Exhibit 10.9
CONFORMED COPY
$175,000,000
Dynegy Inc.
4.75% Convertible Subordinated Debentures due 2023
PURCHASE AGREEMENT
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August 1, 2003
Credit Suisse First Boston LLC
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇ Brothers Inc.
Credit Lyonnais Securities (USA) Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇
Dear Sirs:
1. Introductory. Dynegy Inc., an Illinois corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the several initial purchasers named in Schedule A hereto (the "Purchasers")
an aggregate of U.S. $175,000,000 principal amount of its 4.75% Convertible
Subordinated Debentures due 2023 ("Firm Securities") and, at the election of the
Purchasers, an aggregate of up to an additional aggregate of U.S. $50,000,000
principal amount of its 4.75% Convertible Subordinated Debentures due 2023
("Optional Securities"), each to be issued under an indenture dated as of August
11, 2003 (the "Indenture"), among the Issuers (as defined below) and Wilmington
Trust Company, as trustee (the "Trustee"), on a private placement basis pursuant
to an exemption under Section 4(2) of the United States Securities Act of 1933,
as amended (the "Securities Act"). The Firm Securities and the Optional
Securities will both be unconditionally guaranteed as to the payment of
principal, premium, if any, and interest on a senior unsecured basis (the
"Guarantee" and, together with the Firm Securities and the Optional Securities,
the "Offered Securities") by Dynegy Holdings Inc. (the "Guarantor" and, together
with the Company, the "Issuers"). Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Offering Circular (as defined
below).
The holders of the Offered Securities will be entitled to the benefits of a
Registration Rights Agreement to be dated August 11, 2003 among the Issuers and
the Purchasers (the "Registration Rights Agreement"), pursuant to which the
Issuers will agree to file a shelf registration statement with the Securities
Exchange Commission (the "Commission") registering the resale of the Offered
Securities and the Underlying Shares, as hereinafter defined, under the
Securities Act.
As used herein, the term "Operative Documents" refers to this Agreement,
the Indenture and the Registration Rights Agreement. As used herein, the term
"Underlying Shares" shall mean the shares of Common Stock of the Company
issuable upon conversion of the Offered Securities in accordance with the terms
of the Indenture. Concurrent with the offering of the Offered Securities, the
Guarantor is offering $1.45 billion of its second priority senior secured notes
(the "Notes") which will be guaranteed by certain affiliates of the Guarantor,
including the Company, which Notes will be issued pursuant to an indenture (the
"Notes Indenture") of even date with the Indenture.
2. Representations and Warranties of the Issuers. Each of the Issuers,
jointly and severally, represents and warrants to, and agrees with, the several
Purchasers that:
(a) A preliminary offering circular dated July 25, 2003 (the "Preliminary
Offering Circular") has been prepared by the Issuers and an offering circular
dated the date hereof (the "Offering Circular") relating to the Offered
Securities has been prepared by the Issuers. Such Preliminary Offering Circular
and Offering Circular, as supplemented as of the date of this Agreement, and any
other document approved by the Company for use in connection with the
contemplated resale of the Offered Securities, are hereinafter collectively
referred to as the "Offering Document," which term shall include the portions of
the documents specifically incorporated by reference therein (the "Incorporated
Information"). The Preliminary Offering Circular did not, as of the date
thereof, and the Offering Circular (in the form used by the Purchasers to
confirm sales) as of its date does not, include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. The preceding sentence does not apply to statements in or
omissions from the Preliminary Offering Circular or the Offering Circular based
upon written information furnished to the Company by any Purchaser through
Credit Suisse First Boston LLC ("CSFB") specifically for use therein, it being
understood and agreed that the only such information is that described as such
in Section 7(b) hereof.
(b) No order or decree preventing the use of the Offering Document, or any
order asserting that the transactions contemplated by this Agreement are subject
to the registration requirements of the Securities Act, has been issued and no
proceeding for that purpose has commenced or is pending or, to the knowledge of
the Company or the Guarantor, is contemplated.
(c) Each Issuer has been duly incorporated or formed and is an existing
corporation in good standing under the laws of its state of organization, with
power and authority (corporate and other) to own its properties and conduct its
business as described in the Offering Document; and each Issuer is duly
qualified to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification, except to the extent the failure to so
qualify or be in good standing could not reasonably be expected to have a
material adverse effect on the condition (financial or other), business,
properties, results of operations or, to the knowledge of the Issuers, prospects
of Dynegy Inc. and its subsidiaries, taken as a whole (a "Material Adverse
Effect"). Each Issuer has all requisite corporate power and authority to enter
into the Operative Documents and each Issuer has full power and authority to
authorize, issue and sell the Offered Securities as contemplated by this
Agreement.
(d) Illinois Power Company has been duly incorporated and is an existing
corporation in good standing under the laws of Illinois, with power and
authority (corporate and other) to own its properties and conduct its business
as described in the Offering Document, and is duly qualified to do business as a
foreign corporation in good standing in all other jurisdictions in which its
ownership or lease of property or the conduct of its business requires such
qualification, except to the extent the failure to so qualify or be in good
standing could not reasonably be expected to have a Material Adverse Effect.
(e) Neither of the Issuers nor any of their respective subsidiaries is (i)
in default in the performance of any obligation, agreement, covenant or
condition contained in any indenture, loan agreement, mortgage, lease or other
agreement or instrument that is material to the Issuers and their respective
subsidiaries, taken as a whole, to which either Issuer or their respective
subsidiaries is a party or by which the Company or any of its subsidiaries or
their respective property is bound, except for alleged defaults with respect to
certain agreements as disclosed in the Offering Circular under the caption
"Business--Legal Proceedings", or (ii) in violation of its respective charter or
by-laws, operating agreement or other organizational document that governs the
existence or administration of such entity, in each case, except as could not
reasonably be expected to have a Material Adverse Effect.
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(f) (i) As of March 31, 2003, the Company has an authorized capitalization
as set forth in the Offering Document under the heading "Capitalization of
Dynegy Inc. - Actual", (ii) all of the issued shares of capital stock of each of
the Issuers have been duly and validly authorized and issued and are fully paid
and non-assessable; (iii) all of the issued shares of capital stock of each
subsidiary of the Company, other than the Guarantor, have been duly and validly
authorized and issued and are fully paid and non-assessable; and (iv) the
capital stock of each subsidiary owned by the Issuers, directly or through
subsidiaries, is owned free from liens, encumbrances and material defects other
than liens on Pledged Equity (as defined in the Notes Indenture) and that secure
the Notes and Priority Lien Debt (as defined in the Notes Indenture).
(g) Except as disclosed in the Offering Circular or pursuant to stock
option plans which are disclosed in the Offering Circular, there are no
outstanding (1) options, warrants or other rights to purchase from the Company
or any of its subsidiaries, (2) agreements, contracts, arrangements or other
obligations of the Company or any of its subsidiaries to issue, or (3) other
rights to convert any obligation into or exchange any securities for, in the
case of each of clauses (1) through (3), shares of capital stock of, or other
ownership or equity interests in, the Company or any of its subsidiaries.
(h) The Firm Securities and the Optional Securities have been duly and
validly authorized by the Company and, when duly executed by the Company in
accordance with the terms of the Indenture, assuming due authentication of the
Firm Securities or the Optional Securities, as the case may be, by the Trustee,
upon delivery to the Purchasers against payment therefor in accordance with the
terms hereof, will be validly issued and delivered, and will constitute valid
and binding obligations of the Company entitled to the benefits of the
Indenture, enforceable against the Company in accordance with their terms,
except as such enforceability may be limited by (i) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii) general
principles of equity and the discretion of the court before which any proceeding
therefore may be brought (regardless of whether such enforcement is considered
in a proceeding in equity or at law). On the First Closing Date (as defined
below), the Firm Securities will conform in all material respects, and on the
Optional Closing Date (as defined below), the Optional Securities will conform
to the descriptions thereof contained in the Offering Circular.
(i) The Guarantee to be issued by the Guarantor has been, or as of the
Closing Date will have been, duly and validly authorized by the Guarantor and
when duly executed and delivered by the Guarantor in accordance with the terms
of the Indenture and upon the due execution, authentication and delivery of the
Firm Securities or the Optional Securities, as the case may be, in accordance
with the Indenture and the attachment of the Guarantee thereto and the issuance
of the Offered Securities in the sale to the Purchasers contemplated by this
Agreement, will constitute valid and binding obligation of the Guarantor,
enforceable against the Guarantor in accordance with its terms, except as such
enforceability may be limited by (i) bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium, or other similar laws now or hereafter
in effect relating to creditors' rights generally and (ii) general principles of
equity and the discretion of the court before which any proceeding therefore may
be brought (regardless of whether such enforcement is considered in a proceeding
in equity or at law). On the Closing Date, the Guarantee will conform to the
description thereof in the Offering Circular.
