series B (the "Series B Preferred Stock"), and 182,908 shares
of Mandatorily Convertible Single Reset Preferred Stock, Series C (the "Series C
Preferred Stock"). All such issued and outstanding shares of Enron Common Stock
and Enron Preferred Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. As of the date of this Agreement,
except as set forth in this Section 5.3 and except for shares delivered upon
exercises of options or conversions or exchanges of convertible or exchangeable
securities set forth in this Section 5.3 from October 31, 2001 to the date
hereof, there are no outstanding shares of capital stock of Enron, and there are
no options, warrants, calls, subscriptions, convertible securities or other
rights, agreements or commitments that may obligate Enron or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock or other
voting securities of Enron or any of its Significant Subsidiaries. Enron has no
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote, or (except for the Second Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock and the Zero Coupon Convertible
Senior Notes due 2021 of Enron (the "Zeros")) which are convertible into or
exercisable for securities having the right to vote, with the shareholders of
Enron on any matter.
Section 5.4 Subsidiaries. For purposes of this Agreement,
"Significant Subsidiary" shall mean significant subsidiary as defined in Rule
1-02 of Regulation S-X of the Exchange Act. Each of Enron's Significant
Subsidiaries is a corporation or other legal entity
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duly organized, validly existing and, to the extent such concept or similar
concept exists in the relevant jurisdiction, in good standing under the laws of
its jurisdiction of incorporation or organization, has the corporate or other
entity power and authority to own, operate and lease its properties and to carry
on its business as it is now being conducted, and is duly qualified to do
business and is in good standing (where applicable) in each jurisdiction in
which the ownership, operation or lease of its property or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing does not and is not
reasonably likely to have an Enron Material Adverse Effect. As of the date of
this Agreement, all of the outstanding shares of capital stock of, or other
ownership interests in, each of Enron's Significant Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable, and are owned,
directly or indirectly, by Enron free and clear of all mortgages, deeds of
trust, liens, security interests, pledges, leases, conditional sale contracts,
charges, privileges, easements, rights of way, reservations, options, rights of
first refusal and other encumbrances ("Liens").
Section 5.5 Compliance with Laws; Permits. Except for such
matters as, individually or in the aggregate, do not or are not reasonably
likely to have an Enron Material Adverse Effect and except for matters arising
under Environmental Laws, which are treated exclusively in Section 5.13, and for
tax matters, which are treated exclusively in Section 5.10:
(a) Neither Enron nor any Subsidiary of Enron is in violation
of any applicable law, rule, regulation, code, governmental
determination, order, treaty, convention, governmental certification
requirement or other public limitation, U.S. or non-U.S. (collectively,
"Applicable Laws"), and no claim is pending or, to the knowledge of
Enron, threatened with respect to any such matters. To the knowledge of
Enron, no condition exists which does or is reasonably likely to
constitute a violation of or deficiency under any Applicable Law by
Enron or any Subsidiary of Enron.
(b) Enron and each Subsidiary of Enron hold all permits,
licenses, certifications, variations, exemptions, orders, franchises
and approvals of all governmental or regulatory authorities necessary
for the conduct of their respective businesses as currently conducted
(the "Enron Permits"). All Enron Permits are in full force and effect
and there exists no default thereunder or breach thereof, and Enron has
no notice or actual knowledge that such Enron Permits will not be
renewed in the ordinary course after the Effective Time. No
governmental authority has given, or, to the knowledge of Enron,
threatened to give, any action to terminate, cancel or reform any Enron
Permit.
(c) Enron and each Subsidiary of Enron possess all permits,
licenses, operating authorities, orders, exemptions, franchises,
variances, consents, approvals or other authorizations required for the
present ownership and operation of all its real property or leaseholds
("Enron Real Property"). There exists no material default or breach
with respect to, and no party or governmental authority has taken or,
to the knowledge of Enron, threatened to take, any action to terminate,
cancel or reform any such permit, license, operating authority, order,
exemption, franchise, variance, consent, approval or other
authorization pertaining to Enron Real Property.
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Section 5.6 No Conflict.
(a) Neither the execution and delivery by Enron of this
Agreement nor the consummation by Enron of the transactions contemplated hereby
in accordance with the terms hereof will (i) subject to the approvals referred
to in Section 5.20, conflict with or result in a breach of any provisions of the
articles of incorporation or bylaws of Enron; (ii) violate, or conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination or in a right of termination or cancellation of, or
give rise to a right of purchase under, or accelerate the performance required
by, or result in the creation of any Lien upon any of the properties of Enron or
its Subsidiaries under, or result in being declared void, voidable, or without
further binding effect, or otherwise result in a detriment to Enron or any of
its Subsidiaries under, any of the terms, conditions or provisions of, any note,
bond, mortgage, indenture, deed of trust, license, concession, franchise,
permit, lease, contract, agreement, joint venture or other instrument or
obligation to which Enron or any of its Subsidiaries is a party, or by which
Enron or any of its Subsidiaries or any of their properties is bound or
affected; or (iii) subject to the filings and other matters referred to in
Section 5.6(b), contravene or conflict with or constitute a violation of any
provision of any law, rule, regulation, judgment, order or decree binding upon
or applicable to Enron or any of its Subsidiaries, except, in the case of
matters described in clause (ii) or (iii), as do not and are not reasonably
likely to have, individually or in the aggregate, an Enron Material Adverse
Effect.
(b) Neither the execution and delivery by Enron of this
Agreement nor the consummation by Enron of the transactions contemplated hereby
in accordance with the terms hereof will require any consent, approval,
qualification or authorization of, or filing or registration with, any court or
governmental or regulatory authority, other than (i) the filing of the Articles
of Merger provided for in Section 1.3, (i) the filing of a listing application
with the NYSE pursuant to Section 7.9, (iii) filings required under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Exchange Act, the Securities Act, the Public Utility Holding Company
Act of 1935, as amended (the "1935 Act"), or applicable state securities and
"Blue Sky" laws, (iv) filings, approvals and notifications required under
applicable non-U.S. competition, antitrust or premerger notification laws, (v)
filings with, and the approval of, or notices to, non-U.S. regulatory
authorities having jurisdiction over the Mergers set forth in Section 5.6(b)(v)
of the Enron Disclosure Letter, (vi) filings with, and the approval of, or
notices to, other state regulatory authorities having jurisdiction over the
Mergers set forth in Section 5.6(b)(vi) of the Enron Disclosure Letter (the
filings, approvals and notices in this clause (vi), collectively, the "Enron
Regulatory Approvals") and (vii) filings with, approvals of or notices to the
Federal Energy Regulatory Commission (the "FERC") in connection with the
Mergers, except for any consent, approval, qualification or authorization the
failure of which to obtain and for any filing or registration the failure of
which to make does not and is not reasonably likely to have an Enron Material
Adverse Effect.
Section 5.7 SEC Documents. Enron has filed with the SEC all
documents (including exhibits and any amendments thereto) required to be so
filed by it since January 1, 1999 pursuant to Sections 13(a), 14(a) and 15(d) of
the Exchange Act, and has made available (in paper form or via the internet) to
Dynegy each registration statement, report, proxy statement or information
statement (other than preliminary materials) it has so filed, each in the form
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(including exhibits and any amendments thereto) filed with the SEC
(collectively, the "Enron Reports") and has included in the Enron Disclosure
Letter a draft of its Quarterly Report on Form 10-Q for the quarter ended
September 30, 2001 (the "Draft Third Quarter Report"). As of its respective
date, each Enron Report (i) complied in all material respects in accordance with
the applicable requirements of the Exchange Act and the rules and regulations
thereunder and (ii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading, except for such statements, if any, as have been
modified by subsequent filings with the SEC prior to the date hereof. Each of
the consolidated balance sheets included in or incorporated by reference into
the Enron Reports (including the related notes and schedules) fairly presents in
all material respects the consolidated financial position of Enron and its
consolidated Subsidiaries as of its date, and each of the consolidated
statements of operations, cash flows and changes in shareholders' equity
included in or incorporated by reference into the Enron Reports (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 Enron and its consolidated Subsidiaries 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. The draft consolidated balance sheet
of Enron and its consolidated Subsidiaries as of September 30, 2001 (the
"September 30, 2001 Balance Sheet") included in the Draft Third Quarter Report
(including the related notes and schedules) fairly presents in all material
respects the consolidated financial position of Enron and its consolidated
Subsidiaries as of that date, and the consolidated statements of operations,
cash flows and changes in shareholders' equity included in the Draft Third
Quarter Report (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 Enron and its consolidated
Subsidiaries for the period then ended (subject to (A) such exceptions as may be
permitted by Form 10-Q of the SEC, (B) normal year-end audit adjustments which
will not be material and (C) changes routinely anticipated in the preparation of
the final Quarterly Report on Form 10-Q for the quarter ended September 30, 2001
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 in the September
30, 2001 Balance Sheet, neither Enron nor any of its Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) that would be required to be reflected on, or reserved against in,
a consolidated balance sheet of Enron and its consolidated Subsidiaries or in
the notes thereto prepared in accordance with generally accepted accounting
principles consistently applied, other than liabilities or obligations that were
incurred in the ordinary course of business since September 30, 2001 and
liabilities or obligations that do not and are not reasonably likely to have,
individually or in the aggregate, an Enron 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 the September 30, 2001
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, an
Enron Material Adverse Effect.
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Section 5.8 Litigation. Except as described in the Enron
Reports filed prior to the date of this Agreement and the Draft Third Quarter
Report (collectively, the "Enron Filed Reports") and except for tax matters,
which are treated exclusively in Section 5.10, there are no actions, suits or
proceedings pending against Enron or any of its Subsidiaries or, to Enron's
knowledge, threatened against Enron or any of its Subsidiaries, at law or in
equity or in any arbitration or similar proceedings, before or by any U.S.
federal, state or non-U.S. court, commission, board, bureau, agency or
instrumentality or any U.S. or non-U.S. arbitral or other dispute resolution
body, that are reasonably likely to have, individually or in the aggregate, an
Enron Material Adverse Effect.
Section 5.9 Absence of Certain Changes. Except as described in
the Enron Filed Reports, since December 31, 2000, there has not been (i) any
event or occurrence, or series of events or occurrences, that has had or is
reasonably likely to have, individually or in the aggregate, an Enron Material
Adverse Effect, except for such changes or effects described in clause (1) of
the definition of Enron Material Adverse Effect resulting from changes in
general industry conditions or changes in general economic conditions, (ii) any
material change by Enron or any of its Subsidiaries, when taken as a whole, in
any of its accounting methods, principles or practices or any of its tax
methods, practices or elections, (iii) any declaration, setting aside or payment
of any dividend or distribution in respect of any capital stock of Enron or any
redemption, purchase or other acquisition of any of its securities, except
dividends on shares of Enron Common Stock at a rate of not more than $0.125 per
share per quarter, on shares of its Second Preferred Stock at a rate of not more
than $3.413 per share per quarter, on shares of its 9.142% Preferred Stock at an
annual rate of not more than $91.420 per share and on shares of its Series B
Preferred Stock at an annual rate of 6.5% of the liquidation preference thereof,
or (iv) any increase in or establishment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option, stock
purchase or other employee benefit plan, except in the ordinary course of
business consistent with past practice.
Section 5.10 Taxes.
(a) All tax returns, statements, reports, declarations,
estimates and forms ("Returns") required to be filed by or with respect to Enron
or any of its Subsidiaries (including any Return required to be filed by an
affiliated, consolidated, combined, unitary or similar group for a taxable year
in which Enron or any of its Subsidiaries 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, an Enron 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 generally accepted accounting principles, 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, an Enron Material Adverse Effect.
Representations made in this Section 5.10 are made to the knowledge of Enron to
the extent that the representations relate to a corporation which was, but is
not currently, a part of Enron's or any of its Subsidiaries' affiliated,
consolidated, combined, unitary or similar group.
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(b) Except to the extent not reasonably likely to have,
individually or in the aggregate, an Enron Material Adverse Effect, (i) no
audits or other administrative proceedings or court proceedings are presently
pending with regard to any taxes or Returns of Enron or any of its Subsidiaries
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 Enron or any of its
Subsidiaries may be liable with respect to income and other material taxes that
have not been fully paid or finally settled; (iii) neither Enron nor any of its
Subsidiaries has any 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 which Enron or any of its Subsidiaries 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) neither Enron nor any of its
Subsidiaries is a party to, is bound by or has any obligation under any tax
sharing, allocation or indemnity agreement or any similar agreement or
arrangement. Neither Enron nor any of its Subsidiaries is a party to an
agreement that provides for the payment of any amount in connection with the
Mergers that would be reasonably likely to constitute an "excess parachute
payment" within the meaning of Section 280G of the Code.
(c) Neither Enron nor any of its Subsidiaries knows of any
fact, or has taken any action or has failed to take any action, as a result of
which the Mergers would not qualify as transfers of Enron Common Stock and
Dynegy Common Stock to Newco in a transaction qualifying under Section 351 of
the Code.
(d) 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.
Section 5.11 Employee Benefit Plans.
(a) Section 5.11 of the Enron Disclosure Letter lists or
describes all Enron Benefit Plans. The term "Enron Benefit Plans" means all
material employee benefit plans and other material benefit arrangements,
including all "employee benefit plans" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), whether
or not U.S.-based plans, and all other material employee benefit, bonus,
incentive, deferred compensation, stock option (or other equity-based
compensation), severance, employment, change in control, welfare (including
post-retirement medical and life insurance) and fringe benefit plans, practices
or agreements, whether or not subject to ERISA or U.S.-based and whether written
or oral, sponsored, maintained or contributed to or required to be contributed
to by Enron or any of its Subsidiaries, to which Enron or any of its
Subsidiaries is a party or is required to provide benefits under applicable law
or in which any person who is currently, has been or, prior to the Effective
Time, is expected to become an employee of Enron is a participant. Enron will
make available to Dynegy, within 30 days after the date hereof, with true and
complete copies of the Enron Benefit Plans and, if applicable, the most recent
trust agreements, Forms 5500, summary plan descriptions, funding statements,
annual reports and actuarial reports, if applicable, for each such plan.
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(b) Except for such matters as, individually or in the
aggregate, do not and are not reasonably likely to have an Enron Material
Adverse Effect: all applicable reporting and disclosure requirements have been
met with respect to Enron Benefit Plans; there has been no "reportable event,"
as that term is defined in Section 4043 of ERISA, with respect to Enron Benefit
Plans subject to Title IV of ERISA for which the 30-day reporting requirement
has not been waived; to the extent applicable, the Enron Benefit Plans comply
with the requirements of ERISA and the Code or with other applicable law, and
have been maintained and operated in accordance with their terms, and, to
Enron's knowledge, there are no breaches of fiduciary duty in connection with
the Enron Benefit Plans; there are no pending or, to Enron's knowledge,
threatened claims against or otherwise involving any Enron Benefit Plan; with
respect to the Enron Benefit Plans or any "employee pension benefit plans," as
defined in Section 3(2) of ERISA, that are or were subject to Title IV of ERISA
and have been maintained or contributed to within six years prior to the
Effective Time by Enron, its Subsidiaries or any trade or business (whether or
not incorporated) that is under common control, or that is treated as a single
employer, with Enron or any of its Subsidiaries under Section 414(b), (c), (m)
or (o) of the Code (an "ERISA Affiliate"), (i) neither Enron nor any of its
Subsidiaries has incurred any direct or indirect liability under Title IV of
ERISA in connection with any termination thereof or withdrawal therefrom; and
(ii) there does not exist any accumulated funding deficiency within the meaning
of Section 412 of the Code or Section 302 of ERISA, whether or not waived.
(c) Neither Enron nor any of its Subsidiaries nor any of its
ERISA Affiliates contributes to, or has an obligation to contribute to, a
"multiemployer plan" within the meaning of Section 3(37) of ERISA, and the
execution of, and performance of the transactions contemplated by, this
Agreement will not (either alone or upon the occurrence of any additional or
subsequent events) constitute an event under any benefit or compensation plan,
policy, arrangement or agreement or any trust or loan (in connection therewith)
that will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligations to fund benefits with respect to any employee of Enron
or any Subsidiary thereof which, individually or in the aggregate, are
reasonably likely to have an Enron Material Adverse Effect.
(d) Except as provided in this Agreement, since September 1,
2001, no U.S. Enron Benefit Plan has been amended or modified in a material
substantive respect and no awards or compensation has been made or committed to
or paid under any U.S. Enron Benefit Plan that was not in the ordinary course of
business and consistent with past practices.
Section 5.12 Labor Matters.
(a) As of the date of this Agreement, neither Enron nor any of
its Subsidiaries is a party to, or bound by, any collective bargaining agreement
or similar contract, agreement or understanding with a labor union or similar
labor organization that is material to Enron and its Subsidiaries, taken as a
whole. To the knowledge of Enron, there are no organizational efforts with
respect to the formation of a collective bargaining unit presently being made or
threatened that is reasonably likely to have an Enron Material Adverse Effect.
(b) Except for such matters as do not and are not reasonably
likely to have an Enron Material Adverse Effect and except as described in the
Enron Filed Reports, (i) neither
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Enron nor any Subsidiary of Enron has received any written complaint of any
unfair labor practice or other unlawful employment practice or any written
notice of any material violation of any federal, state or local statutes, laws,
ordinances, rules, regulations, orders or directives with respect to the
employment of individuals by, or the employment practices of, Enron or any
Subsidiary of Enron or the work conditions or the terms and conditions of
employment and wages and hours of their respective businesses and (ii) there are
no unfair labor practice charges or other employee related complaints against
Enron or any Subsidiary of Enron pending or, to the knowledge of Enron,
threatened, before any governmental authority by or concerning the employees
working in their respective businesses.
Section 5.13 Environmental Matters.
(a) Enron and each Subsidiary of Enron 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, an
Enron Material Adverse Effect. There are no past or present facts, conditions or
circumstances that interfere with the conduct of any of their respective
businesses in the manner now conducted or which interfere with continued
compliance with any Environmental Law, except for any noncompliance or
interference that is not reasonably likely to have, individually or in the
aggregate, an Enron Material Adverse Effect.
(b) Except for such matters as do not and are not reasonably
likely to have, individually or in the aggregate, an Enron Material Adverse
Effect, (i) no judicial or administrative proceedings or governmental
investigations are pending or, to the knowledge of Enron, threatened against
Enron or its Subsidiaries 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 Enron or its
Subsidiaries, former) businesses, assets or properties of Enron or any
Subsidiary of Enron, 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) Neither Enron nor any of its Subsidiaries has (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 an Enron Material Adverse Effect.
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Section 5.14 Intellectual Property. Enron and its Subsidiaries
own or possess adequate licenses or other valid rights to use all patents,
patent rights, know-how, trade secrets, trademarks, trademark rights and other
proprietary information and other proprietary intellectual property rights used
or held for use in connection with their respective businesses as currently
being conducted, except where the failure to own or possess such licenses and
other rights does not and is not reasonably likely to have, individually or in
the aggregate, an Enron Material Adverse Effect, and there are no assertions or
claims challenging the validity of any of the foregoing that are reasonably
likely to have, individually or in the aggregate, an Enron Material Adverse
Effect. To the knowledge of Enron, the conduct of Enron's and its Subsidiaries'
respective businesses as currently conducted does not conflict with any patents,
patent rights, licenses, trademarks, trademark rights, trade names, trade name
rights or copyrights of others that are reasonably likely to have, individually
or in the aggregate, an Enron Material Adverse Effect. To the knowledge of
Enron, there is no material infringement of any proprietary right owned by or
licensed by or to Enron or any of its Subsidiaries that is reasonably likely to
have, individually or in the aggregate, an Enron Material Adverse Effect.
Section 5.15 Decrees, Etc. Except for such matters as do not
and are not reasonably likely to have an Enron Material Adverse Effect, (a) no
order, writ, injunction or decree of any court or governmental authority or any
arbitral or other dispute resolution body has been issued or entered against
Enron or any Subsidiary of Enron that continues to be in effect that affects the
ownership or operation of any of their respective assets, and (b) since January
1, 1991, no criminal order, writ, fine, injunction, decree, judgment or
determination of any court or governmental authority has been issued against
Enron or any Subsidiary of Enron.
Section 5.16 Insurance.
(a) Except for such matters as do not and are not reasonably
likely to have, individually or in the aggregate, an Enron Material Adverse
Effect, Enron and its Subsidiaries maintain insurance coverage with financially
responsible insurance companies in such amounts and against such losses as are
customary in the industries in which Enron and its Subsidiaries operate on the
date hereof.
(b) Except for such matters as do not and are not reasonably
likely to have, individually or in the aggregate, an Enron Material Adverse
Effect, (i) no event relating specifically to Enron or its Subsidiaries has
occurred that is reasonably likely, after the date of this Agreement, to result
in an upward adjustment in premiums under any insurance policies they maintain,
(ii) excluding insurance policies that have expired and been replaced in the
ordinary course of business, no excess liability or protection and indemnity
insurance policy has been canceled by the insurer within one year prior to the
date hereof, and to Enron's knowledge, no threat in writing has been made to
cancel (excluding cancellation upon expiration or failure to renew) any such
insurance policy of Enron or any Subsidiary of Enron during the period of one
year prior to the date hereof, and (iii) no event has occurred, including the
failure by Enron or any Subsidiary of Enron to give any notice or information or
by giving any inaccurate or erroneous notice or information, that limits or
impairs the rights of Enron or any Subsidiary of Enron under any such excess
liability or protection and indemnity insurance policies.
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Section 5.17 No Brokers. Enron has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of Enron, Newco or Dynegy to pay any finder's fees, brokerage
or other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby, except
that Enron has retained J.P. Morgan Securities Inc. and Salomon Smith Barney
Inc. as its financial advisors, the arrangements with which have been disclosed
in writing to Dynegy prior to the date hereof.
Section 5.18 Opinions of Financial Advisors. The Board of
Directors of Enron has received the separate opinions of J.P. Morgan Securities
Inc. and Salomon Smith Barney Inc. to the effect that, as of the date of this
Agreement, the Enron Merger Ratio is fair, from a financial point of view, to
the holders of Enron Common Stock.
Section 5.19 Dynegy Stock Ownership. Neither Enron nor any of
its affiliates or associates owns in excess of five percent of the shares of
capital stock of Dynegy or of any other securities convertible into or otherwise
exercisable to acquire shares of capital stock of Dynegy.
Section 5.20 Vote Required. The approval of this Agreement by
(i) the holders of a majority of the votes entitled to be cast by holders of
Enron Common Stock and the Second Preferred Stock voting together as a single
class, with each share of Enron Common Stock being entitled to one vote per
share and each share of Second Preferred Stock being entitled to a number of
votes per share equal to the number of shares of Enron Common Stock into which
such share of Second Preferred Stock is then convertible, and (ii) the holders
of a majority of the outstanding shares of Enron Common Stock entitled to vote
are the only approvals of the holders of any class or series of Enron capital
stock necessary to approve any transaction contemplated by this Agreement.
Section 5.21 Regulation as a Utility.
(a) Enron is a "holding company" as defined in the 1935 Act.
Enron is exempt from registration and all sections of the 1935 Act and the rules
and regulations promulgated thereunder, other than from Section 9(a)(2) thereof,
pursuant to Rule 2 under Section 3(a)(1) of the 1935 Act. Enron also has filed
an application for exemption under Section 3(a)(3) or, in the alternative,
Section 3(a)(5) of the 1935 Act. Pending SEC action on that application, Enron
is exempt from registration and all sections of the 1935 Act and the rules and
regulations promulgated thereunder, other than from Section 9(a)(2) thereof,
pursuant to Section 3(c) of the 1935 Act. Portland General Electric Company
("Enron Utility"), a wholly owned direct Subsidiary of Enron, is a "public
utility company" within the meaning of Section 2(a)(5) of the 1935 Act. No other
Subsidiary of Enron is a "public utility company" within the meaning of Section
2(a)(5) of the 1935 Act.
(b) Enron Utility is regulated as a public utility in the
State of Oregon and in no other state. Neither Enron nor any "subsidiary
company" or "affiliate" (as each such term is defined in the 1935 Act) of Enron
(other than Enron Utility) is subject to regulation as a public utility or
public service company (or similar designation) by any other state in the United
States or any foreign country.
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Section 5.22 Capital Expenditure Program. Section 5.22 of the
Enron Disclosure Letter contains a complete copy of management's most recent
capital expenditure budget of Enron as of the date of this Agreement for each
quarterly period in 2002 (the "Enron Capital Budget").
Section 5.23 Improper Payments. No bribes, kickbacks or other
improper payments have been made by Enron or any Subsidiary of Enron or agent of
any of them in connection with the conduct of their respective businesses or the
operation of their respective assets, and neither Enron, any Subsidiary of Enron
nor any agent of any of them has received any such payments from vendors,
suppliers or other persons, where any such payment made or received is
reasonably likely to have an Enron Material Adverse Effect.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF DYNEGY, NEWCO,
DYNEGY MERGER SUB AND ENRON MERGER SUB
Except as set forth in the disclosure letter delivered to
Enron by Dynegy at or prior to the execution hereof (the "Dynegy Disclosure
Letter"), Dynegy, Newco, Dynegy Merger Sub and Enron Merger Sub, jointly and
severally, represent and warrant to Enron that:
Section 6.1 Existence; Good Standing; Corporate Authority.
Each of Dynegy, Newco, Dynegy Merger Sub and Enron Merger Sub is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Dynegy is duly qualified to do business and, to
the extent such concept or similar concept exists in the relevant jurisdiction,
is in good standing under the laws of any jurisdiction in which the character of
the properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
qualified does not and is not reasonably likely to have, individually or in the
aggregate, a Dynegy Material Adverse Effect. Dynegy has all requisite corporate
power and authority to own, operate and lease its properties and to carry on its
business as now conducted. The copies of the articles or certificate of
incorporation and bylaws of Dynegy, Newco, Dynegy Merger Sub and Enron Merger
Sub previously made available to Enron are true and correct and contain all
amendments as of the date hereof.
Section 6.2 Authorization, Validity and Effect of Agreements.
Each of Dynegy, Newco, Dynegy Merger Sub and Enron Merger Sub has the requisite
corporate power and authority to execute and deliver this Agreement and all
other agreements and documents required to be executed and delivered by it
pursuant to this Agreement. The consummation by Dynegy of the transactions
contemplated hereby has been duly authorized (i) by the Board of Directors of
Dynegy by unanimous vote of the directors present and (ii) by all other
requisite corporate action on behalf of Dynegy, other than the approvals
referred to in Section 6.20. The consummation by each of Newco, Dynegy Merger
Sub and Enron Merger Sub of the transactions contemplated hereby, including, in
the case of Newco, the issuance by Newco of shares of Newco Common Stock
pursuant to the Mergers, has been duly authorized by all requisite corporate
action on behalf of each of Newco, Dynegy Merger Sub and Enron Merger Sub. This
Agreement constitutes the valid and legally binding obligation of each of
Dynegy, Newco, Dynegy Merger Sub and Enron Merger Sub, enforceable against such
party in accordance with its terms, subject
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to applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws relating to creditors' rights and general
principles of equity. Dynegy has taken all action necessary to render the
restrictions set forth in Sections 7.85 and 11.75 of the IBCA inapplicable to
this Agreement and the transactions contemplated hereby.
Section 6.3 Capitalization. The authorized capital stock of
Dynegy consists of 900,000,000 shares of Dynegy Class A Common Stock,
360,000,000 shares of Dynegy Class B Common Stock, and 70,000,000 shares of
preferred stock, no par value ("Dynegy Preferred Stock"). As of November 6,
2001, there were (i) 238,956,530 outstanding shares of Dynegy Class A Common
Stock and 86,599,914 outstanding shares of Dynegy Class B Common Stock, (ii)
27,211,749 shares of Dynegy Common Stock reserved for issuance upon exercise of
outstanding Dynegy Options, and (iii) no outstanding shares of Dynegy Preferred
Stock. All such issued and outstanding shares of Dynegy Common Stock are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights, other than the rights of Chevron U.S.A. Inc. ("Chevron") pursuant to
Article 6 of the Shareholder Agreement, dated as of June 14, 1999 (the "Dynegy
Shareholder Agreement"), among Energy Convergence Holding Company, Illinova
Corporation, Dynegy and Chevron. As of the date of this Agreement, except (a) as
set forth in this Section 6.3, (b) for the rights of Chevron pursuant to Article
6 of the Dynegy Shareholder Agreement and pursuant to the Dynegy Subscription
Agreement and the Dynegy Series B Preferred Stock and (c) for shares delivered
upon exercises of options set forth in this Section 6.3 from October 26, 2001 to
the date hereof, there are no outstanding shares of capital stock of Dynegy, and
there are no options, warrants, calls, subscriptions, convertible securities or
other rights, agreements or commitments that may obligate Dynegy or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock or other
voting securities of Dynegy or any of its Significant Subsidiaries. Dynegy has
no outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote, or which are convertible into or exercisable for
securities having the right to vote, with the shareholders of Dynegy on any
matter.
Section 6.4 Subsidiaries.
(a) Each of Dynegy's Significant Subsidiaries is a corporation
or other legal entity duly organized, validly existing and, to the extent such
concept or similar concept exists in the relevant jurisdiction, in good standing
under the laws of its jurisdiction of incorporation or organization, has the
corporate or other entity power and authority to own, operate and lease its
properties and to carry on its business as it is now being conducted, and is
duly qualified to do business and is in good standing (where applicable) in each
jurisdiction in which the ownership, operation or lease of its property or the
conduct of its business requires such qualification, except for jurisdictions in
which such failure to be so qualified or to be in good standing does not and is
not reasonably likely to have a Dynegy Material Adverse Effect. As of the date
of this Agreement, all of the outstanding shares of capital stock of, or other
ownership interests in, each of Dynegy's Significant Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable, and are owned,
directly or indirectly, by Dynegy free and clear of all Liens.
(b) All of the outstanding capital stock of Newco is owned
directly by Dynegy and all of the outstanding capital stock of each of Dynegy
Merger Sub and Enron Merger Sub is owned directly by Newco. Each of Newco,
Dynegy Merger Sub and Enron Merger Sub has been
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formed solely for the purpose of engaging in the transactions contemplated
hereby and, as of the Effective Time, will not have engaged in any activities
other than in connection with the transactions contemplated by this Agreement.
Immediately prior to the Effective Time, Newco will have 1,000 outstanding
shares of Newco Class A Common Stock, and each of Dynegy Merger Sub and Enron
Merger Sub will have 100 outstanding shares of its common stock, no par value.
(c) The shares of Newco Common Stock to be issued in
connection with the Mergers, when issued in accordance with this Agreement, will
be validly issued, fully paid, nonassessable and free of preemptive rights,
other than the rights of Chevron pursuant to the Shareholder Agreement dated as
of November 9, 2001 among Newco, Dynegy, Enron and Chevron.
Section 6.5 Compliance with Laws; Permits. Except for such
matters as, individually or in the aggregate, do not or are not reasonably
likely to have a Dynegy Material Adverse Effect and except for matters arising
under Environmental Laws, which are treated exclusively in Section 6.13, and for
tax matters, which are treated exclusively in Section 6.10:
(a) Neither Dynegy nor any Subsidiary of Dynegy is in
violation of any Applicable Laws, and no claim is pending or, to the
knowledge of Dynegy, threatened with respect to any such matters. To
the knowledge of Dynegy, no condition exists which does or is
reasonably likely to constitute a violation of or deficiency under any
Applicable Law by Dynegy or any Subsidiary of Dynegy.
(b) Dynegy and each Subsidiary of Dynegy hold all permits,
licenses, certifications, variations, exemptions, orders, franchises
and approvals of all governmental or regulatory authorities necessary
for the conduct of their respective businesses as currently conducted
(the "Dynegy Permits"). All Dynegy Permits are in full force and effect
and there exists no default thereunder or breach thereof, and Dynegy
has no notice or actual knowledge that such Dynegy Permits will not be
renewed in the ordinary course after the Effective Time. No
governmental authority has given, or, to the knowledge of Dynegy,
threatened to give, any action to terminate, cancel or reform any
Dynegy Permit.
(c) Dynegy and each Subsidiary of Dynegy possess all permits,
licenses, operating authorities, orders, exemptions, franchises,
variances, consents, approvals or other authorizations required for the
present ownership and operation of all its real property or leaseholds
("Dynegy Real Property"). There exists no material default or breach
with respect to, and no party or governmental authority has taken or,
to the knowledge of Dynegy, threatened to take, any action to
terminate, cancel or reform any such permit, license, operating
authority, order, exemption, franchise, variance, consent, approval or
other authorization pertaining to Dynegy Real Property.
Section 6.6 No Conflict.
(a) Neither the execution and delivery by Dynegy, Newco,
Dynegy Merger Sub or Enron Merger Sub of this Agreement nor the consummation by
Dynegy, Newco, Dynegy Merger Sub or Enron Merger Sub of the transactions
contemplated hereby in accordance with the
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terms hereof will (i) subject to the approvals referred to in Section 6.20,
conflict with or result in a breach of any provisions of the articles or
certificate of incorporation or bylaws of Dynegy, Newco, Dynegy Merger Sub or
Enron Merger Sub; (ii) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
or in a right of termination or cancellation of, or give rise to a right of
purchase under, or accelerate the performance required by, or result in the
creation of any Lien upon any of the properties of Dynegy or its Subsidiaries
under, or result in being declared void, voidable, or without further binding
effect, or otherwise result in a detriment to Dynegy or any of its Subsidiaries
under, any of the terms, conditions or provisions of, any note, bond, mortgage,
indenture, deed of trust, license, concession, franchise, permit, lease,
contract, agreement, joint venture or other instrument or obligation to which
Dynegy or any of its Subsidiaries is a party, or by which Dynegy or any of its
Subsidiaries or any of their properties is bound or affected; or (iii) subject
to the filings and other matters referred to in Section 6.6(b), contravene or
conflict with or constitute a violation of any provision of any law, rule,
regulation, judgment, order or decree binding upon or applicable to Dynegy or
any of its Subsidiaries, except, in the case of matters described in clause (ii)
or (iii), as do not and are not reasonably likely to have, individually or in
the aggregate, a Dynegy Material Adverse Effect.
(b) Neither the execution and delivery by Dynegy, Newco,
Dynegy Merger Sub or Enron Merger Sub of this Agreement nor the consummation by
Dynegy, Newco, Dynegy Merger Sub or Enron Merger Sub of the transactions
contemplated hereby in accordance with the terms hereof will require any
consent, approval, qualification or authorization of, or filing or registration
with, any court or governmental or regulatory authority, other than (i) the
filing of the Articles of Merger provided for in Section 1.3, (ii) the filing of
a listing application with the NYSE pursuant to Section 7.9, (iii) filings
required under the HSR Act, the Exchange Act, the Securities Act, the 1935 Act,
or applicable state securities and "Blue Sky" laws, (iv) filings, approvals and
notifications required under applicable non-U.S. competition, antitrust or
premerger notification laws, (v) filings with, and the approval of, or notices
to, other state regulatory authorities having jurisdiction over the Mergers set
forth in Section 6.6 of the Dynegy Disclosure Letter (the filings, approvals and
notices in this clause (v), collectively, the "Dynegy Regulatory Approvals") and
(vi) filings with, approvals of or notices to the FERC in connection with the
Mergers, except for any consent, approval, qualification or authorization the
failure of which to obtain and for any filing or registration the failure of
which to make does not and is not reasonably likely to have a Dynegy Material
Adverse Effect.
Section 6.7 SEC Documents. Dynegy has filed with the SEC all
documents (including exhibits and any amendments thereto) required to be so
filed by it since January 1, 1999 pursuant to Sections 13(a), 14(a) and 15(d) of
the Exchange Act, and has made available (in paper form or via the internet) to
Enron each registration statement, report, proxy statement or information
statement (other than preliminary materials) it has so filed, each in the form
(including exhibits and any amendments thereto) filed with the SEC
(collectively, the "Dynegy Reports"). As of its respective date, each Dynegy
Report (i) complied in all material respects in accordance with the applicable
requirements of the Exchange Act and the rules and regulations thereunder and
(ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading except for such
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statements, if any, as have been modified by subsequent filings with the SEC
prior to the date hereof. Each of the consolidated balance sheets included in or
incorporated by reference into the Dynegy Reports (including the related notes
and schedules) fairly presents in all material respects the consolidated
financial position of Dynegy and its consolidated Subsidiaries as of its date,
and each of the consolidated statements of operations, cash flows and changes in
shareholders' equity included in or incorporated by reference into the Dynegy
Reports (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 Dynegy and its consolidated
Subsidiaries 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 consolidated balance sheet
of Dynegy and its consolidated Subsidiaries included in the most recent Dynegy
Report filed prior to the date of this Agreement that includes such a balance
sheet, including all notes thereto, neither Dynegy nor any of its Subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on, or reserved
against in, a consolidated balance sheet of Dynegy or in the notes thereto
prepared in accordance with generally accepted accounting principles
consistently applied, other than liabilities or obligations which are incurred
in the ordinary course of business since the date of the balance sheet included
in the most recent Dynegy Report filed prior to the date of this Agreement and
liabilities or obligations which do not and are not reasonably likely to have,
individually or in the aggregate, a Dynegy 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 Dynegy Material
Adverse Effect.
Section 6.8 Litigation. Except as described in the Dynegy
Reports filed prior to the date of this Agreement and except for tax matters,
which are treated exclusively in Section 6.10, there are no actions, suits or
proceedings pending against Dynegy or any of its Subsidiaries or, to Dynegy's
knowledge, threatened against Dynegy or any of its Subsidiaries, at law or in
equity or in any arbitration or similar proceedings, before or by any U.S.
federal, state or non-U.S. court, commission, board, bureau, agency or
instrumentality or any U.S. or non-U.S. arbitral or other dispute resolution
body, that are reasonably likely to have, individually or in the aggregate, a
Dynegy Material Adverse Effect.
Section 6.9 Absence of Certain Changes. Except as described in
the Dynegy Reports filed prior to the date of this Agreement, since December 31,
2000, there has not been (i) any event or occurrence, or series of events or
occurrences, that has had or is reasonably likely to have, individually or in
the aggregate, a Dynegy Material Adverse Effect, except for such changes or
effects described in clause (1) of the definition of Dynegy Material Adverse
Effect resulting from changes in general industry conditions or changes in
general economic conditions, (ii) any material change by Dynegy or any of its
Subsidiaries, when taken as a whole, in any of its accounting methods,
principles or practices or any of its tax methods, practices or elections, (iii)
any declaration, setting aside or payment of any dividend or distribution in
respect of any capital stock of Dynegy or any redemption, purchase or other
acquisition of any of its
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securities, except dividends on shares of Dynegy Common Stock and Dynegy Class B
Common Stock at a rate of not more than $0.075 per share per quarter, or (iv)
any increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option, stock purchase
or other employee benefit plan, except in the ordinary course of business
consistent with past practice.
Section 6.10 Taxes.
(a) All Returns required to be filed by or with respect to
Dynegy or any of its Subsidiaries (including any Return required to be filed by
an affiliated, consolidated, combined, unitary or similar group for a taxable
year in which Dynegy or any of its Subsidiaries 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 Dynegy 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 generally accepted accounting principles, 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 Dynegy Material Adverse Effect.
Representations made in this Section 6.10 are made to the knowledge of Dynegy to
the extent that the representations relate to a corporation which was, but is
not currently, a part of Dynegy's or any of its Subsidiaries' affiliated,
consolidated, combined, unitary or similar group.
(b) Except to the extent not reasonably likely to have,
individually or in the aggregate, a Dynegy Material Adverse Effect, (i) no
audits or other administrative proceedings or court proceedings are presently
pending with regard to any taxes or Returns of Dynegy or any of its Subsidiaries
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 Dynegy or any of its
Subsidiaries may be liable with respect to income and other material taxes that
have not been fully paid or finally settled; (iii) neither Dynegy nor any of its
Subsidiaries has any 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 which Dynegy or any of its Subsidiaries 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) neither Dynegy nor any
of its Subsidiaries is a party to, is bound by or has any obligation under any
tax sharing, allocation or indemnity agreement or any similar agreement or
arrangement. Neither Dynegy nor any of its Subsidiaries is a party to an
agreement that provides for the payment of any amount in connection with the
Mergers that would be reasonably likely to constitute an "excess parachute
payment" within the meaning of Section 280G of the Code.
(c) Neither Dynegy nor any of its Subsidiaries knows of any
fact, or has taken any action or has failed to take any action, as a result of
which the Mergers would not qualify as transfers of Enron Common Stock and
Dynegy Common Stock to Newco in a transaction qualifying under Section 351 of
the Code.
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Section 6.11 Employee Benefit Plans.
(a) Section 6.11 of the Dynegy Disclosure Letter lists or
describes all Dynegy Benefit Plans. The term "Dynegy Benefit Plans" means all
material employee benefit plans and other material benefit arrangements,
including all "employee benefit plans" as defined in Section 3(3) of ERISA,
whether or not U.S.-based plans, and all other material employee benefit, bonus,
incentive, deferred compensation, stock option (or other equity-based
compensation), severance, employment, change in control, welfare (including
post-retirement medical and life insurance) and fringe benefit plans, practices
or agreements, whether or not subject to ERISA or U.S.-based and whether written
or oral, sponsored, maintained or contributed to or required to be contributed
to by Dynegy or any of its Subsidiaries, to which Dynegy or any of its
Subsidiaries is a party or is required to provide benefits under applicable law
or in which any person who is currently, has been or, prior to the Effective
Time, is expected to become an employee of Dynegy is a participant. Dynegy will
make available to Enron, within 30 days after the date hereof, with true and
complete copies of the Dynegy Benefit Plans and, if applicable, the most recent
trust agreements, Forms 5500, summary plan descriptions, funding statements,
annual reports and actuarial reports, if applicable, for each such plan.
(b) Except for such matters as, individually or in the
aggregate, do not and are not reasonably likely to have a Dynegy Material
Adverse Effect: all applicable reporting and disclosure requirements have been
met with respect to Dynegy Benefit Plans; there has been no "reportable event,"
as that term is defined in Section 4043 of ERISA, with respect to Dynegy Benefit
Plans subject to Title IV of ERISA for which the 30-day reporting requirement
has not been waived; to the extent applicable, Dynegy Benefit Plans comply with
the requirements of ERISA and the Code or with other applicable law, and have
been maintained and operated in accordance with their terms, and, to Dynegy's
knowledge, there are no breaches of fiduciary duty in connection with Dynegy
Benefit Plans; there are no pending or, to Dynegy's knowledge, threatened claims
against or otherwise involving any Dynegy Benefit Plan; with respect to Dynegy
Benefit Plans or any "employee pension benefit plans," as defined in Section
3(2) of ERISA, that are or were subject to Title IV of ERISA and have been
maintained or contributed to within six years prior to the Effective Time by
Dynegy, its Subsidiaries or any of its ERISA Affiliates, (i) neither Dynegy nor
any of its Subsidiaries has incurred any direct or indirect liability under
Title IV of ERISA in connection with any termination thereof or withdrawal
therefrom; and (ii) there does not exist any accumulated funding deficiency
within the meaning of Section 412 of the Code or Section 302 of ERISA, whether
or not waived.
(c) Neither Dynegy nor any of its Subsidiaries nor any of its
ERISA Affiliates contributes to, or has an obligation to contribute to, a
"multiemployer plan" within the meaning of Section 3(37) of ERISA, and the
execution of, and performance of the transactions contemplated by, this
Agreement will not (either alone or upon the occurrence of any additional or
subsequent events) constitute an event under any benefit or compensation plan,
policy, arrangement or agreement or any trust or loan (in connection therewith)
that will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligations to fund benefits with respect to any employee of Dynegy
or any Subsidiary thereof which, individually or in the aggregate, are
reasonably likely to have a Dynegy Material Adverse Effect.
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(d) Except as provided in this Agreement, since September 1,
2001, no U.S. Dynegy Benefit Plan has been amended or modified in a material
substantive respect and no awards or compensation has been made or committed to
or paid under any U.S. Dynegy Benefit Plan that was not in the ordinary course
of business and consistent with past practices.
Section 6.12 Labor Matters.
(a) As of the date of this Agreement, neither Dynegy nor any
of its Subsidiaries is a party to, or bound by, any collective bargaining
agreement or similar contract, agreement or understanding with a labor union or
similar labor organization that is material to Dynegy and its Subsidiaries,
taken as a whole. To the knowledge of Dynegy, there are no organizational
efforts with respect to the formation of a collective bargaining unit presently
being made or threatened that is reasonably likely to have a Dynegy Material
Adverse Effect.
(b) Except for such matters as do not and are not reasonably
likely to have a Dynegy Material Adverse Effect and except as described in the
Dynegy Reports filed prior to the date of this Agreement, (i) neither Dynegy nor
any Subsidiary of Dynegy has received any written complaint of any unfair labor
practice or other unlawful employment practice or any written notice of any
material violation of any federal, state or local statutes, laws, ordinances,
rules, regulations, orders or directives with respect to the employment of
individuals by, or the employment practices of, Dynegy or any Subsidiary of
Dynegy or the work conditions or the terms and conditions of employment and
wages and hours of their respective businesses and (ii) there are no unfair
labor practice charges or other employee related complaints against Dynegy or
any Subsidiary of Dynegy pending or, to the knowledge of Dynegy, threatened,
before any governmental authority by or concerning the employees working in
their respective businesses.
Section 6.13 Environmental Matters.
(a) Dynegy and each Subsidiary of Dynegy has been and is in
compliance with all Environmental Laws except for such matters as do not and are
not reasonably likely to have, individually or in the aggregate, a Dynegy
Material Adverse Effect. There are no past or present facts, conditions or
circumstances that interfere with the conduct of any of their respective
businesses in the manner now conducted or which interfere with continued
compliance with any Environmental Law, except for any noncompliance or
interference that is not reasonably likely to have, individually or in the
aggregate, a Dynegy Material Adverse Effect.
(b) Except for such matters as do not and are not reasonably
likely to have, individually or in the aggregate, a Dynegy Material Adverse
Effect, (i) no judicial or administrative proceedings or governmental
investigations are pending or, to the knowledge of Dynegy, threatened against
Dynegy or its Subsidiaries 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 Dynegy or its
Subsidiaries, former) businesses, assets or properties of Dynegy or any
Subsidiary of Dynegy, including but not limited to on-site or off-site disposal,
release or spill of any Hazardous Materials which facts, conditions or
circumstances violate Environmental Law or are reasonably likely to give rise to
(x) costs, expenses, liabilities or
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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) Neither Dynegy nor any of its Subsidiaries has (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 Dynegy Material Adverse Effect.
Section 6.14 Intellectual Property. Dynegy and its
Subsidiaries own or possess adequate licenses or other valid rights to use all
patents, patent rights, know-how, trade secrets, trademarks, trademark rights
and other proprietary information and other proprietary intellectual property
rights used or held for use in connection with their respective businesses as
currently being conducted, except where the failure to own or possess such
licenses and other rights does not and is not reasonably likely to have,
individually or in the aggregate, a Dynegy Material Adverse Effect, and there
are no assertions or claims challenging the validity of any of the foregoing
that are reasonably likely to have, individually or in the aggregate, a Dynegy
Material Adverse Effect. To the knowledge of Dynegy, the conduct of Dynegy's and
its Subsidiaries' respective businesses as currently conducted does not conflict
with any patents, patent rights, licenses, trademarks, trademark rights, trade
names, trade name rights or copyrights of others that are reasonably likely to
have, individually or in the aggregate, a Dynegy Material Adverse Effect. To the
knowledge of Dynegy, there is no material infringement of any proprietary right
owned by or licensed by or to Dynegy or any of its Subsidiaries that is
reasonably likely to have, individually or in the aggregate, a Dynegy Material
Adverse Effect.
Section 6.15 Decrees, Etc. Except for such matters as do not
and are not reasonably likely to have a Dynegy Material Adverse Effect, (a) no
order, writ, injunction or decree of any court or governmental authority or any
arbitral or other dispute resolution body has been issued or entered against
Dynegy or any Subsidiary of Dynegy that continues to be in effect that affects
the ownership or operation of any of their respective assets, and (b) since
January 1, 1991, no criminal order, writ, fine, injunction, decree, judgment or
determination of any court or governmental authority has been issued against
Dynegy or any Subsidiary of Dynegy.
Section 6.16 Insurance.
(a) Except for such matters as do not and are not reasonably
likely to have, individually or in the aggregate, a Dynegy Material Adverse
Effect, Dynegy and its Subsidiaries maintain insurance coverage with financially
responsible insurance companies in such amounts and against such losses as are
customary in the industries in which Dynegy and its Subsidiaries operate on the
date hereof.
(b) Except for such matters as do not and are not reasonably
likely to have, individually or in the aggregate, a Dynegy Material Adverse
Effect, (i) no event relating specifically to Dynegy or its Subsidiaries has
occurred that is reasonably likely, after the date of this Agreement, to result
in an upward adjustment in premiums under any insurance policies they maintain,
(ii) excluding insurance policies that have expired and been replaced in the
ordinary
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course of business, no excess liability or protection and indemnity insurance
policy has been canceled by the insurer within one year prior to the date
hereof, and to Dynegy's knowledge, no threat in writing has been made to cancel
(excluding cancellation upon expiration or failure to renew) any such insurance
policy of Dynegy or any Subsidiary of Dynegy during the period of one year prior
to the date hereof, and (iii) no event has occurred, including the failure by
Dynegy or any Subsidiary of Dynegy to give any notice or information or by
giving any inaccurate or erroneous notice or information, that limits or impairs
the rights of Dynegy or any Subsidiary of Dynegy under any such excess liability
or protection and indemnity insurance policies.
Section 6.17 No Brokers. Dynegy has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of Enron, Newco or Dynegy to pay any finder's fees, brokerage
or other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby, except
that Dynegy has retained Lehman Brothers Inc. as its financial advisor, the
arrangements with which have been disclosed in writing to Enron prior to the
date hereof.
Section 6.18 Opinion of Financial Advisor. The Board of
Directors of Dynegy has received the opinion of Lehman Brothers Inc. to the
effect that, as of the date of this Agreement, from a financial point of view
the Dynegy Merger Ratio is fair to the holders of Dynegy Class A Common Stock in
light of the Enron Merger Ratio.
Section 6.19 Enron Stock Ownership. Neither Dynegy nor any of
its affiliates or associates owns in excess of five percent of the shares of
capital stock of Enron or of any other securities convertible into or otherwise
exercisable to acquire shares of capital stock of Enron.
Section 6.20 Vote Required. The only vote of the holders of
any class or series of Dynegy capital stock necessary to approve any transaction
contemplated by this Agreement is the affirmative vote in favor of the approval
of this Agreement of the holders of at least two-thirds of the shares of Dynegy
Class A Common Stock and Dynegy Class B Common Stock (voting together).
Concurrently with the execution and delivery hereof, Chevron, the owner of
86,599,914 shares of Dynegy Class B Common Stock, is entering into a Shareholder
Agreement providing for, among other things, the voting of the Dynegy Class B
Common Stock owned by it.
Section 6.21 Regulation as a Utility.
(a) Each of Dynegy and Illinova Corporation, a wholly owned
direct subsidiary of Dynegy ("Illinova"), is a "holding company" as defined in
the 1935 Act. Each of Dynegy and Illinova is exempt from registration and all
sections of the 1935 Act and the rules and regulations promulgated thereunder,
other than from Section 9(a)(2) thereof, under Section 3(a)(1) of the 1935 Act.
Illinois Power Company ("Illinois Power") is a Subsidiary of Dynegy and is a
"public utility company" within the meaning of Section 2(a)(5) of the 1935 Act.
No other Subsidiary of Dynegy is a "public utility company" within the meaning
of Section 2(a)(5) of the 1935 Act.
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(b) Illinois Power is regulated as a public utility in the
State of Illinois and in no other state. Neither Dynegy nor any "subsidiary
company" or "affiliate" (as each such term is defined in the 1935 Act) of Dynegy
(other than the Illinois Power) is subject to regulation as a public utility or
public service company (or similar designation) by any other state in the United
States or any foreign country.
Section 6.22 Improper Payments. No bribes, kickbacks or other
improper payments have been made by Dynegy or any Subsidiary of Dynegy or agent
of any of them in connection with the conduct of their respective businesses or
the operation of their respective assets, and neither Dynegy, any Subsidiary of
Dynegy, nor any agent of any of them has received any such payments from
vendors, suppliers or other persons, where any such payment made or received is
reasonably likely to have a Dynegy Material Adverse Effect.
