STOCK PURCHASE AGREEMENT
among
AMEREN CORPORATION,
ILLINOVA CORPORATION,
ILLINOVA GENERATING COMPANY
and
DYNEGY INC.
Dated as of February 2, 2004
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.1
Certain Defined Terms........................................1
Section 1.2
Other Defined Terms.........................................12
Section 1.3
Other Definitional and Interpretative Provisions............13
ARTICLE II
PURCHASE AND SALE
Section 2.1
Purchase and Sale of Shares.................................15
Section 2.2
Purchase Price..............................................15
Section 2.3
Purchase Price Adjustments..................................16
Section 2.4
Closing............................. .......................17
Section 2.5
Closing Deliveries by Seller................................17
Section 2.6
Closing Deliveries by Purchaser.............................19
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND DYNEGY
Section 3.1
Organization and Qualification............. ................20
Section 3.2
Capitalization..............................................20
Section 3.3
Authority...................................................21
Section 3.4
Consents and Approvals; No Violation........................22
Section 3.5 IPC
Reports.................................................22
Section 3.6 IPC
Financial Statements....................................23
Section 3.7
Absence of Certain Changes; Absence of
Undisclosed Liabilities.....................................23
Section 3.8
Taxes.......................................................24
Section 3.9
Litigation..................................................26
Section 3.10 Employee
Benefit Plans......................................27
Section 3.11
Environmental Matters.......................................29
Section 3.12 Compliance
with Applicable Laws.............................30
Section 3.13 Labor Matters;
Employees....................................31
Section 3.14 Material
Contracts..........................................32
Section 3.15
Intellectual Property.......................................32
Section 3.16 Real
Property...............................................33
Section 3.17
Brokers.....................................................35
Section 3.18 Personal
Property...........................................35
Section 3.19
Availability of Assets; Affiliate Transactions..............35
Section 3.20 Title to
Property...........................................35
Section 3.21 Bank
Accounts; Powers of Attorney; Minute Books.............35
Section 3.22 Regulation
as a Utility.....................................36
Section 3.23 Regulatory
Proceedings......................................36
Section 3.24
Hedging.....................................................36
<PAGE>
Section 3.25
Responsibility for Compliance with Sarbanes-Oxley Act.......36
Section 3.26
Insurance...................................................36
Section 3.27 Clinton
Nuclear Power Station...............................37
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Section 4.1
Organization and Qualification..............................37
Section 4.2
Authority...................................................38
Section 4.3
Conflicts...................................................38
Section 4.4
Securities Matters..........................................39
Section 4.5
Litigation..................................................39
Section 4.6
Availability of Funds.......................................39
Section 4.7
Brokers.....................................................39
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1
Conduct of Business Prior to the Closing....................39
Section 5.2
Access to Information.......................................42
Section 5.3
Governmental Permits and Approvals..........................43
Section 5.4
Notice of Developments......................................45
Section 5.5
Insurance; Risk of Loss.....................................45
Section 5.6
Confidentiality.............................................47
Section 5.7
Intercompany Arrangements...................................47
Section 5.8 Use
of Dynegy and Seller's Names............................47
Section 5.9
Change of Control Offer.....................................48
Section 5.10 Further
Assurances..........................................48
Section 5.11 No Public
Announcement......................................48
Section 5.12 Access to
Records...........................................48
Section 5.13 No
Solicitation.............................................49
Section 5.14 Terminated
Employees........................................49
Section 5.15
Intercompany Note...........................................49
Section 5.16 Covenant
Not to Sue.........................................49
Section 5.17 IPC
Property................................................50
Section 5.18
Remediation of Excluded Environmental Matters...............50
Section 5.19 Consent
Solicitation........................................52
Section 5.20 Generation
Asset Transfers..................................53
Section 5.21 Certain
Additional Agreements...............................53
Section 5.22 Status
Meetings.............................................56
Section 5.23 PPA
Modification Right......................................56
Section 5.24 Compliance
with Sarbanes-Oxley Act..........................57
Section 5.25 Litigation
and Clinton Nuclear Power Station Updates........57
ii
<PAGE>
ARTICLE
VI
EMPLOYEES AND EMPLOYEE MATTERS
Section 6.1
Employment of Transferred Employees.........................57
Section 6.2
Transferred Employee Benefit Matters........................60
Section 6.3
Miscellaneous Benefits......................................69
Section 6.4
Employee Rights.............................................69
Section 6.5 WARN
Act Requirements.......................................70
Section 6.6
Retention of Certain Liabilities by Dynegy..................70
ARTICLE VII
TAX MATTERS AND INDEMNIFICATION
Section 7.1
Preparation and Filing of Tax Returns.......................70
Section 7.2
Cooperation.................................................71
Section 7.3
Transfer Taxes..............................................72
Section 7.4
FIRPTA Certificate..........................................72
Section 7.5 Tax
Sharing Agreements......................................72
Section 7.6 Tax
Refunds.................................................72
Section 7.7
Section 338(h)(10) Election.................................73
Section 7.8 Tax
Indemnification.........................................74
Section 7.9
Survival and Coordination...................................75
ARTICLE VIII
CONDITIONS TO CLOSING
Section 8.1
Conditions to Obligations of Seller.........................75
Section 8.2
Conditions to Obligation of Purchaser.......................77
Section 8.3
Effect of Certain Waivers of Closing Conditions.............78
ARTICLE IX
INDEMNIFICATION
Section 9.1
Obligations of Dynegy.......................................79
Section 9.2
Obligations of Purchaser....................................80
Section 9.3
Procedures..................................................80
Section 9.4
Survival....................................................83
Section 9.5
Limitations on Indemnification..............................83
Section 9.6
Mitigation..................................................85
Section 9.7
Remedies Exclusive..........................................85
Section 9.8 Tax
Indemnification Matters.................................85
Section 9.9
Qualification as to Materiality.............................85
ARTICLE X
TERMINATION AND WAIVER
Section 10.1
Termination.................................................85
Section 10.2 Effect of
Termination.......................................86
iii
<PAGE>
ARTICLE XI
GENERAL PROVISIONS
Section 11.1
Expenses....................................................87
Section 11.2 No
Additional Representations...............................87
Section 11.3
Materiality.................................................89
Section 11.4 Disclosure
Schedules........................................89
Section 11.5 Limitation
on Damages.......................................89
Section 11.6
Notices.....................................................89
Section 11.7
Headings....................................................90
Section 11.8
Severability................................................90
Section 11.9 Entire
Agreement............................................90
Section 11.10
Assignment..................................................91
Section 11.11 No Third Party
Beneficiaries................................91
Section 11.12
Amendment...................................................91
Section 11.13
Waiver......................................................91
Section 11.14 Governing
Law...............................................91
Section 11.15 WAIVER OF JURY
TRIAL........................................92
Section 11.16 Specific
Performance; Remedies..............................92
Section 11.17
Counterparts................................................92
Section 11.18 Representation
by Counsel; Interpretation...................92
Section 11.19 Commercially
Reasonable Efforts to Consummate...............93
iv
<PAGE>
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT, dated as of February 2, 2004, is
entered
into by and among Ameren Corporation, a
Missouri corporation ("Purchaser"),
Illinova Corporation, an Illinois
corporation ("Seller"), Illinova Generating
Company, an Illinois corporation ("IGC"),
and Dynegy Inc., an Illinois
corporation ("Dynegy"). Dynegy, IGC and
Seller are referred to herein as the
"Dynegy Parties".
W I T N E S S E T H:
WHEREAS, Seller owns (a) 62,892,213 shares (the "Common Shares")
of
common stock, without par value, of
Illinois Power Company, an Illinois
corporation ("IPC"), constituting all of
the outstanding common stock of IPC and
(b) 662,924 shares (the "Preferred Shares")
of preferred stock, $50 par value
per share, of IPC, constituting
approximately 73% of the issued and outstanding
preferred stock of IPC, and IGC owns 12,400
shares of common stock, $100 par
value per share, of Electric Energy, Inc.
("EEI"), an Illinois corporation (the
"EEI Shares", and together with the Common
Shares and the Preferred Shares, the
"Shares");
WHEREAS, Dynegy has agreed, as an inducement to Purchaser, to
enter
into this Agreement;
WHEREAS, Seller, IGC, and IPC are wholly-owned subsidiaries of
Dynegy
(other than with respect to the outstanding
shares of preferred stock of IPC
that are not Preferred Shares);
WHEREAS, Seller and IGC desire to sell, and Purchaser desires
to
purchase, the Shares upon the terms and
subject to the conditions set forth in
this Agreement, and Dynegy and Purchaser
desire to make an election under
Section 338(h)(10) of the Code (as defined
below) with respect to the purchase
and sale of the Common Shares and the
Preferred Shares; and
NOW, THEREFORE, in consideration of the premises and the mutual
terms,
conditions and agreements set forth herein,
the parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Certain Defined
Terms. As used in this
Agreement, the
following terms shall have the following
meanings:
"Accounting Firm" shall mean a nationally recognized accounting
firm
mutually acceptable to Seller and
Purchaser.
"Action" shall mean any claim, order, demand, action, suit,
arbitration, mediation, inquiry, proceeding
or investigation by or before any
Governmental Authority.
"Actual IP Contributions" shall mean the amount by which any
cash
contributions made by Dynegy or any of its
Affiliates after the date hereof and
prior to the Closing to any of the Seller
Pension Plans or Seller's VEBAs with
respect to the 2004 plan year results in an
increase
<PAGE>
in the aggregate amounts transferred to the
Purchaser Pension Plans and the
Purchaser's VEBAs over what would have been
transferred to the Purchaser Pension
Plans and the Purchaser's VEBAs pursuant to
this Agreement had such
contributions not been made prior to the
Closing.
"Adjusted Working Capital" shall have the meaning set forth on
Exhibit
A.
"Affiliate" shall mean, with respect to any specified Person, any
other
Person that directly, or indirectly through
one or more intermediaries,
controls, is controlled by or is under
common control with such specified
Person.
"Agreement" shall mean this Purchase Agreement, dated as of the
date
hereof, among Purchaser, Seller, IGC and
Dynegy (including the Exhibits and
Schedules hereto), as amended, modified or
supplemented from time to time.
"AmerGen Power Supply Agreement" shall mean the power purchase
agreement dated June 30, 1999 by and
between Illinois Power Company and AmerGen
Energy Company, L.L.C ("AmerGen").
"Ancillary Agreements" shall mean the PPA, the Transition
Services
Agreement (if applicable), the Tier 2
Memorandum, the Escrow Agreement, the
Blackstart Agreement, the Easement and
Facilities Agreement, the Generation
Agreement and the Termination
Agreements.
"Applicable Rate" shall mean 2% plus the rate of interest per
annum
publicly announced from time to time by
JPMorgan Chase Bank as its prime rate in
effect at its principal office in New York
City. Each change in such prime rate
shall be effective from and including the
date such change is publicly announced
as being effective.
"Asset Transfer Agreements" shall mean (a) the Asset Transfer
Agreement, dated as of October 1, 1999,
between IPC and Seller, (b) the Bill of
Sale and Assignment, effective as of August
31, 2001, between IPC and Seller and
(c) the Assignment and Bill of Sale
effective as of December 31, 2001, between
IPC and Dynegy Midwest Generation,
Inc.("DMG").
"Audit" shall mean any action, suit, audit, assessment or
reassessment
of Taxes, other examination by any Taxing
Authority, or proceeding or appeal of
such proceeding relating to Taxes.
"Blackstart Agreement" shall mean the agreement the form of which
is
set forth on Exhibit F.
"Business" shall mean the business conducted by the IPC
Companies,
including the transmission, distribution
and sale of electric energy, which
business is regulated as a public utility
under PUHCA, and the distribution,
transportation and sale of natural gas in
the State of Illinois.
"Business Day" shall mean any day that is not a Saturday, a Sunday
or
other day on which banks are required or
authorized by Law to be closed in The
City of New York.
2
<PAGE>
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C.
ss. 9601 et seq.
"Code" shall mean the United States Internal Revenue Code of 1986,
as
amended.
"Company Group" shall mean any "affiliated group" (as defined
in
Section 1504(a) of the Code without regard
to the limitations contained in
Section 1504(b) of the Code) that, at any
time on or before the Closing Date,
includes or has included Seller or any IPC
Company or any predecessor of or
successor to Seller or any IPC Company (or
another such predecessor or
successor), or any other group of
corporations that, with respect to any period
on or before the Closing Date, files, has
filed or will file Tax Returns on a
combined, consolidated or unitary basis
with Seller or any IPC Company or any
predecessor of or successor to Seller or
any IPC Company (or another such
predecessor or successor).
"Confidentiality Agreement" shall mean the Confidentiality and
Sales
Process Agreement, dated July 23, 2003,
between Dynegy and Purchaser.
"Contract" shall mean any contract, lease, sublease, license,
indenture, instrument, agreement,
commitment or other legally binding
arrangement.
"Control" (including the terms "controlled by" and "under
common
control with"), with respect to the
relationship between or among two or more
Persons, shall mean the possession,
directly or indirectly, of the power to
direct or cause the direction of the
affairs or management of a Person, whether
through the ownership of voting securities,
by contract or otherwise.
"Controlled Group Liability" means any and all liabilities (i)
under
Title IV of ERISA, (ii) under Section 302
of ERISA, (iii) under Sections 412 and
4971 of the Code, (iv) as a result of a
failure to comply with the continuation
coverage requirements of Section 601 et
seq. of ERISA and Section 4980B of the
Code, and (v) under corresponding or
similar provisions of foreign laws or
regulations, in each case with respect to
or arising under or out of any
"employee benefit plan," as defined in
Section 3(3) of ERISA, maintained or
otherwise contributed to by Dynegy, any
Seller, or any of their subsidiaries at
any time.
"DHI" shall mean Dynegy Holdings Inc., a Delaware corporation.