(j) The Indenture has been, or as of the Closing Date will have been, duly
and validly authorized by each of the Issuers, and upon its execution and
delivery and, assuming due authorization, execution and delivery by the Trustee,
will constitute the valid and binding agreement of the Issuers, enforceable
against the Issuers in accordance with its terms, except as such enforceability
may be limited by (i) bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium, or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefore may be
brought (regardless of whether such enforcement is considered in a proceeding in
equity or at law); and assuming the accuracy of the Purchasers' representations
and warranties and the Purchasers' compliance with the agreements in Section
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4 hereof and compliance with the limitations and restrictions contained under
the heading "Transfer Restrictions" in the Offering Circular, no qualification
of the Indenture under the Trust Indenture Act of 1939, as amended (the "TIA")
is required in connection with the offer and sale of the Offered Securities
contemplated hereby; and the Indenture conforms in all material respects to the
requirements of the TIA, and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder. On the Closing Date,
the Indenture will conform to the description thereof in the Offering Circular.
(k) The Registration Rights Agreement has been, or as of the Closing Date
will have been, duly and validly authorized by the Company and the Guarantor
and, on each Closing Date, will have been duly executed and delivered by the
Company and the Guarantor. When the Registration Rights Agreement has been duly
executed and delivered, the Registration Rights Agreement will constitute a
valid and legally binding obligation of the Company and the Guarantor,
enforceable against the Company and the Guarantor in accordance with its terms,
except as such enforceability may be limited by (i) bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium, or similar laws now or
hereafter in effect relating to or affecting creditors' rights generally and
(ii) general principles of equity and the discretion of the court before which
any proceeding therefore may be brought (regardless of whether such enforcement
is considered in a proceeding in equity or at law). On the Closing Date, the
Registration Rights Agreement will conform to the description thereof in the
Offering Circular.
(l) When the Offered Securities are delivered and paid for pursuant to
this Agreement on each Closing Date, such Offered Securities will be convertible
into the Underlying Shares in accordance with the terms of the Indenture; the
Underlying Shares initially issuable upon conversion of such Offered Securities
have been duly authorized and reserved for issuance upon such conversion and,
when issued upon such conversion, will be validly issued, fully paid and
non-assessable; and the shareholders of the Company have no preemptive rights
with respect to the Offered Securities or the Underlying Shares, other than the
pre-emptive rights of Chevron U.S.A. Inc. as described in the Offering Document,
which rights have been waived in connection with the issuance of the Offered
Securities so long as the Series B Preferred Stock Restructuring (as defined in
the Offering Document) is consummated.
(m) This Agreement has been duly authorized, executed and delivered by
each of the Issuers.
(n) Except as disclosed in the Offering Document, there are no contracts,
agreements or understandings between the Company or the Guarantor and any person
that would give rise to a valid claim against the Company, the Guarantor or any
Purchaser for a brokerage commission, finder's fee or other like payment.
(o) No consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required for the consummation of the
transactions contemplated by the Operative Documents in connection with the
issuance and sale of the Offered Securities by the Issuers, except for (i) the
order of the Commission declaring the Shelf Registration Statement (as defined
in the Registration Rights Agreement) effective; (ii) such as may be required
under foreign or state securities laws, blue sky laws and related regulations;
(iii) those that have been obtained or made on or prior to the Closing Date; and
(iv) those that could not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect and would not materially adversely
affect the ability of the Issuers to perform their respective obligations under
the Operative Documents.
(p) The execution, delivery and performance of the Operative Documents and
the issuance and sale of the Offered Securities will not conflict with or result
in a breach or violation of any of the terms and provisions of, or constitute a
default under (i) any statute, any rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over the
Issuers or any of their respective subsidiaries or any of their properties, (ii)
any agreement or instrument to which the Issuers or any of their respective
subsidiaries is a party or by which the Issuers or any of their respective
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subsidiaries is bound or to which any of the properties of the Issuers or any of
their respective subsidiaries is subject, or (iii) the charter or by-laws of the
Issuers or any of their respective subsidiaries, except in the case of (i) and
(ii), for such breaches, violations or defaults as could not reasonably be
expected to have a Material Adverse Effect.
(q) Except as disclosed in the Offering Document or as could not
reasonably be expected to have a Material Adverse Effect, each obligor under the
Operative Documents (the "Obligors" and each an "Obligor") has (i) good and
marketable title to (in the case of fee interests in real property), (ii) valid
leasehold interests in (in the case of leasehold interests in real or personal
property), and (iii) good title to (in the case of all other personal property),
all of its respective properties and assets reflected in its respective
financial statements. All such properties and assets are free and clear of Liens
except for Priority Liens and Permitted Liens (as each term is defined in the
Notes Indenture).
(r) Except as disclosed in the Offering Document, each of the Issuers and
their respective subsidiaries possesses adequate certificates, authorities or
permits issued by appropriate governmental agencies or bodies necessary to
conduct the business now operated by them and have not received any notice of
proceedings relating to the revocation or modification of any such certificate,
authority or permit that, if determined adversely to either of the Issuers or
their respective subsidiaries, could individually or in the aggregate reasonably
be expected to have a Material Adverse Effect.
(s) Except as disclosed in the Offering Document, each of the Issuers and
their respective subsidiaries is in compliance with all applicable statutes,
regulations and orders of, and all applicable restrictions imposed by all
governmental agencies, bodies or courts, except where the failure to comply
could not reasonably be expected to have a Material Adverse Effect.
(t) No labor dispute with the employees of the Issuers and their
respective subsidiaries, that could reasonably be expected to result in a
Material Adverse Effect, to the knowledge of the Issuers, is imminent.
(u) The Issuers and their respective subsidiaries own or possess on
reasonable terms, adequate trademarks, trade names and other rights to patents,
copyrights and other intellectual property (collectively, "intellectual property
rights") necessary to conduct the business now operated by them, or presently
employed by them, and have not received any notice of infringement of or
conflict with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Issuers or any of their
respective subsidiaries, could reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect.
(v) Except as disclosed in the Offering Document, none of the Issuers or
any of their respective subsidiaries is in violation of any statute, any rule,
regulation, decision or order of any governmental agency or body or any court,
domestic or foreign having jurisdiction over the Issuers or any of their
respective subsidiaries or any of their respective properties, relating to the
use, disposal or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "environmental laws"), owns or operates any real
property contaminated with any substance that is subject to any environmental
laws, is liable for any off-site disposal or contamination pursuant to any
environmental laws, or is subject to any claim relating to any environmental
laws, which violation, contamination, liability or claim could reasonably be
expected to, individually or in the aggregate, have a Material Adverse Effect;
and neither the Company nor the Guarantor is aware of any pending investigation
which might lead to such a claim.
(w) Except as disclosed in the Offering Document, there are no pending
actions, suits or proceedings against or affecting the Issuers, any of their
respective subsidiaries or their respective
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properties that, if determined adversely to the Issuers, or their respective
subsidiaries, could reasonably be expected to, individually or in the aggregate,
have a Material Adverse Effect, or would materially and adversely affect the
ability of the Company or the Guarantor to perform their respective obligations
under the Operative Documents; and except as disclosed in the Offering Document
no such actions, suits or proceedings are, to the Company's or the Guarantor's
knowledge, threatened or contemplated.
(x) The financial statements included in the Offering Document present
fairly the financial position of Dynegy Inc. and its consolidated subsidiaries
as of the dates shown and their results of operations and cash flows for the
periods shown, and such financial statements have been prepared in conformity
with the generally accepted accounting principles in the United States applied
on a consistent basis.
(y) Except as disclosed in the Offering Document, since the date of the
latest audited financial statements in the Offering Circular, there has been no
material adverse change, nor any development or event involving a prospective
material adverse change, in the condition (financial or other), business,
properties, results of operations or, to the knowledge of the Issuers, prospects
of the Issuers and their respective subsidiaries taken as a whole, and, except
as disclosed in or contemplated by the Offering Circular, there has been no
dividend or distribution of any kind declared, paid or made by Dynegy Inc. on
any class of its capital stock.
(z) The Company is subject to the reporting requirements of either Section
13 or Section 15(d) of the Exchange Act and files reports with the Commission on
the Electronic Data Gathering, Analysis, and Retrieval (▇▇▇▇▇) system.
(aa) The Company is not an open-end investment company, unit investment
trust or face-amount certificate company that is or is required to be registered
under Section 8 of the United States Investment Company Act of 1940 (the
"Investment Company Act"); and the Company is not and, after giving effect to
the offering and sale of the Offered Securities and the application of the
proceeds thereof as described in the Offering Document, will not be an
"investment company" as defined in the Investment Company Act.
(bb) The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-14 under the Exchange Act),
which (i) are designed to ensure that material information relating to the
Company and its consolidated subsidiaries, is made known to the principal
executive officer and its principal financial officer by others within those
entities, particularly during the periods in which the periodic reports required
under the Exchange Act are being prepared; (ii) have been evaluated for
effectiveness as of a date within 90 days prior to the date of the Company's
most recently filed quarterly report; and (iii) are effective in all material
respects to perform the functions for which they were established.