ARTICLE 7
COVENANTS
Section 7.1 Conduct of Business. From and after the date
hereof and prior to the Effective Time, except as set forth in the Dynegy
Disclosure Letter or the Enron Disclosure Letter or as expressly contemplated by
any other provision of this Agreement or (provided that the party proposing to
take such action has provided the other party with advance notice of the
proposed action to the extent practicable) as required by Applicable Laws,
unless the other party has consented in writing thereto (which, in the case of
Section 7.1(m), shall not be unreasonably withheld), each of Dynegy and Enron:
(a) shall, and shall cause each of its Subsidiaries to,
conduct its operations according to their usual, regular and ordinary
course in substantially the same manner as heretofore conducted;
provided, however, that this subsection (a) shall not prevent a party
from introducing, or permitting its Subsidiaries from introducing, new
products and services related to the business and operations heretofore
conducted by them;
(b) shall use its commercially reasonable best efforts, and
shall cause each of its Subsidiaries to use its commercially reasonable
best efforts, to preserve intact their business organizations and
goodwill (except that any of its Subsidiaries may be merged with or
into, or be consolidated with, any of its Subsidiaries or may be
liquidated into it or any of its Subsidiaries), keep available the
services of their respective officers and employees and maintain
satisfactory relationships with those persons having business
relationships with them;
(c) shall not amend its articles of incorporation or bylaws,
except that Enron may amend its articles of incorporation to increase
its authorized Enron Common Stock by not more than 500 million shares;
(d) shall promptly notify the other of any material adverse
change in its condition (financial or otherwise) or business or any
termination, cancellation, repudiation or material breach of any
material contract (or communications expressly indicating that the same
may be contemplated) or the institution of any material litigation or
proceedings (including arbitration and other dispute resolution
proceedings) or
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material governmental complaints, investigations, inquiries or hearings
(or communications indicating that the same may be contemplated) or the
breach in any material respect of any representation or warranty
contained herein;
(e) shall promptly make available (in paper form or via the
internet) to the other true and correct copies of any report, statement
or schedule filed with the SEC subsequent to the date of this
Agreement;
(f) in the case of Enron, shall not, and shall not permit any
of its Subsidiaries to, (i) except (A) pursuant to the exercise of
options, warrants, conversion rights and other contractual rights
existing on the date hereof and disclosed pursuant to this Agreement or
not required to be disclosed pursuant to this Agreement or (B) pursuant
to the exercise of awards granted after the date hereof and expressly
permitted under this Agreement or in connection with transactions
permitted by Section 7.1(j), issue or sell any shares of its capital
stock in excess of $2.0 billion in the aggregate (or such larger amount
as (x) Enron may propose in order to prevent a downgrading of Enron's
senior debt to less than investment grade by Standard & Poor's Ratings
Services, a division of the McGraw-Hill Companies, Inc., by Moody's
Investors Service, Inc. or by Fitch, Inc. that shall not affect the
intended accounting treatment set forth in the recitals to this
Agreement and (y) Dynegy consents to in writing, which consent shall
not be unreasonably withheld) for all such issuances and sales (and
provided that any such shares must be converted into Enron Common Stock
prior to the Mergers if the Mergers are to occur), effect any stock
split or otherwise change its capitalization as it existed on the date
hereof, (ii) grant, confer or award any option, warrant, conversion
right or other right not existing on the date hereof to acquire any
shares of its capital stock, (iii) amend or otherwise modify any
option, warrant, conversion right or other right to acquire any shares
of its capital stock existing on the date hereof, (iv) with respect to
any of its former or present employees (including officers and
directors), increase any compensation or benefits, or enter into, amend
or extend (or permit the extension of) any employment or consulting
agreement, except in each case in the ordinary course of business
consistent with past practice, (v) adopt any new employee benefit plan
or agreement (including any stock option, stock benefit or stock
purchase plan) or amend (except as required by law) any existing
employee benefit plan in any material respect, except in the ordinary
course of business consistent with past practice, or (vi) permit any
holder of an option to acquire shares of Enron Common Stock to have
shares withheld upon exercise, for tax purposes, in excess of the
number of shares needed to satisfy the minimum statutory withholding
requirements for federal and state tax withholding;
(g) in the case of Dynegy, shall not, except pursuant to the
exercise of options, warrants, conversion rights and other contractual
rights existing on the date hereof and disclosed pursuant to this
Agreement or not required to be disclosed pursuant to this Agreement or
pursuant to the exercise of awards granted after the date hereof and
not prohibited by this Agreement, issue any shares of its capital stock
if it is reasonably likely to delay materially or to affect materially
and adversely the ability of Dynegy to solicit the approval of its
shareholders of this Agreement and the Dynegy Merger or to obtain any
consent, authorization, order or approval of any governmental
commission, board or
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other regulatory body or the expiration of any applicable waiting
period required to consummate the transactions contemplated by this
Agreement;
(h) except for (i) the payment of regular dividends on the
shares of Enron Common Stock at a quarterly rate of not more than
$0.125 per share, (ii) the payment of dividends on the shares of
Enron's Second Preferred Stock at a quarterly rate of not more than
$3.413 per share, on shares of its 9.142% Preferred Stock at an annual
rate of not more than $91.420 per share, on shares of its Series B
Preferred Stock at an annual rate of 6.5% of the liquidation value
thereof, (iii) any additional dividend payments on the Second Preferred
Stock, the 9.142% Preferred Stock, the Series B Preferred Stock and the
Series C Preferred Stock required by the terms of Enron's articles of
incorporation or statement of resolutions establishing such series of
Preferred Stock, and (iv) the payment of regular dividends on the
shares of Dynegy Common Stock at a quarterly rate of not more than
$0.075 per share, in each case with customary record and payment dates,
shall not (1) declare, set aside or pay any dividend or make any other
distribution or payment with respect to any shares of its capital stock
or (2) redeem, purchase or otherwise acquire any shares of its capital
stock or capital stock of any of its Subsidiaries, or make any
commitment for any such action;
(i) in the case of Enron, shall not, and shall not permit any
of its Subsidiaries to, except for contractual commitments in effect on
the date hereof and disclosed in the Enron Disclosure Letter, sell,
lease or otherwise dispose of any of its assets (including capital
stock of Subsidiaries) that are, individually or in the aggregate,
material to it and its Subsidiaries as a whole, except for (i) sales of
surplus or obsolete equipment, (ii) sales of other assets in the
ordinary course of business, or (iii) sales, leases or other transfers
between such party and its wholly owned Subsidiaries or between those
Subsidiaries;
(j) in the case of Enron, shall not, and shall not permit any
of its Subsidiaries to, except pursuant to contractual commitments in
effect on the date hereof and disclosed in the Enron Disclosure Letter,
acquire or agree to acquire by merging or consolidating with, or by
purchasing an equity interest in or a substantial portion of the assets
of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, in each case (i) for an aggregate consideration for all such
acquisitions in excess of $50 million (excluding acquisitions approved
in writing by both parties) or (ii) where a filing under the HSR Act or
any non-U.S. competition, antitrust or premerger notification laws is
required;
(k) shall not, except as may be required as a result of a
change in generally accepted accounting principles, change any of the
material accounting principles or practices used by it;
(l) shall, and shall cause any of its Subsidiaries to, use
commercially reasonable best efforts to maintain with financially
responsible insurance companies insurance in such amounts and against
such risks and losses as are customary for such party;
(m) shall not, and shall not permit any of its Subsidiaries
to, (i) make or rescind any material election relating to taxes,
including elections for any and all joint
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ventures, partnerships, limited liability companies, working interests
or other investments where it has the capacity to make such binding
election, other than an initial election for an entity under Treas.
Reg.ss. 301.7701-3, (ii) settle or compromise any material claim,
action, suit, litigation, proceeding, arbitration, investigation, audit
or controversy relating to taxes, or (iii) change in any material
respect any of its methods of reporting any item for tax purposes from
those employed in the preparation of its tax returns for the most
recent taxable year for which a return has been filed, except as may be
required by applicable law;
(n) in the case of Enron, shall not, and shall not permit any
of its Subsidiaries to, (i) incur Debt, net of Debt repaid, in an
aggregate principal amount in excess of $1 billion over amounts
reflected in the Debt schedule included in Section 7.1 of the Enron
Disclosure Letter, or guarantee any such Debt or issue or sell any
warrants or rights to acquire any of such Debt or guarantee any debt
securities of others, (ii) except in the ordinary course of business or
with or between its Subsidiaries, enter into any material lease
(whether such lease is an operating or capital lease) or create any
material mortgages, Liens, security interests or other encumbrances on
its property in connection with any indebtedness thereof (other than
Permitted Liens) or (iii) make or commit to make capital expenditures
that, individually or in the aggregate with all other capital
expenditures made in a quarter, exceed the capital expenditures
forecast in the Enron Capital Budget for such quarter by more than 20%,
excluding capital expenditures to repair damage covered by insurance
(provided that if the Termination Date is extended pursuant to Section
9.2(a), Enron shall submit for Dynegy's approval, which shall not be
unreasonably withheld, a capital budget through the extended
Termination Date, and such capital budget, as so approved, shall be
substituted for such forecast for periods after December 31, 2002); for
the purposes of this Agreement, (x) "Debt" shall mean, with respect to
any person, the aggregate amount, without duplication, of (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, and (y) "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
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products, materials or supplies or for any transportation, services or
lease regardless of the nondelivery or nonfurnishing 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, with the amount of any Contingent Obligation being
equal to the amount of the obligation, or portion thereof, so
guaranteed or otherwise supported;
(o) shall not enter into any transaction that is reasonably
likely to delay materially or to affect materially and adversely the
ability of any of the parties hereto to solicit the approval of its
shareholders of this Agreement and the applicable Merger or to obtain
any consent, authorization, order or approval of any governmental
commission, board or other regulatory body or the expiration of any
applicable waiting period required to consummate the transactions
contemplated by this Agreement;
(p) unless in the good faith opinion of its Board of Directors
after consultation with its outside legal counsel the following would
be inconsistent with its fiduciary duties, (i) shall not terminate,
amend, modify or waive any provision of any agreement containing a
standstill covenant to which it is a party and (ii) during such period
shall enforce, to the fullest extent permitted under Applicable Law,
the provisions of such agreement, including by obtaining injunctions to
prevent any breaches of such agreements and to enforce specifically the
terms and provisions thereof in any court of the United States of
America or any state having jurisdiction;
(q) in the case of Enron, shall not, and shall cause its
Subsidiaries not to, make any increase in its risk control limits or
value at risk limits for its trading or other activities above those in
effect on the date hereof as established by Enron's Board of Directors;
and
(r) shall not (i) agree in writing or otherwise to take any of
the foregoing actions or (ii) permit any of its Subsidiaries to agree
in writing or otherwise to take any of the foregoing actions that refer
to Subsidiaries.
Section 7.2 No Solicitation by Enron.
(a) Enron agrees that (i) neither it nor any of its
Subsidiaries shall, and it shall not authorize or permit any of its officers,
directors, employees, agents or representatives (including, without limitation,
any investment banker, attorney or accountant retained by it or any of its
Subsidiaries) to, and on becoming aware of it will use its reasonable best
efforts to stop such person from continuing to, directly or indirectly, solicit,
initiate or encourage (including by way of furnishing nonpublic information), or
take any action designed to facilitate, directly or indirectly, any inquiry,
proposal or offer (including, without limitation, any proposal or offer to its
shareholders) with respect to a tender or exchange offer, merger, consolidation,
business combination, purchase or similar transaction or series of transactions
(other than the transactions contemplated by this Agreement) involving,
individually or in the aggregate, 15% or more of the assets, net revenues or net
operating income of Enron and its Subsidiaries on a consolidated basis or,
except as permitted by Section 7.1(f), 15% or more of any class of capital stock
of Enron, including, without limitation, any merger or similar transaction in
which 15% or more of Enron's
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capital stock is issued to a third party or its shareholders (any such proposal,
offer or transaction being hereinafter referred to as a "Enron Acquisition
Proposal") or cooperate with or assist, participate or engage in any discussions
or negotiations concerning an Enron Acquisition Proposal; and (ii) it will
immediately cease and cause to be terminated any existing negotiations with any
parties conducted heretofore with respect to any of the foregoing; provided that
nothing contained in this Agreement shall prevent Enron or its Board of
Directors from (A) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to an Enron Acquisition Proposal or (B) prior to the Cutoff Date,
providing information (pursuant to a confidentiality agreement in reasonably
customary form and which does not contain terms that prevent Enron from
complying with its obligations under this Section 7.2) to, or engaging in any
negotiations or discussions with, any person or entity who has made an
unsolicited bona fide written Enron Acquisition Proposal with respect to all the
outstanding shares of Enron Common Stock or all or substantially all the assets
of Enron that, in the good faith judgment of the Board of Directors of Enron,
after consultation with a financial advisor of recognized national reputation,
and taking into account the likelihood of financing and consummation, is
superior to the Mergers (a "Enron Superior Proposal") or is reasonably likely to
lead to an Enron Superior Proposal, to the extent the Board of Directors of
Enron, after consultation with its outside legal counsel, determines that the
failure to do so would be inconsistent with its fiduciary obligations; provided,
however, that this Section 7.2 shall not limit the ability of Enron or any of
its Subsidiaries from selling or otherwise disposing of any assets to the extent
permitted by Section 7.1(i).
(b) Prior to taking any action referred to in Section 7.2(a),
if Enron intends to participate in any such discussions or negotiations or
provide any such information to any such third party, Enron shall give prompt
prior oral and written notice to Dynegy of each such action. Enron will
immediately notify Dynegy orally and in writing of any such requests for such
information or the receipt of any Enron Acquisition Proposal or any inquiry with
respect to or that could lead to an Enron Acquisition Proposal, including the
identity of the person or group engaging in such discussions or negotiations,
requesting such information or making such Enron Acquisition Proposal, and the
material terms and conditions of any Enron Acquisition Proposal. Enron will (i)
keep Dynegy fully informed of the status in reasonable detail (including any
changes or proposed changes to such status in reasonable detail) on a timely
basis of any such requests, Enron Acquisition Proposals or inquiries and (ii)
use its reasonable best efforts to provide to Dynegy as soon as practicable
after receipt or delivery thereof with copies of all material correspondence and
other material written material sent or provided to Enron from any third party
in connection with any Enron Acquisition Proposal or sent or provided by Enron
to any third party in connection with any Enron Acquisition Proposal (this
sentence not requiring the providing of information more frequently than once
every 24 hours or the provision of confidential information of such party to
Dynegy, other than the terms and conditions of any Enron Acquisition Proposal).
Any written notice under this Section 7.2 shall be given by facsimile with
receipt confirmed or personal delivery.
(c) Nothing in this Section 7.2 shall permit Enron to enter
into any agreement with respect to an Enron Acquisition Proposal during the term
of this Agreement, it being agreed that during the term of this Agreement
(except pursuant to Section 9.3(c)), Enron shall not enter into any agreement
with any person that provides for, or in any way facilitates, an Enron
Acquisition Proposal, other than a confidentiality and/or standstill agreement
in reasonably
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customary form and that does not contain terms that prevent Enron from complying
with its obligations under this Section 7.2.
(d) For purposes hereof, the "Cutoff Date," when used with
respect to Enron, means the date the condition set forth in Section 8.1(a)(i) is
satisfied.
Section 7.3 No Solicitation by Dynegy.
(a) Dynegy agrees that (i) neither it nor any of its
Subsidiaries shall, and it shall not authorize or permit any of its officers,
directors, employees, agents or representatives (including, without limitation,
any investment banker, attorney or accountant retained by it or any of its
Subsidiaries) to, and on becoming aware of it will use its reasonable best
efforts to stop such person from continuing to, directly or indirectly, solicit,
initiate or encourage (including by way of furnishing nonpublic information), or
take any action designed to facilitate, directly or indirectly, any inquiry,
proposal or offer (including, without limitation, any proposal or offer to its
shareholders) with respect to a tender or exchange offer, merger, consolidation,
business combination, purchase or similar transaction or series of transactions
(other than the transactions contemplated by this Agreement or transactions
pursuant to Article 6 of the Dynegy Shareholder Agreement) involving,
individually or in the aggregate, 15% or more of the assets, net revenues or net
operating income of Dynegy and its Subsidiaries on a consolidated basis or 15%
or more of any class of capital stock of Dynegy, including, without limitation,
any merger or similar transaction in which 15% or more of Dynegy's capital stock
is issued to a third party or its shareholders (any such proposal, offer or
transaction being hereinafter referred to as a "Dynegy Acquisition Proposal") or
cooperate with or assist, participate or engage in any discussions or
negotiations concerning a Dynegy Acquisition Proposal; and (ii) it will
immediately cease and cause to be terminated any existing negotiations with any
parties conducted heretofore with respect to any of the foregoing; provided that
nothing contained in this Agreement shall prevent Dynegy or its Board of
Directors from (A) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to a Dynegy Acquisition Proposal or (B) prior to the Cutoff Date,
providing information (pursuant to a confidentiality agreement in reasonably
customary form and which does not contain terms that prevent Dynegy from
complying with its obligations under this Section 7.3) to or engaging in any
negotiations or discussions with any person or entity who has made an
unsolicited bona fide written Dynegy Acquisition Proposal with respect to all
the outstanding shares of Dynegy Common Stock or all or substantially all the
assets of Dynegy that, in the good faith judgment of the Board of Directors of
Dynegy, after consultation with a financial advisor of recognized national
reputation, and taking into account the likelihood of financing and
consummation, is superior to the Mergers (a "Dynegy Superior Proposal") or is
reasonably likely to lead to a Dynegy Superior Proposal, to the extent that the
Board of Directors of Dynegy, after consultation with its outside legal counsel,
determines that the failure to do so would be inconsistent with its fiduciary
obligations.
(b) Prior to taking any action referred to in Section 7.3(a),
if Dynegy intends to participate in any such discussions or negotiations or
provide any such information to any such third party, Dynegy shall give prompt
prior oral and written notice to Enron of each such action. Dynegy will
immediately notify Enron orally and in writing of any such requests for such
information or the receipt of any Dynegy Acquisition Proposal or any inquiry
with respect to or that could lead to a Dynegy Acquisition Proposal, including
the identity of the person or
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group engaging in such discussions or negotiations, requesting such information
or making such Dynegy Acquisition Proposal, and the material terms and
conditions of any Dynegy Acquisition Proposal. Dynegy will (i) keep Enron fully
informed of the status in reasonable detail (including any changes or proposed
changes to such status in reasonable detail) on a timely basis of any such
requests, Dynegy Acquisition Proposals or inquiries and (ii) use its reasonable
best efforts to provide to Enron as soon as practicable after receipt or
delivery thereof with copies of all material correspondence and other material
written material sent or provided to Dynegy from any third party in connection
with any Dynegy Acquisition Proposal or sent or provided by Dynegy to any third
party in connection with any Dynegy Acquisition Proposal (this sentence not
requiring the providing of information more frequently than once every 24 hours
or the provision of confidential information of such party to Enron, other than
the terms and conditions of any Dynegy Acquisition Proposal). Any written notice
under this Section 7.3 shall be given by facsimile with receipt confirmed or
personal delivery.
(c) Nothing in this Section 7.3 shall permit Dynegy to enter
into any agreement with respect to a Dynegy Acquisition Proposal during the term
of this Agreement, it being agreed that during the term of this Agreement
(except pursuant to Section 9.4(c)), Dynegy shall not enter into any agreement
with any person that provides for, or in any way facilitates, a Dynegy
Acquisition Proposal, other than a confidentiality and/or standstill agreement
in reasonably customary form and that does not contain terms that prevent Dynegy
from complying with its obligations under this Section 7.3.
(d) For purposes hereof, the "Cutoff Date," when used with
respect to Dynegy, means the date the condition set forth in Section 8.1(a)(ii)
is satisfied.
Section 7.4 Meetings of Shareholders.
(a) Each of Dynegy and Enron shall take all action necessary,
in accordance with applicable law and its articles of incorporation and bylaws,
to convene a meeting of its shareholders as promptly as practicable to consider
and vote upon the matters presented in connection with the Mergers. Dynegy and
Enron shall coordinate and cooperate with respect to the timing of such meetings
and shall use their commercially reasonable best efforts to hold such meetings
on the same day. Notwithstanding any other provision of this Agreement, unless
this Agreement is terminated in accordance with the terms hereof, Enron and
Dynegy shall each submit the foregoing matters to its shareholders, whether or
not the Board of Directors of Enron or Dynegy, as the case may be, withdraws,
modifies or changes its recommendation and declaration regarding such matters.
(b) Each of Dynegy and Enron, through its Board of Directors,
shall recommend approval of such matters and use its commercially reasonable
best efforts to solicit from its shareholders proxies in favor of such matters;
provided, however, that the Board of Directors of Dynegy or the Board of
Directors of Enron may at any time prior to such party's Cut-Off Date upon two
business days' prior written notice to Enron or Dynegy, respectively, (i)
withdraw, modify or change any recommendation and declaration regarding such
matters or (ii) recommend and declare advisable any Enron Superior Proposal or
Dynegy Superior Proposal, as the case may be, if in the good faith opinion of
such Board of Directors after consultation with its outside legal counsel the
failure so (x) to withdraw, modify or change its
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recommendation and declaration or (y) to recommend and declare advisable any
Enron Superior Proposal or Dynegy Superior Proposal, as the case may be, would
be inconsistent with its fiduciary obligations.
Section 7.5 Filings; Commercially Reasonable Best Efforts,
Etc.
(a) Subject to the terms and conditions herein provided, Enron
and Dynegy shall:
(i) make their respective required filings under the
HSR Act (and shall share equally all filing fees incident
thereto), which filings shall be made promptly, and thereafter
shall promptly make any other required submissions under the
HSR Act;
(ii) use their commercially reasonable best efforts
to cooperate with one another in (A) determining which filings
are advisable to be made prior to the Effective Time with, and
which consents, approvals, permits or authorizations are
advisable to be obtained prior to the Effective Time from,
governmental or regulatory authorities under any applicable
non-U.S. competition, antitrust or premerger notification laws
(the "Non-U.S. Antitrust Laws") in connection with the
execution and delivery of this Agreement, and the consummation
of the Mergers and the transactions contemplated hereby; and
(B) timely making all such filings and timely seeking all such
consents, approvals, permits or authorizations;
(iii) use their commercially reasonable best efforts
to cooperate with one another in (A) determining which filings
are required to be made prior to the Effective Time with, and
which consents, approvals, permits or authorizations are
required to be obtained prior to the Effective Time from, any
governmental or regulatory authorities of the United States,
the several states and non-U.S. jurisdictions (other than with
respect to any Non-U.S. Antitrust Laws) in connection with the
execution and delivery of this Agreement, and the consummation
of the Mergers and the transactions contemplated hereby; and
(B) timely making all such filings and timely seeking all such
consents, approvals, permits or authorizations;
(iv) promptly notify each other of any communication
concerning this Agreement or the transactions contemplated
hereby to that party from any governmental or regulatory
authority and permit the other party to review in advance any
proposed communication concerning this Agreement or the
transactions contemplated hereby to any governmental or
regulatory authority;
(v) not agree to participate in any meeting or
discussion with any governmental or regulatory authority in
respect of any filings, investigation or other inquiry
concerning this Agreement or the transactions contemplated
hereby unless it consults with the other party in advance and,
to the extent permitted by such governmental or regulatory
authority, gives the other party the opportunity to attend and
participate in such meeting or discussion;
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(vi) furnish the other party with copies of all
correspondence, filings and communications (and memoranda
setting forth the substance thereof) between them and their
Subsidiaries and their respective representatives on the one
hand, and any government or regulatory authority or members or
any such authority's staff on the other hand, with respect to
this Agreement and the transactions contemplated hereby; and
(vii) furnish the other party with such necessary
information and reasonable assistance as such other party and
its affiliates may reasonably request in connection with their
preparation of necessary filings, registrations or submissions
of information to any governmental or regulatory authorities,
including, without limitation, any filings necessary or
appropriate under the provisions of the HSR Act or any
applicable Non-U.S. Antitrust Laws.
(b) Without limiting Section 7.5(a), Dynegy and Enron shall:
(i) each use commercially reasonable best efforts to
avoid the entry of, or to have vacated, terminated or
modified, any decree, order or judgment that would restrain,
prevent or delay the Closing; and
(ii) each use commercially reasonable best efforts to
take any and all steps necessary to obtain any consents or
eliminate any impediments to the Mergers.
(c) Dynegy and Enron intend that the Mergers will qualify as
transfers of Enron Common Stock and Dynegy Common Stock to Newco in a
transaction qualifying under Section 351 of the Code. Neither Dynegy, Enron nor
their respective Subsidiaries shall take actions, cause actions to be taken or
fail to take actions, as a result of which the Mergers would not qualify as
transfers of Enron Common Stock and Dynegy Common Stock to Newco in a
transaction qualifying under Section 351 of the Code.
Section 7.6 Inspection. From the date hereof to the Effective
Time, each of Enron and Dynegy shall allow all designated officers, attorneys,
accountants, financing sources and other representatives of Dynegy or Enron, as
the case may be, access, at all reasonable times, upon reasonable notice, to the
records and files, correspondence, audits and properties, as well as to all
information relating to commitments, contracts, titles, financial position,
litigation, proceedings, complaints, investigations, inquiries or hearings, or
otherwise pertaining to the business and affairs of Dynegy and Enron and their
respective Subsidiaries, including inspection of such properties; provided that
no investigation pursuant to this Section 7.6 shall affect any representation or
warranty given by any party hereunder, and provided further that notwithstanding
the provision of information or investigation by any party, no party shall be
deemed to make any representation or warranty except as expressly set forth in
this Agreement. Notwithstanding the foregoing, no party shall be required to
provide any information which it reasonably believes it may not provide to the
other party by reason of applicable law, rules or regulations, which constitutes
information protected by attorney/client privilege if such privilege would be
adversely affected by reason of being so provided, or which it is required to
keep confidential by reason of contract or agreement with third parties. The
parties hereto shall make reasonable and appropriate substitute disclosure
arrangements under circumstances in which the
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restrictions of the preceding sentence apply. Each of Dynegy and Enron agrees
that it shall not, and shall cause its respective representatives not to, use
any information obtained pursuant to this Section 7.6 for any purpose unrelated
to the consummation of the transactions contemplated by this Agreement. All
nonpublic information obtained pursuant to this Section 7.6 shall be governed by
the Confidentiality Agreement dated October 28, 2001 between Dynegy and Enron
(the "Confidentiality Agreement").
Section 7.7 Publicity. The parties shall consult with each
other before issuing any press release or public announcement pertaining to this
Agreement or the transactions contemplated hereby and shall not issue any such
press release or make any such public announcement without the prior written
consent of the other party, which consent shall not be unreasonably withheld,
except as may be required by applicable law or by obligations pursuant to any
listing agreement with any national securities exchange, in which case the party
proposing to issue such press release or make such public announcement shall use
its commercially reasonable best efforts to consult in good faith with the other
party before issuing any such press releases or making any such public
announcements.
Section 7.8 Registration Statement on Form S-4.
(a) Each of Dynegy and Enron shall cooperate and promptly
prepare, and Newco shall file with the SEC, as soon as practicable, a
Registration Statement on Form S-4 (the "Form S-4") under the Securities Act
with respect to the shares of Newco Common Stock issuable in the Mergers, a
portion of which Registration Statement shall also serve as the joint proxy
statement with respect to the meetings of the shareholders of Dynegy and of
Enron in connection with the transactions contemplated by this Agreement (the
"Proxy Statement/Prospectus"). The respective parties shall cause the Proxy
Statement/Prospectus and the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder. Dynegy and Newco shall use
commercially reasonable best efforts, and Enron shall cooperate with Dynegy and
Newco, to have the Form S-4 declared effective by the SEC as promptly as
practicable. Dynegy and Newco shall use commercially reasonable best efforts to
obtain, prior to the effective date of the Form S-4, all necessary non-U.S.
securities laws, state securities law or "Blue Sky" permits or approvals
required to carry out the transactions contemplated by this Agreement, and
Dynegy and Enron shall share equally all expenses incident thereto (including
all SEC and other filing fees and all printing and mailing expenses associated
with the Form S-4 and the Proxy Statement/Prospectus). Newco shall advise Enron
and Dynegy, promptly after it receives notice thereof, of the time when the Form
S-4 has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the shares of
Newco Common Stock issuable in connection with the Mergers for offering or sale
in any jurisdiction or any request by the SEC for amendment of the Proxy
Statement/Prospectus or the Form S-4 or comments thereon and responses thereto
or requests by the SEC for additional information. Each of the parties shall
also promptly provide each other party copies of all written correspondence
received from the SEC and summaries of all oral comments received from the SEC
in connection with the transactions contemplated by this Agreement. Each of the
parties shall promptly provide each other party with drafts of all
correspondence intended to be sent to the SEC in connection with the
transactions contemplated by this Agreement and allow each such party the
opportunity to comment thereon prior to delivery to the SEC.
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(b) Dynegy and Enron shall each use its commercially
reasonable best efforts to cause the Proxy Statement/Prospectus to be mailed to
its shareholders as promptly as practicable after the Form S-4 is declared
effective under the Securities Act.
(c) Each of Dynegy and Enron shall ensure that the information
provided by it for inclusion in the Proxy Statement/Prospectus and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the respective meetings of shareholders of Dynegy and Enron, or, in the case
of information provided by it for inclusion in the Form S-4 or any amendment or
supplement thereto, at the time it becomes effective, (i) will not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (ii) will comply as
to form in all material respects with the provisions of the Securities Act and
the Exchange Act.
Section 7.9 Listing Application. Dynegy shall cause Newco
promptly to prepare and submit to the NYSE a listing application covering the
shares of Newco Class A Common Stock issuable in the Mergers and shall use
commercially reasonable best efforts to obtain, prior to the Effective Time,
approval for the listing of such shares of Newco Class A Common Stock, subject
to official notice of issuance.
Section 7.10 Letters of Accountants.
(a) Enron shall use commercially reasonable best efforts to
cause to be delivered to Dynegy "comfort" letters of Arthur Andersen LLP,
Enron's independent public accountants, dated within two business days of the
effective date of the Form S-4 and within two business days of the Closing Date,
respectively, and addressed to Dynegy and Newco with regard to certain financial
information regarding Enron included in the Form S-4, in form reasonably
satisfactory to Dynegy and customary in scope and substance for "comfort"
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
(b) Dynegy shall use commercially reasonable best efforts to
cause to be delivered to Enron "comfort" letters of Arthur Andersen LLP,
Dynegy's independent public accountants, dated within two business days of the
effective date of the Form S-4 and within two business days of the Closing Date,
respectively, and addressed to Enron, with regard to certain financial
information regarding Newco and Dynegy included in the Form S-4, in form
reasonably satisfactory to Enron and customary in scope and substance for
"comfort" letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
Section 7.11 Agreements of Rule 145 Affiliates. Prior to the
Effective Time, each of Dynegy and Enron shall cause to be prepared and
delivered to the other a list identifying all persons who such party believes,
at the date of the meeting of such party's shareholders to consider and vote
upon the approval of the matters presented in connection with the Mergers, may
be deemed to be "affiliates" of such party, as that term is used in paragraphs
(c) and (d) of Rule 145 under the Securities Act (the "Rule 145 Affiliates").
Each of Dynegy and Enron shall use commercially reasonable best efforts to cause
each person who is identified as a Rule 145 Affiliate in such list to deliver to
the other, at or prior to the Effective Time, a written agreement,
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in the form of Exhibit 7.11. Newco shall be entitled to place restrictive
legends on any shares of Newco Common Stock issued to such Rule 145 Affiliates
pursuant to the Mergers.
Section 7.12 Expenses. Whether or not the Mergers are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, except as expressly provided in Section 7.5(a)(i), Section 7.8(a)
and Section 9.5(c) of this Agreement or as otherwise agreed in writing by the
parties.
Section 7.13 Indemnification and Insurance.
(a) From and after the Effective Time, Newco and, as
applicable, the Dynegy Surviving Entity and the Enron Surviving Entity shall
indemnify, defend and hold harmless to the fullest extent permitted under
applicable law each person (other than any Excluded Person, except to the extent
of existing irrevocable contractual rights) who is, or has been at any time
prior to the Effective Time, an officer or director of Dynegy or Enron,
respectively, or any Subsidiary or division thereof, and each person who served
at the request of Dynegy or Enron, respectively, as a director, officer, trustee
or fiduciary of another corporation, partnership, joint venture, trust, pension
or other employee benefit plan or enterprise, and each person who is, or has
been at any time prior to the Effective Time, a party to a written employee
indemnification agreement with Dynegy or Enron or any Subsidiary thereof
(individually, an "Indemnified Party" and, collectively, the "Indemnified
Parties") against all losses, claims, damages, liabilities, costs or expenses
(including attorneys' fees), judgments, fines, penalties and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to acts or omissions, or alleged acts
or omissions, by them in their capacities as such, whether commenced, asserted
or claimed before or after the Effective Time. In the event of any such claim,
action, suit, proceeding or investigation (an "Action"), (i) Newco and, as
applicable, the Dynegy Surviving Entity or the Enron Surviving Entity shall pay,
as incurred, the fees and expenses of counsel selected by the Indemnified Party,
which counsel shall be reasonably acceptable to Newco and such Surviving Entity,
in advance of the final disposition of any such Action to the fullest extent
permitted by applicable law and, if required, upon receipt of any undertaking
required by applicable law, and (ii) Newco and such Surviving Entity shall
cooperate in the defense of any such matter; provided, however, Newco and such
Surviving Entity shall not be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld or delayed),
and provided further, that Newco and such Surviving Entity shall not be
obligated pursuant to this Section 7.13 to pay the fees and disbursements of
more than one counsel (other than local counsel) for all Indemnified Parties in
any single Action, unless, in the good faith judgment of any of the Indemnified
Parties, there is or may be a conflict of interests between two or more of such
Indemnified Parties, in which case there may be separate counsel for each
similarly situated group. For purposes of this Agreement, "Excluded Person"
shall mean each officer or director or former officer or director of Enron
specified by Enron in a notice to Dynegy delivered prior to the Closing
referencing this Section 7.13 and identifying such person as an Excluded Person
for purposes hereof.
(b) The parties agree that the rights to indemnification,
including provisions relating to advances of expenses incurred in defense of any
action or suit, in the certificate or
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articles of incorporation and bylaws of Dynegy, Enron and their respective
Subsidiaries with respect to matters occurring through the Effective Time shall
survive the Mergers.
(c) For a period of six years after the Effective Time, Newco
and, as applicable, the Dynegy Surviving Entity and the Enron Surviving Entity
shall cause to be maintained officers' and directors' liability insurance
covering the Indemnified Parties who are, or at any time prior to the Effective
Time were, covered by existing officers' and directors' liability insurance
policies of Dynegy or Enron, as applicable, on terms substantially no less
advantageous to the Indemnified Parties than such existing insurance, provided
that Newco, the Dynegy Surviving Entity and the Enron Surviving Entity shall not
be required to pay aggregate premiums for the six-year period in excess of six
times 150% of the last annual premium paid by Dynegy or Enron, as applicable,
prior to the date hereof (the amount of which premium is set forth in the Dynegy
Disclosure Letter and the Enron Disclosure Letter, as the case may be), but in
such case shall purchase as much coverage as reasonably practicable for such
amount.
(d) The rights of each Indemnified Party hereunder shall be in
addition to any other rights such Indemnified Party may have under the articles
or certificate of incorporation or bylaws of Dynegy, Enron or any of their
respective Subsidiaries, under applicable law or otherwise. The provisions of
this Section 7.13 shall survive the consummation of the Mergers and expressly
are intended to benefit each of the Indemnified Parties.
(e) If Newco, the Dynegy Surviving Entity or the Enron
Surviving Entity or any of their respective successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in either such case, proper provision shall be made so that the
successors and assigns of Newco or such Surviving Entity, as the case may be,
shall assume the obligations set forth in this Section 7.13.
Section 7.14 Agreements Regarding Enron Supplemental
Indentures. Newco shall take such actions as are required by the Indenture,
dated as of February 7, 2001, by and between Enron and The Chase Manhattan Bank,
as Trustee, relating to the Zeros to assume the obligations of Enron to deliver
securities, cash or other assets upon conversion of the Zeros. Newco shall take
all actions as are required by the articles of incorporation of Enron and the
applicable statement of resolutions establishing each of the Second Preferred
Stock, the Series B Preferred Stock and the Series C Preferred Stock to assume
the obligations of Enron to deliver securities, cash or other assets upon
conversion of such series of Enron Preferred Stock.
Section 7.15 No Hire. From the date of this Agreement until
the Effective Time, Dynegy and Enron shall not, and shall cause their respective
Subsidiaries not to, solicit for employment or employ any officer, director or
key employee (personnel at the director level and above in the case of Dynegy or
the manager level and above in the case of Enron) of the other party or its
Subsidiaries. If this Agreement is terminated, Dynegy and Enron shall not, and
shall cause their respective Subsidiaries not to, solicit for employment any
officer, director or key employee of the other party or its Subsidiaries for a
period of 180 days after such termination, provided that this restriction shall
not apply (i) to Dynegy, if the fee provided for in Section 9.5(a) is payable,
or (ii) to Enron, if the fee provided for in Section 9.5(b) is payable. The
solicitation prohibitions of this Section 7.15 shall not apply to solicitations
made to the public or
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the industry generally, and a party shall not be prohibited from employing any
such person who has an outstanding offer of employment as of the date hereof.
Section 7.16 Employee Matters. Newco shall maintain without
substantive modification for a period of one year following the Effective Time
those Enron Benefit Plans that are tax qualified ("tax qualified plans") under
Sections 401(a) and 501(a) of the Code. The active or former employees of Enron
who after the Effective Time participate in a tax qualified plan sponsored or
maintained by Newco or its U.S. federal income tax consolidated Subsidiaries
(collectively, "Newco Group") will receive credit for service under such plan,
but only for purposes of eligibility and vesting, as if service with Enron prior
to the Effective Time had been service with Dynegy. From and after the Effective
Time, Enron employees, excluding those covered by collective bargaining
agreements, will be provided severance benefits that are at least comparable in
all respects to the severance benefits provided by Dynegy under its severance
benefit plans and arrangements for similarly situated employees. For purposes of
the foregoing obligation regarding severance, the term "severance benefit plans
and arrangements" shall not include any individually negotiated agreements. The
foregoing notwithstanding, nothing in this Section 7.16 shall obligate Dynegy to
provide severance benefits if an employee is offered a comparable position,
benefits and salary with a third-party purchaser of the business operation in
which the employee works without regard to the form of the third-party purchase
transaction. Enron Benefit Plans that are employee welfare benefit plans within
the meaning of section 3(1) of ERISA, other than severance pay plans, shall be
maintained for one year after the Effective Time without substantive change in
either benefits provided or classes of employees covered; provided that such
plans may be modified in accordance with past practice to take into account
customary periodic design adjustments and employee premium costs to reflect
experience and change in the law and provided that Enron employees may be
provided medical benefits under the Dynegy medical benefit plans and
arrangements for similarly situated employees commencing as of the January 1
immediately following the Effective Time. Enron employees who on or after the
Effective Time become eligible for health care benefits under plans other than
Enron Benefit Plans, if other than at the end of an annual coverage period under
the analogous or correlative Enron Benefit Plan providing similar health
benefits, shall under such plans be granted credit for co-pays, deductibles and
the like applicable under the Enron Benefit Plan and shall not be subject to any
preexisting condition exclusion that was not applicable under the Enron Benefit
Plan. With respect to sick pay, severance pay and vacation time from and after
the Effective Time, (i) to the extent benefits are dependent upon years of
service and/or compensation criteria, service with and compensation received
from Enron prior to the Effective Time shall be credited as if it had been
service with Dynegy and (ii) no Enron employee who was active at the Effective
Time shall have his annual vacation entitlement reduced for a one-year period
following the Effective Time. Enron may in its discretion continue its present
retiree medical program and its existing portable medical program until the
Effective Time, provided there is no substantive change.
Section 7.17 Alternative Structure. The parties acknowledge
that they would prefer to structure the transactions contemplated hereby in a
manner that results in a single corporation with substantially all the senior
debt (other than that of regulated utility subsidiaries) of Dynegy, Dynegy
Holdings Inc. (a subsidiary of Dynegy) and Enron, in lieu of the Mergers
provided for herein. Accordingly, the parties agree to cooperate with each other
in analyzing and
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determining such a structure that is advisable in connection with these
transactions and promptly to execute and deliver an appropriate amendment to
this Agreement to reflect such structure.
ARTICLE 8
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect
the Mergers. The respective obligation of each party to effect the Mergers shall
be subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) (i) The Enron Merger and this Agreement shall have been
approved by the affirmative vote of (A) holders of a majority of the
votes entitled to be cast by holders of Enron Common Stock and the
Second Preferred Stock voting together as a single class and (B)
holders of a majority of the outstanding shares of Enron Common Stock
entitled to vote thereon; and
(ii) This Agreement shall have been approved by the
affirmative vote of the holders of at least two-thirds of the shares of
Dynegy Class A Common Stock and Dynegy Class B Common Stock (voting
together) entitled to vote thereon.
(b) (i) Any waiting period applicable to the consummation of
the Mergers under the HSR Act shall have expired or been terminated,
(ii) approval of the FERC with respect to the Mergers under Section 203
of the Federal Power Act shall have been granted, (iii) the SEC shall
have taken all necessary action under Section 9(a)(2) of the 1935 Act
and there shall not have been received a written notice from the SEC
(that has not been subsequently withdrawn or negated) of a challenge to
Newco's, Chevron's or ChevronTexaco's reliance on the good-faith
exemption provided by Section 3(c) of the 1935 Act in connection with
the Mergers, (iv) there shall not be pending or threatened in writing
any claim, proceeding or action by an agency of the government of the
United States, of the United Kingdom or of the European Union seeking
to restrain, prohibit or rescind any transactions contemplated by this
Agreement as an actual or threatened violation of the HSR Act, Non-U.S.
Antitrust Laws or other antitrust, competition or premerger
notification, trade regulation law, regulation or order, as applicable,
or seeking to penalize a party for completing any such transaction
which in any of such cases is, in the reasonable judgment of either
Enron or Dynegy, reasonably likely to have a Material Adverse Effect on
Newco after the Effective Time, (v) in the event of any review by the
U.K. Office of Fair Trading or, if applicable, the U.K. Secretary of
State for Trade and Industry, indications reasonably satisfactory to
each of Enron and Dynegy that the Mergers will not be referred to the
Competition Commission shall have been received or, if the Mergers are
referred to the Competition Commission, indications reasonably
satisfactory to each of Enron and Dynegy that the Mergers can proceed,
(vi) any mandatory waiting period under any applicable Non-U.S.
Antitrust Laws (where the failure to observe such waiting period
referred to in this clause (vi) would, in the reasonable judgment of
either Dynegy or Enron, be reasonably likely to have a Material Adverse
Effect on Newco after the Effective Time) shall have expired or been
terminated, (vii) the Enron Regulatory Approvals and the Dynegy
Regulatory Approvals
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shall have been obtained, and no such Enron Regulatory Approval or
Dynegy Regulatory Approval shall impose or contain terms or conditions
that would, in the reasonable judgment of either Dynegy or Enron, be
reasonably likely to have a Material Adverse Effect on Newco after the
Effective Time, (viii) all consents, approvals, permits and
authorizations referred to in Section 7.5(a)(iii) shall have been
obtained (where the failure to obtain such consents, approvals, permits
or authorizations would, in the reasonable judgment of either Dynegy or
Enron, be reasonably likely to have a Material Adverse Effect on Newco
after the Effective Time), and no consent, approval, permit or
authorization shall impose or contain terms or conditions that would,
in the reasonable judgment of either Dynegy or Enron, be reasonably
likely to have a Material Adverse Effect on Newco after the Effective
Time, and (ix) there shall not have been a final or preliminary
administrative order denying approval of or prohibiting the Mergers
issued by a governmental authority with jurisdiction to enforce
applicable Non-U.S. Antitrust Laws, which order is in the reasonable
judgment of either Enron or Dynegy reasonably likely to have a Material
Adverse Effect on Newco after the Effective Time.
(c) None of the parties hereto shall be subject to any decree,
order or injunction that prohibits the consummation of the Mergers
issued by a court of competent jurisdiction of (i) the United States or
any state or other jurisdiction in the United States, (ii) the European
Union or any member state thereof or Canada (the "Specified
Jurisdictions") or (iii) any other jurisdiction (the "Other Non-U.S.
Jurisdictions"); provided, however, that, prior to invoking this
condition, each party shall have complied with Section 7.5, and with
respect to other matters not covered by Section 7.5, shall have used
its commercially reasonable best efforts to have any such decree, order
or injunction lifted or vacated; and no statute, rule or regulation
shall have been enacted by any governmental authority which prohibits
or makes unlawful the consummation of the Mergers; provided, further,
that, with respect to any decree, order, injunction, statute, rule or
regulation of any Other Non-U.S. Jurisdiction, noncompliance with such
decree, order, injunction, statute, rule or regulation would, in the
reasonable judgment of either Dynegy or Enron, be reasonably likely to
have a Material Adverse Effect on Enron, Dynegy or Newco.
(d) The Form S-4 shall have become effective and no stop order
with respect thereto shall be in effect.
(e) The shares of Newco Class A Common Stock to be issued
pursuant to the Mergers shall have been authorized for listing on the
NYSE, subject to official notice of issuance.
Section 8.2 Conditions to Obligation of Enron to Effect the
Mergers. The obligation of Enron to effect the Mergers shall be subject to the
fulfillment or waiver at or prior to the Closing Date of the following
conditions:
(a) Dynegy, Newco, Dynegy Merger Sub and Enron Merger Sub
shall have performed, in all material respects, their covenants and
agreements contained in this Agreement required to be performed on or
prior to the Closing Date, and the representations and warranties of
Dynegy, Newco, Dynegy Merger Sub and Enron
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Merger Sub contained in this Agreement (i) that are qualified as to
materiality or Dynegy Material Adverse Effect shall be true and correct
in all respects as of the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in
which case as of such earlier date), and (ii) that are not so qualified
shall be true and correct in all respects as of the Closing Date,
except to the extent such representations and warranties expressly
relate to an earlier date (in which case as of such earlier date) and
except for such breaches of representations and inaccuracies in
warranties referred to in this clause (ii) that do not have and are not
reasonably likely to have, individually or in the aggregate, a Dynegy
Material Adverse Effect, and Enron shall have received a certificate of
each of Dynegy, Newco, Dynegy Merger Sub and Enron Merger Sub, executed
on its behalf by its President or one of its Vice Presidents, dated the
Closing Date, certifying to such effect.
(b) Enron shall have received the opinion of Vinson & Elkins
L.L.P., counsel to Enron, in form and substance reasonably satisfactory
to Enron and dated the Closing Date, a copy of which shall be furnished
to Dynegy, to the effect that the Mergers will be treated as transfers
of Enron Common Stock by the holders of Enron Common Stock and of
Dynegy Common Stock by the holders of Dynegy Common Stock to Newco in
exchange for Newco Common Stock in a transaction qualifying under
Section 351 of the Code and that no gain or loss will be recognized for
United States federal income tax purposes by the shareholders of Enron
who exchange Enron Common Stock solely for Newco Common Stock pursuant
to the Enron Merger (except to the extent of any cash received in lieu
of fractional shares). In rendering such opinion, such counsel shall be
entitled to receive and rely upon representations of officers of Enron,
Dynegy, Chevron and ChevronTexaco, substantially in the form of
Exhibits 8.2(a), 8.2(b), 8.2(c) and 8.2(d), respectively, dated as of
the Closing Date.
(c) The representations and warranties contained in Section
6.9(i) [no event constituting a Dynegy Material Adverse Effect] shall
be true and correct in all respects as of the Closing Date.
Section 8.3 Conditions to Obligation of Dynegy, Newco, Dynegy
Merger Sub and Enron Merger Sub to Effect the Mergers. The obligations of
Dynegy, Newco, Dynegy Merger Sub and Enron Merger Sub to effect the Mergers
shall be subject to the fulfillment or waiver at or prior to the Closing Date of
the following conditions:
(a) Enron shall have performed, in all material respects, its
covenants and agreements contained in this Agreement required to be
performed on or prior to the Closing Date, and the representations and
warranties of Enron contained in this Agreement (i) that are qualified
as to materiality or Enron Material Adverse Effect shall be true and
correct in all respects as of the Closing Date, except to the extent
such representations and warranties expressly relate to an earlier date
(in which case as of such earlier date), and (ii) that are not so
qualified shall be true and correct in all respects as of the Closing
Date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case as of such earlier
date) and except for such breaches of representations and inaccuracies
in warranties referred to in this clause (ii) that do not have and are
not reasonably likely to have, individually or in the
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aggregate, an Enron Material Adverse Effect, and Dynegy shall have
received a certificate of Enron, executed on its behalf by its
President or one of its Vice Presidents, dated the Closing Date,
certifying to such effect.
(b) Dynegy shall have received the opinion of Baker Botts
L.L.P., counsel to Dynegy, in form and substance reasonably
satisfactory to Dynegy and dated the Closing Date, a copy of which
shall be furnished to Enron, to the effect that the Mergers will be
treated as transfers of Enron Common Stock by the holders of Enron
Common Stock and of Dynegy Common Stock by the holders of Dynegy Common
Stock to Newco in exchange for Newco Common Stock in a transaction
qualifying under Section 351 of the Code and that no gain or loss will
be recognized for United States federal income tax purposes by the
shareholders of Dynegy who exchange Dynegy Common Stock solely for
Newco Common Stock pursuant to the Dynegy Merger and by the
shareholders of Enron who exchange Enron Common Stock solely for Newco
Common Stock pursuant to the Enron Merger (except to the extent of any
cash received in lieu of fractional shares). In rendering such opinion,
such counsel shall be entitled to receive and rely upon representations
of officers of Enron, Dynegy, Chevron and ChevronTexaco, substantially
in the form of Exhibits 8.2(a), 8.2(b), 8.2(c) and 8.2(d),
respectively, dated as of the Closing Date.
(c) The representations and warranties contained in Section
5.9(i) [no event constituting an Enron Material Adverse Effect] shall
be true and correct in all respects as of the Closing Date.
ARTICLE 9
TERMINATION
Section 9.1 Termination by Mutual Consent. This Agreement may
be terminated at any time prior to the Effective Time by the mutual written
consent of Enron and Dynegy.
Section 9.2 Termination by Dynegy or Enron. This Agreement may
be terminated at any time prior to the Effective Time by action of the Board of
Directors of Dynegy or Enron if:
(a) the Mergers shall not have been consummated by November
30, 2002 (the "Termination Date"); provided, however, that the right to
terminate this Agreement pursuant to this clause (a) shall not be
available to any party whose failure to perform or observe in any
material respect any of its obligations under this Agreement in any
manner shall have been the cause of, or resulted in, the failure of the
Mergers to occur on or before such date; provided, further, that, if on
the initial Termination Date (i) the conditions to Closing set forth in
Section 8.1(b) shall not have been fulfilled and/or (ii) the conditions
to Closing set forth in Section 8.1(a) shall not have been fulfilled
and the meetings of shareholders shall not have been held, but in
either case all other conditions to the Closing shall have been
fulfilled or shall be capable of being fulfilled, then the Termination
Date may be extended from time to time by either Enron or Dynegy, by
notice to the other, to a date not later than May 31, 2003;
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(b) a meeting (including adjournments and postponements) of
Enron's shareholders for the purpose of obtaining the approvals
required by Section 8.1(a)(i) shall have been held and such shareholder
approvals shall not have been obtained;
(c) a meeting (including adjournments and postponements) of
Dynegy's shareholders for the purpose of obtaining the approvals
required by Section 8.1(a)(ii) shall have been held and such
shareholder approvals shall not have been obtained; or
(d) a court of competent jurisdiction or governmental,
regulatory or administrative agency or commission of the United States,
any state or other jurisdiction of the United States, any Specified
Jurisdiction or any Other Non-U.S. Jurisdiction shall have issued an
order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and nonappealable; provided, that, with
respect to any order, decree, ruling or other action of any Other
Non-U.S. Jurisdiction, noncompliance with such order, decree, ruling or
other action would, in the reasonable judgment of either Dynegy or
Enron, be reasonably likely to have a Material Adverse Effect on Enron,
Dynegy or Newco.
Section 9.3 Termination by Enron. This Agreement may be
terminated at any time prior to the Effective Time by action of the Board of
Directors of Enron, after, in the case of Section 9.3(b) or (c), consultation
with its outside legal advisors, if
(a) (i) there has been a breach by Dynegy, Newco, Dynegy
Merger Sub or Enron Merger Sub of any representation, warranty,
covenant or agreement set forth in this Agreement or if any
representation or warranty of Dynegy, Newco, Dynegy Merger Sub or Enron
Merger Sub shall have become untrue, in either case such that the
conditions set forth in Section 8.2(a) would not be satisfied and (ii)
such breach is not curable, or, if curable, is not cured within 30 days
after written notice of such breach is given to Dynegy by Enron;
(b) the Board of Directors of Dynegy shall have withdrawn or
materially modified, in a manner adverse to Enron, its approval or
recommendation of the Dynegy Merger or recommended a Dynegy Acquisition
Proposal, or resolved to do so; or
(c) prior to the Cutoff Date, (i) the Board of Directors of
Enron has received an Enron Superior Proposal, (ii) in light of such
Enron Superior Proposal the Board of Directors of Enron shall have
determined in good faith, after consultation with its outside legal
advisors, and taking into account all reasonably available information,
including information concerning the likelihood that the approval by
Enron's shareholders of the Enron Merger and this Agreement will not be
obtained by reason of the existence of such Enron Superior Proposal,
that proceeding with the Enron Merger would be inconsistent with its
fiduciary obligations, (iii) Enron is not in material breach of Section
7.2, Section 7.4, Section 7.5 and Section 7.8, (iv) Enron has paid the
fee provided for under Section 9.5(a)(i), and (v) the Board of
Directors of Enron concurrently approves, and Enron concurrently enters
into, a binding definitive written agreement providing for the
implementation of such Enron Superior Proposal; provided that Enron may
not effect such termination pursuant to this Section 9.3(c) unless and
until (i) Dynegy receives at
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least four business days' prior written notice from Enron of its
intention to effect such termination pursuant to this Section 9.3(c),
which notice includes the terms of the applicable Enron Acquisition
Proposal; and (ii) during such four business day period, Enron shall,
and shall cause its respective financial and legal advisors to,
consider any adjustment in the terms and conditions of this Agreement
that Dynegy may propose.