"Disclosure Schedules" shall mean the Schedules that qualify
any
representation or warranty contained in
Article III and Schedule 1.1(b).
"Dynegy Group" shall mean the "affiliated group" (as defined in
Section
1504(a) of the Code) of which Dynegy is the
common parent, or any other group of
corporations that files, has filed or will
file Tax Returns on a combined,
consolidated or unitary basis with Dynegy
(and, in each case, any predecessor or
successor to such group).
"Enforceable" shall mean, with respect to a Contract, such
Contract
being "enforceable" if it is the legal,
valid and binding obligation of the
applicable Person enforceable against such
Person in accordance with its terms,
except as such enforceability may be
limited by bankruptcy, insolvency,
reorganization, moratorium or other similar
laws relating to or affecting the
rights of creditors and general principles
of equity.
3
<PAGE>
"Environmental Laws" shall mean United States federal, state, and
local
environmental protection, health and safety
or similar Laws imposing liability
or establishing standards of conduct for
protection of the environment or human
health and safety (not to include state or
federal workplace safety issues),
including the federal Clean Water Act, Safe
Drinking Water Act, Resource
Conservation and Recovery Act, Clean Air
Act, Toxic Substances Control Act,
CERCLA and Emergency Planning and Community
Right to Know Act, and similar state
and local laws, each as amended and in
effect on the date hereof.
"Equity
Interest" shall mean any capital stock or other equity
securities of any Person, any securities
convertible into or exercisable or
exchangeable for capital stock or other
equity securities of such Person.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974,
as amended, and the rules and regulations
promulgated thereunder.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as
amended, and the rules and regulations
promulgated thereunder.
"Excluded Environmental Matters" shall mean (a) any actual or
alleged,
known or unknown, violation of
Environmental Law at any time prior to the
Closing Date in connection with the
Business or any of the IPC Assets, or (b)
the actual or alleged, known or unknown,
presence or Release of any Hazardous
Substances at any time prior to the Closing
Date in soil, sediment, surface
water, groundwater, air or any structure at
any IPC Asset or any site formerly
owned or operated by the Business
(including the sites in items 10, 11 and 13 on
Schedule 3.11), including any migration of
those Hazardous Substances from any
IPC Asset or foregoing site to an off-site
location; or (c) any Hazardous
Substances generated by the Business prior
to the Closing Date and sent to an
offsite location for treatment, storage,
disposal or recycling, or (d) all
matters listed on Schedule 3.11; provided
that (i) Excluded Environmental
Matters shall not include the matters set
forth on Schedule 1.1(c), (ii)
Excluded Environmental Matters shall not
include any molecules of Hazardous
Substances that were not actually and
physically present in the soil, sediment,
surface water, groundwater, air or any
structure at any IPC Asset (or the
off-site location to which such molecules
of Hazardous Substances had migrated)
prior to the Closing Date.
"Existing IPC Obligations" shall mean an amount equal to the sum
of:
(a) the unpaid principal amount of all
short-term and long-term indebtedness
(including current portion) for borrowed
money of each of the IPC Companies; (b)
the liquidation preference of the
outstanding shares of preferred stock, $50 par
value per share, of IPC, not owned by
Seller; (c) any accrued and unpaid
dividends on the shares of preferred stock,
$50 par value per share, of IPC, not
owned by Seller, that are in arrears as a
result of the failure of IPC to pay
such dividends on the relevant dividend
payment date; and (d) all outstanding
capital lease obligations of each of the
IPC Companies, if any, in each instance
as of the Closing Date. For purposes of
calculating the amount of the Existing
IPC Obligations, the amount of indebtedness
attributable to the Transitional
Funding Trust Notes shall be reduced by an
amount equal to the lesser of (a)
$240,000 multiplied by the number of days,
from and including the first day
following the most recent date on which a
portion of the Transitional Funding
Trust Notes were repaid, through and
including the Closing Date, and (b) the
amount of restricted cash held by IPC on
the Closing
4
<PAGE>
Date dedicated to the retirement of such
indebtedness. Existing IPC Obligations
as of September 30, 2003 are set forth on
Schedule 1.1(d). For the avoidance of
doubt, Existing IPC Obligations shall not
include the capital lease related to
the Tilton Assets if such assets are
transferred to DMG prior to or at the
Closing.
"FERC" shall mean the Federal Energy Regulatory Commission, or
any
successor thereto.
"Final Determination" shall mean the final resolution of liability
for
any Tax: (a) by IRS Form 870 or 870-AD (or
any successor forms thereto), on the
date of acceptance by or on behalf of the
taxpayer, or by a form having the same
effect under the laws of other
jurisdictions, except that a Form 870 or 870-AD
or comparable form that reserves (whether
by its terms or by operation of law)
the right of the taxpayer to file a claim
for refund and/or the right of the
Taxing Authority to assert a further
deficiency shall not constitute a Final
Determination; (b) by a Governmental Order
of a court of competent jurisdiction
which has become final and unappealable;
(c) by a closing agreement or accepted
offer in compromise under Section 7121 or
7122 of the Code, or agreements having
the same effect under the laws of other
jurisdictions; (d) by any allowance of a
refund or credit in respect of an
overpayment of Tax; or (e) by any other final
disposition, including by reason of the
expiration of the applicable statute of
limitations or by mutual agreement of the
parties.
"Final Order" shall mean any Governmental Order which has not
been
reversed, stayed, enjoined, set aside,
annulled or suspended, with respect to
which any waiting period prescribed by Law
before the transactions contemplated
thereby may be consummated has expired (but
without the requirement for the
expiration of any applicable rehearing or
appeal period), and as to which all
conditions to the consummation of such
transactions prescribed by Law have been
satisfied.
"FPA" shall mean the Federal Power Act, as amended, including
any
regulations promulgated thereunder and any
successor statutes thereto.
"GAAP" shall mean United States generally accepted accounting
principles and practices as in effect from
time to time.
"Generation Agreement" shall mean the agreement in the form of
Exhibit
B.
"Generation Assets" shall mean (a) the "Purchased Assets" described
in
the Asset Transfer Agreements, including
the assets set forth on Schedule 1.1(e)
and (b) any fossil-fuel fired electric
generating stations owned, used or
operated at any time by any of the IPC
Companies, including those assets
identified by the parties pursuant to
clause (ii) of Section 5.20(a) that are to
be transferred to DMG by IPC pursuant to
the Generation Agreement, but excluding
those assets identified by the parties
pursuant to clause (i) of Section 5.20(a)
that are to be transferred to IPC by DMG
pursuant to the Generation Agreement.
"Generation Liabilities" shall mean any and all rights, costs,
damages, disbursements, expenses, losses,
fines, penalties, settlements,
payments, judgments, awards, deficiencies,
charges, commitments, encumbrances,
liens, rights of others, demands, actions,
claims, liabilities, obligations,
debts, causes of action, or lawsuits of any
kind or nature whether known or
5
<PAGE>
unknown, arising from or relating to the
Generation Assets or related Excluded
Environmental Matters, including: (a) items
1 and 2 listed on Schedule 3.11; (b)
actual or alleged failure of any Generation
Assets or their owner or operator to
have complied at any time with any Law
(including Environmental Laws); (c)
actual or alleged presence or Release of
any Hazardous Substance in soil,
sediment, surface water, groundwater, air
or any structure at any Generation
Assets at any time, including in connection
with ash ponds at any Generation
Asset or any migration of Hazardous
Substances from a Generation Asset to an
off-site location; (d) any Hazardous
Substance from a Generating Asset that was
sent to an off-site location for treatment,
storage, disposal or recycling; (e)
closure, shutdown, decommissioning,
monitoring, investigation, cleanup,
containment, remediation, removal,
mitigation, response or restoration work at,
on, beneath, to, from or in any Generation
Assets (including any equipment) at
any time; (f) claims for workers'
compensation benefits payable on account of
injuries, illness or other conditions; (g)
any claims for any personal injury
(including wrongful death) or property
damage (real or personal) relating to the
Generating Assets; or (h) any liabilities
of IPC under the Generation Agreement
or the Asset Transfer Agreements; provided
that Generation Liabilities will not
include the matters set forth on Schedule
1.1(c).
"Governmental Authority" shall mean any United States federal,
state or
local or any foreign government,
supranational, governmental, regulatory or
administrative authority, instrumentality,
agency or commission, political
subdivision, self-regulatory organization
or any court, tribunal or judicial or
arbitral body or mediator.
"Governmental Order" shall mean any order, writ, judgment,
injunction,
decree, stipulation, determination or award
entered by or with any Governmental
Authority.
"Hazardous Substances" shall mean any chemicals, pollutants,
contaminants, wastes, toxic substances,
hazardous substances, mixed hazardous
waste substances, petroleum, petroleum
products, radioactive material or any
substance as defined by and which is
prohibited, limited, or regulated under or
defined in any Environmental Law.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act
of 1976, as amended, and the rules and
regulations promulgated thereunder.
"ICC" shall mean the Illinois Commerce Commission.
"Income Tax Returns" shall mean Tax Returns relating to Income
Taxes.
"Income Taxes" shall mean any Taxes imposed on or determined by
reference to net income, together with any
interest or penalty, addition to tax
or additional amount imposed by any Taxing
Authority on account of such Taxes.
"Indemnifiable Claim" shall mean any claim of an Indemnifiable Loss
for
or against which any party is entitled to
indemnification under this Agreement.
"Indemnifiable Loss" shall mean any cost, damage, disbursement,
expense, liability, loss, fine, penalty or
settlement, payment or judgment of
any kind or nature, including court filing
fees, court costs, arbitration fees
or costs and reasonable fees and
disbursements of legal counsel
6
<PAGE>
and other professionals fees and amounts
paid in settlement that are actually
imposed on, or otherwise actually incurred
or suffered by the specified Person.
"Indemnified Party" shall mean the party entitled to
indemnification
hereunder.
"Indemnifying Party" shall mean the party obligated to provide
indemnification hereunder.
"Intellectual Property" shall mean: (a) any United States and
foreign
invention, patent application, patent,
patent disclosure, including all
reissues, reexaminations, divisions,
continuations and extensions thereof
(whether or not patentable or reduced to
patent) and improvements thereto; (b)
any United States and foreign trademark,
trademark registration, trademark
application, service mark, internet domain
name, trade name, trade dress, logo,
business names (including all assumed or
fictitious names under which any IPC
Company is conducting business or has
within the last three years conducted
business), whether registered or
unregistered, and pending applications to
register the foregoing; (c) any United
States and foreign copyright, copyright
registration, copyrightable works, whether
registered or unregistered, and
pending applications to register the same;
and (d) any design, design
registration, and trade secret (including
confidential information, know-how,
formulae, processes, procedures, research
records, records of inventions, test
information, market surveys and marketing
know-how), and, in each case, any
right to any of the foregoing.
"Intercompany Note" means the promissory note in the original
principal
amount of $2,725,721,995.00 (as adjusted)
issued by Seller to IPC on October 1,
1999.
"IPC Assets" shall mean assets owned or leased by the IPC Companies
as
of the time of the Closing, after giving
effect to asset transfers contemplated
by this Agreement.
"IPC Companies" shall mean IPC and the Persons listed on Schedule
3.2.
"IPC Other Real Property" shall mean easements, licenses,
rights-of-way, option, rights-of-first
refusal, rights-of-first offer or similar
rights or interests in any parcel of real
property, which rights or interest are
held or used by any of the IPC
Companies.
"IPC Owned Real Property" shall mean each parcel of real property
owned
in fee simple by any of the IPC
Companies.
"IPC Properties" shall mean the IPC Owned Real Property, Leased
Real
Property and IPC Other Real Property.
"IRS" means the United States Internal Revenue Service.
"Knowledge" shall mean (a) with respect to Purchaser, the
actual
knowledge (after reasonable inquiry) of the
persons listed on Schedule 1.1(f),
and (b) with respect to any of the Dynegy
Parties, the actual knowledge (after
reasonable inquiry) of the persons listed
on Schedule 1.1(f).
7
<PAGE>
"Law" shall mean any United States federal, state or local
statute,
law, ordinance, regulation, rule, code,
order or other requirement or rule of
law enacted, adopted, issued or promulgated
by any Governmental Authority.
"Leased Real Property" shall mean each lease or similar contract
under
which an IPC Company is a lessee of, or
holds, uses or operates, any real
property owned by third Persons.
"Lien" shall mean any lien (statutory or otherwise), mortgage, deed
of
trust, pledge, security interest, option,
covenant, restriction, easement or
other encumbrance of any kind or any
similar right of any kind.
"Material Adverse Effect" shall mean any condition,
circumstance,
change, event, occurrence or state of facts
that is (a) materially adverse to
the IPC Assets, the Business, financial
condition or results of operations of
the business of the IPC Companies, taken as
a whole; or (b) materially adverse
to the ability of Dynegy, any of the IPC
Companies or any of their respective
Affiliates to perform their obligations
under this Agreement or any Ancillary
Agreement, including the financial
obligations of Dynegy hereunder or
thereunder, other than, with respect to
clause (a) above, any condition,
circumstance, change, event, occurrence or
state of facts (i) relating to or
resulting from economic conditions in
general that are not disproportionately
adverse to the IPC Companies or the
Business; (ii) resulting from the execution
or announcement of this Agreement; (iii)
resulting from a material breach by
Purchaser of this Agreement; (iv) relating
to or resulting from changes or
developments generally in the electric or
gas utility industry that are not
disproportionately adverse to the IPC
Companies or the Business; or (v)
resulting from compliance by Dynegy or any
IPC Company with the terms of this
Agreement or any Ancillary Agreement.
"Natural Gas Act" shall mean the Natural Gas Act, as amended,
including
any regulations promulgated thereunder and
any successor statutes thereto.
"Non-Income Tax Returns" shall mean Tax Returns relating to
Non-Income
Taxes.
