Exhibit 99.2
EXECUTION COPY
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PURCHASE AND SALE AGREEMENT
between
DYNEGY INC.
NNGC HOLDING COMPANY, INC.
and
MIDAMERICAN ENERGY HOLDINGS COMPANY
Dated as of July 28, 2002
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ARTICLE I. DEFINITIONS 1
1.1. Specific Definitions 1
1.2. Rules of Construction 8
ARTICLE II. PURCHASE AND SALE 8
2.1. Purchase and Sale of the Shares 8
2.2. Purchase Price 8
2.3. Closing 8
2.4. Deliveries at Closing 8
2.5. Purchase Price Adjustment 9
ARTICLE III. REPRESENTATIONS AND WARRANTIES OF SELLERS 10
3.1. Organization and Qualification 10
3.2. Capitalization of ▇▇▇▇ ▇▇
3.3. Corporate Authorization 11
3.4. Consents and Approvals 11
3.5. Non-Contravention 12
3.6. Binding Effect 12
3.7. Financial Statements; Undisclosed Liabilities; Absence of
Changes 12
3.8. Legal Proceedings 13
3.9. Taxes 13
3.10. Employee Benefits 14
3.11. Compliance with Laws; Permits 15
3.12. Intellectual Property 15
3.13. Contracts 16
3.14. Brokers 18
3.15. Real and Personal Property; Sufficiency of Assets of ▇▇▇▇ ▇▇
3.16. Environmental Matters 19
3.17. Labor Relations 19
3.18. Insurance 19
3.19. Regulatory Matters 20
3.20. Books and Records of ▇▇▇▇ ▇▇
3.21. Existing Firm Transportation Customers 20
3.22. Health and Safety Matters 21
ARTICLE IV. REPRESENTATIONS AND WARRANTIES OF BUYERS 21
4.1. Organization and Qualification 21
4.2. Corporate Authorization 21
4.3. Consents and Approvals 21
4.4. Non-Contravention 21
4.5. Binding Effect 22
4.6. Brokers 22
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Table of Contents
(continued)
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4.7. Financing 22
4.8. Investment Intent 22
4.9. Sophistication; Information 22
4.10. Legal Proceedings 22
ARTICLE V. COVENANTS 23
5.1. Conduct of the Business 23
5.2. Access 26
5.3. Appropriate Action; Consents; Filings 27
5.4. Announcements 28
5.5. Employee and Benefit Matters 28
5.6. Preservation of Records 31
5.7. [Intentionally omitted.] 31
5.8. Settlement of Intercompany Accounts; Guarantees 32
5.9. Maintenance of 100% Ownership of the Shares; No Encumbrances 32
5.10. Section 338(h)(10) Election 32
5.11. Tax Returns and Transfer Taxes 33
5.12. Transfer Taxes 35
5.13. Confidential Information 35
5.14. Negotiations 36
5.15. Third Party Software and Domain Name 36
ARTICLE VI. CONDITIONS TO CLOSING 36
6.1. Conditions to the Obligations of Buyer and Sellers 36
6.2. Conditions to the Obligations of Buyer 37
6.3. Conditions to the Obligations of Sellers 38
ARTICLE VII. TERMINATION 39
7.1. Termination 39
7.2. Effect of Termination 39
ARTICLE VIII. INDEMNIFICATION 40
8.1. Survival 40
8.2. Indemnification Coverage 40
8.3. Procedures 42
8.4. Remedy 43
ARTICLE IX. GENERAL PROVISIONS 44
9.1. Extension; Waiver 44
9.2. Amendment 44
9.3. Expenses 44
9.4. Governing Law; Venue 44
9.5. Notices 45
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Table of Contents
(continued)
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9.6. Entire Agreement 46
9.7. Headings; Construction 46
9.8. Counterparts 46
9.9. Assignment; Parties in Interest; No Third Party
Beneficiaries 46
9.10. Severability 46
9.11. Specific Performance 47
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PURCHASE AND SALE AGREEMENT
PURCHASE AND SALE AGREEMENT, dated as of July 28, 2002, between DYNEGY
INC., an Illinois corporation ("Dynegy"), NNGC HOLDING COMPANY, INC., a Delaware
corporation ("NNGC Holding" and together with Dynegy, "Sellers") and MIDAMERICAN
ENERGY HOLDINGS COMPANY, an Iowa corporation ("Buyer").
RECITALS:
Dynegy owns 1,000 shares of the Series A Preferred Stock, $1.00 par value
per share (the "Series A Preferred Stock"), of Northern Natural Gas Company, a
Delaware corporation ("NNGC").
NNGC Holding owns 1,002 shares of common stock, $1.00 par value per share
(the "Common Stock"), of NNGC.
Sellers desire to sell, transfer and deliver to Buyer, and Buyer desires to
purchase from Sellers, all of the Series A Preferred Stock and the Common Stock
(collectively, the "Shares"), on the terms and subject to the conditions set
forth herein.
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements contained herein, the parties hereto agree
as follows:
ARTICLE I.
DEFINITIONS
1.1. Specific Definitions.
For purposes of this Agreement, the following terms shall have the meanings
set forth below:
"Affiliate" shall mean, with respect to any specified Person, any other
Person directly or indirectly controlling, controlled by or under common control
with such specified Person.
"Affiliate Contract" shall have the meaning set forth in Section 3.13(b).
"Agreement" shall mean this Purchase and Sale Agreement, together with all
exhibits and schedules hereto, as the same may be amended or supplemented from
time to time in accordance with the terms hereof.
"Alternative Transaction" shall have the meaning set forth in Section 5.14.
"Applicable Laws" shall mean, with respect to any Person, all statutes,
laws, ordinances, rules, orders and regulations of any Governmental Authority
applicable to such Person and its business, properties and assets.
"Benefit Plan" shall mean: (i) each "employee benefit plan," as such term
is defined in Section 3(3) of ERISA, (ii) each plan that would be an employee
benefit plan if it was subject to ERISA, such as foreign plans and plans for
directors, (iii) each stock bonus, stock ownership, stock option, stock
purchase, stock appreciation rights, phantom stock, or other stock plan (whether
qualified or nonqualified), and (iv) each bonus, deferred compensation or
incentive compensation plan; provided, however, that such term shall not include
(a) routine employment policies and procedures developed and applied in the
ordinary course of business and consistent with past practice, including wage,
vacation, holiday, and sick or other leave policies,
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(b) workers compensation insurance, and (c) directors and officers liability
insurance.
"Business" shall mean the business currently conducted by NNGC.
"Business Day" shall mean a day other than a Saturday, Sunday or other day
on which banks located in New York City are authorized or required by law to
close.
"Buyer" shall have the meaning set forth in the preamble to this Agreement.
"Buyer Indemnified Parties" shall have the meaning set forth in Section
8.2(a).
"Buyer Savings Plan" shall have the meaning set forth in Section 5.5(g).
"Buyer's Review Period" shall have the meaning set forth in Section 2.5(b).
"Cap" shall have the meaning set forth in Section 8.2(c).
"Closing" shall mean the closing of the transactions contemplated by this
Agreement.
"Closing Date" shall have the meaning set forth in Section 2.3.
"Closing Date Balance Sheet" shall have the meaning set forth in Section
2.5(a).
"Closing Date Working Capital" shall mean the Working Capital as of the
Closing Date.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Common Stock" shall have the meaning set forth in the recitals to this
Agreement.
"Confidentiality Agreement" shall mean the Confidentiality Agreement
between Dynegy Holdings Inc. and Buyer, dated as of July 2, 2002.
"Continuing Employee" shall have the meaning set forth in Section 5.5(b).
"CPA Firm" shall have the meaning set forth in Section 2.5(b).
"Credit Agreement" shall mean the Credit Agreement dated as of November 19,
2001 among NNGC, the banks named therein, Citicorp North America, Inc. as Paying
Agent, JPMorgan Chase Bank as Collateral Trustee and Issuing Bank and Citicorp
North America, Inc. and JPMorgan Chase Bank as Co-Administrative Agents, as
amended, restated, modified or supplemented from time to time.
"Current Balance Sheet" shall mean the balance sheet of NNGC as of June 30,
2002 included in the Financial Statements.
"Data Room" means the presentation materials in Omaha, Nebraska prepared by
Sellers to assist Buyer in its investigation of NNGC.
"Deductible" shall have the meaning set forth in Section 8.2(c).
"Disclosure Letter" shall mean a letter of even date herewith delivered by
Sellers to Buyer prior to the execution of this Agreement setting forth, among
other things, items of disclosure relating to any or all of the representations
and warranties of Sellers; provided, that (i) no item is required to be set
forth in the Disclosure Letter as an exception to a representation or warranty
if its absence would not result in the related representation or warranty being
deemed untrue or incorrect and (ii) the inclusion of an item in the Disclosure
Letter shall not be deemed an admission by Sellers that such item represents a
material exception or fact, event or circumstance or that such item would result
in a Material Adverse Effect.
"Dynegy" shall have the meaning set forth in the preamble to this
Agreement.
"Encumbrances" shall mean any and all mortgages, security interests, liens,
adverse claims, pledges, restrictions, leases, charges, proxies and voting or
other agreements, or other legal or equitable encumbrances, limitations or
restrictions of any nature whatsoever.
"Environmental Law" means any and all Applicable Laws pertaining to the
protection of environmental quality, regulation of any Hazardous Substance,
pollutant or contaminant, or the remediation of contamination or damage to the
environment or natural resources resulting from a
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release of any Hazardous Substance, pollutant or contaminant into the
environment.
"Equity Securities" shall mean, with respect to a specified Person, any
shares of capital stock of, or other equity interests in, or any securities that
are convertible into or exchangeable for any shares of capital stock of, or
other equity interests in, or any options, warrants or rights of any kind to
acquire any shares of capital stock of, or other equity interests in, such
Person.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended, and the rules and regulations promulgated thereunder.
"Escrow Agreement" shall have the meaning set forth in Section 2.2.
"Estimated Working Capital Amount" shall mean the amount set forth on the
statement (the "EWCA Statement") attached as Exhibit A.
"EWCA Statement" shall have the meaning set forth in Section 1.1.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
together with the rules and regulations promulgated thereunder.
"Fee Property" shall have the meaning set forth in Section 3.15(a).
"FERC" shall mean the United States Federal Energy Regulatory Commission,
or its predecessor agency, the United States Federal Power Commission.
"Final Working Capital Amount" shall have the meaning set forth in Section
2.5(c).
"Financial Statements" shall mean the audited financial statements of NNGC
for the year ended December 31, 2001 and the unaudited financial statements of
NNGC for the five month period ended June 30, 2002 in each case included in
Section 3.7 of the Disclosure Letter.
"GAAP" shall mean accounting principles generally accepted in the United
States of America as in effect from time to time.
"Governmental Authority" shall mean any foreign, federal, tribal, state or
local governmental agency or regulatory body or commission or authority
(including any court or arbitrator).
"Hazardous Substance" means any substance, whether solid, liquid, gaseous
or any combination of the foregoing which is listed, defined or regulated
pursuant to any Environmental Law.
"HSR Act" shall have the meaning set forth in Section 3.4.
"Intellectual Property" means the following intellectual property rights,
both statutory and common law rights, if applicable: (a) any patent granted by
the United States Patent and Trademark Office, as well as any reissued and
reexamined patents and extensions corresponding thereto, and any patent
applications filed with the United States Patent and Trademark Office, as well
as any related continuation, continuation in part, renewals, extensions and
divisional applications and patents issuing therefrom; (b) copyrights and
registrations for the foregoing; (c) trademarks, service marks, trade names,
slogans, domain names, logos, and trade dress, and other indications of origin
and registrations and applications for registrations thereof and all goodwill
associated therewith; and (d) trade secrets and confidential information,
including but not limited to, ideas, designs, concepts, inventions,
improvements, compilations of information, methods, techniques, procedures,
processes and other know-how, whether or not patentable.
"IP Contracts" shall have the meaning set forth in Section 3.12(b).
"IRS" shall mean the United States Internal Revenue Service.
"Knowledge" and "known" shall mean, with respect to Buyer the knowledge of
any officer, director or general manager of Buyer, or with respect to Sellers,
the knowledge of any officer, director or general manager of either of Sellers
or NNGC.
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"Legal Proceedings" shall mean any judicial, administrative or arbitral
actions, suits, proceedings (public or private), investigations or governmental
proceedings before any Governmental Authority.
"Loss" shall have the meaning set forth in Section 8.2(a).
"Major Firm Contracts" shall have the meaning set forth in Section 3.21.
"Major Shipper" shall have the meaning set forth in section 3.21.
"Material Adverse Effect" shall mean (a) any change or effect that is
materially adverse to the business, financial condition, properties, operations,
net income or assets of NNGC; or (b) any effect that would prevent or materially
impair or delay the ability of the Sellers to perform their obligations under
this Agreement or to consummate the transactions contemplated by this Agreement;
provided, however, that Material Adverse Effect shall exclude any change or
effect due to (i) changes in the international, national, regional or local
wholesale or retail markets for natural gas, (ii) rules, regulations or
decisions of the FERC affecting the interstate natural gas transmission industry
as a whole, except for such effects which disproportionately impact NNGC, (iii)
changes in general economic, regulatory or political conditions, commodity
prices for oil or natural gas or securities markets in the United States or
worldwide or any outbreak of hostility, terrorist activities or war, (iv)
changes that affect generally the industry in which NNGC operates, except for
such effects which disproportionately impact NNGC, (v) any matter to the extent
described as such in the Disclosure Letter, and (vi) the announcement or
pendency of the transactions contemplated by this Agreement, or the consummation
of the transactions contemplated hereby.
"Material Contract" shall have the meaning set forth in Section 3.13(a).
"NGA" shall have the meaning set forth in Section 3.19.
"NNGC" shall have the meaning set forth in the recitals to this Agreement.
"NNGC Holding" shall have the meaning set forth in the preamble to this
Agreement.
"NNGC Insurance Policies" shall have the meaning set forth in Section
3.18(a).
"NNGC Plan" shall mean each of the NNGC VEBA and the NNGC Retiree Program.
"NNGC Retiree Program" shall mean (i) the NNGC Medical and Dental Plan for
Retirees and Surviving Spouses and (ii) the portion of the Dynegy Inc. Group
Life and Long Term Disability Plan that provides retiree life insurance benefits
to retirees of NNGC.
"NNGC VEBA" shall mean the trust established under the Northern Natural Gas
Employee Benefit Trust Agreement.
"Objection" shall have the meaning set forth in Section 2.5(b).
"Permitted Encumbrances" shall have the meaning set forth in Section
3.15(a).
"Person" or "person" shall mean and includes any individual, partnership,
joint venture, corporation, business trust, association, joint stock company,
trust, unincorporated organization, limited liability company or form of
business or professional entity.
"Pipeline" shall mean the natural gas pipelines, lateral lines, rights of
way, easements, compressors, compressor stations and other related machinery and
equipment owned or leased by NNGC and used by NNGC in the conduct of its
business.
"Pre-Closing Tax Period" shall mean any taxable period ending on or before
the Closing Date and, with respect to any taxable period which includes but does
not end on the Closing Date, the portion of such taxable period through and
including the Closing Date.
"Pre-Closing Taxes" shall mean (a) any Taxes of NNGC attributable to a
Pre-Closing Tax Period; (b) any liability of NNGC for Taxes of any entity
affiliated with NNGC on or before
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the Closing Date pursuant to Treas. Reg. (S)(S) 1.1502-6 of the Code or any
comparable provision or state or local law; and (c) any liability for Taxes of a
third party for which NNGC may be liable.
"Proceeding" shall have the meaning set forth in Section 5.11(g).
"Property Restrictions" shall have the meaning set forth in Section
3.15(a).
"Protected Information" shall have the meaning set forth in Section 5.13.
"Real Property" shall have the meaning set forth in Section 3.15(a).
"Retained E-mail" shall mean all electronic mail and other computer based
communications stored on any electronic, digital, or other storage or back up
media and retained in the ordinary course of Sellers' or any of their respective
Affiliates' business or the Business.
"Rights of Way" shall have the meaning set forth in Section 3.15(a).
"Section 338 Forms" shall have the meaning set forth in Section 5.10.
"Section 338(h)(10) Election" shall have the meaning set forth in Section
5.10.
