EXHIBIT 99.2
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AGREEMENT AND PLAN OF MERGER
among
DYNEGY INC.,
STANFORD, INC.,
SORIN, INC.,
BADIN, INC.
and
ENRON CORP.
Dated as of November 9, 2001
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TABLE OF CONTENTS
Page
ARTICLE 1 THE MERGERS.............................................................................................2
Section 1.1 The Mergers............................................................................2
Section 1.2 The Closing............................................................................2
Section 1.3 Effective Time.........................................................................2
ARTICLE 2 CERTIFICATE OF INCORPORATION AND BYLAWS OF NEWCO; ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING
ENTITIES........................................................................................3
Section 2.1 Certificate of Incorporation and Bylaws of Newco.......................................3
Section 2.2 Articles of Incorporation of the Enron Surviving Entity................................3
Section 2.3 Bylaws of the Enron Surviving Entity...................................................3
Section 2.4 Articles of Incorporation of the Dynegy Surviving Entity...............................3
Section 2.5 Bylaws of the Dynegy Surviving Entity..................................................3
ARTICLE 3 DIRECTORS AND OFFICERS OF NEWCO AND OF THE SURVIVING ENTITIES...........................................3
Section 3.1 Board of Directors of Newco............................................................3
Section 3.2 Certain Officers of Newco..............................................................4
Section 3.3 Board of Directors of Enron Surviving Entity...........................................4
Section 3.4 Officers of Enron Surviving Entity.....................................................4
Section 3.5 Board of Directors of Dynegy Surviving Entity..........................................4
Section 3.6 Officers of Dynegy Surviving Entity....................................................4
ARTICLE 4 CONVERSION OF COMMON STOCK..............................................................................4
Section 4.1 Enron Merger Ratio.....................................................................4
Section 4.2 Conversion of Capital Stock of Enron and Enron Merger Sub..............................5
Section 4.3 Conversion of Capital Stock of Newco, Dynegy and Dynegy Merger Sub.....................6
Section 4.4 Exchange of Certificates...............................................................7
Section 4.5 Options...............................................................................10
Section 4.6 Dynegy Dissenting Shares..............................................................12
Section 4.7 Adjustment of Enron Merger Ratio......................................................12
Section 4.8 Rule 16b-3 Approval...................................................................12
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF ENRON................................................................12
Section 5.1 Existence; Good Standing; Corporate Authority.........................................12
Section 5.2 Authorization, Validity and Effect of Agreements......................................13
Section 5.3 Capitalization........................................................................13
Section 5.4 Subsidiaries..........................................................................13
Section 5.5 Compliance with Laws; Permits.........................................................14
Section 5.6 No Conflict...........................................................................15
Section 5.7 SEC Documents.........................................................................15
Section 5.8 Litigation............................................................................17
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Section 5.9 Absence of Certain Changes............................................................17
Section 5.10 Taxes.................................................................................17
Section 5.11 Employee Benefit Plans................................................................18
Section 5.12 Labor Matters.........................................................................19
Section 5.13 Environmental Matters.................................................................20
Section 5.14 Intellectual Property.................................................................21
Section 5.15 Decrees, Etc..........................................................................21
Section 5.16 Insurance.............................................................................21
Section 5.17 No Brokers............................................................................22
Section 5.18 Opinions of Financial Advisors........................................................22
Section 5.19 Dynegy Stock Ownership................................................................22
Section 5.20 Vote Required.........................................................................22
Section 5.21 Regulation as a Utility...............................................................22
Section 5.22 Capital Expenditure Program...........................................................23
Section 5.23 Improper Payments.....................................................................23
ARTICLE 6 REPRESENTATIONS AND WARRANTIES OF DYNEGY, NEWCO, DYNEGY MERGER SUB AND ENRON MERGER SUB................23
Section 6.1 Existence; Good Standing; Corporate Authority.........................................23
Section 6.2 Authorization, Validity and Effect of Agreements......................................23
Section 6.3 Capitalization........................................................................24
Section 6.4 Subsidiaries..........................................................................24
Section 6.5 Compliance with Laws; Permits.........................................................25
Section 6.6 No Conflict...........................................................................25
Section 6.7 SEC Documents.........................................................................26
Section 6.8 Litigation............................................................................27
Section 6.9 Absence of Certain Changes............................................................27
Section 6.10 Taxes.................................................................................28
Section 6.11 Employee Benefit Plans................................................................29
Section 6.12 Labor Matters.........................................................................30
Section 6.13 Environmental Matters.................................................................30
Section 6.14 Intellectual Property.................................................................31
Section 6.15 Decrees, Etc..........................................................................31
Section 6.16 Insurance.............................................................................31
Section 6.17 No Brokers............................................................................32
Section 6.18 Opinion of Financial Advisor..........................................................32
Section 6.19 Enron Stock Ownership.................................................................32
Section 6.20 Vote Required.........................................................................32
Section 6.21 Regulation as a Utility...............................................................32
Section 6.22 Improper Payments.....................................................................33
ARTICLE 7 COVENANTS..............................................................................................33
Section 7.1 Conduct of Business...................................................................33
Section 7.2 No Solicitation by Enron..............................................................37
Section 7.3 No Solicitation by Dynegy.............................................................39
Section 7.4 Meetings of Shareholders..............................................................40
Section 7.5 Filings; Commercially Reasonable Best Efforts, Etc....................................41
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Section 7.6 Inspection............................................................................42
Section 7.7 Publicity.............................................................................43
Section 7.8 Registration Statement on Form S-4....................................................43
Section 7.9 Listing Application...................................................................44
Section 7.10 Letters of Accountants................................................................44
Section 7.11 Agreements of Rule 145 Affiliates.....................................................44
Section 7.12 Expenses..............................................................................45
Section 7.13 Indemnification and Insurance.........................................................45
Section 7.14 Agreements Regarding Enron Supplemental Indentures....................................46
Section 7.15 No Hire...............................................................................46
Section 7.16 Employee Matters......................................................................47
Section 7.17 Alternative Structure.................................................................47
ARTICLE 8 CONDITIONS.............................................................................................48
Section 8.1 Conditions to Each Party's Obligation to Effect the Mergers...........................48
Section 8.2 Conditions to Obligation of Enron to Effect the Mergers...............................49
Section 8.3 Conditions to Obligation of Dynegy, Newco, Dynegy Merger Sub and Enron Merger Sub to
Effect the Mergers....................................................................50
ARTICLE 9 TERMINATION............................................................................................51
Section 9.1 Termination by Mutual Consent.........................................................51
Section 9.2 Termination by Dynegy or Enron........................................................51
Section 9.3 Termination by Enron..................................................................52
Section 9.4 Termination by Dynegy.................................................................53
Section 9.5 Effect of Termination.................................................................53
Section 9.6 Extension; Waiver.....................................................................55
ARTICLE 10 GENERAL PROVISIONS....................................................................................55
Section 10.1 Nonsurvival of Representations, Warranties and Agreements.............................55
Section 10.2 Notices...............................................................................55
Section 10.3 Assignment; Binding Effect; Benefit...................................................56
Section 10.4 Entire Agreement......................................................................57
Section 10.5 Amendments............................................................................57
Section 10.6 Governing Law.........................................................................57
Section 10.7 Counterparts..........................................................................57
Section 10.8 Headings..............................................................................57
Section 10.9 Interpretation........................................................................58
Section 10.10 Waivers...............................................................................58
Section 10.11 Incorporation of Disclosure Letters and Exhibits......................................59
Section 10.12 Severability..........................................................................59
Section 10.13 Enforcement of Agreement..............................................................59
Section 10.14 No Special Damages....................................................................59
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GLOSSARY OF DEFINED TERMS
Defined Terms Where Defined
------------- -------------
1935 Act .......................................................................................... Section 5.6(b)
9.142% Preferred Stock ............................................................................ Section 5.3
Action ............................................................................................ Section 7.13(a)
Agreement ......................................................................................... Preamble
Applicable Laws ................................................................................... Section 5.5(a)
Articles of Merger ................................................................................ Section 1.3
Assumed Plans ..................................................................................... Section 4.5(a)
Certificates ...................................................................................... Section 4.4(c)
Chevron ........................................................................................... Section 6.3
ChevronTexaco ..................................................................................... Recitals
Closing ........................................................................................... Section 1.2
Closing Date ...................................................................................... Section 1.2
Code .............................................................................................. Recitals
Confidentiality Agreement ......................................................................... Section 7.6
Contingent Obligation ............................................................................. Section 7.1(n)
Cutoff Date ....................................................................................... Section 7.2(d), Section
7.3(d)
Debt .............................................................................................. Section 7.1(n)
Draft Third Quarter Report ........................................................................ Section 5.7
Dynegy ............................................................................................ Preamble
Dynegy Acquisition Proposal ....................................................................... Section 7.3(a)
Dynegy Benefit Plans .............................................................................. Section 6.11(a)
Dynegy Certificates ............................................................................... Section 4.4(a)
Dynegy Class A Common Stock ....................................................................... Recitals
Dynegy Class B Common Stock ....................................................................... Recitals
Dynegy Common Stock ............................................................................... Recitals
Dynegy Consideration .............................................................................. Section 4.3(b)
Dynegy Disclosure Letter .......................................................................... Article 6 Preface
Dynegy Dissenting Share ........................................................................... Section 4.6
Dynegy Material Adverse Effect .................................................................... Section 10.9(c)
Dynegy Merger ..................................................................................... Recitals
Dynegy Merger Ratio ............................................................................... Section 4.3(b)
Dynegy Merger Sub ................................................................................. Preamble
Dynegy Option ..................................................................................... Section 4.5(a)
Dynegy Permits .................................................................................... Section 6.5(b)
Dynegy Preferred Stock ............................................................................ Section 6.3
Dynegy Real Property .............................................................................. Section 6.5(c)
Dynegy Regulatory Approvals ....................................................................... Section 6.6(b)
Dynegy Reports .................................................................................... Section 6.7
Dynegy Series B Preferred Stock ................................................................... Recitals
Dynegy Shareholder Agreement ...................................................................... Section 6.3
Dynegy Stock Plans ................................................................................ Section 4.5(a)
Dynegy Subscription Agreement ..................................................................... Recitals
Dynegy Superior Proposal .......................................................................... Section 7.3(a)
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Dynegy Surviving Entity ........................................................................... Section 1.1(b)
Effective Time .................................................................................... Section 1.3
Enron ............................................................................................. Preamble
Enron Acquisition Proposal ........................................................................ Section 7.2(a)
Enron Additional Securities ....................................................................... Section 4.1(a)
Enron Benefit Plans ............................................................................... Section 5.11(a)
Enron Capital Budget .............................................................................. Section 5.22
Enron Certificates ................................................................................ Section 4.2(b)
Enron Common Stock ................................................................................ Recitals
Enron Convertible Securities ...................................................................... Section 4.1(b)
Enron Disclosure Letter ........................................................................... Article 5 Preface
Enron Filed Reports ............................................................................... Section 5.8
Enron Material Adverse Effect ..................................................................... Section 10.9(c)
Enron Merger ...................................................................................... Recitals
Enron Merger Ratio. ............................................................................... Section 4.1(a)
Enron Merger Sub .................................................................................. Preamble
Enron Option ...................................................................................... Section 4.5(a)
Enron Parity Price ................................................................................ Section 4.1(c)
Enron Permits ..................................................................................... Section 5.5(b)
Enron Preferred Stock ............................................................................. Section 5.3
Enron Real Property ............................................................................... Section 5.5(c)
Enron Regulatory Approvals ........................................................................ Section 5.6(b)
Enron Reports ..................................................................................... Section 5.7
Enron Stock Plans ................................................................................. Section 4.5(a)
Enron Superior Proposal ........................................................................... Section 7.2(a)
Enron Surviving Entity ............................................................................ Section 1.1(a)
Enron Utility ..................................................................................... Section 5.21(a)
Environmental Laws ................................................................................ Section 5.13(a)
ERISA ............................................................................................. Section 5.11(a)
ERISA Affiliate ................................................................................... Section 5.11(b)
Exchange Act ...................................................................................... Section 4.8
Exchange Agent .................................................................................... Section 4.4(b)
Exchange Fund ..................................................................................... Section 4.4(b)
Excluded Convertible Securities ................................................................... Section 4.1(e)
Excluded Person ................................................................................... Section 7.13(a)
FERC .............................................................................................. Section 5.6(b)
Form S-4 .......................................................................................... Section 7.8(a)
Former Enron Directors ............................................................................ Section 3.1(a)
Former Dynegy Directors ........................................................................... Section 3.1(a)
Hazardous Materials ............................................................................... Section 5.13(b)
HSR Act ........................................................................................... Section 5.6(b)
IBCA .............................................................................................. Section 1.1(b)
Illinois Power .................................................................................... Section 6.21(a)
Illinova .......................................................................................... Section 6.21(a)
Indemnified Parties ............................................................................... Section 7.13(a)
Letter of Transmittal ............................................................................. Section 4.4(c)
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Liens ............................................................................................. Section 5.4
Material Adverse Effect ........................................................................... Section 10.9(c)
Mergers ........................................................................................... Recitals
Newco ............................................................................................. Preamble
Newco Class A Common Stock ........................................................................ Recitals
Newco Class B Common Stock ........................................................................ Recitals
Newco Common Stock ................................................................................ Recitals
Newco Group ....................................................................................... Section 7.16
Newco Share Price ................................................................................. Section 4.4(f)
Non-U.S. Antitrust Laws ........................................................................... Section 7.5(a)(ii)
Northern .......................................................................................... Recitals
Northern Series A Preferred Stock ................................................................. Recitals
NYSE .............................................................................................. Section 4.1(c)
OBCA .............................................................................................. Section 1.1(a)
Original Outstanding Enron Shares ................................................................. Section 4.1(a)
Other Non-U.S. Jurisdictions ...................................................................... Section 8.1(c)
Proxy Statement/Prospectus ........................................................................ Section 7.8(a)
Returns ........................................................................................... Section 5.10(a)
Rule 145 Affiliates ............................................................................... Section 7.11
Rule 16b-3 ........................................................................................ Section 4.8
Sales Consideration ............................................................................... Section 4.1(d)
SEC ............................................................................................... Section 4.5(b)
Second Preferred Stock ............................................................................ Section 5.3
Securities Act .................................................................................... Section 4.4(e)
September 30, 2001 Balance Sheet .................................................................. Section 5.7
Series B Preferred Stock .......................................................................... Section 5.3
Series C Preferred Stock .......................................................................... Section 5.3
Significant Subsidiary ............................................................................ Section 5.4
Specified Jurisdictions ........................................................................... Section 8.1(c)
Subsidiary ........................................................................................ Section 10.9(d)
Tax qualified plans ............................................................................... Section 7.16
Taxes ............................................................................................. Section 5.10(d)
Termination Date .................................................................................. Section 9.2(a)
Third-Party Provisions ............................................................................ Section 10.3
Zeros ............................................................................................. Section 5.3
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") dated as
of November 9, 2001, is by and among Dynegy Inc., an Illinois corporation
("Dynegy"), Stanford, Inc., a Delaware corporation and wholly owned subsidiary
of Dynegy ("Newco"), Sorin, Inc., an Oregon corporation and wholly owned
subsidiary of Newco ("Enron Merger Sub"), Badin, Inc., an Illinois corporation
and wholly owned subsidiary of Newco ("Dynegy Merger Sub"), and Enron Corp., an
Oregon corporation ("Enron").
RECITALS
A. The Enron Merger. At the Effective Time, the parties intend
to effect a merger of Enron Merger Sub with and into Enron, with Enron being the
surviving entity (the "Enron Merger"), pursuant to which each share of common
stock, no par value, of Enron ("Enron Common Stock") will be converted into
0.2685 shares of Class A common stock, par value $.01 per share, of Newco
("Newco Class A Common Stock"), subject to adjustment.
B. The Dynegy Merger. Concurrently with the Enron Merger, the
parties intend to effect a merger of Dynegy Merger Sub with and into Dynegy,
with Dynegy being the surviving entity (the "Dynegy Merger" and, together with
the Enron Merger, the "Mergers"), pursuant to which (i) each share of Class A
common stock, no par value, of Dynegy ("Dynegy Class A Common Stock") will be
converted into one share of Newco Class A Common Stock and (ii) each share of
Class B common stock, no par value, of Dynegy ("Dynegy Class B Common Stock"
and, together with the Dynegy Class A Common Stock, the "Dynegy Common Stock")
will be converted into one share of Class B common stock, par value $.01 per
share, of Newco ("Newco Class B Common Stock" and, together with the Newco Class
A Common Stock, the "Newco Common Stock").
C. Intended U.S. Tax Consequences. The parties to this
Agreement intend that, for federal income tax purposes, the Mergers shall
qualify as transfers of Enron Common Stock and Dynegy Common Stock to Newco in a
transaction qualifying under Section 351 of the Internal Revenue Code of 1986,
as amended (the "Code").
D. Intended U.S. Accounting Treatment. The parties to this
Agreement intend that the Mergers be treated as the purchase of Enron by Dynegy
for accounting purposes.
E. Preferred Stock Subscription Agreements. Concurrently with
the execution and delivery of this Agreement, (i) Dynegy is entering into a
Subscription Agreement with Northern Natural Gas Company ("Northern") and Enron
pursuant to which Dynegy is agreeing to purchase from Northern 1,000 shares of
its Series A Preferred Stock (the "Northern Series A Preferred Stock"); and (ii)
ChevronTexaco Corporation ("ChevronTexaco") is entering into a Subscription
Agreement with Dynegy (the "Dynegy Subscription Agreement") pursuant to which
ChevronTexaco is agreeing to purchase from Dynegy 150,000 shares of its Series B
Mandatorily Convertible Redeemable Preferred Stock, no par value (the "Dynegy
Series B Preferred Stock").
NOW, THEREFORE, in consideration of the foregoing, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE 1
THE MERGERS
Section 1.1 The Mergers.
(a) Upon the terms and subject to conditions of this
Agreement, at the Effective Time, Enron Merger Sub shall be merged with and into
Enron in accordance with this Agreement, and the separate corporate existence of
Enron Merger Sub shall thereupon cease. Enron shall be the surviving entity in
the Enron Merger (sometimes hereinafter referred to as the "Enron Surviving
Entity"). The Enron Merger shall have the effects specified herein and in the
Business Corporation Act of the State of Oregon (the "OBCA").
(b) Upon the terms and subject to conditions of this
Agreement, at the Effective Time, Dynegy Merger Sub shall be merged with and
into Dynegy in accordance with this Agreement, and the separate corporate
existence of Dynegy Merger Sub shall thereupon cease. Dynegy shall be the
surviving entity in the Dynegy Merger (sometimes hereinafter referred to as the
"Dynegy Surviving Entity"). The Dynegy Merger shall have the effects specified
herein and in the Business Corporation Act of the State of Illinois (the
"IBCA").
Section 1.2 The Closing. Upon the terms and subject to the
conditions of this Agreement, the closing of the Mergers (the "Closing") shall
take place (a) at the offices of ▇▇▇▇▇ ▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, at 9:00 a.m., local time, on the first business
day immediately following the day on which the last to be fulfilled or waived of
the conditions set forth in Section 8.1, or, if on such day any condition set
forth in Section 8.2 or Section 8.3 has not been fulfilled or waived, as soon as
practicable after all the conditions set forth in Article 8 (other than the
conditions that by their terms are only capable of being satisfied on the
Closing Date) have been fulfilled or waived in accordance herewith or (b) at
such other time, date or place as Dynegy and Enron may agree, but in no event
prior to the expiration of a period of six months after the initial purchase of
shares of Dynegy Series B Preferred Stock by ChevronTexaco pursuant to the
Dynegy Subscription Agreement. The date on which the Closing occurs is
hereinafter referred to as the "Closing Date."
Section 1.3 Effective Time. On the Closing Date, (i) Dynegy,
Enron and Enron Merger Sub shall cause articles of merger meeting the
requirements of Section 60.494 of the OBCA to be properly executed and filed in
accordance with the OBCA and (ii) Dynegy, Enron and Dynegy Merger Sub shall
cause articles of merger meeting the requirements of Section 11.25 of the IBCA
to be properly executed and filed in accordance with the IBCA (collectively, the
"Articles of Merger"). The Mergers shall become effective at the time that
Dynegy and Enron shall have agreed upon and designated in the respective
Articles of Merger as the effective time thereof (the "Effective Time").
2
ARTICLE 2
CERTIFICATE OF INCORPORATION AND BYLAWS OF NEWCO;
ARTICLES OF INCORPORATION AND BYLAWS OF THE SURVIVING ENTITIES
Section 2.1 Certificate of Incorporation and Bylaws of Newco.
At or prior to the Effective Time, Dynegy and Newco shall take all action as may
be necessary to cause Newco's certificate of incorporation and bylaws to be
amended and restated as of the Effective Time as set forth in Exhibits 2.1(a)
(subject to any adjustments necessary to permit Newco to fulfill its obligations
under Section 7.14) and 2.1(b) hereto, respectively, and to reflect that Newco
shall be named "Dynegy Inc."
Section 2.2 Articles of Incorporation of the Enron Surviving
Entity. As of the Effective Time, the articles of incorporation of Enron in
effect immediately prior to the Effective Time shall be the articles of
incorporation of the Enron Surviving Entity, until duly amended in accordance
with applicable law.
Section 2.3 Bylaws of the Enron Surviving Entity. As of the
Effective Time, the bylaws of Enron in effect immediately prior to the Effective
Time shall be the bylaws of the Enron Surviving Entity, until duly amended in
accordance with applicable law; provided that the number of directors of the
Enron Surviving Entity shall be changed to equal the number of directors of
Enron Merger Sub immediately prior to the Effective Time.
Section 2.4 Articles of Incorporation of the Dynegy Surviving
Entity. As of the Effective Time, the articles of incorporation of Dynegy in
effect immediately prior to the Effective Time shall be the articles of
incorporation of the Dynegy Surviving Entity, until duly amended in accordance
with applicable law.
Section 2.5 Bylaws of the Dynegy Surviving Entity. As of the
Effective Time, the bylaws of Dynegy Merger Sub in effect immediately prior to
the Effective Time shall be the bylaws of the Dynegy Surviving Entity, until
duly amended in accordance with applicable law; provided that the number of
directors of the Dynegy Surviving Entity shall be changed to equal the number of
directors of Dynegy Merger Sub immediately prior to the Effective Time.
ARTICLE 3
DIRECTORS AND OFFICERS OF NEWCO AND
OF THE SURVIVING ENTITIES
Section 3.1 Board of Directors of Newco.
(a) At the Effective Time, the Board of Directors of Newco
shall consist of not more than 15 members, at least three of which shall be
designated by Enron, after consultation with Dynegy, before the Effective Time
("Former Enron Directors"). Prior to the Effective Time, Dynegy shall, after
consultation with Enron, determine the total number of directors on the Board of
Directors of Newco effective as of the Effective Time and the number of Former
Enron Directors (in each case subject to the preceding sentence) and designate
the current members of the Dynegy Board of Directors that will serve on the
Newco Board of
3
Directors as of the Effective Time ("Former Dynegy Directors"). ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ shall be the Chairman of the Board of Newco. From and after the Effective
Time, each person so designated shall serve as a director of Newco until such
person's successor shall be elected and qualified or such person's earlier
death, resignation or removal in accordance with the certificate of
incorporation and bylaws of Newco.
(b) Prior to the Effective Time, Dynegy shall cause Newco to
take such action as may be necessary to cause the Dynegy designees and the Enron
designees to be elected to the Board of Directors of Newco as of the Effective
Time.
Section 3.2 Certain Officers of Newco. From and after the
Effective Time, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall be the Chief Executive Officer of Newco
and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ shall be the President and Chief Operating Officer of
Newco.
Section 3.3 Board of Directors of Enron Surviving Entity. The
directors of Enron Merger Sub immediately prior to the Effective Time shall be
the directors of the Enron Surviving Entity as of the Effective Time, until
their successors shall be elected and qualified or their earlier death,
resignation or removal in accordance with the articles of incorporation and
bylaws of the Enron Surviving Entity.
Section 3.4 Officers of Enron Surviving Entity. The officers
of Enron immediately prior to the Effective Time shall be the officers of the
Enron Surviving Entity as of the Effective Time, until their successors shall be
appointed or their earlier death, resignation or removal in accordance with the
articles of incorporation and bylaws of the Enron Surviving Entity.
Section 3.5 Board of Directors of Dynegy Surviving Entity. The
directors of Dynegy Merger Sub immediately prior to the Effective Time shall be
the directors of the Dynegy Surviving Entity as of the Effective Time, until
their successors shall be elected and qualified or their earlier death,
resignation or removal in accordance with the articles of incorporation and
bylaws of the Dynegy Surviving Entity.
Section 3.6 Officers of Dynegy Surviving Entity. The officers
of Dynegy immediately prior to the Effective Time shall be the officers of the
Dynegy Surviving Entity as of the Effective Time, until their successors shall
be appointed or their earlier death, resignation or removal in accordance with
the articles of incorporation and bylaws of the Dynegy Surviving Entity.
ARTICLE 4
CONVERSION OF COMMON STOCK
Section 4.1 Enron Merger Ratio. For purposes of this
Agreement:
(a) The "Enron Merger Ratio" shall equal 0.2685, subject to
adjustment as provided in this Section 4.1. If, on or after the date of
this Agreement, Enron issues or sells any shares of Enron Common Stock
or any Enron Convertible Securities, other than Excluded Convertible
Securities and securities issued upon conversion, exercise or
4
exchange of Excluded Convertible Securities (collectively, the "Enron
Additional Securities"), for Sales Consideration per share of Enron
Common Stock less than the Enron Parity Price as of the date a price is
determined pursuant to a binding agreement for such issuance or sale,
then the Enron Merger Ratio shall be adjusted by multiplying the Enron
Merger Ratio immediately prior to such adjustment by a fraction, (i)
the numerator of which is the sum of (a) the number of fully diluted
shares of Enron Common Stock outstanding (calculated using the treasury
stock method) immediately prior to the adjustment (the "Original
Outstanding Enron Shares") plus (b) the aggregate Sales Consideration
for such Enron Additional Securities divided by the Enron Parity Price,
and (ii) the denominator of which is the sum of the Original
Outstanding Enron Shares plus the number of shares of Enron Common
Stock represented by such Enron Additional Securities.
(b) "Enron Convertible Securities" means any shares of capital
stock or securities convertible into or exchangeable for Enron Common
Stock, or any options, rights or warrants exercisable to purchase Enron
Common Stock.
(c) "Enron Parity Price" means, with respect to any date, the
product of (i) the Enron Merger Ratio on such date multiplied by (ii)
the per share last reported price of the Dynegy Class A Common Stock as
reported on the consolidated transaction reporting system for
securities traded on the New York Stock Exchange, Inc. ("NYSE") (as
reported in the New York City edition of The Wall Street Journal or, if
not reported thereby, another authoritative source) on such date.
(d) "Sales Consideration" with respect to any issuance or sale
of Enron Additional Securities means the aggregate of (i) the cash
consideration, (ii) the trading value (based on the average last
reported prices therefor for the five consecutive trading days ending
on the first trading day prior to such date as quoted by an
authoritative source agreed upon by Dynegy and Enron) for any listed or
traded securities, and (iii) the fair market value (as determined by
agreement of Dynegy and Enron) for any other consideration, in each
case received therefor or to be received upon the exercise of any
option or warrant. In the event of the issuance of any Enron
Convertible Securities, the shares of Enron Common Stock issuable with
respect to such Enron Convertible Securities shall be deemed to be
issued in such transaction on an as converted basis.
(e) "Excluded Convertible Securities" means (i) the Northern
Series A Preferred Stock, (ii) any Enron Convertible Securities
outstanding on the date of this Agreement and disclosed, or not
required to be disclosed, pursuant to this Agreement, other than the
first two items of Section 5.3 of the Enron Disclosure Letter, and
(iii) employee stock options granted after the date hereof permitted by
Section 7.1(f), provided that the exercise price thereof is not less
than the fair market value on the date of grant (as provided in the
applicable plan).
Section 4.2 Conversion of Capital Stock of Enron and Enron
Merger Sub.
(a) At the Effective Time, each share of common stock, no par
value, of Enron Merger Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Enron Merger and without any action on
the part of the holder thereof, be converted
5
into and become the number of fully paid and nonassessable shares of common
stock, no par value, of the Enron Surviving Entity equal to the quotient of the
number of fully diluted shares of Enron Common Stock outstanding immediately
prior to the Effective Time divided by 1,000.
(b) At the Effective Time, each share of Enron Common Stock
issued and outstanding immediately prior to the Effective Time, including any
shares subject to employment-related restrictions (other than shares of Enron
Common Stock to be canceled without payment of any consideration therefor
pursuant to Section 4.2(c)), shall, by virtue of the Enron Merger and without
any action on the part of the holder thereof, be converted into a fraction of a
share of Newco Class A Common Stock equal to the Enron Merger Ratio and
thereupon shall cease to be outstanding and shall be canceled and retired and
shall cease to exist, and each holder of such shares of Enron Common Stock shall
thereafter cease to have any rights with respect to such shares of Enron Common
Stock, except the right to receive, without interest, certificates for shares of
Newco Class A Common Stock in accordance with Section 4.4(c) and cash for
fractional shares in accordance with Section 4.4(c) and Section 4.4(f) upon the
surrender of the certificate or certificates that immediately prior to the
Effective Time represented shares of Enron Common Stock ("Enron Certificates").
(c) Each share of Enron Common Stock held in Enron's treasury
and each share of Enron Common Stock owned by Enron, Newco, Dynegy, Dynegy
Merger Sub or Enron Merger Sub shall, at the Effective Time and by virtue of the
Enron Merger, cease to be outstanding and shall be canceled and retired without
payment of any consideration therefor, and no shares of capital stock of Newco
or other consideration shall be delivered in exchange therefor.
(d) At the Effective Time, each share of Enron Preferred Stock
issued and outstanding immediately prior to the Effective Time shall remain
outstanding and unaffected by the Enron Merger.
Section 4.3 Conversion of Capital Stock of Newco, Dynegy and
Dynegy Merger Sub.
(a) At the Effective Time, each share of common stock, no par
value, of Dynegy Merger Sub issued and outstanding immediately prior to the
Effective Time shall, by virtue of the Dynegy Merger and without any action on
the part of the holder thereof, be converted into and become one fully paid and
nonassessable share of common stock, no par value, of the Dynegy Surviving
Entity.
(b) At the Effective Time, (i) each share of Dynegy Class A
Common Stock issued and outstanding immediately prior to the Effective Time
(other than Dynegy Dissenting Shares and shares of Dynegy Class A Common Stock
to be canceled without payment of any consideration therefor pursuant to Section
4.3(c)) shall, by virtue of the Dynegy Merger and without any action on the part
of the holder thereof, be converted into one share (the "Dynegy Merger Ratio")
of Newco Class A Common Stock and (ii) each share of Dynegy Class B Common Stock
issued and outstanding immediately prior to the Effective Time (other than
Dynegy Dissenting Shares and shares of Dynegy Class B Common Stock to be
canceled without payment of any consideration therefor pursuant to Section
4.3(c)) shall, by virtue of the Dynegy Merger and without any action on the part
of the holder thereof, be converted into one share of
6
Newco Class B Common Stock (collectively, the "Dynegy Consideration"). At the
Effective Time, each share of Dynegy Common Stock shall, by virtue of the Dynegy
Merger and without any action on the part of the holder thereof, cease to be
outstanding and shall be canceled and retired and shall cease to exist, and each
holder of shares of Dynegy Common Stock (other than Dynegy Dissenting Shares and
shares of Dynegy Common Stock to be canceled without payment of any
consideration therefor pursuant to Section 4.3(c)) shall thereafter cease to
have any rights with respect to such shares of Dynegy Common Stock.
(c) Each share of Dynegy Common Stock issued and held in
Dynegy's treasury and each share of Dynegy Common Stock owned by Enron shall, at
the Effective Time and by virtue of the Dynegy Merger, cease to be outstanding
and shall be canceled and retired without payment of any consideration therefor,
and no shares of capital stock of Newco or other consideration shall be
delivered in exchange therefor.
(d) At the Effective Time, each share of Dynegy Series B
Preferred Stock issued and outstanding immediately prior to the Effective Time,
if any, shall remain outstanding and unaffected by the Dynegy Merger.
(e) Each share of Newco Common Stock and all other shares of
capital stock of Newco issued and outstanding immediately prior to the Effective
Time shall, at the Effective Time and without any action on the part of Newco or
the holder thereof, cease to be outstanding and shall be canceled and retired
without payment of any consideration therefor, and no shares of capital stock of
Newco or other consideration shall be delivered in exchange therefor.
Section 4.4 Exchange of Certificates.
(a) From and after the Effective Time, each outstanding
certificate which prior to the Effective Time represented shares of Dynegy
Common Stock ("Dynegy Certificates") shall be deemed for all purposes to
evidence ownership of, and to represent, the shares of Newco Common Stock into
which the shares of Dynegy Common Stock represented by such Dynegy Certificate
have been converted as herein provided. The registered owner on the books and
records of Dynegy or its transfer agent of any such Dynegy Certificate as of the
Effective Time shall, until such Dynegy Certificate shall have been surrendered
for transfer or otherwise accounted for to Newco or its transfer agent, have and
be entitled to exercise any voting and other rights with respect to and to
receive any dividend and other distributions upon the shares of Newco Common
Stock evidenced by such Dynegy Certificate as above provided. Following the
Effective Time, each holder of record of one or more Dynegy Certificates may,
but shall not be required to, surrender any Dynegy Certificate for cancellation
to Newco or its transfer agent, and the holder of such Dynegy Certificate shall
be entitled to receive in exchange therefor a certificate representing that
number of shares of Newco Common Stock which such holder has the right to
receive pursuant to the provisions of this Article 4, and the Dynegy Certificate
so surrendered shall forthwith be canceled. In the event of a transfer of
ownership of shares of Dynegy Common Stock that is not registered in the
transfer records of Newco or Dynegy, a certificate representing the proper
number of shares of Newco Common Stock may be issued to such a transferee if the
Dynegy Certificate representing such shares of Dynegy Common Stock is presented
to Newco or its transfer agent, accompanied by all documents
7
required to evidence and effect such transfer and to evidence that any
applicable stock transfer taxes have been paid.
(b) As of the Effective Time, Newco shall appoint Mellon
Investor Services LLC or such other party reasonably satisfactory to Enron as
exchange agent (the "Exchange Agent"), and Newco shall, when and as needed,
deposit, or cause to be deposited with the Exchange Agent for the benefit of the
holders of shares of Enron Common Stock for exchange in accordance with this
Article 4, certificates representing the shares of Newco Common Stock to be
issued pursuant to Section 4.2 and delivered pursuant to this Section 4.4 in
exchange for outstanding shares of Enron Common Stock. When and as needed, Newco
shall provide the Exchange Agent immediately following the Effective Time cash
sufficient to pay cash in lieu of fractional shares in accordance with Section
4.4(c) and (f) (such cash and certificates for shares of Newco Common Stock,
together with any dividends or distributions with respect thereto, being
hereinafter referred to as the "Exchange Fund").
(c) Promptly after the Effective Time, Newco shall cause the
Exchange Agent to mail to each holder of record of one or more Enron
Certificates (together with the Dynegy Certificates, the "Certificates") (other
than to holders of shares of Enron Common Stock that, pursuant to Section
4.2(c), are canceled without payment of any consideration therefor): (A) a
letter of transmittal (the "Letter of Transmittal"), which shall specify that
delivery shall be effected, and risk of loss and title to the Enron Certificates
shall pass, only upon delivery of the Enron Certificates to the Exchange Agent
and shall be in such form and have such other provisions as Newco may reasonably
specify and (B) instructions for use in effecting the surrender of the Enron
Certificates in exchange for certificates representing shares of Newco Common
Stock and cash in lieu of fractional shares, if any. Upon surrender of an Enron
Certificate for cancellation to the Exchange Agent together with such Letter of
Transmittal, duly executed and completed in accordance with the instructions
thereto, the holder of such Enron Certificate shall be entitled to receive in
exchange therefor (x) a certificate representing that number of whole shares of
Newco Common Stock and (y) a check representing the amount of cash in lieu of
fractional shares, if any, and unpaid dividends and distributions, if any, which
such holder has the right to receive pursuant to the provisions of this Article
4, after giving effect to any required withholding tax, and the Enron
Certificate so surrendered shall forthwith be canceled. No interest will be paid
or accrued on the cash in lieu of fractional shares and unpaid dividends and
distributions, if any, payable to holders of Enron Certificates. In the event of
a transfer of ownership of Enron Common Stock that is not registered in the
transfer records of Enron, a certificate representing the proper number of
shares of Newco Common Stock, together with a check for the cash to be paid in
lieu of fractional shares, if any, may be issued to such a transferee if the
Enron Certificate representing such Enron Common Stock is presented to the
Exchange Agent, accompanied by all documents required to evidence and effect
such transfer and to evidence that any applicable stock transfer taxes have been
paid.