"Non-Income Taxes" shall mean all Taxes other than Income
Taxes.
"NPL" shall mean the National Priorities List pursuant to
CERCLA.
"PBGC" shall mean the Pension Benefit Guaranty Corporation.
"Permit" shall mean any permit, franchise, consent, approval,
license,
certificate of occupancy, certificate of
public convenience and necessity,
privilege or similar authorization.
"Permitted Liens" shall mean (a) leases, subleases, licenses
and
similar use and occupancy agreements that
do not materially interfere with the
present use of the relevant asset or
property; (b) Liens for Taxes, assessments
and governmental charges or levies not
delinquent or that may be paid without
interest or penalty that do not materially
interfere with the present use of the
relevant assets or property; (c) Liens
imposed by Law (other than any Lien
arising under ss. 412 of the Code or ss.
302 of ERISA) that do not materially
interfere with the present use of the
relevant assets or property; (d) pledges
or deposits to secure obligations under
workers' compensations laws or similar
legislation or to secure public or
statutory obligations that do not materi-
8
<PAGE>
ally interfere with the present use of the
relevant assets or property; (e)
mechanics', carriers', workmen's,
repairmen's or other like Liens arising or
incurred in the ordinary course (excluding
any such lien securing or evidencing
a claim in excess of $400,000 that the
holder thereof has taken affirmative
steps to enforce other than customary
notice, perfection or protective filings),
and Liens arising under original purchase
price conditional sales contracts and
equipment leases with third parties entered
into in the ordinary course, in each
case that do not materially interfere with
the present use of the relevant
assets or property; (f) Liens listed on
Schedule 1.1(b); (g) recorded and
unrecorded easements, covenants, rights of
way and other similar restrictions
that do not materially detract from the
value and do not materially interfere
with the present use of the relevant assets
or property; (h) as to any Leased
Real Property, Liens affecting the interest
of the lessor thereof that do not
materially interfere with the present use
of the relevant assets or property;
(i) all matters created by or on behalf of
Purchaser, including any documents or
instruments to be recorded as part of any
financing for the acquisition of the
Shares by Purchaser; (j) Liens created by
this Agreement or in connection with
the transactions contemplated hereby; and
(k) any other Liens that do not
materially adversely affect title to, or
interfere with the present use of, the
relevant assets or property.
"Person" shall mean any individual, partnership, firm,
corporation,
association, trust, unincorporated
organization, joint venture, limited
liability company or other entity.
"Post-Closing Tax Period" shall mean any taxable period beginning
after
the Closing Date (and, in the case of a
Straddle Period, the portion of such
taxable period beginning on the day after
the Closing Date).
"PPA" shall mean the agreement by and between Dynegy Power
Marketing,
Inc. ("DYPM") and IPC in the form of
Exhibit D, with such changes as may be
required by Governmental Authorities as a
condition to approving the
transactions or any portion thereof
contemplated by this Agreement and the
Ancillary Agreements that are required to
be accepted by Seller or by Purchaser,
pursuant to the provisions of Section 5.3
or 5.23 or are otherwise accepted by
Seller and by Purchaser.
"Pre-Closing Tax Period" shall mean any taxable period ending on
or
before the Closing Date (and, in the case
of a Straddle Period, the portion of
such taxable period ending at the close of
the Closing Date).
"PUHCA" shall mean the Public Utility Holding Company Act of 1935,
as
amended, including any regulations
promulgated thereunder or any successor
statutes thereto.
"Purchaser
Group Member" shall mean the IPC Companies, Purchaser, each
of their respective Affiliates and each of
their respective directors, officers,
employees, agents, successors and
assigns.
"Reference Balance Sheet" shall mean the unaudited consolidated
balance
sheet of IPC as of the Reference Balance
Sheet Date attached as Schedule 1.1(a).
"Reference Balance Sheet Date" shall mean September 30, 2003.
9
<PAGE>
"Release" shall mean any release, spill, emission, leaking,
pumping,
injection, deposit, disposal, empty, dump,
pour, emit, leach, discharge,
dispersal, leaking or migration or allowing
to escape into or through the
environment.
"Remediation" shall mean any or all of the following activities
in
connection with and to the extent they
relate to or arise from the presence or
Release of a Hazardous Substance into or on
air, land, water or groundwater: (a)
monitoring, investigation, sampling,
analysis, cleanup, containment, control,
remediation, removal, mitigation, response,
recovery, corrective action or
restoration work as these terms are defined
individually or collectively under
any Environmental Law or court decision
(collectively, "Work"); (b) obtaining
any Permits from any Governmental Authority
necessary to conduct any of the
Work; (c) preparing and implementing any
plans or studies necessary for
implementation or completion of the Work;
(d) where required or desired,
obtaining a written notice from a
Governmental Authority that no material
additional work is required by such
Governmental Authority; and (e) any other
activities reasonably necessary or
appropriate or required under Environmental
Laws to address the presence or Release of
Hazardous Substances.
"Securities Act"
shall mean the Securities Act of 1933, as amended, and
the rules and regulations promulgated
thereunder.
"SEC" shall mean the United States Securities and Exchange
Commission.
"Seller Group Member" shall mean Seller and Dynegy and each of
their
Affiliates (other than the IPC Companies
after the Closing) and each of their
respective directors, officers, employees
agents, successors and assigns.
"Seller Indemnitors" shall mean Dynegy and Seller.
"Software" shall mean computer software programs and software
systems,
including all databases, compilations, tool
sets, compilers, higher level or
"proprietary" languages, related
documentation and materials, whether in source
code, object code or human readable
form.
"Straddle Period" shall mean any taxable period that begins on
or
before and ends after the Closing Date.
"Subsidiaries" shall mean, with respect to any Person, any and
all
corporations, partnerships, limited
liability companies and other entities with
respect to which such Person, directly or
indirectly, owns securities having the
power to elect a majority of the board of
directors or similar body governing
the affairs of such entity.
"Target Fully Adjusted Working Capital" shall have the meaning
set
forth on Exhibit A.
"Tax" shall mean: (a) any federal, state, local or foreign net
income,
gross income, gross receipts, windfall
profit, severance, property, production,
sales, use, license, excise, franchise,
employment, payroll, withholding,
alternative or add-on minimum, ad valorem,
value-added, transfer, stamp, or
environmental tax (including taxes under
Code Section 59A), or any other tax,
custom, duty, governmental fee or other
like assessment or charge of any kind
whatsoever, together with any interest or
penalty, addition to tax or additional
amount imposed by any
10
<PAGE>
Governmental Authority; and (b) any
liability for the payment of amounts with
respect to payments of a type described in
clause (a) above as a result of being
a member of an affiliated, consolidated,
combined or unitary group, or as a
result of any obligation under any Tax
Sharing Arrangement, Tax indemnity
agreement or arrangement or similar
agreement or arrangement.
"Tax Refund" shall mean a refund of Taxes either in the form of
cash,
credit memos or any similar item as the
result of a Final Determination.
"Tax Return" shall mean any return, filing, report,
questionnaire,
information statement or other document
required to be filed, including any
amendments that may be filed with respect
thereto, for any taxable period with
any Taxing Authority.
"Tax Sharing Arrangement" shall mean any written or unwritten
agreement
or arrangement for the allocation or
payment of Tax liabilities or payment for
Tax benefits with respect to a
consolidated, combined or unitary Tax Return
which Tax Return includes or included any
IPC Company.
"Taxing Authority" shall mean any Governmental Authority exercising
any
authority to impose, regulate or administer
the imposition of Taxes.
"Termination Agreement" shall mean each of the agreements in the
forms
of Exhibit C-1 and Exhibit C-2.
"Tier 2 Memorandum" shall mean the agreement the form of which is
set
forth in Exhibit H.
"Tilton Assets" shall mean all rights and obligations of any of
the
IPC Companies pursuant to and arising from
(a) the Lease, dated as of September
10, 1999, between IPC, as the lessee, and
ABN Amro Bank N.V., not individually
but solely as agent lessor (as amended and
restated as of October 30, 2002 (the
"Tilton Lease"), (b) the Lease Agreement,
dated as of October 29, 1998, between
IPC, as tenant, and Danville Industrial,
L.L.C., an Illinois limited liability
company as landlord and all directly
related rights and obligations held or owed
by any IPC Company (the "Tilton Ground
Lease"), and (c) the Sublease, dated as
of October 1, 1999, between IPC, as
sublessor, and DMG, as sublessee, in
accordance with Section 6.2 of the Tilton
Lease, and all rights, interests,
assets, liabilities and obligations of the
IPC Companies that are primarily
related to the foregoing project.
"Transitional Funding Trust Notes" shall mean the Transitional
Funding
Trust Notes, Series 1998-1, in the original
principal amount of $864,000,000,
issued by Illinois Power Special Purpose
Trust, under the Indenture dated as of
December 1, 1998, between Illinois Power
Special Purpose Trust, as note issuer,
and Harris Trust and Savings Bank, as
trustee.
"Triggering Event" shall mean the occurrence of any of the "events"
set
forth in Paragraph 5 of the Escrow
Agreement, the form of which is set forth in
Exhibit G (the "Escrow Agreement"),
requiring payment in full or in part, as the
case may be, to Seller of the Escrow Funds
(as defined in the Escrow Agreement).
11
<PAGE>
"WARN Act" shall mean the Worker Adjustment and Retraining
Notification
Act of 1988, as amended, including any
regulations promulgated thereunder and
any successor statutes thereto.
Section 1.2 Other Defined
Terms. The following
terms shall have the
meanings defined for such terms in the
Sections set forth below:
Term
Section
----
-------
Accrued Liability
6.2(a)(iv)(A)
Active Employees
6.1(a)
Actual IP Contribution Amount
2.2(a)(ii)
Affiliate Employees
6.1(g)
Allocation
7.6(a)
Altenbaumer Contract
6.1(c)
AmerGen
1.1
Base Energy Contracts
5.21(c)
BACT
5.18(c)
Benefit Payments
6.2(a)(iv)(B)
Blackstart Agreement
5.21(c)
CERCLIS
3.11(g)
Closing
2.4
Closing Date
2.4
Common Shares
Recitals
Compensation Arrangements
3.10(a)
Correction Amount
6.2(b)(iv)(D)
Date of Spinoff
6.2(a)(iv)(A)
DMG
1.1
DOJ
5.3(a)
DYPM
1.1
Dynegy
Recitals
Dynegy Parties
Recitals
Easement and Facilities Agreement
5.21(b)
EEI
Recitals
EEI Shares
Recitals
Employee Benefit Plans
3.10(a)
Employees
3.10(a)
Escrow Agreement
2.2
FIRPTA
3.8(b)
FSA
6.2(d)(vii)
FTC
5.3(a)
Historic Insurance Policies
5.5(b)
IGC
Recitals
Initial Transfer Amount
6.2(a)(iv)(B)
Initial Transfer Date
6.2(a)(iv)(B)
IPC
Recitals
IPC SEC Reports
3.5
Mandate
5.18(c)
12
<PAGE>
Term
Section
----
-------
Material Contracts
3.14
Material Permits
3.12
Non-Union Transferred Employees
6.1(a)
Other Plan Participant
6.2(a)(i)
PGA
9.1(g)
Pollution Control Certification
2.5(x)
Potential Transaction
5.13
Pre-Closing Covenants
9.4
Preferred Shares
Recitals
Proposed Allocation
7.6(a)
Purchase Price
2.2(a)
Purchaser
Recitals
Purchaser Includable Claims
9.5(b)
Purchaser Pension Plan(s)
6.2(a)(ii)
Purchaser Savings Plan(s)
6.2(b)(ii)
Purchaser Welfare Plans
6.2(d)(i)
Purchaser's VEBA
6.2(c)(i)
Retiree(s)
6.2(c)(i)
SEC Reports
3.5
Section 338(h)(10) Election
7.7(a)
Section 338(h)(10) Forms
7.7(b)
Section 4044 Amount
6.2(a)(iv)(A)
Seller
Recitals
Seller Bonus Plans
6.1(e)
Seller Includable Claims
9.5(a)
Seller Pension Plan(s)
6.2(a)(i)
Seller Savings Plans
6.2(b)(i)
Seller Welfare Plans
6.2(d)(i)
Seller's VEBA(s)
6.2(c)(i)
Shares
Recitals
Solvency Opinion
8.1(f)
Tax Controversy
7.8(c)
Termination Date
10.1(b)
Tilton Lease
1.1
Tilton Ground Lease
1.1
Transferred Employee
6.1(a)
Transition Services Agreement
5.21(a)
True-Up Date
6.2(a)(iv)(B)
VEBA Transfer Date
6.2(c)(ii)
Work
1.1
Section 1.3 Other
Definitional and Interpretative Provisions.
(a) The words
"hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall
refer to this Agreement as a whole and
not to any particular
13
<PAGE>
provision of this Agreement, and Section,
Exhibit and Schedule references are to
this Agreement unless otherwise
specified.
(b) The meanings given
to terms defined herein shall be equally
applicable to both the singular and plural
forms of such terms.
(c) All Exhibits and
Schedules annexed hereto or referred to herein are
hereby incorporated in and made a part of
this Agreement as if set forth in full
herein. Any capitalized terms used in any
Exhibit or Schedule but not
otherwise defined therein, shall have the
meaning as defined in this Agreement.
(d) The phrase "made
available" in this Agreement shall mean, with
respect to any document, that (i) a
document containing the information referred
to has actually been provided to the party
(or its representative) to whom
such information is asserted as having been
"made available", (ii) the party
asserting that a document has been made
available can show by clear and
convincing evidence that the party (or its
representative) was provided access
to such document or (iii) such document was
included in the electronic data room
established by Dynegy to which Purchaser
(and its representatives) had access
prior to the execution of this
Agreement.
(e) Whenever the words
"include", "includes" or "including" are used in
this Agreement, they shall be deemed to be
followed by the words "without
limitation". The meaning of general words
herein shall not be limited by
specific examples introduced by "such as"
or "for example" or other similar
expressions unless otherwise specified.