(cc) Based on the most recent evaluation of its disclosure controls and
procedures, the Company is not aware of (i) any significant deficiency in the
design or operation of internal controls which could adversely affect the
ability of the Company to record, process, summarize and report financial data
or any material weaknesses in internal controls, except as disclosed in the
Offering Document; or (ii) any fraud, whether or not material, that involves
management or other employees who have a significant role in internal controls.
(dd) Since the date of the most recent evaluation of such disclosure
controls and procedures, there have been no significant changes in internal
controls or in other factors that could significantly affect internal controls,
including any corrective actions with regard to significant deficiencies and
material weaknesses, except as disclosed in the Offering Document.
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(ee) PricewaterhouseCoopers LLP who have certified certain financial
statements of the Company and its subsidiaries are independent public
accountants as required by the Securities Act and the rules and regulations of
the Commission thereunder.
(ff) Except as set forth in the Offering Document, none of the Issuers or
any of their respective subsidiaries is (i) a "registered holding company," or a
"subsidiary company" or "affiliate" of a "registered holding company" within the
meaning of the Public Utility Holding Company Act of 1935 ("PUHCA"); (ii) a
"public utility company" as defined under Section 2(a) of PUHCA, with the
exception of Illinois Power Company; (iii) subject to regulation under the
Federal Power Act, as amended ("FPA"), other than as a power marketer or an
"exempt wholesale generator" ("EWG") with market-based rate authority, or as a
"qualifying facility" ("QF") under the Public Utility Regulatory Policies Act of
1978, as amended (16 U.S.C. Section 796 et seq.) ("PURPA"), as contemplated by
18 C.F.R. Section 292.601(c), with the exception of Illinois Power Company, or
(iv) with respect to each of the power generation projects in which any of the
Issuers or their respective subsidiaries has an interest that is a QF, subject
to any state law or regulation with respect to rates or the financial or
organizational regulation of electric utilities, other than as contemplated by
18 C.F.R. Section 292.602(c).
(gg) Each of the Company's subsidiaries, providing retail electric service
in the states of Illinois, Michigan, New York and Texas has a validly issued
order from the relevant state public utility or commerce commission to sell
electricity on a retail basis, and such orders are not subject to any pending
challenge, investigation, or proceeding, authorizing such subsidiary to engage
in sales of electricity at retail under the laws of that state. None of the
Company's subsidiaries providing retail electric service is subject to any rate
cap or mitigation measure other than rate caps and mititgation measures
generally applicable to similarly situated retail service providers selling in
the geographic market where such subsidiary conducts its business (and with
respect to Illinois Power Company, its geographic market shall be the State of
Illinois and Illinois Power Company does not provide retail electric service
outside the State of Illinois).
(hh) Except as disclosed in the Offering Document, each of the power
generation projects certified as QF under PURPA in which the Company or its
subsidiaries has an interest meets the requirements for certification as a QF as
set out in PURPA and the regulations of the Federal Energy Regulatory Commission
("FERC") promulgated thereunder, as amended from time to time.
(ii) The Guarantor and each of its subsidiaries that is an Eligible
Facility within the meaning of Section 32 of PUHCA has received a determination
from the FERC, not subject to any pending challenge, that it is an Exempt
Wholesale Generator as that term is defined and used in PUHCA and in the FPA.
(jj) Each of the Issuers and their respective subsidiaries that sells power
at market-based rates outside of the Electric Reliability Councuil of Texas,
Inc. ("ERCOT") has a validly-issued order from the FERC authorizing it to engage
in wholesale sales of electricity, ancillary services in certain markets and, to
the extent permitted under its market-based rate tariff, other products and
services at market-based rates. The FERC has not issued any orders limiting the
ability of each such entity to engage in the wholesale sales of electricity at
market-based prices, and had not imposed any rate caps or mitigation measures
other than rate caps and mitigation measures generally applicable to similarly
situated marketers or generators selling electricity, ancillary services or
other products at wholesale in the geographic market where each such entity
conducts its business.
(kk) Each of the Company's subsidiaries participating in the ERCOT
wholesale electric market has registered with the Public Utilities Commission of
Texas ("PUCT") as a power generation company, and has authority to sell power at
wholesale at a market-based rate that is not subject to any rate cap or
mitigation measure other than those generally applicable to similarly situated
marketers or generators selling electricity in the ERCOT wholesale electric
market.
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(ll) Other than the complaint proceedings challenging (i) the contract
between the California Department of Water Resources and Dynegy Power Marketing,
Inc., Cabrillo Power I LLC, El Segundo Power LLC, and Long Beach Generation LLC
and (ii) the contract between the Kroger Company and Dynegy Power Marketing,
Inc., there are no pending complaints filed with the FERC seeking abrogation or
modification of a contract for the sale of power by the Company or any of its
subsidiaries.
(mm) No securities of the same class (within the meaning of Rule 144A(d)(3)
under the Securities Act) as the Offered Securities are listed on any national
securities exchange registered under Section 6 of the Exchange Act or quoted in
a U.S. automated inter-dealer quotation system.
(nn) The offer and sale of the Offered Securities by the Issuers to the
several Purchasers in the manner contemplated by this Agreement (assuming that
the representations and warranties in Section 4 of this Agreement are true and
correct and the Purchasers comply with the offer and sale procedures set forth
in this Agreement) will be exempt from the registration requirements of the
Securities Act by reason of Section 4(2) thereof, and Regulation D and
Regulation S thereunder.
(oo) None of the Issuers nor any of their respective affiliates, nor any
person acting on its or their behalf (it being understood that no representation
is made with respect to any Purchaser or any Purchaser's affiliates or any of
their representatives) (i) has, within the six-month period prior to the date
hereof, offered or sold in the United States or to any U.S. person (as such
terms are defined in Regulation S under the Securities Act) the Offered
Securities or any security of the same class or series as the Offered Securities
or (ii) has offered or will offer or sell the Offered Securities (A) in the
United States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act or (B)
with respect to any such securities sold in reliance on Rule 903 of Regulation S
under the Securities Act, by means of any directed selling efforts within the
meaning of Rule 902(c) of Regulation S. The Issuers, their respective affiliates
and any person acting on its or their behalf (it being understood that no
representation is made with respect to any Purchaser or any Purchaser's
affiliates or any of their representatives) have complied and will comply with
the offering restrictions requirement of Regulation S and the sale of the
Offered Securities pursuant to Regulation S is not part of a plan or scheme to
evade the registration provisions of the Securities Act. The Company and the
Guarantor have not entered and will not enter into any contractual arrangement
with respect to the distribution of the Offered Securities except for this
Agreement.
(pp) Except in connection with (1) the junior unsecured subordinated notes
due 2015 of Dynegy Inc. issued or to be issued to Chevron USA pursuant to one or
more valid exemptions from registration under the Securities Act, (3) the
convertible preferred stock due 2033 of Dynegy Inc. issued or to be issued to
Chevron USA pursuant to one or more valid exemptions from registration under the
Securities Act and (4) as disclosed in the Offering Document, there are no
contracts, agreements or understandings between the Company or the Guarantor and
any person granting such person the right to require the Company or the
Guarantor to file a registration statement under the Securities Act with respect
to any securities of the Company or the Guarantor or to require the Company or
the Guarantor to include such securities with the Offered Securities registered
pursuant to any Registration Statement.
(qq) None of the Company, the Guarantor, any of their respective
subsidiaries or any agent thereof acting on the behalf of them has taken, and
none of them will take, any action that might cause this Agreement or the
issuance or sale of the Offered Securities to violate Regulation T, Regulation U
or Regulation X of the Board of Governors of the Federal Reserve System.
(rr) The Issuers and each of their respective subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is adequate for
the conduct of their respective businesses and the value of their respective
properties and as is customary for companies engaged in similar businesses in
similar industries.
8
(ss) Except for the "negative watch" outlook for Dynegy Inc. issued by
Standard & Poor's Ratings Group prior to the date of this Agreement, no
"nationally recognized statistical rating organization" as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act (i) has imposed (or has
informed the Company or the Guarantor that it is considering imposing) any
condition (financial or otherwise) on the Company's or the Guarantor's retaining
any rating assigned to the Company or the Guarantor, any securities of the
Company or the Guarantor or (ii) has indicated to the Company or the Guarantor
that it is considering (a) the downgrading, suspension, or withdrawal of, or any
review for a possible change that does not indicate the direction of the
possible change in, any rating so assigned or (b) any change in the outlook for
any rating of the Company, the Guarantor or any securities of the Company or the
Guarantor.
(tt) Except for such matters as could not reasonably be expected to have a
Material Adverse Effect, the Company is in compliance in all material respects
with all presently applicable provisions of ERISA; no "reportable event" (as
defined in ERISA), has occurred with respect to any "pension plan" (as defined
in ERISA), for which the Company would have any liability; the Company has not
incurred and does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company would have any liability that is intended
to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which
would cause the loss of such qualification.