(d) Notwithstanding any other provisions of this Agreement, no
dividends or other distributions declared or made after the Effective Time with
respect to shares of Newco Common Stock with a record date after the Effective
Time shall be paid to the holder of any unsurrendered Enron Certificate with
respect to the shares of Newco Common Stock represented by such Enron
Certificate as a result of the conversion provided in Section 4.2(b) until such
Enron Certificate is surrendered as provided herein. Subject to the effect of
applicable laws,
8
following surrender of any such Enron Certificate, there shall be paid to the
holder of the Enron Certificates so surrendered, without interest, (i) at the
time of such surrender, the amount of dividends or other distributions with a
record date after the Effective Time theretofore payable and not paid with
respect to the number of whole shares of Newco Common Stock issued pursuant to
Section 4.2, less the amount of any withholding taxes, and (ii) at the
appropriate payment date, the amount of dividends or other distributions with a
record date after the Effective Time but prior to surrender and a payment date
subsequent to surrender payable with respect to such whole shares of Newco
Common Stock, less the amount of any withholding taxes.
(e) At or after the Effective Time, the Enron Surviving Entity
and the Dynegy Surviving Entity shall pay from funds on hand at the Effective
Time any dividends or make other distributions with a record date prior to the
Effective Time that may have been declared or made by Enron or Dynegy,
respectively, on shares of Enron Common Stock or Dynegy Common Stock,
respectively, that remain unpaid at the Effective Time, and after the Effective
Time, there shall be no transfers on the stock transfer books of the Enron
Surviving Entity of the shares of Enron Common Stock, or on the stock transfer
books of the Dynegy Surviving Entity of the shares of Dynegy Common Stock, that
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Enron Certificates are presented to the Enron Surviving Entity
or Dynegy Certificates are presented to the Dynegy Surviving Entity, the
presented Certificates shall be canceled and exchanged for certificates
representing shares of Newco Common Stock and cash in lieu of fractional shares,
if any, deliverable in respect thereof pursuant to this Agreement in accordance
with the procedures set forth in this Article 4. Certificates surrendered for
exchange by any person constituting an "affiliate" of Dynegy or Enron for
purposes of Rule 145(c) under the Securities Act of 1933, as amended (the
"Securities Act"), shall not be exchanged until Newco has received a written
agreement from such person as provided in Section 7.11.
(f) No fractional shares of Newco Common Stock shall be issued
pursuant hereto. In lieu of the issuance of any fractional shares of Newco
Common Stock pursuant to Section 4.2(b), cash adjustments will be paid to
holders in respect of any fractional shares of Newco Common Stock that would
otherwise be issuable, and the amount of such cash adjustment shall be equal to
such fractional proportion of the Newco Share Price. For purposes of this
Agreement, the "Newco Share Price" shall mean the average of the per share last
reported prices of the Dynegy Class A Common Stock as reported on the
consolidated transaction reporting system for securities traded on the NYSE (as
reported in the New York City edition of The Wall Street Journal or, if not
reported thereby, another authoritative source) for the 20 consecutive trading
days ending on the fifth trading day prior to the Closing Date, appropriately
adjusted for any stock splits, reverse stock splits, stock dividends,
recapitalizations or other similar transactions.
(g) Any portion of the Exchange Fund (including the proceeds
of any investments thereof and any certificates for shares of Newco Common
Stock) that remains undistributed to the former shareholders of Enron one year
after the Effective Time shall be delivered to Newco. Any former shareholders of
Enron who have not theretofore complied with this Article 4 shall thereafter
look only to Newco for delivery of certificates representing their shares of
Newco Common Stock and cash in lieu of fractional shares, if any, and for any
unpaid
9
dividends and distributions on the shares of Newco Common Stock deliverable to
such former shareholder pursuant to this Agreement.
(h) None of Newco, Dynegy, Enron, the Dynegy Surviving Entity,
the Enron Surviving Entity, the Exchange Agent or any other person shall be
liable to any person for any portion of the Exchange Fund properly delivered to
a public official pursuant to applicable abandoned property, escheat or similar
laws.
(i) If any Certificate shall have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
such Certificate to be lost, stolen or destroyed and, if required by Newco, the
posting by such person of a bond in such reasonable amount as Newco may direct
as indemnity against any claim that may be made against it with respect to such
Certificate, the Exchange Agent will issue in exchange for such lost, stolen or
destroyed Certificate certificates representing the shares of Newco Common
Stock, cash in lieu of fractional shares, if any, and unpaid dividends and
distributions on shares of Newco Common Stock deliverable in respect thereof
pursuant to this Agreement.
Section 4.5 Options.
(a) At the Effective Time, (i) all options to acquire shares
of Enron Common Stock outstanding at the Effective Time under Enron's stock
plans (collectively, the "Enron Stock Plans") identified in Section 4.5(a) of
the Enron Disclosure Letter (individually, a "Enron Option" and collectively,
the "Enron Options") and (ii) all options to acquire shares of Dynegy Class A
Common Stock outstanding at the Effective Time under Dynegy's stock plans
(collectively, the "Dynegy Stock Plans") identified in Section 4.5(a) of the
Dynegy Disclosure Letter (individually, a "Dynegy Option" and collectively, the
"Dynegy Options") shall remain outstanding following the Effective Time, subject
to the modifications described in this Section 4.5(a). Prior to the Effective
Time, Enron, Dynegy and Newco shall take all actions (if any) as may be required
to permit the assumption of such Enron Options and Dynegy Options by Newco
pursuant to this Section 4.5(a). At the Effective Time, the Enron Options and
the Dynegy Options shall be assumed and adjusted by Newco in the manner set
forth herein and with respect to Dynegy Options that are incentive stock options
within the meaning of Section 422 of the Code in such manner that Newco is a
corporation "assuming a stock option in a transaction to which Section 424(a)
applies" within the meaning of Section 424 of the Code. Each Enron Option
assumed and adjusted by Newco shall be subject to the same terms and conditions
as under the applicable Enron Stock Plan and the applicable option agreement
entered into pursuant thereto, except that, immediately following the Effective
Time, (A) each Enron Option shall be an option for that whole number of shares
of Newco Class A Common Stock (rounded up to the next whole share) equal to the
number of shares of Enron Common Stock subject to such Enron Option immediately
prior to the Effective Time multiplied by the Enron Merger Ratio, and (B) the
exercise price per Newco share shall be an amount equal to the exercise price
per share of Enron Common Stock subject to such Enron Option in effect
immediately prior to the Effective Time divided by the Enron Merger Ratio (the
price per share, as so determined, being rounded down to the nearest whole
cent). Each Dynegy Option assumed and adjusted by Newco shall be subject to the
same terms and conditions as under the applicable Dynegy Stock Plan and the
applicable option agreement entered into pursuant thereto, except that,
immediately following the Effective Time, each Dynegy Option shall be an option
for the number of shares of Newco
10
Class A Common Stock equal to the number of shares of Dynegy Common Stock
subject to such Dynegy Option immediately prior to the Effective Time. Without
limiting the foregoing, effective at the Effective Time, Newco shall assume the
Enron Corp. 1999 Stock Plan, Enron Corp. 1994 Stock Plan, Enron Corp. 1991 Stock
Plan, Dynegy Inc. 2000 Long Term Incentive Plan, Dynegy Inc. 2001 Non-Executive
Stock Incentive Plan and Dynegy Inc. 2001 Special Long-Term Incentive Plan
(collectively, the "Assumed Plans") for purposes of employing such plans to make
grants of stock options and other awards based on shares of Newco Class A Common
Stock following the Effective Time; to the extent that any obligation exists at
the Effective Time to issue Enron Common Stock or Dynegy Class A Common Stock
under any Assumed Plan, the obligation of Newco thereafter to issue Newco Common
Stock in fulfillment of such previous obligation shall be to issue the number of
shares of Newco Common Stock equal to (i) in the case of Enron Common Stock, the
number of shares (rounded to the nearest whole share) of Enron Common Stock
subject to such obligation multiplied by the Enron Merger Ratio and (ii) in the
case of Dynegy Class A Common Stock, the number of shares of Dynegy Class A
Common Stock subject to such obligation; provided, however, that, if the
obligation is an award of a specified dollar amount of Enron Common Stock or
Dynegy Common Stock, the substitution shall be effected simply by substituting
Newco Common Stock having the specified dollar value.
(b) At or prior to the Effective Time, Newco shall take all
corporate action necessary to reserve for issuance a number of shares of Newco
Class A Common Stock equal to the number of shares of Newco Class A Common Stock
available for issuance pursuant to the Assumed Plans (which number shall be the
sum of (i) the product (rounded to the nearest whole share) of the number of
shares of Enron Common Stock available for issuance immediately prior to the
Effective Time multiplied by the Enron Merger Ratio plus (ii) the number of
shares of Dynegy Common Stock available for issuance immediately prior to the
Effective Time). Promptly following the Closing Date, Newco shall file with the
Securities and Exchange Commission (the "SEC") a Registration Statement on Form
S-8 (or a post-effective amendment on Form S-8 with respect to the Form S-4 or
such other appropriate form) covering all such shares of Newco Class A Common
Stock and shall cause such registration statement to remain effective (and shall
cause the prospectus or prospectuses relating thereto to remain compliant with
applicable securities laws) for as long as there are outstanding any such Enron
Options or Dynegy Options or, with respect to Assumed Plans other than the Enron
Stock Plans or Dynegy Stock Plans, for as long as required under applicable
securities laws.
(c) Except as otherwise specifically provided by this Section
4.5, the terms of the Enron Options and Dynegy Options and the relevant Enron
Stock Plans and Dynegy Stock Plans, as in effect on the Effective Time, shall
remain in full force and effect with respect to the Enron Options and Dynegy
Options, as applicable, after giving effect to the Mergers and the assumptions
by Newco as set forth above; similarly, the terms of each other Assumed Plan
shall remain in full force and effect after giving effect to the Mergers and the
assumptions by Newco as set forth above. As soon as practicable following the
Effective Time, Newco shall deliver to the holders of Enron Options and Dynegy
Options and beneficiaries of awards under Assumed Plans other than Enron Stock
Plans and Dynegy Stock Plans appropriate notices setting forth the rights of
such holders and beneficiaries pursuant to the respective Enron Stock Plans and
Dynegy Stock Plans and other Assumed Plans and under the agreements evidencing
the grants of such Enron Options and Dynegy Options, and that such Enron Options
and Dynegy Options and such
11
Assumed Plans shall be assumed by Newco and shall continue in effect on the same
terms and conditions (subject to any adjustments required by this Section 4.5).
Section 4.6 Dynegy Dissenting Shares. Notwithstanding anything
in this Agreement to the contrary, no share of Dynegy Common Stock the holder of
which shall have properly complied with the provisions of Section 11.70 of the
IBCA as to rights to dissent with respect to the Dynegy Merger (a "Dynegy
Dissenting Share") shall be deemed converted into and to represent the right to
receive the Dynegy Consideration hereunder; and the holders of Dynegy Dissenting
Shares, if any, shall be entitled to receive such consideration as shall be
determined pursuant to and in accordance with the provisions of such Section
11.70; provided, however, that, if any holder fails to properly perfect or
exercise his or her rights to payment as provided in such Section 11.70, such
holder shall forfeit such right to payment for such Dynegy Dissenting Shares and
each such Dynegy Dissenting Share shall thereupon be deemed to be converted into
the right to receive the Dynegy Consideration.
Section 4.7 Adjustment of Enron Merger Ratio. If, subsequent
to the date of this Agreement but prior to the Effective Time, Dynegy changes
the number of shares of Dynegy Common Stock, or Enron changes the number of
shares of Enron Common Stock, issued and outstanding as a result of a stock
split, reverse stock split, stock dividend, recapitalization or other similar
transaction, the Enron Merger Ratio and other items dependent thereon shall be
appropriately adjusted.
Section 4.8 Rule 16b-3 Approval. Newco agrees that its Board
of Directors shall, at or prior to the Effective Time, adopt resolutions
specifically approving, for purposes of Rule 16b-3 ("Rule 16b-3") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the receipt,
pursuant to Section 4.2 or Section 4.3, of shares of Newco Common Stock, and of
options to acquire shares of Newco Class A Common Stock, by executive officers
or directors of Enron or Dynegy who become executive officers or directors of
Newco subject to Rule 16b-3.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF ENRON
Except as set forth in the disclosure letter delivered to
Dynegy by Enron at or prior to the execution hereof (the "Enron Disclosure
Letter"), Enron represents and warrants to Dynegy, Newco, Dynegy Merger Sub and
Enron Merger Sub that:
Section 5.1 Existence; Good Standing; Corporate Authority.
Enron is a corporation duly incorporated, validly existing and of active status
under the laws of the State of Oregon. Enron is duly qualified to do business
and, to the extent such concept or similar concept exists in the relevant
jurisdiction, is in good standing under the laws of any jurisdiction in which
the character of the properties owned or leased by it therein or in which the
transaction of its business makes such qualification necessary, except where the
failure to be so qualified does not and is not reasonably likely to have,
individually or in the aggregate, an Enron Material Adverse Effect. Enron has
all requisite corporate power and authority to own, operate and lease its
properties and to carry on its business as now conducted. The copies of Enron's
articles of
12
incorporation and bylaws previously made available to Dynegy are true and
correct and contain all amendments as of the date hereof.
Section 5.2 Authorization, Validity and Effect of Agreements.
Enron has the requisite corporate power and authority to execute and deliver
this Agreement and all other agreements and documents required to be executed
and delivered by Enron pursuant to this Agreement. The consummation by Enron of
the transactions contemplated hereby has been duly authorized (i) by the Board
of Directors of Enron by unanimous vote of the directors present and (ii) by all
other requisite corporate action on behalf of Enron, other than the approval
referred to in Section 5.20. This Agreement constitutes the valid and legally
binding obligation of Enron, enforceable against Enron in accordance with its
terms, subject to applicable bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws relating to creditors' rights
and general principles of equity. Enron has taken all action necessary to render
the restrictions set forth in Section 60.825 to 60.845 of the OBCA and in
Article V of its articles of incorporation inapplicable to this Agreement and
the transactions contemplated hereby.
Section 5.3 Capitalization. The authorized capital stock of
Enron consists of 1,200,000,000 shares of Enron Common Stock and 16,500,000
shares of preferred stock, no par value ("Enron Preferred Stock"). As of October
31, 2001, there were (i) 743,905,381 outstanding shares of Enron Common Stock,
(ii) 85,479,162 shares of Enron Common Stock reserved for issuance upon exercise
of outstanding Enron Options, (iii) 6,400,000 shares of Enron Common Stock
reserved for issuance upon exercise of an option held by Bank of America, (iv)
167,053,369 shares of Enron Common Stock reserved for issuance upon conversion
of outstanding Enron convertible or exchangeable securities and (v)
1,570,934.568509 outstanding shares of Enron Preferred Stock, consisting of
1,137,991 shares of Cumulative Second Preferred Convertible Stock (the "Second
Preferred Stock"), 35.568509 shares of 9.142% Perpetual Second Preferred Stock
(the "9.142% Preferred Stock"), 250,000 shares of Mandatorily Convertible Junior
Preferred Stock, Series B (the "Series B Preferred Stock"), and 182,908 shares
of Mandatorily Convertible Single Reset Preferred Stock, Series C (the "Series C
Preferred Stock"). All such issued and outstanding shares of Enron Common Stock
and Enron Preferred Stock are duly authorized, validly issued, fully paid,
nonassessable and free of preemptive rights. As of the date of this Agreement,
except as set forth in this Section 5.3 and except for shares delivered upon
exercises of options or conversions or exchanges of convertible or exchangeable
securities set forth in this Section 5.3 from October 31, 2001 to the date
hereof, there are no outstanding shares of capital stock of Enron, and there are
no options, warrants, calls, subscriptions, convertible securities or other
rights, agreements or commitments that may obligate Enron or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock or other
voting securities of Enron or any of its Significant Subsidiaries. Enron has no
outstanding bonds, debentures, notes or other obligations the holders of which
have the right to vote, or (except for the Second Preferred Stock, the Series B
Preferred Stock, the Series C Preferred Stock and the Zero Coupon Convertible
Senior Notes due 2021 of Enron (the "Zeros")) which are convertible into or
exercisable for securities having the right to vote, with the shareholders of
Enron on any matter.
Section 5.4 Subsidiaries. For purposes of this Agreement,
"Significant Subsidiary" shall mean significant subsidiary as defined in Rule
1-02 of Regulation S-X of the Exchange Act. Each of Enron's Significant
Subsidiaries is a corporation or other legal entity
13
duly organized, validly existing and, to the extent such concept or similar
concept exists in the relevant jurisdiction, in good standing under the laws of
its jurisdiction of incorporation or organization, has the corporate or other
entity power and authority to own, operate and lease its properties and to carry
on its business as it is now being conducted, and is duly qualified to do
business and is in good standing (where applicable) in each jurisdiction in
which the ownership, operation or lease of its property or the conduct of its
business requires such qualification, except for jurisdictions in which such
failure to be so qualified or to be in good standing does not and is not
reasonably likely to have an Enron Material Adverse Effect. As of the date of
this Agreement, all of the outstanding shares of capital stock of, or other
ownership interests in, each of Enron's Significant Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable, and are owned,
directly or indirectly, by Enron free and clear of all mortgages, deeds of
trust, liens, security interests, pledges, leases, conditional sale contracts,
charges, privileges, easements, rights of way, reservations, options, rights of
first refusal and other encumbrances ("Liens").
Section 5.5 Compliance with Laws; Permits. Except for such
matters as, individually or in the aggregate, do not or are not reasonably
likely to have an Enron Material Adverse Effect and except for matters arising
under Environmental Laws, which are treated exclusively in Section 5.13, and for
tax matters, which are treated exclusively in Section 5.10:
(a) Neither Enron nor any Subsidiary of Enron is in violation
of any applicable law, rule, regulation, code, governmental
determination, order, treaty, convention, governmental certification
requirement or other public limitation, U.S. or non-U.S. (collectively,
"Applicable Laws"), and no claim is pending or, to the knowledge of
Enron, threatened with respect to any such matters. To the knowledge of
Enron, no condition exists which does or is reasonably likely to
constitute a violation of or deficiency under any Applicable Law by
Enron or any Subsidiary of Enron.
(b) Enron and each Subsidiary of Enron hold all permits,
licenses, certifications, variations, exemptions, orders, franchises
and approvals of all governmental or regulatory authorities necessary
for the conduct of their respective businesses as currently conducted
(the "Enron Permits"). All Enron Permits are in full force and effect
and there exists no default thereunder or breach thereof, and Enron has
no notice or actual knowledge that such Enron Permits will not be
renewed in the ordinary course after the Effective Time. No
governmental authority has given, or, to the knowledge of Enron,
threatened to give, any action to terminate, cancel or reform any Enron
Permit.
(c) Enron and each Subsidiary of Enron possess all permits,
licenses, operating authorities, orders, exemptions, franchises,
variances, consents, approvals or other authorizations required for the
present ownership and operation of all its real property or leaseholds
("Enron Real Property"). There exists no material default or breach
with respect to, and no party or governmental authority has taken or,
to the knowledge of Enron, threatened to take, any action to terminate,
cancel or reform any such permit, license, operating authority, order,
exemption, franchise, variance, consent, approval or other
authorization pertaining to Enron Real Property.
14
Section 5.6 No Conflict.
(a) Neither the execution and delivery by Enron of this
Agreement nor the consummation by Enron of the transactions contemplated hereby
in accordance with the terms hereof will (i) subject to the approvals referred
to in Section 5.20, conflict with or result in a breach of any provisions of the
articles of incorporation or bylaws of Enron; (ii) violate, or conflict with, or
result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination or in a right of termination or cancellation of, or
give rise to a right of purchase under, or accelerate the performance required
by, or result in the creation of any Lien upon any of the properties of Enron or
its Subsidiaries under, or result in being declared void, voidable, or without
further binding effect, or otherwise result in a detriment to Enron or any of
its Subsidiaries under, any of the terms, conditions or provisions of, any note,
bond, mortgage, indenture, deed of trust, license, concession, franchise,
permit, lease, contract, agreement, joint venture or other instrument or
obligation to which Enron or any of its Subsidiaries is a party, or by which
Enron or any of its Subsidiaries or any of their properties is bound or
affected; or (iii) subject to the filings and other matters referred to in
Section 5.6(b), contravene or conflict with or constitute a violation of any
provision of any law, rule, regulation, judgment, order or decree binding upon
or applicable to Enron or any of its Subsidiaries, except, in the case of
matters described in clause (ii) or (iii), as do not and are not reasonably
likely to have, individually or in the aggregate, an Enron Material Adverse
Effect.
(b) Neither the execution and delivery by Enron of this
Agreement nor the consummation by Enron of the transactions contemplated hereby
in accordance with the terms hereof will require any consent, approval,
qualification or authorization of, or filing or registration with, any court or
governmental or regulatory authority, other than (i) the filing of the Articles
of Merger provided for in Section 1.3, (i) the filing of a listing application
with the NYSE pursuant to Section 7.9, (iii) filings required under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), the Exchange Act, the Securities Act, the Public Utility Holding Company
Act of 1935, as amended (the "1935 Act"), or applicable state securities and
"Blue Sky" laws, (iv) filings, approvals and notifications required under
applicable non-U.S. competition, antitrust or premerger notification laws, (v)
filings with, and the approval of, or notices to, non-U.S. regulatory
authorities having jurisdiction over the Mergers set forth in Section 5.6(b)(v)
of the Enron Disclosure Letter, (vi) filings with, and the approval of, or
notices to, other state regulatory authorities having jurisdiction over the
Mergers set forth in Section 5.6(b)(vi) of the Enron Disclosure Letter (the
filings, approvals and notices in this clause (vi), collectively, the "Enron
Regulatory Approvals") and (vii) filings with, approvals of or notices to the
Federal Energy Regulatory Commission (the "FERC") in connection with the
Mergers, except for any consent, approval, qualification or authorization the
failure of which to obtain and for any filing or registration the failure of
which to make does not and is not reasonably likely to have an Enron Material
Adverse Effect.
Section 5.7 SEC Documents. Enron has filed with the SEC all
documents (including exhibits and any amendments thereto) required to be so
filed by it since January 1, 1999 pursuant to Sections 13(a), 14(a) and 15(d) of
the Exchange Act, and has made available (in paper form or via the internet) to
Dynegy each registration statement, report, proxy statement or information
statement (other than preliminary materials) it has so filed, each in the form
15
(including exhibits and any amendments thereto) filed with the SEC
(collectively, the "Enron Reports") and has included in the Enron Disclosure
Letter a draft of its Quarterly Report on Form 10-Q for the quarter ended
September 30, 2001 (the "Draft Third Quarter Report"). As of its respective
date, each Enron Report (i) complied in all material respects in accordance with
the applicable requirements of the Exchange Act and the rules and regulations
thereunder and (ii) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements made therein, in the light of the circumstances under which they
were made, not misleading, except for such statements, if any, as have been
modified by subsequent filings with the SEC prior to the date hereof. Each of
the consolidated balance sheets included in or incorporated by reference into
the Enron Reports (including the related notes and schedules) fairly presents in
all material respects the consolidated financial position of Enron and its
consolidated Subsidiaries as of its date, and each of the consolidated
statements of operations, cash flows and changes in shareholders' equity
included in or incorporated by reference into the Enron Reports (including any
related notes and schedules) fairly presents in all material respects the
results of operations, cash flows or changes in shareholders' equity, as the
case may be, of Enron and its consolidated Subsidiaries for the periods set
forth therein (subject, in the case of unaudited statements, to (x) such
exceptions as may be permitted by Form 10-Q of the SEC and (y) normal year-end
audit adjustments which will not be material), in each case in accordance with
generally accepted accounting principles consistently applied during the periods
involved, except as may be noted therein. The draft consolidated balance sheet
of Enron and its consolidated Subsidiaries as of September 30, 2001 (the
"September 30, 2001 Balance Sheet") included in the Draft Third Quarter Report
(including the related notes and schedules) fairly presents in all material
respects the consolidated financial position of Enron and its consolidated
Subsidiaries as of that date, and the consolidated statements of operations,
cash flows and changes in shareholders' equity included in the Draft Third
Quarter Report (including any related notes and schedules) fairly presents in
all material respects the results of operations, cash flows or changes in
shareholders' equity, as the case may be, of Enron and its consolidated
Subsidiaries for the period then ended (subject to (A) such exceptions as may be
permitted by Form 10-Q of the SEC, (B) normal year-end audit adjustments which
will not be material and (C) changes routinely anticipated in the preparation of
the final Quarterly Report on Form 10-Q for the quarter ended September 30, 2001
which will not be material), in each case in accordance with generally accepted
accounting principles consistently applied during the periods involved, except
as may be noted therein. Except as and to the extent set forth in the September
30, 2001 Balance Sheet, neither Enron nor any of its Subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) that would be required to be reflected on, or reserved against in,
a consolidated balance sheet of Enron and its consolidated Subsidiaries or in
the notes thereto prepared in accordance with generally accepted accounting
principles consistently applied, other than liabilities or obligations that were
incurred in the ordinary course of business since September 30, 2001 and
liabilities or obligations that do not and are not reasonably likely to have,
individually or in the aggregate, an Enron Material Adverse Effect. All reserves
or adjustments required by generally accepted accounting principles to be
reflected in the carrying value of the assets included in the September 30, 2001
Balance Sheet have been taken other than reserves or adjustments which do not
and are not reasonably likely to have, individually or in the aggregate, an
Enron Material Adverse Effect.
16
Section 5.8 Litigation. Except as described in the Enron
Reports filed prior to the date of this Agreement and the Draft Third Quarter
Report (collectively, the "Enron Filed Reports") and except for tax matters,
which are treated exclusively in Section 5.10, there are no actions, suits or
proceedings pending against Enron or any of its Subsidiaries or, to Enron's
knowledge, threatened against Enron or any of its Subsidiaries, at law or in
equity or in any arbitration or similar proceedings, before or by any U.S.
federal, state or non-U.S. court, commission, board, bureau, agency or
instrumentality or any U.S. or non-U.S. arbitral or other dispute resolution
body, that are reasonably likely to have, individually or in the aggregate, an
Enron Material Adverse Effect.
Section 5.9 Absence of Certain Changes. Except as described in
the Enron Filed Reports, since December 31, 2000, there has not been (i) any
event or occurrence, or series of events or occurrences, that has had or is
reasonably likely to have, individually or in the aggregate, an Enron Material
Adverse Effect, except for such changes or effects described in clause (1) of
the definition of Enron Material Adverse Effect resulting from changes in
general industry conditions or changes in general economic conditions, (ii) any
material change by Enron or any of its Subsidiaries, when taken as a whole, in
any of its accounting methods, principles or practices or any of its tax
methods, practices or elections, (iii) any declaration, setting aside or payment
of any dividend or distribution in respect of any capital stock of Enron or any
redemption, purchase or other acquisition of any of its securities, except
dividends on shares of Enron Common Stock at a rate of not more than $0.125 per
share per quarter, on shares of its Second Preferred Stock at a rate of not more
than $3.413 per share per quarter, on shares of its 9.142% Preferred Stock at an
annual rate of not more than $91.420 per share and on shares of its Series B
Preferred Stock at an annual rate of 6.5% of the liquidation preference thereof,
or (iv) any increase in or establishment of any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option, stock
purchase or other employee benefit plan, except in the ordinary course of
business consistent with past practice.
Section 5.10 Taxes.
(a) All tax returns, statements, reports, declarations,
estimates and forms ("Returns") required to be filed by or with respect to Enron
or any of its Subsidiaries (including any Return required to be filed by an
affiliated, consolidated, combined, unitary or similar group for a taxable year
in which Enron or any of its Subsidiaries was included in such group) on or
prior to the date hereof have been properly filed on a timely basis with the
appropriate governmental authorities, except to the extent that any failure to
file does not and is not reasonably likely to have, individually or in the
aggregate, an Enron Material Adverse Effect, and all taxes due with such Returns
have been duly paid, or deposited in full on a timely basis or adequately
reserved for in accordance with generally accepted accounting principles, except
to the extent that any failure to pay or deposit or make adequate provision for
the payment of such taxes does not and is not reasonably likely to have,
individually or in the aggregate, an Enron Material Adverse Effect.
Representations made in this Section 5.10 are made to the knowledge of Enron to
the extent that the representations relate to a corporation which was, but is
not currently, a part of Enron's or any of its Subsidiaries' affiliated,
consolidated, combined, unitary or similar group.
17
(b) Except to the extent not reasonably likely to have,
individually or in the aggregate, an Enron Material Adverse Effect, (i) no
audits or other administrative proceedings or court proceedings are presently
pending with regard to any taxes or Returns of Enron or any of its Subsidiaries
as to which any taxing authority has asserted in writing any claim; (ii) no
governmental authority is now asserting in writing any deficiency or claim for
taxes or any adjustment to taxes with respect to which Enron or any of its
Subsidiaries may be liable with respect to income and other material taxes that
have not been fully paid or finally settled; (iii) neither Enron nor any of its
Subsidiaries has any liability for taxes under Treas. Reg. ss. 1.1502-6 or any
similar provision of state, local, or non-U.S. tax law, except for taxes of the
affiliated group of which Enron or any of its Subsidiaries is the common parent,
within the meaning of Section 1504(a)(1) of the Code or any similar provision of
state, local, or non-U.S. tax law; and (iv) neither Enron nor any of its
Subsidiaries is a party to, is bound by or has any obligation under any tax
sharing, allocation or indemnity agreement or any similar agreement or
arrangement. Neither Enron nor any of its Subsidiaries is a party to an
agreement that provides for the payment of any amount in connection with the
Mergers that would be reasonably likely to constitute an "excess parachute
payment" within the meaning of Section 280G of the Code.
(c) Neither Enron nor any of its Subsidiaries knows of any
fact, or has taken any action or has failed to take any action, as a result of
which the Mergers would not qualify as transfers of Enron Common Stock and
Dynegy Common Stock to Newco in a transaction qualifying under Section 351 of
the Code.
(d) For purposes of this Agreement, "tax" or "taxes" means all
net income, gross income, gross receipts, sales, use, ad valorem, transfer,
accumulated earnings, personal holding company, excess profits, franchise,
profits, license, withholding, payroll, employment, excise, severance, stamp,
occupation, premium, property, disability, capital stock, or windfall profits
taxes, customs duties or other taxes, together with any interest and any
penalties, additions to tax or additional amounts imposed by any taxing
authority.
Section 5.11 Employee Benefit Plans.
(a) Section 5.11 of the Enron Disclosure Letter lists or
describes all Enron Benefit Plans. The term "Enron Benefit Plans" means all
material employee benefit plans and other material benefit arrangements,
including all "employee benefit plans" as defined in Section 3(3) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), whether
or not U.S.-based plans, and all other material employee benefit, bonus,
incentive, deferred compensation, stock option (or other equity-based
compensation), severance, employment, change in control, welfare (including
post-retirement medical and life insurance) and fringe benefit plans, practices
or agreements, whether or not subject to ERISA or U.S.-based and whether written
or oral, sponsored, maintained or contributed to or required to be contributed
to by Enron or any of its Subsidiaries, to which Enron or any of its
Subsidiaries is a party or is required to provide benefits under applicable law
or in which any person who is currently, has been or, prior to the Effective
Time, is expected to become an employee of Enron is a participant. Enron will
make available to Dynegy, within 30 days after the date hereof, with true and
complete copies of the Enron Benefit Plans and, if applicable, the most recent
trust agreements, Forms 5500, summary plan descriptions, funding statements,
annual reports and actuarial reports, if applicable, for each such plan.
18
(b) Except for such matters as, individually or in the
aggregate, do not and are not reasonably likely to have an Enron Material
Adverse Effect: all applicable reporting and disclosure requirements have been
met with respect to Enron Benefit Plans; there has been no "reportable event,"
as that term is defined in Section 4043 of ERISA, with respect to Enron Benefit
Plans subject to Title IV of ERISA for which the 30-day reporting requirement
has not been waived; to the extent applicable, the Enron Benefit Plans comply
with the requirements of ERISA and the Code or with other applicable law, and
have been maintained and operated in accordance with their terms, and, to
Enron's knowledge, there are no breaches of fiduciary duty in connection with
the Enron Benefit Plans; there are no pending or, to Enron's knowledge,
threatened claims against or otherwise involving any Enron Benefit Plan; with
respect to the Enron Benefit Plans or any "employee pension benefit plans," as
defined in Section 3(2) of ERISA, that are or were subject to Title IV of ERISA
and have been maintained or contributed to within six years prior to the
Effective Time by Enron, its Subsidiaries or any trade or business (whether or
not incorporated) that is under common control, or that is treated as a single
employer, with Enron or any of its Subsidiaries under Section 414(b), (c), (m)
or (o) of the Code (an "ERISA Affiliate"), (i) neither Enron nor any of its
Subsidiaries has incurred any direct or indirect liability under Title IV of
ERISA in connection with any termination thereof or withdrawal therefrom; and
(ii) there does not exist any accumulated funding deficiency within the meaning
of Section 412 of the Code or Section 302 of ERISA, whether or not waived.
(c) Neither Enron nor any of its Subsidiaries nor any of its
ERISA Affiliates contributes to, or has an obligation to contribute to, a
"multiemployer plan" within the meaning of Section 3(37) of ERISA, and the
execution of, and performance of the transactions contemplated by, this
Agreement will not (either alone or upon the occurrence of any additional or
subsequent events) constitute an event under any benefit or compensation plan,
policy, arrangement or agreement or any trust or loan (in connection therewith)
that will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligations to fund benefits with respect to any employee of Enron
or any Subsidiary thereof which, individually or in the aggregate, are
reasonably likely to have an Enron Material Adverse Effect.
(d) Except as provided in this Agreement, since September 1,
2001, no U.S. Enron Benefit Plan has been amended or modified in a material
substantive respect and no awards or compensation has been made or committed to
or paid under any U.S. Enron Benefit Plan that was not in the ordinary course of
business and consistent with past practices.
Section 5.12 Labor Matters.
(a) As of the date of this Agreement, neither Enron nor any of
its Subsidiaries is a party to, or bound by, any collective bargaining agreement
or similar contract, agreement or understanding with a labor union or similar
labor organization that is material to Enron and its Subsidiaries, taken as a
whole. To the knowledge of Enron, there are no organizational efforts with
respect to the formation of a collective bargaining unit presently being made or
threatened that is reasonably likely to have an Enron Material Adverse Effect.
(b) Except for such matters as do not and are not reasonably
likely to have an Enron Material Adverse Effect and except as described in the
Enron Filed Reports, (i) neither
19
Enron nor any Subsidiary of Enron has received any written complaint of any
unfair labor practice or other unlawful employment practice or any written
notice of any material violation of any federal, state or local statutes, laws,
ordinances, rules, regulations, orders or directives with respect to the
employment of individuals by, or the employment practices of, Enron or any
Subsidiary of Enron or the work conditions or the terms and conditions of
employment and wages and hours of their respective businesses and (ii) there are
no unfair labor practice charges or other employee related complaints against
Enron or any Subsidiary of Enron pending or, to the knowledge of Enron,
threatened, before any governmental authority by or concerning the employees
working in their respective businesses.
Section 5.13 Environmental Matters.
(a) Enron and each Subsidiary of Enron has been and is in
compliance with all applicable orders of any court, governmental authority or
arbitration board or tribunal and any applicable law, ordinance, rule,
regulation or other legal requirement (including common law) related to human
health and the environment ("Environmental Laws") except for such matters as do
not and are not reasonably likely to have, individually or in the aggregate, an
Enron Material Adverse Effect. There are no past or present facts, conditions or
circumstances that interfere with the conduct of any of their respective
businesses in the manner now conducted or which interfere with continued
compliance with any Environmental Law, except for any noncompliance or
interference that is not reasonably likely to have, individually or in the
aggregate, an Enron Material Adverse Effect.