"Securities Act" shall mean the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
"Seller Indemnified Parties" shall have the meaning set forth in Section
8.2(b).
"Sellers" shall have the meaning set forth in the preamble to this
Agreement.
"Sellers Group" means the affiliated group of corporations of which Dynegy
is the common parent corporation.
"Sellers Plan" shall mean each Benefit Plan (other than an NNGC Plan) that
is sponsored, maintained or contributed to as of the Closing Date by a Seller or
by any trade or business, whether or not incorporated, that together with a
Seller would be a "single employer" within the meaning of Section 4001 (b) of
ERISA.
"Sellers Savings Plan" shall have the meaning set forth in Section 5.5(g).
"Series A Preferred Stock" shall have the meaning set forth in the recitals
to this Agreement.
"Shares" shall have the meaning set forth in the recitals to this
Agreement.
"Shares Purchase Price" shall have the meaning set forth in Section 2.2.
"Straddle Period" shall have the meaning set forth in Section 8.3(b).
"Subsidiary" shall mean, with respect to any Person, (i) any corporation,
partnership, limited liability company, joint venture or other legal entity of
which such Person (alone or through or together with any other Subsidiary) owns,
directly or indirectly, 50% or more of the stock or other equity or partnership
interests the holders of which are generally entitled to vote for the election
of the board of directors or similar governing body of such corporation,
partnership, limited liability company, joint venture or other legal entity and
(ii) each partnership in which such Person or another Subsidiary of such Person
is the general partner or otherwise controls such partnership.
"Tax" shall mean 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.
"Tax Cap" shall have the meaning set forth in Section 8.2(c).
"Tax Claim" shall have the meaning set forth in Section 8.3(b).
"Tax Items" shall have the meaning set forth in Section 3.9(a).
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"Tax Return" means any return, declaration, report, claim for refund, or
information return or statement relating to Taxes, including any schedule or
attachment thereto.
"Taxing Authority" means, with respect to any Tax, the governmental entity
or political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or subdivision,
including any governmental or quasi-governmental entity or agency that imposes,
or is charged with collecting, social security or similar charges or premiums.
"Transfer Taxes" shall have the meaning set forth in Section 5.12.
"Valuation" shall have the meaning set forth in Section 5.10(c).
"Welfare Benefits" shall have the meaning set forth in Section 5.5(i).
"Working Capital" shall mean total current assets less total current
liabilities; provided that total current assets shall exclude accounts
receivable from Dynegy or any of its Subsidiaries and/or Affiliates; and
provided further that total current liabilities shall exclude (w) short term
debt due to third parties, (x) preferred stock dividends payable to Dynegy or
any of its Subsidiaries and/or Affiliates, (y) the current portion of any
deferred obligations and (z) federal income Taxes payable by NNGC to Dynegy or
any of its Subsidiaries and/or Affiliates pursuant to any Tax sharing
arrangements with NNGC or otherwise, pursuant to the terms of this Agreement.
"Working Capital Closing Statement" shall have the meaning set forth in
Section 2.5(a).
1.2. Rules of Construction.
As used in this Agreement: (a) The words "hereof," "herein," and
"hereunder" and derivative or similar words shall refer to this entire Agreement
and not to any particular provision of this Agreement; (b) the terms "Article"
or "Section" refer to the specified Article or Section of this Agreement; (c)
the terms defined in the singular shall have a comparable meaning when used in
the plural, and vice versa; (d) the terms "dollars" and "$" shall mean United
States dollars; (e) accounting terms which are specifically defined under GAAP
and are not otherwise defined herein shall have the respective meanings given to
them under GAAP; (f) a Legal Proceeding shall not be "pending" unless and until
Sellers shall have received service of process with respect thereto; and (g) all
references in this Agreement to times of the day shall be to New York, New York
time.
ARTICLE II.
PURCHASE AND SALE
2.1. Purchase and Sale of the Shares.
On the terms and subject to the conditions set forth herein, at the
Closing, Sellers shall sell, transfer and deliver to Buyer, and Buyer shall
purchase from Sellers, 100% of the shares of the Series A Preferred Stock and
100% of the shares of the Common Stock that constitute the Shares free and clear
of all Encumbrances.
2.2. Purchase Price.
The purchase price for the Shares (the "Shares Purchase Price") shall be an
amount equal to $928,000,000, (a) plus the Estimated Working Capital Amount, if
it is a positive number, or minus the Estimated Working Capital Amount, if it is
a negative number, and (b) minus $3,600,000. If the NNGC VEBA has not been
funded with at least $30,522,333 in assets on or before the Closing Date,
$30,522,333 of the Shares Purchase Price shall be deposited in an escrow
account, with a mutually selected escrow agent, pursuant to an escrow agreement
as agreed upon by the parties (the "Escrow Agreement"), which escrow shall be
released in
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accordance with Section 2.5(e) hereof; provided, however, the escrow amount
shall be $25,400,000 if the trustee of the NNGC VEBA has notified the Buyer that
$5,122,333 has been funded prior to the Closing. The Shares Purchase Price shall
be subject to adjustment following the Closing pursuant to Section 2.5.
2.3. Closing.
The Closing shall occur on the first Business Day after the date on which
all of the conditions to the Closing set forth in Article VI hereof have been
satisfied or waived (other than those conditions that by their nature are to be
satisfied at the Closing, but subject to the satisfaction or waiver of such
conditions) occurs, or at such other date as the parties hereto shall agree in
writing (such date is referred to herein as the "Closing Date") at the offices
of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., 2300 First City Tower, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ at 10:00 A.M., local time, or at such other place as the parties
hereto may agree in writing.
2.4. Deliveries at Closing.
(a) At the Closing, Buyer shall deliver to Sellers, (i) an amount of cash
equal to the Shares Purchase Price, in immediately available funds by wire
transfer to the account or accounts designated in writing by Sellers not less
than one Business Day prior to the Closing Date; and (ii) the certificates and
other documents to be delivered pursuant to Section 6.3.
(b) At the Closing, Sellers shall deliver to Buyer, (i) a certificate or
certificates representing the Shares, duly and validly endorsed to or registered
in the name of Buyer or its nominees or accompanied by separate stock powers
duly and validly executed by Dynegy or NNGC Holding, as applicable; and (ii) the
certificates and other documents to be delivered pursuant to Section 6.2.
2.5. Purchase Price Adjustment.
(a) Within 30 days following the Closing Date, Buyer shall, at its expense,
prepare, or cause to be prepared, and shall deliver to Sellers a balance sheet
of NNGC as of the Closing Date (the "Closing Date Balance Sheet") and a
statement of Buyer (the "Working Capital Closing Statement"), which shall set
forth in reasonable detail its calculation of the Closing Date Working Capital.
Buyer and Seller may mutually agree to determine the Closing Date to be an end
of the month date. The Closing Date Balance Sheet and the Working Capital
Closing Statement, respectively, shall be prepared on a basis consistent with
the Current Balance Sheet and the EWCA Statement, respectively, using the same
accounting methods, policies, practices, procedures and adjustments as were used
in the preparation of the Current Balance Sheet and the EWCA Statement,
respectively. The Working Capital Closing Statement shall be prepared based on
the books and records of NNGC as of the Closing Date, and Sellers shall grant
Buyer, NNGC and their representatives reasonable access to all books, records,
employees and facilities of Sellers that are reasonably necessary to enable
Buyer to prepare the Closing Date Balance Sheet and the Working Capital Closing
Statement. Sellers agree to cooperate, and shall not interfere, directly or
indirectly, in the preparation of the Closing Date Balance Sheet and the Working
Capital Closing Statement. Buyer shall give Sellers and their representatives
reasonable access to all work papers, books, records, employees and facilities
of Buyer that are reasonably necessary for purposes of reviewing, verifying and
auditing the Closing Date Balance Sheet and the Working Capital Closing
Statement.
(b) Sellers shall have 20 days after receipt to review the Working Capital
Closing Statement and to inform Buyer in writing of any disagreement (the
"Objection") which they may have with the Working Capital Closing Statement. If
Buyer does not receive the Objection
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within such 20-day period, the Closing Date Working Capital amount set forth in
the Working Capital Closing Statement delivered pursuant to Section 2.5(a) shall
be deemed to have been accepted by Sellers and shall become binding upon Buyer
and Sellers. Sellers' Objection shall set forth all of Sellers' proposed changes
thereto, including an explanation in reasonable detail of the basis on which
Sellers propose such changes. If Sellers do timely deliver the Objection to
Buyer, Buyer shall then have 20 days from the date of receipt (the "Buyer's
Review Period") to review and respond to Sellers' Objection. Sellers and Buyer
agree to attempt in good faith to resolve any disagreements with respect to the
determination of Closing Date Working Capital. If they are unable to resolve all
of their disagreements with respect to the determination of Closing Date Working
Capital within 30 days following the expiration of the Buyer's Review Period,
they may refer, at the option of either party, their differences to KPMG Peat
Marwick LLP, or if KPMG Peat Marwick LLP shall decline to accept such
engagement, an internationally recognized firm of independent public accountants
selected jointly by Sellers and Buyer and who has no material financial
relationship with either, who shall determine only with respect to the
differences so submitted, whether and to what extent, if any, the amount of
Closing Date Working Capital set forth in the Working Capital Closing Statement
requires adjustment. If Sellers and Buyer are unable to so select independent
public accountants within five days of KPMG Peat Marwick LLP declining to accept
such engagement, either Sellers or Buyer may thereafter request that the
American Arbitration Association make such selection (as applicable, KPMG Peat
Marwick LLP, the firm selected by Sellers and Buyer or the firm selected by the
American Arbitration Association is referred to as the "CPA Firm"). Sellers and
Buyer shall direct the CPA Firm (i) that it shall not assign a value to any
particular item greater than the greatest value for such item claimed by Sellers
or Buyer or less than the smallest value for such item claimed by Sellers or
Buyer, in each case as presented to the CPA Firm, and (ii) to use its best
efforts to render its determination within 30 days. The CPA Firm's determination
shall be conclusive and binding upon Sellers and Buyer. The fees and
disbursements of the CPA Firm shall be shared equally by Sellers and Buyer.
Sellers and Buyer shall make readily available to the CPA Firm all relevant
books and records relating to the Working Capital Closing Statement and all
other items reasonably requested by the CPA Firm. Neither Sellers nor Buyer have
retained the KPMG Peat Marwick LLP audit services group during the past two
years, and will not retain the KPMG Peat Marwick LLP audit services group prior
to the completion of the determination of the Final Working Capital Amount
pursuant to this Section 2.5.
(c) If the Closing Date Working Capital determined in accordance with the
procedures set forth in this Section 2.5 (the "Final Working Capital Amount") is
less than the Estimated Working Capital Amount, then Sellers shall, within three
Business Days following the determination of the Final Working Capital Amount,
pay to Buyer an amount in cash equal to such deficiency, and if the Final
Working Capital Amount is greater than the Estimated Working Capital Amount,
then Buyer shall, within such three Business Days following the determination of
the Final Working Capital Amount, pay to Sellers an amount in cash equal to such
difference.
(d) The amount payable by Sellers to Buyer or from Buyer to Sellers, as the
case may be, under Section 2.5(c) shall be paid by wire transfer of immediately
available funds to an account designated by Buyer or Sellers, as the case may
be, not less than one Business Day before such payment.
(e) From time to time after the Closing, that portion of the escrowed
amount shall be released to Sellers as further provided in the Escrow Agreement
to the extent such amount of the
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NNGC VEBA has been funded in accordance with the terms of the Escrow Agreement.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers hereby jointly and severally represent and warrant to Buyers as
follows:
3.1. Organization and Qualification.
Each Seller is a corporation, validly existing and in good standing under
the laws of the jurisdiction of its incorporation. NNGC is a corporation, duly
formed, validly existing and in good standing under the laws of the jurisdiction
of its incorporation. NNGC has the requisite corporate power and authority to
own and operate its assets and properties and to carry on its business as
conducted on the date hereof. NNGC is duly qualified to do business and is in
good standing in each jurisdiction where the ownership or operation of its
assets and properties or the conduct of its business requires such
qualification, except where the failure to be so qualified or in good standing,
as the case may be, would not, individually or in the aggregate, have a Material
Adverse Effect. Section 3.1 of the Disclosure Letter sets forth the
jurisdictions in which NNGC is qualified to do business. Sellers have made
available to Buyer accurate and complete copies of the certificate of
incorporation and bylaws of NNGC, with all amendments thereto to the date
hereof.
3.2. Capitalization of NNGC.
(a) The authorized capital stock of NNGC consists of 10,000 shares of
Common Stock, and 1,000 shares of Series A Preferred Stock. NNGC Holding owns
beneficially and of record all of the outstanding Common Stock of NNGC and has
valid and marketable title to the Shares free and clear of all Encumbrances
other than (i) the restrictions imposed pursuant to that certain Stock Pledge
Agreement between NNGC Holding and Citicorp North America, Inc. dated as of
November 19, 2001, (ii) the restrictions imposed pursuant to that certain Voting
Trust Agreement among NNGC Holding, NNGC and Wilmington Trust Company, dated as
of November 19, 2001 and (iii) restrictions on transfer that may be imposed by
federal or state securities laws. The Series A Preferred Stock constitutes the
only preferred stock of NNGC issued and outstanding. Dynegy owns beneficially
and of record all of the Series A Preferred Stock free and clear of any
Encumbrance other than restrictions on transfer that may be imposed by federal
or state securities laws. All of the outstanding capital stock of NNGC has been
duly authorized, validly issued, is fully paid and nonassessable and is not
subject to, or been issued in violation of, any preemptive rights. Except for
(i) the restrictions imposed pursuant to that certain Stock Pledge Agreement
between NNGC Holding and Citicorp North America, Inc. dated as of November 19,
2001 and (ii) the restrictions imposed pursuant to that certain Voting Trust
Agreement among NNGC Holding, NNGC and Wilmington Trust Company, dated as of
November 19, 2001, there are no voting trusts or other agreements or
understandings to which any of the Sellers or NNGC is a party with respect to
the voting of the Shares. There is no indebtedness of NNGC having general voting
rights issued and outstanding. Except for this Agreement, there are no
outstanding securities, options or warrants, agreements or commitments
of any character relating to the Equity Securities of NNGC or obligating NNGC or
any other Person to grant, issue, deliver or sell, repurchase, redeem or
otherwise acquire or cause to be granted, issued, delivered, repurchased,
redeemed or otherwise be acquired or sold, any Equity Securities of NNGC.
(b) NNGC does not own, directly or indirectly, any Equity Securities of any
Person. There are no voting trusts, proxies or other agreements, commitments or
understandings of any
13
character to which Sellers or any of their respective Subsidiaries are a party
or by which Sellers or any of their respective Subsidiaries are bound with
respect to the voting of any Equity Securities of NNGC except for the agreements
described in clauses (i) and (ii) of Section 3.2(a).
3.3. Corporate Authorization.
Each Seller has the requisite corporate power and authority to execute,
deliver and to perform its obligations under this Agreement and to consummate
the transactions contemplated by this Agreement. The execution, delivery and
performance by each Seller of this Agreement and the consummation by each Seller
of the transactions contemplated by this Agreement has been duly authorized by
all necessary corporate and stockholder action on the part of each Seller.
3.4. Consents and Approvals.
No material consent, approval, order or authorization of, or registration,
declaration or filing with, or notification to, any Governmental Authority, or
any other Person, is required to be made or obtained by NNGC or either Seller in
connection with the execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated by this Agreement, except (i)
as set forth in Section 3.4 of the Disclosure Letter, (ii) for the filing of a
premerger notification and report form under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust
Improvements Act of 1976, as amended ("HSR Act"), and (iii) as may be necessary
as a result of any facts or circumstances relating solely to Buyer.
3.5. Non-Contravention.
Assuming that the consents, approvals, authorizations, registrations,
declarations, filings and notifications described in Section 3.4 have been
obtained or made, the execution, delivery and performance of this Agreement by
each Seller, and the consummation of the transactions contemplated hereby, do
not and will not (i) violate any provision of the certificate of incorporation
or bylaws of NNGC or either Seller, (ii) result in the material breach of, or
constitute a material default under, or give to others any rights of
termination, cancellation or acceleration of any right or obligation material to
NNGC or either Seller (in each case whether after the filing of notice or the
lapse of time or both) under, or result in the creation of any Encumbrance on
any assets or properties of NNGC pursuant to, any material agreement, lease,
contract, note, mortgage, indenture, or obligation of any kind to which NNGC is
a party or bound or to which the Shares are subject, or (iii) materially
violate, or result in a material breach of any material Applicable Law or
judgment, order, writ, injunction or decree of any Governmental Authority to
which any Seller, NNGC, the Shares or any of the property or assets of NNGC is
subject, other than the agreements referenced in clauses (i) and (ii) of Section
3.2(a) and the Credit Agreement.