Section 9.4 Termination by Dynegy. This Agreement may be
terminated at any time prior to the Effective Time by action of the Board of
Directors of Dynegy, after, in the case of Section 9.4(b) or (c), consultation
with its outside legal advisors, if:
(a) (i) there has been a breach by Enron of any
representation, warranty, covenant or agreement set forth in this
Agreement or if any representation or warranty of Enron shall have
become untrue, in either case such that the conditions set forth in
Section 8.3(a) would not be satisfied and (ii) such breach is not
curable, or, if curable, is not cured within 30 days after written
notice of such breach is given by Dynegy to Enron;
(b) the Board of Directors of Enron shall have withdrawn or
materially modified, in a manner adverse to Dynegy, its approval or
recommendation of the Enron Merger or recommended an Enron Acquisition
Proposal, or resolved to do so; or
(c) prior to the Cutoff Date, (i) the Board of Directors of
Dynegy has received a Dynegy Superior Proposal, (ii) in light of such
Dynegy Superior Proposal the Board of Directors of Dynegy shall have
determined in good faith, after consultation with its outside legal
advisors, and taking into account all reasonably available information,
including information concerning the likelihood that the approval of
this Agreement by Dynegy's shareholders will not be obtained by reason
of the existence of such Dynegy Superior Proposal, that proceeding with
the Dynegy Merger would be inconsistent with its fiduciary obligations,
(iii) Dynegy is not in material breach of Section 7.3, Section 7.4,
Section 7.5 and Section 7.8, (iv) Dynegy has paid the fee provided for
under Section 9.5(b)(i), and (v) the Board of Directors of Dynegy
concurrently approves, and Dynegy concurrently enters into, a binding
definitive written agreement providing for the implementation of such
Dynegy Superior Proposal; provided that Dynegy may not effect such
termination pursuant to this Section 9.4(c) unless and until (i) Enron
receives at least four business days' prior written notice from Dynegy
of its intention to effect such termination pursuant to this Section
9.4(c), which notice includes the terms of the applicable Dynegy
Acquisition Proposal; and (ii) during such four business day period,
Dynegy shall, and shall cause its respective financial and legal
advisors to, consider any adjustment in the terms and conditions of
this Agreement that Enron may propose.
Section 9.5 Effect of Termination.
(a) If this Agreement is terminated:
(A) by Enron or Dynegy pursuant to Section 9.2(b)
[failure to obtain Enron shareholder approval] either (1)
after the public announcement of an Enron Acquisition
Proposal, whether or not the Enron Acquisition Proposal is
still pending or has been consummated, and Enron enters into
an agreement with respect to any Enron Acquisition Proposal or
is a party to or subject to a
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completed Enron Acquisition Proposal (in either case, whether
or not relating to the initial Enron Acquisition Proposal) on
or prior to the date 12 months after such termination or (2)
after the Board of Directors of Enron has withdrawn or
modified, in a manner adverse to Dynegy, its approval or
recommendation of the Enron Merger or recommended an Enron
Acquisition Proposal, or resolved to do so; or
(B) by Dynegy pursuant to Section 9.4(b) [withdrawal
of Enron recommendation to shareholders]; or
(C) by Enron pursuant to Section 9.3(c) [fiduciary
out];
then Enron shall pay Dynegy a fee of $297.5 million at the time of such
termination (or, in the case of clause (A)(1), at the time such clause is
satisfied, and such fee shall be reduced by any prior payment under Section
9.5(c)) and shall concurrently pay a fee of $52.5 million to ChevronTexaco, in
each case in cash by wire transfer to an account designated by Dynegy or
ChevronTexaco, respectively.
(ii) If this Agreement is terminated by Enron pursuant to
Section 9.3(c) and in accordance with the terms thereof (including the payment
of the fee referred to therein), no fee additional to the fee specified in
Section 9.3(c) shall be payable by Enron to Dynegy.
(b) If this Agreement is terminated:
(A) by Enron or Dynegy pursuant to Section 9.2(c)
[failure to obtain Dynegy shareholder approval] either (1)
after the public announcement of a Dynegy Acquisition
Proposal, whether or not the Dynegy Acquisition Proposal is
still pending or has been consummated, and Dynegy enters into
an agreement with respect to any Dynegy Acquisition Proposal
or is a party to or subject to a completed Dynegy Acquisition
Proposal (in either case, whether or not relating to the
initial Dynegy Acquisition Proposal) on or prior to the date
12 months after such termination or (2) after the Board of
Directors of Dynegy has withdrawn or modified, in a manner
adverse to Enron, its approval or recommendation of the Dynegy
Merger or recommended a Dynegy Acquisition Proposal, or
resolved to do so; or
(B) by Enron pursuant to Section 9.3(b) [withdrawal
of Dynegy recommendation to shareholders]; or
(C) by Dynegy pursuant to Section 9.4(c) [fiduciary
out];
then Dynegy shall pay Enron a fee of $350 million at the time of such
termination (or, in the case of clause (A)(1), at the time such clause is
satisfied, and such fee shall be reduced by any prior payment under Section
9.5(c)) in cash by wire transfer to an account designated by Enron.
(ii) If this Agreement is terminated by Dynegy pursuant to
Section 9.4(c) and in accordance with the terms thereof (including the payment
of the fee referred to
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therein), no fee additional to the fee specified in Section 9.4(c) shall be
payable by Dynegy to Enron.
(c) If this Agreement is terminated by Enron or Dynegy
pursuant to Section 9.2(b) other than in circumstances covered by Section 9.5(a)
requiring the payment of the fee specified therein at the time of termination,
then Enron shall pay Dynegy a fee of $10 million to reimburse it for its costs
and expenses incurred in connection with this transaction. If this Agreement is
terminated by Enron or Dynegy pursuant to Section 9.2(c), other than in
circumstances covered by Section 9.5(b) requiring the payment of the fee
specified therein at the time of termination, then Dynegy shall pay Enron a fee
of $10 million to reimburse it for its costs and expenses incurred in connection
with this transaction.
(d) In the event of termination of this Agreement and the
abandonment of the Mergers pursuant to this Article 9, all obligations of the
parties hereto shall terminate, except the obligations of the parties pursuant
to this Section 9.5, the last sentence of Section 7.6 and Section 7.12 and
Section 7.15 and except for the provisions of Sections 10.2, 10.3, 10.4, 10.6,
10.8, 10.9, 10.11, 10.12, 10.13 and 10.14, provided that nothing in this Section
9.5(d) shall relieve any party from any liability for any willful and material
breach by such party of any of its representations or warranties set forth in
this Agreement or any material breach by such party of any of its covenants or
agreements set forth in this Agreement and, subject to Section 10.14, all rights
and remedies of such nonbreaching party under this Agreement in the case of any
such breach, at law or in equity, shall be preserved. The Confidentiality
Agreement shall survive any termination of this Agreement, and the provisions of
such Confidentiality Agreement shall apply to all information and material
delivered by any party hereunder.
Section 9.6 Extension; Waiver. At any time prior to the
Effective Time, each party may by action taken by its Board of Directors, to the
extent legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 10
GENERAL PROVISIONS
Section 10.1 Nonsurvival of Representations, Warranties and
Agreements. All representations, warranties and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall not survive the
Mergers; provided, however, that the agreements contained in Article 4 and in
Sections 3.1, 3.2, 7.11, 7.12, 7.13, 7.14 and 7.16 and this Article 10 and the
agreements delivered pursuant to this Agreement shall survive the Mergers.
Section 10.2 Notices. Except as otherwise provided herein, any
notice required to be given hereunder shall be sufficient if in writing, and
sent by facsimile transmission or by courier service (with proof of service), or
hand delivery, addressed as follows:
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(a) if to Enron:
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: General Counsel
Facsimile (713) 853-3129
with a copy to:
Vinson & Elkins L.L.P.
1001 Fannin, Suite 2300
Houston, Texas 77002-6760
Attention: William E. Joor, III, Esq.
Scott N. Wulfe, Esq.
Facsimile: (713) 758-2346
(b) if to Dynegy, Newco, Dynegy Merger Sub or Enron Merger
Sub:
Dynegy Inc.
1000 Louisiana, Suite 5800
Houston, Texas 77002
Attention: General Counsel
Facsimile (713) 507-6808
with a copy to:
Baker Botts L.L.P.
One Shell Plaza
910 Louisiana
Houston, Texas 77002-4995
Attention: R. Joel Swanson, Esq.
J. David Kirkland, Jr., Esq.
Facsimile: (713) 229-1522
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
Section 10.3 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for the provisions
of Article 4, Section 7.13 and Section 9.5(a) and except as provided in any
agreements delivered pursuant hereto (collectively, the "Third-Party
Provisions"), nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective heirs,
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successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement. The Third-Party
Provisions may be enforced by the beneficiaries thereof (including ChevronTexaco
with respect to Section 9.5(a)). Notwithstanding the foregoing and any other
provision of this Agreement, and in addition to any other required action of the
Board of Directors of Newco, a majority of the Former Enron Directors (or their
successors) serving on the Board of Directors of Newco shall be entitled during
the one-year period commencing at the Effective Time to enforce the provisions
of Section 7.16 on behalf of Enron's officers, directors and employees, as the
case may be. Such directors' rights and remedies under the preceding sentence
are cumulative and are in addition to any other rights and remedies that they
may have at law or in equity, but in no event shall this Section 10.3 be deemed
to impose any additional duties on any such directors. Newco shall pay, at the
time they are incurred, all reasonable costs, fees and expenses of such
directors incurred in connection with the assertion of any rights on behalf of
the persons set forth above pursuant to this Section 10.3.
Section 10.4 Entire Agreement. This Agreement, the exhibits to
this Agreement, the Enron Disclosure Letter, the Dynegy Disclosure Letter and
any documents delivered by the parties in connection herewith constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto, except that the Confidentiality Agreement shall continue in effect. No
addition to or modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all parties hereto.
Section 10.5 Amendments. This Agreement may be amended by the
parties hereto, by action taken or authorized by their Boards of Directors, at
any time before or after approval of matters presented in connection with the
Mergers by the shareholders of Enron or Dynegy, but after any such shareholder
approval, no amendment shall be made which by law requires the further approval
of shareholders without obtaining such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 10.6 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of Texas, without
regard to its rules of conflicts of laws, except to the extent the laws of the
State of Illinois are required to be applicable to the Dynegy Merger or the laws
of the State of Oregon are required to be applicable to the Enron Merger.
Section 10.7 Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
Section 10.8 Headings. Headings of the Articles and Sections
of this Agreement are for the convenience of the parties only and shall be given
no substantive or interpretative effect whatsoever.
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Section 10.9 Interpretation. In this Agreement:
(a) Unless the context otherwise requires, words describing
the singular number shall include the plural and vice versa, words
denoting any gender shall include all genders, and words denoting
natural persons shall include corporations and partnerships and vice
versa.
(b) The phrase "to the knowledge of" and similar phrases
relating to knowledge of Enron or Dynegy, as the case may be, shall
mean the actual knowledge of its executive officers.
(c) "Material Adverse Effect" with respect to any person shall
mean a material adverse effect on or change in the business, assets,
liabilities, financial condition or results of operations of such
person and its Subsidiaries, taken as a whole, or the ability of the
party to consummate the transactions contemplated by this Agreement or
fulfill the conditions to closing. "Enron Material Adverse Effect" and
"Dynegy Material Adverse Effect" mean a Material Adverse Effect with
respect to Enron and Dynegy, respectively. For purposes of determining
whether an Enron Material Adverse Effect has occurred from and after
the date of this Agreement, to the extent that the liabilities and
expenses from and after the date hereof associated with all pending or
threatened litigation matters, in the reasonable judgment of Dynegy
exercised in good faith after consultation with outside counsel
experienced in such types of litigation, exceed, or are reasonably
likely to exceed, $2 billion in the aggregate (net of proceeds of
insurance and litigation reserves reflected on the September 30, 2001
Balance Sheet), the amount of such excess over $2 billion will be taken
into account in determining whether an Enron Material Adverse Effect
has occurred, and, in any event, if the amount of such excess exceeds,
or is reasonably likely to exceed, $1.5 billion, an Enron Material
Adverse Effect will be deemed to have occurred; provided, however, that
such $1.5 billion threshold shall have no implication, or be used, for
purposes of interpreting any other provision or sentence of this
Agreement, including, without limitation, interpreting whether an Enron
Material Adverse Effect has occurred with respect to any matters other
than litigation matters.
(d) The term "Subsidiary," when used with respect to any
party, shall mean any corporation or other organization (including a
limited liability company), whether incorporated or unincorporated, of
which such party directly or indirectly owns at least 50% of the
securities or other interests having by their terms ordinary voting
power to elect at least 50% of the board of directors or others
performing similar functions with respect to such corporation or other
organization or, except with respect to Article 7, any organization of
which such party or a Subsidiary of such party is a general partner or
managing member.
Section 10.10 Waivers. Except as provided in this Agreement,
no action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
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construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
Section 10.11 Incorporation of Disclosure Letters and
Exhibits. The Enron Disclosure Letter, the Dynegy Disclosure Letter and all
exhibits attached hereto and referred to herein are hereby incorporated herein
and made a part hereof for all purposes as if fully set forth herein.
Section 10.12 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
Section 10.13 Enforcement of Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with its specific
terms or was otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
Section 10.14 No Special Damages. IN NO EVENT SHALL ANY PARTY
BE LIABLE IN RESPECT OF THIS AGREEMENT FOR EXEMPLARY, SPECIAL OR PUNITIVE
DAMAGES.
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IN WITNESS WHEREOF, the parties have executed this Agreement
and caused the same to be duly delivered on their behalf on the day and year
first written above.
DYNEGY INC.
By: /s/ CHARLES L. WATSON
------------------------------------
Charles L. Watson
Chairman of the Board and Chief
Executive Officer
STANFORD, INC.
By: /s/ CHARLES L. WATSON
------------------------------------
Charles L. Watson
President
SORIN, INC.
By: /s/ CHARLES L. WATSON
------------------------------------
Charles L. Watson
President
BADIN, INC.
By: /s/ CHARLES L. WATSON
------------------------------------
Charles L. Watson
President
ENRON CORP.
By: /s/ KENNETH L. LAY
------------------------------------
Kenneth L. Lay
Chairman of the Board and Chief
Executive Officer
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EXHIBIT 2.1(a)
RESTATED CERTIFICATE OF INCORPORATION
OF
STANFORD, INC.
Under Sections 242 and 245 of the
Delaware General Corporation Law
Stanford, Inc. (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "DGCL"), hereby certifies that:
1. The current name of the Corporation is Stanford, Inc. The original
Certificate of Incorporation of the Corporation (as heretofore amended, the
"Certificate of Incorporation") was filed with the Secretary of State of the
State of Delaware on November 2, 2001.
2. The Board of Directors of the Corporation duly adopted resolutions
proposing and declaring advisable the amendments to the Certificate of
Incorporation this Restated Certificate of Incorporation is effecting, and the
Corporation's sole stockholder has duly adopted those amendments and this
Restated Certificate of Incorporation, all in accordance with the provisions of
Sections 228, 242 and 245 of the DGCL.
3. This Restated Certificate of Incorporation (hereinafter, this
Restated Certificate of Incorporation, as it may be further amended or restated
from time to time, is referred to as this "Restated Certificate of
Incorporation") restates and amends the Certificate of Incorporation in its
entirety as follows:
RESTATED CERTIFICATE OF INCORPORATION
FIRST: The name of the Corporation is Stanford, Inc. (hereinafter, the
"Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, City of
Wilmington, County of New Castle, Zip Code 19801, and the name of the registered
agent of the Corporation at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "DGCL").
FOURTH: The aggregate number of shares of capital stock that the
Corporation shall have authority to issue is 3,000,000,000, of which
2,000,000,000 shares are
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classified as Class A common stock, no par value ("Class A Common Stock"), and
800,000,000 shares are classified as Class B common stock, no par value ("Class
B Common Stock" and, together with the Class A Common Stock, the "Common
Stock"), and 200,000,000 shares are classified as preferred stock, no par value
("Preferred Stock").
The Corporation may issue shares of any class or series of its capital
stock from time to time for such consideration and for such corporate purposes
as the Board of Directors of the Corporation (the "Board of Directors") may from
time to time determine.
The following is a statement of the powers, preferences and rights, and
the qualifications, limitations or restrictions, of the Preferred Stock, the
Class A Common Stock and the Class B Common Stock:
DIVISION A. PREFERRED STOCK
The shares of Preferred Stock may be divided into and issued in one or
more series, the relative rights, powers and preferences of which series may
vary in any and all respects. The Board of Directors is expressly vested with
the authority to fix, by resolution or resolutions adopted prior to and
providing for the issuance of any shares of each particular series of Preferred
Stock and incorporate in a certificate of designations filed with the Secretary
of State of the State of Delaware, the designations, powers, preferences,
rights, qualifications, limitations and restrictions thereof, of the shares of
each series of Preferred Stock, to the extent not provided for in this Restated
Certificate of Incorporation, and with the authority to increase or decrease the
number of shares within each such series; provided, however, that the Board of
Directors may not decrease the number of shares within a series of Preferred
Stock below the number of shares within such series that is then issued. The
authority of the Board of Directors with respect to fixing the designations,
powers, preferences, rights, qualifications, limitations and restrictions of
each such series of Preferred Stock shall include, but not be limited to,
determination of the following:
(1) the distinctive designation and number of shares of that series;
(2) the rate of dividends (or the method of calculation thereof)
payable with respect to shares of that series, the dates, terms and other
conditions upon which such dividends shall be payable, and the relative rights
of priority of such dividends to dividends payable on any other class or series
of capital stock of the Corporation;
(3) the nature of the dividend payable with respect to shares of that
series as cumulative, noncumulative or partially cumulative, and if cumulative
or partially cumulative, from which date or dates and under what circumstances;
(4) whether shares of that series shall be subject to redemption, and,
if made subject to redemption, the times, prices, rates, adjustments and other
terms and conditions of such redemption (including the manner of selecting
shares of that series for redemption if fewer than all shares of such series are
to be redeemed);
(5) the rights of the holders of shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation (which rights may be
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different if such action is voluntary than if it is involuntary), including the
relative rights of priority in such event as to the rights of the holders of any
other class or series of capital stock of the Corporation;
(6) the terms, amounts and other conditions of any sinking or similar
purchase or other fund provided for the purchase or redemption of shares of that
series;
(7) whether shares of that series shall be convertible into or
exchangeable for shares of capital stock or other securities of the Corporation
or of any other corporation or entity, and, if provision be made for conversion
or exchange, the times, prices, rates, adjustments, and other terms and
conditions of such conversion or exchange;
(8) the extent, if any, to which the holders of shares of that series
shall be entitled (in addition to any voting rights provided by law) to vote as
a class or otherwise with respect to the election of directors or otherwise;
(9) the restrictions and conditions, if any, upon the issue or reissue
of any additional Preferred Stock ranking on a parity with or prior to shares of
that series as to dividends or upon liquidation, dissolution or winding up;
(10) any other repurchase obligations of the Corporation, subject to
any limitations of applicable law; and
(11) any other designations, powers, preferences, rights,
qualifications, limitations or restrictions of shares of that series.
Any of the designations, powers, preferences, rights, qualifications,
limitations or restrictions of any series of Preferred Stock may be dependent on
facts ascertainable outside this Restated Certificate of Incorporation, or
outside the resolution or resolutions providing for the issue of such series of
Preferred Stock adopted by the Board of Directors pursuant to authority
expressly vested in it by this Restated Certificate of Incorporation. Except as
applicable law or this Restated Certificate of Incorporation otherwise may
require, the terms of any series of Preferred Stock may be amended without
consent of the holders of any other series of Preferred Stock or any class of
capital stock of the Corporation.
The relative powers, preferences and rights of each series of Preferred
Stock in relation to the powers, preferences and rights of each other series of
Preferred Stock shall, in each case, be as fixed from time to time by the Board
of Directors in the resolution or resolutions adopted pursuant to the authority
granted in this Division A of this Article FOURTH, and the consent, by class or
series vote or otherwise, of holders of Preferred Stock of such of the series of
Preferred Stock as are from time to time outstanding shall not be required for
the issuance by the Board of Directors of any other series of Preferred Stock,
whether or not the powers, preferences and rights of such other series shall be
fixed by the Board of Directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in such resolution or
resolutions adopted with respect to any series of Preferred Stock that the
consent of holders of at least a majority (or such greater proportion as shall
be therein fixed) of the outstanding shares of such series voting thereon shall
be required for the issuance of shares of any or all other series of Preferred
Stock.
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Shares of any series of Preferred Stock shall have no voting rights
except as required by law or as provided in the relative powers, preferences and
rights of such series.
DIVISION B. COMMON STOCK
Except as otherwise set forth in this Article FOURTH, Division B, the
relative powers, preferences and rights, and the qualifications, limitations and
restrictions, of the Class A Common Stock and the Class B Common Stock shall be
identical in all respects.
1. Dividends. Subject to the rights of the holders of Preferred Stock, and
subject to any other provisions of this Restated Certificate of Incorporation,
holders of Common Stock shall be entitled to receive such dividends and other
distributions in cash, stock of any corporation (other than Common Stock) or
property of the Corporation as may be declared thereon by the Board of Directors
from time to time out of assets or funds of the Corporation legally available
therefor and shall share equally on a per share basis in all such dividends and
other distributions. In the case of dividends or other distributions payable in
Common Stock, including distributions pursuant to stock splits or divisions of
Common Stock, only shares of Class A Common Stock shall be paid or distributed
with respect to Class A Common Stock and only shares of Class B Common Stock
shall be paid or distributed with respect to Class B Common Stock. The number of
shares of Class A Common Stock and Class B Common Stock so distributed on each
share shall be equal in number. Neither the shares of Class A Common nor the
shares of Class B Common Stock may be reclassified, subdivided or combined
unless such reclassification, subdivision or combination occurs simultaneously
and in the same proportion for each class.
2. Voting.
(a) Except as may be otherwise required by law or by the provisions of this
Restated Certificate of Incorporation or the Bylaws of the Company, the holders
of the Class B Common Stock shall vote together with the holders of the Class A
Common Stock as a single class on every matter coming before any meeting of the
stockholders or otherwise to be acted upon by the stockholders, subject to any
voting rights which may be granted to holders of any other class or series of
Preferred Stock. So long as any Class B Common Stock is outstanding, the
Corporation shall not (x) without the affirmative vote of 66 2/3% of the shares
of Class A and Class B Common Stock outstanding, voting as a single class,
effect any amendments to this Restated Certificate of Incorporation, any
mergers, consolidations, reorganizations, or sales of assets requiring
stockholder approval under the DGCL or dispositions of all or substantially all
of the Corporation's assets, or any liquidation, dissolution or winding up of
the Corporation, or (y) without the affirmative vote of a majority of the shares
of Class B Common Stock outstanding, voting as a separate class, and the
affirmative vote of 66 2/3% of the shares of Class A and Class B Common Stock,
voting as a single class, amend any provision of this paragraph (a) of Section 2
relating to the Common Stock.
(b) The Board of Directors of the Corporation shall consist of at least
twelve members and no more than fifteen members as established from time to time
by resolution of the Board of Directors, except that such numbers are subject to
automatic adjustment as necessary, under those circumstances and during those
time periods that holders of any other class or series
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of the Corporation's outstanding Preferred Stock have rights to elect members of
the Board of Directors (the "Preferred Stock Directors"), as set forth in this
Restated Certificate of Incorporation or in the resolution of the Board of
Directors establishing and designating such series and fixing and determining
the relative rights and preferences thereof. So long as any shares of Class B
Common Stock are outstanding, the holders of the Class B Common Stock, as such
holders, shall be entitled to vote as a separate class for the election of the
greater of (x) three directors of the Corporation and (y) that whole number of
directors that is closest to but not less than 20% of the total number of
directors (the "Class B Directors") and the holders of the Class A Common Stock
shall be entitled to vote as a separate class for the remaining directors of the
Corporation (the "Class A Directors"), excluding Preferred Stock Directors, if
any. At such time as no Class B Common Stock is outstanding, the term of all
Class B Directors shall immediately end.
(c) For purposes of electing Class B Directors, the Board of Directors will
nominate such individuals as may be specified by a majority vote of the then
existing Class B Directors or, if there are no Class B Directors, by holders of
a majority of the Class B Common Stock. The remaining directors will be
nominated in accordance with the Corporation's Bylaws.
(d) At any meeting having as a purpose the election of directors by holders
of the Common Stock, the presence, in person or by proxy, of the holders of a
majority of the shares of the relevant class or classes of Common Stock then
outstanding shall be required and be sufficient to constitute a quorum of such
class or classes for the election of any director by such holders. Each director
shall be elected by the vote or written consent required under the DGCL of the
holders of such class or classes. At any such meeting or adjournment thereof,
(i) the absence of a quorum of such holders of an applicable class of Common
Stock shall not prevent the election of the directors to be elected by the
holders of shares other than such class of Common Stock, and (ii) in the absence
of such quorum (either of holders of such class of Common Stock or of shares
other than such class of Common Stock, or both), a majority of the holders,
present in person or by proxy, of the class or classes of stock which lack a
quorum shall have power to adjourn the meeting for the election of directors
which they are entitled to elect, from time to time, without notice other than
announcement at the meeting, until a quorum shall be present. All of the holders
of Class A Common Stock that are entitled to vote at an election of Class A
Directors shall have the right to vote, in person or by proxy, the number of
shares of Class A Common Stock owned by him or her for as many persons as there
are Class A Directors to be elected and for whose election he or she has a right
to vote, or to cumulate the votes by giving one candidate as many votes as the
number of such Class A Directors multiplied by the aggregate number of votes
shall equal, or by distributing such votes on the same principle among any
number of such candidates. All of the holders of Class B Common Stock that are
entitled to vote at an election of Class B Directors shall have the right to
vote, in person or by proxy, the number of shares of Class B Common Stock owned
by him or her for as many persons as there are Class B Directors to be elected
and for whose election he or she has a right to vote, but in no event shall he
or she be permitted to cumulate his or her votes for one or more Class B
Directors.
(e) Any vacancy in the office of a class of director may be filled by the
remaining directors of such class, unless such vacancy occurred because of the
removal (with or without cause) of a director or all offices of a class of
directors are vacant, in which event such vacancy or vacancies shall be filled
by the affirmative vote of the holders of a majority of the outstanding
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shares of the applicable class of Common Stock. Any or all of the directors may
be removed, with or without cause, by vote or by written consent in each case in
accordance with Section 141 of the DGCL by the holders of the applicable class
of Common Stock and not otherwise. Any director elected to fill a vacancy shall
serve the same remaining term as that of his or her predecessor, subject,
however, to prior death, resignation, retirement, disqualification, or removal
from office.
(f) Without the affirmative vote of the holders of at least 66 2/3% of the
outstanding shares of the Class B Common Stock, the Corporation may not effect
any change in the rights, privileges or preferences of the Class B Common Stock.
This provision shall not be applicable to any amendment to this Restated
Certificate of Incorporation or adoption of resolutions of the Board of
Directors which establishes or designates one or more classes or series of
Preferred Stock in accordance with Article FOURTH, Division A.
(g) With respect to actions by the holders of Class B Common Stock upon
those matters on which such holders are entitled to vote as a separate class,
such actions may be taken without a stockholders meeting, and without any action
by the holders of Class A Common Stock if no approval or action by the holders
of Class A Common Stock is required pursuant to this Restated Certificate of
Incorporation either voting as a separate class or together with the holders of
Class B Common Stock acting as a single class, by the written consent of holders
of the Class B Common Stock who would be entitled to vote at a meeting those
shares having voting power to cast not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares of Class B Common Stock entitled to vote were present and voted.
Notice shall be given in accordance with the applicable provisions of the DGCL
of the taking of corporate action without a meeting by less than unanimous
written consent to those holders of Class B Common Stock on the record date
whose shares were not represented on the written consent.
3. Transfer.
(a) If any person holding shares of Class B Common Stock of record (a
"Class B Holder") purports to transfer such shares of Class B Common Stock,
whether by sale, assignment, gift, bequest or otherwise, except to a Permitted
Transferee, such transfer shall be deemed to constitute a request by the Class B
Holder for conversion of such shares and shall result in such shares being
converted into Class A Common Stock as provided by Section 4 of this Article
FOURTH, Division B.
(b) In the case of a Class B Holder acquiring record and beneficial
ownership of the shares of Class B Common Stock in question upon initial
issuance by the Corporation (an "Original Holder"), a "Permitted Transferee"
shall mean any Affiliate (as defined below) of such Original Holder.
In the case of a Class B Holder which is a Permitted Transferee of an
Original Holder, a "Permitted Transferee" shall mean:
(y) any Original Holder, or
(z) any Permitted Transferee of any Original Holder.
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For this paragraph and Section 4 of this Article FOURTH, Division B,
"Affiliate" means any corporation, partnership, limited liability company or
other entity (each, a "Person") that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
another Person, and includes any Person acting in concert with another Person.
(c) With respect to a Class B Holder which holds shares by virtue of its
status as an Affiliate, the subsequent loss of Affiliate status shall, unless
within 15 days thereafter all shares of Class B Common Stock held by such Class
B Holder are transferred to an Original Holder or a Permitted Transferee of an
Original Holder, result in the automatic conversion of all of its shares of
Class B Common Stock into shares of Class A Common Stock, and stock certificates
formerly representing such shares of Class B Common Stock shall thereupon and
thereafter be deemed to represent shares of Class A Common Stock as provided by
Section 4 of this Article FOURTH, Division B.
(d) Any transfer of shares of Class B Common Stock not permitted hereunder
shall result in the conversion of the transferee's shares of Class B Common
Stock into shares of Class A Common Stock as provided by Section 4 of this
Article FOURTH, Division B, effective as of the date on which certificates
representing such shares are presented for transfer on the books of the
Corporation or on such earlier date that the Corporation receives notice of such
attempted transfer. The Corporation may, in connection with preparing a list of
stockholders entitled to vote at any meeting of stockholders, or as a condition
to the transfer or the registration of shares of Class B Common Stock on the
Corporation's books, require the furnishing of such affidavits or other proof as
it deems necessary to establish that the person is the beneficial owner of
shares of Class B Common Stock or is a Permitted Transferee.
(e) Shares of Class B Common Stock shall be registered in the names of the
beneficial owners thereof and not in "street" or "nominee" name. For this
purpose, a "beneficial owner" of any shares of Class B Common Stock shall mean a
person who, or any entity which, possesses the powers, either singly or jointly,
to direct the voting or disposition of such shares. Certificates for shares of
Class B Common Stock shall bear the following legend:
The rights, preferences and limitations of the Class B Common Stock
represented by this certificate are specified in and governed by the
Restated Certificate of Incorporation of Stanford, Inc., a Delaware
corporation (the "Corporation"), which has been filed with the
Secretary of State of the State of Delaware, and the Corporation's
Bylaws. This certificate is transferable only in the circumstances
described and upon compliance with the conditions specified in the
Corporation's Restated Certificate of Incorporation and Bylaws. A copy
of the Corporation's Restated Certificate of Incorporation and Bylaws
is available from the Corporation without charge to the record holder
of this certificate upon written request to the Corporation at its
principal place of business or record office.
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4. Conversion.
(a) Each share of Class B Common Stock shall be converted at such time, in
such manner and upon such terms and conditions as provided herein into one fully
paid and non-assessable share of Class A Common Stock.
(b) Each share of Class B Common Stock shall automatically convert into a
share of Class A Common Stock (x) at such time as the holders of all Class B
Common Stock cease to own in the aggregate 15% of the issued and outstanding
Common Stock, or (y) at such earlier time as provided in Section 3 of this
Article FOURTH, Division B. Upon automatic conversion of shares of Class B
Common Stock, the Corporation shall reflect such conversion, and the issuance of
Class A Common Stock in connection therewith on its books and records for all
purposes even if certificates reflecting such converted shares of Class B Common
Stock are not surrendered to the Corporation or its transfer agent. All shares
of Class B Common Stock, upon conversion thereof into Class A Common Stock,
shall retain their designation as Class B Common Stock and shall have the status
of authorized and unissued shares of Class B Common Stock; provided that if all
shares of Class B Common Stock outstanding are converted into shares of Class A
Common Stock, then all authorized but unissued shares or treasury shares of
Class B Common Stock shall automatically convert into authorized but unissued or
treasury shares of Class A Common Stock, as the case may be, and no further
shares of Class B Common Stock shall exist. Except as specifically contemplated
under this Section 4, shares of Class B Common Stock may not be converted into
Class A Common Stock.
(c) Each share of Class A Common Stock beneficially owned (within the
meaning of Section 3 of this Article FOURTH, Division B) by Chevron U.S.A. Inc.,
a Pennsylvania corporation ("Chevron"), or its Affiliates shall simultaneous
with Chevron or its Affiliate acquiring such ownership automatically be
converted into one fully paid and non-assessable share of Class B Common Stock;
provided, however, that for purposes of any shares of Class B Common Stock so
issued, only Chevron will be deemed to be the Original Holder thereof for
purposes of the provisions of Section 3 of this Article FOURTH, Division B, and
provided, further, that this provision shall not apply with respect to shares of
Class A Common Stock issued upon conversion of all Class B Common Stock in
accordance with part (x) of the first sentence of paragraph (b) of this Section
4, or any shares of Class A Common Stock owned by Chevron or its Affiliates,
after such conversion shall have occurred. Upon automatic conversion of shares
of Class A Common Stock, the Corporation shall reflect such conversion and the
issuance of Class B Common Stock in connection therewith on its books and
records for all purposes even if certificates reflecting such converted shares
of Class A Common Stock are not surrendered to the Corporation for transfer. All
shares of Class B Common Stock shall be subject to the restrictions and
provisions contained in this Restated Certificate of Incorporation. All shares
of Class A Common Stock, upon conversion thereof into Class B Common Stock,
shall retain their designation as Class A Common Stock and shall have the status
of authorized and unissued shares of Class A Common Stock.
(d) Nothing herein shall prevent the Original Holder (or any Permitted
Transferee) of the Class B Common Stock and the Corporation from executing an
agreement allowing the Original Holder (or any Permitted Transferee), at its
option, to convert the Class B Common Stock into Class A Common Stock, nor the
conversion of any Class B Common Stock pursuant to such agreement.
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(e) The Corporation will, as soon as practicable after such deposit of a
certificate or certificates for Common Stock to be converted in accordance with
this Section 4, issue and deliver at the office of the Corporation or of its
transfer agent to the person for whose account such Common Stock was so
surrendered, a certificate or certificates for the number of full shares of
Common Stock into which the shares represented by the surrendered certificate
are converted. If surrendered certificates for Common Stock are converted only
in part, the Corporation will issue and deliver to the holder, without charge
therefor, a new certificate or certificates representing the aggregate of the
unconverted shares of such class of Common Stock. The failure of the holder to
deliver to the Corporation certificates representing shares of a class of Common
Stock converted in accordance with this Section 4, shall in no way affect the
automatic conversion of such shares.
(f) The issuance of certificates for shares of a class of Common Stock upon
conversion of shares of the other class of Common Stock shall be made without
charge for any issue, stamp or other similar tax in respect of such issuance;
provided, however, if any such certificate is to be issued in a name other than
that of the holder of the share or shares of the class of Common Stock
converted, the person or persons requesting the issuance thereof shall pay to
the Corporation the amount of any tax which may be payable in respect of any
transfer involved in such issuance or shall establish to the satisfaction of the
Corporation that such tax has been paid.
(g) The Corporation shall at all times reserve and keep available, solely
for the purpose of issuance upon conversion of the outstanding shares of Class B
Common Stock, such number of shares of Class A Common Stock as shall be issuable
upon the conversion of all such outstanding shares, provided that nothing
contained herein shall be construed to preclude the Corporation from satisfying
the obligations in respect of the conversion of the outstanding shares of Class
B Common Stock by delivery of shares of Class A Common Stock which are held in
the treasury of the Corporation. The Corporation shall take all such corporate
and other actions as from time to time may be necessary to insure that all
shares of Class A Common Stock issuable upon conversion of shares of Class B
Common Stock upon issue will be duly and validly authorized and issued, fully
paid and nonassessable and free of any preemptive or similar rights. In order
that the Corporation may issue shares of Class A Common Stock upon conversion of
the Class B Common Stock, the Corporation will endeavor to comply with all
applicable Federal and state securities laws and will endeavor to list such
shares to be issued upon conversion on such securities exchange on which the
Class A Common Stock is then listed.
(h) The Corporation shall at all times reserve and keep available, solely
for the purpose of issuance upon conversion of the outstanding shares of Class A
Common Stock a number of shares of Class B Common Stock equal to 40% of the
number of outstanding shares of Class A Common Stock, provided that nothing
contained herein shall be construed to preclude the Corporation from satisfying
the obligations in respect of the conversion of the outstanding shares of Class
A Common Stock by delivery of shares of Class B Common Stock which are held in
the treasury of the Corporation. The Corporation shall take all such corporate
and other actions as from time to time may be necessary to insure that all
shares of Class B Common Stock issuable upon conversion of shares of Class A
Common Stock upon issue will be duly and validly authorized and issued, fully
paid and nonassessable and free of any preemptive or similar rights. In order
that the Corporation may issue shares of Class B Common Stock upon
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conversion of the Class A Common Stock, the Corporation will endeavor to comply
with all applicable Federal and state securities laws.
5. Distribution of Assets. In the event of any liquidation, dissolution or
winding up of the Corporation, or any reduction or decrease of its capital stock
resulting in a distribution of assets to the holders of the Common Stock, after
there shall have been paid to or set aside for the holders of the stock ranking
senior to the Common Stock the full preferential amounts to which they are
respectively entitled, the holders of the Common Stock shall be entitled to
receive, pro rata, all of the remaining assets of the Corporation available for
distribution to its stockholders.
6. Entire Designations. Except as may otherwise be required by law and for
the equitable rights and remedies which may otherwise be available to holders of
Common Stock, the shares of Common Stock shall not have any designations,
preferences, limitations or relative rights, other than those specifically set
forth in this Restated Certificate of Incorporation.
7. Headings. The headings of the various subdivisions of this Division B
are for convenience of reference only and shall not affect the interpretation of
any of the provisions of this Section.
FIFTH: Directors. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors. In addition to the
authority and powers conferred on the Board of Directors by the DGCL or by the
other provisions of this Restated Certificate of Incorporation, the Board of
Directors is authorized and empowered to exercise all such powers and do all
such acts and things as may be exercised or done by the Corporation, subject to
the provisions of the DGCL, this Restated Certificate of Incorporation and the
Bylaws of the Corporation; provided, however, that no Bylaws hereafter adopted,
or any amendments thereto, shall invalidate any prior act of the Board of
Directors that would have been valid if such Bylaws or amendment had not been
adopted.
SIXTH: Action by Written Consent; Special Meetings. Except as
contemplated by Section 2(g) of Article FOURTH, Division B of this Restated
Certificate of Incorporation, no action required to be taken or that may be
taken at any annual or special meeting of the stockholders of the Corporation
may be taken without a meeting, and the power of the stockholders of the
Corporation to consent in writing to the taking of any action by written consent
without a meeting is specifically denied. Unless otherwise provided by the DGCL,
by this Restated Certificate of Incorporation or by any provisions established
pursuant to Article FOURTH hereof with respect to the rights of holders of one
or more outstanding series of Preferred Stock, special meetings of the
stockholders of the Corporation may be called at any time only by the Chairman
of the Board of Directors, the President, the Chief Executive Officer of the
Corporation, by the Board of Directors pursuant to a resolution approved by the
affirmative vote of at least a majority of the members of the Board of
Directors, or by any holder or holders of at least 20% of the outstanding shares
of Common Stock entitled to vote on the matter for which the meeting is called,
and no such special meeting may be called by any other person or persons.
SEVENTH: No director of the Corporation shall be personally liable to
the Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a
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director of the Corporation; provided, however, that this Article SEVENTH shall
not eliminate or limit the liability of such a director (1) for any breach of
such director's duty of loyalty to the Corporation or its stockholders, (2) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) under Section 174 of the DGCL, as the same exists
or as such provision may hereafter be amended, supplemented or replaced, or (4)
for any transactions from which such director derived an improper personal
benefit. If the DGCL is amended after the filing of this Restated Certificate of
Incorporation to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by such law, as so
amended. Any repeal or modification of this Article SEVENTH by the stockholders
of the Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.
EIGHTH: Subject to the provisions of this Restated Certificate of
Incorporation, the Bylaws may be altered, amended or repealed, and new Bylaws
may be adopted, by the board of directors; provided that no amendment or repeal
of (a) the last sentence of Section 3 of Article III of the Bylaws, and (b)
Sections 6, 7(b), 7(c), 9 and 10 of Article III of the Bylaws, nor the adoption
of any provision of the Bylaws which would substantially and adversely affect
the rights of the holders of Class B Common Stock, shall be effective except
upon the affirmative vote of a majority of the shares of Class B Common Stock
outstanding, voting as a separate class.
IN WITNESS WHEREOF, the Corporation has caused the Restated Certificate
of Incorporation to be signed and attested by its duly authorized officers, this
____ day of _______, 2001.
STANFORD, INC.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
11
<PAGE>
EXHIBIT 2.1(b)
AMENDED AND RESTATED BYLAWS
OF
STANFORD, INC.
Adopted and Amended by Resolution of the Board of Directors on
__________ ___, 2001
ARTICLE I
CAPITAL STOCK
Section 1. Share Ownership. Shares for the capital stock of the Company
shall be certificated; provided, however, that the Board of Directors of the
Company may provide by resolution or resolutions that some or all of any or all
classes or series of the Company's stock may be uncertificated shares. Owners of
shares of the capital stock of the Company shall be recorded in the share
transfer records of the Company and ownership of such shares shall be evidenced
by a certificate or book entry notation in the share transfer records of the
Company. Any certificates representing such shares shall be signed by the
Chairman of the Board, if there is one, the President or a Vice President and by
the Treasurer, an Assistant Treasurer, the Corporate Secretary or an Assistant
Corporate Secretary and shall be sealed with the seal of the Company, which
signatures and seal may be facsimiles. In case any officer who has signed or
whose facsimile signature has been placed upon such certificate shall have
ceased to be such officer before such certificate is issued, it may be issued by
the Company with the same effect as if such person were such officer at the date
of its issuance.
Section 2. Stockholders of Record. The Board of Directors of the
Company may appoint one or more transfer agents or registrars of any class of
stock or other security of the Company. The Company may be its own transfer
agent if so appointed by the Board of Directors. The Company shall be entitled
to treat the holder of record of any shares of the Company as the owner thereof
for all purposes, and shall not be bound to recognize any equitable or other
claim to, or interest in, such shares or any rights deriving from such shares,
on the part of any other person, including (but without limitation) a purchaser,
assignee or transferee, unless and until such other person becomes the holder of
record of such shares, whether or not the Company shall have either actual or
constructive notice of the interest of such other person.
Section 3. Transfer of Shares. The shares of the capital stock of the
Company shall be transferable in the share transfer records of the Company by
the holder of record thereof, or his duly authorized attorney or legal
representative in accordance with the Restated Certificate of Incorporation of
the Company and applicable law, upon presentation to the Company or to its
transfer agent (if any) of a duly executed assignment and other evidence of
authority to transfer, or proper evidence of succession, and, if the shares are
represented by a certificate, a duly endorsed certificate or certificates for
shares surrendered for cancellation, and with such proof of the authenticity of
the signatures as the corporation or its transfer agent may reasonably require.
All certificates representing shares surrendered for transfer, properly
endorsed, shall be canceled and new certificates for a like number of shares
shall be issued therefor. In the case of lost,
<PAGE>
stolen, destroyed or mutilated certificates representing shares for which the
Company has been requested to issue new certificates, new certificates or other
evidence of such new shares may be issued upon such conditions as may be
required by the Board of Directors or the Corporate Secretary or an Assistant
Corporate Secretary for the protection of the Company and any transfer agent or
registrar. Uncertificated shares shall be transferred in the share transfer
records of the Company upon the written instruction originated by the
appropriate person to transfer the shares.
Section 4. Stockholders of Record and Fixing of Record Date. Except as
otherwise required by applicable law, for the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive a distribution by the Company
(other than a distribution involving a purchase or redemption by the Company of
any of its own shares) or a share dividend, or in order to make a determination
of stockholders for any other proper purpose, the Board of Directors may fix in
advance a record date for any such determination of stockholders, such date to
be not more than sixty days, and in the case of a meeting of stockholders not
less than ten days, prior to the date on which the particular action requiring
such determination of stockholders is to be taken. If no record date is fixed
for the determination of stockholders entitled to notice of or to vote at a
meeting of stockholders, or stockholders entitled to receive a distribution
(other than a distribution involving a purchase or redemption by the Company of
any of its own shares) or a share dividend, the day next preceding the date on
which notice of the meeting is mailed or the date on which the resolution of the
Board of Directors declaring such distribution or share dividend is adopted, as
the case may be, shall be the record date for such determination of
stockholders. When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as herein provided, such determination
shall apply to any adjournment thereof except where the determination has been
made through the closing of the share transfer records and the stated period of
closing has expired.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meetings. All meetings of stockholders shall be
held at the principal office of the Company, in the City of Houston, Texas, or
at such other place within or without the State of Delaware as may be designated
by the Board of Directors or officer calling the meeting.
Section 2. Annual Meeting. The annual meeting of the stockholders shall
be held on such date and at such time as shall be designated from time to time
by the Board of Directors or as may otherwise be stated in the notice of the
meeting.
Section 3. Special Meetings. Special meetings of the stockholders of
the Company may be called at any time only by the Chairman of the Board, if
there is one, the President and Chief Executive Officer of the Company, by the
Board of Directors pursuant to a resolution approved by the affirmative vote of
at least a majority of the members of the Board of Directors, or by any holder
or holders of at least 20% of the outstanding shares entitled to vote on the
matter for which the meeting is called, and no such special meeting may be
called by any other person or persons.
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Section 4. Notice of Meeting. Except as otherwise required by
applicable law, written or printed notice of all meetings stating the place, day
and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
nor more than sixty days before the date of the meeting, either personally or by
mail, by or at the direction of the Chairman of the Board, if there is one, the
Chief Executive Officer, if there is one, the President, the Corporate Secretary
or the officer or person calling the meeting to each stockholder of record
entitled to vote at such meetings. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, postage prepaid, addressed
to the stockholder at his address as it appears on the share transfer records of
the Company, with postage thereon prepaid.
Section 5. Voting List. The officer or agent having charge of the share
transfer records for shares of the Company shall make, at least ten days before
each meeting of stockholders, a complete list of the stockholders entitled to
vote at such meeting or any adjournment thereof, arranged in alphabetical order,
with the address of and the number of shares held by each, which list, for a
period of ten days prior to such meeting, shall be kept on file at the principal
place of business of the Company and shall be subject to inspection by any
stockholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any stockholder during the whole time of the meeting. The
original share transfer records shall be prima facie evidence as to who are the
stockholders entitled to examine such list or to vote at any meeting of
stockholders. Failure to comply with any requirements of this Section 5 shall
not affect the validity of any action taken at such meeting.
Section 6. Quorum and Vote of Stockholders. Except as otherwise
provided by law, the Restated Certificate of Incorporation of the Company or
these Bylaws, the holders of a majority of shares entitled to vote, represented
in person or by proxy, shall constitute a quorum at a meeting of stockholders,
but, if a quorum is not represented, a majority in interest of those represented
may adjourn the meeting from time to time. With respect to each matter other
than the election of directors as to which no other voting requirement is
specified by law, the Restated Certificate of Incorporation of the Company or in
this Section 6, the affirmative vote of the holders of a majority of the shares
entitled to vote on that matter and represented in person or by proxy at a
meeting at which a quorum is present shall be the act of the stockholders. With
respect to a matter submitted to a vote of the stockholders as to which a
stockholder approval requirement is applicable under the stockholder approval
policy of the New York Stock Exchange, Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or any provision of the Internal
Revenue Code, in each case for which no higher voting requirement is specified
by law, the Restated Certificate of Incorporation of the Company or these
Bylaws, the affirmative vote of the holders of a majority of the shares entitled
to vote on, and voted for or against, that matter at a meeting at which a quorum
is present shall be the act of the stockholders, provided that approval of such
matter shall also be conditioned on any more restrictive requirement of such
stockholder approval policy, Rule 16b-3 or Internal Revenue Code provision, as
applicable, being satisfied. With respect to the approval of independent public
accountants (if submitted for a vote of the stockholders), the affirmative vote
of the holders of a majority of the shares entitled to vote on, and voted for or
against, that matter at a meeting of stockholders at which a quorum is present
shall be the act of the stockholders.
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Section 7. Presiding Officer and Conduct of Meetings. The Chairman of
the Board, if there is one, or in his absence, the Chief Executive Officer, if
there is one, or in his absence, the President shall preside at all meetings of
the stockholders or, if such officers are not present at a meeting, by such
other person as the Board of Directors shall designate or if no such person is
designated by the Board of Directors, the most senior officer of the Company
present at the meeting. The Corporate Secretary of the Company, if present,
shall act as secretary of each meeting of stockholders; if he is not present at
a meeting, then such person as may be designated by the presiding officer shall
act as secretary of the meeting. Meetings of stockholders shall follow
reasonable and fair procedure. Subject to the foregoing, the conduct of any
meeting of stockholders and the determination of procedure and rules shall be
within the absolute discretion of the officer presiding at such meeting (the
"Chairman of the Meeting"), and there shall be no appeal from any ruling of the
Chairman of the Meeting with respect to procedure or rules. Accordingly, in any
meeting of stockholders or part thereof, the Chairman of the Meeting shall have
the sole power to determine appropriate rules or to dispense with theretofore
prevailing rules. Without limiting the foregoing, the following rules shall
apply:
(a) If disorder should arise which prevents continuation of
the legitimate business of meeting, the Chairman of the Meeting may
announce the adjournment of the meeting; and upon so doing, the meeting
shall be immediately adjourned.
(b) The Chairman of the Meeting may ask or require that anyone
not a bona fide stockholder or proxy leave the meeting.
(c) A resolution or motion proposed by a stockholder shall
only be considered for vote of the stockholders if it meets the
criteria of Article II, Section 8 (Proper Business--Annual Meeting of
Stockholders) or Article II, Section 9 (Proper Business--Special
Meeting of Stockholders), as the case may be. The Chairman of the
Meeting may propose any resolution or motion for vote of the
stockholders.
(d) The order of business at all meetings of stockholders
shall be determined by the Chairman of the Meeting.
(e) The Chairman of the Meeting may impose any reasonable
limits with respect to participation in the meeting by stockholders,
including, but not limited to, limits on the amount of time taken up by
the remarks or questions of any stockholder, limits on the number of
questions per stockholder and limits as to the subject matter and
timing of questions and remarks by stockholders.
(f) Before any meeting of stockholders, the Board of Directors
(i) shall appoint three persons other than nominees for office to act
as inspectors of election at the meeting or its adjournment and (ii)
may designate one or more alternate inspectors to replace any inspector
who fails to act. If no inspector or alternate is able to act at a
meeting of stockholders, the Chairman of the Meeting shall appoint one
or more, up to a maximum of three, inspectors of election to act at the
meeting of the stockholders.
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<PAGE>
The duties of the inspectors shall be to:
(i) determine the number of shares outstanding and the
voting power of each such share, the shares represented at the
meeting, the existence of a quorum, and the authenticity,
validity and effect of proxies and ballots;
(ii) receive votes or ballots;
(iii) hear and determine all challenges and questions in
any way arising in connection with the vote and retain for a
reasonable period a record of the disposition of any
challenges made to any determination by the inspectors;
(iv) count and tabulate all votes and ballots;
(v) report and certify to the Board of Directors the
results based on the information assembled by the inspectors;
and
(vi) do any other acts that may be proper to conduct the
election or vote with fairness to all stockholders.
(g) Each inspector of election, before entering upon the
discharge of the duties of inspector, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality
and according to the best of such inspector's ability.
(h) In determining the validity and counting of proxies and
ballots, the inspectors of election shall be limited to an examination
of the items specifically allowed by Section 231(d) of the DGCL.
All determinations of the Chairman of the Meeting shall be conclusive
unless a matter is determined otherwise upon motion duly adopted by the
affirmative vote of the holders of at least 662/3 % of the voting power of the
shares of capital stock of the Company entitled to vote in the election of
directors held by stockholders present in person or represented by proxy at such
meeting.
Section 8. Proper Business--Annual Meeting of Stockholders. At any
annual meeting of stockholders, only such business shall be conducted as shall
be a proper subject for the meeting and shall have been properly brought before
the meeting. To be properly brought before an annual meeting of stockholders,
business (other than business relating to any nomination of directors, which is
governed by Article III, Section 3 of these Bylaws) must (a) be specified in the
notice of such meeting (or any supplement thereto) given by or at the direction
of the Board of Directors (or any duly authorized committee thereof), (b)
otherwise be properly brought before the meeting by or at the direction of the
Chairman of the Meeting or the Board of Directors (or any duly authorized
committee thereof) or (c) otherwise (i) be properly requested to be brought
before the meeting by a stockholder of record entitled to vote in the election
of directors generally, in compliance with the provisions of this Section 8 and
(ii) constitute a proper subject to be brought before such meeting. For business
to be properly brought before an annual meeting of stockholders, any stockholder
who intends to bring any matter (other than a matter relating to any nomination
of directors, which is governed by Article III, Section 3 of these Bylaws)
before an annual meeting of stockholders and is entitled to vote on such matter
must deliver written notice of such stockholder's intent to bring such matter
before the annual
Page 5 of 20
<PAGE>
meeting of stockholders, either by personal delivery or by United States mail,
postage prepaid, to the Corporate Secretary of the Company. Such notice must be
received by the Corporate Secretary not less than ninety days nor more than 180
days prior to the date on which the immediately preceding year's annual meeting
of stockholders was held. In no event shall the public disclosure of an
adjournment of an annual meeting of stockholders commence a new time period for
the giving of a stockholder's notice as described above.
To be in proper written form, a stockholder's notice to the Corporate
Secretary shall set forth as to each matter the stockholder proposes to bring
before the annual meeting of stockholders (a) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting, (b) the name and address, as they appear on the
Company's books and records, of the stockholder proposing such business, (c)
evidence, reasonably satisfactory to the Corporate Secretary of the Company, of
such stockholder's status as such and of the number of shares of each class of
capital stock of the Company of which such stockholder is the beneficial owner,
(d) a description of all arrangements or understandings between such stockholder
and any other person or persons (including their names and the number of shares
beneficially owned by them) in connection with the proposal of such business by
such stockholder and any material interest of such stockholder in such business
and (e) a representation that such stockholder intends to appear in person or by
proxy at the annual meeting to bring such business before the meeting. No
business shall be conducted at an annual meeting of stockholders except in
accordance with the procedures set forth in this Section 8. Beneficial ownership
shall be determined in accordance with Rule 13d-3 under the Exchange Act. When
used in these Bylaws, "person" has the meaning ascribed to such term in Section
2(a)(2) of the Securities Act of 1933, as amended, as the context may require.