(b) Except for such matters as do not and are not reasonably
likely to have, individually or in the aggregate, an Enron Material Adverse
Effect, (i) no judicial or administrative proceedings or governmental
investigations are pending or, to the knowledge of Enron, threatened against
Enron or its Subsidiaries that allege the violation of or seek to impose
liability pursuant to any Environmental Law, and (ii) there are no past or
present facts, conditions or circumstances at, on or arising out of, or
otherwise associated with, any current (or, to the knowledge of Enron or its
Subsidiaries, former) businesses, assets or properties of Enron or any
Subsidiary of Enron, including but not limited to on-site or off-site disposal,
release or spill of any material, substance or waste classified, characterized
or otherwise regulated as hazardous, toxic or otherwise harmful to human health
or the environment under Environmental Laws, including petroleum or petroleum
products or byproducts ("Hazardous Materials") which facts, conditions or
circumstances violate Environmental Law or are reasonably likely to give rise to
(x) costs, expenses, liabilities or obligations for any cleanup, remediation,
disposal or corrective action under any Environmental Law, (y) claims arising
for personal injury, property damage or damage to natural resources, or (z)
fines, penalties or injunctive relief.
(c) Neither Enron nor any of its Subsidiaries has (i) received
any notice of noncompliance with, violation of, or liability or potential
liability under any Environmental Law or (ii) entered into any consent decree or
order or is subject to any order of any court or governmental authority or
tribunal under any Environmental Law or relating to the cleanup of any Hazardous
Materials, except for any such matters as do not and are not reasonably likely
to have an Enron Material Adverse Effect.
20
Section 5.14 Intellectual Property. Enron and its Subsidiaries
own or possess adequate licenses or other valid rights to use all patents,
patent rights, know-how, trade secrets, trademarks, trademark rights and other
proprietary information and other proprietary intellectual property rights used
or held for use in connection with their respective businesses as currently
being conducted, except where the failure to own or possess such licenses and
other rights does not and is not reasonably likely to have, individually or in
the aggregate, an Enron Material Adverse Effect, and there are no assertions or
claims challenging the validity of any of the foregoing that are reasonably
likely to have, individually or in the aggregate, an Enron Material Adverse
Effect. To the knowledge of Enron, the conduct of Enron's and its Subsidiaries'
respective businesses as currently conducted does not conflict with any patents,
patent rights, licenses, trademarks, trademark rights, trade names, trade name
rights or copyrights of others that are reasonably likely to have, individually
or in the aggregate, an Enron Material Adverse Effect. To the knowledge of
Enron, there is no material infringement of any proprietary right owned by or
licensed by or to Enron or any of its Subsidiaries that is reasonably likely to
have, individually or in the aggregate, an Enron Material Adverse Effect.
Section 5.15 Decrees, Etc. Except for such matters as do not
and are not reasonably likely to have an Enron Material Adverse Effect, (a) no
order, writ, injunction or decree of any court or governmental authority or any
arbitral or other dispute resolution body has been issued or entered against
Enron or any Subsidiary of Enron that continues to be in effect that affects the
ownership or operation of any of their respective assets, and (b) since January
1, 1991, no criminal order, writ, fine, injunction, decree, judgment or
determination of any court or governmental authority has been issued against
Enron or any Subsidiary of Enron.
Section 5.16 Insurance.
(a) Except for such matters as do not and are not reasonably
likely to have, individually or in the aggregate, an Enron Material Adverse
Effect, Enron and its Subsidiaries maintain insurance coverage with financially
responsible insurance companies in such amounts and against such losses as are
customary in the industries in which Enron and its Subsidiaries operate on the
date hereof.
(b) Except for such matters as do not and are not reasonably
likely to have, individually or in the aggregate, an Enron Material Adverse
Effect, (i) no event relating specifically to Enron or its Subsidiaries has
occurred that is reasonably likely, after the date of this Agreement, to result
in an upward adjustment in premiums under any insurance policies they maintain,
(ii) excluding insurance policies that have expired and been replaced in the
ordinary course of business, no excess liability or protection and indemnity
insurance policy has been canceled by the insurer within one year prior to the
date hereof, and to Enron's knowledge, no threat in writing has been made to
cancel (excluding cancellation upon expiration or failure to renew) any such
insurance policy of Enron or any Subsidiary of Enron during the period of one
year prior to the date hereof, and (iii) no event has occurred, including the
failure by Enron or any Subsidiary of Enron to give any notice or information or
by giving any inaccurate or erroneous notice or information, that limits or
impairs the rights of Enron or any Subsidiary of Enron under any such excess
liability or protection and indemnity insurance policies.
21
Section 5.17 No Brokers. Enron has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of Enron, Newco or Dynegy to pay any finder's fees, brokerage
or other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby, except
that Enron has retained ▇.▇. ▇▇▇▇▇▇ Securities Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney
Inc. as its financial advisors, the arrangements with which have been disclosed
in writing to Dynegy prior to the date hereof.
Section 5.18 Opinions of Financial Advisors. The Board of
Directors of Enron has received the separate opinions of ▇.▇. ▇▇▇▇▇▇ Securities
Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc. to the effect that, as of the date of this
Agreement, the Enron Merger Ratio is fair, from a financial point of view, to
the holders of Enron Common Stock.
Section 5.19 Dynegy Stock Ownership. Neither Enron nor any of
its affiliates or associates owns in excess of five percent of the shares of
capital stock of Dynegy or of any other securities convertible into or otherwise
exercisable to acquire shares of capital stock of Dynegy.
Section 5.20 Vote Required. The approval of this Agreement by
(i) the holders of a majority of the votes entitled to be cast by holders of
Enron Common Stock and the Second Preferred Stock voting together as a single
class, with each share of Enron Common Stock being entitled to one vote per
share and each share of Second Preferred Stock being entitled to a number of
votes per share equal to the number of shares of Enron Common Stock into which
such share of Second Preferred Stock is then convertible, and (ii) the holders
of a majority of the outstanding shares of Enron Common Stock entitled to vote
are the only approvals of the holders of any class or series of Enron capital
stock necessary to approve any transaction contemplated by this Agreement.
Section 5.21 Regulation as a Utility.
(a) Enron is a "holding company" as defined in the 1935 Act.
Enron is exempt from registration and all sections of the 1935 Act and the rules
and regulations promulgated thereunder, other than from Section 9(a)(2) thereof,
pursuant to Rule 2 under Section 3(a)(1) of the 1935 Act. Enron also has filed
an application for exemption under Section 3(a)(3) or, in the alternative,
Section 3(a)(5) of the 1935 Act. Pending SEC action on that application, Enron
is exempt from registration and all sections of the 1935 Act and the rules and
regulations promulgated thereunder, other than from Section 9(a)(2) thereof,
pursuant to Section 3(c) of the 1935 Act. Portland General Electric Company
("Enron Utility"), a wholly owned direct Subsidiary of Enron, is a "public
utility company" within the meaning of Section 2(a)(5) of the 1935 Act. No other
Subsidiary of Enron is a "public utility company" within the meaning of Section
2(a)(5) of the 1935 Act.
(b) Enron Utility is regulated as a public utility in the
State of Oregon and in no other state. Neither Enron nor any "subsidiary
company" or "affiliate" (as each such term is defined in the ▇▇▇▇ ▇▇▇) of Enron
(other than Enron Utility) is subject to regulation as a public utility or
public service company (or similar designation) by any other state in the United
States or any foreign country.
22
Section 5.22 Capital Expenditure Program. Section 5.22 of the
Enron Disclosure Letter contains a complete copy of management's most recent
capital expenditure budget of Enron as of the date of this Agreement for each
quarterly period in ▇▇▇▇ (▇▇▇ "▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇").
Section 5.23 Improper Payments. No bribes, kickbacks or other
improper payments have been made by Enron or any Subsidiary of Enron or agent of
any of them in connection with the conduct of their respective businesses or the
operation of their respective assets, and neither Enron, any Subsidiary of Enron
nor any agent of any of them has received any such payments from vendors,
suppliers or other persons, where any such payment made or received is
reasonably likely to have an Enron Material Adverse Effect.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF DYNEGY, NEWCO,
DYNEGY MERGER SUB AND ENRON MERGER SUB
Except as set forth in the disclosure letter delivered to
Enron by Dynegy at or prior to the execution hereof (the "Dynegy Disclosure
Letter"), Dynegy, Newco, Dynegy Merger Sub and Enron Merger Sub, jointly and
severally, represent and warrant to Enron that:
Section 6.1 Existence; Good Standing; Corporate Authority.
Each of Dynegy, Newco, Dynegy Merger Sub and Enron Merger Sub is a corporation
duly incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation. Dynegy is duly qualified to do business and, to
the extent such concept or similar concept exists in the relevant jurisdiction,
is in good standing under the laws of any jurisdiction in which the character of
the properties owned or leased by it therein or in which the transaction of its
business makes such qualification necessary, except where the failure to be so
qualified does not and is not reasonably likely to have, individually or in the
aggregate, a Dynegy Material Adverse Effect. Dynegy has all requisite corporate
power and authority to own, operate and lease its properties and to carry on its
business as now conducted. The copies of the articles or certificate of
incorporation and bylaws of Dynegy, Newco, Dynegy Merger Sub and Enron Merger
Sub previously made available to Enron are true and correct and contain all
amendments as of the date hereof.
Section 6.2 Authorization, Validity and Effect of Agreements.
Each of Dynegy, Newco, Dynegy Merger Sub and Enron Merger Sub has the requisite
corporate power and authority to execute and deliver this Agreement and all
other agreements and documents required to be executed and delivered by it
pursuant to this Agreement. The consummation by Dynegy of the transactions
contemplated hereby has been duly authorized (i) by the Board of Directors of
Dynegy by unanimous vote of the directors present and (ii) by all other
requisite corporate action on behalf of Dynegy, other than the approvals
referred to in Section 6.20. The consummation by each of Newco, Dynegy Merger
Sub and Enron Merger Sub of the transactions contemplated hereby, including, in
the case of Newco, the issuance by Newco of shares of Newco Common Stock
pursuant to the Mergers, has been duly authorized by all requisite corporate
action on behalf of each of Newco, Dynegy Merger Sub and Enron Merger Sub. This
Agreement constitutes the valid and legally binding obligation of each of
Dynegy, Newco, Dynegy Merger Sub and Enron Merger Sub, enforceable against such
party in accordance with its terms, subject
23
to applicable bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium or other similar laws relating to creditors' rights and general
principles of equity. Dynegy has taken all action necessary to render the
restrictions set forth in Sections 7.85 and 11.75 of the IBCA inapplicable to
this Agreement and the transactions contemplated hereby.
Section 6.3 Capitalization. The authorized capital stock of
Dynegy consists of 900,000,000 shares of Dynegy Class A Common Stock,
360,000,000 shares of Dynegy Class B Common Stock, and 70,000,000 shares of
preferred stock, no par value ("Dynegy Preferred Stock"). As of November 6,
2001, there were (i) 238,956,530 outstanding shares of Dynegy Class A Common
Stock and 86,599,914 outstanding shares of Dynegy Class B Common Stock, (ii)
27,211,749 shares of Dynegy Common Stock reserved for issuance upon exercise of
outstanding Dynegy Options, and (iii) no outstanding shares of Dynegy Preferred
Stock. All such issued and outstanding shares of Dynegy Common Stock are duly
authorized, validly issued, fully paid, nonassessable and free of preemptive
rights, other than the rights of Chevron U.S.A. Inc. ("Chevron") pursuant to
Article 6 of the Shareholder Agreement, dated as of June 14, 1999 (the "Dynegy
Shareholder Agreement"), among Energy Convergence Holding Company, Illinova
Corporation, Dynegy and Chevron. As of the date of this Agreement, except (a) as
set forth in this Section 6.3, (b) for the rights of Chevron pursuant to Article
6 of the Dynegy Shareholder Agreement and pursuant to the Dynegy Subscription
Agreement and the Dynegy Series B Preferred Stock and (c) for shares delivered
upon exercises of options set forth in this Section 6.3 from October 26, 2001 to
the date hereof, there are no outstanding shares of capital stock of Dynegy, and
there are no options, warrants, calls, subscriptions, convertible securities or
other rights, agreements or commitments that may obligate Dynegy or any of its
Subsidiaries to issue, transfer or sell any shares of capital stock or other
voting securities of Dynegy or any of its Significant Subsidiaries. Dynegy has
no outstanding bonds, debentures, notes or other obligations the holders of
which have the right to vote, or which are convertible into or exercisable for
securities having the right to vote, with the shareholders of Dynegy on any
matter.
Section 6.4 Subsidiaries.
(a) Each of Dynegy's Significant Subsidiaries is a corporation
or other legal entity duly organized, validly existing and, to the extent such
concept or similar concept exists in the relevant jurisdiction, in good standing
under the laws of its jurisdiction of incorporation or organization, has the
corporate or other entity power and authority to own, operate and lease its
properties and to carry on its business as it is now being conducted, and is
duly qualified to do business and is in good standing (where applicable) in each
jurisdiction in which the ownership, operation or lease of its property or the
conduct of its business requires such qualification, except for jurisdictions in
which such failure to be so qualified or to be in good standing does not and is
not reasonably likely to have a Dynegy Material Adverse Effect. As of the date
of this Agreement, all of the outstanding shares of capital stock of, or other
ownership interests in, each of Dynegy's Significant Subsidiaries are duly
authorized, validly issued, fully paid and nonassessable, and are owned,
directly or indirectly, by Dynegy free and clear of all Liens.
(b) All of the outstanding capital stock of Newco is owned
directly by Dynegy and all of the outstanding capital stock of each of Dynegy
Merger Sub and Enron Merger Sub is owned directly by Newco. Each of Newco,
Dynegy Merger Sub and Enron Merger Sub has been
24
formed solely for the purpose of engaging in the transactions contemplated
hereby and, as of the Effective Time, will not have engaged in any activities
other than in connection with the transactions contemplated by this Agreement.
Immediately prior to the Effective Time, Newco will have 1,000 outstanding
shares of Newco Class A Common Stock, and each of Dynegy Merger Sub and Enron
Merger Sub will have 100 outstanding shares of its common stock, no par value.
(c) The shares of Newco Common Stock to be issued in
connection with the Mergers, when issued in accordance with this Agreement, will
be validly issued, fully paid, nonassessable and free of preemptive rights,
other than the rights of Chevron pursuant to the Shareholder Agreement dated as
of November 9, 2001 among Newco, Dynegy, Enron and Chevron.
Section 6.5 Compliance with Laws; Permits. Except for such
matters as, individually or in the aggregate, do not or are not reasonably
likely to have a Dynegy Material Adverse Effect and except for matters arising
under Environmental Laws, which are treated exclusively in Section 6.13, and for
tax matters, which are treated exclusively in Section 6.10:
(a) Neither Dynegy nor any Subsidiary of Dynegy is in
violation of any Applicable Laws, and no claim is pending or, to the
knowledge of Dynegy, threatened with respect to any such matters. To
the knowledge of Dynegy, no condition exists which does or is
reasonably likely to constitute a violation of or deficiency under any
Applicable Law by Dynegy or any Subsidiary of Dynegy.
(b) Dynegy and each Subsidiary of Dynegy hold all permits,
licenses, certifications, variations, exemptions, orders, franchises
and approvals of all governmental or regulatory authorities necessary
for the conduct of their respective businesses as currently conducted
(the "Dynegy Permits"). All Dynegy Permits are in full force and effect
and there exists no default thereunder or breach thereof, and Dynegy
has no notice or actual knowledge that such Dynegy Permits will not be
renewed in the ordinary course after the Effective Time. No
governmental authority has given, or, to the knowledge of Dynegy,
threatened to give, any action to terminate, cancel or reform any
Dynegy Permit.
(c) Dynegy and each Subsidiary of Dynegy possess all permits,
licenses, operating authorities, orders, exemptions, franchises,
variances, consents, approvals or other authorizations required for the
present ownership and operation of all its real property or leaseholds
("Dynegy Real Property"). There exists no material default or breach
with respect to, and no party or governmental authority has taken or,
to the knowledge of Dynegy, threatened to take, any action to
terminate, cancel or reform any such permit, license, operating
authority, order, exemption, franchise, variance, consent, approval or
other authorization pertaining to Dynegy Real Property.
Section 6.6 No Conflict.
(a) Neither the execution and delivery by Dynegy, Newco,
Dynegy Merger Sub or Enron Merger Sub of this Agreement nor the consummation by
Dynegy, Newco, Dynegy Merger Sub or Enron Merger Sub of the transactions
contemplated hereby in accordance with the
25
terms hereof will (i) subject to the approvals referred to in Section 6.20,
conflict with or result in a breach of any provisions of the articles or
certificate of incorporation or bylaws of Dynegy, Newco, Dynegy Merger Sub or
Enron Merger Sub; (ii) violate, or conflict with, or result in a breach of any
provision of, or constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under, or result in the termination
or in a right of termination or cancellation of, or give rise to a right of
purchase under, or accelerate the performance required by, or result in the
creation of any Lien upon any of the properties of Dynegy or its Subsidiaries
under, or result in being declared void, voidable, or without further binding
effect, or otherwise result in a detriment to Dynegy or any of its Subsidiaries
under, any of the terms, conditions or provisions of, any note, bond, mortgage,
indenture, deed of trust, license, concession, franchise, permit, lease,
contract, agreement, joint venture or other instrument or obligation to which
Dynegy or any of its Subsidiaries is a party, or by which Dynegy or any of its
Subsidiaries or any of their properties is bound or affected; or (iii) subject
to the filings and other matters referred to in Section 6.6(b), contravene or
conflict with or constitute a violation of any provision of any law, rule,
regulation, judgment, order or decree binding upon or applicable to Dynegy or
any of its Subsidiaries, except, in the case of matters described in clause (ii)
or (iii), as do not and are not reasonably likely to have, individually or in
the aggregate, a Dynegy Material Adverse Effect.
(b) Neither the execution and delivery by Dynegy, Newco,
Dynegy Merger Sub or Enron Merger Sub of this Agreement nor the consummation by
Dynegy, Newco, Dynegy Merger Sub or Enron Merger Sub of the transactions
contemplated hereby in accordance with the terms hereof will require any
consent, approval, qualification or authorization of, or filing or registration
with, any court or governmental or regulatory authority, other than (i) the
filing of the Articles of Merger provided for in Section 1.3, (ii) the filing of
a listing application with the NYSE pursuant to Section 7.9, (iii) filings
required under the HSR Act, the Exchange Act, the Securities Act, the 1935 Act,
or applicable state securities and "Blue Sky" laws, (iv) filings, approvals and
notifications required under applicable non-U.S. competition, antitrust or
premerger notification laws, (v) filings with, and the approval of, or notices
to, other state regulatory authorities having jurisdiction over the Mergers set
forth in Section 6.6 of the Dynegy Disclosure Letter (the filings, approvals and
notices in this clause (v), collectively, the "Dynegy Regulatory Approvals") and
(vi) filings with, approvals of or notices to the FERC in connection with the
Mergers, except for any consent, approval, qualification or authorization the
failure of which to obtain and for any filing or registration the failure of
which to make does not and is not reasonably likely to have a Dynegy Material
Adverse Effect.
Section 6.7 SEC Documents. Dynegy has filed with the SEC all
documents (including exhibits and any amendments thereto) required to be so
filed by it since January 1, 1999 pursuant to Sections 13(a), 14(a) and 15(d) of
the Exchange Act, and has made available (in paper form or via the internet) to
Enron each registration statement, report, proxy statement or information
statement (other than preliminary materials) it has so filed, each in the form
(including exhibits and any amendments thereto) filed with the SEC
(collectively, the "Dynegy Reports"). As of its respective date, each Dynegy
Report (i) complied in all material respects in accordance with the applicable
requirements of the Exchange Act and the rules and regulations thereunder and
(ii) did not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
made therein, in the light of the circumstances under which they were made, not
misleading except for such
26
statements, if any, as have been modified by subsequent filings with the SEC
prior to the date hereof. Each of the consolidated balance sheets included in or
incorporated by reference into the Dynegy Reports (including the related notes
and schedules) fairly presents in all material respects the consolidated
financial position of Dynegy and its consolidated Subsidiaries as of its date,
and each of the consolidated statements of operations, cash flows and changes in
shareholders' equity included in or incorporated by reference into the Dynegy
Reports (including any related notes and schedules) fairly presents in all
material respects the results of operations, cash flows or changes in
shareholders' equity, as the case may be, of Dynegy and its consolidated
Subsidiaries for the periods set forth therein (subject, in the case of
unaudited statements, to (x) such exceptions as may be permitted by Form 10-Q of
the SEC and (y) normal year-end audit adjustments which will not be material),
in each case in accordance with generally accepted accounting principles
consistently applied during the periods involved, except as may be noted
therein. Except as and to the extent set forth on the consolidated balance sheet
of Dynegy and its consolidated Subsidiaries included in the most recent Dynegy
Report filed prior to the date of this Agreement that includes such a balance
sheet, including all notes thereto, neither Dynegy nor any of its Subsidiaries
has any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) that would be required to be reflected on, or reserved
against in, a consolidated balance sheet of Dynegy or in the notes thereto
prepared in accordance with generally accepted accounting principles
consistently applied, other than liabilities or obligations which are incurred
in the ordinary course of business since the date of the balance sheet included
in the most recent Dynegy Report filed prior to the date of this Agreement and
liabilities or obligations which do not and are not reasonably likely to have,
individually or in the aggregate, a Dynegy Material Adverse Effect. All reserves
or adjustments required by generally accepted accounting principles to be
reflected in the carrying value of the assets included in such balance sheet
have been taken other than reserves or adjustments which do not and are not
reasonably likely to have, individually or in the aggregate, a Dynegy Material
Adverse Effect.
Section 6.8 Litigation. Except as described in the Dynegy
Reports filed prior to the date of this Agreement and except for tax matters,
which are treated exclusively in Section 6.10, there are no actions, suits or
proceedings pending against Dynegy or any of its Subsidiaries or, to Dynegy's
knowledge, threatened against Dynegy or any of its Subsidiaries, at law or in
equity or in any arbitration or similar proceedings, before or by any U.S.
federal, state or non-U.S. court, commission, board, bureau, agency or
instrumentality or any U.S. or non-U.S. arbitral or other dispute resolution
body, that are reasonably likely to have, individually or in the aggregate, a
Dynegy Material Adverse Effect.
Section 6.9 Absence of Certain Changes. Except as described in
the Dynegy Reports filed prior to the date of this Agreement, since December 31,
2000, there has not been (i) any event or occurrence, or series of events or
occurrences, that has had or is reasonably likely to have, individually or in
the aggregate, a Dynegy Material Adverse Effect, except for such changes or
effects described in clause (1) of the definition of Dynegy Material Adverse
Effect resulting from changes in general industry conditions or changes in
general economic conditions, (ii) any material change by Dynegy or any of its
Subsidiaries, when taken as a whole, in any of its accounting methods,
principles or practices or any of its tax methods, practices or elections, (iii)
any declaration, setting aside or payment of any dividend or distribution in
respect of any capital stock of Dynegy or any redemption, purchase or other
acquisition of any of its
27
securities, except dividends on shares of Dynegy Common Stock and Dynegy Class B
Common Stock at a rate of not more than $0.075 per share per quarter, or (iv)
any increase in or establishment of any bonus, insurance, severance, deferred
compensation, pension, retirement, profit sharing, stock option, stock purchase
or other employee benefit plan, except in the ordinary course of business
consistent with past practice.
Section 6.10 Taxes.
(a) All Returns required to be filed by or with respect to
Dynegy or any of its Subsidiaries (including any Return required to be filed by
an affiliated, consolidated, combined, unitary or similar group for a taxable
year in which Dynegy or any of its Subsidiaries was included in such group) on
or prior to the date hereof have been properly filed on a timely basis with the
appropriate governmental authorities, except to the extent that any failure to
file does not and is not reasonably likely to have, individually or in the
aggregate, a Dynegy Material Adverse Effect, and all taxes due with such Returns
have been duly paid, or deposited in full on a timely basis or adequately
reserved for in accordance with generally accepted accounting principles, except
to the extent that any failure to pay or deposit or make adequate provision for
the payment of such taxes does not and is not reasonably likely to have,
individually or in the aggregate, a Dynegy Material Adverse Effect.
Representations made in this Section 6.10 are made to the knowledge of Dynegy to
the extent that the representations relate to a corporation which was, but is
not currently, a part of Dynegy's or any of its Subsidiaries' affiliated,
consolidated, combined, unitary or similar group.
(b) Except to the extent not reasonably likely to have,
individually or in the aggregate, a Dynegy Material Adverse Effect, (i) no
audits or other administrative proceedings or court proceedings are presently
pending with regard to any taxes or Returns of Dynegy or any of its Subsidiaries
as to which any taxing authority has asserted in writing any claim; (ii) no
governmental authority is now asserting in writing any deficiency or claim for
taxes or any adjustment to taxes with respect to which Dynegy or any of its
Subsidiaries may be liable with respect to income and other material taxes that
have not been fully paid or finally settled; (iii) neither Dynegy nor any of its
Subsidiaries has any liability for taxes under Treas. Reg. ss. 1.1502-6 or any
similar provision of state, local, or non-U.S. tax law, except for taxes of the
affiliated group of which Dynegy or any of its Subsidiaries is the common
parent, within the meaning of Section 1504(a)(1) of the Code or any similar
provision of state, local, or non-U.S. tax law; and (iv) neither Dynegy nor any
of its Subsidiaries is a party to, is bound by or has any obligation under any
tax sharing, allocation or indemnity agreement or any similar agreement or
arrangement. Neither Dynegy nor any of its Subsidiaries is a party to an
agreement that provides for the payment of any amount in connection with the
Mergers that would be reasonably likely to constitute an "excess parachute
payment" within the meaning of Section 280G of the Code.
(c) Neither Dynegy nor any of its Subsidiaries knows of any
fact, or has taken any action or has failed to take any action, as a result of
which the Mergers would not qualify as transfers of Enron Common Stock and
Dynegy Common Stock to Newco in a transaction qualifying under Section 351 of
the Code.
28
Section 6.11 Employee Benefit Plans.
(a) Section 6.11 of the Dynegy Disclosure Letter lists or
describes all Dynegy Benefit Plans. The term "Dynegy Benefit Plans" means all
material employee benefit plans and other material benefit arrangements,
including all "employee benefit plans" as defined in Section 3(3) of ERISA,
whether or not U.S.-based plans, and all other material employee benefit, bonus,
incentive, deferred compensation, stock option (or other equity-based
compensation), severance, employment, change in control, welfare (including
post-retirement medical and life insurance) and fringe benefit plans, practices
or agreements, whether or not subject to ERISA or U.S.-based and whether written
or oral, sponsored, maintained or contributed to or required to be contributed
to by Dynegy or any of its Subsidiaries, to which Dynegy or any of its
Subsidiaries is a party or is required to provide benefits under applicable law
or in which any person who is currently, has been or, prior to the Effective
Time, is expected to become an employee of Dynegy is a participant. Dynegy will
make available to Enron, within 30 days after the date hereof, with true and
complete copies of the Dynegy Benefit Plans and, if applicable, the most recent
trust agreements, Forms 5500, summary plan descriptions, funding statements,
annual reports and actuarial reports, if applicable, for each such plan.
(b) Except for such matters as, individually or in the
aggregate, do not and are not reasonably likely to have a Dynegy Material
Adverse Effect: all applicable reporting and disclosure requirements have been
met with respect to Dynegy Benefit Plans; there has been no "reportable event,"
as that term is defined in Section 4043 of ERISA, with respect to Dynegy Benefit
Plans subject to Title IV of ERISA for which the 30-day reporting requirement
has not been waived; to the extent applicable, Dynegy Benefit Plans comply with
the requirements of ERISA and the Code or with other applicable law, and have
been maintained and operated in accordance with their terms, and, to Dynegy's
knowledge, there are no breaches of fiduciary duty in connection with Dynegy
Benefit Plans; there are no pending or, to Dynegy's knowledge, threatened claims
against or otherwise involving any Dynegy Benefit Plan; with respect to Dynegy
Benefit Plans or any "employee pension benefit plans," as defined in Section
3(2) of ERISA, that are or were subject to Title IV of ERISA and have been
maintained or contributed to within six years prior to the Effective Time by
Dynegy, its Subsidiaries or any of its ERISA Affiliates, (i) neither Dynegy nor
any of its Subsidiaries has incurred any direct or indirect liability under
Title IV of ERISA in connection with any termination thereof or withdrawal
therefrom; and (ii) there does not exist any accumulated funding deficiency
within the meaning of Section 412 of the Code or Section 302 of ERISA, whether
or not waived.
(c) Neither Dynegy nor any of its Subsidiaries nor any of its
ERISA Affiliates contributes to, or has an obligation to contribute to, a
"multiemployer plan" within the meaning of Section 3(37) of ERISA, and the
execution of, and performance of the transactions contemplated by, this
Agreement will not (either alone or upon the occurrence of any additional or
subsequent events) constitute an event under any benefit or compensation plan,
policy, arrangement or agreement or any trust or loan (in connection therewith)
that will or may result in any payment (whether of severance pay or otherwise),
acceleration, forgiveness of indebtedness, vesting, distribution, increase in
benefits or obligations to fund benefits with respect to any employee of Dynegy
or any Subsidiary thereof which, individually or in the aggregate, are
reasonably likely to have a Dynegy Material Adverse Effect.
29
(d) Except as provided in this Agreement, since September 1,
2001, no U.S. Dynegy Benefit Plan has been amended or modified in a material
substantive respect and no awards or compensation has been made or committed to
or paid under any U.S. Dynegy Benefit Plan that was not in the ordinary course
of business and consistent with past practices.
Section 6.12 Labor Matters.
(a) As of the date of this Agreement, neither Dynegy nor any
of its Subsidiaries is a party to, or bound by, any collective bargaining
agreement or similar contract, agreement or understanding with a labor union or
similar labor organization that is material to Dynegy and its Subsidiaries,
taken as a whole. To the knowledge of Dynegy, there are no organizational
efforts with respect to the formation of a collective bargaining unit presently
being made or threatened that is reasonably likely to have a Dynegy Material
Adverse Effect.
(b) Except for such matters as do not and are not reasonably
likely to have a Dynegy Material Adverse Effect and except as described in the
Dynegy Reports filed prior to the date of this Agreement, (i) neither Dynegy nor
any Subsidiary of Dynegy has received any written complaint of any unfair labor
practice or other unlawful employment practice or any written notice of any
material violation of any federal, state or local statutes, laws, ordinances,
rules, regulations, orders or directives with respect to the employment of
individuals by, or the employment practices of, Dynegy or any Subsidiary of
Dynegy or the work conditions or the terms and conditions of employment and
wages and hours of their respective businesses and (ii) there are no unfair
labor practice charges or other employee related complaints against Dynegy or
any Subsidiary of Dynegy pending or, to the knowledge of Dynegy, threatened,
before any governmental authority by or concerning the employees working in
their respective businesses.
Section 6.13 Environmental Matters.
(a) Dynegy and each Subsidiary of Dynegy has been and is in
compliance with all Environmental Laws except for such matters as do not and are
not reasonably likely to have, individually or in the aggregate, a Dynegy
Material Adverse Effect. There are no past or present facts, conditions or
circumstances that interfere with the conduct of any of their respective
businesses in the manner now conducted or which interfere with continued
compliance with any Environmental Law, except for any noncompliance or
interference that is not reasonably likely to have, individually or in the
aggregate, a Dynegy Material Adverse Effect.
(b) Except for such matters as do not and are not reasonably
likely to have, individually or in the aggregate, a Dynegy Material Adverse
Effect, (i) no judicial or administrative proceedings or governmental
investigations are pending or, to the knowledge of Dynegy, threatened against
Dynegy or its Subsidiaries that allege the violation of or seek to impose
liability pursuant to any Environmental Law, and (ii) there are no past or
present facts, conditions or circumstances at, on or arising out of, or
otherwise associated with, any current (or, to the knowledge of Dynegy or its
Subsidiaries, former) businesses, assets or properties of Dynegy or any
Subsidiary of Dynegy, including but not limited to on-site or off-site disposal,
release or spill of any Hazardous Materials which facts, conditions or
circumstances violate Environmental Law or are reasonably likely to give rise to
(x) costs, expenses, liabilities or
30
obligations for any cleanup, remediation, disposal or corrective action under
any Environmental Law, (y) claims arising for personal injury, property damage
or damage to natural resources, or (z) fines, penalties or injunctive relief.
(c) Neither Dynegy nor any of its Subsidiaries has (i)
received any notice of noncompliance with, violation of, or liability or
potential liability under any Environmental Law or (ii) entered into any consent
decree or order or is subject to any order of any court or governmental
authority or tribunal under any Environmental Law or relating to the cleanup of
any Hazardous Materials, except for any such matters as do not and are not
reasonably likely to have a Dynegy Material Adverse Effect.
Section 6.14 Intellectual Property. Dynegy and its
Subsidiaries own or possess adequate licenses or other valid rights to use all
patents, patent rights, know-how, trade secrets, trademarks, trademark rights
and other proprietary information and other proprietary intellectual property
rights used or held for use in connection with their respective businesses as
currently being conducted, except where the failure to own or possess such
licenses and other rights does not and is not reasonably likely to have,
individually or in the aggregate, a Dynegy Material Adverse Effect, and there
are no assertions or claims challenging the validity of any of the foregoing
that are reasonably likely to have, individually or in the aggregate, a Dynegy
Material Adverse Effect. To the knowledge of Dynegy, the conduct of Dynegy's and
its Subsidiaries' respective businesses as currently conducted does not conflict
with any patents, patent rights, licenses, trademarks, trademark rights, trade
names, trade name rights or copyrights of others that are reasonably likely to
have, individually or in the aggregate, a Dynegy Material Adverse Effect. To the
knowledge of Dynegy, there is no material infringement of any proprietary right
owned by or licensed by or to Dynegy or any of its Subsidiaries that is
reasonably likely to have, individually or in the aggregate, a Dynegy Material
Adverse Effect.
Section 6.15 Decrees, Etc. Except for such matters as do not
and are not reasonably likely to have a Dynegy Material Adverse Effect, (a) no
order, writ, injunction or decree of any court or governmental authority or any
arbitral or other dispute resolution body has been issued or entered against
Dynegy or any Subsidiary of Dynegy that continues to be in effect that affects
the ownership or operation of any of their respective assets, and (b) since
January 1, 1991, no criminal order, writ, fine, injunction, decree, judgment or
determination of any court or governmental authority has been issued against
Dynegy or any Subsidiary of Dynegy.
Section 6.16 Insurance.
(a) Except for such matters as do not and are not reasonably
likely to have, individually or in the aggregate, a Dynegy Material Adverse
Effect, Dynegy and its Subsidiaries maintain insurance coverage with financially
responsible insurance companies in such amounts and against such losses as are
customary in the industries in which Dynegy and its Subsidiaries operate on the
date hereof.
(b) Except for such matters as do not and are not reasonably
likely to have, individually or in the aggregate, a Dynegy Material Adverse
Effect, (i) no event relating specifically to Dynegy or its Subsidiaries has
occurred that is reasonably likely, after the date of this Agreement, to result
in an upward adjustment in premiums under any insurance policies they maintain,
(ii) excluding insurance policies that have expired and been replaced in the
ordinary
31
course of business, no excess liability or protection and indemnity insurance
policy has been canceled by the insurer within one year prior to the date
hereof, and to Dynegy's knowledge, no threat in writing has been made to cancel
(excluding cancellation upon expiration or failure to renew) any such insurance
policy of Dynegy or any Subsidiary of Dynegy during the period of one year prior
to the date hereof, and (iii) no event has occurred, including the failure by
Dynegy or any Subsidiary of Dynegy to give any notice or information or by
giving any inaccurate or erroneous notice or information, that limits or impairs
the rights of Dynegy or any Subsidiary of Dynegy under any such excess liability
or protection and indemnity insurance policies.
Section 6.17 No Brokers. Dynegy has not entered into any
contract, arrangement or understanding with any person or firm which may result
in the obligation of Enron, Newco or Dynegy to pay any finder's fees, brokerage
or other like payments in connection with the negotiations leading to this
Agreement or the consummation of the transactions contemplated hereby, except
that Dynegy has retained ▇▇▇▇▇▇ Brothers Inc. as its financial advisor, the
arrangements with which have been disclosed in writing to Enron prior to the
date hereof.