3.6. Binding Effect.
This Agreement has been duly executed and delivered by each Seller and,
assuming this Agreement has been duly authorized, executed and delivered by
Buyer, constitutes a valid and legally binding obligation of each Seller,
enforceable against each Seller in accordance with its terms, except as
enforcement may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws of general applicability relating to or affecting
creditors' rights and to general equity principles.
3.7. Financial Statements; Undisclosed Liabilities; Absence of Changes.
(a) 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
stockholders' equity included in the Financial Statements
14
(including any related notes and schedules) fairly presents in all material
respects the results of operations, cash flows or stockholders' equity, as the
case may be, of NNGC for the periods set forth therein (except in the case of
unaudited statements, the omission of a statement of stockholders' equity and
footnotes), in each case in accordance with GAAP consistently applied during the
periods involved, except as required by changes in GAAP or as may be noted
therein, and have been prepared based upon the books of accounts and records of
NNGC.
(b) Except as and to the extent set forth on the Current Balance Sheet,
including all notes thereto, NNGC does not have any material 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 GAAP
consistently applied, other than (i) liabilities and obligations that have
arisen since the date of the Current Balance Sheet in the ordinary course of
business, (ii) liabilities and obligations arising since the Current Balance
Sheet under executory contracts entered into in the ordinary course of business,
including liabilities relating to material hedging arrangements, forward sales
contracts and derivative arrangements of NNGC, each of which material
arrangement or contract is set forth in Section 3.13(a)(x) of the Disclosure
Letter, (iii) liabilities and obligations set forth in Section 3.7 of the
Disclosure Letter.
(c) Except as set forth in Section 3.7 of the Disclosure Letter, since
February 1, 2002 and until the date hereof and to the Sellers' Knowledge from
December 31, 2001 until February 1, 2002, NNGC has conducted its businesses only
in the ordinary course of business, consistent with past practice, and has not,
during such period, taken any of the actions described in Section 5.1(b), except
in connection with entering into this Agreement. Except as set forth in Section
3.7 of the Disclosure Letter, since December 31, 2001 and until the date hereof
there has not been:
(i) Destruction of, damage to, or loss of, any material asset of NNGC
(whether or not covered by insurance); or
(ii) Any event or condition that has had, or would be reasonably expected
to have, a Material Adverse Effect.
3.8. Legal Proceedings.
Except as set forth in Section 3.8 of the Disclosure Letter, as of the
date hereof, there are no Legal Proceedings pending or, to the Sellers'
Knowledge, threatened against or involving NNGC or either Seller that,
individually or in the aggregate, are reasonably likely to (i) have a Material
Adverse Effect or (ii) prevent or materially impair or delay the ability of
either Seller to perform its obligations under this Agreement or to consummate
the transactions contemplated by this Agreement. NNGC is not subject to any
judgment, order, writ, injunction or decree of any Governmental Authority which
has had or is reasonably likely to have, individually or in the aggregate, a
Material Adverse Effect. Notwithstanding the foregoing, Sellers make no
representation or warranty in this Section 3.8 as to any state or federal
rulemaking or similar proceeding of general applicability.
3.9. Taxes.
(a) Except as set forth in Section 3.9(a) of the Disclosure Letter, (i) all
Tax Returns which were required to be filed by or with respect to NNGC have been
duly and timely filed, (ii) all items of income, gain, loss, deduction and
credit or other items ("Tax Items") required to be included in each such Tax
Return have been so included and all such Tax Items and any other information
provided in each such Tax Return is true, correct and complete in all material
respects, (iii) all Taxes shown on each such Tax Return have been timely paid in
full, (iv) no
15
penalty, interest or other charge is or will become due with respect to the late
filing of any such Tax Return or late payment of any such Tax, (v) any liability
of or with respect to NNGC for Taxes not yet due and payable, or which are being
contested in good faith in appropriate proceedings, has been provided for on
NNGC's financial statements in accordance with GAAP, (vi) there is no Legal
Proceeding now pending against, or with respect to, NNGC in respect of any
material Tax or material Tax assessment, nor is any material claim for
additional material Tax or material assessment asserted by any Tax Authority
pending, (vii) since January 1, 1998, no written claim has been made by any Tax
Authority in a jurisdiction where NNGC (or the Sellers with respect to NNGC)
does not currently file a Tax Return that it is or may be subject to Tax by such
jurisdiction, nor to the Sellers' Knowledge is any such assertion threatened in
writing, (viii) Sellers are not "foreign persons" within the meaning of Section
1445 of the Code, (ix) all Tax withholding and deposit requirements imposed on
or with respect to NNGC have been satisfied in full in all respects, and (x)
there are no mortgages, pledges, liens, encumbrances, charges or other security
interests on any of the assets of NNGC that arose in connection with any failure
(or alleged failure) to pay any Tax.
(b) (i) NNGC (or the Sellers with respect to NNGC) has no agreement in
force for and no outstanding request for any extension of time within which to
pay its Taxes or file its Tax Returns; and (ii) NNGC (or the Sellers with
respect to NNGC) is not a party to any agreement, whether written or unwritten,
providing for the payment of Taxes, payment of Tax losses, entitlements to
refunds or similar Tax matters.
(c) NNGC (or Sellers on behalf of NNGC) is not a party to any Tax
allocation or sharing agreement that will survive the Closing.
3.10. Employee Benefits.
(a) Section 3.10(a) of the Disclosure Letter sets forth a list, as of
the date hereof, of (i) the NNGC Plans and (ii) all Sellers Plans sponsored,
maintained or contributed to by NNGC. On or before the date hereof, Sellers have
made available to Buyer copies of each of the following, to the extent
applicable, with respect to each NNGC Plan: the most recent annual report (Form
5500) filed with the Pension and Welfare Benefits Administration, the plan
document, the trust agreement, if any, the most recent summary plan description,
the most recent actuarial report or valuation that is required to be prepared
under Applicable Laws, and the most recent determination letter, if any, issued
by the IRS.
(b) NNGC does not contribute to, and has no obligation to contribute to, a
multiemployer plan (within the meaning of Section 3(37) of ERISA) or a Benefit
Plan (other than a Sellers Plan) subject to Title IV of ERISA, Section 302 of
ERISA or Section 412 of the Code. The transactions contemplated by this
Agreement will not subject Buyer to any liability under Title IV of ERISA with
respect to any NNGC Plan or Sellers Plan.
(c) With respect to any "employee benefit plan," within the meaning of
Section 3(3) of ERISA, that is a Sellers Plan (i) no withdrawal liability,
within the meaning of Section 4201 of ERISA, has been incurred, which withdrawal
liability has not been satisfied, (ii) no liability to the Pension Benefit
Guaranty Corporation has been incurred by Sellers or by any trade or business,
whether or not incorporated, that together with a Seller would be a "single
employer" within the meaning of Section 4001(b) of ERISA, which liability has
not been satisfied, nor does any condition exist which could reasonably be
expected to result in any such liability, (iii) no accumulated funding
deficiency, whether or not waived, within the meaning of Section 302 of ERISA or
Section 412 of the Code has been incurred, and (iv) all contributions (including
16
installments) to such plan required by Section 302 of ERISA and Section 412 of
the Code have been timely made.
(d) Except as otherwise set forth in Section 3.10(d) of the Disclosure
Letter:
(i) With respect to each NNGC Plan, NNGC has substantially performed
all material obligations, whether arising by operation of
Applicable Law or by contract, required to be performed by it,
and no event has occurred and, to the Sellers' Knowledge, there
exists no condition or set of circumstances in connection with
which NNGC could be subject to any material liability for failure
to operate and administer such NNGC Plan in accordance with its
terms or any Applicable Law;
(ii) Each NNGC Plan intended to be qualified under Section 401 of the
Code (A) materially satisfies in form the requirements of such
Section except to the extent amendments are not required by
Applicable Law to be made until a date after the Closing Date,
(B) has received a favorable determination letter from the IRS
regarding such qualified status, and (C) has not been operated in
a way that would adversely affect its qualified status;
(iii) There are no material actions, suits, or claims pending (other
than routine claims for benefits) with respect to any NNGC Plan
or its assets, and, to the Sellers' Knowledge, there is no matter
pending (other than routine qualification determination filings)
with respect to any NNGC Plan before any Governmental Authority;
and
(iv) All contributions required to be made to NNGC Plans pursuant to
their terms and the provisions of ERISA, the Code, or any other
Applicable Law have been timely made.
(d) In connection with the consummation of the transactions contemplated by
this Agreement, no payments of money or other property, acceleration of
benefits, or provision of other rights have been or will be made to any current
or former employee or director of NNGC, under any agreement, or under any NNGC
Plan or Sellers Plan that would be nondeductible under Section 280G of the Code,
whether or not some other subsequent action or event would be required to cause
such payment, acceleration, or provision to be triggered.
3.11. Compliance with Laws; Permits.
Except as relates to Tax matters (which are provided for solely in Section
3.9) and Environmental Matters (which are provided for solely in Section 3.16),
(i) NNGC is in material compliance with all Applicable Laws, (ii) NNGC has all
material permits, licenses, certificates of authority, consents, orders and
approvals of, and has made all material filings, applications and registrations
with, Governmental Authorities that are required in order for NNGC to own and
operate its assets and properties and to carry on its business as conducted on
the date hereof, and such permits, licenses, certificates of authority, orders
and approvals are in full force and effect and NNGC is in material compliance
therewith, (iii) to the Sellers' Knowledge, no event has occurred and is
continuing which permits, or after notice or lapse of time or both would permit,
any modification or termination of any such permit, license, certificate of
authority, consent, order or approval, and (iv) none of Sellers nor NNGC has
received any notice, and no claim or action is pending, or to the Sellers'
Knowledge, threatened against NNGC alleging any material violation of the
matters set forth in clauses (i) and (ii).
3.12. Intellectual Property.
(a) Section 3.12 (a) of the Disclosure Letter sets forth a list of all
issued patents and patent applications, copyright and trademark registrations
and applications and material unregistered trademarks and copyrights owned by
NNGC and currently used in the Business.
(b) The material agreements licensing Intellectual Property to NNGC (the
"IP
17
Contracts") are valid, binding and enforceable by NNGC in accordance with
their respective terms (except where enforceability may be limited by
bankruptcy, insolvency, or other laws affecting creditors' rights generally and
except where enforceability is subject to the application of equitable
principles or remedies). NNGC is not in material breach or violation of, or
material default under, any of the IP Contracts.
(c) Subject to the items listed in Section 3.12(c) of the Disclosure
Letter, NNGC owns, or has the license or right to use, without annual payments
to any other person in excess of $100,000 (other than pursuant to contracts set
forth in Section 3.12(c) of the Disclosure Letter), all material Intellectual
Property currently used to conduct the Business as presently conducted, and to
the Sellers' Knowledge the consummation of the transactions contemplated hereby
will not conflict with, alter or impair any such rights. All Intellectual
Property owned by NNGC is owned free and clear of all Encumbrances, except for
Permitted Encumbrances.
(d) As of the date hereof, to Sellers' knowledge, the Intellectual Property
owned by NNGC does not infringe any patent of any third party. To Sellers'
knowledge, the Intellectual Property owned by NNGC does not infringe any
copyright, registered trademark or trade secret of any third party. No third
party has asserted against NNGC a claim in writing, and there is no suit, action
or proceeding pending or, to the Knowledge of NNGC and Sellers, threatened,
alleging that NNGC is infringing the Intellectual Property of any third party or
challenging NNGC's ownership or use of, or the validity or enforceability of,
any Intellectual Property owned or used by NNGC. To the knowledge of NNGC and
Sellers, no third party is infringing the Intellectual Property owned or
exclusively licensed by NNGC, except for any such infringement which could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. NNGC takes reasonable measures to protect the confidentiality of
its material trade secrets. To the knowledge of NNGC and Sellers, no employee,
independent contractor or agent of NNGC has misappropriated any material trade
secrets or other material confidential information of any third party in the
course of the performance of his or her duties as an employee, independent
contractor or agent of NNGC.
3.13. Contracts.
(a) Setion 3.13(a) of the Disclosure Letter sets forth a list, as of the
date hereof, of each of the following contracts or agreements or arrangements to
which NNGC is a party, or by which NNGC or any of its properties are bound (each
contract or agreement or arrangement set forth in Section 3.13(a) of the
Disclosure Letter being referred to herein as a "Material Contract"; provided
that no NNGC Plan or Sellers Plan shall be a Material Contract):
(i) any commitment, agreement, note, loan, evidence of indebtedness,
letter of credit or guarantee of the indebtedness for borrowed
money of others that Sellers reasonably anticipate will, in
accordance with its terms, involve aggregate payments by NNGC of
more than $200,000 within the remaining term of such agreement;
(ii) any lease under which NNGC is the lessor or lessee of real or
personal property, which lease (A) cannot be terminated by NNGC
without penalty upon not more than 180 calendar days' notice and
(B) involves an annual base rental in excess of $1,000,000;
(iii) any contracts or agreements containing covenants limiting the
freedom of NNGC to engage in any line of business or geographic
area or compete with any Person;
(iv) any employment agreements;
(v) any pending sale of real or personal property of NNGC (other than
sales of natural gas, natural gas liquids, or other terms of
inventory in the ordinary course of business) in
18
excess of $100,000;
(vi) any gas purchase contracts, gas sales contracts, gas processing
agreements, gas storage agreements, transportation agreements,
natural gas liquids sales contracts, and gathering agreements
(1) providing for receipt or payment by NNGC of more than
$3,000,000 annually or (2) which may not be terminated without
payment or penalty with notice of one (1) year or less;
(vii) any purchase order or contract requiring a capital expenditure
or a commitment for a capital expenditure not included in the
capital forecast previously provided to Buyer in the Summary
Information Memorandum dated July 2002 and in excess of
$100,000;
(viii) any obligation to make future payments, contingent or
otherwise, in excess of $100,000 arising out of or relating to
the acquisition or disposition of any business, assets, or
stock of other companies by NNGC;
(ix) any purchase order not in the ordinary course of business and
greater than $250,000;
(x) any hedging arrangements, forward sales contracts and
derivative arrangements in excess of a notional amount of
$500,000 and a term of over one year; or
(xi) any NNGC regulatory rate settlement agreement approved by the
FERC since the NNGC's 1998 Rate Case Settlement Agreement
approved by the FERC on June 18, 1999.
(b) Section 3.13(b) of the Disclosure Letter sets forth a list, as of the
date hereof, of each contract or agreement that NNGC has with an Affiliate (an
"Affiliate Contract").
(c) To the Sellers' Knowledge, NNGC is not in breach or violation of, or
default under, any of the Material Contracts. Each Material Contract is a valid
agreement, arrangement or commitment of NNGC, enforceable against NNGC in
accordance with its terms and, to the Sellers' Knowledge, is a valid agreement,
arrangement or commitment of each other party thereto, enforceable against such
party in accordance with its terms, except in each case where enforceability may
be limited by bankruptcy, insolvency or other laws affecting creditors' rights
generally and except where enforceability is subject to the application of
equitable principles or remedies. True and complete copies of the Material
Contracts and Affiliate Contracts have heretofore been made available to Buyer.
3.14. Brokers.
Except for ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., whose fees will be paid by Dynegy, there is
no investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of Sellers or NNGC or any of their
affiliates or Subsidiaries who is entitled to any fee or commission from Sellers
or NNGC in connection with the transactions contemplated by this Agreement.