Within thirty days after such stockholder shall have submitted the
aforesaid items, the Corporate Secretary or the Board of Directors of the
Company shall determine whether the proposed business has been properly
requested to be brought before the annual meeting of stockholders and shall
notify such stockholder in writing of its determination. If such stockholder
fails to submit a required item in the form or within the time indicated, or if
the Corporate Secretary or the Board of Directors of the Company determines that
the proposed business otherwise has not been properly requested, then such
proposal by such stockholder shall not be voted upon by the stockholders of the
Company at such annual meeting of stockholders. The Chairman of the Meeting
shall, if the facts warrant, determine and declare to the meeting that a
proposal made by a stockholder of the Company pursuant to this Section 8 was not
made in accordance with the procedures prescribed by these Bylaws, and if he
should so determine, he shall so declare to the meeting and the defective
proposal shall be disregarded.
Nothing in this Section 8 shall be interpreted or construed to require
the inclusion of information about any such proposal in any proxy statement
distributed by, at the direction of, or on behalf of the Board of Directors of
the Company.
Section 9. Proper Business--Special Meeting of Stockholders. At any
special meeting of stockholders, only such business shall be conducted as shall
have been stated in the notice of such meeting or shall otherwise have been
properly brought before the meeting by or at the direction of the Chairman of
the Meeting or the Board of Directors (or any duly authorized committee
thereof).
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<PAGE>
Section 10. Action by Written Consent. Except as set forth otherwise in
the Restated Certificate of Incorporation of the Company, no action required to
be taken or that may be taken at any annual or special meeting of the
stockholders of the Company may be taken without a meeting, and the power of the
stockholders of the Company to consent in writing to the taking of any action by
written consent without a meeting is specifically denied.
ARTICLE III
Directors
Section 1. General. The business and affairs of the Company shall be
managed by or under the direction of the Board of Directors.
Section 2. Number; Term. The number of directors which shall constitute
the whole Board of Directors shall be fixed in the manner provided in the
Restated Certificate of Incorporation of the Company. Except as otherwise
provided in the Restated Certificate of Incorporation of the Company or
applicable law, in the event of any change in the authorized number of
directors, each director then continuing to serve as such shall nevertheless
continue as a director until the expiration of his or her current term, or his
or her prior death, resignation, disqualification or removal. No decrease in the
number of directors constituting the Board of Directors shall shorten the term
of any incumbent director.
Each director elected by the holders of Preferred Stock pursuant to
Division A of Article FOURTH of the Restated Certificate of Incorporation of the
Company (or elected by such directors to fill a vacancy) shall serve for a term
ending upon the earlier of the election of his successor or the termination at
any time of a right of the holders of Preferred Stock to elect members of the
Board of Directors.
The above qualifications and limitations notwithstanding, each director
shall serve until his successor shall have been duly elected and qualified,
unless he or she shall resign, become disqualified, disabled or shall otherwise
be removed.
Section 3. Nomination of Directors. Nominations for the election of
directors may be made by the Board of Directors or by any stockholder (each, a
"Nominator") entitled to vote in the election of directors. Such nominations,
other than those made by the Board of Directors, shall be made in writing
pursuant to timely notice delivered to or mailed and received by the Corporate
Secretary of the Company as set forth in this Section 3. To be timely in
connection with an annual meeting of stockholders, a Nominator's notice, setting
forth the name and address of the person to be nominated, shall be delivered to
or mailed and received at the principal executive offices of the Company not
less than 90 days nor more than 180 days prior to the date on which the
immediately preceding year's annual meeting of stockholders was held. To be
timely in connection with any election of a director at a special meeting of the
stockholders, a Nominator's notice, setting forth the name of the person to be
nominated, shall be delivered to or mailed and received at the principal
executive offices of the Company not less than forty days nor more than sixty
days prior to the date of such meeting; provided, however, that in the event
that less than forty-seven days' notice or prior public disclosure of the date
of the special meeting
Page 7 of 20
<PAGE>
of the stockholders is given or made to the stockholders, the Nominator's notice
to be timely must be so received not later than the close of business on the
seventh day following the day on which such notice of date of the meeting was
mailed or such public disclosure was made. At such time, the Nominator shall
also submit written evidence, reasonably satisfactory to the Corporate Secretary
of the Company, that the Nominator is a stockholder of the Company and shall
identify in writing (a) the name and address of the Nominator, (b) the number of
shares of each class of capital stock of the Company owned beneficially by the
Nominator, (c) the name and address of each of the persons with whom the
Nominator is acting in concert, (d) the number of shares of capital stock
beneficially owned by each such person with whom the Nominator is acting in
concert and (e) a description of all arrangements or understandings between the
Nominator and each nominee and any other persons with whom the Nominator is
acting in concert pursuant to which the nomination or nominations are to be
made. At such time, the Nominator shall also submit in writing (i) the
information with respect to each such proposed nominee that would be required to
be provided in a proxy statement prepared in accordance with Regulation 14A
under the Exchange Act and (ii) a notarized affidavit executed by each such
proposed nominee to the effect that, if elected as a member of the Board of
Directors, he will serve and that he is eligible for election as a member of the
Board of Directors. Within thirty days (or such shorter time period that may
exist prior to the date of the meeting) after the Nominator has submitted the
aforesaid items to the Corporate Secretary of the Company, the Corporate
Secretary of the Company shall determine whether the evidence of the Nominator's
status as a stockholder submitted by the Nominator is reasonably satisfactory
and shall notify the Nominator in writing of his determination. The failure of
the Corporate Secretary of the Company to find such evidence reasonably
satisfactory, or the failure of the Nominator to submit the requisite
information in the form or within the time indicated, shall make the person to
be nominated ineligible for nomination at the meeting at which such person is
proposed to be nominated. The Chairman of the Meeting shall, if the facts
warrant, determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by these Bylaws, and if he should so
determine, he shall so declare to the meeting and the defective nomination shall
be disregarded. Beneficial ownership shall be determined in accordance with Rule
13d-3 under the Exchange Act.
No provision of this Section 3 shall apply to the election of any Class
B Director (as defined in the Restated Certificate of Incorporation).
Section 4. Place of Meetings and Meetings by Telephone. Meetings of the
Board of Directors may be held either within or without the State of Delaware,
at whatever place is specified by the officer calling the meeting. Meetings of
the Board of Directors may also be held by means of conference telephone or
other communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in such a meeting by means of
conference telephone or other communications equipment shall constitute presence
in person at such meeting, except where a director participates in a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened. In the absence of
specific designation by the officer calling the meeting, the meetings shall be
held at the principal office of the Company.
Section 5. Regular Meetings. The Board of Directors shall meet each
year immediately following the annual meeting of the stockholders for the
transaction of such business as may
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<PAGE>
properly be brought before the meeting. The Board of Directors shall also meet
regularly at such other times as shall be designated by the Board of Directors.
No notice of any kind to either existing or newly elected members of the Board
of Directors for such annual or regular meetings shall be necessary.
Section 6. Special Meetings. Special meetings of the Board of Directors
may be held at any time upon the call of the Chairman of the Board, if there is
one, the Chief Executive Officer, if there is one, the President or the
Corporate Secretary of the Company or any three of the directors then in office.
Notice of any special meeting shall be given: (i) at least five days prior
thereto if the notice is given personally or by an electronic transmission, (ii)
at least five business days prior thereto if the notice is given by having it
delivered by a third party entity that provides delivery services in the
ordinary course of business and guarantees delivery of the notice to the
director no later than the following business day, and (iii) at least seven
business days prior thereto if the notice is given by mail. Notice of any
meeting where any actions described in Section 7(b) of this Article III will be
considered shall be given to Class B Directors at least 30 days before the vote
on any such action and shall set forth the material terms thereof. For this
purpose, the term "electronic transmission" may include, but shall not be
limited to, a facsimile, email or other electronic means. Notice shall be
delivered to the director's business address and/or telephone number and shall
be deemed given upon electronic transmission, upon delivery to the third party
delivery service, or upon being deposited in the United States mail with postage
thereon prepaid. Notice of the time, place and purpose of any special meeting
may be waived in writing before or after such meeting, and shall be equivalent
to the giving of notice. Attendance of a director at such meeting shall also
constitute a waiver of notice thereof, except where he attends for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened. Except as otherwise provided by
these Bylaws, neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
Section 7. Quorum and Voting
(a) Except as otherwise provided by applicable law, a majority
of the number of directors fixed in the manner provided in the Restated
Certificate of Incorporation of the Company shall constitute a quorum
for the transaction of business. Except as otherwise provided by law,
the Restated Certificate of Incorporation of the Company or these
Bylaws, the affirmative vote of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors. Any regular or special directors' meeting may be adjourned
from time to time by those present, whether a quorum is present or not.
(b) Notwithstanding anything to the contrary herein, so long
as any shares of Class B Common Stock of the Company are issued and
outstanding and the holders of Class B Common Stock have not terminated
their rights to block such actions granted to them under Section 4.1 of
the Stockholder Agreement between the Company and Chevron U.S.A. Inc.,
a Pennsylvania corporation, dated November 9, 2001, the Company shall
not take (or permit to be taken in its capacity as a stockholder or
partner or otherwise permit any subsidiary of the Company to take) any
of the following actions if
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<PAGE>
all of the Class B Directors present at the meeting where such action
is considered vote against such action:
(i) amendment of (A) the last sentence of Article III,
Section 3 of these Bylaws, (B) Article III, Sections 6, 7(b),
7(c), 9 and 10 of these Bylaws, or (C) the last two sentences
of Section 2(d) of Article IV, Division B of the Restated
Certificate of Incorporation of the Company;
(ii) adoption of any provision of these Bylaws or
amendment to the Restated Certificate of Incorporation which
would substantially and adversely affect the rights of the
holders of the Class B Common Stock;
(iii) authorization of new shares of any stock or other
voting securities of the Company where the aggregate
consideration to be received by the Company therefor exceeds
$3 billion;
(iv) any merger or consolidation of the Company or any
subsidiary (other than a merger or consolidation by a
subsidiary with the Company or another subsidiary), any joint
venture, any liquidation or dissolution of the Company, any
voluntary initiation of a proceeding in bankruptcy or
acquiescence to an involuntary initiation of a proceeding in
bankruptcy, any acquisition of stock or assets by the Company
or its subsidiaries, or any issuance of common or preferred
stock by the Company, any of which would result in the payment
or receipt of consideration (including the incurrence or
assumption of indebtedness and liabilities) having a fair
market value exceeding $3 billion; or
(v) any other material transaction (or series of related
transactions) which would result in the payment or receipt of
consideration (including the incurrence or assumption of
indebtedness and liabilities) having a fair market value
exceeding $3 billion and is out of the ordinary course of
business for the Company.
(c) The executive officers of the Company shall advise the
members of the Board of Directors of the consideration of a proposal
relating to any matter of the type described in Section 7(b) at such
time as they determine to give substantive attention to such proposal.
Section 8. Compensation. Directors shall receive such compensation for
their services as shall be determined by the Board of Directors.
Section 9. Executive and Other Committees. The Board of Directors, by
resolution or resolutions adopted by a majority of the full Board of Directors,
may designate one or more members of the Board of Directors to constitute an
Executive Committee, and one or more other committees, which shall in each case
be comprised of such number of directors as the Board of Directors may determine
from time to time. Unless precluded by applicable law or rule of the New York
Stock Exchange, each committee of the Board of Directors, other than any
nomination committee with respect to Class A Directors (as such term is defined
in the Company's Restated Certificate of Incorporation), shall include at least
one Class B Director at
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all times, unless a majority of Class B Directors consents to a committee not
having any Class B Directors. Subject to such restrictions as may be contained
in the Company's Restated Certificate of Incorporation or that may be imposed by
the DGCL, any such committee shall have and may exercise such powers and
authority of the Board of Directors in the management of the business and
affairs of the Company as the Board of Directors may determine by resolution and
specify in the respective resolutions appointing them, and may authorize the
seal of the Company to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to the following
matters: (a) approving or adopting, or recommending to the stockholders of the
Company, any action or matter expressly required by the DGCL to be submitted to
the stockholders for approval, (b) adopting, amending or repealing any Bylaw of
the Company, or (c) actions set forth in Section 7(b) of this Article III. Each
duly authorized action taken with respect to a given matter by any such duly
appointed committee of the Board of Directors shall have the same force and
effect as the action of the full Board of Directors and shall constitute for all
purposes the action of the full Board of Directors with respect to such matter.
The Board of Directors shall have the power at any time to change the
membership of any such committee and to fill vacancies in it. A majority of the
members of any such committee shall constitute a quorum. The Board of Directors
shall name a chairman at the time it designates members to a committee. Each
such committee shall appoint such subcommittees and assistants as it may deem
necessary. Except as otherwise provided by the Board of Directors, meetings of
any committee shall be conducted in accordance with the provisions of Sections 4
and 6 of this Article III as the same shall from time to time be amended. Any
member of any such committee elected or appointed by the Board of Directors may
be removed by the Board of Directors whenever in its judgment the best interests
of the Company will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election or
appointment of a member of a committee shall not of itself create contract
rights.
Section 10. Agenda Items. No action may be taken at a meeting of the
Board of Directors with respect to any matter that was not previously set forth
on an agenda for such meeting if either a majority of the Class B Directors
present at such meeting or a majority of the other directors present at such
meeting oppose taking action at such meeting with respect to such matter.
ARTICLE IV
Officers
Section 1. Officers. The officers of the Company shall consist of a
President and a Corporate Secretary and such other officers and agents as the
Board of Directors may from time to time elect or appoint. The Board of
Directors may delegate to the Chairman of the Board, if there is one, and/or the
Chief Executive Officer, if there is one, the authority to appoint or remove
additional officers and agents of the Company. Each officer shall hold office
until his successor shall have been duly elected or appointed and shall qualify
or until his death or until he shall resign or shall have been removed in the
manner hereinafter provided. Any two or more
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offices may be held by the same person. Except for the Chairman of the Board, if
any, no officer need be a director.
Section 2. Vacancies; Removal. Whenever any vacancies shall occur in
any office by death, resignation, increase in the number of offices of the
Company, or otherwise, the officer so elected shall hold office until his
successor is chosen and qualified. The Board of Directors may at any time remove
any officer of the Company, whenever in its judgment the best interests of the
Company will be served thereby, but such removal shall be without prejudice to
the contract rights, if any, of the person so removed. Election or appointment
of an officer or agent shall not of itself create contract rights.
Section 3. Powers and Duties of Officers. The officers of the Company
shall have such powers and duties as generally pertain to their offices as well
as such powers and duties as from time to time shall be conferred by the Board
of Directors. The Corporate Secretary shall have the duty to record the
proceedings of the meetings of the stockholders and directors in a book to be
kept for that purpose.
ARTICLE V
Indemnification
Section 1. General. The Company shall, to the fullest extent permitted
by applicable law in effect on the date of effectiveness of these Bylaws, and to
such greater extent as applicable law may thereafter permit, indemnify and hold
Indemnitee harmless from and against any and all losses, liabilities, claims,
damages and, subject to Article V, Section 2 (Expenses), Expenses (as this and
all other capitalized words used in this Article V not previously defined in
these Bylaws are defined in Article V, Section 16 (Definitions)), whatsoever
arising out of any event or occurrence related to the fact that Indemnitee is or
was a director or officer of the Company or is or was serving in another
Corporate Status.
Section 2. Expenses. If Indemnitee is, by reason of his Corporate
Status, a party to and is successful, on the merits or otherwise, in any
Proceeding, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith. If Indemnitee is not
wholly successful in such Proceeding but is successful, on the merits or
otherwise, as to any Matter in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or on
his behalf relating to such Matter. The termination of any Matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such Matter. To the extent that the Indemnitee is, by
reason of his Corporate Status, a witness in any Proceeding, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith.
Section 3. Advances. In the event of any threatened or pending action,
suit or proceeding in which Indemnitee is a party or is involved and that may
give rise to a right of indemnification under this Article V, following written
request to the Company by Indemnitee, the Company shall promptly pay to
Indemnitee amounts to cover expenses reasonably incurred by Indemnitee in such
proceeding in advance of its final disposition upon the receipt by the Company
of (i) a written undertaking executed by or on behalf of Indemnitee providing
that
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Indemnitee will repay the advance if it shall ultimately be determined that
Indemnitee is not entitled to be indemnified by the Company as provided in these
Bylaws and (ii) satisfactory evidence as to the amount of such expenses.
Section 4. Repayment of Advances or Other Expenses. Indemnitee agrees
that Indemnitee shall reimburse the Company all expenses paid by the Company in
defending any civil, criminal, administrative or investigative action, suit or
proceeding against Indemnitee in the event and only to the extent that it shall
be determined pursuant to the provisions of this Article V or by final judgment
or other final adjudication under the provisions of any applicable law that
Indemnitee is not entitled to be indemnified by the Company for such expenses.
Section 5. Request for Indemnification. To obtain indemnification,
Indemnitee shall submit to the Corporate Secretary of the Company a written
claim or request. Such written claim or request shall contain sufficient
information to reasonably inform the Company about the nature and extent of the
indemnification or advance sought by Indemnitee. The Corporate Secretary of the
Company shall promptly advise the Board of Directors of such request.
Section 6. Determination of Entitlement; No Change of Control. If there
has been no Change of Control at the time the request for indemnification is
submitted, Indemnitee's entitlement to indemnification shall be determined in
accordance with Section 145(d) of the DGCL. If entitlement to indemnification is
to be determined by Independent Counsel, the Company shall furnish notice to
Indemnitee within ten days after receipt of the request for indemnification,
specifying the identity and address of Independent Counsel. The Indemnitee may,
within fourteen days after receipt of such written notice of selection, deliver
to the Company a written objection to such selection. Such objection may be
asserted only on the ground that the Independent Counsel so selected does not
meet the requirements of Independent Counsel and the objection shall set forth
with particularity the factual basis for such assertion. If there is an
objection to the selection of Independent Counsel, either the Company or
Indemnitee may petition the Court for a determination that the objection is
without a reasonable basis and/or for the appointment of Independent Counsel
selected by the Court.
Section 7. Determination of Entitlement; Change of Control. If there
has been a Change of Control at the time the request for indemnification is
submitted, Indemnitee's entitlement to indemnification shall be determined in a
written opinion by Independent Counsel selected by Indemnitee. Indemnitee shall
give the Company written notice advising of the identity and address of the
Independent Counsel so selected. The Company may, within seven days after
receipt of such written notice of selection, deliver to the Indemnitee a written
objection to such selection. Indemnitee may, within five days after the receipt
of such objection from the Company, submit the name of another Independent
Counsel and the Company may, within seven days after receipt of such written
notice of selection, deliver to the Indemnitee a written objection to such
selection. Any objections referred to in this Section 7 may be asserted only on
the ground that the Independent Counsel so selected does not meet the
requirements of Independent Counsel and such objection shall set forth with
particularity the factual basis for such assertion. Indemnitee may petition the
Court for a determination that the Company's objection to the first and/or
second selection of Independent Counsel is without a reasonable basis and/or for
the appointment as Independent Counsel of a person selected by the Court.
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Section 8. Procedures of Independent Counsel. If a Change of Control
shall have occurred before the request for indemnification is sent by
Indemnitee, Indemnitee shall be presumed (except as otherwise expressly provided
in this Article V) to be entitled to indemnification upon submission of a
request for indemnification in accordance with Article V, Section 5 (Request for
Indemnification), and thereafter the Company shall have the burden of proof to
overcome the presumption in reaching a determination contrary to the
presumption. The presumption shall be used by Independent Counsel as a basis for
a determination of entitlement to indemnification unless the Company provides
information sufficient to overcome such presumption by clear and convincing
evidence or the investigation, review and analysis of Independent Counsel
convinces him by clear and convincing evidence that the presumption should not
apply.
Except in the event that the determination of entitlement to
indemnification is to be made by Independent Counsel, if the person or persons
empowered under Article V, Section 6 (Determination of Entitlement; No Change of
Control) or Section 7 (Determination of Entitlement; Change of Control) to
determine entitlement to indemnification shall not have made and furnished to
Indemnitee in writing a determination within sixty days after receipt by the
Company of the request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification unless Indemnitee knowingly misrepresented a
material fact in connection with the request for indemnification or such
indemnification is prohibited by applicable law. The termination of any
Proceeding or of any Matter therein, by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not
(except as otherwise expressly provided in this Article V) of itself adversely
affect the right of Indemnitee to indemnification or create a presumption that
Indemnitee did not act in good faith and in a manner that he reasonably believed
to be in or not opposed to the best interests of the Company, or with respect to
any criminal Proceeding, that Indemnitee had reasonable cause to believe that
his conduct was unlawful. A person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan of the Company shall be deemed to have acted in a
manner not opposed to the best interests of the Company.
For purposes of any determination hereunder, a person shall be deemed
to have acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company, or, with respect to any
criminal action or Proceeding, to have had no reasonable cause to believe his
conduct was unlawful, if his action is based on the records or books of account
of the Company or another enterprise or on information supplied to him by the
officers of the Company or another enterprise in the course of their duties or
on the advice of legal counsel for the Company or another enterprise or on
information or records given or reports made to the Company or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Company or another enterprise.
The term "another enterprise" as used in this Section shall mean any other
company or any partnership, limited liability company, association, joint
venture, trust, employee benefit plan or other enterprise of which such person
is or was serving at the request of the Company as a director, officer, employee
or agent. The provisions of this paragraph shall not be deemed to be exclusive
or to limit in any way the circumstances in which an Indemnitee may be deemed to
have met the applicable standards of conduct for determining entitlement to
rights under this Article V.
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Section 9. Independent Counsel Expenses. The Company shall pay any and
all reasonable fees and expenses of Independent Counsel incurred acting pursuant
to this Article V and in any proceeding to which it is a party or witness in
respect of its investigation and written report and shall pay all reasonable
fees and expenses incident to the procedures in which such Independent Counsel
was selected or appointed. No Independent Counsel may serve if a timely
objection has been made to his selection until a court has determined that such
objection is without a reasonable basis.
Section 10. Adjudication. In the event that (i) a determination is made
pursuant to Article V, Section 6 (Determination of Entitlement; No Change of
Control) or Section 7 (Determination of Entitlement; Change of Control) that
Indemnitee is not entitled to indemnification under this Article V; (ii)
advancement of Expenses is not timely made pursuant to Article V, Section 3
(Advances); (iii) Independent Counsel has not made and delivered a written
opinion determining the request for indemnification (a) within ninety days after
being appointed by the Court, (b) within ninety days after objections to his
selection have been overruled by the Court or (c) within ninety days after the
time for the Company or Indemnitee to object to his selection; or (iv) payment
of indemnification is not made within five days after a determination of
entitlement to indemnification has been made or deemed to have been made
pursuant to Article V, Section 6 (Determination of Entitlement; No Change of
Control), Section 7 (Determination of Entitlement; Change of Control) or Section
8 (Procedures of Independent Counsel), Indemnitee shall be entitled to an
adjudication in an appropriate court of the State of Delaware, or in any other
court of competent jurisdiction, of his entitlement to such indemnification or
advancement of Expenses. In the event that a determination shall have been made
that Indemnitee is not entitled to indemnification, any judicial proceeding or
arbitration commenced pursuant to this Section 10 shall be conducted in all
respects as a de novo trial on the merits and Indemnitee shall not be prejudiced
by reason of that adverse determination. If a Change of Control shall have
occurred, in any judicial proceeding commenced pursuant to this Section 10, the
Company shall have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be. If a
determination shall have been made or deemed to have been made that Indemnitee
is entitled to indemnification, the Company shall be bound by such determination
in any judicial proceeding commenced pursuant to this Section 10, or otherwise,
unless Indemnitee knowingly misrepresented a material fact in connection with
the request for indemnification, or such indemnification is prohibited by law.
The Company shall be precluded from asserting in any judicial
proceeding commenced pursuant to this Section 10 that the procedures and
presumptions of this Article V are not valid, binding and enforceable and shall
stipulate in any such proceeding that the Company is bound by all provisions of
this Article V. In the event that Indemnitee, pursuant to this Section 10, seeks
a judicial adjudication to enforce his rights under, or to recover damages for
breach of, this Article V, Indemnitee shall be entitled to recover from the
Company, and shall be indemnified by the Company against, any and all Expenses
actually and reasonably incurred by him in such judicial adjudication, but only
if he prevails therein. If it shall be determined in such judicial adjudication
that Indemnitee is entitled to receive part but not all of the indemnification
or advancement of Expenses sought, the Expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall be appropriately
prorated.
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Section 11. Participation by the Company. With respect to any such
claim, action, suit, proceeding or investigation as to which Indemnitee notifies
the Company of the commencement thereof: (a) the Company will be entitled to
participate therein at its own expense; (b) except as otherwise provided below,
to the extent that it may wish, the Company (jointly with any other indemnifying
party similarly notified) will be entitled to assume the defense thereof, with
counsel reasonably satisfactory to Indemnitee. After receipt of notice from the
Company to Indemnitee of the Company's election so to assume the defense
thereof, the Company will not be liable to Indemnitee under this Article V for
any legal or other expenses subsequently incurred by Indemnitee in connection
with the defense thereof other than reasonable costs of investigation or as
otherwise provided below. Indemnitee shall have the right to employ his own
counsel in such action, suit, proceeding or investigation but the fees and
expenses of such counsel incurred after notice from the Company of its
assumption of the defense thereof shall be at the expense of Indemnitee unless
(i) the employment of counsel by Indemnitee has been authorized by the Company,
(ii) Indemnitee shall have reasonably concluded that there is a conflict of
interest between the Company and Indemnitee in the conduct of the defense of
such action or (iii) the Company shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of counsel employed by Indemnitee shall be subject to indemnification pursuant
to the terms of this Article V. The Company shall not be entitled to assume the
defense of any action, suit, proceeding or investigation brought in the name of
or on behalf of the Company or as to which Indemnitee shall have made the
conclusion provided for in (ii) above; and (c) the Company shall not be liable
to indemnify Indemnitee under this Article V for any amounts paid in settlement
of any action or claim effected without its written consent, which consent shall
not be unreasonably withheld. The Company shall not settle any action or claim
in any manner that would impose any limitation or unindemnified penalty on
Indemnitee without Indemnitee's written consent, which consent shall not be
unreasonably withheld.
Section 12. Nonexclusivity of Rights. The rights of indemnification and
advancement of Expenses as provided by this Article V shall not be deemed
exclusive of any other rights to which Indemnitee may at any time be entitled to
under applicable law, the Restated Certificate of Incorporation of the Company,
these Bylaws, any agreement, a vote of stockholders or a resolution of
directors, or otherwise. No amendment, alteration or repeal of this Article V or
any provision hereof shall be effective as to any Indemnitee for acts, events
and circumstances that occurred, in whole or in part, before such amendment,
alteration or repeal. The provisions of this Article V shall continue as to an
Indemnitee whose Corporate Status has ceased for any reason and shall inure to
the benefit of his heirs, executors and administrators. Neither the provisions
of this Article V nor those of any agreement to which the Company is a party
shall be deemed to preclude the indemnification of any person who is not
specified in this Article V as having the right to receive indemnification or is
not a party to any such agreement, but whom the Company has the power or
obligation to indemnify under the provisions of the DGCL.
Section 13. Insurance and Subrogation. The Company may maintain
insurance, at its expense, to protect itself and any director, officer, employee
or agent of the Company or another corporation, partnership, joint venture,
trust or other enterprise against any such expense, liability or loss, whether
or not the Company would have the power to indemnity such person against such
expense, liability or loss under applicable law.
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The Company shall not be liable under this Article V to make any
payment of amounts otherwise indemnifiable hereunder if, but only to the extent
that, Indemnitee has otherwise actually received such payment under any
insurance policy, contract, agreement or otherwise.
In the event of any payment hereunder, the Company shall be subrogated
to the extent of such payment to all the rights of recovery of Indemnitee, who
shall execute all papers required and take all action reasonably requested by
the Company to secure such rights, including execution of such documents as are
necessary to enable the Company to bring suit to enforce such rights.
Section 14. Severability. If any provision or provisions of this
Article V shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby; and, to the
fullest extent possible, the provisions of this Article V shall be construed so
as to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable.
Section 15. Certain Actions for Which Indemnification Is Not Provided.
Notwithstanding any other provision of this Article V, no person shall be
entitled to indemnification or advancement of Expenses under this Article V with
respect to any Proceeding, or any Matter therein, brought or made by such person
against the Company.
Section 16. Definitions. For purposes of this Article V:
"Change of Control" means a change in control of the Company after the
date Indemnitee acquired his Corporate Status, which shall be deemed to have
occurred in any one of the following circumstances occurring after such date:
(i) there shall have occurred an event required to be reported with respect to
the Company in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Exchange Act, whether or not the Company is then subject to such reporting
requirement; (ii) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act) shall have become the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 40% or more of the combined voting power of the Company's
then outstanding voting securities without prior approval of at least two-thirds
of the members of the Board of Directors in office immediately prior to such
person attaining such percentage interest; (iii) the Company is a party to a
merger, consolidation, sale of assets or other reorganization, or a proxy
contest, as a consequence of which members of the Board of Directors in office
immediately prior to such transaction or event constitute less than a majority
of the Board of Directors thereafter; or (iv) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors (including, for this purpose, any new director whose
election or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of such period) cease for any reason to constitute at
least a majority of the Board of Directors.
"Corporate Status" describes the status of Indemnitee as a director,
officer, employee, agent or fiduciary of the Company or of any other
corporation, partnership, limited liability
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company, association, joint venture, trust, employee benefit plan or other
enterprise that Indemnitee is or was serving at the request of the Company.
"Court" means the Court of Chancery of the State of Delaware or any
other court of competent jurisdiction.
"Designated Professional Capacity" shall include, but not be limited
to, a physician, nurse, psychologist or therapist, registered surveyor,
registered engineer, registered architect, attorney, certified public accountant
or other person who renders such professional services within the course and
scope of his employment, who is licensed by appropriate regulatory authorities
to practice such profession and who, while acting in the course of such
employment, committed or is alleged to have committed any negligent acts, errors
or omissions in rendering such professional services at the request of the
Company or pursuant to his employment (including, without limitation, rendering
written or oral opinions to third parties).
"Expenses" shall include all reasonable attorneys' fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, or being or preparing to be a witness in a
Proceeding.
"Indemnitee" includes any officer (including an officer acting in his
Designated Professional Capacity) or director of the Company who is, or is
threatened to be made, a witness in or a party to any Proceeding as described in
Article V, Section 1 (General) or Section 2 (Expenses) by reason of his
Corporate Status.
"Independent Counsel" means a law firm, or a member of a law firm, that
is experienced in matters of corporation law and neither presently is, nor in
the five years previous to his selection or appointment has been, retained to
represent: (i) the Company or Indemnitee in any matter material to either such
party or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder.
"Matter" is a claim, a material issue or a substantial request for
relief.
"Proceeding" includes any action, suit, arbitration, alternate dispute
resolution mechanism, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative, except one
initiated by an Indemnitee pursuant to Article V, Section 10 (Adjudication) to
enforce his rights under this Article V.
Section 17. Notices. Promptly after receipt by Indemnitee of notice of
the commencement of any action, suit or proceeding, Indemnitee shall, if he
anticipates or contemplates making a claim for expenses or an advance pursuant
to the terms of this Article V, notify the Company of the commencement of such
action, suit or proceeding; provided, however, that any delay in so notifying
the Company shall not constitute a waiver or release by Indemnitee of rights
hereunder and that any omission by Indemnitee to so notify the Company shall not
relieve the Company from any liability that it may have to Indemnitee otherwise
than under this Article V. Any communication required or permitted to the
Company shall be addressed to the Corporate Secretary of the Company and any
such communication to Indemnitee shall be
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addressed to Indemnitee's address as shown on the Company's records unless he
specifies otherwise and shall be personally delivered or delivered by overnight
mail delivery. Any such notice shall be effective upon receipt.
Section 18. Contractual Rights. The right to be indemnified or to the
advancement or reimbursement of Expenses (i) is a contract right based upon good
and valuable consideration, pursuant to which Indemnitee may sue as if these
provisions were set forth in a separate written contract between Indemnitee and
the Company, (ii) is intended to be retroactive and shall be available as to
events occurring prior to the adoption of these provisions and (iii) shall
continue after any rescission or restrictive modification of such provisions as
to events occurring prior thereto.
Section 19. Indemnification of Employees, Agents and Fiduciaries. The
Company, by adoption of a resolution of the Board of Directors, may indemnify
and advance expenses to a person who is an employee (including an employee
acting in his Designated Professional Capacity), agent or fiduciary of the
Company including any such person who is or was serving at the request of the
Company as a director, officer, employee, agent or fiduciary of any other
corporation, partnership, joint venture, limited liability company, trust,
employee benefit plan or other enterprise to the same extent and subject to the
same conditions (or to such lesser extent and/or with such other conditions as
the Board of Directors may determine) under which it may indemnify and advance
expenses to an Indemnitee under this Article V.
ARTICLE VI
Miscellaneous Provisions
Section 1. Offices. The address of the registered office of the Company
in the State of Delaware is Corporation Trust Center, 1209 Orange Street, City
of Wilmington, County of New Castle, 19801, and the name of the registered agent
of the Company at such address is The Corporation Trust Company. The principal
office of the Company shall be located in Houston, Texas, unless and until
changed by resolution of the Board of Directors. The Company may also have
offices at such other places as the Board of Directors may designate from time
to time, or as the business of the Company may require. The principal office and
registered office may be, but need not be, the same.
Section 2. Resignations. Any director or officer may resign at any
time. Such resignations shall be made in writing and shall take effect at the
time specified therein, or, if no time is specified, at the time of its receipt
by the Chairman of the Board, if there is one, the Chief Executive Officer, if
there is one, the President or the Corporate Secretary. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.
Section 3. Seal. The Corporate Seal shall be circular in form, shall
have inscribed thereon the name of the Company and may be used by causing it or
a facsimile thereof to be impressed or affixed or otherwise reproduced.
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Section 4. Separability. If one or more of the provisions of these
Bylaws shall be held to be invalid, illegal or unenforceable, such invalidity,
illegality or unenforceability shall not affect any other provision hereof and
these Bylaws shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein.
ARTICLE VII
Amendment of Bylaws
Section 1. Vote Requirements. Subject to the provisions of the
Company's Restated Certificate of Incorporation, these Bylaws may be altered,
amended or repealed, and new Bylaws may be adopted, by the Board of Directors;
provided that no amendment or repeal of (a) the last sentence of Article III,
Section 3 of these Bylaws, or (b) Article III, Sections 6, 7(b), 7(c), 9 and 10
of these Bylaws, nor the adoption of any provision of these Bylaws which would
substantially and adversely affect the rights of the holders of Class B Common
Stock, shall be effective except upon the affirmative vote of a majority of the
shares of Class B Common Stock outstanding.
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EXHIBIT 7.11
FORM OF RULE 145 AFFILIATE LETTER
________________, 200_
[Stanford, Inc.]
1000 Louisiana, Suite 5800
Houston, Texas 77002
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be
deemed to be an "affiliate" of [Dynegy Inc., an Illinois corporation
("Dynegy"),] [Enron Corp., an Oregon corporation ("Enron"),] as the term
"affiliate" is defined for purposes of paragraphs (c) and (d) of Rule 145 of the
Rules and Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"). Pursuant to the terms of the Agreement and Plan
of Merger dated as of November 7, 2001 (the "Agreement"), among Dynegy [Inc., an
Illinois corporation ("Dynegy")], Stanford, Inc., a Delaware corporation and
wholly owned subsidiary of Dynegy to be renamed Dynegy Inc. (the "Company"),
Badin, Inc., an Illinois corporation and wholly owned subsidiary the Company
("Badin"), Sorin, Inc., an Oregon corporation and wholly owned subsidiary the
Company ("Sorin") and Enron [Corp., an Oregon corporation ("Enron")], Sorin will
be merged with and into Enron, with Enron being the surviving entity (the "Enron
Merger"), and concurrently therewith Badin will be merged with and into Dynegy,
with Dynegy being the surviving entity (the "Dynegy Merger" and, together with
the Enron Merger, the "Mergers"). Pursuant to the Mergers, the outstanding
common stock, no par value, of Enron ("Enron Common Stock") will be converted
into Class A common stock, par value $.01 per share, of the Company ("Company
Class A Common Stock"), and the outstanding Class A common stock, no par value,
of Dynegy ("Dynegy Class A Common Stock") and outstanding Class B common stock,
no par value, of Dynegy ("Dynegy Class B Common Stock") will be converted into
Company Class A Common Stock and Class B common stock, par value $.01 per share,
of the Company ("Company Class B Common Stock" and, together with the Company
Class A Common Stock, the "Company Common Stock"), respectively.
As a result of the [Dynegy] [Enron] Merger, I may receive (i) shares
of Company Class A Common Stock in exchange for shares of [Dynegy Class A]
[Enron] Common Stock [and/or (ii) shares of Company Class B Common Stock in
exchange for shares of Dynegy Class B Common Stock] (or upon the exercise of
options for such shares).
I represent, warrant and covenant to the Company that as of the date
I receive any Company Common Stock as a result of the [Dynegy] [Enron] Merger:
A. I shall not make any sale, transfer or other disposition of such
Company Common Stock in violation of the Securities Act or the Rules and
Regulations.
<PAGE>
B. I have carefully read this letter and the Agreement and, to the
extent I felt necessary, discussed the requirements of such documents and
other applicable limitations upon my ability to sell, transfer or
otherwise dispose of the Company Common Stock with my counsel.
C. I have been advised that the issuance of Company Common Stock to
me pursuant to the [Dynegy] [Enron] Merger will be registered with the
Commission under the Securities Act on a Registration Statement on Form
S-4. I have also been advised, however, that, since, at the time the
[Dynegy] [Enron] Merger is submitted for a vote of the shareholders of
[Dynegy] [Enron], I may be deemed to be an affiliate of [Dynegy] [Enron]
for purposes of paragraphs (c) and (d) of Rule 145 of the Rules and
Regulations, I may not sell, transfer or otherwise dispose of the Company
Common Stock issued to me in the [Dynegy] [Enron] Merger within one year
following the [Dynegy] [Enron] Merger, and, if I am then an affiliate of
the Company, thereafter, unless (i) such sale, transfer or other
disposition has been registered under the Securities Act, (ii) such sale,
transfer or other disposition is made in conformity with the volume and
other limitations of Rule 145 of the Rules and Regulations (as such rule
may be hereafter from time to time amended), or (iii) in the opinion of
counsel reasonably acceptable to Company or as described in a "no action"
or interpretive letter obtained by me from the staff of the Commission,
such sale, transfer or other disposition is otherwise exempt from
registration under the Securities Act.
D. [I understand that the Company is under no obligation to register
the sale, transfer or other disposition of the Company Common Stock by me
or on my behalf under the Securities Act or to take any other action
necessary in order to make compliance with an exemption from such
registration available.]
E. I understand that stop transfer instructions will be given to the
Company's transfer agent with respect to the Company Common Stock and that
there will be placed on the certificates for the Company Common Stock
issued to me in connection with the [Dynegy] [Enron] Merger, or any
substitutions therefor, a legend substantially in the form set forth
below:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN
A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES AND MAY ONLY BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED IN COMPLIANCE WITH THE
REQUIREMENTS OF RULE 145 OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
OF 1933."
F. I also understand that unless the transfer by me of my Company
Common Stock has been registered under the Securities Act or is a sale
made in conformity with
<PAGE>
the provisions of Rule 145, the Company reserves the right to place the
following legend on the certificates issued to my transferee in
substantially the form set forth below:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE
ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE
IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE
MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
G. I also understand and agree that the representations, warranties,
covenants and agreements I have made herein are for the benefit of
[Dynegy] [Enron] and the Company and will be relied upon by the Company
and its counsel and accountants.
I understand and agree that the legends set forth in paragraphs [E
and F] above will be removed by delivery of substitute certificates without such
legend if such legend is not required for purposes of the Securities Act. I
understand and agree that such legends and the stop orders referred to above
will be removed if (i) one year shall have elapsed from the date I acquire the
Company Common Stock received in the [Dynegy] [Enron] Merger and the provisions
of Rule 145(d)(2) are then available to me, (ii) two years shall have elapsed
from the date I acquire the Company Common Stock received in the [Dynegy]
[Enron] Merger and the provisions of Rule 145(d)(3) are then available to me or
(iii) the Company has received either an opinion of counsel, which opinion and
counsel shall be reasonably satisfactory to the Company, or a "no action" letter
obtained by me from the staff of the Commission, to the effect that the
restrictions imposed by Rule 145 under the Act no longer apply to me.
Execution of this letter should not be considered an admission,
stipulation or acknowledgement by me that I am an "affiliate" of [Dynegy]
[Enron] or the Company as described in the first paragraph of this letter or
considered as a waiver of any rights that I may have to object to any claim that
I am an affiliate on or after the date of this letter.
Very truly yours,
[Insert Name of Affiliate]
Accepted this _____ day of
____________________, 200__ by
[STANFORD, INC.]
By: ______________________________
Name:
Title:
<PAGE>
EXHIBIT 8.2(a)
ENRON CORP.
OFFICER'S CERTIFICATE
The undersigned, a duly authorized officer of Enron Corp., an Oregon
corporation ("Enron"), and acting as such, in connection with the opinions to
be rendered by Baker Botts L.L.P. and Vinson & Elkins L.L.P. with respect to
certain federal income tax consequences under the Internal Revenue Code of
1986, as amended (the "Code"), of the transactions contemplated by the
Agreement and Plan of Merger (the "Merger Agreement") dated as of November 7,
2001 by and among Dynegy Inc., an Illinois corporation ("Dynegy"), Sorin,
Inc., an Illinois corporation ("Dynegy Merger Sub"), Enron, Badin, Inc., an
Oregon corporation ("Enron Merger Sub") and Stanford, Inc., a Delaware
corporation ("Newco"), hereby represents as follows:1
1. For purposes of this Certificate,
(i) "Chevron Agreements" means the Subscription Agreement by and
between ChevronTexaco Corp. ("Chevron") and Newco dated November 7, 2001 and the
Series A, B and C Warrants attached thereto as exhibits;
(ii) "Chevron Transfers" means the issuance(s) of Newco Stock in
exchange for cash pursuant to the Chevron Agreements;
(iii) "Disposition" means any transaction that, for federal income
tax purposes, constitutes a sale, exchange or other disposition, whether taxable
or nontaxable, of shares of Newco Stock.
(iv) "Newco Stock" means Newco Series A Common Stock and Newco
Series B Common Stock;
(v) "Property" means (x) Dynegy Stock or Enron Common Stock
exchanged for Newco Stock in the Mergers (excluding any shares of Dynegy Stock
as to which dissenters' rights have been exercised under Illinois law) and (y)
cash paid by a Transferor for Newco Stock pursuant to the Chevron Agreements;
(vi) "Dynegy Stock" means Dynegy Series A Common Stock and
Dynegy Series B Common Stock;
(vii) "Transactions" means the Mergers and the Chevron Transfers;
(viii) "Transferor" means (x) each holder of Dynegy Stock or Enron
Common Stock immediately prior to the Effective Time who receives Newco Stock in
the Mergers and (y)
- ---------------------
(1) Capitalized terms used but not defined herein have the meanings ascribed
to them in the Merger Agreement.
<PAGE>
each person to whom Newco issues Newco Stock in exchange for cash pursuant to
the Chevron Agreements.
2. The facts relating to Enron, Newco and the Transactions set forth in
the Merger Agreement and the other agreements relating to the Transactions are
true, accurate and complete in all material respects.
3. The Merger Agreement, the related written agreements entered into
contemporaneously therewith or referenced therein and all exhibits and
attachments thereto represent the full and complete agreement among Dynegy,
Enron and Newco with respect to the Mergers and there are no other written or
oral agreements regarding the Mergers. The Mergers will be consummated in
accordance with the Merger Agreement (including all agreements referenced
therein and all exhibits and attachments thereto), and none of the material
terms and conditions therein has been or will be waived or modified.
4. The facts relating to Enron, Newco and the Transactions set forth in
the [Proxy Statement-Prospectus/Registration Statement] filed with the
Securities and Exchange Commission under the Securities and Exchange Act of
1934, as amended, dated ____, 2002 are true, accurate, and complete in all
material respects at the Effective Time.
5. To the knowledge of Enron, none of the Enron Common Stock or Dynegy
Stock to be exchanged for Newco Stock pursuant to the Mergers is "section 306
stock" within the meaning of section 306(c) of the Code.
6. The Transactions are not the result of the solicitation by a promoter,
broker, or investment house.
7. To the knowledge of Enron, no Transferor of Property to Newco in the
Transactions will retain any rights in the Property so transferred.
8. Newco will not assume any indebtedness of any Transferor in connection
with the Transactions. To the knowledge of Enron, none of the Property will be
received by Newco subject to any indebtedness in the Transactions.
9. There is no plan or intention on the part of Newco to redeem or
otherwise reacquire any of the stock of Newco to be issued in the Transactions
other than the payment of cash in lieu of fractional shares in the Mergers.
10. To the knowledge of Enron, (i) no Transferor has a binding commitment,
and there is no plan or intention on the part of any Transferor, to engage in a
Disposition of any shares of Newco Stock to be received by such Transferor in
the Transactions and (ii) immediately after the Mergers and each issuance of
Newco Stock pursuant to the Chevron Transfers, each Transferor will have the
ability to exercise complete dominion and control over all of the shares of
Newco Stock received by such Transferor in the Transactions, including, without
limitation, all voting rights with respect thereto.
-2-
<PAGE>
11. Taking into account any issuance of additional shares of Newco Stock,
any issuance of Newco Stock for services, the exercise of any Newco stock
rights, warrants, or subscriptions, any public offering of Newco Stock, and, to
the knowledge of Enron, the Disposition of any of the Newco Stock to be received
in the Transactions, the Transferors will be in Control of Newco, regardless of
whether any Newco Stock issuable pursuant to the Chevron Agreements after the
Effective Date is treated as outstanding. For purposes of this paragraph,
"Control" means ownership of stock possessing at least eighty percent (80%) of
the total combined voting power of all classes of stock entitled to vote and at
least eighty percent (80%) of the total number of shares of each other class of
stock.
12. The consideration to be issued to the Transferors in the Mergers was
the result of arm's-length negotiations between the managements of Dynegy and
Enron. Each holder of Property to be exchanged or paid for Newco Stock pursuant
to the Transactions will receive Newco Stock (and, if applicable, cash in lieu
of fractional shares) approximately equal to the fair market value of the
Property exchanged therefor.
13. Newco will remain in existence following the Mergers and any Chevron
Transfer. There is no plan or intention by Newco to liquidate Dynegy or Enron,
to cause Dynegy or Enron to merge with or into any other entity, to effect a
conversion of Dynegy or Enron or to otherwise dispose of any of the Enron Common
Stock and Dynegy Stock transferred to it pursuant to the Mergers.
14. Each of Dynegy, Enron and Newco, and, to the knowledge of Enron, each
Transferor, will pay its or his or her own expenses, if any, incurred in
connection with the Transactions.
15. Newco will not be an investment company within the meaning of section
351(e)(1) of the Code and Treas. Reg. Section 1.351-1(c)(1)(ii).
16. Prior to the Mergers, each of Dynegy Merger Sub and Enron Merger Sub
will be a direct, wholly owned subsidiary of Newco. Each of Dynegy Merger Sub
and Enron Merger Sub is or will be a transitory corporation formed for the sole
purpose of participating in the Mergers.
17. No Newco Stock to be issued in, or in connection with, the
Transactions will be placed in escrow or will be issued under a contingent stock
arrangement or other similar arrangement.
18. The Transactions are being effected for bona fide business reasons.
19. No Newco Stock will be issued for services rendered to or for the
benefit of Newco or any affiliate thereof in connection with the Transactions.
No Newco Stock will be issued for indebtedness of Newco that is not evidenced by
a security or for interest on indebtedness of Newco.
20. Newco Stock will be the only capital stock of Newco issued and
outstanding for federal income tax purposes. There will be no nonvoting class of
capital stock of Newco issued and outstanding for federal income tax purposes.
-3-
<PAGE>
21. There will be no indebtedness between Newco and any Transferor at the
Effective Time or at the time of any Chevron Transfer and there will be no
indebtedness created in favor of any Transferor as a result of the Transactions.
22. All of the transfers by the Transferors made pursuant to the
Transactions will occur under the plan described in the Merger Agreement and the
Chevron Agreements, in which the rights of the parties are defined.
23. The payment of cash in lieu of fractional shares of Newco, if any, in
the Mergers is solely for the purpose of avoiding the expense and inconvenience
to Newco of issuing fractional shares and does not represent separately
bargained-for consideration.
24. None of the compensation received or to be received by any
shareholder-employee of Dynegy or Enron will be separate consideration for, or
allocable to, any of their Dynegy Stock or Enron Common Stock. None of the Newco
Stock received by any such shareholder-employee in the Mergers will be separate
consideration for, or allocable to, any employment agreement or other
compensatory arrangement. The compensation paid to any shareholder-employee will
be for services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's-length for similar services.
25. The undersigned officer is authorized to make all of the statements
set forth herein on behalf of Enron.
I understand that the representations above will be relied upon by Baker
Botts L.L.P. and Vinson & Elkins L.L.P. as a basis for their respective
opinions, and that such opinions will be conditioned upon the initial and
continuing accuracy of these representations.
Dated: ________, 2002
ENRON CORP.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
-4-
<PAGE>
EXHIBIT 8.2(b)
DYNEGY INC.
OFFICER'S CERTIFICATE
The undersigned, a duly authorized officer of Dynegy Inc., an Illinois
corporation ("Dynegy"), and acting as such, in connection with the opinions
to be rendered by Baker Botts L.L.P. and Vinson & Elkins L.L.P. with respect
to certain federal income tax consequences under the Internal Revenue Code of
1986, as amended (the "Code"), of the transactions contemplated by the
Agreement and Plan of Merger (the "Merger Agreement") dated as of November 7,
2001 by and among Dynegy, Sorin, Inc., an Illinois corporation ("Dynegy
Merger Sub"), Enron Corp., an Oregon corporation ("Enron"), Badin, Inc., an
Oregon corporation ("Enron Merger Sub") and Stanford, Inc., a Delaware
corporation ("Newco"), hereby represents as follows:1
1. For purposes of this Certificate,
(i) "Chevron Agreements" means the Subscription Agreement by and
between ChevronTexaco Corp. ("Chevron") and Newco dated November 7, 2001 and the
Series A, B and C Warrants attached thereto as exhibits;
(ii) "Chevron Transfers" means the issuance(s) of Newco Stock in
exchange for cash pursuant to the Chevron Agreements;
(iii) "Disposition" means any transaction that, for federal income
tax purposes, constitutes a sale, exchange or other disposition, whether taxable
or nontaxable, of shares of Newco Stock.
(iv) "Newco Stock" means Newco Series A Common Stock and Newco
Series B Common Stock;
(v) "Property" means (x) Dynegy Stock or Enron Common Stock
exchanged for Newco Stock in the Mergers (excluding any shares of Dynegy Stock
as to which dissenters' rights have been exercised under Illinois law) and (y)
cash paid by a Transferor for Newco Stock pursuant to the Chevron Agreements;
(vi) "Dynegy Stock" means Dynegy Series A Common Stock and
Dynegy Series B Common Stock;
(vii) "Transactions" means the Mergers and the Chevron Transfers;
(viii) "Transferor" means (x) each holder of Dynegy Stock or Enron
Common Stock immediately prior to the Effective Time who receives Newco Stock in
the Mergers and (y)
- ---------------------
(1) Capitalized terms used but not defined herein have the meanings ascribed
to them in the Merger Agreement.
<PAGE>
each person to whom Newco issues Newco Stock in exchange for cash pursuant to
the Chevron Agreements.
2. The facts relating to Dynegy, Newco and the Transactions set forth in
the Merger Agreement, the Chevron Agreements and the other agreements relating
to the Transactions are true, accurate and complete in all material respects.
3. The Merger Agreement, the related written agreements entered into
contemporaneously therewith or referenced therein and all exhibits and
attachments thereto represent the full and complete agreement among Dynegy,
Enron and Newco with respect to the Mergers and there are no other written or
oral agreements regarding the Mergers. The Mergers will be consummated in
accordance with the Merger Agreement (including all agreements referenced
therein and all exhibits and attachments thereto), and none of the material
terms and conditions therein has been or will be waived or modified.
4. The Chevron Agreements (including all agreements referenced therein and
all exhibits and attachments thereto) represent the full and complete agreement
between Newco and Chevron with respect to the Chevron Transfers and there are no
other written or oral agreements regarding the Chevron Transfers. The Chevron
Transfers will be consummated in accordance with the Chevron Agreements
(including all agreements referenced therein and all exhibits and attachments
thereto), and none of the material terms and conditions therein has been or will
be waived or modified.
5. The facts relating to Dynegy, Newco and the Transactions set forth in
the [Proxy Statement-Prospectus/Registration Statement] filed with the
Securities and Exchange Commission under the Securities and Exchange Act of
1934, as amended, dated ____, 2002 are true, accurate, and complete in all
material respects at the Effective Time.
6. To the knowledge of Dynegy, none of the Enron Common Stock or Dynegy
Stock to be exchanged for Newco Stock pursuant to the Mergers is "section 306
stock" within the meaning of section 306(c) of the Code.
7. The Transactions are not the result of the solicitation by a promoter,
broker, or investment house.
8. To the knowledge of Dynegy, no Transferor of Property to Newco in the
Transactions will retain any rights in the Property so transferred.
9. Newco will not assume any indebtedness of any Transferor in connection
with the Transactions. To the knowledge of Dynegy, none of the Property will be
received by Newco subject to any indebtedness in the Transactions.
