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EXHIBIT 10.2
AGREEMENT AND CONSENT
This AGREEMENT AND CONSENT (this "Agreement"), dated as of November 19,
2001 among Dynegy Inc., an Illinois corporation ("Dynegy"), Dynegy Holdings
Inc., a Delaware corporation ("Dynegy Holdings"), Enron Corp., an Oregon
corporation ("Enron"), CGNN Holding Company, Inc., a Delaware corporation
("CGNN"), MCTJ Holding Co. LLC, a Delaware limited liability company ("MCTJ"),
NNGC Holding Company, Inc., a Delaware corporation ("NNGC Holdings"), Northern
Natural Gas Company, a Delaware corporation ("Northern Natural") (Dynegy, Dynegy
Holdings, Enron, CGNN, MCTJ, NNGC Holdings and Northern Natural being
collectively referred to herein as the "Non-Bank Parties"), Citicorp USA, Inc.
and JPMorgan Chase Bank, as Co-Administrative Agents, and the lenders party to
the Credit Agreement (as defined below) (as defined in such Credit Agreement,
the "Banks").
RECITALS
A. CGNN, MCTJ, Enron, Dynegy Holdings, and Dynegy are parties to an
Option Agreement, dated as of November 9, 2001 (the "Option Agreement"), as
amended as of November 19, 2001.
B. On November 9, 2001, Northern Natural filed a Certificate of
Designations of the Series A Preferred Stock (the "Certificate of Designations")
with the Secretary of State of the State of Delaware creating a series of
Northern Natural's Preferred Stock, par value $0.01 per share, designated as the
Series A Preferred Stock (the "Series A Preferred").
C. On November 13, 2001, Northern Natural issued 1,000 shares of Series
A Preferred to Dynegy.
D. Northern Natural has entered into a Credit Agreement, dated as of
November 19, 2001, with Citicorp North America, Inc. and JPMorgan Chase Bank, as
Co-Administrative Agents, Citicorp North America, Inc., as Paying Agent,
JPMorgan Chase Bank, as Collateral Trustee and Issuing Bank, and the Banks (as
amended, restated, modified or supplemented from time to time, the "Credit
Agreement"), and various of the parties have entered, or in the future may
enter, into Security Documents (as defined in the Credit Agreement). The Credit
Agreement, the Notes, the Security Documents, the Enron Guaranty, each Notice of
Borrowing, each Notice of Letter of Credit, the ETSC Agreement, the Subordinated
Enron Note, the Fee Letter, the Letter of Credit Documents, the Assumption
Documents and the Corporate Amendment Documents (as each such term is defined in
the Credit Agreement), as amended, restated, modified or supplemented from time
to time, are collectively referred to herein as the "Bank Documents".
E. The Credit Agreement requires, as a condition precedent to the
extension of credit by the Banks, that the Non-Bank Parties enter into and agree
and consent to the matters set forth in this Agreement.
F. As an inducement to Dynegy and Dynegy Holdings to enter into this
Agreement, the Banks agree to certain matters set forth in this Agreement.
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NOW, THEREFORE, in consideration of the mutual agreements herein
contained and other good and valuable consideration, the sufficiency of which is
hereby acknowledged, the parties hereby agree as follows:
1. Dynegy and Dynegy Holdings approve, pursuant to Section 4.8.7 of the
Option Agreement and Section 5.6 of the Certificate of Designations, the
amendment to the Certificate of Incorporation of Northern Natural attached
hereto as ANNEX A. This approval constitutes a written consent under Section 228
of the Delaware General Corporation Law. Northern Natural agrees promptly to
file the amendment to the certificate of incorporation of northern natural
attached hereto as ANNEX A.