3.15. Real and Personal Property; Sufficiency of Assets of NNGC.
(a) (i) Except as set forth in Section 3.15(a) of the Disclosure Letter,
NNGC owns marketable fee title to, or holds a valid leasehold interest in, or
right-of-way easement (collectively, the "Rights of Way") through, all real
property ("Real Property") used or necessary for the conduct of NNGC's business
as it is presently conducted and as NNGC's business is proposed to be conducted
as of the date hereof, including, without limitation, all real property required
for the construction, operation and maintenance of the Pipeline, and has good
and valid title to all of the material tangible assets and properties which it
owns and which are reflected on the Financial Statements (except for assets and
properties sold, consumed or otherwise disposed of in the ordinary course of
business since the date of the Financial Statements), and (ii) all such
19
Real Property, assets and properties (other than Rights of Way) are owned
or leased free and clear of all Encumbrances, except in the case of Real
Property, assets and properties other than Rights of Way for (A) Encumbrances
set forth in Section 3.15(a) of the Disclosure Letter, (B) liens for current
Taxes not yet due and payable or for Taxes the validity of which is being
contested in good faith, (C) Encumbrances to secure indebtedness reflected on
the Financial Statements, (D) Encumbrances which will be discharged on or prior
to the Closing Date, (E) rights of way, easements, written agreements, laws,
ordinances and regulations affecting building use and occupancy or reservations
of interest in title (collectively, "Property Restrictions") imposed or
promulgated by law or any Governmental Authority with respect to Real Property,
including zoning regulations, provided they do not materially adversely affect
the current use of the applicable Real Property, (F) mechanics', carriers',
workmen's and repairmen's liens and other Encumbrances, Property Restrictions
and other limitations of any kind, if any, which do not materially detract from
the value of or materially interfere with the present use or the use proposed of
any Real Property subject thereto or affected thereby and which have arisen or
been incurred in the ordinary course of business and (G) Encumbrances that do
not materially detract from the value or materially interfere with the present
use of the asset subject thereto or the proposed use of the asset (clauses (A)
through (G) above referred to collectively as "Permitted Encumbrances"). Section
3.15(a) of the Disclosure Letter sets forth a list of all Real Property which
NNGC owns in fee (such Real Property, "Fee Property"). Except as set forth in
Section 3.15(a) of the Disclosure Letter, to NNGC's and Sellers' Knowledge,
NNGC's interests in (1) the Fee Property are exclusive, indefeasible and
perpetual and (2) all Rights of Way are perpetual.
(b) There are no material structural defects relating to any of the
improvements to the Real Property and all tangible assets and property owned or
used by NNGC are in good operating condition, ordinary wear and tear excepted.
To the Sellers' Knowledge, all improvements to the Real Property owned or used
by NNGC do not encroach in any respect on property of others (other than
encroachments that would not materially impair the operations of NNGC).
(c) The assets owned or leased by NNGC or used under the Transition
Services Agreement dated January 31, 2002 constitute all of the assets,
properties and rights used by the Sellers, the Sellers' affiliates and NNGC to
conduct the business of NNGC and the operation of its Pipeline as currently
conducted.
(d) There is no pending or, to the Sellers' Knowledge, threatened
condemnation of any part of the Real Property by any Governmental Authority
which would materially adversely affect NNGC's current use of the applicable
Real Property.
3.16. Environmental Matters.
Except as set forth in Section 3.16 of the Disclosure Letter, (a) the
properties and operations of NNGC are in material compliance with all applicable
Environmental Laws; (b) NNGC is not subject to any existing, pending or, to the
Sellers' Knowledge, threatened Legal Proceeding by or before any Governmental
Authority under any Environmental Law; (c) all material permits, licenses and
similar authorizations required to be obtained or filed by NNGC under any
Environmental Law for the conduct of NNGC's business have been obtained or
filed, are valid and currently in full force and effect, and are freely
transferable to Buyer should such permit transfer be necessary; (d) there has
been no release of any Hazardous Substance, pollutant or contaminant into the
environment by NNGC or in connection with NNGC's properties or operations that
could reasonably be expected to give rise to material fines, penalties or
remedial
20
obligations under Environmental Laws; (e) there has been no material
exposure of any Person or property to any Hazardous Substance, pollutant or
contaminant in connection with the properties or operations of NNGC that could
reasonably be expected to form the basis of a claim for damages or compensation;
and (f) the Sellers have no Knowledge that the NNGC properties are adversely
affected by any release, threatened release, or disposal of a Hazardous
Substance originating or emanating from any other property and for which NNGC
has liability.
3.17. Labor Relations.
(a) (i) NNGC is not a party to, or bound by, any labor or collective
bargaining agreements; (ii) NNGC is not the subject of any representation or
certification proceedings, or petitions seeking a representation proceeding,
and, to the Sellers' Knowledge, no such proceeding is threatened in writing to
be brought or filed with the National Labor Relations Board or any other labor
relations tribunal or authority with respect to NNGC; and (iii) to the Sellers'
Knowledge, there are no organizing activities involving NNGC with respect to any
group of employees of NNGC.
(b) Except as set forth in Section 3.17(b) of the Disclosure Letter, (i)
there are no material strikes, work stoppages, slowdowns, or lockouts, pending
or, to the Sellers' Knowledge, threatened in writing against or involving NNGC;
and (ii) there are no material unfair labor practice charges, complaints,
grievances, arbitrations, or other labor disputes filed or, to the Sellers'
Knowledge, threatened in writing by or on behalf of any employee or group of
employees of NNGC.
3.18. Insurance.
(a) Set forth in Section 3.18(a) of the Disclosure Letter is a list of all
material policies of insurance (other than policies of insurance relating to the
NNGC Plans) which Sellers, their Subsidiaries or NNGC maintains for NNGC with
respect to its assets or operations (the "NNGC Insurance Policies") including
summary coverage terms and expiration dates. All premiums due and payable with
respect to such policies have been paid and no notice of collection of or
written indication of an intention not to renew has been received by Sellers or
NNGC.
(b) Except as set forth in Section 3.18(b) of the Disclosure Letter, all
such NNGC Insurance Policies are in full force and effect and coverage of NNGC
under the NNGC Insurance Policies will terminate upon the Closing Date. NNGC is
not in default under any provisions of the NNGC Insurance Policies, and there is
no claim by NNGC or any other person pending under any of the NNGC Insurance
Policies as to which coverage has been questioned, denied or disputed by the
underwriters or issuers of such NNGC Insurance Policies. NNGC has not
received written notice from an insurance carrier issuing any NNGC Insurance
Policies that alteration of any equipment or any improvements located on Real
Property, purchase of additional equipment, or modification of any of the
methods of doing business of NNGC, will be required or suggested after the date
hereof. The NNGC Insurance Policies maintained are adequate in accordance with
industry standards and the requirements of any Material Contracts and are in at
least the minimum amounts required by Applicable Law, rule, or regulation of any
Governmental Authority, including, without limitation, Environmental Laws.
3.19. Regulatory Matters.
NNGC is a "Natural Gas Company" as that term is defined in Section 2 of the
Natural Gas Act ("NGA"). NNGC is not a "public utility company," "holding
company" or "subsidiary" or "affiliate" of a "registered holding company" as
such terms are defined in the Public Utility Holding Company Act of 1935 (the
"1935 Act"). NNGC is in material compliance with all
21
provisions of the NGA and all rules and regulations promulgated by the FERC
pursuant thereto. NNGC is in material compliance with all orders issued by FERC
that pertain to all terms and conditions and rates charged for services. No
approval of (i) the Securities and Exchange Commission under the 1935 Act or
(ii) FERC under the NGA or the Federal Power Act is required in connection with
the execution of this Agreement by the Sellers or the transaction contemplated
hereby with respect to the Sellers.
3.20. Books and Records of NNGC.
The stock transfer records of NNGC are, and the NNGC minute books for
periods after February 1, 2002 and, to the Sellers' Knowledge, for periods prior
thereto, are complete and correct in all material respects.
3.21. Existing Firm Transportation Customers.
Section 3.21 of the Disclosure Letter sets forth a complete and correct
list of the firm and interruptible transportation and storage contracts of the
Pipeline which resulted in over $3,000,000 in demand and commodity revenue for
the twelve (12) months ended December 31, 2001 ("Major Firm Contracts").
As of the date of this Agreement, except as set forth in Section 3.21 of
the Disclosure Letter,
(i) NNGC is not engaged in any material dispute with any of the
shippers under the Major Firm Contracts ("Major Shipper"),
(ii) There has been no material adverse change in the Major Firm
Contracts since January 1, 2002, and
(iii) No Major Shipper has notified NNGC, in writing in accordance
with the notice provisions of their agreements of any adverse
modification or change in the Major Firm Contracts.
(iv) Since January 1, 2002, NNGC has not at any time delivered to, or
received from, any Major Shipper any formal written notice or
written allegation of a default or breach with respect to any
Major Firm Contract and none of such Major Shippers has, or, to
the Sellers' knowledge, intends to terminate or not exercise any
option to renew.
3.22. Health and Safety Matters.
Except as set forth in Section 3.22 of the Disclosure Letter, (a) the
properties and operations of NNGC are in material compliance with all applicable
health and safety and pipeline safety laws, and have been in material compliance
with applicable health and safety and pipeline safety laws, except for
historical non-compliance that would not reasonably be expected to result in
material fines, penalties or obligations; (b) to the Sellers' Knowledge, since
July 1, 1997, there have been no Pipeline ruptures resulting in serious injury,
loss of life, or material property damage; and (c) to the Sellers' Knowledge,
there are no material defects, corrosion or other damage to the Pipeline that
would create a risk of material pipeline integrity failure.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES OF BUYERS
Buyer hereby represents and warrants to Sellers as follows:
4.1. Organization and Qualification.
Buyer is a corporation, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority to own and operate its assets and properties and to carry on
its business as conducted on the date hereof.
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4.2. Corporate Authorization.
Buyer has the requisite corporate power and authority to execute, deliver
and to perform its obligations under this Agreement and to consummate the
transactions contemplated by this Agreement. The execution, delivery and
performance by Buyer of this Agreement and the consummation by Buyer of the
transactions contemplated by this Agreement have been duly authorized by all
necessary corporate and stockholder action on the part of Buyer.
4.3. Consents and Approvals.
No material consent, approval, order or authorization of, or registration,
declaration or filing with, or notification to, any Governmental Authority, or
any other Person, is required to be made or obtained by Buyer in connection with
the execution, delivery and performance of this Agreement and the consummation
of the transactions contemplated by this Agreement, except for the filing of a
premerger notification and report form under the HSR Act.
4.4. Non-Contravention.
Assuming the consents, approvals, authorizations, registrations,
declarations, filings and notifications described in Section 4.3 have been
obtained or made, the execution, delivery and performance of this Agreement by
Buyer, and the consummation of the transactions contemplated hereby, do not and
will not (i) violate any provision of the certificate of incorporation or the
bylaws of Buyer; (ii) result in the material breach of, or constitute a material
default under, or give to others any rights of termination, cancellation or
acceleration of any right or obligation material to Buyer or any of its
Subsidiaries (in each case whether after the filing of notice or the lapse of
time or both) under, or result in the creation of any Encumbrance on any assets
or properties of NNGC pursuant to, any material agreement, lease, contract,
note, mortgage, indenture or obligation of any kind to which Buyer or its
Subsidiaries is a party or bound; or (iii) materially violate, or result in a
material breach of any material Applicable Law or judgment, order, writ,
injunction or decree of any Governmental Authority to which Buyer or any of its
Subsidiaries is subject.
4.5. Binding Effect.
This Agreement has been duly executed and delivered by Buyer and, assuming
this Agreement has been duly authorized, executed and delivered by each Seller,
constitutes a valid and legally binding obligation of Buyer, enforceable against
Buyer in accordance with its terms, except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws of
general applicability relating to or affecting creditors' rights and to general
equity principles.
4.6. Brokers.
There is no investment banker, broker, finder or other intermediary which
has been retained by or is authorized to act on behalf of Buyer or any
Subsidiary of Buyer who is entitled to any fee or commission from Sellers or any
of their Affiliates in connection with the transactions contemplated by this
Agreement.
4.7. Financing.
Buyer has on the date hereof, and as of the Closing will have, sufficient
cash, available lines of credit, or other sources of available funds to enable
it to pay the full Shares Purchase Price when required hereunder and to effect
the transactions contemplated hereby.
4.8. Investment Intent.
Buyer is acquiring the Shares for its own account and for investment and
not with a view to a distribution thereof within the meaning of the Securities
Act or in violation of any applicable state or federal securities laws.
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4.9. Sophistication; Information.
Buyer is an experienced and sophisticated investor and has such
knowledge and experience in financial and business matters as are necessary to
evaluate the merits and risks of an investment in the Shares. Buyer is able to
bear the economic risk of this investment regarding NNGC, is able to hold the
Shares indefinitely and has a sufficient net worth to sustain a loss of its
entire investment in NNGC in the event such loss should occur.
Buyer acknowledges and affirms that it is an "accredited" investor
within the meaning of Regulation D of the Securities Act. Buyer acknowledges
that (x) the sale of the Shares will not have been registered pursuant to the
Securities Act or any applicable state securities laws, (y) that the Shares will
be characterized as "restricted securities" under federal securities laws and
that under such laws and applicable regulations cannot be sold or otherwise
disposed of without registration or an exemption therefrom and (z) any
certificates representing the Shares will bear a customary legend regarding
restrictions on the transferability of such Shares.
4.10. Legal Proceedings.
As of the date hereof, there are no Legal Proceedings pending or, to the
Buyer's Knowledge, threatened against or involving Buyer that, individually or
in the aggregate, are reasonably likely to prevent or materially impair or delay
the ability of Buyer to perform its obligations under this Agreement or to
consummate the transactions contemplated by this Agreement.
ARTICLE V.
COVENANTS
5.1. Conduct of the Business.
(a) Except as otherwise contemplated by this Agreement or consented to in
writing by Buyer, from the date hereof to the Closing, Sellers shall, taking
into account any matters that may arise that are attributable to the pendency of
the transactions contemplated by this Agreement, (i) cause NNGC to conduct the
Business in all material respects only in the ordinary course, consistent with
past practices and in material compliance with Applicable Laws and (ii) use
their respective reasonable best efforts to preserve the business organization
of NNGC intact, keep available the services of employees of NNGC and preserve
the existing relations with customers, suppliers and other Persons with which
NNGC has significant business dealings, but Sellers and NNGC shall not be
required to make any payments or enter into or amend any contractual
arrangements, agreements or understandings to satisfy the foregoing obligation
unless such payment or other action is required by Applicable Law, by
contractual obligation with such third parties or to operate in the ordinary
course consistent with past practices.
Sellers agree to use their best efforts to keep the NNGC Insurance Policies
in full force and effect through the Closing Date.