Section 6.18 Opinion of Financial Advisor. The Board of
Directors of Dynegy has received the opinion of ▇▇▇▇▇▇ Brothers Inc. to the
effect that, as of the date of this Agreement, from a financial point of view
the Dynegy Merger Ratio is fair to the holders of Dynegy Class A Common Stock in
light of the Enron Merger Ratio.
Section 6.19 Enron Stock Ownership. Neither Dynegy nor any of
its affiliates or associates owns in excess of five percent of the shares of
capital stock of Enron or of any other securities convertible into or otherwise
exercisable to acquire shares of capital stock of Enron.
Section 6.20 Vote Required. The only vote of the holders of
any class or series of Dynegy capital stock necessary to approve any transaction
contemplated by this Agreement is the affirmative vote in favor of the approval
of this Agreement of the holders of at least two-thirds of the shares of Dynegy
Class A Common Stock and Dynegy Class B Common Stock (voting together).
Concurrently with the execution and delivery hereof, Chevron, the owner of
86,599,914 shares of Dynegy Class B Common Stock, is entering into a Shareholder
Agreement providing for, among other things, the voting of the Dynegy Class B
Common Stock owned by it.
Section 6.21 Regulation as a Utility.
(a) Each of Dynegy and Illinova Corporation, a wholly owned
direct subsidiary of Dynegy ("Illinova"), is a "holding company" as defined in
the 1935 Act. Each of Dynegy and Illinova is exempt from registration and all
sections of the 1935 Act and the rules and regulations promulgated thereunder,
other than from Section 9(a)(2) thereof, under Section 3(a)(1) of the 1935 Act.
Illinois Power Company ("Illinois Power") is a Subsidiary of Dynegy and is a
"public utility company" within the meaning of Section 2(a)(5) of the 1935 Act.
No other Subsidiary of Dynegy is a "public utility company" within the meaning
of Section 2(a)(5) of the 1935 Act.
32
(b) Illinois Power is regulated as a public utility in the
State of Illinois and in no other state. Neither Dynegy nor any "subsidiary
company" or "affiliate" (as each such term is defined in the 1935 Act) of Dynegy
(other than the Illinois Power) is subject to regulation as a public utility or
public service company (or similar designation) by any other state in the United
States or any foreign country.
Section 6.22 Improper Payments. No bribes, kickbacks or other
improper payments have been made by Dynegy or any Subsidiary of Dynegy or agent
of any of them in connection with the conduct of their respective businesses or
the operation of their respective assets, and neither Dynegy, any Subsidiary of
Dynegy, nor any agent of any of them has received any such payments from
vendors, suppliers or other persons, where any such payment made or received is
reasonably likely to have a Dynegy Material Adverse Effect.
ARTICLE 7
COVENANTS
Section 7.1 Conduct of Business. From and after the date
hereof and prior to the Effective Time, except as set forth in the Dynegy
Disclosure Letter or the Enron Disclosure Letter or as expressly contemplated by
any other provision of this Agreement or (provided that the party proposing to
take such action has provided the other party with advance notice of the
proposed action to the extent practicable) as required by Applicable Laws,
unless the other party has consented in writing thereto (which, in the case of
Section 7.1(m), shall not be unreasonably withheld), each of Dynegy and Enron:
(a) shall, and shall cause each of its Subsidiaries to,
conduct its operations according to their usual, regular and ordinary
course in substantially the same manner as heretofore conducted;
provided, however, that this subsection (a) shall not prevent a party
from introducing, or permitting its Subsidiaries from introducing, new
products and services related to the business and operations heretofore
conducted by them;
(b) shall use its commercially reasonable best efforts, and
shall cause each of its Subsidiaries to use its commercially reasonable
best efforts, to preserve intact their business organizations and
goodwill (except that any of its Subsidiaries may be merged with or
into, or be consolidated with, any of its Subsidiaries or may be
liquidated into it or any of its Subsidiaries), keep available the
services of their respective officers and employees and maintain
satisfactory relationships with those persons having business
relationships with them;
(c) shall not amend its articles of incorporation or bylaws,
except that Enron may amend its articles of incorporation to increase
its authorized Enron Common Stock by not more than 500 million shares;
(d) shall promptly notify the other of any material adverse
change in its condition (financial or otherwise) or business or any
termination, cancellation, repudiation or material breach of any
material contract (or communications expressly indicating that the same
may be contemplated) or the institution of any material litigation or
proceedings (including arbitration and other dispute resolution
proceedings) or
33
material governmental complaints, investigations, inquiries or hearings
(or communications indicating that the same may be contemplated) or the
breach in any material respect of any representation or warranty
contained herein;
(e) shall promptly make available (in paper form or via the
internet) to the other true and correct copies of any report, statement
or schedule filed with the SEC subsequent to the date of this
Agreement;
(f) in the case of Enron, shall not, and shall not permit any
of its Subsidiaries to, (i) except (A) pursuant to the exercise of
options, warrants, conversion rights and other contractual rights
existing on the date hereof and disclosed pursuant to this Agreement or
not required to be disclosed pursuant to this Agreement or (B) pursuant
to the exercise of awards granted after the date hereof and expressly
permitted under this Agreement or in connection with transactions
permitted by Section 7.1(j), issue or sell any shares of its capital
stock in excess of $2.0 billion in the aggregate (or such larger amount
as (x) Enron may propose in order to prevent a downgrading of Enron's
senior debt to less than investment grade by Standard & Poor's Ratings
Services, a division of the ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., by ▇▇▇▇▇'▇
Investors Service, Inc. or by Fitch, Inc. that shall not affect the
intended accounting treatment set forth in the recitals to this
Agreement and (y) Dynegy consents to in writing, which consent shall
not be unreasonably withheld) for all such issuances and sales (and
provided that any such shares must be converted into Enron Common Stock
prior to the Mergers if the Mergers are to occur), effect any stock
split or otherwise change its capitalization as it existed on the date
hereof, (ii) grant, confer or award any option, warrant, conversion
right or other right not existing on the date hereof to acquire any
shares of its capital stock, (iii) amend or otherwise modify any
option, warrant, conversion right or other right to acquire any shares
of its capital stock existing on the date hereof, (iv) with respect to
any of its former or present employees (including officers and
directors), increase any compensation or benefits, or enter into, amend
or extend (or permit the extension of) any employment or consulting
agreement, except in each case in the ordinary course of business
consistent with past practice, (v) adopt any new employee benefit plan
or agreement (including any stock option, stock benefit or stock
purchase plan) or amend (except as required by law) any existing
employee benefit plan in any material respect, except in the ordinary
course of business consistent with past practice, or (vi) permit any
holder of an option to acquire shares of Enron Common Stock to have
shares withheld upon exercise, for tax purposes, in excess of the
number of shares needed to satisfy the minimum statutory withholding
requirements for federal and state tax withholding;
(g) in the case of Dynegy, shall not, except pursuant to the
exercise of options, warrants, conversion rights and other contractual
rights existing on the date hereof and disclosed pursuant to this
Agreement or not required to be disclosed pursuant to this Agreement or
pursuant to the exercise of awards granted after the date hereof and
not prohibited by this Agreement, issue any shares of its capital stock
if it is reasonably likely to delay materially or to affect materially
and adversely the ability of Dynegy to solicit the approval of its
shareholders of this Agreement and the Dynegy Merger or to obtain any
consent, authorization, order or approval of any governmental
commission, board or
34
other regulatory body or the expiration of any applicable waiting
period required to consummate the transactions contemplated by this
Agreement;
(h) except for (i) the payment of regular dividends on the
shares of Enron Common Stock at a quarterly rate of not more than
$0.125 per share, (ii) the payment of dividends on the shares of
Enron's Second Preferred Stock at a quarterly rate of not more than
$3.413 per share, on shares of its 9.142% Preferred Stock at an annual
rate of not more than $91.420 per share, on shares of its Series B
Preferred Stock at an annual rate of 6.5% of the liquidation value
thereof, (iii) any additional dividend payments on the Second Preferred
Stock, the 9.142% Preferred Stock, the Series B Preferred Stock and the
Series C Preferred Stock required by the terms of Enron's articles of
incorporation or statement of resolutions establishing such series of
Preferred Stock, and (iv) the payment of regular dividends on the
shares of Dynegy Common Stock at a quarterly rate of not more than
$0.075 per share, in each case with customary record and payment dates,
shall not (1) declare, set aside or pay any dividend or make any other
distribution or payment with respect to any shares of its capital stock
or (2) redeem, purchase or otherwise acquire any shares of its capital
stock or capital stock of any of its Subsidiaries, or make any
commitment for any such action;
(i) in the case of Enron, shall not, and shall not permit any
of its Subsidiaries to, except for contractual commitments in effect on
the date hereof and disclosed in the Enron Disclosure Letter, sell,
lease or otherwise dispose of any of its assets (including capital
stock of Subsidiaries) that are, individually or in the aggregate,
material to it and its Subsidiaries as a whole, except for (i) sales of
surplus or obsolete equipment, (ii) sales of other assets in the
ordinary course of business, or (iii) sales, leases or other transfers
between such party and its wholly owned Subsidiaries or between those
Subsidiaries;
(j) in the case of Enron, shall not, and shall not permit any
of its Subsidiaries to, except pursuant to contractual commitments in
effect on the date hereof and disclosed in the Enron Disclosure Letter,
acquire or agree to acquire by merging or consolidating with, or by
purchasing an equity interest in or a substantial portion of the assets
of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division
thereof, in each case (i) for an aggregate consideration for all such
acquisitions in excess of $50 million (excluding acquisitions approved
in writing by both parties) or (ii) where a filing under the HSR Act or
any non-U.S. competition, antitrust or premerger notification laws is
required;
(k) shall not, except as may be required as a result of a
change in generally accepted accounting principles, change any of the
material accounting principles or practices used by it;
(l) shall, and shall cause any of its Subsidiaries to, use
commercially reasonable best efforts to maintain with financially
responsible insurance companies insurance in such amounts and against
such risks and losses as are customary for such party;
(m) shall not, and shall not permit any of its Subsidiaries
to, (i) make or rescind any material election relating to taxes,
including elections for any and all joint
35
ventures, partnerships, limited liability companies, working interests
or other investments where it has the capacity to make such binding
election, other than an initial election for an entity under Treas.
▇▇▇.▇▇. 301.7701-3, (ii) settle or compromise any material claim,
action, suit, litigation, proceeding, arbitration, investigation, audit
or controversy relating to taxes, or (iii) change in any material
respect any of its methods of reporting any item for tax purposes from
those employed in the preparation of its tax returns for the most
recent taxable year for which a return has been filed, except as may be
required by applicable law;
(n) in the case of Enron, shall not, and shall not permit any
of its Subsidiaries to, (i) incur Debt, net of Debt repaid, in an
aggregate principal amount in excess of $1 billion over amounts
reflected in the Debt schedule included in Section 7.1 of the Enron
Disclosure Letter, or guarantee any such Debt or issue or sell any
warrants or rights to acquire any of such Debt or guarantee any debt
securities of others, (ii) except in the ordinary course of business or
with or between its Subsidiaries, enter into any material lease
(whether such lease is an operating or capital lease) or create any
material mortgages, Liens, security interests or other encumbrances on
its property in connection with any indebtedness thereof (other than
Permitted Liens) or (iii) make or commit to make capital expenditures
that, individually or in the aggregate with all other capital
expenditures made in a quarter, exceed the capital expenditures
forecast in the Enron Capital Budget for such quarter by more than 20%,
excluding capital expenditures to repair damage covered by insurance
(provided that if the Termination Date is extended pursuant to Section
9.2(a), Enron shall submit for Dynegy's approval, which shall not be
unreasonably withheld, a capital budget through the extended
Termination Date, and such capital budget, as so approved, shall be
substituted for such forecast for periods after December 31, 2002); for
the purposes of this Agreement, (x) "Debt" shall mean, with respect to
any person, the aggregate amount, without duplication, of (i) all
obligations for borrowed money; (ii) all obligations evidenced by
bonds, debentures, notes or other similar instruments; (iii) all
obligations to pay the deferred purchase price of property or services;
(iv) all capitalized lease obligations; (v) all obligations or
liabilities of others secured by a lien on any asset owned by such
person whether or not such obligation or liability is assumed, to the
extent of the lesser of such obligation or liability or the book value
of such asset; (vi) all Contingent Obligations of such person; and
(vii) any other obligations or liabilities which are required by
generally accepted accounting principles to be shown as debt on a
balance sheet, and (y) "Contingent Obligation" shall mean, as applied
to any person, any direct or indirect liability, contingent or
otherwise, of that person with respect to any indebtedness, lease,
dividend, letter of credit or other similar obligation of another,
including, without limitation, any such obligation directly or
indirectly guaranteed, endorsed (other than for collection or deposit
in the ordinary course of business), co-made or discounted or sold with
recourse by that person, or in respect of which that person is
otherwise directly or indirectly liable, including, without limitation,
any such obligation for which that person is in effect liable through
any agreement (contingent or otherwise) to purchase, repurchase or
otherwise acquire such obligation or any security therefor, or to
provide funds for the payment or discharge of such obligation (whether
in the form of loans, advances, stock purchases, capital contributions
or otherwise), or to maintain the solvency or any balance sheet, income
or other financial condition of the obligor of such obligation, or to
make payment for any
36
products, materials or supplies or for any transportation, services or
lease regardless of the nondelivery or nonfurnishing thereof, in any
such case if the purpose or intent of such agreement is to provide
assurance that such obligation will be paid or discharged, or that any
agreements relating thereto will be complied with, or that the holders
of such obligation will be protected (in whole or in part) against loss
in respect thereof, with the amount of any Contingent Obligation being
equal to the amount of the obligation, or portion thereof, so
guaranteed or otherwise supported;
(o) shall not enter into any transaction that is reasonably
likely to delay materially or to affect materially and adversely the
ability of any of the parties hereto to solicit the approval of its
shareholders of this Agreement and the applicable Merger or to obtain
any consent, authorization, order or approval of any governmental
commission, board or other regulatory body or the expiration of any
applicable waiting period required to consummate the transactions
contemplated by this Agreement;
(p) unless in the good faith opinion of its Board of Directors
after consultation with its outside legal counsel the following would
be inconsistent with its fiduciary duties, (i) shall not terminate,
amend, modify or waive any provision of any agreement containing a
standstill covenant to which it is a party and (ii) during such period
shall enforce, to the fullest extent permitted under Applicable Law,
the provisions of such agreement, including by obtaining injunctions to
prevent any breaches of such agreements and to enforce specifically the
terms and provisions thereof in any court of the United States of
America or any state having jurisdiction;
(q) in the case of Enron, shall not, and shall cause its
Subsidiaries not to, make any increase in its risk control limits or
value at risk limits for its trading or other activities above those in
effect on the date hereof as established by Enron's Board of Directors;
and
(r) shall not (i) agree in writing or otherwise to take any of
the foregoing actions or (ii) permit any of its Subsidiaries to agree
in writing or otherwise to take any of the foregoing actions that refer
to Subsidiaries.
Section 7.2 No Solicitation by Enron.
(a) Enron agrees that (i) neither it nor any of its
Subsidiaries shall, and it shall not authorize or permit any of its officers,
directors, employees, agents or representatives (including, without limitation,
any investment banker, attorney or accountant retained by it or any of its
Subsidiaries) to, and on becoming aware of it will use its reasonable best
efforts to stop such person from continuing to, directly or indirectly, solicit,
initiate or encourage (including by way of furnishing nonpublic information), or
take any action designed to facilitate, directly or indirectly, any inquiry,
proposal or offer (including, without limitation, any proposal or offer to its
shareholders) with respect to a tender or exchange offer, merger, consolidation,
business combination, purchase or similar transaction or series of transactions
(other than the transactions contemplated by this Agreement) involving,
individually or in the aggregate, 15% or more of the assets, net revenues or net
operating income of Enron and its Subsidiaries on a consolidated basis or,
except as permitted by Section 7.1(f), 15% or more of any class of capital stock
of Enron, including, without limitation, any merger or similar transaction in
which 15% or more of Enron's
37
capital stock is issued to a third party or its shareholders (any such proposal,
offer or transaction being hereinafter referred to as a "Enron Acquisition
Proposal") or cooperate with or assist, participate or engage in any discussions
or negotiations concerning an Enron Acquisition Proposal; and (ii) it will
immediately cease and cause to be terminated any existing negotiations with any
parties conducted heretofore with respect to any of the foregoing; provided that
nothing contained in this Agreement shall prevent Enron or its Board of
Directors from (A) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to an Enron Acquisition Proposal or (B) prior to the Cutoff Date,
providing information (pursuant to a confidentiality agreement in reasonably
customary form and which does not contain terms that prevent Enron from
complying with its obligations under this Section 7.2) to, or engaging in any
negotiations or discussions with, any person or entity who has made an
unsolicited bona fide written Enron Acquisition Proposal with respect to all the
outstanding shares of Enron Common Stock or all or substantially all the assets
of Enron that, in the good faith judgment of the Board of Directors of Enron,
after consultation with a financial advisor of recognized national reputation,
and taking into account the likelihood of financing and consummation, is
superior to the Mergers (a "Enron Superior Proposal") or is reasonably likely to
lead to an Enron Superior Proposal, to the extent the Board of Directors of
Enron, after consultation with its outside legal counsel, determines that the
failure to do so would be inconsistent with its fiduciary obligations; provided,
however, that this Section 7.2 shall not limit the ability of Enron or any of
its Subsidiaries from selling or otherwise disposing of any assets to the extent
permitted by Section 7.1(i).
(b) Prior to taking any action referred to in Section 7.2(a),
if Enron intends to participate in any such discussions or negotiations or
provide any such information to any such third party, Enron shall give prompt
prior oral and written notice to Dynegy of each such action. Enron will
immediately notify Dynegy orally and in writing of any such requests for such
information or the receipt of any Enron Acquisition Proposal or any inquiry with
respect to or that could lead to an Enron Acquisition Proposal, including the
identity of the person or group engaging in such discussions or negotiations,
requesting such information or making such Enron Acquisition Proposal, and the
material terms and conditions of any Enron Acquisition Proposal. Enron will (i)
keep Dynegy fully informed of the status in reasonable detail (including any
changes or proposed changes to such status in reasonable detail) on a timely
basis of any such requests, Enron Acquisition Proposals or inquiries and (ii)
use its reasonable best efforts to provide to Dynegy as soon as practicable
after receipt or delivery thereof with copies of all material correspondence and
other material written material sent or provided to Enron from any third party
in connection with any Enron Acquisition Proposal or sent or provided by Enron
to any third party in connection with any Enron Acquisition Proposal (this
sentence not requiring the providing of information more frequently than once
every 24 hours or the provision of confidential information of such party to
Dynegy, other than the terms and conditions of any Enron Acquisition Proposal).
Any written notice under this Section 7.2 shall be given by facsimile with
receipt confirmed or personal delivery.
(c) Nothing in this Section 7.2 shall permit Enron to enter
into any agreement with respect to an Enron Acquisition Proposal during the term
of this Agreement, it being agreed that during the term of this Agreement
(except pursuant to Section 9.3(c)), Enron shall not enter into any agreement
with any person that provides for, or in any way facilitates, an Enron
Acquisition Proposal, other than a confidentiality and/or standstill agreement
in reasonably
38
customary form and that does not contain terms that prevent Enron from complying
with its obligations under this Section 7.2.
(d) For purposes hereof, the "Cutoff Date," when used with
respect to Enron, means the date the condition set forth in Section 8.1(a)(i) is
satisfied.
Section 7.3 No Solicitation by Dynegy.
(a) Dynegy agrees that (i) neither it nor any of its
Subsidiaries shall, and it shall not authorize or permit any of its officers,
directors, employees, agents or representatives (including, without limitation,
any investment banker, attorney or accountant retained by it or any of its
Subsidiaries) to, and on becoming aware of it will use its reasonable best
efforts to stop such person from continuing to, directly or indirectly, solicit,
initiate or encourage (including by way of furnishing nonpublic information), or
take any action designed to facilitate, directly or indirectly, any inquiry,
proposal or offer (including, without limitation, any proposal or offer to its
shareholders) with respect to a tender or exchange offer, merger, consolidation,
business combination, purchase or similar transaction or series of transactions
(other than the transactions contemplated by this Agreement or transactions
pursuant to Article 6 of the Dynegy Shareholder Agreement) involving,
individually or in the aggregate, 15% or more of the assets, net revenues or net
operating income of Dynegy and its Subsidiaries on a consolidated basis or 15%
or more of any class of capital stock of Dynegy, including, without limitation,
any merger or similar transaction in which 15% or more of Dynegy's capital stock
is issued to a third party or its shareholders (any such proposal, offer or
transaction being hereinafter referred to as a "Dynegy Acquisition Proposal") or
cooperate with or assist, participate or engage in any discussions or
negotiations concerning a Dynegy Acquisition Proposal; and (ii) it will
immediately cease and cause to be terminated any existing negotiations with any
parties conducted heretofore with respect to any of the foregoing; provided that
nothing contained in this Agreement shall prevent Dynegy or its Board of
Directors from (A) complying with Rule 14e-2 promulgated under the Exchange Act
with regard to a Dynegy Acquisition Proposal or (B) prior to the Cutoff Date,
providing information (pursuant to a confidentiality agreement in reasonably
customary form and which does not contain terms that prevent Dynegy from
complying with its obligations under this Section 7.3) to or engaging in any
negotiations or discussions with any person or entity who has made an
unsolicited bona fide written Dynegy Acquisition Proposal with respect to all
the outstanding shares of Dynegy Common Stock or all or substantially all the
assets of Dynegy that, in the good faith judgment of the Board of Directors of
Dynegy, after consultation with a financial advisor of recognized national
reputation, and taking into account the likelihood of financing and
consummation, is superior to the Mergers (a "Dynegy Superior Proposal") or is
reasonably likely to lead to a Dynegy Superior Proposal, to the extent that the
Board of Directors of Dynegy, after consultation with its outside legal counsel,
determines that the failure to do so would be inconsistent with its fiduciary
obligations.
(b) Prior to taking any action referred to in Section 7.3(a),
if Dynegy intends to participate in any such discussions or negotiations or
provide any such information to any such third party, Dynegy shall give prompt
prior oral and written notice to Enron of each such action. Dynegy will
immediately notify Enron orally and in writing of any such requests for such
information or the receipt of any Dynegy Acquisition Proposal or any inquiry
with respect to or that could lead to a Dynegy Acquisition Proposal, including
the identity of the person or
39
group engaging in such discussions or negotiations, requesting such information
or making such Dynegy Acquisition Proposal, and the material terms and
conditions of any Dynegy Acquisition Proposal. Dynegy will (i) keep Enron fully
informed of the status in reasonable detail (including any changes or proposed
changes to such status in reasonable detail) on a timely basis of any such
requests, Dynegy Acquisition Proposals or inquiries and (ii) use its reasonable
best efforts to provide to Enron as soon as practicable after receipt or
delivery thereof with copies of all material correspondence and other material
written material sent or provided to Dynegy from any third party in connection
with any Dynegy Acquisition Proposal or sent or provided by Dynegy to any third
party in connection with any Dynegy Acquisition Proposal (this sentence not
requiring the providing of information more frequently than once every 24 hours
or the provision of confidential information of such party to Enron, other than
the terms and conditions of any Dynegy Acquisition Proposal). Any written notice
under this Section 7.3 shall be given by facsimile with receipt confirmed or
personal delivery.
(c) Nothing in this Section 7.3 shall permit Dynegy to enter
into any agreement with respect to a Dynegy Acquisition Proposal during the term
of this Agreement, it being agreed that during the term of this Agreement
(except pursuant to Section 9.4(c)), Dynegy shall not enter into any agreement
with any person that provides for, or in any way facilitates, a Dynegy
Acquisition Proposal, other than a confidentiality and/or standstill agreement
in reasonably customary form and that does not contain terms that prevent Dynegy
from complying with its obligations under this Section 7.3.
(d) For purposes hereof, the "Cutoff Date," when used with
respect to Dynegy, means the date the condition set forth in Section 8.1(a)(ii)
is satisfied.
Section 7.4 Meetings of Shareholders.
(a) Each of Dynegy and Enron shall take all action necessary,
in accordance with applicable law and its articles of incorporation and bylaws,
to convene a meeting of its shareholders as promptly as practicable to consider
and vote upon the matters presented in connection with the Mergers. Dynegy and
Enron shall coordinate and cooperate with respect to the timing of such meetings
and shall use their commercially reasonable best efforts to hold such meetings
on the same day. Notwithstanding any other provision of this Agreement, unless
this Agreement is terminated in accordance with the terms hereof, Enron and
Dynegy shall each submit the foregoing matters to its shareholders, whether or
not the Board of Directors of Enron or Dynegy, as the case may be, withdraws,
modifies or changes its recommendation and declaration regarding such matters.
(b) Each of Dynegy and Enron, through its Board of Directors,
shall recommend approval of such matters and use its commercially reasonable
best efforts to solicit from its shareholders proxies in favor of such matters;
provided, however, that the Board of Directors of Dynegy or the Board of
Directors of Enron may at any time prior to such party's Cut-Off Date upon two
business days' prior written notice to Enron or Dynegy, respectively, (i)
withdraw, modify or change any recommendation and declaration regarding such
matters or (ii) recommend and declare advisable any Enron Superior Proposal or
Dynegy Superior Proposal, as the case may be, if in the good faith opinion of
such Board of Directors after consultation with its outside legal counsel the
failure so (x) to withdraw, modify or change its
40
recommendation and declaration or (y) to recommend and declare advisable any
Enron Superior Proposal or Dynegy Superior Proposal, as the case may be, would
be inconsistent with its fiduciary obligations.
Section 7.5 Filings; Commercially Reasonable Best Efforts,
Etc.
(a) Subject to the terms and conditions herein provided, Enron
and Dynegy shall:
(i) make their respective required filings under the
HSR Act (and shall share equally all filing fees incident
thereto), which filings shall be made promptly, and thereafter
shall promptly make any other required submissions under the
HSR Act;
(ii) use their commercially reasonable best efforts
to cooperate with one another in (A) determining which filings
are advisable to be made prior to the Effective Time with, and
which consents, approvals, permits or authorizations are
advisable to be obtained prior to the Effective Time from,
governmental or regulatory authorities under any applicable
non-U.S. competition, antitrust or premerger notification laws
(the "Non-U.S. Antitrust Laws") in connection with the
execution and delivery of this Agreement, and the consummation
of the Mergers and the transactions contemplated hereby; and
(B) timely making all such filings and timely seeking all such
consents, approvals, permits or authorizations;
(iii) use their commercially reasonable best efforts
to cooperate with one another in (A) determining which filings
are required to be made prior to the Effective Time with, and
which consents, approvals, permits or authorizations are
required to be obtained prior to the Effective Time from, any
governmental or regulatory authorities of the United States,
the several states and non-U.S. jurisdictions (other than with
respect to any Non-U.S. Antitrust Laws) in connection with the
execution and delivery of this Agreement, and the consummation
of the Mergers and the transactions contemplated hereby; and
(B) timely making all such filings and timely seeking all such
consents, approvals, permits or authorizations;
(iv) promptly notify each other of any communication
concerning this Agreement or the transactions contemplated
hereby to that party from any governmental or regulatory
authority and permit the other party to review in advance any
proposed communication concerning this Agreement or the
transactions contemplated hereby to any governmental or
regulatory authority;
(v) not agree to participate in any meeting or
discussion with any governmental or regulatory authority in
respect of any filings, investigation or other inquiry
concerning this Agreement or the transactions contemplated
hereby unless it consults with the other party in advance and,
to the extent permitted by such governmental or regulatory
authority, gives the other party the opportunity to attend and
participate in such meeting or discussion;
41
(vi) furnish the other party with copies of all
correspondence, filings and communications (and memoranda
setting forth the substance thereof) between them and their
Subsidiaries and their respective representatives on the one
hand, and any government or regulatory authority or members or
any such authority's staff on the other hand, with respect to
this Agreement and the transactions contemplated hereby; and
(vii) furnish the other party with such necessary
information and reasonable assistance as such other party and
its affiliates may reasonably request in connection with their
preparation of necessary filings, registrations or submissions
of information to any governmental or regulatory authorities,
including, without limitation, any filings necessary or
appropriate under the provisions of the HSR Act or any
applicable Non-U.S. Antitrust Laws.
(b) Without limiting Section 7.5(a), Dynegy and Enron shall:
(i) each use commercially reasonable best efforts to
avoid the entry of, or to have vacated, terminated or
modified, any decree, order or judgment that would restrain,
prevent or delay the Closing; and
(ii) each use commercially reasonable best efforts to
take any and all steps necessary to obtain any consents or
eliminate any impediments to the Mergers.
(c) Dynegy and Enron intend that the Mergers will qualify as
transfers of Enron Common Stock and Dynegy Common Stock to Newco in a
transaction qualifying under Section 351 of the Code. Neither Dynegy, Enron nor
their respective Subsidiaries shall take actions, cause actions to be taken or
fail to take actions, as a result of which the Mergers would not qualify as
transfers of Enron Common Stock and Dynegy Common Stock to Newco in a
transaction qualifying under Section 351 of the Code.
Section 7.6 Inspection. From the date hereof to the Effective
Time, each of Enron and Dynegy shall allow all designated officers, attorneys,
accountants, financing sources and other representatives of Dynegy or Enron, as
the case may be, access, at all reasonable times, upon reasonable notice, to the
records and files, correspondence, audits and properties, as well as to all
information relating to commitments, contracts, titles, financial position,
litigation, proceedings, complaints, investigations, inquiries or hearings, or
otherwise pertaining to the business and affairs of Dynegy and Enron and their
respective Subsidiaries, including inspection of such properties; provided that
no investigation pursuant to this Section 7.6 shall affect any representation or
warranty given by any party hereunder, and provided further that notwithstanding
the provision of information or investigation by any party, no party shall be
deemed to make any representation or warranty except as expressly set forth in
this Agreement. Notwithstanding the foregoing, no party shall be required to
provide any information which it reasonably believes it may not provide to the
other party by reason of applicable law, rules or regulations, which constitutes
information protected by attorney/client privilege if such privilege would be
adversely affected by reason of being so provided, or which it is required to
keep confidential by reason of contract or agreement with third parties. The
parties hereto shall make reasonable and appropriate substitute disclosure
arrangements under circumstances in which the
42
restrictions of the preceding sentence apply. Each of Dynegy and Enron agrees
that it shall not, and shall cause its respective representatives not to, use
any information obtained pursuant to this Section 7.6 for any purpose unrelated
to the consummation of the transactions contemplated by this Agreement. All
nonpublic information obtained pursuant to this Section 7.6 shall be governed by
the Confidentiality Agreement dated October 28, 2001 between Dynegy and Enron
(the "Confidentiality Agreement").
Section 7.7 Publicity. The parties shall consult with each
other before issuing any press release or public announcement pertaining to this
Agreement or the transactions contemplated hereby and shall not issue any such
press release or make any such public announcement without the prior written
consent of the other party, which consent shall not be unreasonably withheld,
except as may be required by applicable law or by obligations pursuant to any
listing agreement with any national securities exchange, in which case the party
proposing to issue such press release or make such public announcement shall use
its commercially reasonable best efforts to consult in good faith with the other
party before issuing any such press releases or making any such public
announcements.
Section 7.8 Registration Statement on Form S-4.
(a) Each of Dynegy and Enron shall cooperate and promptly
prepare, and Newco shall file with the SEC, as soon as practicable, a
Registration Statement on Form S-4 (the "Form S-4") under the Securities Act
with respect to the shares of Newco Common Stock issuable in the Mergers, a
portion of which Registration Statement shall also serve as the joint proxy
statement with respect to the meetings of the shareholders of Dynegy and of
Enron in connection with the transactions contemplated by this Agreement (the
"Proxy Statement/Prospectus"). The respective parties shall cause the Proxy
Statement/Prospectus and the Form S-4 to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder. Dynegy and Newco shall use
commercially reasonable best efforts, and Enron shall cooperate with Dynegy and
Newco, to have the Form S-4 declared effective by the SEC as promptly as
practicable. Dynegy and Newco shall use commercially reasonable best efforts to
obtain, prior to the effective date of the Form S-4, all necessary non-U.S.
securities laws, state securities law or "Blue Sky" permits or approvals
required to carry out the transactions contemplated by this Agreement, and
Dynegy and Enron shall share equally all expenses incident thereto (including
all SEC and other filing fees and all printing and mailing expenses associated
with the Form S-4 and the Proxy Statement/Prospectus). Newco shall advise Enron
and Dynegy, promptly after it receives notice thereof, of the time when the Form
S-4 has become effective or any supplement or amendment has been filed, the
issuance of any stop order, the suspension of the qualification of the shares of
Newco Common Stock issuable in connection with the Mergers for offering or sale
in any jurisdiction or any request by the SEC for amendment of the Proxy
Statement/Prospectus or the Form S-4 or comments thereon and responses thereto
or requests by the SEC for additional information. Each of the parties shall
also promptly provide each other party copies of all written correspondence
received from the SEC and summaries of all oral comments received from the SEC
in connection with the transactions contemplated by this Agreement. Each of the
parties shall promptly provide each other party with drafts of all
correspondence intended to be sent to the SEC in connection with the
transactions contemplated by this Agreement and allow each such party the
opportunity to comment thereon prior to delivery to the SEC.
43
(b) Dynegy and Enron shall each use its commercially
reasonable best efforts to cause the Proxy Statement/Prospectus to be mailed to
its shareholders as promptly as practicable after the Form S-4 is declared
effective under the Securities Act.
(c) Each of Dynegy and Enron shall ensure that the information
provided by it for inclusion in the Proxy Statement/Prospectus and each
amendment or supplement thereto, at the time of mailing thereof and at the time
of the respective meetings of shareholders of Dynegy and Enron, or, in the case
of information provided by it for inclusion in the Form S-4 or any amendment or
supplement thereto, at the time it becomes effective, (i) will not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading and (ii) will comply as
to form in all material respects with the provisions of the Securities Act and
the Exchange Act.
Section 7.9 Listing Application. Dynegy shall cause Newco
promptly to prepare and submit to the NYSE a listing application covering the
shares of Newco Class A Common Stock issuable in the Mergers and shall use
commercially reasonable best efforts to obtain, prior to the Effective Time,
approval for the listing of such shares of Newco Class A Common Stock, subject
to official notice of issuance.
Section 7.10 Letters of Accountants.
(a) Enron shall use commercially reasonable best efforts to
cause to be delivered to Dynegy "comfort" letters of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
Enron's independent public accountants, dated within two business days of the
effective date of the Form S-4 and within two business days of the Closing Date,
respectively, and addressed to Dynegy and Newco with regard to certain financial
information regarding Enron included in the Form S-4, in form reasonably
satisfactory to Dynegy and customary in scope and substance for "comfort"
letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
(b) Dynegy shall use commercially reasonable best efforts to
cause to be delivered to Enron "comfort" letters of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP,
Dynegy's independent public accountants, dated within two business days of the
effective date of the Form S-4 and within two business days of the Closing Date,
respectively, and addressed to Enron, with regard to certain financial
information regarding Newco and Dynegy included in the Form S-4, in form
reasonably satisfactory to Enron and customary in scope and substance for
"comfort" letters delivered by independent public accountants in connection with
registration statements similar to the Form S-4.
Section 7.11 Agreements of Rule 145 Affiliates. Prior to the
Effective Time, each of Dynegy and Enron shall cause to be prepared and
delivered to the other a list identifying all persons who such party believes,
at the date of the meeting of such party's shareholders to consider and vote
upon the approval of the matters presented in connection with the Mergers, may
be deemed to be "affiliates" of such party, as that term is used in paragraphs
(c) and (d) of Rule 145 under the Securities Act (the "Rule 145 Affiliates").
Each of Dynegy and Enron shall use commercially reasonable best efforts to cause
each person who is identified as a Rule 145 Affiliate in such list to deliver to
the other, at or prior to the Effective Time, a written agreement,
44
in the form of Exhibit 7.11. Newco shall be entitled to place restrictive
legends on any shares of Newco Common Stock issued to such Rule 145 Affiliates
pursuant to the Mergers.