2. The Non-Bank Parties hereby consent to (a) the execution and
delivery by Enron, NNGC Holdings and Northern Natural (and any other subsidiary
of Enron that is a party to or bound by any Bank Document) of the Bank Documents
on or before the Initial Funding Date (as defined in the Credit Agreement) and
any Security Documents, Notes, Notices of Borrowings and Letter of Credit
Documents thereafter, (b) the borrowing or assumption by Northern Natural of up
to $450 million aggregate principal amount of indebtedness under the Bank
Documents, (c) the grant by NNGC Holdings and Northern Natural of the Liens (as
defined in the Credit Agreement) created under the Bank Documents, (d) the
perfection and maintenance of the Liens created under the Bank Documents and (e)
subject to the terms hereof, the exercise by any Secured Party (as defined in
the Credit Agreement) of its or their remedies pursuant to the Bank Documents or
applicable law, whether by judicial action or otherwise, including, without
limitation, any action to accelerate the Secured Obligations, to commence
insolvency or bankruptcy proceedings against any Loan Party (as defined in the
Credit Agreement), foreclosure, sale in lieu of foreclosure, sale after default
under the Uniform Commercial Code of any relevant state, collection of accounts
or other receivables, offset or the institution of litigation (collectively,
"Remedial Action"). Additionally, such consent shall also constitute a written
consent of Dynegy and Dynegy Holdings given in accordance with Section 228 of
the General Corporation Law of the State of Delaware.
3. The Non-Bank Parties agree that Northern Natural may incur
indebtedness that is Permitted Refinancing Debt (as defined in the Certificate
of Designations), and use the proceeds thereof to retire the Secured Obligations
(as defined in the Credit Agreement) in accordance with the Credit Agreement.
4. Except to the extent such payment or distribution is permitted by
the Bank Documents, Dynegy agrees that if it receives any payment or
distribution upon a redemption or repurchase or other acquisition by Northern
Natural of the Series A Preferred prior to (i) the repayment in full in cash of
the non-contingent Secured Obligations, (ii) the termination of all Commitments
(as defined in the Credit Agreement) and (iii) the termination or expiration of
the Letters of Credit (as defined in the Credit Agreement) or, if any Letters of
Credit remain outstanding, the provision of cash collateral or an acceptable
letter of credit in favor of the Issuing Bank (as defined in the Credit
Agreement) to secure the undrawn amount thereunder, such acceptable letter of
credit to be issued by a bank reasonably satisfactory to the Issuing Bank
(hereinafter, such cash collateral or acceptable letter of credit being referred
to as the "LC Collateral Agreements") (the occurrence of items (i), (ii) and
(iii) being referred to as the "Bank Debt Repayment Date") it shall pay over or
deliver to the Paying Agent for the benefit of the
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Secured Parties all such payments or distributions until the occurrence of
the Bank Debt Repayment Date.
5. Dynegy agrees that if it receives any payment or distribution upon a
liquidation, deemed liquidation, dissolution, winding up, bankruptcy,
insolvency, receivership, reorganization, assignment for the benefit of
creditors or other marshaling of assets or liabilities of Northern Natural prior
to the Bank Debt Repayment Date, it shall pay over or deliver to the Paying
Agent for the benefit of the Secured Parties all such payments or distributions
until the occurrence of the Bank Debt Repayment Date.
6. If an Event of Default (as defined in the Credit Agreement) or any
other event occurs under the Bank Documents and the Co-Administrative Agents
have actual knowledge thereof, which results in, or gives the Secured Parties
the right to exercise, a Remedial Action (any such Event of Default or such
other event hereinafter called a "Trigger Event"), the Co-Administrative Agents
shall promptly, but in any case within three Business Days (as defined in the
Credit Agreement) after having actual knowledge of such Trigger Event, provide
written notice to Dynegy and Dynegy Holdings of the existence of the Trigger
Event. If the Secured Parties decide to take any Remedial Action as a result of
such Trigger Event, the Co-Administrative Agents shall promptly, but in any case
within three Business Days after such decision to take such Remedial Action,
provide written notice to Dynegy and Dynegy Holdings of the decision to take
such Remedial Action. The Co-Administrative Agents, on behalf of the Secured
Parties, agree not to take any Remedial Action until the Standstill Period (as
hereinafter defined) has ended; provided, however, nothing herein shall prohibit
any Secured Party from exercising during the Standstill Period any right it may
have at law or under the Bank Documents (i) upon the occurrence and during the
continuance of any Trigger Event to take such action as it deems to be
reasonably necessary to maintain the effectiveness, perfection or priority of
its Liens (as defined in the Credit Agreement) under the Bank Documents or (ii)
upon the occurrence and during the continuance of any Trigger Event other than
an Enron Default (as hereafter defined) to exercise its rights and remedies
under the Account Control Agreements (as defined in the Credit Agreement).