10. There is no plan or intention on the part of Newco to redeem or
otherwise reacquire any of the stock of Newco to be issued in the Transactions
other than the payment of cash in lieu of fractional shares in the Mergers.
-2-
<PAGE>
11. To the knowledge of Dynegy, (i) no Transferor has a binding
commitment, and there is no plan or intention on the part of any Transferor, to
engage in a Disposition of any shares of Newco Stock to be received by such
Transferor in the Transactions and (ii) immediately after the Mergers and each
issuance of Newco Stock pursuant to the Chevron Transfers, each Transferor will
have the ability to exercise complete dominion and control over all of the
shares of Newco Stock received by such Transferor in the Transactions,
including, without limitation, all voting rights with respect thereto.
12. Taking into account any issuance of additional shares of Newco Stock,
any issuance of Newco Stock for services, the exercise of any Newco stock
rights, warrants, or subscriptions, any public offering of Newco Stock, and, to
the knowledge of Dynegy, the Disposition of any of the Newco Stock to be
received in the Transactions, the Transferors will be in Control of Newco,
regardless of whether any Newco Stock issuable pursuant to the Chevron
Agreements after the Effective Date is treated as outstanding. For purposes of
this paragraph, "Control" means ownership of stock possessing at least eighty
percent (80%) of the total combined voting power of all classes of stock
entitled to vote and at least eighty percent (80%) of the total number of shares
of each other class of stock.
13. The consideration to be issued to the Transferors (i) in the Mergers
was the result of arm's-length negotiations between the managements of Dynegy
and Enron and (ii) in the Chevron Transfers was the result of arm's-length
negotiations between the managements of Dynegy and Chevron. Each holder of
Property to be exchanged or paid for Newco Stock pursuant to the Transactions
will receive Newco Stock (and, if applicable, cash in lieu of fractional shares)
approximately equal to the fair market value of the Property exchanged therefor.
14. Newco will remain in existence following the Mergers and any Chevron
Transfer. There is no plan or intention by Newco to liquidate Dynegy or Enron,
to cause Dynegy or Enron to merge with or into any other entity, to effect a
conversion of Dynegy or Enron or to otherwise dispose of any of the Enron Common
Stock and Dynegy Stock transferred to it pursuant to the Mergers.
15. Each of Dynegy, Enron and Newco, and, to the knowledge of Dynegy, each
Transferor, will pay its or his or her own expenses, if any, incurred in
connection with the Transactions.
16. Newco will not be an investment company within the meaning of section
351(e)(1) of the Code and Treas. Reg. Section 1.351-1(c)(1)(ii).
17. Prior to the Mergers, each of Dynegy Merger Sub and Enron Merger Sub
will be a direct, wholly owned subsidiary of Newco. Each of Dynegy Merger Sub
and Enron Merger Sub is or will be a transitory corporation formed for the sole
purpose of participating in the Mergers.
18. No Newco Stock to be issued in, or in connection with, the
Transactions will be placed in escrow or will be issued under a contingent stock
arrangement or other similar arrangement.
-3-
<PAGE>
19. The Transactions are being effected for bona fide business reasons.
20. No Newco Stock will be issued for services rendered to or for the
benefit of Newco or any affiliate thereof in connection with the Transactions.
No Newco Stock will be issued for indebtedness of Newco that is not evidenced by
a security or for interest on indebtedness of Newco.
21. Newco Stock will be the only capital stock of Newco issued and
outstanding for federal income tax purposes. There will be no nonvoting class of
capital stock of Newco issued and outstanding for federal income tax purposes.
22. There will be no indebtedness between Newco and any Transferor at the
Effective Time or at the time of any Chevron Transfer and there will be no
indebtedness created in favor of any Transferor as a result of the Transactions.
23. All of the transfers by the Transferors made pursuant to the
Transactions will occur under the plan described in the Merger Agreement and the
Chevron Agreements, in which the rights of the parties are defined.
24. The payment of cash in lieu of fractional shares of Newco, if any, in
the Mergers is solely for the purpose of avoiding the expense and inconvenience
to Newco of issuing fractional shares and does not represent separately
bargained-for consideration.
25. None of the compensation received or to be received by any
shareholder-employee of Dynegy or Enron will be separate consideration for, or
allocable to, any of their Dynegy Stock or Enron Common Stock. None of the Newco
Stock received by any such shareholder-employee in the Mergers will be separate
consideration for, or allocable to, any employment agreement or other
compensatory arrangement. The compensation paid to any shareholder-employee will
be for services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's-length for similar services.
26. The undersigned officer is authorized to make all of the statements
set forth herein on behalf of Dynegy.
I understand that the representations above will be relied upon by Baker
Botts L.L.P. and Vinson & Elkins L.L.P. as a basis for their respective
opinions, and that such opinions will be conditioned upon the initial and
continuing accuracy of these representations.
Dated: ________, 2002 DYNEGY, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
-4-
<PAGE>
EXHIBIT 8.2(c)
[Chevron U.S.A. Inc. Letterhead]
________, 2002
Baker Botts L.L.P.
910 Louisiana
Houston, Texas 77002
Vinson & Elkins L.L.P
1001 Fannin
Houston, Texas 77002
Dear Sirs:
In connection with the proposed merger (the "Merger") of Sorin, Inc., a
wholly owned subsidiary of Stanford, Inc. ("Newco"),1 with and into Dynegy Inc.
("Dynegy"), where Dynegy survives the Merger, and where Chevron U.S.A. Inc.
("Chevron") will receive Newco common stock in exchange for Dynegy stock, we
represent that we do not have any plan, intention, obligation or other
commitment to sell, exchange, or otherwise dispose of, whether taxable or
nontaxable, for federal income tax purposes the shares of stock of Newco
received in those transactions.
We understand that Baker Botts L.L.P. and Vinson & Elkins L.L.P. will rely
on this Certificate in rendering their opinions as to the transaction and we
will promptly and timely inform them if, after signing this Certificate, we have
reason to believe that any of the facts described herein or any of the
representations made in this Certificate are untrue, incorrect or incomplete in
any respect.
CHEVRON U.S.A. INC.,
a Pennsylvania corporation
By:_________________________________
Title:______________________________
- ------------------
(1) For purposes of this certificate, capitalized terms used and not otherwise
defined herein shall have the meaning ascribed thereto in the Agreement
and Plan of Merger Agreement dated November 7, 2001 providing for the
Merger and/or the Form S-4 filed with the SEC on _______, 2002.
<PAGE>
EXHIBIT 8.2(d)
[ChevronTexaco Corp. Letterhead]
________, 2002
Baker Botts L.L.P.
910 Louisiana
Houston, Texas 77002
Vinson & Elkins L.L.P
1001 Fannin
Houston, Texas 77002
Dear Sirs:
In connection with (1) the proposed merger (the "Merger") of Sorin, Inc.,
a wholly owned subsidiary of Stanford, Inc. ("Newco"),1 with and into Dynegy
Inc. ("Dynegy"), where Dynegy survives the Merger, and where ChevronTexaco Corp.
("Chevron") will receive Newco common stock in exchange for Dynegy stock and (2)
the proposed purchase by Chevron of shares of Newco common stock and warrants
pursuant to the Subscription Agreement by and between Chevron and Newco dated
November 7, 2001 and the Series A, B and C Warrants attached thereto as
exhibits, we represent that we do not have, nor will we have at the time of any
purchase described in clause (2) above, any plan, intention, obligation or other
commitment to sell, exchange, or otherwise dispose of, whether taxable or
nontaxable, for federal income tax purposes the shares of stock of Newco
received in those transactions.
We understand that Baker Botts L.L.P. and Vinson & Elkins L.L.P. will rely
on this Certificate in rendering their opinions as to the transaction and we
will promptly and timely inform them if, after signing this Certificate, we have
reason to believe that any of the facts described herein or any of the
representations made in this Certificate are untrue, incorrect or incomplete in
any respect.
CHEVRONTEXACO CORP.,
a Delaware corporation
By:_________________________________
Title:______________________________
- ------------------
(1) For purposes of this certificate, capitalized terms used and not otherwise
defined herein shall have the meaning ascribed thereto in the Agreement
and Plan of Merger Agreement dated November 7, 2001 providing for the
Merger and/or the Form S-4 filed with the SEC on _______, 2002.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.3
<SEQUENCE>5
<FILENAME>h92082ex99-3.txt
<DESCRIPTION>AGRMNT DYNEGY INC ENRON CORP & CHEVRONTEXACO CORP
<TEXT>
<PAGE>
EXHIBIT 99.3
AGREEMENT
Reference is made to Section 7.17 of that certain Agreement and Plan of
Merger, dated the date hereof (the "Agreement"), by and among Dynegy Inc., an
Illinois corporation ("Dynegy"), Stanford, Inc., a Delaware corporation and
wholly owned subsidiary of Dynegy ("Newco"), Sorin, Inc., an Oregon corporation
and wholly owned subsidiary of Newco, Badin, Inc., an Illinois corporation and
wholly owned subsidiary of Newco, and Enron Corp., an Oregon corporation
("Enron").
The undersigned parties understand and agree that Dynegy, Enron and
ChevronTexaco Corporation, a Delaware corporation ("Chevron") shall consult with
each other with respect to any proposed amendments to the Agreement contemplated
in connection with Section 7.17 of the Agreement. The parties also agree that
the agreement to cooperate set forth in the last sentence of Section 7.17 is not
intended to, and should not be construed to, require any of Dynegy, Chevron, or
any of their respective affiliates to agree to any terms and provisions of any
amendment to the Agreement or any other agreements contemplated thereby, in the
event that any of them shall determine in good faith that so to do would have
materially adverse consequences of a financial performance, accounting, tax or
legal nature for each of them or their respective affiliates in the context of
the Agreement and the transactions contemplated thereby. In addition, the
parties intend that neither Chevron, nor any of its affiliates, shall be
required by such agreement to cooperate to so agree in the event that it shall
so determine that so to do would have such material adverse consequences for
them in the context of their investment in Dynegy and the resulting company in
the merger as provided for in the Agreement. Subject to the foregoing
limitations, Chevron agrees to cooperate with Dynegy and Enron in connection
with actions by Dynegy and Enron pursuant to such Section 7.17.
IN WITNESS WHEREOF, the undersigned parties have signed this Agreement
as of this 9th day of November, 2001.
DYNEGY INC.
By: /s/ KENNETH E. RANDOLPH
--------------------------------------------
Name: Kenneth E. Randolph
--------------------------------------------
Title: Executive Vice President and General Counsel
--------------------------------------------
ENRON CORP.
By: /s/ GREG WHALLEY
--------------------------------------------
Name: Greg Whalley
--------------------------------------------
Title: President and Chief Operating Officer
--------------------------------------------
CHEVRONTEXACO CORPORATION
By: /s/ DAVID R. STEVENSON
--------------------------------------------
Name: David R. Stevenson
--------------------------------------------
Title: Attorney-in-Fact
--------------------------------------------
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.4
<SEQUENCE>6
<FILENAME>h92082ex99-4.txt
<DESCRIPTION>SHAREHOLDER AGREEMENT - DYNEGY INC.
<TEXT>
<PAGE>
EXHIBIT 99.4
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of November 9, 2001, by and among
Dynegy Inc., an Illinois corporation ("DYNEGY"), Enron Corp., an Oregon
corporation ("ENRON"), and Chevron U.S.A. Inc., a Pennsylvania corporation
("SHAREHOLDER").
WHEREAS, concurrently herewith, Dynegy, Enron and certain other
entities are entering into an Agreement and Plan of Merger (as amended or
supplemented from time to time, the "MERGER AGREEMENT;" capitalized terms used
without definition herein having the meanings ascribed thereto in the Merger
Agreement);
WHEREAS, as of November 6, 2001, Shareholder owns and/or has the power
to vote, as applicable, the number and type of Shares (as defined in Section 5)
set forth in Schedule I hereto;
WHEREAS, the Board of Directors of Dynegy has, prior to the execution
of this Agreement, approved and adopted the Merger Agreement, and such approvals
and adoption have not been withdrawn;
WHEREAS, approval of the Merger Agreement by Dynegy's shareholders is a
condition to the consummation of the Mergers; and
WHEREAS, as a condition to its entering into the Merger Agreement,
Enron has required that Shareholder agree, and Shareholder has so agreed, to
enter into this Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
Section 1. Agreement to Vote. (a) Unless the Dynegy Board of Directors
shall have withdrawn its recommendation in favor of the Mergers, Shareholder
hereby agrees to attend, in person or by proxy, the meeting of Dynegy
shareholders at which the matters contemplated by the Merger Agreement or this
Agreement are to be presented to a vote of shareholders of Dynegy, and to vote
(or cause to be voted) all Shares and any other voting securities of Dynegy that
Shareholder, directly or indirectly, owns or has the right to vote or direct the
voting of (including any such securities acquired hereafter but excluding any
Shares or other securities Shareholder has the right to acquire but has not
acquired) (collectively, the "COVERED SHARES") for approval and adoption of the
following: (i) the Merger Agreement and (ii) any related action reasonably
required in furtherance thereof. Unless the Dynegy Board of Directors shall have
withdrawn its recommendation in favor of the Mergers, Shareholder hereby further
agrees that until the Termination Date (as defined in Section 1(b)), it shall,
from time to time, in connection with any consent solicitation relating to the
Merger Agreement, timely execute and deliver (or cause to be timely executed and
delivered) a written consent with respect to any Covered Shares in favor of the
approval and adoption of the Merger Agreement and any action required in
furtherance thereof.
(b) From and after the date hereof until the Termination Date, unless
the Dynegy Board of Directors shall have withdrawn its recommendation of the
Mergers, Shareholder hereby agrees
<PAGE>
to vote (or cause to be voted) any Covered Shares against any Dynegy Acquisition
Proposal and any related action reasonably required in furtherance thereof, at
any meeting of shareholders of Dynegy (including any adjournments or
postponements thereof) called to consider and vote on any Dynegy Acquisition
Proposal. Shareholder further agrees that, until the Termination Date, in
connection with any consent solicitation relating to a Dynegy Acquisition
Proposal, Shareholder will timely execute and deliver (or cause to be timely
executed and delivered) a written consent with respect to any Covered Shares
against any Dynegy Acquisition Proposal as contemplated by the immediately
preceding sentence. For purposes hereof, the term "TERMINATION DATE" shall mean
the first to occur of (a) the termination of the Merger Agreement and (b) the
date of consummation of the Mergers.
(c) To the extent inconsistent with the foregoing provisions of this
Section 1 or the other provisions of this Agreement, Shareholder hereby (i)
revokes any and all previous proxies with respect to any Covered Shares, (ii)
waives any provisions of the Shareholder Agreement dated June 14, 1999 among
Dynegy (f/k/a Energy Convergence Holding Company), Illinova Corporation, Dynegy
Holdings Inc. (f/k/a Dynegy Inc.), a Delaware corporation and Shareholder (the
"SHAREHOLDER AGREEMENT") with respect to actions contemplated by the Merger
Agreement, and (iii) waives any provisions of the Stockholder Agreement dated
the date hereof among Dynegy, Stanford, Inc., a Delaware corporation, Enron and
Shareholder (the "STOCKHOLDER AGREEMENT") with respect to actions contemplated
by the Merger Agreement.
(d) From the date hereof until the Termination Date, Shareholder shall
not (other than through, or resulting from (i) its current ownership in Dynegy,
(ii) the transactions contemplated by the Merger Agreement, (iii) the
transaction contemplated by the Series B Preferred Stock Subscription Agreement,
dated November 9, 2001, by and between ChevronTexaco Corporation and the Class B
Common Stock Subscription Agreement, dated November 9, 2001, between
ChevronTexaco Corporation and Stanford, Inc., or (iv) the proper exercise of the
preemptive rights of stockholder under Article VI of the Shareholders Agreement)
directly or indirectly, acquire, offer or propose to acquire, solicit an offer
to sell, become a "participant" in a "solicitation" of proxies, as those terms
are defined in Rule 14a-11 and 14a-1, respectively, under the Exchange Act, in
respect of any voting securities of Enron or Dynegy, as applicable, that may be
outstanding and entitled to vote relating to any of the foregoing, or otherwise
agree to acquire by purchase or otherwise (or permit any person or entity that
directly or indirectly, through one or more intermediaries, controls or is
controlled by, or is under common control with, Shareholder to undertake any of
such actions) any voting securities of Enron or Dynegy, as applicable; provided
that nothing hereunder shall prevent Shareholder from making a Qualified Offer
for Dynegy voting securities (as defined in the Shareholder Agreement) in the
circumstances contemplated by Section 3.1(b) of the Shareholder Agreement.
(e) Nothing herein contained shall (i) restrict, limit or prohibit any
individuals who may represent Shareholder on Dynegy's Board of Directors from
exercising (in his or her capacity as a director or officer) his or her
fiduciary duties to the shareholders of Dynegy under applicable law or (ii)
require any individual, in his or her capacity as an officer of Dynegy, to take
any action in contravention of, or omit to take any action pursuant to, or
otherwise take or refrain from taking any actions that are inconsistent with,
instructions or directions of the Board of Directors of
2
<PAGE>
Dynegy undertaken in the exercise of its fiduciary duties, provided that nothing
in this Section 1(e) shall relieve or be deemed to relieve Shareholder from its
obligations under Sections 1 or 2.
Section 2. Disposition of Shares. From and after the date hereof until
the Termination Date, Shareholder hereby agrees that it will not directly or
indirectly sell, pledge, encumber, grant any proxy or enter into any voting or
similar agreement with respect to, transfer or otherwise dispose of
(collectively, "TRANSFER"), or agree or contract to Transfer, any Covered Shares
(or any interest therein) with respect to which Shareholder, directly or
indirectly, controls the right to Transfer; provided, however, that Shareholder
may Transfer Covered Shares to an Affiliate (as defined below) of Shareholder
provided that such Affiliate agrees to be subject to the terms and conditions
set forth in this Agreement. For purposes of this Agreement, "AFFILIATE" shall
mean any corporation, partnership, limited liability company or other entity
(each a "PERSON") that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
another Person, and includes any Person acting in concert with another Person.
Section 3. Other Covenants and Agreements. Each party shall execute and
deliver such additional instruments and other documents and shall take such
further actions as may be reasonably necessary or appropriate to effectuate,
carry out and comply with all of their obligations under this Agreement. Without
limiting the generality of the foregoing, no party shall enter into any
agreement or arrangement (or alter, amend or terminate any existing agreement or
arrangement) or take any other action (or fail to take any other action) if such
action (or failure) would materially impair the ability of any party to
effectuate, carry out or comply with all the terms of this Agreement. Enron
hereby agrees to cooperate with Shareholder in connection with any filings
required to be made by Shareholder in connection with the Mergers and the
transactions contemplated thereby.
Section 4. Representations and Warranties of Enron. Enron represents
and warrants to Shareholder as follows: (a) each of this Agreement and the
Merger Agreement has been approved by the Board of Directors of Enron,
representing all necessary corporate action on the part of Enron, except for the
approval of Enron's shareholders contemplated by the Merger Agreement, (b) each
of this Agreement and the Merger Agreement has been duly executed and delivered
by a duly authorized officer of Enron, and (c) each of this Agreement and the
Merger Agreement constitutes a valid and binding agreement of Enron, enforceable
against Enron, except as such enforceability may be subject to the effects of
bankruptcy, insolvency, reorganization, moratorium, or other laws relating to or
affecting the rights of creditors, and general principles of equity.
Section 5. Representations and Warranties of Shareholder. Shareholder
represents and warrants to Enron as follows: (a) Shareholder has the corporate
power and authority to execute and deliver this Agreement, (b) this Agreement
has been duly executed and delivered by Shareholder, (c) this Agreement
constitutes the valid and binding agreement of Shareholder, except as such
enforceability may be subject to the effects of bankruptcy, insolvency,
reorganization, moratorium, or other laws relating to or affecting the rights of
creditors, and general principles of equity, (d) Shareholder has the full power
and authority to vote, or execute a
3
<PAGE>
consent with respect to, all Covered Shares as contemplated hereby, (e) the
securities of Dynegy listed next to the name of Shareholder on Schedule I hereto
are the only securities of Dynegy owned by Shareholder and over which
Shareholder has the power to vote (or direct the voting) (collectively, the
"SHARES"), (f) except as provided in the Shareholder Agreement and the
Stockholder Agreement, Shareholder is the lawful owner of the Shares listed on
Schedule I as owned by it, free and clear of all liens, charges, encumbrances
and commitments of every kind, other than this Agreement, and has the power to
vote (including by an irrevocable power to vote or execution of a consent) such
Shares without any actions on the part of any other party, and (g) the execution
and delivery by Shareholder of this Agreement does not violate or breach any
law, contract, instrument, agreement or arrangement to which Shareholder is a
party or by which Shareholder is bound, except to the extent such violation or
breach does not prevent or delay performance of such Shareholder's obligations
hereunder.
Section 6. Effectiveness. It is a condition precedent to the
effectiveness of this Agreement that the Merger Agreement shall have been duly
executed and delivered by the parties thereto. Any amendment or change to the
Merger Agreement that (i) changes the Merger Ratio, (ii) adds any cash or other
consideration to be paid to holders of Enron Common Stock, (iii) changes the
termination date of the Merger Agreement, (iv) allows the Closing Date to occur
on or prior to a date that is at least 6 months after the date Shareholder
purchases the Series B Convertible Preferred Stock of Dynegy to be issued under
the Dynegy Subscription Agreement, or (v) materially adversely affects the
Shareholder or its interests in Dynegy or Stanford, will nullify the
effectiveness of this Agreement and this Agreement shall terminate immediately.
Section 7. Miscellaneous.
(a) Notices, Etc. All notices, requests, demands or other
communications required by or otherwise with respect to this Agreement shall be
in writing and shall be deemed to have been duly given to any party when
delivered personally (by courier service or otherwise), when delivered by
telecopy and confirmed by return telecopy, or three days after being mailed by
courier service that guarantees overnight delivery, in each case to the
applicable addresses set forth below:
If to Enron:
Enron Corp.
1300 Smith Street
Houston, Texas 77002
Attention: General Counsel
Telecopy: (713) 853-6161
with copy to:
Vinson & Elkins, L.L.P.
1001 Fannin, Suite 2300
Houston, Texas 77002-6760
Attention: William E. Joor III, Esq.
Scott N. Wulfe, Esq.
Telecopy: (713) 758-2346
4
<PAGE>
If to the Shareholder:
Chevron U.S.A. Inc.
1301 McKinney St.
Houston, TX 77010
Attention: President of Chevron U.S.A. Inc.
Telecopy: (713) 754-5554
Fax: (713) 754-5777
with copies to:
Harvey D. Hinman, Esq.
Vice President and General Counsel
ChevronTexaco Corporation
575 Market Street
San Francisco, CA 94105
Tel: (415) 894-3232
Fax: (415) 894-6017
and:
Terry Michael Kee, Esq. and
Rodney R. Peck, Esq.
Pillsbury Winthrop LLP
50 Fremont Street
Post Office Box 7880
San Francisco, CA 94120-7880
Tel: (415) 983-1000
Fax: (415) 983-1200
and:
Dynegy Inc.
1000 Louisiana Street
Suite 6700
Houston, TX 77002
Attention: Kenneth Randolph
Tel: (713) 507-6400
Fax: (713) 507-6806
5
<PAGE>
and:
Baker Botts L.L.P.
One Shell Plaza
910 Louisiana
Houston, Texas 77002-4995
Attention: R. Joel Swanson, Esq.
J. David Kirkland, Jr., Esq.
Telecopy: (713) 229-1522
and:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
711 Louisiana Street, 19th Floor
Houston, TX 77002
Attention: Robert Allen
Telecopy: (713) 236-0822
or to such other address as such party shall have designated by notice so given
to each other party.
(b) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated except by an
instrument in writing signed by Enron, Dynegy and Shareholder.
(c) Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the parties and their
respective successors and assigns, including without limitation any corporate
successor by merger or otherwise, or any party succeeding to the ownership of
(or power to vote) any Covered Shares.
(d) Entire Agreement. This Agreement (together with the Merger
Agreement) embodies the entire agreement and understanding between the parties
relating to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter. There are no representations,
warranties or covenants by the parties hereto relating to such subject matter
other than those expressly set forth in this Agreement and the Merger Agreement.
(e) Severability. If any term of this Agreement or the application
thereof to any party or circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Agreement and the application of such term to
the other party or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by applicable law, provided that in
such event the parties shall negotiate in good faith in an attempt to agree to
another provision (in lieu of the term or application held to be invalid or
unenforceable) that will be valid and enforceable and will carry out the
parties' intentions hereunder.
(f) Specific Performance. The parties acknowledge that money damages
are not an adequate remedy for violations of this Agreement and that any party
may, in its sole discretion,
6
<PAGE>
apply to a court of competent jurisdiction for specific performance or
injunctive or such other relief as such court may deem just and proper in order
to enforce this Agreement or prevent any violation hereof and, to the extent
permitted by applicable law, each party waives any objection to the imposition
of such relief.
(g) Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise or beginning of the
exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
(h) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with its obligations hereunder, and any custom or practice of the parties
at variance with the terms hereof, shall not constitute a waiver by such party
of its right to exercise any such or other right, power or remedy or to demand
such compliance.
(i) Third Party Beneficiaries. This Agreement is not intended to be for
the benefit of and shall not be enforceable by any person or entity who or which
is not a party hereto.
(j) Waiver of Jury Trial. Each party hereto hereby waives any right to
a trial by jury in connection with any action, suit, or proceeding, which arises
in connection with this Agreement.
(k) Governing Law. This Agreement and all disputes hereunder shall be
governed by and construed and enforced in accordance with the laws of the State
of Illinois to the fullest extent possible.
(l) Name, Captions, Gender. The name assigned this Agreement and the
section captions used herein are for convenience of reference only and shall not
affect the interpretation or construction hereof. Whenever the context may
require, any pronoun used herein shall include the corresponding masculine,
feminine or neuter forms.
(m) 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 instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
(n) Expenses. Enron, Dynegy, and Shareholder each shall bear its own
expenses incurred in connection with this Agreement and the transactions
contemplated hereby.
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
7
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Shareholder
Agreement as of the date first above written.
DYNEGY INC.
By: /s/ HUGH A. TARPLEY
-----------------------------
Name: Hugh A. Tarpley
Title: Executive Vice President
ENRON CORP.
By: /s/ RAYMOND M. BOWEN, JR.
-----------------------------
Name: Raymond M. Bowen, Jr.
Title: Executive Vice President -
Finance and Treasurer
CHEVRON U.S.A. INC.
By: /s/ RICHARD P. COHAGAN
-----------------------------
Name: Richard P. Cohagan
Title: Attorney-in-Fact
8
<PAGE>
SCHEDULE I
SHARES
DYNEGY CLASS B COMMON STOCK 86,599,914
9
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.5
<SEQUENCE>7
<FILENAME>h92082ex99-5.txt
<DESCRIPTION>STOCKHOLDER AGREEMENT - CHARLES L. WATSON
<TEXT>
<PAGE>
EXHIBIT 99.5
SHAREHOLDER AGREEMENT
SHAREHOLDER AGREEMENT, dated as of November 9, 2001, by and between
Enron Corp., an Oregon corporation ("ENRON"), and Charles L. Watson
("SHAREHOLDER").
WHEREAS, concurrently herewith, Dynegy Inc. ("DYNEGY"), Enron and
certain other entities are entering into an Agreement and Plan of Merger (as
amended or supplemented from time to time, the "MERGER AGREEMENT;" capitalized
terms used without definition herein having the meanings ascribed thereto in the
Merger Agreement);
WHEREAS, as of September 30, 2001, Shareholder owns and/or has the
power to vote, as applicable, the number and type of Shares (as defined in
Section 5) set forth in Schedule I hereto;
WHEREAS, the Board of Directors of Dynegy has, prior to the execution
of this Agreement, approved and adopted the Merger Agreement, and such approvals
and adoption have not been withdrawn;
WHEREAS, approval of the Merger Agreement by Dynegy's shareholders is a
condition to the consummation of the Mergers; and
WHEREAS, as a condition to its entering into the Merger Agreement,
Enron has required that Shareholder agrees, and Shareholder has so agreed, to
enter into this Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements set forth herein, the parties hereto agree as follows:
Section 1. Agreement to Vote. (a) Unless the Dynegy Board of Directors
shall have withdrawn its recommendation in favor of the Mergers, Shareholder
hereby agrees to attend the meeting of Dynegy shareholders at which the matters
contemplated by the Merger Agreement or this Agreement are to be presented to a
vote of shareholders of Dynegy, in person or by proxy, and to vote (or cause to
be voted) all Shares and any other voting securities of Dynegy that Shareholder,
directly or indirectly, owns or has the right to vote or direct the voting of
(including any such securities acquired hereafter but excluding any Shares or
other securities Shareholder has the right to acquire but has not acquired)
(collectively, the "COVERED SHARES") for approval and adoption of the following:
(i) the Merger Agreement and (ii) any related action reasonably required in
furtherance thereof. Unless the Dynegy Board of Directors shall have withdrawn
its recommendation in favor of the Mergers, Shareholder hereby further agrees
that until the Termination Date (as defined in Section 1(b)), he shall, from
time to time, in connection with any consent solicitation relating to the Merger
Agreement, timely execute and deliver (or cause to be timely executed and
delivered) a written consent with respect to any Covered Shares in favor of the
approval and adoption of the Merger Agreement and any action required in
furtherance thereof.
(b) From and after the date hereof until the Termination Date, unless
the Dynegy Board of Directors shall have withdrawn its recommendation of the
Mergers, Shareholder hereby agrees
<PAGE>
to vote (or cause to be voted) any Covered Shares against any Dynegy Acquisition
Proposal and any related action reasonably required in furtherance thereof, at
any meeting of shareholders of Dynegy (including any adjournments or
postponements thereof) called to consider and vote on any Dynegy Acquisition
Proposal. Shareholder further agrees that, until the Termination Date, in
connection with any consent solicitation relating to a Dynegy Acquisition
Proposal, Shareholder will timely execute and deliver (or cause to be timely
executed and delivered) a written consent with respect to any Covered Shares
against any Dynegy Acquisition Proposal as contemplated by the immediately
preceding sentence. For purposes hereof, the term "TERMINATION DATE" shall mean
the first to occur of (a) the termination of the Merger Agreement and (b) the
date of consummation of the Mergers.
(c) Shareholder hereby revokes any and all previous proxies with
respect to any Covered Shares.
(d) Nothing herein contained shall (i) restrict, limit or prohibit
Shareholder, who is a director and officer of Dynegy, from exercising (in his
capacity as a director or officer) his fiduciary duties to the shareholders of
Dynegy under applicable law, or (ii) require Shareholder, in his capacity as an
officer of Dynegy, to take any action in contravention of, or omit to take any
action pursuant to, or otherwise take or refrain from taking any actions which
are inconsistent with, instructions or directions of the Board of Directors of
Dynegy undertaken in the exercise of his fiduciary duties, provided that nothing
in this Section 1(d) shall relieve or be deemed to relieve Shareholder from his
obligations under Sections 1 or 2.
Section 2. Disposition of Shares. From and after the date hereof until
the Termination Date, Shareholder hereby agrees that he will not, directly or
indirectly, sell, pledge, encumber, grant any proxy or enter into any voting or
similar agreement with respect to, transfer or otherwise dispose of
(collectively, "TRANSFER"), or agree or contract to Transfer, any Covered Shares
(or any interest therein) with respect to which Shareholder, directly or
indirectly, controls the right to Transfer; provided, however, that Shareholder
may Transfer his respective Covered Shares to an Affiliate (as defined below) of
Shareholder provided that such Affiliate agrees to be subject to the terms and
conditions set forth in this Agreement. For purposes of this Agreement,
"AFFILIATE" shall mean any corporation, partnership, limited liability company
or other entity that Shareholder directly or indirectly through one or more
intermediaries controls, or is controlled by, or is under common control with,
Shareholder.
Section 3. Other Covenants and Agreements. Each party shall execute and
deliver such additional instruments and other documents and shall take such
further actions as may be reasonably necessary or appropriate to effectuate,
carry out and comply with all of their obligations under this Agreement. Without
limiting the generality of the foregoing, neither party shall enter into any
agreement or arrangement (or alter, amend or terminate any existing agreement or
arrangement) or take any other action (or fail to take any other action) if such
action (or failure) would materially impair the ability of any party to
effectuate, carry out or comply with all the terms of this Agreement. Enron
hereby agrees to cooperate with Shareholder in connection with any filings
required to be made by Shareholder in connection with the Mergers and the
transactions contemplated thereby.
2
<PAGE>
Section 4. Representations and Warranties of Enron. Enron represents
and warrants to Shareholder as follows: (a) each of this Agreement and the
Merger Agreement has been approved by the Board of Directors of Enron,
representing all necessary corporate action on the part of Enron, except for the
approval of Enron's shareholders contemplated by the Merger Agreement, (b) each
of this Agreement and the Merger Agreement has been duly executed and delivered
by a duly authorized officer of Enron, and (c) each of this Agreement and the
Merger Agreement constitutes a valid and binding agreement of Enron, enforceable
against Enron.
Section 5. Representations and Warranties of Shareholder. Shareholder
represents and warrants to Enron as follows: (a) Shareholder has the requisite
competence and authority to execute and deliver this Agreement, (b) this
Agreement has been duly executed and delivered by Shareholder, (c) this
Agreement constitutes the valid and binding agreement of such Shareholder, (d)
Shareholder has the full power and authority to vote, or execute a consent, with
respect to, all Covered Shares as contemplated hereby, (e) the securities of
Dynegy listed next to the name of Shareholder on Schedule I hereto are the only
securities of Dynegy owned by Shareholder and over which Shareholder has the
power to vote (or direct the voting) (collectively, the "SHARES"), (f)
Shareholder is the lawful owner of the Shares listed on Schedule I as owned by
him, free and clear of all liens, charges, encumbrances and commitments of every
kind, other than this Agreement, and has the power to vote (including by an
irrevocable power to vote or execution of a consent) such Shares without any
actions on the part of any other party, and (g) the execution and delivery by
Shareholder of this Agreement does not violate or breach any law, contract,
instrument, agreement or arrangement to which Shareholder is a party or by which
Shareholder is bound, except to the extent such violation or breach does not
prevent or delay performance of such Shareholder's obligations hereunder.
Section 6. Effectiveness. It is a condition precedent to the
effectiveness of this Agreement that the Merger Agreement shall have been duly
executed and delivered by the parties thereto. Any amendment or change to the
Merger Agreement that (i) changes the Merger Ratio, (ii) adds any cash or other
consideration to be paid to holders of Enron Common Stock, (iii) changes the
termination date of the Merger Agreement, or (iv) materially adversely affects
the Shareholder, will nullify the effectiveness of this Agreement and this
Agreement shall terminate immediately.
Section 7. Miscellaneous.
(a) Notices, Etc. All notices, requests, demands or other
communications required by or otherwise with respect to this Agreement shall be
in writing and shall be deemed to have been duly given to any party when
delivered personally (by courier service or otherwise), when delivered by
telecopy and confirmed by return telecopy, or three days after being mailed by
courier service that guarantees overnight delivery, in each case to the
applicable addresses set forth below:
3
<PAGE>
If to Enron:
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: General Counsel
Telecopy: (713) 853-6161
with copy to:
Vinson & Elkins, L.L.P.
101 Fannin, Suite 2300
Houston, Texas 77002-6760
Attention: William E. Joor III, Esq.
Scott N. Wulfe, Esq.
Telecopy: (713) 758-2346
If to the Shareholder:
Charles L. Watson
1000 Louisiana Street
Suite 6700
Houston, TX 77002
Telecopy: (713) 507-6400
and:
Baker Botts L.L.P.
One Shell Plaza
910 Louisiana
Houston, Texas 77002-4995
Attention: R. Joel Swanson, Esq.
J. David Kirkland, Jr., Esq.
Telecopy: (713) 229-1522
and:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
711 Louisiana Street, 19th Floor
Houston, TX 77002
Attention: Robert Allen
Telecopy: (713) 236-0822
or to such other address as such party shall have designated by notice so given
to each other party.
(b) Amendments, Waivers, Etc. This Agreement may not be amended,
changed, supplemented, waived or otherwise modified or terminated except by an
instrument in writing signed by Enron and Shareholder.
4
<PAGE>
(c) Successors and Assigns. This Agreement shall be binding upon and
shall inure to the benefit of and be enforceable by the parties and their
respective heirs, successors and assigns, including without limitation any
corporate successor by merger or otherwise, or any party succeeding to the
ownership of (or power to vote) any Covered Shares.
(d) Entire Agreement. This Agreement (together with the Merger
Agreement) embodies the entire agreement and understanding between the parties
relating to the subject matter hereof and supersedes all prior agreements and
understandings relating to such subject matter. There are no representations,
warranties or covenants by the parties hereto relating to such subject matter
other than those expressly set forth in this Agreement and the Merger Agreement.
(e) Severability. If any term of this Agreement or the application
thereof to any party or circumstance shall be held invalid or unenforceable to
any extent, the remainder of this Agreement and the application of such term to
the other party or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by applicable law, provided that in
such event the parties shall negotiate in good faith in an attempt to agree to
another provision (in lieu of the term or application held to be invalid or
unenforceable) that will be valid and enforceable and will carry out the
parties' intentions hereunder.
(f) Specific Performance. The parties acknowledge that money damages
are not an adequate remedy for violations of this Agreement and that any party
may, in his or its sole discretion, apply to a court of competent jurisdiction
for specific performance or injunctive or such other relief as such court may
deem just and proper in order to enforce this Agreement or prevent any violation
hereof and, to the extent permitted by applicable law, each party waives any
objection to the imposition of such relief.
(g) Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise or beginning of the
exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
(h) No Waiver. The failure of any party hereto to exercise any right,
power or remedy provided under this Agreement or otherwise available in respect
hereof at law or in equity, or to insist upon compliance by any other party
hereto with his or its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of his or its right to exercise any such or other right, power or remedy
or to demand such compliance.
(i) Third Party Beneficiaries. This Agreement is not intended to be for
the benefit of and shall not be enforceable by any person or entity who or which
is not a party hereto.
(j) Jurisdiction. Each party (a) consents to submit himself or itself
to the personal jurisdiction of any federal court located in the State of Texas
or any Texas state court if any
5
<PAGE>
action, suit or proceeding arises in connection with this Agreement and (b)
agrees that he or it will not attempt to defeat or deny such personal
jurisdiction by motion or other request for leave from any such court. Each
party hereto hereby waives any right to a trial by jury in connection with any
such action.
(k) Governing Law. This Agreement and all disputes hereunder shall be
governed by and construed and enforced in accordance with the laws of the State
of Illinois to the fullest extent possible.
(l) Name, Captions, Gender. The name assigned this Agreement and the
section captions used herein are for convenience of reference only and shall not
affect the interpretation or construction hereof. Whenever the context may
require, any pronoun used herein shall include the corresponding masculine,
feminine or neuter forms.
(m) 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 instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, the
parties hereto.
(n) Expenses. Enron and Shareholder shall bear his or its own expenses
incurred in connection with this Agreement and the transactions contemplated
hereby.
REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.
6
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed this Shareholder
Agreement as of the date first above written.
ENRON CORP.
By: /s/ RAYMOND M. BOWEN, JR.
------------------------------------------
Name: Raymond M. Bowen, Jr.
----------------------------------------
Title: Executive Vice President -
Finance and Treasurer
---------------------------------------
SHAREHOLDER
/s/ CHARLES L. WATSON
---------------------------------------------
Charles L. Watson
7
<PAGE>
SCHEDULE I
SHARES
Dynegy Class A Common Stock 8,504,816
8
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.6
<SEQUENCE>8
<FILENAME>h92082ex99-6.txt
<DESCRIPTION>STOCKHOLDER AGREEMENT - STANFORD, INC.
<TEXT>
<PAGE>
EXHIBIT 99.6
STOCKHOLDER AGREEMENT
THIS STOCKHOLDER AGREEMENT, dated as of November 9, 2001 (the "AGREEMENT"),
is made by and among Stanford, Inc., a Delaware corporation ("STANFORD"), Dynegy
Inc., an Illinois corporation ("DYNEGY"), Enron Corp., an Oregon corporation
("ENRON"), and Chevron U.S.A. Inc., a Pennsylvania corporation (the
"STOCKHOLDER").
WHEREAS, Stockholder owns a significant percentage of the outstanding
capital stock of Dynegy;
WHEREAS, Stanford, Enron, Dynegy and certain other entities have entered
into an Agreement and Plan of Merger dated as of the date hereof (the "MERGER
AGREEMENT"), that provides for, among other things, the merger of a subsidiary
of Stanford with and into Dynegy (the "MERGER"), pursuant to which shares of
Stanford's Class B Common Stock, no par value $.01 per share ("CLASS B SHARES"),
shall be issued to Stockholder in exchange for its shares of Dynegy Class B
Common Stock, subject to the terms and conditions of the Merger Agreement;
WHEREAS, on the closing date of the Merger, ChevronTexaco Corporation, an
Affiliate of Stockholder ("CHEVRONTEXACO"), may purchase additional shares of
Stanford Class B Shares pursuant to the terms of a Subscription Agreement dated
as of the date hereof (the "SUBSCRIPTION AGREEMENT") by and between Stanford and
ChevronTexaco; and
WHEREAS, as an inducement to Stanford, Enron and Dynegy to enter into the
Merger Agreement, Stockholder agreed to enter into this Agreement to provide for
certain agreements and obligations of the parties hereto prior to and following
the closing of the Merger.
NOW, THEREFORE, in consideration of the premises and the mutual and
independent covenants hereinafter set forth and other good and valuable
consideration the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, each of the following capitalized terms is
defined as follows:
"AFFILIATE" shall mean a Person that directly, or indirectly through one or
more intermediaries, controls, or is controlled by, or is under common control
with, another Person, and includes any Person acting in concert with another
Person.
"AUCTION" shall mean a sale process for 100% of the total combined voting
power of the outstanding voting securities of Stanford conducted by an
investment banking firm of national reputation selected by Stanford and
reasonably acceptable to Stockholder. An "Auction" may include either (i) a
broad or narrow solicitation of interest and may or may not involve multiple
rounds of bidding as determined by Stanford's Board of Directors or a committee
thereof or (ii) any recapitalization, combination, reverse merger or other
similar transaction.
<PAGE>
"BLOCKING EVENT" shall occur if either (a) all of the directors elected to
Stanford's Board of Directors pursuant to the terms of the Class B Shares
present at the meeting where a Covered Transaction is considered vote against a
Covered Transaction and such Covered Transaction is otherwise approved by at
least a majority of the directors elected to Stanford's Board of Directors then
in office, or (b) any of the Class B Shares are voted against a Covered
Transaction and such Covered Transaction is otherwise approved by at least
two-thirds of those shares entitled to vote on the transaction (other than the
Class B Shares and other than shares that are beneficially owned by members of
Stanford's Board of Directors and the executive officers of Stanford or any
Subsidiary of Stanford). Notwithstanding the foregoing, no "Blocking Event"
shall be deemed to occur with respect to (a) any Covered Transaction which is a
substantially similar transaction as a Covered Transaction previously acted
upon, the intent of the parties being that repetitive submissions of
substantially similar proposals shall not result in additional Blocking Events
having occurred or (b) any event that would otherwise constitute a Blocking
Event pursuant to clause (a) or (b) of the preceding sentence with respect to
which a majority of the directors elected to Stanford's Board of Directors then
in office (other than the directors elected by the holders of the Class B
Shares) determines that such event shall not be deemed to be a Blocking Event.
"BUYOUT EVENT" shall occur upon the earlier of (a) the occurrence of a
second Blocking Event within a period of 24 consecutive months following the
occurrence of a prior Blocking Event or (b) the occurrence of a third Blocking
Event (regardless of the period of time between Blocking Events).
"CLASS A SHARES" shall mean shares of Stanford's Class A Common Stock, par
value $.01 per share.
"CLOSING" shall mean the closing of the transactions contemplated by the
Merger Agreement.
"COVERED TRANSACTION" shall mean an event specified in Article III, Section
7(b) (excluding clause (i) and (ii) thereof) of the Amended and Restated Bylaws
of Stanford.
"EFFECTIVE DATE" shall mean the effective date of the Merger.
"EXCHANGE ACT" shall mean the Securities and Exchange Act of 1934, as
amended.
"GOVERNMENTAL AUTHORITY" shall mean any governmental or regulatory
authority or agency.
"GOVERNMENTAL ORDER" shall mean any rule, regulation, order, writ or decree
of a Governmental Authority.
"PARENT" shall mean any Person of which Stockholder is a "subsidiary
company" as defined in PUHCA.
2
<PAGE>
"PERSON" shall mean a natural person, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a Governmental Authority.
"PUBLIC SALE" shall mean (a) an underwritten public offering of Class B
Shares (or the Class A Shares into which they are convertible) pursuant to an
effective registration statement under the Securities Act or (b) a bona fide
public sale of Class B Shares (or the Class A Shares into which they are
convertible) in an open market transaction through a broker, dealer or market
maker under Rule 144 (or any successor rule thereto) of the Securities Act.
"PUHCA" shall mean the Public Utility Holding Company Act of 1935, as
amended, including any regulations promulgated thereunder or any successor
statutes thereto.
"PUHCA EXEMPTION" shall mean an exemption under Section 3(a)(3) of PUHCA
from the registration and other requirements of PUHCA.
"QUALIFIED OFFER" shall mean a written offer by Stockholder or any
Affiliate thereof to acquire all, but not less than all, of the outstanding
voting securities of Stanford for consideration consisting solely of cash or
freely tradable securities listed on a national securities exchange or the
NASDAQ National Market (or successors thereto), which offer is accompanied by a
fairness opinion relating to such offer from an investment banking firm of
national reputation.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Registration Rights
Agreement dated as of the date hereof between Stockholder and Stanford.
"SEC" shall mean the Securities and Exchange Commission or any successor
organization.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"THIRD PARTY OFFER" shall mean a bona fide cash offer from any Person to
acquire all or any part of the Class B Shares (or the Class A Shares into which
they are convertible).
"THIRD PARTY OFFEROR" shall mean a Person who makes a Third Party Offer.
"TRANSFER" shall mean: (a) when used as a noun, any direct or indirect
transfer, sale, assignment, conveyance, pledge, hypothecation, encumbrance or
other disposition; and (b) when used as a verb, to directly or indirectly
transfer, sell, assign, convey, pledge, hypothecate, encumber or otherwise
dispose of; provided that "Transfer" shall not include any such transfer to a
"Permitted Transferee" (as defined in Stanford's Restated Certificate of
Incorporation) provided that such Permitted Transferee agrees in writing to
become a party to this Agreement and to be bound by the provisions hereof;
provided, further, that "Transfer" shall include a change of control of any
Person who holds, directly or indirectly, Class B Shares (but shall not include
a change of control with respect to ChevronTexaco).
3
<PAGE>
"VOTING AGREEMENT" shall mean the Shareholder Agreement dated as of the
date hereof between Stockholder and Enron.
"WIDELY DISBURSED PUBLIC SALE" shall mean a Public Sale in which no
purchaser and its affiliates (a) acquires Class B Shares (or the Class A Shares
or other securities into which the Class B Shares are convertible) representing
more than 3% of the total combined voting power of all voting securities of
Stanford then outstanding or (b) acquire any shares to the extent that such
acquisition will increase such purchaser's and its Affiliates' combined voting
power to more than 5% of the total combined voting power of all voting
securities of Stanford then outstanding.
ARTICLE II
AGREEMENTS RELATING TO PUHCA AND ICC CERTIFICATION
2.1 Covenants of Stockholder and Stanford. Stockholder and Stanford
covenant and agree that:
(a) In furtherance of the application previously filed by Stockholder
for a PUHCA exemption, Stockholder shall amend its application with the SEC
as may be reasonably necessary or appropriate to reflect the changed
circumstances arising from the transaction contemplated by the Merger
Agreement and the related transactions by and among the Stockholder and/or
its affiliates and Stanford and/or Dynegy. In the event that after Closing
(as defined in the Merger Agreement), the SEC denies the PUHCA exemption
application (as the same may be amended in connection with the transactions
contemplated by the Merger Agreement) made under Section 2.1(a) of the
Shareholder Agreement, dated as of June 14, 1999, by and among Dynegy
(f/k/a Energy Convergence Holding Company), Illinova Corporation, an
Illinois corporation, Dynegy Holdings Inc., a Delaware corporation (f/k/a
Dynegy Inc.), and Stockholder, or revokes or revises in a manner adverse to
Stockholder an exemption previously granted, and no action Stockholder is
required to take, or will agree to take, under this Section 2.1 will enable
Stockholder to obtain an exemption or to restore the exemption previously
granted, Stanford shall have the sole responsibility to take and will take
the necessary actions to avoid Stockholder becoming a holding company
required to register under PUHCA including, without limitation, one or more
of the following: joining or becoming subject to an independent system
operator or a separate transmission company, joining or contributing assets
to a regional transmission organization, functionally separating its lines
of business, or divesting utility assets or public utility companies, in
any such event only to the extent necessary to allow perfection of an
exemption or for Stockholder to avoid the requirement that Stockholder
register as a holding company pursuant to PUHCA. In such instances,
Stockholder shall cooperate with Stanford in its efforts to obtain
perfection of an exemption from the registration requirements of PUHCA for
Stockholder, but will not be required to take any action materially
affecting Stockholder's ownership interest or minority Stockholder
protection rights (including governance and voting rights) pertaining to
Stanford, or Stockholder's ability to acquire "foreign utility companies"
under Section 33 of PUHCA.
4
<PAGE>
(b) Notwithstanding any other provision of this Section 2.1, in the
event that Stockholder acquires (other than through Stanford) a direct or
indirect interest in any public utility company or acquires voting stock in
Stanford in addition to the stock to be acquired under the Merger Agreement
and the Subscription Agreement: (i) Stanford shall not be required to
undertake any action to remedy the legal consequences under PUHCA of any
such acquisition, and (ii) Stockholder shall have the sole responsibility
to take (if it elects to do so) the necessary actions to avoid Stockholder
becoming a holding company required to register under PUHCA including,
without limitation, divestiture of the additional interests acquired by
Stockholder and modification of Stockholder's minority Stockholder
protection rights (including governance and voting rights) in any of
Stockholder's direct or indirect interests in a public utility company.
(c) Stanford agrees that it will not (nor allow any subsidiary to)
enter into transactions or to take other action that would put the
exemptions from the registration requirements of PUHCA held by Stanford or
Stockholder at risk or restrict Stockholder's ability to invest in or
acquire interests in "foreign utility companies" as defined by section
33(a)(3) of PUHCA.
(d) Stanford, Enron and Dynegy shall furnish such information and
provide such assistance, as Stockholder may reasonably request for purposes
of implementing the provisions of this Section 2.1.
ARTICLE III
LIMITATIONS ON ACQUISITIONS AND TRANSFERS
3.1 Limitations on Certain Acquisitions by Stockholder. Stanford and
Stockholder covenant and agree that:
(a) Stockholder may freely acquire, or permit any Affiliate of
Stockholder to acquire, by purchase or otherwise, any securities of
Stanford or become affiliated with any Person who owns securities of
Stanford, so long as Stockholder and its Affiliates do not collectively
beneficially own (including any securities of other Persons with whom
Stockholder or its Affiliates are affiliated) securities representing more
than 40% of the total combined voting power of the outstanding voting
securities of Stanford.
(b) From the date hereof until the first anniversary of the Closing,
Stockholder shall not, directly or indirectly, acquire, offer or propose to
acquire, solicit an offer to sell, become a "participant" in a
"solicitation" of proxies, as those terms are defined in Rule 14a-11 and
14a-1, respectively, under the Exchange Act, in respect of any voting
securities of Stanford that may be outstanding and entitled to vote
relating to any of the foregoing, or otherwise agree to acquire by purchase
or otherwise (or permit any Affiliate of Stockholder to undertake any of
such actions) any securities of Stanford in excess of 40% of the total
combined voting power of the outstanding voting securities of Stanford;
provided, however, that Stockholder may (i) make a Qualified Offer in
accordance with Section 3.1(d) if, and only if, any Person or group of
Persons (other than an Affiliate of
5
<PAGE>
Stockholder) acquires, offers, solicits an offer to sell, or otherwise
seeks or agrees to acquire by purchase or otherwise beneficial ownership
(as such term is defined in Rule 14d-1 of the Exchange Act) of any
securities of Stanford representing 15% or more of the total combined
voting power of the outstanding voting securities of Stanford or (ii)
exercise its preemptive rights pursuant to Article VI hereof.
(c) From and after the first anniversary of the Closing, Stockholder
shall not, directly or indirectly, acquire, offer or propose to acquire,
solicit an offer to sell, become a "participant" in a "solicitation" of
proxies, as those terms are defined in Rule 14a-11 and 14a-1, respectively,
under the Exchange Act, in respect of any voting securities of Stanford
that may be outstanding and entitled to vote relating to any of the
foregoing, or otherwise agree to acquire by purchase or otherwise (or
permit any Affiliate of Stockholder to undertake any of such actions) any
securities of Stanford in excess of 40% of the total combined voting power
of the outstanding voting securities of Stanford; provided, however, that
Stockholder shall be entitled to make a Qualified Offer in accordance with
Section 3.1(d).