(uu) Except as disclosed in the Offering Circular, the Company and its
subsidiaries have filed all material federal, state and local income and
franchise tax returns required to be filed through the date hereof and have paid
all taxes due thereon, and no tax deficiency except where the same may be
contested in good faith by appropriate proceedings, and no tax deficiency has
been determined adversely to the Issuers or any of their respective subsidiaries
which has had (nor does the Company or the Guarantor have any knowledge of any
tax deficiency in writing which, if determined adversely to the Issuers or any
of their respective subsidiaries, could reasonably be expected to have) a
Material Adverse Effect.
(vv) Prior to the date hereof, neither the Company nor any of its
affiliates has taken any action which is designed to or which has constituted or
which might have been expected to cause or result in stabilization or
manipulation of the price of any security of the Company in connection with the
offering of the Offered Securities.
(ww) The Offering Document contains all the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Securities Act.
(xx) The statements set forth in the Offering Circular under the caption
"Description of the Convertible Debentures," insofar as they purport to
constitute a summary of the terms of the Offered Securities, under the captions
"Offering Circular Summary--Recent Developments," "Certain Relationships and
Related Party Transactions," "Description of the Capital Stock," "Description of
the Amended Credit Facility," "Series B Preferred Stock Restructuring,"
"Material United States Federal Income Tax Considerations," "Price Range of
Common Stock and Dividend Policy" and "Plan of Distribution," insofar as they
purport to describe the provisions of the laws and documents referred to
therein, are accurate and fair summaries in all material respects.
(yy) The market-related and customer-related data and estimates included in
the Offering Document are based on or derived from sources which the Company
believes to be reliable.
9
3. Purchase, Sale and Delivery of Offered Securities. On the basis of the
representations, warranties and agreements herein contained, but subject to the
terms and conditions herein set forth, the Issuers or agree to sell to the
Purchasers, and the Purchasers agree, severally and not jointly, to purchase
from the Issuers, at a purchase price of 97% of the principal amount thereof
(the "Purchase Price") plus accrued interest from August 11, 2003 to the First
Closing Date (as hereinafter defined) U.S. $175,000,000 principal amount of the
Firm Securities in the respective amounts set forth opposite the names of the
several Purchasers in Schedule A hereto.
The Company will deliver against payment of the purchase price the Firm
Securities in the form of one or more permanent global Securities in definitive
form with the Guarantee affixed thereto (the "Global Securities") deposited with
the Trustee as custodian for The Depository Trust Company ("DTC") and registered
in the name of Cede & Co., as nominee for DTC. Interests in any permanent Global
Securities will be held only in book-entry form through DTC, except in the
limited circumstances described in the Offering Document. Payment for the
Offered Securities shall be made by the Purchasers in Federal (same day) funds
by wire transfer to an account at a bank acceptable to CSFB on August 11, 2003,
or at such other time not later than seven full business days thereafter as CSFB
and the Company determine, such time being herein referred to as the "First
Closing Date", against delivery to the Trustee as custodian for DTC of the Firm
Securities representing all of the Firm Securities. The Firm Securities will be
made available for checking at the office of O'Melveny & ▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at least 24 hours prior to the First Closing
Date.
In addition, upon written notice from CSFB given to the Company from time
to time not more than 30 days subsequent to the date of this Agreement the
Purchasers may purchase all or less than all of the Optional Securities at the
Purchase Price (including any accrued interest thereon to the related Optional
Closing Date (as defined below) to be paid for the Firm Securities; provided,
however, that Optional Securities may not be issued in whole or in part after
the period which ends 13 days after the date hereof unless the Purchasers
determine that such Optional Securities would not be treated as having been
issued with "original issue discount" for purposes of Sections 1271-1275 of the
Code and the applicable Treasury regulations promulgated thereunder. The Company
agrees to sell to the Purchasers the principal amount of Optional Securities
specified in such notice and the Purchasers agrees to purchase such Optional
Securities. Such Optional Securities shall be purchased from the Issuers for the
account of each Purchaser in the same proportion as the amount of Firm
Securities set forth next to such Purchaser's name in Schedule A hereto bears to
the total number of Offered Securities. No Optional Securities shall be sold or
delivered unless the Firm Securities previously have been, or simultaneously
are, sold and delivered. The right to purchase the Optional Securities or any
portion thereof may be exercised from time to time and to the extent not
previously exercised may be surrendered and terminated at any time upon notice
by CSFB to the Company.
Each time for the delivery of and payment for the Optional Securities,
being herein referred to as the "Optional Closing Date", which may be the First
Closing Date (the First Closing Date and each Optional Closing Date, if any,
being sometimes referred to as a "Closing Date"), shall be determined by CSFB
but shall not be later than seven full business days after written notice of
election to purchase Optional Securities is given. The Company will deliver
against payment of the purchase price the Optional Securities being purchased on
each Optional Closing Date in the form of one or more permanent global
Securities in definitive form (each, an "Optional Global Security") deposited
with the Trustee as custodian for DTC and registered in the name of Cede & Co.,
as nominee for DTC. Payment for such Optional Securities shall be made by the
Purchasers in Federal (same day) funds by wire transfer to an account at a bank
acceptable to CSFB against delivery to the Trustee as custodian for DTC of the
Optional Global Securities representing all of the Optional Securities being
purchased on such Optional Closing Date.
4. Representations by Purchasers; Resale by Purchasers.
10
(a) Each Purchaser severally represents and warrants to the Issuers that
it is an "accredited investor" within the meaning of Regulation D under the
Securities Act.
(b) Each Purchaser severally acknowledges that the Offered Securities have
not been registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
except in accordance with Regulation S or pursuant to an exemption from the
registration requirements of the Securities Act. Each Purchaser severally
represents and agrees that it has offered and sold the Offered Securities and
will offer and sell the Offered Securities only in accordance with Rule 903 or
Rule 144A ("Rule 144A") under the Securities Act. Accordingly, neither such
Purchasers nor any of its affiliates, nor any persons acting on its or their
behalf, have engaged or will engage in any directed selling efforts with respect
to the Offered Securities, and such Purchaser, its affiliates and all persons
acting on its or their behalf have complied and will comply with the offering
restrictions requirement of Regulation S and Rule 144A.
(c) Each Purchaser severally agrees that it and each of its affiliates has
not entered and will not enter into any contractual arrangement with respect to
the distribution of the Offered Securities except for any such arrangements with
the other Purchasers or affiliates of the other Purchasers or with the prior
written consent of the Company.
(d) Each Purchaser severally agrees that it and each of its affiliates
will not offer or sell the Offered Securities by means of any form of general
solicitation or general advertising, within the meaning of Rule 502(c) under the
Securities Act, including, but not limited to (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
media or broadcast over television or radio, or (ii) any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising. Each Purchaser severally agrees, with respect to resales made in
reliance on Rule 144A of any of the Offered Securities, to deliver either with
the confirmation of such resale or otherwise prior to settlement of such resale
a notice to the effect that the resale of such Offered Securities has been made
in reliance upon the exemption from the registration requirements of the
Securities Act provided by Rule 144A.
(e) Each Purchaser severally represents and agrees that: (i) it has not
offered or sold and prior to the expiry of a period of six months from the
closing date, will not offer or sell any of the Offered Securities to persons in
the United Kingdom except to persons whose ordinary activities involve them in
acquiring, holding, managing or disposing of investments (as principal or agent)
for the purposes of their businesses or otherwise in circumstances which have
not resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has only communicated or caused to be communicated and will only communicate or
cause to be communicated any invitation or inducement to engage in investment
activity (within the meaning of section 21 of the Financial Services and Markets
Act 2000) received by it in connection with the issue or sale of any of the
Offered Securities in circumstances in which section 21(1) of the FSMA does not
apply to the Issuers; and (iii) it has complied and will comply with all
applicable provisions of the FSMA with respect to anything done by it in
relation to the of the Offered Securities in, from or otherwise involving the
United Kingdom.
5. Certain Agreements of the Issuers. Each of the Issuers, jointly and
severally, agrees with the several Purchasers that:
(a) The Company will advise CSFB promptly of any proposal to amend or
supplement the Offering Circular and will not effect such amendment or
supplement without CSFB's consent (which consent shall not be unreasonably
withheld or delayed). If, at any time prior to the completion of the resale of
the Offered Securities by the Purchasers any event occurs as a result of which
the Offering Document as then amended or supplemented would include an untrue
statement of a material fact or omit
11
to state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, the
Company promptly will notify CSFB of such event and promptly will prepare, at
its own expense, an amendment or supplement which will correct such statement or
omission. Neither CSFB's consent to, nor the Purchasers' delivery to offerees or
investors of, any such amendment or supplement shall constitute a waiver of any
of the conditions set forth in Section 6.