(b) From and after the date hereof to the Closing Date, except as otherwise
contemplated by this Agreement or as set forth in Section 5.1(b) of the
Disclosure Letter, Sellers shall not permit NNGC, without the prior written
consent of Buyer (which consent shall not be unreasonably withheld or delayed)
to:
(i) (A) increase the compensation payable to or to become payable to or
grant any bonuses to any former or present director, officer, employee
or consultant, except in the ordinary course of business consistent
with past practices for persons who are not former or present officers
or directors, (B) enter into or amend any employment, severance,
24
termination or similar agreement or arrangement with any former or
present director, officer, employee or consultant, (C) establish,
adopt, enter into or amend or modify any Benefit Plan except as may be
required by Applicable Law, (D) grant any severance or termination
pay, (E) amend or take any other actions to increase the amount of, or
accelerate the payment or vesting of, any benefit or amount under any
Benefit Plan, policy or arrangement (including the acceleration of
vesting, waiving of performance criteria or the adjustment of awards
or providing for compensation or benefits to any former or present
director, officer, employee or consultant), or (F) contribute,
transfer or otherwise provide any cash, securities or other property
to any grantee, trust, escrow or other arrangement that has the effect
of providing or setting aside assets for benefits payable pursuant to
any termination, severance or other change in control agreement;
except (1) pursuant to any contract, agreement or other legal
obligation of NNGC existing at the date of this Agreement, (2) in the
case of severance or termination payments, pursuant to the severance
policies adopted by NNGC existing at the date of this Agreement, and
(3) as required by Applicable Law;
(ii) declare, set aside or pay any dividend on, or make any other
distribution in respect of, outstanding Equity Securities of NNGC;
(iii)(A) directly or indirectly redeem, purchase or otherwise acquire, or
offer to redeem, purchase or otherwise acquire, any outstanding Equity
Securities of NNGC, or (B) effect any reorganization or
recapitalization or split, combine or reclassify any of the Equity
Securities of NNGC or issue or authorize or propose the issuance of
any other securities in respect of, in lieu of or in substitution for,
such Equity Securities;
(iv) (A) offer, issue, deliver, grant or sell, or authorize or propose the
offering, issuance, delivery, grant or sale (including the grant of
any Encumbrances or limitations on voting rights), of any Equity
Securities of NNGC or (B) amend or otherwise modify the terms of any
outstanding Equity Securities the effect of which will be to make such
terms more favorable to the holders thereof;
(v) (A) adopt a plan of complete or partial dissolution or liquidation,
(B) acquire or agree to acquire, by merging or consolidating with,
purchasing Equity Securities in, or purchasing all or a portion of the
assets of, or in any other manner, any business or any Person or
otherwise acquire or agree to acquire any assets or property of any
other Person (excluding capital expenditures), in each case for
consideration in excess of $100,000 or for consideration for all such
acquisitions in excess of $500,000 or (C) make any loans, advances or
capital contributions to, or investments in any Person in excess of
$100,000 except for (1) loans, advances and capital contributions, or
investments pursuant to and in accordance with the terms of any
Material Contract or other legal obligation, in each case existing as
of the date of this Agreement, (2) contributions in aid of
construction made in the ordinary course, consistent with past
practices or (3) customary loans and advances to employees in amounts
not material to NNGC;
(vi) make or commit to make any capital expenditures other than (A) those
set forth in Section 5.1(b) of the Disclosure Letter, (B) pursuant to
contracts, forecasts or plans in existence on the date hereof, (C)
reasonable expenditures made by NNGC in connection with any emergency
or force majeure events affecting NNGC and (D) other capital
expenditures not in excess of $500,000, in the aggregate;
(vii)sell, transfer, lease, exchange or otherwise dispose of, whether by
merging, consolidating
25
or in any other manner, or grant any Encumbrance with respect to,
any of the material properties or assets of NNGC, except for (A)
sales of natural gas and condensate in the ordinary course of
business consistent with past practices and (B) sales or other
dispositions of property or assets that in the aggregate are not
material to NNGC; provided, that the sale or other disposition of
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▇▇▇▇▇ shall be deemed material and shall require the prior
written consent of Buyer;
(viii) adopt or propose any amendments to its certificate of
incorporation or bylaws;
(ix) (A) change in any material respect any of its methods or
principles of accounting in effect at June 30, 2002, except to
the extent required to comply with GAAP, (B) make or rescind any
material election relating to Taxes (other than any election that
must be made periodically and is made consistent with past
practice), (C) settle or compromise any material claim, action,
suit, litigation, proceeding, arbitration, investigation, audit
or controversy relating to Taxes or (D) change any of its
material methods of reporting income or deductions for United
States federal income tax purposes from those employed in the
preparation of the United States federal income tax returns for
the taxable year ended December 31, 2001, except, in each case,
as may be required by Applicable Law;
(x) incur, create, assume, guarantee or otherwise become liable for
any obligation for borrowed money, purchase money indebtedness or
any obligation of any other Person, whether or not evidenced by a
note, bond, debenture, guarantee, indemnity or similar
instrument, except for (A) refinancings of existing indebtedness,
(B) additional indebtedness not exceeding $100,000 in the
aggregate, and (C) trade payables incurred in the ordinary course
of business consistent with past practice; provided that in the
case of (A) - (C), no additional non-current liabilities shall be
incurred, created, assumed, guaranteed or otherwise become the
liability or obligation of NNGC;
(xi) pay, discharge, settle or satisfy any claims, liabilities,
obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise) prior to the same being due in excess of
$500,000 in the aggregate, other than (A) in the ordinary course
of business consistent with past practices, (B) pursuant to
mandatory terms of any agreement, understanding or arrangement as
in effect on the date hereof, or (C) NNGC may continue to pursue,
prosecute and resolve any pending FERC proceedings;
(xii) take or cause to be taken any action that could reasonably be
expected to result in any of the conditions contained in Section
6.1(a) not being satisfied;
(xiii) (A) renew, modify, amend or terminate any Material Contract to
which NNGC is a party, or waive, delay the exercise of, release
or assign any material rights or claims thereunder in each case
except in the ordinary course of business consistent with past
practice, (B) enter into or amend in any material manner any
contract, agreement or commitment with any former or present
director, officer or employee of NNGC or with any Affiliate or
associate (as defined under the Exchange Act) of any of the
foregoing Persons except to the extent permitted under Section
5.1(b)(i), and (C) enter into any agreements or contracts that if
entered into on or prior to the date hereof would be required to
be disclosed in Section 3.13(a) of the Disclosure Letter;
(xiv) enter into any agreements, understandings, contracts or
commitments with, or engage in any transactions or transfers of
assets or liabilities to or from, Sellers or any of their
Affiliates other than those allowed by NNGC's natural gas tariff
on file with FERC,
26
those expressly contemplated by this Agreement or those listed in
Section 3.13(b) of the Disclosure Letter;
(xv) other than routine compliance filings, make any filings or submit
any documents or information to FERC without prior consultation
with Buyer; or
(xvi) agree in writing or otherwise to take any of the foregoing
actions set forth in this Section 5.1(b).
5.2. Access.
(a) Prior to the Closing, Sellers shall, and shall cause NNGC to, (a)
permit Buyer and its agents (including their counsel, accountants and
consultants) to have reasonable and appropriate access upon reasonable advance
notice to such books, records, properties, facilities, executive-level
personnel, managers, officers, independent accountants, legal counsel and
customers of NNGC with respect to the Business as are reasonably necessary to
allow Buyer to make such inspections as it reasonably requires to verify the
representations and warranties contained in Article III and (b) furnish promptly
to Buyer and its representatives such information concerning NNGC, the Business
and the properties, contracts, records and personnel as may be reasonably
requested to the extent that such access or information is not prohibited by
FERC marketing affiliate rules.
(b) Sellers shall have the right to have a representative present at all
times of any such inspections, interviews, and examinations conducted at or on
the offices or other facilities or properties of Sellers or NNGC. Additionally,
Buyer shall hold in confidence all such information on the terms and subject to
the conditions contained in the Confidentiality Agreement. Buyer shall have no
right of access to, and Sellers shall have no obligation to provide to Buyer,
(1) bids received from others in connection with the transactions contemplated
by this Agreement and information and analysis (including financial analysis)
relating to such bids, or (2) any information the disclosure of which would
jeopardize any privilege available to NNGC, Sellers or any of their Affiliates
relating to such information or would cause Sellers to breach a confidentiality
obligation. Buyer agrees that if Buyer or its authorized representatives
receive, or if the information (whether in electronic mail format, on computer
hard drives or otherwise) held by NNGC as of the Closing includes information
that relates to the business operations or other strategic matters of Sellers,
or any of their Affiliates (other than NNGC) such information shall be held in
confidence on the terms and subject to the conditions contained in the
Confidentiality Agreement, but the term of the restriction on the disclosure and
use of such information shall continue in effect as to such information for a
period of two years from the Closing. Buyer further agrees that if Sellers or
NNGC inadvertently furnishes to Buyer copies of or access to information that is
subject to clause (2) of the second preceding sentence, Buyer will, upon
Sellers' request, promptly return same to Sellers and Buyer will destroy any and
all extracts therefrom or notes pertaining thereto (whether in electronic or
other format). Buyer shall indemnify, defend, and hold harmless Sellers and
their Affiliates from and against any losses or damages asserted against or
suffered by Sellers relating to, resulting from, or arising out of, examinations
or inspections made by Buyer or its authorized representatives pursuant to
Section 5.2.
(c) Buyer agrees that Sellers may retain (i) a copy of all materials
included in the Data Room, together with a copy of all documents referred to in
such materials, (ii) copies of all books and records prepared by Sellers or
their Affiliates in connection with the transactions contemplated by this
Agreement, including bids received from others and information relating to
27
such bids, (iii) copies of any books and records which may be relevant in
connection with the defense of disputes arising hereunder, (iv) all
consolidating and consolidated financial information and all other accounting
books and records prepared or used in connection with the preparation of
financial statements of Sellers (provided that copies shall be provided to the
Buyer), and (v) copies of all Retained E-Mail. Sellers agree that all such
information shall be held in confidence on the terms and subject to the
conditions contained in the Confidentiality Agreement as if Sellers were the
receiving party thereunder, but the term of the restriction on the disclosure
and use of such information shall continue in effect as to such information for
a period of two years from the Closing.
(d) Each party agrees that it will cooperate with and make available to the
other parties during normal business hours, all books and records, information,
and employees (without substantial disruption of employment) retained and
remaining in existence after the Closing Date which are necessary or useful in
connection with (i) any Tax inquiry, audit, investigation, or dispute, (ii) any
litigation or investigation, or (iii) any other matter requiring any such books
and records, information, or employees for any reasonable business purpose,
provided that (a) with respect to providing Buyer access to Retained E-Mail,
Sellers shall provide access to Buyer upon Buyer's request, and shall furnish
Buyer with copies of, only those portions of the Retained E-Mail that pertain or
relate to the Business or NNGC or its assets and (b) Sellers shall not be
required by this Section 5.2(d) to make available to Buyer any information
referred to in clause (1) of the third sentence of Section 5.2(b) or clause (ii)
of Section 5.2(c). The party requesting any such books and records, information,
or employees shall bear all of the out-of-pocket costs and expenses reasonably
incurred in connection with providing such books and records, information, or
employees. Sellers may require certain financial information related to the
Business for periods prior to the Closing Date for the purpose of filing
federal, state, local, and foreign Tax Returns and other governmental reports,
and Buyer agrees to furnish such information to Sellers at Sellers' request and
expense.
5.3. Appropriate Action; Consents; Filings.
(a) Through the Closing Date, Sellers and Buyer will each cooperate with
each other and use (and will cause their respective Subsidiaries to use)
reasonable best efforts (i) to take, or to cause to be taken, all actions, and
to do, or to cause to be done, all things necessary, proper or advisable on its
part under this Agreement, Applicable Law or otherwise to consummate and make
effective the transactions contemplated by this Agreement, (ii) to obtain
promptly from any Governmental Authorities any authorizations or orders required
to be obtained by Sellers or Buyer or any of their respective Subsidiaries in
connection with the authorization, execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby, and
(iii) to promptly make all necessary filings, and thereafter make any other
required submissions, with respect to this Agreement and prompt consummation of
the transactions contemplated hereby required under (A) the HSR Act and (B) any
other Applicable Law. Sellers and Buyer will cooperate with each other in
connection with the making of all such filings, including providing copies of
all such documents to the nonfiling party and its advisors prior to filings and,
if requested, will accept all reasonable additions, deletions or changes
suggested in connection therewith. Each Seller and Buyer will furnish all
information concerning itself, its Subsidiaries and Affiliates required for any
application or other filing to be made pursuant to any Applicable Law or any
applicable regulations of any Governmental Authority in connection with the
transactions contemplated by this Agreement. Sellers and Buyer will file as
28
promptly as practicable and in any event within one Business Day of the date
hereof the notification and report form required by the HSR Act, together with
all required supplemental information and request early termination of the
waiting period with respect to the sale of the Shares under the HSR Act.
(b) Through the Closing Date, each Seller and Buyer will give prompt notice
to the other of (i) any notice or other communication from any Person alleging
that the consent of such Person is or may be required in connection with this
Agreement and the transactions contemplated by this Agreement, (ii) any notice
or other communication from any Governmental Authority in connection with this
Agreement and the transactions contemplated by this Agreement, (iii) any Legal
Proceedings commenced or threatened in writing against, relating to or involving
or otherwise affecting Sellers, Buyer or their respective Subsidiaries that
relate to this Agreement and the transactions contemplated by this Agreement and
(iv) if there occurs any event or condition that might reasonably be expected to
cause or result in any of its representations or warranties contained herein to
be untrue or inaccurate in any material respect or to delay or impede the
ability of either Buyer or either Seller, respectively, to consummate the
transactions contemplated by this Agreement or to fulfill their respective
obligations set forth herein.
(c) Through the Closing Date, Sellers and Buyer agree to cooperate and use
their reasonable best efforts to contest and resist any action, including
legislative, administrative or judicial action, and to have vacated, lifted,
reversed or overturned any order (whether temporary, preliminary or permanent)
of any Governmental Authority that is in effect, that restricts, prevents or
prohibits the consummation of the transactions contemplated by this Agreement,
including the active pursuit of all available avenues of administrative and
judicial appeal.
(d) Prior to the Closing Date, each Seller and Buyer will give (or will
cause their respective Subsidiaries to give) any notices to third Persons, and
use, and cause their respective Subsidiaries to use, their reasonable best
efforts to obtain promptly any consents from third Persons (A) necessary, proper
or advisable to consummate the transactions contemplated by this Agreement or to
satisfy any of the conditions set forth in Article VI, (B) otherwise required
under any contracts, licenses, leases or other agreements in connection with the
consummation of the transactions contemplated hereby or (C) required to prevent
a Material Adverse Effect.
5.4. Announcements.
Buyer and Sellers shall consult promptly with each other prior to issuing
any press release or otherwise making any public statement with respect to the
transactions contemplated by this Agreement or making any filing with respect to
such transactions with the Securities and Exchange Commission. Buyer and Sellers
shall provide to each of the other parties hereto for review a copy of any such
press release, statement or filing, and shall not issue any such press release,
or make any such public statement or filing, prior to such consultation and
review, unless required by applicable law or the rules of a national securities
exchange.
5.5. Employee and Benefit Matters.
(a) On or before the Closing, Sellers shall take all actions necessary, if
any, to cause NNGC to cease to be an adopting or participating employer under
all Sellers Plans.
(b) Buyer shall cause each individual who is employed by NNGC as of the
Closing (including, without limitation, each such individual who is on a
vacation, sick, disability or other leave of absence other than an individual
who is receiving long-term disability benefits under a Sellers Plan as of the
Closing Date) (a "Continuing Employee") to be provided with, subject to
29
the remaining paragraphs of this Section 5.5, employee benefit plans, other
compensation, benefits, policies, programs and arrangements that are, in the
aggregate, substantially comparable with those provided to similarly situated
employees of Buyer. Without limiting the generality of the foregoing, with
respect to medical and dental benefits, Buyer shall cause each Continuing
Employee and his or her eligible dependents (including all such Continuing
Employee's dependents covered immediately prior to the Closing Date by a NNGC
Plan or Sellers Plan that is a group health plan) to be covered under a group
health plan maintained by Buyer or an Affiliate of Buyer that (i) provides
medical and dental benefits to the Continuing Employee and such eligible
dependents effective immediately upon the Closing Date and (ii) credits such
Continuing Employee, for the year during which such coverage under such group
health plan begins, with any deductibles and co-payments already incurred during
such year under a NNGC Plan or Sellers Plan that is a group health plan.
(c) Prior to the Closing Date, Sellers shall take all actions necessary to
have the members of the administrative committee of the NNGC VEBA resign
effective as of the Closing Date.
(d) Buyer shall cause the employee benefit plans and programs maintained
after the Closing by Buyer, NNGC and the Affiliates of Buyer to recognize each
Continuing Employee's years of service and level of seniority prior to the
Closing Date with Sellers, NNGC and their Affiliates (including service and
seniority with any other employer that was recognized by Sellers, NNGC or their
Affiliates) for purposes of terms of employment, eligibility to participate,
vesting and, to the extent not duplicative of any benefits received under any
Benefit Plan, the accrual of benefits, vesting and benefit determination under
such plans and programs (but not for benefit accrual purposes under any defined
benefit pension plan). Buyer shall cause each employee welfare benefit plan or
program sponsored by Buyer or one of its Affiliates that a Continuing Employee
may be eligible to participate in on or after the Closing Date to waive any
preexisting condition exclusion with respect to participation and coverage
requirements applicable to such Continuing Employee to the extent such exclusion
did not apply with respect to such employee under the corresponding NNGC Plan or
Sellers Plan immediately prior to the Closing Date.
(e) Buyer expressly agrees that it assumes all obligations to provide any
required notice under the United States Worker Adjustment and Retraining
Notification Act or any other Applicable Laws, and to pay all severance
payments, damages for wrongful dismissal and related costs, with respect to the
termination of any employee of NNGC by Buyer or NNGC that occurs on or after the
Closing Date.
