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$450 MM NORTHERN NATURAL GAS COMPANY REVOLVING FACILITY
BORROWER: Northern Natural Gas Company (the "Borrower").
GUARANTOR: Enron Corp.
FACILITY: Secured $450 million revolving credit
facility, of which approximately $115,000,000
of Citibank, N.A.'s initial advances shall be
deemed to be conversions of the obligations
assumed under the Assumption Documents (as
defined in the Commitment Letter) (the
"Assumption Obligations") and, upon such
conversion, the obligations assumed under the
Assumption Documents shall be cancelled (the
"Facility"). Citibank, N.A., The Chase
Manhattan Bank and the Borrower will determine
the appropriate structure for the conversion
of the Assumption Obligations in the Credit
Agreement.
ACCORDION FEATURE: Provided no default exists at such time, the
Borrower may, without consent of the Lenders,
increase the size of the Facility to an amount
not to exceed $550 million. No Lender is in
any way obligated to participate in such
increase by increasing its own commitment
amount, which decision shall be made in the
sole discretion of each Lender at the time the
Borrower elects to exercise its option to
increase the Facility.
PAYING AGENT: Citibank, N.A.
CO-ARRANGERS: Salomon Smith Barney Inc. and J.P. Morgan
Securities Inc.
CO-ADMINISTRATIVE AGENTS: The Chase Manhattan Bank and Citibank, N.A..
LENDERS: Citibank, N.A. and The Chase Manhattan Bank
and such other Lenders acceptable to Citibank,
N.A. and The Chase Manhattan Bank.
SECURITY: A first priority perfected security interest
securing the obligations under the Facility in
(i) all capital stock of the Borrower; (ii) an
unsecured subordinated intercompany note by
Enron Corp. payable to the order of the
Borrower ("Intercompany Note"); and (iii)
subject to agreed exceptions, all other assets
of the Borrower ("Collateral").
USE OF PROCEEDS: Working capital and loans to Enron Corp., such
loans to be subordinated to all other debt of
Enron Corp.
MATURITY DATE: 364 days after the Closing Date.
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CLOSING DATE: On or before November 16, 2001 or, with the
consent of Citibank, N.A. and The Chase
Manhattan Bank, such other date on which
Citibank, N.A. and The Chase Manhattan Bank
shall be satisfied that all conditions
precedent set forth in the Commitment Letter
have been met.
INTEREST RATES
AND FEES: At the Borrower's option, Advances will be
available to it at the rates and for the
Interest Periods set forth below:
(a) Base Rate Option: Base Rate plus 1.50%.
The Base Rate is a fluctuating rate per
annum equal at all times to the highest
of: (i) Citibank's publicly announced
"base rate", (ii) 1/2 of 1% per annum
above the latest three-week moving average
of secondary market morning offering rates
in the United States for three-month
certificates of deposit of major U.S.
money center banks, adjusted for reserve
requirements and FDIC assessment rates,
and (iii) 1/2 of 1% per annum above the
weighted average of the rates on overnight
Federal funds transactions with members of
the Federal Reserve System arranged by
Federal funds brokers.
(b) Eurodollar Rate Option: LIBOR plus 2.50%.
LIBOR is the rate per annum (rounded
upward to the nearest 1/100 of 1% per
annum) appearing on Telerate Page 3750 (or
any successor page) as the London
interbank offered rate for deposits in
dollars at approximately 11:00 a.m.
(London time) two business days before the
first day of the relevant Interest Period
for a term comparable to such Interest
Period. If for any reason such rate is not
available, LIBOR shall be the rate per
annum (rounded upward to the nearest 1/100
of 1% per annum) appearing on Reuters
Screen LIBO page as the London interbank
offered rate for deposits in dollars at
approximately 11:00 a.m. (London time) two
business days before the first day of the
relevant Interest Period for a term
comparable to such Interest Period;
provided, however, if more than one rate
is specified on Reuters Screen LIBO page,
the applicable rate shall be the
arithmetic mean of all such rates. If
neither the Telerate Page 3750 nor the
Reuters Screen LIBO page rate is
available, then LIBOR shall be the rate
per annum at which dollar deposits are
offered by the principal office of
Citibank in London to prime banks in the
London interbank market at 11:00 A.M.
(London
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time) two business days before the first
day of the relevant Interest Period and
with a maturity equal to such Interest
Period. The Borrower may select Interest
Periods of 1, 2 or 3 months for LIBOR
Advances. The Borrower will reimburse each
Lender, upon demand, for the cost of
reserve requirements actually incurred.
DEFAULT RATE: When an event of default exists, all unpaid
amounts under the Facility will bear interest
payable on demand at the Base Rate plus 3.50%.