(f) References to "the
date of this Agreement" or "the date hereof"
shall mean February 2, 2004, and the terms
"currently" and "presently" shall
mean as of February 2, 2004.
(g) References to a
Person include its successors and permitted
assigns. References to a "party" or the
"parties" shall refer, respectively,
to a party or the parties to this
Agreement, unless the context otherwise
requires or this Agreement otherwise
specifies.
(h) The phrase "in the
ordinary course" shall mean in the ordinary
course of the Business.
(i) Without limiting
the rights of the Purchaser Group Members to
indemnification pursuant to Sections 9.1(c)
through (i) no representation
or warranty in Article III is made
whatsoever with respect to any of the
matters for which indemnification is
provided to Purchaser pursuant to
Sections 9.1(c) through (i).
(j) References to a
specified number of days prior to the Closing shall
mean such specified number of days prior to
the Closing Date as determined in
the reasonable good faith judgment of
Purchaser and Dynegy.
14
<PAGE>
ARTICLE II
PURCHASE AND SALE
Section 2.1 Purchase and
Sale of Shares. Upon the terms and subject
to the conditions of this Agreement, at the
Closing, Seller and IGC shall sell
to Purchaser, and Purchaser shall purchase
from Seller and IGC, the Shares.
Section 2.2 Purchase
Price.
(a) The aggregate purchase price for the Shares shall be
$2,300,000,000
(i) less an amount equal to the Existing IPC Obligations;
(ii) plus an amount equal to the amount by which the Actual
IP Contributions exceed $17,500,000 or minus an amount equal
to the amount by which the Actual IP Contributions are less
than $17,500,000, as applicable (the "Actual IP Contributions
Amount");
(iii) plus the amount by which the Final Adjusted Working
Capital is greater than the Target Fully Adjusted Working
Capital (if the Final Adjusted Working Capital is greater
than the Target Fully Adjusted Working Capital); and
(iv) minus the amount by which the Target Fully Adjusted
Working Capital is greater than the Final Adjusted Working
Capital (if the Target Fully Adjusted Working Capital is
greater than the Final Adjusted Working Capital)
(such aggregate amount, the "Purchase
Price"). No later than seven Business
Days prior to the Closing, Seller shall
deliver to Purchaser a certificate
executed on behalf of Seller by the
President, Executive Vice President or
any Senior Vice President of Seller, dated
the date of its delivery, setting
forth Seller's calculation of the amount of
the Existing IPC Obligations setting
forth in reasonable detail the basis for
such calculation. The Purchase Price
will be payable as set forth in paragraphs
(b) and (c) of this Section 2.2.
(b) At the Closing,
Purchaser will pay $2,300,000,000 in cash minus the
sum of (i) an amount equal to the Existing
IPC Obligations, and
(ii) $100,000,000 (representing the amount
of the Escrow Funds that are to be
delivered at Closing by Purchaser to an
Escrow Agent (as defined in the Escrow
Agreement), mutually acceptable to
Purchaser and Dynegy under the Escrow
Agreement; provided, with respect to the
reduction set forth in clause (ii)
of this paragraph (b), that (A) in the
event that a Triggering Event has
occurred that would result in a payment to
Seller in part of the Escrow Funds
had the Escrow Agreement been entered into
prior to the occurrence of such
Triggering Event, such $100,000,000 amount
shall be reduced by the amount that
would have been so paid in such event and
(B) in the event that a Triggering
Event has occurred that would result in a
payment to Seller in full of the
Escrow Funds had the Escrow Agreement been
entered into prior to the occurrence
of such Triggering Event, such $100,000,000
amount shall be reduced to zero.
15
<PAGE>
(c) After the Closing
the Purchase Price shall be adjusted to reflect
the difference between the Target Fully
Adjusted Working Capital and the Final
Adjusted Working Capital as provided in
Section 2.3 and the Actual IP
Contributions Amount as of the True-Up
Date.
Section 2.3 Purchase Price
Adjustments.
(a) Promptly following
the Closing Date, but in no event later than 60
days after the Closing Date, Purchaser
shall provide to Seller a certificate
executed on behalf of Purchaser by the
President, Executive Vice President
or any Senior Vice President of Purchaser,
dated the date of its delivery,
setting forth Purchaser's (i) proposed
Adjusted Working Capital as of the
Closing Date (the "Proposed Final Adjusted
Working Capital") and (ii)
Purchaser's reasonably detailed calculation
thereof (the "Closing Date
Statement"). The Closing Date Statement
shall be prepared in accordance with
GAAP (except as noted on Exhibit A) and in
a manner consistent with the policies
and principles used in connection with the
preparation of the Reference Balance
Sheet (provided, however, that in preparing
the Closing Date Statement, the
inclusions, exclusions, adjustments and
terms set forth on Exhibit A shall be
given effect).
(b)
Purchaser shall
provide reasonable cooperation to, and shall cause
the IPC Companies and their respective
employees and agents to provide
reasonable cooperation to, Seller and its
employees and representatives in their
review of the Closing Date Statement and
shall provide Seller and its
employees and representatives reasonable
access to the applicable personnel,
properties, books and records of Purchaser
and the IPC Companies for such
purpose. In the event Seller disputes the
correctness of the Proposed Final
Adjusted Working Capital proposed by
Purchaser, Seller shall notify Purchaser
in writing of its objections within 30 days
after receipt of the Closing Date
Statement and shall set forth, in writing
and in reasonable detail, the reasons
for Seller's objections. If Seller fails to
deliver its notice of objections
within 30 days after receipt of the Closing
Date Statement, Seller shall be
deemed to have accepted Purchaser's
calculation. Seller and Purchaser shall
endeavor in good faith to resolve any
disputed matters within 15 days after
receipt of Seller's notice of objections.
If Seller and Purchaser are unable to
resolve the disputed matters, Seller and
Purchaser shall promptly refer the
disputed matters to the Accounting Firm.
The Accounting Firm shall offer Seller
and Purchaser (and their respective
employees and representatives) the
opportunity to provide written submissions
regarding their positions on the
disputed matters, which opportunity shall
not extend more than 15 days after the
submission of the disputed matters to the
Accounting Firm. The Accounting Firm
shall deliver a written report resolving
all disputed matters and setting forth
the basis for such resolution within 30
days after Seller and Purchaser have
submitted in writing (or have had the
opportunity to submit in writing but have
not submitted) their positions as to the
disputed items. The determination of
the Accounting Firm in respect of the
correctness of each matter remaining in
dispute shall be conclusive and binding on
Seller and Purchaser. The
determination of the Accounting Firm shall
be based solely on the written
submissions by Seller and Purchaser and
shall not be by independent review (it
being understood that the Accounting Firm
need not accept in its entirety the
submission of either one party or the
other). The Adjusted Working Capital as of
the Closing Date, as finally determined
pursuant to this Section 2.3(b) (whether
by failure of Seller to deliver a timely
notice of objection, by agreement of
Seller and Purchaser or by de-
16
<PAGE>
termination of the Accounting Firm), are
referred to herein as the "Final
Adjusted Working Capital".
(c) Promptly (but in
no event later than five Business Days) after the
determination of the Final Adjusted Working
Capital, (i) if the Final
Adjusted Working Capital is greater than
the Target Fully Adjusted Working
Capital, Purchaser shall pay to Seller the
amount of such difference, with
simple interest thereon from the Closing
Date to the date of payment at a
fixed rate per annum equal to the
Applicable Rate, and (ii) if the Final
Adjusted Working Capital is less than the
Target Fully Adjusted Working Capital,
Dynegy or Seller shall pay to Purchaser the
amount of such difference, with
simple interest thereon from the Closing
Date to the date of payment at a fixed
rate per annum equal to the Applicable
Rate.
(d) The fees and
expenses, if any, of the Accounting Firm retained in
accordance with this Section 2.3 to resolve
any dispute shall be paid one-half
by Purchaser and one-half by Seller.
(e) Within 10 days
after the Closing or as soon as practicable
thereafter, Dynegy (after consultation with
Purchaser) shall provide Purchaser
with its good faith estimate of the Actual
IP Contributions. Within 5 days after
the receipt of such estimate, (i) Purchaser
shall pay to Dynegy an amount equal
to the amount by which such estimated
Actual IP Contributions exceed
$17,500,000 or (ii) Dynegy or Seller shall
pay to Purchaser an amount equal
to the amount by which such estimated
Actual IP Contributions are less than
$17,500,000, as applicable. The
determination of the Actual IP Contributions
(as opposed to the estimate) shall be made
at the same time as the "true up" is
being conducted under Section 6.2(a)(iv)(B)
and shall be subject to the dispute
resolution procedures set forth in Section
6.2(a)(iv)(C) and the correction
procedures set forth in Section
6.2(a)(iv)(D).
(f) In the event the
Accounting Firm is requested to resolve any
dispute pursuant to this Section 2.3, any
meetings or proceedings involving the
Accounting Firm in connection with such
dispute resolution shall be held in
New York, New York.
Section 2.4 Closing. Upon
the terms and subject to the conditions of
this Agreement, the sale and
purchase of the Shares contemplated by this
Agreement shall take place at a closing
(the "Closing") to be held at the
offices of O'Melveny & Myers LLP, 30
Rockefeller Plaza, New York, New York
at 10:00 a.m., New York City time, within
10 Business Days after the day on
which all conditions to the obligations of
the parties set forth in Article
VIII (except for such conditions which by
their nature are satisfied on the
Closing Date) are satisfied or waived, or
at such other place or at such
other time or on such other date as Seller
and Purchaser may mutually agree
upon in writing (the day on which the
Closing takes place being the "Closing
Date"). For all purposes of this Agreement,
including all provisions relating to
Taxes and accounting matters, the Closing
shall be deemed to have occurred at
11:59 p.m., Chicago, Illinois time, on the
Closing Date.
Section 2.5 Closing
Deliveries by Seller. Subject to the fulfillment
or waiver of the conditions set forth in
Section 8.1, at the Closing, Seller
shall deliver to Purchaser:
17
<PAGE>
(a) stock certificates
evidencing the Common Shares registered in the
name of Purchaser or its nominee, stock
certificates evidencing the Preferred
Shares registered in the name of Purchaser
or its nominee, and stock
certificates evidencing the EEI Shares
registered in the name of Ameren
Energy Resources Company or its nominee, in
form reasonably satisfactory to
Purchaser;
(b) a receipt for the
portion of the Purchase Price payable at the
Closing pursuant to Section 2.2
hereunder;
(c) the certificate
required to be delivered pursuant to
Section 8.2(a);
(d) the stock or unit
books, stock or unit ledgers, minute books and
corporate or similar seals of the IPC
Companies; provided, however, that any of
the foregoing items shall be deemed to have
been delivered pursuant to this
Section 2.5(d) if such item has been
delivered to, or is otherwise located at,
the offices of an IPC Company;
(e) copies of the
articles of incorporation of Seller and Dynegy
certified as of a recent date by the
Secretary of State of the State of
Illinois;
(f) copies of the
articles of incorporation or other organizational
documents of each of the IPC Companies
certified as of a recent date by the
Secretary of State of the state of its
organization;
(g) certificate of
good standing of Seller and Dynegy issued as of a
recent date by the Secretary of State of
the State of Illinois;
(h) certificate of
good standing of each of the IPC Companies certified
as of a recent date by the Secretary of
State of the state of its organization;
(i) certificate of the
Secretary of Seller, dated the Closing Date, as
to (i) no amendments to the articles of
incorporation of Seller since a
specified date; (ii) the by-laws of Seller;
(iii) the resolutions of the board
of directors of Seller and of IPC
authorizing the execution, delivery and
performance of this Agreement, the
Ancillary Agreements and the transactions
contemplated hereby and thereby; and (iv)
the incumbency and signatures of the
officers of Seller and of IPC executing
this Agreement and the Ancillary
Agreements;
(j) certificate of the
Secretary or Assistant Secretary of Dynegy,
dated the Closing Date, as to (i) no
amendments to the articles of incorporation
of Dynegy since a specified date; (ii) the
by-laws of Dynegy; (iii) the
resolutions of the board of directors of
Dynegy authorizing the execution,
delivery and performance of this Agreement,
the Ancillary Agreements and the
transactions contemplated hereby and
thereby; and (iv) the incumbency and
signatures of the officers of Dynegy
executing this Agreement and the
Ancillary Agreements;
(k) all consents and
Permits, including those described in Section
8.2(e), that are received by the Dynegy
Parties in connection with this
Agreement on or prior to the Closing Date;
provided, however, that any of the
foregoing items shall be deemed to have
been delivered pursuant to this Section
2.5(k) if such item has been made available
to Purchaser prior
18
<PAGE>
to the Closing, remains in full force in
effect, and is located at the offices
of any IPC Company;
(l) a signed
resignation by each of the directors of each of the IPC
Companies;
(m) the certificate
required to be delivered pursuant to Section 7.4;
(n) to the extent
applicable, transfer tax declarations, duly executed
by the applicable Dynegy Party or Affiliate
thereof;
(o) the Base Energy
Contracts referred to in Section 5.21(c), duly
executed by IPC;
(p) a written
certification by Dynegy ("Pollution Control
Certification") stating that, to the
Knowledge of Dynegy, AmerGen Energy
Company, L.L.C is in compliance in all
material respects with the requirements
of Article 6.8(e) of the Asset Purchase
Agreement between Illinois Power
Company, as Seller, and AmerGen Energy
Company, L.L.C, as Buyer, dated June 30,
1999; and
(q) in the event a
Triggering Event (that would have the effect of
requiring the full payment of the Escrow
Funds had the Escrow Agreement been
entered into prior to such Triggering
Event) has not occurred prior to the
Closing Date, the Escrow Agreement, duly
executed by Seller.