(f) Prior to the Closing, Sellers shall cause the employment of the
individuals identified in Section 5.5(f)(i) of the Disclosure Letter and the
employment of any individual who is receiving long-term disability benefits
under a Sellers Plan as of the Closing Date to be transferred from NNGC to a
Seller or an Affiliate of a Seller (other than NNGC). After the Closing, Buyer
shall cause NNGC to make an employment offer to each individual identified in
Section 5.5(f)(ii) of the Disclosure Letter effective as of the date indicated
in Section 5.5(f)(ii) of the Disclosure Letter with respect to such individual;
provided, however, that NNGC shall not be required to provide any such
individual with such an employment offer if such individual is not employed in
the Business by Enron Corp. or an Affiliate of Enron Corp. as of such effective
date. If an individual who receives an employment offer from NNGC pursuant to
the preceding sentence accepts such employment offer, then such individual shall
be treated as a Continuing
30
Employee for purposes of this Section 5.5 (other than paragraph (i) below).
Without limiting the scope of the preceding sentence, each such individual who
accepts NNGC's employment offer shall (i) receive the benefit of paragraph (b)
above, (ii) receive the benefit of paragraph (b) above by substituting for
purposes of such paragraph his or her date of hire by NNGC for the Closing Date
and the group health plan maintained by Enron Corp. or an Affiliate thereof for
a NNGC Plan or Sellers Plan, (iii) receive the benefit of paragraph (c) above by
substituting for purposes of such paragraph his or her date of hire by NNGC for
the Closing Date, recognizing such individual's service and seniority with Enron
Corp. and its Affiliates, and substituting employee welfare benefit plans and
programs of Enron Corp. and its Affiliates for the corresponding NNGC Plans and
Sellers Plans, (iv) receive the benefit of paragraph (f) below by substituting
the Enron Corp. Savings Plan for the Sellers Savings Plan (but limited to the
extent Enron Corp. is willing to take similar actions with respect to
outstanding plan loans), and (v) receive the benefit of paragraph (i) below.
(g) Sellers (i) shall take such actions, if any, as may be necessary to
provide for the distribution to the Continuing Employees of their vested account
balances under the Dynegy Inc. 401(k) Savings Plan (the "Sellers Savings Plan"),
(ii) shall permit each Continuing Employee to elect on the Closing Date (or as
soon thereafter as reasonably practicable) a direct rollover of his or her
rolloverable account balance under the Sellers Savings Plan to a defined
contribution plan designated by Buyer (the "Buyer Savings Plan"), and (iii)
shall cause the Sellers Savings Plan to deliver to the Buyer Savings Plan as
soon as reasonably practicable after the Closing Date the promissory notes and
other loan documentation, if any, of the Continuing Employees who have elected
such a direct rollover in accordance with the procedures prescribed by Sellers.
Sellers and Buyer shall also take such actions, if any, as are necessary to
permit the continuation of loan repayments by Continuing Employees to the
Sellers Savings Plan during the period beginning on the Closing Date and ending
90 calendar days after the Closing Date; provided, however, that if a Continuing
Employee makes a direct rollover election as described in this paragraph within
such 90-day period, then the Sellers Savings Plan shall continue to accept loan
repayments from such Continuing Employee until the date of such direct rollover.
The Buyer Savings Plan shall accept the direct rollover of electing Continuing
Employees' benefits in cash and, if applicable, promissory notes that are not
accelerated from the Sellers Savings Plan. Sellers represent, covenant and agree
with respect to the Sellers Savings Plan, and Buyer represents, covenants and
agrees with respect to the Buyer Savings Plan, that, as of each date of a
rollover described in this paragraph, such plan (i) satisfies the requirements
of Sections 401(a), (k), and (m) of the Code and (ii) will have received, or a
pending application will have been timely filed for, a favorable determination
letter from the IRS regarding such qualified status and covering amendments
required to have been adopted prior to the expiration of the GUST remedial
amendment period.
(h) Claims of Continuing Employees and their eligible beneficiaries and
dependents for medical, dental, prescription drug, life insurance, and/or other
welfare benefits ("Welfare Benefits") (other than disability benefits) that are
incurred before the Closing Date shall be the sole responsibility of Sellers and
the Sellers Plans. Claims of Continuing Employees and their eligible
beneficiaries and dependents for Welfare Benefits (other than disability
benefits) that are incurred on or after the Closing Date shall be the sole
responsibility of Buyer and NNGC. For purposes of the preceding provisions of
this paragraph, a medical/dental claim shall be considered incurred on the date
when the medical/dental services are rendered or medical/dental supplies are
provided, and not when the condition arose or when the course of treatment
began.
31
Claims of individuals receiving long-term disability benefits under a
Sellers Plan as of the Closing Date shall be the sole responsibility of Sellers
and the Sellers Plans. Claims of Continuing Employees and their eligible
beneficiaries and dependents for short term or long term disability benefits
that are made on or after the Closing Date shall be the sole responsibility of
Buyer and NNGC (without regard to whether the circumstances giving rise to such
claim occurred before, on or after the Closing Date).
(i) With respect to all employees who terminated from employment with NNGC
or any of its Affiliates prior to the Closing Date and who have been, or are
eligible to be, provided with post-retirement medical, dental and/or life
insurance coverage as of the Closing Date under the NNGC Retiree Program, NNGC
shall assume and retain any and all liability with respect to the provision of
such coverages to such retired employees and their eligible dependents on and
after the Closing Date, provided that Buyer shall have the right to make changes
to such coverage to the extent permitted under Applicable Laws. Subject to the
provision in the preceding sentence, NNGC shall also extend post-retirement
medical, dental and/or life insurance coverages to all Continuing Employees (and
their eligible dependents). Neither Seller nor any of their Affiliates (other
than NNGC) shall have any liability on or after the Closing Date with respect to
the provision of post-retirement medical, dental and life insurance coverages
for those persons described in the preceding sentences of this paragraph. On or
before the Closing Date, Sellers and NNGC shall take any and all actions
necessary to cause, effective as of the Closing Date, (i) NNGC to be the sole
sponsor of the NNGC Retiree Program and the NNGC VEBA and (ii) the contracts
used in connection with the administration and provision of the benefits under
the NNGC Retiree Program (other than the Administrative Services Agreement
between Dynegy and ▇▇▇▇▇▇ Associates LLC) to be held by NNGC.
5.6. Preservation of Records.
Buyer agrees that it shall, at its own expense, preserve and keep the
material records relating to the Business that could reasonably be required
after the Closing by Sellers for as long as is specified for such categories of
records in the document retention program applicable to the Business in effect
on the Closing Date provided that Buyer agrees that it shall preserve and keep
all books and records of the Business relating to any investigation instituted
by a Governmental Authority or Legal Proceeding (whether or not existing on the
Closing Date) if any possibility exists that such investigation or legal
proceeding may relate to matters occurring prior to the Closing, without regard
to the document retention program. In addition, Buyer shall make such records
available to Sellers as may be reasonably required by Sellers in connection
with, among other things, any insurance claim, Legal Proceeding or governmental
investigation relating to the Business. Notwithstanding the foregoing, Sellers
shall retain with respect to NNGC all original books, records, reports, Tax
Returns and all other information relating to Taxes for taxable periods that end
on or prior to the Closing Date. At Buyer's request, Sellers shall provide
copies of such retained materials (including computer files and similar
electronic media), at Buyer's expense, to Buyer.
5.7. [Intentionally omitted.]
5.8. Settlement of Intercompany Accounts; Guarantees.
At or prior to the Closing, Sellers shall cause all intercompany payables,
receivables and loans between NNGC, on the one hand, and Dynegy and its
Affiliates (other than NNGC), on the other hand, to be settled or canceled,
other than as set forth in Section 5.8 of the Disclosure Letter. Buyer and
Sellers shall cooperate and use commercially reasonable efforts in
32
order that, effective as of the Closing Date, (i) any guarantees, support or
agreement by Dynegy or any of its Subsidiaries (other than NNGC) of NNGC's
indebtedness or obligations and any liabilities related thereto as set forth in
Section 5.8 of the Disclosure Letter shall be released as to the Dynegy or such
Subsidiaries in a manner satisfactory to Dynegy without creation of any material
default under the obligation guaranteed or supported and (ii) substitute
arrangements, if required, by Buyer or its Affiliates shall be in effect.
5.9. Maintenance of 100% Ownership of the Shares; No Encumbrances.
Sellers hereby covenant that, from the date hereof to the Closing, NNGC
Holding will maintain ownership of 100% of the Common Stock; and Dynegy will
maintain ownership of 100% of the Series A Preferred Stock. Sellers 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 NNGC to any entity other than Sellers from the date hereof through
the Closing. Sellers will not, directly or indirectly, offer for sale, contract
to sell, sell, distribute, grant any option, right or warrant to purchase,
suffer any Encumbrances upon, pledge, hypothecate or otherwise dispose of any
Equity Securities of NNGC, or any other rights to acquire an equity interest in
NNGC.
5.10. Section 338(h)(10) Election.
(a) Subject to Buyer's review and approval of such filings (including
Buyer's review and approval of any allocation of the purchase price and assumed
liabilities included therein), which approval shall not be unreasonably
withheld, Dynegy shall make a timely election under Section 338(h)(10) of the
Code with respect to the purchase of the Shares of NNGC from Enron Corp. and its
affiliates pursuant to the Subscription Agreement, dated as of November 9, 2001
by and among Enron Corp., Northern Natural Gas Company and Dynegy Inc. If Buyer
notifies Sellers in writing on or before the Closing Date, Sellers and Buyer
shall jointly make an election as described in Section 338(h)(10) of the Code,
and any corresponding election under state or local law pursuant to which a
separate election is permissible, with respect to Buyer's acquisition of the
Shares pursuant to this Agreement (the "Section 338(h)(10) Election") Buyer and
Sellers agree to report all transfers pursuant to this Agreement consistent with
the Section 338(h)(10) Election and shall take no position contrary thereto
unless required to do so by applicable tax law pursuant to a determination as
defined in Section 1313(a) of the Code.
(b) Buyer shall be responsible for the preparation and filing of all
returns, documents, statements and other forms that are required to be submitted
to any Tax Authority in connection with the making of the Section 338(h)(10)
Election, including, without limitation, any "statement of section 338 election"
and IRS Form 8023 (together with any schedules or attachments thereto) that are
required pursuant to the Treasury Regulations promulgated under Section 338 of
the Code (collectively, the "Section 338 Forms"). Buyer shall deliver each
Section 338 Forms to Seller at least 30 days prior to the date such Section 338
Forms are required to be filed. Sellers shall execute and deliver to Buyer such
documents or forms (including executed Section 338 Forms) as are requested and
are required by any laws in order to properly complete the Section 338 Form at
least 20 days prior to the date such Section 338 Form is required to be filed.
Sellers shall provide Buyer with such information as Buyer reasonably requests
in order to prepare the Section 338 Forms by the later of 30 days after Buyer's
request for such information or 30 days prior to the date on which Buyer is
required to deliver such forms to Sellers.
(c) The Shares Purchase Price, liabilities of the Company and other
relevant items shall be allocated in accordance with Section 338(b)(5) of the
Code and the Treasury
33
Regulations promulgated thereunder. Within 90 days following the Closing Date,
Buyer shall prepare and provide to Sellers a schedule that sets forth the fair
market value of the assets of the Company (the "Valuation"). The allocations set
forth in the Valuation shall be reasonably determined by Buyer and shall be
binding on Buyer and Sellers unless Sellers, within 10 days of delivery to
Sellers of the Valuation, conclude in good faith that the Valuation is
manifestly unreasonable. All allocations contained in the Valuation shall be
used by each party in preparing the Section 338 Forms and all other relevant Tax
Returns, subject to adjustment to reflect (i) Sellers' selling expenses as a
reduction of sales proceeds and (ii) Buyer's acquisition expenses as an addition
to the Shares Purchase Price, except as otherwise required by law.
(d) Notwithstanding any other provision of this Agreement to the contrary,
Sellers agree that any income and gain recognized as a result of, and in
accordance with, the making of the Section 338(h)(10) Election will be included
in the consolidated federal income tax return of Dynegy's consolidated group and
any resulting tax liability will be paid by Dynegy, as the common parent of
Dynegy's consolidated group.
5.11. Tax Returns and Transfer Taxes.
(a) The Sellers Group Return. Sellers shall cause to be included in the
consolidated federal income Tax Returns (and the state income Tax Returns of any
state that permits consolidated, combined or unitary income Tax Returns, if any)
of the Sellers Group for all periods ending on or before the Closing Date, all
Tax Items of NNGC which are required to be included therein, shall cause such
Tax Returns to be timely filed with the appropriate Taxing Authorities, and
shall be responsible for the timely payment (and entitled to any refund) of all
Taxes due with respect to the periods covered by such Tax Returns. The income of
NNGC will be apportioned to the period up to and including the Closing Date and
the period after the Closing Date by closing the books of NNGC as of the end of
the Closing Date.
(b) Returns for Periods Ending on or Before the Closing Date. Sellers shall
prepare or cause to be prepared and Buyer shall file or cause to be filed all
Tax Returns for NNGC for all periods ending on or prior to the Closing Date
which are filed after the Closing Date and are not described in paragraph (a)
above. Sellers shall permit Buyer to review and comment on each such Tax Return
described in the preceding sentence and shall make such revisions to such Tax
Returns as are reasonably requested by Buyer. Sellers shall reimburse Buyer for
Taxes of NNGC with respect to such periods within fifteen (15) days after
payment by Buyer or NNGC of such Taxes to the extent such Taxes are not
reflected in the determination of the Final Working Capital Amount.
(c) Straddle Returns.
(i) With respect to any Tax Return covering a taxable period
beginning on or before the Closing Date and ending after the
Closing Date that is required to be filed after the Closing Date
with respect to NNGC, Buyer shall cause such Tax Return to be
prepared, shall cause to be included in such Tax Return all Tax
Items required to be included therein, and at least 30 days prior
to the due date (including extensions) of such Tax Return shall
furnish a copy of such Tax Return to Sellers. Buyer shall permit
Sellers to review and comment on each such Tax Return and shall
make such revisions to such Tax Returns as reasonably requested
by Sellers. Buyer shall timely file such Tax Return with the
appropriate Taxing Authority, and shall be responsible for the
timely payment of all Taxes due with respect to the period
covered by such Tax Return. Sellers shall pay to Buyer within
fifteen days after the date on which such Taxes were paid with
respect to
34
such periods an amount equal to the portion of such Taxes
determined by an interim closing of the books as of the Closing
Date which would have been due with respect to the period covered
by such Tax Return if such taxable period ended on and included
the Closing Date to the extent such Taxes are not reflected in
the determination of the Final Working Capital Amount.
(ii) To the extent permitted by law or administrative practice, (A)
the taxable year of NNGC that includes the Closing Date shall be
treated as closing on (and including) the Closing Date and (B)
all transactions occurring on the Closing Date but after the
Closing shall have occurred shall be reported on Buyer's
consolidated United States federal income Tax Return to the
extent permitted by Treasury Regulation Section
1.1502-76(b)(1)(ii)(B) and shall be similarly reported on other
Tax Returns of Buyer or its Affiliates.
(d) State and Local Taxes. Notwithstanding anything to the contrary herein,
(1) property Taxes shall be allocated between Sellers and Buyer on a daily basis
over the period beginning on the date that ownership of the property results in
imposition of the Tax and ending on the day before the next date that ownership
of the property results in imposition of the Tax; and (2) franchise, doing
business and capital Taxes shall be allocated between Buyer and Sellers on a
daily basis over the period for which payment of the Tax provides the right to
engage in business.
(e) Consistency. Any Tax Return to be prepared pursuant to the provisions
of Section 5.11(b) and (c) shall be prepared in a manner consistent with
practices followed in prior years with respect to similar Tax Returns, except
for changes required by changes in law or fact.