(b) The Company will furnish to CSFB copies of the Preliminary Offering
Circular, the Offering Circular and all amendments and supplements to such
documents, in each case as soon as available and in such quantities as CSFB
reasonably requests. At any time when the Company is not subject to Section 13
or 15(d) of the Exchange Act, and any Offered Securities remain "restricted
securities" within the meaning of the Securities Act, the Company will promptly
furnish or cause to be furnished to CSFB (and, upon request, to each of the
other Purchasers) and, upon request of holders and prospective purchasers of the
Offered Securities, to such holders and purchasers, copies of the information
required to be delivered to holders and prospective purchasers of the Offered
Securities pursuant to Rule 144A(d)(4) under the Securities Act (or any
successor provision thereto) in order to permit compliance with Rule 144A in
connection with resales by such holders of the Offered Securities. The Company
will pay the expenses of printing and distributing to the Purchasers all such
documents.
(c) The Issuers will use all commercially reasonable efforts to obtain the
qualification of the Offered Securities for sale and the determination of their
eligibility for investment under the laws of such jurisdictions in the United
States and Canada as CSFB designates and will continue such qualifications in
effect so long as required for the resale of the Offered Securities by the
Purchasers, provided that neither the Company nor the Guarantor will be required
to qualify as a foreign corporation or to file a general consent to service of
process in any such state.
(d) During the period of two years after the Closing Date, the Issuers
will, upon request, furnish to CSFB, each of the other Purchasers and any holder
of Offered Securities a copy of the restrictions on transfer applicable to the
Offered Securities.
(e) Subject to the Purchasers' compliance with its representations and
warranties and agreements set forth in Section 4 hereof, the Issuers consent to
the use of the Offering Document, and any amendments and supplements thereto
required pursuant to Section 5(a) hereto, by the Purchasers.
(f) During the period of two years after the later of the First Closing
Date and the last Optional Closing Date, the Company will not, and will not
permit any of its affiliates (as defined in Rule 144 under the Securities Act)
to, resell any of the Offered Securities that have been reacquired by any of
them, unless such Offered Securities are resold in a transaction registered
under the Securities Act.
(g) During the period of two years after the later of the First Closing
Date and the last Optional Closing Date, the Company will not be or become, an
open-end investment company, unit investment trust or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act.
(h) Each of the Issuers, jointly and severally, agree to pay all expenses
incidental to the performance of its obligations under the Operative Documents
including (i) the fees and expenses of the Trustee and its professional
advisers, (ii) all expenses in connection with the execution, issue,
authentication, packaging and initial delivery of the Offered Securities, the
preparation and printing of the Preliminary Offering Circular and the Offering
Circular and amendments and supplements thereto, and any other document relating
to the issuance, offer, sale and delivery of the Offered Securities, (iii) the
cost of qualifying the Offered Securities for trading in The Portal/SM/ Market
("PORTAL") of The Nasdaq Stock
12
Market, Inc. and any expenses incidental thereto, (iv) for any expenses
(including fees and disbursements of counsel) incurred in connection with
qualification of the Offered Securities for sale under the state securities laws
as provided in Section 5(c) and the printing of memoranda relating thereto, (v)
for any fees charged by investment rating agencies for the rating of the Offered
Securities, and (vi) for expenses incurred in distributing the Preliminary
Offering Circular and the Offering Circular (including any amendments and
supplements thereto) to the Purchasers. The Company will reimburse the
Purchasers for all travel expenses of the Purchasers and the Company's officers
and employees and any other expenses of the Purchaser and the Company in
connection with attending or hosting meetings with prospective purchasers of the
Offered Securities.
(i) In connection with the offering, until CSFB shall have notified the
Company and the other Purchasers, which notice shall be promptly provided upon
the written request of the Company, of the completion of the resale of the
Offered Securities, neither the Company nor any of its affiliates has or will,
either alone or with one or more other persons, bid for or purchase for any
account in which it or any of its affiliates has a beneficial interest any
Offered Securities or attempt to induce any person to purchase any Offered
Securities; and neither it nor any of its affiliates will make bids or purchases
for the purpose of creating actual, or apparent, active trading in, or of
raising the price of, the Offered Securities.
(j) For a period of 90 days from the date of the initial offering of the
Offered Securities by the Purchasers, neither the Company nor the Guarantor will
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any shares of Class A Common Stock of the Company except issuances
of Class A Common Stock pursuant to the conversion or exchange of the Offered
Securities or other convertible or exchangeable securities or the exercise of
warrants or options, in each case outstanding on the date hereof, grants of
employee, consultant or director stock options pursuant to the terms of a plan
in effect on the date hereof, issuances of Offered Securities pursuant to the
exercise of such options or the exercise of any other employee stock options
outstanding on the date hereof, or upon issuance or conversion of Optional
Securities. Neither the Company nor the Guarantor will at any time offer, sell,
contract to sell, pledge or otherwise dispose of, directly or indirectly, any
securities under circumstances where such offer, sale, pledge, contract or
disposition would cause the exemption afforded by Section 4(2) of the Securities
Act or the safe harbor of Regulation S thereunder to cease to be applicable to
the offer and sale of the Offered Securities.
(k) The Company will apply the net proceeds from the sale of the Offered
Securities to be sold by it hereunder substantially in accordance with the
description set forth in the Offering Document under the caption "Use of
Proceeds."
(l) Except as stated in this Agreement and in the Offering Document,
neither the Issuers nor any of their respective affiliates have taken, nor will
any of them take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of any security of the Issuers to facilitate the sale or resale of the
Offered Securities.
(m) The Issuers will use their best efforts to permit the Offered
Securities to be designated PORTAL securities in accordance with the rules and
regulations adopted by the National Association of Securities Dealers, Inc.
relating to trading in PORTAL and to permit the Offered Securities to be
eligible for clearance and settlement through DTC.
(n) The Issuers agree not to sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any security (as defined in the Securities
Act), that would be integrated with the sale of the Offered Securities in a
manner that would require the registration under the Securities Act of the sale
to the Purchasers or the resale of the Offered Securities.
13
(o) The Issuers agree to comply with all the terms and conditions of the
Operative Documents and all agreements set forth in the representation letters
of the Issuers to DTC relating to the approval of the Offered Securities by DTC
for "book entry" transfer.
(p) The Issuers agree that prior to any registration of the Offered
Securities pursuant to the Registration Rights Agreement, or at such earlier
time as may be required, the Indenture shall be qualified under the TIA and any
necessary supplemental indentures will be entered into in connection therewith,
provided that the agreement set forth in this paragraph shall remain in effect
until the Registration Rights Agreement has been executed by all parties thereto
and has become a binding agreement enforceable against each party thereto.
(q) The Issuers will do and perform all things required or necessary to be
done and performed under this Agreement by them prior to each Closing Date, and
to satisfy all conditions precedent to the Purchasers' obligations hereunder to
purchase the Offered Securities.
6. Conditions of the Obligations of the Purchasers. The obligations of the
several Purchasers to purchase and pay for the Offered Securities will be
subject to the accuracy of the representations and warranties on the part of the
Issuers herein as of the date hereof and on the Closing Date, to the accuracy of
the statements of officers of the Issuers made pursuant to the provisions
hereof, to the performance by the Issuers of their respective obligations
hereunder and to the following additional conditions precedent:
(a) The Purchasers shall have received a letter, substantially in the form
attached hereto as Annex A, dated the date of this Agreement, of
PricewaterhouseCoopers LLP confirming that they are independent public
accountants within the meaning of the Securities Act and the applicable
published rules and regulations thereunder ("Rules and Regulations"). Such
letter shall be in form and substance reasonably satisfactory to the Purchasers
as agreed as of the date hereof and shall cover the matters ordinarily covered
by accountants' "comfort letters" to initial purchasers in connection with
offerings similar to the offering of the Offered Securities.
(b) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event involving a
prospective change, in the condition (financial or other), business, properties
or results of operations of the Company or any of the Guarantors and their
respective subsidiaries taken as a whole which, in the judgment of a majority in
interest of the Purchasers, including CSFB, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the offering or the
sale of and payment for the Offered Securities; (ii) any downgrading in the
rating of any debt securities of the Company by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g) under
the Securities Act), or any public announcement that any such organization has
under surveillance or review its rating of any debt securities of the Company
(other than an announcement with positive implications of a possible upgrading,
and no implication of a possible downgrading, of such rating) or, except for the
"negative watch" outlook for the Company issued by Standard & Poor's Ratings
Group prior to the date of this Agreement, any announcement that the Company has
been placed on negative outlook as of or after the date of this Agreement; (iii)
any change in U.S. or international financial, political or economic conditions
or currency exchange rates or exchange controls as would, in the judgment of a
majority in interest of the Purchasers, including CSFB, be likely to prejudice
materially the success of the proposed issue, sale or distribution of the
Offered Securities, whether in the primary market or in respect of dealings in
the secondary market; (iv) any material suspension or material limitation of
trading in securities generally on the New York Stock Exchange or any setting of
minimum prices for trading on such exchange, or any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter market; (v)
any general banking moratorium declared by U.S. Federal or New York authorities;
(vi) any major disruption of settlements of securities or clearance services in
the United States; or (vii) any attack on, outbreak or escalation of
14
hostilities or act of terrorism involving the United States, any declaration of
war by Congress or any other national or international calamity or emergency if,
in the judgment of a majority in interest of the Purchasers including CSFB, the
effect of any such attack, outbreak, escalation, act, declaration, calamity or
emergency makes it impractical or inadvisable to proceed with completion of the
offering or sale of and delivery and payment for the Offered Securities.