Section 2.6 Closing
Deliveries by Purchaser. Subject to the
fulfillment or waiver of the conditions set
forth in Section 8.2, at the
Closing, Purchaser shall deliver, or cause
to be delivered to Seller:
(a) by wire transfer
in immediately available funds to a bank account
or bank accounts of Seller designated by
written notice to Purchaser at least
two Business Days before the Closing, an
amount in U.S. dollars equal to the
cash portion of the Purchase Price payable
at the Closing pursuant to Section
2.2 hereunder (without reduction or setoff
of any kind);
(b) a receipt for the
Shares;
(c) the certificate
required to be delivered pursuant to Section
8.1(a);
(d) copies of the
certificate of incorporation of Purchaser certified
as of a recent date by the Secretary of
State of the State of Missouri;
(e) certificate of
good standing of Purchaser issued as of a recent
date by the Secretary of State of the State
of Missouri;
(f) certificate of the
Secretary or Assistant Secretary of Purchaser,
dated the Closing Date, as to (i) no
amendments to the certificate of
incorporation of Purchaser since a
specified date; (ii) the by-laws of
Purchaser; (iii) the resolutions of the
board of directors of Purchaser
authorizing the execution, delivery and
performance of this Agreement and the
trans-
19
<PAGE>
actions contemplated hereby and thereby;
and (iv) the incumbency and
signatures of the officers of Purchaser
executing this Agreement; and
(g) in the event a
Triggering Event (that would have the effect of
requiring the full payment of the Escrow
Funds had the Escrow Agreement been
entered into prior to such Triggering
Event) has not occurred prior to the
Closing Date, the Escrow Agreement, duly
executed by Purchaser.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER AND DYNEGY
As an inducement to Purchaser to enter into this Agreement, to
the
execution of the Ancillary Agreements and
to consummate the transactions
contemplated hereby and by the Ancillary
Agreements, except as set forth in the
SEC Reports filed prior to the date hereof
(it being understood that, in order
for this exception to apply, the relevance
of any disclosure in the SEC Reports
to a particular representation below must
be reasonably apparent from the
disclosure itself), Seller and Dynegy
jointly and severally hereby represent and
warrant to Purchaser as follows:
Section 3.1 Organization and
Qualification.
(a) Each Dynegy Party
is a corporation duly organized, validly existing
and in good standing under the Laws of the
State of Illinois. Each Dynegy Party
has the requisite corporate power and
authority to own, use or lease and to
operate its properties and to carry on its
business as it is now conducted. Each
Dynegy Party is not in default in the
performance, observation or fulfillment of
any provision of its articles of
incorporation or by-laws.
(b) Each of the IPC
Companies is duly organized, validly existing and
in good standing under the Laws of its
jurisdiction of incorporation or
organization, is duly qualified to do
business as a foreign corporation or other
entity and is in good standing in each
jurisdiction in which the character of
its properties or the nature of its
business makes such qualification necessary,
except in jurisdictions, if any, where the
failure to be so qualified would not
individually or in the aggregate reasonably
be expected to result in a Material
Adverse Effect. Each of the IPC Companies
has the requisite corporate or other
similar power and authority to own, use or
lease and to operate its properties
and to carry on its business as it is now
conducted. Seller has made available
to Purchaser a complete and correct copy of
the articles of incorporation and
by-laws and other constituent documents of
each of the IPC Companies, each as
amended to date, and such articles of
incorporation, by-laws and other
constituent documents as so made available
are in full force and effect. None of
the IPC Companies is in default in the
performance, observation or fulfillment
of any provision of its articles of
incorporation or by-laws or other
constituent documents.
Section 3.2
Capitalization.
(a) The authorized
capital stock of IPC consists of (i)100,000,000
shares of common stock, no par value, of
which 75,643,937 shares are issued and
62,892,213 shares are outstanding and (ii)
15,000,000 total shares of preferred
stock, of which (A) 5,000,000 are Serial
Preferred Stock, $50 par value, of
which 912,675 shares are issued and
outstanding, (B)
20
<PAGE>
5,000,000 are Serial Preferred Stock, no
par value, none of which are issued and
outstanding and (C) 5,000,000 are
Preference Stock, no par value, none of which
are issued and outstanding. All outstanding
shares of IPC are duly authorized,
validly issued, fully paid and
nonassessable, and free of preemptive rights.
Except as set forth above, and other than
this Agreement, there are no
outstanding subscriptions, options, rights,
warrants, convertible securities,
stock appreciation rights, phantom equity,
or other Contracts obligating IPC to
issue, transfer, sell, redeem, repurchase
or otherwise acquire any shares of its
capital stock of any class.
(b) Except for 249,751
shares of preferred stock held by third parties,
Seller is the record or beneficial owner of
all of the outstanding Equity
Interests of IPC, there are no irrevocable
proxies with respect to any such
Equity Interests, and no Equity Interests
of IPC are or may become required to
be issued because of any options, warrants,
rights to subscribe to, calls or
commitments relating to, or securities or
rights convertible into or
exchangeable or exercisable for, Equity
Interests of IPC, and there are no
Contracts by which Seller or IPC is bound
to issue additional Equity Interests
of IPC or securities convertible into or
exchangeable or exercisable for any
such Equity Interests. All of such Equity
Interests are duly authorized, validly
issued, fully paid and nonassessable and,
except for 249,751 shares of preferred
stock held by third parties, are owned by
Seller free and clear of all Liens.
(c) IGC is the record
or beneficial owner of the EEI Shares, which are
duly authorized, validly issued, fully paid
and nonassessable, and free of
preemptive rights, and are owned by IGC
free and clear of all Liens.
(d) Schedule 3.2 sets
forth with respect to each Subsidiary of IPC, the
number of authorized, issued and
outstanding shares of capital stock of each
class, the number of issued shares of
capital stock held as treasury shares and
the number of shares of capital stock
unissued and not reserved for any purpose.
IPC, either directly or indirectly, owns
100% of all issued and outstanding
shares of capital stock, limited liability
company interests or other Equity
Interests of such Subsidiaries, and owns no
capital stock, other securities, or
rights or obligations to acquire the same,
of any other Person. All of the
outstanding shares of capital stock or
other Equity Interests of each Subsidiary
of IPC are duly authorized, validly issued,
fully paid and nonassessable and
free of preemptive rights. There are no
subscriptions, options, rights warrants,
calls, convertible securities, stock
appreciation rights, phantom equity, or
other Contracts relating to or obligating
IPC or any of its Affiliates
(including such Subsidiary) to issue, sell,
redeem, repurchase or otherwise
acquire any shares of capital stock or
Equity Interests of any Subsidiary of
IPC.
Section 3.3 Authority. Each
Dynegy Party has full corporate power
and authority to execute and deliver this
Agreement and any Ancillary Agreements
to be executed by it and to consummate the
transactions contemplated hereby and
thereby. The execution, delivery and
performance of this Agreement and the
Ancillary Agreements to be executed by such
Dynegy Party and the consummation of
the transactions contemplated hereby and
thereby have been duly and validly
authorized by the board of directors of
such Dynegy Party, and do not require
any other authorization or consent of any
Dynegy Party, any of its Affiliates or
its stockholders. This Agreement has been,
and upon its execution and delivery,
each Ancillary Agreement to be executed by
any Dynegy Party will have been, duly
and val-
21
<PAGE>
idly authorized, executed and delivered by
such Dynegy Party and is or
will be upon its execution Enforceable
against such Dynegy Party.
Section 3.4 Consents and
Approvals; No Violation. The execution and
delivery of this Agreement, the Ancillary
Agreements, the Base Energy
Contracts, the consummation of the
transactions contemplated hereby and
thereby, and the performance by Dynegy,
Seller, IGC and the IPC Companies
of their obligations hereunder and under
the Ancillary Agreements and Base
Energy Contracts, to the extent applicable,
do not and will not:
(a) except as listed
in Schedule 3.4(a), require any writ, waiver,
consent, judgment, decree, approval, order,
act or Permit of, or registration,
filing with or notification to any
Governmental Authority, except for municipal
and county franchises and Permits that are
ministerial in nature and are
customarily obtained from Governmental
Authorities after closings in connection
with transactions of the same nature as are
contemplated hereby;
(b) except as listed
in Schedule 3.4(b), conflict with, result in any
violation of or breach of or constitute a
default (with notice or lapse of time
or both) under, or give rise to any right
of termination, purchase, first
refusal, cancellation, modification or
acceleration or guaranteed payments or a
loss of rights under (i) any provision of
the articles of incorporation or
by-laws of Seller or the articles of
incorporation or by-laws (or other similar
organizational documents) of any of its
Affiliates; or (ii) any provisions of
any Contract to which any IPC Company,
Seller, IGC or Dynegy is a party or may
be subject or bound or by which any IPC
Assets or the Business may be subject or
bound;
(c) upon receipt of
the approvals and consents listed on Schedule
3.4(a), violate the provisions of any Law
or Governmental Order, or result in
the termination or lapse of any Permit,
applicable to Dynegy, Seller, IGC, any
IPC Company, any IPC Assets or the
Business; or
(d) result in the
creation of any Lien other than Permitted Liens upon
any IPC Asset or properties or assets of
any IPC Company, Purchaser or any of
its Affiliates or on any Equity Interests
of any IPC Company, Purchaser or any
of its Affiliates under any applicable Law
or under any Contract to which any
IPC Company, Seller, or Dynegy is a party
or by which any IPC Company, Seller,
Dynegy, the IPC Assets or the Business or
any of their properties may be subject
bound;
except, with respect to any of Sections
3.4(a), 3.4(b)(ii) and 3.4(c), to the
extent any such writ, waiver, consent,
judgment, decree, approval, order, act,
Permit, registration, filing or notice
requirement, conflict, violation, breach,
default, right of termination, purchase,
first refusal, cancellation,
modification or acceleration or guaranteed
payment or loss of right, violation
of Law or Governmental Order or Lien would
not reasonably be expected,
individually or in the aggregate, (A) to
result in a Material Adverse Effect or
(B) to prevent the consummation of any
transactions contemplated hereby or by
any Ancillary Agreement.
Section 3.5 IPC Reports. The
filings required to be made by IPC
since January 1, 2003, under PUHCA,
applicable Illinois Laws, the FPA and the
Natural Gas Act have been timely filed with
the appropriate Governmental
Authority and, as of the date of such
22
<PAGE>
filings, complied in all material respects
with all applicable requirements of
each such Law. Copies of such filings have
been made available to Purchaser. IPC
has filed with, or furnished to, the SEC,
as the case may be, each form,
registration statement, report, schedule,
proxy or information statement and
other document (including exhibits and
amendments thereto) required to be filed
or furnished to the SEC since January 1,
2003 under the Securities Act or the
Exchange Act, as applicable (collectively,
the "IPC SEC Reports"). Dynegy has
filed with, or furnished to, the SEC, as
the case may be, and made available to
Purchaser, copies of each form,
registration statement, report, schedule, proxy
or information statement and other document
(including exhibits and amendments
thereto) required to be filed with or
furnished to the SEC since January 1, 2003
under the Securities Act or the Exchange
Act (together with the IPC SEC Reports,
the "SEC Reports"). As of the respective
dates that the IPC SEC Reports were
filed, or furnished, as the case may be,
each IPC SEC Report, including any
financial statements or schedules included
therein, (a) complied in all material
respects with all applicable requirements
of the Securities Act and the Exchange
Act; and (b) did not contain any untrue
statement of a material fact or omit to
state a material fact required to be stated
therein or necessary to make the
statements therein, in light of the
circumstances under which they were made,
not materially misleading. No event has
occurred between the date of the most
recent IPC SEC Report and the date hereof
that would require the filing of a
Current Report on Form 8-K by IPC or
Dynegy.
Section 3.6 IPC Financial
Statements. Each of the audited
consolidated financial statements and
unaudited consolidated interim financial
statements of IPC (including any related
notes and schedules) included (or
incorporated by reference) in its Annual
Reports on Form 10-K for each of the
two fiscal years ended December 31, 2001
and 2002 (the "IPC Financial
Statements"), and any subsequent IPC SEC
Report, has been prepared from, and is
in accordance with, the books and records
of IPC, complies in all material
respects with applicable accounting
requirements and with the SEC's published
rules and regulations, has been prepared in
accordance with GAAP (except in the
case of unaudited statements, as permitted
under Form 10-Q under the Exchange
Act) applied on a consistent basis (except
as may be indicated in the notes
thereto) and fairly presents in all
material respects in conformity with GAAP
applied on a consistent basis (except as
may be indicated in the notes thereto),
the consolidated financial position of IPC
as of the date thereof and the
consolidated results of operations and cash
flows (and changes in financial
position, if any) of IPC for the periods
presented therein (subject to normal
year-end adjustments and the absence of
financial footnotes in the case of any
unaudited interim financial
statements).
Section 3.7 Absence of
Certain Changes; Absence of Undisclosed
Liabilities.