(d) (i) In connection with any Qualified Offer, Stockholder shall
deliver the Qualified Offer in writing to Stanford. In the event that
Stanford does not accept such offer in writing within 30 days after
receipt, such offer shall be deemed withdrawn and Stockholder shall
elect for Stanford to either: (A) conduct an Auction in which
Stockholder may participate but shall have no special priority or
other rights vis-a-vis other bidders, or (B) conduct an Auction in
which Stockholder shall not participate but at the conclusion thereof
Stockholder shall have the right to acquire all of the outstanding
voting securities of Stanford at a purchase price per share equal to
105% of the purchase price per share set forth in the bid selected by
Stanford's Board of Directors and in such event, Stanford's Board of
Directors shall approve promptly and in any case within 10 days of
Stockholder's request in writing made within 10 days of the conclusion
of any such Auction (written notice of such conclusion to be given
immediately by Stanford to Stockholder) entering into a definitive
agreement with Stockholder for such a transaction containing customary
terms and conditions, and Stanford shall, within 2 days of the
approval of its Board of Directors of such an agreement, execute and
deliver the same to Stockholder; such terms and conditions shall
include a termination fee of 5 percent of the aggregate value of
Stanford as evidenced by the per share value payable by Stockholder
under the agreement and a right of Stanford to terminate the
transaction and pay such termination fee to Stockholder if Stanford's
Board of Directors determines that it is necessary for Stanford to so
terminate the agreement in order for the Board to properly discharge
its fiduciary duties. In the event of any such termination by
Stanford, Stockholder may, in its discretion, proceed with a tender or
exchange offer for all of the common stock of Stanford which
Stockholder does not own at such price as it shall choose irrespective
of any other provisions of this Agreement and shall be free to pursue
any other rights and remedies which it may then have against Stanford
arising from such termination; Stockholder shall not be obligated to
6
<PAGE>
tender its shares to such other bidder nor to vote in favor of any
other transaction in the event of such termination.
(ii) Any Auction shall be subject to the following provisions:
(A) The Auction shall be completed within 120 days after
Stanford receives the Qualified Offer and the corresponding sale
shall close within 60 days after completion of the Auction.
(B) If Stanford does not receive an offer acceptable to its
Board of Directors in an Auction conducted pursuant to Section
3.1(d)(i)(B) within 120 days after Stanford receives a Qualified
Offer, Stockholder may either (I) proceed with its Qualified
Offer (which may take the form of a tender offer or exchange
offer) and close such purchase within 60 days thereafter, or (II)
reinitiate the process by submitting a new Qualified Offer.
(C) In the event that Stockholder is not the successful
bidder in an Auction conducted pursuant to Sections 3.1(d)(i)(A)
or (B) or does not elect to purchase in the Auction, Stockholder
agrees that it shall vote its Class B Shares in favor of the
successful bidder's transaction and not exercise dissenter's
rights, shall tender its shares (in the event of a tender offer),
and otherwise shall reasonably cooperate in consummating the
transaction.
(D) Stanford and Stockholder agree that the purchase price
set forth in a Qualified Offer is highly confidential and, as
such, Stanford and Stockholder (and each of their Affiliates)
shall not, to the extent legally permissible, disclose such
purchase price to any Person without the prior written consent of
the other party.
(E) To the extent that a successful bidder proposes a
purchase price that is not solely for cash, the stock and cash
components of such bid shall be substantially equivalent in value
(on a per share basis) and the bid shall provide for sufficient
cash (or be on such other terms) such that Stockholder may
receive solely cash for its Class B Shares.
(F) In any Auction, Stanford may be a bidder.
3.2 Transfer Restrictions. Stanford and Stockholder covenant and agree that
commencing upon the Closing and for a period of one year thereafter (the
"RESTRICTED PERIOD"), Stockholder shall not Transfer any Class B Shares except
in a transaction pursuant to Section 3.1(d) hereof, Article IV hereof or a
Governmental Order. Following the Restricted Period, Stockholder shall not
Transfer or propose to Transfer any Class B Shares except in a transaction
pursuant to Article III, Article IV or a Governmental Order.
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<PAGE>
(a) Widely Disbursed Public Sale. Following the Restricted Period,
Stockholder may Transfer any Class B Shares in one or more Widely Disbursed
Public Sales.
(b) Other Transfers. Following the Restricted Period, Stockholder may
Transfer part or all of its Class B Shares in accordance with this Section
3.2(b) and Stanford shall first be given the opportunity, in the following
manner, to purchase (or cause a Person or group designated by Stanford (a
"STANFORD DESIGNEE") to purchase) all, but not less than all, of such
offered Class B Shares:
(i) Proposed Transfer in the Absence of a Third Party Offer. If,
from time to time, at any time when Stockholder is not in receipt of a
Third Party Offer, Stockholder desires to Transfer some or all of the
Class B Shares other than pursuant to a Widely Disbursed Public Sale,
Stockholder shall deliver a written notice (the "OFFER NOTICE") to
Stanford of such intention and stating the number of Class B Shares
that Stockholder proposes to Transfer and the cash purchase price per
share for such Transfer. Stanford (or a Stanford Designee) shall have
the right for thirty (30) days from the receipt of the Offer Notice,
exercisable by written notice in accordance with Section 8.4 hereof,
to elect to purchase (or to designate the Stanford Designee to
purchase) all, but not less than all, of the Class B Shares specified
in the Offer Notice for cash at a purchase price per share as set
forth therein.
(A) If Stanford (or a Stanford Designee) does not provide
Stockholder written notice of its election to purchase within
thirty (30) days from receipt of the Offer Notice, Stockholder
may, but is not obligated to, Transfer all, but not less than
all, of the Class B Shares as specified in the Offer Notice at
the cash purchase price per share set forth therein (or at a
higher price), provided that such Transfer must be completed
within 180 days after Stockholder delivers the Offer Notice.
(B) If Stanford exercises its right to purchase the Class B
Shares specified in the Offer Notice, the closing of the purchase
of such Class B Shares shall take place within 180 days after
Stockholder delivers the Offer Notice at a time and place
reasonably specified by Stanford (or a Stanford Designee). At the
closing, Stanford (or a Stanford Designee) shall deliver to
Stockholder cash or immediately available funds in an amount
equal to the total purchase price of the Class B Shares set forth
in the Offer Notice and Stockholder (and its Affiliates) shall
deliver to Stanford (or a Stanford Designee) certificates
representing the Class B Shares, duly endorsed in blank or
accompanied by stock powers duly executed and otherwise in form
acceptable for transfer of the shares on the books of Stanford,
free and clear of liens, claims or other encumbrances of any
nature. If, for any reason other than a delay caused by
Stockholder, Stanford (or a Stanford Designee) fails to complete
the purchase of the
8
<PAGE>
Class B Shares in accordance with this clause within 180 days
after Stockholder delivers the Offer Notice, then Stockholder
(and its Affiliates) may, but is not obligated to, Transfer the
Class B Shares at such price as it shall deem appropriate,
provided that Stockholder shall complete such Transfer within 180
days thereafter. Stockholder and Stanford expressly agree that,
with respect to the first failure of Stanford to complete the
purchase of the Class B Shares as required by this clause (B),
Stockholder shall have no remedies other than (1) the rights set
forth in the immediately preceding sentence and (2) a right to
recover from Stanford on demand Stockholder's reasonable out of
pocket expenses related to the proposed sale; provided, however
that such limitation on Stockholder's remedies shall only be
applicable if Stanford exercised its right to purchase under this
clause (B) in good faith and with the written advice of a
nationally-recognized investment banking firm or financial
institution that sufficient financing would be available for such
transaction.
(ii) Transfer Pursuant to a Third Party Offer. At any time
Stockholder receives and desires to accept an unsolicited Third Party
Offer, Stockholder shall deliver a written notice (the "THIRD PARTY
OFFER NOTICE") to Stanford of such intention and stating the identity
of the Third Party Offeror, the number of Class B Shares that
Stockholder proposes to Transfer and the purchase price per share for
such Transfer. Following, receipt of the Third Party Offer Notice,
Stanford's board of directors shall determine, in its sole discretion,
whether the sale to the Third Party Offeror is acceptable and shall
deliver a written notice to Stockholder stating whether the sale to
the Third Party Offeror is acceptable within thirty (30) days from the
receipt of the Third Party Offer Notice.
(A) If Stanford advises Stockholder that the sale to the
Third Party Offeror is acceptable, then Stockholder may proceed
with the Transfer of Class B Shares in accordance with the Third
Party Offer Notice (or at a higher price).
(B) If Stanford advises Stockholder that the sale to the
Third Party Offeror is not acceptable, then Stockholder shall
have the right to require Stanford to purchase (or to designate a
Stanford Designee to purchase) all, but not less than all, of the
Class B Shares specified in the Third Party Offer Notice for cash
at a purchase price equal to 105% of the purchase price per share
as set forth in the Third Party Offer Notice. If, for any reason
other than a delay caused by Stockholder, Stanford (or a Stanford
Designee) fails to complete the purchase within 180 days from its
receipt of the Third Party Offer Notice, Stockholder may, but is
not obligated to, Transfer the Class B Shares specified in the
Third Party Offer Notice at such price as it shall deem
appropriate, provided that Stockholder shall complete such
Transfer within 180 days thereafter. Stockholder and Stanford
expressly agree that, with respect to the first
9
<PAGE>
such failure of Stanford to complete the purchase of the
Class B Shares as required by this clause (B), Stockholder
shall have no remedies other than (1) the rights set forth
in the immediately preceding sentence and (2) a right to
recover from Stanford on demand Stockholder's reasonable out
of pocket expenses related to the proposed sale; provided,
however that such limitation on Stockholder's remedies shall
only be applicable if Stanford exercised its right to
purchase under this clause (B) in good faith and with the
written advice of a nationally-recognized investment banking
firm or financial institution that sufficient financing
would be available for such transaction.
3.3 Time Periods. Whenever a provision of Article III or IV provides that
an action is to be taken within a specified period of time, such period shall be
increased to the extent reasonable to accommodate obtaining any required
approvals from any Governmental Authorities.
3.4 Additional Stockholder Covenants. Stockholder shall not seek, directly
or indirectly, to place representatives on the Board of Directors of Stanford or
seek the removal of any member of the Board of Directors of Stanford except
pursuant to the terms of the Class B Shares set forth in the Restated
Certificate of Incorporation of Stanford.
3.5 Shares Subject to the Agreement. Except as otherwise provided for
herein, all Class B Shares now or hereafter owned by Stockholder or its
Affiliates shall be subject to the terms of this Agreement.
3.6 References to Class B Shares. With respect to any Transfer, a reference
to Class B Shares herein shall be deemed to include the Class A Shares or other
securities issuable upon conversion of the Class B Shares in accordance with
Stanford's Restated Certificate of Incorporation upon the Transfer of such Class
A Shares or other securities to a third party.
3.7 Legend and Stop Transfer Order. To assist in effectuating the
provisions of this Agreement, Stockholder hereby consents:
(a) to the placement of the following legend on all certificates
certifying ownership of the Class B Shares until such Class B Shares have
been sold, transferred or disposed of pursuant to the requirements of
Article III hereof:
The shares represented by this certificate are subject to the
provisions of a Stockholder Agreement by and among Stanford, Inc.,
Dynegy Inc. and Chevron U.S.A. Inc. (and certain other parties) and
may not be sold, transferred, pledged, hypothecated or otherwise
disposed of except in accordance therewith. A copy of said Agreement
is on file at the office of the Secretary of Stanford; and
10
<PAGE>
(b) to the entry of a stop transfer order with the transfer agent or
agents of Stanford securities against the transfer of Class B Shares except
in compliance with the requirements of this Agreement, or, if Stanford is
its own transfer agent with respect to any Class B Shares, to the refusal
by Stanford to transfer any such securities except in compliance with the
requirements of this Agreement.
ARTICLE IV
STANFORD'S BUYOUT RIGHTS
4.1 Buyout Rights. Subject to the limitations hereinafter set forth, upon
the occurrence of a Buyout Event, Stockholder's blocking rights under this
Agreement with respect to a Covered Transaction and pursuant to Article III,
Section 7 of Stanford's Amended and Restated Bylaws shall, subject to
reinstatement under clause (a)(iii) hereunder, terminate and Stockholder shall,
within 180 days after the occurrence of a Buyout Event (or such longer period as
may be required to avoid disgorgement of short swing profits under Section 16 of
the Exchange Act with respect to Class B Shares owned at the time of the Buyout
Event), at its option either:
(a) Sell (and cause its Affiliates to sell) all of the Class B Shares
(1) in a Widely Disbursed Public Sale or (2) to a third party in a private
sale, provided that any such private sale shall be subject to the following
provisions:
(i) As promptly as practicable, Stockholder shall deliver written
notice to Stanford of any proposed buyer under clause (2) of this
Section 4.1(a) and the purchase price per share and other material
terms of such proposed sale.
(ii) If, within 30 days after receipt of Stockholder's notice,
Stanford's board of directors delivers written notice to Stockholder
that a proposed buyer or terms are not acceptable, in its sole
discretion, then Stockholder shall have the right to require Stanford
to purchase (or find an acceptable buyer to purchase) all of the Class
B Shares at a purchase price equal to 105% of the purchase price
agreed to between Stockholder and the third party under clause (2) of
this Section 4.1(a).
(iii) If, for any reason other than a delay caused solely by
Stockholder, Stanford (or any acceptable buyer appointed by Stanford)
fails to purchase the Class B Shares within 180 days after the date of
the Buyout Event, then Stockholder (and its Affiliates) shall be free
to Transfer the Class B Shares at such price as it shall deem
appropriate, provided that Stockholder shall complete such Transfer
within 180 days thereafter, provided, that if Stockholder chooses not
to sell the Class B Shares after such failure, then notwithstanding
any of the provisions of this Section 4.1, the Blocking Event
triggering the Buyout Event shall not be deemed to be a Blocking Event
and Stockholder's blocking rights under Article III, Section 7 of
Stanford's Amended and Restated Bylaws shall thereupon be reinstated.
Stockholder and Stanford expressly agree that, with
11
<PAGE>
respect to the first failure of Stanford to complete the purchase of
the Class B Shares as required by this clause (iii), Stockholder shall
have no remedies other than (1) the rights set forth in the
immediately preceding sentence and (2) a right to recover from
Stanford on demand Stockholder's reasonable out of pocket expenses
related to the proposed sale; provided, however that such limitation
on Stockholder's remedies shall only be applicable if Stanford
exercised its right to purchase under this clause (iii) in good faith
and with the written advice of a nationally-recognized investment
banking firm or financial institution that sufficient financing would
be available for such transaction.
(b) Elect to retain the Class B Shares, by delivering a written
election to Stanford, provided that such Class B Shares and the directors
elected by such Class B Shares shall no longer be entitled to any blocking
rights under Article III, Section 7 of Stanford's Amended and Restated
Bylaws.
ARTICLE V
CERTAIN AGREEMENTS RELATING TO
THE MERGER AGREEMENT AND STANFORD
5.1 Sales of Class B Common Stock. Stanford covenants and agrees that it
shall not issue or agree to issue to any Person other than Stockholder or its
Affiliates any Class B Shares (or any security convertible or exchangeable into
such Class B Shares or any option, warrant or other right to acquire such Class
B Shares) without the prior written consent of Stockholder.
5.2 Restraints on Stockholders Ownership. Stanford covenants and agrees
that its shall not adopt a stockholder rights plan, "poison pill" or similar
device that prevents Stockholder from exercising its rights under Section 3.1(c)
or Article IV.
5.3 Representatives on Stanford's Board of Directors. Dynegy and Stanford
covenant and agree that they shall cause the three directors nominated by
Stockholder to be appointed to Stanford's Board of Directors pursuant to Section
3.1 of the Merger Agreement.
5.4 Waiver of Conditions in Merger Agreement; Amendments. The officers of
Dynegy and Stanford shall not waive any material condition to closing set forth
in the Merger Agreement or enter into any material amendments thereof without
the further approval of a majority of the Dynegy Board of Directors and, in
addition, a majority of the Class B Directors of Dynegy (as defined in the
Amended and Restated Articles of Incorporation of Dynegy).
ARTICLE VI
PREEMPTIVE RIGHTS
6.1 Employee Benefit Plans. In the event that Stanford issues any equity
securities pursuant to stock option, restricted stock or other employee benefit
plans, within 30 days following the end of each fiscal quarter Stanford shall
notify Stockholder in writing of all such issuances. Within 30 days after the
receipt of such notification, Stockholder may notify Stanford
12
<PAGE>
of its intent to purchase its "proportionate share" of such securities, in which
event Stanford shall issue such equity securities to Stockholder in exchange for
the purchase price. Notwithstanding the foregoing, in the event that Stanford is
subject to a stock split, reverse split, merger, share exchange or other
transaction in which the rights of Stockholder may be adversely impacted in the
event it is not able to purchase its proportionate share in a timely fashion,
the notice required by this Section shall be given in sufficient time for
Stockholder to elect to purchase equity securities and participate in such
transaction.
6.2 Other Issuances. In the event that Stanford issues any equity
securities other than as contemplated by the Merger Agreement and as described
in Section 6.1 hereof, promptly, but in all events within 30 days following each
such issuance, Stanford shall notify Stockholder in writing of such issuance.
Within 30 days after the receipt of such notification, Stockholder may notify
Stanford in writing of its intent to purchase its proportionate share of such
securities, in which event Stanford shall issue such equity securities to
Stockholder in exchange for the purchase price.
6.3 Intended Issuances. Notwithstanding the provisions of Section 6.2, in
order to enable Stanford to efficiently structure financings and other
securities issuances, to the extent that Stanford notifies Stockholder in
writing of the material terms of an intended issuance of any equity securities,
as promptly as practicable thereafter Stockholder shall notify Stanford in
writing of its election to purchase its proportionate share of such securities,
in which case Stanford shall issue such equity securities to Stockholder in
exchange for the purchase price at the time of the issuance to others. In the
event that the material terms of the intended issuance change prior to issuance,
Stanford shall promptly give Stockholder written notice thereof, and as promptly
as practicable thereafter Stockholder shall reconfirm (or reverse) its prior
election in writing.
6.4 Purchase Price. The purchase price for equity securities issued
pursuant to Section 6.1 or 6.2 shall equal: (a) in the event that the securities
are issued in an arms' length transaction based upon the market price of
Stanford's securities, at the price of such issuance, (b) if clause (a) does not
apply, at the mean closing price on the New York Stock Exchange (or other
primary market for the relevant securities) over the twenty (20) trading days
most immediately preceding the issuance, (c) if neither clause (a) or (b)
applies, at the fair market value thereof as determined for purposes of
complying with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, if a notification is required pursuant to such Act, and (d) otherwise
at the fair market value thereof, in cash, as determined in good faith by the
Board of Directors of Stanford.
6.5 Proportionate Share. For purposes of the issuance of securities to
Stockholder pursuant to this Article VI, Stockholder's "proportionate share"
shall be that number of shares or interests which preserves Stockholder's
proportionate interest in the equity value of Stanford at the same level as
prior to the issuance that triggered Stockholder's rights.
6.6 Nature of Securities. To the extent that Stockholder is entitled to
purchase Class A Common Shares pursuant to this Article VI, it instead shall be
issued Class B Common Shares
13
<PAGE>
on a one-for-one basis. To the extent that Stockholder is entitled to purchase
any other voting securities, Stanford and Stockholder shall negotiate in good
faith and agree upon the nature of the securities and, if applicable, the
restrictions on or privileges of, such securities so that the purposes of this
Agreement are effected. Stockholder shall have no preemptive rights with respect
to securities that do not participate in the earnings of Stanford or, absent a
payment or other default, in the election of directors of Stanford.
6.7 Presumption. In order to facilitate future reviews of the books and
records of Stanford, there shall be an irrefutable presumption that this Article
VI has been fully complied with by Stanford: (a) absent a filing by Stockholder
with the SEC (for instance, on a Schedule 13D) within 180 days following the end
of any fiscal year of a document stating its belief that it was not issued the
securities that it was entitled to during such fiscal year, with respect to all
issuances during such year, and (b) absent the institution of litigation against
Stanford by Stockholder prior thereto, 180 days following the last date on which
there has been any Class B Shares outstanding, with respect to all issuances.
ARTICLE VII
EFFECTIVENESS; TERMINATION
7.1 Effectiveness and Term. The provisions of this Agreement shall be
effective and terminate as follows:
(a) The provisions of Articles I, II and VIII hereof shall be
effective as of the date hereof and shall terminate on the date following
the Effective Date on which Stockholder and its Affiliates own less than
10% of the total combined voting power of all voting securities of
Stanford; and
(b) The remaining provisions (other than Articles I, II and VIII) of
this Agreement shall be effective at the Effective Date and shall terminate
on the date Stockholder and its Affiliates cease to own at least 15% of the
total combined voting power of all voting securities of Stanford.
Notwithstanding the foregoing, if the Merger Agreement is terminated in
accordance with its terms, the provisions of this Agreement shall be null and
void and of no further force or effect and this Agreement shall be deemed
terminated; provided, however, that no termination of this Agreement shall in
any way relieve any party from any liability arising as a result of any breach
of this Agreement by such party prior to the effective date of such termination.
7.2 Issuance of New Certificates. Upon a termination of the provisions of
this Agreement contemplated by Section 7.1(b), all Class B Shares subject to
this Agreement shall be relieved from the terms and conditions contained herein,
and the stock certificates of Stanford representing such Class B Shares may be
surrendered to Stanford for cancellation and issuance of a new certificate
without the legend required pursuant to Section 3.7. Such new certificates shall
be issued and delivered to Stockholder as soon as practicable and the stop
transfer order provided for in Section 3.7 shall be rescinded immediately.
14
<PAGE>
ARTICLE VIII
GENERAL PROVISIONS
8.1 Intent and Interpretation. Each of parties hereto stipulates and
acknowledges that Stanford has made, prior to the date hereof, a careful
evaluation of Stockholder, its investment objectives with regard to the Class B
Shares and its lack of intent to obtain control of Stanford by its acquisition
thereof, and the compatibility of such objectives with the objectives of
Stanford; that such factors were critical to Stanford in the decision to
consummate the Merger and thereby issue a large block of voting securities to
Stockholder; that, absent the restrictions in this Agreement, ownership of the
Class B Shares would present an unusual opportunity for Stockholder to gain
effective control of Stanford; that Stanford might have reached a different
decision with regard to the Merger and the resulting issuance of the Class B
Shares to a group of related persons had such persons been other than
Stockholder; therefore, that the restrictions set forth in this Agreement are a
material part of the consideration received by Stanford for the issuance of the
Class B Shares in the Merger, and that the primary intent of such restrictions
is to insure that such block of securities does not come to rest in the hands or
under the control of any single holder or group of holders other than
Stockholder and that the size of such block of securities is not, except as
otherwise herein provided, increased over a prescribed amount, without the
consent of Stanford. Stockholder acknowledges and agrees that such purpose and
intent are reasonable and that the restrictions set forth in this Agreement are
reasonable in view of such purpose and intent. Further, Stockholder and Stanford
agree that, should any disagreement arise in the interpretation of any such
restrictions as applied to any set of facts, such disagreement shall be resolved
by interpreting and applying each restriction in the manner that will most
nearly effectuate the purpose and intent of such restrictions as herein stated.
8.2 Specific Enforcement. Each of the parties hereto acknowledges and
agrees that the other parties hereto would be irreparably damaged and that money
damages are not an adequate remedy in the event that any of the provisions of
this Agreement were not performed in accordance with their specific terms or
were otherwise breached because, among other reasons, each such provision
relates to potential control of Stanford. It is accordingly agreed that each
party hereto shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to specifically enforce this Agreement and the
terms and provisions hereof in any court of the United States or any state
thereof, in addition to any other remedy to which such party may be entitled, at
law or in equity. It is further agreed that none of the parties hereto shall
raise the defense that there is an adequate remedy at law.
8.3 Severability. If any term of this Agreement or the application thereof
to any party or circumstance shall be held invalid or unenforceable to any
extent, the remainder of this Agreement and the application of such term to the
other parties or circumstances shall not be affected thereby and shall be
enforced to the greatest extent permitted by applicable law, provided that in
such event the parties shall negotiate in good faith in an attempt to agree to
another provision (in lieu of the term or application held to be invalid or
unenforceable) that will be valid and enforceable and will carry out the
parties' intentions hereunder.
15
<PAGE>
8.4 Notices, Etc. All notices, requests, demands or other communications
required by or otherwise with respect to this Agreement shall be in writing and
shall be deemed given (i) when made, if made by hand delivery, and upon
confirmation of receipt, if made by facsimile, (ii) one business day after being
deposited with a next-day courier, postage prepaid, or (iii) three business days
after being sent certified or registered mail, return receipt requested, postage
prepaid, in each case to the applicable addresses set forth below (or to such
other address as such party may designate in writing from time to time):
If to Stanford, Dynegy or Enron:
Dynegy Inc.
1000 Louisiana, Suite 5800
Houston, Texas 77002
Attention: President
Telecopy: (713) 507-6808
with copies (which shall not constitute notice) to:
Akin, Gump, Strauss, Hauer & Feld, L.L.P.
711 Louisiana; Suite 1900 South
Houston, Texas 77002
Attention: Robert B. Allen
Telecopy (713) 236-0822
If to Stockholder:
Chevron U.S.A. Inc.
1301 McKinney
Houston, TX 77010
Attention: President
Telecopy: (713) 754-5777
16
<PAGE>
with a copy to:
ChevronTexaco Corporation
575 Market Street
San Francisco, CA 94105
Attention: General Counsel
Telecopy: (415) 894-6017
and to:
Pillsbury Winthrop LLP
50 Fremont Street
P.O. Box 7880
San Francisco, CA 94120-7880
Attention: Terry M. Kee, Esq.
and Rodney R. Peck, Esq.
Telecopy: (415) 983-1200
or to such other address as such party shall have designated by notice so given
to each other party.
8.5 Amendments, Waivers, Etc. This Agreement may not be amended, changed,
supplemented, waived or otherwise modified or terminated except by an instrument
in writing signed by all of the parties hereto (or their successors).
8.6 Entire Agreement. This Agreement (together with the Merger Agreement,
the Registration Rights Agreement, the Voting Agreement, the Subscription
Agreement and the Restated Certificate of Incorporation and Amended and Restated
Bylaws of Stanford) embodies the entire agreement and understanding among the
parties relating to the subject matter hereof and supersedes all prior
agreements and understandings relating to such subject matter. There are no
representations, warranties or covenants by the parties hereto relating to such
subject matter other than those expressly set forth in this Agreement, the
Merger Agreement, the Registration Rights Agreement, the Voting Agreement and
the Subscription Agreement.
8.7 Remedies Cumulative. All rights, powers and remedies provided under
this Agreement or otherwise available in respect hereof at law or in equity
shall be cumulative and not alternative, and the exercise or beginning of the
exercise of any thereof by any party shall not preclude the simultaneous or
later exercise of any other such right, power or remedy by such party.
8.8 No Waiver. The failure of any party hereto to exercise any right, power
or remedy provided under this Agreement or otherwise available in respect hereof
at law or in equity, or to insist upon compliance by any other party hereto with
its obligations hereunder, and any custom or practice of the parties at variance
with the terms hereof, shall not constitute a waiver by such
17
<PAGE>
party of his or her right to exercise any such or other right, power or remedy
or to demand such compliance.
8.9 No Third Party Beneficiaries. This Agreement is not intended to be for
the benefit of and shall not be enforceable by any person or entity who or which
is not a party hereto.
8.10 Consent to Jurisdiction. Each party (a) consents to submit itself to
the personal jurisdiction of any federal court located in the State of Delaware
or any Delaware state court if any action, suit or proceeding arises in
connection with this Agreement, and (b) agrees that it will not attempt to
defeat or deny such personal jurisdiction by motion or other request for leave
from any such court.
8.11 Governing Law. This Agreement shall be construed, interpreted, and
governed in accordance with the laws of Delaware, without reference to rules
relating to conflicts of law.
8.12 Name, Captions, Gender. The name assigned this Agreement and the
section captions used herein are for convenience of reference only and shall not
affect the interpretation or construction hereof. Whenever the context may
require, any pronoun used herein shall include the corresponding masculine,
feminine or neuter forms.
8.13 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 instrument. Each counterpart may consist of a
number of copies each signed by less than all, but together signed by all, of
the parties hereto.
8.14 Expenses. Except as expressly provided herein, each of the parties
hereto shall each bear its own expenses incurred in connection with this
Agreement and the transactions contemplated hereby.
8.15 Successors and Assigns. Stockholder shall not assign this Agreement
without the written consent of Stanford, except to an Affiliate of Stockholder
as contemplated herein; Stanford may assign this Agreement only to any successor
to substantially all of its business as a result of a merger, consolidation or
sale by Stanford. Subject to the foregoing, this Agreement shall be binding upon
and inure to the benefit of and be enforceable by the successors and assigns of
the parties hereto.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
18
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly and validly executed this
Stockholder Agreement as of the day and year first above written.
STANFORD INC.
By: /s/ HUGH A. TARPLEY
--------------------------------------
Name: Hugh A. Tarpley
------------------------------------
Title: Executive Vice President
-----------------------------------
DYNEGY INC.
By: /s/ HUGH A. TARPLEY
--------------------------------------
Name: Hugh A. Tarpley
------------------------------------
Title: Executive Vice President
-----------------------------------
CHEVRON U.S.A. INC.
By: /s/ RICHARD P. COHAGAN
--------------------------------------
Name: Richard P. Cohagan
------------------------------------
Title: Attorney-in-Fact
-----------------------------------
ENRON CORP.
By: /s/ RAYMOND M. BOWEN, JR.
--------------------------------------
Name: Raymond M. Bowen, Jr.
------------------------------------
Title: Executive Vice President -
Finance and Treasurer
-----------------------------------
19
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.7
<SEQUENCE>9
<FILENAME>h92082ex99-7.txt
<DESCRIPTION>SUBSCRIPTION AGREEMENT
<TEXT>
<PAGE>
EXHIBIT 99.7
NORTHERN NATURAL GAS COMPANY
SUBSCRIPTION AGREEMENT
NOVEMBER 9, 2001
<PAGE>
TABLE OF CONTENTS
<Table>
<Caption>
PAGE
----
<S> <C> <C>
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
</Table>
i
<PAGE>
<Table>
<S> <C> <C>
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
</Table>
ii
<PAGE>
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
iii
<PAGE>
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.
1
<PAGE>
"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.
"Hart-Scott-Rodino" means the Hart-Scott-Rodino 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
Hart-Scott-Rodino 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 Baker Botts 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 Hart-Scott-Rodino 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,
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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
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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 J. P. Morgan Securities Inc. and Salomon Smith 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 Lehman 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) Hart-Scott-Rodino. 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
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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);
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(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 Hart-Scott-Rodino 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
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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.
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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
1400 Smith Street
Houston, Texas 77002
Telecopy: (713) 646-2738
Attention: General Counsel
with a copy to (which shall not constitute notice
to the Company):
Vinson & Elkins L.L.P.
1001 Fannin, Suite 2300
Houston, Texas 77002
Telecopy: (512) 236-3205
Attention: Thomas P. Mason
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If to the Purchaser:
Dynegy Inc.
1000 Louisiana, Suite 5800
Houston, Texas 77002
Telecopy: 713-507-6808
Attention: General Counsel
with a copy to (which shall not constitute notice
to the Purchaser):
Baker Botts L.L.P.
One Shell Plaza
910 Louisiana
Houston, TX 77002-4995
Telecopy: (713) 229-1234
Attention: R. Joel Swanson
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
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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
<PAGE>
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
<PAGE>
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/ RAYMOND M. BOWEN, JR.
------------------------------
Name: Raymond M. Bowen, Jr.
Title: Executive Vice President -
Finance and Treasurer
NORTHERN NATURAL GAS COMPANY
By: /s/ DREW J. FOSSUM
------------------------------
Name: Drew J. Fossum
Title: Vice President and
General Counsel
DYNEGY INC.
By: /s/ HUGH A. TARPLEY
------------------------------
Name: Hugh A. Tarpley
Title: Executive Vice President
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.8
<SEQUENCE>10
<FILENAME>h92082ex99-8.txt
<DESCRIPTION>CERTIFICATE OF DESIGNATIONS - SERIES A PREFERRED
<TEXT>
<PAGE>
EXHIBIT 99.8
CERTIFICATE OF DESIGNATIONS
of the
SERIES A PREFERRED STOCK
of
NORTHERN NATURAL GAS COMPANY
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
NORTHERN NATURAL GAS COMPANY, a Delaware corporation (the
"Corporation"), HEREBY CERTIFIES that resolutions were duly adopted by the Board
of Directors of the Corporation in accordance with Section 151(g) of the General
Corporation Law of the State of Delaware pursuant to the authority conferred
upon the Board of Directors of the Corporation by the provisions of the Restated
Certificate of Incorporation of the Corporation as follows:
RESOLVED, that a series of the Corporation's Preferred Stock,
par value $0.01 per share ("Preferred Stock"), designated as Series A Preferred
Stock be and hereby is created and that the designation and number of shares
thereof and the powers, preferences and rights thereof are as follows:
SERIES A PREFERRED STOCK
1. Designation and Amount; No Fractional Shares. There shall
be a series of Preferred Stock designated as "Series A Preferred Stock" (the
"Series A Preferred Stock") and the authorized number of shares constituting
such series shall be 1,000. The Series A Preferred Stock is issuable in whole
shares only.
2. Dividends. Holders of shares of Series A Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of Directors
or a duly authorized committee thereof out of funds of the Corporation legally
available for payment of dividends, cumulative cash dividends at the rate of 6%
per annum, compounded quarterly, per share on the initial liquidation preference
of $1,500,000 per share (equivalent to $90,000 per annum per share of Series A
Preferred Stock). Dividends on the Series A Preferred Stock shall be payable
annually in arrears on January 31 of each year (each an "Annual Dividend Payment
Date") commencing on January 31, 2003; provided, however, the Corporation may
pay accrued dividends at any time that is not an Annual Dividend Payment Date at
its election (the date of the first dividend payment that is not an Annual
Dividend Payment Date is referred to herein as the "Initial Dividend Payment
Date"). After the Initial Dividend Payment Date, dividends on the Series A
Preferred Stock shall be payable quarterly in arrears commencing on the last day
of the calendar quarter immediately following the Initial Dividend Payment Date
(each such quarterly dividend
<PAGE>
payment date is referred to herein as a "Quarterly Dividend Payment Date" and,
together with the Annual Dividend Payment Date, a "Dividend Payment Date"). If
any date on which dividends would otherwise be payable is a Saturday, Sunday or
a day on which banking institutions in the State of Texas are authorized or
obligated by law or executive order to close, then the dividends otherwise
payable on such date shall instead be payable on the next succeeding business
day. Dividends on shares of the Series A Preferred Stock shall be fully
cumulative and shall accumulate (whether or not declared and whether or not the
Corporation has funds legally available for the payment of dividends), on a
daily basis, without interest, from the previous Dividend Payment Date, except
that the first dividend shall accrue, without interest, from the date of initial
issuance of the Series A Preferred Stock. Dividends shall be payable, in
arrears, to holders of record as they appear in the records of the Corporation
at the close of business on the applicable record date, which shall be the 15th
day of the calendar month in which the applicable Dividend Payment Date falls or
such other date designated by the Board of Directors of the Corporation for the
payment of dividends that is not more than 30 nor less than 10 days prior to
such Dividend Payment Date. Any dividend payable on the Series A Preferred Stock
for any dividend period that is shorter or longer than a full quarterly or
annual period, as the case may be, shall be computed on the basis of the ratio
of the actual number of days in such partial period to the actual number of days
in such full quarterly or annual period. Additional dividends shall accrue with
respect to any dividends (including dividends payable pursuant to this sentence)
not paid by the Dividend Payment Date on which such dividend accrues; such
additional dividends shall accrue whether or not declared, at a rate of 6% per
annum compounded quarterly, and shall be payable in the same manner and at such
times as provided in this Section 2 with respect to dividends on each
outstanding share of Series A Preferred Stock.
No dividends may be declared or paid or set apart for payment
on any stock of the Corporation ranking on a parity with the Series A Preferred
Stock with respect to the payment of dividends unless there shall also be or
have been declared and paid or set apart for payment on the Series A Preferred
Stock dividends for all dividend payment periods of the Series A Preferred Stock
ending on or before the dividend payment date of such parity stock, ratably in
proportion to the respective amounts of dividends (x) accumulated and unpaid or
payable on such parity stock, on the one hand, and (y) accumulated and unpaid
through the dividend payment period or periods of the Series A Preferred Stock
next preceding such dividend payment date, on the other hand.
Except as set forth in the preceding paragraph, unless full
cumulative dividends on the Series A Preferred Stock have been paid through the
most recently completed quarterly or annual dividend period, as the case may be,
for the Series A Preferred Stock, no dividends may be paid or declared and set
apart for payment or other distribution made upon the Common Stock or on any
other stock of the Corporation ranking junior to or on a parity with the Series
A Preferred Stock as to dividends, nor may any of the Corporation's common
stock, par value $1.00 per share ("Common Stock"), or any other stock of the
Corporation ranking junior to or on a parity with the Series A Preferred Stock
as to dividends be redeemed, purchased or otherwise acquired for any
consideration (or any payment be made to or available for a sinking fund for the
redemption of any shares of such stock; provided, however, that any moneys
theretofore deposited in any sinking fund with respect to any such stock in
compliance with the provisions of such sinking fund may thereafter be applied to
the purchase or redemption of such stock in accordance with the terms of such
sinking fund, regardless of whether at the time of such
2
<PAGE>
application full cumulative dividends upon shares of the Series A Preferred
Stock outstanding to the most recent Dividend Payment Date shall have been paid
or declared and set apart for payment) by the Corporation; provided that any
such junior or parity stock or Common Stock may be converted into or exchanged
for stock of the Corporation ranking junior to the Series A Preferred Stock as
to dividends. Notwithstanding anything to the contrary in this paragraph, the
Corporation may at any time pay any dividend or other distribution resulting
from the cancellation by the Corporation of Debt (as defined in Section 5) owed
by Enron Corp. ("Enron") and its Affiliates (as defined in Section 5) to the
Corporation (the "Intercompany Note Receivable") under the zero-balance cash
management program of Enron (the "Cash Management Program"); provided, that such
cancellation of Debt does not at any time reduce the amount of the Intercompany
Note Receivable to a net amount less than the sum of (a) $240 million and (b) an
amount equal to all dividends (whether or not declared) accrued and accumulated
and unpaid on the shares of Series A Preferred Stock at such time.
3. Liquidation Preference. The shares of Series A Preferred
Stock shall rank, as to rights to distributions upon liquidation, dissolution or
winding up of the Corporation, prior to the shares of Common Stock and any other
stock of the Corporation ranking junior to the Series A Preferred Stock as to
rights upon liquidation, dissolution or winding up of the Corporation, so that
in the event of any liquidation, dissolution or winding up of the Corporation,
whether voluntary or involuntary, the holders of the Series A Preferred Stock
shall be entitled to receive out of the assets of the Corporation legally
available for distribution to its stockholders, an amount equal to $1,500,000
per share, plus an amount equal to all dividends (whether or not declared)
accrued and accumulated and unpaid on the shares of Series A Preferred Stock to
the date of payment, before any distribution of assets is made to holders of
shares of Common Stock or any other class or series of stock of the Corporation
that ranks junior to the Series A Preferred Stock as to rights to distributions
upon liquidation, dissolution or winding up. The holders of the Series A
Preferred Stock shall not be entitled to receive the preferential amounts as
aforesaid until the liquidation preference of any other stock of the Corporation
ranking senior to the Series A Preferred Stock as to rights to distributions
upon liquidation, dissolution or winding up shall have been paid (or a sum set
aside therefor sufficient to provide for payment) in full. After payment of the
full amount of the preferential amounts as aforesaid, the holders of shares of
Series A Preferred Stock will not be entitled to any further participation in
any distribution of assets by the Corporation. If, upon any liquidation,
dissolution or winding up of the Corporation, the assets of the Corporation, or
proceeds thereof, distributable among the holders of shares of Series A
Preferred Stock and any stock ranking on a parity with the Series A Preferred
Stock as to rights to distributions on liquidation, dissolution or winding up of
the Corporation shall be insufficient to pay in full the preferential amounts to
which such stock would be entitled, then such assets, or the proceeds thereof,
shall be distributable among such holders ratably in accordance with the
respective amounts which would be payable on such shares if all amounts payable
thereon were paid in full. For the purposes hereof, any sale of all or
substantially all of the assets of the Corporation and any consolidation, merger
or acquisition pursuant to which the holders of the outstanding capital stock of
the Corporation immediately prior to such acquisition, consolidation or merger
fail to hold capital stock representing 100% of the voting power of the
Corporation or surviving entity immediately following such acquisition,
consolidation or merger shall be deemed to be a liquidation, dissolution or
winding up of the Corporation.
3
<PAGE>
4. Voting Rights. The Series A Preferred Stock, except as
provided herein or as otherwise from time to time required by law, shall have no
voting rights. Whenever, at any time or times, two quarterly dividends, whether
or not consecutive, on the outstanding shares of Series A Preferred Stock or on
any stock ranking on a parity with the Series A Preferred Stock with respect to
the payments of dividends shall be in arrears, the holders of the Series A
Preferred Stock shall vote separately as a class upon all matters upon which
holders of the Common Stock (and of any other securities which may similarly be
entitled to vote with the holders of the Common Stock) are entitled to vote,
other than with respect to the election of directors, and, when so voting, shall
be entitled to one vote for each share of Series A Preferred Shock held, and
shall be entitled, notwithstanding any provision hereof, to notice of any
stockholders' meeting in accordance with the bylaws of the Corporation. The
voting rights set forth in the previous sentence shall continue until all
dividends accumulated on such shares of Preferred Stock on which voting rights
have been conferred, including the Series A Preferred Stock, for the past
dividend periods and the then current dividend period shall have been fully paid
or declared and a sum sufficient for the payment thereof set aside for payment,
whereupon such right shall terminate, subject to revesting in the event of each
and every subsequent default of the character above mentioned.
5. Protective Provisions. So long as any shares of any Series
A Preferred Stock remain outstanding, the Corporation shall not, without the
affirmative vote of the holders of at least a majority of the shares of such
Series A Preferred Stock:
5.1 Redemptions. Except as provided in Section 6, directly
or indirectly redeem, purchase or otherwise acquire,
any of the Corporation's or any Subsidiary's equity
securities;
5.2 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);
5.3 Mergers. Merge or consolidate, or enter into an
agreement providing for any merger or consolidation,
with any Person if the holders of the Corporation's
capital stock prior to the transaction will own less
than 100% of the voting power of the surviving
corporation's capital stock after the transaction;
5.4 Sale of Assets. Except as provided in Schedule 5.4,
sell, lease or otherwise dispose of any assets of the
Corporation, other than obsolete equipment or inventory
and other than assets 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
<PAGE>
5.5 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;
5.6 Charter Amendments. Make any amendment to or waive any
provision of the Corporation's certificate of
incorporation or bylaws, or file any resolution of the
Board with the Secretary of State of Delaware, in
either case which materially and adversely affects the
holders of the Preferred Shares and except for any
amendment to the certificate of incorporation of the
Corporation that are intended to make the Corporation
bankruptcy remote;
5.7 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 of a maximum amount of $1,950
million to MCTJ Holding Co. LLC, (iii) loans pursuant
to the Cash Management Program and (iv) Investments,
loans, advances and guarantees made in the Ordinary
Course of Business;
5.8 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 Corporation and certain banks and (iii) Permitted
Refinancing Debt;
5.9 Capital Expenditures. Make, or permit the Corporation
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
5.11 Note Receivable. Allow the Intercompany Note Receivable
to be less than the sum of (a) $240 million and (b) an
amount equal to all dividends
5
<PAGE>
(whether or not declared) accrued and accumulated and
unpaid on the shares of Series A Preferred Stock at any
time.
For the purposes of this Section 5,
(a) "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 Inc. ("Dynegy") and its Affiliates shall be deemed
to be an Affiliate of the Corporation. 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.
(b) "Capital Expenditures" has the meaning ascribed to such term under
United States generally accepted accounting principles as in effect from time to
time, consistently applied.
(c) "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.
(d) "Debt" shall mean, with respect to any person, the aggregate
amount, without duplication, of (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 between Enron and the Corporation.
6
<PAGE>
(e) "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.
(f) "Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity,
quality and frequency).
(g) "Permitted Refinancing Debt" shall mean any Debt of the Corporation
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 Corporation 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.
(h) "Person" means any individual, partnership, joint venture,
corporation, limited liability company, trust, unincorporated organization or
other entity.
(i) "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.
(j) "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
7
<PAGE>
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.
6. Redemption. The shares of Series A Preferred Stock shall be
redeemable at the option of the Corporation in accordance with this Section 6:
6.1 Per share redemption payment. If one of the events
set forth in Section 6.5 gives rise to an option on
the part of the Corporation to redeem all, but not
less than all, of the outstanding shares of Series A
Preferred Stock, then at such time as the shares are
redeemed the Corporation may redeem, to the extent it
has legally available funds therefor, all, but not
less than all, shares of Series A Preferred Stock
outstanding at a redemption price per share equal to
the original liquidation preference amount of
$1,500,000 per share (the "Redemption Price");
provided, that on the date of redemption the Board of
Directors, or duly authorized committee thereof,
declares and pays accrued and accumulated and unpaid
dividends on all outstanding shares of Series A
Preferred Stock.
6.2 Notice of Redemption. If the Corporation exercises
its option to redeem all, but not less than all, of
the outstanding shares of Series A Preferred Stock,
pursuant to this Section 6 then at such time as the
Corporation shall redeem such shares, notice of such
redemption shall be given by certified mail, return
receipt requested, to each holder of record of the
shares to be redeemed, at such holder's address as
the same appears on the stock register of the
Corporation at least 30 days prior to the redemption
date. The notice shall state:
6.2.1. the redemption date;
6.2.2. the place or places in Houston, Texas where
certificates for such shares are to be
surrendered for payment of the Redemption
Price; and
6.2.3. that dividends on the shares to be redeemed
will cease to accrue on such redemption
date.
6.3 Effect of notice of redemption. If Notice of
Redemption is delivered as set forth above, then from
and after the redemption date (unless the Corporation
fails to pay the Redemption Price on the redemption
date) dividends on the Series A Preferred Stock so
called for redemption shall cease to accrue, and said
shares shall no longer be deemed to be outstanding,
and all rights of the holders thereof as stockholders
of the Corporation (except the right to receive from
the Corporation the Redemption Price) shall cease.
Upon surrender in accordance with said notice of the
certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Board shall
so require and the notice shall so
8
<PAGE>
state), such shares shall be redeemed by the
Corporation at the Redemption Price aforesaid.
6.4 Authorized but unissued shares. Any shares of Series
A Preferred Stock that shall at any time have been
redeemed or purchased by the Corporation shall, after
such redemption, have the status of authorized but
unissued shares or Preferred Stock, without
designation as to series until such shares are once
more designated as part of a particular series by the
Board.
6.5 Events giving rise to an option to redeem.
6.5.1. Redemption option lasting six months. The
Corporation will have the option to redeem
all, but not less than all, of the
outstanding Series A Preferred Stock for a
period of six months from the date of any of
the following events:
6.5.1.1. The Merger Agreement has been
terminated pursuant to Section 9.1
thereof;
6.5.1.2. The Merger Agreement has been
terminated pursuant to Section
9.2(a) thereof;
6.5.1.3. The Merger Agreement has been
terminated pursuant to Section
9.2(d) thereof; or
6.5.1.4. The third anniversary of the date
that the Merger Agreement has been
terminated pursuant to Section
9.2(b), 9.3(c), 9.4(a) or 9.4(b)
thereof.
6.5.2. Redemption option lasting one year. The
Corporation will have the option to redeem
all, but not less than all, of the
outstanding Series A Preferred Stock for a
period of one year from the date of any of
the following events:
6.5.2.1. The Merger Agreement has been
terminated pursuant to Section
9.2(c);
6.5.2.2. Enron notifies Dynegy that it is
terminating the Merger Agreement
pursuant to Section 9.3(a) of the
Merger Agreement;
6.5.2.3. The Merger Agreement has been
terminated pursuant to Section
9.3(b); or
6.5.2.4. The Merger Agreement has been
terminated pursuant to Section
9.4(c).
9
<PAGE>
For the purposes of this Section 6, "Merger Agreement" shall
mean that certain Agreement and Plan of Merger among Dynegy, Stanford, Inc.,
Sorin, Inc., Badin, Inc. and Enron dated as of November 7, 2001.
7. Rank. Any stock of any class or classes or series of the
Corporation shall be deemed to rank:
7.1 prior to shares of the Series A Preferred Stock,
either as to dividends or upon liquidation,
dissolution or winding up, or both, if the holders of
stock of such class or classes or series shall be
entitled by the terms thereof to the receipt of
dividends or of amounts distributable upon
liquidation, dissolution or winding up, as the case
may be, in preference or priority to the holders of
shares of the Series A Preferred Stock;
7.2 on a parity with shares of the Series A Preferred
Stock, either as to dividends or upon liquidation,
dissolution or winding up, or both, whether or not
the dividend rates, dividend payment dates, or
liquidation prices per share thereof are different
from those of the Series A Preferred Stock, if the
holders of stock of such class or classes or series
shall be entitled by the terms thereof to the receipt
of dividends or of amounts distributed upon
liquidation, dissolution or winding up, as the case
may be, in proportion to their respective dividend
rates or liquidation prices, without preference or
priority of one over the other as between the holders
of such stock and the holders of shares of Series A
Preferred Stock; and
7.3 junior to shares of the Series A Preferred Stock,
either as to dividends or upon liquidation,
dissolution or winding up, or both, if such class or
classes or series shall be Common Stock or if the
holders of the Series A Preferred Stock shall be
entitled to the receipt of dividends or of amounts
distributable upon liquidation, dissolution or
winding up, as the case may be, in preference or
priority to the holders of stock of such class or
classes or series.
10
<PAGE>
IN WITNESS WHEREOF, said Northern Natural Gas Company has caused this
Certificate to be signed by Drew J. Fossum, its Vice President and General
Counsel, on November 7, 2001.
NORTHERN NATURAL GAS COMPANY
/s/ DREW J. FOSSUM
------------------------------
Name: Drew J. Fossum
Title: Vice President and
General Counsel
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.9
<SEQUENCE>11
<FILENAME>h92082ex99-9.txt
<DESCRIPTION>CERTIFICATE OF CORRECTION - SERIES A PREFERRED
<TEXT>
<PAGE>
EXHIBIT 99.9
CERTIFICATE OF CORRECTION
OF
CERTIFICATE OF DESIGNATIONS OF SERIES A PREFERRED STOCK
OF
NORTHERN NATURAL GAS COMPANY
Northern Natural Gas Company, a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware
(the "Company"), does hereby certify:
1. The name of the corporation is Northern Natural Gas Company.
2. A Certificate of Designations of Series A Preferred Stock of the
Company was filed with the Secretary of State of Delaware on November 8, 2001
and that said Certificate requires correction as permitted by Section 103 of
the General Corporation Law of the State of Delaware.
3. The inaccuracy or defect of said Certificate to be corrected is as
follows: (i) the date of the Agreement and Plan of Merger referenced in Section
6 thereof was incorrectly stated as November 7, 2001, when it should have been
November 9, 2001; and (ii) the Certificate did not include the Schedule 5.4
referenced in Section 5 thereof.
4. The last paragraph of Section 6 is corrected to read as follows:
"For the purposes of this Section 6, "Merger Agreement" shall mean
that certain Agreement and Plan of Merger among Dynegy, Stanford,
Inc., Sorin, Inc., Badin, Inc. and Enron dated as of November 9, 2001."
5. There is attached to the Certificate a Schedule 5.4 in the form
attached hereto.
IN WITNESS WHEREOF, the undersigned has executed this Certificate on
behalf of the Company on the 9th day of November, 2001.
NORTHERN NATURAL GAS COMPANY
By: /s/ DREW J. FOSSUM
-----------------------------
Name: Drew J. Fossum
Title: Vice President and
General Counsel
<PAGE>
SCHEDULE 5.4
Excepted Sales, Leases or Other Dispositions of Assets
1. MOPS (approximately 100 miles of 24" pipe and other pipeline
facilities extending from a point near Tivoli, Texas and offshore
2. Beaver-Hugoton (approximately 500 miles of 8" to 30" pipe and
approximately 77 compressor units and related facilities in or near
the Hugoton Basin in Texas, Oklahoma and southwestern Kansas)
3. East Leg ( 9.9 miles of 24" and other Facilities in Walworth and
Waukesha Counties, Wisconsin)
4. Kermit to Eunice (approximately 40 miles of 16" pipe and related
facilities in Lea County, New Mexico)
5. Skellytown (approximately 10.4 miles of 24" and 12" pipe and related
facilities in Carson County, Texas)
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.10
<SEQUENCE>12
<FILENAME>h92082ex99-10.txt
<DESCRIPTION>EXCHANGE AGREEMENT
<TEXT>
<PAGE>
EXHIBIT 99.10
EXCHANGE AGREEMENT
This EXCHANGE AGREEMENT (this "Agreement"), dated on November 9, 2001,
is by and between Dynegy Inc., an Illinois corporation ("Dynegy"), and Enron
Corp., an Oregon corporation ("Enron").
A. Merger Agreement. Concurrently with the execution of this Agreement,
Dynegy, Stanford, Inc., a Delaware corporation, Badin, Inc., an Oregon
corporation, Sorin, Inc., an Illinois corporation, and Enron entered into an
Agreement and Plan of Merger (the "Merger Agreement").
NOW THEREFORE, in consideration of the mutual agreements contained
herein and other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. In this Agreement, unless there is something
in the subject matter or context inconsistent therewith, the following terms
shall have the respective meanings set out below (and grammatical variations of
such terms shall have corresponding meanings):
"Authorization" shall mean any and all permits, licenses,
authorizations, orders, certificates, registrations or other approvals granted
by any Governmental Authority.
"Certificate of Designations" means the Certificate of Designations of
the NNGC Preferred Stock.
"Dynegy Acquisition Proposal" shall have the meaning assigned to such
term in the Merger Agreement.
"Dynegy Exchange Event" means a termination of the Merger Agreement
pursuant to any of (i) Section 9.2(b) thereof after a public announcement of an
Enron Acquisition Proposal whether or not the Enron Acquisition Proposal is
still pending or has been consummated, (ii) Section 9.3(c) thereof or (iii)
Section 9.4(b) thereof.
"Dynegy Exchange Option" has the meaning specified in Section 2.1
hereof.