During the Standstill Period, Dynegy shall have the right, but not the
obligation, to cure any Event of Default (as defined in the Credit Agreement).
For purposes of this Agreement, "Standstill Period" means the period commencing
on the date a Trigger Event occurs and ending on the earliest of (i) 30 days
after delivering written notice to Dynegy and Dynegy Holdings of their decision
to take any Remedial Action, and (ii) the occurrence of any Event of Default
with respect to Northern Natural under Section 6.01(e) of the Credit Agreement
(the "Standstill Period").
During the Standstill Period, unless the Trigger Event has been cured
or waived in accordance with the Bank Documents, Dynegy and its assignees shall
have the option, but not the obligation, to purchase from the holders (the
"Holders") of the Secured Obligations (the "Bank Debt") for an amount (the "Bank
Debt Purchase Price") equal to the sum of (a) the principal amount of Bank Debt
then outstanding (excluding the undrawn amount of any outstanding Letters of
Credit), (b) any accrued and unpaid interest on the Bank Debt at the time of
purchase and (c) all accrued and unpaid fees, costs and expenses owed by
Northern Natural under the Bank Documents. In addition, if such option is
exercised, Dynegy will provide for LC Collateral Arrangements. The LC Collateral
Arrangements shall be effected, and the Bank Debt Purchase Price shall be paid
in immediately available funds, in each case collectively in
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exchange for the contemporaneous (i) sale, transfer and assignment by the
Holders to Dynegy or its assignee of all rights and obligations of the
Holders under the Bank Documents as of such date and (ii) delivery to Dynegy
or its assignee of all evidence of the Bank Debt. Such transfer shall be made
pursuant to documentation in form and substance reasonably satisfactory to
all Co-Administrative Agents and Dynegy, and shall be made expressly without
representation or warranty by, or recourse to, the Holders except that the
Holders shall provide a warranty of good title to the Bank Debt, free and
clear of encumbrances. At Dynegy's request and expense, the Holders shall
execute and deliver such other documents as shall be reasonably requested to
so transfer the Bank Debt and the liens and security interests evidenced by
the Security Documents.
During the Standstill Period, unless the Trigger Event has been cured
or waived by the Secured Parties in accordance with the Bank Documents, in the
event that Dynegy has any senior unsecured long-term debt with an Investment
Grade Rating (as hereinafter defined), Dynegy may at its option, in lieu of
exercising the option contained in the previous paragraph, execute a guarantee
of the Bank Debt or provide a guarantee of the Bank Debt from a Person which
owns greater than 20% of Dynegy's common stock as of the date hereof and at such
time has senior unsecured long-term debt with an Investment Grade Rating, in
either event pursuant to a Guarantee substantially in the form of ANNEX B
attached hereto (any such guarantee herein called an "Alternate Guarantee" and
the Person executing and delivering such Alternate Guarantee is herein called
the "Alternate Guarantor"). If such Alternate Guarantor is not Dynegy, ANNEX B
shall be modified as necessary. An "Investment Grade Rating" means the Person
issuing the Guarantee has at least two of the following ratings: (i) at least
BBB- from Standard & Poor's Rating Group or any successor thereto, (ii) at least
Baa3 from Moody's Investors Service, Inc. or any successor thereto, or (iii) at
least BBB- from Fitch IBCA, Duff & Phelps or any successor thereto. Upon the
execution of such an Alternate Guarantee, any Event of Default under Sections
6.01(b) (as subsection (b) relates to any action by Enron or any ERISA Affiliate
(as defined in the Credit Agreement) other than Northern Natural and its
Subsidiaries under Section 4.01(h) and Section 4.01(m)); 6.01(i); 6.01(j),
6.01(k), and 6.01(l) (as subsections (j), (k) and (l) relate to any ERISA
Affiliate other than Northern Natural and its Subsidiaries); 6.01(m); and
6.01(n)(A), (B) and (C) of the Credit Agreement (each, an "Enron Default") will
automatically be cured and such Events of Default will be amended to substitute
the Alternate Guarantor for Enron as appropriate given the context and
references to Enron in Sections 4.01(m) and 5.02(l) of the Credit Agreement will
be changed to references to the Alternate Guarantor. Upon the execution of such
an Alternate Guarantee on or before the end of the Standstill Period, the Enron
Guaranty and any other guaranty of the Secured Obligations by Enron or any
Subsidiary of Enron (other than Northern Natural and NNGC Holdings) will be
terminated and any such Enron Default shall be deemed cured.