(a) Except as listed
in Schedule 3.7 or as permitted by this Agreement
or the Ancillary Agreements, since
September 30, 2003: (i) the Business has been
conducted in all material respects in the
ordinary course; (ii) through the date
hereof there has not been any Material
Adverse Effect; (iii) except for
declarations, set asides and payments of
dividends with respect to regular
quarterly cash dividends with respect to
the preferred stock of IPC in
accordance with its terms, there has not
been any declaration, setting aside or
payment of any dividend or other
distribution with respect to any shares of
capital stock of any IPC Company or any
repurchase, redemption or other
acquisition by IPC of any outstanding
shares of capital stock or other
securities of, or other ownership interests
in, any IPC Company; (iv) there
23
<PAGE>
has not been any amendment or modification
of any term of any outstanding
security of any IPC Company; (v) there has
not been any change in any method of
accounting or accounting principles,
practices or policies by any IPC Company,
except for any such change required because
of a concurrent change in GAAP or
the applicable rules and regulations of the
SEC; (vi) except as required by
applicable Law, no Tax Return has been
prepared or filed by or with respect to
Seller, the Business, any IPC Asset or any
IPC Company that is inconsistent with
past practice, no position has been taken,
election made, or method adopted by
or with respect to Seller or any IPC
Company that is inconsistent with positions
taken, elections made or methods used in
preparing or filing similar Tax Returns
with respect to Seller or such IPC Company
in prior periods, no Tax Sharing
Arrangement, Tax indemnity Contract or
similar Contract or arrangement affecting
Seller or any IPC Company has been entered
into, amended or modified by Seller
or any IPC Company, and no payments under
any Tax Sharing Arrangement, Tax
indemnity Contract or similar Contract have
been made that are outside the
ordinary course of business, inconsistent
with past practice or inconsistent
with the terms thereof; and (vii) there has
not been any damage, destruction or
other casualty loss with respect to any IPC
Assets or the Business that has a
value of at least $5,000,000 or is material
in the aggregate to the IPC
Companies, the Business or the IPC Assets
which is not covered by insurance.
(b) None of the IPC
Companies has any liabilities or obligations
(whether known or unknown, accrued,
absolute, contingent or otherwise) of any
nature, except those which: (i) are accrued
or reserved against in the most
recent audited consolidated financial
statements of IPC or reflected in the
notes thereto; (ii) were incurred in the
ordinary course; (iii) have been
discharged or paid in full; or (iv) are not
required to be reflected in the
consolidated financial statements or the
notes thereto of IPC prepared in
accordance with GAAP consistently
applied.
Section 3.8 Taxes.
(a) Except as listed
in Schedule 3.8:
(i) Each IPC Company
has timely filed or will timely file or
cause to be timely filed (taking into
account all extensions of due dates) all
material Tax Returns required by applicable
Law to be filed prior to or as of
the Closing Date. All such material Tax
Returns are or will be true, complete
and correct and disclose all Taxes required
to be paid for the periods covered
thereby.
(ii) Each IPC Company has timely paid, whether or not shown on
any Tax Return, all Taxes imposed on it or
for which it may otherwise be liable
or, with respect to Non-Income Taxes, where
payment is not yet due, will have
established as a liability or reserve taken
into account in determining Final
Adjusted Working Capital an adequate
accrual, determined in accordance with GAAP
(as described in paragraph 1 of Exhibit A),
for the payment of, all such
Non-Income Taxes imposed on it or for which
it may otherwise be liable.
(iii) All deficiencies asserted in writing or assessments made
as a result of any Audit of the Tax Returns
referred to in clause (i) have been
paid in full.
24
<PAGE>
(iv) No Audit is pending or, to the Knowledge of Seller,
threatened with respect to any Tax Returns
filed by or with respect to, or Taxes
due from or with respect to, any IPC
Company. To the Knowledge of Seller, with
respect to Taxes for all taxable periods
beginning on or after January 1, 2000,
no deficiency or adjustment for any Taxes
has been threatened, proposed,
asserted or assessed against any IPC
Company that remains outstanding. There are
no Liens for Taxes upon the assets of any
IPC Company, except Permitted Liens.
(v) No IPC Company has
given or been requested to give any
waiver of statutes of limitations relating
to the payment of Taxes or has
executed powers of attorney with respect to
Tax matters that will be outstanding
as of the Closing Date. No IPC Company is
the beneficiary of any extension of
time within which to file any Tax
Return.
(vi) No IPC Company (or any Affiliate thereof) has received any
Tax rulings, made any request that is still
pending for rulings, or entered into
any closing agreements relating to any IPC
Company that would reasonably be
expected to affect any Tax liability
relating to any IPC Company for any period
after the Closing Date.
(vii) All Taxes that any IPC Company is required by Law to
withhold or to collect for payment have
been duly withheld and collected and
have been timely paid to the appropriate
Taxing Authority or, to the extent due
after the Closing Date, will be reflected
as a liability or reserve, determined
in accordance with GAAP (as described in
paragraph 1 of Exhibit A), taken into
account in determining Final Adjusted
Working Capital.
(viii) All Tax
sharing, Tax indemnity or similar Contracts
relating to any IPC Company (other than
this Agreement) will terminate prior to
the Closing and neither Purchaser nor any
IPC Company will have any liability
thereunder on or after the Closing Date,
except to the extent of Non-Income Tax
liabilities included in the calculation of
Final Adjusted Working Capital.
(ix) Each IPC Company
(other than IPC and IP Gas Supply
Company) (A) is disregarded for federal
income tax purposes as an entity
separate from IPC, (B) was formed through a
contribution of assets from IPC or
another IPC Company, (C) is not a successor
to any entity and (D) has no
liability for Taxes of IPC, any member of
any Company Group or any other Person.
(x) Dynegy has filed a
consolidated Federal income Tax Return
with IPC for the taxable year that was two
years preceding the current taxable
year and as of the Closing Date will be
eligible to make a Section 338(h)(10)
Election with respect to the Common Shares
and the Preferred Shares.
(xi) No IPC Company
has any liability for the Taxes of any
other person (other than any IPC Company)
under Treasury Regulation Section
1.1502-6 or any comparable provision of
state, local or foreign law, by contract
or otherwise.
(xii) Each Dynegy
Group has filed all material Tax Returns that
it was required to file for each taxable
period during which any IPC Company was
a member of such
25
<PAGE>
Dynegy Group. All such Tax Returns are or will
be true, correct and complete
in all material respects. All material
Income Taxes owed by any Dynegy Group
have been paid for each taxable period
during which any IPC Company was a member
of such group. No Audit is pending or, to
the Knowledge of Dynegy or Seller,
threatened with respect to any Tax Returns
filed by or with respect to, or Taxes
due from or with respect to, any Dynegy
Group for any taxable period during
which any IPC Company was a member of such
Dynegy Group. To the Knowledge of
Dynegy or Seller, no Taxing Authority has
requested any information related to
Tax matters from, or with respect to, any
Company Group for any taxable period
during which any IPC Company was a member
of such Company Group. No material
deficiency or adjustment for any Taxes has
been threatened, proposed, asserted
or assessed against any Company Group that
remains outstanding for any taxable
period during which any IPC Company was a
member of such Company Group.
(xiii) No IPC Company
will be required to include any material
item of income in, or exclude a material
item of deduction from, taxable income
for any Post-Closing Tax Period as a result
of any (A) change in method of
accounting for a Pre-Closing Tax Period
under Code Section 481(c) (or any
corresponding or similar provision under
state, local or foreign Income Tax
law), (B) written and legally binding
agreement with a Taxing Authority relating
to Taxes, (C) installment sale or open
transaction disposition or intercompany
transaction made on or prior to the Closing
Date, (D) prepaid amount received on
or prior to the Closing Date, or (E)
deferred intercompany gain or excess loss
account described in Treasury regulations
promulgated under Section 1502 of the
Code (or any corresponding or similar
provision under state, local or foreign
Income Tax law).
(b) No transaction
contemplated by this Agreement is subject to
withholding under Section 1445 of the Code
(relating to "FIRPTA").
(c) Except as listed
in Schedule 3.8, no payment or other benefit, and
no acceleration of the vesting of any
options, payments or other benefits,
will be, as a result of the transactions
contemplated by this Agreement, an
"excess parachute payment" to a
"disqualified individual" as those terms are
defined in Section 280G of the Code and the
Treasury regulations thereunder.
Section 3.9 Litigation. As
of the date hereof, except as disclosed
in Schedule 3.9: (a) there are no
outstanding Governmental Orders or Actions
pending or, to the Knowledge of Seller,
threatened against or affecting any IPC
Company or any of their present or former
directors or officers, any IPC Assets
or the Business that would individually
reasonably be expected to exceed
$500,000, or that would in the aggregate
reasonably be expected to exceed
$1,000,000, as the case may be, in costs,
expenses, disbursements, losses,
obligations, liabilities, settlement
payments, awards, judgments, fines
penalties and damages, which determination
of exposure shall be made consistent
with IPC policies for establishing reserves
in accordance with GAAP; (b) no IPC
Company is permanently or temporarily
enjoined by any Governmental Order from
engaging in or continuing any conduct or
practice in connection with the
Business or the IPC Assets, nor, to the
Knowledge of Seller, is any
investigation pending by any Governmental
Authority with respect to any of the
IPC Companies, the Business or any of the
IPC Assets; and (c) there is no
Governmental Order enjoining any IPC
26
<PAGE>
Company from taking or requiring any IPC
Company to take any action of any kind
with respect to the Business or any of the
IPC Assets. Notwithstanding the
foregoing, no representation or warranty in
this Section 3.9 is made with
respect to ERISA matters, environmental
matters, labor and employee matters and
intellectual property matters.
Section 3.10 Employee Benefit
Plans.
(a) Schedule 3.10
lists each written "employee benefit plan," as
defined in Section 3(3) of ERISA, each
stock option, stock purchase, stock
ownership, deferred compensation,
severance, performance, bonus, incentive,
vacation or holiday pay plan, policy,
understanding or arrangement and each
other employee benefit plan or arrangement
(including fringe benefit plans or
arrangements) that is maintained on the
date hereof or otherwise contributed to
by any Dynegy, Seller or any of their
subsidiaries for the benefit of Employees
("Employee Benefit Plans"). There are no
Employee Benefit Plans that are
sponsored solely for the benefit of
Employees. There are no Employee Benefit
Plans that are sponsored solely by one or
more of the IPC Companies. In
addition, Schedule 3.10 lists each material
written employment, compensation,
and consulting agreement or arrangement,
and any agreement or arrangement
associated with a change in ownership or
the sale of substantially all the
assets of any IPC Company or Dynegy or any
of their respective Affiliates, in
each case, entered into with any Employee
("Compensation Arrangements"). There
are no plans or arrangements that are
"pension plans" within the meaning of
Section 3(2) of ERISA but are not intended
to be qualified under Section 401(a)
of the Code pursuant to which any Employee
is entitled to benefits. The term
"Employees" shall mean all Active
Employees, Other Plan Participants and
Retirees, as those terms are used in
Article VI. Seller has made available to
Purchaser copies of (i) each Employee
Benefit Plan and each Compensation
Arrangement (or, in the case of any
material unwritten Employee Benefit Plans or
Compensation Arrangements, descriptions
thereof); (ii) the most recent annual
report on Form 5500 filed with the
applicable Governmental Authority with
respect to each Employee Benefit Plan (if
any such report was required by
applicable Law); (iii) the most recent
summary plan description for each
Employee Benefit Plan for which such a
summary plan description is required by
applicable Law; (iv) each trust agreement
or annuity contract relating to any
Seller Pension Plan or Seller VEBA; and (v)
the most recent actuarial report for
any Seller Pension Plan. Each report
described in clause (v) of the preceding
sentence accurately describes the funded
status of the plan to which it relates
as of the date indicated in such report and
there has been no material change in
the investment strategy of such plan since
such date. To the knowledge of Dynegy
and Seller and except as set forth on
Schedule 3.10, no IPC Company maintains
any material oral Employee Benefit Plan or
Compensation Arrangement. For
purposes of the preceding sentence, the
term "knowledge" means the actual
knowledge of the Director Human Resources
of IPC.
(b) Except for matters
that are listed in Schedule 3.10 or would not
result in a material liability to
Purchaser: (i) each Employee Benefit Plan has
been administered in accordance with its
terms; (ii) each IPC Company and all
the Employee Benefit Plans are in
compliance with all Laws applicable to the
Employee Benefit Plans, including ERISA and
the Code (or any similar applicable
Law of a country other than the United
States); and (iii) to the Knowledge of
Seller, there are no investigations by any
Governmental Agency, termination
proceedings or other Actions against or
directly involving any Employee Benefit
Plan or
27
<PAGE>
asserting any rights or claims to benefits
under any Employee Benefit
Plan (except claims for benefits payable in
the normal operation of the Employee
Benefit Plans).
(c) Except as listed
in Schedule 3.10, (i) all material contributions
to, and payments from, any Seller Pension
Plan, Seller VEBA and Seller Savings
Plan that may have been required to be made
in accordance with the terms of such
plans or any applicable collective
bargaining agreement have been timely made;
(ii) no person has failed to make a
required installment or any other payment
required under Section 412 of the Code to
any Seller Pension Plan before the
applicable due date; and (iii) none of
Dynegy, Seller or any of the IPC
Companies or any of their respective
Affiliates has contributed to (or been
required to contribute to) a multiemployer
plan, within the meaning of Section
3(37) of ERISA, since February 1, 2000 for
the benefit of Employees. Schedule
3.10 identifies each trust funding any
Employee Benefit Plan that is intended to
meet the requirements of Code Section
501(c)(9), and each such trust meets such
requirements and provides no disqualified
benefits (as such term is defined in
Code Section 4976(b)) or (iii) is
unfunded.
(d) Except as set
forth on Schedule 3.10, (i) each Employee Benefit
Plan that is intended to qualify under
Section 401(a) of the Code has been the
subject of a favorable determination letter
from the IRS to the effect that such
plan is qualified and the related trust is
exempt from Federal income taxes
under Sections 401(a) and 501(a),
respectively, of the Code, no such
determination letter has been revoked and,
to the Knowledge of Dynegy and
Seller, revocation has not been threatened;
and (ii) no event has occurred that
would subject any Employee Benefit Plan to
any material Tax under Section 511 of
the Code. Seller has made available to
Purchaser a copy of the most recent
determination letter received with respect
to each Employee Benefit Plan for
which such a letter has been issued, as
well as a copy of any pending
application for a determination letter.
Seller has also made available to
Purchaser a list of all amendments as to
which a favorable determination letter
has not yet been received.