(c) The Guarantor shall have received the consent of the requisite lenders
under the its existing Credit Agreement dated as of April 1, 2003, to amend the
credit facility thereunder substantially on the terms set forth in the Offering
Document, and such amendment shall have become effective prior to or on the
Closing Date on substantially the terms described in the Offering Circular; upon
the effectiveness of such amendment the consummation of the transactions
contemplated under the Agreement shall not conflict with the Guarantor's Credit
Agreement as then in effect; and the Purchasers shall have received
counterparts, conformed as executed, of such amendment to the Credit Agreement
and such other documentation as they deem necessary to evidence the consummation
thereof.
(d) The Purchasers shall have received counterparts, conformed as
executed, of the Exchange Agreement, dated as of July 28, 2003, with respect to
the exchange of Dynegy Inc.'s $1.5 billion Series B mandatorily convertible
redeemable preferred stock currently held by a subsidiary of ChevronTexaco for
cash and other securities of Dynegy Inc., substantially on the terms described
in the Offering Circular.
(e) The Purchasers shall have received an opinion, dated such Closing
Date, of O'Melveny & ▇▇▇▇▇ LLP, special counsel for the Issuers, that:
(i) The Guarantor is validly existing as a corporation in good
standing under the laws of the State of Delaware, has the corporate
power and authority under the Delaware General Corporate Law (the
"DGCL") and its certificate of incorporation and bylaws to own its
properties and conduct its business as described in the Offering
Circular;
(ii) The Guarantor has all requisite corporate power and
authority to enter into the Operative Documents;
(iii) Assuming that the Firm Securities and the Optional
Securities have been duly authorized by all necessary corporate action
on the part of the Company, when executed and authenticated in
accordance with the provisions of the Indenture and delivered to and
paid for by the Purchasers in accordance with the terms of this
Agreement, the Firm Securities and the Optional Securities will be the
legally valid and binding obligations of the Company, entitled to the
benefits of the Indenture and enforceable against the Company in
accordance with their terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally (including, without limitation, fraudulent
conveyance laws) and by general principles of equity including,
without limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific
performance or injunctive relief, regardless whether considered in a
proceeding in equity or at law. The Firm Securities and the Optional
Securities conform in all material respects to the description thereof
in the Offering Document;
(iv) The Guarantee of the Guarantor has been duly authorized by
the Guarantor and, when executed by the Guarantor and when the Offered
Securities on which the Guarantee has been endorsed have been duly
executed by the Company and
15
authenticated by the Trustee in accordance with the terms of the
Indenture and delivered and paid for by the Purchasers in accordance
with the terms of this Agreement, the Guarantee will be the legally
valid and binding obligation of the Guarantor, enforceable against the
Guarantor in accordance with its terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally (including, without limitation, fraudulent
conveyance laws) and by general principles of equity including,
without limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific
performance or injunctive relief, regardless whether considered in a
proceeding in equity or at law. The Guarantee conforms in all material
respects to the descriptions thereof in the Offering Document;
(v) The execution and delivery of the Indenture has been duly
authorized by all necessary corporate action of the Guarantor and,
assuming the due authorization, execution and delivery thereof by the
Trustee and the Company, is the legally valid and binding agreement of
the Company and the Guarantor, enforceable against the Company and the
Guarantor in accordance with its terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally (including, without limitation, fraudulent
conveyance laws) and by general principles of equity including,
without limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific
performance or injunctive relief, regardless whether considered in a
proceeding in equity or at law. The Indenture conforms in all material
respects to the descriptions thereof in the Offering Document;
(vi) The Indenture conforms in all material respects to the
requirements of the TIA, and the rules and regulations of the
Commission applicable to an indenture which is qualified thereunder;
(vii) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Guarantor and, assuming the
due execution and delivery thereof by the Purchasers and the Company,
is the legally valid and binding agreement of the Company and the
Guarantor, enforceable against the Company and the Guarantor in
accordance with its terms, except to the extent that such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or affecting
creditors' rights generally (including, without limitation, fraudulent
conveyance laws) and by general principles of equity including,
without limitation, concepts of materiality, reasonableness, good
faith and fair dealing and the possible unavailability of specific
performance or injunctive relief, regardless whether considered in a
proceeding in equity or at law. The Registration Rights Agreement
conforms in all material respects to the descriptions thereof in the
Offering Circular;
(viii) Each of the Company and the Guarantor is not and, after
giving effect to the offering and sale of the Offered Securities and
the application of the proceeds thereof as described in the Offering
Document, will not be an "investment company" as defined in the
Investment Company Act and the rules and regulations of the Commission
thereunder;
(ix) Neither the Company nor the Guarantor is (i) a registered
holding company or is required, by Section 5 of the Public Utility
Holding Company Act of 1935, as amended ("PUHCA"), to register as a
holding company, or (ii) a "subsidiary
16
company" (as defined in PUHCA) of a company that is a registered
holding company or is required by Section 5 of PUHCA, to register as a
holding company;
(x) No FPA approval or authorization is required for the
execution and delivery by the Issuers of this Agreement, the Offered
Securities, the Indenture and the Registration Rights Agreement, and
the performance by the Issuers of the obligations thereunder;
(xi) No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by the Operative
Documents in connection with the issuance or sale of the Offered
Securities by the Company, except for the order of the Commission
declaring the Shelf Registration Statement effective; except that this
opinion shall be limited to the following (the "Applicable Laws"):
those current statutes, rules or regulations of any governmental,
legislative, judicial, administrative or regulatory body of the State
of New York, the State of Delaware and the United States of America by
which the Company or the Guarantor is bound, which such counsel has,
in the exercise of customary professional diligence, recognized as
applicable to the transactions of the type contemplated by the
Purchase Agreement other than (i) the anti-fraud provisions and
registration requirements of the federal securities laws and the rules
and regulations of the Commission thereunder (which, in the case of
registration rights, is the subject of the opinion set forth in
paragraph (xv) of the opinion), (ii) applicable state or foreign
securities or Blue Sky laws, (iii) the rules and regulations of the
NASD in connection with the purchase and distribution of the Firm
Securities and the Optional Securities by the Purchasers and (iv)
energy regulatory laws, except as set forth in paragraphs (ix) and (x)
of the opinion;
(xii) The execution and delivery by each of the Company and the
Guarantor of each of the Operative Documents to which it is a party,
the issuance, sale and delivery of the Firm Securities and the
Optional Securities and performance by the Company, and the issuance,
sale and delivery of the Guarantee and the performance by the
Guarantor, will not conflict with or result in a breach of violation
of any of the terms and provisions of, or constitute a default under
(i) to our knowledge, any Applicable Laws; (ii) any agreement or
instrument to which the Company or the Guarantor or any of their
respective subsidiaries is a party or by which the Company or the
Guarantor or any of their respective subsidiaries is bound or to which
any of the properties of the Company or the Guarantor or any of their
respective subsidiaries is subject that is filed pursuant to paragraph
4 or paragraph 10 of Item 601 of Regulation S-K as an exhibit to the
Company's Annual Report on Form 10-K/A for the year ended December 31,
2002 and to the Company's other reports filed since January 1, 2003
pursuant to Section 13 of the Exchange Act; or (iii) the charter or
by-laws of the Guarantor or any of its subsidiaries that are organized
under the laws of the State of New York or the State of Delaware;
(xiii) The Purchase Agreement has been duly authorized, executed
and delivered by the Guarantor;
(xiv) The statements contained in the Offering Document under
the captions (a) "Description of the Convertible Debentures" insofar
as such statements purport to constitute a summary of the terms of the
Firm Securities, the Optional Securities, the Guarantee, the Indenture
and the Registration Rights Agreement; (b) "Certain Relationships and
Related Transactions", "Description of Capital Stock", "Description of
the Amended Credit Facility", "The Series B Preferred Stock
Restructuring" and "Plan of
17
Distribution", insofar as such statements purport to constitute a
summary of the documents referred to therein; (c) "Material United
States Federal Income Tax Considerations" insofar as such statements
purport to constitute a summary of the United States federal tax laws
referred to therein; and (d) "Price Range of Common Stock and Dividend
Policy;" in each case, are accurate and fairly summarize in all
material respects the matters referred to therein; and
(xv) Assuming without independent investigation, (a) that the
Offered Securities are sold to the Purchasers, and initially resold by
the Purchasers, in accordance with the terms of and in the manner
contemplated by, the Purchase Agreement and the Offering Circular; (b)
the accuracy of the representations and warranties of the Company and
the Guarantor set forth in the Purchase Agreement and in those certain
certificates delivered at the closing; (c) the accuracy of the
representations and warranties of the Purchasers set forth in the
Purchase Agreement; (d) the due performance and compliance by the
Company, the Guarantor and the Purchasers of their respective
covenants and agreements set forth in the Purchase Agreement; and (e)
the Purchasers' compliance with the Offering Circular and the transfer
procedures and restrictions described therein, it is not necessary to
register the Offered Securities under the Securities Act or to qualify
an indenture in respect thereof under the Trust Indenture Act in
connection with the issuance and sale of the Offered Securities by the
Company to the Purchasers or in connection with the offer, resale and
delivery of the Offered Securities by the Purchasers in the manner
contemplated by the Purchase Agreement and the Offering Circular, it
being expressly understood that we express no opinion as to any
subsequent offer or resale of any of the Offered Securities.