COMMITMENT FEE: A commitment fee of 0.50% per annum shall
accrue on the daily average unused
commitments.
INTEREST AND FEE
PAYMENTS: Interest on Base Rate Advances and commitment
fees will be payable quarterly in arrears.
Interest on LIBOR Advances will be payable at
the end of the relevant Interest Period.
Interest will be computed on a 365/366-day
basis for Base Rate Advances and on a 360-day
basis for LIBOR Advances. Commitment fees will
be computed on a 360-day basis.
BORROWINGS: Borrowings shall be in minimum principal
amounts of $25,000,000 for LIBOR Advances and
$10,000,000 for Base Rate Advances. All
Advances under the Facility will be made by
the Lenders ratably in proportion to their
respective commitments in the Facility.
Borrowings will be available on same day
notice (by 11:00 a.m. New York City time) for
Base Rate Advances and three business days'
notice for Eurodollar Rate Advances. On the
Closing Date the Borrower shall request an
initial Borrowing of an amount sufficient to
convert all the Assumption Obligations to
advances.
OPTIONAL PREPAYMENTS: Advances may be prepaid in an amount of at
least $10,000,000 on same day notice for Base
Rate Advances and three business days notice
for LIBOR Advances. The Borrower will bear all
losses and costs (but not lost profits)
related to prepayment of LIBOR Advances prior
to the last day of the relevant Interest
Period.
MANDATORY PREPAYMENTS: Subject to agreed exceptions, the Advances
shall be paid and the commitments permanently
reduced by an amount equal to the net cash
proceeds the Borrower receives from (i) any
asset sales, (ii) equity issuances, or (iii)
capital markets transactions.
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CONDITIONS PRECEDENT
TO CLOSING: Customary for financings of this nature,
including:
(a) the execution and delivery of the
following, in form and substance satisfactory
to the Co-Administrative Agents, for the
Facility: (i) a credit agreement, (ii)
certificates with respect to resolutions,
charter, by-laws, incumbency and signatures
and certified copies of all other relevant
documents evidencing any necessary corporate
action and governmental approvals, (iii) all
security documents necessary to obtain a first
perfected security interest (subject to agreed
exceptions) in the Collateral securing the
Facility only (other than certain of the
Borrower's real estate and pipelines and
fixtures that the Co-Administrative Agents
agree may be obtained after the Closing Date
("Post-Closing Collateral")), including
execution and delivery of pledge agreements
covering all of the Borrower's capital stock
and the Intercompany Note and a security
agreement covering all the Borrower's personal
property, (iv) a solvency and corporate
separateness certificate by the Borrower's
chief financial officer, and (v) favorable
legal opinions from counsel for the Borrower
and Enron Corp., including an opinion as to
the enforceability of all loan documents and
the perfection and enforceability of the
security interests and an opinion regarding
governmental approvals for the Facility (such
opinions to be subject to customary exceptions
and qualifications including bankruptcy,
preference, fraudulent transfer or conveyance,
equitable principles, and customary
qualifications as to the enforceability of
indemnities); and
(b) (i) the Paying Agent's obtaining a
first perfected security interest, subject to
agreed exceptions, in the Collateral (other
than the Post-Closing Collateral), and (ii)
receipt of all charters, bylaws, partnership
agreements, or other similar documents for
each of Enron Corp.'s subsidiaries that
directly or indirectly has any interest in the
Borrower.
POST-CLOSING REQUIREMENT: Within 60 days (except as agreed) after the
Closing Date, (i) the Borrower shall have
executed all security documents necessary to
obtain a first perfected security interest
(subject to agreed exceptions) securing the
Facility only in the Post-Closing Collateral
and (ii) the Paying Agent shall have received
satisfactory opinions of counsel with respect
thereto.
CONDITIONS PRECEDENT TO
INITIAL ADVANCE: o Enron Corp. shall have a rating of at
least BBB- and Baa3 by S&P and Moody's,
respectively, and if such rating is BBB-
and Baa3, such rating must be accompanied
with a "stable" outlook ("Investment
Grade").
o Neither Co-Administrative Agent shall have
determined that, except as publicly
disclosed or disclosed in writing to the
Co-Administrative Agents before the
execution of the Commitment
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Letter, since December 31, 2000 a material
adverse change in the business, condition
(financial or otherwise), operations,
performance, properties or prospects of
Enron Corp. and its subsidiaries, taken as
a whole, shall have occurred.