(f) Refunds. If after the Closing Date Buyer or NNGC receives a refund or
utilizes a credit of any Tax attributable to a taxable period (or portion
thereof) ending on or before the Closing Date which Tax was not reflected in the
determination of the Final Working Capital Amount, Buyer shall pay to Sellers
within fifteen calendar days after such receipt an amount equal to such refund
received or credit (or so much of such refund or credit as relates to the
portion of the taxable period ending on or before the Closing Date and not
reflected in the determination of the Final Working Capital Amount) utilized,
together with any interest received or credited thereon. If after the Closing
Date Sellers receive a refund or utilize a credit of a Tax attributable to a
taxable period (or portion thereof) ending on or before the Closing Date which
Tax was reflected in the Final Working Capital Amount, Sellers shall pay to
Buyer within fifteen calendar days after such receipt an amount equal to such
refund received or credit (or so much of such refund or credit as related to the
portion of the taxable period ending on or before the Closing Date that is
reflected in the Final Working Capital Amount) utilized, together with any
interest received or credited thereon.
(g) Access to Tax Records. Buyer, NNGC and Sellers shall cooperate fully,
as and to the extent reasonably requested by the other party, in connection with
the filing of Tax Returns and any audit, litigation or other proceeding (each a
"Proceeding") with respect to Taxes. Such cooperation shall include the
retention and (upon the other party's request) the provision of records and
information which are reasonably relevant to any such Proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Buyer and
Sellers agree (i) to retain (or cause to be retained) all books and records with
respect to Tax matters pertinent to NNGC relating to any taxable period
beginning before the Closing Date until the expiration of the statute of
limitations
35
(and, to the extent notified by Buyer or Sellers, any extensions thereof) of the
respective taxable periods, and to abide by all record retention agreements
entered into with any Taxing Authority, and (ii) to give the other party
reasonable written notice prior to transferring, destroying or discarding any
such books and records and, if the other party so requests, NNGC or Sellers, as
the case may be, shall allow the other party to take possession of such books
and records. Buyer and Sellers further agree, upon request, to use their best
efforts to obtain any certificate or other document from any Governmental
Authority or any other Person as may be necessary to mitigate, reduce or
eliminate any Tax that could be imposed (including, but not limited to, with
respect to the transactions contemplated hereby). Buyer and Sellers further
agree, upon request, to provide the other party with all information that either
party may be required to report pursuant to Section 6043 of the Code and
Treasury Regulations promulgated thereunder.
5.12. Transfer Taxes.
All excise, sales, use, transfer (including real property transfer or
gains), stamp, documentary, filing, recordation and other similar taxes,
together with any interest, additions or penalties with respect thereto and any
interest in respect of such additions or penalties, resulting directly from the
transactions contemplated by this Agreement (the "Transfer Taxes"), shall be
borne as follows: (i) 50% by Sellers and (ii) 50% by Buyer. Any Tax Returns that
must be filed in connection with Transfer Taxes shall be prepared and filed when
due by the party primarily or customarily responsible under the applicable local
law for filing such Tax Returns, and such party shall use reasonable commercial
efforts to provide such Tax Returns to the other party at least 10 days prior to
the due date for such Tax Returns.
5.13. Confidential Information.
During the period commencing on the date of this Agreement and ending on
the second anniversary of the Closing Date hereunder, except as required by
Applicable Law or stock exchange rule, the Sellers and their affiliates shall
not, directly or indirectly, disclose to any person or entity or use in any
regulatory rate cases related to NNGC any information not in the public domain
or generally known in the industry, in any form, acquired prior to the Closing
Date, relating to the business and operations of NNGC, including but not limited
to information regarding customers, vendors, suppliers, trade secrets, training
programs, manuals or materials, technical information, contracts, systems,
procedures, mailing lists, know-how, trade names, improvements, price lists,
financial or other data (including the revenues, costs or profits associated
with any of NNGC's services), business plans, code books, invoices and other
financial statements, computer programs, software systems, databases, discs and
printouts, plans (business, technical or otherwise), customer and industry
lists, correspondence, internal reports, personnel files, sales and advertising
material, telephone numbers, names, addresses or any other compilation of
information, written or unwritten, which is or was used by NNGC, regardless of
whether such information was or is owned on the date hereof by NNGC
(collectively, "Protected Information").
5.14. Negotiations.
From and after the date hereof, the Sellers shall not, and shall not
authorize or permit any of their Subsidiaries or its or their officers,
directors, employees, affiliates, stockholders, representatives, agents, nor
anyone acting on behalf of them, directly or indirectly, to solicit, engage in
discussions or negotiations with, or provide any information to, any person,
firm, or other entity or group (other than the Buyer or its representatives)
concerning any consolidation or merger to which NNGC is a party, sale of all of
substantially all of the assets of ▇▇▇▇,
▇▇
▇▇▇▇▇▇▇▇ or sale of the Shares or other Equity Securities of NNGC or similar
transaction involving NNGC (each an "Alternative Transaction") unless and until
this Agreement is terminated pursuant to and in accordance with Article VII
hereof. The Sellers shall promptly communicate to the Buyer any written
proposals or offers concerning any such Alternative Transaction which they may
receive.
5.15. Third Party Software and Domain Name.
Prior to Closing, and for a period of 120 days after Closing, Sellers
shall, and shall cause their Affiliates to, use their respective commercially
reasonable best efforts to obtain assignments of any material third party
software used by, or on behalf of, NNGC, the license for which is held by
Sellers, their Affiliates, Enron Corp., or any of its Affiliates or which
software is owned by Enron Corp. or its Affiliates. Such efforts shall include,
as reasonably requested by Buyer, compiling relevant information regarding such
licensed software, contacting and negotiating with the licensors of such
software and, subsequent to Closing, providing assistance to and cooperation
with NNGC in obtaining such assignments. Notwithstanding the foregoing, such
efforts shall not require Sellers to expend any monies in consideration for
obtaining any of such licensor consents. Sellers shall on or prior to Closing
transfer to NNGC the registration for the domain name
▇▇▇.▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
ARTICLE VI.
CONDITIONS TO CLOSING
6.1. Conditions to the Obligations of Buyer and Sellers.
The respective obligations of each party to consummate the transactions
contemplated hereby are subject to the satisfaction of the following conditions,
any or all of which may be waived in writing by the parties hereto, in whole or
in part, to the extent permitted under Applicable Laws, on or prior to the
Closing Date:
(a) No Injunctions or Restraints. No preliminary or permanent injunction
or other order issued by any Governmental Authority, nor any statute,
rule, regulation, decree or executive order promulgated or enacted by
any Governmental Authority, which declares this Agreement invalid or
unenforceable in any respect or prevents the consummation of the
transactions contemplated hereby, shall be in effect; and no action or
proceeding seeking to declare this Agreement invalid or unenforceable
in any respect or to prevent the consummation of the transactions
contemplated hereby shall have been instituted by the FERC, the
Federal Trade Commission or the Department of Justice and be pending
before any other Governmental Authority.
(b) HSR Act. The waiting period under the HSR Act applicable to the
transactions contemplated hereby shall have expired or been
terminated.
(c) Consents Obtained. All consents, approvals, authorizations and waivers
set forth in Section 6.1(c) of the Disclosure Letter shall have been
obtained.
6.2. Conditions to the Obligations of Buyer.
The obligation of Buyer to consummate the transactions contemplated hereby
is further subject to the satisfaction of the following conditions, any or all
of which may be waived in writing by Buyer, in whole or in part, on or prior to
the Closing Date.
(a) Representations and Warranties. The representations and warranties of
Sellers made herein shall be true and correct, at and as of the
Closing Date (except to the extent that any representation or warranty
speaks as of a specified date, in which
37
case such representation or warranty shall be true and correct only as
of such specified date), except for (i) changes permitted by this
Agreement and (ii) failures of such representations and warranties to
be true and correct that without regard to any materiality or Material
Adverse Effect standard in such representation or warranty could not,
individually or in the aggregate, have a Material Adverse Effect.
Buyer shall have received a certificate from each Seller to such
effect dated the Closing Date and signed on behalf of such Seller by
an authorized officer of such Seller.
(b) Agreements. Each Seller shall have performed in all material respects
all of its obligations, agreements and covenants required to be
performed by it under this Agreement on or prior to the Closing Date.
Buyer shall have received a certificate from each Seller to such
effect dated the Closing Date and signed on behalf of such Seller by
an authorized officer of such Seller.
(c) No Material Adverse Effect. Since the date hereof, there shall not
have occurred any change, event or condition which has had or could
reasonably be expected to have a Material Adverse Effect, nor shall
there have been (1) a general rate proceeding initiated by NNGC under
Section 4 or by FERC under Section 5 of the NGA or (2) physical damage
to NNGC's Pipeline which significantly impairs the operation of the
Pipeline or causes a substantial decrease in the throughput of the
Pipeline for a period of more than two weeks.
(d) Resignation of Directors of NNGC. All of the directors of NNGC shall
have tendered their resignations as members of the Board of Directors
of NNGC and copies thereof shall have been provided to Buyer.
(e) Receipt of Documents. Sellers shall have delivered to Buyer (i)
certificates evidencing the Shares, (ii) copies of the certificate of
incorporation and the bylaws of NNGC, certified as being true by the
Secretary of NNGC, and (iii) a certificate evidencing the good
standing of NNGC under the laws of its jurisdiction of incorporation.
(f) Bankruptcy Filings. None of Dynegy, Dynegy Holdings, Inc., MCTJ
Holding Company LLC, NNGC Holding or NNGC shall have filed,
voluntarily or otherwise, any petition for relief under chapter 11,
title 11 of the United States Code, 11 ▇.▇.▇.▇▇. ss. 101, et seq. on
or prior to the Closing Date.
(g) Opinion of Counsel. Buyer shall have received an opinion, dated the
Closing Date, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel to Sellers, stating
that Buyer will acquire the Shares free and clear of any adverse
claims within the meaning of the Uniform Commercial Code, which
opinion shall be in form and substance reasonably satisfactory to
Buyer.
(h) There shall be no material default by the Sellers or any of their
affiliates (including, without limitation, NNGC) under the Credit
Agreement upon or immediately prior to the Closing.
6.3. Conditions to the Obligations of Sellers.
The obligation of Sellers to consummate the transactions contemplated
hereby is further subject to the satisfaction of the following conditions, any
or all of which may be waived in writing by Sellers, in whole or in part, on or
prior to the Closing Date:
(a) Representations and Warranties. The representations and warranties of
Buyer
38
made herein shall be true and correct at and as of the Closing Date
(except to the extent that any representation or warranty speaks as of
a specified date, in which case such representation or warranty shall
be true and correct only as of such specified date) , except for (i)
changes permitted by this Agreement and (ii) failures of such
representations and warranties to be true and correct that without
regard to any materiality standard in such representation or warranty
could not, individually or in the aggregate, prevent or materially
impair or delay the ability of Buyer to perform its obligations under
this Agreement or to consummate the transactions contemplated by this
Agreement. Sellers shall have received a certificate to such effect
dated the Closing Date and signed on behalf of Buyer by an authorized
officer of Buyer.
(b) Agreements. Buyer shall have performed in all material respects all of
its obligations, agreements and covenants required to be performed by
it under this Agreement on or prior to the Closing Date. Sellers shall
have received a certificate to such effect dated the Closing Date and
signed on behalf of Buyer by an authorized officer of Buyer.
(c) Release of Guarantees. Any guaranty, support or other agreement listed
in Section 5.8 of the Disclosure Letter by which Dynegy or any
Subsidiary of Dynegy (other than NNGC) guarantees or supports NNGC's
indebtedness shall be released in a manner reasonably satisfactory to
Dynegy without creating any material default under the obligation
guaranteed or supported.
(d) Receipt of Documents and Payment. Buyer shall have delivered to
Sellers the Shares Purchase Price in accordance with Section 2.5.
ARTICLE VII.
TERMINATION
7.1. Termination.
This Agreement may be terminated and the transactions contemplated hereby
abandoned at any time prior to the Closing:
(a) by mutual written consent of Buyer and Sellers;
(b) by Sellers, if the Closing shall not have occurred on or prior to
August 23, 2002 and the condition set forth in Section 6.1(b) shall
not have been satisfied; provided, however, that Sellers are not then
in material breach of Section 5.3 or Section 5.14.
(c) by Buyer or Sellers, if the Closing shall not have occurred on or
prior to October 27, 2002;
(d) by Buyer, so long as Buyer is not then in material breach of its
obligations under this Agreement, upon a breach of any covenant or
agreement on the part of Sellers set forth in this Agreement, or if
any representation or warranty of Sellers shall have been or become
untrue, in each case such that the conditions set forth in Section
6.2(a) or (b) would not be satisfied and such breach or untruth (i)
cannot be cured by Sellers or (ii) if curable, is not cured within 10
days of the date on which Sellers receive written notice thereof from
Buyer;
(e) by Sellers, so long as Sellers are not then in material breach of
their obligations under this Agreement, upon a breach of any covenant
or agreement on the part of Buyer set forth in this Agreement, or if
any representation or warranty of Buyer
39
shall have been or become untrue, in each case such that the
conditions set forth in Section 6.3(a) or (b) would not be satisfied
and such breach or untruth (i) cannot be cured by Buyer or (ii) if
curable, is not cured within 10 days of the date on which Buyer
receive written notice thereof from Sellers; or
(f) by Buyer or Sellers, if any competent Governmental Authority shall
have issued an order, decree or ruling or taken any other action,
which permanently enjoins or prevents or otherwise prohibits the
acquisition by Buyer of the Shares and such order, decree, ruling or
other action shall have become final and nonappealable.
7.2. Effect of Termination.
(a) In the event of termination by Sellers or Buyer pursuant to Section
7.1, written notice thereof stating the provision of Section 7.1 pursuant to
which such termination is made shall promptly be given to the other parties
hereto. In the event of termination pursuant to Section 7.1, the transactions
contemplated by this Agreement shall be terminated and this Agreement shall
forthwith become void and have no further effect, except that the provisions of
this Article VII and Article VIII shall survive the termination hereof. Nothing
in this Section 7.2 shall be deemed to release any party from any liability for
any material breach by such party of the terms and provisions of this Agreement
occurring before such termination.
(b) In the event that this Agreement is terminated by Sellers pursuant to
Section 7.1(b), then Sellers shall pay to Buyer the sum of $10,000,000 within
two Business Days following notice of such termination in cash by wire transfer
of immediately available funds to an account designated in writing by Buyer.
(c) If this Agreement (i) is terminated pursuant to Sections 7.1(a), (b) or
(d) and (ii) Sellers consummate an Alternative Transaction within 12 months of
the date of such termination of this Agreement, then Seller shall pay to Buyer
the sum of $25,000,000.00 in cash by wire transfer of immediately available
funds to an account designated in writing by Buyer on or prior to the date of
the closing of the Alternative Transaction; provided, however, that no fee shall
be payable if (A) the Agreement is terminable pursuant to Section 7.1(e)
(without regard to Section 7.1(e)(i) and (ii)) or (B) this Agreement is
terminated by Sellers or Buyer pursuant to Section 7.1(c) and at such time,
assuming that the waiting period under the HSR Act had expired or terminated,
all of the conditions to the obligations of Sellers and Buyer to consummate the
transactions contemplated by this Agreement set forth in Article VI would have
been fulfilled or waived in accordance with this Agreement.
(d) The parties hereto agree that if Sellers pay to Buyer the applicable
fees provided pursuant to Section 7.2(b) and/or Section 7.2(c), then Buyer shall
have no other remedy for such termination or any breach of this Agreement and
Buyer shall not assert or pursue in any manner, directly or indirectly, any
claim or cause of action against Sellers or any of their affiliates, officers or
directors based upon such termination or any breach of this Agreement by Sellers
unless Sellers shall have breached or otherwise failed to comply with their
obligations set forth in Section 5.14.
ARTICLE VIII.
INDEMNIFICATION
8.1. Survival.
The respective representations and warranties of the parties hereto
contained herein or in any certificates or other documents delivered pursuant to
this Agreement on the Closing shall survive the Closing until April 30, 2003;
provided however, that the representations and
40
warranties set forth in Section 3.2 (Capitalization) shall survive indefinitely,
the representations and warranties set forth in Section 3.16 (Environmental
Matters) shall survive until the fifth anniversary of the Closing Date and the
representations and warranties in Section 3.9 (Taxes) shall survive for a period
equal to the applicable statute of limitations.