Section 7.12 Expenses. Whether or not the Mergers are
consummated, all costs and expenses incurred in connection with this Agreement
and the transactions contemplated hereby shall be paid by the party incurring
such expenses, except as expressly provided in Section 7.5(a)(i), Section 7.8(a)
and Section 9.5(c) of this Agreement or as otherwise agreed in writing by the
parties.
Section 7.13 Indemnification and Insurance.
(a) From and after the Effective Time, Newco and, as
applicable, the Dynegy Surviving Entity and the Enron Surviving Entity shall
indemnify, defend and hold harmless to the fullest extent permitted under
applicable law each person (other than any Excluded Person, except to the extent
of existing irrevocable contractual rights) who is, or has been at any time
prior to the Effective Time, an officer or director of Dynegy or Enron,
respectively, or any Subsidiary or division thereof, and each person who served
at the request of Dynegy or Enron, respectively, as a director, officer, trustee
or fiduciary of another corporation, partnership, joint venture, trust, pension
or other employee benefit plan or enterprise, and each person who is, or has
been at any time prior to the Effective Time, a party to a written employee
indemnification agreement with Dynegy or Enron or any Subsidiary thereof
(individually, an "Indemnified Party" and, collectively, the "Indemnified
Parties") against all losses, claims, damages, liabilities, costs or expenses
(including attorneys' fees), judgments, fines, penalties and amounts paid in
settlement in connection with any claim, action, suit, proceeding or
investigation arising out of or pertaining to acts or omissions, or alleged acts
or omissions, by them in their capacities as such, whether commenced, asserted
or claimed before or after the Effective Time. In the event of any such claim,
action, suit, proceeding or investigation (an "Action"), (i) Newco and, as
applicable, the Dynegy Surviving Entity or the Enron Surviving Entity shall pay,
as incurred, the fees and expenses of counsel selected by the Indemnified Party,
which counsel shall be reasonably acceptable to Newco and such Surviving Entity,
in advance of the final disposition of any such Action to the fullest extent
permitted by applicable law and, if required, upon receipt of any undertaking
required by applicable law, and (ii) Newco and such Surviving Entity shall
cooperate in the defense of any such matter; provided, however, Newco and such
Surviving Entity shall not be liable for any settlement effected without its
written consent (which consent shall not be unreasonably withheld or delayed),
and provided further, that Newco and such Surviving Entity shall not be
obligated pursuant to this Section 7.13 to pay the fees and disbursements of
more than one counsel (other than local counsel) for all Indemnified Parties in
any single Action, unless, in the good faith judgment of any of the Indemnified
Parties, there is or may be a conflict of interests between two or more of such
Indemnified Parties, in which case there may be separate counsel for each
similarly situated group. For purposes of this Agreement, "Excluded Person"
shall mean each officer or director or former officer or director of Enron
specified by Enron in a notice to Dynegy delivered prior to the Closing
referencing this Section 7.13 and identifying such person as an Excluded Person
for purposes hereof.
(b) The parties agree that the rights to indemnification,
including provisions relating to advances of expenses incurred in defense of any
action or suit, in the certificate or
45
articles of incorporation and bylaws of Dynegy, Enron and their respective
Subsidiaries with respect to matters occurring through the Effective Time shall
survive the Mergers.
(c) For a period of six years after the Effective Time, Newco
and, as applicable, the Dynegy Surviving Entity and the Enron Surviving Entity
shall cause to be maintained officers' and directors' liability insurance
covering the Indemnified Parties who are, or at any time prior to the Effective
Time were, covered by existing officers' and directors' liability insurance
policies of Dynegy or Enron, as applicable, on terms substantially no less
advantageous to the Indemnified Parties than such existing insurance, provided
that Newco, the Dynegy Surviving Entity and the Enron Surviving Entity shall not
be required to pay aggregate premiums for the six-year period in excess of six
times 150% of the last annual premium paid by Dynegy or Enron, as applicable,
prior to the date hereof (the amount of which premium is set forth in the Dynegy
Disclosure Letter and the Enron Disclosure Letter, as the case may be), but in
such case shall purchase as much coverage as reasonably practicable for such
amount.
(d) The rights of each Indemnified Party hereunder shall be in
addition to any other rights such Indemnified Party may have under the articles
or certificate of incorporation or bylaws of Dynegy, Enron or any of their
respective Subsidiaries, under applicable law or otherwise. The provisions of
this Section 7.13 shall survive the consummation of the Mergers and expressly
are intended to benefit each of the Indemnified Parties.
(e) If Newco, the Dynegy Surviving Entity or the Enron
Surviving Entity or any of their respective successors or assigns (i)
consolidates with or merges into any other person and shall not be the
continuing or surviving corporation or entity in such consolidation or merger or
(ii) transfers all or substantially all of its properties and assets to any
person, then and in either such case, proper provision shall be made so that the
successors and assigns of Newco or such Surviving Entity, as the case may be,
shall assume the obligations set forth in this Section 7.13.
Section 7.14 Agreements Regarding Enron Supplemental
Indentures. Newco shall take such actions as are required by the Indenture,
dated as of February 7, 2001, by and between Enron and The Chase Manhattan Bank,
as Trustee, relating to the Zeros to assume the obligations of Enron to deliver
securities, cash or other assets upon conversion of the Zeros. Newco shall take
all actions as are required by the articles of incorporation of Enron and the
applicable statement of resolutions establishing each of the Second Preferred
Stock, the Series B Preferred Stock and the Series C Preferred Stock to assume
the obligations of Enron to deliver securities, cash or other assets upon
conversion of such series of Enron Preferred Stock.
Section 7.15 No Hire. From the date of this Agreement until
the Effective Time, Dynegy and Enron shall not, and shall cause their respective
Subsidiaries not to, solicit for employment or employ any officer, director or
key employee (personnel at the director level and above in the case of Dynegy or
the manager level and above in the case of Enron) of the other party or its
Subsidiaries. If this Agreement is terminated, Dynegy and Enron shall not, and
shall cause their respective Subsidiaries not to, solicit for employment any
officer, director or key employee of the other party or its Subsidiaries for a
period of 180 days after such termination, provided that this restriction shall
not apply (i) to Dynegy, if the fee provided for in Section 9.5(a) is payable,
or (ii) to Enron, if the fee provided for in Section 9.5(b) is payable. The
solicitation prohibitions of this Section 7.15 shall not apply to solicitations
made to the public or
46
the industry generally, and a party shall not be prohibited from employing any
such person who has an outstanding offer of employment as of the date hereof.
Section 7.16 Employee Matters. Newco shall maintain without
substantive modification for a period of one year following the Effective Time
those Enron Benefit Plans that are tax qualified ("tax qualified plans") under
Sections 401(a) and 501(a) of the Code. The active or former employees of Enron
who after the Effective Time participate in a tax qualified plan sponsored or
maintained by Newco or its U.S. federal income tax consolidated Subsidiaries
(collectively, "Newco Group") will receive credit for service under such plan,
but only for purposes of eligibility and vesting, as if service with Enron prior
to the Effective Time had been service with Dynegy. From and after the Effective
Time, Enron employees, excluding those covered by collective bargaining
agreements, will be provided severance benefits that are at least comparable in
all respects to the severance benefits provided by Dynegy under its severance
benefit plans and arrangements for similarly situated employees. For purposes of
the foregoing obligation regarding severance, the term "severance benefit plans
and arrangements" shall not include any individually negotiated agreements. The
foregoing notwithstanding, nothing in this Section 7.16 shall obligate Dynegy to
provide severance benefits if an employee is offered a comparable position,
benefits and salary with a third-party purchaser of the business operation in
which the employee works without regard to the form of the third-party purchase
transaction. Enron Benefit Plans that are employee welfare benefit plans within
the meaning of section 3(1) of ERISA, other than severance pay plans, shall be
maintained for one year after the Effective Time without substantive change in
either benefits provided or classes of employees covered; provided that such
plans may be modified in accordance with past practice to take into account
customary periodic design adjustments and employee premium costs to reflect
experience and change in the law and provided that Enron employees may be
provided medical benefits under the Dynegy medical benefit plans and
arrangements for similarly situated employees commencing as of the January 1
immediately following the Effective Time. Enron employees who on or after the
Effective Time become eligible for health care benefits under plans other than
Enron Benefit Plans, if other than at the end of an annual coverage period under
the analogous or correlative Enron Benefit Plan providing similar health
benefits, shall under such plans be granted credit for co-pays, deductibles and
the like applicable under the Enron Benefit Plan and shall not be subject to any
preexisting condition exclusion that was not applicable under the Enron Benefit
Plan. With respect to sick pay, severance pay and vacation time from and after
the Effective Time, (i) to the extent benefits are dependent upon years of
service and/or compensation criteria, service with and compensation received
from Enron prior to the Effective Time shall be credited as if it had been
service with Dynegy and (ii) no Enron employee who was active at the Effective
Time shall have his annual vacation entitlement reduced for a one-year period
following the Effective Time. Enron may in its discretion continue its present
retiree medical program and its existing portable medical program until the
Effective Time, provided there is no substantive change.
Section 7.17 Alternative Structure. The parties acknowledge
that they would prefer to structure the transactions contemplated hereby in a
manner that results in a single corporation with substantially all the senior
debt (other than that of regulated utility subsidiaries) of Dynegy, Dynegy
Holdings Inc. (a subsidiary of Dynegy) and Enron, in lieu of the Mergers
provided for herein. Accordingly, the parties agree to cooperate with each other
in analyzing and
47
determining such a structure that is advisable in connection with these
transactions and promptly to execute and deliver an appropriate amendment to
this Agreement to reflect such structure.
ARTICLE 8
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect
the Mergers. The respective obligation of each party to effect the Mergers shall
be subject to the fulfillment at or prior to the Closing Date of the following
conditions:
(a) (i) The Enron Merger and this Agreement shall have been
approved by the affirmative vote of (A) holders of a majority of the
votes entitled to be cast by holders of Enron Common Stock and the
Second Preferred Stock voting together as a single class and (B)
holders of a majority of the outstanding shares of Enron Common Stock
entitled to vote thereon; and
(ii) This Agreement shall have been approved by the
affirmative vote of the holders of at least two-thirds of the shares of
Dynegy Class A Common Stock and Dynegy Class B Common Stock (voting
together) entitled to vote thereon.
(b) (i) Any waiting period applicable to the consummation of
the Mergers under the HSR Act shall have expired or been terminated,
(ii) approval of the FERC with respect to the Mergers under Section 203
of the Federal Power Act shall have been granted, (iii) the SEC shall
have taken all necessary action under Section 9(a)(2) of the 1935 Act
and there shall not have been received a written notice from the SEC
(that has not been subsequently withdrawn or negated) of a challenge to
Newco's, Chevron's or ChevronTexaco's reliance on the good-faith
exemption provided by Section 3(c) of the 1935 Act in connection with
the Mergers, (iv) there shall not be pending or threatened in writing
any claim, proceeding or action by an agency of the government of the
United States, of the United Kingdom or of the European Union seeking
to restrain, prohibit or rescind any transactions contemplated by this
Agreement as an actual or threatened violation of the HSR Act, Non-U.S.
Antitrust Laws or other antitrust, competition or premerger
notification, trade regulation law, regulation or order, as applicable,
or seeking to penalize a party for completing any such transaction
which in any of such cases is, in the reasonable judgment of either
Enron or Dynegy, reasonably likely to have a Material Adverse Effect on
Newco after the Effective Time, (v) in the event of any review by the
U.K. Office of Fair Trading or, if applicable, the U.K. Secretary of
State for Trade and Industry, indications reasonably satisfactory to
each of Enron and Dynegy that the Mergers will not be referred to the
Competition Commission shall have been received or, if the Mergers are
referred to the Competition Commission, indications reasonably
satisfactory to each of Enron and Dynegy that the Mergers can proceed,
(vi) any mandatory waiting period under any applicable Non-U.S.
Antitrust Laws (where the failure to observe such waiting period
referred to in this clause (vi) would, in the reasonable judgment of
either Dynegy or Enron, be reasonably likely to have a Material Adverse
Effect on Newco after the Effective Time) shall have expired or been
terminated, (vii) the Enron Regulatory Approvals and the Dynegy
Regulatory Approvals
48
shall have been obtained, and no such Enron Regulatory Approval or
Dynegy Regulatory Approval shall impose or contain terms or conditions
that would, in the reasonable judgment of either Dynegy or Enron, be
reasonably likely to have a Material Adverse Effect on Newco after the
Effective Time, (viii) all consents, approvals, permits and
authorizations referred to in Section 7.5(a)(iii) shall have been
obtained (where the failure to obtain such consents, approvals, permits
or authorizations would, in the reasonable judgment of either Dynegy or
Enron, be reasonably likely to have a Material Adverse Effect on Newco
after the Effective Time), and no consent, approval, permit or
authorization shall impose or contain terms or conditions that would,
in the reasonable judgment of either Dynegy or Enron, be reasonably
likely to have a Material Adverse Effect on Newco after the Effective
Time, and (ix) there shall not have been a final or preliminary
administrative order denying approval of or prohibiting the Mergers
issued by a governmental authority with jurisdiction to enforce
applicable Non-U.S. Antitrust Laws, which order is in the reasonable
judgment of either Enron or Dynegy reasonably likely to have a Material
Adverse Effect on Newco after the Effective Time.
(c) None of the parties hereto shall be subject to any decree,
order or injunction that prohibits the consummation of the Mergers
issued by a court of competent jurisdiction of (i) the United States or
any state or other jurisdiction in the United States, (ii) the European
Union or any member state thereof or Canada (the "Specified
Jurisdictions") or (iii) any other jurisdiction (the "Other Non-U.S.
Jurisdictions"); provided, however, that, prior to invoking this
condition, each party shall have complied with Section 7.5, and with
respect to other matters not covered by Section 7.5, shall have used
its commercially reasonable best efforts to have any such decree, order
or injunction lifted or vacated; and no statute, rule or regulation
shall have been enacted by any governmental authority which prohibits
or makes unlawful the consummation of the Mergers; provided, further,
that, with respect to any decree, order, injunction, statute, rule or
regulation of any Other Non-U.S. Jurisdiction, noncompliance with such
decree, order, injunction, statute, rule or regulation would, in the
reasonable judgment of either Dynegy or Enron, be reasonably likely to
have a Material Adverse Effect on Enron, Dynegy or Newco.
(d) The Form S-4 shall have become effective and no stop order
with respect thereto shall be in effect.
(e) The shares of Newco Class A Common Stock to be issued
pursuant to the Mergers shall have been authorized for listing on the
NYSE, subject to official notice of issuance.
Section 8.2 Conditions to Obligation of Enron to Effect the
Mergers. The obligation of Enron to effect the Mergers shall be subject to the
fulfillment or waiver at or prior to the Closing Date of the following
conditions:
(a) Dynegy, Newco, Dynegy Merger Sub and Enron Merger Sub
shall have performed, in all material respects, their covenants and
agreements contained in this Agreement required to be performed on or
prior to the Closing Date, and the representations and warranties of
Dynegy, Newco, Dynegy Merger Sub and Enron
49
Merger Sub contained in this Agreement (i) that are qualified as to
materiality or Dynegy Material Adverse Effect shall be true and correct
in all respects as of the Closing Date, except to the extent such
representations and warranties expressly relate to an earlier date (in
which case as of such earlier date), and (ii) that are not so qualified
shall be true and correct in all respects as of the Closing Date,
except to the extent such representations and warranties expressly
relate to an earlier date (in which case as of such earlier date) and
except for such breaches of representations and inaccuracies in
warranties referred to in this clause (ii) that do not have and are not
reasonably likely to have, individually or in the aggregate, a Dynegy
Material Adverse Effect, and Enron shall have received a certificate of
each of Dynegy, Newco, Dynegy Merger Sub and Enron Merger Sub, executed
on its behalf by its President or one of its Vice Presidents, dated the
Closing Date, certifying to such effect.
(b) Enron shall have received the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇
L.L.P., counsel to Enron, in form and substance reasonably satisfactory
to Enron and dated the Closing Date, a copy of which shall be furnished
to Dynegy, to the effect that the Mergers will be treated as transfers
of Enron Common Stock by the holders of Enron Common Stock and of
Dynegy Common Stock by the holders of Dynegy Common Stock to Newco in
exchange for Newco Common Stock in a transaction qualifying under
Section 351 of the Code and that no gain or loss will be recognized for
United States federal income tax purposes by the shareholders of Enron
who exchange Enron Common Stock solely for Newco Common Stock pursuant
to the Enron Merger (except to the extent of any cash received in lieu
of fractional shares). In rendering such opinion, such counsel shall be
entitled to receive and rely upon representations of officers of Enron,
Dynegy, Chevron and ChevronTexaco, substantially in the form of
Exhibits 8.2(a), 8.2(b), 8.2(c) and 8.2(d), respectively, dated as of
the Closing Date.
(c) The representations and warranties contained in Section
6.9(i) [no event constituting a Dynegy Material Adverse Effect] shall
be true and correct in all respects as of the Closing Date.
Section 8.3 Conditions to Obligation of Dynegy, Newco, Dynegy
Merger Sub and Enron Merger Sub to Effect the Mergers. The obligations of
Dynegy, Newco, Dynegy Merger Sub and Enron Merger Sub to effect the Mergers
shall be subject to the fulfillment or waiver at or prior to the Closing Date of
the following conditions:
(a) Enron shall have performed, in all material respects, its
covenants and agreements contained in this Agreement required to be
performed on or prior to the Closing Date, and the representations and
warranties of Enron contained in this Agreement (i) that are qualified
as to materiality or Enron Material Adverse Effect shall be true and
correct in all respects as of the Closing Date, except to the extent
such representations and warranties expressly relate to an earlier date
(in which case as of such earlier date), and (ii) that are not so
qualified shall be true and correct in all respects as of the Closing
Date, except to the extent such representations and warranties
expressly relate to an earlier date (in which case as of such earlier
date) and except for such breaches of representations and inaccuracies
in warranties referred to in this clause (ii) that do not have and are
not reasonably likely to have, individually or in the
50
aggregate, an Enron Material Adverse Effect, and Dynegy shall have
received a certificate of Enron, executed on its behalf by its
President or one of its Vice Presidents, dated the Closing Date,
certifying to such effect.
(b) Dynegy shall have received the opinion of ▇▇▇▇▇ ▇▇▇▇▇
L.L.P., counsel to Dynegy, in form and substance reasonably
satisfactory to Dynegy and dated the Closing Date, a copy of which
shall be furnished to Enron, to the effect that the Mergers will be
treated as transfers of Enron Common Stock by the holders of Enron
Common Stock and of Dynegy Common Stock by the holders of Dynegy Common
Stock to Newco in exchange for Newco Common Stock in a transaction
qualifying under Section 351 of the Code and that no gain or loss will
be recognized for United States federal income tax purposes by the
shareholders of Dynegy who exchange Dynegy Common Stock solely for
Newco Common Stock pursuant to the Dynegy Merger and by the
shareholders of Enron who exchange Enron Common Stock solely for Newco
Common Stock pursuant to the Enron Merger (except to the extent of any
cash received in lieu of fractional shares). In rendering such opinion,
such counsel shall be entitled to receive and rely upon representations
of officers of Enron, Dynegy, Chevron and ChevronTexaco, substantially
in the form of Exhibits 8.2(a), 8.2(b), 8.2(c) and 8.2(d),
respectively, dated as of the Closing Date.
(c) The representations and warranties contained in Section
5.9(i) [no event constituting an Enron Material Adverse Effect] shall
be true and correct in all respects as of the Closing Date.
ARTICLE 9
TERMINATION
Section 9.1 Termination by Mutual Consent. This Agreement may
be terminated at any time prior to the Effective Time by the mutual written
consent of Enron and Dynegy.
Section 9.2 Termination by Dynegy or Enron. This Agreement may
be terminated at any time prior to the Effective Time by action of the Board of
Directors of Dynegy or Enron if:
(a) the Mergers shall not have been consummated by November
30, 2002 (the "Termination Date"); provided, however, that the right to
terminate this Agreement pursuant to this clause (a) shall not be
available to any party whose failure to perform or observe in any
material respect any of its obligations under this Agreement in any
manner shall have been the cause of, or resulted in, the failure of the
Mergers to occur on or before such date; provided, further, that, if on
the initial Termination Date (i) the conditions to Closing set forth in
Section 8.1(b) shall not have been fulfilled and/or (ii) the conditions
to Closing set forth in Section 8.1(a) shall not have been fulfilled
and the meetings of shareholders shall not have been held, but in
either case all other conditions to the Closing shall have been
fulfilled or shall be capable of being fulfilled, then the Termination
Date may be extended from time to time by either Enron or Dynegy, by
notice to the other, to a date not later than May 31, 2003;
51
(b) a meeting (including adjournments and postponements) of
Enron's shareholders for the purpose of obtaining the approvals
required by Section 8.1(a)(i) shall have been held and such shareholder
approvals shall not have been obtained;
(c) a meeting (including adjournments and postponements) of
Dynegy's shareholders for the purpose of obtaining the approvals
required by Section 8.1(a)(ii) shall have been held and such
shareholder approvals shall not have been obtained; or
(d) a court of competent jurisdiction or governmental,
regulatory or administrative agency or commission of the United States,
any state or other jurisdiction of the United States, any Specified
Jurisdiction or any Other Non-U.S. Jurisdiction shall have issued an
order, decree or ruling or taken any other action permanently
restraining, enjoining or otherwise prohibiting the transactions
contemplated by this Agreement and such order, decree, ruling or other
action shall have become final and nonappealable; provided, that, with
respect to any order, decree, ruling or other action of any Other
Non-U.S. Jurisdiction, noncompliance with such order, decree, ruling or
other action would, in the reasonable judgment of either Dynegy or
Enron, be reasonably likely to have a Material Adverse Effect on Enron,
Dynegy or Newco.
Section 9.3 Termination by Enron. This Agreement may be
terminated at any time prior to the Effective Time by action of the Board of
Directors of Enron, after, in the case of Section 9.3(b) or (c), consultation
with its outside legal advisors, if
(a) (i) there has been a breach by Dynegy, Newco, Dynegy
Merger Sub or Enron Merger Sub of any representation, warranty,
covenant or agreement set forth in this Agreement or if any
representation or warranty of Dynegy, Newco, Dynegy Merger Sub or Enron
Merger Sub shall have become untrue, in either case such that the
conditions set forth in Section 8.2(a) would not be satisfied and (ii)
such breach is not curable, or, if curable, is not cured within 30 days
after written notice of such breach is given to Dynegy by Enron;
(b) the Board of Directors of Dynegy shall have withdrawn or
materially modified, in a manner adverse to Enron, its approval or
recommendation of the Dynegy Merger or recommended a Dynegy Acquisition
Proposal, or resolved to do so; or
(c) prior to the Cutoff Date, (i) the Board of Directors of
Enron has received an Enron Superior Proposal, (ii) in light of such
Enron Superior Proposal the Board of Directors of Enron shall have
determined in good faith, after consultation with its outside legal
advisors, and taking into account all reasonably available information,
including information concerning the likelihood that the approval by
Enron's shareholders of the Enron Merger and this Agreement will not be
obtained by reason of the existence of such Enron Superior Proposal,
that proceeding with the Enron Merger would be inconsistent with its
fiduciary obligations, (iii) Enron is not in material breach of Section
7.2, Section 7.4, Section 7.5 and Section 7.8, (iv) Enron has paid the
fee provided for under Section 9.5(a)(i), and (v) the Board of
Directors of Enron concurrently approves, and Enron concurrently enters
into, a binding definitive written agreement providing for the
implementation of such Enron Superior Proposal; provided that Enron may
not effect such termination pursuant to this Section 9.3(c) unless and
until (i) Dynegy receives at
52
least four business days' prior written notice from Enron of its
intention to effect such termination pursuant to this Section 9.3(c),
which notice includes the terms of the applicable Enron Acquisition
Proposal; and (ii) during such four business day period, Enron shall,
and shall cause its respective financial and legal advisors to,
consider any adjustment in the terms and conditions of this Agreement
that Dynegy may propose.
Section 9.4 Termination by Dynegy. This Agreement may be
terminated at any time prior to the Effective Time by action of the Board of
Directors of Dynegy, after, in the case of Section 9.4(b) or (c), consultation
with its outside legal advisors, if:
(a) (i) there has been a breach by Enron of any
representation, warranty, covenant or agreement set forth in this
Agreement or if any representation or warranty of Enron shall have
become untrue, in either case such that the conditions set forth in
Section 8.3(a) would not be satisfied and (ii) such breach is not
curable, or, if curable, is not cured within 30 days after written
notice of such breach is given by Dynegy to Enron;
(b) the Board of Directors of Enron shall have withdrawn or
materially modified, in a manner adverse to Dynegy, its approval or
recommendation of the Enron Merger or recommended an Enron Acquisition
Proposal, or resolved to do so; or
(c) prior to the Cutoff Date, (i) the Board of Directors of
Dynegy has received a Dynegy Superior Proposal, (ii) in light of such
Dynegy Superior Proposal the Board of Directors of Dynegy shall have
determined in good faith, after consultation with its outside legal
advisors, and taking into account all reasonably available information,
including information concerning the likelihood that the approval of
this Agreement by Dynegy's shareholders will not be obtained by reason
of the existence of such Dynegy Superior Proposal, that proceeding with
the Dynegy Merger would be inconsistent with its fiduciary obligations,
(iii) Dynegy is not in material breach of Section 7.3, Section 7.4,
Section 7.5 and Section 7.8, (iv) Dynegy has paid the fee provided for
under Section 9.5(b)(i), and (v) the Board of Directors of Dynegy
concurrently approves, and Dynegy concurrently enters into, a binding
definitive written agreement providing for the implementation of such
Dynegy Superior Proposal; provided that Dynegy may not effect such
termination pursuant to this Section 9.4(c) unless and until (i) Enron
receives at least four business days' prior written notice from Dynegy
of its intention to effect such termination pursuant to this Section
9.4(c), which notice includes the terms of the applicable Dynegy
Acquisition Proposal; and (ii) during such four business day period,
Dynegy shall, and shall cause its respective financial and legal
advisors to, consider any adjustment in the terms and conditions of
this Agreement that Enron may propose.
Section 9.5 Effect of Termination.
(a) If this Agreement is terminated:
(A) by Enron or Dynegy pursuant to Section 9.2(b)
[failure to obtain Enron shareholder approval] either (1)
after the public announcement of an Enron Acquisition
Proposal, whether or not the Enron Acquisition Proposal is
still pending or has been consummated, and Enron enters into
an agreement with respect to any Enron Acquisition Proposal or
is a party to or subject to a
53
completed Enron Acquisition Proposal (in either case, whether
or not relating to the initial Enron Acquisition Proposal) on
or prior to the date 12 months after such termination or (2)
after the Board of Directors of Enron has withdrawn or
modified, in a manner adverse to Dynegy, its approval or
recommendation of the Enron Merger or recommended an Enron
Acquisition Proposal, or resolved to do so; or
(B) by Dynegy pursuant to Section 9.4(b) [withdrawal
of Enron recommendation to shareholders]; or
(C) by Enron pursuant to Section 9.3(c) [fiduciary
out];
then Enron shall pay Dynegy a fee of $297.5 million at the time of such
termination (or, in the case of clause (A)(1), at the time such clause is
satisfied, and such fee shall be reduced by any prior payment under Section
9.5(c)) and shall concurrently pay a fee of $52.5 million to ChevronTexaco, in
each case in cash by wire transfer to an account designated by Dynegy or
ChevronTexaco, respectively.
(ii) If this Agreement is terminated by Enron pursuant to
Section 9.3(c) and in accordance with the terms thereof (including the payment
of the fee referred to therein), no fee additional to the fee specified in
Section 9.3(c) shall be payable by Enron to Dynegy.
(b) If this Agreement is terminated:
(A) by Enron or Dynegy pursuant to Section 9.2(c)
[failure to obtain Dynegy shareholder approval] either (1)
after the public announcement of a Dynegy Acquisition
Proposal, whether or not the Dynegy Acquisition Proposal is
still pending or has been consummated, and Dynegy enters into
an agreement with respect to any Dynegy Acquisition Proposal
or is a party to or subject to a completed Dynegy Acquisition
Proposal (in either case, whether or not relating to the
initial Dynegy Acquisition Proposal) on or prior to the date
12 months after such termination or (2) after the Board of
Directors of Dynegy has withdrawn or modified, in a manner
adverse to Enron, its approval or recommendation of the Dynegy
Merger or recommended a Dynegy Acquisition Proposal, or
resolved to do so; or
(B) by Enron pursuant to Section 9.3(b) [withdrawal
of Dynegy recommendation to shareholders]; or
(C) by Dynegy pursuant to Section 9.4(c) [fiduciary
out];
then Dynegy shall pay Enron a fee of $350 million at the time of such
termination (or, in the case of clause (A)(1), at the time such clause is
satisfied, and such fee shall be reduced by any prior payment under Section
9.5(c)) in cash by wire transfer to an account designated by Enron.
(ii) If this Agreement is terminated by Dynegy pursuant to
Section 9.4(c) and in accordance with the terms thereof (including the payment
of the fee referred to
54
therein), no fee additional to the fee specified in Section 9.4(c) shall be
payable by Dynegy to Enron.
(c) If this Agreement is terminated by Enron or Dynegy
pursuant to Section 9.2(b) other than in circumstances covered by Section 9.5(a)
requiring the payment of the fee specified therein at the time of termination,
then Enron shall pay Dynegy a fee of $10 million to reimburse it for its costs
and expenses incurred in connection with this transaction. If this Agreement is
terminated by Enron or Dynegy pursuant to Section 9.2(c), other than in
circumstances covered by Section 9.5(b) requiring the payment of the fee
specified therein at the time of termination, then Dynegy shall pay Enron a fee
of $10 million to reimburse it for its costs and expenses incurred in connection
with this transaction.
(d) In the event of termination of this Agreement and the
abandonment of the Mergers pursuant to this Article 9, all obligations of the
parties hereto shall terminate, except the obligations of the parties pursuant
to this Section 9.5, the last sentence of Section 7.6 and Section 7.12 and
Section 7.15 and except for the provisions of Sections 10.2, 10.3, 10.4, 10.6,
10.8, 10.9, 10.11, 10.12, 10.13 and 10.14, provided that nothing in this Section
9.5(d) shall relieve any party from any liability for any willful and material
breach by such party of any of its representations or warranties set forth in
this Agreement or any material breach by such party of any of its covenants or
agreements set forth in this Agreement and, subject to Section 10.14, all rights
and remedies of such nonbreaching party under this Agreement in the case of any
such breach, at law or in equity, shall be preserved. The Confidentiality
Agreement shall survive any termination of this Agreement, and the provisions of
such Confidentiality Agreement shall apply to all information and material
delivered by any party hereunder.
Section 9.6 Extension; Waiver. At any time prior to the
Effective Time, each party may by action taken by its Board of Directors, to the
extent legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto, (b) waive any
inaccuracies in the representations and warranties made to such party contained
herein or in any document delivered pursuant hereto and (c) waive compliance
with any of the agreements or conditions for the benefit of such party contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
ARTICLE 10
GENERAL PROVISIONS
Section 10.1 Nonsurvival of Representations, Warranties and
Agreements. All representations, warranties and agreements in this Agreement or
in any instrument delivered pursuant to this Agreement shall not survive the
Mergers; provided, however, that the agreements contained in Article 4 and in
Sections 3.1, 3.2, 7.11, 7.12, 7.13, 7.14 and 7.16 and this Article 10 and the
agreements delivered pursuant to this Agreement shall survive the Mergers.
Section 10.2 Notices. Except as otherwise provided herein, any
notice required to be given hereunder shall be sufficient if in writing, and
sent by facsimile transmission or by courier service (with proof of service), or
hand delivery, addressed as follows:
55
(a) if to Enron:
Enron Corp.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, III, Esq.
▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to Dynegy, Newco, Dynegy Merger Sub or Enron Merger
Sub:
Dynegy Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Facsimile (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: R. ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
J. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Jr., Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address as any party shall specify by written notice so given,
and such notice shall be deemed to have been delivered as of the date so
telecommunicated, personally delivered or mailed.
Section 10.3 Assignment; Binding Effect; Benefit. Neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto (whether by operation of law or otherwise)
without the prior written consent of the other parties. Subject to the preceding
sentence, this Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and assigns. Notwithstanding
anything contained in this Agreement to the contrary, except for the provisions
of Article 4, Section 7.13 and Section 9.5(a) and except as provided in any
agreements delivered pursuant hereto (collectively, the "Third-Party
Provisions"), nothing in this Agreement, expressed or implied, is intended to
confer on any person other than the parties hereto or their respective heirs,
56
successors, executors, administrators and assigns any rights, remedies,
obligations or liabilities under or by reason of this Agreement. The Third-Party
Provisions may be enforced by the beneficiaries thereof (including ChevronTexaco
with respect to Section 9.5(a)). Notwithstanding the foregoing and any other
provision of this Agreement, and in addition to any other required action of the
Board of Directors of Newco, a majority of the Former Enron Directors (or their
successors) serving on the Board of Directors of Newco shall be entitled during
the one-year period commencing at the Effective Time to enforce the provisions
of Section 7.16 on behalf of Enron's officers, directors and employees, as the
case may be. Such directors' rights and remedies under the preceding sentence
are cumulative and are in addition to any other rights and remedies that they
may have at law or in equity, but in no event shall this Section 10.3 be deemed
to impose any additional duties on any such directors. Newco shall pay, at the
time they are incurred, all reasonable costs, fees and expenses of such
directors incurred in connection with the assertion of any rights on behalf of
the persons set forth above pursuant to this Section 10.3.
Section 10.4 Entire Agreement. This Agreement, the exhibits to
this Agreement, the Enron Disclosure Letter, the Dynegy Disclosure Letter and
any documents delivered by the parties in connection herewith constitute the
entire agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements and understandings among the parties with respect
thereto, except that the Confidentiality Agreement shall continue in effect. No
addition to or modification of any provision of this Agreement shall be binding
upon any party hereto unless made in writing and signed by all parties hereto.
Section 10.5 Amendments. This Agreement may be amended by the
parties hereto, by action taken or authorized by their Boards of Directors, at
any time before or after approval of matters presented in connection with the
Mergers by the shareholders of Enron or Dynegy, but after any such shareholder
approval, no amendment shall be made which by law requires the further approval
of shareholders without obtaining such further approval. This Agreement may not
be amended except by an instrument in writing signed on behalf of each of the
parties hereto.
Section 10.6 Governing Law. This Agreement shall be governed
by and construed in accordance with the laws of the State of
Texas, without
regard to its rules of conflicts of laws, except to the extent the laws of the
State of Illinois are required to be applicable to the Dynegy Merger or the laws
of the State of Oregon are required to be applicable to the Enron Merger.
Section 10.7 Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all of the
parties hereto.
Section 10.8 Headings. Headings of the Articles and Sections
of this Agreement are for the convenience of the parties only and shall be given
no substantive or interpretative effect whatsoever.
57
Section 10.9 Interpretation. In this Agreement:
(a) Unless the context otherwise requires, words describing
the singular number shall include the plural and vice versa, words
denoting any gender shall include all genders, and words denoting
natural persons shall include corporations and partnerships and vice
versa.
(b) The phrase "to the knowledge of" and similar phrases
relating to knowledge of Enron or Dynegy, as the case may be, shall
mean the actual knowledge of its executive officers.
(c) "Material Adverse Effect" with respect to any person shall
mean a material adverse effect on or change in the business, assets,
liabilities, financial condition or results of operations of such
person and its Subsidiaries, taken as a whole, or the ability of the
party to consummate the transactions contemplated by this Agreement or
fulfill the conditions to closing. "Enron Material Adverse Effect" and
"Dynegy Material Adverse Effect" mean a Material Adverse Effect with
respect to Enron and Dynegy, respectively. For purposes of determining
whether an Enron Material Adverse Effect has occurred from and after
the date of this Agreement, to the extent that the liabilities and
expenses from and after the date hereof associated with all pending or
threatened litigation matters, in the reasonable judgment of Dynegy
exercised in good faith after consultation with outside counsel
experienced in such types of litigation, exceed, or are reasonably
likely to exceed, $2 billion in the aggregate (net of proceeds of
insurance and litigation reserves reflected on the September 30, 2001
Balance Sheet), the amount of such excess over $2 billion will be taken
into account in determining whether an Enron Material Adverse Effect
has occurred, and, in any event, if the amount of such excess exceeds,
or is reasonably likely to exceed, $1.5 billion, an Enron Material
Adverse Effect will be deemed to have occurred; provided, however, that
such $1.5 billion threshold shall have no implication, or be used, for
purposes of interpreting any other provision or sentence of this
Agreement, including, without limitation, interpreting whether an Enron
Material Adverse Effect has occurred with respect to any matters other
than litigation matters.