Such shall also state that it has no reason to believe that the Offering
Circular, as of its date or the date of any amendment or supplement thereto, as
of the date hereof and as of such Closing Date, contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made not misleading; it being understood that such counsel
need express no opinion as to the financial statements and other financial data
contained in the Offering Circular.
(f) Local counsel to the Company in Illinois shall have furnished to the
Purchasers their written opinion, dated the Closing Date, substantially in the
form attached hereto as Annex B. Such opinion shall be in form and substance
reasonably satisfactory to the Purchasers hereto as agreed as of the date
hereof, as to such matters under the laws of Illinois as the Purchasers may
reasonably request.
(g) The Purchasers shall have received an opinion, dated such Closing
Date, of ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Group General Counsel--Corporate Finance & Securities
for the Company, that:
(i) As of March 31, 2003, the Company has an authorized
capitalization as set forth in the Offering Document; and except as
set forth in the Offering Document, the capital stock of each
subsidiary owned by the Company or the Guarantors, as the case may be,
directly or through subsidiaries, to his knowledge is owned free from
liens, encumbrances and material defects;
(ii) Except as set forth in the Offering Document, there are no
contracts, agreements or understandings between the Company or the
Guarantor and any person granting such person the right to require the
Company or the Guarantor to file a registration statement under the
Securities Act with respect to any securities of the Company or the
Guarantor or to require the Company or the Guarantor to include such
18
securities with the Offered Securities and Guarantee registered
pursuant to any Registration Statement; and
(iii) To my knowledge, and other than as set forth in the
Offering Document, there are no pending actions, suits or proceedings
against or affecting the Company, the Guarantor or any of their
respective subsidiaries or any of their respective properties that, if
determined adversely to the Company, the Guarantor or any of their
respective subsidiaries, would individually or in the aggregate have a
Material Adverse Effect, or would materially and adversely affect the
ability of the Company or the Guarantor to perform its obligations
under the Operative Documents, or which are otherwise material in the
context of the sale of the Offered Securities; and no such actions,
suits or proceedings are, to such counsel's knowledge, threatened or
contemplated; and
(iv) Except as set forth in the Offering Document with respect
to the preemptive rights of Chevron U.S.A. Inc., which rights have
been waived in connection with the issuance of the Offered Securities
so long as the Series B Preferred Stock Restructuring (as defined in
the Offering Document) is consummated, the shareholders of the Company
have no preemptive rights with respect to the Firm Securities or
Optional Securities under any agreement or instrument to which the
Company is a party or by which the Company is bound.
Such shall also state that it has no reason to believe that the Offering
Circular, as of its date or as of the Closing Date, contained or contains any
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading; it being understood that such
counsel need express no opinion as to the financial statements or other
financial data contained in the Offering Circular. Such counsel also shall
confirm, based on certificates of public officials, that each of the Company and
the Guarantor is duly qualified to do business as a foreign corporation in good
standing in the other jurisdictions where so qualified and nothing has come to
the attention of such counsel to cause him to believe that the Company is not so
duly qualified, in each case except to the extent the failure to so qualify or
be in good standing in such other jurisdictions could not reasonably be expected
to have a Material Adverse Effect.
(h) The Purchasers shall have received from ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ LLP, counsel
for the Purchasers, such opinion or opinions, dated the Closing Date, with
respect to the incorporation of the Company and the Guarantor, the validity of
the Offered Securities, the Offering Document, the exemption from registration
for the offer and sale of the Firm Securities and the Optional Securities by the
Company and the Guarantee thereof by the Guarantor, to the several Purchasers
and the resales by the several Purchasers as contemplated hereby and other
related matters as CSFB may require, and the Issuers shall have furnished to
such counsel such documents as they request for the purpose of enabling them to
pass upon such matters.
(i) The Purchasers shall have received a certificate, dated such Closing
Date, of the President or any Vice President and a principal financial or
accounting officer of the Company and the Guarantor in which such officers, to
the best of their knowledge after reasonable investigation, shall state that the
representations and warranties of the Company and the Guarantor in this
Agreement are true and correct, that the Company and the Guarantor have complied
with all agreements and satisfied all conditions on its part to be performed or
satisfied hereunder and under other Operative Documents at or prior to such
Closing Date, and that, subsequent to the date of the most recent financial
statements in the Offering Document there has been no material adverse change,
nor any development or event that reasonably could be expected to result in a
prospective material adverse change, in the condition (financial or other),
business, properties, results of operations or prospects of the Company, the
Guarantor or any of their
19
respective subsidiaries except as set forth in the Offering Circular (exclusive
of any amendment or supplement thereto on or after the date hereof).
(j) The Purchasers shall have received a letter, dated such Closing Date,
of PricewaterhouseCoopers LLP which meets the requirements of subsection (a) of
this Section, except that the specified date referred to in such subsection will
be a date not more than three days prior to such Closing Date for the purposes
of this subsection.
(k) As of such Closing Date, the representations and warranties contained
in the Operative Documents will be true and correct in all material respects.
(l) The Company shall have furnished or caused to be furnished to the
Trustee on such Closing Date certificates of officers of the Company reasonably
satisfactory to the Trustee as to the accuracy of the representations and
warranties of the Obligors in the Operative Documents at and as of such Closing
Date and as to such other matters as the Trustee may reasonably request.
(m) On such Closing Date, each Operative Document will conform, as to
legal matters, in all material respects to the description thereof contained in
the Offering Circular.
(n) The Company shall have furnished to the Purchasers executed copies of
a lock-up letter agreement from each executive officer of the Company listed in
the Offering Circular under the caption "Management" substantially in the form
set forth in Annex C hereto.
(o) The Issuers shall have authorized, executed and delivered the
Registration Rights Agreement, substantially in the form of Annex D hereto.
(p) The Company and the Guarantor will furnish the Purchasers with such
conformed copies of such opinions, certificates, letters and documents as the
Purchasers reasonably request. CSFB may in its sole discretion waive on behalf
of the Purchasers compliance with any conditions to the obligations of the
Purchasers hereunder.
7. Indemnification and Contribution.
(a) The Company and the Guarantor will, jointly and severally, indemnify
and hold harmless each Purchaser, its partners, affiliates, directors and
officers and each person, if any, who controls such Purchaser within the meaning
of Section 15 of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such Purchaser may become subject, under
the Securities Act or the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Offering Document, or any amendment or supplement thereto,
or any related preliminary offering circular, or arise out of or are based upon
the omission or alleged omission to state therein a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, including any losses, claims, damages or
liabilities arising out of or based upon the Company's or the Guarantor's
failure to perform its obligations under Section 5(a) of this Agreement, and
will reimburse each Purchaser for any legal or other expenses actually and
reasonably incurred by such Purchaser in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the neither the Company nor the Guarantor will
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement in or omission or alleged omission from any of such documents in
reliance upon and in conformity with written information furnished to the
Company by any Purchaser through CSFB specifically for use therein, it being
understood and agreed that
20
the only such information consists of the information described as such in
subsection (b) below; provided, further, however, that the foregoing indemnity
agreement with respect to losses, claims, damages or liabilities shall not inure
to the benefit of any Purchaser (or any person controlling any Purchaser) to the
extent that such losses, claims, damages or liabilities arise out of or based
upon (x) any untrue statement or alleged untrue statement of any material fact
in the Preliminary Offering Circular or (y) the omission or alleged omission to
state in the Preliminary Offering Circular a material fact necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading, if and only if: (1) the person asserting such losses,
claims, damages or liabilities purchased Offered Securities from such Purchaser
in the initial resale by such Purchaser (such person, an "Initial Resale
Purchaser") and a copy of the Offering Circular was not sent or given by or on
behalf of such Purchaser to such Initial Resale Purchaser, (2) the Company
furnished to the Purchasers sufficient copies of the Offering Circular on a
timely basis to permit delivery of the Offering Circular by the Purchasers to
all Initial Resale Purchasers at or prior to the delivery of the written
confirmation of the sale of the Offered Securities to such person, and (3) the
disclosure contained in the Offering Circular cured the defect in the
Preliminary Offering Circular giving rise to such losses, claims, damages or
liabilities.