7. Dynegy and any subsequent holder of shares of the Series A Preferred
agree that they will not sell, assign, transfer, convey or otherwise dispose of
any shares of or interest in the Series A Preferred unless the recipient of such
shares or interest has previously agreed in writing, in form and substance
reasonably satisfactory to the Co-Administrative Agents and delivered to the
Co-Administrative Agents, to become a Non-Bank Party to and be subject to and
bound by this Agreement; provided that no such Assignee of Dynegy shall have the
benefit of the option to provide a guarantee under Section 6 hereof. Dynegy
agrees to submit to Northern Natural for legending in accordance with Section 8
of the Certificate of Amendment to the Restated
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Certificate of Incorporation of Northern Natural, and Northern Natural agrees
to so legend the certificate or certificates representing all of the
outstanding shares of Series A Preferred.
8. Each of JPMorgan Chase Bank, Citicorp USA, Inc. and Citicorp North
America, Inc. hereby (i) represents that it has no security interest in the
Pledged Shares (as defined in the Credit Agreement) other than pursuant to the
Security Documents and the Voting Trust Agreements referred to therein and (ii)
agrees that none of Northern Natural, NNGC Holdings and MCTJ has guaranteed any
indebtedness of Enron or its Affiliates (other than MCTJ and its subsidiaries)
to the Banks.
9. This Agreement shall be governed by and construed in accordance
with the laws of the State of New York. This Agreement may not be amended
except by an instrument in writing signed by each of the parties hereto.
10. This Agreement and any amendments hereto may be executed in
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute but a single document.
11. Except as specifically set forth or referred to herein, nothing
herein is intended or shall be construed to confer upon any Person other than
the parties hereto and their successors or assigns, (including without
limitation any Person that becomes a Secured Party in accordance with the Bank
Documents) any rights or remedies under or by reason of this Agreement.
12. This Agreement shall be binding upon and inure to the benefit of
each of the parties hereto and their successors and assigns.
13. Nothing contained in this Agreement shall be deemed to create for
any purpose whatsoever a partnership between the parties hereto or any
fiduciary, agency, joint venture, trust or other similar duties between the
parties hereto.
14. Nothing herein shall be interpreted to create any liability of
Dynegy for the payment or performance of the Secured Obligations or impose any
liability upon Dynegy due to the occurrence of any Default or Event of Default
(as such terms are defined in the Credit Agreement).
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This Agreement is executed this 19th day of November, 2001.
DYNEGY INC.
By: /s/ Hugh A. Tarpley
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Name: Hugh A. Tarpley
Title: Executive Vice President
DYNEGY HOLDINGS INC.
By: /s/ Hugh A. Tarpley
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Name: Hugh A. Tarpley
Title: Executive Vice President
ENRON CORP.
By: /s/ Raymond M. Bowen, Jr.
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Name: Raymond M. Bowen, Jr.
Title: Executive Vice President Finance and
Treasurer
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CGNN HOLDING COMPANY, INC.
By: /s/ Kevin A. Howard
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Name: Kevin A. Howard
Title: Authorized Agent
MCTJ HOLDING CO. LLC
By: /s/ Kevin A. Howard
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Name: Kevin A. Howard
Title: Authorized Agent
NNGC HOLDING COMPANY, INC.
By: /s/ Kevin A. Howard
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Name: Kevin A. Howard
Title: Authorized Agent
NORTHERN NATURAL GAS COMPANY
By: /s/ Kevin A. Howard
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Name: Kevin A. Howard
Title: Authorized Agent
CITICORP NORTH AMERICA, INC.,
as Co-Administrative Agent
By: /s/ J. Christoper Lyons
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Name: J. Christoper Lyons
Title: Vice President
JPMORGAN CHASE BANK,
as Co-Administrative Agent and as a Bank
By: /s/ Robert Anastasio
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Name: Robert Anastasio
Title: Vice President
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CITICORP USA, INC.,
as a Bank
By: /s/ J. Christoper Lyons
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Name: J. Christoper Lyons
Title: Vice President