(d) The term "Subsidiary," when used with respect to any
party, shall mean any corporation or other organization (including a
limited liability company), whether incorporated or unincorporated, of
which such party directly or indirectly owns at least 50% of the
securities or other interests having by their terms ordinary voting
power to elect at least 50% of the board of directors or others
performing similar functions with respect to such corporation or other
organization or, except with respect to Article 7, any organization of
which such party or a Subsidiary of such party is a general partner or
managing member.
Section 10.10 Waivers. Except as provided in this Agreement,
no action taken pursuant to this Agreement, including, without limitation, any
investigation by or on behalf of any party, shall be deemed to constitute a
waiver by the party taking such action of compliance with any representations,
warranties, covenants or agreements contained in this Agreement. The waiver by
any party hereto of a breach of any provision hereunder shall not operate or be
58
construed as a waiver of any prior or subsequent breach of the same or any other
provision hereunder.
Section 10.11 Incorporation of Disclosure Letters and
Exhibits. The Enron Disclosure Letter, the Dynegy Disclosure Letter and all
exhibits attached hereto and referred to herein are hereby incorporated herein
and made a part hereof for all purposes as if fully set forth herein.
Section 10.12 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
Section 10.13 Enforcement of Agreement. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with its specific
terms or was otherwise breached. It is accordingly agreed that the parties shall
be entitled to an injunction or injunctions to prevent breaches of this
Agreement and to enforce specifically the terms and provisions hereof, this
being in addition to any other remedy to which they are entitled at law or in
equity.
Section 10.14 No Special Damages. IN NO EVENT SHALL ANY PARTY
BE LIABLE IN RESPECT OF THIS AGREEMENT FOR EXEMPLARY, SPECIAL OR PUNITIVE
DAMAGES.
59
IN WITNESS WHEREOF, the parties have executed this Agreement
and caused the same to be duly delivered on their behalf on the day and year
first written above.
DYNEGY INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chairman of the Board and Chief
Executive Officer
STANFORD, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
SORIN, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
BADIN, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
ENRON CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇
Chairman of the Board and Chief
Executive Officer
60
EXHIBIT 2.1(a)
RESTATED CERTIFICATE OF INCORPORATION
OF
STANFORD, INC.
Under Sections 242 and 245 of the
Delaware General Corporation Law
Stanford, Inc. (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "DGCL"), hereby certifies that:
1. The current name of the Corporation is Stanford, Inc. The original
Certificate of Incorporation of the Corporation (as heretofore amended, the
"Certificate of Incorporation") was filed with the Secretary of State of the
State of Delaware on November 2, 2001.
2. The Board of Directors of the Corporation duly adopted resolutions
proposing and declaring advisable the amendments to the Certificate of
Incorporation this Restated Certificate of Incorporation is effecting, and the
Corporation's sole stockholder has duly adopted those amendments and this
Restated Certificate of Incorporation, all in accordance with the provisions of
Sections 228, 242 and 245 of the DGCL.
3. This Restated Certificate of Incorporation (hereinafter, this
Restated Certificate of Incorporation, as it may be further amended or restated
from time to time, is referred to as this "Restated Certificate of
Incorporation") restates and amends the Certificate of Incorporation in its
entirety as follows:
RESTATED CERTIFICATE OF INCORPORATION
FIRST: The name of the Corporation is Stanford, Inc. (hereinafter, the
"Corporation").
SECOND: The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of New Castle, Zip Code 19801, and the name of the registered
agent of the Corporation at such address is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware (the "DGCL").
FOURTH: The aggregate number of shares of capital stock that the
Corporation shall have authority to issue is 3,000,000,000, of which
2,000,000,000 shares are
classified as Class A common stock, no par value ("Class A Common Stock"), and
800,000,000 shares are classified as Class B common stock, no par value ("Class
B Common Stock" and, together with the Class A Common Stock, the "Common
Stock"), and 200,000,000 shares are classified as preferred stock, no par value
("Preferred Stock").
The Corporation may issue shares of any class or series of its capital
stock from time to time for such consideration and for such corporate purposes
as the Board of Directors of the Corporation (the "Board of Directors") may from
time to time determine.
The following is a statement of the powers, preferences and rights, and
the qualifications, limitations or restrictions, of the Preferred Stock, the
Class A Common Stock and the Class B Common Stock:
DIVISION A. PREFERRED STOCK
The shares of Preferred Stock may be divided into and issued in one or
more series, the relative rights, powers and preferences of which series may
vary in any and all respects. The Board of Directors is expressly vested with
the authority to fix, by resolution or resolutions adopted prior to and
providing for the issuance of any shares of each particular series of Preferred
Stock and incorporate in a certificate of designations filed with the Secretary
of State of the State of Delaware, the designations, powers, preferences,
rights, qualifications, limitations and restrictions thereof, of the shares of
each series of Preferred Stock, to the extent not provided for in this Restated
Certificate of Incorporation, and with the authority to increase or decrease the
number of shares within each such series; provided, however, that the Board of
Directors may not decrease the number of shares within a series of Preferred
Stock below the number of shares within such series that is then issued. The
authority of the Board of Directors with respect to fixing the designations,
powers, preferences, rights, qualifications, limitations and restrictions of
each such series of Preferred Stock shall include, but not be limited to,
determination of the following:
(1) the distinctive designation and number of shares of that series;
(2) the rate of dividends (or the method of calculation thereof)
payable with respect to shares of that series, the dates, terms and other
conditions upon which such dividends shall be payable, and the relative rights
of priority of such dividends to dividends payable on any other class or series
of capital stock of the Corporation;
(3) the nature of the dividend payable with respect to shares of that
series as cumulative, noncumulative or partially cumulative, and if cumulative
or partially cumulative, from which date or dates and under what circumstances;
(4) whether shares of that series shall be subject to redemption, and,
if made subject to redemption, the times, prices, rates, adjustments and other
terms and conditions of such redemption (including the manner of selecting
shares of that series for redemption if fewer than all shares of such series are
to be redeemed);
(5) the rights of the holders of shares of that series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation (which rights may be
2
different if such action is voluntary than if it is involuntary), including the
relative rights of priority in such event as to the rights of the holders of any
other class or series of capital stock of the Corporation;
(6) the terms, amounts and other conditions of any sinking or similar
purchase or other fund provided for the purchase or redemption of shares of that
series;
(7) whether shares of that series shall be convertible into or
exchangeable for shares of capital stock or other securities of the Corporation
or of any other corporation or entity, and, if provision be made for conversion
or exchange, the times, prices, rates, adjustments, and other terms and
conditions of such conversion or exchange;
(8) the extent, if any, to which the holders of shares of that series
shall be entitled (in addition to any voting rights provided by law) to vote as
a class or otherwise with respect to the election of directors or otherwise;
(9) the restrictions and conditions, if any, upon the issue or reissue
of any additional Preferred Stock ranking on a parity with or prior to shares of
that series as to dividends or upon liquidation, dissolution or winding up;
(10) any other repurchase obligations of the Corporation, subject to
any limitations of applicable law; and
(11) any other designations, powers, preferences, rights,
qualifications, limitations or restrictions of shares of that series.
Any of the designations, powers, preferences, rights, qualifications,
limitations or restrictions of any series of Preferred Stock may be dependent on
facts ascertainable outside this Restated Certificate of Incorporation, or
outside the resolution or resolutions providing for the issue of such series of
Preferred Stock adopted by the Board of Directors pursuant to authority
expressly vested in it by this Restated Certificate of Incorporation. Except as
applicable law or this Restated Certificate of Incorporation otherwise may
require, the terms of any series of Preferred Stock may be amended without
consent of the holders of any other series of Preferred Stock or any class of
capital stock of the Corporation.
The relative powers, preferences and rights of each series of Preferred
Stock in relation to the powers, preferences and rights of each other series of
Preferred Stock shall, in each case, be as fixed from time to time by the Board
of Directors in the resolution or resolutions adopted pursuant to the authority
granted in this Division A of this Article FOURTH, and the consent, by class or
series vote or otherwise, of holders of Preferred Stock of such of the series of
Preferred Stock as are from time to time outstanding shall not be required for
the issuance by the Board of Directors of any other series of Preferred Stock,
whether or not the powers, preferences and rights of such other series shall be
fixed by the Board of Directors as senior to, or on a parity with, the powers,
preferences and rights of such outstanding series, or any of them; provided,
however, that the Board of Directors may provide in such resolution or
resolutions adopted with respect to any series of Preferred Stock that the
consent of holders of at least a majority (or such greater proportion as shall
be therein fixed) of the outstanding shares of such series voting thereon shall
be required for the issuance of shares of any or all other series of Preferred
Stock.
3
Shares of any series of Preferred Stock shall have no voting rights
except as required by law or as provided in the relative powers, preferences and
rights of such series.
DIVISION B. COMMON STOCK
Except as otherwise set forth in this Article FOURTH, Division B, the
relative powers, preferences and rights, and the qualifications, limitations and
restrictions, of the Class A Common Stock and the Class B Common Stock shall be
identical in all respects.
1. Dividends. Subject to the rights of the holders of Preferred Stock, and
subject to any other provisions of this Restated Certificate of Incorporation,
holders of Common Stock shall be entitled to receive such dividends and other
distributions in cash, stock of any corporation (other than Common Stock) or
property of the Corporation as may be declared thereon by the Board of Directors
from time to time out of assets or funds of the Corporation legally available
therefor and shall share equally on a per share basis in all such dividends and
other distributions. In the case of dividends or other distributions payable in
Common Stock, including distributions pursuant to stock splits or divisions of
Common Stock, only shares of Class A Common Stock shall be paid or distributed
with respect to Class A Common Stock and only shares of Class B Common Stock
shall be paid or distributed with respect to Class B Common Stock. The number of
shares of Class A Common Stock and Class B Common Stock so distributed on each
share shall be equal in number. Neither the shares of Class A Common nor the
shares of Class B Common Stock may be reclassified, subdivided or combined
unless such reclassification, subdivision or combination occurs simultaneously
and in the same proportion for each class.
2. Voting.
(a) Except as may be otherwise required by law or by the provisions of this
Restated Certificate of Incorporation or the Bylaws of the Company, the holders
of the Class B Common Stock shall vote together with the holders of the Class A
Common Stock as a single class on every matter coming before any meeting of the
stockholders or otherwise to be acted upon by the stockholders, subject to any
voting rights which may be granted to holders of any other class or series of
Preferred Stock. So long as any Class B Common Stock is outstanding, the
Corporation shall not (x) without the affirmative vote of 66 2/3% of the shares
of Class A and Class B Common Stock outstanding, voting as a single class,
effect any amendments to this Restated Certificate of Incorporation, any
mergers, consolidations, reorganizations, or sales of assets requiring
stockholder approval under the DGCL or dispositions of all or substantially all
of the Corporation's assets, or any liquidation, dissolution or winding up of
the Corporation, or (y) without the affirmative vote of a majority of the shares
of Class B Common Stock outstanding, voting as a separate class, and the
affirmative vote of 66 2/3% of the shares of Class A and Class B Common Stock,
voting as a single class, amend any provision of this paragraph (a) of Section 2
relating to the Common Stock.
(b) The Board of Directors of the Corporation shall consist of at least
twelve members and no more than fifteen members as established from time to time
by resolution of the Board of Directors, except that such numbers are subject to
automatic adjustment as necessary, under those circumstances and during those
time periods that holders of any other class or series
4
of the Corporation's outstanding Preferred Stock have rights to elect members of
the Board of Directors (the "Preferred Stock Directors"), as set forth in this
Restated Certificate of Incorporation or in the resolution of the Board of
Directors establishing and designating such series and fixing and determining
the relative rights and preferences thereof. So long as any shares of Class B
Common Stock are outstanding, the holders of the Class B Common Stock, as such
holders, shall be entitled to vote as a separate class for the election of the
greater of (x) three directors of the Corporation and (y) that whole number of
directors that is closest to but not less than 20% of the total number of
directors (the "Class B Directors") and the holders of the Class A Common Stock
shall be entitled to vote as a separate class for the remaining directors of the
Corporation (the "Class A Directors"), excluding Preferred Stock Directors, if
any. At such time as no Class B Common Stock is outstanding, the term of all
Class B Directors shall immediately end.
(c) For purposes of electing Class B Directors, the Board of Directors will
nominate such individuals as may be specified by a majority vote of the then
existing Class B Directors or, if there are no Class B Directors, by holders of
a majority of the Class B Common Stock. The remaining directors will be
nominated in accordance with the Corporation's Bylaws.
(d) At any meeting having as a purpose the election of directors by holders
of the Common Stock, the presence, in person or by proxy, of the holders of a
majority of the shares of the relevant class or classes of Common Stock then
outstanding shall be required and be sufficient to constitute a quorum of such
class or classes for the election of any director by such holders. Each director
shall be elected by the vote or written consent required under the DGCL of the
holders of such class or classes. At any such meeting or adjournment thereof,
(i) the absence of a quorum of such holders of an applicable class of Common
Stock shall not prevent the election of the directors to be elected by the
holders of shares other than such class of Common Stock, and (ii) in the absence
of such quorum (either of holders of such class of Common Stock or of shares
other than such class of Common Stock, or both), a majority of the holders,
present in person or by proxy, of the class or classes of stock which lack a
quorum shall have power to adjourn the meeting for the election of directors
which they are entitled to elect, from time to time, without notice other than
announcement at the meeting, until a quorum shall be present. All of the holders
of Class A Common Stock that are entitled to vote at an election of Class A
Directors shall have the right to vote, in person or by proxy, the number of
shares of Class A Common Stock owned by him or her for as many persons as there
are Class A Directors to be elected and for whose election he or she has a right
to vote, or to cumulate the votes by giving one candidate as many votes as the
number of such Class A Directors multiplied by the aggregate number of votes
shall equal, or by distributing such votes on the same principle among any
number of such candidates. All of the holders of Class B Common Stock that are
entitled to vote at an election of Class B Directors shall have the right to
vote, in person or by proxy, the number of shares of Class B Common Stock owned
by him or her for as many persons as there are Class B Directors to be elected
and for whose election he or she has a right to vote, but in no event shall he
or she be permitted to cumulate his or her votes for one or more Class B
Directors.
(e) Any vacancy in the office of a class of director may be filled by the
remaining directors of such class, unless such vacancy occurred because of the
removal (with or without cause) of a director or all offices of a class of
directors are vacant, in which event such vacancy or vacancies shall be filled
by the affirmative vote of the holders of a majority of the outstanding
5
shares of the applicable class of Common Stock. Any or all of the directors may
be removed, with or without cause, by vote or by written consent in each case in
accordance with Section 141 of the DGCL by the holders of the applicable class
of Common Stock and not otherwise. Any director elected to fill a vacancy shall
serve the same remaining term as that of his or her predecessor, subject,
however, to prior death, resignation, retirement, disqualification, or removal
from office.
(f) Without the affirmative vote of the holders of at least 66 2/3% of the
outstanding shares of the Class B Common Stock, the Corporation may not effect
any change in the rights, privileges or preferences of the Class B Common Stock.
This provision shall not be applicable to any amendment to this Restated
Certificate of Incorporation or adoption of resolutions of the Board of
Directors which establishes or designates one or more classes or series of
Preferred Stock in accordance with Article FOURTH, Division A.
(g) With respect to actions by the holders of Class B Common Stock upon
those matters on which such holders are entitled to vote as a separate class,
such actions may be taken without a stockholders meeting, and without any action
by the holders of Class A Common Stock if no approval or action by the holders
of Class A Common Stock is required pursuant to this Restated Certificate of
Incorporation either voting as a separate class or together with the holders of
Class B Common Stock acting as a single class, by the written consent of holders
of the Class B Common Stock who would be entitled to vote at a meeting those
shares having voting power to cast not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares of Class B Common Stock entitled to vote were present and voted.
Notice shall be given in accordance with the applicable provisions of the DGCL
of the taking of corporate action without a meeting by less than unanimous
written consent to those holders of Class B Common Stock on the record date
whose shares were not represented on the written consent.
3. Transfer.
(a) If any person holding shares of Class B Common Stock of record (a
"Class B Holder") purports to transfer such shares of Class B Common Stock,
whether by sale, assignment, gift, bequest or otherwise, except to a Permitted
Transferee, such transfer shall be deemed to constitute a request by the Class B
Holder for conversion of such shares and shall result in such shares being
converted into Class A Common Stock as provided by Section 4 of this Article
FOURTH, Division B.
(b) In the case of a Class B Holder acquiring record and beneficial
ownership of the shares of Class B Common Stock in question upon initial
issuance by the Corporation (an "Original Holder"), a "Permitted Transferee"
shall mean any Affiliate (as defined below) of such Original Holder.
In the case of a Class B Holder which is a Permitted Transferee of an
Original Holder, a "Permitted Transferee" shall mean:
(y) any Original Holder, or
(z) any Permitted Transferee of any Original Holder.
6
For this paragraph and Section 4 of this Article FOURTH, Division B,
"Affiliate" means any corporation, partnership, limited liability company or
other entity (each, a "Person") that directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
another Person, and includes any Person acting in concert with another Person.
(c) With respect to a Class B Holder which holds shares by virtue of its
status as an Affiliate, the subsequent loss of Affiliate status shall, unless
within 15 days thereafter all shares of Class B Common Stock held by such Class
B Holder are transferred to an Original Holder or a Permitted Transferee of an
Original Holder, result in the automatic conversion of all of its shares of
Class B Common Stock into shares of Class A Common Stock, and stock certificates
formerly representing such shares of Class B Common Stock shall thereupon and
thereafter be deemed to represent shares of Class A Common Stock as provided by
Section 4 of this Article FOURTH, Division B.
(d) Any transfer of shares of Class B Common Stock not permitted hereunder
shall result in the conversion of the transferee's shares of Class B Common
Stock into shares of Class A Common Stock as provided by Section 4 of this
Article FOURTH, Division B, effective as of the date on which certificates
representing such shares are presented for transfer on the books of the
Corporation or on such earlier date that the Corporation receives notice of such
attempted transfer. The Corporation may, in connection with preparing a list of
stockholders entitled to vote at any meeting of stockholders, or as a condition
to the transfer or the registration of shares of Class B Common Stock on the
Corporation's books, require the furnishing of such affidavits or other proof as
it deems necessary to establish that the person is the beneficial owner of
shares of Class B Common Stock or is a Permitted Transferee.
(e) Shares of Class B Common Stock shall be registered in the names of the
beneficial owners thereof and not in "street" or "nominee" name. For this
purpose, a "beneficial owner" of any shares of Class B Common Stock shall mean a
person who, or any entity which, possesses the powers, either singly or jointly,
to direct the voting or disposition of such shares. Certificates for shares of
Class B Common Stock shall bear the following legend:
The rights, preferences and limitations of the Class B Common Stock
represented by this certificate are specified in and governed by the
Restated Certificate of Incorporation of Stanford, Inc., a Delaware
corporation (the "Corporation"), which has been filed with the
Secretary of State of the State of Delaware, and the Corporation's
Bylaws. This certificate is transferable only in the circumstances
described and upon compliance with the conditions specified in the
Corporation's Restated Certificate of Incorporation and Bylaws. A copy
of the Corporation's Restated Certificate of Incorporation and Bylaws
is available from the Corporation without charge to the record holder
of this certificate upon written request to the Corporation at its
principal place of business or record office.
7
4. Conversion.
(a) Each share of Class B Common Stock shall be converted at such time, in
such manner and upon such terms and conditions as provided herein into one fully
paid and non-assessable share of Class A Common Stock.
(b) Each share of Class B Common Stock shall automatically convert into a
share of Class A Common Stock (x) at such time as the holders of all Class B
Common Stock cease to own in the aggregate 15% of the issued and outstanding
Common Stock, or (y) at such earlier time as provided in Section 3 of this
Article FOURTH, Division B. Upon automatic conversion of shares of Class B
Common Stock, the Corporation shall reflect such conversion, and the issuance of
Class A Common Stock in connection therewith on its books and records for all
purposes even if certificates reflecting such converted shares of Class B Common
Stock are not surrendered to the Corporation or its transfer agent. All shares
of Class B Common Stock, upon conversion thereof into Class A Common Stock,
shall retain their designation as Class B Common Stock and shall have the status
of authorized and unissued shares of Class B Common Stock; provided that if all
shares of Class B Common Stock outstanding are converted into shares of Class A
Common Stock, then all authorized but unissued shares or treasury shares of
Class B Common Stock shall automatically convert into authorized but unissued or
treasury shares of Class A Common Stock, as the case may be, and no further
shares of Class B Common Stock shall exist. Except as specifically contemplated
under this Section 4, shares of Class B Common Stock may not be converted into
Class A Common Stock.
(c) Each share of Class A Common Stock beneficially owned (within the
meaning of Section 3 of this Article FOURTH, Division B) by Chevron U.S.A. Inc.,
a Pennsylvania corporation ("Chevron"), or its Affiliates shall simultaneous
with Chevron or its Affiliate acquiring such ownership automatically be
converted into one fully paid and non-assessable share of Class B Common Stock;
provided, however, that for purposes of any shares of Class B Common Stock so
issued, only Chevron will be deemed to be the Original Holder thereof for
purposes of the provisions of Section 3 of this Article FOURTH, Division B, and
provided, further, that this provision shall not apply with respect to shares of
Class A Common Stock issued upon conversion of all Class B Common Stock in
accordance with part (x) of the first sentence of paragraph (b) of this Section
4, or any shares of Class A Common Stock owned by Chevron or its Affiliates,
after such conversion shall have occurred. Upon automatic conversion of shares
of Class A Common Stock, the Corporation shall reflect such conversion and the
issuance of Class B Common Stock in connection therewith on its books and
records for all purposes even if certificates reflecting such converted shares
of Class A Common Stock are not surrendered to the Corporation for transfer. All
shares of Class B Common Stock shall be subject to the restrictions and
provisions contained in this Restated Certificate of Incorporation. All shares
of Class A Common Stock, upon conversion thereof into Class B Common Stock,
shall retain their designation as Class A Common Stock and shall have the status
of authorized and unissued shares of Class A Common Stock.
(d) Nothing herein shall prevent the Original Holder (or any Permitted
Transferee) of the Class B Common Stock and the Corporation from executing an
agreement allowing the Original Holder (or any Permitted Transferee), at its
option, to convert the Class B Common Stock into Class A Common Stock, nor the
conversion of any Class B Common Stock pursuant to such agreement.
8
(e) The Corporation will, as soon as practicable after such deposit of a
certificate or certificates for Common Stock to be converted in accordance with
this Section 4, issue and deliver at the office of the Corporation or of its
transfer agent to the person for whose account such Common Stock was so
surrendered, a certificate or certificates for the number of full shares of
Common Stock into which the shares represented by the surrendered certificate
are converted. If surrendered certificates for Common Stock are converted only
in part, the Corporation will issue and deliver to the holder, without charge
therefor, a new certificate or certificates representing the aggregate of the
unconverted shares of such class of Common Stock. The failure of the holder to
deliver to the Corporation certificates representing shares of a class of Common
Stock converted in accordance with this Section 4, shall in no way affect the
automatic conversion of such shares.
(f) The issuance of certificates for shares of a class of Common Stock upon
conversion of shares of the other class of Common Stock shall be made without
charge for any issue, stamp or other similar tax in respect of such issuance;
provided, however, if any such certificate is to be issued in a name other than
that of the holder of the share or shares of the class of Common Stock
converted, the person or persons requesting the issuance thereof shall pay to
the Corporation the amount of any tax which may be payable in respect of any
transfer involved in such issuance or shall establish to the satisfaction of the
Corporation that such tax has been paid.
(g) The Corporation shall at all times reserve and keep available, solely
for the purpose of issuance upon conversion of the outstanding shares of Class B
Common Stock, such number of shares of Class A Common Stock as shall be issuable
upon the conversion of all such outstanding shares, provided that nothing
contained herein shall be construed to preclude the Corporation from satisfying
the obligations in respect of the conversion of the outstanding shares of Class
B Common Stock by delivery of shares of Class A Common Stock which are held in
the treasury of the Corporation. The Corporation shall take all such corporate
and other actions as from time to time may be necessary to insure that all
shares of Class A Common Stock issuable upon conversion of shares of Class B
Common Stock upon issue will be duly and validly authorized and issued, fully
paid and nonassessable and free of any preemptive or similar rights. In order
that the Corporation may issue shares of Class A Common Stock upon conversion of
the Class B Common Stock, the Corporation will endeavor to comply with all
applicable Federal and state securities laws and will endeavor to list such
shares to be issued upon conversion on such securities exchange on which the
Class A Common Stock is then listed.
(h) The Corporation shall at all times reserve and keep available, solely
for the purpose of issuance upon conversion of the outstanding shares of Class A
Common Stock a number of shares of Class B Common Stock equal to 40% of the
number of outstanding shares of Class A Common Stock, provided that nothing
contained herein shall be construed to preclude the Corporation from satisfying
the obligations in respect of the conversion of the outstanding shares of Class
A Common Stock by delivery of shares of Class B Common Stock which are held in
the treasury of the Corporation. The Corporation shall take all such corporate
and other actions as from time to time may be necessary to insure that all
shares of Class B Common Stock issuable upon conversion of shares of Class A
Common Stock upon issue will be duly and validly authorized and issued, fully
paid and nonassessable and free of any preemptive or similar rights. In order
that the Corporation may issue shares of Class B Common Stock upon
9
conversion of the Class A Common Stock, the Corporation will endeavor to comply
with all applicable Federal and state securities laws.
5. Distribution of Assets. In the event of any liquidation, dissolution or
winding up of the Corporation, or any reduction or decrease of its capital stock
resulting in a distribution of assets to the holders of the Common Stock, after
there shall have been paid to or set aside for the holders of the stock ranking
senior to the Common Stock the full preferential amounts to which they are
respectively entitled, the holders of the Common Stock shall be entitled to
receive, pro rata, all of the remaining assets of the Corporation available for
distribution to its stockholders.
6. Entire Designations. Except as may otherwise be required by law and for
the equitable rights and remedies which may otherwise be available to holders of
Common Stock, the shares of Common Stock shall not have any designations,
preferences, limitations or relative rights, other than those specifically set
forth in this Restated Certificate of Incorporation.
7. Headings. The headings of the various subdivisions of this Division B
are for convenience of reference only and shall not affect the interpretation of
any of the provisions of this Section.
FIFTH: Directors. The business and affairs of the Corporation shall be
managed by or under the direction of the Board of Directors. In addition to the
authority and powers conferred on the Board of Directors by the DGCL or by the
other provisions of this Restated Certificate of Incorporation, the Board of
Directors is authorized and empowered to exercise all such powers and do all
such acts and things as may be exercised or done by the Corporation, subject to
the provisions of the DGCL, this Restated Certificate of Incorporation and the
Bylaws of the Corporation; provided, however, that no Bylaws hereafter adopted,
or any amendments thereto, shall invalidate any prior act of the Board of
Directors that would have been valid if such Bylaws or amendment had not been
adopted.
SIXTH: Action by Written Consent; Special Meetings. Except as
contemplated by Section 2(g) of Article FOURTH, Division B of this Restated
Certificate of Incorporation, no action required to be taken or that may be
taken at any annual or special meeting of the stockholders of the Corporation
may be taken without a meeting, and the power of the stockholders of the
Corporation to consent in writing to the taking of any action by written consent
without a meeting is specifically denied. Unless otherwise provided by the DGCL,
by this Restated Certificate of Incorporation or by any provisions established
pursuant to Article FOURTH hereof with respect to the rights of holders of one
or more outstanding series of Preferred Stock, special meetings of the
stockholders of the Corporation may be called at any time only by the Chairman
of the Board of Directors, the President, the Chief Executive Officer of the
Corporation, by the Board of Directors pursuant to a resolution approved by the
affirmative vote of at least a majority of the members of the Board of
Directors, or by any holder or holders of at least 20% of the outstanding shares
of Common Stock entitled to vote on the matter for which the meeting is called,
and no such special meeting may be called by any other person or persons.
SEVENTH: No director of the Corporation shall be personally liable to
the Corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a
10
director of the Corporation; provided, however, that this Article SEVENTH shall
not eliminate or limit the liability of such a director (1) for any breach of
such director's duty of loyalty to the Corporation or its stockholders, (2) for
acts or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (3) under Section 174 of the DGCL, as the same exists
or as such provision may hereafter be amended, supplemented or replaced, or (4)
for any transactions from which such director derived an improper personal
benefit. If the DGCL is amended after the filing of this Restated Certificate of
Incorporation to authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director of the
Corporation, in addition to the limitation on personal liability provided
herein, shall be limited to the fullest extent permitted by such law, as so
amended. Any repeal or modification of this Article SEVENTH by the stockholders
of the Corporation shall be prospective only, and shall not adversely affect any
limitation on the personal liability of a director of the Corporation existing
at the time of such repeal or modification.
EIGHTH: Subject to the provisions of this Restated Certificate of
Incorporation, the Bylaws may be altered, amended or repealed, and new Bylaws
may be adopted, by the board of directors; provided that no amendment or repeal
of (a) the last sentence of Section 3 of Article III of the Bylaws, and (b)
Sections 6, 7(b), 7(c), 9 and 10 of Article III of the Bylaws, nor the adoption
of any provision of the Bylaws which would substantially and adversely affect
the rights of the holders of Class B Common Stock, shall be effective except
upon the affirmative vote of a majority of the shares of Class B Common Stock
outstanding, voting as a separate class.
IN WITNESS WHEREOF, the Corporation has caused the Restated Certificate
of Incorporation to be signed and attested by its duly authorized officers, this
____ day of _______, 2001.
STANFORD, INC.
By:
-------------------------------------
Name:
--------------------------------
Title:
-------------------------------
11
EXHIBIT 2.1(b)
AMENDED AND RESTATED BYLAWS
OF
STANFORD, INC.
Adopted and Amended by Resolution of the Board of Directors on
__________ ___, 2001
ARTICLE I
CAPITAL STOCK
Section 1. Share Ownership. Shares for the capital stock of the Company
shall be certificated; provided, however, that the Board of Directors of the
Company may provide by resolution or resolutions that some or all of any or all
classes or series of the Company's stock may be uncertificated shares. Owners of
shares of the capital stock of the Company shall be recorded in the share
transfer records of the Company and ownership of such shares shall be evidenced
by a certificate or book entry notation in the share transfer records of the
Company. Any certificates representing such shares shall be signed by the
Chairman of the Board, if there is one, the President or a Vice President and by
the Treasurer, an Assistant Treasurer, the Corporate Secretary or an Assistant
Corporate Secretary and shall be sealed with the seal of the Company, which
signatures and seal may be facsimiles. In case any officer who has signed or
whose facsimile signature has been placed upon such certificate shall have
ceased to be such officer before such certificate is issued, it may be issued by
the Company with the same effect as if such person were such officer at the date
of its issuance.
Section 2. Stockholders of Record. The Board of Directors of the
Company may appoint one or more transfer agents or registrars of any class of
stock or other security of the Company. The Company may be its own transfer
agent if so appointed by the Board of Directors. The Company shall be entitled
to treat the holder of record of any shares of the Company as the owner thereof
for all purposes, and shall not be bound to recognize any equitable or other
claim to, or interest in, such shares or any rights deriving from such shares,
on the part of any other person, including (but without limitation) a purchaser,
assignee or transferee, unless and until such other person becomes the holder of
record of such shares, whether or not the Company shall have either actual or
constructive notice of the interest of such other person.
Section 3. Transfer of Shares. The shares of the capital stock of the
Company shall be transferable in the share transfer records of the Company by
the holder of record thereof, or his duly authorized attorney or legal
representative in accordance with the Restated Certificate of Incorporation of
the Company and applicable law, upon presentation to the Company or to its
transfer agent (if any) of a duly executed assignment and other evidence of
authority to transfer, or proper evidence of succession, and, if the shares are
represented by a certificate, a duly endorsed certificate or certificates for
shares surrendered for cancellation, and with such proof of the authenticity of
the signatures as the corporation or its transfer agent may reasonably require.
All certificates representing shares surrendered for transfer, properly
endorsed, shall be canceled and new certificates for a like number of shares
shall be issued therefor. In the case of lost,
stolen, destroyed or mutilated certificates representing shares for which the
Company has been requested to issue new certificates, new certificates or other
evidence of such new shares may be issued upon such conditions as may be
required by the Board of Directors or the Corporate Secretary or an Assistant
Corporate Secretary for the protection of the Company and any transfer agent or
registrar. Uncertificated shares shall be transferred in the share transfer
records of the Company upon the written instruction originated by the
appropriate person to transfer the shares.
Section 4. Stockholders of Record and Fixing of Record Date. Except as
otherwise required by applicable law, for the purpose of determining
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, or entitled to receive a distribution by the Company
(other than a distribution involving a purchase or redemption by the Company of
any of its own shares) or a share dividend, or in order to make a determination
of stockholders for any other proper purpose, the Board of Directors may fix in
advance a record date for any such determination of stockholders, such date to
be not more than sixty days, and in the case of a meeting of stockholders not
less than ten days, prior to the date on which the particular action requiring
such determination of stockholders is to be taken. If no record date is fixed
for the determination of stockholders entitled to notice of or to vote at a
meeting of stockholders, or stockholders entitled to receive a distribution
(other than a distribution involving a purchase or redemption by the Company of
any of its own shares) or a share dividend, the day next preceding the date on
which notice of the meeting is mailed or the date on which the resolution of the
Board of Directors declaring such distribution or share dividend is adopted, as
the case may be, shall be the record date for such determination of
stockholders. When a determination of stockholders entitled to vote at any
meeting of stockholders has been made as herein provided, such determination
shall apply to any adjournment thereof except where the determination has been
made through the closing of the share transfer records and the stated period of
closing has expired.
ARTICLE II
Meetings of Stockholders
Section 1. Place of Meetings. All meetings of stockholders shall be
held at the principal office of the Company, in the City of Houston,
Texas, or
at such other place within or without the State of Delaware as may be designated
by the Board of Directors or officer calling the meeting.
Section 2. Annual Meeting. The annual meeting of the stockholders shall
be held on such date and at such time as shall be designated from time to time
by the Board of Directors or as may otherwise be stated in the notice of the
meeting.
Section 3. Special Meetings. Special meetings of the stockholders of
the Company may be called at any time only by the Chairman of the Board, if
there is one, the President and Chief Executive Officer of the Company, by the
Board of Directors pursuant to a resolution approved by the affirmative vote of
at least a majority of the members of the Board of Directors, or by any holder
or holders of at least 20% of the outstanding shares entitled to vote on the
matter for which the meeting is called, and no such special meeting may be
called by any other person or persons.
Page 2 of 20
Section 4. Notice of Meeting. Except as otherwise required by
applicable law, written or printed notice of all meetings stating the place, day
and hour of the meeting and, in case of a special meeting, the purpose or
purposes for which the meeting is called, shall be delivered not less than ten
nor more than sixty days before the date of the meeting, either personally or by
mail, by or at the direction of the Chairman of the Board, if there is one, the
Chief Executive Officer, if there is one, the President, the Corporate Secretary
or the officer or person calling the meeting to each stockholder of record
entitled to vote at such meetings. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail, postage prepaid, addressed
to the stockholder at his address as it appears on the share transfer records of
the Company, with postage thereon prepaid.
Section 5. Voting List. The officer or agent having charge of the share
transfer records for shares of the Company shall make, at least ten days before
each meeting of stockholders, a complete list of the stockholders entitled to
vote at such meeting or any adjournment thereof, arranged in alphabetical order,
with the address of and the number of shares held by each, which list, for a
period of ten days prior to such meeting, shall be kept on file at the principal
place of business of the Company and shall be subject to inspection by any
stockholder at any time during usual business hours. Such list shall also be
produced and kept open at the time and place of the meeting and shall be subject
to the inspection of any stockholder during the whole time of the meeting. The
original share transfer records shall be prima facie evidence as to who are the
stockholders entitled to examine such list or to vote at any meeting of
stockholders. Failure to comply with any requirements of this Section 5 shall
not affect the validity of any action taken at such meeting.