8.2. Indemnification Coverage.
(a) Notwithstanding the Closing or the delivery of the Shares and
regardless of any investigation at any time made by or on behalf of the Buyer or
of any knowledge or information that the Buyer may have, the Sellers shall
jointly and severally indemnify and agree to defend, save and hold the Buyer,
NNGC and each of their officers, directors, employees, agents and affiliates
(other than the Sellers) (collectively, the "Buyer Indemnified Parties")
harmless if any such Buyer Indemnified Party shall at any time or from time to
time suffer any damage, judgment, fine, penalty, demand, settlement, liability,
loss, cost, Tax, expense (including reasonable attorneys', consultants' and
experts' fees), claim or cause of action (each, a "Loss") arising out of,
relating to or resulting from:
(i) any breach or inaccuracy in any representation by the Sellers or the
breach of any warranty by the Sellers contained in this Agreement
(other than those contained in Section 3.9) or any certificates or
other documents delivered pursuant to this Agreement on Closing;
(ii) any failure by the Sellers to perform or observe any term, provision,
covenant, or agreement (other than those contained in Section 5.11) on
the part of the Sellers to be performed or observed under this
Agreement; and
(iii) any Pre-Closing Taxes or any breach or inaccuracy in any
representation or warranty by Sellers in Section 3.9 or any failure by
Sellers to perform or observe any term, provision, covenant or
agreement on the part of Sellers to be performed or observed under
Section 5.11.
(b) Notwithstanding the Closing or the delivery of the Shares and
regardless of any investigation at any time made by or on behalf of the Sellers
or of any knowledge or information that the Sellers may have, and the Buyer
shall indemnify and agree to defend, save and hold the Sellers and its officers,
directors, employees, agents and affiliates (collectively, the "Seller
Indemnified Parties") harmless if any such Seller Indemnified Party shall at any
time or from time to time suffer any Loss arising out of, relating to, or
resulting from:
(i) any breach or inaccuracy in any representation by the Buyer or the
breach of any warranty by the Buyer contained in this Agreement or any
certificates or other documents delivered pursuant to this Agreement
on Closing; and
(ii) any failure by the Buyer to perform or observe any term, provision,
covenant, or agreement on the part of the Buyer to be performed or
observed under this Agreement.
(c) The foregoing indemnification obligations shall be subject to the
following limitations:
(i) the Sellers' aggregate liability under Section 8.2(a)(i) and (ii) and
the Buyer's aggregate liability under Section 8.2(b) shall not, in
either case, exceed $208,800,000 (the "Cap"); provided, however, that
the Cap shall not be applicable to breaches under Section 2.5 or 3.2;
and the Seller's aggregate liability under Section 8.2(iii) shall not
exceed $208,800,000 (the "Tax Cap");
(ii) no indemnification for any Losses asserted against the Buyer or the
Sellers, as the case may be, under Section 8.2(a)(i) or (ii) or
Section 8.2(b) shall be required unless and until
41
the cumulative aggregate amount of such Losses exceeds $5,000,000, at
which point the Sellers or the Buyer, as the case may be, shall be
obligated to indemnify the Indemnified Party (as hereinafter defined)
only as to the amount of such Losses in excess of $5,000,000 (the
"Deductible"); provided, however, that the Deductible shall not be
applicable to breaches under Section 2.5 or 3.2 or Losses asserted
against Sellers under Section 8.2(a)(iii);
(iii) no indemnification for any Losses asserted against Sellers under
Section 8.2(a)(iii) for a breach of any inaccuracy of any
representation under Section 3.9 or failure by Sellers to perform any
covenant under Section 5.11 shall be required unless and until the
cumulative aggregate amount of such Losses exceeds $50,000, at which
point Sellers shall be obligated to indemnify the Indemnified Party
the full amount of such Losses;
(iv) the amount of any Losses suffered by a Seller Indemnified Party or a
Buyer Indemnified Party, as the case may be, shall be reduced by any
third-party insurance which such party receives in respect of or as a
result of such Losses. If any Losses for which indemnification is
provided hereunder is subsequently reduced by any third-party
insurance or other indemnification benefit or recovery, the amount of
the reduction shall be remitted to the Indemnifying Party (as
hereinafter defined);
(v) no claim may be asserted nor may any action be commenced (A) against
the Sellers for breach or inaccuracy of any representation or breach
of a warranty, unless written notice of such claim or action is
received by the Sellers describing in reasonable detail the facts and
circumstances with respect to the subject matter of such claim or
action on or prior to the date on which the representation or warranty
on which such claim or action is based ceases to survive as set forth
in Section 8.1 (it being agreed and understood that if a claim for a
breach of a representation or warranty is timely made, the
representation or warranty shall survive until the date on which such
claim is finally liquidated or otherwise resolved), or (B) against the
Buyer for breach or inaccuracy of any representation or breach of a
warranty, unless written notice of such claim or action is received by
the Buyer describing in reasonable detail the facts and circumstances
with respect to the subject matter of such claim or action on or prior
to the date on which the representation or warranty on which such
claim or action is based ceases to survive as set forth in Section 8.1
(it being agreed and understood that if a claim for a breach of a
representation or warranty is timely made, the representation or
warranty shall survive until the date on which such claim is finally
liquidated or otherwise resolved);
(vi) an Indemnified Party shall not be entitled under this Agreement to
multiple recovery for the same Losses; and
(vii) no Losses shall be recoverable under this Agreement by an Indemnified
Party to the extent that the Losses are capital items that have
historically been included in NNGC's rate base.
(d) Notwithstanding anything contained herein, Buyer shall not be entitled
to indemnification under this Agreement for any Loss arising out of, relating to
or resulting from Legal Proceedings set forth in Section 8.2 of the Disclosure
Letter.
8.3. Procedures.
(a) With respect to any claim other than a Tax Claim (as defined herein),
any Indemnified Party shall notifythe Indemnifying Party (with reasonable
specificity) promptly after it becomes aware of facts supporting a claim or
action for indemnification under this Article VIII, and shall
42
provide to the Indemnifying Party as soon as practicable thereafter all
information and documentation reasonably necessary to support and verify any
Losses associated with such claim or action. Subject to Section 8.2(c)(v), the
failure to so notify or provide information to the Indemnifying Party shall not
relieve the Indemnifying Party of any liability that it may have to any
Indemnified Party, except to the extent that the Indemnifying Party demonstrates
that it has been materially prejudiced by the Indemnified Party's failure to
give such notice, in which case the Indemnifying Party shall be relieved from
its obligations hereunder to the extent of such material prejudice. The
Indemnifying Party shall defend, contest or otherwise protect the Indemnified
Party against any such claim or action by counsel of the Indemnifying Party's
choice at its sole cost and expense; provided, however, that the Indemnifying
Party shall not make any settlement or compromise without the prior written
consent of the Indemnified Party (which consent shall not be unreasonably
withheld or delayed) unless the sole relief provided is monetary damages that
are paid in full by the Indemnifying Party. The Indemnified Party shall have the
right, but not the obligation, to participate at its own expense in the defense
thereof by counsel of the Indemnified Party's choice and shall in any event use
its reasonable best efforts to cooperate with and assist the Indemnifying Party.
If the Indemnifying Party fails timely to defend, contest or otherwise protect
against such suit, action, investigation, claim or proceeding, the Indemnified
Party shall have the right to do so, and the Indemnified Party shall be entitled
to recover the entire cost thereof from the Indemnifying Party, including,
without limitation, reasonable attorneys' fees, disbursements and amounts paid
as the result of such suit, action, investigation, claim or proceeding.
(b) If a claim is made by any Tax Authority which, if successful, is likely
to result in an indemnity payment to Buyer or any of its affiliates pursuant to
Section 8.2(a)(iii), Buyer shall notify Sellers of such claim (a "Tax Claim"),
stating the nature and basis of such claim and the amount thereof, to the extent
known. Failure to give such notice shall not relieve Sellers from any liability
which it may have on account of this indemnification or otherwise, except to the
extent that Sellers are materially prejudiced thereby. Sellers will have the
right, at their option, upon timely notice to Buyer, to assume control of any
defense of any Tax Claim (other than a Tax Claim related solely to Taxes of NNGC
for any Tax period that begins on or prior to the Closing Date and ends after
the Closing Date (each, a "Straddle Period")) with its own counsel; provided,
however, such counsel is reasonably satisfactory to Buyer. Sellers' right to
control a Tax Claim will be limited to amounts in dispute which would be paid by
Sellers or for which Sellers would be liable pursuant to Article VIII. Costs of
such Tax Claims are to be borne by Sellers unless the Tax Claim relates to
taxable periods ending after the Closing Date, in which event such costs will be
fairly apportioned. Buyer and NNGC shall cooperate with Sellers in contesting
any Tax Claim, which cooperation shall include the retention and, upon Sellers'
request, the provision of records and information which are reasonably relevant
to such Tax Claim and making employees available on a mutually convenient basis
to provide additional information or explanation of any material provided
hereunder. Buyer and Sellers shall jointly control all proceedings taken in
connection with any claims for Taxes relating solely to a Straddle Period of
NNGC.
8.4. Remedy.
Absent fraud, and except as provided in Section 9.11, from and after the
Closing the sole remedy of a party in connection with (i) a breach or inaccuracy
of the representations, or breach of warranties, in this Agreement or any
certificates or other documents delivered pursuant
43
to this Agreement on Closing, or (ii) any failure by a party to perform or
observe any term, provision, covenant, or agreement on the part of such party to
be performed or observed under this Agreement, shall, in each case, be as set
forth in this Article VIII.
ARTICLE IX.
GENERAL PROVISIONS
9.1. Extension; Waiver.
The parties hereto may, 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
contained herein; and (c) waive compliance by the other parties with any of the
agreements or conditions 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 a
written instrument signed on behalf of such party. The failure of any party
hereto to assert any of its rights hereunder shall not constitute a waiver of
such rights.
9.2. Amendment.
This Agreement may be amended, modified or supplemented only by written
agreement of Buyer and Sellers at any time prior to the Closing.
9.3. Expenses.
Each of the parties hereto shall pay the fees and expenses of its
respective counsel, accountants and other experts and shall pay all other costs
and expenses incurred by it in connection with the negotiation, preparation and
execution of this Agreement and the consummation of the transactions
contemplated hereby. Except as otherwise specifically provided herein, Sellers
shall pay any fees and expenses incurred prior to Closing of any outside
counsel, accountants and other experts of NNGC in connection with the
negotiation and preparation of this Agreement.
9.4. Governing Law; Venue.
(a) This Agreement will be governed by, and construed in accordance with,
the laws of the State of New York, without regard to any conflict or choice of
law principles that would apply the substantive law of some other jurisdiction.
(b) THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK AND THE FEDERAL COURTS OF THE UNITED STATES OF AMERICA
LOCATED IN THE STATE OF NEW YORK SOLELY IN RESPECT OF THE INTERPRETATION AND
ENFORCEMENT OF THE PROVISIONS OF THIS AGREEMENT AND THE DOCUMENTS REFERRED TO IN
THIS AGREEMENT AND IN RESPECT OF THE TRANSACTIONS CONTEMPLATED HEREBY, AND
HEREBY WAIVE, AND AGREE NOT TO ASSERT, AS A DEFENSE IN ANY ACTION, SUIT OR
PROCEEDING FOR INTERPRETATION OR ENFORCEMENT HEREOF OR ANY SUCH DOCUMENT THAT IS
NOT SUBJECT THERETO OR THAT SUCH ACTION, SUIT OR PROCEEDING MAY NOT BE BROUGHT
OR IS NOT MAINTAINABLE IN SAID COURTS OR THAT VENUE THEREOF MAY NOT BE
APPROPRIATE OR THAT THIS AGREEMENT OR ANY SUCH DOCUMENT MAY NOT BE ENFORCED IN
OR BY SUCH COURTS, AND THE PARTIES HERETO IRREVOCABLY AGREE THAT ALL CLAIMS WITH
RESPECT TO SUCH ACTION, SUIT OR PROCEEDING SHALL BE HEARD AND DETERMINED BY SUCH
A NEW YORK STATE OR FEDERAL COURT. THE PARTIES HEREBY CONSENT TO AND GRANT ANY
SUCH COURT JURISDICTION OVER THE PERSON OF SUCH PARTIES AND
44
OVER THE SUBJECT MATTER OF SUCH DISPUTE AND AGREE THAT MAILING OF PROCESS OR
OTHER PAPERS IN CONNECTION WITH SUCH ACTION, SUIT OR PROCEEDING IN THE MANNER
PROVIDED IN SECTION 9.5 OR IN SUCH OTHER MANNER AS MAY BE PERMITTED BY LAW SHALL
BE VALID AND SUFFICIENT SERVICE THEREOF.
9.5. Notices.
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if signed by the respective persons
giving them (in the case of any corporation the signature shall be by an officer
thereof) and delivered by hand, or mailed registered or certified, return
receipt requested, postage prepaid and addressed to the party at the address
specified below or sent by electronic transmission (with confirmation) to the
telecopier number specified below:
If to Sellers, to:
Dynegy Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
NNGC Holding Company, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Buyer, to:
MidAmerican Energy Holdings Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
with a copy to:
▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇
▇▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Such names, addresses or telecopier numbers may be changed by notice given
in accordance with this Section 9.5. Notices and other communications properly
given as aforesaid shall be deemed delivered upon delivery by hand, on the day
the sender received telecopier confirmation that such notice was received at the
telecopier number of addressee, or on the fifth Business Day following the date
of mailing.
9.6. Entire Agreement.
This Agreement, together with the Disclosure Letter and all schedules,
exhibits, annexes, certificates, instruments and agreements delivered pursuant
hereto and the Confidentiality Agreement constitute the entire understanding of
the parties hereto with respect to the subject matter contained herein, and
supersedes and cancels all prior agreements, negotiations, correspondence,
undertakings (expressed or implied) and communications of the parties, oral or
written, respecting such subject matter. There are no restrictions, promises,
representations, warranties, agreements or undertakings of any party hereto with
respect to the transactions contemplated by this Agreement other than those set
forth herein or made hereunder. Buyer acknowledge that none of Sellers, NNGC or
any other Person has made any representation or warranty, expressed or implied,
as to the accuracy or completeness of any information regarding NNGC furnished
or made available to Buyer or their representatives, except as expressly set
forth in this Agreement and the Disclosure Letter.
9.7. Headings; Construction.
The article, section and paragraph headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. This Agreement shall be deemed to be joint
work product of Buyer and Sellers without regard to the identity of the
draftsperson, and any rule of construction that a document shall be interpreted
or construed against the drafting party shall not be applicable.
9.8. Counterparts.
This Agreement may be executed in multiple counterparts and by different
parties hereto in separate counterparts, each of which shall be deemed to be an
original, but all of which shall constitute one and the same agreement.
9.9. Assignment; Parties in Interest; No Third Party Beneficiaries.
Neither this Agreement nor any of the rights, interest or obligations
hereunder shall be
46
assigned, directly or indirectly, prior to the Closing Date by any of the
parties hereto without the prior written consent of the other parties, except
that Buyer shall be permitted to assign its obligations hereunder to a
wholly-owned direct or indirect subsidiary of Buyer without such prior written
consent so long as Buyer remains obligated with respect to its obligations
hereunder. This Agreement shall be binding upon Sellers and Buyer and shall
inure to the sole benefit of Sellers and Buyer and their respective successors
and permitted assigns. Except as contemplated by Article VIII, nothing in this
Agreement, express or implied, is intended to or will confer upon any other
Person any rights or remedies under or by reason of this Agreement.
9.10. Severability.
The invalidity of any portion hereof shall not affect the validity, force
or effect of the remaining portions hereof. If it is ever held that any
restriction hereunder is too broad to permit enforcement of such restriction to
its fullest extent, each party agrees that a court of competent jurisdiction may
enforce such restriction to the maximum extent permitted by law, and each party
hereby consents and agrees that such scope may be judicially modified
accordingly in any proceeding brought to enforce such restriction.
9.11. 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 parties to this Agreement for which
monetary 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 Section 9.11 is without prejudice to any other rights that the parties
hereto may have for any failure to perform this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first written above by their respective duly authorized
officers.
DYNEGY INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Vice President
NNGC HOLDING COMPANY, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Title: Senior Vice President
MIDAMERICAN ENERGY HOLDINGS COMPANY
By: /s/ ▇▇▇▇ ▇▇▇▇
----------------------------------
Name: ▇▇▇▇ ▇▇▇▇
Title: President and Chief Operating
Officer
48