(b) Each Purchaser will severally and not jointly indemnify and hold
harmless the Company, the Guarantor and their respective directors and officers
and each person, if any, who controls the Company or the Guarantor within the
meaning of Section 15 of the Securities Act, against any losses, claims, damages
or liabilities to which the Company or the Guarantor may become subject, under
the Securities Act or the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Offering Document, or any amendment or supplement thereto,
or any related preliminary offering circular, or arise out of or are based upon
the omission or the alleged omission to state therein a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or omission
or alleged omission was made in reliance upon and in conformity with written
information furnished to the Company by such Purchaser through CSFB specifically
for use therein, and will reimburse any legal or other expenses reasonably
incurred by the Company and the Guarantor in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Purchaser consists of the following information in the Offering
Document furnished on behalf of each Purchaser: the third, sixth, eleventh and
thirteenth paragraphs under the caption "Plan of Distribution"; provided,
however, that the Purchasers shall not be liable for any losses, claims, damages
or liabilities arising out of or based upon the Company's or the Guarantor's
failure to perform its obligations under Section 5(a) of this Agreement.
(c) Promptly after receipt by an indemnified party under this Section of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the failure to notify the indemnifying party shall not relieve it
from any liability that it may have under subsection (a) or (b) above except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided further that the
failure to notify the indemnifying party shall not relieve it from any liability
that it may have to an indemnified party otherwise than under subsection (a) or
(b) above. In case any such action is brought against any indemnified party and
it notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that it may
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel reasonably satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and after notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
21
indemnified party in connection with the defense thereof other than reasonable
costs of investigation. In any such proceeding, any indemnified party shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such indemnified party unless (i) the indemnifying
party and the indemnified party shall have mutually agreed to the contrary; (ii)
the indemnifying party has failed within a reasonable time to retain counsel
reasonably satisfactory to the indemnified party; (iii) the indemnified party
shall have reasonably concluded that there may be legal defenses available to it
that are different from or in addition to those available to the indemnifying
party; (or (iv) the named parties in any such proceeding (including any
impleaded parties) include both the indemnifying party and the indemnified party
and representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them. It is understood
and agreed that the indemnifying party shall not, in connection with any
proceeding or related proceeding in the same jurisdiction, be liable for the
fees and expenses of more than one separate firm (in addition to any local
counsel) for all indemnified parties, and that all such fees and expenses shall
be reimbursed as they are incurred. Any such separate firm for any Purchaser,
its affiliates, directors and officers and any control persons of such Purchaser
shall be designated in writing by CSFB and any such separate firm for the
Company, the Guarantors, their directors and officers and any control persons of
the Company and the Guarantors shall be designated in writing by the Company. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened action in respect of
which any indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party unless such settlement
includes (i) an unconditional release of such indemnified party from all
liability on any claims that are the subject matter of such action and (ii) does
not include a statement as to or an admission of fault, culpability or failure
to act by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a) or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages or
liabilities referred to in subsection (a) or (b) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Issuers on the
one hand and the Purchasers on the other from the offering of the Offered
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Issuers on the one hand and the Purchasers on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Issuers on the one hand
and the Purchasers on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses) received by
the Issuers bear to the total discounts and commissions received by the
Purchasers from the Issuers under this Agreement. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Issuers or the Purchasers
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such untrue statement or omission. The amount
paid by an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (d). Notwithstanding the
provisions of this subsection (d), no Purchaser shall be required to contribute
any amount in excess of the amount by which the total discounts, fees and
commissions received by such Purchaser exceeds the amount of any damages which
such Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. The Purchasers'
obligations in this subsection (d) to contribute are several in proportion to
their respective purchase obligations and not joint.
(e) The obligations of the Issuers under this Section shall be in addition
to any liability which the Issuers may otherwise have and shall extend, upon the
same terms and conditions, to each person, if
22
any, who controls any Purchaser within the meaning of the Securities Act or the
Exchange Act; and the obligations of the Purchasers under this Section shall be
in addition to any liability which the respective Purchasers may otherwise have
and shall extend, upon the same terms and conditions, to each person, if any,
who controls the Company or the Guarantor within the meaning of the Securities
Act or the Exchange Act.
8. Default of Purchasers. If any Purchaser or Purchasers default in their
obligations to purchase Securities hereunder and the aggregate principal amount
of the Offered Securities that such defaulting Purchaser or Purchasers agreed
but failed to purchase does not exceed 10% of the total principal amount of the
Offered Securities, CSFB may make arrangements satisfactory to the Company for
the purchase of such Offered Securities by other persons, including any of the
Purchasers, but if no such arrangements are made by the Closing Date, the
non-defaulting Purchasers shall be obligated severally, in proportion to their
respective commitments hereunder, to purchase the Offered Securities that such
defaulting Purchasers agreed but failed to purchase. If any Purchaser or
Purchasers so default and the aggregate principal amount of the Offered
Securities with respect to which such default or defaults occur exceeds 10% of
the total principal amount of the Offered Securities and arrangements
satisfactory to CSFB and the Company for the purchase of such Offered Securities
by other persons are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Purchaser or
the Issuers, except as provided in Section 9. As used in this Agreement, the
term "Purchaser" includes any person substituted for a Purchaser under this
Section. Nothing herein will relieve a defaulting Purchaser from liability for
its default.
9. Survival of Certain Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements of the
Issuers or their respective officers and of the several Purchasers set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made by
or on behalf of any Purchaser, its affiliates, the Issuers or any of their
respective representatives, officers or directors or any controlling person, and
will survive delivery of and payment for the Offered Securities. If this
Agreement is terminated pursuant to Section 8 or if for any reason the purchase
of the Offered Securities by the Purchasers is not consummated, the Issuers
shall remain responsible for the expenses to be paid or reimbursed by it
pursuant to Section 5 and the respective obligations of the Issuers and the
Purchasers pursuant to Section 7 shall remain in effect and if any Offered
Securities have been purchased hereunder the representations and warranties in
Section 2 and all obligations under Section 5 shall remain in effect; provided,
that if this Agreement is terminated pursuant to Section 8 hereof, the Issuers
shall not be obligated to reimburse any defaulting Purchaser on account of any
expenses that otherwise would have been reimbursed hereunder. If the purchase of
the Offered Securities by the Purchasers is not consummated for any reason other
than solely because of the termination of this Agreement pursuant to Section 8
or the occurrence of any event specified in clause (iii), (iv), (v), (vi) or
(vii) of Section 6(b), the Issuers will reimburse the Purchasers for all
out-of-pocket expenses (including fees and disbursements of counsel) reasonably
incurred by them in connection with the offering of the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if sent
to the Purchasers will be mailed, delivered, faxed or sent by courier to the
Purchasers, c/o Credit Suisse First Boston LLC, Eleven ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Transactions Advisory Group (Fax: ▇▇▇-▇▇▇-▇▇▇▇),
or, if sent to the Company or the Guarantor, will be mailed, delivered or
telegraphed and confirmed to it at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ Attention: General Counsel (Fax: ▇▇▇-▇▇▇-▇▇▇▇); provided, however,
that any notice to a Purchaser pursuant to Section 7 will be mailed, delivered,
faxed or sent by courier and confirmed to such Purchaser.
11. Successors. This Agreement will inure to the benefit of and be binding
upon the parties hereto and their respective successors and the controlling
persons referred to in Section 7, and no other person will have any right or
obligation hereunder, except that holders of Offered Securities shall be
entitled to enforce
23
the agreements for their benefit contained in the second and third sentences of
Section 5(b) hereof against the Issuers as if such holders were parties hereto.
12. Representation of Purchasers. CSFB will act for the several Purchasers
in connection with this purchase, and any action under this Agreement taken by
CSFB will be binding upon all the Purchasers.
13. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
14. Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to principles
of conflicts of laws.
The Company and the Guarantor hereby submit to the non-exclusive
jurisdiction of the Federal and state courts in the Borough of Manhattan in The
City of New York in any suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
24
If the foregoing is in accordance with the Purchasers' understanding of our
agreement, kindly sign and return to the Company one of the counterparts hereof,
whereupon it will become a binding agreement among the Issuers and the several
Purchasers in accordance with its terms.
Very truly yours,
Dynegy Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
-------------------------------------
Title: Senior Vice President and
Treasurer
Dynegy Holdings Inc.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
-------------------------------------
Title: Senior Vice President and
Treasurer
The foregoing Purchase Agreement is
hereby confirmed and accepted as
of the date first above written.
Credit Suisse First Boston LLC
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇▇▇▇ Brothers Inc.
Credit Lyonnais Securities (USA) Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
By: Credit Suisse First Boston LLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
--------------------------------
Title: Managing Director
25
SCHEDULE A
Principal Amount
of Offered
Purchasers Securities
------------------------------------------------------------ ------------------
Credit Suisse First Boston LLC ............................. $ 105,000,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated .......................... 33,250,000
▇.▇. ▇▇▇▇▇▇ Securities Inc. ................................ 14,000,000
▇▇▇▇▇▇ Brothers Inc. ....................................... 8,750,000
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated ......... 8,750,000
Credit Lyonnais Securities (USA) Inc. ...................... 5,250,000
-----------------
Total ................................................... $ 175,000,000
=================
26