Section 6. Quorum and Vote of Stockholders. Except as otherwise
provided by law, the Restated Certificate of Incorporation of the Company or
these Bylaws, the holders of a majority of shares entitled to vote, represented
in person or by proxy, shall constitute a quorum at a meeting of stockholders,
but, if a quorum is not represented, a majority in interest of those represented
may adjourn the meeting from time to time. With respect to each matter other
than the election of directors as to which no other voting requirement is
specified by law, the Restated Certificate of Incorporation of the Company or in
this Section 6, the affirmative vote of the holders of a majority of the shares
entitled to vote on that matter and represented in person or by proxy at a
meeting at which a quorum is present shall be the act of the stockholders. With
respect to a matter submitted to a vote of the stockholders as to which a
stockholder approval requirement is applicable under the stockholder approval
policy of the New York Stock Exchange, Rule 16b-3 under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), or any provision of the Internal
Revenue Code, in each case for which no higher voting requirement is specified
by law, the Restated Certificate of Incorporation of the Company or these
Bylaws, the affirmative vote of the holders of a majority of the shares entitled
to vote on, and voted for or against, that matter at a meeting at which a quorum
is present shall be the act of the stockholders, provided that approval of such
matter shall also be conditioned on any more restrictive requirement of such
stockholder approval policy, Rule 16b-3 or Internal Revenue Code provision, as
applicable, being satisfied. With respect to the approval of independent public
accountants (if submitted for a vote of the stockholders), the affirmative vote
of the holders of a majority of the shares entitled to vote on, and voted for or
against, that matter at a meeting of stockholders at which a quorum is present
shall be the act of the stockholders.
Page 3 of 20
Section 7. Presiding Officer and Conduct of Meetings. The Chairman of
the Board, if there is one, or in his absence, the Chief Executive Officer, if
there is one, or in his absence, the President shall preside at all meetings of
the stockholders or, if such officers are not present at a meeting, by such
other person as the Board of Directors shall designate or if no such person is
designated by the Board of Directors, the most senior officer of the Company
present at the meeting. The Corporate Secretary of the Company, if present,
shall act as secretary of each meeting of stockholders; if he is not present at
a meeting, then such person as may be designated by the presiding officer shall
act as secretary of the meeting. Meetings of stockholders shall follow
reasonable and fair procedure. Subject to the foregoing, the conduct of any
meeting of stockholders and the determination of procedure and rules shall be
within the absolute discretion of the officer presiding at such meeting (the
"Chairman of the Meeting"), and there shall be no appeal from any ruling of the
Chairman of the Meeting with respect to procedure or rules. Accordingly, in any
meeting of stockholders or part thereof, the Chairman of the Meeting shall have
the sole power to determine appropriate rules or to dispense with theretofore
prevailing rules. Without limiting the foregoing, the following rules shall
apply:
(a) If disorder should arise which prevents continuation of
the legitimate business of meeting, the Chairman of the Meeting may
announce the adjournment of the meeting; and upon so doing, the meeting
shall be immediately adjourned.
(b) The Chairman of the Meeting may ask or require that anyone
not a bona fide stockholder or proxy leave the meeting.
(c) A resolution or motion proposed by a stockholder shall
only be considered for vote of the stockholders if it meets the
criteria of Article II, Section 8 (Proper Business--Annual Meeting of
Stockholders) or Article II, Section 9 (Proper Business--Special
Meeting of Stockholders), as the case may be. The Chairman of the
Meeting may propose any resolution or motion for vote of the
stockholders.
(d) The order of business at all meetings of stockholders
shall be determined by the Chairman of the Meeting.
(e) The Chairman of the Meeting may impose any reasonable
limits with respect to participation in the meeting by stockholders,
including, but not limited to, limits on the amount of time taken up by
the remarks or questions of any stockholder, limits on the number of
questions per stockholder and limits as to the subject matter and
timing of questions and remarks by stockholders.
(f) Before any meeting of stockholders, the Board of Directors
(i) shall appoint three persons other than nominees for office to act
as inspectors of election at the meeting or its adjournment and (ii)
may designate one or more alternate inspectors to replace any inspector
who fails to act. If no inspector or alternate is able to act at a
meeting of stockholders, the Chairman of the Meeting shall appoint one
or more, up to a maximum of three, inspectors of election to act at the
meeting of the stockholders.
Page 4 of 20
The duties of the inspectors shall be to:
(i) determine the number of shares outstanding and the
voting power of each such share, the shares represented at the
meeting, the existence of a quorum, and the authenticity,
validity and effect of proxies and ballots;
(ii) receive votes or ballots;
(iii) hear and determine all challenges and questions in
any way arising in connection with the vote and retain for a
reasonable period a record of the disposition of any
challenges made to any determination by the inspectors;
(iv) count and tabulate all votes and ballots;
(v) report and certify to the Board of Directors the
results based on the information assembled by the inspectors;
and
(vi) do any other acts that may be proper to conduct the
election or vote with fairness to all stockholders.
(g) Each inspector of election, before entering upon the
discharge of the duties of inspector, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality
and according to the best of such inspector's ability.
(h) In determining the validity and counting of proxies and
ballots, the inspectors of election shall be limited to an examination
of the items specifically allowed by Section 231(d) of the DGCL.
All determinations of the Chairman of the Meeting shall be conclusive
unless a matter is determined otherwise upon motion duly adopted by the
affirmative vote of the holders of at least 662/3 % of the voting power of the
shares of capital stock of the Company entitled to vote in the election of
directors held by stockholders present in person or represented by proxy at such
meeting.
Section 8. Proper Business--Annual Meeting of Stockholders. At any
annual meeting of stockholders, only such business shall be conducted as shall
be a proper subject for the meeting and shall have been properly brought before
the meeting. To be properly brought before an annual meeting of stockholders,
business (other than business relating to any nomination of directors, which is
governed by Article III, Section 3 of these Bylaws) must (a) be specified in the
notice of such meeting (or any supplement thereto) given by or at the direction
of the Board of Directors (or any duly authorized committee thereof), (b)
otherwise be properly brought before the meeting by or at the direction of the
Chairman of the Meeting or the Board of Directors (or any duly authorized
committee thereof) or (c) otherwise (i) be properly requested to be brought
before the meeting by a stockholder of record entitled to vote in the election
of directors generally, in compliance with the provisions of this Section 8 and
(ii) constitute a proper subject to be brought before such meeting. For business
to be properly brought before an annual meeting of stockholders, any stockholder
who intends to bring any matter (other than a matter relating to any nomination
of directors, which is governed by Article III, Section 3 of these Bylaws)
before an annual meeting of stockholders and is entitled to vote on such matter
must deliver written notice of such stockholder's intent to bring such matter
before the annual
Page 5 of 20
meeting of stockholders, either by personal delivery or by United States mail,
postage prepaid, to the Corporate Secretary of the Company. Such notice must be
received by the Corporate Secretary not less than ninety days nor more than 180
days prior to the date on which the immediately preceding year's annual meeting
of stockholders was held. In no event shall the public disclosure of an
adjournment of an annual meeting of stockholders commence a new time period for
the giving of a stockholder's notice as described above.
To be in proper written form, a stockholder's notice to the Corporate
Secretary shall set forth as to each matter the stockholder proposes to bring
before the annual meeting of stockholders (a) a brief description of the
business desired to be brought before the meeting and the reasons for conducting
such business at the meeting, (b) the name and address, as they appear on the
Company's books and records, of the stockholder proposing such business, (c)
evidence, reasonably satisfactory to the Corporate Secretary of the Company, of
such stockholder's status as such and of the number of shares of each class of
capital stock of the Company of which such stockholder is the beneficial owner,
(d) a description of all arrangements or understandings between such stockholder
and any other person or persons (including their names and the number of shares
beneficially owned by them) in connection with the proposal of such business by
such stockholder and any material interest of such stockholder in such business
and (e) a representation that such stockholder intends to appear in person or by
proxy at the annual meeting to bring such business before the meeting. No
business shall be conducted at an annual meeting of stockholders except in
accordance with the procedures set forth in this Section 8. Beneficial ownership
shall be determined in accordance with Rule 13d-3 under the Exchange Act. When
used in these Bylaws, "person" has the meaning ascribed to such term in Section
2(a)(2) of the Securities Act of 1933, as amended, as the context may require.
Within thirty days after such stockholder shall have submitted the
aforesaid items, the Corporate Secretary or the Board of Directors of the
Company shall determine whether the proposed business has been properly
requested to be brought before the annual meeting of stockholders and shall
notify such stockholder in writing of its determination. If such stockholder
fails to submit a required item in the form or within the time indicated, or if
the Corporate Secretary or the Board of Directors of the Company determines that
the proposed business otherwise has not been properly requested, then such
proposal by such stockholder shall not be voted upon by the stockholders of the
Company at such annual meeting of stockholders. The Chairman of the Meeting
shall, if the facts warrant, determine and declare to the meeting that a
proposal made by a stockholder of the Company pursuant to this Section 8 was not
made in accordance with the procedures prescribed by these Bylaws, and if he
should so determine, he shall so declare to the meeting and the defective
proposal shall be disregarded.
Nothing in this Section 8 shall be interpreted or construed to require
the inclusion of information about any such proposal in any proxy statement
distributed by, at the direction of, or on behalf of the Board of Directors of
the Company.
Section 9. Proper Business--Special Meeting of Stockholders. At any
special meeting of stockholders, only such business shall be conducted as shall
have been stated in the notice of such meeting or shall otherwise have been
properly brought before the meeting by or at the direction of the Chairman of
the Meeting or the Board of Directors (or any duly authorized committee
thereof).
Page 6 of 20
Section 10. Action by Written Consent. Except as set forth otherwise in
the Restated Certificate of Incorporation of the Company, no action required to
be taken or that may be taken at any annual or special meeting of the
stockholders of the Company may be taken without a meeting, and the power of the
stockholders of the Company to consent in writing to the taking of any action by
written consent without a meeting is specifically denied.
ARTICLE III
Directors
Section 1. General. The business and affairs of the Company shall be
managed by or under the direction of the Board of Directors.
Section 2. Number; Term. The number of directors which shall constitute
the whole Board of Directors shall be fixed in the manner provided in the
Restated Certificate of Incorporation of the Company. Except as otherwise
provided in the Restated Certificate of Incorporation of the Company or
applicable law, in the event of any change in the authorized number of
directors, each director then continuing to serve as such shall nevertheless
continue as a director until the expiration of his or her current term, or his
or her prior death, resignation, disqualification or removal. No decrease in the
number of directors constituting the Board of Directors shall shorten the term
of any incumbent director.
Each director elected by the holders of Preferred Stock pursuant to
Division A of Article FOURTH of the Restated Certificate of Incorporation of the
Company (or elected by such directors to fill a vacancy) shall serve for a term
ending upon the earlier of the election of his successor or the termination at
any time of a right of the holders of Preferred Stock to elect members of the
Board of Directors.
The above qualifications and limitations notwithstanding, each director
shall serve until his successor shall have been duly elected and qualified,
unless he or she shall resign, become disqualified, disabled or shall otherwise
be removed.
Section 3. Nomination of Directors. Nominations for the election of
directors may be made by the Board of Directors or by any stockholder (each, a
"Nominator") entitled to vote in the election of directors. Such nominations,
other than those made by the Board of Directors, shall be made in writing
pursuant to timely notice delivered to or mailed and received by the Corporate
Secretary of the Company as set forth in this Section 3. To be timely in
connection with an annual meeting of stockholders, a Nominator's notice, setting
forth the name and address of the person to be nominated, shall be delivered to
or mailed and received at the principal executive offices of the Company not
less than 90 days nor more than 180 days prior to the date on which the
immediately preceding year's annual meeting of stockholders was held. To be
timely in connection with any election of a director at a special meeting of the
stockholders, a Nominator's notice, setting forth the name of the person to be
nominated, shall be delivered to or mailed and received at the principal
executive offices of the Company not less than forty days nor more than sixty
days prior to the date of such meeting; provided, however, that in the event
that less than forty-seven days' notice or prior public disclosure of the date
of the special meeting
Page 7 of 20
of the stockholders is given or made to the stockholders, the Nominator's notice
to be timely must be so received not later than the close of business on the
seventh day following the day on which such notice of date of the meeting was
mailed or such public disclosure was made. At such time, the Nominator shall
also submit written evidence, reasonably satisfactory to the Corporate Secretary
of the Company, that the Nominator is a stockholder of the Company and shall
identify in writing (a) the name and address of the Nominator, (b) the number of
shares of each class of capital stock of the Company owned beneficially by the
Nominator, (c) the name and address of each of the persons with whom the
Nominator is acting in concert, (d) the number of shares of capital stock
beneficially owned by each such person with whom the Nominator is acting in
concert and (e) a description of all arrangements or understandings between the
Nominator and each nominee and any other persons with whom the Nominator is
acting in concert pursuant to which the nomination or nominations are to be
made. At such time, the Nominator shall also submit in writing (i) the
information with respect to each such proposed nominee that would be required to
be provided in a proxy statement prepared in accordance with Regulation 14A
under the Exchange Act and (ii) a notarized affidavit executed by each such
proposed nominee to the effect that, if elected as a member of the Board of
Directors, he will serve and that he is eligible for election as a member of the
Board of Directors. Within thirty days (or such shorter time period that may
exist prior to the date of the meeting) after the Nominator has submitted the
aforesaid items to the Corporate Secretary of the Company, the Corporate
Secretary of the Company shall determine whether the evidence of the Nominator's
status as a stockholder submitted by the Nominator is reasonably satisfactory
and shall notify the Nominator in writing of his determination. The failure of
the Corporate Secretary of the Company to find such evidence reasonably
satisfactory, or the failure of the Nominator to submit the requisite
information in the form or within the time indicated, shall make the person to
be nominated ineligible for nomination at the meeting at which such person is
proposed to be nominated. The Chairman of the Meeting shall, if the facts
warrant, determine and declare to the meeting that a nomination was not made in
accordance with the procedures prescribed by these Bylaws, and if he should so
determine, he shall so declare to the meeting and the defective nomination shall
be disregarded. Beneficial ownership shall be determined in accordance with Rule
13d-3 under the Exchange Act.
No provision of this Section 3 shall apply to the election of any Class
B Director (as defined in the Restated Certificate of Incorporation).
Section 4. Place of Meetings and Meetings by Telephone. Meetings of the
Board of Directors may be held either within or without the State of Delaware,
at whatever place is specified by the officer calling the meeting. Meetings of
the Board of Directors may also be held by means of conference telephone or
other communications equipment by means of which all persons participating in
the meeting can hear each other. Participation in such a meeting by means of
conference telephone or other communications equipment shall constitute presence
in person at such meeting, except where a director participates in a meeting for
the express purpose of objecting to the transaction of any business on the
ground that the meeting is not lawfully called or convened. In the absence of
specific designation by the officer calling the meeting, the meetings shall be
held at the principal office of the Company.
Section 5. Regular Meetings. The Board of Directors shall meet each
year immediately following the annual meeting of the stockholders for the
transaction of such business as may
Page 8 of 20
properly be brought before the meeting. The Board of Directors shall also meet
regularly at such other times as shall be designated by the Board of Directors.
No notice of any kind to either existing or newly elected members of the Board
of Directors for such annual or regular meetings shall be necessary.
Section 6. Special Meetings. Special meetings of the Board of Directors
may be held at any time upon the call of the Chairman of the Board, if there is
one, the Chief Executive Officer, if there is one, the President or the
Corporate Secretary of the Company or any three of the directors then in office.
Notice of any special meeting shall be given: (i) at least five days prior
thereto if the notice is given personally or by an electronic transmission, (ii)
at least five business days prior thereto if the notice is given by having it
delivered by a third party entity that provides delivery services in the
ordinary course of business and guarantees delivery of the notice to the
director no later than the following business day, and (iii) at least seven
business days prior thereto if the notice is given by mail. Notice of any
meeting where any actions described in Section 7(b) of this Article III will be
considered shall be given to Class B Directors at least 30 days before the vote
on any such action and shall set forth the material terms thereof. For this
purpose, the term "electronic transmission" may include, but shall not be
limited to, a facsimile, email or other electronic means. Notice shall be
delivered to the director's business address and/or telephone number and shall
be deemed given upon electronic transmission, upon delivery to the third party
delivery service, or upon being deposited in the United States mail with postage
thereon prepaid. Notice of the time, place and purpose of any special meeting
may be waived in writing before or after such meeting, and shall be equivalent
to the giving of notice. Attendance of a director at such meeting shall also
constitute a waiver of notice thereof, except where he attends for the express
purpose of objecting to the transaction of any business on the ground that the
meeting is not lawfully called or convened. Except as otherwise provided by
these Bylaws, neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the Board of Directors need be specified in the
notice or waiver of notice of such meeting.
Section 7. Quorum and Voting
(a) Except as otherwise provided by applicable law, a majority
of the number of directors fixed in the manner provided in the Restated
Certificate of Incorporation of the Company shall constitute a quorum
for the transaction of business. Except as otherwise provided by law,
the Restated Certificate of Incorporation of the Company or these
Bylaws, the affirmative vote of a majority of the directors present at
any meeting at which there is a quorum shall be the act of the Board of
Directors. Any regular or special directors' meeting may be adjourned
from time to time by those present, whether a quorum is present or not.
(b) Notwithstanding anything to the contrary herein, so long
as any shares of Class B Common Stock of the Company are issued and
outstanding and the holders of Class B Common Stock have not terminated
their rights to block such actions granted to them under Section 4.1 of
the Stockholder Agreement between the Company and Chevron U.S.A. Inc.,
a Pennsylvania corporation, dated November 9, 2001, the Company shall
not take (or permit to be taken in its capacity as a stockholder or
partner or otherwise permit any subsidiary of the Company to take) any
of the following actions if
Page 9 of 20
all of the Class B Directors present at the meeting where such action
is considered vote against such action:
(i) amendment of (A) the last sentence of Article III,
Section 3 of these Bylaws, (B) Article III, Sections 6, 7(b),
7(c), 9 and 10 of these Bylaws, or (C) the last two sentences
of Section 2(d) of Article IV, Division B of the Restated
Certificate of Incorporation of the Company;
(ii) adoption of any provision of these Bylaws or
amendment to the Restated Certificate of Incorporation which
would substantially and adversely affect the rights of the
holders of the Class B Common Stock;
(iii) authorization of new shares of any stock or other
voting securities of the Company where the aggregate
consideration to be received by the Company therefor exceeds
$3 billion;
(iv) any merger or consolidation of the Company or any
subsidiary (other than a merger or consolidation by a
subsidiary with the Company or another subsidiary), any joint
venture, any liquidation or dissolution of the Company, any
voluntary initiation of a proceeding in bankruptcy or
acquiescence to an involuntary initiation of a proceeding in
bankruptcy, any acquisition of stock or assets by the Company
or its subsidiaries, or any issuance of common or preferred
stock by the Company, any of which would result in the payment
or receipt of consideration (including the incurrence or
assumption of indebtedness and liabilities) having a fair
market value exceeding $3 billion; or
(v) any other material transaction (or series of related
transactions) which would result in the payment or receipt of
consideration (including the incurrence or assumption of
indebtedness and liabilities) having a fair market value
exceeding $3 billion and is out of the ordinary course of
business for the Company.
(c) The executive officers of the Company shall advise the
members of the Board of Directors of the consideration of a proposal
relating to any matter of the type described in Section 7(b) at such
time as they determine to give substantive attention to such proposal.
Section 8. Compensation. Directors shall receive such compensation for
their services as shall be determined by the Board of Directors.
Section 9. Executive and Other Committees. The Board of Directors, by
resolution or resolutions adopted by a majority of the full Board of Directors,
may designate one or more members of the Board of Directors to constitute an
Executive Committee, and one or more other committees, which shall in each case
be comprised of such number of directors as the Board of Directors may determine
from time to time. Unless precluded by applicable law or rule of the New York
Stock Exchange, each committee of the Board of Directors, other than any
nomination committee with respect to Class A Directors (as such term is defined
in the Company's Restated Certificate of Incorporation), shall include at least
one Class B Director at
Page 10 of 20
all times, unless a majority of Class B Directors consents to a committee not
having any Class B Directors. Subject to such restrictions as may be contained
in the Company's Restated Certificate of Incorporation or that may be imposed by
the DGCL, any such committee shall have and may exercise such powers and
authority of the Board of Directors in the management of the business and
affairs of the Company as the Board of Directors may determine by resolution and
specify in the respective resolutions appointing them, and may authorize the
seal of the Company to be affixed to all papers which may require it; but no
such committee shall have the power or authority in reference to the following
matters: (a) approving or adopting, or recommending to the stockholders of the
Company, any action or matter expressly required by the DGCL to be submitted to
the stockholders for approval, (b) adopting, amending or repealing any Bylaw of
the Company, or (c) actions set forth in Section 7(b) of this Article III. Each
duly authorized action taken with respect to a given matter by any such duly
appointed committee of the Board of Directors shall have the same force and
effect as the action of the full Board of Directors and shall constitute for all
purposes the action of the full Board of Directors with respect to such matter.
The Board of Directors shall have the power at any time to change the
membership of any such committee and to fill vacancies in it. A majority of the
members of any such committee shall constitute a quorum. The Board of Directors
shall name a chairman at the time it designates members to a committee. Each
such committee shall appoint such subcommittees and assistants as it may deem
necessary. Except as otherwise provided by the Board of Directors, meetings of
any committee shall be conducted in accordance with the provisions of Sections 4
and 6 of this Article III as the same shall from time to time be amended. Any
member of any such committee elected or appointed by the Board of Directors may
be removed by the Board of Directors whenever in its judgment the best interests
of the Company will be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the person so removed. Election or
appointment of a member of a committee shall not of itself create contract
rights.
Section 10. Agenda Items. No action may be taken at a meeting of the
Board of Directors with respect to any matter that was not previously set forth
on an agenda for such meeting if either a majority of the Class B Directors
present at such meeting or a majority of the other directors present at such
meeting oppose taking action at such meeting with respect to such matter.
ARTICLE IV
Officers
Section 1. Officers. The officers of the Company shall consist of a
President and a Corporate Secretary and such other officers and agents as the
Board of Directors may from time to time elect or appoint. The Board of
Directors may delegate to the Chairman of the Board, if there is one, and/or the
Chief Executive Officer, if there is one, the authority to appoint or remove
additional officers and agents of the Company. Each officer shall hold office
until his successor shall have been duly elected or appointed and shall qualify
or until his death or until he shall resign or shall have been removed in the
manner hereinafter provided. Any two or more
Page 11 of 20
offices may be held by the same person. Except for the Chairman of the Board, if
any, no officer need be a director.
Section 2. Vacancies; Removal. Whenever any vacancies shall occur in
any office by death, resignation, increase in the number of offices of the
Company, or otherwise, the officer so elected shall hold office until his
successor is chosen and qualified. The Board of Directors may at any time remove
any officer of the Company, whenever in its judgment the best interests of the
Company will be served thereby, but such removal shall be without prejudice to
the contract rights, if any, of the person so removed. Election or appointment
of an officer or agent shall not of itself create contract rights.
Section 3. Powers and Duties of Officers. The officers of the Company
shall have such powers and duties as generally pertain to their offices as well
as such powers and duties as from time to time shall be conferred by the Board
of Directors. The Corporate Secretary shall have the duty to record the
proceedings of the meetings of the stockholders and directors in a book to be
kept for that purpose.
ARTICLE V
Indemnification
Section 1. General. The Company shall, to the fullest extent permitted
by applicable law in effect on the date of effectiveness of these Bylaws, and to
such greater extent as applicable law may thereafter permit, indemnify and hold
Indemnitee harmless from and against any and all losses, liabilities, claims,
damages and, subject to Article V, Section 2 (Expenses), Expenses (as this and
all other capitalized words used in this Article V not previously defined in
these Bylaws are defined in Article V, Section 16 (Definitions)), whatsoever
arising out of any event or occurrence related to the fact that Indemnitee is or
was a director or officer of the Company or is or was serving in another
Corporate Status.
Section 2. Expenses. If Indemnitee is, by reason of his Corporate
Status, a party to and is successful, on the merits or otherwise, in any
Proceeding, he shall be indemnified against all Expenses actually and reasonably
incurred by him or on his behalf in connection therewith. If Indemnitee is not
wholly successful in such Proceeding but is successful, on the merits or
otherwise, as to any Matter in such Proceeding, the Company shall indemnify
Indemnitee against all Expenses actually and reasonably incurred by him or on
his behalf relating to such Matter. The termination of any Matter in such a
Proceeding by dismissal, with or without prejudice, shall be deemed to be a
successful result as to such Matter. To the extent that the Indemnitee is, by
reason of his Corporate Status, a witness in any Proceeding, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith.
Section 3. Advances. In the event of any threatened or pending action,
suit or proceeding in which Indemnitee is a party or is involved and that may
give rise to a right of indemnification under this Article V, following written
request to the Company by Indemnitee, the Company shall promptly pay to
Indemnitee amounts to cover expenses reasonably incurred by Indemnitee in such
proceeding in advance of its final disposition upon the receipt by the Company
of (i) a written undertaking executed by or on behalf of Indemnitee providing
that
Page 12 of 20
Indemnitee will repay the advance if it shall ultimately be determined that
Indemnitee is not entitled to be indemnified by the Company as provided in these
Bylaws and (ii) satisfactory evidence as to the amount of such expenses.
Section 4. Repayment of Advances or Other Expenses. Indemnitee agrees
that Indemnitee shall reimburse the Company all expenses paid by the Company in
defending any civil, criminal, administrative or investigative action, suit or
proceeding against Indemnitee in the event and only to the extent that it shall
be determined pursuant to the provisions of this Article V or by final judgment
or other final adjudication under the provisions of any applicable law that
Indemnitee is not entitled to be indemnified by the Company for such expenses.
Section 5. Request for Indemnification. To obtain indemnification,
Indemnitee shall submit to the Corporate Secretary of the Company a written
claim or request. Such written claim or request shall contain sufficient
information to reasonably inform the Company about the nature and extent of the
indemnification or advance sought by Indemnitee. The Corporate Secretary of the
Company shall promptly advise the Board of Directors of such request.
Section 6. Determination of Entitlement; No Change of Control. If there
has been no Change of Control at the time the request for indemnification is
submitted, Indemnitee's entitlement to indemnification shall be determined in
accordance with Section 145(d) of the DGCL. If entitlement to indemnification is
to be determined by Independent Counsel, the Company shall furnish notice to
Indemnitee within ten days after receipt of the request for indemnification,
specifying the identity and address of Independent Counsel. The Indemnitee may,
within fourteen days after receipt of such written notice of selection, deliver
to the Company a written objection to such selection. Such objection may be
asserted only on the ground that the Independent Counsel so selected does not
meet the requirements of Independent Counsel and the objection shall set forth
with particularity the factual basis for such assertion. If there is an
objection to the selection of Independent Counsel, either the Company or
Indemnitee may petition the Court for a determination that the objection is
without a reasonable basis and/or for the appointment of Independent Counsel
selected by the Court.
Section 7. Determination of Entitlement; Change of Control. If there
has been a Change of Control at the time the request for indemnification is
submitted, Indemnitee's entitlement to indemnification shall be determined in a
written opinion by Independent Counsel selected by Indemnitee. Indemnitee shall
give the Company written notice advising of the identity and address of the
Independent Counsel so selected. The Company may, within seven days after
receipt of such written notice of selection, deliver to the Indemnitee a written
objection to such selection. Indemnitee may, within five days after the receipt
of such objection from the Company, submit the name of another Independent
Counsel and the Company may, within seven days after receipt of such written
notice of selection, deliver to the Indemnitee a written objection to such
selection. Any objections referred to in this Section 7 may be asserted only on
the ground that the Independent Counsel so selected does not meet the
requirements of Independent Counsel and such objection shall set forth with
particularity the factual basis for such assertion. Indemnitee may petition the
Court for a determination that the Company's objection to the first and/or
second selection of Independent Counsel is without a reasonable basis and/or for
the appointment as Independent Counsel of a person selected by the Court.
Page 13 of 20
Section 8. Procedures of Independent Counsel. If a Change of Control
shall have occurred before the request for indemnification is sent by
Indemnitee, Indemnitee shall be presumed (except as otherwise expressly provided
in this Article V) to be entitled to indemnification upon submission of a
request for indemnification in accordance with Article V, Section 5 (Request for
Indemnification), and thereafter the Company shall have the burden of proof to
overcome the presumption in reaching a determination contrary to the
presumption. The presumption shall be used by Independent Counsel as a basis for
a determination of entitlement to indemnification unless the Company provides
information sufficient to overcome such presumption by clear and convincing
evidence or the investigation, review and analysis of Independent Counsel
convinces him by clear and convincing evidence that the presumption should not
apply.
Except in the event that the determination of entitlement to
indemnification is to be made by Independent Counsel, if the person or persons
empowered under Article V, Section 6 (Determination of Entitlement; No Change of
Control) or Section 7 (Determination of Entitlement; Change of Control) to
determine entitlement to indemnification shall not have made and furnished to
Indemnitee in writing a determination within sixty days after receipt by the
Company of the request therefor, the requisite determination of entitlement to
indemnification shall be deemed to have been made and Indemnitee shall be
entitled to such indemnification unless Indemnitee knowingly misrepresented a
material fact in connection with the request for indemnification or such
indemnification is prohibited by applicable law. The termination of any
Proceeding or of any Matter therein, by judgment, order, settlement or
conviction, or upon a plea of nolo contendere or its equivalent, shall not
(except as otherwise expressly provided in this Article V) of itself adversely
affect the right of Indemnitee to indemnification or create a presumption that
Indemnitee did not act in good faith and in a manner that he reasonably believed
to be in or not opposed to the best interests of the Company, or with respect to
any criminal Proceeding, that Indemnitee had reasonable cause to believe that
his conduct was unlawful. A person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan of the Company shall be deemed to have acted in a
manner not opposed to the best interests of the Company.
For purposes of any determination hereunder, a person shall be deemed
to have acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Company, or, with respect to any
criminal action or Proceeding, to have had no reasonable cause to believe his
conduct was unlawful, if his action is based on the records or books of account
of the Company or another enterprise or on information supplied to him by the
officers of the Company or another enterprise in the course of their duties or
on the advice of legal counsel for the Company or another enterprise or on
information or records given or reports made to the Company or another
enterprise by an independent certified public accountant or by an appraiser or
other expert selected with reasonable care by the Company or another enterprise.
The term "another enterprise" as used in this Section shall mean any other
company or any partnership, limited liability company, association, joint
venture, trust, employee benefit plan or other enterprise of which such person
is or was serving at the request of the Company as a director, officer, employee
or agent. The provisions of this paragraph shall not be deemed to be exclusive
or to limit in any way the circumstances in which an Indemnitee may be deemed to
have met the applicable standards of conduct for determining entitlement to
rights under this Article V.
Page 14 of 20
Section 9. Independent Counsel Expenses. The Company shall pay any and
all reasonable fees and expenses of Independent Counsel incurred acting pursuant
to this Article V and in any proceeding to which it is a party or witness in
respect of its investigation and written report and shall pay all reasonable
fees and expenses incident to the procedures in which such Independent Counsel
was selected or appointed. No Independent Counsel may serve if a timely
objection has been made to his selection until a court has determined that such
objection is without a reasonable basis.
Section 10. Adjudication. In the event that (i) a determination is made
pursuant to Article V, Section 6 (Determination of Entitlement; No Change of
Control) or Section 7 (Determination of Entitlement; Change of Control) that
Indemnitee is not entitled to indemnification under this Article V; (ii)
advancement of Expenses is not timely made pursuant to Article V, Section 3
(Advances); (iii) Independent Counsel has not made and delivered a written
opinion determining the request for indemnification (a) within ninety days after
being appointed by the Court, (b) within ninety days after objections to his
selection have been overruled by the Court or (c) within ninety days after the
time for the Company or Indemnitee to object to his selection; or (iv) payment
of indemnification is not made within five days after a determination of
entitlement to indemnification has been made or deemed to have been made
pursuant to Article V, Section 6 (Determination of Entitlement; No Change of
Control), Section 7 (Determination of Entitlement; Change of Control) or Section
8 (Procedures of Independent Counsel), Indemnitee shall be entitled to an
adjudication in an appropriate court of the State of Delaware, or in any other
court of competent jurisdiction, of his entitlement to such indemnification or
advancement of Expenses. In the event that a determination shall have been made
that Indemnitee is not entitled to indemnification, any judicial proceeding or
arbitration commenced pursuant to this Section 10 shall be conducted in all
respects as a de novo trial on the merits and Indemnitee shall not be prejudiced
by reason of that adverse determination. If a Change of Control shall have
occurred, in any judicial proceeding commenced pursuant to this Section 10, the
Company shall have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be. If a
determination shall have been made or deemed to have been made that Indemnitee
is entitled to indemnification, the Company shall be bound by such determination
in any judicial proceeding commenced pursuant to this Section 10, or otherwise,
unless Indemnitee knowingly misrepresented a material fact in connection with
the request for indemnification, or such indemnification is prohibited by law.
The Company shall be precluded from asserting in any judicial
proceeding commenced pursuant to this Section 10 that the procedures and
presumptions of this Article V are not valid, binding and enforceable and shall
stipulate in any such proceeding that the Company is bound by all provisions of
this Article V. In the event that Indemnitee, pursuant to this Section 10, seeks
a judicial adjudication to enforce his rights under, or to recover damages for
breach of, this Article V, Indemnitee shall be entitled to recover from the
Company, and shall be indemnified by the Company against, any and all Expenses
actually and reasonably incurred by him in such judicial adjudication, but only
if he prevails therein. If it shall be determined in such judicial adjudication
that Indemnitee is entitled to receive part but not all of the indemnification
or advancement of Expenses sought, the Expenses incurred by Indemnitee in
connection with such judicial adjudication or arbitration shall be appropriately
prorated.
Page 15 of 20
Section 11. Participation by the Company. With respect to any such
claim, action, suit, proceeding or investigation as to which Indemnitee notifies
the Company of the commencement thereof: (a) the Company will be entitled to
participate therein at its own expense; (b) except as otherwise provided below,
to the extent that it may wish, the Company (jointly with any other indemnifying
party similarly notified) will be entitled to assume the defense thereof, with
counsel reasonably satisfactory to Indemnitee. After receipt of notice from the
Company to Indemnitee of the Company's election so to assume the defense
thereof, the Company will not be liable to Indemnitee under this Article V for
any legal or other expenses subsequently incurred by Indemnitee in connection
with the defense thereof other than reasonable costs of investigation or as
otherwise provided below. Indemnitee shall have the right to employ his own
counsel in such action, suit, proceeding or investigation but the fees and
expenses of such counsel incurred after notice from the Company of its
assumption of the defense thereof shall be at the expense of Indemnitee unless
(i) the employment of counsel by Indemnitee has been authorized by the Company,
(ii) Indemnitee shall have reasonably concluded that there is a conflict of
interest between the Company and Indemnitee in the conduct of the defense of
such action or (iii) the Company shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and expenses
of counsel employed by Indemnitee shall be subject to indemnification pursuant
to the terms of this Article V. The Company shall not be entitled to assume the
defense of any action, suit, proceeding or investigation brought in the name of
or on behalf of the Company or as to which Indemnitee shall have made the
conclusion provided for in (ii) above; and (c) the Company shall not be liable
to indemnify Indemnitee under this Article V for any amounts paid in settlement
of any action or claim effected without its written consent, which consent shall
not be unreasonably withheld. The Company shall not settle any action or claim
in any manner that would impose any limitation or unindemnified penalty on
Indemnitee without Indemnitee's written consent, which consent shall not be
unreasonably withheld.
Section 12. Nonexclusivity of Rights. The rights of indemnification and
advancement of Expenses as provided by this Article V shall not be deemed
exclusive of any other rights to which Indemnitee may at any time be entitled to
under applicable law, the Restated Certificate of Incorporation of the Company,
these Bylaws, any agreement, a vote of stockholders or a resolution of
directors, or otherwise. No amendment, alteration or repeal of this Article V or
any provision hereof shall be effective as to any Indemnitee for acts, events
and circumstances that occurred, in whole or in part, before such amendment,
alteration or repeal. The provisions of this Article V shall continue as to an
Indemnitee whose Corporate Status has ceased for any reason and shall inure to
the benefit of his heirs, executors and administrators. Neither the provisions
of this Article V nor those of any agreement to which the Company is a party
shall be deemed to preclude the indemnification of any person who is not
specified in this Article V as having the right to receive indemnification or is
not a party to any such agreement, but whom the Company has the power or
obligation to indemnify under the provisions of the DGCL.