"Enron Acquisition Proposal" shall have the meaning assigned to such
term in the Merger Agreement.
"Enron Common Stock" means the common stock, no par value, of Enron.
"Enron Exchange Event" means a termination of the Merger Agreement
pursuant to any of (i) Section 9.2(c) after a public announcement of a Dynegy
Acquisition Proposal whether or not the Dynegy Acquisition Proposal is still
pending or has been consummated, (ii) Section 9.3(b) thereof or (iii) Section
9.4(c) thereof.
"Enron Exchange Option" has the meaning specified in Section 2.2
hereof.
<PAGE>
"Enron Merger Ratio" has the meaning specified in Section 4.1 of the
Merger Agreement.
"Exchange Option Ratio" has the meaning specified in Section 2.3
hereof.
"NNGC" means Northern Natural Gas Corporation, a Delaware corporation.
"NNGC Preferred Stock" means the Series A Preferred Stock, par value
$.01 per share, of NNGC.
"Governmental Agency" means any federal, state, local, foreign or other
governmental agency, instrumentality, commission, authority, board or body.
"Governmental Authority" shall mean any Governmental Agency (other than
a court) of the United States, any foreign country, or any domestic or foreign
state, and any political subdivision thereof, and shall include any
multinational authority having governmental or quasi-governmental powers.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"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.
"Material Adverse Effect" shall have the meaning ascribed to such term
in the Merger Agreement.
"Merger" shall have the meaning ascribed to such term in the Merger
Agreement.
"Option" shall have the meaning ascribed to such term in the Option
Agreement.
"Option Agreement" means the Option Agreement, dated as of the date
hereof, among CGNN Holding Company, Inc., a Delaware corporation, MCTJ Holding
Co. LLC, a Delaware limited liability company, Enron and Dynegy Holdings, Inc.,
a Delaware corporation.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the date hereof, between Enron and Dynegy.
"Regulation" shall mean any rule or regulation of any Governmental
Authority having the effect of Law or of any rule or regulation of any
self-regulatory organization.
Section 1.2. Interpretations Not Affected by Headings. The division of
this Agreement into articles, sections and other portions and the insertion of
headings are for convenience of reference only and shall not affect the
construction or interpretation hereof. Unless otherwise indicated, all
references to an "Article" or "Section" followed by a number refer to the
specified Article or Section of this Agreement. The terms "this Agreement,"
"hereof," "herein" and "hereunder" and similar expressions refer to this
Agreement and not to any particular Article, Section or other portion hereof.
2
<PAGE>
Section 1.3. Rules of Construction. Unless otherwise specifically
indicated or the context otherwise requires, (a) all references to "dollars" or
"$" mean United States dollars, (b) words importing the singular shall include
the plural and vice versa and words importing any gender shall include all
genders, and (c) "include," "includes" and "including" shall be deemed to be
followed by the words "without limitation."
ARTICLE II
EXCHANGE OPTIONS
Section 2.1. Dynegy Exchange Event. Upon the terms and subject to the
conditions of this Agreement, Dynegy shall have the option (the "Dynegy Exchange
Option") to exchange all, but not less than all, of its NNGC Preferred Stock for
shares of Enron Common Stock, exercisable at any time during the period of 90
days commencing on the date of the occurrence of a Dynegy Exchange Event by
giving written notice of such exercise to Enron.
Section 2.2. Enron Exchange Event. Upon the terms and subject to the
conditions of this Agreement, Enron shall have the option (the "Enron Exchange
Option") to require Dynegy to exchange all, but not less than all, of its NNGC
Preferred Stock for shares of Enron Common Stock, exercisable at any time during
the period of 15 days commencing on the date of the occurrence of a Enron
Exchange Event by giving written notice of such exercise to Dynegy.
Section 2.3. Exchange Option Ratio. Upon exercise of either the Dynegy
Exchange Option or the Enron Exchange Option, each share of NNGC Preferred Stock
shall be exchanged for a number of shares of Enron Common Stock determined by
multiplying (a) the quotient obtained by dividing $1,500,000 plus all accrued
and unpaid dividends thereon (whether or not declared and whether or not NNGC
has funds legally available for the payment of dividends) by $8.86 by (b) a
fraction, the numerator of which is the Enron Merger Ratio as in effect on the
date of the Merger Agreement and the denominator of which is the Enron Merger
Ratio in effect at the time of the termination of the Merger Agreement (the
"Exchange Option Ratio").
Section 2.4. Notice; Closing Location. If Dynegy wishes to exercise the
Dynegy Exchange Option, it shall send a written notice (the date of which being
herein referred to as the "Dynegy Notice Date") to Enron specifying a date (as
it may be extended from time to time, the "Dynegy Closing Date") not earlier
than three Business Days nor later than 10 Business Days from the Dynegy Notice
Date for the closing of the exchange pursuant to the Dynegy Exchange Option (the
"Dynegy Closing"). The Dynegy Closing will take place at the offices of Vinson &
Elkins, L.L.P., 1001 Fannin Street, Houston, Texas 77002.
Section 2.5. Notice; Closing Location. If Enron wishes to exercise the
Enron Exchange Option, it shall send a written notice (the date of which being
herein referred to as the "Enron Notice Date") to Dynegy specifying a date (as
it may be extended from time to time, the "Enron Closing Date") not earlier than
three Business Days nor later than 10 Business Days from the Enron Notice Date
for the closing of the exchange pursuant to the Enron Exchange Option (the
"Enron Closing"). The Enron Closing will take place at the offices of Vinson &
Elkins, L.L.P., 1001 Fannin Street, Houston, Texas 77002.
Section 2.6. Extension. If either a Dynegy Closing or a Enron Closing
(each, a "Closing") cannot be effected by reason of the application of any Law,
Regulation or Order, the Dynegy Closing Date or Enron Closing Date, as the case
may be, shall be extended to not later
3
<PAGE>
than 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
Authority is required in connection with the exercise of the Dynegy Exchange
Option or the Enron Exchange Option, as the case may be, by virtue of the
application of such Law, Regulation or Order, Dynegy and Enron shall promptly
file the required notice or application for Authorization and Dynegy and Enron
shall expeditiously process the same.
Section 2.7. Exchange of Certificates. At any Closing, upon the
satisfaction of the conditions set forth in Article VI, Dynegy shall deliver the
certificates representing the shares of NNGC Preferred Stock to Enron, duly
endorsed by the registered holder thereof either in blank or to Enron, and Enron
shall issue to Dynegy, the shares of Enron Common Stock issuable pursuant to
Section 2.3. The shares of Enron Common Stock to be issued shall be evidenced by
certificates registered in the name of Dynegy.
Section 2.8. Transfer of Dynegy Exchange Option. If at any time Dynegy
has the right to exercise the Dynegy Exchange Option and the conditions
specified in Section 6.1 have not been satisfied, Dynegy will have the right to
assign its rights under this Agreement to any third party, provided that (i)
such assignee assumes all of Dynegy's obligations under this Agreement and (ii)
Dynegy shall have concurrently with such assignment transferred all of Dynegy's
NNGC Preferred Stock to such assignee.
Section 2.9. Make-Whole Right. In the event that Dynegy is prevented
from receiving Enron Common Stock following an exercise of either the Dynegy
Exchange Option or the Enron Exchange Option, as the case may be, by reason of
the failure, after the good faith efforts of both Enron and Dynegy, to satisfy
the conditions for the issuance of Enron Common Stock to Dynegy specified in
Section 6.1 hereof, Enron shall, as promptly as practicable, take all such
action as may be necessary to:
(i) create a class of preferred stock of Enron (the
"Enron Preferred Stock") that (A) would be non-voting, (B)
would convert to Enron Common Stock upon a transfer of the
Enron Preferred Stock to any party or parties as to which the
conditions specified in Section 6.1 would be satisfied with
respect to the Enron Common Stock to be received by any such
party, (C) would not vote, separately as a class, with respect
to any merger, share exchange or other business combination,
(D) would participate pari passu with the Enron Common Stock
with respect to dividends and upon liquidation and (E) would
otherwise have such terms as would allow the Enron Preferred
Stock to have, as nearly as possible taking into account legal
and regulatory constraints, the same economic terms as the
Enron Common Stock,
(ii) issue such number of shares of Enron Preferred
Stock to Dynegy in exchange for all of its NNGC Preferred
Stock as would, taking into account the conversion ratio with
respect to such shares of Enron Preferred Stock, provide for
the issuance of an aggregate number of shares of Enron Common
Stock as would equal the aggregate number of shares of Enron
Common Stock that Dynegy would have been entitled to receive,
based on the Exchange Option Ratio, had it received Enron
Common Stock upon exercise of the Dynegy Exchange Option,
4
<PAGE>
(iii) amend the Registration Rights Agreement to
treat the Enron Preferred Stock as if it were Registrable
Common Stock (as defined in the Registration Rights
Agreement), and
(iv) if necessary to allow for the conversion of the
Enron Preferred Stock into Enron Common Stock in accordance
with the stockholder approval requirements of the NYSE, submit
to its stockholders for approval, with the favorable
recommendation of the Board of Directors, the issuance of the
Enron Common Stock issuable upon conversion of the Enron
Preferred Stock;
provided, however, that in the event that the conditions specified in Section
6.1 have not been satisfied after a period of 12 months following the date of
the exercise of the Dynegy Exchange Right, Dynegy shall have the right to elect,
by written notice to Enron, to either (i) withdraw its exercise of the Dynegy
Exchange Right and thereafter exercise its rights under the Option Agreement or
(ii) receive consideration from Enron (which may be, at the election of Enron,
in the form of cash, assets or securities, or some combination thereof) that
would have the same economic value as the Enron Common Stock that Dynegy would
have received at the time of its exercise of the Dynegy Exchange Option if the
Enron Common Stock had been issued to Dynegy as of the first anniversary date of
such exercise and Dynegy had immediately sold such Enron Common Stock on the New
York Stock Exchange or other national securities market (without discount to the
then public trading price of Enron's Common Stock). In the event an Enron
Acquisition Proposal is consummated, the surviving party shall be under the same
obligation as Enron to substitute for shares of Enron Common Stock (or Enron
Preferred Stock) the number of shares of acquiror common stock (or preferred
stock of the acquiring company) that would have been received had Dynegy been
able to receive the Enron Common Stock upon a Dynegy Exchange Option or an Enron
Exchange Option, but for the failure to satisfy the conditions of Section 6.1.
Section 2.10. Termination of Exchange Options. The Enron Exchange
Option and the Dynegy Exchange Option shall terminate upon any of (i) the
consummation of the Merger, (ii) the exercise of the Option or (iii) the
redemption of all outstanding shares of NNGC Preferred Stock pursuant to the
Certificate of Designation.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF ENRON
Enron hereby represents and warrants to Dynegy as follows:
Section 3.1. Existence. 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.
Section 3.2. Authorization and Enforceability; Issuance of Enron Common
Stock.
(a) Enron has the full power and authority and has taken all required
corporate and other action necessary to authorize and permit Enron to execute
and deliver this Agreement and to carry out the terms hereof and to issue and
deliver Enron Common Stock, and none of such actions will violate any provision
of Enron's Articles of Incorporation or Bylaws or any
5
<PAGE>
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 constitutes 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.
(b) The shares of Enron Common Stock that may be issued
pursuant to this Agreement 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 shares of Enron Common
Stock that may be issued pursuant to this Agreement are not subject to any
preemptive right of any stockholder of Enron or to any right of first refusal or
other similar right in favor of any person which has not been waived and will
not require the approval of holders of Enron Common Stock or any other class of
Enron capital stock.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF DYNEGY
Dynegy hereby represents and warrants to Enron as follows:
Section 4.1. Existence. Dynegy 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.
Section 4.2. Authorization and Enforceability. Dynegy has the full
power and authority and has taken all action necessary to permit Dynegy to
execute and deliver this Agreement and to carry out the terms hereof and
thereof, and none of such actions will violate any provision of Dynegy's
Certificate of Incorporation or Bylaws 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 Dynegy is a
party or by which it is bound. This Agreement constitutes a legal, valid and
binding obligation of Dynegy, enforceable against Dynegy 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.
Section 4.3. Investment Intent of Dynegy. Dynegy is acquiring the Enron
Common Stock for its own account for investment and not with a view to
distribution.
Section 4.4. Status of Shares. Dynegy has been informed by Enron that
the shares of Enron Common Stock that may be issued pursuant to this Agreement
have not been registered under the Securities Act of 1933, as amended (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. Enron may place a restriction legend on the
certificates representing the shares of Enron Common Stock reflecting the
foregoing restrictions.
6
<PAGE>
Section 4.5. Sophistication and Financial Condition; Information.
Dynegy represents and warrants to Enron 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 shares of Enron Common Stock. Dynegy is able to
bear the economic risk of this investment regarding Enron, is able to hold the
shares of Enron Common Stock indefinitely and has a sufficient net worth to
sustain a loss of its entire investment in Enron in the event such loss should
occur. Dynegy (a) has been furnished with such information about Enron and the
shares of Enron Common Stock as it has requested, (b) has made its own
independent inquiry and investigation into, and based thereon, has formed an
independent judgment concerning Enron and the shares of Enron Common Stock and
(c) is an "accredited" investor within the meaning of Regulation D of the
Securities Act, as currently in effect.
ARTICLE V
COVENANTS
Section 5.1. Enron Reservation of Enron Stock. Enron shall at all times
reserve and keep available out of its authorized but unissued shares of Enron
Common Stock, solely for the purposes of issuance upon exchange of the NNGC
Preferred Stock in accordance with this Agreement, such number of shares of
Enron Common Stock as are issuable upon the exchange of all outstanding shares
of the NNGC Preferred Stock pursuant to this Agreement. All shares of Enron
Common Stock which are so issuable shall, when issued, be duly and validly
issued, fully paid and nonassessable and free from all taxes, liens and charges.
Enron shall take all such commercially reasonable actions as may be reasonably
necessary to assure that all such shares of Enron Common Stock may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of Enron
Common Stock may be listed (except for official notice of issuance which shall
be immediately transmitted by Enron upon issuance).
Section 5.2. Filings; Commercially Reasonable Best Efforts, Etc.
(a) Subject to the terms and conditions herein provided, Enron
and Dynegy shall:
(i) make their respective required filings under the
HSR Act (and shall share equally all filing fees incident thereto),
which filings shall be made promptly, and thereafter shall promptly
make any other required submissions under the HSR Act;
(ii) make their respective filings, and obtain the
consents, approvals, permits or authorizations, required to be made or
obtained prior to the Closing with or from any governmental or
regulatory authorities of the United States, the several states and
non-U.S. jurisdictions (other than with respect to any applicable
non-U.S. competition, antitrust or premerger notification laws (the
"Non-U.S. Antitrust Laws"));
(iii) use their commercially reasonable best efforts
to cooperate with one another in (A) determining which filings are
advisable to be made with, and which consents, approvals, permits or
authorizations are required to be obtained from, governmental or
regulatory authorities under the Non-U.S. Antitrust Laws in connection
with the execution and delivery of this Agreement, and the consummation
of the
7
<PAGE>
transactions contemplated by this Agreement and the transactions
contemplated hereby; and (B) timely making all such filings and timely
seeking all such consents, approvals, permits or authorizations;
(iv) promptly notify each other of any communication
concerning this Agreement or the transactions contemplated hereby to
that party from any governmental or regulatory authority and permit the
other party to review in advance any proposed communication concerning
this Agreement or the transactions contemplated hereby to any
governmental or regulatory authority;
(v) not agree to participate in any meeting or
discussion with any governmental or regulatory authority in respect of
any filings, investigation or other inquiry concerning this Agreement
or the transactions contemplated hereby unless it consults with the
other party in advance and, to the extent permitted by such
governmental or regulatory authority, gives the other party the
opportunity to attend and participate in such meeting or discussion;
(vi) furnish the other party with copies of all
correspondence, filings and communications (and memoranda setting forth
the substance thereof) between them and their subsidiaries and their
respective representatives on the one hand, and any government or
regulatory authority or members or any such authority's staff on the
other hand, with respect to this Agreement and the transactions
contemplated hereby; and
(vii) furnish the other party with such necessary
information and reasonable assistance as such other party and its
affiliates may reasonably request in connection with their preparation
of necessary filings, registrations or submissions of information to
any governmental or regulatory authorities, including, without
limitation, any filings necessary or appropriate under the provisions
of the HSR Act or any applicable Non-U.S. Antitrust Laws.
(b) Without limiting Section 5.2(a), Enron and Dynegy shall:
(i) each use commercially reasonable best efforts to
avoid the entry of, or to have vacated, terminated or modified, any
decree, order or judgment that would restrain, prevent or delay the
consummation of the transactions contemplated by this Agreement; and
(ii) each use commercially reasonable best efforts to
take any and all steps necessary to obtain any consents or eliminate
any impediments to the consummation of the transactions contemplated by
this Agreement.
(c) Nothing in this Agreement shall require either Dynegy or
Enron to dispose of any of its assets or to limit its freedom of action with
respect to any of its businesses, whether prior to or after the consummation of
the transactions contemplated by this Agreement, or to commit or agree to any of
the foregoing, to obtain any consents, approvals, permits or authorizations or
to remove any impediments to the consummation of the transactions contemplated
by this Agreement relating to competition, antitrust or premerger notification
laws or to avoid the entry of, or to effect the dissolution of, any injunction,
temporary restraining order or other order in any suit or proceeding relating to
competition, antitrust or premerger notification laws.
8
<PAGE>
Section 5.3. Listing Application. Enron shall promptly prepare and
submit to the New York Stock Exchange ("NYSE") a listing application covering
the shares of Enron Common Stock issuable pursuant to the exercise of the Enron
Exchange Option and the Dynegy Exchange Option and shall use commercially
reasonable best efforts to obtain, prior to the exercise of the Enron Exchange
Option or the Dynegy Exchange Option, approval for the listing of such shares of
Enron Common Stock on the NYSE, subject to official notice of issuance.
Section 5.4. Enron Acquisition Proposals. Enron shall not enter into
any agreement in respect of a Enron Acquisition Proposal unless in such
agreement the parties thereto expressly acknowledge and affirm the obligations
of Enron under this Agreement and the surviving party in such transaction
expressly assumes such obligations.
ARTICLE VI
CONDITIONS
Section 6.1. Conditions to Enron's and Dynegy's Obligations. The
obligations of Enron and Dynegy to complete the exchange of NNGC Common Stock
for shares of Enron Common Stock upon the exercise of the Enron Exchange Option
or the Dynegy Exchange Option shall be subject to the fulfillment of the
following conditions:
(a) (i) Any waiting period applicable to the consummation of
the transactions contemplated by this Agreement under the HSR Act shall have
expired or been terminated, (ii) if required by law, approval of the FERC with
respect to the consummation of the transactions contemplated by this Agreement
under Section 203 of the Federal Power Act shall have been granted, (iii) the
Securities and Exchange Commission shall have taken all necessary action under
Section 9(a)(2) of the Public Utility Holding Company Act of 1935, as amended
(the "1935 Act"), and the exemptions of Enron and Dynegy from the provisions of
the 1935 Act other than Section 9(a)(2) will not change as a result of the
consummation of the transactions contemplated by this Agreement (provided that
each party will be entitled to waive satisfaction of this condition with respect
to the application of this condition to it), (iv) there shall not be pending or
threatened in writing any claim, proceeding or action by an agency of the
government of the United States, of the United Kingdom or of the European Union
seeking to restrain, prohibit or rescind any transactions contemplated by this
Agreement as an actual or threatened violation of the HSR Act, Non-U.S.
Antitrust Laws or other antitrust, competition or premerger notification, trade
regulation law, regulation or order, as applicable, or seeking to penalize a
party for completing any such transaction which in any of such cases is, in the
reasonable judgment of either Enron or Dynegy, reasonably likely to have a
Material Adverse Effect on Enron or Dynegy, (v) in the event of any review by
the U.K. Office of Fair Trading or, if applicable, the U.K. Secretary of State
for Trade and Industry, indications reasonably satisfactory to each of Enron and
Dynegy that the consummation of the transactions contemplated by this Agreement
will not be referred to the Competition Commission shall have been received or,
if the consummation of the transactions contemplated by this Agreement are
referred to the Competition Commission, indications reasonably satisfactory to
each of Enron and Dynegy that the consummation of the transactions contemplated
by this Agreement can proceed, (vi) any mandatory waiting period under any
applicable Non-U.S. Antitrust Laws (where the failure to
9
<PAGE>
observe such waiting period referred to in this clause (vi) would, in the
reasonable judgment of either Dynegy or Enron, be reasonably likely to have a
Material Adverse Effect on Enron or Dynegy) shall have expired or been
terminated, (vii) all consents, approvals, permits and authorizations referred
to in Section 5.2(a)(ii) and (iii) shall have been obtained, and no such
consent, approval, permit or authorization shall impose or contain terms or
conditions that would, in the reasonable judgment of either Enron or Dynegy, be
reasonably likely to have a Material Adverse Effect on Enron or Dynegy, and
(viii) there shall not have been a final or preliminary administrative order
denying approval of or prohibiting the transactions contemplated by this
Agreement issued by a governmental authority with jurisdiction to enforce
applicable Non-U.S. Antitrust Laws, which order is, in the reasonable judgment
of either Enron or Dynegy, reasonably likely to have a Material Adverse Effect
on Enron or Dynegy.
(b) None of the parties hereto shall be subject to any decree,
order or injunction of a court of competent jurisdiction that prohibits the
consummation of the transactions contemplated hereby issued by a court of
competent jurisdiction of (i) the United States or any state or other
jurisdiction in the United States, (ii) the European Union or any member state
thereof or Canada or (iii) any other jurisdiction (the "Other Non-U.S.
Jurisdictions"); provided, however, that, prior to invoking this condition, each
party shall have complied with Section 5.2, and with respect to other matters
not covered by Section 5.2, shall have used its commercially reasonable best
efforts to have any such decree, order or injunction lifted or vacated; and no
statute, rule or regulation shall have been enacted by any governmental
authority which prohibits or makes unlawful the consummation of the transactions
contemplated by this Agreement; provided, further, that, with respect to any
decree, order, injunction, statute, rule or regulation of any Other Non-U.S.
Jurisdiction, noncompliance with such decree, order, injunction, statute, rule
or regulation would, in the reasonable judgement of either Dynegy or Enron, be
reasonably likely to have a Material Adverse Effect on Enron or Dynegy.
(c) The shares of Enron Common Stock to be issued pursuant to
the exercise of the Enron Exchange Option or the Dynegy Exchange Option shall
have been authorized for listing on the NYSE, subject to official notice of
issuance.
ARTICLE VII
GENERAL PROVISIONS
Section 7.1. Notices. Except as otherwise provided herein, any notice
required to be given hereunder shall be sufficient if in writing, and sent by
facsimile transmission or by courier service (with proof of service), or hand
delivery, addressed as follows:
(a) if to Enron:
Enron Corp.
1400 Smith Street
Houston, Texas 77002
Attention: General Counsel
Facsimile: (713) 853-3129
10
<PAGE>
with a copy to:
Vinson & Elkins L.L.P.
1001 Fannin, Suite 2300
Houston, Texas 77002-6760
Attention: Thomas P. Mason, Esq.
Facsimile: (713) 758-2346
(b) if to Dynegy:
Dynegy Inc.
1000 Louisiana, Suite 5800
Houston, Texas 77002
Attention: General Counsel
Facsimile: (713) 507-6808
with a copy to:
Baker Botts L.L.P.
One Shell Plaza
910 Louisiana
Houston, Texas 77002-4995
Attention: R. Joel Swanson, Esq.
J. David Kirkland, Jr., Esq.
Facsimile: (713) 229-1522
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
Section 7.2. Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
unless the following conditions are satisfied: (a) the other party hereto
consents in writing to the assignment, and (b) in the case of an assignment by
Dynegy, (i) such assignee assumes all of Dynegy's obligations under this
Agreement and (ii) Dynegy shall have concurrently with such assignment
transferred all of its NNGC Preferred Stock to such assignee. Subject to the
preceding sentence, this Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
Notwithstanding anything contained in this Agreement to the contrary, nothing in
this Agreement, expressed or implied, is intended to confer on any person other
than the parties hereto or their respective heirs, successors, executors,
administrators and assigns any rights, remedies, obligations or liabilities
under or by reason of this Agreement.
Section 7.3. Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings among the parties with
respect thereto. No addition to or modification of any provision of this
Agreement shall be binding upon any party hereto unless made in writing and
signed by all parties hereto.
11
<PAGE>
Section 7.4. Amendments. This Agreement may be amended by the parties
hereto, by action taken or authorized by their Boards of Directors. This
Agreement may not be amended except by an instrument in writing signed on behalf
of each of the parties hereto.
Section 7.5. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas, without regard to
its rules of conflicts of laws.
Section 7.6. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
Section 7.7. Waivers. Except as provided in this Agreement, no action
taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
Section 7.8. Severability. Any term or provision of this Agreement
which is invalid or unenforceable in any jurisdiction shall, as to that
jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
Section 7.9. Enforcement of Agreement. The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with its specific terms or was
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of this Agreement and to
enforce specifically the terms and provisions hereof, this being in addition to
any other remedy to which they are entitled at law or in equity.
Section 7.10. No Special Damages. IN NO EVENT SHALL ANY PARTY BE LIABLE
IN RESPECT OF THIS AGREEMENT FOR EXEMPLARY, SPECIAL OR PUNITIVE DAMAGES.
12
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement and caused
the same to be duly delivered on their behalf on the day and year first written
above.
DYNEGY INC.
By: /s/ HUGH A. TARPLEY
---------------------------------------
Name: Hugh A. Tarpley
Title: Executive Vice President
ENRON CORP.
By: /s/ RAYMOND M. BOWEN, JR.
---------------------------------------
Name: Raymond M. Bowen, Jr.
Title: Executive Vice President --
Finance and Treasurer
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.11
<SEQUENCE>13
<FILENAME>h92082ex99-11.txt
<DESCRIPTION>OPTION AGREEMENT
<TEXT>
<PAGE>
EXHIBIT 99.11
OPTION AGREEMENT
This OPTION AGREEMENT (this "Agreement") dated as of November 9, 2001
is by and among CGNN Holding Company, Inc., a Delaware corporation (the
"Grantor"), MCTJ Holding Co. LLC, a Delaware limited liability company (the
"Company"), Enron Corp., an Oregon corporation ("Enron"), Dynegy Holdings Inc.,
a Delaware corporation (the "Grantee") and, solely for the provisions of Section
5.1 hereof, Dynegy Inc., an Illinois corporation ("Dynegy").
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. Membership Interest. Grantor 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. Option.
2.1. Grant of Option. Subject to the terms and conditions set
forth herein, the Grantor hereby grants to the Grantee an irrevocable option
(the "Option") to purchase all, but not less than all, of the outstanding
membership interests in the Company (the "Option Interests") after the
occurrence of an Exercise Event (as defined in Section 2.5) at the Exercise
Price.
2.2. Purchase Price of Option. In consideration of the grant
of the Option, immediately after the filing under the HSR Act required in
connection with this Agreement, Grantee will pay $1 million to Grantor by wire
transfer of immediately available funds.
2.3. Exercise Price. The exercise price (the "Exercise Price")
of the Option shall be the total sum of (a) $23 million plus (b) $950 million
less (c) 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 (d) if the amount of Estimated Working
Capital exceeds $-0-, the amount of such excess, minus (d) if the amount of
Estimated Working Capital is less than $-0-, the amount of such shortfall.
<PAGE>
2.4. Option Term; Expiration of Option. The Option shall be
exercisable at any time after the occurrence of an Exercise Event set forth in
Section 2.5 and shall remain in full force and effect until the earliest of (a)
the Effective Time as defined in Section 1.3 of the Merger Agreement, (b) the
redemption of all outstanding shares of Series A Preferred Stock in accordance
with its terms or (c) the exchange of Series A Preferred Stock for Enron Common
Stock pursuant to the Exchange Agreement (the "Option Term"). If the Option has
not been exercised prior to the expiration of the Option Term, the rights and
obligations set forth in this Agreement shall expire and terminate.
2.5. Exercise Events. The Option will become exercisable upon
the occurrence of the following events ("Exercise Events"):
2.5.1. Exercise at any time. The Option may be
exercised at any time after:
2.5.1.1. the Merger Agreement has been
terminated pursuant to Section
9.2(b);
2.5.1.2. the Merger Agreement has been
terminated pursuant to Section
9.3(c);
2.5.1.3. the Merger Agreement has been
terminated pursuant to Section
9.4(b);
2.5.1.4. Dynegy notifies Enron that it is
terminating the Merger Agreement
pursuant to Section 9.4(a) of the
Merger Agreement (such notice
constituting a representation by
Dynegy to Enron that Dynegy is
validly entitled to terminate the
Merger Agreement under such Section
9.4(a)).
2.5.2. Exercise at any time beginning six months
plus one day after termination of the Merger
Agreement. The Option may be exercised at
any time beginning six months plus one day
after:
2.5.2.1. the Merger Agreement has been
terminated pursuant to Section 9.1;
2.5.2.2. the Merger Agreement has been
terminated pursuant to Section
9.2(a)); or
2.5.2.3. the Merger Agreement has been
terminated pursuant to Section
9.2(d).
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<PAGE>
2.5.3. Exercise at any time beginning one year plus
one day after termination of the Merger
Agreement. The Option may be exercised at
any time beginning one year plus one day
after:
2.5.3.1. the Merger Agreement has been
terminated pursuant to Section
9.2(c);
2.5.3.2. Enron notifies Dynegy that it is
terminating the Merger Agreement
pursuant to Section 9.3(a) of the
Merger Agreement (such notice
constituting a representation by
Enron to Dynegy that Enron is
validly entitled to terminate the
Merger Agreement under such Section
9.3(a);
2.5.3.3. the Merger Agreement has been
terminated pursuant to Section
9.3(b); or
2.5.3.4. the Merger Agreement has been
terminated pursuant to Section
9.4(c);
2.6. Working Capital Adjustment.
2.6.1. 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 biding 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.
2.6.2. 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
-3-
<PAGE>
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 Option; Conditions; Closing.
3.1. Notice; Closing Location. If the Grantee wishes to
exercise the 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
Option (the "Closing"). The Closing will take place at the offices of Baker
Botts L.L.P., 910 Louisiana, Houston, Texas 77002.
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 such Option Interests 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 hereto shall have
obtained clearance under the HSR Act to
proceed with the transactions contemplated
hereby.
3.3.2. Release of Guaranties. Unless waived by
Enron, it shall be a condition to Closing
that (a) either any guaranty by Enron or any
Subsidiary of Enron (other than the Company
and NNGC Holdings) 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 Enron or any
Subsidiary of Enron (other than NNGC
Holdings) of the Company's indebtedness to
NNGC be released effective as of the
Closing.
3.3.3. Issuance of Series A Preferred Stock. The
Series A Preferred Stock shall have been
issued in accordance with the Subscription
Agreement.
3.3.4. Affiliated Group. Unless waived by Grantee,
it shall be a condition to Closing that at
the Closing Date, each of NNGC Holdings and
NNGC has at all times during its existence
been
-4-
<PAGE>
treated by Enron as a member of the
affiliated group of corporations of which
Enron is the common parent filing
consolidated returns for federal income tax
purposes.
3.3.5. Accuracy of Grantor, 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.
3.3.6. Accuracy of Grantee 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. 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.
3.3.8. 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.
3.4. Payment and Delivery of Certificates.
3.4.1. Payment. At the Closing, the Grantee shall
pay the Exercise Price to the Grantor in
immediately available funds by wire transfer
to a bank account designated by the Grantor.
3.4.2. Delivery. At the Closing, simultaneously
with the delivery of immediately available
funds as provided above, the Grantor shall
deliver to the Grantee a certificate or
certificates representing the Option
Interests, which Option Interests shall be
duly authorized, validly issued, fully paid
and nonassessable and free and clear of all
Liens, and the Grantee shall deliver to the
Company its written agreement that the
Grantee will not offer to sell or otherwise
dispose of such Option Interests in
violation of applicable Law.
3.5. Certificates. 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. A COPY OF SUCH
AGREEMENT WILL BE PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON
RECEIPT BY THE COMPANY OF A WRITTEN REQUEST THEREFOR.
-5-
<PAGE>
3.6. Unlegended Certificates. A new certificate or
certificates evidencing the same membership interests in the Company 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. Section 338(h)(10) Election. Enron and Dynegy shall make
timely and effective elections under Section 338(h)(10) of the Code, and any
similar elections under any applicable state, local, foreign or other income tax
law (collectively, the "Section 338(h)(10) Elections") with respect to Grantee's
purchase for tax purposes of the common stock of NNGC Holdings and the deemed
purchase(s) for tax purposes of the common stock of NNGC and any relevant
subsidiaries of NNGC (collectively, the "Qualified Stock Purchases"). To
facilitate such elections, at the Closing, Grantee shall deliver to Grantor an
Internal Revenue Service Form 8023 and any similar forms under applicable state,
local, foreign or other income tax law (the "Forms") with respect to the
Qualified Stock Purchases, which Forms shall be properly executed by Dynegy and
Enron at the Closing. Grantor and Grantee shall, at or prior to the Closing,
agree to a schedule showing an allocation of the deemed purchase price for the
assets of NNGC among the assets of NNGC and any relevant subsidiaries of NNGC,
consistent with the principles of Section 338(h)(10) of the Code and the
regulations thereunder (the "Allocation"). Grantee shall complete the Forms in a
manner consistent with the Allocation, Dynegy shall cause such Forms to be
timely filed with the appropriate taxing authorities and Grantee shall deliver a
copy of such Forms to Enron as promptly as practicable after filing. If, after
filing such Forms, any changes or supplements are required to the Forms, Grantee
and Grantor shall promptly agree on such changes. Thereafter, Grantee and
Grantor shall complete any required amendments or supplements to the Forms,
Dynegy and Enron shall properly execute such amended Forms, Dynegy shall timely
file the Forms, and any required supplements thereto, and Grantee shall deliver
a copy of such Forms and supplements to Enron as soon as practicable after
filing. Enron and Grantor shall provide such information as Grantee may
reasonably request from Grantor in order to prepare the Forms and any required
amendments or supplements thereto.
4.2. Maintenance of 100% ownership of Company membership
interests, NNGC Holdings capital stock and NNGC common stock; no Liens. Enron
and Grantor hereby covenant that through the Option Term Grantor will maintain
ownership of 100% of the membership interests in the Company, and the Company
will maintain ownership of 100% of the capital stock of NNGC Holdings and NNGC
Holdings will maintain ownership of 100% of the common stock of NNGC, from the
date hereof through the Closing Date. The Company, NNGC Holdings and NNGC hereby
covenant not to issue any equity interests 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 Holdings or NNGC to any entity other than Grantor
from the date hereof through the Closing Date. Grantor, the Company, Enron, NNGC
Holdings 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
-6-
<PAGE>
in the Company, NNGC Holdings or NNGC (other than Liens, pledges or
hypothecation of the NNGC Common Stock to secure Debt under the Bank Credit
Facilities), any securities convertible into, or exercisable or exchangeable
for, any equity interests in the Company, NNGC Holdings or NNGC, or any other
rights to acquire any equity interest in the Company, NNGC Holdings or NNGC.
4.3. Continuing Services after the Closing. For a period
beginning on the Closing Date and ending on the earlier to occur of (a) the date
that is six months from the Closing Date, and (b) the Closing Date as defined in
the Purchase Option Agreement, if requested by NNGC, Enron shall cause Enron
Transportation Services Company to provide services (other than cash management
services provided in the Cash Management Program) to NNGC on substantially the
same terms as provided on the date hereof, and Grantee shall cause Grantor to
compensate Enron and its Affiliates for such service at a rate not to exceed the
cost incurred by the entity providing the service. The services will be provided
pursuant to a mutually agreeable customary transition services agreement, which
will contain customary indemnity provisions.
4.4. Termination of waiting period under HSR Act. Enron will,
and will cause Grantor to, use their commercially reasonable best efforts to
obtain early termination of the waiting period under the HSR Act for the
exercise of the Option.
4.5. Forgiveness of debt owed by Enron. After the Exercise and
prior to the Closing, the Company will cause NNGC to cancel and forgive all
indebtedness owed to the Company or any of its Subsidiaries by Enron or its
Affiliates (other than the Company and NNGC Holdings), other than a net amount
of such debt equal to $240 million plus any dividends (whether or not declared)
accrued and unpaid on the shares of Series A Preferred Stock at such time. The
remaining outstanding indebtedness will be evidenced by a note of Enron to NNGC
in substantially the form of Exhibit A.
4.6. No Assets or Operations. Neither the Company nor NNGC
Holdings will acquire any assets, conduct any operations, or incur any
liabilities from the date hereof through the Closing Date except for liabilities
of the Company to NNGC in an amount up to $1,950 million.
4.7. Affirmative Covenants Related to the Company, NNGC
Holdings and NNGC. Enron, Grantee and the Company covenant that for the period
between the execution of this Agreement and the Closing Date, the Company, NNGC
Holdings and NNGC shall, and shall cause each of its Subsidiaries to:
4.7.1. cause all properties owned by it 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
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<PAGE>
advantageously conducted at all times;
provided, that the foregoing shall not
prevent it from discontinuing the
maintenance of any of such properties if
such discontinuance is, in the judgment of
its management, desirable in the conduct of
its business;
4.7.2. preserve and keep in full force and effect
its corporate existence, rights (charter and
statutory), licenses and franchises;
provided, that it 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 its
business as a whole;
4.7.3. maintain its books, accounts and records in
accordance with GAAP;
4.7.4. comply with all material legal requirements
and material contractual obligations
applicable to its operations and business
and pay all applicable taxes as they become
due and payable; and
4.7.5. permit representatives of the Grantee and
its agents (including their counsel,
accountants and consultants) to have
reasonable access during business hours to
its 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.
4.8. Negative Covenants Related to the Company, NNGC Holdings
and NNGC. For the period between the execution of this Agreement and the Closing
Date, Enron, Grantor and the Company covenant that, without the approval of the
Grantee, none of the Company, NNGC Holdings or NNGC will:
4.8.1. 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 (i)
any dividend or other distribution resulting
from the cancellation by NNGC of Debt owed
by Enron and its Affiliates to NNGC (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 less than $240 million plus accrued and
unpaid dividends on the Series A Preferred
Stock and (ii) dividends on the Series A
Preferred Stock;
4.8.2. Redemptions. Except as provided pursuant to
the terms of the Series A Preferred Stock,
directly or indirectly redeem, purchase or
otherwise acquire, any of its equity
securities;
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<PAGE>
4.8.3. 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);
4.8.4. Mergers. Merge or consolidate, or enter into
an agreement providing for any merger or
consolidation, with any Person if the
holders of its capital stock prior to the
transaction will own less than 100% of
NNGC's capital stock after the transaction;
4.8.5. Sale of Assets. Except as provided in
Schedule 4.8.5, sell, lease or otherwise
dispose of any of its assets, 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;
4.8.6. 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;
4.8.7. Charter Amendments. Make any amendment to or
waive any provision of its certificate of
incorporation or bylaws, limited liability
company agreement or other organizational
documents, 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 Preferred Stock;
4.8.8. 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 (i) loans to any
wholly owned Subsidiary, (ii) loans of a
maximum amount of $1,950 million from NNGC
to the Company and (iii) loans pursuant to
the Cash Management Program;
4.8.9. 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
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<PAGE>
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;
4.8.10. Capital Expenditures. Make, or permit the
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; and
4.8.11. Note Receivable. Allow the Intercompany Note
Receivable to be less than a net amount of
$240 million plus accrued and unpaid
dividends on the Series A Preferred Stock.
5. Representations and Warranties.
5.1. Representations and Warranties of Grantee. Grantee hereby
represents and warrants to Enron, Grantor and the Company 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 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
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enforcement of creditor's rights generally
and (ii) general principles of equity.
5.1.3. Investment Intent of Grantee. Grantee is
acquiring the Option and, if it exercises
the Option, will acquire the Option
Interests 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 Option Interests.
Grantee is able to bear the economic risk of
this investment regarding the Company, is
able to hold the Option Interests
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. Grantee (a) has been furnished with
such information about Enron, Grantor, the
Company and the Option and 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 the Company and the
Option Interests 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 Option
Interests will bear a customary legend
regarding restrictions on the
transferability of such Option Interests.
5.2. Representations and Warranties of Enron, NNGC Holdings,
Grantor and the Company. Each of Enron, NNGC Holdings, Grantor and the Company
hereby represents and warrants to Grantee as follows:
5.2.1. Existence; Qualification; Subsidiaries. Each
of Enron, NNGC Holdings, Grantor and the
Company is a corporation or limited
liability company duly organized, validly
existing and in good standing under the laws
of their state of incorporation or
organization and have full corporate or
limited liability company power and
authority to conduct their business and own
and operate their properties as now
conducted, owned and operated. NNGC 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. NNGC is an indirect
subsidiary of Enron.
5.2.2. Authorization and Enforceability. Each of
Enron, NNGC Holdings, Grantor and the
Company have full power and authority and
have taken all required corporate and other
action
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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
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 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. Ownership of Entire Equity Interest.
5.2.3.1. Grantor owns 100% of the membership
interests of the Company.
5.2.3.2. The Company owns 100% of the
capital stock of NNGC Holdings.
5.2.3.3. NNGC Holdings owns 100% of the
common stock of NNGC.
5.2.4. Third-Party Approvals. Assuming the accuracy
of the representations and warranties of the
Grantee contained in this Agreement and
except for filings under the HSR Act, none
of Enron, NNGC Holdings, Grantor or the
Company 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.
5.2.5. Affiliated Group. Each of NNGC Holdings and
NNGC has at all times during its existence
been treated as a member of the affiliated
group of corporations of which Enron is the
common parent filing consolidated returns
for federal income tax purposes.
5.2.6. Disregarded Entity. The Company is and has
at all times been a disregarded entity for
federal income tax purposes.
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5.2.7. No Other Assets or Operations. The Company
was formed on November 2, 2001. NNGC
Holdings was formed on November 2, 2001. The
Company's only assets are 1,000 shares of
common stock of NNGC Holdings and $1,000 in
cash. NNGC Holdings's only assets are 1,000
shares of common stock of NNGC and $1,000 in
cash. Neither the Company nor NNGC Holdings
has incurred any liabilities (other than the
contemplated liability to NNGC of $1,950
million) or has conducted any operations
since their respective dates of formation.
5.2.8. Capitalization.
5.2.8.1. Capitalization of the Company. As
of the Closing Date after giving
effect to the transactions
contemplated hereby, there shall be
1,000 authorized units representing
membership interests of the
Company. At the time of the
Closing, all of the outstanding
membership interests 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). 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
membership interests of the
Company.
5.2.8.2. Capitalization of NNGC Holdings. As
of the Closing Date after giving
effect to the transactions
contemplated hereby, the authorized
capital stock of NNGC Holdings
shall be 1,000 shares of common
stock. At the time of the Closing,
all of the outstanding capital
stock of NNGC Holdings 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). As of the Closing
Date, NNGC Holdings 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
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any character relating to any
issued or unissued shares of
capital stock of NNGC Holdings.
5.2.8.3. Capitalization of NNGC. As of the
Closing Date after giving effect to
the transactions contemplated
hereby, the authorized capital
stock of NNGC shall be as set forth
on Schedule 5.2.8.3 attached
hereto. At the time of the Closing,
(i) all of the outstanding capital
stock of NNGC 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
NNGC will rank pari passu or senior
in right of payment of dividends or
redemption to the Series A
Preferred Stock. Except as set
forth on Schedule 5.2.8.3, as of
the Closing Date, NNGC 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 (except
Liens on the equity securities
granted to secure Debt), 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 NNGC.
5.2.9. Financial Statements; Disclosure. The
Financial Statements (including the related
notes and schedules) fairly present in all
material respects the financial position of
NNGC 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
NNGC 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, NNGC does not have
any Liabilities or obligations of any nature
(whether accrued, absolute, contingent or
otherwise) that would be required to be
reflected on, or reserved against in, a
balance sheet of NNGC or in the notes
thereto prepared in accordance with
generally accepted
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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.
5.2.10. Litigation. As of the date hereof, no
claims, suits, proceedings or investigations
are pending or, to the Company, NNGC
Holdings or NNGC's knowledge, threatened
against NNGC or any officer or director
thereof which, individually or in the
aggregate, could reasonably be expected to
have a Material Adverse Effect.
5.2.11. No Undisclosed Liabilities. NNGC has no
Liabilities except (i) as disclosed on
Schedule 5.2.11 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.
5.2.12. Agreements. No event has occurred which,
with notice or lapse of time, would
constitute a default with respect to NNGC,
under any material agreement, arrangement or
understanding to which NNGC is a party, and,
to the knowledge of NNGC, no other Person is
in default under any such agreement.
5.2.13. Environmental Matters.
5.2.13.1. NNGC 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.
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<PAGE>
5.2.13.2. 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
NNGC, threatened against NNGC 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 NNGC, former)
businesses, assets or properties of
NNGC, 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.
5.2.13.3. NNGC 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.
5.2.14. Transactions With Affiliates. NNGC is not
party to any agreement, arrangement or
transaction with any officer, director or
Affiliate of NNGC, other than (i) corporate
services and similar arrangements or
transactions pursuant to which NNGC obtains
goods and services used in its Ordinary
Course of Business for which NNGC is charged
expense allocations by Enron consistent with
past practices, (ii) transactions occurring
pursuant to NNGC's participation in the
existing cash management program of Enron
(the "Cash Management Program"), (iii) the
Tax Allocation Agreement, (iv) operational
agreements between NNGC and one or more of
the Affiliates of Enron, such as
interconnect agreements, transportation
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<PAGE>
agreements and other agreements, related to
NNGC's facilities and services, and (vi)
arrangements relating to the employment and
compensation of employees in the Ordinary
Course of Business, expense reimbursal and
advances for business purposes in accordance
with the customary policies and procedures
of NNGC.
5.2.15. Taxes.
5.2.15.1. All tax returns, statements,
reports, declarations, estimates
and forms ("Returns") required to
be filed by or with respect to the
Company, NNGC Holdings and NNGC
(including any Return required to
be filed by an affiliated,
consolidated, combined, unitary or
similar group for a taxable year in
which the Company, NNGC Holdings
and NNGC were 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 5.2.15 are made to the
knowledge of the Company, NNGC
Holdings and NNGC to the extent
that the representations relate to
a corporation which was, but is not
currently, a part of the Company,
NNGC Holdings and NNGC's
affiliated, consolidated, combined,
unitary or similar group.
5.2.15.2. 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, NNGC Holdings or NNGC 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, NNGC Holdings or
NNGC may be liable with respect to
income and other material taxes
which have not been fully paid or
finally settled; (iii) the Company,
NNGC Holdings and NNGC have no
Liability for taxes
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under Treas. Reg. Section 1.1502-6
or any similar provision of state,
local, or non-U.S. tax law, except
for taxes of the affiliated group
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, NNGC Holdings and
NNGC are 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 other than
the Tax Allocation Agreement (which
Tax Allocation Agreement shall be
terminated as of the Closing).
5.2.15.3. 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.
5.2.16. Certain Fees. No fees or commissions will be
payable by the Company, NNGC Holdings or
NNGC to any broker, financial advisor,
finder, investment banker, or bank with
respect to the transactions contemplated by
this Agreement, except that Enron has
retained J. P. Morgan Securities Inc. and
Salomon Smith Barney Inc. as its financial
advisors. The Grantee 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 Enron or any of its
Subsidiaries. The Company, NNGC Holdings and
NNGC shall indemnify and hold harmless the
Grantee, 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. Guarantee by Enron of Grantor's and the Company's Obligations
hereunder. Enron hereby unconditionally guarantees to Grantee the prompt,
faithful and full performance of all of the covenants and obligations of
Grantor, NNGC Holdings and the Company under the terms of this Agreement.
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7. 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
Grantee 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 5.1 hereof which shall survive indefinitely, and except for the
representations and warranties set forth in Section 5.2.15 hereof which shall
survive until the date that is ninety (90) days following the expiration of one
applicable statute of limitation.
8. Indemnification.
8.1. Indemnification by Enron and Grantor. In consideration of
Grantee's execution and delivery of this Agreement and the acquisition of the
Option hereunder and in addition to all of Enron's and Grantor's other
obligations under this Agreement, Enron and Grantor shall defend, protect,
indemnify and hold harmless Grantee 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 "Dynegy 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
Dynegy Indemnitee is a party to the action for which indemnification hereunder
is sought (the "Indemnified Liabilities"), incurred by the Dynegy 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 Enron or Grantor herein;
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 7. In addition, Enron
shall indemnify Dynegy 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 Enron is the common parent under Treas. Reg. Section
1.1502-6 (or similar principles of state, local or foreign law). Enron and
Grantor shall reimburse the Dynegy Indemnitees for the Indemnified Liabilities
as such Indemnified Liabilities are incurred. To the extent that the foregoing
undertaking by Enron or Grantor may be unenforceable for any reason, Enron and
Grantor shall make the maximum contribution to the payment and satisfaction of
each of the Indemnified Liabilities which is permissible under applicable law.
8.2. Indemnification by the Grantee. In consideration of Enron
and Grantor execution and delivery of this Agreement and issuance of the Option
hereunder and in addition to all of the Grantee's other obligations under this
Agreement, the Grantee shall defend, protect, indemnify and hold harmless Enron
and Grantor and all of their Affiliates, officers, directors, employees and
agents (including, without limitation, those retained in connection with the
transactions contemplated by this Agreement) (collectively, the "Enron
Indemnitees") from and against any and all Indemnified Liabilities incurred by
the Enron 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 Grantee herein; 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
7.1. Grantee shall reimburse the Enron Indemnitees for the Indemnified
Liabilities as such Indemnified Liabilities are incurred. To the
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extent that the foregoing undertaking by Grantee may be unenforceable for any
reason, the Grantee shall make the maximum contribution to the payment and
satisfaction of each of the Indemnified Liabilities which is permissible under
applicable law.
8.3. Indemnification Procedure.
8.3.1. 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.
8.3.2. 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 8.3.1 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
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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 Section 8.
9. Miscellaneous.
9.1. 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.
9.2. 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 be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
9.3. 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.
9.4. 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.
9.5. 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.
9.6. 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:
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<PAGE>
If to the Company to:
MCTJ Holding Co. LLC
1400 Smith Street
Houston, Texas 77002
Attention: General Counsel
Facsimile (713) 853-3129
with an information copy, which shall not
constitute notice to:
Vinson & Elkins L.L.P.
1001 Fannin, Suite 2300
Houston, Texas 77002-6760
Attention: William E. Joor, III, Esq.
Scott N. Wulfe, Esq.
Facsimile: (713) 758-2346
If to the Grantor to:
CGNN Holding Company, Inc.
1400 Smith Street
Houston, Texas 77002
Attention: General Counsel
Facsimile (713) 853-3129
with an information copy, which shall not
constitute notice to:
Vinson & Elkins L.L.P.
1001 Fannin, Suite 2300
Houston, Texas 77002-6760
Attention: William E. Joor, III, Esq.
Scott N. Wulfe, Esq.
Facsimile: (713) 758-2346
If to Grantee to:
Dynegy Holdings Inc.
1000 Louisiana, Suite 5800
Houston, Texas 77002
Attention: General Counsel
Facsimile (713) 507-6808
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<PAGE>
with an information copy, which shall not
constitute notice to:
Baker Botts L.L.P.
One Shell Plaza
910 Louisiana
Houston, Texas 77002-4995
Attention: R. Joel Swanson, Esq.
J. David Kirkland, Jr., Esq.
Facsimile: (713) 229-1522
9.7. 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.
9.8. Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option 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.
9.9. Further Assurances. In the event of any exercise of the
Option by the Grantee, the Company 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.
9.10. 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.
9.11. Complete Agreement; No Third Party Beneficiary. This
Agreement (including the Subscription Agreement, the Merger 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.]
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this 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/ RAYMOND M. BOWEN, JR.
------------------------------------
Name: Raymond M. Bowen, Jr.
Title: Authorized Agent
CGNN HOLDING COMPANY, INC.,
a Delaware corporation
By: /s/ DREW J. FOSSUM
------------------------------------
Name: Drew J. Fossum
Title: Authorized Agent
MCTJ HOLDING CO. LLC,
a Delaware limited liability company
By: /s/ DREW J. FOSSUM
------------------------------------
Name: Drew J. Fossum
Title: Authorized Agent
DYNEGY HOLDINGS INC.,
a Delaware corporation
By: /s/ HUGH A. TARPLEY
-------------------------------------
Name: Hugh A. Tarpley
Title: Authorized Agent
Solely for the provisions of Section 5.1
hereof:
DYNEGY INC.,
an Illinois corporation
By: /s/ HUGH A. TARPLEY
-------------------------------------
Name: Hugh A. Tarpley
Title: Authorized Agent
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<PAGE>
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.
"Cash Management Program" means Enron's existing zero balance cash
management program.
"Closing" shall have the meaning ascribed to such term in Section 2
herein.
"Closing Date" shall have the meaning ascribed to such term in Section
2 herein.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contingent Obligations" 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
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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.
"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.
"Current Balance Sheet" means the consolidated balance sheet of NNGC
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.
"Enron Common Stock" means the common stock, no par value, of Enron.
"Estimated Working Capital" means Grantor's good faith estimate made
within five Business Days of Closing of Working Capital on the Closing Date.
"Exchange Agreement" means that certain Exchange Agreement by and among
Dynegy and Enron executed concurrently herewith.
"Exercise" means exercise of the Option.
"Exercise Price" shall have the meaning ascribed to such term in
Section 2 herein.
"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
2.6.
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<PAGE>
"Financial Statements" means the audited consolidated financial
statements of NNGC 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.
"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 Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended.
"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" means Northern Natural Gas Company, a Delaware corporation and
its subsidiaries.
"NNGC Holdings" means NNGC Holding Company, Inc., a Delaware
corporation and wholly owned Subsidiary of the Company.
"Notice Date" shall have the meaning ascribed to such term in Section 2
herein.