CONDITIONS PRECEDENT TO
ALL ADVANCES: Customary for financings of this nature, including
the following:
o All representations and warranties are
correct on and as of the date of the
borrowing before and after giving effect
to such borrowing and to the application
of the proceeds therefrom (other than
those representations and warranties that
expressly relate solely to a specific
earlier date, which shall remain correct
as of such earlier date), as though made
on and as of such date.
o No event or condition exists or would
result from such borrowing which
constitutes an event of default or would
constitute an event of default but for the
requirement that notice be given or time
elapse or both.
o The Paying Agent shall have received such
other approvals, opinions or documents as
any Lender through the Paying Agent may
reasonably request.
REPRESENTATIONS
AND WARRANTIES OF THE
BORROWER: Usual and customary for transactions of this
nature, including but not limited to: (i)
confirmation of corporate status and authority of
the Borrower and its subsidiaries, (ii)
documentation and performance duly authorized and
do not contravene laws, corporate documents,
judgments, orders or material agreements, (iii)
documentation, including the Corporate Amendment
Documents and the Assumption Documents, are legal,
valid, binding and enforceable, (iv) financial
statements, (v) since December 31, 2000, no
material adverse change in the business, condition
(financial or otherwise), operations, performance,
properties or prospects of the Borrower and its
subsidiaries, taken as a whole, (vi) no litigation
having a material adverse effect, (vii) ERISA,
(viii) environmental condition, (ix) taxes, (x)
status under Investment Company Act and Public
Utility Holding Company Act, (xi) full and
complete disclosure, (xii) solvency, and (xiii)
corporate separateness.
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COVENANTS: Usual and customary for transactions of this
nature including: (i) periodic financial
statements, certificates of compliance with
financial covenant, notice of default, certain
ERISA information, and other information
reasonably requested from time to time, (ii)
compliance with laws, including environmental
compliance, (iii) use of proceeds, (iv)
maintenance of existence, (v) insurance, (vi)
visitation rights, (vii) prohibition on liens
and negative pledges subject to agreed
exceptions, (viii) prohibition on debt subject
to agreed exceptions, (ix) no sale, lease,
transfer or other disposition of the
Borrower's or any of its subsidiaries' assets
with a value of more than $25,000,000 in the
aggregate after the closing date or the
Borrower's pipeline, (x) no merger or
consolidation by the Borrower unless no
default exists or results and the Borrower is
survivor, (xi) limitation on investments,
(xii) tangible net worth in accordance with
GAAP of at least $750,000,000, (xiii) no
change in lines of business, (xiv) corporate
separateness, (xv) limitations on transactions
with affiliates, (xvi) prohibition on
distributions; (xvii) subject to agreed
exceptions, prohibition on intercompany
advances when a default has occurred and is
continuing or would result therefrom, when the
sum of the Borrower's unrestricted cash and
the availability under the Facility after
giving effect thereto is less than
$30,000,000, or when Enron Corp. is no longer
Investment Grade, (xviii) completion of
expansion as disclosed to the
Co-Administrative Agents, and (xix) no
subsidiaries.
EVENTS OF DEFAULT: Customary events of default for transactions
of this nature, including: (i) failure to pay
principal when due or interest and commitment
fees after 5-day grace period, (ii)
representations and warranties untrue when
made, (iii) failure to comply with affirmative
covenants if not cured within 30 days after
written notice, (iv) failure to comply with
negative covenants, (v) cross default or
acceleration of Debt of the Borrower or a
subsidiary for borrowed money greater than
$10,000,000 or the occurrence and continuance
of an Event of Default under the
$1,750,000,000 364-Day Revolving Credit
Agreement dated as of May 14, 2001 among Enron
Corp., the banks party thereto and Citibank,
N.A. and The Chase Manhattan Bank, as
Co-Administrative Agents for such banks or the
$1,250,000,000 Long-Term Revolving Credit
Agreement dated as of May 18, 2000 among Enron
Corp., the banks party thereto and Citibank,
N.A. and The Chase Manhattan Bank, as
Co-Administrative Agents for such banks, (vi)
bankruptcy or insolvency of Enron Corp. or the
Borrower or any of its subsidiaries, (vii) any
unsatisfied judgment against the Borrower or
any of its subsidiaries for payment of money
greater than $10,000,000 unless enforcement
stayed by appeal or otherwise, (viii)
occurrence of certain circumstances respecting
ERISA plans, (ix) except as agreed, Enron
Corp. shall cease to own directly or
indirectly 100% of the Borrower's capital
stock, (x) an event of default under the
Guaranty shall occur, (xi) any loan document,
including the
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Guaranty or a security document (subject to
agreed exceptions), fails to remain in full
force or effect or any action is taken to
discontinue or to assert the invalidity or
unenforceability thereof or any obligor under
a loan document, including the Guaranty or a
security document, shall disclaim an
obligation thereunder, (xii) subject to agreed
upon matters, any collateral document fails to
create a valid and perfected first priority
security interest (subject to agreed
exceptions) in any Collateral purported to be
covered thereby, or (xiii) the Borrower shall
fail to comply with the terms of the Fee
Letter.