(e) None of Dynegy,
Seller, any of the IPC Companies or any of their
respective Affiliates has made or granted
or committed to make or grant any
material benefit improvements under any
Seller Pension Plan (except as provided
in the plan documents and/or Memorandum of
Agreement dated May 29, 2003 and the
Tentative Agreement of Joint IBEW
Negotiating Committee and Illinois Power dated
July 15, 2003 made available to Purchaser)
to which Transferred Employees are or
may become entitled which are not reflected
in the actuarial report dated
January 1, 2002 provided by Seller to
Purchaser and, except as specifically
provided in the documents described in
Section 3.10(a) or as permitted by
Section 5.1, there are no other amendments
to any Employee Benefit Plan or
Compensation Arrangement that have been
adopted or approved, nor has Dynegy, any
IPC Company or any of their respective
Affiliates undertaken to make any such
amendments or to adopt or approve any new
Employee Benefit Plan or Compensation
Arrangement.
(f) Except for matters
that are set forth on Schedule 3.10, with
respect to each Seller Pension Plan, (i) no
proceeding has been initiated to
terminate such plan; (ii) there has been no
"reportable event" (as such term is
defined in Section 4043(c) of ERISA) prior
to the date hereof other than
reportable events for which notice is
waived under applicable regulations; (iii)
no "accumulated funding deficiency" (within
the meaning of Section 412 of the
Code),
28
<PAGE>
whether or not waived, has occurred; and
(iv) no person has provided or
is required to provide security to such
plan under section 401(a)(29) of the
Code due to a plan amendment that results
in an increase in current liability.
(g) Dynegy, Seller and
their respective Affiliates have complied with
the health care continuation requirements
of Part 6 of Title I of ERISA in all
material respects. Except as set forth in
Schedule 3.10, neither the execution
and delivery of this Agreement nor the
consummation of the transaction
contemplated by this Agreement and by the
Ancillary Agreements will (either
alone or in conjunction with any other
event) result in an increase in the
amount of compensation or benefits or
accelerate the vesting or timing of
payment or cause the funding or delivery of
any compensation or benefits payable
to or in respect of any person rendering
services to any IPC Company or result
in any limitation on the right of any IPC
Company to amend, merge, terminate or
receive a reversion of assets from any
Employee Benefit Plan or related trust.
(h) None of Dynegy,
Seller nor any of their respective Affiliates nor,
to the Knowledge of Dynegy and Seller, any
other "disqualified person" (within
the meaning of Section 4975 of the Code) or
"party in interest" (within the
meaning of Section 3(14) of ERISA) has
taken any action with respect to any
Employee Benefit Plan which could subject
Purchaser or any of the IPC Companies
to the penalty or tax under Section 502(i)
or Section 502(l) of ERISA or Section
4975 of the Code.
(i) None of Dynegy,
Seller nor any of their respective Affiliates has
taken any action or failed to take any
action as of the date hereof that will
result in any potential liability, whether
direct or indirect, contingent or
otherwise, to Purchaser or any of the IPC
Companies under Section 4063, 4064,
4069, 4204 or 4212(c) of ERISA.
Section 3.11 Environmental
Matters. Except as
listed in Schedule
3.11:
(a) The IPC Companies,
the IPC Assets and the Business are in
compliance with all Environmental Laws,
except for any violations that would not
individually or in the aggregate reasonably
be expected to result in a
Material Adverse Effect.
(b) Neither any IPC
Company nor any Seller Group Member has caused or
allowed the generation, treatment,
manufacture, processing, distribution, use,
storage, disposal, Release, transport or
handling of any Hazardous Substances at
any of the IPC Assets, except for any such
action or actions that would not
individually or in the aggregate reasonably
be expected to result in a Material
Adverse Effect.
(c) To the Knowledge
of Seller, no IPC Company or any of its Affiliates
has received any written notice from any
Governmental Authority or third party
or any other written communication alleging
or concerning any material violation
by any IPC Company of any Environmental
Law, or responsibility or liability of
any IPC Company under, any Environmental
Law, or in connection with the Release,
threatened Release or presence of any
Hazardous Substances at, on, or beneath,
to, from or in the indoor or outdoor
environment at any of the Businesses or IPC
Asset or any off-site location (including
soil, sediment, surface water,
groundwater, air or any component of a
structure), which would reasonably be
expected
29
<PAGE>
to result in a Material Adverse Effect. To
the Knowledge of Seller,
there are no pending or threatened Actions
with respect to the Businesses or the
IPC Assets alleging or concerning any
violation of or responsibility or
liability under any Environmental Law or
the Release, threatened Release or
presence of any Hazardous Substances at,
on, beneath, to, from or in the indoor
or outdoor environment at any of the
Businesses or IPC Assets or any off-site
location (including soil sediment, surface
water, groundwater, air or any
component of a structure) that, if
adversely determined, would reasonably be
expected to result individually or in the
aggregate in a Material Adverse
Effect.
(d) The IPC Companies
hold and are in material compliance with all
Permits from all Governmental Authorities
under all Environmental Laws required
for the operation of the Business and the
IPC Assets, except Permits the failure
of which to hold would not individually or
in the aggregate reasonably be
expected to have a Material Adverse Effect.
To the Knowledge of Seller, there
are no pending or threatened Actions
seeking to modify, revoke or deny renewal
of any of such Permits.
(e) To the Knowledge
of Seller, no claims have been asserted or
threatened against any of the IPC Companies
or any Seller Group Member for any
personal injury (including wrongful death)
or property damage (real or personal)
arising out of exposure to Hazardous
Substances used, handled, generated,
transported, disposed of or Release at any
of the IPC Assets, that, if adversely
determined, would reasonably be expected to
result in a Material Adverse Effect
individually or in the aggregate.
(f) None of the IPC
Companies and none of the Seller Group Members is
subject to any outstanding written
Governmental Order or settlement agreement
with any Person relating to any of the IPC
Assets or the Business, in each case
with respect to any Environmental Matters
that, if adversely determined, would
reasonably be expected to result in a
Material Adverse Effect individually or in
the aggregate.
(g) To the Knowledge
of Seller, no IPC Assets are listed or proposed
for listing on the NPL, or on the
Comprehensive Environmental Response
Compensation and Liability Information
System List ("CERCLIS") or any similar
state list of sites.
Section 3.12
Compliance with Applicable Laws.
(a) The IPC Companies
hold all Permits necessary to entitle the IPC
Companies to own or lease, operate and use
the IPC Assets (except with respect
to IPC Assets not owned or leased by the
IPC Companies, before giving effect to
asset transfers contemplated by this
Agreement), and for the lawful conduct of
the Business, other than any Permits for
which the failure of an IPC Company to
hold such Permits would not individually or
in the aggregate reasonably be
expected to have a Material Adverse Effect
(collectively, the "Material
Permits"). Schedule 3.12(a) sets forth a
list and brief description of each
Material Permit. Each Material Permit is
valid and in full force and effect.
Except as set forth in Schedule 3.12(a),
each IPC Company is in compliance in
all material respects with its Material
Permits. The Business is not being, and
none of the IPC Companies or their
respective Affiliates has received any notice
from any Person that the Business is being,
conducted in violation of any Law,
including any Law relating to occupational
health and safety, except for
possible viola-
30
<PAGE>
tions that would not individually or in the
aggregate reasonably be expected to
result in a Material Adverse Effect.
Notwithstanding the foregoing, no
representation or warranty in this Section
3.12 is made with respect to ERISA
matters, environmental matters, labor and
employee matters and intellectual
property matters. In no event shall
Material Permits be deemed to include any
item which is a Material Contract.
(b) Each of the IPC
Companies is in compliance with regulations under
Illinois Law governing its operations as an
Integrated Distribution Company,
under 83 Illinois Administrative Code Part
452, to the extent applicable.
(c) Schedule 3.12(c) sets forth a list of each municipal and
county
franchise agreement to which any IPC
Company is a party as of the date hereof.
Section 3.13 Labor Matters;
Employees.
(a) Schedule 3.13(a)
lists all collective bargaining, labor or similar
agreements, including material local or
side agreements (other than
Employee Benefit Plans as set forth in
Section 3.10), in effect to which
any IPC Company is a party or by which any
IPC Company is bound or
otherwise used in the Business). Copies of
all such agreements have been
made available to Purchaser. Since February
1, 2000, each IPC Company has
complied in all material respects with its
obligations related to, and is
not in material default under, any
collective bargaining agreement to which
any IPC Company is a party or by which any
IPC Company, the Business or the
IPC Assets may be subject or bound. To the
Knowledge of Seller, there are
currently no union organizing activities
relative to any IPC Company, the
IPC Assets or the Business among the
current employees of any IPC Company.
Other than ordinary grievances concerning
individual employees that are
being resolved solely pursuant to internal
grievance procedures and
immaterial and ordinary course Actions
pending or, to the Knowledge of
Seller, threatened involving employment
matters, (i) there is no labor
strike, dispute, slowdown, work stoppage or
lockout actually pending or, to
the Knowledge of Seller, threatened against
or directly and adversely
affecting any IPC Company, the IPC Assets
or the Business; (ii) there is no
unfair labor practice charge or complaint
against any IPC Company or
involving the IPC Assets or the Business
pending or, to the Knowledge of
Seller, threatened before the National
Labor Relations Board or any similar
state or foreign agency; and (iii) there is
no pending or, to the Knowledge
of Seller, threatened employee or
governmental claim or investigation
regarding employments matters, including
any charges to the Equal
Employment Opportunity Commission or state
employment practice agency, or,
to the Knowledge of Seller, investigations
regarding Fair Labor Standards
Act compliance, audits by the Office of
Federal Contractor Compliance
Programs.
(b) Since February 1,
2000, no IPC Company has effectuated (i) a "plant
closing" (as defined in the WARN Act)
affecting any site of employment or
one or more facilities or operating units
within any site of employment or
facility of any IPC Company; or (ii) a
"mass layoff" (as defined in the
WARN Act) affecting any site of employment
or facility of any IPC Company,
nor has any IPC Company been engaged in
layoffs or employment terminations
sufficient in number to trigger application
of any similar state or local
Law.
31
<PAGE>
(c) As of the date of
this Agreement, Employees of the IPC Companies
who are represented by the Laborers
International Union or the Pipefitters
receive the same employee benefits as the
employees of the IPC Companies who are
represented by the International
Brotherhood of Electrical Workers (the "IBEW"),
as provided for in the Joint Benefits
Agreement with the IBEW.
Section 3.14 Material
Contracts. Except as
set forth in Schedule
3.14:
(a) No IPC Company is
a party to or bound by: (i) any Contract that
provides for remaining annual consideration
in an amount in excess of
$5,000,000; (ii) any Contract that
restricts any IPC Company, the IPC Assets,
the Business or any Person who after the
Closing would be an Affiliate of such
IPC Company from engaging in any line of
business or competing with any Person;
(iii) any Contract limiting the right of
any IPC Company to pay dividends or
distributions to its shareholders; (iv) any
Contract that would impose or
expressly permit the imposition of, or
require any Person to impose or expressly
permit the imposition of, upon and due to
the consummation of the transactions
contemplated by this Agreement or any
Ancillary Agreement, any Lien other than
Permitted Liens upon any of the businesses,
assets or properties of Purchaser or
any of its Affiliates; or (v) any Contract
that is a "material contract" (as
such term is defined in Item 601(b)(10) of
Regulation S-K of the General Rules
and Regulations promulgated by the SEC) of
the IPC Companies (such Contracts
described in clauses (i) through (v),
collectively the "Material Contracts".
Notwithstanding the foregoing, no
representation or warranty in this Section
3.14 is made with respect to, and "Material
Contracts" shall be deemed not to
include any Contract relating to, ERISA
matters, environmental matters, labor
and employee matters, personal property,
intellectual property matters and real
property matters (other than the real
property matters identified on Schedule
3.14). In no event shall Material Contracts
be deemed to include any item which
is a Material Permit.
(b) Each IPC Company
that is a party to a Material Contract has
performed in all material respects all
obligations to be performed by it and has
observed in all material respects all terms
to be observed by it under such
Material Contract. No IPC Company has
received any written notice of
cancellation or threatened cancellation
relating to a Material Contract or has
any Knowledge that a Material Contract is
likely to be cancelled, other than
upon any expiration of such Material
Contract in accordance with its terms.
(c) Except as set
forth in Schedule 3.14, each Material Contract is a
valid and binding agreement, is in full
force and effect, is Enforceable by the
IPC Company that is a party thereto against
each other party thereto in
accordance with its terms, except for those
Material Contracts which by their
terms will expire prior to the Closing (or
are otherwise terminated prior to the
Closing in the ordinary course of business
or in accordance with the provisions
of this Agreement). To the Knowledge of
Seller, each other party to a Material
Contract is not in default or in breach in
any material respect of any such
Material Contract.
Section 3.15 Intellectual
Property.
(a) Schedule 3.15
contains a complete list of all issued patents,
registered copyrights, trademark
registrations, domain name registrations, and
applications for any of the foregoing
32
<PAGE>
that have been issued to, assigned to or
filed by any of the IPC Companies or
used in the Business, except for such
issued patents, registered copyrights,
trademark registrations, domain name
registrations, and applications for any of
the foregoing, the failure of which to have
would not individually or in the
aggregate reasonably be expected to have a
Material Adverse Effect. Except as
would not individually or in the aggregate
reasonably be expected to result in a
Material Adverse Effect, the IPC Companies
have all rights to the Intellectual
Property owned, licensed or used by them as
are necessary to conduct the
Business.
(b) Except as
disclosed in Schedule 3.15, (i) all material patents,
trademark registrations, service mark
registrations and internet domain name
registrations issued to, assigned to or
filed by any of the IPC Companies or
used in the Business are in full force and
effect and all applications for any
such patent, trademark and service mark are
pending without challenge (other
than office actions which may have been
issued by the U.S. Patent and Trademark
Office or its foreign equivalents); (ii)
the material Intellectual Property in
the form of Contracts is Enforceable by the
IPC Company that is a party to such
Contracts; and (iii) the IPC Companies have
the right to bring actions for
infringement or unauthorized use of the
material Intellectual Property owned by
the IPC Companies.