"Option Interests" has the meaning set forth in Section 2.1.
"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,
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<PAGE>
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 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 Preferred Stock" means the Series A Preferred Stock, par
value $.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.
"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.
"Tax Allocation Agreement" means that certain undated existing tax
allocation agreement between Enron and NNGC.
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"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, less (c) accounts payable, less
(d) transportation and exchange gas payable, less (e) accrued taxes, less (f)
accrued interest. For purposes of clarity, Working Capital excludes the
Intercompany Note Receivable in calculating the Exercise Price.
A-5
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.12
<SEQUENCE>14
<FILENAME>h92082ex99-12.txt
<DESCRIPTION>PURCHASE OPTION AGREEMENT
<TEXT>
<PAGE>
EXHIBIT 99.12
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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<PAGE>
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 Baker Botts L.L.P., 910 Louisiana, Houston, Texas 77002.
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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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<PAGE>
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. Reg.ss. 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
-8-
<PAGE>
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
-9-
<PAGE>
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
-10-
<PAGE>
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.
1400 Smith Street
Houston, Texas 77002
Attention: General Counsel
Facsimile: (713) 853-3129
with an information copy, which shall not
constitute notice to:
Vinson & Elkins L.L.P.
1001 Fannin, Suite 2300
Houston, Texas 77002-6760
Attention: William E. Joor, III, Esq.
Scott N. Wulfe, Esq.
Facsimile: (713) 758-2346
-11-
<PAGE>
If to Dynegy or Dynegy Holdings to:
Dynegy Inc.
1000 Louisiana, Suite 5800
Houston, Texas 77002
Attention: General Counsel
Facsimile: (713) 507-6808
with an information copy, which shall not
constitute notice to:
Baker Botts L.L.P.
One Shell Plaza
910 Louisiana
Houston, Texas 77002-4995
Attention: R. Joel Swanson, Esq.
J. David Kirkland, Jr., Esq.
Facsimile: (713) 229-1522
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.
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<PAGE>
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-
<PAGE>
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/ RAYMOND M. BOWEN, JR.
------------------------------------
Name: Raymond M. Bowen, Jr.
Title: Authorized Agent
CGNN HOLDING COMPANY, INC.,
a Delaware corporation
By: /s/ DREW J. FOSSUM
------------------------------------
Name: Drew J. Fossum
Title: Authorized Agent
MCTJ HOLDING CO. LLC,
a Delaware limited liability company
By: /s/ DREW J. FOSSUM
------------------------------------
Name: Drew J. Fossum
Title: Authorized Agent
NORTHERN NATURAL GAS COMPANY,
a Delaware corporation
By: /s/ DREW J. FOSSUM
------------------------------------
Name: Drew J. Fossum
Title: Authorized Agent
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<PAGE>
DYNEGY HOLDINGS INC.,
a Delaware corporation
By: /s/ HUGH A. TARPLEY
---------------------------------
Name: Hugh A. Tarpley
Title: Authorized Agent
DYNEGY INC.,
an Illinois corporation
By: /s/ HUGH A. TARPLEY
---------------------------------
Name: Hugh A. Tarpley
Title: Authorized Agent
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<PAGE>
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
A-1
<PAGE>
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 Hart-Scott-Rodino 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
<PAGE>
"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
<PAGE>
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.
A-4
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.13
<SEQUENCE>15
<FILENAME>h92082ex99-13.txt
<DESCRIPTION>REGISTRATION RIGHTS AGREEMENT
<TEXT>
<PAGE>
EXHIBIT 99.13
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") dated as of
November 9, 2001, is by and between Enron Corp., an Oregon corporation (the
"COMPANY"), and Dynegy Inc., an Illinois corporation ("STOCKHOLDER").
WHEREAS, the Company, Northern Natural Gas Company, a Delaware
corporation ("Northern"), and Stockholder entered into a Subscription Agreement
dated the date hereof pursuant to which Stockholder will purchase shares of
Series A Preferred Stock, par value $0.01 per share, of Northern ("Series A
Preferred Stock") that may be exchanged for Common Stock, no par value, of the
Company ("Common Stock") pursuant to an Exchange Agreement dated the date hereof
by and between the Company and Stockholder (the "Exchange Agreement");
WHEREAS, in connection with the Exchange Agreement, the Company has
agreed to grant to Stockholder certain registration rights set forth below.
NOW, THEREFORE, in consideration of these premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by Stockholder and the Company, the parties hereto agree as
follows:
SECTION 1.
DEFINITIONS
1.1 SPECIFIC DEFINITIONS.
The following capitalized terms shall have the meanings ascribed to
them in this Section 1.1:
"AFFILIATE" shall have the meaning set forth in Rule 12b-2 under the
Exchange Act.
"AGREEMENT" shall have the meaning set forth in the preamble hereto.
"COMMON STOCK" shall have the meaning set forth in the recitals hereto.
"COMPANY" shall have the meaning set forth in the preamble hereto.
"COMPANY REGISTRATION" is defined in Section 3.1.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"HOLDER" shall mean Stockholder and each transferee of Registrable
Common Stock directly or indirectly (in a chain of title) from Stockholder to
whom the right to cause one or more demand registrations under Section 2.1 has
been expressly assigned in writing in accordance with Section 9.1 directly or
indirectly (in a chain of title) from Stockholder.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 7.3.
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 7.3.
"INSPECTORS" shall have the meaning set forth in Section 4.1(l).
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"LOSS" or "LOSSES" shall have the meaning set forth in Section 7.1.
"MATERIAL EVENT" shall have the meaning set forth in Section 4.1(k).
"MERGER AGREEMENT" shall have the meaning set forth in the recitals
hereto.
"PARTICIPATING HOLDERS" shall have the meaning set forth in Section
2.2(a).
"PERSON" shall mean any business entity (including, without limitation,
a corporation, partnership (limited or general), limited liability company or
business trust) or a natural person.
"PROSPECTUS" shall have the meaning set forth in Section 7.1.
"REGISTER" "REGISTERED" and "REGISTRATION" and words of similar import
refer to a registration effected by preparing and filing with the SEC a
registration statement in compliance with the Securities Act, and the
declaration and ordering by the SEC of effectiveness of such registration
statement or document.
"REGISTRABLE COMMON STOCK" shall mean any Common Stock issuable upon
exchange of the Series A Preferred Stock, and any securities issued or issuable
in respect of any such Registrable Common Stock by way of any stock split or
stock dividend or in connection with any combination of shares,
recapitalization, merger, consolidation, reorganization or otherwise. Common
Stock shall cease to be Registrable Common Stock when (i) it has been disposed
of in a transaction registered under the Securities Act, (ii) it has been sold
pursuant to Rule 144 under the Securities Act, (iii) it is held by a Person not
entitled to the benefits of this Agreement under Section 9.1, (iv) at such time
as the Registrable Common Stock held by such holder constitutes less than 1% of
the then outstanding shares of Common Stock and such shares could be sold
without registration pursuant to Rule 144 under the Securities Act, or (v) it
has otherwise been transferred in circumstances where no restrictive legend is
required on the certificate for such shares because no restriction on transfer
exists.
"SEC" shall mean the United States Securities and Exchange Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SERIES A PREFERRED STOCK" shall have the meaning set forth in the
recitals hereto.
"STOCKHOLDER" shall have the meaning set forth in the preamble hereto.
1.2 OTHER DEFINITIONS.
Other capitalized terms used herein but not defined in Section 1.1
shall have the respective meanings ascribed to them throughout this Agreement.
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SECTION 2.
REGISTRATION RIGHTS
2.1 DEMAND REGISTRATION RIGHTS.
(a) Upon receipt of a written request from a Holder to
register under the Securities Act (whether for purposes of a public offering, an
exchange offer or otherwise) all or part of the Registrable Common Stock held by
such Holder, the Company shall as expeditiously as reasonably possible (but in
any event not later than forty-five (45) days after receipt of such request)
prepare and file, and use its commercially reasonable best efforts to cause to
become effective as soon thereafter as practicable, a registration statement
under the Securities Act to effect the offering of such Registrable Common Stock
in the manner specified in such request.
(b) Holders of a majority of the Registrable Common Stock to
be included in such registration shall be entitled to select and retain one or
more investment bankers or managers reasonably acceptable to the Company in
connection with any underwritten offerings made pursuant to this Section 2.1.
(c) Subject to the terms and conditions set forth in Section
2.2, Holder may request the Company to register Registrable Common Stock under
the Securities Act pursuant to this Section 2.1 at any time and from time to
time; provided, however, that the Company shall not be required to register
Registrable Common Stock pursuant to this Section 2.1 more than once in any
270-day period.
2.2 TERMS AND CONDITIONS OF DEMAND REGISTRATION RIGHTS.
Notwithstanding anything to the contrary contained elsewhere herein,
the registration rights granted to the Holders in Section 2.1 are expressly
subject to the following terms and conditions:
(a) The Holders, collectively, shall only be entitled to six
(6) requests to register Registrable Common Stock under the terms of Section
2.1. A "request" as it is used in this Section 2.2(a) shall be deemed to have
occurred only upon completion of a requested registration and the subsequent
sale of Registrable Common Stock by one or more Holders; provided, however, that
if the Company shall have substantially completed its requirements to permit the
sale of the Registrable Common Stock and all Holders participating in any such
registration (the "Participating Holders") determine to withdraw such
registration or not to effect sales of Registrable Common Stock pursuant to such
registration, then a "request" shall be deemed to have occurred unless either
(i) such withdrawal or determination not to effect sales resulted from an
adverse change in the Company's circumstances or (ii) the Participating Holders
pay the Company's out-of-pocket expenses associated with such registration.
(b) The Company shall be entitled to defer for a reasonable
period of time, but not to exceed ninety (90) days in the aggregate, the filing
of any registration statement otherwise required to be prepared and filed by it
under Section 2.1 if the Company notifies the Holder, within five (5) business
days after such Holder requested the registration under Section 2.1 that the
Company (i) is at such time conducting or is about to conduct an underwritten
public offering of its securities for its own account and the Board of Directors
of the Company determines in
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good faith that such offering would be materially adversely affected by such
registration requested by the Holders or (ii) would be required (as determined
after consultation with counsel) to disclose in such registration statement
information not otherwise then required by law to be publicly disclosed and, in
the good faith judgment of the Board of Directors of the Company, such
disclosure might adversely affect any material business transaction or
negotiation in which the Company is then engaged. If the Company elects to defer
the filing of a registration statement pursuant to this Section 2.2(b), the
Holder may withdraw its request, in writing, during the time of such deferral
and such request shall not be counted toward the limit set forth in Section
2.2(a).
(c) The Holders shall not be entitled to exercise their rights
pursuant to Section 2.1 during the 60-day period immediately following the
effective date of any registration statement filed by the Company under the
Securities Act (other than on Form S-8 or another similar form) in respect of an
offering or sale of Common Stock of the Company by or on behalf of the Company
or any other stockholder of the Company.
(d) The Company shall not be obligated to effect a
registration pursuant to Section 2.1 above unless the shares of Registrable
Common Stock proposed to be included in such registration are reasonably
expected to have an aggregate sales price to the public of at least $100
million.
SECTION 3.
PIGGYBACK REGISTRATION RIGHTS
3.1 PIGGYBACK REGISTRATION RIGHTS. If at any time or from time to time
the Company shall propose to register any Common Stock for public sale under the
Securities Act (a "COMPANY REGISTRATION"), the Company shall give the Holders
prompt written notice of the proposed registration and shall include in such
registration on the same terms and conditions as the other securities included
in such registration such number of shares of Registrable Common Stock as such
Holders shall request within five (5) business days after the giving of such
notice; provided, however, that the Company may at any time prior to the
effectiveness of any such registration statement, in its sole discretion and
without the consent of such Holders, abandon the proposed offering in which such
Holders had requested to participate (provided that the Company gives such
Holders prompt notice of such decision); and provided further that such Holders
shall be entitled to withdraw any or all of their shares of Registrable Common
Stock to be included in a registration statement under this Section 3.1 at any
time prior to the date on which the registration statement with respect to such
shares of Registrable Common Stock is declared effective by the SEC. The Company
shall be entitled to select the investment bankers and/or managers, if any, to
be retained in connection with any registration referred to in this Section 3.1.
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3.2 RESTRICTIONS ON PIGGYBACK REGISTRATION RIGHTS.
Notwithstanding anything to the contrary contained elsewhere herein,
the registration rights granted to the Holders in Section 3.1 are expressly
subject to the following terms and conditions:
(a) The Company shall not be obligated to include shares of
Registrable Common Stock in an offering as contemplated by Section 3.1 if the
Company is advised in writing by the managing underwriter or underwriters of
such offering (with a copy to each Participating Holder), that the success of
such offering would in its or their good faith judgment be adversely affected by
such inclusion (after consideration of all relevant factors, including without
limitation, the impact of any delay caused by including such shares); provided,
however, that the Company shall in any case be obligated to include such number
of shares of Registrable Common Stock in such offering, if any, as such
underwriter or underwriters shall determine will not adversely affect the
success of such offering.
(b) The Company shall not be obligated to include any shares
of Registrable Common Stock in any registration by the Company of any Common
Stock in connection with any merger, acquisition, exchange offer, or any other
business combination, including any transaction within the scope of Rule 145
promulgated pursuant to the Securities Act, subscription offer, dividend
reinvestment plan or stock option or other director or employee incentive or
benefit plan. In addition, the Company shall not be obligated to include any
shares of Registrable Common Stock in any registration that is effected pursuant
to any of the agreements listed on Exhibit A hereto (the "Existing Registration
Rights Agreements") to the extent that such Existing Registration Rights
Agreements prohibit such inclusion.
(c) The Company shall use commercially reasonable best efforts
to cause the managing underwriter or underwriters of a proposed underwritten
offering to permit the Registrable Common Stock requested to be included in a
registration of Common Stock pursuant to this Section 3 to be included on the
same terms and conditions as any similar securities included therein.
Notwithstanding the foregoing, the Company shall not be required to include
Registrable Common Stock of any Holder in such offering unless such Holder
accepts the terms of the underwriting agreement between the Company and the
managing underwriter or underwriters. If the managing underwriter or
underwriters of a proposed underwritten offering advise the Company in writing
that in its or their good faith judgment the total amount of securities,
including securities requested to be included in a registration of Common Stock
pursuant to this Section 3 and other similar securities, to be included in such
offering is sufficiently large to adversely affect the success of such offering,
then in such event the securities to be included in such offering shall be
allocated first to the Company and then, to the extent that any additional
securities can, in the good faith judgment of such managing underwriter or
underwriters, be sold without creating any such adverse effect on the success of
such offering (but subject to existing priority requirements in the Existing
Registration Rights Agreements), to the Participating Holders based upon the
number of shares of Registrable Common Stock requested to be included in such
registration.
(d) In the event that some but less than all of the
Participating Holders' shares of Registrable Common Stock are included in an
offering contemplated by a registration statement pursuant to this Section 3,
each Participating Holder shall execute one or more
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"lockup" letters, in customary form, setting forth an agreement by such
Participating Holder not to offer for sale, sell, grant any option for the sale
of, or otherwise dispose of, directly or indirectly, any shares of Common Stock,
or any securities convertible into or exchangeable into or exercisable for any
shares of Common Stock, for a period of ninety (90) days from the date such
offering commences; provided, however, that if the period of any such "lockup"
applicable to the Company with respect to any such registration statement shall
be less than ninety (90) days, then the period of time applicable to the
Participating Holders shall be such lesser period of time.
SECTION 4.
COVENANTS
4.1 COVENANTS OF THE COMPANY.
In connection with any offering of shares of Registrable Common Stock
pursuant to this Agreement, the Company shall:
(a) Prepare and file with the SEC such amendments and
post-effective amendments to the registration statement as may be necessary to
keep the registration statement effective for a period of not less than 120
days, unless the offering is a continuous offering of securities under Rule 415,
in which case the registration statement shall be kept effective until the first
anniversary of such effective date or, in either case, such shorter period which
will terminate when all Registrable Common Stock covered by such registration
statement has been sold or withdrawn at the request of participating holders of
Registrable Common Stock; and cause the prospectus to be supplemented by any
required prospectus supplement, and as so supplemented to be filed pursuant to
Rule 424 under the Securities Act;
(b) Furnish to the Participating Holders and to each managing
underwriter, if any, (i) at least two (2) business days prior to filing with the
SEC, any registration statement covering shares of Registrable Common Stock, any
amendment or supplement thereto, and any prospectus used in connection
therewith, which documents will be subject to the reasonable review of the
Participating Holders and such underwriter, and, with respect to a registration
statement prepared pursuant to Section 2.1, the Company shall not file any such
documents with the SEC to which the Participating Holders shall reasonably
object; and (ii) a copy of any and all transmittal letters or other
correspondence with the SEC or any other governmental agency or self-regulatory
body or other body having jurisdiction (including any domestic or foreign
securities exchange) relating to such offering of shares of Registrable Common
Stock;
(c) Furnish to the Participating Holders and each managing
underwriter, if any, such number of copies of such registration statement, each
amendment and supplement thereto (in each case including all exhibits thereto
and documents incorporated by reference therein) and the prospectus included in
such registration statement (including each preliminary prospectus and
prospectus supplement) as the Participating Holders or such underwriter may
reasonably request in order to facilitate the sale of the shares of Registrable
Common Stock;
(d) After the filing of such registration statement, promptly
notify the Participating Holders of any stop order issued or enforcement action
initiated or, to the
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knowledge of the Company, threatened to be issued by the SEC and promptly take
all reasonable actions to prevent the entry of such stop order or to obtain its
withdrawal if entered;
(e) Use its commercially reasonable best efforts to qualify
such shares of Registrable Common Stock for offer and sale under the securities,
"blue sky" or similar laws of such jurisdictions (including any foreign country
or any political subdivision thereof in which shares of Common Stock are then
listed) as the Participating Holders or underwriter shall reasonably request and
use its commercially reasonable best efforts to obtain all appropriate
registrations, permits and consents required in connection therewith, except
that the Company shall not for any such purpose be required to qualify generally
to do business as a foreign corporation in any jurisdiction wherein it is not so
qualified, or to subject itself to taxation or to file a general consent to
service of process in any such jurisdiction;
(f) Furnish to each managing underwriter, if any, an opinion
of counsel for the Company addressed to each of them, dated as of the date of
the closing of the offering of shares of Registrable Common Stock, and a
"comfort" letter or letters signed by the Company's independent public
accountants, each in reasonable and customary form and covering such matters of
the type customarily covered by opinions or comfort letters delivered by such
parties in underwritten public offerings, and use its commercially reasonable
best efforts to have such opinions and comfort letters addressed to and
delivered to each Participating Holder;
(g) Furnish unlegended certificates representing ownership of
the shares of Registrable Common Stock being sold in such denominations as shall
be requested by the Participating Holders or the managing underwriter, if any,
provided such request is made at least two (2) business days prior to the
closing of the sale of such shares;
(h) Promptly inform the Participating Holders (i) in the case
of any offering of shares of Registrable Common Stock in respect of which a
registration statement is filed under the Securities Act, of the date on which
such registration statement or any post-effective amendment thereto becomes
effective and, if applicable, of the date of filing a Rule 430A prospectus (and,
in the case of an offering abroad of shares of Registrable Common Stock, of the
date when any required filing under the securities and other laws of such
foreign jurisdictions shall have been made and when the offering may be
commenced in accordance with such laws) and (ii) of any request by the SEC, any
securities exchange, government agency, self-regulatory body or other body
having jurisdiction for any amendment of or supplement to any registration
statement or preliminary prospectus or prospectus included therein or any
offering memorandum or other offering document relating to such offering;
(i) Subject to subparagraph (k) below, until the earlier of
(i) such time as all of the shares of Registrable Common Stock being offered
have been disposed of by the Participating Holders in accordance with the
intended method of disposition set forth in the registration statement or other
offering document (and the expiration of any prospectus delivery requirements in
connection therewith) or (ii) the expiration of 120 days after such registration
statement or other offering document becomes effective (unless the offering is a
continuous offering of securities under Rule 415, in which case until the
earlier of (i) the date the offering is completed and (ii) the first anniversary
of such effective date), keep effective and maintain any registration,
qualification or approval obtained in connection with the offering of the shares
of
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Registrable Common Stock, and amend or supplement the registration statement or
prospectus or other offering document used in connection therewith to the extent
necessary in order to comply with applicable securities laws;
(j) Use its commercially reasonable best efforts to have the
shares of Registrable Common Stock listed on any domestic and foreign securities
exchanges on which the Common Stock is then listed;
(k) As promptly as practicable, notify the Participating
Holders at any time when a prospectus relating to the sale of the shares of
Registrable Common Stock is required by law to be delivered in connection with
sales by an underwriter or dealer, of the occurrence of an event (a "Material
Event") requiring the preparation of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such shares,
such prospectus will not contain an untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statement therein, in light of the circumstances under which they were made,
not misleading, and as promptly as practicable (subject to Section 4.3) make
available to the Participating Holders and to each managing underwriter, if any,
any such supplement or amendment; in the event the Company shall give such
notice, the Company shall extend the period during which such registration
statement shall be maintained effective as provided in Sections 4.1(a) and (i)
by the number of days during the period from and including the date of the
giving of such notice to the date when the Company shall make available to the
Participating Holders such supplemented or amended prospectus;
(l) Make available for inspection during the normal business
hours of the Company by the Participating Holders, any underwriter participating
in such offering, and any attorney, accountant or other agent retained by the
Participating Holders or any such underwriter in connection with the sale of
shares of Registrable Common Stock (collectively, the "INSPECTORS"), all
relevant financial and other records, pertinent corporate documents and
properties of the Company as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the officers, directors
and employees of the Company to supply all information reasonably requested by
any such Inspector in connection with such registration statement and make
available for consultation and for analyst and other marketing calls such
officers, accountants and employees in connection therewith as shall reasonably
be requested by the Participating Holders; provided, however, that (i) in
connection with any such inspection, any such Inspectors shall cooperate to the
extent reasonably practicable to minimize any disruption to the operation by the
Company of its business, (ii) any records, information or documents shall be
kept confidential by such Inspectors, unless (A) such records, information or
documents are in the public domain or otherwise publicly available or (B)
disclosure of such records, information or documents is required by a court or
administrative order or by applicable law (including, without limitation, the
Securities Act) and (iii) the Company will not be required to waive any
privilege in connection with any such registration;
(m) Enter into and perform its obligations under usual and
customary agreements (including an underwriting agreement in usual and customary
form) and take such other actions as are reasonably required in order to
expedite or facilitate the sale of the Registrable Common Stock.
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(n) Make "generally available to its security holders" (within
the meaning of Rule 158 of the Securities Act) an earnings statement satisfying
the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder no
later than 45 days after the end of the 12-month period beginning with the first
day of the Company's first fiscal quarter commencing after the effective date of
the registration statement, which earnings statement shall cover said 12-month
period;
(o) If requested by the managing underwriter or underwriters
or a Participating Holder, promptly incorporate in a prospectus supplement or
post-effective amendment such information as the managing underwriter or
underwriters or any participating Holder reasonably requests to be included
therein, including, without limitation, information with respect to the number
of shares of Registrable Common Stock being sold by the Participating Holders to
any underwriter or underwriters, the purchase price being paid therefor by such
underwriter or underwriters and with respect to any other terms of an
underwritten offering of the Registrable Common Stock to be sold in such
offering, and promptly make all required filings of such prospectus by
supplement or post-effective amendment;
(p) As promptly as practicable after filing with the SEC of
any document which is incorporated by reference in a prospectus contained in a
registration statement, deliver a copy of such document to the Participating
Holders;
(q) Not later than the effective date of the applicable
registration statement (or if later, the earliest business day thereafter on
which a CUSIP number is available), provide a CUSIP number for all Registrable
Common Stock and provide the applicable transfer agent with printed certificates
for the Registrable Common Stock which are in a form eligible for deposit with
The Depository Trust Company (if such Registrable Common Stock is then eligible
for such deposit);
(r) Cooperate with each seller of Registrable Common Stock and
each underwriter or agent, if any, participating in the disposition thereof and
their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers;
(s) Provide and cause to be maintained a transfer agent and
registrar for all Registrable Common Stock covered by such registration
statement from and after a date not later than the effective date thereof; and
(t) Take all other steps necessary to effect the registration
of the Registrable Common Stock contemplated hereby.
4.2 COVENANT OF THE PARTICIPATING HOLDERS.
Each Participating Holder agrees and covenants that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in Section 4.1(k) hereof, the Participating Holder will forthwith discontinue
disposition of Registrable Common Stock pursuant to the registration statement
covering such Registrable Common Stock until the Participating Holder's receipt
of the copies of the supplemented or amended prospectus contemplated by Section
4.1(k) hereof, and, if so directed by the Company, the Participating
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Holder will deliver to the Company all copies, other than permanent file copies,
then in the Participating Holder's possession of the most recent prospectus
covering such Registrable Common Stock at the time of receipt of such notice.
4.3 DEFERRAL PERIOD.
Upon the occurrence or existence of any pending corporate development
or any other Material Event that, in the reasonable judgment of the Company,
makes it appropriate to suspend the availability of the registration statement
and the related prospectus or other offering document in connection with the
registration of shares of Registrable Common Stock, the Company shall give
notice to the Participating Holders that the availability of such registration
statement or other offering document is suspended (a "Deferral Notice") and,
upon receipt of the Deferral Notice, the Participating Holders agree not to sell
any Registrable Common Stock pursuant to such registration statement or other
offering document until receipt of copies of the supplemented or amended
prospectus or other offering document provided for in Section 4.1(k) above, or
until they are advised in writing by the Company that the prospectus or other
offering document may be used, and have received copies of any additional or
supplemental filings that are incorporated or deemed incorporated by reference
in such prospectus, if applicable. The period during which the availability of
such registration statement and any prospectus or other offering document is
suspended (the "Deferral Period") shall not exceed 120 days in any 12
consecutive calendar month period; provided, that a single Deferral Period shall
not exceed 45 days. The Company's obligations under Section 4.1 shall be
suspended during any Deferral Period.
SECTION 5.
RESTRICTIONS ON PUBLIC SALE BY THE COMPANY AND OTHERS
5.1 The Company agrees:
(a) Upon a written request from a Holder not to effect any
public sale or distribution of any Common Stock during the 30-day period
following the pricing of any firm commitment underwritten public offering
pursuant to a registration statement filed pursuant to Section 2.1, except in
connection with any merger, acquisition, exchange offer, or any other business
combination, including any transaction within the scope of Rule 145 promulgated
pursuant to the Securities Act, subscription offer, dividend reimbursement plan
or stock option or other director or employee incentive or benefit plan or
pursuant to commitments under the Existing Registration Rights Agreements;
provided that the Company shall not be obligated to comply with more than three
such requests in any 12-month period.
(b) That any agreement entered into after the date hereof
pursuant to which the Company grants registration rights with respect to the
Company's securities shall not interfere with any Holders' ability to exercise
their rights hereunder.
5.2 Upon a written request from the Company, each Holder agrees not to
effect any public sale or distribution of Registrable Common Stock during the
30-day period following the pricing of any firm commitment underwritten public
offering of Common Stock by the Company; provided that no Holder shall be
required to comply with more than three such requests in any 12-month period.
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SECTION 6.
EXPENSES
All expenses incurred in connection with the registration of
Registrable Common Stock, including, without limitation, all filing fees, escrow
fees, fees and expenses of compliance with securities or blue sky laws
(including fees and disbursements of the Company's counsel in connection with
blue sky qualifications of the Registrable Common Stock), rating agency fees,
printing expenses, messenger and delivery expenses, internal expenses
(including, without limitation, all salaries and expenses of the Company's
officers and employees performing legal or accounting duties), the fees and
expenses incurred in connection with the listing of the securities to be
registered on each securities exchange on which similar securities issued by the
Company are then listed, and fees and disbursements of counsel for the Company
and the reasonable fees and disbursements of a single counsel for the
Participating Holders and the Company's independent certified public accountants
(including the expenses of any special audit or "cold comfort" letters required
by or incident to such performance) directly attributable to the registration of
securities, Securities Act liability insurance (if the Company elects to obtain
such insurance), and the fees and expenses of any special experts or other
persons retained by the Company will be borne by the Company. The Company shall
have no obligation to pay and shall not pay any underwriting fees, discounts or
commissions in connection with any Registrable Common Stock registered pursuant
to this Agreement or any out-of-pocket expenses of the holders in connection
therewith (except as expressly contemplated by the preceding sentence).
SECTION 7.
INDEMNIFICATION
7.1 INDEMNIFICATION BY THE COMPANY.
The Company agrees to indemnify and hold harmless each Participating
Holder, its officers, directors and agents, and will agree to indemnify and hold
harmless any underwriter of Registrable Common Stock, and each person, if any,
who controls any of the foregoing persons within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages, liabilities and expenses (individually, a
"LOSS" collectively, "LOSSES") arising from or caused by (x) with respect to any
registration statement relating to Registrable Common Stock, any untrue
statement or alleged untrue statement of a material fact or omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading and with respect to any
prospectus relating to the Registrable Common Stock (as amended or supplemented
if the Company shall have furnished any amendments or supplements thereto) or
any preliminary prospectus, any untrue statement or alleged untrue statement of
a material fact or omission or alleged omission to state therein a material fact
necessary in order to make the statements, in light of the circumstances under
which they were made, not misleading and (y) any violation or alleged violation
by the Company of the Securities Act, any blue sky laws, securities laws or
other applicable laws of any state in which shares of Registrable Common Stock
are offered and relating to action or inaction required of the Company in
connection with such offering; and will reimburse each such person for any legal
or other out-of-pocket expenses reasonably incurred in connection with
investigating, or defending against, any such Loss (or any
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proceeding in respect thereof), subject to the provisions of Section 7.3, except
that the indemnification provided for in this Section 7.1 shall not apply to
Losses that are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon and in conformity with information
furnished in writing to the Company by or on behalf of such Participating Holder
expressly for use therein. Notwithstanding the foregoing, the Company shall not
be liable in any such case to the extent that any such Loss arises out of, or is
based upon, an untrue statement or alleged untrue statement or omission or
alleged omission made in any preliminary prospectus if (i) such Participating
Holder failed to send or deliver a copy of the prospectus included in the
relevant registration statement at the time it became effective (the
"PROSPECTUS") with or prior to the delivery of written confirmation of the sale
of Registrable Common Stock to the person asserting such Loss or who purchased
such Registrable Common Stock which are the subject thereof if, in either case,
such delivery is required by the Securities Act and (ii) the Prospectus would
have corrected such untrue statement or omission or alleged untrue statement or
alleged omission; and the Company shall not be liable in any such case to the
extent that any such Loss arises out of, or is based upon, an untrue statement
or alleged untrue statement of a material fact or omission or alleged omission
to state a material fact in the Prospectus, if such untrue statement or alleged
untrue statement or omission or alleged omission is corrected in any amendment
or supplement to the Prospectus and if, having previously been furnished by or
on behalf of the Company with copies of the Prospectus as so amended or
supplemented, such Participating Holder thereafter fails to deliver such
Prospectus as so amended or supplemented prior to and concurrently with the sale
of Registrable Common Stock if such delivery is required by the Securities Act.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Participating Holders or any other
person indemnified hereunder and shall survive the transfer of such securities
by the Participating Holders.
7.2 INDEMNIFICATION BY PARTICIPATING HOLDERS.
Each Participating Holder agrees to indemnify and hold harmless the
Company, its officers and directors, and each person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or Section
20 of the Exchange Act to the same extent as the indemnity made pursuant to
clause (x) of Section 7.1 above from the Company to the Participating Holders,
but only with reference to information furnished in writing by or on behalf of
the Participating Holders expressly for use in any registration statement or
prospectus relating to shares of Registrable Common Stock, or any amendment or
supplement thereto, or any preliminary prospectus.
7.3 CONDUCT OF INDEMNIFICATION PROCEEDINGS.
In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to Section 7.1 or 7.2, such person (the "INDEMNIFIED PARTY") shall
promptly notify the person against whom such indemnity may be sought (the
"INDEMNIFYING PARTY") in writing, provided that the failure to so notify the
Indemnifying Party will not relieve the Indemnifying Party of any liability it
may have under this Agreement or otherwise except to the extent of any loss,
damage, liability or expense arising from such failure. The Indemnifying Party,
upon the request of the Indemnified Party, shall retain counsel reasonably
satisfactory to such Indemnified Party to represent such Indemnified Party and
any others the Indemnifying Party may designate in such proceeding and
12
<PAGE>
shall pay the fees and disbursements of such counsel related to such proceeding.
In any such proceeding, any Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention, (ii) the Indemnifying Party
shall have failed to comply with its obligations under the preceding sentence or
(iii) the Indemnified Party shall have been advised by its counsel in writing
that actual or potential differing interests exist between the Indemnifying
Party and the Indemnified Party. The Indemnifying Party shall not be liable for
any settlement of any proceeding effected without its written consent, which
consent shall not be unreasonably withheld. In no event will the Indemnifying
Party be responsible for the fees and disbursements or more than one independent
counsel on behalf of all Indemnified Parties. The Indemnifying Party shall not
agree to any settlement as the result of which any remedy or relief, other than
monetary damages for which the Indemnifying Party shall be fully responsible,
shall be applied to or against an Indemnified Party without the prior written
consent of such Indemnified Party.
7.4 CONTRIBUTION.
If the indemnification provided for in this Section 7.4 from the
Indemnifying Party is unavailable to an Indemnified Party hereunder in respect
of any Losses, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Losses in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party and
Indemnified Party in connection with the actions which resulted in such Losses,
as well as any other relevant equitable considerations. The relative fault of
such Indemnifying Party and Indemnified Party shall be determined by reference
to, among other things, whether any action in question, including any untrue or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact, has been made by, or relates to information supplied by,
such Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the Losses referred
to above shall be deemed to include, subject to the limitations set forth in
Section 7.3, any legal or other fees or expenses reasonably incurred by such
party in connection with any investigation or proceeding. No party shall be
liable for contribution with respect to any action or claim settled without its
written consent, which consent shall not be unreasonably withheld.
Notwithstanding the provisions of this Section 7.4, no Participating
Holder shall be required to contribute any amount in excess of the amount by
which the total price at which the Registrable Common Stock of such
Participating Holder was offered to the public exceeds the amount of any damages
which such Participating Holder has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission of alleged omission. The
parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 7.4 were determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to in the immediately preceding paragraph. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation.
13
<PAGE>
SECTION 8.
AVAILABLE INFORMATION
For as long as there are any shares of Registrable Common Stock, the
Company shall take such reasonable action and file such information, documents
and reports as shall be required by the SEC as a condition to the availability
of Rule 144 and Rule 144A, or any successor provisions.
SECTION 9.
ASSIGNMENT OF RIGHTS
9.1 ASSIGNMENT OF RIGHTS.
Subject to Section 9.2, the Registrable Common Stock and rights of a
Holder under this Agreement with respect to any Registrable Common Stock owned
by such Holder may be assigned to any person who acquires Registrable Common
Stock from such Holder, except that any person who acquires such Registrable
Common Stock (x) pursuant to a public offering registered under the Securities
Act, or (y) pursuant to a transfer made in accordance with Rule 144 under the
Securities Act (or any similar successor provision) may not be assigned rights
hereunder with respect to such Registrable Common Stock. Notwithstanding the
foregoing, rights to cause one or more demand registrations under Section 2.1
may only be assigned if such rights are expressly assigned in writing from such
Holder and if such assignee is acquiring Registrable Common Stock with a fair
market value as of the time of such assignment equal to at least $50 million.
Any assignment of registration rights pursuant to this Section 9.1 shall be
effective only upon receipt by the Company of (a) written notice from the
assigning Holder (i) stating the name and address of any assignee, (ii)
describing the manner in which the assignee acquired Registrable Common Stock
from such Holder and (iii) identifying the Registrable Common Stock with respect
to which the rights under this Agreement are being assigned and (b) the written
agreement of such assignee to be bound by the obligations of such Holder under
this Agreement.
9.2 SCOPE OF ASSIGNMENT.
The rights of an assignee under Section 9.1 shall be the same rights
granted to the Stockholder under this Agreement, except that in no event shall
the Company's obligations hereunder be increased due to any such assignment.
After any such assignment, the assigning Holder shall retain its rights under
this Agreement with respect to all other Registrable Common Stock owned by the
assigning Holder.
SECTION 10.
MISCELLANEOUS
10.1 PROVISION OF INFORMATION.
Any Holder shall, and shall cause its officers, directors, employees
and agents to complete and execute all such questionnaires as the Company shall
reasonably request in connection with any registration pursuant to this
Agreement.
14
<PAGE>
10.2 INJUNCTIONS.
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with its specified terms or were otherwise breached. Therefore, the
parties hereto shall be entitled to an injunction or injunctions to prevent
breaches of the provisions of this Agreement and to enforce specifically the
terms of provisions hereof in any court having jurisdiction, such remedy being
in addition to any other remedy to which they may be entitled at law or in
equity.
10.3 SEVERABILITY.
If any term or provision of this Agreement is held by a court of
competent jurisdiction to be invalid, void, or unenforceable, the remainder of
the terms and provisions set forth herein shall remain in full force and effect
and shall in no way be affected, impaired or invalidated, and the parties hereto
shall use their commercially reasonable best efforts to find and employ an
alternative means to achieve the same or substantially the same result as that
contemplated by such term or provision.
10.4 FURTHER ASSURANCES.
Subject to the specific terms of this Agreement, the Holders and the
Company shall make, execute, acknowledge and deliver such other instruments and
documents, and take all such other actions, as may be reasonably required in
order to effectuate the purposes of this Agreement and to consummate the
transactions contemplated hereby.
10.5 ENTIRE AGREEMENT; MODIFICATION.
This Agreement contains the entire understanding of the parties with
respect to the transactions contemplated hereby and supersedes all agreements
and understandings entered into prior to the execution hereof. This Agreement
may be modified only by a written instrument duly executed by or on behalf of
the Company and Holders holding a majority of the Registrable Common Stock. No
breach of any covenant, agreement, warranty or representation shall be deemed
waived unless expressly waived in writing by or on behalf of the party who might
assert such breach.
10.6 COUNTERPARTS.
For the convenience of the parties hereto, any number of counterparts
of this Agreement may be executed by the parties hereto, but all such
counterparts shall be deemed one and the same instrument.
10.7 NOTICES.
All notices, consents, requests, demands, and other communications
hereunder shall be in writing and shall be given by hand or by mail (return
receipt requested) or sent by overnight delivery service, cable, telegram, or
facsimile transmission to the parties at the address specified beside each
party's name on the signature pages hereto or at such other address as shall be
specified by the parties by like notice.
Notice so given shall, in the case of notice so given by mail, be
deemed to be given and received on the fourth business day after posting, in the
case of notice so given by overnight
15
<PAGE>
delivery service, on the day after notice is deposited with such service, and in
the case of notice so given by cable, telegram, facsimile transmission or, as
the case may be, personal delivery, on the date of actual delivery.
10.8 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO ANY CHOICE OF
LAW PRINCIPLES WHICH MIGHT REQUIRE OR PERMIT THE APPLICATION OF THE LAWS OF
ANOTHER JURISDICTION.
10.9 SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and shall inure to the benefit of
and be enforceable by and against the successors and permitted assigns of the
parties hereto.
10.10 PARTIES IN INTEREST.
Except as otherwise specifically provided herein, nothing in this
Agreement expressed or implied is intended or shall be construed to confer any
right or benefit upon any person, firm or corporation other than Stockholder and
the Company and their respective successors and permitted assigns.
10.11 TERMINATION.
This Agreement shall terminate if the Exchange Agreement terminates
without any Common Stock being issued thereunder.
16
<PAGE>
IN WITNESS WHEREOF, Stockholder and the Company have caused this
Registration Rights Agreement to be duly executed as of the date first above
written.
DYNEGY INC.
By: /s/ HUGH A. TARPLEY
-------------------------------
Name: Hugh A. Tarpley
Title: Executive Vice President
Address:
1000 Louisiana, Suite 5800
Houston, TX 77002
Attn:
Telecopier:
ENRON CORP.
By: /s/ RAYMOND M. BOWEN, JR.
-------------------------------
Name: Raymond M. Bowen, Jr.
Title: Executive Vice President-
Finance and Treasurer
Address:
Attn:
Telecopier:
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
Source: http://www.sec.gov/Archives/edgar/data/1024401/000102440101500046/0001024401-01-500046.txt
-----BEGIN PRIVACY-ENHANCED MESSAGE-----
Proc-Type: 2001,MIC-CLEAR
Originator-Name: webmaster@www.sec.gov
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<SEC-DOCUMENT>0001024401-01-500046.txt : 20011218
<SEC-HEADER>0001024401-01-500046.hdr.sgml : 20011218
ACCESSION NUMBER: 0001024401-01-500046
CONFORMED SUBMISSION TYPE: 8-K
PUBLIC DOCUMENT COUNT: 3
CONFORMED PERIOD OF REPORT: 20011202
ITEM INFORMATION: Bankruptcy or receivership
ITEM INFORMATION: Financial statements and exhibits
FILED AS OF DATE: 20011217
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: ENRON CORP/OR/
CENTRAL INDEX KEY: 0001024401
STANDARD INDUSTRIAL CLASSIFICATION: SECURITY BROKERS, DEALERS & FLOTATION COMPANIES [6211]
IRS NUMBER: 470255140
STATE OF INCORPORATION: OR
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 8-K
SEC ACT: 1934 Act
SEC FILE NUMBER: 001-13159
FILM NUMBER: 1815702
BUSINESS ADDRESS:
STREET 1: 1400 SMITH ST
CITY: HOUSTON
STATE: TX
ZIP: 77002-7369
BUSINESS PHONE: 7138536161
MAIL ADDRESS:
STREET 1: 1400 SMITH ST
CITY: HOUSTON
STATE: TX
ZIP: 77002-7369
FORMER COMPANY:
FORMER CONFORMED NAME: ENRON OREGON CORP
DATE OF NAME CHANGE: 19961008
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>ene8-k1214.txt
<DESCRIPTION>FORM 8-K
<TEXT>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): December 2, 2001
ENRON CORP.
(Exact name of Registrant as specified in its charter)
Oregon 1-13159 47-0255140
(State or other jurisdiction (Commission file number) (I.R.S. employer
of incorporation) identification no.)
1400 Smith Street
Houston, Texas 77002
(Address of principal executive offices)
Registrants' telephone number, including area code: (713) 853-6161
<PAGE>
ITEM 3. Bankruptcy or Receivership.
(a) On December 2, 2001, Enron Corp. (the "Company") and certain
other subsidiaries of the Company (collectively, the "Debtors")
each filed voluntary petitions for relief under chapter 11 of
title 11 of the United States Code (the "Bankruptcy Code") in the
United States Bankruptcy Court for the Southern District of New
York (the "Bankruptcy Court") (Case Nos. 01-16033, 01-16034, 01-
16035, 01-16036, 01-16037, 01-16038, 01-16039, 01-16040, 01-
16041, 01-16042, 01-16043, 01-16044, 01-16045 and 01-16046).
Between December 3, 2001 and December 6, 2001, additional
subsidiaries of the Company each filed voluntary petitions for
relief under chapter 11 of the Bankruptcy Code in the Bankruptcy
Court (Case Nos. 01-16048, 01-16076, 01-16078, 01-16080, 01-
16109, 01-16110 and 01-16111). As of midnight, Eastern Standard
time, on December 13, 2001, no additional subsidiaries of the
Company had filed voluntary petitions for relief under chapter 11
of the Bankruptcy Code in the Bankruptcy Court. The Debtors
manage, and will continue to manage, their properties and operate
their businesses as "debtors-in-possession" under the jurisdiction
of the Bankruptcy Court and in accordance with the applicable
provisions of the Bankruptcy Code.
On December 2, 2001, the Company issued a press release
relating to the foregoing, a copy of which is attached hereto as
Exhibit 99.1 and incorporated herein by reference.
On December 3, 2001, the Company and certain of its subsidiaries
received binding commitments for a $1.5 billion debtor-in-possession
revolving crecit facility (the "DIP Facility"), subject to the
satisfaction of certain conditions precedent. The DIP Facility
is being provided by JPMorgan Chase Bank and Citicorp USA, Inc.
On December 3, 2001, the Bankruptcy Court entered an interim order
approving, among other things, a loan of up to $250 million of the
commitments under the DIP Facility to the Company and certain of
its subsidiaries. On December 3, 2001, the Company issued a press
release relating to the DIP Facility, a copy of which is attached
hereto as Exhibit 99.2 and incorporated herein by reference.
(b) Not applicable.
ITEM 7. Financial Statements, Pro Forma Financial Information
and Exhibits.
(c) Exhibits.
99.1 Press Release of the Company dated December 2, 2001.
99.2 Press Release of the Company dated December 3, 2001.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned hereunto duly authorized.
ENRON CORP.
Date: December 14, 2001 By: JEFFREY MCMAHON
Jeffrey McMahon
Executive Vice President and
Chief Financial Officer
<PAGE>
EXHIBIT INDEX
Exhibit No. Description
99.1 Press Release of the Company dated December 2, 2001.
99.2 Press Release of the Company dated December 3, 2001.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>3
<FILENAME>ex-99_1.txt
<DESCRIPTION>PRESS RELEASE
<TEXT>
Exhibit 99.1
ENRON FILES VOLUNTARY PETITIONS FOR CHAPTER 11
REORGANIZATION; SUES DYNEGY FOR BREACH OF CONTRACT, SEEKING
DAMAGES OF AT LEAST $10 BILLION
FOR IMMEDIATE RELEASE: Sunday, December 2, 2001
- Proceeds of Lawsuit Would Benefit Enron's Creditors
- Company in Active Discussions to Receive Credit Support
For, Recapitalize and Revitalize Its North American
Wholesale Energy Trading Operations Under New Ownership
Structure
- Enron Will Downsize Operations and Continue Sales of
Non-Core Assets
HOUSTON -- Enron Corp. (NYSE: ENE) announced today that it
along with certain of its subsidiaries have filed voluntary
petitions for Chapter 11 reorganization with the U.S.
Bankruptcy Court for the Southern District of New York. As
part of the reorganization process, Enron also filed suit
against Dynegy Inc. (NYSE: DYN) in the same court, alleging
breach of contract in connection with Dynegy's wrongful
termination of its proposed merger with Enron and seeking
damages of at least $10 billion. Enron's lawsuit also seeks
the court's declaration that Dynegy is not entitled to
exercise its option to acquire an Enron subsidiary that
indirectly owns Northern Natural Gas Pipeline. Proceeds from
the lawsuit would benefit Enron's creditors.
In a related development aimed at preserving value in its
North American wholesale energy trading business, Enron said
that it is in active discussions with various leading
financial institutions to provide credit support for,
recapitalize and revitalize that business under a new
ownership structure. It is anticipated that Enron would
provide the new entity with traders, back office
capabilities and technology from Enron's North American
wholesale energy business, and that the new entity would
conduct counterparty transactions through EnronOnline, the
company's existing energy trading platform. Any such
arrangement would be subject to the approval of the
Bankruptcy Court.
In connection with the company's Chapter 11 filings, Enron
is in active discussions with leading financial institutions
for debtor-in-possession (DIP) financing and expects to
complete these discussions shortly. Upon the completion and
court approval of these arrangements, the new funding will
be available immediately on an interim basis to supplement
Enron's existing capital and help the company fulfill
obligations associated with operating its business,
including its employee payroll and payments to vendors for
goods and services provided on or after today's filing.
Filings for Chapter 11 reorganization have been made for a
total of 14 affiliated entities, including Enron Corp.;
Enron North America Corp., the company's wholesale energy
trading business; Enron Energy Services, the company's
retail energy marketing operations; Enron Transportation
Services, the holding company for Enron's pipeline
operations; Enron Broadband Services, the company's
bandwidth trading operation; and Enron Metals & Commodity
Corp.
Enron-related entities not included in the Chapter 11 filing
are not affected by the filing. These non-filing entities
include Northern Natural Gas Pipeline, Transwestern
Pipeline, Florida Gas Transmission, EOTT, Portland General
Electric and numerous other Enron international entities.
To conserve capital, Enron will implement a comprehensive
cost-saving program that will include substantial workforce
reductions. These workforce reductions primarily will affect
the company's operations in Houston, where Enron currently
employs approximately 7,500 people.
In addition, the company will continue its accelerated
program to divest or wind down non-core assets and
operations. Details of the units to be affected will be
communicated shortly.
The Dynegy Lawsuit
In its lawsuit filed today in U.S. Bankruptcy Court in New
York, Enron alleges, among other things, that Dynegy
breached its Merger Agreement with Enron by terminating the
agreement when it had no contractual right to do so; and
that Dynegy has no right to exercise its option to acquire
the entity that indirectly owns the Northern Natural Gas
pipeline because that option can only be triggered by a
valid termination of the Merger Agreement.
The Chapter 11 Filings
In conjunction with today's petitions for Chapter 11
reorganization, Enron will ask the Bankruptcy Court to
consider a variety of "first day motions" to support its
employees, vendors, trading counterparties, customers and
other constituents. These include motions seeking court
permission to continue payments for employee payroll and
health benefits; obtain interim financing authority and
maintain cash management programs; and retain legal,
financial and other professionals to support the company's
reorganization actions. In accordance with applicable law
and court orders, vendors and suppliers who provided goods
or services to Enron Corp. or the subsidiaries that have
filed for Chapter 11 protection before today's filing may
have pre-petition claims, which will be frozen pending court
authorization of payment or consummation of a plan of
reorganization.
The Wholesale Energy Trading Business
The discussions currently underway with various leading
financial institutions are aimed at obtaining credit support
for, recapitalizing and revitalizing Enron's North American
wholesale energy trading operations under a new ownership
structure in which Enron would continue to have a
significant ownership interest.
"If these discussions are successful, they could result in
the creation of a new trading entity with a strong and
unencumbered balance sheet, the industry's finest trading
team, and its leading technology platform, all backed by one
or more of the world's leading financial institutions," said
Greg Whalley, Enron president and chief operating officer.
"We understand that it may take time for counterparties to
resume normal trading levels with this entity, but we are
confident that this business can be put back on a solid
footing. Obviously, our potential partners share our
confidence or they would not be at the table with us. We
intend to take steps to retain employees who are key to the
future success of our wholesale energy trading business and
to regain the support and confidence of its trading
counterparties."
Comment by Ken Lay
"From an operational standpoint, our energy
businesses-including our pipelines and utilities-are
conducting normal operations and will continue to do so, "
said Kenneth L. Lay, chairman and CEO of Enron. "While
uncertainty during the past few weeks has severely impacted
the market's confidence in Enron and its trading operations,
we are taking the steps announced today to help preserve
capital, stabilize our businesses, restore the confidence of
our trading counterparties, and enhance our ability to pay
our creditors."
Enron's principal legal advisor with regard to the proposed
merger with Dynegy, Enron's Chapter 11 filings, the Dynegy
lawsuit, and related matters is Weil, Gotshal & Manges LLP.
Enron's principal financial advisor with regard to its
financial restructuring is The Blackstone Group.
About Enron Corp.
Enron Corp. markets electricity and natural gas, delivers
energy and other physical commodities, and provides
financial and risk management services to customers around
the world. Enron's Internet address is www.enron.com.
Forward-looking Statements
This press release contains statements that are forward-
looking within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Investors are cautioned that any such forward-
looking statements are not guarantees of future performance
and that actual results could differ materially as a result
of known and unknown risks and uncertainties, including:
various regulatory issues, the outcome of the Chapter 11
process, the outcome of the litigation discussed above, the
outcome of the discussions referred to above, general
economic conditions, future trends, and other risks,
uncertainties and factors disclosed in the Company's most
recent reports on Forms 10-K, 10-Q and 8-K filed with the
Securities and Exchange Commission.
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99
<SEQUENCE>4
<FILENAME>ex-99_2.txt
<DESCRIPTION>PRESS RELEASE
<TEXT>
Exhibit 99.2
ENRON ARRANGES $1.5 BILLION OF DEBTOR-IN-POSSESSION FINANCING
FOR IMMEDIATE RELEASE: Monday, December 3, 2001
HOUSTON - Enron Corp. (NYSE: ENE) announced today that, in
connection with its Chapter 11 filings, it has arranged up
to $1.5 billion of debtor-in-possession (DIP) financing. The
financing, arranged by Citigroup and JP Morgan Chase, will
be syndicated and is secured by substantially all of the
company's assets.
Upon Court approval, which the company expects to receive
shortly, $250 million of the new funding will become
available on an interim basis to supplement Enron's existing
capital and help the company fulfill obligations associated
with operating its business, including its employee payroll
and payments to vendors for goods and services provided on
or after yesterday's filing.
"With this financing in place, Enron can continue to do
business and move forward to implement the first steps of
its reorganization. We appreciate the support of our lenders
and are fully committed to meeting our obligations to our
creditors as best we can," said Kenneth L. Lay, Enron
chairman and CEO.
An additional $250 million will be made available to Enron
as soon as the company provides the lenders with a
satisfactory business plan. The $1 billion balance of the
facility will be available to the company upon the
satisfaction of certain conditions, including the entry of a
final order and the successful completion of syndication.
The remaining $1 billion balance of the facility will be
used in part to repay $550 million of existing indebtedness
of Transwestern Pipeline.
Enron Corp. markets electricity and natural gas, delivers
energy and other physical commodities, and provides
financial and risk management services to customers around
the world. Enron's Internet address is www.enron.com. The
stock is traded under the ticker symbol "ENE."
This press release contains statements that are forward-
looking within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Investors are cautioned that any such forward-
looking statements are not guarantees of future performance
and that actual results could differ materially as a result
of known and unknown risks and uncertainties, including:
various regulatory issues, the outcome of the Chapter 11
process, the actions of the Bankruptcy Court with respect to
the referenced debtor-in-possession financing, general
economic conditions, future trends, and other risks,
uncertainties and factors disclosed in the Company's most
recent reports on Forms 10-K, 10-Q and 8-K filed with the
Securities and Exchange Commission.
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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