GUARANTY: Unconditional guaranty of payment, not of
collection. The Guaranty will include
customary representations and warranties,
including the following: (i) confirmation of
corporate status and authority, (ii)
documentation and performance duly authorized
and do not contravene laws, corporate
documents, judgments, orders or material
agreements, (iii) documentation legal, valid,
binding and enforceable, (iv) full disclosure,
(v) corporate separateness between Enron Corp.
and the Borrower, (vi) solvency, (vii) except
as publicly disclosed or disclosed in writing
to the Co-Administrative Agents before the
execution of the Commitment Letter , since
December 31, 2000 no material adverse change
in the business, condition (financial or
otherwise), operations, performance,
properties or prospects of Enron Corp. and its
subsidiaries, taken as a whole, has occurred.
The Guaranty will also include customary
affirmative and negative covenants, including
(i) each of the covenants contained in Enron
Corp.'s revolving credit agreements, as in
effect from time to time, (ii) prohibition on
liens and negative pledges for Enron Corp. and
its subsidiaries subject to agreed exceptions,
and (iii) maintenance of corporate
separateness between Enron Corp. and the
Borrower.
TRANSFERS AND
PARTICIPATIONS: Lenders permitted to assign commitments and
loans under the Facility, in whole or part, to
another Lender in the Facility, and, with the
consent of the Paying Agents and, so long as
no default exists, the Borrower (which
consents shall not be unreasonably withheld),
to a person that is not a Lender. Lenders may
sell participations in the Facility provided
that the assigning Lender retains all voting
rights (except as specified in the definitive
loan documentation) and all obligations under
the Facility.
OTHER: The documentation will include customary
agency language, and Majority Lenders for the
Facility will be defined as those holding at
least 66-2/3% of the Commitments under the
Facility. The loan documentation will contain
customary provisions regarding taxes,
illegality, increased costs and capital
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adequacy, subject to certain limitations, a
waiver of jury trial, and a consent to New
York jurisdiction.
EXPENSES; INDEMNITY: All reasonable expenses incurred (i) by the
Lenders in connection with the preparation,
execution, delivery, modification, amendment
and administration of the loan documentation
(including reasonable fees and expenses of
counsel to the Lenders) or (ii) by either
Co-Administrative Agent or any Lender in
connection with the enforcement of the loan
documentation (including reasonable legal
expenses), are for the Borrower's account. To
the fullest extent permitted by law, the
Borrower will indemnify and hold harmless each
Co-Administrative Agent, each Lender and each
of their respective officers, directors,
employees and agents (each an "Indemnified
Party") from and against any and all claims,
damages, losses, liabilities and expenses
(including reasonable fees and expenses of
counsel) that may be incurred by or asserted
against any Indemnified Party (other than by
either Co-Administrative Agent or another
Lender or any of their respective successors
and assigns), in each case arising out of or
in connection with any environmental claim or
by reason of any investigation, litigation or
proceeding arising out of, related to or in
connection with the loan documentation or any
transaction in which any proceeds of the
Facility are applied, excluding any claim,
damage, loss, liability or expense
attributable to such Indemnified Party's gross
negligence or willful misconduct. No
Indemnified Party shall have any liability
(whether in contract, tort or otherwise) to
the Borrower or any of its security holders or
creditors for or in connection with the
transactions contemplated hereby, except for
direct damages (as opposed to special,
indirect, consequential or punitive damages
(including, without limitation, any loss of
profits, business or anticipated savings))
resulting from such Indemnified Party's gross
negligence or willful misconduct. Except as
set forth in the next succeeding sentence,
Borrower shall not have any liability to any
Indemnified Party (whether in contract, tort
or otherwise) in connection with the Facility
for punitive, exemplary or treble damages. If
(a) an Indemnified Party is required to pay
damages of the type specified in the preceding
sentence to another person (that is not an
Indemnified Party), and (b) such Indemnified
Party would be entitled to indemnification
under this provision but for the limitation
set forth in the preceding sentence, then the
Indemnified Party shall nonetheless be
entitled to indemnification for such Losses.
GOVERNING LAW: New York.
COUNSEL TO THE
CO-ADMINISTRATIVE AGENTS: Bracewell & Patterson, L.L.P.
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