(c)
As of the date hereof
and except as disclosed in Schedule 3.15,
(i) during the three years before the
Closing Date, no written claim has been
made or asserted against any of the IPC
Companies that alleges any Intellectual
Property owned or used by any of the IPC
Companies or used in the Business and
material to their business infringes the
Intellectual Property of another
Person; (ii) no litigation, arbitration or
other proceeding is currently pending
or, to the Knowledge of Seller, threatened
against any of the IPC Companies or
any of their respective Affiliates with
respect to any material Intellectual
Property owned or used by or used in the
Business; (iii) during the three years
before the Closing Date, no claim has been
made or asserted against any of the
IPC Companies or any of their respective
Affiliates that challenges the
validity, enforceability or ownership of
any material Intellectual Property
owned or used by the IPC Companies or used
in the Business; (iv) to the
Knowledge of Seller, the conduct of the
Business does not violate, conflict with
or infringe the Intellectual Property owned
by any other Person; and (v) to the
Knowledge of Seller, there is no continuing
infringement by any other Person of
the material Intellectual Property owned or
used by any of the IPC Companies or
used in the Business.
(d) Schedule 3.15
contains a complete list of all material Software
owned or licensed by any of the IPC
Companies or used in the Business. Except as
disclosed in Schedule 3.15 or as would not
individually or in the aggregate
reasonably be expected to result in a
Material Adverse Effect, the IPC Companies
either: (i) own the entire right, title and
interest in and to the Software used
in the Business free and clear of Liens
except for Permitted Liens; or (ii) have
the right and license to use the same in
the conduct of the Business. Except as
would not individually or in the aggregate
reasonably be expected to result in a
Material Adverse Effect, the IPC Companies
have all rights to the Software owned
licensed or used by them or in the Business
as are necessary to conduct their
Business.
Section 3.16 Real Property.
The IPC Properties and the scope of the
IPC Companies' rights in the IPC Properties
are sufficient for the operation of
the Business in the manner currently
operated and in compliance in all
material respects with all applicable
33
<PAGE>
Laws. No IPC Company owns, leases or uses
in connection with the Business any
real property other than the IPC
Properties. Except as set forth on Schedule
3.16 or as would not individually or in the
aggregate reasonably be expected to
result in a Material Adverse Effect: (i)
the IPC Companies have good, valid,
marketable and insurable fee simple title
to the IPC Owned Real Property, a
good, valid, marketable and insurable
leasehold interest in the Leased Real
Property, and easements or other similar
rights in, and quiet enjoyment of, the
IPC Other Real Property, in each case free
and clear of any Liens other than
Permitted Liens (and, in the case of the
Leased Real Property, subject to (a)
any assignment or transfer restrictions and
other terms and conditions contained
in any applicable lease, and (b) if
applicable, the lack of recordation of such
lease or a memorandum thereof in the
applicable local real estate recording
office); (ii) all improvements and
occupancy, and the use of such improvements
and occupancy of the IPC Properties, and
all business operations thereon conform
in all material respects with all
applicable zoning, building, fire and safety
Laws and, to the Knowledge of Seller, none
of the IPC Properties has received
any currently effective notice of
noncompliance with any Laws; (iii) each lease,
sublease, easement, license or other
agreement or instrument comprising any
portion of the IPC Properties is a valid
and binding agreement in full force and
effect and Enforceable by the IPC Company
which is a party thereto against the
other parties thereto, no material default
by any of the IPC Companies or, to
the Knowledge of Seller, by any other party
exists under any provision thereof
and no condition or event exists which
after notice or lapse of time or both
would constitute a material default
thereunder by any of the IPC Companies or,
to the Knowledge of Seller, any other
party; (iv) there are, to the Knowledge of
Seller, no disputes, oral agreements, or
forbearance programs in effect with
respect to any such lease, sublease,
easement, license or other agreement or
instrument; (v) no IPC Company nor any IPC
Property is in material breach or
default under, or in violation of or
noncompliance with, any Liens and, to the
Knowledge of Seller, no event has occurred
and no condition or state of facts
exists which, with the passage of time or
the giving of notice or both, would
constitute such a breach, default,
violation or noncompliance; (vi) none of the
IPC Companies has received written notice
and Seller have no Knowledge of (A)
any default by a landlord or other Person
under any fee mortgage or other Lien
that is superior to any lease, sublease,
easement or license comprising a
portion of the IPC Properties or (B) any
claim of paramount title by any third
party claiming the right to terminate any
lease, sublease, easement or license
comprising a portion of the IPC Properties;
(vii) the IPC Companies have legal
and practical access to all roads and
utilities needed for the conduct of their
business on the IPC Properties in the
manner presently conducted; (viii) none of
the IPC Companies has received and, to the
Knowledge of Seller, there do not
exist any adverse claims to such access
that would adversely affect the use
currently being made of such access by the
IPC Companies; (ix) there are no
encroachments onto IPC Properties of any
improvements on any adjoining property;
(x) the IPC Properties are not located
within any flood plain or subject to any
similar type of restrictions for which any
permit, license or additional
insurance may be necessary for the use and
operation thereof; and (xi) there are
no pending condemnation or similar
proceedings relating to any of the IPC
Properties. The transfer of the Generation
Assets pursuant to the Asset Transfer
Agreements (including for these purposes
the Generation Agreement) were
consummated in compliance in all material
respects with all Laws, Permits and
any approvals of any Governmental
Authority.
34
<PAGE>
Section 3.17 Brokers. No
broker, finder or investment banker (other
than Credit Suisse First Boston LLC) is
entitled to any brokerage, finder's fee
or other fee or commission payable by
Dynegy or Seller or any of their
respective Affiliates in connection with
the transactions contemplated hereby
and by the Ancillary Agreements.
Section 3.18 Personal
Property. Schedule 3.18 contains a list of
each Contract or right under which any of
the IPC Companies is lessee, or holds
or operates, any machinery, equipment,
vehicle or other tangible personal
property owned by a Person other than the
IPC Companies, except those that are
terminable by the IPC Company party thereto
without penalty on 60 days or less
notice and those that provide for annual
payments of $500,000 or less.
Section 3.19 Availability of
Assets; Affiliate Transactions.
(a) Except as set
forth in Schedule 3.19, the IPC Assets constitute all
the material assets used in the Business
and are sufficient for the conduct of
the Business as it is currently
conducted.
(b) Schedule 3.19 sets
forth a description of all material services
provided by any Affiliate of any of the IPC
Companies (other than another IPC
Company) to any of the IPC Companies with
respect to the Business utilizing
either (i) assets not included in the IPC
Assets or (ii) employees that are not
Active Employees, and the manner in which
the costs of providing such services
have been allocated to the Business.
Section 3.20 Title to
Property. The IPC Companies have good and
marketable title to all of the material IPC
Assets (other than the IPC
Properties, which are covered by Section
3.16), free and clear of all Liens,
except for Permitted Liens.
Section 3.21 Bank Accounts;
Powers of Attorney; Minute Books.
(a) Schedule 3.21
lists a complete and correct list of all bank
accounts and safe deposit boxes of each IPC
Company and persons authorized to
sign or otherwise act with respect thereto
and a complete and correct list of
all persons holding a general or special
power of attorney granted by any of the
IPC Companies and a complete and correct
copy thereof.
(b) The minute books
of each of the IPC Companies have been made
available to Purchaser. Such minute books
contain true and complete records of
all meetings and other corporate action
taken by the board of directors and
stockholders of each of the IPC Companies
during the past three years.
35
<PAGE>
Section 3.22 Regulation as a
Utility. IPC is regulated as a public
utility by the State of Illinois. Except as
set forth in the previous sentence,
neither IPC nor any "subsidiary company" or
"affiliate" of IPC is subject to
regulation as a public utility or public
service company (or similar
designation) by any other state in the
United States or any foreign country.
Dynegy and Seller are public utility
holding companies as defined by PUHCA, but
currently claim exemptions from
registration under PUHCA under Section 3(a)(1)
of PUHCA pursuant to orders of the SEC
issued thereunder.
Section 3.23 Regulatory
Proceedings. Except as listed on Schedule
3.23, and other than fuel adjustment or
purchase gas adjustment, manufactured
gas plant remediation expense adjustment or
similar adjusting rate mechanisms,
none of the IPC Companies all or part of
whose rates or services are regulated
by a Governmental Authority (a) is a party
to any rate proceeding before a
Governmental Authority that would
reasonably be expected to result in orders
that, individually or in the aggregate,
would have a Material Adverse Effect;
(b) has rates that have been or are being
collected subject to refund, pending
final resolution of any rate proceeding
pending before a Governmental Authority
or on appeal to a court; or (c) is a party
to any Contract with any Governmental
Authority (other than franchise, customer
and service area agreements) imposing
conditions on rates or services in effect
as of the date hereof.
Section 3.24 Hedging. Except
as set forth in Schedule 3.24, none of
the IPC Companies engages in any natural
gas, electricity or other futures or
options trading or is a party to any price
swaps, hedges, futures or similar
instruments, except for transactions and
Contracts entered into, or hedge
Contracts, for the purchase or sale of
electricity or hydrocarbons, transmission
rights and ancillary services or other
financial hedges and swaps to which any
of the IPC Companies is a party that, to
the Knowledge of Seller, are in
accordance with the general practices of
other similarly situated companies in
the industry.
Section 3.25 Responsibility
for Compliance with Sarbanes-Oxley Act.
IPC has responsibility for establishing and
maintaining internal control over
financial reporting, as defined in the
Sarbanes-Oxley Act, of IPC through the
Closing to the extent required of IPC
through such date in its capacity as a
Subsidiary of Dynegy, pursuant to the
Sarbanes-Oxley Act.
Section 3.26 Insurance. Each
of the IPC Companies is currently
insured with insurers rated at least A.M.
Best A-VII, and are in such amounts
and against such types of risks as are
customary and appropriate in its industry
or otherwise deemed reasonable by Seller.
All such policies are in full force
and effect; however, except for the
coverage required under Section 5.5(c),
coverage of the IPC Companies under
Seller's insurance policies will terminate
at Closing. As respects the current
policies of insurance covering the IPC
Companies, Corporate Risk Management &
Insurance has not received any written
notice of cancellation with respect to any
insurance policy covering any IPC
Company, except as would not have a
Material Adverse Effect. All premiums due
and payable with respect to such policies
have been paid. For any written notice
of any demand or suit against any IPC
Company for damages because of bodily
injury, including death, personal injury or
property damage made against any IPC
Company estimated to have an ultimate
liability of $500,000 per occurrence or
more, Seller and Dynegy represent that
these matters have been reported to
36
<PAGE>
IPC's excess insurance carrier(s) to the
extent that information has been
disclosed in writing from the IPC
Companies' personnel to the Corporate Risk
Management & Insurance Department
(Houston).
Section 3.27 Clinton Nuclear
Power Station. Except
as set forth in
Schedule 3.27, as of the date hereof, to
Seller's Knowledge:
(a) neither AmerGen
nor any of its Affiliates have made demand, notice
of claim, claim or potential claim against
Seller or any of its Affiliates
arising from the Asset Purchase Agreement
dated June 30, 1999, between AmerGen
and IPC or other agreement related to the
sale of the Clinton Nuclear Power
Station ("APA"), including any claim for
indemnification pursuant to Section
8.1(b) of the APA;
(b) neither Seller nor
any of its Affiliates have made demand, notice
of claim, claim or potential claim against
AmerGen arising from the APA or other
agreements related to the sale of the
Clinton Nuclear Power Station, including
any claim for indemnification pursuant to
Section 8.1(a) of the APA;
(c) no demands, claims
or potential claims have been asserted against
Seller or any of its Affiliates arising out
or related to IPC's ownership or
operation of the Clinton Nuclear Power
Station; and
(d) no demands, claims
or potential claims, liabilities or obligations
have been asserted against Seller or any of
its Affiliates arising from (or
alleged to arise from) the off-site
disposal, treatment, storage, transportation
or recycling of Hazardous Substances from
the Clinton Nuclear Power Station,
including any shipments from Clinton
Nuclear Power Station prior to December 15,
1999.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PURCHASER
As an inducement to Seller, IGC and Dynegy to enter into this
Agreement and
the Ancillary Agreements and to consummate the transactions
contemplated
hereby and thereby, Purchaser hereby represents and warrants
to Seller, IGC
and Dynegy as follows:
Section 4.1 Organization and
Qualification.
Purchaser is a corporation duly incorporated, validly existing and
in
good standing under the Laws of the State
of Missouri, is duly qualified to do
business as a foreign corporation and is in
good standing in each jurisdiction
in which the character of Purchaser's
properties or the nature of its business
makes such qualification necessary, except
in jurisdictions, if any, where the
failure to be so qualified would not
individually or in the aggregate reasonably
be expected to result in a material adverse
effect on Purchaser's ability to
perform its obligations under this
Agreement or the Escrow Agreement. Purchaser
has the requisite corporate power and
authority to own, use or lease its
properties and to carry on its business as
it is now conducted. Purchaser has
made available to Seller a complete and
correct copy of its
37
<PAGE>
certificate of incorporation and by-laws,
each as amended to date, and
Purchaser's certificate of incorporation
and by-laws as so made available are in
full force and effect. Purchaser is not in
default in the performance,
observation or fulfillment of any provision
of its certificate of incorporation
and by-laws. Purchaser is treated as a
corporation for all Tax purposes and is
eligible to be the purchaser in a
"qualified stock purchase" as such term is
defined in Section 338 of the Code.
Section 4.2 Authority.
Purchaser has full corporate power and authority to execute and
deliver
this Agreement, the Escrow Agreement and to
consummate the transactions
contemplated hereby. The execution,
delivery and performance o