Section 13. Insurance and Subrogation. The Company may maintain
insurance, at its expense, to protect itself and any director, officer, employee
or agent of the Company or another corporation, partnership, joint venture,
trust or other enterprise against any such expense, liability or loss, whether
or not the Company would have the power to indemnity such person against such
expense, liability or loss under applicable law.
Page 16 of 20
The Company shall not be liable under this Article V to make any
payment of amounts otherwise indemnifiable hereunder if, but only to the extent
that, Indemnitee has otherwise actually received such payment under any
insurance policy, contract, agreement or otherwise.
In the event of any payment hereunder, the Company shall be subrogated
to the extent of such payment to all the rights of recovery of Indemnitee, who
shall execute all papers required and take all action reasonably requested by
the Company to secure such rights, including execution of such documents as are
necessary to enable the Company to bring suit to enforce such rights.
Section 14. Severability. If any provision or provisions of this
Article V shall be held to be invalid, illegal or unenforceable for any reason
whatsoever, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby; and, to the
fullest extent possible, the provisions of this Article V shall be construed so
as to give effect to the intent manifested by the provision held invalid,
illegal or unenforceable.
Section 15. Certain Actions for Which Indemnification Is Not Provided.
Notwithstanding any other provision of this Article V, no person shall be
entitled to indemnification or advancement of Expenses under this Article V with
respect to any Proceeding, or any Matter therein, brought or made by such person
against the Company.
Section 16. Definitions. For purposes of this Article V:
"Change of Control" means a change in control of the Company after the
date Indemnitee acquired his Corporate Status, which shall be deemed to have
occurred in any one of the following circumstances occurring after such date:
(i) there shall have occurred an event required to be reported with respect to
the Company in response to Item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Exchange Act, whether or not the Company is then subject to such reporting
requirement; (ii) any "person" (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act) shall have become the "beneficial owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 40% or more of the combined voting power of the Company's
then outstanding voting securities without prior approval of at least two-thirds
of the members of the Board of Directors in office immediately prior to such
person attaining such percentage interest; (iii) the Company is a party to a
merger, consolidation, sale of assets or other reorganization, or a proxy
contest, as a consequence of which members of the Board of Directors in office
immediately prior to such transaction or event constitute less than a majority
of the Board of Directors thereafter; or (iv) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors (including, for this purpose, any new director whose
election or nomination for election by the Company's stockholders was approved
by a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of such period) cease for any reason to constitute at
least a majority of the Board of Directors.
"Corporate Status" describes the status of Indemnitee as a director,
officer, employee, agent or fiduciary of the Company or of any other
corporation, partnership, limited liability
Page 17 of 20
company, association, joint venture, trust, employee benefit plan or other
enterprise that Indemnitee is or was serving at the request of the Company.
"Court" means the Court of Chancery of the State of Delaware or any
other court of competent jurisdiction.
"Designated Professional Capacity" shall include, but not be limited
to, a physician, nurse, psychologist or therapist, registered surveyor,
registered engineer, registered architect, attorney, certified public accountant
or other person who renders such professional services within the course and
scope of his employment, who is licensed by appropriate regulatory authorities
to practice such profession and who, while acting in the course of such
employment, committed or is alleged to have committed any negligent acts, errors
or omissions in rendering such professional services at the request of the
Company or pursuant to his employment (including, without limitation, rendering
written or oral opinions to third parties).
"Expenses" shall include all reasonable attorneys' fees, retainers,
court costs, transcript costs, fees of experts, witness fees, travel expenses,
duplicating costs, printing and binding costs, telephone charges, postage,
delivery service fees, and all other disbursements or expenses of the types
customarily incurred in connection with prosecuting, defending, preparing to
prosecute or defend, investigating, or being or preparing to be a witness in a
Proceeding.
"Indemnitee" includes any officer (including an officer acting in his
Designated Professional Capacity) or director of the Company who is, or is
threatened to be made, a witness in or a party to any Proceeding as described in
Article V, Section 1 (General) or Section 2 (Expenses) by reason of his
Corporate Status.
"Independent Counsel" means a law firm, or a member of a law firm, that
is experienced in matters of corporation law and neither presently is, nor in
the five years previous to his selection or appointment has been, retained to
represent: (i) the Company or Indemnitee in any matter material to either such
party or (ii) any other party to the Proceeding giving rise to a claim for
indemnification hereunder.
"Matter" is a claim, a material issue or a substantial request for
relief.
"Proceeding" includes any action, suit, arbitration, alternate dispute
resolution mechanism, investigation, administrative hearing or any other
proceeding, whether civil, criminal, administrative or investigative, except one
initiated by an Indemnitee pursuant to Article V, Section 10 (Adjudication) to
enforce his rights under this Article V.
Section 17. Notices. Promptly after receipt by Indemnitee of notice of
the commencement of any action, suit or proceeding, Indemnitee shall, if he
anticipates or contemplates making a claim for expenses or an advance pursuant
to the terms of this Article V, notify the Company of the commencement of such
action, suit or proceeding; provided, however, that any delay in so notifying
the Company shall not constitute a waiver or release by Indemnitee of rights
hereunder and that any omission by Indemnitee to so notify the Company shall not
relieve the Company from any liability that it may have to Indemnitee otherwise
than under this Article V. Any communication required or permitted to the
Company shall be addressed to the Corporate Secretary of the Company and any
such communication to Indemnitee shall be
Page 18 of 20
addressed to Indemnitee's address as shown on the Company's records unless he
specifies otherwise and shall be personally delivered or delivered by overnight
mail delivery. Any such notice shall be effective upon receipt.
Section 18. Contractual Rights. The right to be indemnified or to the
advancement or reimbursement of Expenses (i) is a contract right based upon good
and valuable consideration, pursuant to which Indemnitee may ▇▇▇ as if these
provisions were set forth in a separate written contract between Indemnitee and
the Company, (ii) is intended to be retroactive and shall be available as to
events occurring prior to the adoption of these provisions and (iii) shall
continue after any rescission or restrictive modification of such provisions as
to events occurring prior thereto.
Section 19. Indemnification of Employees, Agents and Fiduciaries. The
Company, by adoption of a resolution of the Board of Directors, may indemnify
and advance expenses to a person who is an employee (including an employee
acting in his Designated Professional Capacity), agent or fiduciary of the
Company including any such person who is or was serving at the request of the
Company as a director, officer, employee, agent or fiduciary of any other
corporation, partnership, joint venture, limited liability company, trust,
employee benefit plan or other enterprise to the same extent and subject to the
same conditions (or to such lesser extent and/or with such other conditions as
the Board of Directors may determine) under which it may indemnify and advance
expenses to an Indemnitee under this Article V.
ARTICLE VI
Miscellaneous Provisions
Section 1. Offices. The address of the registered office of the Company
in the State of Delaware is Corporation Trust Center, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of New Castle, 19801, and the name of the registered agent
of the Company at such address is The Corporation Trust Company. The principal
office of the Company shall be located in Houston,
Texas, unless and until
changed by resolution of the Board of Directors. The Company may also have
offices at such other places as the Board of Directors may designate from time
to time, or as the business of the Company may require. The principal office and
registered office may be, but need not be, the same.
Section 2. Resignations. Any director or officer may resign at any
time. Such resignations shall be made in writing and shall take effect at the
time specified therein, or, if no time is specified, at the time of its receipt
by the Chairman of the Board, if there is one, the Chief Executive Officer, if
there is one, the President or the Corporate Secretary. The acceptance of a
resignation shall not be necessary to make it effective, unless expressly so
provided in the resignation.
Section 3. Seal. The Corporate Seal shall be circular in form, shall
have inscribed thereon the name of the Company and may be used by causing it or
a facsimile thereof to be impressed or affixed or otherwise reproduced.
Page 19 of 20
Section 4. Separability. If one or more of the provisions of these
Bylaws shall be held to be invalid, illegal or unenforceable, such invalidity,
illegality or unenforceability shall not affect any other provision hereof and
these Bylaws shall be construed as if such invalid, illegal or unenforceable
provision or provisions had never been contained herein.
ARTICLE VII
Amendment of Bylaws
Section 1. Vote Requirements. Subject to the provisions of the
Company's Restated Certificate of Incorporation, these Bylaws may be altered,
amended or repealed, and new Bylaws may be adopted, by the Board of Directors;
provided that no amendment or repeal of (a) the last sentence of Article III,
Section 3 of these Bylaws, or (b) Article III, Sections 6, 7(b), 7(c), 9 and 10
of these Bylaws, nor the adoption of any provision of these Bylaws which would
substantially and adversely affect the rights of the holders of Class B Common
Stock, shall be effective except upon the affirmative vote of a majority of the
shares of Class B Common Stock outstanding.
Page 20 of 20
EXHIBIT 7.11
FORM OF RULE 145 AFFILIATE LETTER
________________, 200_
[Stanford, Inc.]
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
I have been advised that as of the date of this letter I may be
deemed to be an "affiliate" of [Dynegy Inc., an Illinois corporation
("Dynegy"),] [Enron Corp., an Oregon corporation ("Enron"),] as the term
"affiliate" is defined for purposes of paragraphs (c) and (d) of Rule 145 of the
Rules and Regulations (the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") under the Securities Act of 1933, as
amended (the "Securities Act"). Pursuant to the terms of the Agreement and Plan
of Merger dated as of November 7, 2001 (the "Agreement"), among Dynegy [Inc., an
Illinois corporation ("Dynegy")], Stanford, Inc., a Delaware corporation and
wholly owned subsidiary of Dynegy to be renamed Dynegy Inc. (the "Company"),
Badin, Inc., an Illinois corporation and wholly owned subsidiary the Company
("Badin"), Sorin, Inc., an Oregon corporation and wholly owned subsidiary the
Company ("Sorin") and Enron [Corp., an Oregon corporation ("Enron")], Sorin will
be merged with and into Enron, with Enron being the surviving entity (the "Enron
Merger"), and concurrently therewith Badin will be merged with and into Dynegy,
with Dynegy being the surviving entity (the "Dynegy Merger" and, together with
the Enron Merger, the "Mergers"). Pursuant to the Mergers, the outstanding
common stock, no par value, of Enron ("Enron Common Stock") will be converted
into Class A common stock, par value $.01 per share, of the Company ("Company
Class A Common Stock"), and the outstanding Class A common stock, no par value,
of Dynegy ("Dynegy Class A Common Stock") and outstanding Class B common stock,
no par value, of Dynegy ("Dynegy Class B Common Stock") will be converted into
Company Class A Common Stock and Class B common stock, par value $.01 per share,
of the Company ("Company Class B Common Stock" and, together with the Company
Class A Common Stock, the "Company Common Stock"), respectively.
As a result of the [Dynegy] [Enron] Merger, I may receive (i) shares
of Company Class A Common Stock in exchange for shares of [Dynegy Class A]
[Enron] Common Stock [and/or (ii) shares of Company Class B Common Stock in
exchange for shares of Dynegy Class B Common Stock] (or upon the exercise of
options for such shares).
I represent, warrant and covenant to the Company that as of the date
I receive any Company Common Stock as a result of the [Dynegy] [Enron] Merger:
A. I shall not make any sale, transfer or other disposition of such
Company Common Stock in violation of the Securities Act or the Rules and
Regulations.
B. I have carefully read this letter and the Agreement and, to the
extent I felt necessary, discussed the requirements of such documents and
other applicable limitations upon my ability to sell, transfer or
otherwise dispose of the Company Common Stock with my counsel.
C. I have been advised that the issuance of Company Common Stock to
me pursuant to the [Dynegy] [Enron] Merger will be registered with the
Commission under the Securities Act on a Registration Statement on Form
S-4. I have also been advised, however, that, since, at the time the
[Dynegy] [Enron] Merger is submitted for a vote of the shareholders of
[Dynegy] [Enron], I may be deemed to be an affiliate of [Dynegy] [Enron]
for purposes of paragraphs (c) and (d) of Rule 145 of the Rules and
Regulations, I may not sell, transfer or otherwise dispose of the Company
Common Stock issued to me in the [Dynegy] [Enron] Merger within one year
following the [Dynegy] [Enron] Merger, and, if I am then an affiliate of
the Company, thereafter, unless (i) such sale, transfer or other
disposition has been registered under the Securities Act, (ii) such sale,
transfer or other disposition is made in conformity with the volume and
other limitations of Rule 145 of the Rules and Regulations (as such rule
may be hereafter from time to time amended), or (iii) in the opinion of
counsel reasonably acceptable to Company or as described in a "no action"
or interpretive letter obtained by me from the staff of the Commission,
such sale, transfer or other disposition is otherwise exempt from
registration under the Securities Act.
D. [I understand that the Company is under no obligation to register
the sale, transfer or other disposition of the Company Common Stock by me
or on my behalf under the Securities Act or to take any other action
necessary in order to make compliance with an exemption from such
registration available.]
E. I understand that stop transfer instructions will be given to the
Company's transfer agent with respect to the Company Common Stock and that
there will be placed on the certificates for the Company Common Stock
issued to me in connection with the [Dynegy] [Enron] Merger, or any
substitutions therefor, a legend substantially in the form set forth
below:
"THE SHARES REPRESENTED BY THIS CERTIFICATE WERE ISSUED IN
A TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES AND MAY ONLY BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED IN COMPLIANCE WITH THE
REQUIREMENTS OF RULE 145 OR PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
OF 1933."
F. I also understand that unless the transfer by me of my Company
Common Stock has been registered under the Securities Act or is a sale
made in conformity with
the provisions of Rule 145, the Company reserves the right to place the
following legend on the certificates issued to my transferee in
substantially the form set forth below:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 AND WERE
ACQUIRED FROM A PERSON WHO RECEIVED SUCH SHARES IN A
TRANSACTION TO WHICH RULE 145 PROMULGATED UNDER THE
SECURITIES ACT OF 1933 APPLIES. THE SHARES HAVE BEEN
ACQUIRED BY THE HOLDER NOT WITH A VIEW TO, OR FOR RESALE
IN CONNECTION WITH, ANY DISTRIBUTION THEREOF WITHIN THE
MEANING OF THE SECURITIES ACT OF 1933 AND MAY NOT BE SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH AN
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT OF 1933."
G. I also understand and agree that the representations, warranties,
covenants and agreements I have made herein are for the benefit of
[Dynegy] [Enron] and the Company and will be relied upon by the Company
and its counsel and accountants.
I understand and agree that the legends set forth in paragraphs [E
and F] above will be removed by delivery of substitute certificates without such
legend if such legend is not required for purposes of the Securities Act. I
understand and agree that such legends and the stop orders referred to above
will be removed if (i) one year shall have elapsed from the date I acquire the
Company Common Stock received in the [Dynegy] [Enron] Merger and the provisions
of Rule 145(d)(2) are then available to me, (ii) two years shall have elapsed
from the date I acquire the Company Common Stock received in the [Dynegy]
[Enron] Merger and the provisions of Rule 145(d)(3) are then available to me or
(iii) the Company has received either an opinion of counsel, which opinion and
counsel shall be reasonably satisfactory to the Company, or a "no action" letter
obtained by me from the staff of the Commission, to the effect that the
restrictions imposed by Rule 145 under the Act no longer apply to me.
Execution of this letter should not be considered an admission,
stipulation or acknowledgement by me that I am an "affiliate" of [Dynegy]
[Enron] or the Company as described in the first paragraph of this letter or
considered as a waiver of any rights that I may have to object to any claim that
I am an affiliate on or after the date of this letter.
Very truly yours,
[Insert Name of Affiliate]
Accepted this _____ day of
____________________, 200__ by
[STANFORD, INC.]
By: ______________________________
Name:
Title:
EXHIBIT 8.2(a)
ENRON CORP.
OFFICER'S CERTIFICATE
The undersigned, a duly authorized officer of Enron Corp., an Oregon
corporation ("Enron"), and acting as such, in connection with the opinions to
be rendered by ▇▇▇▇▇ ▇▇▇▇▇ L.L.P. and ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. with respect to
certain federal income tax consequences under the Internal Revenue Code of
1986, as amended (the "Code"), of the transactions contemplated by the
Agreement and Plan of Merger (the "
Merger Agreement") dated as of November 7,
2001 by and among Dynegy Inc., an Illinois corporation ("Dynegy"), Sorin,
Inc., an Illinois corporation ("Dynegy Merger Sub"), Enron, Badin, Inc., an
Oregon corporation ("Enron Merger Sub") and Stanford, Inc., a Delaware
corporation ("Newco"), hereby represents as follows:1
1. For purposes of this Certificate,
(i) "Chevron Agreements" means the Subscription Agreement by and
between ChevronTexaco Corp. ("Chevron") and Newco dated November 7, 2001 and the
Series A, B and C Warrants attached thereto as exhibits;
(ii) "Chevron Transfers" means the issuance(s) of Newco Stock in
exchange for cash pursuant to the Chevron Agreements;
(iii) "Disposition" means any transaction that, for federal income
tax purposes, constitutes a sale, exchange or other disposition, whether taxable
or nontaxable, of shares of Newco Stock.
(iv) "Newco Stock" means Newco Series A Common Stock and Newco
Series B Common Stock;
(v) "Property" means (x) Dynegy Stock or Enron Common Stock
exchanged for Newco Stock in the Mergers (excluding any shares of Dynegy Stock
as to which dissenters' rights have been exercised under Illinois law) and (y)
cash paid by a Transferor for Newco Stock pursuant to the Chevron Agreements;
(vi) "Dynegy Stock" means Dynegy Series A Common Stock and
Dynegy Series B Common Stock;
(vii) "Transactions" means the Mergers and the Chevron Transfers;
(viii) "Transferor" means (x) each holder of Dynegy Stock or Enron
Common Stock immediately prior to the Effective Time who receives Newco Stock in
the Mergers and (y)
---------------------
(1) Capitalized terms used but not defined herein have the meanings ascribed
to them in the
Merger Agreement.
each person to whom Newco issues Newco Stock in exchange for cash pursuant to
the Chevron Agreements.
2. The facts relating to Enron, Newco and the Transactions set forth in
the
Merger Agreement and the other agreements relating to the Transactions are
true, accurate and complete in all material respects.
3. The
Merger Agreement, the related written agreements entered into
contemporaneously therewith or referenced therein and all exhibits and
attachments thereto represent the full and complete agreement among Dynegy,
Enron and Newco with respect to the Mergers and there are no other written or
oral agreements regarding the Mergers. The Mergers will be consummated in
accordance with the
Merger Agreement (including all agreements referenced
therein and all exhibits and attachments thereto), and none of the material
terms and conditions therein has been or will be waived or modified.
4. The facts relating to Enron, Newco and the Transactions set forth in
the [Proxy Statement-Prospectus/Registration Statement] filed with the
Securities and Exchange Commission under the Securities and Exchange Act of
1934, as amended, dated ____, 2002 are true, accurate, and complete in all
material respects at the Effective Time.
5. To the knowledge of Enron, none of the Enron Common Stock or Dynegy
Stock to be exchanged for Newco Stock pursuant to the Mergers is "section 306
stock" within the meaning of section 306(c) of the Code.
6. The Transactions are not the result of the solicitation by a promoter,
broker, or investment house.
7. To the knowledge of Enron, no Transferor of Property to Newco in the
Transactions will retain any rights in the Property so transferred.
8. Newco will not assume any indebtedness of any Transferor in connection
with the Transactions. To the knowledge of Enron, none of the Property will be
received by Newco subject to any indebtedness in the Transactions.
9. There is no plan or intention on the part of Newco to redeem or
otherwise reacquire any of the stock of Newco to be issued in the Transactions
other than the payment of cash in lieu of fractional shares in the Mergers.
10. To the knowledge of Enron, (i) no Transferor has a binding commitment,
and there is no plan or intention on the part of any Transferor, to engage in a
Disposition of any shares of Newco Stock to be received by such Transferor in
the Transactions and (ii) immediately after the Mergers and each issuance of
Newco Stock pursuant to the Chevron Transfers, each Transferor will have the
ability to exercise complete dominion and control over all of the shares of
Newco Stock received by such Transferor in the Transactions, including, without
limitation, all voting rights with respect thereto.
-2-
11. Taking into account any issuance of additional shares of Newco Stock,
any issuance of Newco Stock for services, the exercise of any Newco stock
rights, warrants, or subscriptions, any public offering of Newco Stock, and, to
the knowledge of Enron, the Disposition of any of the Newco Stock to be received
in the Transactions, the Transferors will be in Control of Newco, regardless of
whether any Newco Stock issuable pursuant to the Chevron Agreements after the
Effective Date is treated as outstanding. For purposes of this paragraph,
"Control" means ownership of stock possessing at least eighty percent (80%) of
the total combined voting power of all classes of stock entitled to vote and at
least eighty percent (80%) of the total number of shares of each other class of
stock.
12. The consideration to be issued to the Transferors in the Mergers was
the result of arm's-length negotiations between the managements of Dynegy and
Enron. Each holder of Property to be exchanged or paid for Newco Stock pursuant
to the Transactions will receive Newco Stock (and, if applicable, cash in lieu
of fractional shares) approximately equal to the fair market value of the
Property exchanged therefor.
13. Newco will remain in existence following the Mergers and any Chevron
Transfer. There is no plan or intention by Newco to liquidate Dynegy or Enron,
to cause Dynegy or Enron to merge with or into any other entity, to effect a
conversion of Dynegy or Enron or to otherwise dispose of any of the Enron Common
Stock and Dynegy Stock transferred to it pursuant to the Mergers.
14. Each of Dynegy, Enron and Newco, and, to the knowledge of Enron, each
Transferor, will pay its or his or her own expenses, if any, incurred in
connection with the Transactions.
15. Newco will not be an investment company within the meaning of section
351(e)(1) of the Code and Treas. Reg. Section 1.351-1(c)(1)(ii).
16. Prior to the Mergers, each of Dynegy Merger Sub and Enron Merger Sub
will be a direct, wholly owned subsidiary of Newco. Each of Dynegy Merger Sub
and Enron Merger Sub is or will be a transitory corporation formed for the sole
purpose of participating in the Mergers.
17. No Newco Stock to be issued in, or in connection with, the
Transactions will be placed in escrow or will be issued under a contingent stock
arrangement or other similar arrangement.
18. The Transactions are being effected for bona fide business reasons.
19. No Newco Stock will be issued for services rendered to or for the
benefit of Newco or any affiliate thereof in connection with the Transactions.
No Newco Stock will be issued for indebtedness of Newco that is not evidenced by
a security or for interest on indebtedness of Newco.
20. Newco Stock will be the only capital stock of Newco issued and
outstanding for federal income tax purposes. There will be no nonvoting class of
capital stock of Newco issued and outstanding for federal income tax purposes.
-3-
21. There will be no indebtedness between Newco and any Transferor at the
Effective Time or at the time of any Chevron Transfer and there will be no
indebtedness created in favor of any Transferor as a result of the Transactions.
22. All of the transfers by the Transferors made pursuant to the
Transactions will occur under the plan described in the
Merger Agreement and the
Chevron Agreements, in which the rights of the parties are defined.
23. The payment of cash in lieu of fractional shares of Newco, if any, in
the Mergers is solely for the purpose of avoiding the expense and inconvenience
to Newco of issuing fractional shares and does not represent separately
bargained-for consideration.
24. None of the compensation received or to be received by any
shareholder-employee of Dynegy or Enron will be separate consideration for, or
allocable to, any of their Dynegy Stock or Enron Common Stock. None of the Newco
Stock received by any such shareholder-employee in the Mergers will be separate
consideration for, or allocable to, any employment agreement or other
compensatory arrangement. The compensation paid to any shareholder-employee will
be for services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's-length for similar services.
25. The undersigned officer is authorized to make all of the statements
set forth herein on behalf of Enron.
I understand that the representations above will be relied upon by ▇▇▇▇▇
▇▇▇▇▇ L.L.P. and ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. as a basis for their respective
opinions, and that such opinions will be conditioned upon the initial and
continuing accuracy of these representations.
Dated: ________, 2002
ENRON CORP.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
-4-
EXHIBIT 8.2(b)
DYNEGY INC.
OFFICER'S CERTIFICATE
The undersigned, a duly authorized officer of Dynegy Inc., an Illinois
corporation ("Dynegy"), and acting as such, in connection with the opinions
to be rendered by ▇▇▇▇▇ ▇▇▇▇▇ L.L.P. and ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. with respect
to certain federal income tax consequences under the Internal Revenue Code of
1986, as amended (the "Code"), of the transactions contemplated by the
Agreement and Plan of Merger (the "
Merger Agreement") dated as of November 7,
2001 by and among Dynegy, Sorin, Inc., an Illinois corporation ("Dynegy
Merger Sub"), Enron Corp., an Oregon corporation ("Enron"), Badin, Inc., an
Oregon corporation ("Enron Merger Sub") and Stanford, Inc., a Delaware
corporation ("Newco"), hereby represents as follows:1
1. For purposes of this Certificate,
(i) "Chevron Agreements" means the Subscription Agreement by and
between ChevronTexaco Corp. ("Chevron") and Newco dated November 7, 2001 and the
Series A, B and C Warrants attached thereto as exhibits;
(ii) "Chevron Transfers" means the issuance(s) of Newco Stock in
exchange for cash pursuant to the Chevron Agreements;
(iii) "Disposition" means any transaction that, for federal income
tax purposes, constitutes a sale, exchange or other disposition, whether taxable
or nontaxable, of shares of Newco Stock.
(iv) "Newco Stock" means Newco Series A Common Stock and Newco
Series B Common Stock;
(v) "Property" means (x) Dynegy Stock or Enron Common Stock
exchanged for Newco Stock in the Mergers (excluding any shares of Dynegy Stock
as to which dissenters' rights have been exercised under Illinois law) and (y)
cash paid by a Transferor for Newco Stock pursuant to the Chevron Agreements;
(vi) "Dynegy Stock" means Dynegy Series A Common Stock and
Dynegy Series B Common Stock;
(vii) "Transactions" means the Mergers and the Chevron Transfers;
(viii) "Transferor" means (x) each holder of Dynegy Stock or Enron
Common Stock immediately prior to the Effective Time who receives Newco Stock in
the Mergers and (y)
---------------------
(1) Capitalized terms used but not defined herein have the meanings ascribed
to them in the
Merger Agreement.
each person to whom Newco issues Newco Stock in exchange for cash pursuant to
the Chevron Agreements.
2. The facts relating to Dynegy, Newco and the Transactions set forth in
the
Merger Agreement, the Chevron Agreements and the other agreements relating
to the Transactions are true, accurate and complete in all material respects.
3. The
Merger Agreement, the related written agreements entered into
contemporaneously therewith or referenced therein and all exhibits and
attachments thereto represent the full and complete agreement among Dynegy,
Enron and Newco with respect to the Mergers and there are no other written or
oral agreements regarding the Mergers. The Mergers will be consummated in
accordance with the Merger Agreement (including all agreements referenced
therein and all exhibits and attachments thereto), and none of the material
terms and conditions therein has been or will be waived or modified.
4. The Chevron Agreements (including all agreements referenced therein and
all exhibits and attachments thereto) represent the full and complete agreement
between Newco and Chevron with respect to the Chevron Transfers and there are no
other written or oral agreements regarding the Chevron Transfers. The Chevron
Transfers will be consummated in accordance with the Chevron Agreements
(including all agreements referenced therein and all exhibits and attachments
thereto), and none of the material terms and conditions therein has been or will
be waived or modified.
5. The facts relating to Dynegy, Newco and the Transactions set forth in
the [Proxy Statement-Prospectus/Registration Statement] filed with the
Securities and Exchange Commission under the Securities and Exchange Act of
1934, as amended, dated ____, 2002 are true, accurate, and complete in all
material respects at the Effective Time.
6. To the knowledge of Dynegy, none of the Enron Common Stock or Dynegy
Stock to be exchanged for Newco Stock pursuant to the Mergers is "section 306
stock" within the meaning of section 306(c) of the Code.
7. The Transactions are not the result of the solicitation by a promoter,
broker, or investment house.
8. To the knowledge of Dynegy, no Transferor of Property to Newco in the
Transactions will retain any rights in the Property so transferred.
9. Newco will not assume any indebtedness of any Transferor in connection
with the Transactions. To the knowledge of Dynegy, none of the Property will be
received by Newco subject to any indebtedness in the Transactions.
10. There is no plan or intention on the part of Newco to redeem or
otherwise reacquire any of the stock of Newco to be issued in the Transactions
other than the payment of cash in lieu of fractional shares in the Mergers.
-2-
11. To the knowledge of Dynegy, (i) no Transferor has a binding
commitment, and there is no plan or intention on the part of any Transferor, to
engage in a Disposition of any shares of Newco Stock to be received by such
Transferor in the Transactions and (ii) immediately after the Mergers and each
issuance of Newco Stock pursuant to the Chevron Transfers, each Transferor will
have the ability to exercise complete dominion and control over all of the
shares of Newco Stock received by such Transferor in the Transactions,
including, without limitation, all voting rights with respect thereto.
12. Taking into account any issuance of additional shares of Newco Stock,
any issuance of Newco Stock for services, the exercise of any Newco stock
rights, warrants, or subscriptions, any public offering of Newco Stock, and, to
the knowledge of Dynegy, the Disposition of any of the Newco Stock to be
received in the Transactions, the Transferors will be in Control of Newco,
regardless of whether any Newco Stock issuable pursuant to the Chevron
Agreements after the Effective Date is treated as outstanding. For purposes of
this paragraph, "Control" means ownership of stock possessing at least eighty
percent (80%) of the total combined voting power of all classes of stock
entitled to vote and at least eighty percent (80%) of the total number of shares
of each other class of stock.
13. The consideration to be issued to the Transferors (i) in the Mergers
was the result of arm's-length negotiations between the managements of Dynegy
and Enron and (ii) in the Chevron Transfers was the result of arm's-length
negotiations between the managements of Dynegy and Chevron. Each holder of
Property to be exchanged or paid for Newco Stock pursuant to the Transactions
will receive Newco Stock (and, if applicable, cash in lieu of fractional shares)
approximately equal to the fair market value of the Property exchanged therefor.
14. Newco will remain in existence following the Mergers and any Chevron
Transfer. There is no plan or intention by Newco to liquidate Dynegy or Enron,
to cause Dynegy or Enron to merge with or into any other entity, to effect a
conversion of Dynegy or Enron or to otherwise dispose of any of the Enron Common
Stock and Dynegy Stock transferred to it pursuant to the Mergers.
15. Each of Dynegy, Enron and Newco, and, to the knowledge of Dynegy, each
Transferor, will pay its or his or her own expenses, if any, incurred in
connection with the Transactions.
16. Newco will not be an investment company within the meaning of section
351(e)(1) of the Code and Treas. Reg. Section 1.351-1(c)(1)(ii).
17. Prior to the Mergers, each of Dynegy Merger Sub and Enron Merger Sub
will be a direct, wholly owned subsidiary of Newco. Each of Dynegy Merger Sub
and Enron Merger Sub is or will be a transitory corporation formed for the sole
purpose of participating in the Mergers.
18. No Newco Stock to be issued in, or in connection with, the
Transactions will be placed in escrow or will be issued under a contingent stock
arrangement or other similar arrangement.
-3-
19. The Transactions are being effected for bona fide business reasons.
20. No Newco Stock will be issued for services rendered to or for the
benefit of Newco or any affiliate thereof in connection with the Transactions.
No Newco Stock will be issued for indebtedness of Newco that is not evidenced by
a security or for interest on indebtedness of Newco.
21. Newco Stock will be the only capital stock of Newco issued and
outstanding for federal income tax purposes. There will be no nonvoting class of
capital stock of Newco issued and outstanding for federal income tax purposes.
22. There will be no indebtedness between Newco and any Transferor at the
Effective Time or at the time of any Chevron Transfer and there will be no
indebtedness created in favor of any Transferor as a result of the Transactions.
23. All of the transfers by the Transferors made pursuant to the
Transactions will occur under the plan described in the Merger Agreement and the
Chevron Agreements, in which the rights of the parties are defined.
24. The payment of cash in lieu of fractional shares of Newco, if any, in
the Mergers is solely for the purpose of avoiding the expense and inconvenience
to Newco of issuing fractional shares and does not represent separately
bargained-for consideration.
25. None of the compensation received or to be received by any
shareholder-employee of Dynegy or Enron will be separate consideration for, or
allocable to, any of their Dynegy Stock or Enron Common Stock. None of the Newco
Stock received by any such shareholder-employee in the Mergers will be separate
consideration for, or allocable to, any employment agreement or other
compensatory arrangement. The compensation paid to any shareholder-employee will
be for services actually rendered and will be commensurate with amounts paid to
third parties bargaining at arm's-length for similar services.
26. The undersigned officer is authorized to make all of the statements
set forth herein on behalf of Dynegy.
I understand that the representations above will be relied upon by ▇▇▇▇▇
▇▇▇▇▇ L.L.P. and ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. as a basis for their respective
opinions, and that such opinions will be conditioned upon the initial and
continuing accuracy of these representations.
Dated: ________, 2002 DYNEGY, INC.
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
-4-
EXHIBIT 8.2(c)
[Chevron U.S.A. Inc. Letterhead]
________, 2002
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
In connection with the proposed merger (the "Merger") of Sorin, Inc., a
wholly owned subsidiary of Stanford, Inc. ("Newco"),1 with and into Dynegy Inc.
("Dynegy"), where Dynegy survives the Merger, and where Chevron U.S.A. Inc.
("Chevron") will receive Newco common stock in exchange for Dynegy stock, we
represent that we do not have any plan, intention, obligation or other
commitment to sell, exchange, or otherwise dispose of, whether taxable or
nontaxable, for federal income tax purposes the shares of stock of Newco
received in those transactions.
We understand that ▇▇▇▇▇ ▇▇▇▇▇ L.L.P. and ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. will rely
on this Certificate in rendering their opinions as to the transaction and we
will promptly and timely inform them if, after signing this Certificate, we have
reason to believe that any of the facts described herein or any of the
representations made in this Certificate are untrue, incorrect or incomplete in
any respect.
CHEVRON U.S.A. INC.,
a Pennsylvania corporation
By:_________________________________
Title:______________________________
------------------
(1) For purposes of this certificate, capitalized terms used and not otherwise
defined herein shall have the meaning ascribed thereto in the Agreement
and Plan of Merger Agreement dated November 7, 2001 providing for the
Merger and/or the Form S-4 filed with the SEC on _______, 2002.
EXHIBIT 8.2(d)
[ChevronTexaco Corp. Letterhead]
________, 2002
▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
In connection with (1) the proposed merger (the "Merger") of Sorin, Inc.,
a wholly owned subsidiary of Stanford, Inc. ("Newco"),1 with and into Dynegy
Inc. ("Dynegy"), where Dynegy survives the Merger, and where ChevronTexaco Corp.
("Chevron") will receive Newco common stock in exchange for Dynegy stock and (2)
the proposed purchase by Chevron of shares of Newco common stock and warrants
pursuant to the Subscription Agreement by and between Chevron and Newco dated
November 7, 2001 and the Series A, B and C Warrants attached thereto as
exhibits, we represent that we do not have, nor will we have at the time of any
purchase described in clause (2) above, any plan, intention, obligation or other
commitment to sell, exchange, or otherwise dispose of, whether taxable or
nontaxable, for federal income tax purposes the shares of stock of Newco
received in those transactions.
We understand that ▇▇▇▇▇ ▇▇▇▇▇ L.L.P. and ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. will rely
on this Certificate in rendering their opinions as to the transaction and we
will promptly and timely inform them if, after signing this Certificate, we have
reason to believe that any of the facts described herein or any of the
representations made in this Certificate are untrue, incorrect or incomplete in
any respect.
CHEVRONTEXACO CORP.,
a Delaware corporation
By:_________________________________
Title:______________________________
------------------
(1) For purposes of this certificate, capitalized terms used and not otherwise
defined herein shall have the meaning ascribed thereto in the Agreement
and Plan of Merger Agreement dated November 7, 2001 providing for the
Merger and/or the Form S-4 filed with the SEC on _______, 2002.